Differential effects of price‐beating versus price‐matching guarantee on retailers' price image

Differential effects of price‐beating versus price‐matching guarantee on retailers' price image Purpose – Seeks to study the effect of a low‐price guarantee (PG) on store price image and store patronage intention. Two kinds of low‐price guarantee are studied: a price‐matching guarantee (PMG) where the price difference is refunded and a price‐beating guarantee (PBG) where a retailer offers an additional compensation. Design/methodology/approach – A questionnaire is used to collect information on 180 non‐student respondents in an experimental framework where low‐price guarantee dimension is manipulated through three advertisements for printers. Findings – Findings are: first, that PG indeed lowers store price image, increases the confidence that the store has lower prices and increases patronage intention; second, that, compared with a PMG whose effects are positive but rather small, a PBG further lowers the store price image on the low prices dimension without increasing the intention to search for lower price, this intention being already rather high in the PMG condition; third, that a larger effect is observed for non‐regular customers. Research limitations/implications – Research limitations are associated with the data collection. For greater reality the study uses an existing retail chain, so specific effects coming from this chain could influence the results but this bias cannot be evaluated as the experiment involves one retailer only. Practical implications – Practical implications are that price image can be manipulated without any change in pricing policy by a low‐price guarantee and that the interest to adopt a price‐beating guarantee is real. Originality/value – The contribution of this study lies in its focus on a large PBG level that retailers already apply and in demonstrating that a PG depends on the relationship between the consumer and the retailer with a stronger effect on non‐regular customers. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Product & Brand Management Emerald Publishing

Differential effects of price‐beating versus price‐matching guarantee on retailers' price image

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Publisher
Emerald Publishing
Copyright
Copyright © 2005 Emerald Group Publishing Limited. All rights reserved.
ISSN
1061-0421
DOI
10.1108/10610420510624558
Publisher site
See Article on Publisher Site

Abstract

Purpose – Seeks to study the effect of a low‐price guarantee (PG) on store price image and store patronage intention. Two kinds of low‐price guarantee are studied: a price‐matching guarantee (PMG) where the price difference is refunded and a price‐beating guarantee (PBG) where a retailer offers an additional compensation. Design/methodology/approach – A questionnaire is used to collect information on 180 non‐student respondents in an experimental framework where low‐price guarantee dimension is manipulated through three advertisements for printers. Findings – Findings are: first, that PG indeed lowers store price image, increases the confidence that the store has lower prices and increases patronage intention; second, that, compared with a PMG whose effects are positive but rather small, a PBG further lowers the store price image on the low prices dimension without increasing the intention to search for lower price, this intention being already rather high in the PMG condition; third, that a larger effect is observed for non‐regular customers. Research limitations/implications – Research limitations are associated with the data collection. For greater reality the study uses an existing retail chain, so specific effects coming from this chain could influence the results but this bias cannot be evaluated as the experiment involves one retailer only. Practical implications – Practical implications are that price image can be manipulated without any change in pricing policy by a low‐price guarantee and that the interest to adopt a price‐beating guarantee is real. Originality/value – The contribution of this study lies in its focus on a large PBG level that retailers already apply and in demonstrating that a PG depends on the relationship between the consumer and the retailer with a stronger effect on non‐regular customers.

Journal

Journal of Product & Brand ManagementEmerald Publishing

Published: Oct 1, 2005

Keywords: Pricing policy; Corporate image; Experimentation; Competitive strategy

References

  • The effects of discount level, price consciousness and sale proneness on consumers' price perception and behavioral intentions
    Alford, B.; Biswas, A.
  • Hassle costs: the Achilles' heel of price‐matching guarantees
    Hviid, M.; Shaffer, G.
  • Search at different price levels: the impact of knowledge and search cost
    Smith, G.

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