Retailer pricing strategy and consumer choice under price uncertainty

Shai Danziger, Liat Hadar, Vicki G. Morwitz

Research output: Contribution to journalArticlepeer-review

27 Scopus citations

Abstract

This research examines how consumers choose retailers when they are uncertain about store prices prior to shopping. Simulating everyday choice, participants made successive retailer choices where on each occasion they chose a retailer and only then learned product prices. The results of a series of studies demonstrated that participants were more likely to choose a retailer that offered an everyday low pricing strategy (EDLP) or that offered frequent small discounts over a retailer that offered infrequent large discounts. This choice advantage for the retailer that was cheaper more often manifested even when its average price was judged to be higher. The same results were obtained when choices were made a day apart, when price feedback was only given for the chosen retailer, and when price feedback was given for both retailers. Participant’s expectations of future prices but not their judgments of retailer’s past average prices predicted their subsequent retailer choice.

Original languageEnglish
Pages (from-to)761-774
Number of pages14
JournalJournal of Consumer Research
Volume41
Issue number3
DOIs
StatePublished - 1 Oct 2014
Externally publishedYes

ASJC Scopus subject areas

  • Business and International Management
  • Anthropology
  • Arts and Humanities (miscellaneous)
  • Economics and Econometrics
  • Marketing

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