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 estimates 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 consumer and product characteristics that explain the variations in price knowledge. They find, for example, that frequent promotions increase consumers' ability to remember regular prices and that store switchers do not possess better price knowledge than other shoppers.