An information processing review of the subjective value of money and prices

Raghubir, Priya

doi:10.1016/j.jbusres.2006.09.013

Cited by 67 publications

(51 citation statements)

References 82 publications

(71 reference statements)

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“…It would also be important to observe how reference prices do indeed change after repeated implementations of price discounts (Sinha & Smith, 2000). In this sense, a potential limitation of using high price discounts may be that consumers can infer the cost structure and normal margins of a product from the presence of promotions (Raghubir, 2006). For example, if a manufacturer has offered a high discount of 50%, consumers would infer that the manufacturer was covering production costs and that margins were actually greater than 50%.…”

Section: Discussionmentioning

confidence: 99%

“…Overall, the current results suggest that the selection of one tool over another should depend on the promotional benefit level offered. Thus, marketers have to take into account that consumers value a "high" price discount more than an equivalent premium but also that, as Raghubir (2006) suggests, sometimes consumers may purchase a product on sale because it is on sale, rather than because of the cost savings of the sale. This may incline managers to avoid offering an unnecessarily high discount.…”

Section: Discussionmentioning

confidence: 99%

“…A substantial body of literature on sales promotions uses an informationprocessing framework to examine how consumers value and respond to them (for a review, see Raghubir, 2006). Studies have illustrated that equivalent promotions can be valued differently depending on, among other factors, the framework used.…”

Section: Promotional Framing and Consumer Information Processingmentioning

confidence: 99%

“…Ozanne, Brucks, and Grewal (1992) suggest that at "moderate" benefit levels consumers have a higher uncertainty about the benefits offered by the promotion, making the decision task more complex (Bettman, Luce, & Payne, 1998). By accepting that consumers' perceptions are based on the effort they put into a decision (Raghubir, 2006), the rationale of the U-inverted explanation of consumer information processing is expressed in terms of consumers' willingness to undertake the greatest amount of processing to reduce the uncertainty that is present in situations where the discrepancy level is moderate.…”

Section: H2cmentioning

confidence: 99%

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Effectiveness of price discounts and premium promotions

Palazón

Delgado‐Ballester

2009

Psychology and Marketing

111

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Although price discounts are by far the most common form of sales promotions employed by firms, the increasing use of premiums as a promotional strategy may imply that they are occupying a more important place in the promotional strategy. Since price discounts are quite costly and can reduce consumers' reference prices, undermine perception of quality, and hurt brand equity, it is crucial to know what type of promotion is the most preferred and valued by consumers. As the most recent works in the field have argued that the promotional benefit level is an important determinant of promotional effectiveness, this research reports the results of two experimental studies that investigated the interaction effect between promotional benefit level and promotion type across three levels of benefit (low, moderate, high). The results obtained suggest that at high benefit levels price discounts are more effective than premiums, while the opposite occurs at low levels. However, a similar evaluation of promotional tools was found at moderate benefit levels. The findings offer guidance to managers who might benefit from knowing what is the best strategy to promote their products and services. Our work also extends prior related research because, to this date, the effectiveness of price discounts and premiums across promotional benefit levels is an under-researched issue.

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Section: Discussionmentioning

confidence: 99%

Section: Discussionmentioning

confidence: 99%

Section: Promotional Framing and Consumer Information Processingmentioning

confidence: 99%

Section: H2cmentioning

confidence: 99%

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Effectiveness of price discounts and premium promotions

Palazón

Delgado‐Ballester

2009

Psychology and Marketing

111

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“…Other researchers have considered a range of specific valuation biases (for a review, see Raghubir, 2006). For example, people are more reluctant to spend a $100 bill than to spend an equal amount with a gift certificate purchase (Raghubir & Srivastava, in press), a credit card purchase (Prelec & Simester, 2001), or successive purchases using smaller denominations that sum to $100 (Mishra, Mishra, & Nayakankuppam, 2006).…”

mentioning

confidence: 99%

Easy on the mind, easy on the wallet: The roles of familiarity and processing fluency in valuation judgments

Alter

Oppenheimer

2008

Psychonomic Bulletin & Review

117

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Although people routinely estimate the value of items in their environment, from goods and services to natural resources and lost earnings following an accident, the processes that underlie human valuation estimates are not well understood. We show that people use familiarity and fluency-the ease with which they process information-to determine an item's value. In three experiments, participants believed that familiar forms of currency (e.g., a familiar $1 bill) had greater purchasing power than their unfamiliar counterparts (e.g., a rare and unfamiliar coin). Mechanistic analyses showed a positive correlation between participants' familiarity with the unfamiliar currency and their estimates of its value. We conclude by discussing the theoretical and practical implications of our findings for researchers, marketing experts, and policymakers alike.

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