Volume 60

Number 2

Summer 1984

Comparison Price, Coupon, and Brand Effects on Consumer Reactions to Retail Newspaper Advertisements
WILLIAM O. BEARDEN DONALD R. LICHTENSTEIN
ASSIStant Professor of Marketing Louisana State University Baton Rouge, Louisrana Professor of Marketing Universuy of South Carolina Columbia. South Carolina

JESSE E. TEEL
Associate Professor of Marketing University of South Carolina Columbia, South Carolma

This paper reports an examination of the reactions of consumers to a series of retail advertisements in which the presence and absence of a comparison price, the presence and absence of a coupon, and brand type were varied in a 2 X 2 X 3 design. The results indicate significant effects from both the price and brand manipulations. Most price advertising is associated with either retail newspaper advertising or cues found within the retail environment (Berkowitz and Walton 1980; Wilkinson, Mason, and Paksoy 1982). In the former case, the advertiser is faced with a number of decisions regarding the content and format of the actual advertisement. Included among these decisions are important questions regarding three aspects of promotional design: (1) which brand to focus upon; (2) whether a coupon should be included; and (3) whether to include both the regular and the sale prices or the sale price alone.'
I Other decisions, though not addressed in the present study, include whether to advertise a sale or a regular-priced product, the development of advertising schedules, the selection of product categories to promote, and the actual format of the advertisement (placement, size, etc.). Further, for the advertisements featuring a sale, there are a number of methods available for presenting the price information (cf', Della Bitta, Monroe, and McGinnis 1981).

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Journal of Retailing

A number of unresolved issues surrounds each of these decisions. For example, the inclusion of reference prices in advertising has been shown to increase consumer perceptions of the savings involved in a price promotion. However, controversy remains regarding the extent of consumer discounting of reference prices and their effects on consumer purchase behavior (for example Blair and Landon 1981; Keiser and Krum 1976). In addition, the emerging strength and prevalence of private and generic labels have considerably enhanced the position of the retailer in the distribution chain. Retailers are now less dependent upon national manufacturers for promotional support and frequently promote in-house brands (Business Week 1981). Surprisingly, little attention has been directed at the relative efficacy of promoting the various brand categories. Likewise, questions remain regarding the benefits of including coupons in the advertisement. The use of coupons provides a vehicle for disseminating price information but enables only the coupon holder to benefit from the price reduction. However, this benefit to coupon users may be offset by the time expense of processing and monitoring coupon redemption. The present study was designed to investigate some of these issues. Specifically, the effects of varying brand labels (such as national, private, generic), the presence or absence of a coupon, and the inclusion of reference comparison prices on consumer reactions to retail newspaper advertisements were examined. LITERATURE Comparison Prices In general, price effects have been shown to interact with variations in extrinsic and intrinsic (as by Olson 1977; Shimp and Bearden 1982) and/ or contextual (as by Monroe 1973; Monroe, Della Bitta, and Downey 1977; Monroe 1979) cues. Comparison prices represent a frequently employed extrinsic contextual cue. Comparison or reference price advertising involves the provision of some comparison price to document the saving associated with the selling price. A comparison price cue is provided when an explicit comparison price is paired with the offering price in an advertisement (Berkowitz and Walton 1980). In actuality, a number of methods are available for presenting comparison prices (for example, trade area, former price, and comparable value comparisons) (Della Bitta, McGinnis 1981); furthermore, comparison pricing may involve other procedures than the pairing of an actual (former) price with an explicit price. Consumer perceptions of a comparative price may be conceptualized from the perspective of a number of behavioral paradigms (for example, Weber's "just noticeable difference"). One of these explanations is as12 REVIEW AND RESEARCH HYPOTHESES

An assimilation effect may occur when the buyer perceives the offering price as belonging to the same set of prices as the regular price. A complementary explanation is provided by adaptation-level theory. and Federal Trade Commission (FTC) implications has been reviewed recently by Blair and Landon (1981) and Della Bitta et a!. and price acceptability (cf. 1981). and (3) interact with other aspects of the offering (such as the product). The influence of comparison prices on consumer evaluations and response has been examined within the design of a number of multifactor experiments involving manipulations of (1) store type (Berkowitz and Walton 1980). Della Bitta et al. Berkowitz and Walton 1980). their effects on consumer behavior. Monroe 1979). Della Bitta et a!. Blair and Landon 1981. Consequently. the price is not so drastically different that it provokes a contrast effect. Della Bitta et a!. attitudes toward purchase. 1981). (2) result in some discounting of the higher regular price. Fry and McDougall 1974. Blair and Landon 1981). and (6) brand type (national versus "off" brand) (Blair and Landon 1981). Berkowitz and Walton (1980). Under this explanation of price interpretation processes. the following research hypothesis is proposed: HI: Advertisements with reference prices will produce more positive consumer price perceptions. In sum. value. consumers evaluate price cues after comparison with an adaptation-level price stored in memory. and intentions to purchase than advertisements without reference prices. Della Bitta et a!. The adaptation level is assumed to represent an average of a set of stimuli (prices) for similar produces and need not necessarily correspond to any actual price on the market (Monroe 1979. (3) the amount of discount (Berkowitz and Walton 1980. the offering or sale price must be sufficiently lower than the comparison price to induce a perception of saving but still be within the assimilation range so that a contrast effect is not provoked and the credibility of the prices endangered. (4) the semantic cues associated with the price presentation (Berkowitz and Walton 1980. (2) the presence or absence of comparison price cues (Berkowitz and Walton 1980. The literature regarding empirical tests of the role of comparison prices in advertising. (5) catalog versus noncatalog presentation (Sewall and Goldstein 1979. page 44). (1981). and Sewall and Goldstein (1979) regarding the use of comparison prices.g. to achieve a perception of saving.. comparison prices (1) produce larger perceptions of savings than advertisements using only the sale price. That is. Based largely on the results of Blair and Landon (1981). Price perceptions are used here to refer to cognitive reactions regarding perceived worth. 13 Copyright © 2001 All Rights Reserved . 1981).Consumer Reactions to Retail Newspaper Advertisements similation-contrast theory (e. (1981).

and the breadth of product categories represented (Reibstein and Traver 1982). self-perception theory orders the effects of deal retraction on repeat purchases (that is. This conclusion is based on the attribution hypothesis that when a deal involving some effort and value (for example. consumers who had switched brands to take advantage of the deal will have less motivation to repurchase than if no deal had been offered. 1978. direct savings to consumers in the form of lower prices exceeded $500 million (Strang 1981). 1978. 1978. Tybout.Journal of Reraihng Coupons A substantial portion of the advertising and promotional budgets for many consumer products is devoted to coupon activity. a media-distributed coupon) is retracted. increasing usage. Specifically. switching increases with the magnitude of the incentive associated with the deal). encouraging purchases of larger sizes. and Sen 1978. and increasing trade buying (for example. A third stream of research has attempted to isolate correlates of coupon usage and general deal proneness (see Blattberg et al. a number of theoretical perspectives have been proposed as being appropriate. Oliver 1980. Robinson 1977). it is argued that economic utility theory orders the effects of coupons on brand switching (that is. In contrast. While little published research has addressed directly the alternatives of 14 . Over 75 percent of all households are involved with coupons (Aycrigg 1981. Dodson. Coupon activity has been steadily expanding in terms of the number of coupons distributed. and Sternthal (1978) argue that economic utility theory and self-perception theory explain the differential effects of media-distributed and package coupons on brand loyalty. holding users against competitive entries. Dodson. Montgomery 1971). Coupons have been described as being useful for inducing trial. Nielsen Researcher 1979). Bvessing. Conversely. mediadistributed coupons results in significantly less loyalty when no deal was offered) (Dodson et al. The effects of coupons have been examined from several perspectives. Cotton and Babb 1978. Raju and Hastak 1980). retraction of high-value. Regarding behavioral explanations of coupon effectiveness. a number of attempts have been made to examine the cognitive processes and behavioral underpinnings of individual responses to deals and deal retraction (Dodson et al. the value associated with a promotion. and Sternthal1978. pages 79. Blattberg. Montgomery 1971. Ward and Davis 1978). One stream of research has attempted to identify the market factors affecting aggregate redemption rates in an effort to enhance predictability and control (Reibstein and Traver 1982. Tybout. converting triers to regular users.80).

Consumer Reactions to Retail Newspaper Advertisements couponing versus no couponing. in a study of known and fictitious brands. Bellizzi et al. generics have achieved in excess of 5 percent of the market for many high-volume. this is not likely for consumers in general given the potential for all shoppers to take advantage of deals not requiring coupon clipping and redemption. Kruekeberg. suggest that brand names may be dominant (over price) in effects on quality while price is dominant within a brand category. The results reported by Venkataraman (1981). commodity categories (DiMaria 1981. The results of Bellizzi. and Martin (1981) seem to provide a mix of reactions to the various brand types. coupon usage. (It could be argued that consumers who are highly involved with coupons would more highly evaluate advertisements with coupons than advertisements without coupons. Hamilton. Based on the prominence of national 15 Copyright © 2001 All Rights Reserved . Business Week 1981). Generic brands are generally perceived as substantially lower in price and quality (for example. Brand Types The continuing growth of private brands and the emergence of generic labels have resulted in considerable changes in the normal retail marketing environment for many consumer products. coupled with the increasing efficiency of reduced-service retail operations. 1981). the following hypothesis stems from the time and effort associated with clipping and redeeming coupons and the general availability to all potential shoppers of a price promotion without coupons. while sales of generic brands do not typically rival private and national brand volume. However. attitudes toward purchase. and intentions to purchase than advertisements with coupons.) H2: Advertisements without coupons will produce more positive consumer price perceptions. The suggestion was made that generic brand advertising might be useful for eliciting patronage from particular market segments. These changes. shopping enjoyment. Generic brands have now received considerable publicity and are generally familiar to most consumers. For example. However. did report differential effects in responsiveness to advertisements across brand preference groups. private. Bellizzi et al. and acceptance of advice from personal sources. and generic brands reported similar shopping profiles in terms of innovativeness. page 70). are causing shifts in the balance of marketing power toward a trade that has been subservient to manufacturers with large advertising budgets and market data (Business Week 1981. "highrater" groups for national. Further.

They were instructed to obtain agreement to participate in a study of newspaper content and advertising from 100 households selected at the discretion of the interviewer in each neighborhood. the first study may more clearly reflect actual marketing practices in which prices vary across brand categories. private) (cf.Journal of Retailmg brands and their heavy promotional budgets. Alternatively. This latter position stems from the possibility that less discounting by consumers of the regular price for national brand promotions will occur because of the higher source credibility associated with known brands (see Sternthal. METHOD Data were collected initially from 544 grocery shoppers residing 1Il urban and suburban neighborhoods surrounding a medium-sized SMSA. the two studies are discussed in their chronological sequence. Interactions No formal interaction hypotheses arc offered. The demographic composition of the sample suggests that the respondents were generally up16 . The second study was felt necessary given that the possibility of confounding of treatment effects was recognized after completing the first study. First. The data reported in this study are based on 544 complete responses received within 3 weeks of the personal contacts. No differences in response rates were found over the areas sampled. however. Two separate studies were conducted (for two products). Since many of the research procedures were similar. a significant interaction might be predicted on the premise that the additional information associated with comparison price cues is more important for lesser known brands (such as generic. two arguments for a price format by brand type interaction appear tenable. it could be argued that comparison prices might be more effective in stimulating consumer purchases for national brands. Blair and Landon 1981). the following hypothesis is offered: H3: Advertisements focusing on national brands will produce more positive price perceptions. and Leavitt 1978). Eight interviewers were assigned to one of eight middle-class neighborhoods selected on a convenience basis. These issues are addressed in subsequent sections. and intentions to purchase than advertisements for generic and private brands. While the potential for confounding in study 2 was reduced. attitudes. Dholakia.

a demographic profile of the adult population of the SMSA in which the studies were conducted was compiled. n = 292. private. the possibility of nonresponse bias exists. The cell sizes ranged from 20 to 28 and from 16 to 25 for the paper towel and cooking oil analyses. The 17 Copyright © 2001 All Rights Reserved . subjects were given a packet containing two news stories. Sixty-six percent of the respondents were female. (2) 50 percent of the population had family incomes above $19. 55 percent had family incomes above $20. and a return postage-paid envelope. (The MANCO VA tests for the various effects were obtained by adjusting the appropriate sums of squares for all other effects in order to account for the nonorthogonal nature of the design [Applebaum and Cramer 1974]). Since 32 percent and 49 percent of the sample either failed to respond or returned incomplete questionnaires.000.--------- --------------------- Consumer Reactions to Retail Newspaper Advertisements scale. In each advertisement. 59 percent had completed college. Similar to the procedures used by Berkowitz and Walton (1980. The population profile revealed that (1) the median age category was 35 to 44 years. Each study involved a 2 x 2 x 3 design in which (1) comparison price present or absent (regular and sale price versus sale price only). (3) 51 percent were female. each subject was asked to evaluate both the news stories and a single advertisement and to return the enclosed questionnaire. and national) represented the levels of the variables examined. (2) coupon present or absent. In an effort to examine possible differences between the population and sample respondents. and cooking oil. the samples on which this study is based were better educated and contained more females. and (4) 21 percent of the population had completed college. respectively. a coupon was either present or absent. The response rates in this study and a follow-up one (described later) were 68 percent and 51 percent respectively. Upon agreement to participate in the study. Study participants were qualified as being nonstudent adult household heads with primary household shopping responsibility. n = 252) were investigated. pages 351-352). The median age category was 35 to 49 years. a survey about both the news stories and the ad. and (3) three brand categories (generic. Consequently. The latter is undoubtedly due to the focus upon the primary family grocery shopper. The inclusion of the news stories and the use of a non fictitious store as the ad source were used to enhance experimental realism. a newspaper advertisement.000. Study Design Two parallel studies involving both food and nonfood grocery products (paper towels.

Nine-place scaled statements were used to operationalize the manipulation checks. For the paper towel study. Berkowitz and Walton (1980) concluded that higher comparison prices were necessary for nonprice-oriented stores based upon an analysis of the results of 20 percent and 40 percent discount levels. Operational Measures Multiple-item scales were formed by summing individual items designed to reflect the different dependent variables. All items were randomly varied in direction to reduce acquiescence bias and recoded for consistent direction prior to summation. The brands included in the ad were available in the stores for both products in generic. was labeled as being appropriate for obtaining the product at the sale price. and $1. 18 . The regular prices stated in the ads reflected prices charged during the time of the study. $0. the actual brand names promoted by the store were employed. private. 1981).49 ($0.------~--------- Journal of Retailing coupon. Since the store used here belongs to a traditional grocery chain that does not market its products on price alone.64 ($0. Seven-place scaled statements were employed to assess the dependent and covariate measures. and manipulation checks included in the newspaper advertising survey.79 ($2. These price differentials represented an approximate 30 percent saving in each case.09). and $0. It should be noted.89). private. Consequentl y. the prices varied across the brand treatment conditions. In each case. covariates.) For cooking oil. compare at/our price) (Berkowitz and Walton 1980.69).34 ($0. (This issue is addressed subsequently in the discussion of a follow-up study. private. the corresponding prices were $0. $1. when provided.49 ($2.09 ($1. that significant effects have been found across methods of presenting prices (regular price/ sale price. The promotion described in the advertisement was purportedly available at the largest grocery store chain in the SMSA sampled. The comparison-price manipulation involved presenting either the sale price alone (the "comparison-price absent" condition) or both the regular and the sale price (the "comparison-price present" condition). the sale prices (regular prices) were $1. The brand independent variable involved using either a generic. the average of Berkowitz and Walton's levels (or 30 percent) was selected for use in this study. Della Bitta et al. X percent off/now only. however.59). or national label as the focal point of the advertisement.59) for the generic. and national labels.49). and national brands. respectively. The intent here is not to evaluate the various methods of presenting comparison-price cues.

perceived saving. In four separate factor analyses (two studies by two products). Covariates. Combining the five items into a summary price-perception measure was also supported by factor analysis. These items were bipolar adjective sets reflecting individual opinions about the store chain providing the advertisement (in- eX 19 Copyright © 2001 All Rights Reserved . among others. harmful-beneficial. and willingness to buy (Walton and Berkowitz 1979).32 or 66.58). value for the money. Berkowitz and Walton (1980). a single factor solution resulted in each case (with an average eigenvalue for one factor equaling 3. page 426) that interest in purchasing an offered product is not necessarily induced by a perception of value or saving.Consumer Reacnons to Ret311 Newspaper Advertisements Dependent Variables. Since an actual store was used as the source of the advertisement. a single price-perception dependent variable was formed as a sum of the five items. willingness to buy. Based largely on high intercorrelations across both products (X = . Three related dependent variables representing a range of reactions to the ads were investigated: (1) price perceptions. income. It should also be noted that one of the items.58) was higher than the average correlation between the summary price measure and the four-item index of behavioral intentions = . education. good-bad). and age-were also included in the study as covariates. page 352).32). page 356). and uncertain -certain. reported differential responses to varying price-presentation formats and advertising stimuli across demographic groups. and (3) behavioral intentions (BI). Respondent perceptions of the price value of the promotion were assessed using the five semantic differential statements employed by Berkowitz and Walton (1980. foolish-wise. Further.4 percent variation explained). possible-impossible. Measures of store image and trust in addition to four demographic variables-sex. price acceptability. Behavioral intentions regarding the likelihood of purchase and use of product were assessed using four bipolar statements labeled likely-unlikely. The items were designed to reflect perceived worth. Subsequent analyses using only the remaining four price-perception items did not affect the results described later. is very similar to intentions. Attitude toward the purchase and use of the product advertised was operationalized as the sum of the subject's responses to seven bipolar adjective sets (for example. an l l-item index of store image was developed and used as a covariate to help partial out any reactions to the ads that might result from existing attitudes and opinions regarding the store itself (cf. (1981. the average intercorrelation among the five priceperception items (X = . improbable-probable. (2) attitudes toward purchase and use (Aact). Berkowitz and Walton 1980. The inclusion of both a price-perception dependent variable and purchase-related measures is consistent with the suggestion of Della Bitta et al.

To maintain similarity with other operational statements. RESULTS Variable Means and Reliability Estimates Variable means. standard deviations.56).92 for the operational measures of attitudes toward purchase and behavioral intentions. and income (p = . a single agree-disagree statement regarding the presence or absence of a coupon was used to verify the coupon present-absent condition. education (p = . Barnes 1975). the store presenting the advertisement can be trusted. that is. the orientation toward individuals in each item was restructured to reflect trust toward the store or its management). Examination of the mean differences between the two products studied indicated that except for behavioral intentions. The reliability estimates ranged from . that the respondents were more inclined to purchase the paper towel product. and modern-old-fashioned) (Tull and Hawkins 1976. general knowledge of the brand. Comparison of the demographic characteristics of the respondents in the two studies (n = 292 and n = 252) did not reveal any significant differences between studies in terms of sex (p . It did appear.----------------------Journal of Retailing eluding fast-slow service. A measure of trust was also developed by rewording the three agreedisagree statements comprising the personality construct described by Robinson and Shaver (1973) to retail shopping situations. however. and the covariate measures are presented in Table I. page 351-352). Seven-place agree-disagree scales followed statements similar to: "Generally speaking. dirty-clean.79)." Manipulation Checks. Two scaled statements reflecting the adequacy and amount of price information included in the advertisement were used as manipulation checks for the comparison-price independent variable. Combining the 11 items into an overall measure of store image was supported by item-to-total correlations and reliability analysis (average coefficient alpha = .81). the variables investigated were evaluated similarly by the respondents in both groups.68 for one brand-manipulation check variable to . 20 . age (p = . ThIS variable was included as a covariate in an effort to account for differential responses stemming from general ad believability associated with different advertising stimuli (cf.18). the manipulation checks. These 11 items are also among the store-image attributes studied by Kunkel and Berry (1968) and Peterson and Kerin (1981). and the amount of advertising normally associated with the brand were used as manipulation checks for the brand-independent variable.51). Three items reflecting the size of the product manufacturer. and reliability estimates (coefficient alpha) for the three dependent variables.

r-'" I r-I «. V) r'" 00 I '" I 0- I r<'. o '~ '" E Z o.Consumer Reactions to Retail Newspaper Advertisements DO 0 -0 00 DO ODO <') -.~ 21 Copyright © 2001 All Rights Reserved .0 DO o r-.

These results suggest that trust in the source of the advertisement affected price perceptions while store image seemed to influence attitudes 22 .46) for the follow-up study suggest marginal significant differences. were considered initially as covariates in a MANCO VA analysis.00 (p < . and 9. and t = 9.63. P < .02) and 1.01).41.49.62 and 10. along with sex.20 (p < . P < .14.97. respectively.71. P < .29 (F = 240. the brand manipulation check mean scores were 22.76 (t = 8.39.35.26 (t = 34. Consequently. P < . These tests for treatment by covariate interaction.01) and 8. P < .16 (p < .Journal of Retaihng Manipulation Check Results Each of the manipulation check analyses indicated that the treatment variations were perceived by the respondents as intended. The resulting F-values of 1. Box's M multivariate test for homogeneity of dispersion matrices was computed for both products in the initial study and the follow-up study described later. However. Since both consumer exposure to and evaluations of advertisements are generally assumed to differ across market segments. and education. income.01. the results presented hereafter are based on the use of only sex.81. subsequent analysis indicated that age.22 versus 1. however. However. 17. and trust as covariates.67 and 16. Therefore. it is correct to use the variables as covariates (and not as treatment variables). given the large number of degrees of freedom associated with the Box's M test.09) for the initial two product analyses and 1.13 (p < . P < . Regarding the coupon treatments.06) and 1. the mean scores for the three-item scale across the national. and education were not significant as covariates. demographic characteristics were included initially as covariates.86. 18. the mean scores were 8. The mean scores for the two-item price-information manipulation check for the condition in which both the sale and the regular prices were presented were 15.14 for the paper towel and cooking oil analyses. income.01). Tests for the homogeneity of regression coefficients were conducted.01). The corresponding means for the sale-price-only condition were 10. were not significant. For study 2. and generic brand conditions were 23. Covariance Analyses Store image and trust. store image. the practical effect of the difference in the variance/covariance matrices was believed to be minimal.67. For study 1.01). age.27 versus 1. private. respectively (F = 223. The overall mulitvariate analysis of covariance results is presented in Table 2. and 9.64 (t = 25.

Given the lack of statistical significance of the other tests. this result was believed to be spurious and no true interaction effects were thought to exist.32 .24 .44 .470 3.93 .275 6. .23 .470 6.03 R2 .30 2.58 3.001 .Consumer Reactions to Rct311 Newspaper Advertisements TABLE 2 Multivariate A. One interaction (coupon times price) was statistically significant (p < .981 .993 p P < < . Independent variables F-value df Prob. Eight tests of interaction effects were conducted for the two products.25 . Analysis of Covariance Results Dependent variables Product I (paper towels) Pnce perceptions Covariates Trust Store Image Sex 2.41b 4.54 .275 3.41 551 7.10" .470 . 23 Copyright © 2001 All Rights Reserved .26" . Intentions t-values for within-cells 1.01.000 027 .09b -.550 6.611 .235 6. MANCO V A results Product 1 (paper towels) Product 2 (cooking oil) F-value df Prob.75 3. the price format and the brand manipulations were significant in both studies. Main effects Coupon (e) Price format (P) Brand (B) lnteracttons ex P exB PxB exp xB a b 1.92 .235 3.90 12a Product 2 (cooking oil) Price perceptions Attitudes Intentions Attitude.272 .05" 1.550 3.12 3.473 959 . (This conclusion is also supported by the lack of any significant interactions in the follow-up study.05) for the paper towel product but not for the cooking oil.02 4.40" 2.50 .32" .550 241 .13" B.58 3.) In terms of the main effects.550 6.235 6.84 1.275 6.35 7.10 .41 .39 .990 005 000 433 .72a 1.05 and intentions regarding purchase.04a regrc-ston 3.470 6.19 127 .80 1.

attitudes. (Ignore for now the results of study 2. trust in the source of the advertisement. (1981). two findings regarding the brand effects are of interest. Generally. Consistent with the findings of Blair and Landon (1981) and Della Bitta et al. intentions to buy were greatest for the national brand groups. all dependent variables contributed to the significant brand effects. and sex were included as covariates. the results of these two studies underscore the notion that consumer reactions to retail newspaper advertisements can be enhanced through the provision of both a regular and a sale price. in terms of the three dependent variables examined. This procedure is appropriate when the dependent variahles can be theoretically ordered (Spector 1977). Second. The inclusion of a coupon did not seem to enhance or detract from consumer reactions to the advertisements. Higher mean scores reflect more favorable price evaluations and more positive attitudes toward purchase and intentions to buy. and intentions were higher when both the regular price and the sale price were presented as opposed to presenting the sale price only. The assumption was made that price represents one product dimension on which subsequent attitudes and intentions are based (see Ajzen and Fishbein 1980. These results held even when store opinions. the logical ordering of price perceptions. Monroe 1979). For both products. In this case. Regarding the price-perception variable. respondent likelihood of purchase was greater for the national brand in comparison with generic and private-label mean scores. ThIS finding did not hold for the more expensive cooking oil product. The results of these tests suggest that price perceptions generally contributed most to the separation between group means. First. The Roy-Bargman test is useful for determining the relative contribution of the dependent variables for the individual effects. attitudes. and behavioral intentions was used to sequence the variables. the mean scores for price perceptions. In sum. and national) were found. 24 . however. WIth the exception of price perceptions for product 2.---------------------------------------------- Journal of Retailing Examination of the mean scores in Table 3 gives additional insight into the direction of these effects. the results of product I (paper towels) suggest that the generic-branded product was more favorably evaluated. Mixed results across the brand categories (generic. private. Contrast estimates expressed as the percent absolute mean difference between groups are presented in Table 4 along with Roy-Bargman stepdown F-tests.) LaTour (1981) suggests that contrast estimates be used as measures of effect size in nonorthogonal designs. price perceptions were most favorable for the generic brand for only the lower-priced product. These estimates reveal a moderate price-comparison effect and a substantive brand effect.

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In this follow-up study. all variables were evaluated similarly.93 for the operational measure of attitudes toward purchase.60). However. respectively) did not reveal any significant differences between the follow-up paper towel and cooking oil studies in terms of sex (p = .000. Six hundred households selected randomly from the telephone directory of the same SMSA were contacted by phone and asked to participate in a study of newspaper advertising and content. Hence. The original phone respondents who indicated a willingness to participate were randomly assigned to one of the two product categories and 12 treatment conditions. age (p = .50). impossible to determine directly whether the brand effects were due to brand differences or the variations in price associated with the three different brand categories. respondents may have been reacting to absolute discounts. Therefore. not the discount percentages. 27 Copyright © 2001 All Rights Reserved . therefore. 49 percent had family incomes above $20. The median age category was 35 to 49 years. agreements were obtained from the primary grocery shopper within each household. Five hundred and twenty-five agreed to review the materials and to respond to a mail questionnaire. subjects in the initial studies previously described were exposed to actual prices associated with the different brands at the time of the study. The cell sizes ranged from 12 to 16 for the paper towel study and from 10 to 14 for the cooking oil study. and internal consistency estimates are shown in Table 1. Reliability and Manipulation Check Estimates. prices were constant across brands. examination of mean scores indicated that except for behavioral intentions. Again. Variable means. would be more impressive. given its higher price.46). In an attempt to provide realistic prices for each brand category. in these two follow-up studies. It is. and the inclusion of regular prices may have made these discounts even more apparent. This followup study is based on the 305 complete responses received. Of the respondents. Again. comparison of the respondents' demographic characteristics (n = 161 and 144. education (p = . The absolute discount offered on a national brand. Consequently. standard deviations.37). The reliability estimates ranged from . the median private-label prices used in the intial studies were incorporated into the ads for all three brands. a follow-up study was conducted to assist in resolving this issue. Likewise. Respondents.Consumer Reactions to Retail Newspaper Advertisements Additional Findings A follow-up study was conducted to partially replicate and extend the findings of the initial study. and income (p = . 75 percent had completed college.67 for the covariate measure of trust to . two parallel 2 x 2 x 3 experiments were again conducted using the same products and general design. 64 percent were female.

These differences resulted in t-values of 22. however. and 8.31.13 (p < .78. and generic brands were 23.00 (t = 7. the mean scores were 8.02 (p < .66 for the paper towel and cooking oil responses. Store image. Examination of the mean scores generally reveals a dominance of the national brands in comparison with the generic and private label products. P < . sex. Trust was significant in its effect on price perceptions and attitudes for cooking oil.24 for cooking oil. Again. Again. respectively.01). trust. As in the previous results.87 and 15. was significant regarding attitudes for the paper towel product and intentions for cooking oil.--------------- Journal of Retailing As in the analysis described above.14 versus 1. The corresponding means for the "sale price only" condition were 12.82 (F = 174. For the coupon present/ absent question. each of the manipulation checks indicated that the treatment variations were perceived as intended. P < . the mean scores across the national. P < . higher mean scores represent more favorable price perceptions and positive attitudes and intentions. 22 cell means favored not including a coupon.38 for towels and 8.01) and 22. the tests for treatment by covariate interactions were not significant. private. 18.01).10. The main effect results differed from those found in the initial studies. comparison of the mean scores indicated that.01).04 (F = 157. These main effect differences in comparison with those of the earlier study may be due to the confounding of price with brand in the initial study. These results arc supported by the mean scores presented in Table 6. However. Regarding the cooking oil results.04.79. however. Covariance Analyses. The mean scores for the two-item price-information manipulation check for the condition in which both a sale and a regular price were presented were 15.01) and 10. Specifically. the generic and private labels were usually evaluated closer to the national brands in terms of price perceptions. the brand treatment was significant for both products and a coupon effect was found for paper towels. attitudes and intentions to purchase were more favorable for the national brands for both products. no price-comparison effects were found in the follow-up.04 (t = 5. Regarding the inclusion of coupons. P < . of 36 possible comparisons (3 dependent variables x 2 products x 3 brands x 2 price format conditions). The overall multivariate analysis of covariance results is presented in Table 5.82.01) for the different product analyses. the corresponding mean scores were 23. suggesting that use of sex and the measures of trust and store image as covariates were appropriate. and 9. No clear results emerged regarding the inclusion of a comparison price in these follow-up 28 . and store image were included as covariates. respectively.14 versus 1. 19.08.61. For the paper towel study. Similar to the previous analyses. A somewhat similar pattern emerged regarding the covariates.

288 6.03 2.63 .127 6.267 .144 6.66 .288 .69" 61 14 t-Values for within-cells Product I (paper towels) Pnce perceplions 1.54b Intentions .01 .254 3. results.91 .37 -.992 .24 . Independent variahles F-Value df Prob.254 .870 .127 3.127 6.Consumer Reactions to Retail Newspaper Advertisements TABLE 5 Multivariate A.491 . M mn effects Coupon (C) Pnce format (P) Brand (B) Interactions CxP CxB PxB CxPxB a b 3.29 5.144 1.33 .04 Covanates Trust Store image ~ex Atntudes 1.254 6.288 3. SUMMARY AND DISCUSSION The intent of this study was to investigate the influence of price format. As found in the previous study.607 .85 3.75 41 465 81 . MANCOV A results Product I (paper towels) Product 2 (cookmg Oil) F-Value df Prob.47 R2 n- - lOa 190 37 20" - 52 08b B.130 1. Analysis of Covariance Results: Follow-Up Study regressions Product 2 (cooking oil) Pnce perccplions 2.111 .000 .743 000 .080 .254 6. Differences in attitudes toward purchase probably accounted for the coupon effect found in the paper towel results.75 I 74 161 3. Returning to Table 4.836 .144 3.04 206h -1. all the dependent variables contributed to the brand effects with the exception of behavioral intentions for the cooking oil analyses.012 .45a Intentions 1.64 .531 p P < < .288 6. and brand type on consumer evaluations of newspaper 29 Copyright © 2001 All Rights Reserved .05. the contrast estimates and the Roy-Bargman tests are consistent with these conclusions. coupon presence.144 6.36 75 -121 02 Attitudes 3.

t> ..) r. '1: ~ ~~~ V) 0\ 00 'r: ~ M ("'I 0 --- ~ ~~ .... r-O\ . ".-.. rV) M 007 M ...._ --.....r-: 0\ ....r.. »-r-.--._ r-ot'< V) 00 00 "-' "-' "-' N V) 00 N V) NNrN~ '1:_00 \0-'0\ ~O ~ ~ ~~V) (')r')o '-' M '-' M V) 0\ \0 M t'<rM t'<-' --- 000'00 000 0\07 M M-.. 30 .. V) .-< f:::"~0\" ".q-\O N~ ~t:~ V) . r- .{~oo M M MM MM V) ~ \0 _.. M 00 \Ot'<M M.q-r-O\ N ~.q-M NOO~ \oOM ~ .) V (') 00 MMM M t'< \0 0\ r'-' "-' '-' V)t'<0 OOMO ~~t'< o _..r) V) 00 0\ 0\0 \07r---: M t'< --. \O -':OM ~~N \0007 r(') OOV) M.-__ -' N -' V) 00 00 ~~ o~o /"_r--.r)o~ r-V)..q- .-..0000 MMM ..q-oooo ~~~ .r..........oV)r---: ~.....-__ ~ N8~ rM ~t=:'8 \Or-r- ~~~ V) ~ \0 ~Nr---: ~t:t:0\ .q-O \0 \0 0\ N~ ~~~ ONOO \0 t> r> CO'NOO 7r-\O 000\0 M~ t:::'ooo V)O l=:i~f:l N~OO 000 00 V) 0\ M -MM \0 00 00 M0 ~ .-....-. CONN 00\..q-\O--O N~ V) 7".q-0 ~ 00 0 7 r') \0 ~ \0 .-----------------Journal of Retailing ~~~ -' NN \0 0\ rO...-...-< NN~ 70\\0 7M\o M (') 0\ .r--00 '--' 0 \0 70(') \0 V) \0 M (') . 00'0 if)i£)if....-~ 0') ---M 7r--.0\ __.._~ 'l.q-M 8G~ ---.q\O. ("1.......0 "-' "-' "-' V) r.. ~~N M 0\ M~ \0 t'< OOO(..

For example. Webster 1965). prices varied with brand type) were presented. Consequently. the possibility that some of the respondents did not regard the concept-testing nature of the newspaper materials as realistic. in the second study. This finding does not rule out. When actual prices were allowed to vary with brand type in study 1. this result might have differed if analyzed using only consumers reporting regular deal-prone or coupon-redemption activity. More positive attitudes and greater intentions to purchase were perceived toward national brands irrespective of the price-presentation format and whether or not the price was allowed to vary. and intentions to buy served as the dependent variables and represented a range of consumer reactions to the different advertisements. First. First. intentions to purchase the higher-priced product were generally greater when no comparison price was presented. the role of brand name in 31 Copyright © 2001 All Rights Reserved . price sensitivity may well vary between staples and personal care products. Consequently. however.Consumer Reactions to Retail Newspaper Advertisements advertisements. 1978. However. The results of four similar studies involving two products and two price variations (that is. Several research issues seem worthy of study. Montgomery 1971. the study did incorporate the use of multiple dependent variables. in the initial study. However. support was found for the inclusion of reference prices. Caveats are also in order regarding the failure to test varying discount levels and to control for brand-price familiarity. the advantages of promoting nationally known brands and the use of reference or comparison prices seem apparent. And. attitudes toward purchase. This support is expected given the larger market share and national advertising support associated with national brands. the potential for confounding from different prices was reduced and a different sampling frame and method were employed. These results provide a number of suggestions regarding future research into consumer evaluations and the use of newspaper advertising. No definitive support was found for the coupon hypothesis. care should be exercised in generalizing the findings. replication of products and research methods. the existence of a deal-prone segment of consumers (for example. The strongest support was provided for the third hypothesis. Caution is also in order regarding the potential effects of consumer-deal proneness and the generalizability of results across other product categories. similar to the findings of Berkowitz and Walton (1980) regarding the complex effects of store type on consumer responses when more than a quality evaluation is considered. Consumer perceptions of the price value of the offering. and the failure to collect purchase data. Blattberg et al. and nonstudent subjects. The study was limited by the convenience sampling procedures used in the initial data collection.

56-70 Berkowitz. Fall Educators' Conference. and Generic Brands. Understanding Atutudes and Predicting Social Behavior. (1975). 349-358 Blair. 57 (Winter). For a discussion of managerial implications. and Martin Fishbein (1980). Laud Landon (1981). Blattberg. the type and amount of information needed with the different brands and the interaction with varying score types remain in question." Proceedings. P.416-427. Cotton. John R. "Contextual Influences on Consumer Pnce Responses: An Experimental Analysis. Ill. and E. Hamilton. Kent B. Fry. McDougall (1974). "Factors Influencing Consumer Reacnon to Retail Newspaper Sale Advertising." Journal of Marketing. 38 (July).: Nielsen Co. N J : Prentice-Hall. and Gordon H." Journal of Marketmg Research. and Elliot M. please turn to the Executive Summaries section at the beginning of this issue.. Monroe. 61-68." Journal of Marketing. "Consumer Response to Promotional Deals. Eric N." NCH Reporter.74 32 . and S Sen (1978). 8] (6). brands. P. Cramer (1974)." Journal of Marketing Research." Psychological Bulletin." Journal of Marketing Research. Second. The results here and those of Berkowitz and Walton (1980) suggest the potential for interactions among the available price-presentation formats. "Consumer Perceptions of Natronal. Business Week (1981). 335-343. Northbrook. 3. Chicago: Amencan Marketmg Association. June 8.. and E. 18 (November)." Journal of Marketing Research. "Idennfymg the Deal Prone Segment. 72-81. and store types. "Impact of Deals and Deal Retraction on Brand SWitching. "More Mfr. future research should consider testing varying discount levels and incorporating familiarity with products and product prices directly into the research design. and Brian Sternthal (1978).. "No Frills Food: New Power for the Supermarkets.-------_--------------------------- Journal of Retailing connoting quality and influencing the appeal of a promotion needs investigation. and Warren S. and John R. Joe A. Joseph A. Martin (1981). I. 109-113. Joseph N. Englewood Cliffs. "Consumer Appraisal of Retail Pnce Advertisements. (1981). Brand Wars Seen for '80's. 17 (August). Edward A. Pnvate. "Consumer Perceptions of Comparative Price Advertisements. Krueckcbcrg.. Albert 1. and John M McGinllls (1981). Della Bltta.. James G. 369-377. M.." Supermarket News. 45 (Spring).vketailer Tension. "Coupon Distnbution and Redernption Patterns. Aycrigg. REFERENCES Ajzen. "Some Problems m the Nonorthogonal Analysis of Variance. Bames." Journal of Marketing.. "The Effects of Reference Prices in Retail Adverusernents. 15 (August). DiMaria. Alice M Tybout. 64-. 471-477 Bellizzi. Last. 42 (July). R." Journal ofRetailing. Appelbaum. Peacock Buessing. Eugene (1981).. 15 (February). Harry F.. Richard H. Mark I. T. C . Inc. 70-80. Babb (1978)." March 23. Dodson. Walton (1980). leek.

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