The effects of discount level, price consciousness and sale proneness on consumers' price perception and behavioral intention☆
Introduction
The use of an advertised reference price with an advertised sale price focuses consumers' attention on the difference between the two prices. This leads to a perception of greater value concerning the purchase of the product. In addition, consumers are less likely to search other retail locations and have an increased likelihood of purchase Biswas and Blair, 1991, Biswas et al., 1993, Grewal et al., 1998, Urbany et al., 1988.
Outcome variables examined by previous research have been consumers' perception of value of the deal, consumers' benefits of additional search or search intention and purchase intention. These variables have been observed while manipulating the level of the advertised reference price or the sale price to provide the desired stimulus. In addition, since the impact of external reference price is dependent on the contextual variables, researchers have examined how such prices interact with store type Ahmed and Gulas, 1982, Biswas and Blair, 1991, brand familiarity Blair and Landon, 1981, Biswas and Blair, 1991 and consistency and distinctiveness of advertising Burton and Lichtenstein, 1988, Lichtenstein and Bearden, 1989, Lichtenstein et al., 1991.
While prior research has focused on the effects of the focal and contextual cues in price promotion advertisements, the effects of individual variables have been largely ignored. Individual difference variables may moderate the effect of reference prices on outcome variables. One exception is a paper by Inman et al. (1990), which examines the role of consumers' need for cognition in their assessment of promotional signals. Key individual difference variables that have been extensively discussed, but largely ignored as moderating variables are (a) consumers' level of price consciousness and (b) consumers' level of sale proneness (Lichtenstein et al., 1993). Both are likely to influence consumers' perceptions of advertised reference prices and their behavioral intentions.
The current study attempts to integrate price consciousness and sale proneness into the advertised reference price framework. This is done by assessing the effect of price consciousness and sale proneness on consumers' perceptions of offer value, search and buying intentions, and also by examining how these individual variables interact with each other and with the discount offered in the advertisement. In the Section 2 we present a brief review related to the effects of reference prices and price discounts followed by discussions of price consciousness and sale proneness.
Section snippets
Effects of reference prices or price discounts
The theoretical rationale for reference price effects or price discounts generally focuses on three complementary theories: (1) adaptation level (Helson, 1964); (2) assimilation–contrast Sherif, 1963, Sherif and Hovland, 1961; and (3) transaction utility theory (Thaler, 1985). A joint assimilation–contrast and adaptation level framework has been suggested as a way to explain the relationship between external reference price, offer price, and the internal price range (Lichtenstein and Bearden,
Study design
A 2 (Levels of price discount)×2 (Price consciousness)×2 (Sale proneness) between-subjects experimental design was used for the study. Price discount was manipulated, whereas price consciousness and sale proneness were measured variables per Lichtenstein et al. (1993). Price discount was manipulated by varying the level of sale or offer price for the experimental product (Avia running shoe) at two levels (US$54.95 and US$79.95) while holding the reference price constant at US$89.95. The
Results
Examination of the measurement scales revealed a troublesome correlation between search intention and price consciousness (.848). Face validity assessment led to the removal of the second and third price consciousness items (see Appendix A), reducing the correlation to .822. The content of these two items is very similar to that of the search intention items.
The reliability and structure of the measurement items were assessed using LISREL 8.2. A confirmatory factor analysis, restraining each
Discussion
As applied to pricing research, adaptation level theory suggests that contextual, as well as individual difference variables, i.e., psychological and physiological processes, can affect consumers' processing of a price discount. While prior research has focused on the effects of the focal and contextual cues in price promotion advertisements, the effects of individual variables have been largely ignored. This study attempts to assess effects of individual difference variables sale proneness and
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A previous version of this paper was presented at the 1999 Society for Marketing Advances Conference.
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