Search results
1 – 10 of over 4000Brian R. Kinard, Michael L. Capella and Greg Bonner
Using adaptation‐level theory as a conceptual framework, the purpose of this research is to determine what effect, if any, marketplace conditioning has on consumer price estimates…
Abstract
Purpose
Using adaptation‐level theory as a conceptual framework, the purpose of this research is to determine what effect, if any, marketplace conditioning has on consumer price estimates and product evaluations.
Design/methodology/approach
A total of 475 subjects participated in two experiments that required them to read a scenario, evaluate a series of advertised products, and perform an aided price recall task.
Findings
The results suggest consumers are more likely to recall the correct price when more of the rightmost digits end in 0 or 9. Moreover, when prices are incorrectly recalled, consumers are likely to inadvertently assume prices end in commonly used rightmost digits (i.e. 5 and 9). Combined, the results demonstrate odd pricing effects are likely a result of marketplace price conditioning rather than truncation of rightmost digits as suggested by the analog model of numerical cognition.
Practical implications
Findings suggest that use of atypical rightmost digits in odd prices fails as a method to differentiate products in the mind of the consumer. This would explain the use of larger right ending digits by retailers in an effort to maximize profit without impacting consumer perceptions of quality, value, and purchase likelihood. In the absence of strong quality image effects, retailers are encouraged to continue the practice of setting prices with digits ending in 9.
Originality/value
A key theoretical implication of this study is that the underestimation heuristic based on leftmost digit processing fails to explain the results of the incorrectly recalled price estimates. As a result, adaptation‐level theory may provide a more robust explanation for odd pricing effects.
Details
Keywords
Cause-related marketing (CRM) campaigns have become common features of the marketplace. CRM often involves a for-profit business agreeing to contribute a specified amount to a…
Abstract
Purpose
Cause-related marketing (CRM) campaigns have become common features of the marketplace. CRM often involves a for-profit business agreeing to contribute a specified amount to a cause when the business’s customers engage in revenue-generating exchanges. Despite the central role that price is likely to play in a consumer’s decision to purchase or not to purchase an offer associated with a CRM campaign, to the best of the authors’ knowledge, very few have examined price framing effects in a CRM context. This paper aims to explore the effect of rightmost digits manipulation in prices on participation intentions for CRM campaigns.
Design/methodology/approach
In Study 1, 241 college students participated in an online experiment for class credit. The experiment used a 3 (price level: low, medium and high) × 2 (price ending: 99 ending and no ending) between-subjects design. The dependent variable was participation intention, and several moderators and mediators were considered. PROCESS was used to test the moderated mediation. In Study 2, 351 subjects participated in an online experiment with a design similar to the earlier study. In Study 2, however, new mediators were added and the moderated mediation was tested using SPSS PROCESS macro.
Findings
This research shows that price ending impacts the effectiveness of CRM as a tactic on consumers’ purchase intentions. Consistent with the authors’ prediction, this study shows that consumers exposed to a 99-ending CRM offer are more likely to participate in the offer compared to consumers exposed to a no-ending priced offer. Offer attractiveness, elaboration and corporate social responsibility were also shown to have a strong effect on participation intentions.
Practical implications
This research indicates that for moderately priced products, 99-ending prices led to an increased influence on consumer purchase intentions; on the other hand, no-ending/even-ending prices were more effective for high-priced products. Thus, the use of the right digit effect by managers in a CRM context as way of increasing consumers’ participation likelihood is likely to be more successful for moderately priced offers.
Originality/value
This research extends previous work on CRM and right digit effect in pricing. This study’s findings, in both Studies 1 and 2, demonstrate that the effectiveness of CRM campaigns on consumer choice is dependent on the offer price ending. Consumers exposed to the no-ending priced CRM offers tend to be affected less by CRM campaigns compared to consumers exposed to 99-ending offers, who perceive the offer as more attractive.
Details
Keywords
Alexander C. Larson, Rita L. Reicher and David William Johnsen
– The purpose of this research is to test for price threshold effects in the demand for high-involvement services for small businesses.
Abstract
Purpose
The purpose of this research is to test for price threshold effects in the demand for high-involvement services for small businesses.
Design/methodology/approach
The authors use a stated preference choice-based conjoint study of small business telecommunications demand. Using survey data, individual-level parameter estimates for a demand model are achieved via the Hierarchical Bayes method of estimation.
Findings
For demand for small business telecommunications services, the authors find very strong positive impacts of nine-ending and zero-ending prices on the demand for a common bundle of telecommunications services (wired telephone service, broadband internet, and cellular telephone service), even at prices so high a shift in the left-most digit does not occur.
Practical implications
The advertising, brand, or product manager or statistician who assumes threshold effects are not extant in high-involvement service demand may find conventional demand estimation methods lead to erroneous conclusions and less effective pricing strategies.
Originality/value
In the statistical literature on price-ending effects on product demand, most products for which demand is modelled are low-involvement consumer products priced at less than ten monetary units per unit of product. There is a lacuna in this price-ending effects literature regarding small businesses and high-involvement services offered at three-digit prices via monthly subscription. This research indicates that testing for threshold effects should be de rigeur in the methodology of demand estimation for telecommunications or other high-involvement services.
Details
Keywords
Esther L. Kim and Sarah Tanford
Cross-selling becomes critical for business success as pent-up travel demand drives travelers to spend more on vacations. The primary purpose of this research is to identify if an…
Abstract
Purpose
Cross-selling becomes critical for business success as pent-up travel demand drives travelers to spend more on vacations. The primary purpose of this research is to identify if an unexpected discount leads to consumers' additional purchases online. This research proposes effective cross-selling strategies across hospitality sectors.
Design/methodology/approach
Two experiments were conducted to investigate factors that influence travelers' add-on spending. Study 1 determined the psychological mechanism of unexpected discounts on hotel customers' additional spending by individual thinking styles. A 2 (discount: none vs surprise) x 2 (thinking style: holistic vs analytic) quasi-experimental design was utilized. Study 2 applied the identified pricing strategy by individual thinking styles to cruise line add-on selling. A 2 (discount: none vs surprise) x 2 (product type: hedonic vs utilitarian) x 2 thinking style (holistic vs analytic) quasi-experiment was used.
Findings
The findings indicate that an unexpected discount increases holistic thinkers' overall travel spending, regardless of add-on types. Although the unexpected discount effect on analytic thinkers' overall spending was significant, an unexpected discount enhanced their intentions to purchase a hedonic add-on.
Practical implications
Hospitality operators can improve cross-selling strategies with a surprise discount offer. Offering add-on items in the same transaction with a cabin booking will increase add-on purchases. Hotels can make add-on purchases more appealing by emphasizing the experiential aspects of a hotel stay.
Originality/value
This research broadens knowledge of cross-selling by linking add-on purchases to discount pricing on a primary product. The findings provide new strategies to stimulate add-on purchases and maximize profitability.
Details
Keywords
Devon DelVecchio, Timothy B. Heath and Max Chauvin
Multi-unit discounts (MUDs, e.g. “3 for $4”) typically increase sales relative to other discounting frames. This study demonstrates the value of MUDs by showing that positive…
Abstract
Purpose
Multi-unit discounts (MUDs, e.g. “3 for $4”) typically increase sales relative to other discounting frames. This study demonstrates the value of MUDs by showing that positive multi-unit price/quantity signals are potent enough to match and even exceed the sales produced by larger discounts on single items. However, there is reason to believe that MUDs can produce neutral effects in some cases (e.g. among consumers interested in only single-unit purchases) and even negative effects in others. In addition, the study considers whether MUDs can, in some cases, reduce purchase quantities by signaling smaller-than-otherwise-planned purchase amounts and/or lower-quality products.
Design/methodology/approach
The effectiveness of MUDs is tested in both the field and lab. Study 1 models purchase quantities stemming from 2,374 purchases of discounted items at a mass retailer. Purchased products ranged in type from pantry items to apparel and electronics, and ranged in price from 44¢ to $99.99. There were 1,530 single-unit discounts, 596 two-unit discounts and 248 discounts, involving three or more units. Study 2 consists of a laboratory experiment that overcomes the shortcomings of Study 1 by accounting for non-purchasers, controlling for product classes and testing whether smaller MUDs can lead to lower purchase quantities for larger-purchase-quantity products.
Findings
The results of both the field study and the laboratory experiment indicate that MUDs’ monetary cue (savings) and purchase-quantity cue (volume) increase purchase quantities. Generally, purchase quantities increased monotonically with the number of units offered in the discount. In fact, the quantity cue is so effective that it can increase sales enough as to substitute for larger discounts. However, in some instances, MUDs can decrease intended purchase quantities. The negative effect of MUDs is the most pronounced for larger unit deals, offering deeper discounts on perishable goods.
Originality/value
This research is the first to demonstrate that the power of the signals provided by MUDs may be so positive as to lead them to be more effective than discounts of substantially larger value but also so negative as to render them less effective than single-units discounts. This negative outcome poses a threat beyond those typically associated with discounts, in that rather than consumers simply discounting a discount, in which case the discount remains positive even if their impact at the margin wanes, the MUD frame may actually reduce sales.
Details
Keywords
Although findings have been somewhat inconsistent, there is evidence from both experimental studies and field research that prices set just below the nearest round figure produce…
Abstract
Although findings have been somewhat inconsistent, there is evidence from both experimental studies and field research that prices set just below the nearest round figure produce higher than expected demand at that level. Among the different explanations that have been proposed for these effects are that consumers round prices down, encode prices from left to right, remember only the “most important” digits of a price, and/or attach certain “images” to nine‐ending prices. Utilizing a unique experimental setting, the author examines dollar vs cents digit recall as well as the choice frequencies associated with zero‐ vs nine‐ending prices to determine the efficacy of the proposed explanations. Within this setting, the author concludes that left‐to‐right digit encoding may be a necessary condition for higher than expected demand.
Details
Keywords
Mohammadali Zolfagharian and Atefeh Yazdanparast
This paper aims to delve into the complexity and multiplicity of consumer experiences in relation to mobile and virtual technology, and provides a lived-experience account of the…
Abstract
Purpose
This paper aims to delve into the complexity and multiplicity of consumer experiences in relation to mobile and virtual technology, and provides a lived-experience account of the Consumer Immediacy Pandemic (CIP) and related consumer experiences and responses.
Design/methodology/approach
Using open-ended, in-depth interviews, as well as personal essays, the research questions are addressed through the interpretive hermeneutic approach.
Findings
The CIP is an important, multifaceted consumer shift, whose ramifications are traceable in consumer behavior. It encompasses three consumer problem-solving styles (i.e. real-time, mobile and virtual problem-solving). Consumers adapt to the CIP through such strategies as unbundling of presence, temporal gain and synchronization, task continuity, work-fun integration and multi-tasking.
Research limitations/implications
With conventional theories ineffectively explaining consumer experiences with such products as smart phone, social media and selfie stick, this paper provides fruitful directions for studying consumer-technology relationships.
Practical implications
The findings point to untapped and novel needs rooted in consumer experience with mobile and virtual technology such as the needs for personal information management and/or professional counseling.
Social implications
The paper provides evidence as to a deep-seated shift in the role of technology in consumer life. Underestimating the ongoing and future success and power of mobile and virtual technology can be too costly for society at large.
Originality/value
This study exposes the dialogical interplay between consumer agency and structural influences that compels consumers to internalize immediacy as a taken-for-granted expectation. Such pandemic alters the ways consumers go about satisfying their needs and wants. The findings can help understand the twenty-first century consumer, theorize product agency and chart marketing and policy directions.
Details
Keywords
This paper aims to suggest that individuals are either consciously or non‐consciously aware of the left‐right (forward/backward) orientation of numeric digits. The purpose of the…
Abstract
Purpose
This paper aims to suggest that individuals are either consciously or non‐consciously aware of the left‐right (forward/backward) orientation of numeric digits. The purpose of the studies is to demonstrate that the “directionality” (left‐ or right‐facing nature) of numerals, and the resultant eye movement bias that this directionality creates may affect the degree to which consumers attend to, or focus upon, the various digits in a price. The degree of attention paid to these digits will, in turn, impact consumers' price‐encoding strategies. It is argued that the use of left (right)‐facing digits may increase (decrease) the likelihood that consumers will employ a truncation (i.e. rounding down) price‐encoding strategy.
Design/methodology/approach
The paper contains two experiments. In Experiment 1, subjects were exposed to one of four ads containing regular and sale prices. The prices were placed at opposite ends of the Mueller‐Lyer illusion, with the prices substituting for the “extraneous stimuli” (i.e. inward‐ or outward‐facing wings) in the illusion. In Experiment 2, subjects were exposed to one of six ads containing a sale price only.
Findings
In Experiment 1, digit “directionality” was found to cause eye movement bias, which resulted in distorted physical distance perceptions. In Experiment 2, digit directionality was found to impact price‐rounding behavior.
Research limitations/implications
It is suggested that perceived digit‐directionality creates eye movement bias, and that eye movement bias may impact the manner in which price digits are recalled and encoded. Eye movement bias can be inferred from the results of Experiment 1, but it is not directly measured. It is suggested that future research efforts might employ eye‐tracking measures to more directly confirm that this perceptual bias does indeed occur.
Practical implications
The findings have important implications for the marketing practitioner, because they demonstrate that the use of particular digit combinations can result in a price being perceived as greater or less than its actual value.
Originality/value
In presenting the concept of “digit‐directionality”, the paper offers an entirely new rubric in which to examine matters pertaining to numerical cognition.
Details
Keywords
Weiling Zhuang and Bruce Alford
This study aims to extend prior studies by examining the mediation effects of sticker shock on the relationship between price discount and buying intention. Sticker shock refers…
Abstract
Purpose
This study aims to extend prior studies by examining the mediation effects of sticker shock on the relationship between price discount and buying intention. Sticker shock refers to the discrepancy between a brand’s sale price (SP) and an individual’s internal reference price (IRP) (Winer 1985).
Design/methodology/approach
Prior marketing research on sticker shock is primarily model-based. The authors employed a between-subject experimental design, and hypotheses were tested using a series of regression functions (Baron and Kenny 1986).
Findings
The results suggest the effect of price discount on buying intention is partially mediated by sticker shock.
Practical implications
The research results suggest that consumers take into account price messages from different sources, such as advertised reference price, SP and IRP. IRP is a key reference point that consumers use to develop the “gain” or “loss” perception. Firms may apply different strategies to influence consumers’ internal reference point and, in turn, influence the perception of the attractiveness of the sale product.
Originality/value
This study contributes to the literature by first testing the mediation effects of sticker shock on the relationship between price discount and buying intention.
Details