The Effects of Price-Comparison Advertising on Buyers’ Perceptions of Acquisition Value, Transaction Value, and Behavioral Intentions

Abstract

The authors expand and integrate prior price-perceived value models within the context of price comparison advertising. More specifically, the conceptual model explicates the effects of advertised selling and reference prices on buyers’ internal reference prices, perceptions of quality, acquisition value, transaction value, and purchase and search intentions. Two experimental studies test the conceptual model. The results across these two studies, both individually and combined, support the hypothesis that buyers’ internal reference prices are influenced by both advertised selling and reference prices as well as the buyers’ perception of the product's quality. The authors also find that the effect of advertised selling price on buyers’ acquisition value was mediated by their perceptions of transaction value. In addition, the effects of perceived transaction value on buyers’ behavioral intentions were mediated by their acquisition value perceptions. The authors suggest directions for further research and implications for managers.

Would you believe it? A detailed investigation of believability in comparative price advertising

“…An experimental approach was adopted, following the predominant methodology used in previous studies (see, e.g., Blair & Landon, 1981;Grewal et al, 1998;Urbany et al, 1988), although our final study might technically be termed quasi-experimental (Lord, 1994). Our choice of category types and discount sizes was informed by a prestudy.…”

“…By comparison, Urbany et al (1988) incorporated the notion of search benefit into their study, which they defined in the classic economic sense (after Stigler, 1961) as the improvement in value or price that the buyer believes can be found by searching. Purchase intention has been characterised as a willingness to buy a product (Compeau & Grewal, 1998;Grewal et al, 1998) and, similarly, the probability that a consumer will buy a product (Dodds, Monroe, & Grewal, 1991). In their meta-analysis, Compeau and Grewal (1998) reviewed a number of previous studies and confirmed that as the ARP increases or SP decreases, which would in turn tend to affect perceptions of acquisition and transaction value, then purchase intention increases.…”

“…Monroe and Chapman (1987) and Thaler (1985) conceptualised the two constructs as independent from one another. Nevertheless, Grewal et al (1998) argued that there are conceptual and operational reasons for assuming that the two constructs are interrelated and that a price promotion which engenders positive transaction value may in turn have a positive influence on the consumer's perception of the acquisition value, as the consumer's evaluation of value generally is enhanced.…”

“…It is a commonplace strategy (Chandrashekaran & Grewal, 2003;Lowengart, 2002) and has prompted a large amount of interest from both managerial and public policy perspectives (Urbany, Bearden, & Weilbaker, 1988). From a managerial perspective, price comparison advertising is appealing because comparing a selling price with a higher advertised reference price (ARP) may enhance buyers' value perceptions and thereby increase the likelihood of purchase (Grewal, Monroe, & Krishnan, 1998). However, the practice has proved controversial from a public policy perspective (Urbany et al, 1988), not least due to the potential for such advertising to deceive consumers (Grewal & Compeau, 1992), particularly if an inflated or otherwise deceptive ARP is used.…”

The Importance of Value-Added Services to Support the Customer Search and Purchase Process on Travel Websites

“…Similar to mulsumption phase. timedia presentations on a website, it is suggested that a map will give a richer and more detailed Comparing prices is often a key factor in decidpicture of the tourism product, especially if the ing which product to buy (Grewal, 1998) and product is a vacation package to a specific destinahence it is important to provide the customers with tion, but also if the customer is considering which services to support the need for information on travel options to consider on how to get to a destiprices and make the comparison as easy as possination. This need for deep and detailed informable for the customer.…”