Are Low Price Guarantees And Price Matching Guarantees Created Equal: Examining The Effects Of Different Types Of Price Guarantees On Consumers’ Evaluations

Retailers offer one of Low Price Guarantees (LPGs) or Price Matching Guarantees (PMGs) to signal their price position in the marketplace. Past literature has assumed that both LPG and PMG work similarly as signals of low prices, and consequently, LPG and PMG have been used interchangeably in both research and practice. In my dissertation, I posit that LPG and PMG send out different price signals, and therefore have different effects on consumers’ evaluations. Across four studies, I show that LPGs signal lower prices than PMGs, and so LPGs lead to superior evaluations in pre-purchase scenarios, especially for promotion focused consumers actively seeking the lowest price. However, if post-purchase consumers identify a lower price in the marketplace, implying a signal default, then repurchase intentions are less in the case of LPGs, especially among promotion focused consumers. In initial studies, in pre-purchase scenarios, I show that purchase intentions are higher when LPGs (vs. PMGs) are used, with the effect stronger amongst promotion focused (vs. prevention focused) consumers. In a subsequent study, which examines post-purchase scenario, I show that upon signal default, consumers’ repurchase intentions are lower when LPGs (vs. PMGs) had been used, and that these effects are stronger amongst promotion focused (vs. prevention focused) consumers. Finally, I run a study wherein the (very) same participants go through a pre-purchase scenario and a post-purchase scenario in succession, and I replicate the above effects

Why markdown as a pricing modality?

Markdown as a pricing modality is ubiquitous in retail whereas everyday low price (EDLP) remains relatively rare (despite its several advantages, such as simplicity). This paper explores whether and why retailers can use either of these pricing modalities as an effective defense against a competitor entering the market with the alternative pricing modality. Various studies have shown that consumers are strategic and heterogeneous in their valuation of a product. Consumers are also shown to be regret-prone, and anticipation of regret affects their purchase decisions. Consumers experience availability regret when they are unable to purchase products due to stockouts and high-price regret when they miss an opportunity to purchase products at low prices. Considering such factors, consumers decide whether, when, and from which retailer to purchase the product. In such a market environment, we find that the possible entry of a competitor should deter retailers from using the EDLP pricing modality but not markdown. We also identify a new reason for the markdown retailer to ration stock (in addition to the reason for discouraging consumers to wait for the markdown). In particular, we show that the markdown retailer can use inventory rationing to preclude a cutthroat competition and bankruptcy after the entry of an EDLP retailer. We also quantify how consumer regret affects both retailers' decisions and resulting profits. In particular, in a competitive market, the EDLP retailer cannot simply disregard consumers' availability and high-price regret (even when it stocks ample inventory and does not discount prices). We show that high-price regret and availability regret have complementary effects on the markdown retailer's rationing strategy and the EDLP retailer's price decision. Finally, using a proprietary price data set from a large department store, we show that ignoring regret factors causes the markdown retailer to leave up to 20% of its profits on the table. In addition, in a competitive market, the markdown retailer rations too aggressively when regret is ignored and, as a result, leaves some of the forgone profit to its competitor-the EDLP retailer. The retail industry is often characterized by its slim profit margins. In such an environment, the aforementioned results also suggest that retailers should seriously consider investing in developing the capacity to estimate and quantify the role of regret in consumers' purchase decisions

The Impact of Non-Price Factors on Grocery Store Price Image

The price image of grocery stores plays a huge role in where consumers choose to shop. Research relating to price image often focuses on the impact of individual prices; however, there is growing evidence that non-price factors impact the formation of consumer’s store price images. My research seeks to uncover what non-price factors are significant drivers of price image.To uncover the impact of non-price factors on price image, I conducted a survey representative of the United States’ population. The survey asked respondents about seven non-price factors, and the general pricing at certain grocery stores. After conducting Cronbach’s alpha analyses and factor analyses, I ran a linear regression to identify the statistically significant factors. The final regression revealed that product assortment, atmosphere/décor, service quality, store size, price-matching policy, untidiness, and age are all significant drivers of price image in grocery stores.Bachelor of Scienc

An exploratory study of the factors influencing Generation-Y's purchasing intention within the toy industry in Malaysia

Modern age living in Malaysia has subjected people to focus on electronic device intervention in daily activities and forget about childhood memories of imagination especially with conventional toys. Store image and ambience plays a vital role in reliving this imagination and boost purchase intentions amongst the younger generation who grew up in the technology age. The purpose of this research is to identify the factors of store image that affects the purchasing intention of Gen-Y’s in a toy store. Retailers need better strategy for their store image to attract these future decision makers in the toy industry. 200 respondents were surveyed around the Klang area where factor analysis and reliability test were performed to ensure the validity and reliability while multiple linear regression was used to explore the relationship between the constructs. The result of the research showed that perceived value, store physical attributes, and service quality are significant factors that influence customers purchasing intention

A new era in retail:Private-label production by national-brand manufacturers and premium-quality private labels

Private labels have witnessed considerable growth in grocery retailing. While existing academic studies have provided valuable insights concerning the evolution of private labels, several issues remain largely unexplored. First, in the face of these large private-label volumes, private-label production opportunities arise. Due to increased private-label competition, national-brand manufacturers increasingly pursue a dual-branding strategy and engage in private-label production next to their national-brand activities. In chapter two of this dissertation, a major motivation for national-brand manufacturers to engage in private-label production, namely whether it creates retailer goodwill, is investigated. It shows that private-label production is indeed rewarded: national-brand manufacturers involved in private-label production for a discounter have a higher likelihood of obtaining national-brand shelf presence at that discounter. The third chapter focuses on one of the main reasons why retailers push private labels, i.e. because they generate high margins, and considers how a retailer’s private-label margins vary within categories. It demonstrates that a retailer’s private-label margins depend on the nature of the private-label supplier-retailer relationship, that they differ across quality tiers and package sizes, and that they are affected by a supplier’s extent of national-brand focus next to its private-label production for the retailer. Finally, this dissertation concentrates on the recent premium private-label trend. Even though premium private labels are seen as “one of the hottest trends in retailing,” retailers are selective in picking their battles with top-quality national brands and do not feel the need to extend their standard private label with a premium private label in every category. The fourth chapter provides insight into why retailers offer premium private labels in some categories, but not in others. The research presented in this dissertation is among the first to empirically investigate the phenomenon of private-label production, and to shed light on the recent trend of premium private labels

The effects of advertised exclusivity on consumer behavior

Retailers routinely counter price competition by matching or beating competitors\u27 prices. However, in addition to offering price-matching guarantees many retailers are increasingly adopting a differentiation or product assortment strategy of using advertised retailer exclusive products (AREPs) that are not directly comparable to competitor offerings. Such goods may offer added utilitarian and hedonic benefits to the consumer. With this tactic, products are advertised and labeled as exclusive, but the nature of the exclusivity may range no further than an exclusive label to more pronounced differences, such as unique or additional features. However, the effectiveness of such tactics at: (1) decreasing search motivations for lower prices and/or alternative versions of the product, (2) shaping perceived value (both utilitarian and hedonic), and (3) influencing consumers\u27 purchase decisions, is relatively unknown. Furthermore, while AREPs are a fairly new trend in retailing, the idea of exclusive products is a well-worn marketing idea. Luxury goods, in particular, are associated with exclusivity. However, exclusivity, especially the explicit, advertised exclusivity associated with AREPs, is different from the implied exclusivity of luxury goods. Therefore, this dissertation also presents a continuum and classification scheme of exclusivity to assist in differentiating between the types of exclusivity appeals and products. With the various forms of exclusivity classified, this dissertation gives a refined definition of exclusivity in a marketing context. Next, this dissertation discusses commonly accepted reference price models (e.g. Urbany et al. 1988, Alford and Engelland 2000) and suggests ways in which AREPs might influence these models and convince consumers to pay more for an exclusive product. An alternative model specifically addresses ways in which AREPs attempt to suppress or enhance parts of the traditional reference price model to increase purchase intention. AREPs, by their very nature, have no identical products available for comparison. However, other retailers may offer extremely similar versions of the same products. Rather than competing on price, AREPs use a combination of scarcity, whether real or perceived, prestige pricing, and additional hedonic (i.e. emotional) or utilitarian (i.e. practical) value to make the sale price more attractive. This unique combination of exclusive features and attributes may increase the likelihood of customer lock-in, in which customers must visit the retailer, and perhaps pay a slightly higher price, in order to obtain the additional exclusive attributes. Overall, this dissertation focuses on the nature of exclusivity in a marketing context, both in the retail marketplace and in the academic literature. While AREPs as a retailing strategy are discussed in-depth, other forms of exclusivity are also discussed to better define exclusivity and differentiate between the forms that exclusivity takes in the marketplace. Last, an experiment testing consumer reactions to exclusivity promotions provides insight into the effectiveness of such promotions and gives a better understanding of how consumers perceive exclusive product promotions. The experiment was conducted using a web survey at a university in the southern United States. After cleaning the data, 321 valid responses remained. MANCOVA was used to analyze the results of the survey, and exclusivity promotions alone appeared to have had little impact on consumer perceptions. When exclusivity and additional product attributes were both present, exclusivity promotions significantly lowered the subjects\u27 attitudes toward the product in some manipulations. Overall, exclusivity promotions and their effects seem related to the type of attributes that are combined with the exclusivity promotion, and these effects appear to vary across product class