Low price signal default: an empirical investigation of its consequences

Abstract

Low-price guarantees (LPG) signal the market position of a seller's offer price and promise to compensate consumers in case that information is erroneous. In this research, we demonstrate that when retailers default on the information provided by an LPG, consumer perceptions of the retailer suffer, but the extent of the damage depends on the conditions associated with the default. On the basis of attribution theory, we posit that consumers may attribute default to the retailer's opportunism but emphasize this attribution differently in various default conditions. Furthermore, we show that the restoration of consumer perceptions after a refund depends on consumers' focus in terms of the signal itself. If they consider the protective, compensatory function of a low price signal, their postrefund outcomes are more favorable; when they focus on the informational function, these outcomes are less favorable. We discuss the theoretical and practical implications of these findings.

Influencia de las emociones en la compra de vino por enoturistas en el nuevo mundo del vino: el caso de México

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Refund depth effects on the impact of price-beating guarantees

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Enhancing perceptions of price–value associated with price-matching guarantees

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