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Consumer Perceptions of Deals: Biasing Effects of Varying Deal Prices

Consumer Perceptions of Deals: Biasing Effects of Varying Deal Prices Some brands in the market opt to offer a single “deal” price (e.g., Pepsi brand soft drink at $1.09 every alternate week), whereas others opt to offer 2 or more deal prices (e.g., Coca-Cola brand soft drink at $0.99 in Week 1 and $1.19 in Week 3). It was hypothesized that offering multiple deal prices is likely to result in underestimation of deal frequency and average deal price, which will bias the price consumers are willing to pay for the brand. Results from 3 laboratory experiments, a longitudinal experiment, and a survey support the hypotheses. In addition, consumers are likely to be willing to pay more for the brand when it is offered at 2 deal prices with a small difference compared with a single deal price. Implications of these findings for consumer welfare and pricing policy are discussed. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Experimental Psychology: Applied American Psychological Association

Consumer Perceptions of Deals: Biasing Effects of Varying Deal Prices

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Publisher
American Psychological Association
Copyright
Copyright © 1996 American Psychological Association
ISSN
1076-898x
eISSN
1939-2192
DOI
10.1037/1076-898X.2.3.187
Publisher site
See Article on Publisher Site

Abstract

Some brands in the market opt to offer a single “deal” price (e.g., Pepsi brand soft drink at $1.09 every alternate week), whereas others opt to offer 2 or more deal prices (e.g., Coca-Cola brand soft drink at $0.99 in Week 1 and $1.19 in Week 3). It was hypothesized that offering multiple deal prices is likely to result in underestimation of deal frequency and average deal price, which will bias the price consumers are willing to pay for the brand. Results from 3 laboratory experiments, a longitudinal experiment, and a survey support the hypotheses. In addition, consumers are likely to be willing to pay more for the brand when it is offered at 2 deal prices with a small difference compared with a single deal price. Implications of these findings for consumer welfare and pricing policy are discussed.

Journal

Journal of Experimental Psychology: AppliedAmerican Psychological Association

Published: Sep 1, 1996

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