Vanhuele (2002) Measuring price knowledge

Vanhuele (2002) Measuring price knowledge - Marc Vanhuele...

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72 / Journal of Marketing, October 2002 Journal of Marketing Vol. 66 (October 2002), 72–85 Measuring the Price Knowledge Shoppers Bring to the Store Reference price research suggests that consumers memorize and recall price information when selecting brands for frequently purchased products. Previous price-knowledge surveys, however, indicate that memory for prices is lower than expected. In this study, the authors show that these price-knowledge surveys provide imperfect esti- mates of price knowledge, because they focus only on recall and short-term memory. The authors propose, instead, to use a combination of price recall, price recognition, and deal recognition to measure the degree to which consumers use auditory verbal, visual Arabic, or analogue magnitude representations to memorize prices. The authors show how the combination of these three measures provides a much richer understanding of consumers’ knowledge of prices. The results suggest that the price knowledge involved in reference prices may often not be accessible to recall but shows up in price recognition and deal recognition. In addition, the authors identify con- sumer and product characteristics that explain the variations in price knowledge. They find, for example, that fre- quent promotions increase consumers’ ability to remember regular prices and that store switchers do not possess better price knowledge than other shoppers. Marc Vanhuele is Associate Professor of Marketing, HEC School of Man- agement (France). Xavier Drèze is Visiting Professor of Marketing, Univer- sity of California, Los Angeles. The authors thank the HEC Foundation for its financial support and Shantanu Dutta, Gilles Laurent, and the four anonymous JM reviewers for their constructive feedback. C onsumers have a strong interest in keeping a knowl- edge base of prices for products they frequently pur- chase. This knowledge base enables them to assess the attractiveness of advertised promotions (in flyers, adver- tisements, and the store itself), alerts them to price increases, and enables them to compare prices across stores. Marketers are interested in finding out how complete and accurate this knowledge base is. The assumption in early economic price theory that consumers are aware of most prices has been invalidated by surveys of price knowledge. Dickson and Sawyer’s (1990) in-store price knowledge surveys provide estimates of price knowledge that are surprisingly low. Only 47% to 55% of the respondents could accurately recall the price of an item they had just placed in their shopping cart, and 19% to 23% did not even attempt to give an estimate. These results have been replicated by other researchers (Le Boutillier, Le Boutillier, and Neslin 1994; Wakefield and Inman 1993). A consumer’s price knowledge base is, by definition,
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Vanhuele (2002) Measuring price knowledge - Marc Vanhuele...

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