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The Impact of Store-Price Signals on Consumer Search and Store Evaluation

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  • Ho, Hillbun (Dixon)
  • Ganesan, Shankar
  • Oppewal, Harmen

Abstract

Always low price (ALP) and low price guarantee (LPG) are store-price signals that retailers frequently use to induce favorable store-price image and discourage consumers from comparing prices across stores. Although both policies signal low prices, only LPG is an obligatory promise to beat rival stores’ prices. Results of two shopping simulations show that when consumer search costs are relatively low, ALP may effectively discourage consumer search whereas LPG may trigger more search. Paradoxically, consumers tend to evaluate ALP stores less favorably (as having lower integrity and higher self-serving intention) than LPG stores even when both signals appear to be credible. These findings suggest that LPG is a superior tactic for creating a favorable store image while ALP is more effective for discouraging consumer search. The results also indicate that consumers visit fewer stores when the LPG is not a credible signal of lowest market price than when it is credible. This is because consumers are inclined to either claim discounts or refunds at the non-credible LPG store or to purchase at the competing store with a lower price rather than continue searching.

Suggested Citation

  • Ho, Hillbun (Dixon) & Ganesan, Shankar & Oppewal, Harmen, 2011. "The Impact of Store-Price Signals on Consumer Search and Store Evaluation," Journal of Retailing, Elsevier, vol. 87(2), pages 127-141.
  • Handle: RePEc:eee:jouret:v:87:y:2011:i:2:p:127-141
    DOI: 10.1016/j.jretai.2011.01.007
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    Cited by:

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    2. Thomas Robbert & Stefan Roth, 2018. "The importance of transparency signals in à la carte pricing," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 17(1), pages 32-40, February.
    3. Suwelack, Thomas & Hogreve, Jens & Hoyer, Wayne D., 2011. "Understanding Money-Back Guarantees: Cognitive, Affective, and Behavioral Outcomes," Journal of Retailing, Elsevier, vol. 87(4), pages 462-478.
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    5. Haruvy, Ernan & Popkowski Leszczyc, Peter T.L., 2016. "Measuring the Impact of Price Guarantees on Bidding in Consumer Online Auctions," Journal of Retailing, Elsevier, vol. 92(1), pages 96-108.
    6. Cheriet, F., 2019. "Perceptions des consommateurs de la sortie de Lidl du hard discount alimentaire en France," Working Papers MoISA 201901, UMR MoISA : Montpellier Interdisciplinary center on Sustainable Agri-food systems (social and nutritional sciences): CIHEAM-IAMM, CIRAD, INRAE, L'Institut Agro, Montpellier SupAgro, IRD - Montpellier, France.
    7. Agustin V. Ruiz Vega & Consuelo Riano Gil & Carla Di Pierri Del Vecchio, 2014. "Do Low Price Signals Influence Online Purchases of Tourist Accommodation Services? The Moderating Role of Gender," Business and Management Research, Business and Management Research, Sciedu Press, vol. 3(4), pages 96-111, December.
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    9. Nicole Koschate-Fischer & Katharina Wüllner, 2017. "New developments in behavioral pricing research," Journal of Business Economics, Springer, vol. 87(6), pages 809-875, August.
    10. Foued Cheriet, 2019. "Consumers Perceptions about Lidl exit of food hard discount in France [Perceptions des consommateurs de la sortie de Lidl du hard discount alimentaire en France]," Working Papers hal-02788619, HAL.
    11. Jonathan Z. Zhang & Chun-Wei Chang, 2021. "Consumer dynamics: theories, methods, and emerging directions," Journal of the Academy of Marketing Science, Springer, vol. 49(1), pages 166-196, January.
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