The influence price presentation has on customer evaluations

Abstract

This paper's goal was to investigate the effect different forms of price presentation have on Brazilian customers' evaluations regarding the following variables: purchase intentions, word-of-mouth communications, trust in advertising, perceived value, and perception of expensive prices. We use the literature suggested by Smith and Nagle (2005a, b) and Krishna, Briesch, Lehmann, and Yuan (2002), in which they suggested that perceived value of price explains customer judgments. Findings from Study 1 indicated that when price is presented in the form of R$ 2,299.00 at the competitors, R$ 1,599.00 here (versus the control group with the traditional price), the retailer had better results in terms of customer purchase intentions. This finding was achieved for products with both high involvement and high monetary value: i.e., values over $ 1,500.00. Outcomes from Study 2, which was based on a low involvement product, a hair dryer, on a specific date in the retail calendar, Mother's Day, showed that the price presented as only this weekend significantly increased customer purchase intentions. Study 3 supported that a 5% discount (vs. regular price vs. 10% vs. 15%) resulted in greater positive impact on buying intention. The paper contributes to price theory by supporting the assumption that price presentation positively influences buying intention, confirming the arguments of Nagle, Hogan and Zale (2011), Urbany, Bearden and Weilbaker (1988) and rejecting the studies by Blech (1981), Golden (1979), and Goodwin and Etgar (1980).

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