Retailers’ Use of Partially Comparative Pricing in a Usage Category Context: an Exploratory Study
Ellen Campos Sousa is a second year Ph.D. student in the Marketing Department at Florida International University. Her doctoral research focus is on the effect of mindfulness on consumer behavior. She is also working on different on areas such as need for touch, charity advertising, and price comparison. She holds a Master’s (2012) and Bacharelor’s (2002) degree in Business Administration from State University of Ceará (UECE), Brazil.
Partially comparative price (PCP) happens when some products have a comparison price and other products have only the featured retailer’s price (Barone et al., 2004). It is common retailers promote advertisements with products from different product categories, but within the same usage category (e.g., products for Christmas, Mother’s Day, and a barbecue party). However, it is still unexplored how consumers evaluate the non-comparatively priced (NCP) products that belong to the same usage category as a CP product in an advertisement.
This research aims to fill this gap, proposing that items that are not naturally within the same product category may still share membership within other types of categories (e.g., products served at a barbecue party). If so, then the assimilation effect observed in a within-product context (Miniard et al., 2013) might extend to a between-product context so long as the products share membership within a type of category (e.g., usage categories).
To test this proposition, one study was conducted. One hundred and sixty-nine undergraduate students from a southeast university were randomly assigned to one of the six conditions. The study had two types of advertisement with four products: hamburger, plastic cups, a barbecue tool set, and hot dogs. These products were chosen because they belong to the same usage categorization (barbecue), but they are not in the same product categorization.
In the study, a two-way ANOVA was conducted for each product. The product price belief was the dependent variable, and the price and the usage categories were factors. The result shows no statistical significance for the usage categories and for the interaction between usage and price categories in all ANOVAs (p>0.05). Only the main effect of price condition was significant for all NC products: plastic cups (F = 20.176, p<.001), barbecue tool set (F = 5.534, p<0.05), and hot dogs (7.565, p<0.05).
This results showed that when consumers categorize NCP items offered by a retailer (plastic cups, barbecue tool set, and hot dogs) as members of the same usage category (barbecue party) to which a comparatively priced item belongs, the assimilation occurred and consumers held more favorable relative price beliefs about the NCP items (plastic cups, barbecue tool set, and hot dogs). Thus, using a barbecue as a cue to the usage categorization, the study showed that the assimilation effect observed in a within-product context (Miniard et al., 2013) was extended to a between-product context because participants categorized all four products as belonging to the same usage category. It is important to note that the assimilation effect occurred even for the control group, which can lead an interpretation that the participants, even without any clue, naturally classified all products as products to use at a barbecue party.
While understanding consumer's perception of prices is often studied by researchers, there is a distinct lack of studies in academia about consumer's perception of a non-comparative price item in a partially comparative prices context. This study contributes to fulfilling this gap. From a practical perspective, contributions will be valuable since the use of comparison price in an advertisement is a common practice by retailers. Understanding one way to enhance the consumer price belief for a product or a store is extremely important. This paper presents the first study of a project that is still in progress.