Price Cues Research Articles

Consumer Evaluation of Low Price Guarantees: The Moderating Role of Reference Price and Store Image

This article reports the findings of 2 studies that examined the effects of low price guarantees (LPG) in retail advertisements within the framework of signaling theory. Overall, an LPG in an ad resulted in higher value perceptions and shopping intentions. Findings also suggest that the effect of an LPG is likely to be moderated by other price cues such as reference prices and by the price image of the store. An LPG resulted in higher value perception and shopping intention when reference prices were low or absent, but lowered search intention in the presence of a high reference price. Additional findings suggest that intention to search for a better price was lower, particularly when an LPG was offered by a low price image store. For high price image stores, an LPG increased value perceptions and shopping intentions, while also increasing search intentions, indicating the possibility that LPGs can act as a double‐edged sword in certain instances. Managerial and public policy implications are also noted.

Cross‐cultural studies on the information content of service advertising

Differences in cultural values may result in perceptual differences and thus necessitate the use of different advertising information content in varying cultures. Intends to test the relationship between cultural values and the information cues employed in service advertising, using an affective response approach instead of the traditional cognitive response approach (content analysis). The results show that Hong Kong has significantly more information cues than does service advertising in the USA. The results also show that information content and cultural values often relate in a non‐random way. The use of price cues is associated with power‐distance, due to the close relationship between price and status. People from masculine cultures prefer performance information cues, as to them achievement and status are important for indicating success. People in less individualistic cultures with high uncertainty avoidance prefer content cues, in order to protect group interests and eliminate uncertainty in buying decisions. Information cues on availability tend to be appreciated in long‐term orientation cultures with high power‐distances. However, no relationship was found between quality cues and cultural values.

The influence of price reductions on shoppers' reference price and reservation price when upgrading to premium brands

In order to encourage consumers to upgrade to a more expensive brand of a particular product, category price reduction on premium brands was provided as a stimulus. An interactive dynamic instrument was used to record the consumer's instantaneous response to changing price cues, and their levels of reference price and reservation price for their preferred premium brand were established. The contextual variables influencing these price levels are considered and discussed. From the research results it is evident that retailers while encouraging existing shoppers to switch to more expensive brands, would require to discount them differently depending on the contextual factors and shopper groups being targeted.

The universality of the signal theory for products and services

The effect of price and warranty information, acting together, on Chinese consumers' perceptions of product quality is the primary focus of this study. Specific theories, such as the price–quality relationship and signal theory, are tested by using a structural equations model. A set of hypotheses is developed specifically for Chinese consumers, based on these theories and Chinese cultural values; one model is developed for a consumer durable and another for a service category. The models are calibrated on two different samples of respondents in Guangzhou, China. Relationships between the model constructs are compared across consumer durable and service models. We find a difference in the way warranty information acts as a signal of quality for the service but not for the durable. We believe that, because we used a Chinese sample, this finding is hard evidence of the applicability of signal theory to service categories. Chinese consumers are different from westerners in their use of the price cue — there is no evidence of a price–quality relationship but price appears to have a pure allocation role — it affects risk perception, and has an indirect effect on purchase intention. The implications of the findings for marketing strategy in China are discussed.

Menu price endings that communicate value and quality

This paper investigates the extent to which restaurant marketers use the price endings .00 and .09 to communicate quality and value images, and whether consumers use those price endings as information cues when choosing where to dine out. The experimental data shows that marketers probably rely on price cues and that consumers use those cues. Moreover, many other researchers have found that there is a perceived relationship between prices ending in 0 and overall quality, and prices ending in 9 and overall value. This paper discusses three theories that might explain why consumers associate the price endings 0 and 9 with quality and value: the Schemer Schema Intuitive theory, the Persuasion Knowledge Model, and signaling theory. Those theories suggest that consumers learn from the behavior of marketers and that consumers use their intuition, persuasion knowledge, and coping behavior to interpret, evaluate, and adapt to the marketers' pricing practices.

Dimensions of Price as a Marketing Universal: A Comparison of Japanese and U.S. Consumers

Consumer behaviors within a segment and regarding a product category that do not vary across cultures are defined as market universale (Dawar and Parker 1994). Japanese and U.S. students (N = 267) participated in this study of price cues. The psychometric properties of three different price scales—price/quality schema, prestige sensitivity, and value consciousness—are assessed, and equality constraints are introduced to compare the measurement models from the two groups. Results suggest that the scales are reliable measures across the two countries and that market-universal behaviors may exist for a similar segment of Japanese and U.S. consumers.

Dutch Consumer Use of Intrinsic, Country-of-Origin, and Price Cues in Product Evaluation and Choice

Product choice and ratings of quality and value were employed as dependent variables in a multi-cue experiment. Real products, varying in intrinsic properties, were presented to Dutch consumers for choice and rating, and extrinsic information cues were made available via a computerized information display board. The product categories used were men's shirts, smoke detectors, and pickles. Duth consumres appear to be heterogeneous in their tests and preferences for products, and rely little on extrinsic information cues to guide their choices, trusting instead, their ability to evaluate the products themselves. They appear to place little importance on country-of-origin as a cue choice. Finally models with product choice as the dependent variable achieved better levels of explanation than models using ratings of product quality or value as dependent variables.

The relative effect of price and personal referral cues on consumers' perception of dental services.

This paper reports on an experimental study that examines the relative effect of price and personal referral cues on the consumers perception of dental services. The results of the study show that price and personal referral do effect the perceived competence of the dentist as well as consumer purchase probability.

Price cue utilization in product evaluations: The moderating role of motivation and attribute information

To date, relatively little research has focused on the psychological processes underlying the use of price information in product quality evaluations when attribute information is also available and varies in strength. In this article, the heuristic-systematic model of persuasion provides the framework for examining how consumers' level of motivation and the congruency of their price-based expectations of quality with attribute-based perceptions would moderate price cue utilization in product evaluations. Consistent with predictions based on the heuristic-systematic model, the study found that price was utilized as a heuristic cue when motivation was low and subjects engaged in heuristic processing. However, when motivation was high, use of the price cue depended on the extent to which subjects' initial price-based expectations were confirmed by subsequent systematic processing of attribute information. Specifically, under congruent conditions, both price and attribute information influenced product evaluations. In contrast, under incongruent conditions, the price cue did not affect product evaluations, and attribute information alone was utilized. Conceptual and managerial implications of the results are discussed.

Market Cues Affect on Consumers’ Product Evaluations

This paper reports the effects of market cues, price and store name information, on consumers’ evaluations of quality, monetary sacrifice, and value and on their subsequent willingness to buy. Retailers use market cues as perceptual indicators to influence consumer behavior and consumers need to be better informed so that they can evaluate these cues. The study reexamines the conceptual model of Dodds, Monroe, and Grewal (1991) with emphasis on testing the quadratic relationship between the price cue and perceived value and willingness to buy. This study found that as prices increase, buyers assume increases in product quality and monetary sacrifice. However, buyers’ perceptions of the value of the goods and their willingness to buy initially increase and then decrease. The effect of store name information does not influence buyers’ perceptions of value but does influence their opinions of quality, intention to buy, and the perception of price.

Effective use of advertisements promoting sale prices

Draws from various theoretical bases and empirical research to offer managerial recommendations concerning the communication of sale price information in advertisements. Addresses the manner in which the manipulation of price cues, semantic cues and product cues in an advertisement can enhanceperceptions of utility via increases in the internal reference price, the perceived value implied by the offering price, and perceptions of product quality.

Cross‐cultural Effects of Price on Perceived Product Quality

Examines the relationship between the price cue and buyers′ perceptions of product quality in a cross‐cultural environment: Poland and Sweden are chosen to explore relationships in the construct between the newly emerging free market economies in Eastern Europe and traditional market economies. Hypothesizes that the price cue will have a significant effect on the perceived quality of frequently purchased consumer products. Consumer taste tests were conducted in both cultures using ice cream as the product at three price levels: no significant relationship was found between the stated price of the product and perceived product quality in either country. However, large differences are found in the level of quality perceived by different age cohorts in Poland. Pre‐adolescent subjects consistently ranked the quality of all samples above their older cohorts.

Country‐of‐origin effects on product quality judgments: An information integration perspective

AbstractFunctional measurement methodology is used to examine the simultaneous effects of country‐of‐manufacture and price information on judgments about product quality and overall product evaluation The results suggest that a simple (constant weight) averaging model adequately accounts for the cognitive algebra used by consumers to integrate country image and price cues Also, the derived scale values for country image and price suggest that these variables produce roughly equivalent (and strong) effects on product Judgments Implications of these results for future research on country‐of‐origin effects are discussed.

The Moderating Effect of Prior Knowledge on Cue Utilization in Product Evaluations

This article examines the dissimilar use of product information cues in product evaluations by differentially familiar subjects. Specifically, the use of price cues and intrinsic product cues for the assessment of product quality is hypothesized to depend on prior knowledge. For a product with a positive quality-price association in the marketplace, the study shows that low-familiar and highly familiar subjects tend to perceive a stronger price-quality relationship than do moderately familiar subjects. Moreover, as subjects product familiarity increases, the use of intrinsic cues for product quality assessments tends to become relatively stronger.

Frugality: A cross‐national moderator of the price‐quality relationship

AbstractDespite numerous studies of the effect of price information on perceived quality, the existence of a generalized price‐quality relationship is still uncertain. Methodological differences among studies make comparisons difficult. Additionally, individual difference variables have been largely ignored in the extant research. The current study investigated and found a significant mediating effect of a personal value—frugality—on the price‐perceived quality relationship, as well as on the relationship between price cues and purchasing estimates. The nature of the moderating role of frugality on imputed quality was found to be similar for consumers of two nationalities. Thus, the usefulness of employing frugality as a cross‐national segmentation variable is suggested.

Consumer Price Perception: A Multi‐Dimensional Analysis of Perceived Quality and Adaptation—Level Price as Determinants of Price Perception

Price is a significant determinant of consumers' purchase decisions. It is assumed in this study that the analysis of consumer price perception is of vital importance to understanding the effects of price information on purchase decisions. Earlier it has been studied experimentally in isolation, how a single price cue affects consumer perception of a product's quality. In this study there is the main difference that the influence of an array of prices for the product on the consumer's price perception is examined experimentally at the same time.

The Effectiveness of Retail Price Reductions: A Comparison for Alternative Expressions of Price

The unit price of any good represents the quantity of income and/or wealth which the household must render to the seller per unit of product purchased, as well as the quantity of alternative goods and services which must be foregone, for each unit of substitute product acquired. Presumably more complete and accurate price information would enable the household to enhance its utility through an improved allocation of its scarce budget between goods and services and/or through the additional leisure it would gain from spending smaller amounts of time engaged in the retrieval, storage, and evaluation of self-generated unit price data. Most studies of unit pricing have concentrated on one or more of the following issues: (1) the awareness and uses made of unit-pricing information by households [1, 3, 6]; (2) the resultant changes in the distribution of sales between various package sizes, and product brands [2]; and (3) the cost of initiating and maintaining a unit-pricing system [8, 9]. This study is concerned with the impact of expressing cents-off price reductions of grocery products in unit price rather than net terms. Households accept various price cues and rely on those cues to assess the purchase cost of products. The consumer's perception and interpretation of prices and short-term discounts therein, however, may depend in part on the format by which they are expressed or communicated. Specifically, if in addition to prices the magnitude of price discounts are also expressed on a per unit basis, by the choice of management or requirement of the law, buyers may not respond as positively to price reductions as they do when the price discount is expressed only in absolute terms, i.e., consumers who know only that

The effect of price cuts on perceived product quality in a grocery shopping simulation

Suggests that housewives shift brand preferences when confronted with actual price differentials in a market and, irrespective of income or educational levels, react to price cues on low‐priced grocery items. Discusses and compares various studies conducted across varying price differences and consumer stereotypes in the UK and the USA. Reports results of an experiment designed to extend empirical evidence about the relationships among brand preference, perceived quality and price cues. Sums up that this study once again confirms the basic importance of price to housewives.

The Relationship between Price and Blind-Rated Quality for Margarines and Butters

proposition that get what you pay for. Both immediate quality evaluations and longer-term memory of good and bad product experiences are apt to be biased in favor of more expensive products [5, 6, 10, 11]. Therefore, an adequate test of that proposition is possible only if price cues are eliminated. Previous research which has tested products under the blind condition has concentrated more on brand