Same but different - The effect of the unit of measure on the valuation of a unit price

Abstract

Unit prices are a ubiquitous phenomenon. The respective legal norms leave a certain freedom of choice with regard to the reference unit. However, research on the impact of alternative measurement units on consumer behaviour is still in its infancy and its findings are inconclusive. Moreover, this influence has so far only been measured directly. Investigating the product category bottled beer (with its essential product attributes ‘brand’, ‘price’, ‘alcohol content’ and ‘size of packaging unit’), a Choice Based Conjoint experiment provides empirical evidence that a large (per 1 L) compared to a small (per 100 mL) size unit of measurement leads to a significant shift of importance towards the product attribute ‘price’ at the expense of the ‘brand’. In addition, consumers react more sensitively to price changes. At the strategic level, retailers can use these insights to sharpen their positioning through a suitable unit price measure. When making operational decisions, retailers should bear in mind that the reference unit influences the likelihood of purchase, the scope for price increases and the opportunities for up-selling.