I recently read an article in the July 2013 issue of Journal of Marketing titled, “Retailers’ Use of Partially Comparative Pricing: From Across-Category to Within-Category Effects” authored by Paul W. Miniard, Shazad iVIustapha Mohammed, Michael J. Barone, & Cecilia M.O. Alvarez. Comparative pricing is an interesting topic – I know that I enjoy ads that provide perspective on whether or not $11.00 for 100 ounces of Tide Laundry Detergent is a good deal. Instead of just the price, I would love the assurance of knowing this is a lower price than available somewhere else.
This article, though, goes beyond basic comparative pricing results and looks at the impact on items without the comparative price – both within and outside the category (i.e., other laundry detergents (same category) or window cleaners (outside category) in the Tide example). The article states that comparative pricing has a POSITIVE influence on price perceptions for same category items that were not included in the comparative pricing exercise. This is exciting . . . . so if Store A advertises it has Product Z for a lower price than at Store B – on average, consumers are likely to perceive the price of other same category products (Y, X, and V) as also being less expensive at Store A relative to Store B.
The authors note that prior research had found that this type of partial comparative pricing is a double edged sword: improving beliefs about the comparatively priced product, but also damaging perceptions of non-comparatively priced products. The authors suggest that given their 5 studies found support for the benefit of comparative pricing across all brands within the category, that the managerial implications could be huge and further research is warranted.
Unsurprisingly, I agree; let’s research! I would love to better understand consumers’ perceptions of price. In customer experience surveys, we ask for perceptions of price – but usually just in overall manner (sometimes for the customer as well as its large competitors). I’m wondering if we could delve into the topic of price a bit more. Is it possible that if a company is known to be the least expensive for a flagship product that this perception could carry over to similar products, regardless of the reality?