Comparative Pricing Benefits Multiple Products in the Category


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I recently read an article in the July 2013 issue of Journal of Marketing titled, “Retailers’ Use of Partially Comparative Pricing: From Across-Category to Within-Category Effects” authored by Paul W. Miniard, Shazad iVIustapha Mohammed, Michael J. Barone, & Cecilia M.O. Alvarez. Comparative pricing is an interesting topic – I know that I enjoy ads that provide perspective on whether or not $11.00 for 100 ounces of Tide Laundry Detergent is a good deal. Instead of just the price, I would love the assurance of knowing this is a lower price than available somewhere else.

This article, though, goes beyond basic comparative pricing results and looks at the impact on items without the comparative price – both within and outside the category (i.e., other laundry detergents (same category) or window cleaners (outside category) in the Tide example). The article states that comparative pricing has a POSITIVE influence on price perceptions for same category items that were not included in the comparative pricing exercise. This is exciting . . . . so if Store A advertises it has Product Z for a lower price than at Store B – on average, consumers are likely to perceive the price of other same category products (Y, X, and V) as also being less expensive at Store A relative to Store B.

The authors note that prior research had found that this type of partial comparative pricing is a double edged sword: improving beliefs about the comparatively priced product, but also damaging perceptions of non-comparatively priced products. The authors suggest that given their 5 studies found support for the benefit of comparative pricing across all brands within the category, that the managerial implications could be huge and further research is warranted.

Unsurprisingly, I agree; let’s research! I would love to better understand consumers’ perceptions of price. In customer experience surveys, we ask for perceptions of price – but usually just in overall manner (sometimes for the customer as well as its large competitors). I’m wondering if we could delve into the topic of price a bit more. Is it possible that if a company is known to be the least expensive for a flagship product that this perception could carry over to similar products, regardless of the reality?

Republished with author's permission from original post.

Stacy Sanders
Stacy's responsibilities include design and analysis of customer and competitive experience studies. Playing the role of statistical analyst, Stacy works with clients and Walker teams to design research studies to successfully address client needs, while also interpreting the data and analyses to formulate executive-oriented findings and recommendations.


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