Comparing fixed price and discounted price strategies: the role of affect on evaluations

Abstract

Price is an important variable because it has a direct impact on a company’s profitability. However, there is limited evidence to support the effectiveness of competing strategies of fixed pricing and discounted pricing. As a result, both strategies are practised extensively in the industry. This paper draws on theories on affect, information processing, and pricing to provide a conceptual framework. The aim is to examine the effect of fixed pricing and discounted pricing on consumers’ affect and evaluation of products. Results from an experiment indicate that a fixed price format elicits more positively valenced thoughts and stronger positive affect than a discounted price format. This affective response, in turn, results in a less thorough processing of price information and, consequently, higher perceptions of quality and value for the fixed price format. Managerial implications of these findings are discussed.

Citation

Suri, R., Manchanda, R.V. and Kohli, C.S. (2002), "Comparing fixed price and discounted price strategies: the role of affect on evaluations", Journal of Product & Brand Management, Vol. 11 No. 3, pp. 160-173. https://doi.org/10.1108/10610420210430051