Red price? Red flag! Eye‐tracking reveals how one red price can hurt a retailer

Abstract

Retailers present prices in red color to signal savings. Past research has shown that presenting all prices in red increases perceived savings from the store. However, in practice, retailers often present just one price in red in promotion materials with multiple prices. Will consumers perceive higher savings from the store even if only one price is presented in red? This research examines this prevalent retail practice using a theoretical lens. The theoretical framework predicts that two unique learned associations with red color (red: Savings and red: Stop) play a key role in shaping consumers' perception of savings from stores that highlight only one price in red. This research proposes and empirically demonstrates that consumers perceive lower savings from stores that present only one price in red. The theoretical framework is validated using a multi-method approach that combines the strengths of behavioral and physiological (eye-tracking) methods. Findings from this research suggest that presenting only one price in red lowers perceived savings from the store, which may hurt sales.

Color research in marketing: Theoretical and technical considerations for conducting rigorous and impactful color research

“…Red flag! Eye‐tracking reveals how one red price can hurt a retailer” Ye, Bhatt, Jeong, Zhang, and Suri (2020) focus on two learned color associations for the color red (red = savings vs. red = stop) to better understand how red affects pricing. Building from past research that found consumers (male more than female) infer higher savings when prices in a promotion flyer are displayed in red (Puccinelli, Chandrashekaran, Grewal, & Suri, 2013) the authors explore whether this red effect holds for promotional material that presents only one product price in red.…”

Many a little makes a mickle: Why do consumers negatively react to sequential price disclosure?

“…In this respect, our study is one of the few to rely on direct quantitative price perception measures using eye tracking to trace automatic consumer decision making processes as repeatedly requested (Greenleaf et al, 2016; Zuschke, 2019). It is worth emphasizing that we rely on a relatively large eye‐tracking sample compared to other studies in the field (e.g., DelVecchio et al, 2019; Ye et al, 2020).…”

“…In addition, the perceived transparency of the firm's pricing captures the degree to which a customer infers that the firm's pricing is intentionally open, honest, and understandable (Homburg et al, 2014). and occurs when prices stand out from the environment; it often depends on the presentation format (e.g., the color of the price tag), or whether price increases are expected or unexpected (Bertini & Wathieu, 2008;Eccleston & Crombez, 1999;Ye et al, 2020). Surcharges and final price increases should evoke bottom-up attention to the final price, as consumers cannot anticipate the final price and the number of the surcharges dripping in.…”

“…Indirect methods cannot directly capture attention the way eye tracking, for example, can do (Greenleaf et al, 2016). Eye tracking provides insights into the underlying cognitive processes of consumer decision-making as, for example, preferences for written (vs. nonwritten) marketing information (DelVecchio et al, 2019), the use of heuristics and price cues (Bogomolova et al, 2020), or the role of attention to red prices (Ye et al, 2020). Therefore, using eye tracking in a simulated online environment, we directly capture consumers' attention to the final price when altering the timing of the final price disclosure and the number of surcharges.…”

“Looking sharp”: Price typeface influences awareness of spending in mobile payment

“…While it is already known that payment format influences spending, there is perhaps, a more subtle way in which spending behavior is influenced, that is, by means of the sensory elements of the price format (e.g., shape, size, color). Previous studies have demonstrated that the sensory elements of price format, such as the color in which the price information is presented (e.g., Puccinelli et al, 2013; Ye et al, 2020), price font size (e.g., Coulter & Coulter, 2005), and price font clarity (Mead & Hardesty, 2018) sometimes affect the consumer's price perception. In the present research, we look, in particular, at how typeface, as a potentially salient sensory element of price format may influence consumers' awareness of spending in the context of mobile payment.…”