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

PRICE V. QUALITY EXPERIMENTS The researchers conducted eight experiments that tested marketing techniques that leaned toward price or quality. In one experiment, consumers were shown an ad for a bottle of wine with either a high or low price. When subtly reminded of quality, consumers evaluated the expensive wine more favorably than the cheap wine. However, when subtly reminded of value, they rated the cheap wine more favorably.

WHEN PRODUCT MARKETING BACKFIRES Sales promotions succeed when consumers perceive that they are getting a good deal, but they can also backfire if consumers perceive that lower prices indicate poor quality. Posavac gives department store J.C. Penney as an example.

"A company may implement an everyday low-pricing strategy that manages to reduce brand value and alienate consumers if many of them believe that low prices equal low quality. Over the years, J.C. Penney customers had become so used to sales that they no longer believed they were getting a good deal," said Posavac.

The researchers found that because consumers use multiple "naive theories" when analyzing a product, a company's subtle marketing tactics toward price or quality may attract one consumer while easily turning another consumer off.

"[Companies] design a strategy by assuming that a certain naive theory is going to drive consumer evaluation and choice when, in fact, several naive theories are available to the consumer," the authors conclude.

Vanderbilt Owen Graduate School of Management is ranked as a top institution by BusinessWeek, The Wall Street Journal, U.S. News & World Report, Financial Times and Forbes.  For more news from Vanderbilt, go to http://news.vanderbilt.edu.

[Media Note: Vanderbilt has a 24/7 TV and radio studio with a fiber optic line and ISDN line. Use of the TV studio with Vanderbilt experts is free, except for reserving fiber time.]

SOURCE Vanderbilt University

Copyright 2011 PR Newswire. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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