Search

Recent managerial evidence and academic research has suggested that consumer decisions are influenced not only by the prices of individual items but also by a retailer's price image, which reflects a consumer's impression of the overall price level of a retailer. Despite the increasing importance of price image in marketing theory and practice, existing research has not provided a clear picture of how price images are formed and how they influence consumer behavior. This article addresses this discrepancy by offering a comprehensive framework delineating the key drivers of price image formation and their consequences for consumer behavior. Contrary to conventional wisdom that assumes price image is mainly a function of a retailer's average price level, this research identifies several price-related and nonprice factors that contribute to price image formation. The authors further identify conditions in which these factors can overcome the impact of the average level of prices, resulting in a low price image despite the retailer's relatively high prices, as well as conditions in which people perceive a retailer to have a high price image despite its relatively low average price level. [ABSTRACT FROM AUTHOR]

A common strategy for controlling spending is to impose a price restraint on oneself. For example, a consumer who is concerned with limiting expenses may decide before going shopping that he or she only wants to spend approximately $100 for a particular purchase. Although conventional wisdom predicts that self-imposed price restraints will decrease consumer spending, the authors show that salient price restraints can actually increase consumers' preferences for high-priced, high-quality items. The authors propose that making a price restraint salient has the effect of partitioning consumers' evaluations of price and quality, leading to larger differences in perceived quality between options and a greater focus on quality during the final decision. Thus, while budgets and other types of price restraints can limit spending by eliminating some high-priced options from consideration, this research suggests that they can also have the ironic effect of increasing consumers' spending relative to a situation in which consumers have not imposed a price restraint. [ABSTRACT FROM AUTHOR]

How do vertical product line extensions influence a retailer's price image? Conventional wisdom suggests that adding an upscale or downscale item to a product line has a directionally consistent impact on price image, such that upscale extensions increase price image and downscale extensions decrease price image. In contrast, this research argues that vertical extensions can have the opposite effect, such that upscale extensions can decrease rather than increase price image, and vice versa for downscale extensions. The authors further propose that the impact of vertical extensions on price image is a function of consumer goals and, in particular, whether consumers have the intent of browsing or buying. The authors test these predictions in a series of five empirical studies that offer converging evidence in support of the proposed theory. [ABSTRACT FROM AUTHOR]