Specifying Price Judgments with Range–Frequency Theory in Models of Brand Choice

Niedrich, Ronald W.; Weathers, Danny; Hill, R. Carter; Bell, David

doi:10.1509/jmkr.46.5.693

Cited by 52 publications

(42 citation statements)

References 38 publications

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“…Price is a complex variable that can exert a dual role by increasing both perceptions of monetary sacrifice and perceptions of quality (Erickson & Johansson, 1985;Leavitt, 1954;Rao & Monroe, 1988). Moreover, usually price is not assessed as an isolated item but in comparison with either a reference price or a price distribution, such as the endpoint prices of the brand portfolio (Niedrich, Sharma, & Wedell, 2001;Niedrich, Weathers, Hill, & Bell, 2009). In the specific case of vertical extensions, we could expect that consumers assess the congruency between the price of the new product and the price-quality image of the parent brand rather than the price itself (Michel & Salha, 2005).…”

Section: Price (Discount Size)mentioning

confidence: 99%

The role of perceived value in vertical brand extensions of luxury and premium brands

Riley

Pérez

Bravo

2015

Journal of Marketing Management

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This study examines the role of perceived value in the relationship between brand attitude, perceived fit, extension attitude and consumers' purchase intention of downscale vertical extensions of luxury and premium brands in two product categories: cars and shoes. Results from 236 individuals with different income levels show that extension attitude is positively related to purchase intention both directly and indirectly, via the perceived value of the extension; the latter is more strongly correlated than extension attitude to consumers' purchase intention. Brand attitude is also positively associated with perceived value. Overall, perceived value partially mediates the relationships of brand attitude and of extension attitude with purchase intention.The product category affects the strength of some of the relationships in the model, including the role of fit. Summary statement of contributionThe study establishes the role of perceived extension value as a mediator of the relationships of brand attitude and of extension attitude with the purchase intention of vertical extensions of premium and luxury brands in two product categories. The product category affects some of the relationships in the model: the association between fit and perceived value is statistically significant only for the more conspicuous category of cars. No earlier study had undertaken such a comprehensive empirical analysis.

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Section: Price (Discount Size)mentioning

confidence: 99%

The role of perceived value in vertical brand extensions of luxury and premium brands

Riley

Pérez

Bravo

2015

Journal of Marketing Management

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“…However, the implications of the rank-based models have not been explored within the literature on food evaluation or within the marketing and consumer research literature more generally (although see Niedrich et al, 2001;Niedrich et al, 2009). In these literatures, the reference level account still predominates.…”

Section: Social Norms and Rank-based Nudgingmentioning

confidence: 99%

Social norms and rank-based nudging: Changing willingness to pay for healthy food.

Aldrovandi

Brown

Wood

2015

Journal of Experimental Psychology: Applied

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People's evaluations in the domain of healthy eating are at least partly determined by the choice context. We systematically test reference level and rank-based models of relative comparisons against each other and explore their application to social norms nudging, an intervention that aims at influencing consumers' behavior by addressing their inaccurate beliefs about their consumption relative to the consumption of others. Study 1 finds that the rank of a product or behavior amongst others in the immediate comparison context, rather than its objective attributes, influences its evaluation. Study 2 finds that when a comparator is presented in isolation the same rank-based process occurs based on information retrieved from memory. Study 3 finds that telling people how their consumption ranks within a normative comparison sample increases willingness to pay for a healthy food by over 30% relative to the normal social norms intervention that tells them how they compare to the average. We conclude that social norms interventions should present rank information (e.g., "you are in the most unhealthy 10% of eaters") rather than information relative to the average (e.g., "you consume 500 calories more than the average person"). Kees, & Huggins, 2006; Freelands-Graves & Nitzke, 2002), the prevalence of health-related issues arising from poor dietary choices is on the rise. It has been suggested that one factor contributing to food overconsumption is the relative nature of people's evaluation of food products and their healthiness, which can lead to the same foods being appraised differently depending on the other food options available in the decision-making context (Chandon & Wansink, 2012; Chernev, 2011; Geier, Rozin, & Doros, 2006;Sharpe, Staelin, & Huber, 2008;Wansink, Just, & Payne, 2009). KeywordsIn the present study, we first contribute to this literature using the rank principle as embodied in rank-based models such as Range Frequency Theory (RFT; Parducci, 1965) and Decision by Sampling (DbS;Stewart, Chater, & Brown, 2006), which have previously been applied in cognitive and social psychology. We extend the models here to both the consumption and the broader consumer research (cf. also Niedrich, Sharma, & Wedell, 2001;Niedrich, Weathers, Hill, & Bell, 2009). In doing so we explain how people's evaluations and purchase of products involve integration of information about a product with information on rival products present in the choice context or retrieved from memory. Second, in direct tests across three studies we advance theory in the field of consumers' food choice by finding support for the predictions of rank-based models rather than the extant dominant model (based on reference level; Helson, 1947). Third, we show how to improve social norms interventions, as commonly used in social marketing and public health, through a minor reframing of the interventional messages to target people's natural ways of processing information as suggested by DbS and RFT. Contextual Influence on Food Evaluation and...

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“…Equation (1) does not have a separate price term, as it is not jointly identified with the ERP gain-loss components (Briesch et al 1997;Moon et al 2006;Niedrich et al 2009). …”

Section: Loss Aversion Asymmetrymentioning

confidence: 99%

“…However, extant reference price studies indicate that IRP is shaped by a substantially larger number of past purchase occasions (Briesch et al 1997;Niedrich et al 2009). Under these more realistic circumstances, the gap between the brand's price and its IRP is not only the result of the frequency of price increases versus decreases but is the net effect of both the frequency and magnitude.…”

Section: Condition 2: Brand Prices Increase Over Timementioning

confidence: 99%

“…(1 − IRP )PRICE , , −1 , with the smoothing parameter 0 ≤ IRP ≤ 1 reflecting the amount of price memory (Kalyanaram and Little 1994;Niedrich et al 2009). This brandspecific IRP performed best in an extensive comparison of alternative reference price specifications (Briesch et al 1997) and is most frequently used in the literature (Erdem et al 2001).…”

Section: Frequencies Of Gains and Lossesmentioning

confidence: 99%

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Why are Consumers Less Loss Averse in Internal than External Reference Prices?

Oest

2013

Journal of Retailing

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The literature has produced mixed support for loss aversion in a reference price context and the outcome may depend on the type of reference price. One extant study has reported empirical evidence that consumers are less loss averse in internal than external reference prices, but without discussing causes or implications. In the current study, we reconcile relevant literature and propose this asymmetric loss aversion result as an empirical generalization. Next, we provide and test an explanation: two empirical regularities in pricing cause that consumers tend to observe few losses for external reference price and many losses for internal reference price, making them less sensitive to internal than external losses. We use two scanner panel data sets to show that the two empirical regularities contribute to asymmetric loss aversion, while accounting for alternative explanations. We explore the implications of loss aversion asymmetry for the effectiveness of price promotions by simulation.

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Specifying Price Judgments with Range–Frequency Theory in Models of Brand Choice

Cited by 52 publications

References 38 publications

The role of perceived value in vertical brand extensions of luxury and premium brands

The role of perceived value in vertical brand extensions of luxury and premium brands

Social norms and rank-based nudging: Changing willingness to pay for healthy food.

Why are Consumers Less Loss Averse in Internal than External Reference Prices?

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