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It's Not All Relative: The Effects of Mental and Physical Positioning of Comparative Prices on Absolute versus Relative Discount Assessment

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  • Choi, Pilsik
  • Coulter, Keith S.

Abstract

In the context of three experiments, the authors examine the manner in which consumers compare a sale price to an explicit reference value. They find that a comparison of sale price to regular price may be more likely to involve an absolute (dollar amount) assessment, whereas a comparison of sale price to a competitor's price may be more likely to involve a relative (percent) assessment. The authors also find that vertical (i.e., columnar) placement of prices may result in a greater tendency to estimate discounts in relative terms. Conversely, horizontal (i.e., side-by-side) placement may result in a greater tendency to compute absolute numerical difference. The results provide important implications for retail managers in terms of framing and communicating price discounts.

Suggested Citation

  • Choi, Pilsik & Coulter, Keith S., 2012. "It's Not All Relative: The Effects of Mental and Physical Positioning of Comparative Prices on Absolute versus Relative Discount Assessment," Journal of Retailing, Elsevier, vol. 88(4), pages 512-527.
    • Handle: RePEc:eee:jouret:v:88:y:2012:i:4:p:512-527
    DOI: 10.1016/j.jretai.2012.04.001
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    References listed on IDEAS

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    2. Michael Barone & Keith Lyle & Karen Winterich, 2015. "When deal depth doesn't matter: How handedness consistency influences consumer response to horizontal versus vertical price comparisons," Marketing Letters, Springer, vol. 26(2), pages 213-223, June.
    3. Montazeri, Samaneh & Tamaddoni, Ali & Stakhovych, Stanislav & Ewing, Michael, 2021. "Empirical decomposition of customer responses to discount coupons in online FMCG retailing," Journal of Retailing and Consumer Services, Elsevier, vol. 58(C).
    4. Michael J. Barone & Xingbo Li & Karen Page Winterich & Keith B. Lyle, 2018. "Social-Spatial Effects in Pricing: When and How Vertical Orientations Shape Processing of Price Comparisons," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 5(3), pages 137-145, December.
    5. Jean-Pierre I. Rest & Alan M. Sears & Li Miao & Lorna Wang, 2020. "A note on the future of personalized pricing: cause for concern," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(2), pages 113-118, April.
    6. Henrika Langen & Martin Huber, 2022. "How causal machine learning can leverage marketing strategies: Assessing and improving the performance of a coupon campaign," Papers 2204.10820, arXiv.org, revised Jun 2022.
    7. Silva, Emmanuel Marques & Moreira, Rafael de Lacerda & Bortolon, Patricia Maria, 2023. "Mental Accounting and decision making: a systematic literature review," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 107(C).

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