The Price Matching Guarantee: The Effect of the Refund Size and the Moderator Role of the Retailer Price Strategy

Abstract

This research builds on the signal theory to predict that an EDLP (Every Day Low Price) strategy will influence a consumer's perception of a low-price guarantee. The results of a study show that an EDLP retailer may offer a high refund because this will produce high credibility. However, a high refund offered without an EDLP will lead to lower credibility which, in turn, reduces the value and the consumer's buying intention.