The Influence of Price Presentation Order on Consumer Choice

Abstract

Existing theory and prior research suggest that consumers perceive purchase prices more/less favorably when they are preceded by higher/ lower prices. However, to date, researchers have found these effects in contexts in which the product, and thus perceived quality, is held constant. Given that consumers commonly believe price and quality are positively correlated and that price-quality perceptions have been shown to influence price evaluations and willingness to pay, the generalizability of existing research to commonly encountered contexts is questionable. In this research, the authors examine the influence of price order on consumer choice across differing brands in contexts in which consumer quality perceptions are free to covary with price and they are manipulated to be correlated or uncorrelated with price. Using reference dependence theory as a framework, they find that when differing brand options are presented in descending price order, consumers tend to choose higher-price options; when they are presented in ascending price order, consumers tend to choose lower-priced options (the price order effect). In addition, the authors show that consumers' price-quality perceptions are a necessary condition for this effect. (print), 1547-7193 (electronic) 708Consumer decisions are often influenced by factors that are irrelevant to the inherent utility of the choice options. Abundant research has shown that one such example is presentation order; in many cases, the order in which options are presented significantly influences consumer responses (e.g., Dhar and Simonson 1992; Diehl and Zauberman 2005). We add to this stream of literature by examining whether brand choice differs depending on whether the price sequence is descending or ascending (i.e., from highest-to lowest-priced brand or vice versa).Consumers frequently make choices among options that are ordered according to price. For example, many major online stores choose to present their brand assortment in a menu-based ascending or descending price order format, and they often provide a tool for re-sorting the brands in the alternative format. To quantify this, we conducted a survey of major online stores and found that 51.8% (43 of 83) provide such a price-based sorting tool. Price-based presentations are also frequently used offline-for example, in restaurant menus (Parsa and Njite 2004).Despite the marketplace frequency of price-ordered presentation of options, prior research on the influence of price presentation is incomplete. First, in previous investigations, all prices in the series involve the same product. This assumption does not hold in general in the market. Second, consumers evaluating a given purchase price in either an ascending or descending price series are exposed to different sets of context prices such that price order is confounded with the context set of prices. Finally, previous studies have presented prices sequentially and individually rather than simultaneously in a menu-based format.To illustrate the implications of attempting ...

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