High‐low pricing: audit evidence and consumer preferences

Abstract

In spite of their importance within pricing strategies, “seasonal sales” have received little attention within the literature. The recent interest in “high‐low” pricing has, however, increased the attention given to temporal shifts in store‐wide, rather than item level, prices. Following a brief review, this paper draws upon two case studies of leading retailers of apparel in the UK. Evidence is also presented from audits of pricing and markdown activities over a three‐year period, illustrating some contrasts between stated strategies and actual pricing activities. A cost‐benefit analysis of high‐low pricing requires knowledge of consumer preferences and attitudes. Results are drawn from a study of over 2,600 “sale” shoppers, indicating stated preferences for markdown frequency, depth and coverage. In general “sale” shoppers appear to prefer a variety of markdown levels, increasing their scope to succeed as bargain hunters.

An empirical study of consumer behavior related to private labels and national brand promotions

“…The strategy of private labels, traditionally founded on a fair value-for-money ratio, has probably given them the image of a functional and 'serious' choice. An analogy can probably be found in consumer preference for high-low pricing versus EDLP: the second is perceived as boring (McGoldrick, Betts, and Keeling 2000), and it is even less profitable (Hoch, Xavier, and Purk 1994).…”

Economics and marketing on pricing: how and why do they differ?

“…$199) versus round even prices (e.g. $200) (Coulter, 2001, 2002; Estelami, 1999; Gendall et al , 1997; Gendall, 1998), the effectiveness of different kinds of price promotions such as price discounts and coupons on sales (Fearne et al , 1999; Kendrick, 1998; Madan and Suri 2001; McGoldrick et al , 2000), the role of mood in price promotions (Hsu and Liu, 1998), the way that the consumers' gender and culture affects their perception of price increases (Maxwell, 1999), the extent to which the acceptance of a price as fair and appropriate influences the buyers' level of satisfaction (Huber et al , 2001), the extent to which the degree of awareness of banking charges influences the expectations and perceptions of quality (Kangis and Passa, 1997), the effect of price bundling of services on the perception of value (Naylor and Frank, 2001).…”

“…Other issues that have been investigated under this behavioral perspective refer to the pricing over a product's life cycle (Adcock et al , 1998; Bagozzi et al , 1998; Monroe, 2003), the pricing practices of service organisations (Hoffman et al , 2002; Kurtz and Clow, 1998; Zeithaml and Bitner, 1996), the determination of prices in an international context (Dolan and Simon, 1997; Myers, 2002), the pricing of retail products (McGoldrick et al , 2000; Subrahmanyan, 2000), the pricing of high‐technology industrial products and services (Baltas and Freeman, 2001; Shipley and Jobber, 2001), and the pricing of on‐line products (Ellsworth and Ellsworth, 1997; Hardaker and Graham, 2001; Monroe, 2003).…”

Rationale and design of moderated choice experiments: a strategic pricing application

“…A retailer adopting an EDLP positioning, however, offers its customers a constant price that is neither as high as the undiscounted price in high-low nor as low as the discounted price. The logic and empirical success of these two retailer strategies have been the focus of some academic attention (Ho et al, 1998;Hoch et al, 1994;Bell and Lattin, 1998;Lal and Rao, 1997;McGoldrick et al, 2000).…”