Location, location, location: When and how low price locations improve consumer price perceptions

Abstract

Does seeing a price in a physically low (vs. high) location prompt consumers to believe that the featured product is less costly? Recent research supports this possibility by showing that low price locations trigger “down=less” metaphors which prompt price perceptions that are monetarily “low” in magnitude. Extending such work, we offer a two‐stage model to account for price location effects and examine theoretically‐relevant moderators that influence the likelihood of “down=less” metaphors being activated (Stage 1) and being mapped onto a price magnitude judgment (Stage 2). Results demonstrate that price location effects will emerge under conditions where consumers (a) experience feelings of high (vs. low) power that encourage metaphor activation and (b) possess a high (vs. low) need for structure that encourages the mapping, or transfer, of these metaphors onto a price judgment mapping. A final study shows that “down=less” metaphorical influences do not affect price magnitude judgments in the presence of factors that inhibit either metaphor activation (i.e., feelings of low power) or mapping (i.e., a low need for structure). By identifying these contingencies, this research further specifies when price location effects are likely to arise, increasing our understanding of pricing in general and this locational phenomenon in particular.

How consumers evaluate costs in complex services: the case of mutual fund fees

“…Understanding how consumers evaluate prices, therefore, remain one of the primary research questions in consumer research (e.g. Barone et al. , 2022).…”

“…Understanding how consumers evaluate prices, therefore, remain one of the primary research questions in consumer research (e.g. Barone et al, 2022). Yet, our understanding of how consumers deal with costs in the decision-making process is far from complete, particularly when it comes to more complex situations (Gruner and Soutar, 2021).…”

“…However, while research demonstrate how consumers evaluate prices and costs in general (e.g. Lurie and Srivastava, 2005; Barone et al. , 2022), as well as some limited research exploring consumers’ (negative) reactions to complex pricing schemes (Homburg et al.…”

“…However, while research demonstrate how consumers evaluate prices and costs in general (e.g. Lurie and Srivastava, 2005;Barone et al, 2022), as well as some limited research exploring consumers' (negative) reactions to complex pricing schemes (Homburg et al, 2014;Layer et al, 2017), little research in marketing focus specifically on mapping the mistakes that consumers can make when evaluating costs in complex services settings. Given, as stated by Gruner and Soutar (2021), that "consumers' often unpredictable behaviour can be partially attributed to the complexity of their information environments" (p. 278) as well as the importance for consumer well-being of many complex services, this is concerning.…”