Price recall: Brand and store type differences

Abstract

Price is among the most important choice criteria for customers, whose price knowledge is often surprisingly inaccurate. This study aims at providing new insights into differences in price recall across brands and store types, and their potential effect on marketing efficiency and customers’ store choice. Towards this aim, we analyze the price recall of consumers for 51 food items by a random-effects panel estimation employing a survey with 715 participants. Our results show that customers recall national brand prices better than private labels, almost irrespectively of the store type; consumers overestimate store brand prices in both store types; the effect, however, is much higher for the convenience store. These outcomes have consequences for the marketing strategy: despite a price-matching guarantee for the store brands in the convenience store, the price image is still in favor of the discounter. This result raises doubts on the effectiveness of the price-matching guarantee, at least in this context. The everyday low price strategy of the discounter seems to pay off in terms of the price image. Though both stores charge the exact same prices for their store brands, prices at the discounter are on average perceived to be significantly lower.