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Holiday Sale Backlash: Do Consumers See Cheap Prices As Cheap Products?

Vanderbilt research looks at how consumers value products based on price and popularity

NASHVILLE, Tenn., Nov. 20, 2012 /PRNewswire-USNewswire/ -- The holidays usher in the biggest shopping season of the year. As alluring as all those sales can be, consumers make very different conclusions when it comes to sale prices. And consumers often make inferences to fill in gaps in knowledge when they don't have complete information regarding products.

New research by Vanderbilt Owen Graduate School of Management professor Steve Posavac and his co-authors finds that in some consumers' minds, price denotes quality. For others, low price leads a consumer to believe he or she is getting a good value.

"The bottom line of our research is that people can hold two opposing beliefs about a product. In the case of price, most people simultaneously believe that low prices mean good value and that low prices mean low quality. But these two beliefs are not equally present in consumers' minds all the time," said Posavac, the E. Bronson Ingram Professor in Marketing.

The forthcoming research is in the Journal of Consumer Research finds that consumers use a series of theories when considering value and price. And how they size up a possible purchase is going to depend on what's on their mind when they're thinking about a given product.

"Consumers rarely have complete information and use various strategies to fill the gaps in their knowledge as they consider and choose products. One of these strategies involves using naive theories: informal, common sense, explanations that consumers use to make sense of their environment," write Posavac and his co-authors Helene Deval, Susan P. Mantel and Frank R. Kardes.

For example, consumers may believe that popular products that are well advertised are high in quality while also believing that scarce or rarely heard of products are high in quality.

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