IDEAS home Printed from https://ideas.repec.org/a/eee/jouret/v98y2022i3p542-557.html
   My bibliography  Save this article

Retail price discount depth and perceived quality uncertainty

Author

Listed:
  • Zheng, Dan
  • Chen, Yuxin
  • Zhang, Zhe
  • Che, Hai

Abstract

This study analyzes the impact of retail price discount depth on consumer perception of quality uncertainty and its implications. While the extant research finds a negative relationship between perceived mean quality (indicated by the mean of quality perception) and price discount, we suggest an inverted-U-shaped relationship between perceived quality uncertainty (indicated by the variance of quality perception) and price discount. The underlying mechanism for this phenomenon is that consumer attribution of price promotion varies by discount depth. Specifically, when provided with a moderate discount (compared with a low or high discount), consumers cannot ascertain whether the discount is related to product quality; thus, they perceive a higher level of quality uncertainty and correspondingly rely more on other cues, such as country of origin and product popularity information, to make inferences about quality. Those findings have implications for setting the depth of retail price discounts and providing product quality-related information in the context of price promotion.

Suggested Citation

  • Zheng, Dan & Chen, Yuxin & Zhang, Zhe & Che, Hai, 2022. "Retail price discount depth and perceived quality uncertainty," Journal of Retailing, Elsevier, vol. 98(3), pages 542-557.
    • Handle: RePEc:eee:jouret:v:98:y:2022:i:3:p:542-557
    DOI: 10.1016/j.jretai.2021.12.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0022435921000786
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jretai.2021.12.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kamel Jedidi & Carl F. Mela & Sunil Gupta, 1999. "Managing Advertising and Promotion for Long-Run Profitability," Marketing Science, INFORMS, vol. 18(1), pages 1-22.
    2. Ali Faraji-Rad & Michel Tuan Pham, 2017. "Uncertainty Increases the Reliance on Affect in Decisions," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 44(1), pages 1-21.
    3. Zike Cao & Kai-Lung Hui & Hong Xu, 2018. "When Discounts Hurt Sales: The Case of Daily-Deal Markets," Information Systems Research, INFORMS, vol. 29(3), pages 567-591, September.
    4. Herr, Paul M & Kardes, Frank R & Kim, John, 1991. "Effects of Word-of-Mouth and Product-Attribute Information on Persuasion: An Accessibility-Diagnosticity Perspective," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 17(4), pages 454-462, March.
    5. Julian Hofmann & Michel Clement & Franziska Völckner & Thorsten Hennig-Thurau, 2007. "The price-perceived quality relationship: A meta-analytic review and assessment of its determinants," Post-Print hal-02990424, HAL.
    6. Asher Wolinsky, 1983. "Prices as Signals of Product Quality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 50(4), pages 647-658.
    7. Kukar-Kinney, Monika & Carlson, Jeffrey R., 2015. "A fresh look at consumers' discounting of discounts in online and bricks-and-mortar shopping contexts," International Journal of Research in Marketing, Elsevier, vol. 32(4), pages 442-444.
    8. Wiggins, Steven N & Lane, W J, 1983. "Quality Uncertainty, Search, and Advertising," American Economic Review, American Economic Association, vol. 73(5), pages 881-894, December.
    9. Franziska Völckner & Julian Hofmann, 2007. "The price-perceived quality relationship: A meta-analytic review and assessment of its determinants," Marketing Letters, Springer, vol. 18(3), pages 181-196, September.
    10. Gupta, Sunil & Cooper, Lee G, 1992. "The Discounting of Discounts and Promotion Thresholds," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 19(3), pages 401-411, December.
    11. Grewal, Dhruv & Marmorstein, Howard & Sharma, Arun, 1996. "Communicating Price Information through Semantic Cues: The Moderating Effects of Situation and Discount Size," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 23(2), pages 148-155, September.
    12. Tülin Erdem & Michael P. Keane & Baohong Sun, 2008. "A Dynamic Model of Brand Choice When Price and Advertising Signal Product Quality," Marketing Science, INFORMS, vol. 27(6), pages 1111-1125, 11-12.
    13. Scott, Carol A & Yalch, Richard F, 1980. "Consumer Response to Initial Product Trial: A Bayesian Analysis," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 7(1), pages 32-41, June.
    14. Harold J. Leavitt, 1954. "A Note on Some Experimental Findings About the Meanings of Price," The Journal of Business, University of Chicago Press, vol. 27, pages 205-205.
    15. Xinshu Zhao & John G. Lynch & Qimei Chen, 2010. "Reconsidering Baron and Kenny: Myths and Truths about Mediation Analysis," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 37(2), pages 197-206, August.
    16. Catherine Tucker & Juanjuan Zhang, 2011. "How Does Popularity Information Affect Choices? A Field Experiment," Management Science, INFORMS, vol. 57(5), pages 828-842, May.
    17. Anthony D. Miyazaki & Dhruv Grewal & Ronald C. Goodstein, 2005. "The Effect of Multiple Extrinsic Cues on Quality Perceptions: A Matter of Consistency," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 32(1), pages 146-153, June.
    18. Rao, Akshay R & Monroe, Kent B, 1988. "The Moderating Effect of Prior Knowledge on Cue Utilization in Product Evaluations," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 15(2), pages 253-264, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Irena Antošová & Jana Stávková, 2023. "Changes in the intensity and impact of factors influencing consumer behaviour in the food market over time," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 69(9), pages 358-365.
    2. Xia, Feihong & Chatterjee, Rabikar & Venkatesh, R., 2022. "Clinching the deal: An empirical study of the drivers of diffusion of daily deals," Journal of Business Research, Elsevier, vol. 149(C), pages 824-832.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kukar-Kinney, Monika & Xia, Lan, 2017. "The effectiveness of number of deals purchased in influencing consumers' response to daily deal promotions: A cue utilization approach," Journal of Business Research, Elsevier, vol. 79(C), pages 189-197.
    2. Zike Cao & Kai-Lung Hui & Hong Xu, 2018. "When Discounts Hurt Sales: The Case of Daily-Deal Markets," Information Systems Research, INFORMS, vol. 29(3), pages 567-591, September.
    3. Mukherjee, Amaradri & Jha, Subhash & Smith, Ronn J., 2017. "Regular Price $299; Pre-order Price $199: Price Promotion for a Pre-ordered Product and the Moderating Role of Temporal Orientation," Journal of Retailing, Elsevier, vol. 93(2), pages 201-211.
    4. Francisco B. Galarza & Gabriella Wong, 2017. "The Impact of Price Information on Consumer Behavior: An Experiment," Working Papers 106, Peruvian Economic Association.
    5. Eisenbeiss, Maik & Wilken, Robert & Skiera, Bernd & Cornelissen, Markus, 2015. "What makes deal-of-the-day promotions really effective? The interplay of discount and time constraint with product type," International Journal of Research in Marketing, Elsevier, vol. 32(4), pages 387-397.
    6. Boccali, Filippo & Mariani, Marcello M. & Visani, Franco & Mora-Cruz, Alexandra, 2022. "Innovative value-based price assessment in data-rich environments: Leveraging online review analytics through Data Envelopment Analysis to empower managers and entrepreneurs," Technological Forecasting and Social Change, Elsevier, vol. 182(C).
    7. Khare, Adwait & Labrecque, Lauren I. & Asare, Anthony K., 2011. "The Assimilative and Contrastive Effects of Word-of-Mouth Volume: An Experimental Examination of Online Consumer Ratings," Journal of Retailing, Elsevier, vol. 87(1), pages 111-126.
    8. Anton, Ramona & Chenavaz, Régis Y. & Paraschiv, Corina, 2023. "Dynamic pricing, reference price, and price-quality relationship," Journal of Economic Dynamics and Control, Elsevier, vol. 146(C).
    9. Martín-Herrán, Guiomar & Taboubi, Sihem & Zaccour, Georges, 2012. "Dual role of price and myopia in a marketing channel," European Journal of Operational Research, Elsevier, vol. 219(2), pages 284-295.
    10. Inderst, Roman & Pfeil, Sebastian, 2014. "An "Image Theory" of RPM," MPRA Paper 54139, University Library of Munich, Germany.
    11. Dutta, Sujay & Banerjee, Somak & Johnson, Aaron & Biswas, Abhijit, 2022. "Overcoming the challenge of low familiarity: Can a weakly familiar brand signal quality with exceptionally strong warranty?," Journal of Business Research, Elsevier, vol. 141(C), pages 737-754.
    12. Bhatt, Siddharth & Pai, Dinesh R. & DelVecchio, Devon, 2023. "The dark side of multiunit discounts: Multiunit discounts reduce rest of basket revenue," Journal of Retailing and Consumer Services, Elsevier, vol. 72(C).
    13. Chung, Myungjin & Saini, Ritesh, 2022. "Consumer self-uncertainty increases price dependency," Journal of Business Research, Elsevier, vol. 140(C), pages 40-48.
    14. Einat Tenenboim & Nira Munichor & Yoram Shiftan, 2023. "Justifying toll payment with biased travel time estimates: Behavioral findings and route choice modeling," Transportation, Springer, vol. 50(2), pages 477-511, April.
    15. Rao, Akshay R & Monroe, Kent B, 1996. "Causes and Consequences of Price Premiums," The Journal of Business, University of Chicago Press, vol. 69(4), pages 511-535, October.
    16. Liang, Sai & Schuckert, Markus & Law, Rob & Chen, Chih-Chien, 2017. "Be a “Superhost”: The importance of badge systems for peer-to-peer rental accommodations," Tourism Management, Elsevier, vol. 60(C), pages 454-465.
    17. Ho, Edward & Kowatsch, Tobias & Ilic, Alexander, 2014. "The Sales Velocity Effect on Retailing," Journal of Interactive Marketing, Elsevier, vol. 28(4), pages 237-256.
    18. Agam Gupta & Arqum Mateen & Divya Sharma & Uttam K. Sarkar & Vinu Cheruvil Thomas, 2019. "Combating incumbency advantage of network effects: The role of entrant’s decisions and consumer preferences," Competition and Regulation in Network Industries, , vol. 20(1), pages 3-32, March.
    19. (Kay) Byun, Kyung-ah & Ma, Minghui & Kim, Kevin & Kang, Taeghyun, 2021. "Buying a New Product with Inconsistent Product Reviews from Multiple Sources: The Role of Information Diagnosticity and Advertising," Journal of Interactive Marketing, Elsevier, vol. 55(C), pages 81-103.
    20. Li, Hui & Xu, Yunjie & Huang, Lihua, 2021. "When less is more? The contingent effect of product supply limitation in the release of new electronic products," Journal of Retailing and Consumer Services, Elsevier, vol. 60(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jouret:v:98:y:2022:i:3:p:542-557. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/journal-of-retailing .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.