The psychology of savings: Why the highest price matters
Getting shoppers to focus on the original list price makes it possible to increase the perception of a good deal.
Fri, Nov 22, 2013 at 12:15 PM
While all shoppers love a good sale, being able to see an item's original price makes the deal more tempting to consumers, research finds.
A new study in the Journal of Consumer Research revealed that getting shoppers to focus on the original list price makes it possible to increase the perception of a good deal.
The study's authors, Christina Kan and Donald Lichtenstein of the University of Colorado, Boston University's Susan Jung Grant and the University of Florida's Chris Janiszewski, wrote in their research that the more consumers rely on the original price when trying to determine a product’s worth, the more valuable they perceive the deal to be.
"If a retailer can get a consumer to pay more attention to a $179 original list price, and less attention to a $99 sale price when assessing the worth of a winter jacket, then the $99 sale price will seem like a better deal," they wrote in the study.
The study research summarizes three situations in which list prices have more influence on the estimated worth of a product and, by extension, the perceived value of the deal. Researchers found that the key is getting consumers to focus on the similarities the sale item has with competing products.
The authors discovered that when a consumer focuses on competing product similarities, they are more likely to consider all of the available information — both the original and sale prices — when judging the worth of a product. In contrast, when a consumer focuses on product dissimilarities, the shopper is more likely to consider only the sale price when determining the subjective value of the product.
"Retailers can make a sales event more effective by encouraging the consumer to rely on the original price when assessing both the value of the product and the value of the deal," the authors wrote.
Additionally, the researchers believe consumers can lessen the impact of the original price on their assessment of the product's overall worth by comparing product prices at competing retailers.
The study, "Strengthening the Influence of Advertised Reference Prices through Information Priming," is scheduled to be published in the Journal of Consumer Research's April 2014 issue.
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