Consumer Response To Retailers' Use of Partially Comparative Pricing

Consumers sometimes encounter a combination of comparative and non-comparative prices in the marketplace. A grocer, for instance, may employ signage that provides favorable price comparisons against a competitor for a portion of its products, a practice we refer to as partially comparative pricing. We examine the effects of partially comparative pricing on consumer response and find that it has both desirable and undesirable effects. On the one hand, such pricing enhances consumers’ beliefs about the relative prices of comparatively priced products and about the retailer’s relative prices in general. At the same time, however, it also reduces consumers’ relative price beliefs about non-comparatively priced products and their intentions to purchase these products. We further show that this adverse influence of partially comparative pricing stems from consumers’ suspicions about why price comparisons exist for some, but not all, products. We also document how these effects depend on store patronage. Implications of our research are discussed, as are suggestions for future empirical efforts.   Return to Dr. Manning's Home Page