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Lena Himbert

Unit Pricing
Empirical Investigations
of its Influences at the
Product and Retailer Levels

Unit Pricing

Lena Himbert

Unit Pricing
Empirical Investigations of its Influences
at the Product and Retailer Levels
With a foreword by Prof. Dr. Stefan Roth

Lena Himbert
Kaiserslautern, Germany
Dissertation Technische Universitt Kaiserslautern, 2015

ISBN 978-3-658-13475-4
ISBN 978-3-658-13476-1 (eBook)
DOI 10.1007/978-3-658-13476-1
Library of Congress Control Number: 2016939260
Springer Fachmedien Wiesbaden 2016
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Foreword
In addition to the product price, retailers have to indicate the unit price for prepackaged products. For liquid products, the unit price has to be stated as price
per hundred milliliters, or price per liter, and for other products as price per hundred grams, or per kilogram. However, although these requirements are binding,
retailers have numerous possibilities to influence the indication and presentation
of the unit price. For example, there are exemptions for small retailers from unit
pricing and retailers can indicate unit prices for small package sizes as price per
hundred milliliters or hundred grams, while for larger package sizes the unit
price has to be indicated as price per liter or kilogram.
With the introduction of unit pricing in the marketplace, research also focused on
the indication and presentation of unit price information. In the beginning, this
stream of research focused on the question, whether consumers are aware of unit
prices and whether consumers take unit prices into consideration when shopping.
However, until today there is no sufficient investigation on the aspect, if the
indication and the presentation of unit prices can be used to influence the perception and evaluation of certain offers and their prices.
Therefore, Lena Himbert set herself the task to investigate these influences in
detail. For this purpose, first the state of the unit price research has been thoroughly analyzed. Based on this literature analysis, Lena Himbert identified a
number of gaps in research, she aims to address with this dissertation. In particular, she investigates the influence of unit pricing on the product level and on the
retailer level. For both areas of research, Lena Himbert develops theory-based
research hypotheses that are tested with four experimental studies. With these
studies Lena Himbert addresses several of the before identified research gaps,
while also highlighting additional need for research in these areas.
Lena Himbert succeeded to write an excellent dissertation. Essential research
gaps are identified as well as empirically addressed. Thereby, on the one hand, an
important contribution to this area of research has been made and on the other

VI

Foreword

hand, a number of research gaps were identified that have to be answered by


future studies. I wish this work the interest of a wide readership and the inspiring
impact to encourage future research projects.
Prof. Dr. Stefan Roth

Kaiserslautern, January 2016

Preface
When shopping for pre-packaged products, consumers are offered a variety of
product and price information at the point of purchase. To name some of the
information available, retailers and manufacturers offer the customer information
on package size, nutrition facts, ingredients, brand name and overall price. Oftentimes consumers are not able to consider all the information when making a
decision for a product, due to time restrictions or cognitive constraints. The unit
price is a price information given to the consumer that integrates the package
size information into the price information and thereby lowers the information
load for the consumers in the shopping situation. While in many geographical
regions the indication of unit prices is regulated by the national legislature, retailers have considerable leeway concerning the unit price format. Aspects that
can be varied are the unit of measure utilized (e.g., price per kg vs price per 100
g) as well as the unit price color or font size. There is little to no previous research that gives advice to retailers how they should indicate the unit price on the
price label. This represents a severe gap in research as it can be assumed the unit
price layout influences consumer behavior in various ways. Furthermore, previous research did not address the influence of unit price availability and unit price
prominence on the consumers attitude towards a retailer. Therefore, the aim of
this dissertation is to analyze the influence of unit prices on consumers attitude
towards products as well as retailers.
I was engaged in researching and writing this thesis from May 2011 to May
2015, during my time as scientific research assistant at the University of Kaiserslautern.
I would like to express my sincere gratitude to my advisor Prof. Dr. Stefan Roth
for supporting me during these four years. He has been actively interested in my
work and has always been available to advise me. I am grateful for his motivation, patience, and immense knowledge.

VIII

Preface

I also would like to thank the members of my PhD committee, Prof. Dr. Reinhold
Hlscher, Prof. Dr. Matthias Baum and Prof. Dr. Oliver Wendt, for their effort
and support. Thank you for letting my defense be an enjoyable moment.
Completing this work would have been all the more difficult were it not for the
support and friendship of my colleagues at the chair of Marketing, Dr. Eduard
Stoppel, Dipl.-Wirtsch.-Ing. Lucas Pfisterer, Dr. Kathrin Bsener, Dr. Thomas
Robbert, Dr. Thomas Schmidt, Dipl.-Wirtsch.-Ing. Sascha Sohn, Dipl.-Wirtsch.Ing. Lennart Straus, Dr. David Zitzlsperger.
I also wish to thank Prof. Dr. Stephan Zielke for his advice and sharing his pricing knowledge, especially during the weeks I spent at the University of Aarhus.
In regard to my experimental studies, I also wish to thank all of the respondents,
without whose cooperation I would not have been able to conduct this analysis.
For the non-scientific side of my thesis, I particularly want to thank Bastian
Hauschild. Thank you for your love, patience, support, and unwavering belief in
me. I also want to thank my parents, Ursula and Jrgen Himbert, my sister, Lisa
Himbert, and my brother, Hannes Himbert, for their continued encouragement
and unconditional love.
I hope you enjoy your reading
Lena Himbert

Cologne, January 2016

Table of Content
Table of Content
List of Figures
List of Tables
List of Abbreviations and Acronyms
List of Symbols
1
Introduction

1.1
1.2

Motivation
Objective and Research Questions

1
3

1.3

Structure

Categorization and Review of Unit Price Research


2.1

13

Legislation and the Importance of Unit Prices in the Marketplace 14

2.1.1

Package Downsizing

18

2.1.2
2.1.3

Quantity Discounts
Quantity Surcharges

21
22

2.2
Categorization of Unit Price Literature
2.2.1
Overview Behavioral Pricing Literature
2.2.2

IX
XI
XIII
XVII
XIX
1

26
26

Classification of Unit Price Literature

46

Previous Research and Theoretical Background

79

3.1

Previous Research in Relevant Fields of Research

3.1.1

Framing of Quantitative Information

3.1.2
3.1.3

Price-Quality Relationship
Store Price Image

3.2
Theoretical Background
3.2.1
Unit Price Usage

80
80
86
110
120
121

3.2.2
3.2.3

Influence of Unit Price Format on Price-Level Perception


Influence of Unit Price Format on Quality Perception

127
131

3.2.4

Influence of Unit Prices on Store Price Image

134

Table of Content

Development and Empirical Testing of Hypotheses


4.1

Influence of the Unit Price at the Product Level

137

4.1.1
4.1.2

Hypotheses Development
Experiment 1: Unpackaged Goods

137
141

4.1.3
4.1.4

Experiment 2: Pre-Packaged Goods


Discussion

168
188

4.2

Influence of the Unit Price at the Retailer Level

190

4.2.1
4.2.2

Hypotheses Development
Experiment 3: Influence of Unit Price on Store Price Image

192
202

4.2.3

Experiment 4: Influence of Unit Price Prominence on Store


Price Image

219

4.2.4
Discussion
4.3
Implications for Retailers, Research and Legislature

137

232
236

4.3.1

Managerial Implications

236

4.3.2
4.3.3

Implications for Research


Implications for Legislature

238
239

Concluding Remarks

241

5.1
5.2

Summary
Limitations

241
243

5.3

Future Research

245

References
Appendices

253
287

List of Figures
Figure 1: Overview research questions (Product level)

Figure 2: Overview research questions (Retailer level)

Figure 3: Thesis structure


Figure 4: Integrative framework of behavioral pricing research (based on

11

Homburg/Koschate (2005a, p. 386))


Figure 5: Relative price thresholds and categorization of price-level

27

perception (based on Diller (2008a, p. 129))


Figure 6: Factors influencing consumers quality perception.

31
94

Figure 7: Overview of relevant theories

121

Figure 8: Utility function according to prospect theory (based on


Kahneman/Tversky (1979, p. 279))

127

Figure 9: Hypotheses overview (Product level)


Figure 10: Product categories mentioned in Pretest 1

141
143

Figure 11: Acceptable price range (Salami)

145

Figure 12: Acceptable price range (Tomatoes)


Figure 13: Means and standard deviations (Salami)

145
156

Figure 14: Mediation involving three variables (based on Zhao et al. (2010,
p. 198))
158
Figure 15: SEM: product category salami (*** p < 0.01, ** p < 0.05)
Figure 16: Means and standard deviations (Tomatoes)

163
164

Figure 17: SEM: Product category tomatoes (*** p < 0.01)

168

Figure 18: Acceptable price range (Jam)


Figure 19: Acceptable price range (Paint)

171
171

Figure 20: Means and standard deviation for price-level perception (Jam)
Figure 21: SEM: Product category jam (***p<0.01, **p<0.05)

179
183

Figure 22: Means and standard deviation for price-level perception (Paint)
Figure 23: SEM: Product category wall paint (***p<0.01, **p<0.05)

184
188

Figure 24: Hypothesis overview

202

XII

List of Figures

Figure 25: Mean frequency of consideration for purchase for individual


product groups
Figure 26: Perceived unit price prominence

203
208

Figure 27: Perceived store price image dimensions (Experiment 3)


Figure 28: SEM results experiment 3 (*** p < 0.01, ** p < 0.05)

214
217

Figure 29: Perceived unit price prominence

221

Figure 30: Perceived store price image dimensions (Experiment 4)


Figure 31: SEM results experiment 4

227
229

List of Tables
Table 1: Overview of influencing factors on price knowledge

46

Table 2: Literature overview

52

Table 3: Unit price awareness: Literature overview


Table 4: Unit price awareness: Predictors

54
58

Table 5: Unit price comprehension: Literature overview


Table 6: Unit price comprehension: Predictors

60
62

Table 7: Unit price usage: Literature overview


Table 8: Unit price usage: Predictors

63
67

Table 9: Consumer reaction: Literature overview

70

Table 10: Consumer reaction: Moderators


Table 11: Moderators on price-perceived quality relationship

74
109

Table 12: Overview store price image literature


Table 13: Stimuli overview (Experiment 1)

118
147

Table 14: Dependent variables: Measurement

147

Table 15: Scale reliability (Experiment 1)


Table 16: Standard quality criteria experiment 1 (Salami)

152
153

Table 17: Indicator loadings and cross-loadings (Salami)


Table 18: Squared latent variable correlations and AVEs

153
154

Table 19: Standard quality criteria experiment 1 (Tomatoes)


Table 20: Indicator loadings and cross-loadings (Tomatoes)

154
155

Table 21: Squared latent variable correlations and AVEs (Tomatoes)

155

Table 22: T-test price-level perception (Salami)


157
Table 23: Influence of price-level perception on quality perception (Salami) 157
Table 24: Influence of price-level perception and quality perception on
purchase intention (Salami)

158

Table 25: Mediation effects: Quality perception (Salami)


Table 26: Mediation effects: Purchase intention (Salami)

159
160

Table 27: Influence of interaction effects on price-level perception

161

XIV

List of Tables

Table 28: Influence of interaction effects on quality perception

161

Table 29: Path coefficients SEM (Salami)


Table 30: T-test price-level perception (Tomatoes)

163
164

Table 31: Influence of price-level perception on quality perception


(Tomatoes)

165

Table 32: Influence of price-level perception and quality perception on


purchase intention (Tomatoes)
Table 33: Mediation effects: Quality perception (Tomatoes)

165
165

Table 34: Mediation effects: Purchase intention (Tomatoes)


Table 35: Influence of interaction effects on price-level perception

165
166

Table 36: Influence of interaction effects on quality perception


Table 37: Results SEM (Tomatoes)

167
167

Table 38: Stimuli overview (Experiment 2)

172

Table 39: Scale reliability (Experiment 2)


Table 40: Standard quality criteria experiment 2 (Jam)

175
176

Table 41: Indicator loadings and cross-loadings (Jam)


Table 42: Squared latent variable correlations and AVEs (Jam)

176
177

Table 43: Standard quality criteria experiment 2 (Paint)


Table 44: Indicator loadings and cross-loadings (Paint)

177
178

Table 45: Squared Latent Variable Correlations and AVEs (Paint)

178

Table 46: T-test price-level perception (Jam)


Table 47: Influence of price-level perception on quality perception (Jam)

179
180

Table 48: Influence of price-level perception and quality perception on


purchase intention (Jam)

180

Table 49: Mediation effects: Quality perception (Jam)


Table 50: Mediation effects: Purchase intention (Jam)

181
181

Table 51: Influence of interaction effects on price-level perception

181

Table 52: Influence of interaction effects on price-level perception


Table 53: Results SEM (Jam)

182
183

Table 54: T-test price-level perception (Paint)


Table 55: Influence of price-level perception on quality perception (Paint)

184
185

List of Tables

XV

Table 56: Influence of price-level perception and quality perception on


purchase intention (Paint)
Table 57: Mediation effects: Quality perception (Paint)

185
185

Table 58: Mediation effects: Purchase intention (Paint)


Table 59: Influence of interaction effects on price-level perception

186
186

Table 60: Influence of interaction effects on price-level perception

187

Table 61: Results SEM (Paint)


Table 62: Overview of results (Experiment 1 & 2)

187
189

Table 63: Example for product shelf labels for product category pasta
Table 64: Sizes of experimental groups

206
207

Table 65: Manipulation check


Table 66: Scale reliability (Experiment 3)

209
211

Table 67: Standard quality criteria (Experiment 3)

211

Table 68: Indicator loadings and cross-loadings (Experiment 3)


Table 69: Squared latent variable correlations and AVEs (Experiment 3)

213
213

Table 70: Means and standard deviations of the individual factor levels
Table 71: Path coefficients SEM (Experiment 3)

215
217

Table 72: Mediation effects: Value-for-money perception


Table 73: Mediation effects: Shopping intentions

218
218

Table 74: Manipulation Check

221

Table 75: Cronbachs alpha for store price image dimensions and shopping
intentions (Experiment 4)

223

Table 76: Standard Quality Criteria Experiment 4


Table 77: Indicator loadings and cross-loadings (Experiment 4)

224
225

Table 78: Squared latent variable correlations and AVEs (Experiment 4)


Table 79: Means and standard deviations of the individual factor levels

226
226

Table 80: Path coefficients SEM (Experiment 3)

228

Table 81: Mediation effects: Value-for-money perception


Table 82: Mediation effects: Shopping intentions

229
230

Table 83: Overview moderating effects


Table 84: Differences in consumer segments

231
232

Table 85: Overview of results (Experiment 3 & 4)

235

List of Abbreviations and Acronyms


AMA

American Marketing Association

ANOVA analysis of variance


art.
AVE

article
average variance extracted

B-2-B
B-2-C

business-to-business
business-to-consumer

EC
EDLP

European Community
everyday low price

EEC

European Economic Community

ERP
EU

external reference price


European Union

e.g.
et al.

exempli gratia (for example)


et alii (and others)

etc.

et cetera (and the rest)

FPackV
i.e.

Fertigpackungsverordnung (Pre-Packaging Order)


id est (that is)

g
IRP

gram(s)
internal reference price

kg
l

kilogram(s)
liter(s)

mean

Mar.
ml

March
milliliter(s)

n.s.
Oct.

not significant
October

PAngV
para.

Preisangabenverordnung (Quotation of Prices Order)


paragraph

PLS

SmartPLS

XVIII

List of Abbreviations and Acronyms

PTPK

pricing tactic persuasion knowledge

SD
sec.

standard deviation
section

SEM
SPSS

structural equation model


IBM SPSS Statistics 22

USA

United States of America

VAT
vs

value-added tax
versus

List of Symbols
a

constant of integration

Cronbachs alpha

path coefficient

UPS

unit price of smaller package size

UPL
I

unit price of larger package size


stimulus

,
K
kit

stimulus change
constant ratio
budget constraint for product (category) i at the time t

price

p
p*

price for product i


reference price for product i

value equivalent of product i

3
price change
PLPi price-level perception for product i
Q
perceived quality level
R
S
w

response
stimulus magnitude
total utility of paying the price p for a product i when the consumers
reference price is p*

1 Introduction
1.1 Motivation
When shopping for pre-packaged products, consumers are offered a variety of
product and price information at the point of purchase. To name only a few, consumers have the opportunity to evaluate product alternatives based on the brand,
the products country of origin, the packaging design, nutrition facts listed on a
packaging, the package size, as well as the product price. Oftentimes consumers
are not able to consider all the information when making a decision for a product, because of time restrictions or cognitive constraints. In order to ease the
product evaluation process for the consumer, the unit price was introduced.
While overall prices indicate the amount of money that buyers must give up to
acquire the specific product or service. (Kukar-Kinney et al., 2012, p. 64), the
unit price specifies what a given product costs per unit of measure, such as per
kilogram, liter, or pound, depending on the geographic region and the physical
condition of the product. Hence, the consumer himself does not have to conduct
mathematical operations to put price and package size into perspective. Thus, the
unit price reduces the information load the consumer faces when making a product decision.
Unit pricing was introduced in the early 1970s, as a consumer protection mechanism, to improve the consumers efficiency in making an informed purchase
decision (Padberg, 1977, p. 5). From shortly before the introduction of unit prices until today, research has dealt with this pricing practice. Here researchers
focused on the questions, whether customers are aware of this additional pricing
information, understand how to use it for price comparison and actually use it for
determining the best-value product. Furthermore, research analyzed if unit pricing lowers the average unit price the customer pays while shopping and if it
hence helps the consumer to make more economical purchase decisions. Previ-

Springer Fachmedien Wiesbaden 2016


L. Himbert, Unit Pricing,
DOI 10.1007/978-3-658-13476-1_1

Introduction

ous research also found differences in unit price awareness, comprehension, and
usage between individual consumer segments.
While in many geographical regions the indication of unit prices is regulated by
the national legislature, retailers have considerable leeway concerning the unit
price format. Aspects that can be varied are the unit of measure (e.g., price per kg
vs price per 100 g), as well as the unit price color or font size. There is little to no
previous research that gives advice to retailers, how they should indicate the unit
price on the price label. This represents a severe gap in research, as it can be
assumed that the unit price layout influences consumer behavior in various ways.
Therefore, the aim of this thesis is to analyze the influence of unit price availability and format on consumer behavior. Within this thesis, the influence of unit
price at two different levels is considered.
First, the influence of unit price format on the product level is assessed. Here the
influence of the unit prices unit of measure on consumers purchase intention for
different products is analyzed. While the unit price color and font size is mostly
consistent within a store, retailers oftentimes vary the unit of measure (e.g., price
per kg vs price per 100 g) even within product categories. Here the influence
different unit price formats have on consumers purchase intention is empirically
assessed.
Second, while the unit price layout is mostly standardized at the individual retailers, the unit price availability, font size, and color differ across retailers. Some
retailers, especially small retailers, do not indicate any unit prices, other retailers
display the unit price in very small font size, and still other retailers place the
unit price in a large font size and very prominently on the price label. Therefore,
the second aim of this thesis is to analyze the influence of the unit price availability and unit price prominence on the consumers attitude towards a retailer.
By addressing these research gaps, this thesis adds not only to the current unit
price research, but also to the behavioral pricing literature, as the unit price has
not been included in research regarding price-level perception, price-quality
relationship, and store price image literature.

Objective and Research Questions

1.2 Objective and Research Questions


As previously outlined, the aim here is to investigate the influence of the unit
price at the product and retailer levels.
At the product level, the influence of unit price format on price-level perception
is analyzed, which subsequently also influences quality perception, whereas both
constructs also influence purchase intention. While regulations stipulate the
presentation of unit prices at the point of purchase, retailers themselves can decide which format to use for unit prices. Format is referred to as the manner in
which product data are structurally organized and presented within an information source (Muller, 1985, p. 144). Formal aspects of the unit price that the
retailer can determine are the size of the unit price information on the price label,
the color of the unit price on the price label, as well as the position of the unit
price on the price label. For example, a retailer can indicate the unit price on the
price label in a larger, smaller or equal font size as the overall price, can present
the unit price in black color and red color, and can position the unit price above,
under, to the left or to the right of the overall price on the price label. When paying attention to unit prices, it becomes obvious that retailers differ in the way
they present unit prices. Furthermore, the unit price format differs between product categories or even between individual products at the same retailer. One
aspect of unit price format the seller can vary is the unit prices unit of measure.
For example, a retailer can indicate the unit price for a solid product as price per
kg or as price per 100 g. Throughout this thesis, the term large unit of measure is
used for units of measure that involve larger numerical values (e.g., price per kg,
price per l) and the term small unit of measure for those that involve smaller
numerical values (e.g., price per 100 g, price per 100 ml). Especially for products
in small package sizes, regulations allow the retailer to choose between a small
unit of measure and a large unit of measure. In Germany, unit prices for products
that are sold in package sizes of maximum 250 g or 250 ml, the retailer is free to
indicate the unit price as price per kg or price per 100 g, or price per l or price per
100 ml, respectively (PAngV para. 2 sentence 3).

Introduction

The retailers choice of unit price measure determines the numerical value of the
unit price. The numerical value of unit price is multiple times higher if a large
unit of measure is used, compared to the choice of a small unit of measure. For
example, if a unit price is presented as price per kg (e.g., 1,30 / kg), the numerical value of the unit price is tenfold the numerical value of the unit price if displayed as price per 100 g (e.g., 0,13 / 100 g). This difference in nominal unit
price value may influence consumer behavior, as individuals tend to concentrate
on the numerical part of quantitative information, while neglecting the framing
(Pelham et al., 1994, p. 111; Tversky/Kahneman, 1981, p. 457). Consumers may
infer a higher price level from the bigger numerical expression, neglecting the
unit prices unit of measure. In this way, a unit price indicated as price per kg
may be perceived as more expensive than the identical unit price presented as
price per 100 g.
The perceived price level of a product cannot be considered an isolated construct, as the price level also influences the consumers quality perception as well
as his purchase intention for the product. To assess a products quality is a central
aspect of consumer decision-making, since finding a product with an acceptable
relation between quality and price is the primary task within this decisionmaking process (Diller, 1977, p. 220). Consumers tend to conclude that
high-priced products are of higher quality than low priced products (Hansen,
2005, p. 431; Teas/Agarwal, 2000, p. 283; Sweeney et al., 1999, p. 92;
Chapman/Wahlers, 1999, p. 58; Chapman, 1993, p. 6; Scitovszky, 1945, p. 100).
Therefore, consumers may also infer a higher product quality when observing a
unit price stated in a larger unit of measure (e.g., 10 / kg) than when observing a
unit price stated in a smaller unit of measure (e.g., 1 / 100 g), based on the assumed higher price-level perception. From a microeconomic point of view, the
price constraints a consumers budget. Therefore, it can be assumed that a larger
unit of measure leads to a decline in purchase intention, as the price-level perception increases with the unit prices unit of measure. On the other hand, it can be
assumed that the purchase intention increases if the unit price is stated in a larger
unit of measure, since the price-level perception has also a positive influence on
quality perception. Hence, the following research questions are addressed:

Objective and Research Questions

Does the unit prices unit of measure influence the consumers


price-level perception?

Does this price-level perception subsequently also influence consumers


quality perception and purchase intention?

These research questions are summarized in Figure 1. In the empirical part of


this thesis, these research questions are addressed with two experiments. While
the first experiment focuses on unpackaged goods, the second experiment focuses on prepackaged goods.
Price-Level Perception

Unit Price
Unit of Measure

Purchase Intention

Quality Perception

Figure 1: Overview research questions (Product level)

By addressing these research questions, this thesis responds to calls for research
to assess the influence of unit of measure on price-level perception (Miyazaki et
al., 2000, p. 96; Monroe/LaPlaca, 1972, p. 19). One previous study analyzed the
influence of usage-based units of measure (e.g., price per serving, price per wash
load) and measure-based units of measure (e.g., price per kg, price per liter) on
the consumers ability to choose the higher value product. Kwortnik et al. (2006,
p. 49) find evidence that usage-based unit prices enable consumers to choose
higher value products, compared to measure-based unit prices, in product categories where different usage rates exist. However, they did not distinguish between
different types of measure-based unit prices. Therefore, answering these research
questions adds to unit price research by considering the influence of the unit
prices unit of measure on price-level perception, quality perception and purchase intention.

Introduction

Besides the influence of unit price format on the product level, also the influence
of unit prices at the retailer level is considered. Previous unit price literature has
mainly addressed the influence of unit pricing at the product level. Only one
study also assessed the influence of unit prices on retailer choice. Lamont et al.
(1972, p. 226) demonstrate that consumers prefer retailers that have lower unit
prices and that consumers are willing to change the retailer because of those.
However, previous research has not considered the influence of unit price availability, or unit price prominence on store price image and the impact of unit price
prominence on retailer choice. It can be expected that the presentation of unit
prices as well as the unit price prominence influence the consumers attitude
towards the retailers. For example, consumers may appreciate the unit price
presentation, because it eases the comparison of product prices of differently
sized product alternatives, which then can lead to a positive attitude towards the
retailer and its pricing policy. The consumers attitude towards the pricing policy
is an important aspect for retailers, as this positive attitude can lead to a higher
likelihood of the consumer choosing a given retailer for shopping (Zielke, 2010,
p. 760). From a retailers perspective, this is an even more important decision
than the customers purchase decision on the product level. Therefore, in this
thesis, the influence of the unit price on different store price image dimensions,
such as price perceptibility, price processibility, price-level perception, value-formoney perception, and (price) evaluation certainty is analyzed.
Here, the influence of unit price availability in general is investigated, as well as
the influence of unit price prominence on store price image.
There are markets in which the unit price is not mandatory, yet. In emerging
markets, such as Russia and India, unit prices are not mandatory and therefore
are not displayed on price labels. Not only in emerging markets unit prices are
missing on price labels, also small retailers in markets where the unit price is
common practice are exempted from the obligation to indicate unit prices. For
these retailers it is important to see, whether the unit price availability has a favorable influence on the store price image and, consequently, also on the consumers intention to shop at a given store. If the answer to this question is yes, it

Objective and Research Questions

is easier for retailers that do not indicate unit prices, yet, to decide on making the
investment to introduce unit prices at their stores.
Although unit pricing is mandatory in many markets, even in markets in which
unit prices have been used for decades, various shortcomings of unit price indication have been observed. Consumerists have observed that unit prices are
missing on numerous price labels in supermarkets, that unit prices utilize the
wrong measuring unit (e.g., price per kg for liquids), that the unit prices are indicated in a confusing way, and erroneous unit prices exist due to calculations
errors (Verbraucherzentrale Brandenburg, 2010, pp. 1017). These consumerists
also claim that for almost 90 % of the price labels, the unit price is indicated in a
too small font size. This indicates that many retailers neglect the presentation of
unit prices and are not aware of potential consequences. Therefore, it is important to analyze the influence of unit price prominence on the consumers
attitude towards a retailer. Except for one paper, the influence of unit price prominence has not been considered in research. Miyazaki et al. (2000, pp. 103, 107)
investigate the influence of unit price prominence on consumer behavior and find
an increase in unit price awareness and unit price usage. Furthermore, they find a
switch to products with lower unit prices if unit prices are presented prominently,
in contrast to a less prominent unit price statement. However, the influence of
unit price prominence on consumers attitude towards a retailers has not gained
any attention in research, yet. The assessment of the influence of unit price
prominence is highly important, since even though unit prices are mandatory for
most retailers, there are only few regulations concerning the unit price format
and retailers do not have any information about the influence of unit price prominence.
Hence, the following research questions in regard to store price image are addressed:
x

Does the presence of unit prices influence a stores price image and
shopping intentions?

Does the prominence of the unit price influence the store price image
and shopping intentions?

Introduction

These research questions are illustrated in Figure 2. In the empirical part of this
thesis, these research questions are again addressed with two experiments. While
the first experiment assesses the general influence of unit price presence and unit
price prominence on store price image, the second experiment provides further
insights into the influence of unit price prominence on store price image and
shopping intentions under considerations of moderating variables. Since it can be
assumed that individual consumer segments react differently to the different
degrees of unit price prominence, several moderating variables and control variables are taken into account. Based on these moderating variables, consumer
segments, for which unit price prominence strongly influences the store price
image, are identified and described based on socio-demographic as well as psychographic characteristics. This leads not only to implications for future research, as well as for retail practice, as it can be highlighted for which consumer
segments it is especially important that retailers present unit prices prominently
on price labels. Analyzing the influence of unit price prominence on store price
image adds to the existing unit price literature as well as store price image literature, as it provides retailers with relevant insights on the influence of unit prices
on consumers attitude towards their store.
Unit Price Availability
Store Price Image

Shopping Intentions

Unit Price Availability/


Unit Price Prominence

Moderating Variables

Figure 2: Overview research questions (Retailer level)

1.3 Structure
This thesis is divided into five chapters. Chapter 1 highlights the motivation for
and the objectives of this thesis, presents the research questions this thesis aims

Structure

to answer and underlines their relevance. Furthermore, the structure of this thesis
is presented.
In Chapter 2, a detailed overview of the current state of unit price research is
given. In order to provide a structured overview, the previous research is categorized according to the conceptual framework for behavioral pricing research by
Homburg/Koschate (2005a, p. 389). For each of this models three phases, an
overview of the relevant constructs is given that have been discussed in research
regarding overall prices and that are also relevant for unit prices. After presenting
this conceptual framework, the unit price literature is categorized according to
this framework and the findings of previous unit price research are presented.
Before empirically addressing the research questions, Chapter 3 provides a literature review of the relevant fields of research that help to understand the potential influence of unit price on consumers attitude towards products as well as on
consumers attitude in regard to retailers. Here, the first field of research addresses the influence of different framings of quantitative information on the consumers perception of quantity. This helps to better understand the potential influence
different unit price formats may have on consumers price-level perception. The
second field of research focusses on the influence of price on the quality perception and factors influencing this relationship. An insight into this research domain helps to understand the potential influence the unit price format may have
on the consumers perception of quality and that a variety of moderating variables for this relationship can exist. The third field of research addresses the concept of store price image, as well as factors influencing the store price image and
the consumers choice of retailer. Furthermore, Chapter 3 introduces theories and
heuristics that are the theoretical foundation for the hypotheses developed in
Chapter 4.
Chapter 4 is divided into two parts. The first part focusses on empirical investigations of the influence of unit price format at the product level, while the second part focusses on the empirical investigation of the influence of unit price
availability and unit price prominence at the retailer level. For both parts, first, a
set of hypotheses is developed based on the theories that were introduced before.
Afterwards, to test both sets of hypotheses, for each part two experiments are

10

Introduction

described and the results are discussed. In the end of Chapter 4, based on the
empirical results, implications for retailers, research, as well as legislation are
derived.
Chapter 5, the last part of this thesis, summarizes the results of the empirical
studies. Furthermore, the limitations of the empirical studies are discussed and
avenues for future research are highlighted. An overview of this thesis structure
is presented in Figure 3.

Structure

11

Chapter 1: Introduction

Chapter 2: Categorization and Review of Unit Price Research


Presentation of Behavioral Pricing Research Framework

Categorization of Unit Price Research according to the Behavioral Pricing Research Framework

Chapter 3: Previous Research and Theoretical Background


Previous Research
Framing of
Quantitative Information

Price-Quality Relationship

Store Price Image

Relevant Theories and Heuristics

Chapter 4: Development and Empirical Testing of Hypotheses


Product Level

Retailer Level

Hypotheses Development

Hypotheses Development

Experiment 1:
Influence on Unpackaged Products

Experiment 3:
Influence of Unit Price on Store Price Image

Experiment 2:
Influence on Prepackaged Products

Experiment 4:
Influence of Unit Price Prominence
on Store Price Image

Chapter 5: Conclusion

Figure 3: Thesis structure

13

Categorization and Review of Unit Price


Research

Unit pricing first became of interest in the late 1960s, after a number of unsuccessful attempts to ease price-based comparisons for consumers by adjusting
packaging legislation (Padberg, 1977, p. 6). The unit price, as the price for a
standard unit of measurement, enables consumers to compare prices of products
sold in different packages and sizes. In this way, the unit price offers transparent
and precise information about retail prices and allows the consumer to judge the
real value for money (Snijders et al., 2004, p. 15) at the point of purchase. The
mandatory indication of pricing information as well as product and nutrition
information can be seen as a program of Societal Sovereignty (Padberg, 1977,
p. 12). Wherever producers or retailers act irresponsible in regard to pricing or
product characteristics, information about this malpractice is available to consumer groups, and producers or retailers can be made accountable for their actions.
Previous research has addressed the unit price and has started to analyze the
impact unit pricing has on consumers, retailers, and manufacturers. In this chapter a comprehensive overview of the current state of unit price research is presented. This chapter is divided into three sections. In the first section, the relevance of unit price research is highlighted by giving a brief overview of the legal
background, and the advantages and disadvantages of the unit prices for customers and retailers. In the second part of this chapter, an overview of the current
behavioral pricing literature is presented that is categorized according to the
framework suggested by Homburg/Koschate (2005a, p. 386). This is important,
as also the unit price research is categorized according to this framework later
on. For each phase of the framework, concepts of behavioral pricing research are
presented and discussed. After the clarification of the framework and the concepts involved, unit price literature is structured according to this conceptual
Springer Fachmedien Wiesbaden 2016
L. Himbert, Unit Pricing,
DOI 10.1007/978-3-658-13476-1_2

14

Categorization and Review of Unit Price Research

framework in the third section of this chapter. In this way a well-structured and
comprehensive overview of the current state of unit price literature is provided.

2.1 Legislation and the Importance of Unit Prices in the


Marketplace
The indication of unit prices is common practice in retail and even mandatory in
many countries worldwide. In the USA, unit pricing laws and regulations exist in
19 states and two territories. In 11 of these regions, it is mandatory for retailers to
provide unit prices (National Institute of Standards and Technology (NIST),
2013). Besides legislation, there are also agreements among retailers to display
unit prices, such as an agreement between the major online retailers Wal-Mart,
Costco, Walgreens and other online retailers (Brody, 2014). Recently, in 2009,
unit pricing also became mandatory in Australia (SKM MMA, 2010, p. 5). Within the European Union, displaying unit prices has been mandatory for decades.
As early as 1979, the first EU-Directive on unit pricing was developed comprising guidelines concerning unit prices for food (79/581/EEC). Adapting several
changes, the Directive 79/581/EEC was replaced by Directive 88/314/EEC in the
late 1980s that, however, led to a complex system for exemptions. In order to
ease and standardize the use of exemptions, the previous directives were replaced
by the Directive 98/6/EC that is effective until today.
The directive 98/6/EC is the basis for todays unit price legislature in the individual member states. This directive was established in order to guarantee a high
level of consumer protection and to improve consumer information as the easiest
way to facilitate price evaluations and price comparisons. In this way, it enables
individuals to make informed product choices based on simple comparisons
(98/6/EC, art. 1(6)). The European Council (98/6/EC, art. 2(b)) defines the unit
price as the final price, including VAT and all other taxes, for one kilogramme,
one litre, one metre, one square metre or one cubic metre of the product or a
different single unit of quality which is widely and customarily used in the
Member State concerned in the marketing of specific products. However, the

Legislation and the Importance of Unit Prices in the Marketplace

15

EC allows exemptions for products that are supplied in the context of a service
provision, auctions, antiques and works of art. Furthermore, it allows Member
States to create exemptions for products for which unit prices are not useful or
would create confusion, as well as for small retailers for which the presentation
of unit prices would constitute an exorbitant financial burden, because of their
limited financial resources and their limited number of personnel (98/6/EC, art.
6). Concerning the formal layout of the unit price the directive does not give any
narrow regulations. It indicates that unit price as well as the selling price has to
be unambiguous, easily identifiable and clearly legible (98/6/EC, art. 4(1)). EU
Member States had to adapt their national law in a way that it meets or exceeds
the requirements of the EC directive until March 2000 and are requested to inflict penalties for infringement of these national laws (98/6/EC, art. 8). In 2004,
legislation implementing 98/6/EC was in force in all 15 Member States (Snijders
et al., 2004, p. 6).
Germany is one example for an EU state that implemented the directive 98/6/EC
in their national law. Here, the adaptation to the directive 98/6/EC has been integrated into the Preisangabenverordnung (PAngV; Quotation of Prices Order).
PAngV para. 2 sentence 1 (as amended on Oct. 18th, 2002) states that anyone
offering goods commercially or frequently to end-consumers, is required to indicate the unit price besides the price per package. The unit price has to include
VAT and other price components and has to be placed in close proximity to the
overall price. This order has to be considered in combination with a second order, the Fertigpackungsverordnung (FPackV; Pre-packaging Order). FPackV sec.
2 para. 7 (as amended on Mar. 8th, 1994) determines that the content of aerosol
containers as well as pre-packaged liquids have to be stated by volume. The
content of all other groceries has to be stated by weight. Here a number of exceptions exist. For example, the package size information for honey, dairy and vinegar essence has to be stated by weight. The unit price has to be stated using the
same unit of measure as determined in the FPAckV for the package size information. PAngV para. 2 sentence 3 (as amended on Oct. 18th, 2002) furthermore
determines that for pre-packaged goods in containers of less than 250 g or less

16

Categorization and Review of Unit Price Research

than 250 ml, the retailer is allowed to state the unit price as price per 100 g and
price per 100 ml, respectively.
The importance of unit pricing in the EU increased further in 2007, when the EU
Directive 2007/45/EC was passed that gives manufacturers more leeway concerning package sizes. This regulation abolishes the regulations 75/106/EEC and
80/232/EEC that specified and regulated the nominal volume and nominal
weight for a variety of products. 75/106/EEC specified in particular the permitted volumes for beverages, such as wines, milk, juices and lemonade
(75/106/EEC, Annex III). The nominal weight for a variety of products, such as
food products sold by weight or volume, pet food, cleaning products, cosmetics
and washing products was regulated in the directive 80/232/EEC (Annex I-III).
Due to these two regulations, the customer was familiar with these package sizes
and did not have to pay attention to unit prices, since different products of these
product types could be compared based on the overall price due to the regulated
package size. When the European Union abolished 75/106/EEC and 80/232/EEC
in 2007, products that used to be regulated before, could now be sold in any
arbitrary amount, thus drastically increasing the importance of unit prices for
price comparisons. In other words, the directive 2007/45/EC thus repeals the
previous directives that determined package sizes, for the reason that free nominal quantities ensure the producers freedom to meet consumers desires and
increases competition (2007/45/EC, (5)). Member States with regulations concerning the nominal quantities for milk, butter, dried pasta and coffee were allowed to continue these regulations until 2012 and for white sugar until 2013
(2007/45/EC, art. 2 (2)). The content of wines in various forms as well as spirit
drinks remain regulated (2007/45/EC, Annex (1)).
Displaying unit prices at the point of purchase has consequences for customers
as well as for retailers. For customers, this additional information is a source of
greater transparency regarding the retailers pricing practices and enables for a
more economical decision-making. If the unit price is available, customers can
compare the prices of differently sized product alternatives without having to
conduct major arithmetic operations. While it has been argued that unit pricing is
solely advantageous to the customer (Diller, 1981, p. 284), there are also possible

Legislation and the Importance of Unit Prices in the Marketplace

17

disadvantages. Adding unit price information to the general product information


can lead to an information overload. It has been shown that over-stimulation
potentially results in impaired information assimilation and consequently to an
impaired information evaluation process (Bialkova et al., 2013, p. 71; Malhotra,
1982, p. 424; Jacoby et al., 1974b, p. 66, 1974a, p. 40). Another disadvantage is
that price labels in supermarkets have only a limited area for information. Adding more information to it can compromise the readability and clarity of the
label. Furthermore, perceived conflicts between the unit price information and
the overall price demand cognitive capacities from the customers. For example,
given Product A has a lower unit price than Product B, while Product A has a
significantly larger package size than Product B. In this case, the overall price of
Product A is higher than the overall price of Product B, but the unit price of
Product A is lower than the unit price of Product B. Here the customer has to
decide whether to make the product decision based on a low unit price (Product
A) or based on a low overall price (Product B). However, based on the majority
of studies that see unit pricing as a positive action of consumerism (Diller, 1981,
p. 284; Granger/Billson, 1972, pp. 247248; Houston, 1972, p. 54), it is evident
that the advantages of unit prices for consumers exceed its disadvantages.
Retailers, on the other hand, have to bear additional effort and investment in
order to install and maintain unit prices (Lamont et al., 1972, p. 231;
McCullough/Padberg, 1971, pp. 89). But also possible advantages of unit pricing for retailers have been discussed. Russo et al. (1975, pp. 101102) consider a
potential increase in sales of the retailers own brands if unit prices are displayed.
This assumption is based on the observation that a clear presentation of unit
prices results in an increase in sales of lower-priced items, such as store brands.
Thus retailers can increase their profits from the sale of their own brands. What
remains unclear is, to what extend the retailer determines the unit price and to
what extend the manufacturer is responsible for the unit price. However, since
the majority of consumers make their purchases at retail stores, the pricing of
consumer products is a two-stage process that involves manufacturers, which
charge retailers a price for the products, and retailers that determine the price
they subsequently charge the end-consumer. Due to the power retailers have in

18

Categorization and Review of Unit Price Research

the channel relationship, pricing primarily is a retailer-controlled activity


(Mulhern/Leone, 1991, p. 64). On the other hand, manufacturers determine the
package size that also influences the unit price. An important aspect is the increased price transparency and the influence this has on customer behavior and
the consumers attitude towards the price. Here attitude is seen as an evaluative
state in regard to a familiar or discriminable stimulus (Jacoby/Olson, 1976, p. 5).
Furthermore, if unit prices are available to consumers and they are paying attention to the unit price, customers become aware of strategies involving variations
of the unit price, such as package downsizing, quantity discounts and quantity
surcharges. If consumers become aware of unit price variations, this can influence their attitude towards retailers as well as towards the products, whose unit
price are varied.
To emphasize the relevance of unit price variations in the market place, the most
common pricing strategies are discussed below.

2.1.1 Package Downsizing


Package downsizing has been defined as the practice of reducing the content of
the package, without reducing the price or altering the size and look of the package (Gupta et al., 2007, p. 240). The former, larger package size is not available
anymore after the package content has been reduced dDNU%DODJWDVS .
The terms product downsizing (Snir/Levy, D., 2011, p. 1), downsizing price
increase (Gourville/Koehler, 2004, p. 2), and downsizing (Gourville/Koehler,
2004, p. 2; Snir/Levy, 2011, p. 1) have been used synonymously to the term
package downsizing in literature. Not adjusting a products overall price, while
decreasing the content of the package, implies an increase of the unit price.
Awareness of the current unit price statement as well as knowledge regarding the
product content or the unit price before the package downsizing are consumer
requirements for noticing this type of price increase, since the package price and
also the products visual appearance remains the same. Some researchers (Gupta
et al., 2007, p. 249) perceive package downsizing as unethical, as it violates the
American Marketing Associations (AMA) Code of Ethics, by acting unfair and
drawing the curtain over price increases.

Legislation and the Importance of Unit Prices in the Marketplace

19

Downsizing is a common pricing practice that appeals to retailers and manufacturers, since customers are considerably more attentive to the overall price of a
product than to the content dDNU%DODJWDVS*RXUYLOOH.RHKOHU
p. 16). Consumers in general neglect the content information for the product and
use alternative content indicators, such as the visual appearance of the package
size, past usage experience, as well as tactile content comparisons (Lennard et
al., 2001, p. 188). Therefore, they tend to neglect the reduced package content
and the unit price increase (Adams et al., 1991, p. 87). Especially high-income
and well-educated consumers, as well as consumers with small households are
less sensitive to changes in package size, while large households are more sensitive to package downsizing dDNU%DODJWDVSS10). There are manifold reasons, why manufacturers and retailers pursue package downsizing as a
method for increasing the unit price. Besides an increase in margin and profitability, product downsizing is also used to maintain a specific price point, since
nominal prices are carefully chosen for strategic reasons. Additional reasons for
downsizing package sizes are an increase in purchase frequency due to smaller
package sizes, the avoidance of raw material cost increases, response to demographic changes (i.e., single-households, smaller families), reaction to lifestyle
changes (i.e., increasing health awareness), and the introduction of changes in
packaging (Adams et al., 1991, pp. 8788). Because of its relevance in the marketplace, downsizing is frequently and internationally discussed in (online)
newspapers and magazines (Jalsovec, 2013; Sueddeutsche.de, 2011a, 2011b;
McDermott, 2003; Song, 2003; Abrams, 1991) as well as in research (Kachersky,
2011; Blatter et al., 2011; Gupta et al., 2007; Gourville/Koehler, 2004; Adams et
al., 1991).
Package downsizing has been observed for a variety of products and brands. For
example, Procter and Gamble reduced the number of diapers per package in
2013 from 37 to 34. This is the fourth reduction of package size for this product
within seven years, while the price has remained nearly the same (Jalsovec,
2013). Another example for multiple package downsizing is Pringles potato
chips. Their package size has been reduced from 200 g to 170 g to 165 g, while
the price remained constant. This implies an increase in unit price by 21.21 %

20

Categorization and Review of Unit Price Research

(Sueddeutsche.de, 2011b). Other examples for product categories where package


downsizing has been observed are laundry detergent (Sueddeutsche.de, 2011a),
hazelnut chocolate spread, cookies, chewing gum, baby food, pre-packaged
cheese, dishwashing detergent, cereals (Sueddeutsche.de, 2011a), fabric softener,
soap (Sueddeutsche.de, 2011b), butter, packaged iced tea (Sueddeutsche.de,
2010), bagged tea (Sueddeutsche.de, 2011a, 2010) and (instant) coffee
(Sueddeutsche.de, 2011a; McDermott, 2003). When asked about the reduction of
package size, producers assign improved product characteristics (Jalsovec, 2013;
Sueddeutsche.de, 2011a) or an increased product concentration (Jalsovec, 2013)
as reasons for product downsizing.
Research analyzed the impact package downsizing has on individuals attitude
towards the product, once they realize the downsizing. Kachersky (2011, p. 484)
differentiates between consumers with a high level of pricing tactic persuasion
knowledge (PTPK) and a low level of PTPK. PTPK describes the level of
knowledge an individual possesses concerning myriad pricing practices that exist
in the market. Kachersky (2011, p. 484) demonstrates that product downsizing
leads to less favorable attitudes towards the brand, compared to nominal price
increases (without changing the package size) for consumers with high degrees
of PTPK. This relationship is moderated by the inferred retailers motive for the
price increase. On the other hand, for consumers with a low level of PTPK, nominal price increases lead to less favorable retailer attitudes compared to package
downsizing (Kachersky, 2011, p. 484). Blatter et al. (2011, p. 6) show that several factors moderate the impact the different types of price increases have on the
consumer. They demonstrate that initial price level and the degree of price increase moderate this relationship. For high-price products and large price increases, nominal price increases lead to a higher reduction of consumers purchase intention than package downsizing. For low-price products and small degrees of price increases the decrease of purchase intention is similar for both
types of price increase.

Legislation and the Importance of Unit Prices in the Marketplace

21

2.1.2 Quantity Discounts


Quantity discounts are a form of second-degree price discrimination (Cohen,
2008, p. 502; Khan/Jain, 2005, p. 516; Gerstner/Hess, 1987, p. 513). A price
discrimination exists, if the supplier offers identical or only marginally different
products at different prices to different consumer segments (Homburg, 2015, p.
717; Scitovszky, 1945, p. 102). In the case of a second degree price discrimination, customers can autonomously choose their segment (Homburg, 2015). A
quantity discount exists if a retailer offers different sizes of an otherwise identical product and the larger packages unit price (UPL ) is lower than the unit price
of the smaller package (UPS ):
UPS > UPL
(1)
Therefore, quantity discounts are examples for second-degree price discrimination, since customers are free to decide, at which unit price to buy a given product.
Because of this volume discount, it is economically more reasonable for customers to purchase the product in bulk if storing costs and product expiration dates
can be neglected. Quantity discounts have been a common practice for decades,
which has led to the majority of consumers assuming quantity discounts when
shopping for a variety of products (Mitchell et al., 2003, p. 177). For example,
Wansink (1996, p. 5) as well as Raghubir/Krishna (1999, p. 321) empirically
demonstrate that consumers use more of a product in a large package than they
use of the same product in a small package, because they belief in a lower unit
price for the large package. A large share of supermarket products are indeed
priced offering volume discounts (Cohen, 2008, p. 502; Gerstner/Hess, 1987, p.
492; McGoldrick/Marks, 1985, p. 53), whereas the magnitude of quantity discounts differs between the individual product categories (Walden, 1988, p. 83).
Quantity discounts encourage consumer to purchase large-size products and
increase customer loyalty (Widrick, 1985, p. 5). Furthermore, incorporating
quantity discount policies oftentimes leads to more effective pricing schemes and
consequently to higher profits for the retailer and manufacturer (Gu/Yang, 2010,
p. 1111). Quantity discounts are offered in B-2-C markets as well as in B-2-B
markets and are available for products as well as for services. Examples for

22

Categorization and Review of Unit Price Research

quantity discounts for services are discounted multi-trip cards for public transportation or larger food servings that cost marginally more than smaller food
servings. Bargain pricing for enlarging food servings are typically offered by fast
food restaurants (e.g., supersizing, foot size portions) and are seen as a cause for
the global obesity epidemic and the resulting health-care problems
(Dobson/Gerstner, 2010, pp. 770, 777). Research has addressed quantity discounts and has suggested models for optimal discount pricing schedules for
manufacturers (Goyal, 1987; Gerstner/Hess, 1987; Lee/Rosenblatt, 1986;
Monahan, 1984). Furthermore, literature addressed reasons for the presence of
quantity discounts in the marketplace. Those are non-linear packaging costs, as
the surface area of a product increases less than its volume if the package size is
increased. Transaction costs and especially marketing cost can be assumed to be
identical for products with a larger volume as for products with a smaller volume. For manufacturers, further benefits of larger package sizes sold are reduced
order processing costs, as larger individual orders lead to fewer orders per year
from the individual consumer. There are also manufacturing cost savings, as
larger orders lead to longer production runs as well as less manufacturing setups. Also shipping costs can decline as the manufacturer can benefit from transportation discounts for fewer larger orders in contrast to a large number of small
orders (Widrick, 1985, p. 5; Monahan, 1984, p. 721). Hence, packaging costs,
transaction costs, marketing cost and other components of producers and sellers
costs decrease on per unit basis as the product content increases, enabling retailers to offer quantity discounts (Moore/Heeler, 1992, pp. 858859). Decreased
unit costs being one reason for offering quality discounts, it has been shown that
quantity discounts are also offered to discriminate consumer segments and are
not always cost-driven (Cohen, 2008, p. 514).

2.1.3 Quantity Surcharges


Another form of second-degree price discrimination in combination with a nonproportional unit price are quantity surcharges. Quantity surcharges occur if a
retailer offers different sizes of an otherwise identical product, and the larger
package carries a higher unit price than the smaller package (Gupta/Rominger,

Legislation and the Importance of Unit Prices in the Marketplace

23

1996, p. 1299; Agrawal et al., 1993, p. 335; Walker/Cude, 1984, p. 123). Hence,
in this case the unit price of the larger product (UPL ) is higher than the unit price
of the smaller product (UP ):
UPS < UPL
(2)
Quantity surcharges are the inverse of quantity discounts (Moore/Heeler, 1992,
p. 857). Here buying small packages is more economical for the customers than
buying large packages if other aspects, such as the expenses for an increased
shopping frequency, can be neglected. Quantity surcharges have also be referred
to as quantity premiums (Gerstner/Hess, 1987, p. 491) and are common practice
in the marketplace (Zotos/Lysonski, 1993, p. 9; McGoldrick/Marks, 1985, p. 59;
Cude/Walker, 1984, p. 291). Retailers can utilize quantity surcharges to discourage the exaggerated consumption of a scarce good (e.g., fuel, water) or to exploit
the consumers belief in large economy-sized products (Widrick, 1985, p. 4). The
vast majority of consumers expects large size products to have the lowest unit
prices (Zotos/Lysonski, 1993, p. 11). This overreliance on quantity discounts
leads to consumers neglecting the existence of quantity surcharges, which then
leads to a social and individual misallocation of resources (Walker/Cude, 1984,
p. 121). Quantity Surcharges have been continuously addressed in research
(Binkley/Bejnarowicz, 2003; Sprott et al., 2003; Manning et al., 1998; Widrick,
1979b, 1979a, 1985; Nason/Della Bitta, 1983). Research foci in this field of
research are in particular the question if there are product categories and retailer
characteristics that have a positive influence on the occurrence of quantity surcharges (Sprott et al., 2003; Zotos/Lysonski, 1993; Cude/Walker, 1984;
Walker/Cude, 1984; Widrick, 1979b, 1979a), the question, if there are factors
that lead to a higher awareness of quantity surcharges among customers
(Manning et al., 2003; Binkley/Bejnarowicz, 2003; Miyazaki et al., 2000;
Agrawal et al., 1993), as well as consequences of quantity surcharges for retailers (Manning et al., 1998).
There is disagreement in literature concerning the question, if quantity surcharges are specific to certain product categories. Palla et al. (2010, pp. 325327)
show that quantity surcharges exist among various product categories by analyzing store price data of 26 supermarkets and 35 product categories. Additionally,

24

Categorization and Review of Unit Price Research

Zotos/Lysonski (1993, p. 9) show that there are product categories (e.g., chocolate bars, toilet paper, napkins) where quantity surcharges are a frequent phenomenon. They also find evidence that quantity surcharges are not only specific
to certain product categories, but also to certain brands (Zotos/Lysonski, 1993, p.
9). Walker/Cude (1984, p. 124) are able to demonstrate that quantity surcharges
occur most frequently for laundry detergents and less frequently for food and
personal care products. On a more general level, Agrawal et al. (1993, pp. 352
353) find that the propensity to purchase a large package and the demand for a
product have a possible influence on the probability of quantity surcharges in a
given product category. Another influencing factor is the number of brand sizes.
The more brand sizes exist, the higher is the likelihood of a quantity surcharge
on a product (Zotos/Lysonski, 1993, p. 11; Walker/Cude, 1984, p. 125). Widrick
(1979b, p. 103) demonstrates that, although it seems counterintuitive, there is a
positive relationship between the display of unit prices and the likelihood of
quantity surcharges at a retailer. However, Walker/Cude (1984, p. 126) are not
able to confirm this relationship, as they do not find a significant relationship
between unit price presentation and the availability of quantity surcharges.
Moore/Heeler (1992, p. 864) ask managers responsible for pricing of supermarket products, what they believe are the most important reasons for quantity surcharges in the marketplace. The most frequently stated reason is the increase of
margins, followed by more expensive packaging and production costs for larger
products, the identification for products as loss leaders, and inventory carrying
costs.
In regard to consumer characteristics that have a positive influence on quantity
surcharge awareness the results are manifold. One aspect that has a positive
influence on quantity surcharge awareness is price search. If the consumer actively searches for prices, the probability of purchasing the larger product (with
the higher unit price) is lower if the amount of the quantity surcharge is above
the consumers willingness-to-pay (Agrawal et al., 1993, p. 352). Another consumer characteristic that leads to a higher awareness of quantity surcharges in the
marketplace is unit price awareness (Manning et al., 2003, p. 374). This finding
seems intuitive, as the awareness of unit prices and the evaluation thereof is a

Legislation and the Importance of Unit Prices in the Marketplace

25

prerequisite for the awareness of quantity surcharges. A retailer characteristic


that has a positive influence on consumers awareness of quantity surcharges is
the unit price prominence (Miyazaki et al., 2000, p. 107). The more prominently
a retailer displays the unit price on the price label, the more likely it is that consumers become aware of quantity surcharges.
As consequences of quantity surcharges for the retailer, Manning et al. (1998, pp.
382, 384) identify a less favorable pricing and brand evaluation by consumers,
compared to quantity discounts, and an increase in purchases of smaller packages. However, they were not able to find evidence for a negative influence on
consumers attitude towards the retailer, based on quantity surcharges. Furthermore, Manning et al. (1998, p. 392) find evidence that the number of purchased
items increases when quantity surcharges are present. This can be seen in combination with the increased purchase of smaller packages.
A relevant question in this context is, who is responsible for quantity surcharges
in the marketplace, retailers or producers. One article stresses that for the majority of quantity surcharges in the marketplace, the different unit prices for different
package sizes is created at the retail level rather than at the producer level
(Moore/Heeler, 1992, p. 864). This is in line with the finding that retailers control the pricing of consumer products (Mulhern/Leone, 1991, p. 64).
In order to take notice of package downsizing, quantity surcharges, or quantity
discounts, as well as to determine the most economical brand and package size,
simple mathematical operations are mostly insufficient. Due to the large variety
of package sizes available and the quotient of a larger and a smaller package
sizes not being integer, complex mathematical operations are necessary to determine the best-value product. To facilitate the price evaluation process for the
customer, unit prices have been introduced. For decades, research has addressed
unit pricing and a variety of research articles focusing on this topic have been
published in the leading marketing and retailing journals. Therefore, the remainder of this chapter gives an overview of the behavioral pricing literature in general and the unit price literature in particular.

26

Categorization and Review of Unit Price Research

2.2 Categorization of Unit Price Literature


In order to present a comprehensive and structured overview of unit price research, the unit price literature is categorized according to an integrative framework for behavioral pricing research. Therefore, in a first step, the price information processing framework by Homburg/Koschate (2005a, p. 386) for categorizing the unit pricing literature is explained. This framework is considered as
well-suited for the aim of categorizing the unit price literature, as it gives a structured overview of the consumers price information processing by dividing the
process in several consequent phases. This framework is based on the in psychology predominant paradigm of cognitive information processing. Information
processing theory is frequently utilized as theoretical basis in pricing research as
well as in consumer behavior research (Brown/Dant, 2009, p. 116). Not only the
framework, but also the concepts that are relevant for the individual phases of
price processing are described. Subsequently, the individual publications of unit
price research are categorized according to the phases of this price processing
framework.

2.2.1 Overview Behavioral Pricing Literature


As described above, the reasoning behind unit pricing is the empowerment of
customers to make more economical purchase decisions (Lamont et al., 1972, p.
223; Monroe/LaPlaca, 1972, pp. 1617). This additional information thereby
influences customers shopping behavior. Therefore, it is of extraordinary interest
to investigate, how customers process unit price information, in order to predict
and understand customers reactions. There has been extensive research on behavioral pricing in the past (Cheng/Monroe, 2013; Homburg/Koschate, 2005a,
2005b). The behavioral pricing research focuses on buyers perception, remembering, processing and usage of price information (Cheng/Monroe, 2013, p. 103).
Whereupon the argument that the price can be seen as a physical stimulus, such
as light and sound, is the fundamental premise of behavioral pricing research
(Cheng/Monroe, 2013, p. 104). Homburg/Koschate (2005a, p. 386) divide consumers processing of price information into three phases: price information

Categorization of Unit Price Literature

27

awareness, price information evaluation and price information storage. Psychological pricing concepts related to the price information awareness phase are
price interest, price search and price mavenism. In the price information evaluation phase, information that has been integrated into the short-term memory is
processed and evaluated. Concepts relevant for this phase are absolute and relative price thresholds, price sensitivity, reference prices, accepted price ranges,
price-level perception, price-value perception, the relation between price and
perceived quality, and the perceived price fairness. The last phase is the price
information storage phase, including learning processes and remembering.
Learning leads to sustainable changes in behavior based on experience and observations. Remembering describes the storage of processed information in the
long-term memory. Price knowledge and price recall are central concepts of this
phase (Homburg/Koschate, 2005a, p. 386). An overview of this conceptual
framework is given in Figure 4.
In the following paragraphs the individual phases of the price informationprocessing framework are discussed and findings of the phases most relevant for
unit pricing are highlighted, in order to subsequently categorize previous unit
price research according to this framework.
Phases of Price Information Processing

Central Concepts

Price Information
Awareness

- Price Interest
- Price Search
- Price Mavenism

Price Information
Evaluation

- Price Thresholds
- Price Sensitivity
- Reference Prices
- Accepted Price Range
- Price-Level Perception
- Price-Value Perception
- Relation between Price
and Perceived Quality
- Perceived Price Fairness

Price Information
Storage

- Price Recall
- Price Knowledge

Figure 4: Integrative framework of behavioral pricing research (based on Homburg/Koschate (2005a, p. 386))

28

2.2.1.1

Categorization and Review of Unit Price Research

Price Information Awareness

The price information awareness phase contains processes that lead to the assimilation of price information to the short-term memory. The short-term memory
comprises all stimuli the consumer is aware of at a given point in time
(Jacoby/Olson, 1976, p. 7). Characteristic for the short-term memory is its limited storage capacity for information and the loss of information if it is not rehearsed (Jacoby/Olson, 1976, p. 8). Price awareness has also been defined as
the ability of buyers to recall prices paid (Monroe, 2003, p. 120). This, however, makes price information awareness not clearly distinguishable from price
knowledge. Concepts included in the price information awareness phase are
price interest, price search, and price mavenism. Price interest describes the
customers need to search for price information, in order to consider it for their
purchase decision. Price search, on the other hand, implies an actual effort invested in obtaining and comparing the prices of competitive stores (Urbany et
al., 1996, p. 92). The term price mavenism is derived from the more general term
market maven that stands for an individual that possesses information about
various different products, retailers and other market related aspects, and enjoys
discussions with other consumers and relishes responding to requests for market
information (Feick/Price, 1987, p. 85). Price mavenism in particular has been
described as the extent to which an individual possesses a considerable amount
of price information of different product and of retailers that offer low prices.
This individual also starts discussions with other consumers about prices and
responds to requests for price information from other consumers (Lichtenstein et
al., 1993, p. 235).

2.2.1.2

Price Information Evaluation

According to the framework of Homburg/Koschate (2005a, p. 386), in the price


information awareness phase, consumers evaluate prices assimilated during the
preceding price information awareness phase. Price evaluation utilizes capacities
of the working memory. The working memory is the part of the cognitive system
that holds the information that is currently in an individuals focus of attention
(Hinson et al., 2003, p. 299; Bettman et al., 1991, p. 54). Constructs of this phase

Categorization of Unit Price Literature

29

that are well-established in literature focusing on overall prices are price thresholds, reference prices, price sensitivity, the accepted price range, price-level
perception, relation between price and perceived quality, price-value perception,
and perceived price fairness. This is in line with a current article of
Cheng/Monroe (2013, p. 103), who consider reference price, differential price
threshold, absolute price threshold and acceptable price range as integral concepts of consumers price-perception formation. In the following paragraphs,
each concept is explained and findings of previous research are presented. Hereby concepts that are especially relevant to unit price research are discussed more
extensively than others.
2.2.1.2.1 Price Thresholds
Price thresholds are price points where the consumers willingness-to-purchase
changes abruptly (Monroe, 2003, p. 116). This change can either be an increase
in demand or a decrease in demand, or a change in price-level perception, depending on the type of price threshold. There are absolute and relative price
thresholds. Beyond absolute price thresholds, consumers do not make a purchase, since if the price is located above the upper price threshold, the price
exceeds the budget allocated to the purchase. For the upper absolute price
threshold also the term reservation price is used (Monroe, 2003, p. 141). Below
the lower price threshold, shoppers do not buy a product, because they assume an
inferior product quality (Mser/Herrmann, 2006, p. 2; Monroe, 1971a, p. B
521). Relative price thresholds, on the other hand, not necessarily impact purchase decisions. They primarily influence price-level perceptions. At the point of
relative price thresholds, price-level perceptions change abruptly (Diller, 2008a,
p. 128). For example, when exceeding a relative price threshold, the price-level
perception can change from a perceived moderate price level to a perceived high
price level without influencing the customers purchase intention. The concept of
relative price thresholds is illustrated in Figure 5. Here the abscissa displays the
price for product i (pi) and the ordinate displays the price-level perception for
product i (PLPi). Relative price thresholds exist at prices p1, p2, p3, p4 and p5.
Here the consumer abruptly assigns the price of the product to another price-

30

Categorization and Review of Unit Price Research

level category (e.g., at p3 the price-level perception changes from high to medium). The broken line illustrates the underlying double bent, continuous function.
The existence of price thresholds for overall prices has been demonstrated in
literature (Sirvanci, 2011, p. 46; Han et al., 2001, p. 446; Kaas/Hay, 1984, p. 341;
Monroe, 1971b, p. 461). However, research also indicates that lower absolute
price thresholds do not exist for all consumers segments. Ofir (2004, p. 616)
shows with a series of experiments, considering twelve frequently purchased
supermarket products, that the price acceptability is not always inversely Ushaped, with the lower and upper absolute price thresholds being the endpoints.
He finds evidence that for specific customer groups, such as consumers with a
low income as well as consumers with a low product involvement, the price
acceptability function is continuously declining with increasing prices.

Categorization of Unit Price Literature

31

PLPi

very
low
low
medium

high

very
high

p1

p2

p3

p4

p5

pi

Figure 5: Relative price thresholds and categorization of price-level perception


(based on Diller (2008a, p. 129))

Closely related to the concept of price thresholds is the concept of the influence
of price endings on consumer price-level perception. Especially just-below prices, which are prices set marginally below a round price, such as 7.99
(Manning/Sprott, 2009, p. 328) have been addressed in previous research. These
prices are also referred to as 99-ending prices (Carver/Padgett, 2012, p. 497) or
nine-ending prices (Thomas/Morwitz, 2005, p. 54). Previous research has assessed the influence of just-below prices on consumer behavior. Manning/Sprott
(2009, p. 330) find that if product price combinations of round prices and justbelow prices are combined in a way that the difference between the leftmost

32

Categorization and Review of Unit Price Research

digits is maximized, the likelihood of the lower-priced alternative being selected


for purchase increases. In contrast, product price combinations that minimize the
difference between leftmost digits increase the likelihood that the higher priced
alternative is selected. Furthermore, in purchase situations wherein consumers
pay attention to prices and want to take advantage of potential savings, justbelow pricing enhances the choice share of the lower-priced alternative, compared to round pricing. This relationship is mediated by the perceived price difference (Manning/Sprott, 2009, pp. 332333).
In addition, research has shown that the consumers responding time to a multidimensional price increases if the price endings are not round compared to the
scenario where the price endings are round. This accounts for different types of
multi-dimensional prices, such as additive multi-dimensional prices (e.g., product price plus shipping costs) and multiplicative multi-dimensional prices (e.g.,
monthly payment and number of payments) (Estelami, 1999, p. 250).
One reason why retailers utilize just-below prices is the left-digit effect. The leftdigit effect refers to the fact that by using just-below prices instead of round
prices (e.g., $ 1.99 instead of $ 2.00), the leftmost digit changes. This change in
the leftmost digit and not the one cent price difference leads to the consumers
perception of a lower price in case of the just-below price, compared to the round
price (Thomas/Morwitz, 2005, p. 55). Thus, price attractiveness is evaluated
based on the leftmost digit and this digit is compared to the leftmost digits of
other prices within the evoked set (Carver/Padgett, 2012, p. 504). Product category familiarity moderates the influence of the left-digit on the price-level perception. Consumers that are familiar with a product category do not evaluate
prices merely on the left digit of the price, but also consider the remaining digits
of the price statement (Carver/Padgett, 2012, p. 507).
However, using just-below prices is not advantageous per se. For example, convenience conscious consumers prefer round prices and perceive them as more
attractive. Hereby convenience consciousness is defined as the extend, to which
an individual focuses on avoiding effort and saving time (Wieseke et al., 2015).
Consequently the purchase intention of this consumer segment increases if prices

Categorization of Unit Price Literature

33

are round, since these prices are more convenient to evaluate (Wieseke et al.,
2015).
2.2.1.2.2 Reference Prices
Reference prices have been extensively discussed in behavioral pricing literature.
They are also referred to as fair prices (Chen et al., 2014, p. 1) or anticipated
prices (Winer, 1986, p. 251). An alternative, but not as comprehensive definition
for the reference price is the description as the consumers perceived current
price of a brand; (Winer, 1986, p. 251). The reference price is a price against
which individuals evaluate the price of a product under consideration
(Rajendran/Tellis, 1994, p. 22). If the price under consideration is lower than the
reference price, consumers perceive it as a gain, whereas if a given price is higher than the reference price, consumers perceive it as a loss and are less likely to
make the purchase (Chen et al., 2014, p. 1). Reference prices are anchoring levels in the context of prices formed by the customer based on the price environment, as for example past prices (Kopalle et al., 1996, p. 61). Several researchers
distinguish between internal reference prices (IRP) and external reference prices
(ERP). IRPs are stored in the consumers memory and can be retrieved for comparisons, whereas ERPs are price cues present at the point or comparison, as for
example prices of other products in the evoked set (Chandrashekaran, 2012, p.
54; Grewal et al., 1998, p. 47; Mazumdar/Papatla, 1995, p. 111; Mayhew/Winer,
1992, p. 62; Biswas/Blair, 1991, p. 2). IRPs are considered as a small range of
prices, rather than one specific price point (Lee, 2013, p. 151; Cheng/Monroe,
2013, p. 112; Monroe, 2003, p. 135). Furthermore they are subjective, consumerspecific, as well as idiosyncratic to products and product categories (Lee, 2013,
pp. 151152; Cheng/Monroe, 2013, p. 108; Monroe, 2003, p. 135). The IRP is
also dynamic. It changes as new prices that serve as anchors are encountered by
the consumer, irrespective whether the encounter takes place during an experiment, through an advertisement or when shopping for a similar product (Lee,
2013, p. 152; Cheng/Monroe, 2013, pp. 108, 112; Chandrashe-karan/Grewal,
2006, p. 1067; Monroe, 2003, p. 135). Additionally, prices that are equidistant
from the IRP, but not in the same direction, are not necessarily perceived as

34

Categorization and Review of Unit Price Research

equally attractive. Prices below the IRP are perceived as less attractive than prices above the IRP, although the distance to the reference price is the same for both
prices (Monroe, 2003, p. 135). Furthermore, Thomas/Menon (2007, p. 404) derive the finding that consumers uncertainty about their IRP lead to higher IRPs.
Hardesty/Suter (2005, p. 133) find evidence that IRPs for online retailers are
lower than IRPs in regard to bricks-and-mortar retailers. Possible explanations
the authors offer are that consumers expect online retailers to have lower overhead costs and are therefore able to offer low prices, as well as the consumers
underestimation of shipping and handling costs. Mazumdar/Sinha (2005, p. 86)
summarize that the strongest determinant of a consumers IRP are prior observed
prices, while prices encountered more recently have a greater effect on the IRP
than more distant ones. They also conclude that the more often consumers have
purchased an item during promotions, the lower is the usage of internal reference
prices when evaluating prices (Mazumdar et al., 2005, p. 91). Prior research also
found that buyers perception of quality, advertised selling price and advertised
reference prices (e.g., prices of competitors products or substitutes) have a positive influence on the internal reference price (Grewal et al., 1998, p. 53).
Lowe/Alpert (2010b, p. 508) demonstrate that the price of a pioneer product
influences the IRP for the pioneer brand as well as for the follower brands. In
contrast, the prices of follower brands merely influence the IRP for follower
brands, not for the pioneer brand. Furthermore, Lowe/Alpert (2010a, pp. 857,
861) find that for new products the IRP shifts in the direction of the pioneers
price. In later time periods, the pioneers price will still be more important for the
IRP level than the followers price.
On the other hand, consumers adapt their price expectations according to ERPs.
Examples for ERPs are prices of other product alternatives or prior prices of the
same product that are displayed on the price label (e.g., was 8.99 , now 7.99 ).
Also unit prices that consumers compare at the point of purchase can be seen as
reference prices. If the ERP is the same as the initial price expectation for the
product under consideration, consumers price expectations do not change. If the
ERP is lower than the initial price expectation, the consumers price expectation
will decrease proportionately. However, if the ERP is higher than the consumers

Categorization of Unit Price Literature

35

initial price expectation, the price expectations increase until a certain point.
Beyond this point the price expectations decrease again (Kopalle/LindseyMullikin, 2003, p. 229).
Besides the existence of reference prices, former literature focuses on the reference price usage level and the question, whether customers use internal or external unit prices. ERPs as well as IRPs are utilized only if the consumer consciously evaluates the current selling price (Cheng/Monroe, 2013, p. 123). Prior research demonstrates that consumers use both, IRPs and ERPs, but they place
different weights to the two types of reference prices (Mazumdar et al., 2005, p.
91; Mazumdar/Papatla, 2000, p. 256). Moon et al. (2006, p. 9) identify
psychographic characteristics of consumers that rely primarily on the IRP. Consumers focusing on the IRP have higher price knowledge and are more price
sensitive. They also tend to monitor prices and plan purchases ahead. Puccinelli
et al. (2009, p. 19) partly confirm this finding and show that consumers using
IRPs tend to be more price sensitive than those relying on ERPs. Chandrashekaran (2012, p. 57) finds that high-involvement consumers prefer to refer to their
own IRP when evaluating prices, while low-involvement customers prefer external price cues, such as market prices. Mazumdar/Paptla (2000, p. 92) show that
consumers using the IRP are more sensitive to gains, while those using ERPs are
more sensitive to losses. Also consumers utilizing IRPs purchase from a smaller
variety of brands than those utilizing ERPs. In regard to products, IRPs are used
more often for expensive product categories, while ERPs are used for categories
with a greater frequency of promotions or categories with longer interpurchase
time (Mazumdar/Papatla, 2000, pp. 255, 257).
Most recent literature, however, states that there are no ERPs, but all reference
prices are dynamic, internal prices that individuals refer to for comparison of
product prices. They argue that all relevant external information has to be
brought into mind in order to make comparisons and evaluations. Therefore,
every reference price would have to be considered as internal (Cheng/Monroe,
2013, p. 108).
Reference prices exist for products as well as for services. Faranda (2011, p.
139), for example, shows that the influence of a market-based reference price on

36

Categorization and Review of Unit Price Research

consumers price perceptions of a service is stronger in a deregulated market than


in a regulated market. However, since the focus of this thesis is on products, the
concept of reference prices in regard to services is not further elaborated.
Besides ERPs and IRPs, literature also addressed irrelevant reference prices.
Nunes/Boatwick (2004) assess the influence of incidental prices on the willingness-to-pay for a specific product. They define incidental prices as price advertised, offered or paid for unrelated products or goods that neither sellers not buyers regard as relevant to the price of an item that they are engaged in selling or
buying (Nunes/Boatwright, 2004, p. 457). In laboratory studies they show that a
high price for a sweatshirt can increase the willingness-to-pay for a CD and vice
versa (Nunes/Boatwright, 2004, p. 460). Reasons for this are anchoring and adjustment effects that occur even if anchors are semantically unrelated to a cue
that is evaluated. Furthermore, Ariely et al. (2003, p. 85) demonstrate an influence of the last digits of the participants social security number on the minimum
accepted payment for experiment participation if the participant recalled this
information shortly before participating in an experiment.
2.2.1.2.3 Further Concepts of the Price Evaluation Phase
Besides price thresholds and reference prices, a third concept of the price evaluation phase is price sensitivity. It describes the degree to which a change in price
leads

to

reaction

(e.g.,

price

perception,

purchase

intention)

(Homburg/Koschate, 2005a, p. 389). In the case that the customer reaction is a


purchase intention, this concept is also referred to as price elasticity. Price elasticity indicates the relative change in demand per relative change in price
(Homburg, 2015, pp. 667668; Peter/Olson, 1987, p. 581).
Another concept of the price information evaluation phase is the acceptable
price range. In general, a latitude of acceptance is defined as the range of stimuli
that are judged as acceptable by an individual or a group of individuals (Sherif,
1963, p. 148). In the context of behavioral pricing research, the acceptable price
range is the area between the lower absolute price threshold and the upper absolute price threshold (Cheng/Monroe, 2013, p. 109; Diller, 2008a, p. 128). A range
has to be seen as being two dimensional, consisting of the width dimension and

Categorization of Unit Price Literature

37

the level dimension. Therefore, an acceptable price is defined by its level and the
latitude of acceptable prices width (Lichtenstein et al., 1988, p. 244). Consumers
will consider a purchase if the price is located within this acceptable price range.
While the consumers allocated budget is exceeded in case a price is above the
upper threshold, consumers mistrust the product quality for prices below the
lower threshold. By means of a survey among runners, Lichtenstein et al. (1988,
p. 250) identified several factors that influence the level and the width of the
acceptable price range for running shoes. While product involvement and a general price-quality believe have a positive influence on the level of the acceptable
price range, price consciousness tends to lower the level of the acceptable price
range. Furthermore, price consciousness has also a negative influence on the
width of the acceptable price range.
Price-level perception has been defined as the perception of prices while neglecting quality differences (Zielke, 2010, p. 750; Diller, 2008a, p. 140). Product
quality is either irrelevant or has already been taken into account when selecting
the consideration set (Diller, 2008a, p. 140). For individual products, the consumer evaluates the price level by comparing a given price with a reference price
(Rajendran/Tellis, 1994, p. 22). The evaluation of prices is especially important
to consumers for commodities that are offered at different stores at different
prices (Meffert et al., 2012, p. 487). The perceived price level of individual
products can then be the basis for the consumers overall price level image of a
store (Zielke, 2010, p. 751).
In contrast to the price-level perception, price-value perception is the outcome of
the comparison of an offers price and quality (Diller, 2008a, p. 139) or more
generally spoken, the trade-off between give components and get components,
where get components are not only the price but might also be physic costs,
psychic costs and temporal costs (Zielke, 2010, p. 751). The terms price-value
perception and value-for-money perception (Zielke, 2010, p. 751) have been
used synonymously. The price-value perception characterizes the acceptance
probability of an offer (Diller, 2008a, p. 148). The get component can be determined by a variety of constructs, for example, quality, utility, attitude, or satisfaction and always has to be considered as subjective (Diller, 2008a, p. 148).

38

Categorization and Review of Unit Price Research

Although price-level perception as well as price-value perception are both influenced by a products price, individual products and retailers can perform very
differently regarding these constructs (Zielke, 2010, p. 751). A product with a
low perceived price level can have a high perceived value-for-money if it offers
a high quality and a high number of product features at this low price.
The relationship between price and perceived quality is a further construct of the
price information evaluation phase. Price has been defined as the sacrifice for
obtaining a product or service (Peter/Olson, 2010, p. 441; Zeithaml, 1988, p. 10).
However, instead of seeing price only as a sacrifice, early literature already
demonstrates that price is used as an external cue for product quality and that a
higher price leads to the consumers assumption of higher quality (Shapiro, 1973,
p. 288; Scitovszky, 1945, p. 100).
Perceived price fairness is the consumers perception that a price is right, just or
legitimate (Campbell, 2007, p. 261). Diller (2008a, pp. 166168, 2008b, pp.
354355) proposes the existence of seven different components of price fairness:
price honesty, price reliability, the right of influence and co-determination, obligingness, respect, consistent behavior and distributive justice. Price honesty addresses the clarity and truth of the price information. Price reliability describes
the adherence to the price presented in the original contract. The consumers
influence and co-determination in a business relationship increase acceptance
especially in asymmetric relationships. Obliging behavior is determined by courtesy in cases of doubt and flexibility in unforeseen situations. Respect as a component of price fairness describes the general attitude towards the business partner when seeking a long-term relationship. Consistent behavior implies interaction processes that always follow the same principles. Distributive justice stands
for a price-performance ratio that is acceptable and customary in the particular
market.
Besides defining price fairness, previous research also analyzes predicting variables for price fairness perception. Martin et al. (2009, p. 591) show that customer
loyalty influences price fairness perception. Loyal customers see minor price
increases as fairer than non-loyal customers. Bolton/Alba (2006, p. 261) find
evidence that the reason behind a price increase is an influencing factor for price

Categorization of Unit Price Literature

39

fairness perception. While customers deem it fair to increase the price of a product or service if the cost associated increases, they perceive it as unfair if the
price increase compensates a non-aligned cost increase. In order to evaluate price
fairness, consumers may evaluate the price based on the obtained value, relative
to other prices, such as those offered by competitors or those paid by other customers, or based on the retailers price setting practice. This implies that a price
can be judged by outcome fairness (i.e., the price a product is offered at) or by
procedural fairness (i.e., the way a price or a price change is set)
(Ferguson/Ellen, 2013, p. 404). In this way, proactively communicating a price
increase (vs not communicating it) and communicating the reason for the price
increase (vs not disclosing the reason for the price increase) results in a more
positively perceived price fairness (Ferguson/Ellen, 2013, p. 407). While for a
smaller price increase perceived price fairness is judged more positively if only
limited information about the price increase is communicated, for larger price
increases price fairness is judged more positively if the detailed information is
disclosed and if the cost increase is related to the product (Ferguson/Ellen, 2013,
p. 408).
These concepts all belong to the price information evaluation phase. The price
information evaluation then can result in a consumer reaction. One example for a
consumer reaction is a purchase decision.

2.2.1.3

Price Information Storage

The third phase in the price processing framework by Homburg/Koschate


(2005a, p. 386) is the price information storage phase with its concepts price
recall and price knowledge. While price information evaluation utilizes capacities of the consumers working memory, price information is transferred to the
consumers long-term memory for storage. Different from an individuals working memory, the long-term memory is seen as infinite and information transferred to the long-term memory is never lost (Trommsdorff/Teichert, 2011, p.
213; Bettman et al., 1991, p. 55; Jacoby/Olson, 1976, p. 7). However, information can be forgotten, which is seen as an individuals inability to retrieve
information from the long-term memory at a certain point in time. The right

40

Categorization and Review of Unit Price Research

retrieval strategies or retrieval cues at the right moment can re-enable an individual to retrieve this information from long-term memory and hence remember
this information (Bettman et al., 1991, p. 55). The long-term memory not only
contains facts but also procedures for applying these facts (Bettman et al., 1991,
p. 54). As price information awareness and price information evaluation, price
information storage and its concepts of price recall and price knowledge refer to
the product and have to be regarded separately from the concept of store price
knowledge that refers to the consumers knowledge of the price level of individual stores (Kukar-Kinney et al., 2012, p. 64)
The terms price recall and price knowledge have been used synonymously in
previous literature (Homburg/Koschate, 2005b, p. 502), and therefore are treated
as synonyms in this thesis as well. There is dissension in literature concerning
the definition of price knowledge. Evanschitzky et al. (2004, p. 391) define price
knowledge as an individuals capability to keep a certain price in mind, even if
the individual has not been confronted with this particular price recently. In contrast, Aalto-Setl/Raijas (2003, p. 181) state that price knowledge also can be
seen as the recall of recently encountered prices. Previous price knowledge studies have operationalized price knowledge in four different ways. First, as the
customers ability to retrieve exact prices of products (Jensen/Grunert, 2014, p.
338; Vanhuele/Drze, 2002, p. 76; Mazumdar/Monroe, 1992, p. 76;
Dickson/Sawyer, 1990, p. 46), second, as a customers ability to recognize prices
of certain products (Jensen/Grunert, 2014, p. 338), third, as a customers ability
to rank alternative products based on their prices (Mazumdar/Monroe, 1990, p.
19), and as customers deal spotting ability (Jensen/Grunert, 2014, p. 338;
Vanhuele/Drze, 2002, p. 76).
Price knowledge has been divided into explicit price knowledge and implicit
price

knowledge.

Explicit

knowledge

is

consciously

remembered

(Homburg/Koschate, 2005b, p. 502). Monroe/Lee (1999, p. 215) state that an


effective explicit-memory performance is expressed by an individuals ability to
recall information that is in the context of an event and its ability to retrieve what
happened there and then. In contrast, implicit knowledge does not include a
conscious recall of the exposure event. Also contrary to explicit price knowledge,

Categorization of Unit Price Literature

41

implicit price knowledge refers rather to a broader concept than to a specific


consumption experience or specific product (Homburg et al., 2012, p. 78). Storing and retrieving implicit price knowledge is a subconscious process that nevertheless influences purchasing behavior (Evanschitzky et al., 2004, p. 398).
Unit price knowledge has been measured at different points. It has been measured before the store visit (Jensen/Grunert, 2014, p. 338; Vanhuele/Drze, 2002,
p. 76), during the shopping situation (Jensen/Grunert, 2014, p. 338;
Wakefield/Inman, 1993, p. 221; Dickson/Sawyer, 1990, p. 46) or after the shopping situation (Jensen/Grunert, 2014, p. 337). Highlighting the different measuring points is important, since these measurements also determine the respective
definition of price knowledge. For example, if asked about product prices during
the shopping situation, customers might retrieve the price information from the
working memory instead of long-term memory.
Research has addressed the general level of price knowledge among consumers
as well as factors influencing price knowledge. Several articles show that price
knowledge of customers in general tends to be low (Evanschitzky et al., 2004, p.
401; Vanhuele/Drze, 2002, p. 76; Dickson/Sawyer, 1990, p. 47). When assessing price knowledge immediately after the item selection, Dickson/Sawyer
(1990, p. 47) find that one fifth of the shoppers were not able to even name a
price estimate. One third of the interviewed customers named an incorrect price
estimate, and merely less than half of the study participants were able to recall
the correct price seconds after selecting the item. In contrast to Dickson/Sawyer
(1990, p. 46), Vanhuele/Drze (2002, p. 76) assess price knowledge ahead of the
shopping situation, so consumers are not able to retrieve prices from short-term
or working memory. The recall of correct prices is even lower in studies of the
latter article, as only one out of ten customers was able to recall the exact price
for products these customers frequently purchase. One third of the consumers
were not able to give a price estimate that was within 20% of the correct price
(Vanhuele/Drze, 2002, p. 77). One reason of the difference in price knowledge
between the studies of Dickson/Sawyer (1990, p. 47) and Vanhuele/Drze (2002,
p. 77) can be assumed to be the retrieval of price knowledge from different
memory types. However, despite the differences in price knowledge, both studies

42

Categorization and Review of Unit Price Research

show that the exact price knowledge of consumers is low. In addition to this
finding, Evanschitzky et al. (2004, p. 401) observe that prices customers estimate
based on their knowledge are generally higher than actual prices.
Consumers price knowledge has not only been assessed for products but also for
services. Some exemplary results are that greater price knowledge exists for nonfinancial services than for financial services and that there is a positive influence
of advertising exposure and the use of the price-quality scheme on price
knowledge (Estelami, 2005, pp. 133134). Since the focus of this thesis is on the
pricing of products, the price knowledge for services is not further discussed.
Besides assessing the general price knowledge of individuals, research has also
assessed possible predictors for consumers price knowledge.
Several articles assess price knowledge and focus on various potential consumerrelated predictors influencing price recall accuracy. One of the considered influencing factors is age. The actual influence of age remains unclear as
Zeithaml/Fuerst (1983, p. 415) find older participants to not recall prices as accurately as younger participants do, while Wakefield/Inman (1993, p. 225) do not
find any influence of age on price knowledge. Not only adults have knowledge
concerning prices, also children possess a certain degree of price knowledge for
products they are familiar with, and are able to recognize price increases and
price decreases (Damay et al., 2014, pp. 170171). Income on the other hand has
a negative influence on price knowledge (Wakefield/Inman, 1993, p. 226). As
possible reason, the authors suggest that financial restrictions of low-income
consumers lead to a higher attention to price. Gender, as a further sociodemographic variable, does not have any effect on price knowledge
(Wakefield/Inman, 1993, p. 226). Also, buying frequency in a product category
does not seem to influence price knowledge (Dickson/Sawyer, 1990, p. 48).
A psychographic aspect that influences price recall accuracy positively is brand
loyalty (Vanhuele/Drze, 2002, p. 79; Le Boutillier et al., 1994, p. 39). Jensen et
al. (2014, p. 341) confirm this finding for the price knowledge level during and
after the store visit, but cannot find an influence of brand loyalty on the price
knowledge before a store visit. Another psychographic influencing factor for
price storage is the individuals familiarity with a given currency. Consumers

Categorization of Unit Price Literature

43

tend to have a better and more accurate knowledge of prices that are stated in a
currency the consumer is not familiar with (Gaston-Breton/Raghubir, 2014, p.
220). A possible reason for this is that consumers may process price information
stated in a foreign currency more thoroughly. The time a consumer spends at the
retailer has no influence on price knowledge (Le Boutillier et al., 1994, p. 39),
while consumer satisfaction, however, influences price knowledge. Individuals
process negative information more thoroughly than positive information and
therefore they are able to recall it more easily (Homburg et al., 2012, p. 78). As a
result, explicit price knowledge is lower in the case of high customer satisfaction
than in the case of low customer satisfaction, since in the latter case the customer
processes the price information more deeply in the post-purchase phase
(Homburg et al., 2012, p. 80). There is no influence of consumer satisfaction on
implicit price knowledge (Homburg et al., 2012, p. 82).
Besides consumer-related factors, product-related aspects influence price
knowledge as well. Aalto-Setl/Raijas (2003, p. 188) find that consumers in
general have a good knowledge of market prices and that variations in retrieved
prices can be explained by price variations in the marketplace. However, they
also find variations in price knowledge across product categories. While consumers tend to be well-informed about prices of strong brands and homogenous
products, such as milk and sugar, price knowledge for heterogeneous products is
lower (Aalto-Setl/Raijas, 2003, pp. 187188). A possible explanation for this
difference in price knowledge is that prices of heterogeneous products in the
marketplace vary more widely than prices for homogeneous products (AaltoSetl/Raijas, 2003, p. 187). Other studies confirm the finding that price
knowledge of strong brands tends to be higher than for weak brands
(Evanschitzky et al., 2004, p. 401). Furthermore, for basic home furnishing
products and home electronics a relative accurate price knowledge exists, while
price knowledge for luxury products is low (Estelami, 1998, p. 259).
Vanhuele/Drze (2002, p. 79) identify the price range within a product category
as a predicting factor for price knowledge. In categories with a wider price range
among products, price knowledge of consumers is lower than in product categories with a smaller price range (Vanhuele/Drze, 2002, p. 79). Jensen/Grunert

44

Categorization and Review of Unit Price Research

(2014, p. 341) confirm this finding for the price knowledge before a store visit.
However, they also find that during the store visit a wide price range has a positive influence on price knowledge, while the price range has no influence on the
post-shopping price knowledge. Price promotions are also considered a predictor
for price knowledge. While earlier research did not find an influence of price
promotions or consumers awareness of special prices (Dickson/Sawyer, 1990,
pp. 4748), more recent research was able to find a positive influence of price
promotions on price knowledge. Vanhuele/Drze (2002, p. 79) demonstrate that
price promotions not only lead to an increase of the knowledge of promoted
prices but also to a better knowledge of normal prices. For product categories
with a high share of promotional prices, the price knowledge of consumers is
especially high during the store visit, but there is no effect of deal share for price
knowledge before and after the store visit (Jensen/Grunert, 2014, p. 341). This
seconds the findings by Le Boutillier et al. (1994, p. 39), who monitor price
knowledge during the shopping situation and find a positive influence of price
promotion on the accurate recall of prices, and the findings of Wakefield/Inman
(1993, p. 224), who find evidence for a higher price knowledge of consumers
that realize the promotional state of a product. Lastly, a product categorys buying frequency has a positive influence on price knowledge (Jensen/Grunert,
2014, p. 341; Le Boutillier et al., 1994, p. 39). The more frequently a product is
purchased, the better is the consumers price knowledge.
A third group of predictors for price knowledge is related to the study design.
Xia (2005, p. 343) demonstrates that consumers that evaluate a given price in a
study, remember this price more accurately than those that were merely asked to
remember that given price without evaluating it. While a simple exposure to
prices, such as remembering a set of prices without further incentive, requires
mere sensory processing, further semantic processing is required when evaluating prices. This semantic processing supports price retrieval accuracy (Xia, 2005,
p. 340). When consumers evaluate prices, price recall accuracy is also higher
than if the consumer merely compares prices (Xia, 2005, p. 342). Also, as mentioned earlier, the point of measurement influences the measured store price
knowledge. The accuracy of recalled prices is highest during and after the store

Categorization of Unit Price Literature

45

visit compared to the recall accuracy before a store visit (Jensen/Grunert, 2014,
pp. 339340). Table 1 offers a summary of these predictors for price knowledge.
As outlined before, the conceptual framework of Homburg/Koschate (2005a, p.
386) divides consumers price processing into three phases: price information
awareness, price information evaluation, and price information storage. For each
phase, relevant concepts were presented. In a next step, unit price literate is categorized according to this model, in order to give a comprehensive of previous
research on how consumers process unit prices.

SocioDemographic
Predictors

Predictor

Positive Effect

Negative Effect

No effect

Age

Zeithaml/Frst
(1983)

Wakefield/Inman
(1993)

Gender

Wakefield/Inman
(1993)

Income

Wakefield/Inman
(1993)

Jensen et al.
(2014)a,
Vanhuele/Drze
(2002)

Jensen et al.
(2014)b,
Le Boutillier
et al. (1994)

Currency
Familiarity

GastonBreton/Raghubir
(2014)

Price Comparison

Le Boutillier et al.
(1994)

Price Consciousness

Jensen et al.
(2014)b, c

Jensen et al.
(2014) a

Price Usage

Wakefiled/Inman
(1993)

Purchase
Frequency

Le Boutillier et al.
(1994)

Dickson/Sawyer
(1990)

Store loyalty

Jensen et al.
(2014)

Time Spent at
Point of
Purchase

Le Boutillier et al.
(1994)

Estelami et al.

l
a
t
e
d

Psychographic Predictors

Brand Loyalty

Brand

46

Categorization and Review of Unit Price Research


Strength
Buying
Frequency

Jensen et al. (2014)

Price Promotions

Price Range
Product
Category
Product
Homogeneity

StudyRelated
Predictors

(2004),
-

Jensen et al.
(2014)b,
Le Boutillier et al.
(1994), Wakefield/
Inman (1993)

Jensen et al.
(2014)a,c,
Dickson/S awyer
(1990)

Jensen et al.
(2014)b

Vanhuele/Drze
(2002),
Jensen et al. (2014)a

Jensen et al.
(2014)c

Estelami et al.
(2004)d

Estelami et al.
(2004)e

Aalto-Setl/Raijas
(2003)

Measurement Point

Jensen et al.
(2014)b, c

Depth of
Price Processing

Xia (2005)

before store visit


during store visit
c
after store visit
d
for home furnishing products and home electronics
e
for luxury goods
b

Table 1: Overview of influencing factors on price knowledge

2.2.2 Classification of Unit Price Literature


29 publications were identified that either focus on unit pricing or their empirical
analysis includes an aspect of unit pricing, such as unit price awareness, unit
price comprehension or unit price usage, as a dependent or independent variable.
English as well as German literature is included into this literature review. Since
the main focus here is on consumer behavior regarding unit prices in everyday
shopping situations, the identified publications focus on the B-to-C interaction
and the retailing context. Of these 29 publications, 27 articles have been published in 16 different journals: Advances in Consumer Research, British Journal
of Management, European Journal of Marketing, Journal of Applied Psychology,

Categorization of Unit Price Literature

47

Journal of Business Research, Journal of Consumer Affairs, Journal of Consumer


Policy, Journal of Consumer Psychology, Journal of Consumer Research, Journal
of Consumer Studies and Home Economics, Journal of Marketing, Journal of
Marketing Research, Journal of Product & Brand Management, Journal of Retailing, Mississippi Valley Journal of Business and Economics, and Search Agriculture. The remaining two publications are a book chapter (Diller, 1981) and a
report (Price, 1978).
The framework of Homburg/Koschate (2005a, p. 386) suggests that behavioral
pricing literature can be categorized according to three different phases of price
processing. These phases are price information awareness, price information
evaluation, and price information storage. In order to derive a structured overview for the unit price literature, which can be seen as a sub-section of behavioral pricing research, previous research in this specific field is also categorized
according to this structural framework. When applied to unit prices, the three
phases of unit price processing are unit price awareness (UPA), unit price evaluation (UPE) and unit price storage (UPS).
Fehler! Verweisquelle konnte nicht gefunden werden. gives a brief overview
of the phases of unit price information processing that have been addressed by
the respective authors. To give a more detailed overview, the unit price evaluation phase is again divided into unit price comprehension (C), unit price usage
(U) and consumer reaction (R). This table shows that each phase has been addressed in behavioral pricing literature. Customer reaction to unit prices has
drawn exceptional attention of research. Most articles address this aspect by
analyzing the influence of unit pricing on customers purchase decisions. In contrast, unit price information knowledge has only been in the focus of one paper
(Zeithaml, 1982).
A variety of research designs is applied within this field of research. Except for
three literature reviews (Diller, 1981; Carman, 1972; Monroe/LaPlaca, 1972), the
vast majority of studies either employ a causal design (CD, 14 studies) and/or a
descriptive design (DD, 13 studies). The empirical studies consider different

48

Categorization and Review of Unit Price Research

consumer groups as participants in their studies. They address customers at the


supermarket (Boya, 1987), approach consumers in trains (Manning et al., 2003),
at airport terminals (Miyazaki et al., 2000), or via telephone (Lamont et al.,
1972). Students have been chosen as participants in particular for laboratory
experiments (Yan et al., 2014; Kwortnik et al., 2006). When including products
into the research, groceries are a frequently chosen product category, besides
detergents, as well as health and beauty products. Most studies were conducted
in the USA. However, some empirical studies were conducted in Europe and one
study in Hong Kong.
In the following paragraphs, the individual phases of unit price processing, unit
price awareness, unit price evaluation and unit price storage as discussed in detail, and findings of articles addressing these phases are highlighted.

Categorization of Unit Price Literature

Author

Yan et al.
(2014)

Mndez
Garca
de
Paredes
et al.
(2013)

CD

49

DD

Participants

Products

UPA

Students
(n=44,
n=41,
n=123,
n=203,
n=91)

Snacks,
Health &
Beauty
Products

Consumers
(n=679)
Consumer
Panel
(n=186)

UPE

UPS

Country

Hong
Kong

Spain

USA

Detergents,
Health &
Beauty
Products,
Housewares

Detergents,
Cereals

Kwortnik
et al.
(2006)

Students
(n=216)
Consumer
Panel
(n=402)

Mitchell
et al.
(2003)

Consumers (n
> 1,000)

UK

Train
passengers
(n=623)

USA

Train
passengers
(n=684)
Consumers at
airport
(n=66)

Groceries

UK

Manning
et al.
(2003)

Miyazaki
et al.
(2000)

50

Categorization and Review of Unit Price Research

Walden (1988)

Groceries,
Health &
Beauty
Products,
Stationery,
Detergents

Boya (1987)

Shoppers
(n=375)

Groceries,
Detergents

USA

McGoldrick/Marks
(1985)

Shoppers
(n=493)

Groceries

UK

Shoppers
(n=843)

Groceries,
Detergents,
Health &
Beauty
Products

USA

Female
heads of
households
(n=?)

Groceries,
Detergents,
Health &
Beauty
Products,
Housewares

USA

Shoppers
(n=1,119)

Housewares,
Detergents,
Groceries,
Coffee,
Health &
Beauty
products

USA

Groceries

USA

Groceries,
Detergents

USA

Aaker/Ford (1983)

Zeithaml (1982)

McElroy/Aaker
(1979)

Price (1978)

Primary
household
food
shoppers
(n=1,417)

Russo (1977)

USA

Categorization of Unit Price Literature

51

Russo et al.
(1975)

Detergents,
Pet food,
Housewares

USA

Anderson
(1974)

Groceries

UK

Kilbourne
(1974)

Housewives
(n=200)

Groceries

USA

LaPlaca (1974)

Housewives
(n=151)

Groceries

USA

Mathews et al.
(1974)

Female shoppers (n=260)

USA

Gatewood/Perloff
(1973)

Volunteers
(n=75)

Nonperishable
items

USA

Isakson/Maurizi
(1973)

Detergents,
Groceries

USA

USA

Lamont et al.
(1972)

Consumers
(telephone)
(n=2,330)
Product manufacturers
(n=177)

Houston (1972)

Housewives
(n=53)

Groceries,
Housewares,
Detergents

USA

Granger/Billson
(1972)

Housewives
(n=200)

Detergents,
Nonalcoholic
beverages

USA

52

Categorization and Review of Unit Price Research

McCullough/Padberg
(1971)

Shoppers
(n=2,396)

Groceries,
Detergents,
Housewares,
Health &
Beauty
Products

Block et al. (1971)

Groceries

CD: Causal Research Design


UPA: Unit Price Awareness Phase
C: Unit Price Comprehension
'HVLJQXQWLOL]HG
3KDVHDGGUHVVHG

USA

USA

DD: Descriptive Research


Design
UPE: Unit Price Evaluation
Phase
U: Unit Price Usage
'HVLJQQRWXWLOL]HG
3KDVHQRWDGGUHVVHG

UPS: Unit Price Storage


Phase
C: Consumer Reaction

Table 2: Literature overview

2.2.2.1

Unit Price Awareness

Price information awareness refers to the process of consumers assimilation of


price information for a subsequent evaluation. If applied to unit price information,
this phase is characterized by a conscious assimilation of unit price information
and the consumers awareness that this specific information can be found at the
point of purchase.
Of the 29 relevant unit price research papers that were identified, nine articles
address the unit price awareness phase (Manning et al., 2003, p. 371; Miyazaki et
al., 2000, p. 103; Boya, 1987, p. 284; McGoldrick/Marks, 1985, p. 57;
Aaker/Ford, 1983, p. 119; McElroy/Aaker, 1979, p. 48; Price, 1978, p. 4; Lamont
et al., 1972, p. 225; McCullough/Padberg, 1971, p. 17). Table 3 provides a detailed overview of literature addressing unit price awareness. Several articles
investigate the percentage of customers, who are aware of unit price information
at the point of purchase. Percentages of unit price awareness vary between
51.5 % (McGoldrick/Marks, 1985, p. 57) and 91.7 % (Boya, 1987, p. 283). Boya
(1987, p. 283) holds his research method of personal interviews partly accountable for this high percentage of awareness.

Categorization of Unit Price Literature

53

All studies addressing unit price awareness utilize a subjective measurement in a


sense, that study participants answer questions concerning their own unit price
awareness. This bears the weakness that answers can be biased by unit price
unaware consumers stating that they have noticed unit price information in supermarkets (type I error). In this way results can be inflated to higher awareness
levels,

however, this

weakness has not been considered as severe

(McCullough/Padberg, 1971, p. 16).


Except for the two most recent studies, unit price awareness was measured dichotomously (i.e., yes/no). Participants were asked, if they remember seeing
labels that display unit prices either on a general level (Price, 1978, p. 4), or they
were shown actual price labels from a specific supermarket and were asked if
they recall seeing these labels (McCullough/Padberg, 1971, p. 16). More recent
studies that measure unit price awareness use 5-point scales (Manning et al.,
2003, p. 371; Miyazaki et al., 2000, p. 102), which enables the researchers to not
only calculate awareness levels as a percentage, but also to measure the degree of
awareness. Table 3 summarizes the operationalization of unit price awareness
within the individual studies and the measured degree of unit price awareness.
Several factors that influence consumers unit price awareness have been identified. These factors can be divided into demographic, psychographic and retailerrelated factors.
Several demographic factors have been considered as potential predictors for unit
price awareness. For example, one study assesses the influence of gender on unit
price awareness but did not find a significant effect (Boya, 1987, p. 287). Consensus exists in the literature that there is a negative influence of age on unit
price awareness (Boya, 1987, p. 285; McGoldrick/Marks, 1985, p. 57; Price,
1978, p. 3; McCullough/Padberg, 1971, p. 17). McGoldrick/Marks (1985, p. 57)
show that especially the group of consumers under 35 remembers seeing price
per pound signs and can recognize actual shelf edge labels displaying the unit
price. Consumers older than 55 years have significant lower unit price awareness
percentages for both measures. This finding seconds the results of Price (1978, p.
3) that reveal a significant higher percentage of the 35 to 44 years old group of
shoppers that remembers seeing unit price labels in the supermarket compared to

54

Categorization and Review of Unit Price Research

senior citizens. In an earlier study, McCullough/Padberg (1971, p. 17) also


demonstrate that respondents younger than 39 years are significantly more unit
price aware than consumers older than 60 years of age.
Author(s)

Operationalization

Percentage
Awareness

Manning et al.
(2003)

Recall of seeing labels displaying unit prices


(5-point scale, definitely sure, store displays unit
prices definitely sure store does not show unit
prices)

Miyazaki et al.
(2000)

Recall of seeing labels displaying unit prices


(5-point scale, definitely sure, store displays unit
prices definitely sure store does not show unit
prices)

Boya (1987)

Recognition of actual price labels


Dichotomous measurement (Yes/No)

91.7 % (n = 375)

McGoldrick/Marks
(1985)

Recall of seeing price per pound signs


Dichotomous measurement (Yes/No)
51.5 % (n = 493)
Recognition of actual price labels.
Dichotomous measurement (Yes/No)

Aaker/Ford (1983)

Recall of seeing unit price labels


Dichotomous measurement (Yes/No)

73.5 %-90.4 %
(n=362/481)

McElroy/Aaker
(1979)

Recall of seeing unit price labels


Dichotomous measurement (Yes/No)

73.2 %
(n = 1,119)

Price (1978)

Recall of seeing unit price labels


Dichotomous measurement (Yes/No)

72 % (n = 1,417)

Lamont et al. (1972)

67.9 %
(n = 2,330)

McCullough/Padber
g (1971)

Recall of unit price labels


Dichotomous measurement (Yes/No)

65.5 %
(n = 1,584)

Table 3: Unit price awareness: Literature overview

Three articles examine the influence of education on unit price awareness (Price,
1978, p. 3; Lamont et al., 1972, p. 225; McCullough/Padberg, 1971, p. 17). All
three articles conclude that there is a significant positive influence of education
on unit price awareness. Price (1978, p. 3) reveals significant differences in unit

Categorization of Unit Price Literature

55

price awareness between college graduates and those who did not complete high
school. McCullough/Padberg (1971, p. 17) show that respondents holding a
college degree are more aware of unit prices than respondents of lower education. The same articles that analyze education as an influencing factor on unit
price awareness also assess the impact of income on unit price awareness (Price,
1978, p. 3; McCullough/Padberg, 1971, p. 17). Education and income are oftentimes correlated, as education can lead to a higher income level. Price (1978, p.
3) finds evidence for a positive relationship between income and unit price
awareness, since individuals of households with more than $ 15,000 income per
year show a significant higher awareness than those with less than $ 10,000 annual income. This replicates the findings by McCullough/Padberg (1971, p. 17)
that also show a positive relationship between income and unit price awareness.
These findings are counterintuitive in a sense that unit prices were introduced to
facilitate price-value comparisons that are even more relevant for low-income
customer segments. However, results presented above indicate that, in fact, unit
price awareness increases with income level, which contradicts the intention
behind unit pricing.
Early studies investigate the relationship between the exposure to unit prices and
unit price awareness (McGoldrick/Marks, 1985, p. 57; McCullough/Padberg,
1971, p. 17). McGoldrick/Marks (1985, p. 57) find evidence that a significantly
higher percentage of those consumers that are responsible for their household
shopping and therefore shop more frequently are aware of price per pound signs
and are able to recall shelf edge labels that display unit prices.
McCollough/Padberg (1971, p. 17) show that the more frequently shoppers have
visited stores that display unit prices, the higher is the percentage of shoppers
that are able to recall seeing price labels displaying unit prices. These results
indicate that a frequent exposure to unit prices influences unit price awareness
positively.
Price (1978, p. 3) demonstrates that household size influences unit price awareness positively. Her results show that members of households that include three
or more members are significantly more often aware of unit prices than customers shopping for smaller households. Lamont et al. (1972, p. 225) are able to

56

Categorization and Review of Unit Price Research

show that the occupation of the household head influences unit price awareness.
The unit price awareness is especially high if the household head is employed as
a professional or manager. In contrast, McGoldrick/Marks (1985, p. 57) consider
the occupation of the household head as potential influencing factors, however,
results of their studies do not reveal a significant influence on unit price awareness. In an earlier study, Price (1978, p. 3) is also able to show that there are
regional differences in the percentages of shoppers being aware of unit prices.
She demonstrates that more consumers in the North-Eastern region of the United
States are aware of unit prices than consumers of other regions within the USA.
As a possible reason, Price (1978, p. 3) suggests, that while conducting her research, eight of the nine states where unit pricing was mandatory are located in
North-Eastern part of the USA.
Besides demographic factors, research also shows that several psychographic
factors serve as predictors for unit price awareness. Manning et al. (2003, p. 374)
analyze the influence of unit price comprehension on unit price awareness. They
find that the procedural unit price knowledge (Manning et al., 2003, p. 368),
which is the consumers knowledge about the use of unit prices when making
purchase decisions, has a significant positive influence on unit price awareness at
the point of purchase. Unit price usage knowledge here is measured using an
open-ended measure (Manning et al., 2003, p. 371), asking the participant to list
all the ways a person can possibly use unit price information. Miyazaki et al.
(2000, p. 103) assess the relationship between price consciousness and unit price
awareness. They are able to find evidence that price consciousness has a direct
positive influence on unit price awareness, as well as it moderates the influence
of unit price prominence on unit price awareness. The positive relationship between unit price prominence and unit price awareness is even stronger among
price conscious shoppers. McGoldrick/Marks (1985, pp. 5758) show that consumers that choose store brands instead of national brands are more likely to be
aware of unit prices. This result is controversial, as one can argue that the relationship points in the inverse direction and customers more aware of unit prices
purchase store brands more frequently. The authors argue that this is not the case,
since the popularity of store brands has been longer established than unit pricing

Categorization of Unit Price Literature

57

exists in the market place and that store brands are not always the best-priced
alternative. Moreover, customers buying store brands are a specific customer
group very loyal to a store and its brand, and hence more likely to adapt innovations introduced by the store, such as unit pricing (McGoldrick/Marks, 1985, p.
58).
Besides demographic and psychographic consumer-related predictors, also retailer-related predictors for unit price awareness have been investigated. Miyazaki et al. (2000, p. 103) provide evidence that unit price prominence, that is
retailer-specific, has a positive influence on unit price awareness. The authors
manipulate the unit price in a way that the more prominent unit price (in contrast
to the less prominent unit price) is placed in close proximity to the item price, a
greater amount of white space is allocated around the unit price, the words unit
price are included on the price label, and the font size used is 25 % of the item
prices font size (11.8 % for the non-prominent unit price) (Miyazaki et al., 2000,
p. 100). Results show that when unit prices are displayed more prominently, unit
price awareness increases significantly (Miyazaki et al., 2000, p. 103). An overview of these factors as well as findings of previous studies related to these factors are presented in Table 4.

58
Predictor

Categorization and Review of Unit Price Research


Positive Effect

Negative Effect

No Effect

Gender

Boya (1987)

Age

Boya (1987), McGoldrick/Marks (1985),


Price (1978),
McCullough/Padberg (1
971)

Price (1978), Lamont et


al. (1972),
McCullough/Padberg (19
71)

Price (1978), Lamont


(1972),
McCullough/Padberg
(1971)

Price (1978)

Lamont (1972)

McGoldrick /Marks
(1985)

Community
Size

Price (1978)

Region
(North-East
of USA)

Price (1978)

Exposure to
Unit Prices

McGoldrick/Marks
(1985),
McCullough/Padberg
(1971)

Price Consciousness

Miyazaki et al. (2000)

Frequent
Store Brand
Choice

McGoldrick/Marks
(1985)

Unit Price
Comprehension

Manning et al. (2003)

Unit Price
Prominence

Miyazaki et al. (2000)

Education

Income

Household
Size
Occupation
of Household
Head

Table 4: Unit price awareness: Predictors

Categorization of Unit Price Literature

2.2.2.2

59

Unit Price Evaluation

According to the framework of Homburg/Koschate (2005a, p. 386), subsequent


to the price information awareness phase, consumers evaluate prices they encountered in the first phase. Constructs of this phase are price thresholds, reference prices, price sensitivity, accepted price range, price-level perception, relation between price and perceived quality, price-value perception and perceived
price fairness. These concepts have not been applied to unit pricing in the past.
Unit price literature that can be assigned to the price evaluation phase rather
focuses on unit price comprehension and unit price usage at the point of purchase. The result of this phase is a customer reaction, such as a purchase decision. In order to give a more detailed overview of unit price research focusing on
unit price evaluation, this phase is divided into unit price comprehension, unit
price usage, and consumer reaction.
2.2.2.2.1 Unit Price Comprehension
In order to use the unit price for price evaluations, the shopper has to first understand how unit prices can be helpful when comparing different product alternatives. Several articles address unit price comprehension, which is defined as the
customers understanding of how unit prices can be used to determine the bestvalue product.
Five articles address the consumers knowledge of how unit prices can be used
(Manning et al., 2003, p. 371; Boya, 1987, p. 283; Aaker/Ford, 1983, p. 120;
McElroy/Aaker, 1979, p. 49; McCullough/Padberg, 1971, p. 18). As a method of
measurement, in four of these articles consumers are asked an open-ended question about how unit prices can be used (Manning et al., 2003, p. 371; Boya,
1987, p. 283; Aaker/Ford, 1983, p. 120; McElroy/Aaker, 1979, p. 49). Furthermore, McCullough/Padberg (1971, p. 18) present three statements to participants, of which only one statement is true about unit price usage, and the participants have to identify the correct statement. By not asking customers directly
about their unit price comprehensions, but interpreting the answers to the open
questions, this measurement is more objective than the subjective measurement
of unit price awareness. Although the interpretation is still to some extent de-

60

Categorization and Review of Unit Price Research

pendent on the interviewer or the person coding the answers, the results can be
assumed to be more reliable and conservative (Aaker/Ford, 1983, p. 120;
McElroy/Aaker, 1979, p. 49).
Unit price comprehension ranges from 36.7 % to 73.6 % (Aaker/Ford, 1983, p.
119) for the entire sample and from 50.0 % (Aaker/Ford, 1983, p. 119) to 97.5 %
(McElroy/Aaker, 1979, p. 48) for the subsample of those consumers aware of
unit pricing. An overview of the operationalization and unit price comprehension
levels is given in Table 5. Several demographic and psychographic factors have
been identified to influence unit price understanding. It seems intuitive that education influences unit price comprehension. Manning et al. (2003, p. 374) confirm this hypothesis by demonstrating that education has a significant positive
influence on unit price usage knowledge.
Author(s)

Operationalization

Percentage Comprehension

Manning et al.
(2003)

Listing different ways to use unit prices


Open ended question

n.a.
(n=309)

Boya (1987)

Listing different ways to use unit prices


Open ended question

55.5 % (n=375)
(59.3 % of those aware)

Aaker/Ford (1983)

Listing different ways to use unit prices


Open ended question

36.7 %-73.6 % (n=266/435)


(50.0 %-81.4 % of those
aware)

McElroy/Aaker
(1979)

Listing different ways to use unit prices


Open ended question

71.4 % (n=1,119)
(97.5 % of those aware)

McCullough/Padberg
(1971)

3 options of unit price usage to choose


from
(1 of them correct)

48.5 % (n=1,584)
(74.0 % of those aware)

Table 5: Unit price comprehension: Literature overview

Boya (1987, p. 285) derives the same result and also confirms the positive influence of education on unit price comprehension. While only 40% of participants
that have an education level of some high school or less know how unit prices
can be used, 64 % of those with 13 to 16 years of education understand the concept of unit pricing (Boya, 1987, p. 286). These results confirm
McCullough/Padbergs (1971, p. 18) findings that only 47.7 % of those that
merely completed elementary school understand unit price labels, while 82.7 %

Categorization of Unit Price Literature

61

of college graduates comprehend unit pricing. This difference is significant and


supports the assumption of a positive relationship between education and unit
price knowledge.
Since education and income oftentimes are correlated, it is not surprising that
also a positive relationship between income and unit price knowledge has been
observed. Boya (1987, pp. 285286) finds evidence that unit price usage
knowledge declines as family income decreases. Earlier, McCullough/Padberg
(1971, p. 285) derive the result that of those with annual family incomes of
$ 4,000 or less 62.6 % understand unit price labels, compared to 81.1 % of those
with an annual income of over $ 16,000. This difference is also significant.
Again, these findings to some extent contradict the idea behind unit pricing,
since it was introduced in order to ease the identification of best-value products,
which is most important to consumers of lower income levels. Furthermore, the
prior exposure to unit prices influences unit price comprehension. Manning et al.
(2003, p. 374) demonstrate that the years of residency in the USA have a positive
influence on unit price usage knowledge. The reasoning for testing this relationship is that unit pricing has already been very common in the USA at the time the
study was conducted. The authors propose that in other countries unit pricing is
less common and that therefore immigrants are not as familiar with unit prices
and have lower unit price comprehension (Manning et al., 2003, pp. 368369).
However, other measures of exposure to unit price, such as the percentage of
household shopping the subject is responsible for (Manning et al., 2003, p. 374)
and shopping frequency (McCullough/Padberg, 1971, p. 18), do not seem to
influence procedural unit price knowledge.
A last factor Manning et al. (2003, p. 374) address is price consciousness. Price
consciousness, which is defined as the consumers sensitivity concerning price
differentials (Monroe et al., 1986, p. 594), is found to have a significant positive
influence on unit price comprehension. The authors expect price conscious customers to be more motivated to use unit pricing information and therefore are
more knowledgeable about unit price usage (Manning et al., 2003, p. 370). An
overview of the influencing factors is given in Table 6.

62

Categorization and Review of Unit Price Research

Predictor

Positive Effect

Negative
Effect

No Effect

Boya
(1987)

McCullough/Padberg
(1971)

Manning et al. (2003), Boya


(1987), McCullough/Padberg
(1971)

Gender

Boya (1987)

Income

Boya (1987),
McCullough/Padberg (1971)

Manning et al. (2003)

Manning et al. (2003)

Price Consciousness

Manning et al. (2003),

Shopping Frequency
(Exposure to unit
prices)

McCullough/Padberg
(1971)

Years of Residency in
the US (Exposure to
Unit Prices)

Manning et al. (2003)

Age
Education

Percentage of Household Shopping (Exposure to Unit Prices)

Table 6: Unit price comprehension: Predictors

2.2.2.2.2 Unit Price Usage


After highlighting which consumer segments know how to use unit price information, in a next step, an overview of the literature analyzing which consumer
groups de facto use unit price information at the point of purchase and what
influencing factors exist, is presented.
Eleven articles analyze unit price usage (Mitchell et al., 2003, p. 177; Manning et
al., 2003, p. 374; Miyazaki et al., 2000, p. 104; Boya, 1987, pp. 284285;
McGoldrick/Marks, 1985, p. 57; Aaker/Ford, 1983; McElroy/Aaker, 1979, p. 54;
Price, 1978, pp. 56; Mathews et al., 1974, p. 25; Lamont et al., 1972, p. 225;
McCullough/Padberg, 1971, p. 19). Table 7 provides an overview of the results
of these studies, the operationalization of unit price usage, and the derived percentage usage rate. Unit price usage is mostly operationalized as the consideration of unit price information at the point of purchase. The measurement applied
to unit price usage is similar to the subjective measurement used for unit price

Categorization of Unit Price Literature

63

awareness. This self-reported data of the own consideration and usage of unit
prices can be biased, because of forgetting, participants confusion or the trend
towards exaggerating behavior, in order to enhance self-image (Aaker/Ford,
1983, p. 121; Russo, 1977, p. 193).
Author(s)

Operationalization

Percentage Usage

Manning et al. (2003)

Consideration of unit price information


(1 item), 7-point Likert scale

Mitchell et al. (2003)

Consideration of unit price information


(3 item), 3-point scale

51.4 % (n>1,000)

Miyazaki et al. (2000)

Consideration of unit price information


(2 items), 7-point Likert scale

Boya (1987)

64.8 % (n=375)
(68.3 % of those aware)

McGoldrick/Marks
(1985)

34.1 % (n=493)

Aaker/Ford (1983)

33.1 % - 59.9 %
(n=362/481)
(45.1 %-66.2 % of those
aware)

McElroy/Aaker (1979)

Consideration of unit price information

60.7 % (n=1,119)
(85.0 % of those aware)

Price (1978)

84 % of those aware

Mathews et al. (1974)

Unit price usage frequency

Lamont et al. (1972)

53.3 % (n=816)
(65.1 % of those aware)

McCullough/Padberg
(1971)

Consideration of unit price information


Dichotomous (yes/no)

64.2 % of those understanding (n=769)

Table 7: Unit price usage: Literature overview

The unit price usage rate was found to be between 34.1 % (McGoldrick/Marks,
1985, p. 57) and 64.8 % (Boya, 1987, p. 284). Unit price usage among those that
are aware of unit prices is generally higher (Boya, 1987, p. 284; Aaker/Ford,
1983, p. 119; McElroy/Aaker, 1979, p. 48; Lamont et al., 1972, p. 225).
Again, influencing factors are identified that are similar to those for unit price
awareness and unit price comprehension and are again categorized into demo-

64

Categorization and Review of Unit Price Research

graphic, psychographic and retailer-related influencing factors (for an overview


see Table 8). One of the considered demographic factors is gender. Mitchell et al.
(2003, p. 178) find evidence, that more male participants frequently use unit
prices when shopping than female study participants. In contrast, Boyas (1987,
p. 287) results do not reveal any significant impact of gender on unit price usage.
Two articles (Boya, 1987, p. 285; Lamont et al., 1972, p. 225) find evidence that
age influences unit price usage negatively. In contrast, Mitchell et al. (2003, p.
178) find a positive influence of age on unit price usage. Price (1978, p. 5) and
McCullough/Padberg (1971, p. 19) reveal a non-linear effect of age on unit price
usage.
Several household-related factors are identified as influencing factors. One factor
is household size. On the one hand, the positive influence of household size leads
to higher unit price usage for households of five or more members (Price, 1978,
pp. 56) or three or more members (Lamont et al., 1972, p. 225), respectively.
McCullough/Padberg (1971, p. 19), on the other hand, do not find a significant
impact of household size on unit price usage. The second influencing factor
related to household characteristics is the age of children in the household.
McCullough/Padberg (1971, p. 19) show that a higher percentage of families
with small children uses unit price information than families without any children or with older children. Consumers that do a higher percentage of their
household shopping at stores that display unit prices are found more often to use
unit price information than individuals that shop less frequently at stores displaying unit prices (McGoldrick/Marks, 1985, p. 57). Another household-related
influencing factor is the occupation of the household head. Lamont et al. (1972,
p. 225) find that if a shopper is part of a family where the household head is a
professional or manager, the probability that he uses unit price information for
price evaluation is higher than for other occupations of the household head.
However, McGoldrick/Marks (1985, p. 57) are not able to replicate this effect.
Two papers show a positive influence of education on unit price usage. Shoppers
with some college education are significantly more likely to consult unit price
information than those with a lower level of education (Mitchell et al., 2003, p.

Categorization of Unit Price Literature

65

178; Price, 1978, pp. 56). However, McCullough/Padberg (1971, p. 19) did not
observe such an effect.
Beside these demographic factors also psychographic variables were tested for
influence on unit price usage. In general, among consumers that understand how
unit prices can be used, a greater percentage actually uses unit prices (Manning
et al., 2003, p. 374), which seems intuitive. Shoppers that frequently choose store
bands, tend to have a higher likelihood to use unit price information than those
that rarely or never choose store brands (McGoldrick/Marks, 1985, p. 57). The
critical question, in which direction this causal relationship points, has been
addressed by the authors by highlighting that store brands have been introduced
earlier than unit pricing, as well as store brands are not always the best-value
alternative. Brand loyalty influences unit price usage negatively
(McElroy/Aaker, 1979, p. 54), since loyal consumers only compare prices of
different product sizes, if at all, and not prices of different brands. Mathews et al.
(1974, p. 25) find evidence that the consumers perceived unit price importance
influences unit price usage in a positive way.
Not only factors that are consumer-specific influence unit price usage, also retailer-related influencing factors have been identified. Miyazaki et al. (2000, p.
104) discover that unit price prominence, which is determined by the retailer, has
a positive influence on unit price usage for consumers that show a low level of
price consciousness. The number of unique brand-size choices at a store influences the unit price usage positively, while the number of package sizes and the
number of different brands displayed do not yield any significant effect
(McElroy/Aaker, 1979, p. 54). Another influencing factor is the price dispersion
within a product category. Price dispersion is calculated as the difference between highest and lowest unit price divided by the average unit price. The lower
this price dispersion, the higher is the unit price usage rate (McElroy/Aaker,
1979, p. 54). This seems sensible, since if the price dispersion is high, price differences become obvious, which reduces the necessity of unit price comparison.
Table 8 gives an overview of the predictors for unit price usage.
Predictor

Positive Effect

Neg.
Effect

Non-Linear
Effect

No Effect

66

Categorization and Review of Unit Price Research

Mitchell et al.
(2003)

Boya
(1987),
Lamont et
al. (1972),

Price (1978),
McCullough/
Padberg
(1971)

McGoldrick/Marks
(1985)

Children
Age

McCullough/
Padberg
(1971)

Community
Size

Price (1978)

Education

Mitchell et al.
(2003),
Price (1978)

--

McCullough/Padber
g (1971)

Gender

Mitchell et al.
(2003)a

Boya (1978)

Geographic
Region

Price (1978)

Household
Size

Price (1978),
Lamont et al.
(1972)

McCullough/Padber
g (1971)

gr
a
p
hi

Demographic Factors

Age

Income

Boya (1987)

Mitchell et al.
(2003),
Price (1978),
Lamont et al. (1972),
McCullough/Padber
g (1971)

Occupation
Level of
Household
Head

Lamont et al.
(1972)

McGoldrick/Marks
(1985)

Percentage
of Shopping
at Store
displaying
Unit Prices

McGoldrick/Marks
(1985)

Shopping
Frequency

Lamont et al. (1972)

Value of
weekly food
purchase

Lamont et al. (1972)

Brand
Loyalty

McElroy/
Aaker

Categorization of Unit Price Literature

67
(1979)

Store Brand
Choice

McGoldrick/
Marks (1985)

Lamont et al. (1972)

Unit Price
Comprehension

Manning et al.
(2003)

Unit Price
Importance

Mathews et al.
(1974)

Number of
Brand-Size
Combinations at the
Store

McElroy/Aaker
(1979)

Price
Dispersion
at the Store

McElroy/
Aaker
(1979)

Unit Price
Prominence

Miyazaki et al.
(2000)

Retailer-Related
Factors

Store
Loyalty

for male consumers

Table 8: Unit price usage: Predictors

2.2.2.2.3 Consumer Reaction


While it was highlighted above that a considerable percentage of consumers uses
unit prices, or at least states that this information is considered, the result of the
unit price evaluation phase, the consumer reaction to the display of unit prices,
remains unclear. Therefore, in a next step, articles are identified that address the
change in product choice that is caused by unit price presentation.
In contrast to the assessment of unit price awareness and unit price usage, the
actual switch in product choice is measured objectively in most studies
(Kwortnik et al., 2006, p. 46; Miyazaki et al., 2000, p. 100). This objectivity is
achieved by the observation of participants in the scope of laboratory experiments (Kwortnik et al., 2006, p. 46) or field experiments (Houston, 1972, p. 51)
or, alternatively, comparing sales volumes for products in different price information scenarios (Russo et al., 1975, p. 13).

68

Categorization and Review of Unit Price Research

Unit price information is manipulated in different ways among these studies. The
majority of studies compares a scenario where the unit price and the overall price
are displayed with a scenario, in which only the item price is stated (Kilbourne,
1974, p. 454; LaPlaca, 1974, p. 12). Three studies analyze whether consumers
buy products with lower unit prices if unit prices are stated as a structured list,
compared to the presentation of unit prices on individual shelf labels (Zeithaml,
1982, p. 359; Russo, 1977, p. 194; Russo et al., 1975, p. 13). One recent study
(Kwortnik et al., 2006, p. 49) assesses differences in the product choice behavior
between the display of usage-based unit prices (e.g., price per serving) and
measure-based unit prices (e.g., price per pound). They find evidence that the
provision of usage-based unit prices enables customers to choose products with a
higher price-value ratio in product categories where different usage rates exist, as
it is the case for detergent or instant coffee powder. Another study assesses the
influence of unit price prominence and finds that unit price prominence on the
price label has a positive influence on the selection of better value products,
while it has a negative influence on the selection of products that are priced with
unit price surcharges (Miyazaki et al., 2000, p. 107). Table 9 gives a comprehensive overview of the 16 identified articles addressing the consumers reaction to
unit prices.

Author(s)

Dimension
of main
product
switch

Switch
to
cheaper
products

Mndez
Garca de
Paredes
et al.
(2013)

Kwortnik
et al.
(2006)

Miyazaki et al.

Design /
Dependent Variable

Unit price
manipulation
-

Product size

Laboratory experiment (Observation) /


Product choice

Laboratory experiment (Observation) /


Product choice

Usage-based
unit price /
Measurebased unit
price

Field experiment (survey) /

Prominent /

Categorization of Unit Price Literature


(2000)
Boya (1987)

Zeithaml (1982)

Russo (1977)

Russo et al. (1975)

Anderson (1974)

LaPlaca (1974)

Kilbourne (1974)

Gatewood/Perloff
(1973)

Product Choice

Not prominent

Survey / n/a

Available /
Not available

Laboratory experiment (Observation) /


Price paid per unit;
Average price paid per unit

Shelf labels /
Shelf labels +
structured list of
unit prices

Brand,
Product Size

Field experiment (Observation) /


Mean price paid per unit
purchased

No unit price /
Shelf tags /
Shelf tags + structured list

Field experiment (Observation) /


Percentage change market
share

Shelf tags /
Structured list

Field experiment (Observation) /


Sales volume

Available /
Not available

Laboratory experiment (Questionnaire) /


Purchase choice intention

Available /
Not available

Laboratory experiment (Observation) /


Customer expenditure

Available /
Not available
Available /
Not available

Laboratory experiment (Observation) /


Product selection;
Number of correctly identifying the product with lowest
unit price;
Minutes spent making product
choice

Secondary data analysis


(Observation) /
Sales volume

Available /
Not available

Brand,
Store, Product Size

Survey (Questionnaire) /
Self-reported switching
behavior

Available /
Not available

Brand

Isakson/Maurizi
(1973)

Lamont et al.
(1972)

69

70

Categorization and Review of Unit Price Research

Houston (1972)

Field experiment (Observation) /


Frequency of choosing the minimum unit
price item;
Monetary difference between actual choice
and minimum unit price item.

Available /
Not available

Laboratory experiment (Observation) /


Product selection

Available /
Not available

Secondary data analysis (Observation) /


Sales volume

Available /
Not available

Field experiment (Observation) /


Sales volume

Available /
Not available

Granger/Billson (1972)

McCullough/Padberg
(1971)

Block et al. (1971)

6ZLWFKWRFKHDSHUSURGXFWDOWHUQDWLYHZDVREVHUYHG
6ZLWFKWRFKHDSHUSURGXFWDOWHUQDWLYHZDVQRWREVHUYHG

Table 9: Consumer reaction: Literature overview

Of the 16 relevant articles, only three articles did not record a switch in product
choice when unit prices are present. Kilbourne (1974, p. 454) does not find any
evidence for a product switching behavior when conducting a laboratory experiment that manipulates unit price availability and measures the respective customer expenditure. All participants of this study are low-income customers, the
customer group profiting most from possible savings. However, as highlighted in
the previous sections, this customer group is less aware of unit prices and lacks
unit price comprehension compared to other income groups. Therefore, Kilbournes (1974, p. 454) findings are not surprising. In line with this study,
McCullough/Padberg (1971, p. 13) do not find any influence of unit price information on product selection. They also test for a possible moderating effect of
education on the influence of unit pricing on product choice and are also not able
to find significant differences in sales. However, they compare sales of different
stores. In this way more than one factor is different between the experimental
groups. Therefore, the sales volumes can be influenced by numerous different
variables not controlled for. In contrast to McCullough/Padberg (1971, p. 11),
Block et al. (1971, p. 38) manipulate the price display at the same store, which
controls for more influencing factors. They also find that displaying unit prices

Categorization of Unit Price Literature

71

does not elicit a change in consumer purchase behavior in favor of the least costly item within the product category. They did not find a moderating influence of
income level (Block et al., 1971, p. 43).
The majority of articles, however, find that unit pricing initiates a switch in customers product selection towards products with lower unit prices. Research in
this field not only analyzes whether a general change in product choice exists,
but also in which dimensions of product choice the switch occurs. The two dimensions considered are product size and brand.
There are several reasons why a customer would switch between package sizes
instead of brands that are listed by Boya (1987, p. 289). First, in general, it is
easier for shoppers to compare different package sizes than different brands,
since different sizes of the same product are oftentimes located on the shelf in
close proximity to each other. In contrast, different brands can be located at entirely different locations in the isle, so that comparisons are hard to make. Secondly, brand loyalty is an important reason for preferring a switch in size over a
switch in brand, since customers that prefer one specific brand still can chose the
same brand if they switch to another product size. Another reason for switching
product size instead of brand is the customers preference for specific product
characteristics such as nutrition or ingredients. Therefore, consumers change to
other product sizes in the experimental setting, since changing the brand can
imply that the product characteristics change. Lastly, when collecting selfreported data, participants do not want to admit that they would change to another brand solely because of price and therefore change to another product size.
Since quantity discounts are predominant in the market place
(McGoldrick/Marks, 1985, p. 53), the more economical decision for the customer is to switch to a larger size in most cases, if customers can afford the overall
price of the larger package size. Granger/Billson (1972, p. 241) show, analyzing
the data from their laboratory experiment, that unit pricing as an extra information leads to a reduction of the number of consumers choosing the smaller
sizes as well as to a doubling of the number of participants choosing the larger
product alternative. Russo (1977, p. 199) confirms this finding. In his field experiment, changes to a larger size occurred when shelf labels displaying unit

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prices are provided. Mndez Garca de Paredes et al. (2013, p. 415) show that
more consumers change the product size than change the brand in their experiment, where customers had to decide between various real offers with or without
unit prices provided.
However, various studies demonstrate that it is not possible to make a general
statement concerning the consumer reaction to the unit price. As unit price
awareness, unit price comprehension and unit price usage, the consumers reaction to a unit price depends on a variety of demographic, psychographic, product-related, as well as retailer-related influencing factors. Lamont et al. (1972, p.
226) identify several factors that influence the customers change in product
choice in favor of a different product size. One of these factors is age. Age influences a change in this dimension negatively: the older a customer, the less likely
he will change to another product size. Lamont et al. (1972, p. 226) find evidence that, as for product size, age influences the switch to another brand negatively. It is rather the younger customers that switch brands because of unit prices. A second demographic variable that has been investigated is income. LaPlaca
(1974, p. 13) shows that customers purchase intentions depend on unit price
information, but are moderated by income. Income weakens the influence of unit
price availability on the purchase of lower priced product alternatives. In contrast, Isakson/Maurizi (1973, p. 283) find evidence that a switch to products with
lower unit prices occurs, however, the unit prices paid decrease significantly only
for the middle- and high-income shoppers, not for the low-income shoppers.
Lamont et al. (1972, p. 226) identify two household-related factors that influence
the customers change in product choice in favor of a different product size or
brand. There is a weak significance that the number of household members has a
positive influence on product size change, as well as the average value of weekly
food purchase. If the household head is a manager or a professional, the customer is also more likely to change to a different product size. Regarding the product
switch to a different brand, again the number of household members as well as
the household heads occupation as a manager or professional have a positive
influence (Lamont et al., 1972, p. 226).

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73

Besides demographic variables also psychographic variables moderate the influence of the unit price statement on product choice. Lamont et al. (1972, p. 226)
find evidence that store loyalty weakens the influence of the unit price availability on product choice in favor of brands and product sizes with lower unit prices.
Continuous shopping at the same store leads to an ingraining of certain buying
habits as well as to an increased reluctance to use unit prices to change buying
habits. LaPlaca (1974, p. 13) shows that customers purchase intentions depend
on unit price information, but are moderated by brand importance. Brand importance has a negative influence on the occurrence of a change in product
choice. If a products brand is important to the consumer, unit prices do not lead
to a product switch.
Besides consumer-related moderators, also product-related factors impact the
relationship between unit price availability and product choice. One of these
moderators is product category. Russo (1977, p. 197) shows that displaying unit
price information on shelf tags leads to an increased purchase of less expensive
brands or product sizes. He showed that this occurs in various product categories, even though only statistically significant for three product categories out of
six, apple juice, laundry detergent, and syrup. Boya (1987, p. 290) suggests that
also brand differentiation influences brand change negatively. In a product category where brands are highly differentiated and especially when prices are within a narrow range, unit price is less likely to influence brand choice.
Furthermore, a retailer-related influencing factor was identified. This factor is
unit price dispersion at the store. The higher the unit price differences at a store
are, the less likely is a switch in product choice (LaPlaca, 1974, p. 15).
For products that are offered with different dosages across the product category,
retailers oftentimes use usage-based unit prices instead of measure-based unit
prices. This is necessary, for example, for washing detergents as the addition of
filler materials leads to the necessity of a higher dosage for these detergents. This
underlines the high utility value of usage-based unit prices. Usage-based unit
prices also act as moderators and strengthen the influence of unit prices on the
choice of products with lower unit prices (Kwortnik et al., 2006, p. 49).

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Miyazaki et al. (2000, p. 107) manipulate unit price prominence and find evidence that unit price prominence strengthens the effect of the unit price on the
choice of better-value products and reduces the purchase of quantity-surcharged
items. Russo (1977, p. 198) records a considerable increase in store brand choice
in his field experiment for the scenario that presents unit prices on a structured
list, in comparison to the unit price presentation on individual shelf labels or to
the scenario where no unit prices are displayed. Articles that compare the availability of unit prices on shelf labels with the display of a single structured list,
which contains all unit prices of a product category, prove that consumers tend to
rather switch products in favor of items with lower unit prices in the case of the
structured list (Zeithaml, 1982, p. 365; Russo et al., 1975, p. 15).
A detailed overview of the moderating factors for the relationship between unit
price presentation and the choice of more economical product alternatives is
given in Table 10.
Moderator

Positive Effect

Negative Effect

No
Effect

Age

Lamont et al.
(1972)

Income

Isakson/Maurizi (1973)

LaPlaca (1974)

Household Size

Lamont et al. (1972)

Occupation Level of Household


Head

Lamont et al. (1972)

Store Loyalty

Lamont et al.
(1972)

Brand Importance

LaPlaca (1974)

Product Differentiation

Anderson (1975)

Price Dispersion at the Store

LaPlaca (1974)

Usage-Based Unit Price

Kwortnik et al. (2006)

Unit Price Prominence

Miyazaki et al. (2000)

Structured List of Unit Prices

Russo (1977), Russo et al.


(1975)

Table 10: Consumer reaction: Moderators

Categorization of Unit Price Literature

75

Besides the frequency of customers choosing products with lowest unit prices,
literature also addresses further consumer reactions to unit pricing. Gatewood/Perloff (1973, p. 83) demonstrate a higher accuracy in choosing the most
economical package within a product group when unit prices are present. They
also conducted a chronometric analysis by measuring the time required to make
a purchase decision. The results of this analysis show that consumers need less
time, in order to choose the most economical item if the unit price is presented.
In a same way, Houston (1972, p. 53) shows with a field experiment that the
frequency of choosing an item that does not correspond to the minimum unit
price item, as well as the monetary difference between the actual choice and the
minimum unit price item, decreases.
As briefly mentioned above, unit pricing also has an impact on the purchase of
products that are priced with quantity surcharges. Miyazaki et al. (2000, p. 107)
as well as Granger and Billson (1972, p. 242) show that products involving quantity surcharges are chosen less frequently, if unit prices are present.
Besides the different dimensions of product switching behavior due to the provision of unit price information, Lamont et al. (1972, p. 226) address switching
behavior on a higher level: the choice of retailer. They analyze self-reported data
from participants and find that some participants are willing to change the retailer because of lower unit prices. They also address moderators influencing this
relationship. A factor influencing shopping intentions is, again, the number of
household members, however, now in a negative way. Single households or
households of two persons indicate they would change the retailer because of
lower unit prices. Members of households where the household head is a manager or professional are also more likely to do their shopping at a different store if
it offers lower unit prices.
In contrast to unit price literature, behavioral pricing literature in general offers a
wide range of concepts that explain how consumers evaluate prices, such as the
concept of reference prices, price thresholds, price sensitivity etc. Existing unit
price research largely neglects these concepts. One exception is the article by
Mndez Garca de Paredes et al. (2013, p. 420), who address the concept of reference prices. They analyze the influence the usage of unit prices has on refer-

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ence price formation and find an influence of the unit price on reference price
formation in categories with a great variety of different brands and product sizes.
Because of the influence of unit prices, reference prices in these categories tend
to be lower than in categories where unit prices are not considered. However,
Mndez Garca de Paredes et al. (2013, p. 420) analyze the influence the unit
price has on the general reference price and do not treat the unit price itself as a
possible reference price. Another recent article addresses the concept of pricequality relationship in regard to unit prices. In a laboratory experiment, Yan et al.
(2014, p. 7) show that participants rate the quality of products in a smaller package size as higher than the quality of products in a larger package size. This effect is fully mediated by the assumed unit price. Even if unit price information is
not provided on the price label, participants expect the smaller package to have a
higher unit price and accordingly rate the product quality as higher. In contrast,
for the case that the unit price is explicitly provided and held constant among
product sizes, package size has no influence on quality perception (Yan et al.,
2014, p. 9). Consumers rely more on unit price than on overall price in their
quality perception, even if it is not explicitly stated. However, if their cognitive
resources are constrained and unit price is not explicitly stated, the overall price
has a greater influence on product quality perception than unit price (Yan et al.,
2014, p. 11).

2.2.2.3

Unit Price Storage

While there has been extensive research on price knowledge for item prices, only
one study has addressed the recall of unit prices. In a laboratory experiment,
Zeithaml (1982, p. 361) is able to show that neither a structured list of unit prices, as opposed to shelf tags or item marking, nor legibility of shelf tags does
improve the accuracy of unit price recall. However, a structured list of unit prices
leads to a higher certainty associated with consumers recall of unit prices
(Zeithaml, 1982, p. 364).
This chapter shows that there is a high level of unit price awareness, unit price
comprehension and unit price usage among consumers. Research also shows that
a large share of consumers uses unit prices at the market place and purchases

Categorization of Unit Price Literature

77

product alternatives with lower unit prices if unit prices are explicitly stated.
However, consumer behavior in regard to unit prices cannot be generalized.
Several consumer-related, product-specific and retailer-specific factors influence
consumers unit price awareness, unit price comprehension, unit price usage as
well as the consumers reaction to unit prices. Only little research exists in regard
to unit price knowledge, the influence of unit price format, and consumers reactions to the unit price besides reactions at the product level. This underlines the
relevance of the research questions, this thesis aims to answer.

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Background

After presenting and categorizing the previous unit price literature in general,
this chapter focuses specifically on the theoretical foundation of the hypotheses
that are developed and tested in the next chapter. As previously outlined, this
thesis addresses two sets of research questions. The first set of research questions
is related to the influence of unit price format on the attitude towards products,
while the second set of research questions addresses the influence of unit price
availability and unit price prominence on the attitude towards retailers. In order
to underline the relevance of these research questions, as well as to better understand the influence of the unit price on the judgment of products and retailers, an
overview of previous findings in relevant fields of research is given. As the first
research question addresses the influence of unit price format on price-level
perception, an overview of previous research on the influence of framing on the
perception of quantitative information is presented, as the unit price format can
be seen as the framing of unit price information. The second research question
addresses the influence of unit price format on quality perception and purchase
intention. Therefore, also findings of previous literature that investigates the
general influence of price on quality is highlighted highlight. As the second set
of research questions (i.e., research questions 3 and 4) addresses the influence of
unit prices on store price image, an overview of previous research on store price
image is provided. Finally, after giving an overview of these fields of research,
theories and consumer heuristics are presented that are utilized in Chapter 4 to
develop the individual sets of hypothesis.

Springer Fachmedien Wiesbaden 2016


L. Himbert, Unit Pricing,
DOI 10.1007/978-3-658-13476-1_3

80

3.1

Previous Research and Theoretical Background

Previous Research in Relevant Fields of Research

3.1.1 Framing of Quantitative Information


When making a purchase decision, consumers are faced with a vast number of
product alternatives, each involving numerous product attributes. Information
about product attributes is distributed from various sources such as advertisement, packaging, retailers, as well as friends and family. Furthermore, the consumer needs to make trade-off decisions between product performance and price
(Bettman et al., 1991, p. 50). As a consequence, the consumer is confronted with
a sometimes overwhelming amount of information that has to be evaluated, in
order to make a substantiated purchase decision. But not only the amount of
information increases the difficulty of consumers decision-making, also the way
this information is presented can impede its processibility and, thus, adds complexity. Due to consumers bounded rationality that is caused by cognitive restrictions (Simon, 1955, p. 101) as well as time constraints, consumers cannot
always make rational purchase decisions. Therefore, consumers apply heuristics
instead of a systematic processing strategy, especially when their involvement in
the purchase situation is low (Chaiken, 1980, p. 762). This allows to handle high
amounts of information as economically as possible. However, if consumers use
heuristics to estimate quantity, the framing of this information oftentimes is neglected, which can lead to quantity estimations that do not correspond to the real
quantity. In the following paragraphs, previous research results are highlighted
that underline the influence of framing on perceptions of quantity.
Literature has addressed the consumers processing of numerical information and
resulting inferences in various ways. For example, research has shown that the
way numeric information is graphically presented influences consumers perception of quantity. In fact, risk is perceived differently depending on the framing
that is utilized to present this information. Stone et al. (2003, p. 26) demonstrate
that the graphical framing of risk information influences the perceived risk. The
authors focus on diagrams, which display information of the probability of unfortunate events, and find that risk information given as pie charts increases an
individuals perception of risk compared to the condition where risk information

Previous Research in Relevant Fields of Research

81

is given as a number of asterisks. Furthermore they demonstrate that consumers


are willing to pay more for an improved toothpaste if the risk of gum disease is
stated as bar graph compared to the condition where the risk is stated with bare
numbers (Stone et al., 2003, p. 29). This again indicates that the perception of
risk is influenced by its framing. Not only the influence of graphical framing on
risk, also the influence on the perception of surface areas and volumes, and the
subsequent willingness-to-pay has been shown. Krider et al. (2001, p. 414) investigate the increase of customers willingness-to-pay, with an increasing pizza
size under different framing conditions. They find that the willingness-to-pay
increases more if pictures of the differently sized pizzas are provided than if only
linear dimension information (e.g., diameter) is provided. However, if area information is given, the consumers willingness-to-pay increases even stronger
than if pictures are provided. The difference in willingness-to-pay between linear
dimension information and area information can be assumed to be the steeper
increase in the numerical value in the area framing than in the diameter framing.
Besides the graphic display of quantitative information, also the measuring unit
influences consumers perception of quantity. In this regard, previous research
has focused on rewards programs, monetary values, and again perceptions of
risk.
For each rewards program two numerical aspects have to be determined. First,
the reward distance, which stands for the required points to redeem rewards, has
to be determined, and second, the step size, which is the amount of points earned
per dollar or euro spent, per hotel stay, per coffee purchased etc. depending on
the rewards program. Bagchi/Li (2011, p. 888) define higher magnitude programs as programs with larger reward distances (e.g., 1,000 points vs 100 points)
and larger step sizes (e.g., 10 points per dollar spent vs 1 point per dollar spent)
compared to lower-magnitude programs. They find several influences for the
program magnitude on consumers post-enrollment inferences. When the program magnitude is low, customers that are near the reward evaluate the progress
to be higher, tend to be more loyal, and have a higher likelihood to recommend
the program, compared to customers that are far from the reward. When the

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program magnitude is high, the influence of distance to the reward on consumers inferences is attenuated (Bagchi/Li, 2011, p. 898).
A number of articles addresses the influence of currency, which can be seen as
the framing of monetary values, on price-level perceptions. Literature shows that
a strong currency that, hence, involves smaller numerical values leads to an underestimation of the price level by the consumer. A variety of research in this
field was published shortly after the Euro changeover. Gaston-Breton (2006, p.
275) demonstrates that if conveyed in Euros, consumers perceive differences in
prices as smaller than in French Francs. As a possible explanation she suggests
that the difference expressed in Euros is less numerous than the same monetary
difference expressed in French francs, since the currency exchange rate from
Euro to French Francs is greater than one (Gaston-Breton, 2006, p. 277). Also
the price premiums of expensive brands compared to private label brands are
perceived as smaller when the price is expressed in Euros than when expressed
in the more numerous currency of Spanish Pesetas (Wertenbroch et al., 2007, p.
7). Here the suggested explanation is again the difference in numerosity between
the price difference expressed in Euro and in Pesetas. Wertenbroch et al. (2007,
p. 5) also confirm earlier findings and show, when both prices and budgets are
adjusted to a new currency with a lower numerosity, underspending occurs,
while if the new currency involves a higher numerosity, then consumers tend to
overspend.
Several other articles focus on the influence of framing numerical information on
purchase decisions. Burson et al. (2009, p. 1076) find evidence for the influence
of large and small units of measure on preferences. With an experiment they
show that individuals prefer a phone plan that is superior in terms of numbers of
calls dropped, if this information is expanded (number of dropped calls per 1000
calls vs number of dropped calls per 100 calls), on the other hand, consumers
prefer a phone plan that is superior in terms of price if this information is expanded (price per year vs price per month). Similarly, the subjects are willing to
pay more for a movie-rental plan if the number of movies that can be rented is
expressed in an expanded scale (number of movies per year) than if it is expressed in an contracted scale (number of movies per months) (Burson et al.,

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83

2009, p. 1077). This again shows that a high numerosity leads to high perceived
quantities, while units of measure are neglected.
Gourville (1998, p. 401) investigates the influence of the framing of donation
amounts of individuals willingness-to-donate. He finds that if the amount per
day is small enough, and therefore comparable to typical everyday expenditures,
more individuals are willing to donate in the dollar per day scenario. For example, in his experiment, more participants are willing to donate $ 1 / day than
$ 365 / year. However, if the daily donation amount is large, the framing of donation dollars per day leads to an equal or even lower willingness-to-donate than if
the donation amount is expressed as dollars per year. Not surprisingly, Bambauer-Sachse/Grewal (2011, p. 161) find evidence that especially for expensive
products, product evaluation is better and purchase intention is higher if the prices are temporally reframed (e.g., price per day). In contrast, for low-priced products, product evaluations are better and purchase intentions are higher in the
aggregate price condition.
Pandeleare et al. (2011, p. 311) empirically demonstrate that differences between
product attributes are perceived as larger if the attribute is described with a scale
that involves a higher numerosity. One example they use are dishwasher warranties. Given the warranty for product A is either 7 years or 84 month, the warranty
for product B is either 9 years or 108 months. If the warranties for both products
are stated in the unit that involves a higher numerosity (i.e., months), the warranty differences are perceived as larger than if the warranties are expressed in
years. Furthermore, the scale not only influences the perceived differences of the
attributes but also the purchase intention. Purchase intention is higher if the
product attribute is expressed with the scale that implies a larger numerosity.
This relationship is fully mediated by perceived quality (Pandelaere et al., 2011,
pp. 312313).
In the same way, Zhang/Schwarz (2012, p. 256) show that consumers prefer finegrained rather than coarse units. Participants in their study preferred a GPS devices when the battery life was stated as 120 minutes over an identical device for
which the battery life was stated as 2 hours. A reason for this is that consumers

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Previous Research and Theoretical Background

expect the confidence interval to be smaller if quantitative information is stated


in more precise units than in more coarse units.
In contrast, Lembregts/Pandelaere (2013) demonstrate with a series of five experiments that numerosities not always determine consumers purchase decision
and that consumers prefer units that satisfy both, the consumers demand for
accuracy as well as their need for cognitive efficiency (Lembregts/Pandelaere,
2013, p. 1280). For example, if a product attribute is expressed on a scale that
ranges from 1 to 10, the consumers need for cognitive efficiency is satisfied.
However, attribute information that is given on a scale from 1 to 1000 is extremely accurate. Since consumers strive for satisfying both needs, they probably
prefer the attribute information being expressed on a scale from 1 to 100, so that
both needs are sufficiently satisfied and no need is over-achieved or neglected.
Furthermore, consumers appreciate the usage of familiar units. Lembregts/Pandelaere (2013, p. 1282) find evidence, that consumers are willing to
pay more if a certain product attribute (e.g., battery life of cell phone) is stated
using the default unit with a lower numerosity (e.g., days of battery life) than if a
non-default unit is used that implies a higher numerosity (e.g., hours of battery
life). The researchers also find evidence that fluency, which is associated with
the default unit, is the reason why consumers behave this way
(Lembregts/Pandelaere, 2013, p. 1284).
Monga/Bagchi (2012) show with a series of four experiments that consumers do
not focus on numerosity for quantity estimation in all purchase situations. In
certain shopping situations consumers focus on the unit of measure and infer
quantity from this indicator. For example, given two products of the same category, for the first product the content is stated in kg, for the second product the
content is stated in g. Consumers might perceive the quantity of the first product
as higher, as the content is stated in kilograms, while neglecting the numerical
value. Monga/Bagchi (2012, pp. 193194) find that consumers infer quantity
from the unit in particular when they think is an abstract mindset. The researchers demonstrate this with a scenario description, in which participants intend to
buy a new table when they move to a new apartment. The move either takes
place in six days (concrete mindset) or in six months (abstract mindset). The size

Previous Research in Relevant Fields of Research

85

for the table is given either in inches (high numerosity, small unit) or in feet (low
numerosity, large unit). The price remains the same for any condition. The researchers show that the table with the size given in inches is perceived as a better
deal if the move is in six days (concrete mindset), while the table with the size
given in feet is perceived more attractive if the move is in six months (abstract
mindset).
lkmen et al. (2008) also demonstrate that consumers in specific situations
focus on the unit of measure rather than the numeric value. By conducting a
series of experiments, they show that when estimating monthly and yearly
spending, participants tend to estimate the monthly spending to be lower than
their yearly spending when put into perspective (lkmen et al., 2008, p. 246).
Here, a possible reason is that consumers focus on the larger unit (i.e., year) in
the latter scenario.
Chandran/Menon (2004, p. 379) find evidence that the temporal framing of
health risks influences self-risk estimates and concerns about health hazards.
Risk judgments are higher in the day framing than in the year framing. Health
risks presented using a day frame (e.g., number of infections each day) are perceived as more threatening due to higher proximity and concreteness than health
risks presented to an individual in a year frame (e.g., number of infections each
year). The framing of negative outcomes (e.g., succumbing to a disease) in a day
frame (vs year frame) leads to an increased perceived risk, more concerns, higher
motivation to take precautionary actions, higher anxiety, and a higher effectiveness of risk communication. In contrast, if positive outcomes are presented in a
day or year frame, the effects are reversed. For example, if the information how
many heart diseases can be avoided is presented in a year frame, the risk of succumbing to a heart disease is perceived as lower than if this positive information
is presented in a day frame, since the number of avoided heart diseases is lower
in the latter scenario (Chandran/Menon, 2004, pp. 382384). This is another
example of consumers focusing on the unit of measure rather than on the numeric information.
This literature review shows that consumers perceive quantities differently, depending on the framing applied. Subsequently, the framing also influences con-

86

Previous Research and Theoretical Background

sumer behavior, such as consumers willingness-to-pay and their purchase decisions. However, previous literature did not address the influence of the unit price
framing on consumer behavior. Hence, also potential differences in consumer
behavior, depending on the presentation of unit price using a large unit of measure (e.g., price per kg) or a small unit of measure (e.g., price per 100 g), have not
been addressed. This is surprising, as various researchers have called for research
in this regard for decades. Monroe/LaPlaca (1972, p. 19) review several studies
and criticize that the unit prices unit of measure utilized in studies all lead to
smaller unit prices than overall prices, diminishing price differences. For example, if two boxes of cereals contain 250 g each and cost 0.99 and 0.89 , respectively. If the unit prices are indicated as price per 100 g, the unit prices of the
cereal boxes are 0.40 and 0.36 , respectively. Hence, while the price difference
for the overall price is 0.10 , the unit price difference, however, is only 0.04 . If
the unit price was indicated as price per kg, the unit price difference would be
0.40 , accentuating the price difference between both product alternatives. Monroe/LaPlaca (1972, p. 19) argue that the usage of a unit of measure for the unit
price that is smaller than the actual size of the package will lead to an underestimation of the actual price difference. Consequently, this can lead to less economical purchase decisions by the consumer, as the motivation to switch to the
cheaper product alternative is small. However, they do not empirically test their
assumptions. Also Miyazaki et al. (2000, p. 109) call for research that assesses
the influence of unit prices and the unit of measure in particular. They also assume that differences between unit prices stated with a large unit of measure are
perceived as larger than differences between unit prices stated with a small unit
of measure, due to the differences in numerical values.

3.1.2 Price-Quality Relationship


The field of research that is especially relevant for the second research question
is the field of the influence of prices on quality perception. The traditional economic meaning of price is the monetary sacrifice that customers have to make to
obtain a given product or service (Kukar-Kinney et al., 2012, p. 64;
Monroe/Krishnan, 1985, p. 209). However, price is not only a monetary sacri-

Previous Research in Relevant Fields of Research

87

fice, prices also serve as information cue for customers. Over time the complexity of purchase decisions has increased with the number, the variety, and the complexity of consumer goods. Producers as well as retailers further increase this
uncertainty by the usage of complex names of ingredients, detailed descriptions
of the manufacturing process, and the usage of technical terms in advertisements.
Due to the high complexity of the product judgment process, consumers rely on
indices of quality (Scitovszky, 1945, p. 100) for the judgment of quality. Frequently used indices of quality are the size and the age of the producing company and its financial success, warranties, and advertisement. Another important
index of quality for the consumer is a products price (Hansen, 2005, p. 431;
Teas/Agarwal, 2000, p. 283; Sweeney et al., 1999, p. 92; Chapman/Wahlers,
1999, p. 58; Chapman, 1993, p. 6; Scitovszky, 1945, p. 100).
Previous research has found evidence for the role of price as information cue in
regard to product quality. Oftentimes quality assessment is associated with a high
degree of uncertainty. This uncertainty is based on the fact that neither consumers have perfect information about a product, nor are human beings perfect processors of information (Monroe/Krishnan, 1985, pp. 209210). Because of this
uncertainty, consumers rely on inferences and tend to use the price as an indicator for quality (Diller, 2008a, p. 150; Monroe/Krishnan, 1985, pp. 209210;
Stokes, 1985, p. 191). The customers perceived quality has been defined in
various ways. Monroe/Krishnan (1985, p. 212) define perceived quality as the
perceived ability of a product to provide satisfaction relative to the available
alternatives. The relativity of perceived quality has been emphasized before by
Tull et al. (1964, p. 186) stating that perceived quality is derived by the comparison of various information cues to a set of criteria previously established to judge
the considered product. According to Oude Ophuis/van Trijp (1995, p. 178) perceived quality is a subjective construct that is the result of a judgment process
that is based on visible as well as invisible product attributes, which were either
experienced before, or the individual believes that a certain characteristic is associated with the product under consideration. According to Steenkamp (1989, p.
58), early literature defines quality as fitness for use. This definition, however,
focuses on the use of products, while other forms of consumption, for example

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Previous Research and Theoretical Background

appreciation and possession, are not addressed. Furthermore, this definition neglects the idiosyncrasy of the product evaluation process that results in perceived
quality and the selective perception and processing of cues. As a consequence,
Steenkamp (1989, p. 99) offers a more comprehensive definition of perceived
quality: Perceived product quality is an idiosyncratic value judgment with respect to the fitness for consumption of the product which is based upon the conscious and/or unconscious processing of appropriate and available intrinsic and
extrinsic quality cues in relation to relevant experience and credence quality
attributes, and formed within the context of prior experience, perceived quality
risk, quality-consciousness, usage goals, and other personal and situational
variables (Steenkamp, 1989, p. 99, italics added).
Although previous research addresses the relationship between price and perceived quality, it remains unclear how this price-perceived quality relationship is
established. According to Rao (2005, pp. 402403), a possible source of this
relationship is advertisement that reinforces customers believes in the quality of
expensive products. The most obvious reason for consumers price-quality beliefs would be the actual existence of a positive correlation between the price and
the objective quality of products and services in the marketplace. In the case
that consumers observe a positive price-objective quality relationship over time,
it seems reasonable to utilize price as an indication of quality. Due to the constant availability of price the consumer is certain of the availability of price for
the quality judgement. In contrast, he cannot be certain of the availability of
other criteria to assess quality, nor of the completeness of this information. Lacking information then can lead to consumers uncertainty concerning their ability
to indicate product quality (Monroe, 1971a, pp. B519B520).
However, the correlation between price and objective quality tends to be moderate or even negative (Kirchler et al., 2010, p. 284; Rao, 2005, p. 401; Frst et
al., 2004, p. 542; Judd, 2000, p. 20; Gerstner, 1985, p. 214; Diller, 1977, p. 228).
The weakness of studies assessing objective product quality is the conceptualization of objective quality. Objective quality in these studies has been conceptualized as product usability, and data from expert tests has been used as data basis
(e.g., data from the Buying Guide, Gerstner, 1985, p. 210). However, even if

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the data is based on expert opinions, these opinions are still subjective and methods for deriving data on objective quality, such as weighted scoring sheets, are at
least to a certain degree arbitrary.
Nevertheless, these studies find that price in general is not a good predictor for
product quality in terms of product usability (Imkamp, 2003, p. 383; Diller,
1977, p. 227). Several studies that analyze the relationship between price and
quality show differences in the correlations for different product categories.
While Diller (1977, p. 228) is able to show that there is a positive correlation
between price and product quality for recreation-oriented, leisure and sports
products as well as for record players, only a weak correlation exists for automobiles, automotive equipment and (large) household appliances. For cosmetics the
correlation between price and objective quality is almost non-existent.
Kirchler et al. (2010, p. 279) found a strong correlation between price and objective quality in the product categories of computer and telephones, but they found
close to no correlation for food. They are also able to confirm Dillers (1977, p.
228) finding of a merely marginal correlation between price and quality for cosmetics.
Judd (2000, p. 18) identifies a strong but negative correlation between price and
objective quality for canned beans and a moderate negative correlation for unsweetened chocolate, spaghetti and canned tomatoes. The same study reveals a
moderate positive correlation between price and objective quality for canned
tuna and balsamic vinegar.
On a more general level, Hanf/Wersebe (1994, p. 346) demonstrate with a metaanalysis that product durability and the accessibility of quality information have
a positive influence on the degree to which the price reflects the actual quality,
while prestige has a negative influence on the quality reflection by the price.
Also on a general level, Gerstner (1985, p. 214) shows that a correlation between
price and objective quality can be found for non-frequently bought products
rather than for frequently purchased products.
While price is not the perfect mean to identify the best quality product, Frst et
al. (2004, p. 548) find price to be a highly reliable indicator to exclude products
with a poor quality from considerations. While he shows that the product with

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the highest price in most cases is not the product with the highest quality, the
lowest-priced products tend to be the products of the lowest quality. These studies demonstrate that while price seems to be a quite reliable indicator for quality
in some product categories, such as durables, it does not necessarily reliably
predict the quality in other product categories.
Nevertheless, the price-quality belief exists among consumers. Over decades,
numerous studies have analyzed the existence of the price-quality belief, as well
as moderators of the relationship between price and perceived quality. Studies
have analyzed the influence of price on perceived quality in single cue studies as
well as in multi-cue studies. A comprehensive overview of the studies as well as
the considered moderators is given in the following sections.

Price as Single-Cue
Previous literature can be categorized according to the number of informational
cues the study participant is exposed to. Several studies analyze the consumers
quality perception with the price being the only cue available for quality judgment (Hansen, 2005; Shiv et al., 2005; Chapman/Wahlers, 1999; Chapman,
1993; Peterson, 1970; Gabor/Granger, 1966; Tull et al., 1964; Leavitt, 1954).
Leavitt (1954, pp. 207208) conducted some of the first experiments in this field
of research. For different product categories (i.e., cooking sherry, moth flakes,
razor blades, and floor wax) he manipulated the price differences between two
brands. Although Leavitt (1954) did not measure quality perception as dependent
variable, the participants purchase intention and satisfaction with their product
choice indicate that consumers expect different quality levels depending on the
price level of a product.
Tull et al. (1964) build upon the experiments conducted by Leavitt (1954) and
carried out similar experiments with products like table salt, margarine, aspirin,
light bulbs, floor wax, toothbrushes, shampoo, and shoe polish (Tull et al., 1964,
p. 187). Based on their finding that purchase intention does not necessarily decrease with increasing price, they assume a price-perceived quality relationship.
In a similar way, by highlighting demand curves for several household articles,
such as foods, nylon stockings and carpets, Gabor/Granger (1966, p. 50) show

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that, within the accepted price range, a positive price-perceived quality relationship exists and influences demand positively for the products in this experiment.
While previous research used demand as dependent variable to measure quality
perception, McConnell (1968a, p. 332) introduces quality perception as dependent variable in his study. The participants of his study tasted identical beers
priced at different levels. They show that the participants rated the beers taste
better, the higher its price. Thereby he concludes that price has a strong influence
on quality perception (McConnell, 1968a, p. 334). Also Peterson (1970, p. 526)
treats perceived quality as a dependent variable in his study. Utilizing the price of
a novel soft drink concentrate as stimulus, his study shows that perceived quality
is significantly different at different price levels. However, he was not able to
show a monotonic perceived quality function with price as dependent variable
(Peterson, 1970, p. 526). The function he derives has rather an inverted U-shape,
which supports the finding of Gabor/Granger (1966) that beyond a certain price
threshold, perceived quality does not further increase with increasing price.
Chapman (1993, p. 6) conducted a similar experiment and presented participants
prices and rebates for portable dual cassette recorders. As part of his model, he
tested the price-perceived quality relationship. He confirms the findings of previous literature and shows that the price (without taking the rebates into account)
influences the participants quality perception. However, he did not test if the
perceived quality is lower when rebates are applied to the price.
Based on Chapmans (1993) research, Chapman/Wahlers (1999, p. 55) conducted
another experiment, where prices and rebates for several consumer electronics
goods are presented to the participants. They, again, confirm the finding that the
original price (without rebates applied) influences the quality perception positively.
Shiv et al. (2005, p. 387) provide evidence for the influence of price on expected
quality in an experimental setting where participants consumed differently priced
but otherwise identical energy drinks. After the consumption, the participants had
to solve puzzles. Participants that had consumed the lower priced alternative
solved significantly less puzzles than the participants that had consumed the high
priced product alternative. In a second experiment the energy drink was bought

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with a discount for the one group and without a discount for the second group.
Results show that participants that consumed the discounted energy drink rated
their workout intensity as lower than participants that consumed the energy drink
for which no discount was given (Shiv et al., 2005, p. 383). This again supports
the existence of a price-perceived quality relationship.

Multi-Cue Studies
The utility of single-cue studies has been questioned due to their lack of realism.
If consumers are merely provided a single cue, they assess a products quality
based on this cue, although naturally they would also use other cues present in
real purchase scenarios for quality judgment (Steenkamp, 1989, p. 63). Therefore, numerous studies focus on the role of price as an informational cue, while
also other informational cues are also available to the participant.
Many of the studies distinguish between intrinsic attributes and extrinsic attributes that serve as information cues. While intrinsic attributes are an integral part
of the product and cannot be separated from the physical product (e.g., flavor,
ingredients, shape, material, gas mileage of cars), extrinsic attributes are also
product-related, but changes of these attributes do not have any effect on the
product itself and are not physical elements of the product (e.g., store image,
brand name, country of origin) (Lee/Lou, 2011, p. 21; Szybillo/Jacoby, 1974, p.
74). Although price is product-related, a change in price does not result in a
change of the physical product. Price is therefore considered an external attribute
(Olson, 1977, p. 284). Previous literature has shown that price is used as an indicator of quality if no other cues are available (Monroe/Krishnan, 1985, p. 222;
Stokes, 1985, p. 241). If information about intrinsic and extrinsic attributes is
available, different information cues interact when quality perceptions are
formed. Although some researchers are of the opinion that consumers are more
familiar with external cues and therefore predominantly rely on these cues when
anticipating quality (Lee/Lou, 2011, p. 22), the majority of researchers find evidence that internal attributes dominate external cues (Miyazaki et al., 2005, p.
147; Pincus/Waters, 1975, p. 281; Szybillo/Jacoby, 1974, pp. 7677;
Valenzi/Andrews, 1971, p. 89). Furthermore, other extrinsic attributes can have a

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stronger influence on quality perception than price. For example, if brand information is available to the consumer, or the consumer has a specific store image
in mind, these attributes are more likely to be used as indicators of quality than
price (Szybillo/Jacoby, 1974, pp. 7677; Gardner, 1971, p. 243). External attributes, including price, are used as cues for product quality especially when information about intrinsic attributes is scarce, perceived as not useful, or cannot be
processed (Miyazaki et al., 2005, p. 146).
However, the usage of extrinsic and intrinsic attributes to anticipate product
quality cannot be seen as universal, but depends on a variety of consumeridiosyncratic, product-specific and retailer-specific aspects. Since the utilization
of price as a cue for product quality is assumed to be a function of individuals
previous experiences, the lack of a universal price-quality inference is not surprising. Rather, research supporting such a universal relationship should be highly suspect (Peterson/Wilson, 1985, pp. 248249). Therefore, literature has highlighted that the relationship between price, as an extrinsic cue, and perceived
quality is influenced by a variety of moderators. Moderators are defined as quantitative or qualitative variable, which affects the direction or the strength (or
both) of a relationship between an independent and a dependent variable
(Baron/Kenny, 1986, p. 1174). These moderators can be divided into consumeridiosyncratic, product-related, retailer-specific and study-related moderators.
These moderators are discussed in the following paragraphs, as illustrated in
Figure 6. This is important, as future studies in this regard should control for
these variables in order to control for aspects dominating the price-perceived
quality relationship.

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Consumer-Related
Moderators

Product-Related
Moderators

Price

Quality

Retailer-Related
Factors

Study DesignRelated Factors

Figure 6: Factors influencing consumers quality perception.

Consumer-related moderators
Starting with consumer-related moderators, a review of previous literature shows
that socio-demographic factors are discussed less frequently than psychographic
factors. Socio-demographic factors discussed in literature are age, gender, education, income and cultural background. Shapiro (1973, p. 290) highlights the
positive correlation between age and the reliance on price as indicator for quality,
as well as the negative correlation between education and the usage of price as a
cue for quality. However, according to him, there is no correlation between income and the usage of price as indicator for quality. In contrast to Shapiro (1973,
p. 290), Tull et al. (1964, p. 191) did not find a significant moderating effect for
age, gender, or education. Dawar/Parker (1994, p. 91) tested for moderating
effects of cultural background, but were not able to show any influence on the
price-quality relationship.
Considerably more psychographic consumer characteristics have been analyzed
in previous research as potential moderators for the usage of price for quality
judgment. The most extensive analysis of psychographic moderators was conducted by Vlckner (2006), who analyzed 17 potential moderators.
A first potential psychographic moderator discussed is the consumers general
believe in a positive correlation between price and quality and is defined as the
degree to which consumers believe that price is a positive indication of quality
(Ofir, 2004, p. 617). Ofir (2004, p. 618) shows that here a positive moderation

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effect exists. Furthermore, Lee/Lou (2011, p. 26) show that consumers with a
stronger believe in the price-quality relationship are more likely to rely on the
price cue when evaluating product quality than consumers without a general
belief in the correlation of price and quality. This finding seems intuitive. In
earlier research, Peterson/Wilson (1985, p. 263) yield similar findings with their
experiment, however, they utilize product preference as dependent variable instead of product quality, and merely infer product quality from consumers product preferences. They find that individuals that are more price reliant in regard to
quality have a stronger preference for higher-priced consumer electronics than
the lower-priced products, in contrast to other individuals.
A second potential psychographic moderator is the consumers quality interest.
Research shows that quality interest strengthens the positive influence of price
on perceived quality (Vlckner, 2006, p. 484; Smith/Natesan, 1999, p. 565). By
definition, quality is important to those consumers that show a high level of
quality interest. Vlckner (2006, pp. 477478) offers two reasons why individuals that are interested in quality rely on price as an indicator for quality. First,
quality interest leads to a high level of perceived risk in purchase situations,
since a bad buy (i.e., the purchase of a low quality product) involves substantial
negative consequences for consumers that are interested in quality. In order to
reduce this risk, these individuals concentrate on price as an indicator for quality.
Second, quality-interested consumers rely more on price as a cue for quality as a
high need for quality comes along with an increased need for information in
regard to product quality. Price is an easily available informational cue and is
therefore used by quality interested consumers as quality indicator, while less
quality interested consumers have a lower need for information and neglect price
as information cue regarding quality. Smith/Natesan (1999, p. 565) furthermore
demonstrate that the individuals quality importance has a positive influence on
the reliance of price as a cue for product quality.
Another psychographic aspect, for which the influence on the price-perceived
quality relationship has been assessed, is brand loyalty. Vlckner (2006, p. 479)
hypothesizes a negative influence on the usage of price for quality perception. As
a possible reason she points out that for brand loyal customers the brand is a

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more important quality signal than price. Furthermore, if consumers with a high
degree of brand loyalty use price as a cue for quality, the product evaluation may
lead to a situation in which a change in product choice seems reasonable. Since
brand loyal consumers have high switching costs, they can avoid these situations
by not using price as a cue for quality. However, Vlckners (2006, p. 484) experiment does not yield any significant results for brand loyalty. Nevertheless,
her results of a latent class analysis indicate that brand loyalty has a positive
(instead of a negative) influence on the usage of price as an indicator for quality
for the consumer segment that comprises older consumers with a strong pricequality belief and a high willingness to pay (Vlckner, 2006, pp. 488489).
Vlckner (2006, p. 484) also investigates empirically the complexity of the shopping task as psychographic moderator and shows that it has a positive influence
on the usage of price as an indicator for quality. As possible reason for this,
Vlckner (2006, p. 480) suggests that consumers try to reduce the complexity of
the shopping task by applying heuristics. One such heuristic is the use of price as
an indicator for quality, instead of other cues that are more difficult to process.
Also the perceived product complexity influences price-quality inferences. Kirchler et al. (2010, p. 283) show with their empirical research that in general the
perceived product complexity has a positive influence on the usage of price as an
indicator of quality. Here similar reasons as for shopping complexity can be
assumed. When consumers perceive a product as complex, they use heuristics to
ease the task of finding the best product. However, Kirchler et al. (2010, p. 283)
also find that perceived complexity does not have a positive influence on the
price-perceived quality relationship for all product categories. While consumers
tend to focus on price for complex products in the categories of food and beverages, as well as in the home and garden segment, product complexity has a negative influence of the usage of price as quality indicator in the product categories
car and transport, as well as in the computer and telephone segment.
Besides the perceived product complexity, also perceived quality differences in a
product category have a positive influence on the price-perceived quality relationship. Leavitt (1954, p. 209) and Vlckner (2006, p. 484) find evidence for
this moderating effect. Consumers tend to rather use price as an indicator for

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quality in product categories, for which the consumers believe that significant
differences between brands exist, than for categories where brands are very similar (Vlckner, 2006; Leavitt, 1954). As a possible reason, it has been suggested
that if quality differences are only marginal, price differences do not appear as
being justified and price is therefore not used as information cue concerning
product quality. Another potential explanation is the increased perceived risk if
quality differences are substantial. Prices are then used as indicators for quality,
in order to reduce this risk (Vlckner, 2006, p. 481).
Kukar-Kinney et al. (2012, p. 66) hypothesize that compulsive buyers, compared
to non-compulsive buyers, are less likely to infer quality from price. They define
compulsive buying as a consumers tendency to be preoccupied with buying
that is revealed through repetitive buying and a lack of impulse control over
buying (Kukar-Kinney et al., 2012, p. 63). However, the empirical assessment
by Kukar-Kinney et al. (2012, p. 68) shows no significant moderating effect of
compulsive buying.
Another psychographic factor that is hypothesized to influence the usage of price
as an indicator of quality are consumers perceived financial restrictions and
price consciousness. Both attitudes lead to consumers focusing on low prices,
while price-quality tradeoffs are neglected. Ofir (2004, p. 618) demonstrates that
price conscious consumers have a continuously declining price acceptability
function as prices increase. He infers quality perceptions from price acceptability
and thereby shows that price consciousness has a negative influence on the priceperceived quality relation. In line with this, Vlckner (2006, p. 484) is able to
show that price consciousness has a negative effect of the influence of price on
perceived quality. For financial restrictions she is not able to substantiate such a
relationship.
Cronley et al. (2005, p. 161) expect information load to positively influence the
usage of price as quality indicator. The underlying reasoning is that consumers
that are preoccupied with a high information load (e.g., high number of product
information available, remembering items on shopping list) tend to ease the
product judgment process by applying heuristics, such as the usage of price as
signal for quality. Cronley et al. (2005, p. 163) find support for their hypothesis

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and show that the usage of price as an indicator for quality is higher in situations
of high information load.
For similar reasons, time pressure is expected to support a price-perceived quality relationship, since consumers that perceive time pressure also tend to utilize
heuristics, in order to expedite the decision-making process. Zeithaml (1988, p.
9) proposes that consumers rely more on extrinsic product attributes for quality
evaluation if the assessment of internal cues demands more time and effort than
the consumer is able or willing to spend. Suri/Monroe (2003, p. 98) empirically
demonstrate that indeed a high price leads to a high perceived quality if the consumer evaluates products under time pressure. Cronley et al. (2005, p. 164) second this finding with the results of their experiment where time pressure is manipulated. Their results show that the tendency to infer quality from price is
weaker when consumers are put under time pressure and the consumer has a high
need for cognitive closure, which refers to the need to reach a definite opinion.
However, here only the interaction effect is significant, not the main effect of
time pressure on price-perceived quality relationship.
Vlckner (2006, p. 480) hypothesizes that the consumers need for cognitive
consistency has an influence on the usage of price as an indicator for quality.
However, she does not propose a clear direction of this influence. She assumes
that on the one hand, the availability of products that seem to be of the same
quality, but are offered at different prices, leads to cognitive dissonances. To
reduce this cognitive dissonance, consumers can assume that, despite the similarity of the products, the product with the higher price is of higher quality. On the
other hand, she also proposes that, in order to reduce these cognitive dissonances, consumers collect more information about the product in the pre-purchase
phase. The increase of product knowledge then has a negative influence on the
usage of price as quality indicator. Her empirical study initially does not yield
any significant influence for need for cognitive consistency. However, after conducting a latent class analysis, she finds a negative significant influence of this
moderator for the customer segment of the older and more quality-conscious
consumers.

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In this context, Cronley et al. (2005, p. 164) also find evidence of a positive
influence of need for cognitive closure on the price-perceived quality relationship. Cognitive closure here is defined as the desire to reach a definite opinion,
thus avoiding confusion or ambiguity. (Cronley et al., 2005, p. 161). Time pressure further enhances the positive influence of need for cognitive closure on the
reliance on price for quality judgments (Cronley et al., 2005, p. 164).
In the article by Vlckner (2006) she also analyzes the influence of consumers
need for exclusivity and need for prestige. Unfortunately, she does not offer any
definition or explanation for these potential moderators or how to differentiate
them. The items used to assess both constructs indicate that need for exclusivity
refers to the opinion that an exclusive product has to have a high price and that
need for prestige refers to the consumers desire to possess expensive products
(Vlckner, 2006, p. 493). The results of her experiment show that both factors
influence the reliance on price for quality assessment positively (Vlckner, 2006,
p. 484). As a potential reason Vlckner (2006, p. 478) assumes that the prestige
and exclusivity, which are associated with a high price, can be relevant dimensions of quality for consumers, especially for those with a high need for prestige.
In this context, also earlier research by Brucks et al. (2000, p. 370) showed that if
quality is seen as a multidimensional construct with search dimensions (i.e.,
quality are versatility and ease of use), experience dimensions (i.e., durability,
serviceability), and credence dimensions (i.e., performance, prestige), price is
rather used to judge credence dimensions than search dimensions.
Also the consumers knowledge of how to objectively judge quality is treated as a
potential moderator of the price-perceived quality relationship. It can be assumed
that consumers with a large knowledge in this regard have no need to rely on
price as quality indicator and therefore this moderator exerts a negative influence
of the price-perceived quality relationship. However, Smith/Natesan (1999, p.
565) do not find any evidence for the consumers perceived ability to judge quality on the usage of price as an indicator for quality. In the same way, Vlckner
(2006, p. 484) is also not able to find a moderating effect of the ability to judge
the objective quality of a product.

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Peterson/Wilson (1985, p. 265) analyzed the influence of the perceived risk of


product failure on the usage of price as indicator for quality. They empirically
show that the preference for high-priced products increases if the consumer perceives a high risk of failure. Here it can also be assumed that consumers try to
mitigate the risk by using price as an indicator for quality.
The reliance on price as an indicator of product quality also further increases as
product involvement increases (Ofir, 2004, p. 618; Smith/Natesan, 1999, p. 565).
The term involvement refers to a persons perceived relevance of the object
based on inherent needs, values, and interests. (Zaichkowsky, 1985, p. 342).
Furthermore, it is seen as the extent to which an individual shows interest in
information concerning a product and is interested in gaining more knowledge
about it (Puccinelli et al., 2009, p. 20). Involvement has been categorized according to its persistence into enduring involvement and situational involvement.
Enduring involvement is characterized by a product categorys general relevance
for an individual. In contrast, situational involvement is temporary and initiated
by short-term changes within the individuals immediate surroundings (Lee/Lou,
2011, p. 22). Consumers with a high level of enduring involvement concerning a
product category have a stronger reliance on brand and price when assessing
product quality than consumers displaying a lower level of enduring product
involvement in this category. In contrast, consumers that are heavily involved in
a specific evaluation situation, rely more on intrinsic attributes than on extrinsic
attributes, such as price, brand and country of origin, when evaluating a product
than consumers that show less situational involvement (Lee/Lou, 2011, p. 25).
Besides product involvement, also product knowledge and familiarity are seen as
potential moderators for the price-perceived quality relationship. The term product familiarity has been treated synonymously to the term product (category)
knowledge (Johnson/Russo, 1984, p. 544). If consumers have a high product
familiarity, they tend to memorize a higher amount of product information when
judging different product alternatives (Johnson/Russo, 1984, p. 545). This is in
line with research by Alba (1983, p. 578), who also shows that high-knowledge
individuals recall a significantly greater amount and more difficult product details than low-knowledge individuals that reviewed the same information before.

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Therefore, it can be assumed that because of the product knowledge and the ease
of product information assimilation, consumers with high product knowledge do
not have to rely on price for the assessment of quality. This is in line with
Rao/Monroe (1988, p. 259), who observe a stronger price-perceived quality
relationship for unfamiliar consumers than for consumers with a moderate prior
product knowledge. Vlckner/Hofmann (2007, p. 193) and Vlckner (2006, p.
484) find also a negative influence of product familiarity on the price-perceived
quality relationship. Lee/Lou (2011, p. 22) hypothesized an increase in the reliance on external cues, such as brand, price and country-of-origin with increasing
product familiarity. However, they were only able to find support for an increased reliance on brand name and country-of-origin with increasing product
familiarity, but not for an increased reliance on price. Stokes (1985, p. 242) analyzes the influence of the familiarity of background brands. They find that also if
background brands are unfamiliar, consumers tend to infer quality from price.
Having unfamiliar background brands, not only unfamiliar stimuli brands, adds
uncertainty and perceived risk to the purchase situation that leads to consumers
inferring quality from price to reduce the risk.
Whether the consumer utilizes a price as a cue for product quality depends also
on the quality dimension that is assessed. Brucks et al. (2000, p. 368) demonstrate that the likelihood that a price is utilized as an indicator for quality depends on the quality dimension the consumer strives to judge. The likelihood
increases as dimensions move from search properties to credence properties (see
also above for the moderators need for exclusivity and need for prestige). In the
same way, Brucks et al. (2000, p. 369) show that while the likelihood of the
brand being utilized as indicator for performance or durability is significantly
higher than the likelihood of the utilization of price as an indicator of quality, for
prestige the brand and the price are equally likely to be used as indicator for
quality (Brucks et al., 2000, p. 369).
Product-Related Moderators
The group of product-related moderators has not been discussed as extensively
as consumer-related moderators in previous literature. However, a number of
studies exist that addressed also this group of moderators. The price-perceived

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quality relationship has been shown for a variety of products, such as beer
(McConnell, 1968b, p. 300), margarine and butter (Valenzi/Andrews, 1971, p.
88), floor wax and shampoo (Tull et al., 1964, p. 187), razor blades (Leavitt,
1954, p. 207), jam (Vlckner, 2006, p. 482), cassette recorder and tennis rackets
(Lambert, 1972, p. 36), calculators and wristwatches (Teas/Agarwal, 2000, p.
281), televisions, stereo receivers, and cameras (Peterson/Wilson, 1985, p. 256),
as well as for womens blazers (Rao/Monroe, 1988, p. 256). However, the priceperceived quality relationship is stronger for certain product categories than for
others.
A first product-related influencing factor is brand. High-reputation brands have a
positive influence on the price-perceived quality relationship, as the interaction
of brand name and price leads to a higher perceived quality, a higher perceived
value, and an increase in purchase intention (Dodds/Monroe, 1985, p. 88;
Monroe/Krishnan, 1985, pp. 225, 228). This shows that the brand name does not
generally dominate the price as a signal of quality, but, in fact, increases the
impact of price on quality perception (Monroe/Krishnan, 1985, p. 225).
A second potential product-related moderator is country of origin. For example,
if a country is famous for high quality products, the importance of price as quality cue may decline, as the country of origin dominates the quality assessment.
With two studies, one involving stimulus advertisement of calculators, the other
one utilizing advertisements for wristwatches, Teas/Agarwal (2000, p. 284) do
not find any moderating effect of the products country of origin on the influence
of price on quality perception. Hence, for calculators as well as for wrist watches, a direct effect of price on quality perception exists and does not vary significantly, no matter if the country of origin is Japan or Mexico (for calculators), or
Switzerland or Mexico (for wristwatches), respectively.
Furthermore, the influence of product durability on the usage of price for quality
assessment has been discussed in literature. Burton/Lichtenstein (1990, p. 717)
demonstrate that, especially in the case of durable products, consumers expect
high-price products to be of high quality. Boyle/Lathrop (2009, p. 61) second this
finding and show that significantly more consumers believe in a positive pricequality relationship for durable products than for non-durable products. One

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potential explanation is that durable products are often related to a higher risk,
since they will be in an individuals possession for a longer time. By using price
as an indicator for quality, consumers try to lower this perceived risk.
However, for high-priced products that also involve a high risk, consumer do not
rely more on price for quality judgment than for low-priced products. Peterson/Wilson (1985, p. 258) find a negative influence of price level on the pricequality relationship. In their experiment only 69 % of participants chose the
highest-priced television at $ 450, while 87 % of participants chose the highest-priced camera at $ 188. They assign this negative moderating influence to
consumers limited budgets. However, when conducting a meta-analysis,
Rao/Monroe (1989, p. 355) are also not able to identify a moderating influence
of price-level across the 36 studies they considered in their research. In contrast,
Vlckner/Hofmann (2007, p. 192) found a positive influence of the price level
on the price-perceived quality relationship in their meta-analysis. The selection
of studies they considered in their research comprised a higher variance in price
level, which might be a reason why their findings differ from Rao/Monroes
(1989, p. 355) results.
Another potential moderator is the price range in a product category. Peterson/Wilson (1985, p. 262) find interaction effects and show that in the case of
low perceived risk and a small difference between the highest-priced and the
lowest-priced product in a product category, consumers tend to choose the higher-priced products, because they anticipate a higher quality. In contrast, if the
risk of failure for the lower-priced alternative is low and the price variance is
high, consumers tend to prefer the lower-priced alternative. Smith/Natesan
(1999, p. 565) find a direct positive moderating effect of price range on the priceperceived quality relationship.
Lichtenstein/Burton (1989, p. 433) demonstrate that consumers infer a higher
quality from higher prices especially for product categories in which an objective
price-quality relationship exists. This indicates that consumers realize for which
product categories the price-quality belief holds true. However, the correlation
between perceived price-quality relationship and the objective price-quality
relationship tends to be low. In the same way, Kirchler et al. (2010, p. 284) find a

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positive correlation between the objective price-quality relationship and the consumers usage of price as an indicator for quality.
Also product warranty has a moderating effect on the relationship between price
and perceived quality. A warranty is defined as strong if it has a long warranty
period and the warranty is also executed in the absence of product failure. On the
one hand, the positive influence of a high price on perceived product quality is
strengthened if a strong warranty is available. On the other hand, if the warranty
is weak and the price is low, the weak warranty has a negative influence on
quality perception (thus strengthening the negative quality signal of the low
price). In the case of inconsistent price and warranty cues, the negative cue (low
price, weak warranty) will dominate evaluations, so that high-priced products
with a weak warranty and low priced products with a strong warranty are perceived as being of equal quality (Miyazaki et al., 2005, p. 148).
Retailer-Related Moderators
A third group of moderators are retailer-related influencing factors. Darke/Chung
(2005) analyze, whether the discount format the retailer uses influences the
price-perceived quality relationship. Discounts lower the product price and,
hence, potentially lead to a perceived lower product quality. Darke/Chung (2005,
p. 41) came to the conclusion that price discounts (e.g., 50 % off) have a negative
influence on the price-perceived quality relationship, while offering a free gift,
that leads to the same value-for-money outcome as the discount, has no influence
on the price-perceived quality relationship (Darke/Chung, 2005, p. 43).
Similarly to the brand name, store name has a positive influence on the priceperceived quality relationship (Monroe/Krishnan, 1985, p. 229). In stores with a
good reputation, consumers rather use price as an indicator for quality than in
stores with a negative reputation.
Study Design-Related Moderators
A number of meta-analyses (Vlckner/Hofmann, 2007; Rao/Monroe, 1989;
Monroe/Krishnan, 1985) and an experiment (Vlckner/Sattler, 2005) extracted
the influence of several study-related influencing factors that are discussed below. Rao/Monroe (1989, p. 355) show that within-subject designs produce a
larger effect size for the price-perceived quality relationship than between-

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subject designs. Hence, if study participants are shown several stimuli variations
(e.g., several products and their prices in a row) the effect size is larger than if
the participants encounter only one stimulus. Vlckner/Hofmann (2007, p. 192)
confirm Rao/Monroes (1989, p. 355) findings. Earlier, Monroe/Krishnan (1985,
p. 225) yield similar results by qualitatively comparing studies and observing
that the in the within-subject designs the largest effect sized were observed.
Vlckner/Hofmann (2007, p. 192) do not find a significant influence of the country the study was conducted in, which leads to the assumption that the priceperceived quality relationship is worldwide a similar phenomenon.
Although this result is counterintuitive, Rao/Monroe (1989, p. 355) show with
their meta-analysis that over all 36 studies, single-cue studies did not produce a
significant stronger relationship between price and perceived quality than multicue studies. It would be more intuitive if single-cue studies resulted in a stronger
relationship, since multi-cue studies potentially add further signals of quality for
the consumer. Subsequently, the relationship between price and perceived quality
is expected to be lower, as the consumers quality perception is based on several
signals and not price only. Vlckner/Hofmann (2007, p. 192) confirm this finding. These results relate to external as well as internal cues. However, if other
intrinsic cues are available, the influence of price as an external cue for quality
weakens (Miyazaki et al., 2005, p. 147; Pincus/Waters, 1975, p. 281;
Szybillo/Jacoby, 1974, pp. 7677; Valenzi/Andrews, 1971, p. 89).
Rao/Monroe (1989) show that the strength of the price manipulation, which
relates to the difference between price stimuli, has an influence on the priceperceived quality relationship. The stronger the price manipulation, the stronger
is the relationship between price and perceived quality. In contrast, Vlckner/Hofmann (2007, p. 192) did not find such an relationship.
Furthermore, Vlckner/Hofmann (2007, p. 192) show that experiments that are
conducted with student samples, lead to marginally stronger price-perceived
quality relationships than non-student samples. However, differences between
the student and non-student samples are not significant.
Finally, Vlckner/Sattler (2005, p. 10) demonstrate that the price-perceived quality relationship is especially strong if the product stimuli are presented to the

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Previous Research and Theoretical Background

participants as free gifts, compared to the scenario where participants hypothetically have to pay the full price for the product.
By giving a comprehensive overview of the research on the price-quality relationship, it becomes obvious that price-quality inferences are made by consumers. However, this relationship cannot be seen as universal, but rather depends on
a number of factors related to the consumer, the product, the retailer and the
study design. An overview of these individual factors is given in Table 11.

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Consumer-Related Factors

Moderator

107
Negative
Effect

Positive Effect

No Effect

Age

Shapiro (1973)

Tull et al. (1964)

Cultural background

Dawar/Parker
(1994)

Belief in Price-Quality Inference

Lee/Lou (2011),
Ofir (2004),
Peterson/Wilson
(1985)

Brand Loyalty

Vlckner (2006)

Complexity of Shopping Task

Vlckner (2006)

Compulsive Buying

Kukar-Kinney et al.
(2012)

Education

Shapiro
(1973)

Tull et al. (1964)

Financial Restrictions

Vlckner (2006)

Gender

Tull et al. (1964)

Income

Shapiro (1973)

Information Load

Cronley et al.
(2005)

Intended Use of Product

Vlckner (2006)a

Vlckner (2006)

Need for Cognitive Consistency

Vlckner
(2006)a

Vlckner (2006)

Need for Cognitive Closure

Cronley et al.
(2005)

Need for Exclusivity

Vlckner (2006)

Need for Prestige

Vlckner (2006)

Need for Social Acceptance

Vlckner
(2006)a

Vlckner (2006)

Knowledge of Objective
Quality Assessment

Vlckner (2006),
Smith/Natesan
(1999)

Product-Related Factors

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Previous Research and Theoretical Background


Perceived Product
Complexity

Kirchler et al. (2010)

Perceived Quality
Differences in
Product Category

Vlckner (2006),
Leavitt (1954)

Perceived Risk of
Failure

Peterson/Wilson (1985)

Price Consciousness

Vlckner (2006),
Ofir (2004)

Product Involvement

Lee/Lou (2011)b,
Ofir (2004),
Smith/Natesan (1999)

Lee/Lou
(2011)c

Product
Knowledge/ Familiarity

Vlckner/Hofmann
(2007),
Vlckner (2006),
Rao/Monroe (1988),
Stokes (1985)d

Lee/Lou
(2011)

Quality Dimension

Brucks et al. (2000)e

Quality Interest

Vlckner (2006),
Smith/Natesan (1999)

Self-Confidence

Vlckner
(2006)

Time Pressure

Cronley et al. (2005)f,


Suri/Monroe (2003)

Brand

Dodds/Monroe (1985),
Monroe/Krishnan (1985)

Country of Origin

Teas/Agarwal
(2000)

Product Durability

Boyle/Lathrop (2009),
Burton/Lichtenstein (1990)

Price Differences

Smith/Natesan (1999)

Peterson/Wilson
(1985)

Price Level

Vlckner/Hofmann (2007)

Peterson/Wilson
(1985)

Rao/Monroe
(1989)

Objective PriceQuality Relationship

Kirchler et al. (2010),


Lichtenstein/Burton (1989)

Warranty

Miyazaki et al. (2005)g

Miyazaki et al.
(2005)h

Study Design

Retailer-Related
Factors

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109

Framing of Discount

Darke/Chung
(2005)i

Darke/Chung
(2005)j

Store Name

Monroe/Krishnan
(1985)

Availability of Intrinsic
Information

Miyazaki et al.
(2005),
Picus/Waters
(1975),
Szybillo/Jacoby
(1974),
Valenzi/Andrews
(1971)

Within-Subjects Design
(vs Beween-Subjects
Design)

Vlckner/Hofmann
(2007),
Rao/Monroe (1989),
Monroe/Krishnan
(1985)

Country (Study)

Vlckner/Hofmann
(2007)

Single Cue Study (vs.


Multi-Cue Study)

Vlckner/Hofmann
(2007),
Rao/Monroe (1989)

Strength of Price Manipulation

Rao/Monroe (1989)

Vlckner/Hofmann
(2007)

Student Sample (vs.


Non-Student Sample)

Vlckner/Hofmann
(2007)

Gift (vs. Full Price to


Pay)

Vlckner/Sattler
(2005)

after latent class analysis


for enduring involvement
c
for situational involvement
d
product knowledge refers to background
brands, not the brands of the stimuli products
e
for credence dimensions of quality

for consumers with high need for cognitive closure


for high prices
h
for low prices
i
for price discounts
j
for free gifts

Table 11: Moderators on price-perceived quality relationship

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Previous Research and Theoretical Background

Influence of Unit Prices on Quality Perception


The literature included in the literature review above focuses on the overall price
of products. However, it has been proposed in literature that unit prices can be
used to infer quality, too. Early research proposes that if consumers utilize price
as indicator for quality, large unit price units of measure that accentuate price
differences (e.g., price per kg vs price per 100 g) can lead to consumers switching
to higher-priced products (Monroe/LaPlaca, 1972, p. 20). A possible reason for
such a behavior is that they infer a larger quality difference between the products
if a large unit of measure is used than if a small unit of measure is utilized, which
diminishes numerical unit price differences. However, they do not offer any
empirical evidence for this proposition. Results of a recent study (Yan et al.,
2014, p. 7) support this proposition. They empirically show that participants rate
the quality of products with smaller package sizes higher than the quality of
products with larger package sizes. This effect is fully mediated by the expected
unit price. In the absence of unit price information on the price label, participants
expect the smaller package to have a higher unit price and consequently they rate
the product quality as higher. In contrast, in the case that the unit price is explicitly provided and held constant among product sizes, package size has no influence on quality perception (Yan et al., 2014, p. 9). Consumers rely more on unit
price than on overall price in their quality perception, even if the unit price is not
explicitly stated. However, if their cognitive resources are constrained and unit
price is not explicitly stated, the overall price will have a greater influence on
product quality perception than unit price (Yan et al., 2014, p. 11). Yan et al.
(2014, p. 7) manipulate package size, while not displaying unit prices and treating unit price as a mediating variable rather than as a predicting variable. Therefore, the assessment of the influence the unit price and the unit price measure has
on the quality judgment remains a research gap.

3.1.3 Store Price Image


Besides analyzing the influence of unit price format on consumer behavior at the
product level, a second aim of this thesis is to analyze the influence of unit prices
at the retailer level. More precisely, this thesis sheds more light on the question,

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111

whether unit price availability and unit price prominence influence the store
price image and consequently also the choice of retailer.
Previous literature focusing on store price image has exclusively taken overall
prices into account, while no attention has been paid to the influence of unit
prices. Therefore, the next paragraphs give an overview of previous store price
image literature.
Image in general has been defined very broadly in the past. Mazursky/Jacoby
(1986, p. 147) define image as an affect that is inferred from current perceptions
included in the memory that are attached to a phenomenon and depict what this
phenomenon means to an individual. Dichter (1985, p. 77) furthermore highlights that images are dynamic and highly complex.
In regard to images of stores, Doyle/Fenwick (1974, p. 40) suggest that store
image is an individuals attitude concerning the store and the individuals overall
impression of it. They characterize store image as the shoppers perception of
store characteristics, such as unit prices, the variety of goods sold, layout, reputation for quality, as well as parking facilities (Doyle/Fenwick, 1974, p. 39). Mazursky/Jacoby (1986, p. 162) conclude that store image has several core facets,
such as price information, but also additional peripheral facets, such as store
policies. According to Martineau (1958, pp. 5152), a consumers store image is
determined by factors such as layout and architecture, symbols and colors, advertising, and sales personnel. Nevin/Houston (1980, p. 85) conduct an exploratory
factor analysis and find that attributes determining a retailers image can be categorized as assortment attributes, facility attributes, and market posture. More
specifically, Lindquist (1974, p. 31) describes retailer image as being complex
and consisting of a combination of tangible or functional factors and intangible
or psychological factors that a consumer perceives to be present. He identified
nine attributes that contribute to the formation of retailer image and consequently
also to consumers favorable or unfavorable attitude towards a retailer. These
nine attributes are merchandize (including the pricing of merchandize), service,
clientele, physical facilities, convenience, promotion, store atmosphere, institutional factors, as well as post-transaction satisfaction (Lindquist, 1974, pp. 31
32). In a similar way, Oxenfeldt (1974, p. 9) considers store image to be a com-

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Previous Research and Theoretical Background

bination of emotional and factual attribute. The consumer reacts in an emotional


way to retailer characteristics, as he perceives them. According to him the store
image consists of tangible reality factors, such as quality and assortment
breadth, intangible but genuine substantive benefits, such as friendliness and
pleasurableness, and fantasies, such as that best people shop there
(Oxenfeldt, 1974, p. 13). Retailers assign considerable effort to generate positive
attitudes towards their stores, as well as the goods and services they offer, because of the assumption that consumers with a positive attitude are more likely to
behave in a way that benefits the retailer (Puccinelli et al., 2009, p. 21).
Store price image in particular focuses on a stores image in regard to prices,
while excluding other facets of a stores image. In previous pricing literature,
store price image has been addressed and conceptualized in different ways
(Desai/Talukdar, 2003, p. 904; Cox/Cox, 1990, p. 430). Some researchers focus
on the price-level aspect and see price image merely as the general belief about
the overall level of prices that consumers associate with a particular retailer
(Hamilton/Chernev, 2013, p. 2) and, thus, refer to store price image as price-level
perception (Ofir et al., 2008, p. 414; Kukar-Kinney et al., 2007, p. 219;
Desmet/Nagard, 2005, p. 393; Srivastava/Lurie, 2004, p. 117). On the other
hand, store price image has been conceptualized as a multidimensional construct
(Zielke, 2006, p. 299, 2010, p. 750). Here store price image has been defined as a
multidimensional latent variable that consists of several perceptual dimensions
about a retailers pricing activities and their consequences (Zielke, 2010, p.
750), taking several dimensions of store price image into account, while the
former definition limits it to a stores perceived price level. The perceptual dimensions considered are namely price-level perception, value-for-money perception, price perceptibility, price processibility, and (price) evaluation certainty.
Price-level perception is the perception of a products or shopping baskets price,
while neglecting quality differences. Here a positive price-level perception is
defined as a condition under which the consumer perceives the price level as low.
Value-for-money perception represents the tradeoff between give (e.g., money,
effort) and get (e.g., utility) components. Price perceptibility describes the convenience with which a customer can visually perceive price information from a

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113

retailer. Price processibility is the ease of comparing prices of different product


alternatives in a purchase situation. Evaluation certainty refers to the ease of the
price evaluation process at store level and the consumers certainty regarding the
judgment of a stores prices. Previous research also points out that the store price
image influences consumers choice of retailer, and therefore retailers should pay
attention to the consumers attitude towards a stores pricing practices (Zielke,
2010, p. 759; Alba et al., 1994, p. 219).
Previous literature did not only define the concept of store price image, but also
assessed what aspects influence the consumers store price image. Most aspects
for which the influence on store price image has been assessed were retailer
characteristics, such as low-price guarantees (Ho et al., 2011, p. 127),
price-matching guarantees (Kukar-Kinney et al., 2007, p. 212; Srivastava/Lurie,
2004, p. 118), or price-beating guarantees (Desmet/Nagard, 2005, p. 394). But
also consumer related aspects, such as price consciousness (Kukar-Kinney et al.,
2007, p. 212) and the amount of recalled low-priced and higher-priced items
(Ofir et al., 2008, p. 416) have been analyzed as potential influencing factors.
Jain/Srivastava (2000) conduct a series of experiments and analyze the influence
of price-matching guarantees on store price image in terms of price-level perception. If a price-matching guarantee is offered by a retailer, the retailer refunds
consumers the difference between the price they paid for a specific product and
another retailers lower price for the same product if the lower price has been
discovered by the customer after purchasing the product at the former retailer.
The researchers demonstrate that the availability of a price-matching guarantee
leads to a lower perceived store price image, as well as to a higher confidence of
consumers that they can find low prices at this store (Jain/Srivastava, 2000, p.
353). The reasoning here is that if price-matching guarantees are available, the
market mechanisms are perceived as stronger, which leads to lower price levels.
Srivastava/Lurie (2004, p. 120) demonstrate that if a price-matching guarantee is
available, consumers perceive a stores price level as lower. They furthermore
show that the relationship between the perception of other consumers intentions
to enforce a guarantee and a consumers perception of store prices is mediated by
the perceived cost of offering a price-matching guarantee for high-price retailers

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(Srivastava/Lurie, 2004, p. 121). In addition, the relationship between the availability of price-matching guarantees and the perceived store price image is moderated by the perceived search costs. Search costs have a negative influence on
this relationship, as the availability of price-matching guarantees leads to lower
perceived store prices if search costs are low, but not in the case of high search
costs (Srivastava/Lurie, 2004, p. 122).
Desmet/Nagard (2005, p. 393) differentiate two types of low-price guarantees:
price-matching guarantees and price-beating guarantees. While in the case of
price-matching guarantees retailers match their price to prices of competitors that
offer a lower price, retailers offering price-beating guarantees refund the customer more than the difference between their price and the competitors lower price.
When analyzing the influence of these two types of low price guarantees, Desmet/Nagard (2005, p. 397) find that both types have a positive influence on the
retailers price image (i.e., a lower perceived price level), but the positive influence of price-beating guarantees is stronger than the influence of price-matching
guarantees. Furthermore, the customers intention to shop at a given store increases for any type of price guarantee. However, here as well, price-beating
guarantees have a stronger positive influence than price-matching guarantees. In
addition, a price-beating guarantee is also perceived as being of higher value for
the customer than a price-matching guarantee. Nevertheless, the researchers
underline that price-beating guarantees also can have negative effects as they
tend to be less believable, compared to price-matching guarantees
(Desmet/Nagard, 2005, p. 397).
Kukar-Kinney et al. (2007, p. 211) do not distinguish these two types of price
guarantees, but rather define price-matching guarantees as guarantees or promises to match or beat competitive prices before or after a purchase. They find
that price consciousness moderates the influence of price-matching guarantees
depth (i.e., the magnitude of the refund for the case that a competitor offers a
lower price) on store price image. In this sense, price consciousness has a negative influence on the relationship between price-matching guarantee depth and
store price image, as price unconscious consumer see an increase in depth as a
sign for lower prices, while price conscious consumers see an increased price-

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115

matching guarantee depth as a sign for high prices of the retailer in general. Furthermore, price consciousness moderates the relationship between refund depth
and shopping intention at a given store positively. For highly price-conscious
consumers, the correlation between shopping intention and refund depth is
stronger than for low price conscious consumers. However, price consciousness
does not moderate the influence of refund depth on consumers price search
activities before the purchase. In contrast, price consciousness moderates the
influence of refund length (i.e., the time period within which a refund can be
claimed) on prepurchase price search. Especially those consumers with low price
consciousness reduce their prepurchase price search if the refund length increases (Kukar-Kinney et al., 2007, p. 218).
In a recent paper, Ho et al. (2011) again analyze the influence of different price
signals on store image in general and on store price image, in terms of price-level
perception, in particular. By means of an experiment involving an online customer panel, they analyze the influence of two different pricing practices on store
price image: everyday low-price promises and price-matching guarantees. The
main difference between these signals is that everyday low-price promises are a
non-obligatory promise (Ho et al., 2011, p. 127), while a price-matching guarantee is a binding commitment. They find that if the everyday low-price promise
is credible, consumers perceive stores promising everyday low-price promises as
more customer-oriented, less self-serving, and as of greater integrity than stores
with low-price guarantees (Ho et al., 2011, p. 134). Furthermore, and which
appears intuitive, they find that stores with credible everyday low-price promises
have a more positive image. These retailers appear more customer-oriented, less
self-serving, and more integer than stores with non-credible everyday low-price
promises. Furthermore, they also find that stores offering price-matching guarantees as obligatory commitment, compared to stores with non-credible everyday
low-price promises, are perceived as more customer-oriented, less self-serving,
and more integer. In regard to price-level perception, consumers perceive that
stores with credible everyday low-price promises and stores with price-matching
guarantees offer lower prices than stores with non-credible everyday low-price
promises (Ho et al., 2011, p. 133).

116

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Ofir et al. (2008, p. 417) analyze the influence of the number of products, the
consumer is able to recall from memory, on store price image. They asked study
participants to either recall two or five low-priced products offered at a specific
supermarket. The results show that the stores price level is perceived as lower if
participants have to recall two low-priced products than if they have to recall five
low-priced products. In the same way, consumers perceive a stores price level as
higher when asked to recall two high-priced items, in contrast to when remembering five high-priced items. The researchers argue that the ease of recalling
two items lead to a stronger incorporation of these prices into the overall price
image than if five prices have to be recalled, which is the more difficult task. If
the task is difficult, the consumers infer that those prices are not typical for this
store (Ofir et al., 2008, p. 417). These relationships are moderated by consumers
store knowledge. Consumers with more knowledge about products and the store
do rely less on the ease of recalling low prices on the one hand, and they have
less difficulties recalling five low-priced products, on the other hand. Therefore,
for consumers with a higher knowledge, the perceived store price level is lower
when five low priced products are recalled, while for less knowledgeable consumers the perceived price level is lower if only two low price products have to
be recalled (Ofir et al., 2008, p. 420). However, consumers store experience,
which is here seen as the consumers frequency of visits to a store and information searches at a given store, has no influence on the relationship between
number of prices recalled and perceived price level (Ofir et al., 2008, p. 422).
In contrast to previous research, Zielke (2010, pp. 750751) defines store price
image not as price-level perception, but rather sees it as a multidimensional construct. As discussed above, according to the author, store price image comprises
the dimensions price-level perception, value-for-money perception, price perceptibility, price processibility, and evaluation certainty. In his work, he analyzes the
influence of different store types on the individual store price image dimensions,
as well as their moderating effect on the relationship between the individual store
price image dimensions. The store types he compares are discount stores, supermarkets, organic food stores, and public markets (Zielke, 2010, p. 752). He finds
that, depending on the type of store, different dimensions have a positive influ-

Previous Research in Relevant Fields of Research

117

ence on value-for-money perception. For discount stores and supermarkets,


price-level perception has a strong positive influence on value-for-money perception. This implies that for these stores, price level dominates the value-formoney perception, which is reasonable for discounters and supermarkets. In
contrast, for organic food stores and weekly markets the price-level perception
does not have a significant influence on the value-for-money perception. For
organic food stores the most important dimension influencing the value perception is evaluation certainty. For weekly markets, no other store price image dimension has a significant influence on value-for-money perceptions. For the
individual store types also different store price image dimensions influence consumers intention to shop at a given store. Predictors for consumers shopping
intention in the case of supermarkets and discounters are similar. For both store
types value-for-money perception is the most important driver for shopping
intentions, followed by price-level perception. For organic food stores the
strongest influence on shopping intentions exerts again value-for-money perception followed by price processibility. A potential reason for this can be seen in
the difficulty for consumers to compare prices of organic and non-organic products. Consumers appreciate it if stores ease price processibility in general. For
weekly markets, shopping intention is predominantly driven by price perceptibility that is the ease with which consumers can access product prices. A second
important driver here is also price-level perception (Zielke, 2010, pp. 761762).
This literature overview shows that different definitions of store price image
exist, as well as a variety of factors that influence the consumers image of a
stores pricing practices. An overview of previous literature on store price image
is given in Table 12.
Author(s)

Ho et al. (2011)

Def.
Store
Price
Image

Design/
Methodology

Participants

Causal / Online
Experiment

n = 382, n = 350
Online consumer panel

Predictors

Everyday Low
Price Promises
Price-Matching
Guarantee

118

Zielke (2010)

Ofir et al. (2008)

Previous Research and Theoretical Background

Kukar-Kinney et
al. (2007)

Descriptive / PaperPencil Questionnaire

n = 306
Consumers

Causal / Survey

n = 99, n = 101,
n = 78, n = 100
Supermarket
Shoppers

Causal / Computer
simulated experiment

n = 403
Undergraduate
Students

Store format
Number of recalled
low-priced products
Number of recalled
low-priced or
higher-priced
products
Price Consciousness
Refund depth of
Price-Matching
Guarantee
No price guarantee

Desmet/LeNagard
(2005)

Causal / Personal
Interview

n = 180
Consumers at
shopping mall

Price-Matching
Guarantee
Price-Beating
Guarantee

Srivastava/Lurie
(2004)

Jain/Srivastava
(2000)

Causal / Survey

n = 106
Graduate students

Causal/Survey

n = 104
Graduate students, consumers at airport

Price-Matching
Guarantee
Search costs
(present / absent)
Price-Matching
Guarantee

VWRUHSULFHLPDJHVHHQDVSULFH-level perception
VWRUHSULFHLPDJHVHHQDVPXOWLGLPHQVLRQDOFRQVWUXFW

Table 12: Overview store price image literature

Unit prices have not been included into the unit price research, yet. Reviewing
previous research on factors that influence store price image leads to the question, whether also unit prices can influence a stores price image. Unit prices
have been introduced in order to ease price comparisons at the point of purchase.
Thereby it is easier for consumers to determine the product with the lowest price
regardless of the package size and shape. Making it easier for the consumer to

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119

find lower-priced products can influence the stores overall price image. Unit
prices have been introduced to increase price processibility, therefore, it can be
expected that unit prices also influence this dimension of store price image. Furthermore, a prominently displayed unit price can even further increase price
processibility, as prominence makes it even easier for the consumer to compare
unit prices. As the display of unit prices makes it easier for consumers to find
lower prices while the offered value remains the same, it can also be assumed the
unit price have a positive influence on value-for-money perception. One objective of this thesis is to analyze the influence of unit prices on store price image.
Here, store price image should not be used to merely represent price-level perception, but rather as a multidimensional construct as suggested by Zielke (2006,
p. 299, 2010, p. 750).
The aim of this thesis is to analyze the influence of unit price format on pricelevel perception, perceived quality and purchase intention, as well as the influence of unit price availability and unit price prominence on store price image. By
presenting the previous literature in the relevant fields of research, it has been
demonstrated that past research demonstrated that the framing of numerical information influences the perception of quantity. This leads to the assumption that
the unit price unit of measure, as the framing of the unit price, can influence the
price-level perception. Furthermore, previous research provided evidence for the
influence of prices on consumers quality perception. However, a number of
potential consumer-related, product-related, retailer-related as well as studyrelated moderators have to be considered here. Therefore, it is assumed that the
unit price can also influence the quality perception and that different framings of
the unit price can lead to differences in quality perception, while a number of
control variables have to be considered. Finally, the review of the literature addressing consumers store price image and its influencing factors shows that a
number of pricing practices can influence the consumers perception of a stores
pricing practices. Hence, it is expected that also unit pricing, as a store-specific
pricing practice, can influence the store price image.

120

Previous Research and Theoretical Background

Having these assumptions in mind, in the next paragraphs, theories and consumer heuristics are presented that represent the foundation for the hypotheses in
regard to the unit prices influences on the product and retailer levels.

3.2

Theoretical Background

The hypotheses concerning the influence of unit price format on consumers


attitude towards individual products as well as towards individual retailers are
based on theoretical premises and heuristics. The general usage of unit prices as
reference prices at the point of purchase is explained by the Weber-Fechner law,
adaptation-level theory, range-frequency theory, assimilation-contrast theory,
and prospect theory. Furthermore, theories and heuristics that support the hypotheses concerning the influence of unit price format on price-level perception
are the theory of bounded rationality, framing effects, the numerosity heuristic,
the face value effect, money illusion, and unitosity effects. In regard to the influence of unit price on quality perception relevant theories are the theory of perceived risk, inference theory, cue utilization theory. Additional theories that lend
support to the influence of unit price availability and unit price prominence on
store price image are the appraisal theory and availability heuristics. An overview of these theories is given in Figure 7.

Theoretical Background

121
Weber-Fechner Law,
Adaptation-Level Theory,
Range-Frequency Theory,
Assimilation-Contrast Theory,
Prospect Theory

Unit
Unit
Price
Price
Usage
Bounded Rationality,
Framing Effects,
Numerosity Heuristic,
Face-Value Effect,
Money Illusion,
Unitosity Effect

Price-Level
Perception

Theory of Perceived Risk,


Inference Theory
Cue Utilization Theory

Cue Utilization Theory,


Inference Theory
Apparisal Theory,
Availabiltiy Heuristic

Quality Perception

Store Price Image

Figure 7: Overview of relevant theories

3.2.1 Unit Price Usage


Unit prices can be seen as reference prices that are used at the point of purchase
to compare prices of different product alternatives. The theoretical foundation of
reference prices can be found in psychophysics (Cheng/Monroe, 2013, p. 103).
Relevant Theories in this context are Webers law and its extension the WeberFechner law (Kaas/Hay, 1984, p. 336; Henderson Britt, 1975, p. 24). Webers
law describes how people notice different magnitudes of physical stimuli
(Cheng/Monroe, 2013, p. 105) and describes that rather than the absolute difference, ratios are important when predicting an individuals reaction to a stimulus
change. It expresses the proportional relationship between the magnitude of a
physical stimulus and the magnitude that has to be added to the stimulus, so
individuals are able to perceive a change in the stimulus (Cheng/Monroe, 2013,
p. 108). The Weber-Fechner law can be expressed as

=K

(3)

with K as a constant ratio, I is the stimulus that is used as reference and I is the
stimulus change (Henderson Britt, 1975, pp. 2122). The general principle is that

122

Previous Research and Theoretical Background

a change in stimulus (I) leads to a reaction, if the ratio of I and the initial
stimulus (I) meets or exceeds the constant term K. If the ratio equals K (equation
(3)), I is the just noticeable difference, the smallest possible change of I that
leads to a reaction. Price is considered a physical stimulus, and as such it can
cause individual-specific sensations (Cheng/Monroe, 2013, p. 104). If applied to
prices, Webers-Law implies that if a given price (P) is increased by a certain
amount (P), it depends on the price increase in relation to the initial price
(P/P) if the price increase is perceptible. If this ratio equals K, P is the differential price threshold that is the minimum price difference necessary for the
consumer to perceive a change in price (Monroe, 1973, p. 75).
P

=K

(4)

The price (P), the price difference (P) is compared to, serves as reference price.
If the difference between a price and its reference price is large enough, so that
the ratio of the difference to the reference price and the reference price itself
equals or exceeds the constant K, a price is perceived as significantly different
from a reference price. Hence, an individual bases its evaluation of a given price
on a reference price. If the ratio of the price difference and the reference price
(P/P) equals K, P is also seen as a differential price threshold that is defined
as the minimum difference in price between the price in question and a buyers
reference price necessary to induce a perception of a price change
(Cheng/Monroe, 2013, p. 108).
As price is considered a physical stimulus, and an individuals reactions to physical stimuli is specific to the individual and external factors, literature suggests
that K is specific to individuals, products, and markets (Dehaene/Marques, 2002,
p. 717).
Fechner extended Webers-Law, as this only holds true for a limited range of
stimulus intensities. For example, for very small reference stimuli, the constant K
becomes very large. Therefore, Fechner brought forward the argument that the
subjective sensation has to be measured indirectly by using differential increments and formulated the Weber-Fechner law accordingly (Monroe, 1973, p. 74):
R = K log S +a

(5)

Theoretical Background

123

Here R is the extend of the response, S the stimulus magnitude, K again is a constant term and a is the constant of integration (Monroe, 1973, p. 74). Several
researchers found a good fit for a logarithmic response function, considering
perceived quality as the consumers response:
Q = K log P
(6)
Here Q stands for the level of quality perceived by the consumer, K is a constant
term and P stands for the price (Monroe, 1973, p. 75).
A second theory the concept of reference prices is based on, is the adaptationlevel theory. Psychologists adopted the term adaptation from biology, where the
meaning is adjustment to the conditions under which species must live in order
to survive (Helson, 1964, p. 37), and from sensory physiology that defines adaptation in a more restricted way as decrement in intensity of sensation or muscular response as a result of steady-state stimulation or continued responses.
(Helson, 1964, p. 38). Psychologist commonly use the latter definition for the
concept of adaptation (Helson, 1964, p. 42). According to adaptation-level theory, stimuli are judged in relation to internal standards, so-called adaptation levels,
that represent the combined impacts of past and present encounters of similar
stimuli (Monroe, 2003, p. 130). The response to a new stimulus is influenced by
the relationship between the new stimulus and the adaptation level (Diaz, 2013,
p. 13). Therefore, all judgments are related to an individuals existing but dynamic adaptation level. These adaptation levels are rather regions than specific points
in a continuum. Stimuli influencing the adaptation levels can be divided into
focal, contextual and organic cues. Focal cues are stimuli, individuals are directly
responding to, such as price. Contextual cues, also referred to as background
cues, are stimuli present in the environment, influencing an individuals perceptions. Organic cues are inner physiological and psychological processes that
influence behavior (Cheng/Monroe, 2013, p. 110). For prices, the adaptationlevel theory implies that a weighted average of previously encountered prices
forms an initial reference price against which current selling prices are evaluated
(DelVecchio/Craig, 2008, p. 273). Therefore, the reference price can be seen as
an adaptation level for newly encountered prices. With every newly encountered

124

Previous Research and Theoretical Background

price, the reference price is assimilated to the new price, however, usually the
new price does not replace the initial reference price (Lee, 2013, pp. 152153).
With a series of experiments Janiszweski/Lichtenstein (1999) demonstrate that in
addition to the adaptation-level theory the range theory offers explanations for
reference price effects. According to the adaptation-level theory, price evaluations are based on a comparison of the market price and an IRP. However, Janiszweski/Lichtenstein (1999, p. 358) propose that also the range theory has to be
utilized to explain reference price effects. They empirically show that the evaluation of a given price is rather based on the comparison of this price and the endpoints of the range of prices within an evoked set then with one specific adaptation level. Like adaption-level theory, range theory posits also that the distribution structure of prices within a category as well as their sequential order influence the reference price (Lee, 2013, p. 154). Range-Theory suggests that a stimulus is judged in relation to the endpoints of the set of stimuli, to which the stimulus belongs (Volkmann, 1951, p. 279). Applied to price evaluations, this implies
that a current selling price is evaluated in relation to the highest and lowest prices a consumer has encountered (DelVecchio/Craig, 2008, p. 273). The position of
a price within the range of prices of a consideration set, hence, influences a
prices perceived attractiveness. Consequently, range theory highlights the conceptualization of the reference price as an accepted price range rather than a
price point (Homburg/Koschate, 2005a, p. 395). An extension of the rangetheory is Parduccis (1965) range-frequency theory, which posits that not only
the range of stimuli influences the standard an individual compares new stimuli
against, but also the frequency of encountered prices affects the reference price.
The range principle within this theory also asserts that an individual utilizes
categories to subdivide the range, i.e. the difference between the end points of
stimuli values. For example, an individual may divide the range in two categories, large and small, comprising the upper and the lower half, respectively,
of the stimuli range (e.g., mean split). Pursuant to the range principle, these categories are fixed. The frequency principle, on the other hand, asserts that individuals utilize categories for a fixed proportion on stimuli that are judged (e.g.,
median split). Going back to the example of the categories large and small,

Theoretical Background

125

each comprises half of the stimuli range. If more stimuli are perceived that can
be assigned to the large category, the subrange of this category becomes smaller, so that the amount of stimuli in each category is spread more evenly among
categories (Parducci, 1965, p. 408). Applied to the price evaluation process, this
implies that a prices attractiveness is not only evaluated on its position within a
price range, but also based on the distribution of the other prices within this
range. Categories (e.g., very expensive) comprise a more narrow range of
prices, the more often prices within this category are encountered.
Similar to the adaptation-level theory, assimilation-contrast theory suggests that
a newly encountered stimuli is compared by an individual against a standard of
previously experienced stimuli in this category (Cheng/Monroe, 2013, p. 111).
Hereby stimuli that are similar to the standard of previously encountered stimuli
are perceived as more similar to the standard than they actually are (assimilation
effect). In contrast, stimuli that are not similar to the standard are perceived as
more differently from the standard than they actually are (contrast effect). Sherif/Hovland (1961, pp. 128129) illustrated this assimilation and contrast of
stimuli with an individuals stand in regard to a social issue. Here the individuals stand is understood as the latitude of acceptance. This latitude of acceptance
is defined as the range of positions on an issue that an individual considers
acceptable to him (Sherif/Hovland, 1961, p. 129). In contrast, positions concerning a social issue outside this latitude of acceptance are contrasted to the
individuals stand and perceived as objectionable. The range of positions that are
contrasted to the individuals position is also called latitude of rejection. For the
price evaluation process the assimilation-contrast theory implies that prices that
are within the accepted price range are assimilated and prices outside of the accepted price range are contrasted and are perceived as significantly different
from the reference price (Homburg/Koschate, 2005a, p. 396). Hence, consumers
accept prices that are within a certain range around their reference, however,
prices outside this range are located within the latitude of rejection and are perceived as either too low or too high.
However, as mentioned before, prices that are located above or below but are
equidistant to a certain reference price are not perceived as equally attractive.

126

This

Previous Research and Theoretical Background

can

be

explained

with

the

assumptions

of

prospect

theory

(Kahneman/Tversky, 1979). Prospect theory describes that individuals are more


sensitive to losses than to gains. According to prospect theory, the utility function
is convex for gains and concave for losses (see Figure 8) (Kahneman/Tversky,
1979, p. 279). When judging prices in relation to reference prices, consumers
perceive either a gain (i.e., price below reference price) or a loss (i.e., price
above reference price). Based on the assumed loss aversion, it can be expected
that a loss is evaluated more negatively than a gain of the same extend. Furthermore, because of the concave utility function for losses and the convex utility
function for gains, a declining sensitivity for losses and gains is assumed
(Homburg/Koschate, 2005a, p. 397). The run of the utility curve, as described by
Kahneman/Tversky (1979, p. 279), therefore offers a reason for different perceptions of price attractiveness for prices equidistant from a reference price. Losses,
hence, lead to a lower perceived negative utility to a greater extend, than gains
that have to same distance to a reference price lead to positive utility for the
consumer.

Theoretical Background

127
Utility

Losses

Gains

Figure 8: Utility function according to prospect theory (based on Kahneman/Tversky


(1979, p. 279))

3.2.2 Influence of Unit Price Format on Price-Level Perception


After introducing theories that explain the concept of reference prices, now theories are presented that explain the influence of framing on the perception of
quantities.
Simon (1955, p. 99) criticizes the assumption by traditional economic theory of a
rationally behaving homo economicus. He points out that, just as the maximum
speed an organism is able to move at restricts its behavioral alternative, computational capacity potentially represents a boundary to an individuals ability to
make rational choices (Simon, 1955, p. 101). Due to this bounded rationality,
consumers might not be able to determine the exact pay-off for each alternative
and to rank order the pay-off of all possible outcomes. This is necessary, in order
to specify for all alternatives if one outcome is better, equal or worse compared
to any other outcome. With a series of experiments, Kahneman/Tversky (1979)

128

Previous Research and Theoretical Background

support the assumption that consumers do not always act rationally and identify
a number of irrational effects, such as certainty effects that describes consumers
preference for certain outcomes over uncertain outcomes, even if the expected
outcome is higher in the latter case.
Rational choices imply that preferences between options do not change depending on the frame. Most decision problems can be expressed in more than one
way, hence, different frames can be used to formulate a decision problem
(Tversky/Kahneman, 1981, p. 453). Frames can be compared to alternative perspectives for observing a visual scene (Tversky/Kahneman, 1981, p. 453). A
decision frame is defined as the decision-makers acts, outcomes and contingencies (Tversky/Kahneman, 1981, p. 453) in regard to a particular choice. This
frame is furthermore influenced by external factors, such as the formulation of
the problem, but also by psychographic characteristics of the decision-maker,
such as personal norms, habits and other characteristics (Tversky/Kahneman,
1981, p. 453). However, since human perceptions and decision-making is not
perfect, changes of framing oftentimes lead to changes in relative desirability of
different options (Tversky/Kahneman, 1981, p. 453). These framing effects
violate invariance, a fundamental aspect of rationality. Invariance is the assumption that variations in the description of outcomes, which represents a change in
the decision frame, do not affect preferences (Tversky/Kahneman, 1986, p.
S253). Framing effects occur if extensionally equivalent descriptions lead to
different choices by altering the relative salience of different aspects of the problem (Kahneman, 2003, p. 1458). Framing effects in this sense have also been
defined as attribute framing to distinguish this form of framing from the
gain/loss framing underlying mental accounting (Darke/Chung, 2005, p. 37). The
fundamental principle of framing effects is the passive acceptance of a given
problem formulation. Due to this passivity, individuals are not able to derive a
standard representation for differently framed alternative problem formulations
(Kahneman, 2003, p. 1459). By not actively computing the outcome, the problem framing is accepted as a given and invariance between the two differently
framed but otherwise equal problem alternatives do not arise. Rationality should
prevent different framing of the same problem to influence the perceived attrac-

Theoretical Background

129

tiveness of different alternatives. In the context of consumer behavior, framing


effects have been defined to occur if superficial alterations of the description of
an offer results in a change of associations about the offer, which consequently
influences product evaluation (Darke/Chung, 2005, p. 37). The occurrence of
framing effects has been demonstrated for outcomes concerning the loss of human lives or health risks and decisions concerning money (Chandran/Menon,
2004; Tversky/Kahneman, 1981, p. 457) or perceptions of volume
(Raghubir/Krishna, 1999, p. 317). For example, health risks are perceived to be
more threatening if expressed in a day-frame (e.g., people succumbed to a disease per day) than in a year frame, because of the closer proximity and the higher
concreteness (Chandran/Menon, 2004, p. 376). Containers are perceived to have
a higher volume if they are elongated, compared to containers of the same volume that have a lower height (Raghubir/Krishna, 1999, p. 317).
Consumer choice typically involves several alternatives, each being described by
a variety of attributes. The higher the number of product alternatives as well as
the amount of attributes, the more difficult the decision process is for the consumer. According to Bettman et al. (1991, p. 51) further factors that add to this
complexity are the process complexity of specific attributes and the degree of
uncertainty concerning the values of attributes involved. As the amount of shared
attributes among the evoked set of products or services decreases, the complexity
of the purchase decision further increases. With increasing complexity of the
purchase decision, the likelihood of consumers utilizing heuristics when making
a purchase decision increases. One heuristic frequently used is the numerosity
heuristic. Numerosity refers to the number of discriminable elements
(Brannon/Terrace, 1998, p. 746) of a stimulus. The usage of the numerosity heuristic is defined as the judgment of individuals concerning amounts or likelihood
of occurrence on basis of the indicated number of units that compose the stimulus (Pelham et al., 1994, p. 104). There is a tendency to infer quantity from numerosity, since this inference is relatively effortless to make and consequently
hard to resist (Pelham et al., 1994, p. 107).
The unit of measure influences the numerosity involved to describe an attribute.
The computational use of numerical representation is not specific to humans, but

130

Previous Research and Theoretical Background

also animals show this behavior. Rosencrantz and Macduff, two rhesus monkeys
that participated in a study by Brannon/Terrace (1998, p. 748), were able to order
stimuli in regard to their numerosity for the numerosity range from 1 to 9. Furthermore, chickens display a preference for higher numerosity, by preferring to
eat a grain divided into four parts instead of one single grain of the same size
(Wolfe/Kaplon, 1941, p. 356). Such numerosity heuristics are also prevalent
among humans (Tversky/Kahneman, 1981, p. 457). For example, Pelham et al.
(1994, p. 113) show that participants that have the task to estimate a sum of several elements infer the sum from the number of elements of the problem and not
from the value of the individual elements. For example, although both sums are
equal, 3.4 + 2.1 + 1.3 + 0.8 + 1.1 + 2.2 is estimated to be greater than
4.1 + 3.9 + 2.9, because of the higher number of elements. Cognitive load further
strengthens the numerosity effect. This is also supported by another experiment,
in which participants tend to infer the monetary value of a stack of coins rather
from the number of coins than from the value of the individual coins (Pelham et
al., 1994, p. 117). Here the numerosity effect is also further strengthened by time
pressure. A last experiment by Pelham et al. (1994, p. 125) further supports these
findings and shows that participants that are put under time pressure perceive a
foreign person that is described with nine positive characteristics more positively
than participants that are presented with three groups of three characteristics.
A theory that focuses on the influence of the nominal value of currencies is the
theory of money illusion (Shafir et al., 1997, p. 341). Money illusion can be interpreted as a bias in the assessment of real value of economic transactions,
induced by a nominal evaluation (Shafir et al., 1997, p. 348). Shafir et al. (1997,
p. 345) show that in times of inflation, individuals tend to overestimate the increasing prices, while they do not adjust their equivalently increasing budget
and, hence, underestimate their purchasing power. Reasons why individuals
focus on the nominal value instead of the real value are that nominal values are
easy to assess, easy to evaluate, and oftentimes give an reasonable estimate of
the actual worth (Shafir et al., 1997, p. 366).
Closely related to money illusion effects are face-value effects. In the special
case that subjects compare prices in different currencies, face-value effects can

Theoretical Background

131

be frequently observed. The face-value effect describes that consumers overestimate prices in foreign currencies involving a higher number of units (e.g., Norwegian or Danish Kroner, Swedish Kronor compared to Euro) compared to their
local currency. In contrast, consumers tend to underestimate prices in currencies
that involve a smaller number of units to express an equivalent price (e.g., Pound
Sterling, Kuwaiti or Bahraini Dinar compared to Euro) (Raghubir/Srivastava,
2002, p. 346).
The opposite of the numerosity effect is the unitosity effect. The unitosity effect
describes the circumstance that consumers rather use the unit of measure as cue
for the quantity of a stimulus than the number of units expressing the stimulus.
Hence, numerical information expressed in larger units are perceived to be of
higher quantity than numerical information expressed in smaller unit of measure,
since individuals infer a higher quantity from the larger units of measure. In the
case of weight, the indicated weight of an item will be perceived as larger if
indicated in kg than the equivalent weight expressed in g, regardless of the numerical information (Monga/Bagchi, 2012, p. 187). As discussed before, research has shown that consumers apply unitosity heuristics rather in abstract
mindsets, while numerosity heuristics are applied in more concrete mindsets
(Monga/Bagchi, 2012, p. 192).

3.2.3 Influence of Unit Price Format on Quality Perception


A foundation for the relationship between price and quality perception can be
seen in the theory of perceived risk. Risk regarding purchases has been conceptualized in a two-dimensional way. The first dimension captures the uncertainty
concerning the decision outcome and the second dimension covers the magnitude of possible negative consequences when a particular product is purchased
(Kroeber-Riel/Grppel-Klein, 2013, p. 483). Hence, the first dimension is related
to the likelihood of making the wrong choice and the second dimension involves
the potential consequences of making a wrong choice. According to KroeberRiel/Grppel-Klein (2013, p. 483) negative consequences can be of financial,
functional, psychological or social nature. For example, the purchase of a purse

132

Previous Research and Theoretical Background

has negative functional consequences if the zip fastener breaks soon after the
purchase. In contrast, if friends dislike the purse, the purchase would have negative social consequences. Consumers strive for risk reduction when their personal threshold for risk indifference is exceeded (Kroeber-Riel/Grppel-Klein, 2013,
p. 484; Monroe/Krishnan, 1985, p. 214). In a purchase situation, consumers aim
for a gain in terms of a high performance-to-price ratio. Prospect theory shows
that individuals strive for certainty in gain situations, such as a purchase situation, and therefore are risk-averse in this gain situations (Kahneman/Tversky,
1979, pp. 268269). Therefore, if the perceived risk exceeds the tolerable risk,
consumers are expected to develop risk reduction strategies. One technique for
reducing the risk of a wrong quality judgment in a purchase situations is the
reliance on price. The consumer believes to reduce the risk of choosing a lowquality product by selecting a high-priced product, based on an assumed positive
correlation of price and quality (Diller, 1977, p. 221). Therefore, the perceived
risk in purchase situations is seen as a reason for the existence of price-oriented
quality valuations (Diller, 2008a, p. 151). The perceived risk can also explain the
consumers reaction in situations of cognitive dissonance. A purchase situation,
in which several products of apparently same quality are offered at different
prices, has to lead to cognitive inconsistencies if the consumer is convinced that
product performance has its price. This cognitive dissonance during product
evaluation can be resolved by the consumers assumption that, despite the similar
visual appearance, the higher-priced product has a higher quality (Diller, 1977, p.
221).
Another reason for the price-quality relationship can be seen in inference theory.
To make inferences refers to the construction of meanings about concepts and
relationships that are not explicit in the environmental information
(Peter/Olson, 1987, pp. 171172, italics removed). The tendency to make inferences instead of an in-depth investigation of given information is driven by costbenefit considerations (Nisbett/Ross, 1980, p. 295). In order to make inferences,
the individual has to believe in a relationship between cue and attribute. For
example, if a consumer believes in the relationship between price, as a cue, and
quality, as an attribute, he can draw inferences. In contrast, if he does not believe

Theoretical Background

133

in the relationship between cue and attribute, it is unlikely that inferences concerning the attribute are drawn based on the cue (Steenkamp, 1989, p. 111). Furthermore, previously learnt relationships that can be activated from memory,
strongly influence inferences (Peter/Olson, 1987, p. 172). Cues that consumers
use for making inferences about values, abstract attributes, or consequences, are
oftentimes tangible attributes as, for example, price, brand, or country-of-origin.
Finally, also cue utilization theory, which is similar to inference theory, supports
the assumption of consumers using prices to judge quality. According to this
theory, consumers tend to focus on a narrow range of cues that are used to make
inferences about concepts if they are faced with a large amount of information
(Easterbrook, 1959, p. 197). Typically, the more prominent cues are used here to
make inference. Price is an extrinsic product attribute that can be used as a cue to
judge quality (Hansen, 2005, p. 431). Therefore, consumers refer to one or more
indicators to use them as cues for judging the quality of a products overall performance (Richardson et al., 1994, p. 29). Cues are evoked depending on their
predictive and confidence values (Richardson et al., 1994, p. 29). While the
predictive value stands for a cues association with product quality from the
consumers point of view, the confidence value is the degree of the consumers
confidence in their ability to utilize and evaluate a cue accurately (Richardson et
al., 1994, p. 29).
The assumption of the influence of price-level perception and quality perception
on purchase intention is based on utility theory. Utility theory assumes that the
likelihood of an individual participating in an exchange transaction depends on
the relation of the utility that has to be surrendered and the utility gained
(Lichtenstein/Bearden, 1988, p. 189). In the context of consumer behavior, this
implies that a consumer approves a transaction if the perceived utility of a product exceeds the monetary sacrifice a customer has to make, in order to obtain this
product (Lichtenstein/Bearden, 1988, p. 189; Thaler, 1985, p. 207). Thaler (1985,
p. 205) distinguishes between two different types of utility: acquisition utility
and transaction utility. Acquisition utility is equal to the economic loss or gain
associated with a purchase and represents the difference between the utility of a
good and the price of the product and is designated as:

134

Previous Research and Theoretical Background

v(p ,-p),

(7)

where p is the value equivalent of some product i and p is the actual price of a
product i.
Transaction utility is the difference between the actual price of a good and a
reference price a consumer has in mind and is defined as

v(-p:-p* ),

(8)
which stands for the utility of paying the price p for a product i when the consumers reference price is p*. The total utility w of a product z hence is the sum
of acquisition utility and transaction utility (Thaler, 1985, p. 205).

wi,p,p* =vp ,-p+v(-p:-p* )

(9)

The consumers decision process, whether to purchase a certain good z or not


can be described as
wz,p,p*
p

>k it

(10)

A consumer will purchase a certain good z if the quotient of the total utility of z
and its price p exceeds the consumers budget constraint kit for category i at the
time t (Thaler, 1985, p. 207). This implies that the probability of a consumer
buying a certain product decreases if the utility of a product decreases or its
(perceived) price increases. Hence, if the consumers price-level perception increases, the consumers purchase intention decreases.

3.2.4 Influence of Unit Prices on Store Price Image


Hypotheses concerning the influence of unit prices on store price image are also
based on cue utilization theory and inference theory. Further theories, this set of
hypotheses is based on, are the availability heuristic and appraisal theory.
The availability heuristic is defined as a judgmental heuristic in which a person
evaluates the frequency of classes or the probability of event by availability, i.e.,
by the ease with which relevant instances come to mind (Tversky/Kahneman,
1973, p. 207). With a number of experiments Tversky/Kahneman (1973) illustrate that consumers indeed use availability heuristic in order to estimate frequencies or probabilities. For example, in one experiment individuals had to

Theoretical Background

135

estimate whether there are more words in English language that start with the
letter K than words where K is the third letter. As it is easier to recall words that
start with K than words with K as third letter, most individuals estimated that
there are more words starting with the letter K. Actually, in English language, K
is one of eight letters which appear more frequently as the third letter of a word
than in the very beginning of a word (Tversky/Kahneman, 1973, pp. 211212).
Furthermore, they show that the prominence of information cues influence an
individuals judgments. They asked two groups of participants to estimate a
product within 5 seconds. One group had to estimate the product
8 x 7 x 6 x 5 x 4 x 3 x 2 x 1, the other group had to estimate the product
1 x 2 x 3 x 4 x 5 x 6 x 7 x 8. Obviously, for the first group higher digits (e.g., 8, 7)
were on prominent first places of the product, for the latter group smaller digits
(e.g., 1, 2) were in the beginning of the mathematical expression. Because of the
availability heuristic, participants in the first group estimated the product to be
significantly larger than participants of the second group (Tversky/Kahneman,
1973, pp. 215, 216)
Appraisal theory, on the other hand, asserts that emotions are activated by the
evaluation (so called appraisals) of situations and events (Roseman/Smith, 2001,
p. 3). However, the same event can lead to different emotions for the evaluation
of the same even for different individuals. Also an individuals emotions in regard to an event can change over time. Furthermore, also the expectation of a
pleasant or an unpleasant event, such as the expectation of tasting a pleasant
dish, can lead to the activation of emotions. This also interacts with the perceived
certainty of an event. For example, if an individual is certain that they will obtain
a pleasant experience, they feel joy, whereas if they are uncertain that the experience they will obtain is pleasant, they feel hope (Roseman/Evdokas, 2004, p. 15).
In both ways, the evaluation of events or experiences leads to the activation of
emotions.
These theories discussed above are used in the next chapter to develop hypotheses concerning the influence of unit prices on consumer behavior as well as the
influence of unit prices on store price image.

137

Development and Empirical Testing of


Hypotheses

After giving a comprehensive literature overview as well as an overview of relevant theories, this chapter focuses on the development of hypotheses and on the
empirical testing of these hypotheses. This chapter is divided into two parts, first
the influence of the unit price format on the consumers attitude towards individual products is analyzed. In the second part of the chapter, the influence of the
unit price on the consumers attitude towards retailers is addressed.

4.1 Influence of the Unit Price at the Product Level


4.1.1 Hypotheses Development
The theories outlined in Chapter 3 are the foundation for the hypotheses development regarding the influence of unit price format on consumers price-level
perception, and consequently also quality perception and purchase intention.
Based on framing effects, it can be proposed that consumers perceive unit prices
differently, depending on the framing of the unit price. The conveying of otherwise equivalent unit prices in different units of measure can be seen as using
different framings for the same problem. Framing effects then will lead to different perceptions of unit prices for different unit price measurements.
Cognitive activity is an oftentimes overlooked cost of purchase decision-making.
At the same time, according to Peter/Olson (2010, p. 445), cognitive activity is
often the type of cost that is easiest for consumers to reduce. Therefore, it is
expected that consumers make use of heuristics in order to minimize the (cognitive) cost associated with a purchase if potential savings associated with an attentive price evaluation do not exceed the reduction in cognitive activity. One heuristic that is frequently applied by consumers is the numerosity heuristic. According to Pelham et al. (1994, p. 104) consumers make use of the numerosity heuris Springer Fachmedien Wiesbaden 2016
L. Himbert, Unit Pricing,
DOI 10.1007/978-3-658-13476-1_4

138

Development and Empirical Testing of Hypotheses

tic if they judge quantities on basis of the indicated number of units. Hence, if
individuals apply numerosity heuristics, they infer quantity primarily from the
numerical information and neglect information concerning the measuring unit.
Applied to unit prices, consumers focus on the numerical information of the unit
price statement and neglect to which unit of measure this numerical information
refers. This leads to the perception of higher unit prices for unit prices expressed
in larger units of measure (e.g., price per kg, price per l), compared to the unit
prices statement under usage of a smaller units of measure (e.g., price per 100 g,
price per 100 ml).
The phenomenon of money illusion describes consumers tendency to refer primarily to the nominal value of a monetary amount than to the real value when
judging prices (Shafir et al., 1997, p. 348). Applied to unit prices, this leads to
consumers focusing rather on the nominal value of a unit price, while neglecting
the unit of measure, hence the real value of the unit price.
The face-value effect implies that consumers tend to underestimate prices in
currencies that involve a smaller number of units to express an equivalent price,
while they overestimate prices in currencies that involve a larger number of units
(Raghubir/Srivastava, 2002, p. 346). When transferring this theory to unit prices,
the face-value effect leads to consumers overestimating unit prices that involve
larger numerical values, while consumers underestimate unit prices that involve
smaller numbers.
The unitosity heuristic describes the consumer behavior, where consumer focus
rather on the unit of measure than on the numerical value. Unitosity heuristics
are primarily used in abstract mindsets (Monga/Bagchi, 2012, p. 192). Therefore,
it is questionable to what extend unitosity heuristics are applied in concrete purchase decisions. However, in the case of unit prices, as the weight unit is the
denominator of the unit of measure, numerosity heuristics as well as unitosity
heuristics result in higher perceived price levels for unit prices stated in large
units of measure (e.g., price per kg, price per l). This further strengthens the
assumption that unit prices expressed in price per kg or l lead to higher perceived
unit prices than if the unit prices are expressed as price per 100 g or 100 ml.
Based on the presented theories and heuristics, the following is expected:

Influence of the Unit Price at the Product Level

139

H1: The consumer perceives the price level as higher if the unit price is stated in
a large unit of measure, compared to the presentation of unit prices in a
small unit of measure.
The influence of the unit price format on price-level perception can subsequently
also influence the quality perception, as suggested by cue utilization theory,
inference theory, and theory of perceived risk. According to cue utilization theory, consumers refer to one or more indicators to use them as cues for judging the
quality of a products overall performance (Richardson et al., 1994, p. 29). Price
is an extrinsic product attribute consumers frequently use as cue to judge quality
(Hansen, 2005, p. 431). Unit prices are a specific type of price information and
therefore can also be used to judge quality.
Similarly, inference theory suggests that consumers make inferences about concepts as well as relationships that cannot be directly assessed. These inferences
are based on cues that are available in the environment (Peter/Olson, 1987, pp.
171172). In this way, prices are used as cues for quality, since quality is not
explicitly assessable based on environmental information. As unit prices are also
price information, they can be used to infer quality.
According to the theory of perceived risk, individuals strive to reduce the perceived risk if their personal threshold for risk is exceeded (Monroe/Krishnan,
1985, p. 214). One technique to reduce the risk of buying a low-quality product
that is frequently applied by consumers is the purchase of high-price products, as
consumers assume a high-priced product to have a high quality (Diller, 1977, p.
221). Therefore, the subjective perceived risk in purchase situations is a reason
for the existence of price-oriented quality evaluations (Diller, 2008a, p. 151). As
the unit price is a price information, it can be assumed that consumers also refer
to the unit price in order to reduce the perceived risk. Based on these theories it
is hypothesized:
H2: The higher perceived price level leads subsequently to a higher perceived
quality.

140

Development and Empirical Testing of Hypotheses

The hypotheses concerning the influence of price-level perception and quality


perception on purchase intention are based on utility theory, which assumes that
the likelihood of an individual participating in an exchange transaction depends
on the relation of the utility that has to be surrendered and the utility gained
(Lichtenstein/Bearden, 1988, p. 189; Thaler, 1985, p. 207). This implies that the
probability of a consumer buying a certain product will decrease if the utility of a
product decreases or its (perceived) price increases. Hence, if the consumers
price-level perception increases, the consumers purchase intention will decrease.
Therefore, it is hypothesized:
H3: The consumers price-level perception has a negative influence on purchase
intention.
Utility theory also implies that the probability of a consumer buying a certain
product can be increased either by lowering its price p or by increasing its utility.
A products acquisition utility can be enhanced by increasing the quality perception of a product. Hence, it is assumed that a consumers purchase intention is
higher for products with a higher perceived quality. Thus, it is hypothesized:
H4: Perceived quality has a positive influence on purchase intention.
These four hypotheses are illustrated in Figure 9. This conceptual model is similar to the ones of Dodds/Monroe (1985, p. 86) and Hansen (2005, p. 423), which
have been empirically tested, and have been extended by other researchers
(Chapman/Wahlers, 1999, p. 53; Chapman, 1993, p. 2). Their models are extended by including the influence of the unit price format on price-level perception,
quality perception and consequently also purchase intention.

Influence of the Unit Price at the Product Level

141

Price-Level Perception

Unit Price
Unit of Measure

Purchase Intention

+
Quality Perception

Figure 9: Hypotheses overview (Product level)

4.1.2 Experiment 1: Unpackaged Goods


The hypotheses developed above were tested with two experiments. Experimental designs are used by researchers to assess how different experimental
conditions influence the behavior of subjects (Lee, 1975, pp. 23). In other
words, experimenters intentionally vary one aspect in order to discover what
happens to something else later (Shadish et al., 2002, p. 3). Experiments have
the unique advantage to provide evidence for causal relationships (Shadish et al.,
2002, pp. 3, 7; Lee, 1975, pp. 23). Experiments are defined as the practice of
holding everything constant except for the one variable under consideration
(Brown/Melamed, 1990, p. 1). By varying only a single factor, ceteris paribus,
causal relationships can be proven. Therefore, experiments are especially powerful when testing behavioral assumptions (Falk/Heckman, 2009, p. 537).
Good experimental designs have to fulfill several requirements. First, the analysis based on the experiment should yield unambiguous information concerning
the main objectives of the experiment and maximum information regarding the
objectives, as well as provide unbiased estimates. Second, experimental design
should be appropriate to test the hypotheses under consideration. And third, the
experimental design has to be feasible in the working conditions the researcher is
facing (Winer, 1971, p. 150).
Consumers may behave differently in the case of unpackaged goods and for prepackaged goods, since in the latter condition the overall price is available in

142

Development and Empirical Testing of Hypotheses

addition to the unit price. Therefore, the first experiment is designed to extract
the influence of unit price unit of measure for unpackaged goods, while the second experiment is designed to assess this relationship for pre-packaged goods.
The idea of both experiments is that two groups of participants are presented
several price labels. Unit prices are presented as price per kg to one experimental
group and as price per 100 g to the other group. After the stimulus presentation,
participants answer questions concerning their perceived price level, perceived
quality, and their purchase intention. In order to determine details for the first
experiment, two pretests were conducted. With the first pretest the product categories used were determined, with the second pretest the prices for the stimuli
were determined.

4.1.2.1

Pretest 1

The product categories for this first experiment were determined based on a
qualitative pretest collecting data of shopping behavior for unpackaged goods
(n = 8, 25 % female, mean age = 27.5, SD = 3.46). Previous research suggests to
include products that are frequently purchased by the sample of the experiment
with their own money (Gardner, 1970, p. 29). Therefore, participants were asked
to write a list of up to ten product categories, which they frequently buy as unpackaged products instead of their pre-packaged product alternatives. The results
are presented in Figure 10, indicating how frequently the individual items are
mentioned and where in the list of items they are ranked on average. The results
show that the majority of participants mention tomatoes as a product they frequently buy as loose items. Additionally, if tomatoes are mentioned, on average
they appear in the beginning of the list, which implies that participants mentioned tomatoes from the top of their mind. Another product category mentioned
by the majority of participants is sausages. Compared to meat, which is also
named by five participants, sausages, at the average, appear at slightly higher
ranks in the lists of items mentioned. Therefore, tomatoes and salami were chosen as products for the experiment.

Influence of the Unit Price at the Product Level

143

Figure 10: Product categories mentioned in Pretest 1

4.1.2.2 Pretest 2
Furthermore, a second pre-test (n = 35, 51.4 % female, mean age = 31.9,
SD = 8.75) was conducted to determine the accepted price range for both of the
products. The Van-Westendorp method was utilized to determine the upper and
lower price threshold and selected prices within this acceptable price range that
reflect typical supermarket prices for the considered products.
According to the Van-Westendorp method (Ku, 2014, p. 200), in order to determine the acceptable price range for a product, consumers have to indicate four
different price points. First, a price for the product, which is justified but still
inexpensive, second, the price for the product that is relatively high but still acceptable, third, the lowest price that is perceived as too high, as well as a price
that is considered so low that the consumer is in doubt about the product quality.
The percentage of consumers that named the individual prices is then displayed
cumulatively in a diagram. The acceptable price range is between the interception of the curves indicating the cumulative percentages of prices perceived as

144

Development and Empirical Testing of Hypotheses

too low and those perceived as relatively high, and the interception of the curves
indicating the cumulative percentages of respondents perceiving the respective
prices as too high and the cumulated percentage curve of those perceiving it as
still inexpensive and justified. According to this method, for the product category
salami, the acceptable price range is between 1.10 and 2.50 per 100 g (see
Figure 11). For the experiment, 1.50 /100 g and 15.00 /kg, respectively, were
selected as stimuli. For tomatoes, the acceptable price range is between 2.00
and 3.00 per kg. Here, 0.21 /100 g and 2.10 /kg were determined as stimuli
(see Figure 12).

4.1.2.3

Methodology

In the first experiment, subjects are presented a computer-simulated shopping


scenario. Computer-simulated scenarios are a common methodology in behavioral pricing research (Carver/Padgett, 2012, p. 501). The advantage of a computer-simulated shopping scenario is that participants can see the stimulus at the
same time under the exact same conditions. According to Sattler (1994, pp. 36
37), computer-based experiments are not inferior to real product presentation in
terms of internal or external validity. Hypothetic product presentations yield the
same internal validity as real product presentations. He also states that both
presentation forms can also yield high external validity, since hypothetic as well
as real product presentations can be designed to resemble real product encounters
in purchase situations.

Influence of the Unit Price at the Product Level


100%

145

Acceptable Price Range

90%

Cumulated Percentage of Respondents

80%
70%
60%
50%
40%
30%
20%
10%
0%

Price
too low

inexpensive/justified

high/still acceptable

too high

Figure 11: Acceptable price range (Salami)

100%

Acceptable Price Range

90%

Cumulated Percentage of Respondents

80%
70%
60%
50%
40%
30%
20%
10%
0%

Price
too low

inexpensive/justified

high/still acceptable

too high

Figure 12: Acceptable price range (Tomatoes)

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Development and Empirical Testing of Hypotheses

For the first experiment a one-factorial between-subjects design with unit price
measure operationalized at two levels was chosen. In order to extract the causal
relationship between unit price format and the consumers perception of the price
level and the quality as well as their purchase intention, the unit price format is
the only variable altered between the two experimental groups. A betweensubjects design is chosen, since demand characteristics are less likely here than
when using within-subjects designs. When participants encounter multiple stimuli in form of products with different attributes (e.g., price, brand, store name, or
here unit price measure), participants can perceive a demand to allocate different
ratings to different product samples or stimuli (Olson, 1977, p. 276). Using a
between-subjects design prevents participants from feeling obliged to indicate
differences in price-level perception and quality perception between different
product alternatives that they actually do not perceive. Furthermore, the previous
research shows that the price-quality relationship is stronger if within-subjects
designs are utilized. Hence, using a between-subject design is the more conservative approach.
In the beginning of the experiment, price labels for both product categories were
presented to the participants. The price labels displayed the product category as
well as the unit price of the product. As outlined above, the price of the product
is either displayed as price per kg (Group 1) or price per 100 g (Group 2). Within
each condition, participants were presented with two pictures of price labels for
unpackaged goods. One price label displayed the price of tomatoes, the other
price label the price of salami. The order of the product categories was randomized, in order to prevent any order effects. Examples for the price labels presented during the experiment are displayed in Table 13.
At the same time as the stimuli were presented to the participants, subjects are
asked to indicate their perception of price level, their perception of the products
quality as well as their intention to buy these products. Price-level perception is
measured with two items. To yield a spontaneous overall rating of the perceived
quality, it was measured utilizing one item. Such a one-item measurement of
overall quality has been frequently applied in literature (Lee/Lou, 2011, p. 29;
Lichtenstein/Burton, 1989, p. 432; Stokes, 1985, p. 238). Purchase intention is

Influence of the Unit Price at the Product Level

147

measured with a multi-item scale, as suggested in literature (Grewal et al., 1998,


p. 52; Dodds et al., 1991, p. 318). An overview of the items utilized is given in
Table 14. All item measurements utilized 7-point agreement-disagreement scales,
as suggested by Likert (1932, p. 42) for the measurement of attitudes. Except for
the items measuring the individual store price image dimension scales and shopping intentions scale the option I dont know was available to the participants
for each item.
Product Category
(Group 1 & Group 2)
Large unit of measure
(Group 1)

Small unit of measure


(Group 2)

Salami

Tomaten

1 kg

1 kg

15,00

2,10

Salami

Tomaten

100 g

100 g

1,50

0,21

Table 13: Stimuli overview (Experiment 1)


Construct
name

Item name

Item Text and Measurement

Price-level
perception

Pri_Lev1

This product is inexpensive.

Pri_Lev2

This product has a high price.

Quality
perception

Purchase
intention

Qua_Per

This product has a high quality.

Pur_Int1

It is very likely, that I would buy


this product at this retailer.

Pur_Int2

The probability that I would


consider buying the product is
high.

Pur_Int3

If I were going to buy <product


name>, I would consider buying
this product.

Adaptation of

Ofir et al. (2008, p. 416)


Lee/Lou (2011, p. 29),
Lichtenstein/Burton (1989, p.
432),
Stokes (1985, p. 238)

Grewal et al. (1998, p. 52),


Dodds et al. (1991, p. 318)

Table 14: Dependent variables: Measurement

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Development and Empirical Testing of Hypotheses

The review of literature revealed that the consumers reaction to unit prices as
well as the price-quality relationship are influenced by a variety of factors. These
factors may dominate the price-level assessment and the quality assessment,
making it impossible to extract the influence of unit price format. Therefore, a
variety of control variables was included into the questionnaire that participates
had to complete after the stimulus presentation. As the previous literature shows,
unit price awareness and usage, as well as the price-quality relationship is influences by similar socio-demographic and psychographic characteristic. Therefore,
the same variables are used to control for possible influences on the relationships
between unit of measure and price-level perception, as well as price-level perception and quality perception. The following variables were included in the
questionnaire as control variables: brand consciousness, brand differences, striving for prestige, shopping complexity, comparison shopping, unit price awareness, unit price importance, unit price comprehension, unit price usage, price
consciousness, price-quality beliefs, financial constraints, quality consciousness,
brand loyalty, time pressure, need for simplification of cognitive tasks, risk aversion, household size, shopping frequency, income, gender, age, and education.
An overview of the scales used for the measurement of individual control variables is provided in Appendix 1. Two independent researchers translated the
scales exclusively available in English to German. Several scales are single-item
scales that have been used in previous research. Utilizing single-item scales is in
line with the opinion of a group of researchers, who state that using scales with
two or more items is not always necessary or even sensible. This is especially the
case if a concrete object is rated on a concrete attribute (Rossiter, 2002, p. 310,
2011, p. 1586; Bergkvist/Rossiter, 2007, p. 182; Vlckner, 2006, p. 483). Furthermore, single-item scales have the advantage that the questionnaire involves
less items and is therefore less time-consuming for the participant, which can
lead to a lower respondent refusal rate and, hence, minimizes costs associated
with data collection and data processing (Bergkvist/Rossiter, 2007, p. 176). Having fewer items for measuring the constructs also allows researchers to add additional control variables without inflating the questionnaire.

Influence of the Unit Price at the Product Level

4.1.2.4

149

Data Collection

For the first experiment a laboratory environment was chosen. The advantage of
a laboratory environment is a high degree of internal validity, as the individual
levels of the independent variables are controlled and the influence of extraneous
variables is minimized (Zeithaml, 1982, p. 360). The experiment took place from
December 1st to December 4th, 2014, at the Mafox Laboratory Kaiserslautern.
Participants of the experiment were undergraduate as well as graduate students
of the Technical University of Kaiserslautern and obtained a financial incentive
(i.e., 10 ) to take part in the experiment. Besides this experiment, the students
also took part in two different studies with different aims not related to unit prices. Students were welcomed in front of the laboratory and were lead to the laboratory in groups of maximum 12 students at a time. Each student was seated individually in front of a computer screen with keyboard and mouse available for
data entry. The laboratory experiment was executed with the help of the online
questionnaire platform provided by Questback (Version EFS 10.5) and participants were randomly assigned to one of the two conditions (price per kg, price
per 100 g). Before the experiment started, instructions for the experiment were
read to the groups of students. However, the objective of the study was not revealed. After participating in the experiments, students received their monetary
incentive and left the laboratory without being able to talk to the next group of
students about the experiment.

4.1.2.5

Results

The collected data was analyzed with IBM SPSS Statistics 22 (SPSS). When the
online data collection was completed, the dataset was extracted from Questbacks online platform as a SPSS file. The original dataset contained 152 observations. Subsequently the data set was labeled, missing values were determined
and other attributes of the dataset were specified (e.g., number of decimals, field
lengths, level of measurement for individual items). After the dataset had been
labeled and the attributes had been specified, the dataset was cleaned. One participant was excluded from the analysis, due to failure to respond to the questionnaire after observing the stimuli. Furthermore, the dataset was screened for outli-

150

Development and Empirical Testing of Hypotheses

ers and influential points. Cases are considered as outliers if the absolute values
of standardized residuals are greater than three (Hartung et al., 2009, p. 586) or
two (Backhaus et al., 2011, p. 103), respectively. No cases showed standardized
residuals greater than 1.51 and thus no case has been identified as outlier. Furthermore, by monitoring the Cooks distance values, it was determined whether
the dataset contains any cases that are influential points. Cases are considered
influential points, if Cooks distance value for these cases is greater than one.
These cases are called influential points, because regression coefficients reach
different values if these specific cases are not considered in the regression analysis (Vlckner, 2006, p. 485; Chatterjee/Hadi, 1986, p. 383). Also no cases were
identified as influential points. Therefore, the final dataset comprises 151 observations of participants (35.3 % female, mean age = 22.32 years, SD = 2.46) for the
two different factor levels. Cell sizes range from 67 (price per kg) to 84 (price
per 100 g) across the two conditions.
The first step of the data analysis is the evaluation of construct quality, before the
individual hypotheses are tested. In order to test Hypothesis 1, t-tests are conducted. To test Hypothesis 2 to 4, regression analyses and mediation analyses are
executed. Furthermore, the influence of control variables is accessed by moderation analyses. Finally, an overview of the entire model is given by a structure
equation modeling (SEM).
4.1.2.5.1 Evaluation of Construct Quality
Before the individual hypotheses are tested the construct quality is analyzed.
According, to Nunnally (1978, p. 245) a scale is seen as reliable if Cronbachs
is greater than .70. The reliability of the purchase intention scales is given, since
Cronbachss for purchase intention for both product categories is greater than
.90. According to Eisinga et al. (2013, p. 8), the usage of Cronbachs  for the
estimation of reliability for two-item scales is not recommended. For the exact
calculation of reliability for two-items Cronbachs  has very high demands in
regard to the composite scale and therefore tends to underestimate reliability.
Therefore, they suggest using the correlation coefficient Spearman-Browns to
estimate reliability. For the two-item scale of price-level perception, is signifi-

Influence of the Unit Price at the Product Level

151

cant, hence, this scale is reliable, too (Table 15). Scale reliability was tested for
control variables as well. However, several control variables did not satisfy the
reliability criteria. Therefore, need for simplification of cognitive tasks, brand
consciousness and brand differences were excluded from further analysis
(Appendix 1).
Furthermore, internal consistency reliability is assessed by analyzing the models
composite reliability. Hair et al. (2011, p. 145) suggest that composite reliability
should be above .70. Convergent validity indicates that one set of indicators
constitutes the same construct. This can be inferred from unidimensionality. A
measurement for convergent validity is the average variance extracted (AVE). An
AVE value of 0.5 or more is a sign for a sufficient convergent validity, as the
latent variable is able to explain more than 50 % of its indicators variance on
average (Henseler et al., 2009, p. 299). Indicator reliability is given if all indicator loadings are above .70 (Hair et al., 2011, p. 145). The prerequisite for discriminant validity is that all AVEs of the individual constructs are larger than any of
the constructs squared correlations with another latent construct
(Fornell/Larcker, 1981, p. 46). This requirement is also referred to as the FornellLarcker criterion (Hair et al., 2011, p. 145). An additional requirement for discriminant validity is that all loadings of an indicator have to be higher than its
cross loadings (Hair et al., 2011, p. 145).

Construct
Name

Salami

Price-level
perception
Quality
perception
Purchase
intention

ItemtoTotal

Cronbachs 
(>.70) a

SpearmanBrowns

.86**

.83

.91

Item
Name

Item Text and


Measurement

Pri_Lev1

This product is
inexpensive.

Pri_Lev2

This product has


a high price.

Qua_Per

This product has


a high quality.

Pur_Int1

It is very likely,
that I would buy
this product at
this retailer.

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Development and Empirical Testing of Hypotheses

Price-level
perception

Tomatoes

Quality
perception

Purchase
intention

Pur_Int2

The probability that I


would consider
buying the product is
high.

.84

Pur_Int3

If I were going to buy


<product name>, I
would consider
buying this product.

.79

Pri_Lev1

This product is
inexpensive.

Pri_Lev2

This product has a


high price.

Qua_Per

This product has a


high quality.

Pur_Int1

It is very likely, that I


would buy this product at this retailer.

.87

Pur_Int2

The probability that I


would consider
buying the product is
high.

.88

Pur_Int3

If I were going to buy


<product name>, I
would consider
buying this product.

.76

.87***

.92

a
Nunnally (1978, p. 245)
**p < .05
***p < .01

Table 15: Scale reliability (Experiment 1)

For the product category salami all standard quality criteria for the constructs are
met. Composite reliability for all latent variables is greater or equal to .94. All
AVEs are not lower than .93 (Table 16). Indicator loadings are all above .90.
Discriminant validity is given, since the Fornell-Larcker criterion is met and
additionally all indicator loadings are at least .20 higher than the indicators
cross-loadings (Table 16 Table 18).
For the product category tomatoes all standard quality criteria are again met.
Composite reliability is greater than or equal to .95 for the latent variables. All
AVEs are not lower than .86 (Table 19). Indicator loadings are all above .89.

Influence of the Unit Price at the Product Level

153

Since the Fornell-Larcker criterion is met and additionally all indicator loadings
are at least .20 higher than the indicators cross-loadings discriminant validity is
given (Hair et al., 2011; Fornell/Larcker, 1981) (Table 19 Table 21)
Composite Reliability (> .70)a

Convergent Validity (AVE) (> .50)a, b

Price-Level
Perception

.96

.93

Purchase Intention

.94

.85

Quality Perception

1.00

1.00

a
b

Hair et al. (2011, p. 145)


Henseler et al. (2009, p. 299)

Table 16: Standard quality criteria experiment 1 (Salami)


Unit of Measure

Price-Level
Perception

Purchase Intention

Quality Perception

0.21

-0.11

0.09

Pur_Int1

-0.12

-0.46

0.92

0.18

Pur_Int2

-0.11

-0.49

0.93

0.15

Pur_Int3

-0.08

-0.53

0.91

0.19

Pri_Lev1

0.22

0.96

-0.47

0.27

Pri_Lev2

0.18

0.96

-0.56

0.15

Qua_Per

0.09

0.22

0.19

1.00

Case

Bold numbers indicate indicator loadings, other numbers indicate cross-loadings

Table 17: Indicator loadings and cross-loadings (Salami)

154

Development and Empirical Testing of Hypotheses


Unit of Measure

Price-Level Perception

Purchase Intention

Quality Perception

Unit of Measure

0.00

0.00

0.00

0.00

Price-Level
Perception

0.04

0.93

0.00

0.00

Purchase Intention

0.01

0.29

0.85

0.00

Quality Perception

0.01

0.05

0.04

1.00

Bold numbers indicate AVEs, other numbers indicate squared latent variable correlations

Table 18: Squared latent variable correlations and AVEs


Composite Reliability
(> .70)a

Convergent Validity (AVE) (> .50)a

Price-Level
Perception

.97

.94

Purchase
Intention

.95

.86

Quality
Perception

1.00

1.00

Hair et al. (2011, p. 145)

Table 19: Standard quality criteria experiment 1 (Tomatoes)

Influence of the Unit Price at the Product Level

155

Unit of
Measure

Price-Level
Perception

Purchase
Intention

Quality
Perception

Case

1.00

.05

-.03

.08

Pur_Int1

-.05

-.53

.94

.21

Pur_Int2

-.01

-.57

.95

.21

Pur_Int3

-.03

-.57

.89

.20

Pri_Lev1

.08

.97

-.58

.09

Pri_Lev2

.02

.97

-.58

.05

Qua_Per

.08

.07

.22

1.00

Bold numbers indicate indicator loadings, other numbers indicate cross-loadings

Table 20: Indicator loadings and cross-loadings (Tomatoes)


Unit of Measure

Price-Level
Perception

Purchase
Intention

Unit of Measure

.00

Price-Level Perception

.00

.94

Purchase Intention

.00

.36

.86

Quality Perception

.01

.01

.05

Quality
Perception

1.00

Bold numbers indicate AVEs, other numbers indicate squared latent variable correlations

Table 21: Squared latent variable correlations and AVEs (Tomatoes)

4.1.2.5.2 Product Category Salami


The hypotheses 14 are tested individually for the each product category. First,
the hypotheses are tested for the product category salami and afterwards they are
tested the product category tomatoes.
The influence of the unit price format on price-level perception is tested with an
independent-samples t-test. This test is used to determine, whether the means of

156

Development and Empirical Testing of Hypotheses

a metric variable for two independent experimental groups differ significally


(Backhaus et al., 2011, p. 81). Hypothesis 1 expects that the price-level perception is higher if the unit price is indicated with a large unit of measure (i.e., price
per kg) than if the unit price is indicated with a small unit of measure (i.e., price
per 100 g). For the t-tests and the regression analyses sum scores of the individual constructs items were utilized as independent variables, dependent variables
and control variables. The average perceived price level is medium as the mean
price level-perception is between 4.99 and 4.35 on a 7-point scale (Figure 13).
As predicted, the price-level perception of the experimental group that saw the
unit price as price per kg is higher than the price-level perception of the group
that saw the unit price as price per 100 g. The t-test confirms that this indicates a
significant influence of unit price measurement on price-level perception (see
Table 22). Therefore, H1 is supported for this product category.

7.00

Price-Level Perception

6.00
5.00

4.99
4.35

4.00
3.00
2.00
1.00
Product Category Salami
1 kg

100 g

Figure 13: Means and standard deviations (Salami)

Influence of the Unit Price at the Product Level

Salami: PriceLevel Perception


(H1)

157

Experimental
Group

Group
Size

Mean

SD

t-Statistik

kg

67

4.99

1.52

100 g

84

4.35

1.47

t (1, 147) = 2.62


p < 0.05

Table 22: T-test price-level perception (Salami)

Hypothesis 2 predicts a positive influence of price-level perception on quality


perception. Since the independent variable (price-level perception) and dependent variable (quality perception) are both metric variables, a regression analysis
is conducted to see on the one hand, if the influence of price-level perception on
quality perception is positive and, on the other hand, if this influence is significant (Backhaus et al., 2011, p. 56). A regression analysis reveals that price-level
perception has a positive, significant influence on quality perception (Table 23)
and hence lends support to Hypothesis 2.
Standardized
(Constant)
Salami: Price-Level Perception

t (1, 149)
10.45 (p < .01)

.22

2.73 (p < .01)

Dependent Variable: Salami: Quality Perception

Table 23: Influence of price-level perception on quality perception (Salami)

Hypothesis 3 expects a negative influence of price-level perception on purchase


intention, while Hypothesis 4 expects a positive influence of quality perception
on purchase intention. Both hypotheses are tested with the same regression analysis, by including price-level perception as well as quality perception as independent variables. The dependent variable here is purchase intention. The results
show, that both variables influence purchase intention significantly. Price-level
perception has a negative influence on purchase intention, while quality perception has a positive influence on purchase intention (Table 24). Hence, Hypothesis
3 and Hypothesis 4 are supported as well.

158

Development and Empirical Testing of Hypotheses


Standardized

(Constant)

t (2, 148)
11.31 (p < .01)

Salami: Price-Level Perception

-.60

-9.09 (p < .01)

Salami: Quality Perception

.32

4.90 (p < .01)

Dependent Variable: Salami: Purchase Intention

Table 24: Influence of price-level perception and quality perception on purchase intention
(Salami)

It is further tested if an influence of unit format on quality perception that is


mediated by price-level perception exists. Mediation occurs when an independent variable has an indirect influence on a dependent variable through one or
more intervening variables (Baron/Kenny, 1986, p. 1176). These intervening
variables are referred to as mediators. Hence, mediation hypotheses postulate
how a predictor variable (X) influences a dependent variable (Y) through a single
or several potential mediators (M) (Preacher/Hayes, 2008, p. 879).
c

Independent
Variable (X)

Potential
Mediator (M)

Dependent
Variable (Y)

Figure 14: Mediation involving three variables (based on Zhao et al. (2010, p. 198))

For our model, a test for mediations with three variables and that is nonrecursive has to be used. Here the predicting variable is unit price unit of measure (X), the dependent variable is quality perception (Y) and the potential mediator is price-level perception (M). For this type of model three patterns for mediations and two patterns for non-mediation have been identified (Zhao et al., 2010,
p. 200). The first pattern is a complementary mediation. Here a mediation effect
(a x b) as well as a direct effect (c) coexist and point at an identical direction. In
contrast, for a competitive mediation the mediated effect (a x b) and the direct
effect (c) also coexist but point in opposite directions. For an indirect-only mediation merely the mediation effect (a x b) exists but no direct effect between pre-

Influence of the Unit Price at the Product Level

159

dictor variable and the outcome variable. One pattern of non-mediation is the
direct-only non-mediation. Here the direct effect between predictor and depending variable (c) exists, but no mediation effect between predictor and tested mediator variable and outcome variable exists. In case of a no-effect non-mediation
neither a direct effect nor a mediator effect exists. The mediation effect is tested
using bootstrapping, due to several advantages, such as that, in contrast to Sobels test, no assumptions are made about the sampling distribution (Hayes,
2009, p. 413). Therefore, the procedure suggested by Hayes (2013, p. 413), that
is based on regression analyses including bootstrapping, is utilized for the mediation analysis. To conduct this analysis, the add-on macro PROCESS for SPSS is
used that is able to conduct mediation, moderation, and conditional process analysis (Hayes, 2014). Bootstrapping (1,000 bootstrap samples, as suggested by
Field (2013, p. 414)) confirmed a positive indirect effect of the unit of measure
on quality perception through price-level perception (Table 25). Also no direct
effect of unit of measure on quality perception could be found. This implies that
quality perception increases because of the higher perceived price-level perception that previously has been influenced positively by the unit price unit of
measure.
Independent
Variable (X)

Mediator (M)

Dependent
Variable (Y)

Direct Effect
(c)

Indirect
Effect (a x b)

Unit of measure

Price-Level
Perception

Quality
perception

.11

.11**

** p < .05

Table 25: Mediation effects: Quality perception (Salami)

A second mediation analysis was conducted to see, whether the unit price unit of
measure influences purchase intention via price-level perception as well as via
quality perception. The mediation analysis was conducted in the same way as
described before. The results show that the consumers purchase intention is
influenced in a negative way through price-level perception, and in a positive
way though price-level perception and quality perception (Table 26). As expected, there is no direct effect of unit price format on purchase intention. Furthermore, there is also no influence of unit of measure on purchase intention only

160

Development and Empirical Testing of Hypotheses

mediated by quality perception. This is not surprising, as the previous mediation


analysis showed that there is no direct effect unit of measure on quality perception.
Independent
Variable (X)

Mediator (M)

Dependent
Variable (Y)

Direct Effect
(c)

Indirect Effect
(a x b)

Price-Level
Perception

Unit of measure

Quality
Perception
Price Level
Perception Quality
Perception

-.37**

Purchase Intention

.04
-.05
.04**

** p < .05

Table 26: Mediation effects: Purchase intention (Salami)

In order to see whether certain psychographic or socio-demographic aspects


influence the impact of unit price format on price-level perception, moderation
analyses have been conducted. According to Irwin/McClelland (2003, p. 366)
many researchers utilize median splits for moderation analysis if the predictor is
measured continuously and then compare the dependent variables means for the
two resulting groups. Although these median splits are the most common way to
dichotomize the predictor, also other methods, such as splitting the sample at the
middle of the predictors scale, exist (Irwin/McClelland, 2003, p. 366). However,
splitting the sample has several disadvantages. Those are, for example, the reduction in power of simple regression and distortion effects on the correlation between the predictor and dependent variable. Hence, dichotomization is not recommended to be used for moderation analysis (Irwin/McClelland, 2003, p. 371).
The procedure suggested by Hayes (2013, p. 225) is applied here again.
When checking for the influence of the interaction effect of the experimental
group and the individual control variables on price-level perception, bootstrapping (1000 samples, as suggested by Field (2013, p. 402)) reveals that for consumers that compare prices in general at the supermarket or are price conscious,
the influence of unit of measure on price-level perception is weaker (Table 27).

Influence of the Unit Price at the Product Level

161

Brand loyalty, on the other hand, has a positive influence on the relationship
between unit of measure and price-level perception. However, the significance of
this moderator is weak (p < .10). In addition, another moderation analysis reveals
that financial constraints of the consumer weaken the relationship between pricelevel perception and quality perception (Table 28). There are no significant interaction effects for the remaining control variables (Appendix 2 Appendix 3).
Therefore, they are not further discussed at this point.
Interaction Effect: Experimental Group x Control
Variable

Control Variable

t (3, 147)

Coefficient

Comparison Shopping - Check Prices

-2.00 (p < .05)

-.58

Price Consciousness

-3.87 (p < .05)

-.73

Brand Loyalty

1.86 (p < .10)

.31

Dependent variable: Price-level perception

Table 27: Influence of interaction effects on price-level perception

Control Variable
Financial Constraints

Interaction Effect:
Price-Level Perception x Control Variable
t (3, 147)

Coefficient

2.27 (p < .05)

.09

Dependent variable: Quality perception

Table 28: Influence of interaction effects on quality perception

To get an overview of the complete structural model, the hypotheses were also
tested using SEM. SEMs are frequently used in consumer behavior research
(Brown/Dant, 2009, p. 120) and are statistical procedures that can be used to test
measurement as well as functional, predictive, and causal assumptions
(Bagozzi/Yi, 2012, p. 8). SEM is a second-generation method, in contrast to ttest or regression analyses that are classified as first-generation methods. There
are several advantages that have been assigned to SEMs. As a generic tool,
SEMs offer a broad integrative function bringing forward the synergy and complementarity between different statistical methods (Bagozzi/Yi, 2012, p. 10).
Another advantage of SEMs is that several types of errors can be taken into ac-

162

Development and Empirical Testing of Hypotheses

count. In this way, measurement or random error in latent variables indicators


can be modeled and explicitly estimated. Furthermore, a representation of method or systematic error is also possible (Bagozzi/Yi, 2012, p. 10). Additional benefits of SEMs in contrast to first-generation methods are the provision of direct
tests of mediation, methods for the assessment of construct validity that are more
comprehensive than traditional correlation analysis (Bagozzi/Yi, 2012, p. 12).
The software utilized here for SEM is SmartPLS (Ringle et al., 2005, hereafter
PLS). PLS offers a variety of advantages over other path modeling approaches.
First of all, PLS is able to avoid problems due to small sample sizes and can
therefore be applied in situations where other methods cannot be used (Henseler
et al., 2009, p. 283). Furthermore, PLS path modeling is able to estimate complex models that involve a variety of latent as well as manifest variables
(Henseler et al., 2009, p. 283). In addition, PLS can be used if independent variables are correlated and the assumption on independence is violated. PLS can be
used to avoid these collinearity problems (Xiong/Meullenet, 2006, p. 190). Here,
this software was chosen for analyzing the results of these experiments, as the
sample sizes are less than 200.
The results of the SEM are in line with the findings of the t-test and the regressions and are summarized in Figure 15. The unit of measure has a significant
influence on price-level perception, which subsequently also influences quality
perception positively. Furthermore, price-level perception influences purchase
intentions negatively, while quality perception influences purchase intention
positively. The R values especially for price-level perception (R = .04) and
quality perception (R = .05) are very small. However, the aim of this experiment
is not to explain the entire price-level perception or quality perception. These
factors depend on a variety of other aspects than the unit price. The aim here is
rather to show that the unit price format is one of the predictors for price-level
perception and quality perception.

Influence of the Unit Price at the Product Level

163

Sample
Mean
(M)

SD

Standard
Error
(SE)

t-Statistic

Unit of Measure
Price-Level Perception

.21

.21

.08

.08

2.72***

Price-Level Perception
Quality Perception

.22

.22

.09

.09

2.30***

Price-Level Perception
Purchase Intention

-.61

-.61

.07

.07

8.45***

Quality Perception
Purchase Intention

.32

.32

.06

.06

5.09***

*** p < .01

Table 29: Path coefficients SEM (Salami)


Price-Level Perception
R=.04
.21***

Unit Price
Unit of Measure

-.61***

Purchase Intention
R=.39

.22**

Quality Perception
R=.05

.32***

Figure 15: SEM: product category salami (*** p < 0.01, ** p < 0.05)

4.1.2.5.3 Product Category Tomatoes


The second product category considered in this experiment is tomatoes. All four
hypotheses are tested for this product category as well. In a first step, the influence of unit or measure on price-level perception is analyzed with a t-test. The ttest indicates that the general price level of the tomatoes is perceived as lower as
the price level of the salami before. The mean price-level perception is between
2.93 and 3.07 (Figure 16). However, here the t-test does not show any significant
differences in the price-level perception between the individual experimental
groups (Table 30). Hence, H1 is not supported for this product category.

164

Development and Empirical Testing of Hypotheses

7.00

Price-Level Perception

6.00
5.00
4.00
3.07

3.00

2.93

2.00
1.00
Product Category Tomatoes
1 kg

100 g

Figure 16: Means and standard deviations (Tomatoes)

Tomatoes: Price-Level Perception (H1)

Experimental
Group

Group Size

Mean

SD

t-Statistik

kg

67

3.07

1.40

100 g

84

2.93

1.50

t (1,147) = .587
n.s.

Table 30: T-test price-level perception (Tomatoes)

In order to test whether the price-level perception has an influence on quality


perception and purchase intention as well as if quality perception has an influence on purchase intention, regression analyses were conducted for this product
category as well. This analysis reveals that price-level perception has no general
influence on quality perception (Table 31). Therefore, Hypothesis 2 cannot be
supported for this product category. However, as expected here price-level perception has again a negative influence on purchase intention, while quality perception has a positive influence on purchase intention (Table 32).

Influence of the Unit Price at the Product Level

165
Standardized

(Constant)

t (1, 149)
18.29 (p < .01)

Tomatoes: Price-Level Perception

.07

.89 (n.s.)

Dependent Variable: Tomatoes: Quality Perception

Table 31: Influence of price-level perception on quality perception (Tomatoes)


Standardized
(Constant)

t (2, 148)
13.89 (p < .01)

Tomatoes: Price-Level Perception

-.62

-9.92 (p < .01)

Tomatoes: Quality Perception

.27

4.32 (p < .01)

Dependent Variable: Tomatoes: Purchase Intention

Table 32: Influence of price-level perception and quality perception on purchase intention
(Tomatoes)

Also, when testing for possible mediation effect, no significant effect could be
found (Table 33 Table 34). Hence, the hypotheses have to be rejected for this
product category, at least if looking at the entire sample.
Independent
Variable (X)

Mediator (M)

Dependent
Variable (Y)

Direct
Effect (c)

Indirect
Effect (a x b)

Unit of measure

Price-Level
Perception

Quality perception

.16

.01

Table 33: Mediation effects: Quality perception (Tomatoes)


Independent
Variable (X)

Mediator (M)

Dependent
Variable (Y)

Direct
Effect (c)

Price-Level
Perception

Unit of measure

Quality Perception
Price Level
Perception Quality Perception

Indirect
Effect (a x b)
-.09

Purchase Intention

.06
-.06

Table 34: Mediation effects: Purchase intention (Tomatoes)

.00

166

Development and Empirical Testing of Hypotheses

In order to test, whether the unit of measure influences price-level perception for
certain customer segments, control variables are included into the analysis by
means of a moderation analysis. A moderations analysis was conducted according to the procedure suggested by Hayes (2013, p. 225). This analysis reveals a
significant positive influence of the interaction effect of unit price format and
quality consciousness (Table 35) that influences price-level perception. For the
quality conscious consumer segment, unit price unit of measure has a more positive influence on price-level perception.
In order to test, whether price-level perception influences the quality perception
for certain consumer segment, another moderation analysis was conducted.
Bootstrapping (1,000 samples) shows a significant interaction effect of
price-level perception and unit price usage and price-level perception and age
(Table 36). For consumers that do not frequently compare unit prices at the point
of purchase, and therefore are less familiar with this information, the higher
nominal unit price signals a higher quality. The same is true for younger consumers. However, no control variable increases the influence of price-level perception on quality perception. No significant interaction effects were revealed for
the remaining control variables (Appendix 4 Appendix 5). Therefore, they are
not further discussed here.
Control Variable

Interaction Effect: Experimental Group x Control Variable

Quality Consciousness

t (3, 146)

Coefficient

2.23 (p < .05)

.43

Dependent variable: Price-level perception

Table 35: Influence of interaction effects on price-level perception

Influence of the Unit Price at the Product Level

167

Interaction Effect:
Price-Level Perception x Control Variable

Control Variable

t (3, 146)

Coefficient

Comparison Shopping Check


Unit Prices

-2.16 (p < .05)

-.13

Age

-2.20 (p < .05)

-.06

Dependent variable: Quality perception

Table 36: Influence of interaction effects on quality perception

Again, to get a complete overview of the structural model, the hypotheses are
tested using SEM.
The results of the SEM are in line with the previous findings and are summarized
in Table 37 and Figure 17. SEM again demonstrates that there is no influence of
unit of measure on price-level perception and no influence of price-level perception on quality perception. However, also for the product category of tomatoes,
price-level perception as well as quality perception have a significant influence
on purchase intention.

sample
mean (M)

SD

SE

t-statistics

Measuring Unit
Price-Level Perception

.05

.05

.08

.08

.61

Price-Level Perception
Quality Perception

.07

.08

.09

.09

.82

Price-Level Perception
Purchase Intention

-.62

-.62

.06

.06

9,71***

Quality Perception
Purchase Intention

.27

.27

.07

.07

3.66***

*** p < .01

Table 37: Results SEM (Tomatoes)

168

Development and Empirical Testing of Hypotheses

Price-Level Perception
R=.00
.05

Unit Price
Unit of Measure

-.62***

Purchase Intention
R=.43

.07

Quality Perception
R=.01

.27***

Figure 17: SEM: Product category tomatoes (*** p < 0.01)

The results of this experiment indicate that a large unit price unit of measure
leads to a higher price-level perception, compared to a small unit or measure
only for the product category of tomatoes. Subsequently also the quality perception increases with a large unit of measure and purchase intention is positively
influenced by the quality perception and negatively influenced by the price-level
perception. Here the influence of price-level perception on purchase intention is
stronger than the influence of quality perception. However, the results also indicate that this is not a universal relationship. In fact, by including control variables, it becomes obvious that several variables, such as the consumers quality
consciousness and the consumers unit price usage habits, influence the relationships in this model.

4.1.3 Experiment 2: Pre-Packaged Goods


The first experiment addresses the question of how the unit price measure influences the price level and quality perception of loose goods, for which the unit
price is the only price information available. For pre-packaged goods the products overall item price is displayed in addition to the unit price, and is oftentimes
more prominent on the price label. Therefore, the influence of the unit price unit
of measure for pre-packaged goods may be weaker. In order to test the hypotheses also for pre-packaged goods, a second experiment was conducted.
The main idea of the second experiment is similar to the one of the first experiment. Participants are presented price labels displaying overall product prices as

Influence of the Unit Price at the Product Level

169

well as unit prices. Here, one group sees the unit price in a small unit of measure,
the other group sees the unit price in a large unit of measure. Subsequently, differences in price-level perception, quality perception and purchase intention are
evaluated.
Conducting a multi-cue study in this context is highly relevant, since otherwise
cues that are available to consumers in reality (e.g., overall price, package size)
are ignored (Lee/Lou, 2011, p. 21). As previous literature indicates, the influence
of price on quality perception depends on the number of cues in the study. In
general, the price has a stronger influence on quality perception if it is the only
cue within the study. Most products in supermarkets are packaged. On price tags
for pre-packaged products, the unit price is always presented next to the overall
price. When reading the price label, the consumer hence is confronted with several product attributes that can serve as cues for quality judgment, such as overall
price and package size. In order to see if there are differences in the influence of
unit price on quality perception for loose goods and packaged products, a second
experiment was conducted focusing on packaged products. To identify product
categories that can be used as stimuli for this experiment, as well as optimal
prices for the stimuli, two pretests were conducted.

4.1.3.1

Pretest 1

Consumers buy pre-packaged goods a lot more often than unpackaged products.
Therefore, a broader variety of products can be considered here. By means of a
literature review and focus group discussions, products were identified that fulfill
the following criteria: food as well as non-food products need to be considered,
the products should be relevant to the sample, a variation in price range has to
exist across product categories, as well as that there should be quality differences
within the product category. The products that were selected are strawberry jam
and wall paint. Strawberry jam has been utilized in several previous studies and
meets the criteria for products in experimental studies assessing quality and
price-level perception (Vlckner, 2006, p. 482; Vlckner/Sattler, 2005, p. 7; Ofir,
2004, p. 617). Jam is particularly suitable for these types of experiments, since a
wide shopping experience among consumers can be assumed for this product

170

Development and Empirical Testing of Hypotheses

category as well as a considerable degree of quality uncertainty. Because of this


uncertainty, the purchase of this product is associated with a high perceived risk
that leads to the usage of price as informational cue (Vlckner, 2006, p. 482).
Furthermore, this product category is seen to be adequate, since brand and price
are highly important for purchases in this category, while other product attributes
are of secondary importance (Sattler, 1994, p. 34). Wall paint has been determined by a focus group discussion, as this product is familiar to a wide range of
consumers, is a non-food product, and price as well as quality varies considerably between brands.

4.1.3.2

Pretest 2

For the product category of strawberry jam & wall paint acceptable price ranges
were determined. The acceptable price range was estimated by means of a VanWestendorp analysis (see Figure 18 and Figure 19). For strawberry jam the lower
price threshold is 1.90 per 300 g and the reservation price is 2.50 per 300 g. A
300 g jar was used for the pretest, as this is the typical size offered at supermarkets. For an overall price per jar (300 g) that is stated on the price label for both
experimental groups 2.10 /kg was chosen. The unit price was indicated as
0.70 /100 g and 7.00 /kg, depending on the experimental group. For wall paint
the lower price threshold is 10 per 10 l and the upper price threshold is 20 per
10 l. The overall price per 10 l paint bucket was set at 18 . Consequently, the unit
prices 0.18 /100 g and 1.80 /l are chosen, whereas the overall price per 10 l
paint bucket stated on the price label is 18 .

Influence of the Unit Price at the Product Level


100%

171

Acceptable
Price Range

90%

Cumulated Percentage of Respondents

80%
70%
60%
50%
40%
30%
20%
10%
0%

Price
too low

inexpensive/justified

high/still acceptable

too high

Figure 18: Acceptable price range (Jam)


100%
Acceptable Price Range
90%

Cumulated Percentage of Respondents

80%
70%
60%
50%
40%
30%
20%
10%
0%

too low

Price
inexpensive/justified

high/still acceptable

Figure 19: Acceptable price range (Paint)

too high

172

4.1.3.3

Development and Empirical Testing of Hypotheses

Methodology

In this second experiment subjects were presented with a computer-simulated


shopping scenario involving a one-factorial between-subjects design. The independent variable is the unit price format that has been operationalized at two
levels, a large unit price measure (price per kg) and a small unit price measure
(price per 100 g). The stimuli are presented in Table 38. The between-subjects
design was again chosen to prevent any demand characteristics.
While seeing the product stimulus, participants again were asked to indicate their
perception of the price level and the product quality in the same way as in the
first experiment. After the stimulus presentation, participants completed an
online questionnaire containing scales to assess the same psychographic and
socio-demographic characteristics as in experiment 1 that are again used as control variables later on.
Product Category
(Group 1 & Group 2)
1 Glas Erdbeerkonfitre
300 g

Large unit of measure


(Group 1)

Small unit of measure


(Group 2)

1 Eimer Wandfarbe, wei


10 l

2,10

18,00

Grundpreis: 7,00 /kg

Grundpreis: 1,80 /l

1 Glas Erdbeerkonfitre
300 g

1 Eimer Wandfarbe, wei


10 l

2,10

18,00

Grundpreis: 0,70 /100g

Grundpreis: 0,18 /100ml

Table 38: Stimuli overview (Experiment 2)

4.1.3.4

Data collection

The experiment was administered online. In this way participants were able to
take part in the experiment at their leisure. The online setting also allows for a
greater variety of demographic characteristics of participants, in contrast to laboratory experiments based on student samples. The sample is a convenience
sample based on participants who were invited to the study by email as well as

Influence of the Unit Price at the Product Level

173

social and professional networks. When accessing the online platform on which
the experiment was administered, participants were randomly assigned to one of
the two experimental settings. Participants were able to access the online experiment between December 30th, 2014 and January 11th, 2015. In this experiment,
no incentive was offered to the participants.

4.1.3.5

Results

The complete dataset contained 179 cases was cleaned by deleting 81 cases
where participants discontinued their participation after the third page. This early
termination of the participation indicates a lack of interest and therefore a lack of
diligence in study participation. In this dataset neither outliers nor influential
points could be observed. Consequently the final dataset contains 98 cases.
4.1.3.5.1 Evaluation of construct quality
A total of 98 participants (54.3 % female, mean age = 24.05 years, SD = 6.44)
were assigned to the two different factor levels. Cell sizes range from 48 (price
per 100 g) to 50 (price per kg) across the two conditions. The reliability of the
individual scales is given, since Cronbachs alpha for purchase intention is greater than .89 and Spearmans  for the two-item price-level perception scale for
both product categories is highly significant (p < 0.01). For the t-tests and regression analyses sum scores of the individual constructs items were utilized as
dependent variables and control variables (Table 39).
All standard quality criteria for the constructs are met. Composite reliability for
all latent variables is greater than .91. All AVEs are not lower than .82. Indicator
loadings are all above .87. Discriminant validity is given, since the FornellLarcker criterion is met and additionally all indicator loadings are at least .20
higher than the indicators cross-loadings (Hair et al., 2011; Fornell/Larcker,
1981) (Table 40 Table 42).
Also for the product category wall paint, all standard quality criteria are again
met. For all latent variables composite reliability is greater than .91. Convergent
validity is at hand as all AVEs are not lower than .78. Outer loadings are all
above .84. The criteria for discriminant validity as fulfilled, since all indicator

174

Development and Empirical Testing of Hypotheses

loadings are at least .20 higher than the indicators cross-loadings and the Fornell-Larcker criterion is met (Hair et al., 2011; Fornell/Larcker, 1981) (Table 43
Table 45).

Influence of the Unit Price at the Product Level

Construct
Name

Price-level
perception

Jam

Quality
perception

Purchase
intention

Price-level
perception

Wall Paint

Quality
perception

Purchase
intention

175

Item
Name

Item Text and Measurement

ItemtoTotal

Pri_Lev1

This product is inexpensive.

Pri_Lev2

This product has a


high price.

Qua_Per

This product has a


high quality.

Pur_Int1

It is very likely, that I


would buy this product at this retailer.

.85

Pur_Int2

The probability that I


would consider buying the product is
high.

.79

Pur_Int3

If I were going to buy


<product name>, I
would consider buying this product.

.72

Pri_Lev1

This product is inexpensive.

Pri_Lev2

This product has a


high price.

Qua_Per

This product has a


high quality.

Pur_Int1

It is very likely, that I


would buy this product at this retailer.

.72

Pur_Int2

The probability that I


would consider buying the product is
high.

.78

Pur_Int3

If I were going to buy


<product name>, I
would consider buying this product.

.63

Cronbachs
 ! a

SpearmanBrowns

.69**

.89

.67**

.84

Nunnally (1978, p. 245)


**p < .05 ***p < .01

Table 39: Scale reliability (Experiment 2)

176

Development and Empirical Testing of Hypotheses


Composite Reliability (> .70)a

Convergent Validity (AVE) (> .50)a

Price-Level Perception

.91

.84

Purchase Intention

.93

.82

Quality Perception

1.00

1.00

Hair et al. (2011, p. 145)

Table 40: Standard quality criteria experiment 2 (Jam)


Unit of
Measure

Price-Level
Perception

Purchase
Intention

Quality Perception

Case

1.00

.27

-.21

.09

Pur_Int1

-.21

-.41

.93

.18

Pur_Int2

-.17

-.44

.91

.18

Pur_Int3

-.19

-.42

.87

.19

Pri_Lev1

.29

.92

-.36

.30

Pri_Lev2

.21

.92

-.50

.09

Qua_Per

.09

.21

.20

1.00

Bold numbers indicate indicator loadings, other numbers indicate cross-loadings

Table 41: Indicator loadings and cross-loadings (Jam)

Influence of the Unit Price at the Product Level

Unit of
Measure

177

Price-Level Perception

Purchase
Intention

Unit of Measure

.00

Price-Level Perception

.07

.84

Purchase Intention

.04

.22

.82

Quality Perception

.01

.04

.04

Quality
Perception

1.00

Bold numbers indicate AVEs, other numbers indicate squared latent variable correlations

Table 42: Squared latent variable correlations and AVEs (Jam)


Composite Reliability (> .70)a

Convergent Validity (AVE) (> .50)a

Price-Level Perception

.92

.84

Purchase Intention

.91

.78

Quality Perception

1.00

1.00

Hair et al. (2011, p. 145)

Table 43: Standard quality criteria experiment 2 (Paint)

178

Development and Empirical Testing of Hypotheses


Unit of
Measure

Price-Level
Perception

Purchase
Intention

Quality
Perception

Case

1.00

.18

-.13

.12

Pur_Int1

-.15

-.12

.88

.28

Pur_Int2

-.10

-.22

.92

.22

Pur_Int3

-.10

-.19

.84

.24

Pri_Lev1

.18

.93

-.11

.45

Pri_Lev2

.14

.91

-.28

.31

Qua_Per

.12

.42

.28

1.00

Bold numbers indicate indicator loadings, other numbers indicate cross-loadings

Table 44: Indicator loadings and cross-loadings (Paint)


Unit of
Measure

Price-Level
Perception

Purchase
Intention

Unit of Measure

0,00

Price-Level Perception

0,03

0,84

Purchase Intention

0,02

0,04

0,78

Quality Perception

0,01

0,17

0,08

Quality
Perception

1,00

Bold numbers indicate AVEs, other numbers indicate squared latent variable correlations

Table 45: Squared Latent Variable Correlations and AVEs (Paint)

4.1.3.5.2 Product Category Jam


The hypotheses are first tested for the product category jam, and subsequently
also for the product category wall paint. To test hypothesis 1, a t-test is conducted. To test hypotheses 2 to 4, regression analysis and mediation analyses are
conducted. To analyze the influence of control variables on the individual rela-

Influence of the Unit Price at the Product Level

179

tionships also moderation analyses are conducted. An overview of the entire


model is given by SEM.
Hypothesis 1 expects that the unit price unit of measure has a positive influence
on the price-level perception. Hence, the perceived price level is expected to be
higher if the unit price is indicated as price per kg, in contrast to the indication of
the unit price as price per 100 g. The overall perceived price level for both groups
is moderate to low (Figure 20). The t-test indicates a highly significant influence
of unit price measurement on price-level perception (Table 46). Hence, although
the overall price is the same for both groups, the group that saw the unit price as
price per kg perceived the jam as significantly more expensive than the group of
consumers that saw the unit price as price per 100 g.
7.00

Price-Level Perception

6.00
5.00

4.72
3.88

4.00
3.00
2.00
1.00

Product Category Jam


1 kg

100g

Figure 20: Means and standard deviation for price-level perception (Jam)

Jam: Price-Level Perception


(H1)

Experimental
Group

Group Size

Mean

SD

t-Statistik

kg

49

4.72

1.48

100 g

48

3.88

1.33

t (1, 95) = 2.97


p < 0.01

Table 46: T-test price-level perception (Jam)

180

Development and Empirical Testing of Hypotheses

The regression analysis reveals that price-level perception has only a weak positive influence on quality perception (Table 47). Furthermore, price-level perception as well as quality perception influence purchase intention as predicted.
Price-level perception has a negative influence on purchase intention, while
quality perception has a positive influence on purchase intention (Table 48).
Therefore, hypotheses 3 and 4 are also supported, while hypothesis 2 has to be
rejected.
Standardized
(Constant)

t (1, 95)
6.60 (p < .01)

Jam: Price-Level Perception

.19

1.88 (p < .10)

Dependent Variable: Jam: Quality Perception

Table 47: Influence of price-level perception on quality perception (Jam)


Standardized
(Constant)

t (2, 94)
13.89 (p < .01)

Jam: Price-Level Perception

-.57

-6.58 (p < .01)

Jam: Quality Perception

.26

2.99 (p < .01)

Dependent Variable: Jam: Purchase Intention

Table 48: Influence of price-level perception and quality perception on purchase intention
(Jam)

In order to see if the unit of measure influences quality perception and purchase
intention through price-level perception, mediation analyses were conducted in
the same way as when analyzing the results of the first experiment. However, the
only mediation effect that is significant for the product category jam, is the indirect influence of unit of measure on purchase intention through price-level perception (Table 50). The remaining direct and indirect effects in the model are not
significant (Table 49, Table 50).

Influence of the Unit Price at the Product Level

181

Independent
Variable (X)

Mediator (M)

Dependent
Variable
(Y)

Direct Effect
(c)

Indirect Effect
(a x b)

Unit of
measure

Price-Level Perception

Quality
perception

.20

.14

Table 49: Mediation effects: Quality perception (Jam)


Independent
Variable (X)

Mediator (M)

Dependent
Variable
(Y)

Direct Effect
(c)

 Indirect Effect
(a x b)

Price-Level Perception
Unit of
measure

Quality Perception
Price Level Perception Quality Perception

-.45**
Purchase
Intention

.05

-.19

.04

** p < .05

Table 50: Mediation effects: Purchase intention (Jam)

To see, whether the relationships in the model become stronger for individual
customer segments, moderation analysis were conducted, as suggested by Hayes
(2013, p. 225). The results show that quality consciousness strengthens the influence on the unit of measure on price-level perception. This implies that those
customers, that perceive quality as important infer a high quality from the numerosity of the unit price for the product category jam (Table 51).

Control Variable
Quality Consciousness

Interaction Effect:
Experimental Group x Control Variable
t (3, 146)

Coefficient

2.23 (p < .05)

.43

Dependent variable: Price-level perception

Table 51: Influence of interaction effects on price-level perception

No control variable could be identified that strengthens the influence of unit


price-level perception on quality perception. The only significant moderation
effect exists for unit price comprehension (Table 52). However, this moderation

182

Development and Empirical Testing of Hypotheses

effect is negative, implying that consumers, who know how unit prices can be
used to find the best-value product, do even less infer quality from the pricelevel perception. No significant interaction effects for the remaining control
variables exist (Appendix 6 Appendix 7). Hence, they are not further discussed
at this point.
Control Variable
Unit Price Comprehension

Interaction Effect:
Price-Level Perception x Control Variable
t (3, 146)

Coefficient

-2.51 (p < .05)

-.14

Dependent variable: Quality perception

Table 52: Influence of interaction effects on price-level perception

To get an overview of the complete structural model, the hypotheses were also
tested using SEM. The results of the SEM support H1H4 and are summarized in
(Table 53, Figure 21). As hypothesized, the unit of measure has a positive influence on the price-level perception. Price-level perception then has a positive
influence on quality perception and a negative influence on purchase intention.
Quality intention, on the other hand, influences purchase intention positively.
Again, the R values for price-level perception (R = .07) and quality perception
(R = .01) are very small. But again, the aim here is not to explain these constructs, but rather to show that unit price is one of the factors that influence
price-level perception and quality perception.

Influence of the Unit Price at the Product Level

183

sample mean (M)

SD

SE

t-statistics

Measuring Unit
Price-Level Perception

.27

.28

.10

.10

2.84***

Price-Level Perception
Quality Perception

.21

.21

.12

.12

1.74**

Price-Level Perception
Purchase Intention

-.53

-.54

.08

.08

6.45***

Quality Perception
Purchase Intention

.32

.32

.09

.09

3.33***

*** p < .01


** p < .05

Table 53: Results SEM (Jam)


Price-Level Perception
R=.07
.27***

Unit Price
Unit of Measure

-53***

Purchase Intention
R=.43

.21**

Quality Perception
R=.01

.32***

Figure 21: SEM: Product category jam (***p<0.01, **p<0.05)

4.1.3.5.3 Product Category Wall Paint


The second pre-packaged product category analyzed is wall paint. Hypothesis 1
expects a positive influence of unit of measure on price-level perception. The
general perceived price level for the product category wall paint is medium to
low (Ml = 3.84, M100ml = 3.28, Figure 22). In order to see if difference in the price
level perception exist, a t-test was conducted. This test reveals only a weak significant influence of unit price measurement on price-level perception (Table
54). Therefore, Hypothesis 1 cannot be supported for this product category. To
test hypotheses 2-4 that expect a positive influence of price-level perception on
quality perception, negative influence of price-level perception on purchase

184

Development and Empirical Testing of Hypotheses

intention, as well as a positive influence of quality perception on purchase intention, regression analyses were conducted. The analyses reveal that price-level
perception has a positive general influence on quality perception (Table 55).
Price-level perception as well as quality perception influence purchase intention
as predicted. Price-level perception has a negative influence on purchase intention, while quality perception has a positive influence on purchase intention
(Table 56). Hence, hypotheses 24 are supported for the product category wall
paint.
7.00

Price-Level Perception

6.00
5.00
3.84

4.00

3.28
3.00
2.00
1.00
Product Category Paint
1 kg

100g

Figure 22: Means and standard deviation for price-level perception (Paint)

Jam: Price-Level Perception


(H1)

Experimental
Group

Group Size

Mean

SD

t-Statistik

kg

49

3.84

1.57

100 g

48

3.28

1.31

t (1, 95) = 1.89


p < 0.10

Table 54: T-test price-level perception (Paint)

Influence of the Unit Price at the Product Level

185
Standardized

t (1, 149)

(Constant)

5.61 (p < .01)

Paint: Price-Level Perception

.40

4.24 (p < .10)

Dependent Variable: Paint: Quality Perception

Table 55: Influence of price-level perception on quality perception (Paint)


Standardized

t (2, 148)

(Constant)

9.84 (p < .01)

Paint: Price-Level Perception

-.41

-4.06 (p < .01)

Paint: Quality Perception

.40

3.93 (p < .01)

Dependent Variable: Paint: Purchase Intention

Table 56: Influence of price-level perception and quality perception on purchase intention
(Paint)

In order to see if the unit price influences quality perception through price-level
perception, a mediation analysis was conducted. The mediation analysis reveals
that the unit of measure influences quality perception indeed indirectly through
price-level perception. Here only this indirect effect exists, the direct effect is not
significant (Table 57).
Independent
Variable (X)

Mediator (M)

Dependent
Variable
(Y)


Direct
Effect (c)

 Indirect Effect
(a x b)

Unit of measure

Price-Level Perception

Quality
perception

.19

.20**

** p < .05

Table 57: Mediation effects: Quality perception (Paint)

A further mediation analysis was conducted to analyze the influence of the unit
of measure on purchase intention through price-level perception and quality
perception. The results show that the unit of measure only has an influence on
purchase intention through price-level perception and quality perception. The
direct effect as well as the indirect effect through price-level perception or quality perception are non-significant (Table 58).

186

Development and Empirical Testing of Hypotheses

Independent
Variable (X)

Mediator (M)

Dependent
Variable
(Y)

Direct Effect
(c)

 Indirect Effect
(a x b)

Price-Level Perception
Unit of
measure

Quality Perception
Price Level Perception Quality Perception

-.21
Purchase
Intention

-.8

-.25

.08**

** p < .05

Table 58: Mediation effects: Purchase intention (Paint)

In order to see, whether the unit price format has a stronger influences on pricelevel perception for individual segments as well as if a stronger influence of
price-level perception on quality perception exists for certain consumer groups,
the influence of control variables has been assessed. Only the control variable
unit price awareness reveals an interaction effect. Bootstrapping (1,000 samples)
shows a highly significant positive influence of the interaction effect of unit price
format and unit price awareness in general, as well as a significant interaction
effect of unit price format and unit price awareness in this experiment (Table 59).
For the group of unit price aware participants, unit price format has a positive
influence on price-level perception. This seems sensible, as it implies that the
unit price has a stronger influence on the consumer if he is aware of the unit
price, compared to if he does not notice this price information or processes it
subconsciously. There were no significant interaction effects for the remaining
control variables (Appendix 8 Appendix 9). Hence, they are not further discussed here.
Control Variable

Interaction Effect: Experimental Group x Control Variable


t (3, 146)

Coefficient

Unit Price Awareness Experiment

2.11 (p < .05)

.47

Unit Price Awareness General

2.79 (p < .01)

.66

Dependent variable: Price-level perception

Table 59: Influence of interaction effects on price-level perception

Influence of the Unit Price at the Product Level

Control Variable
Household Size

187

Interaction Effect: Price-Level Perception x Control Variable


t (3, 89)

Coefficient

2.08 (p < .01)

.18

Dependent variable: Quality perception

Table 60: Influence of interaction effects on price-level perception

Again, to get a complete overview of the structural model, the hypotheses were
tested using SEM. The results of the SEM are generally in line with the findings
of the t-test and the regression analysis and are summarized in Table 61 and
Figure 23. Surprisingly, when conducting a PLS analysis, the path from unit of
measure to price-level perception becomes significant at a .05 level, without
considering any moderators. The t-test that was conducted before only found a
weak significance for this relationship at a .10 level. In line with the regression
analyses, SEM found a significant positive influence of price-level perception on
quality perception, as well as the expected positive effect of quality perception
on purchase intention, and the negative effect of price-level perception on purchase intention.

Sample Mean (M)

SD

SE

t-statistics

Measuring Unit
Price-Level Perception

.18

.18

.10

.10

1.81**

Price-Level Perception
Quality Perception

.42

.42

.12

.12

3.58***

Price-Level Perception
Purchase Intention

-.39

-.39

.11

.11

3.66***

Quality Perception
Purchase Intention

.44

.45

.08

.08

5.34***

*** p < .01


** p < .05

Table 61: Results SEM (Paint)

188

Development and Empirical Testing of Hypotheses

Price-Level Perception
R=.03
.18**

Unit Price
Unit of Measure

-.39***

Purchase Intention
R=.20

.42***

Quality Perception
R=.17

.44***

Figure 23: SEM: Product category wall paint (***p<0.01, **p<0.05)

This second experiment shows that for the product category of strawberry jam
and wall paint the unit price format has an influence on price-level perception,
quality perception and purchase intention. The individual relationships are again
influenced by a number of moderators, such as quality consciousness and unit
price awareness.

4.1.4 Discussion
Two experiments were conducted that shed light on the influence of unit of
measure on the product evaluation by the consumer. The first experiment focused
on unpackaged products, while the second experiment focused on prepackaged
products. The results show that the influence of the unit prices unit of measure
on price-level perception, quality perception and purchase intention depends on
the product category. For unpackaged salami as well as strawberry jam, the effects were as hypothesized. The larger unit of measure (i.e., price per kg) leads to
a higher perceived price level and subsequently also to a higher perceived quality. These two constructs subsequently also influence purchase intention. The
indirect effect of unit of measure on quality perception and purchase intention
through price-level perception could be confirmed by mediation analyses. For
the product category paint, only a weak positive influence of unit of measure on
price-level perception exists. For the product category tomatoes the individual
relationships were not strong enough to be significant. An overview of the hypotheses is given in Table 62.

Influence of the Unit Price at the Product Level

189

Unpackaged Products

Pre-Packaged Products

Salami

Tomatoes

Jam

Paint

H18QLW3ULFH)RUPDW
Price-Level Perception

H2: Price-/HYHO3HUFHSWLRQ4XDOLW\
Perception

H3: Price-/HYHO3HUFHSWLRQ3Xrchase Intention

H44XDOLW\3HUFHSWLRQ
Purchase Intention

Table 62: Overview of results (Experiment 1 & 2)

In order to see whether the influence of unit of measure as well as the influence
of price-level perception on quality perception changes if control variables are
taken into account, moderation analyses were conducted for each product categories. The variables that moderate the individual relationships also differ between
the individual product categories. For example, for the product category of unpackaged salami, the unit of measure has a positive influence on price-level
perception. This relationship becomes significantly weaker for price conscious
consumers. This is reasonable as price conscious consumers behave differently
than non-price conscious consumers to achieve their goal of reducing overall
spending. They focus more on store brands than non-price conscious consumers
that are less concerned about prices (Koschate-Fischer et al., 2014, p. 72). Price
consciousness consumers as well as consumers that actively compare prices
focus more on price aspects of purchases than other aspects (Kukar-Kinney et al.,
2007, p. 218). Price conscious consumers engage more in searching for lower
prices and price information in general, in order to pay a lower price for a product or service (Lichtenstein et al., 1988, p. 250).
On the other hand, for the product category of salami, brand loyalty strengthens
the price-quality relationship. A possible reason for this is that these consumers
seek for reassurance that their brand loyalty is a sensible decision. In addition,
brand-loyal consumers do not compare prices of different brands and therefore

190

Development and Empirical Testing of Hypotheses

do not access the unit price information carefully enough to realize different
frames and therefore might infer the price level from the nominal value.
Unit price awareness, in the experiment as well as in general, strengthens the
influence of price-level perception on quality perception for the product category
wall paint. This also seems reasonable, since unit price awareness implies that
the consumer realizes the availability of unit price on the price label, however, it
does not necessarily imply that consumers use this information carefully. A brief
consideration of the unit price, hence, can lead to consumers merely focusing on
the numerosity of the unit price, while neglecting the unit of measure.
These results are in line with previous findings that show that unit price usage as
well as the inference of quality from price cannot be seen as a universal consumer behavior. These literature streams also underline that these aspects of consumer behavior are strongly dependent on socio-demographic and, in particular,
psychographic consumer characteristics.

4.2

Influence of the Unit Price at the Retailer Level

While the first experiment focused on the influence of the unit price at the product level, the second experiments concentrates on the influence of the unit price
at the retailer level.
In the European Union as well as in other regions, such as the USA and Australia, presenting unit prices next to overall prices at the point of purchase is mandatory. However, there are a number of exemptions from mandatory unit pricing in
practice. For example, within the EU, the directive 98/6/EC (Article 6) allows
member states to indemnify small retailers from the obligation to provide unit
prices. At least eight member states, among those Austria, Germany, United
Kingdom and Luxembourg, included this exceptional rule in their national law
(Snijders et al., 2004, p. 9). The reasoning behind this rule is justified from the
small business perspective as well as from the customers perspective. For small
retailers, displaying unit prices is cumbersome, as displaying this information
implies additional administrative burdens, cost, and time investments. While
large retailers use computerized systems to print price labels or to even send

Influence of the Unit Price at the Retailer Level

191

prices to digital price labels, small retailers use price guns or handwritten labels
and rather put price labels on the individual products than on shelves. Customers,
on the other hand, perceive unit prices in at small retailers as less relevant, since
these stores offer a limited range of goods that make unit price comparisons less
relevant (Snijders et al., 2004, pp. 9, 11).
However, the Member States applying the exemption for small businesses have
individual definitions for the group of retailers that is eligible to refrain from
presenting unit prices. Some Member States, as for example Austria, Belgium
and Luxemburg, determine which retailers are considered as small based on the
sales area. Additionally, Austria and the Netherlands infer from the number of
employees, if a retailer is considered a small retailer. In contrast, Ireland defines
as small business based on the lack of access to technology necessary for printing shelf labels and scanning bar codes (Snijders et al., 2004, p. 10). There are
large differences within the EU concerning the percentage of small retailers
within a country.
Besides small retailers, also a number of product categories are exempted from
the indication of unit prices (e.g., see Directive 98/6/EC, art. 5(1) and art. 5(2)).
Reasons for the exemption of certain product types are twofold. First of all, for
certain product categories unit prices are not useful or would be confusing to the
consumer. For example, this is the case if there is only one item in the package
and weight is irrelevant, or if there are different types of products in one package. Another reason why products are exempted are national peculiarities.
It can be expected that the presentation of unit prices as well as the unit price
format influences the consumers attitude towards the retailers. For example,
consumers can appreciate the unit price presentation, because it eases the comparison of product prices under consideration of package size difference, which
then can lead to a positive attitude towards the retailer and its pricing policy. The
consumers attitude towards the pricing policy is an important aspect for retailers, as a positive attitude can lead to a higher likelihood of the consumer choosing a given retailer for shopping (Zielke, 2010, p. 760), which is from the retailers perspective an even more important decision than the customers purchase decision at the product level.

192

Development and Empirical Testing of Hypotheses

Based on these arguments, an influence of unit price presence and unit price
prominence on a retailers store price image is suggested, which subsequently
has an effect on shopping intentions. Furthermore, moderating effects regarding
the impact of unit prominence on different price image dimensions are assumed.
The construct used for store price image here is the one suggested by Zielke
(2006, p. 299, 2010, p. 750). Here store price image consists of five dimensions:
price-level perception, value-for-money perception, price processibility, price
perceptibility, and evaluation certainty. Price-level perception has been defined
as the perception of prices while neglecting quality differences (Zielke, 2010, p.
750; Diller, 2008a, p. 140). In contrast to the price-level perception, price-value
perception is the outcome of the comparison of an offers price and quality
(Diller, 2008a, p. 139) or more generally spoken, the trade-off between give
components and get components, where get components are not only the price
but might also be physic costs, psychic costs and temporal costs (Zielke, 2010, p.
751). Price perceptibility describes the convenience with which a customer can
visually perceive price information from a retailer. Price processibility is the ease
of comparing prices of different product alternatives in a purchase situation.
Evaluation certainty refers to the ease of the price evaluation process at the store
level and the consumers certainty regarding the judgment of a stores prices
(Zielke, 2010, p. 750).
The hypotheses that are developed in the following expect that the unit price
influences the individual dimensions of the store price image and subsequently
also shopping intention. In the next paragraphs, for each of the store price image
dimensions, several hypotheses are postulated. The first set of hypotheses predicts the general impact of unit pricing on the individual dimensions, while the
second set of hypotheses addresses the strengthening effect of unit price prominence. Furthermore, hypotheses regarding mediation effects via store price image dimensions are developed.

4.2.1 Hypotheses Development


In the next paragraphs, hypotheses in regard to the influence of unit price on the
individual store price image dimensions as well as hypothesis regarding the in-

Influence of the Unit Price at the Retailer Level

193

fluence of unit price prominence on the individual store price image are formulated. In addition to this, two hypothesis also predict the indirect influence of unit
price on value-for-money perception and shopping intention are derived.
Price Processibility
In many countries, indicating the unit price in close proximity to the price per
package is mandatory. The main reason behind making unit pricing mandatory is
to ease the price-based comparison of product alternatives with different package
sizes at the point of purchase (Lamont et al., 1972, p. 223; Monroe/LaPlaca,
1972, p. 17) and thereby to increase price processibility as more product information is available. It is easier for customers to compare prices while taking
product sizes into consideration when unit prices are given. Otherwise, unit prices would have to be calculated autonomously. Inference theory states that individuals refrain from in-depth investigations in regard to certain concepts and
rather make inferences about them based on available attributes (Peter/Olson,
1987, p. 172; Nisbett/Ross, 1980, p. 295). Unit prices can be such an attribute
and consumers can use it to make inferences about a retailers store price image,
as the store price image is hard to assess directly. As the price and the unit price
are easily accessible for the consumer on the price tag and, hence, are prominent
information cues for the consumer, it can be expected that consumers use these
cues to make inferences about the store price image. Hence, it is expected:
H1a: The unit price statement has a direct positive influence on price processibility.
Price Perceptibility
Price perceptibility indicates how conveniently the customer can visually perceive price information presented by the retailer. When shopping at the supermarket, the customer is confronted with countless product alternatives, each
providing information about numerous product attributes, such as ingredients,
nutrition, price, etc. By adding unit prices to the price display, more information
is added, potentially promoting an information overload effect that may result in

194

Development and Empirical Testing of Hypotheses

suboptimal decision making (Bialkova et al., 2013, p. 71; Malhotra, 1982, p.


424; Jacoby et al., 1974b, p. 66, 1974a, p. 40). Adding unit prices to the price tag
increases the information load for the customer and complicates the identification of relevant (price) information for optimal decision-making. More generally,
so called visual clutter (Rosenholtz et al., 2007, p. 1) makes it more difficult to
visually identify a target piece of information. Here visual clutter is defined as
the state in which excess items, or their representation or organization, lead to a
degradation of performance at some task (Rosenholtz et al., 2007, p. 3). Consequently, the level of visual clutter in a display refers to the convenience with
which an attention-attracting target to this display (Rosenholtz et al., 2007, p. 4).
However, research shows that information overload only takes place, if a very
large amount of information (> 10 attributes) is given (Malhotra, 1982, p. 424;
Jacoby et al., 1974a, p. 40, 1974b, p. 66). Furthermore, they also show that consumers are more satisfied and feel better informed as the number of information
presented inclines.
Furthermore, research on visual attention has also shown that a combination of
two targets receives more attention than a single target (Bialkova et al., 2013, p.
68). Again, based on cue utilization theory (Easterbrook, 1959, p. 179) and inference theory (Lamont et al., 1972, p. 223; Monroe/LaPlaca, 1972, p. 17), it can be
assumed that the unit price information can be used as a cue to make inferences
about abstract concepts, such as the store price image. Since the additional unit
price information leads to consumers being more satisfied with the amount of
information available and perceiving it as easier to find the price information, the
additional unit price is a positive cue for the inference of store price image and
price perceptibility in particular. Therefore, it is hypothesized:
H2a: The unit price statement has a positive direct influence on price perceptibility.
Evaluation Certainty
For similar reasons that suggest a positive relationship between unit pricing and
price processibility, it can be assumed that customers are more certain regarding

Influence of the Unit Price at the Retailer Level

195

their evaluation of price. The mere presence of unit prices can encourage consumers to infer that price comparison in this store is easier, because prices can be
compared with less effort and more accurately (Zeithaml, 1982, p. 365). According to inference theory (Lamont et al., 1972, p. 223; Monroe/LaPlaca, 1972, p.
17), individuals use different information cues to make inferences related to
events that they are not able to assess. An application of this theory on unit pricing leads to unit prices being an information cue for a pricing policy that is easy
to evaluate and increases customers certainty about the price-based product
choice. Prior research has observed similar effects for price guarantees
(Desmet/Nagard, 2005, p. 394). This leads to the third hypothesis:
H3a: The unit price statement has a positive direct influence on evaluation certainty.
Price-Level Perception
The price level is defined as the absolute amount of money one needs to give up
to get something of value (Monroe/Krishnan, 1985, p. 217). The price-level
perception of individual products impacts the price-level perception of the entire
store via generalization and information-integration processes (Alba et al., 1994,
p. 224; Bykkurt, 1986, p. 368). For example, Alba et al. (1994, p. 224) show
that the more frequent the consumer perceives a price advantage compared to
another store, the higher is the probability that the stores overall price-level is
perceived to be lower. Since unit prices ease price comparisons, customers are
able to choose products with lower unit prices (Miyazaki et al., 2000, p. 107;
Russo, 1977, p. 199; Granger/Billson, 1972, p. 241). This can have an impact on
the perceived price level of the store, since the customer integrates the lower unit
price into the overall price-level perception at store level. This is supported by
the availability heuristic that states that consumers judge frequency of an event
based on the availability of this event (Tversky/Kahneman, 1973, p. 207). Hence,
based on the availability heuristic, it can be suggested that consumers evaluate a
stores prices based on how easily prices of certain products come to their mind.
If, for example, the consumer remembers a large number of low-priced products

196

Development and Empirical Testing of Hypotheses

in a store, he infers that the store has a low price level, no matter if the sample of
prices he remembers is representative of the store or not. Again, research on
price guarantees found inference effects on price-level perception. Researchers
show that the perceived price level of a store is lower if price matching guarantees are available (Srivastava/Lurie, 2004, p. 120; Jain/Srivastava, 2000, p. 353).
Furthermore, based on the inference theory, the usage of the unit price statement
as an indicator of store-wide low prices for the customer, suggesting a transparent retailers pricing practice not hiding unexpectedly high prices, can be assumed. Unit prices can also act as cue for a low price level, as they increase price
transparency underlining that there are no hidden high prices. As consumers see
unit prices for a variety of products at a store, they transfer the low perceived
prices of individual products to the store level. This can result in a low perceived
overall store price level.
H4a: The unit price statement has a positive direct influence on price-level perception.
Unit Price Prominence
Besides the influence of unit price presence on the store price image, also the
influence of unit price prominence is addressed. This is relevant, since retailers
have a high degree of creative leeway concerning the display of unit prices on
the price label. Unit price prominence is retailer-specific and various levels of
unit price prominence exist in the marketplace. While some retailers use a large
font size for the unit prices and even highlight them, other retailers use a very
small font size for unit prices, which leads to the impression of retailers hiding
unit prices. Therefore, the next set of hypotheses addresses the influence of unit
price prominence on the store price image.
Previous research shows that information prominence has an impact on consumer behavior. On a general level, Bettman/Kakkar (1977, p. 237) demonstrate that
the information format strongly influences the way individuals process given
information. Individuals tend to process information cues in the easiest possible
way in regard to the information format used. For example, it is very easy to

Influence of the Unit Price at the Retailer Level

197

process information that is prominently displayed, while it is more difficult to


process information that is presented in a non-prominent way.
Peter/Olson (2010, p. 109) postulate that different factors influence consumers
attention regarding information presented in the marketplace. Factors they list
are the consumers affective state in general, the consumers involvement as well
as the information prominence. They state that in general the most prominent
information presented to the customer is the information that is most likely to
attract consumers attention (Peter/Olson, 2010, p. 110).
Similarly, also Kim (2006, p. 312) finds evidence that the prominence with
which individual information cues are presented influence consumer behavior.
He shows that for price discounts consumers willingness to purchase is highest
if the before-rebate price, the rebate, as well as the after-rebate price are presented equally prominently. However, the influence of information prominence on
consumer behavior here is moderated by factors such as rebate size and consumers price knowledge (Kim, 2006, p. 314). In the same way it can be assumed
that certain consumer segments appreciate a unit price that is presented in an
equally prominent way as the overall price, as this increases price transparency.
Pioneer research on unit price prominence found positive effects on the awareness and usage of unit prices (Miyazaki et al., 2000, pp. 103104). Therefore, it
is assumed that the extent of the unit prices impact on the single store price
image dimensions depends also on its prominence on the price tag. For example,
if the unit price is hidden or stated in a much smaller font size than other information given for a certain product, the customers awareness of this information
will be low and consequently, the impact on the price processibility dimension
will only be minor. The same reasoning can also be applied to the remaining
relevant store price image dimensions. A second stream in literature that supports
the assumption that unit price prominence has a positive influence on store price
image is literature addressing visual fluency (Winkielman et al., 2003, p. 77;
Reber et al., 1998, p. 46). Perceptual fluency has been defined as the subjective
feeling of ease or difficulty experienced while making a decision (Novemsky et
al., 2007, p. 347). While processing fluency can be increased by a repeated stimulus presentation, perceptual fluency is increased by visual prominence of the

198

Development and Empirical Testing of Hypotheses

stimulus (Reber et al., 1998, pp. 4546). Perceptual fluency, again, enhances an
individuals preference for a stimulus and decreases the disliking of stimuli
(Reber et al., 1998, pp. 46, 48). Even the preference for an otherwise neutral
stimulus is enhanced by increasing its perceptual fluency by enhancing its visual
prominence (Reber et al., 1998, p. 48). This shows that consumer judgments are
not only based on the evaluation of an object itself but also on the ease of stimulus perception (Novemsky et al., 2007, p. 350). Several variables, such as the
contrast between content and ground and clarity have a positive influence on
perceptual fluency (Winkielman et al., 2003, p. 77). In their extensive literature
review, Winkielman et al. (2003, p. 81) conclude that individuals have a more
positive attitude towards stimuli that are easy to process. A unit price statement
with a higher prominence can be easier processed than a unit price statement that
is difficult to find on a price tag due to a low level of prominence. Therefore, it
can be assumed that consumers prefer prominent unit price statements, which
thus have a positive influence on the store price image.
The Weber-Fechner law implies that a stimulus only leads to a behavioral impact, if it exceeds or at least meets a just noticeable difference when compared to
the environment or a stimulus perceived at the same time (Henderson Britt,
1975, pp. 2122). Applied to unit prices, this leads to the assumption that the unit
price will only have a behavioral impact and consequently change the store price
image if its prominence exceeds a specific level.
Availability theory posits that consumers judge frequency of an event based on
the availability of this event (Tversky/Kahneman, 1973, p. 207). Hence, based on
the availability heuristic, it can be suggested that consumers evaluate a stores
prices based on how easily low prices come to their mind. If unit prices are stated prominently and consumers can easily find low-priced products, the consumer
remembers a large number of low priced products in a store, and he infers that
the store has a low price level. In the same way it can be assumed that individual
aspects of a stores pricing practice that the customer remembers influences also
other dimensions of the stores price image. For example, if the customer remembers the availability of unit prices at a store, he may infer that the store offers a

Influence of the Unit Price at the Retailer Level

199

high price processibility, which eases the comparison of prices of different product alternatives.
However, former research on unit price research shows that no general statement
about unit price awareness, unit price usage and consumer reaction to unit prices
can be made. The consumers processing of unit prices rather depends on several
demographic, psychographic and retailer related aspects (Miyazaki et al., 2000,
pp. 103104; McGoldrick/Marks, 1985; Lamont et al., 1972, p. 225). Therefore,
two factors are tested for moderation of the influence of unit prices on store price
image. First, a positive moderating effect of prior unit price usage on the unit
price prominences influence on the store price image dimensions is assumed. If
consumers frequently and consciously use unit prices when judging product
alternatives, the influence of unit price prominence is stronger than for consumers being aware that this information is available but do not use this information,
or for consumers not realizing the availability of unit prices at all. This is based
on the assumption that the concept of unit prices will be activated more easily if
the consumer has frequently used unit prices in the past and has learnt about this
concept. In line with theories on long-term memory, information that is learnt
and stored in long-term memory can be used for the evaluation of newly encountered information, after it is retrieved from long-term memory with the aid of
retrieval strategies or retrieval cues (Bettman et al., 1991, p. 56).
Second, it is assumed that brand consciousness moderates the influence of unit
price prominence on store price image. Previous unit price literature shows that
frequently purchasing store brands increases unit price awareness and unit price
usage (McGoldrick/Marks, 1985, p. 57), while brand loyalty decreases unit price
usage (McElroy/Aaker, 1979, p. 54). Therefore, a negative influence of brand
consciousness on the relationship between unit price prominence and store price
image is assumed. Consumers being brand conscious allocate more importance
to the product brand and perceive unit prices as less important for judging product alternatives. Due to this perceived insignificance of unit price information,
brand consciousness weakens the influence of unit price prominence on store
price image.
Considering these factors, it is hypothesized:

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Development and Empirical Testing of Hypotheses

H1b-d: (b) Unit price prominence has a positive influence on price processibility.
This effect increases with (c) stronger unit price usage and (d) weaker
brand consciousness.
H2b-d: (b) Unit price prominence has a positive influence on price perceptibility.
This effect increases with (c) stronger unit price usage and (d) weaker
brand consciousness.
H3b-d: (b) Unit price prominence has a positive influence on evaluation certainty. This effect increases with (c) stronger unit price usage and (d) weaker brand consciousness.
H4b-d: (b) Unit price prominence has a positive influence on price-level perception. This effect increases with (c) stronger unit price usage and (d)
weaker brand consciousness.
Value-for-money perception
Value-for-money perception results from a tradeoff between give (e.g.., money)
and get (i.e., perceived value) components (Zeithaml, 1988, p. 10). Since unit
price information does not impact the get component of a purchase, as for example a products quality or features, it is hypothesized that unit pricing has no
direct influence on value-for-money perception, but an indirect influence, since
price processibility, price perceptibility, price-level perception and evaluation
certainty can influence the give component of the tradeoff. This relationship
between the individual store price image dimensions, without taking unit prices
into account, has been shown in the past (Zielke, 2010, p. 760). Therefore, it is
hypothesized:
H5: The unit price has a positive indirect effect on value-for-money perception,
mediated by (a) price processibility, (b) price perceptibility, (c) evaluation
certainty and (d) price-level perception.

Influence of the Unit Price at the Retailer Level

201

Shopping intention
Shopping intention is the likelihood that the consumer will purchase goods from
a given retailer. Shopping intention should not be confused with purchase intention that stands for the consumers intention to buy a specific item, while the
retailer is not further specified. However, the terms shopping intention and purchase intention have been used inconsistently in previous literature or the same
scales were used to measure both, shopping intention and purchase intention, and
are therefore ambiguous (Jain/Srivastava, 2000, p. 353). In this thesis, it is differentiated between both concepts and consider only shopping intention in terms
of the consumers choice of retailer in this part of the thesis. Several factors
influence the consumers shopping intention, such as the availability of price
matching refunds and store type. The availability of price matching refunds increase the shopping intention for a retailer (Jain/Srivastava, 2000, p. 354).
Former research shows that all five dimensions of price image have either a
direct or indirect influence on shopping intentions (Zielke, 2010, p. 760). Shopping intentions indicate, whether a consumer would consider shopping at a given
store. Here a positive impact of price processibility, price perceptibility, evaluation certainty, price-level perception and value-for-money perception on shopping intentions is assumed, since these relationships have also been shown in the
past. Consumers prefer stores that are perceived to have a transparent pricing
practice and convey a lower price level. Hence, it is proposed:
H6: The unit price has a positive indirect effect on the customers shopping intentions, mediated by (a) price processibility, (b) price perceptibility, (c)
evaluation certainty, (d) price-level perception and (e) value-for-money
perception.
An overview of the hypotheses is given in Figure 24.

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Development and Empirical Testing of Hypotheses

Price-Level Perception

H1

H6a

Price Processibility

H6b

H2
H5b

H5a

Value-for-Money
Perception

Large Unit Price

H6e

Shopping Intentions

H3
H5c

H5b

H4
Price Perceptibility

H6c
H6d

Evaluation Certainty

Figure 24: Hypothesis overview

To test these hypotheses, two experiments were conducted. The first experiment
was administered at a laboratory and assessed the influence of unit price availability and unit price prominence in general. The second experiment was administered online and concentrates on the influence of unit price prominence and the
role of moderating variables. Both experiments utilized similar methods. The
methods as well as the experiments results are described in the following sections.

4.2.2 Experiment 3: Influence of Unit Price on Store Price Image


To test these hypotheses, an experimental methodology was adopted. As an experimental design, simulated shopping tasks are utilized. This is similar to other
recent investigations in the area of behavioral pricing (McKechnie et al., 2012, p.
1508; Thomas/Kyung, 2011, p. 1). Here unit price availability or unit price
prominence were manipulated between the individual groups in order to extract
potential differences in the perception of store price image. In order to determine
the product categories used in this experiment, a pretest was conducted.

Influence of the Unit Price at the Retailer Level

4.2.2.1

203

Pretest

In order to display product categories in the simulated shopping task that the
participants frequently consider during their weekly shopping trips, these products categories were identified with a pretest. 24 undergraduate students took
part in the pretest (33.33 % female, mean age = 24.67 years, SD = 1.93) and indicated on a 5-point scale, how frequently they consider 24 different product categories for purchase during their shopping trips (1 = very frequently, 5 = never).
Among the various product categories presented, personal care products
(mean = 2.29, SD = .91), pasta (mean = 2.21, SD = .83) and bread (mean = 1.92,
SD = .78) were among the products categories most frequently considered for
purchase and were chosen for the experiment as they represent food as well as
non-food products (for an overview of all product categories see Figure 25). The
specific products used in the experiment, hence, are spaghetti, sandwich bread,
and shampoo.
1.00

Mean frequency of consideration for purchase

1.50
1.92
2.00
2.50
3.00
3.50

2.21 2.25
2.29 2.29

2.42 2.46
2.67 2.71

2.78

2.87 2.91
2.96

3.04
3.29 3.30
3.54
3.74 3.78

3.88 3.88 3.88

4.00
4.35
4.50

4.77

5.00

Figure 25: Mean frequency of consideration for purchase for individual product groups

204

4.2.2.2

Development and Empirical Testing of Hypotheses

Methodology

For this first experiment, a one factorial between-subjects design with unit price
presentation operationalized at three levels was chosen. To extract the causal
relationship between unit price presence as well as its prominence and the customers store price image and shopping intentions, unit price presentation was
the only variable altered between the three groups in this experiment. Prominence can be manipulated in different ways. First of all, prominence is enhanced
if the information appears in a low information dense area (Bialkova et al., 2013,
p. 69). Furthermore, prominence can be manipulated with color effects or by
variation of size. Because size can be ideally controlled for in experiments, unit
price prominence is manipulated by using different font sizes. Hence, the three
levels of unit price presentation are a non-existent unit price, a unit price presented in a small font size and a unit price presented in a larger font size. The no unit
price condition and the small unit price condition are compared, in order to address hypotheses 1a4a, the two conditions where the unit price is present (small
unit price, large unit price) are compared to address hypotheses 1b4b.
Previous experiments manipulating unit prices have been scenario-based
(Kwortnik et al., 2006, p. 50) or have utilized simulated grocery aisles (Zeithaml,
1982, p. 361). Both methodologies were followed by a paper-pencil questionnaire to record the participants perceptions and reactions. For the reason of high
internal validity, the first experiment was administered at a laboratory. As mentioned before, the advantage of a laboratory setting is that influences not allowed
for in the experiment can be eliminated.
The retail shelves in the displayed pictures had price labels attached, displaying
the products name, content and price. As outlined above, the unit price on these
price labels was manipulated. In the first condition, no unit price was displayed,
in the second condition, the unit price was added to the price label in a small font
size and in the third condition the unit price was displayed in a large font size.
Examples for price labels for the product category pasta are presented in Table
63. The individuals were randomly assigned to one of the three conditions (no
unit price, small unit price, large unit price). Within each condition, participants
saw three pictures of retail shelves. Each retail shelf displayed products of one

Influence of the Unit Price at the Retailer Level

205

product category. Retails shelves were presented in the following product category order: shampoo, pasta and sandwich bread. The products displayed were of
well-known brands in order to create an impression as realistic as possible for the
participants. Since product choice or any customer reaction on product level is
not of interest for this study, displaying real brand names is feasible and a common practice in unit price literature (Yan et al., 2014, p. 16; Miyazaki et al.,
2000, p. 105). In order to avoid influences on the store price image by consumer
drawing conclusions from existing stores and their store brands, no store brands
were displayed. Furthermore, any additional information was eliminated from
the product packages displayed that did not refer to product name, brand, package content, or nutrition information. Such additional information was, for example, displayed third-party awards for excellent product quality that were displayed on the package (e.g., Stiftung Warentest) and could potentially influence consumers image perceptions.
As for the experiments in the first part of this chapter, using picture stimuli has
several advantages over the presentation of a physical retail shelf. First, a larger
sample can be addressed than if a retail shelf is presented to each participant
individually. Second, and even more important, the pictures ensure that each
participant encounters the exact identical stimuli under the exact same conditions
that sustains a high internal validity of the study (Kilbourne, 1974, p. 454).
In order to encourage participants to consider the price information on the label
when looking at the retail shelf in the picture, they were asked whether they
would choose one or more product(s) displayed if this was a real shopping situation, and if so, which product(s) they would choose.

206

Development and Empirical Testing of Hypotheses


Individual Product Alternatives for Product Category Pasta

No unit price
(Group 1)

Small unit
price
(Group 2)

Large unit
price
(Group 3)

DE CECCO
SPAGHETTI 520G

1.

99

DE CECCO
SPAGHETTI 520G

ZABLER HOCHZEITN.
SPAGHETTI 250G

BUITONI
SPAGHETTI 450G

DE CECCO
SPAGHETTI 500G

1.39

1.69

1.79

ZABLER HOCHZEITN.
SPAGHETTI 250G

BUITONI
SPAGHETTI 450G

DE CECCO
SPAGHETTI 500G

1.99
3,83 JE 1 KG

1.39
5,56 JE 1 KG

1.69
3,75 JE 1 KG

1.79

DE CECCO
SPAGHETTI 520G

ZABLER HOCHZEITN.
SPAGHETTI 250G

BUITONI
SPAGHETTI 450G

DE CECCO
SPAGHETTI 500G

1.99
3,83 JE 1 KG

1.39
5,56 JE 1 KG

1.69
3,75 JE 1 KG

3,58 JE 1 KG

1.79
3,58 JE 1 KG

Table 63: Example for product shelf labels for product category pasta

After the stimulus presentation, respondents completed an online questionnaire.


The questionnaire contained a store price image scale (Zielke, 2010, p. 757), a
manipulation check (to confirm that the unit price prominence was perceived
differently between the individual scenarios), as well as variables controlling for
psychographic and demographic characteristics (e.g., price consciousness, financial restrictions, purchase of store brands, age, gender, education and income).
All measurements, except for demographic data, utilized 7-point Likert-scales.
Except for the items measuring the individual store price image dimension scales
and shopping intentions scale the option I dont know was available to the
participants for each item.

4.2.2.3

Data Collection

Undergraduate as well as graduate students took part in the study, in which product shelves were displayed on computer screens. Participating students received
a monetary incentive to participate in the study. The study was conducted at the
Mafox Laboratory Kaiserslautern between March 12th and March 15th, 2013.

Influence of the Unit Price at the Retailer Level

207

Participants entered the laboratory in groups and were individually assigned to


computers. All participants were briefed how to conduct the experiment at the
computers, but the subject and purpose of the study remained unknown.

4.2.2.4

Results

335 students took part in the experiments, whereas 8 participants did not complete the questionnaire and were excluded from the dataset. Furthermore, no
outliers or influential points were identified. Therefore, a total of 327 respondents (34.20 % female, mean age = 23.85 years, SD = 5.75) were assigned to the
three different factor levels. Cell sizes ranged from 105 to 115 across the three
conditions (Table 64).
Experimental Group

Group Size

% of Total Sample

No Unit Price

115

35.20

Small Unit Price

105

32.10

Large Unit Price

107

32.70

Total Sample

327

100.00

Table 64: Sizes of experimental groups

An ANOVA was conducted to analyze whether the unit price prominence was
perceived significantly differently between the experimental groups. While ttests are suitable to compare two means, ANOVAs are frequently used to examine differences between more than two means (or medians) (Malhotra et al.,
2012, p. 664). This analysis is used, to verify that the unit price prominence is
perceived differently by the individual experimental groups. The results show
that the perceived unit price prominence increases with unit price font size
(Figure 26, Table 65) and that there is a significant difference between groups
(F(2, 322), p .01). However, the results of the ANOVA do not indicate, between
which experimental groups significant differences exit. Several procedures exist
to conduct post-hoc tests in order to determine between which experimental
groups significant differences in means exist. To mention some of these tests, the
Newman-Keuls tests, Tukey procedure, the least-significant difference approach
by Fisher and the Scheff test have been utilized in previous literature. However,

208

Development and Empirical Testing of Hypotheses

the Scheff test is the most conservative test in regard to type I error and leads to
the lowest number of significances (Winer, 1971, p. 201). Because of its conservatism, the Scheff test is utilized here. The post-hoc test shows that between
all groups the difference in unit price prominence is significant at least at a .05
level.

Perceived Unit Price Prominence

7
5.66

6
5.05
5
4
3.01

3
2
1

Experimental Groups
No Unit Price

Small Unit Price

Large Unit Price

Figure 26: Perceived unit price prominence


Experimental
Group

M / SD

No Unit Price

3.01 / 1.94

Small Unit Price

Large Unit Price

5.05 / 1.77

ANOVA

Post-Hoc-Test (Scheff)
No vs. Small Unit Price
(p < 0.01)
No vs. Large Unit Price
(p < 0.01)

F(2,
322) = 69.23 / p = .00

5.66 / 1.55

Table 65: Manipulation check

Small vs. No Unit Price


(p < 0.01)
Small vs Large Unit Price
(p < 0.05)
Large vs. No Unit Price
(p < 0.01)
Large vs Small Unit Price
(p < 0.05)

Influence of the Unit Price at the Retailer Level

209

4.2.2.4.1 Evaluation of Construct Quality


As Cronbachs alpha for all dimensions and shopping intentions are greater than
or equal to .81, the reliability of the store price image scale used is given. Furthermore, all standard quality criteria for the constructs are met. Composite reliability for all latent variables is greater than .87. Convergent validity is at hand,
as all AVEs are not lower than .57. The outer loadings are all above .71. Also
discriminant validity is given, since the Fornell-Larcker criterion is met and
additionally all indicator loadings are at least .20 higher than the indicators
cross-loadings (Fornell and Larcker 1981; Hair et al. 2011)(Table 66-Table 69).
Construct

Evaluation
Certainty

Items

E_Cer1

I can assess this store very well


regarding the prices.

.69

E_Cer2

I find it easy to assess the prices in


this shopping establishment.

.77

E_Cer3a

I cannot assess this store at all


regarding the prices.

78

E_Cer4
a

I find it difficult to assess the prices


in this shopping establishment.

74

P_Lev1

The prices are generally very low


here.

.63

The price level is very high here.

.61

P_Lev3

You can buy cheap groceries here.

.65

P_Lev4

The prices are cheaper here than in


other stores.

.57

This store is more expensive than


other stores.

.57

P_Lev2

PriceLevel
Perception

Item-tototal
correlation

P_Lev5

Cronbachs
alpha

.88

.81

210

Price
Processibility

Price
Perceptibility

Value-forMoney
Perception

Development and Empirical Testing of Hypotheses

P_Pro1 a

Comparing the prices of different products requires


a lot of effort in this store.

.89

P_Pro2 a

It takes a long time to find the most reasonablypriced product within a product group here.

.88

P_Pro3 a

Price comparisons within a product group reveal


that products are costlier here than in other stores.

.81

P_Pro4

Comparing the prices of different products in this


store is easy.

.79

P_Per1

The prices are easily discernible in this store.

.76

P_Per2

You can easily discern how much a particular product costs here.

.80

P_Per3 a

The prices are harder to discern here compared with


other stores.

.72

P_Per4 a

The prices are hard to discern in this store.

.79

V_Mon1

The prices here are appropriate in relation to what I


get for my money.

.77

V_Mon2

The prices here are excessive in relation to what I


get for my money

.66

V_Mon3

I get good value for money here.

.75

V_Mon4

Compared with other stores, the price-performance


ratio is very good here.

.72

The ratio between price and performance is considerably worse here than in other stores.

.64

V_Mon5

.93

.89

.88

Influence of the Unit Price at the Retailer Level

Shopping
Intentions

211

S_Int1

I should shop at this store as


often as possible.

.74

S_Int2 a

I should shop at this store as


seldom as possible.

.76

S_Int3

I should consider this store for


my shopping.

.79

S_Int4 a

I should disregard this store for


my shopping.

.80

.90

reverse scaled

Table 66: Scale reliability (Experiment 3)


Composite Reliability (>
.70)a

Convergent Validity (AVE) (>


.50)a, b

Evaluation Certainty

.92

.74

Price Perceptibility

.93

.76

Price Processibility

.95

.83

Price-Level Perception

.87

.58

Value-for-Money Perception

.91

.67

Shopping Intention

.93

.76

a
b

Hair et al. (2011, p. 145)


Henseler et al. (2009, p. 299)

Table 67: Standard quality criteria (Experiment 3)

212

Development and Empirical Testing of Hypotheses

Evaluation Certainty

Price
Perceptibility

Price Processi-bility

PriceLevel
Perception

Value-forMoney
Percep-tion

Shopping
Intention

E_Cer1

.85

.46

.48

.04

.15

.29

E_Cer2

.89

.50

.52

.00

.09

.26

E_Cer3R

.86

.41

.46

-.03

.09

.24

E_Cer4R

.84

.39

.44

-.03

.05

.26

P_Per1

.45

.86

.54

.02

.15

.31

P_Per2

.44

.87

.57

-.03

.11

.23

P_Per3R

.46

.86

.62

.00

.15

.37

P_Per4R

.43

.88

.64

-.06

.08

.25

P_Pro1R

.50

.61

.93

-.10

-.01

.20

P_Pro2R

.50

.60

.93

-.04

.05

.27

P_Pro3R

.48

.62

.91

.04

.09

.37

P_Pro4

.53

.64

.88

-.04

.07

.28

P_Lev1

-.03

-.02

-.05

.77

.51

.44

P_Lev2R

.00

-.02

.03

.76

.51

.42

P_Lev3

.06

.07

.03

.81

.59

.54

P_Lev4

-.07

-.10

-.06

.71

.44

.36

P_Lev5R

.00

-.03

-.07

.74

.57

.44

V_Mon1

.10

.16

.03

.59

.85

.52

V_Mon2R

.07

.07

.04

.52

.78

.45

V_Mon3

.12

.12

.00

.55

.84

.49

Influence of the Unit Price at the Retailer Level

213

V_Mon4

.09

.15

.07

.59

.83

.54

V_Mon5

.09

.09

.09

.59

.77

.50

S_Int1

.27

.26

.25

.59

.53

.85

S_Int2R

.27

.24

.27

.53

.52

.87

S_Int3

.27

.35

.27

.47

.57

.88

S_Int4R

.27

.34

.31

.46

.52

.89

Bold numbers indicate indicator loadings, other numbers indicate cross-loadings

Table 68: Indicator loadings and cross-loadings (Experiment 3)


Evaluation
Certainty

Price
Price
Perceptibili- Processibilty
ity

Price-Level
Perception

Shopping
Intention

Evaluation
Certainty

.74

Price
Perceptibility

.26

.76

Price
Processibility

.31

.46

.83

Price-Level
Perception

.00

.00

.00

.58

Shopping
Intention

.10

.12

.10

.34

.76

Value-forMoney
Perception

.01

.02

.00

.48

.38

Value-forMoney
Perception

Bold numbers indicate AVEs, other numbers indicate squared latent variable correlations

Table 69: Squared latent variable correlations and AVEs (Experiment 3)

.67

214

Development and Empirical Testing of Hypotheses

4.2.2.4.2 Testing of Hypotheses


In order to test the hypotheses 1a to 4a, analyses of variance (ANOVAs) and
post-hoc tests were conducted. For the ANOVAs, sum scores of the individual
constructs items were utilized as dependent variables and control variables. The
means of the individual store price image dimensions increase with unit price
availability and unit price availability, except for the dimension price-level perception (Figure 27). ANOVAs indicated a significant influence of unit price on
price processibility, price perceptibility and evaluation certainty, but not on pricelevel perception. An overview is given in Table 70.

Perceived Store Price Image

7.00
6.00
5.17

5.42

5.00

5.40

5.66

4.42

4.39

4.65

3.83

4.00

3.74

3.78

3.75

3.21
3.00
2.00
1.00
Price Processibility Price Perceptibility Evaluation Certainty
No Unit Price

Small Unit Price

Price Level
Perception

Large Unit Price

Figure 27: Perceived store price image dimensions (Experiment 3)

The post-hoc tests indicate significant differences for the price processibility
dimension between the small unit price condition and the no unit price condition,
as well as well as for the price perceptibility dimension, and the evaluation certainty dimension (Table 70). Therefore, only H1a-H3a can be confirmed, while
H4a has to be rejected.

Influence of the Unit Price at the Retailer Level

215

As there are significant differences between the small unit price condition and
the large unit price condition, there is no positive influence of unit price prominence on the individual store price image dimensions or shopping intentions.
Therefore, there is no support for Hypotheses 1b-4b based on this experiment.

ANOVA

No Unit
Price

Small Unit
Price

Large Unit
Price

Dimension

F/p

M / SD

M / SD

M / SD

Price Processibility (H1)

F(2,
320) = 66.42 /
p = .00

Price Perceptibility (H2)

F (2,
319) = 23.04 /
p = .00

4.42 / 1.64

Evaluation Certainty (H3)

F (2,
319) = 10.48 /
p = .00

Price Level
Perception (H4)

F (2, 315) = .06 /


p = .92

Post
hoc.
sig. at
p .05)

5.42 / 1.41

No vs.
Small
No vs.
Large

5.40 / 1.32

5.66 / 1.29

No vs.
Small
No vs.
Large

3.83 / 1.33

4.39 / 1.42

4.65 / 1.30

No vs.
Small
No vs.
Large

3.74 / 1.08

3.78 / 1.04

3.75 / 1.00

3.21 / 1.76

5.17 / 1.47

Table 70: Means and standard deviations of the individual factor levels

To get an overview of the complete structural model, including H5 and H6, the
hypotheses are also tested using SEM. The software utilized is again SmartPLS
(Ringle et al., 2005).
Two dummy variables are included in the model in order to assess the influence
of a small unit price and a large unit price on the individual store price image
dimensions compared to the no unit price condition that serves as a reference
category. The results presented in Figure 28 and Table 71 show that, compared to
the no unit price condition, a small unit price has a significant positive impact on
price processibility, price perceptibility, and evaluation certainty. This replicates
the findings from the ANOVA. Similar, but slightly larger coefficients resulted
also for the large unit price condition. The R-value for shopping intentions is

216

Development and Empirical Testing of Hypotheses

.54. The R value for other store price image, such as price-level perception and
evaluation certainty, are very small. However, the aim of this model is not to
explain the individual store price image dimensions, but to show that also unit
prices have a significant influence on the individual store price image dimension.

Sample
Mean (M)

SD

Standard
Error (SE)

t-Statistic

(YDOXDWLRQ&HUWDLQW\6KRpping Intention

.12

.13

.05

.05

2.32**

(YDOXDWLRQ&HUWDLQW\9DOXHfor-Money Perception

.07

.07

.06

.06

1.10

/DUJH83(YDOXDWLRQ
Certainty

.28

.29

.06

.06

4.88***

/DUJH833ULFH3HUFHSWLEility

.39

.39

.06

.06

6.96***

Large 833ULFH3URFHVVLEility

.56

.56

.05

.05

11.45***

/DUJH833ULFH-Level
Perception

.00

.00

.06

.06

.03

3ULFH3HUFHSWLELOLW\6KRpping Intention

.14

.15

.06

.06

2.36**

3ULFH3HUFHSWLELOLW\9DOXHfor-Money Perception

.18

.18

.05

.05

3.28***

Price 3URFHVVLELOLW\6KRpping Intention

.14

.14

.06

.06

2.39**

3ULFH3URFHVVLELOLW\9DOXHfor-Money Perception

-.08

-.08

.06

.06

1.29

Price-/HYHO3HUFHSWLRQ
Shopping Intention

.38

.38

.06

.06

6.75***

Price-/HYHO3HUFHSWLRQ
Value-for-Money Perception

.70

.70

.03

.03

20.25***

6PDOO83(YDOXDWLRQ
Certainty

.18

.18

.06

.06

2.96***

6PDOO833ULFH3HUFHSWLEility

.31

.31

.06

.06

5.39***

6PDOO833ULFH3URFHVVLEility

.49

.49

.05

.05

9.83***

Influence of the Unit Price at the Retailer Level

217

6PDOO833ULFH-Level
Perception

.03

.03

.06

.06

.45

Value-for-Money Perception
6KRSSLQJ,QWHQWLRQ

.31

.30

.06

.06

4.81***

*** p < .01, ** p < .05

Table 71: Path coefficients SEM (Experiment 3)


Price-Level Perception
R=.00
.03

Small Unit Price

.00
Price Processibility
R=.29

.49***

.56***

-.08

.38***

.70***

Value-for-Money
Perception
R=.51
.31***

Price Perceptibility
R=.13

.39***

Large Unit Price

.28***

.18***

.14**

.31***

.07

Shopping Intentions
R=.54

.14**

.12**

.18***
Evaluation Certainty
R=.06

Figure 28: SEM results experiment 3 (*** p < 0.01, ** p < 0.05)

It is further tested if an influence of unit pricing on value-for-money perception


exists that is mediated by price processibility, price perceptibility, evaluation
certainty and price-level perception. A positive influence of unit price availability
on price processibility, price perceptibility as well as evaluation certainty was
shown above. Also a positive influence of price perceptibility on value-formoney perception exists. After the main effects were analyzed, now mediation
effects are assessed.
Bootstrapping (1,000 bootstrap samples) confirmed only a positive indirect effect
of unit price presence (small vs. no unit price) on value-for-money perception
through price perceptibility (Table 72). Therefore, H5b is supported, while H5a,
H5c and H5d are rejected.

218

Development and Empirical Testing of Hypotheses

Independent
Variable (X)

Mediator (M)

Dependent
Variable (Y)

Evaluation Certainty
Unit price
availability

Price Processibility
Price Perceptibility

Value-ForMoney
Perception

Price-Level
Perception

Direct
Effect (c)

Indirect
Effect (a x b)

.04

.06

.17

.04

-.04

.11**

.07

.01

** p < .05

Table 72: Mediation effects: Value-for-money perception

Additionally, it was tested for an indirect influence of unit pricing on shopping


intentions. It has been proposed that this influence is mediated by all five store
price image dimensions. Bootstrapping (1,000 samples) shows significant indirect effects for price processibility, price perceptibility, evaluation certainty and
value-for-money perception (through price perceptibility) (Table 73). Hence,
H6a-c and H6e are supported, while H6d has to be rejected as there is no indirect
effect of unit price availability on shopping intention via price-level perception.
Independent
Variable (X)

Unit price
availability

Dependent
Variable (Y)

Direct
Effect (c)

Indirect
Effect (a x b)

Evaluation Certainty

.50**

.16**

Price Processibility

.38

.31**

.43**

.22**

.61**

.03

.47**

.08**

Mediator (M)

Price Perceptibility
Price-Level Perception
Value-for-Money Perception
(trough Price Perceptibility)

Shopping
Intention

** p < .05

Table 73: Mediation effects: Shopping intentions

The results show that unit price availability indeed has an impact on store price
image. Price processibility, price perceptibility, as well as evaluation certainty
increase with unit price availability. Unit price prominence is not found to influence any of the four considered store price image dimensions. However, for all
dimensions of store price image, except for price-level perception a trend indicat-

Influence of the Unit Price at the Retailer Level

219

ing a positive relationship is visible, and additionally all coefficients for the large
unit price dummy in the SEM are greater than for the small unit price dummy,
except for price-level perception. There is also a positive indirect influence on
value-for-money perception, mediated by price perceptibility as well as on shopping intentions, mediated by price processibility, price perceptibility, evaluation
certainty and value-for-money perception.

4.2.3 Experiment 4:
Influence of Unit Price Prominence on Store Price Image
Surprisingly, the results of this first experiment outline a lack of influence of unit
price prominence on store price image. In order to get further insights into this
influence of unit price prominence, a second experiment focusing primarily on
the influence of unit price prominence on store price image was conducted. Furthermore, prior unit price usage and brand consciousness, as potential moderators of the relationship between unit price prominence and store price image, are
included.

4.2.3.1

Methodology

The methodology of the second experiment was similar to the first experiments
methodology with a number of changes made. First, the experiment was administered online. While for the first experiment, a student-only sample was utilized
and the experiment took place at a specific date and time at the laboratory, participants in the second experiment were able to take part in the experiment at their
leisure and the online setting allows for a broader variety of psychographic and
demographic factors among participants. Therefore, the results are more generalizable (McKechnie et al., 2012, p. 1508).
Second, the no unit price scenario is omitted. In order to get further insights in
the influence of unit price prominence on store price image and shopping intentions, the second experiment concentrates on analyzing the difference between
the influence of a small unit price and the influence of a large unit price. In this
way, reasons for the surprising result of the first experiment, showing a positive

220

Development and Empirical Testing of Hypotheses

but non-significant influence of unit price prominence on store price image, are
further investigated.
Third, moderating variables are added to the questionnaire following the stimulus presentation. A three-item scale to analyze the influence of brand consciousness (Donthu/Gilliland, 1996, p. 74) as well as a one-item measure of unit price
usage (Manning et al., 2003, p. 371) were added.

4.2.3.2

Data Collection

Participants were invited to the study by email as well as through professional


and social networks. When accessing the online platform on which the experiment was administered, participants were randomly assigned to one of the two
experimental settings. Before the online experiment started, the procedure was
explained to the participants. However, the purpose of the study was neither
revealed before the participants took part in the study, nor afterwards. Participants were able to access the online experiment between August 3rd and August
12th, 2014.

4.2.3.3

Results

214 participants accessed the webpage of the online experiment. However, 70


individuals did not complete the questionnaire. Therefore, they were deleted
from the dataset. No outliers or influential points occurred. Hence, a total of 144
respondents (47.1 % female, mean age = 30.75 years, SD = 10.45) were randomly
assigned to the two factor levels. Cell sizes were 79 for the condition where
small unit prices were displayed and 65 for the condition where large unit prices
were presented.
The manipulation check shows that the perceived unit price prominence increases significantly when a large unit price is presented (p < .01; see Table 74).

Perceived Unit Price Prominence

Influence of the Unit Price at the Retailer Level

221

7.00
5.72

6.00
4.57

5.00
4.00
3.00
2.00
1.00

Experimental Groups
Small Unit Price

Large Unit Price

Figure 29: Perceived unit price prominence

Unit Price Prominence

T-Test

Small Unit Price

Large Unit Price

T/p

M / SD

M / SD

-3.54 / .00

4.57 / 1.98

5.72 / 1.68

Table 74: Manipulation Check

4.2.3.1.1 Evaluation of Construct Quality


The reliability of the store price image scale used is given, since Cronbachs
alpha for all dimensions and shopping intentions are again greater than or equal
to .70. For the t-tests and regression analyses sum scores of the individual constructs items were utilized as dependent variables and control variables. The
standard quality criteria of the model are met. Composite reliability for all latent
variables is greater or equal to .83. Outer loadings are all above .71 except for
price-level perception (.49). All AVEs are not lower than .64 except for pricelevel perception (.49). Discriminant validity is also at hand, since the Fornell-

222

Development and Empirical Testing of Hypotheses

Larcker criterion is met (Hair et al., 2011, p. 145; Fornell/Larcker, 1981, p. 46)
(Table 75 Table 78).
Construct

Evaluation
Certainty

Price-Level
Perception

Items

Item-to-total
correlation

E_Cer1

I can assess this store very


well regarding the prices.

.86

E_Cer2

I find it easy to assess the


prices in this shopping establishment.

.81

E_Cer3a

I cannot assess this store at all


regarding the prices.

.79

E_Cer4 a

I find it difficult to assess the


prices in this shopping establishment.

.81

P_Lev1

The prices are generally very


low here.

.59

P_Lev2 a

The price level is very high


here.

.50

P_Lev3

You can buy cheap groceries


here.

.66

P_Lev4

The prices are cheaper here


than in other stores.

.39

P_Lev5 a

This store is more expensive


than other stores.

.42

P_Pro1 a

Comparing the prices of


different products requires a
lot of effort in this store.

.81

P_Pro2 a

It takes a long time to find the


most reasonably-priced
product within a product
group here.

.72

P_Pro3 a

Price comparisons within a


product group reveal that
products are costlier here than
in other stores.

.72

P_Pro4

Comparing the prices of


different products in this store
is easy.

.61

Price
Processibility

Cronbachs
alpha

.92

.75

.87

Influence of the Unit Price at the Retailer Level

P_Per1

The prices are easily discernible in this store.

.77

P_Per2

You can easily discern how


much a particular product
costs here.

.74

The prices are harder to


discern here compared with
other stores.

.71

P_Per4 a

The prices are hard to discern


in this store.

.74

V_Mon1

The prices here are appropriate in relation to what I get


for my money.

.73

V_Mon2 a

The prices here are excessive


in relation to what I get for
my money

.61

V_Mon3

I get good value for money


here.

.72

V_Mon4

Compared with other stores,


the price-performance ratio is
very good here.

.78

V_Mon5 a

The ratio between price and


performance is considerably
worse here than in other
stores.

.62

S_Int1

I should shop at this store as


often as possible.

.53

S_Int2 a

I should shop at this store as


seldom as possible.

.67

S_Int3

I should consider this store


for my shopping.

.71

S_Int4 a

I should disregard this store


for my shopping.

.65

Price
Perceptibility
P_Per3

Value-forMoney
Perception

Shopping
Intentions

223

.88

.87

.82

reverse scaled

Table 75: Cronbachs alpha for store price image dimensions and shopping intentions
(Experiment 4)

224

Development and Empirical Testing of Hypotheses


Composite Reliability
(> .70)a

Convergent Validity (AVE)


(> .50)a, b

Evaluation Certainty

0.94

0.81

Price Perceptibility

0.92

0.73

Price Processibility

0.91

0.71

Price-Level Perception

0.83

0.49

Value-for-Money Perception

0.91

0.66

Shopping Intention

0.88

0.64

a
b

Hair et al. (2011, p. 145)


Henseler et al. (2009, p. 299)

Table 76: Standard Quality Criteria Experiment 4


Evaluation
Price
Price
Price-Level
Certainty Perceptibility Processibility Perception

Value-forMoney
Perception

Shopping
Intention

E_Cer1

0.92

0.32

0.29

0.18

0.24

0.30

E_Cer2

0.90

0.30

0.34

0.13

0.23

0.34

E_Cer3

0.88

0.24

0.31

0.13

0.22

0.30

E_Cer4

0.89

0.24

0.32

0.15

0.23

0.32

P_Per1

0.25

0.86

0.55

0.07

0.19

0.34

P_Per2

0.21

0.83

0.54

0.12

0.22

0.32

P_Per3

0.31

0.87

0.68

0.13

0.26

0.44

P_Per4

0.26

0.86

0.63

0.18

0.27

0.40

P_Pro1

0.28

0.67

0.90

0.11

0.29

0.50

P_Pro2

0.30

0.59

0.86

0.21

0.33

0.51

P_Pro3

0.30

0.58

0.85

0.20

0.33

0.44

P_Pro4

0.31

0.55

0.76

0.12

0.32

0.39

P_Lev1

0.07

0.07

0.16

0.71

0.41

0.28

Influence of the Unit Price at the Retailer Level

225

P_Lev2

0.20

0.22

0.16

0.76

0.56

0.35

P_Lev3

0.16

0.07

0.11

0.78

0.50

0.32

P_Lev4

0.07

-0.02

0.02

0.49

0.17

0.26

P_Lev5

0.04

0.12

0.17

0.72

0.52

0.36

V_Mon1

0.25

0.20

0.29

0.46

0.83

0.40

V_Mon2

0.10

0.25

0.25

0.45

0.74

0.40

V_Mon3

0.24

0.25

0.30

0.50

0.83

0.44

V_Mon4

0.29

0.24

0.32

0.58

0.88

0.49

V_Mon5

0.15

0.20

0.33

0.62

0.77

0.54

S_Int1

0.19

0.25

0.31

0.40

0.51

0.72

S_Int2

0.20

0.28

0.37

0.37

0.42

0.81

S_Int3

0.44

0.43

0.51

0.36

0.46

0.86

S_Int4

0.25

0.42

0.54

0.33

0.44

0.82

Bold numbers indicate indicator loadings, other numbers indicate cross-loadings

Table 77: Indicator loadings and cross-loadings (Experiment 4)


Evaluation
Certainty

Price
Perceptibility

Price
Processibility

Price-Level
Perception

Shopping
Intention

Value-forMoney
Perception

Evaluation
Certainty

0.81

0.00

0.00

0.00

0.00

0.00

Price
Perceptibility

0.09

0.73

0.00

0.00

0.00

0.00

Price
Processibility

0.12

0.50

0.71

0.00

0.00

0.00

Price-Level
Perception

0.03

0.02

0.04

0.49

0.00

0.00

226

Development and Empirical Testing of Hypotheses

Shopping
Intention

0.12

0.20

0.30

0.20

0.64

0.00

Value-forMoney
Perception

0.07

0.08

0.14

0.42

0.32

0.66

Bold numbers indicate AVEs, other numbers indicate squared latent variable correlations

Table 78: Squared latent variable correlations and AVEs (Experiment 4)

4.2.3.1.2 Testing of Hypotheses


In order to assess the influence of unit price prominence on the individual store
price image dimensions, t-test were conducted. The results show a significant
influence of unit price prominence on price processibility (MSmallUnitPrice = 5.03,
MLargeUnitPrice = 5.52, t(1, 142) = -2.00, p = .05). Therefore, H1b is confirmed, while
H2bH4b are rejected (see Table 79).
T-Test

Small Unit Price

Large Unit Price

t/p

M / SD

M / SD

Price Processibility

-2.00 / .05

5.03 / 1.64

5.52 / 1.19

Price Perceptibility

-1.51 / .13

5.25 / 1.51

5.60 / 1.27

Evaluation Certainty

.37 / .71

4.46 / 1.61

4.36 / 1.62

Price Level Perception

-.54 / .59

3.78 / 1.04

3.87 / .93

Dimension

Table 79: Means and standard deviations of the individual factor levels

Influence of the Unit Price at the Retailer Level

227

7.00

Perceived Store Price Image

6.00

5.52
5.03

5.60
5.25

5.00

4.46 4.36

4.00

3.78

3.87

3.00
2.00
1.00
Price Processibility Price Perceptibility Evaluation Certainty
Small Unit Price

Price Level
Perception

Large Unit Price

Figure 30: Perceived store price image dimensions (Experiment 4)

Again, to get an overview of the complete structural model, the hypotheses are
also tested by means of Smart PLS (Ringle et al., 2005). Here only a single
dummy variable is included in the SEM. This dummy variable represents the
large unit price condition. The comparison group that serves as control group is
the small unit price condition. This analysis replicates the previous finding by
showing that unit price prominence only significantly influences price processibility. The R-value for shopping intentions is .49. In general the R values of the
individual store price image dimensions, which are only influenced by the unit
price according to this model, are small. However, as mentioned before, this
experiment does not yield to explain the individual store price image dimensions
completely. The aim is rather to show that also unit prices influence the store
price image to a certain degree. The results of this SEM analysis are summarized
in Table 80 and Figure 31.

228

Development and Empirical Testing of Hypotheses

Sample Mean (M)

SD

Standard Error
(SE)

t-Statistic

Evaluation Certainty

Shopping Intentions

.11

.12

.10

.10

1.21

Evaluation Certainty

Value-for-Money
Perception

.08

.08

.07

.07

1.06

/DUJH83(YDOXation Certainty

-.03

-.03

.08

.08

.38

/DUJH833ULFH
Perceptibility

.12

.13

.08

.08

1.50

/DUJH833ULFH
Processibility

.17

.17

.08

.08

2.21**

/DUJH833ULFHLevel Perception

.04

.04

.08

.08

.43

3ULFH3HUFHSWLELOLW\
Shopping Intentions

.08

.09

.09

.09

.97

3ULFH3HUFHSWLELOLW\
Value-for-Money
Perception

.01

.02

.11

.11

.06

3ULFH3URFHVVLELOLW\
Shopping Intentions

.31

.31

.08

.08

3.84***

3ULFH3URFHVVLELOLW\
Value-for-Money
Perception

.23

.22

.09

.09

2.59**

Price-Level Perception

Shopping Intentions

.17

.18

.09

.09

1.88**

Price-Level Perception

Value-for-Money
Perception

.59

.60

.05

.05

11.40***

Value-for-Money
3HUFHSWLRQ
Shopping Intentions

.28

.28

.09

.09

3.30***

*** p < .01, ** p < .05

Table 80: Path coefficients SEM (Experiment 3)

Influence of the Unit Price at the Retailer Level

229

Price-Level Perception
R=.00

.04

.17**

Price Processibility
R=.02
.23**

.17*

.59***

Value-for-Money
Perception
R=.49

Large Unit Price

.12

.01

-.03

Price Perceptibility
R=.02

.31***

.29***

.08

Shopping Intentions
R=.49

.08

.12

Evaluation Certainty
R=.00

Figure 31: SEM results experiment 4

A mediation analysis was conducted, in order to see if the unit price prominence
also has an indirect influence on value-for-money perception and which store
price image dimensions act as mediators. When conducting a mediation analysis,
bootstrapping confirms a significant indirect effect of unit price prominence on
value-for-money perception through price processibility (Table 81), supporting
H5a.
Independent
Variable (X)

Mediator
(M)

Dependent Variable (Y)

Evaluation
Certainty
Unit price Prominence

Price
Processibility
Price
Perceptibility
Price-Level
Perception

Value-For-Money
Perception

Direct
Effect (c)

Indirect
Effect (a x b)

.27

-.02

.13

.13**

.19

.07

.20

.06

** p < .05

Table 81: Mediation effects: Value-for-money perception

Furthermore, unit price prominence influences shopping intention indirectly


through price processibility and value-for-money perception (through price pro-

230

Development and Empirical Testing of Hypotheses

cessibility). Therefore, H6a and H6e are supported. In contrast to the first experiment, there is no indirect effect on value-for-money perception or shopping
intention via price perceptibility (Table 82).
Independent
Variable

Unit Price
Prominence

Direct Effect
(c)

Indirect
Effect
(a x b)

Evaluation Certainty

.64**

-.03

Price Processibility

.40**

.21**

Price Perceptibility

.49**

.13

Price-Level Perception

.56**

.05

.34**

.06**

.38**

.04

Mediator

Value-for-Money Perception
(trough Price Processibility)
Value-for-Money Perception
(trough Price Perceptibility)

Dependent
Variable

Shopping Intention

** p < .05

Table 82: Mediation effects: Shopping intentions

In a next step, the moderating effect of unit price usage and brand consciousness
on the relationships between unit price prominence and price processibility (1cd), price perceptibility (2c-d), evaluation certainty (3c-d) and price-level perception (4c-d) was analyzed. These results are presented in Table 83. Bootstrapping
(1,000 samples) reveals a significant positive influence of the interaction effect
of unit price prominence and unit price usage on price processibility, price perceptibility, and evaluation certainty. These results show that unit price usage
strengthens the effect of unit price prominence on price processibility, price perceptibility and evaluation certainty.
The moderating effect of brand consciousness was assessed in the same way. The
interaction effect of unit price prominence and brand consciousness has a weak
negative influence on price processibility and a strong negative influence on
price perceptibility (Table 83). Prior unit price usage and brand consciousness
have no moderating influence on the impact of unit price prominence on price-

Influence of the Unit Price at the Retailer Level

231

level perception. Based on this moderation analysis, H1b-d, H2b-d, and H3b-c
are supported, while H3d and H4b-d cannot be confirmed.
Moderator
Prior Unit Price Usage

Brand Consciousness

Price Processibility

= .33, t(3, 131) = 2.55**

= -.34,
t(3, 128) = -1.92*

Price Perceptibility

= .56, t(3, 131) = 4.51***

= -.46,
t(3, 128) = -2.93***

Evaluation Certainty

= .32, t(3, 131) = 2.25**

= -.06, t(3, 128) = -.29

= .14, t(3, 131) = 1.21

= -.10, t(3, 128) = -.82

Price-Level Perception
***p < .01, **p < .05, *p < .10

Table 83: Overview moderating effects

For retailers as well as for research it is important to know which customer segments use unit prices and are brand conscious, since these variables influence the
impact of unit price prominence on price processibility, price perceptibility and
evaluation certainty. When comparing demographic and psychographic control
variables that were included in the questionnaire by means of median splits, it
can be observed that consumers with a very frequent unit price usage tend to be
slightly older than those that use unit prices less often at the point of purchase
(Table 84). Furthermore, users with a very frequent unit price usage perceive unit
prices at the point of purchase as more important than other consumers. Finally,
users with a high unit price usage are more price conscious and purchase store
brands more frequently than consumers with a low unit price usage. In contrast
to unit price usage that strengthens the influence of unit price prominence on
price processibility and price perceptibility, brand consciousness weakens these
relationships. While only 50 % percent of female participants are brand conscious, 69.4 % of the male participants indicated a high brand consciousness
= 5.35, p .05). Consumers with a low brand consciousness, like the group of
consumers with high unit price usage, tend to be more price conscious and purchase store brands more frequently. Therefore, it can be assumed that the consumer segment, for which the store price image is influenced strongest by unit
price prominence, is slightly older, with a higher probability female, and per-

232

Development and Empirical Testing of Hypotheses

ceives unit prices as important information. Additionally, those consumers are


more price-conscious and purchase store brands more frequently than other consumers.
Unit Price Usage

Brand Consciousness

MLowUPUsag
e / SD

MHighUPUsag
e / SD

MLowBrandConsc. / SD

MHighBrandConsc. / SD

Age

28.98/9.68

32.22/10.8
9

-1.79*

31.53/10.26

30.23/10.61

.70

Unit Price
Importance

5.87/1.75

6.95/.36

5.17**
*

6.69/1.10

6.31/1.43

1.73

Price
Consciousness

4.21/1.58

4.97/1.49

2.92**
*

5.19/1.71

4.23/1.34

3.67**
*

Store Brand
Choice

4.56/1.53

5.25/1.79

-2.40**

5.50/1.89

4.55/1.47

3.29**
*

* p < .10, ** p < .05, *** p < .01

Table 84: Differences in consumer segments

4.2.4 Discussion
With two experiments, the impact unit pricing has on store price image and consequently also on consumers shopping intentions was analyzed. The results
show that the statement of unit prices impacts several store price image dimensions. Price processibility increases when the unit price is displayed. Unit prices
ease the process of comparing prices by eliminating the aspect package content
from the price statement. Furthermore, price perceptibility increases when unit
prices are present. A reason for this could be the circumstance of combining two
types of price information on a tag attracting more attention than a single piece
of price information. Third, evaluation certainty increases when unit prices are
given on the price label. This can be explained with customers perceiving the
price evaluation process as more convenient when unit prices are present and
hence are more certain about their price evaluation at store level. There is no
impact of unit pricing on price-level perception, suggesting that the unit price
statement does not influence whether a retailer is perceived as expensive or as

Influence of the Unit Price at the Retailer Level

233

inexpensive. Also an indirect influence of unit price presence on value-for-money perception has been shown that is mediated by price perceptibility,
as well as an indirect influence on shopping intentions via price processibility,
price perceptibility, evaluation certainty and value-for-money perception. This
implies that customers rather shop at retailers displaying unit prices, all other
aspects being equal. This shopping preference is explained by the improved store
price image. This is an important result as it shows that price image dimensions
beyond the mere price level perception explain the behavioral relevance of unit
prices.
Not only the presence, but also the prominence of unit price information influences price image dimensions. However, these relationships are moderated by
prior unit price usage and brand consciousness. Obviously, the effect of unit
price prominence depends on how easily the unit price concept is activated in the
consumers memory and how much attention they pay on price versus other
information. Hence, effects of unit price prominence differ between customer
groups.
However, some results are also surprising. An influence of unit price presence
and unit price prominence on price-level perception was expected. It was assumed that unit price information eases the identification of low-price products
and serves as a low price signal. Thereby it improves the price-level perception
of the entire store. However, such an effect was not observed. A possible reason
for this is the subjects convenient store price-level evaluation in the experimental setting. Consumers rely on cues for evaluating a stores price level, when
a thorough evaluation and integration of product price information is complicated and time consuming (such as in supermarkets offering thousands of products).
In the experimental situation only four products were presented at once and only
limited information (e.g., overall price, package size, unit price) were given to
the participants. Therefore, there was no need for respondents to use the presence
of unit price information as a cue for inferring low prices. Furthermore, the limited number of products enabled consumers to integrate all price information in
the overall price level evaluation, and not only the price of the possibly more
economical product chosen based on unit price information.

234

Development and Empirical Testing of Hypotheses

Another surprising result is that unit price presence influences value-for-money


perception through price perceptibility, while unit price prominence influences
value-for-money perception through price processibility. However, this result
becomes less surprising when noticing that the influence of unit price prominence on price perceptibility, although not significant, is not small = .12,
t = 1.50) and price perceptibility has a very strong influence on price processibility = .70, t = 12.45). An overview of the findings of both experiments can be
found in Table 85.

Influence of the Unit Price at the Retailer Level


Hypotheses

235
Exp. 3

Exp. 4

H1a

The unit price statement has a direct positive influence on


price processibility.

H2a

The unit price statement has a positive direct influence on


price perceptibility.

H3a

The unit price statement has a positive direct influence on


evaluation certainty.

H4a

The unit price statement has a positive direct influence on


price-level perception.

H1b-d

(b) Unit price prominence has a positive influence on price


processibility that is moderated by (c) unit price usage and (d)
brand consciousness.

H2b-d

(b) Unit price prominence has a positive influence on price


perceptibility that is moderated by (c) unit price usage and (d)
brand consciousness.

H3b-d

(b) Unit price prominence has a positive influence on evaluation certainty that is moderated by (c) unit price usage and (d)
brand consciousness.

(9)

H4b-d

(b) Unit price prominence has a positive influence on pricelevel perception that is moderated by (c) unit price usage and
(d) brand consciousness.

H5

The unit price has a positive indirect effect on value-for-money


perception, mediated by (a) price processibility, (b) price
perceptibility, (c) evaluation certainty and (d) price-level
perception.

(9)

(9)

H6

The unit price has a positive indirect effect on the customers


shopping intentions, mediated by (a) price processibility, (b)
price perceptibility, (c) evaluation certainty, (d) price-level
perception and (e) value-for-money perception.

(9)

(9)

9 confirmed
(9) partly confirmed
X not confirmed
not tested

Table 85: Overview of results (Experiment 3 & 4)

236

Development and Empirical Testing of Hypotheses

4.3

Implications for Retailers, Research and Legislature

The results that were obtained from four experiments have important implications for retailers, research as well as for legislature. In the following paragraphs,
implications are discussed that are relevant to these three stakeholder groups.

4.3.1

Managerial Implications

In regard to the influence of unit price format on consumers attitude towards


individual products, the results show that for certain products, consumers perceive the price level as higher if the unit price is indicated in a larger unit of
measure. This result is relevant to retailers, as they can use this information to
systematically influence consumers price-level perception. For example, retailers that want to emphasize low prices, as for example discounters, can use a
small unit of measure for their unit prices, so that consumers perceive their prices as low. On the other hand, retailers that want to emphasize exclusivity, such as
high-class department stores offering groceries and household goods (e.g., Galaries Lavayette), can use large units of measure to emphasize the high price and,
hence, the exclusivity and prestige of their products. Furthermore, retailers can
utilize units of measure to shift the demand to specific products. For example,
discounters or retailers that offer their own store brands can use small units of
measure for the unit prices of the products of their own brands, while using large
units of measure for other brands, in order to increase the demand for their own
products. Other reasons for shifting consumer demand can be excess supply,
limited durability of products, or higher margins of certain products. Retailers
can use a small unit of measure for these products, in order to increase demand.
However, retailers have to keep legislature in mind. Especially for small package
sizes retailers are free to choose between different units of measure. Hence, for
products with small package sizes, retailers can use the unit price format to influence consumers price-level perception of individual products.
The unit price format not only influences the consumers price-level perception
but subsequently also their quality perception. Therefore, retailers can also ma-

Implications for Retailers, Research and Legislature

237

nipulate the unit price format in a way that it supports their quality promises. For
example, retailers that emphasize their high quality standards, such as wholefood
shops or weekly markets, can utilize large units or measures for their unit prices,
in order to emphasize their high quality standards. Besides this, these retailers
can also selectively use large units of measure to emphasize the quality of certain
products. In contrast to discounters, wholefood stores and weekly markets may
be able to increase the demand for certain products by increasing the perceived
quality of their products at the expense of low prices, since their customers oftentimes are less price conscious and more quality conscious.
The store price image influences a consumers decision to shop at a given store.
Therefore, highlighting factors that influence the store price image is highly
relevant to retailers. The results of experiments 3 and 4 show that unit price
prominence, as well as unit price availability influence the store price image and
consequently also consumers shopping intentions.
Comparing the scenario of a missing unit price with the presence of a unit price
is not a purely academic exercise. Although nowadays in most countries unit
prices are mandatory, there are various exemptions, for example for small retailers. Most countries in the EU do not plan to change the law regarding the exemption of small retailers from mandatory unit pricing, partly because the number of
small retailers in the marketplaces is constantly declining and partly because
small retailers are perceived to need protection from the high financial burden
and the time investment necessary for indicating unit prices (Snijders et al.,
2004, pp. 6667). However, the results suggest that whenever possible, the unit
price should be stated by the retailer in order to improve the store price image
and to strengthen customers intentions to shop at this store. If the unit price is
stated on the price tag, customers perceive it as easier to find the lowest price for
a given product, to locate relevant price information on the price tag and feel
more certain about their evaluation of price.
The results also reveal a significant impact on store price image for prominently
stated unit prices in contrast to smaller unit prices for the dimensions price processibility, and there is also a positive but non-significant trend also for price
perceptibility and evaluation certainty. Legislature gives retailers a lot of leeway

238

Development and Empirical Testing of Hypotheses

in regard to the unit price layout on the price label (e.g. PAngV). Hence, they are
free to either highlight unit prices very prominently on the price label or to hide
this price information by using a small font size. The results suggest that retailers
should present unit prices prominently on the price label as this has a positive
effect on store price image (especially the price processibility dimension) and
shopping intentions. The influence of unit price prominence on the store price
image dimensions is moderated by prior unit price usage and brand consciousness, leading to a positive price image especially for the customer segment that
uses unit price frequently and that is not brand conscious. This customer segment
seems to be slightly older, is price conscious and prefers store brands. These
consumer groups may prefer to shop at discounters, so these results are especially interesting for this group of retailers. However, the results are not only relevant for discounters, but also for super- and hypermarkets, that strive to attract
this consumer segment. In order to convince the price conscious consumers to
switch to supermarkets, those should prominently present unit price information
on price labels, to improve the supermarkets store price image in relation to the
discounters.

4.3.2

Implications for Research

From an academic perspective, these studies add to the existing unit price research, the research on the influence of framing of numerical information, research addressing the price-quality relationship as well as to the existing store
price image literature.
As mentioned before, previous research on unit pricing did not focus on the unit
prices unit of measure. With two experiments, it has been shown that the unit
price format does have an influence on price-level perception and quality perception and subsequently also on purchase intention. Future research on unit pricing
needs to have these findings in mind and should also control for unit of measure
when conducting experiments or other empirical research.
Furthermore, previous research concerning the influence of the framing of numerical information on quantity perception addressed various kinds of numeric

Implications for Retailers, Research and Legislature

239

information, such as package content, currencies, risk, and customer rewards


programs. However, no study addressed the influence of framing of unit prices
on quantity perception. These studies show that a larger unit of measure leads to
higher perceived price levels and, thus, adds to this field of research.
The influence of price on perceived quality has been extensively discussed in
research. It has been shown that a price-perceived quality relationship exists for
many products and consumer-related, product-related, retailer-related or studyrelated moderating variables have been highlighted. However, this field of research has only analyzed the influence of overall prices on quality perception.
The influence of the unit price on quality perception has been widely neglected.
Hence, these studies also add to this field of research by demonstrating the positive influence of unit prices on quality perception that is also moderated by several consumer-related attributes.
Furthermore, the empirical results contribute to the store price image literature.
Previous literature in this field has identified predictors for store price image,
such as price guarantees. However, the influence of unit prices on store price
image has not been assessed, yet. The empirical results of experiment 3 and 4
add to the field of price image research by highlighting the impact of unit price
information on several store price image dimensions, such as price processibility
and evaluation certainty.

4.3.3

Implications for Legislature

Legislation leaves retailers considerable leeway concerning the format of unit


prices. In Germany, for example, for products that are offered in package sizes
that are not larger than 250 ml or 250 g, retailers can choose if they indicate the
unit price in the large unit of measure (i.e., price per kg, price per liter) or in a
small unit of measure (i.e., price per 100 g, price per 100 ml). However, these
empirical studies show that the choice of unit price format influences the customers price-level perception and subsequently also the quality perception and
the purchase intention. This implies that retailers can manipulate consumer behavior by the choice of unit price format. For example, by using a small unit of

240

Development and Empirical Testing of Hypotheses

measure for more expensive products, which leads to a lower price-level perception for these products, and using a large unit of measure for products with lower
unit prices, the retailer influences the consumer in a way that the consumer may
make a less economical purchase decision. Hence, legislature should consider the
option to standardize unit price formats also for small package sizes to prevent
consumer manipulation by the retailer.
Legislation also leaves retailers a lot of leeway concerning the unit price prominence on the price tag. For example, retailers can choose the font size and color
freely, as long as the unit price is clearly visible for the consumers. Furthermore,
legislature offers exemptions for small retailers from the mandatory display of
unit prices. Nevertheless, these empirical studies show that the unit price prominence and unit price availability influences the consumers attitude towards a
retailers pricing practices and the retailer selection. Since, unit prices have a
positive influence on store price image and shopping intention, there is no need
for legislature in this regard to standardize unit price prominence on the price
label, as it is for the retailers own sake to present unit prices prominently to their
customers. Furthermore, there is no need for legislature to make unit prices mandatory for small retailers, as they might profit probability more from a more
positive store image than consumers would profit from unit prices for the small
retailers limited range of products.
However, the conducted experiments also shows that especially the consumer
segment that is slightly older, is price conscious and purchases store brands frequently, and therefore profits from prominent unit prices. For them unit price
prominence has the strongest influence on price processibility and price perceptibility. This customer group might be especially vulnerable and legislation
should support a more convenient acquisition of the overall price and unit price
as well as an ease of price comparison for this customer segment at the point of
purchase. This, however, can be realized by including higher standards for unit
price prominence in the unit price legislation.

241

5 Concluding Remarks
5.1

Summary

The aim of this thesis was to empirically investigate the influence of the unit
price at the product and retailer level. In the first part of this thesis, a comprehensive overview of unit price research was given that was structured according to
the individual phases of price information processing. In order to better understand the individual phases of consumers price processes, i.e., price information
awareness, price information evaluation, and price information storage, the most
important concepts of the individual phases were reviewed, and categorized the
unit price research according to these phases. This categorization reveals that
each phase of unit price processing has been addressed by previous unit price
research. However, there are differences in the thoroughness of the consideration
of each phase. Many studies concentrate on unit price awareness and unit price
usage. These studies also highlight differences in unit price awareness and unit
price usage between individual consumer groups, product categories, and retailers. Other phases, such as unit price storage, barely gained any attention from
previous research.
Especially the influence of the unit prices unit of measure on the evaluation of
products as well as the influence of unit price availability and prominence on the
store price image have not been addressed. To underline the relevance of the
research questions and to find avenues for further research, previous findings in
relevant fields of research were discussed. Here the relevant fields of research
address the influence of framing on the perception of quantitative information,
the influence of prices on quality perception, as well as the store price image.
The empirical part of this thesis was divided into two parts. First, the influence
of unit price format at the product level was analyzed. In the second part, the
influence of the unit price at the retailer level was analyzed.
Springer Fachmedien Wiesbaden 2016
L. Himbert, Unit Pricing,
DOI 10.1007/978-3-658-13476-1

242

Concluding Remarks

In the first part, after developing the hypotheses regarding the unit price formats
influence on consumers attitude towards individual products, the hypotheses
were tested with two experiments. The experiments manipulated the unit prices
unit of measure and compared the price-level perception, quality perception and
purchase intention of the individual experimental group. The results differ between product categories. For the product category of unpackaged salami and
prepackaged jam, results show that a large unit of measure (e.g., price per kg)
leads to a higher perceived price-level perception, and subsequently also to a
higher perceived quality. Price-level perception as well as quality perception then
influence the consumers purchase intention, while the negative influence of
price-level perception on purchase intention tends to be stronger than the positive
influence of quality perception. For the product category of tomatoes no influence of unit price format on consumer behavior could be observed, Furthermore
and in line with previous research, several moderation effects exist for psychographic characteristics.
In the second part, the influence of unit prices on the store price image was addressed. Again, hypotheses were developed and tested with two experiments.
The results show that the statement of unit prices impacts several store price
image dimensions. Price processibility, price perceptibility and evaluation certainty increase if the unit price is displayed. However, there is no impact of unit
pricing on price-level perception, suggesting that the unit price statement does
not influence whether a retailer is perceived as expensive or as inexpensive. Also
an indirect influence of unit price presence on value-for-money perception has
been discovered that is mediated by price perceptibility, as well as an indirect
influence on shopping intentions via price processibility, price perceptibility,
evaluation certainty and value-for-money perception. This implies that customers
prefer retailers that display unit prices, all other aspects being equal.
Not only the presence, but also the prominence of unit price information influences the store price image dimension price processibility. However, this relationship is moderated by prior unit price usage and brand consciousness and
therefore differs between customer groups.

Limitations

243

However, the results prove the existence of unit price influences at the retailer
and product levels that have not been addressed by previous research.

5.2

Limitations

One shortcoming of the conducted experiments is the geographic region the


experiments were conducted in. The studies included in this thesis were conducted in Germany, where the indication of unit prices is well established and the
retail market is concentrated with only a low share of small retailers that are not
obliged to indicate unit prices, in the marketplace. Therefore, German consumers
are very familiar with the unit price. It would be a great addition to this field of
research to conduct similar experiments in geographic regions with a higher
number of small retailers or with a higher number of products exempt from the
indication of unit prices. Furthermore, it would be of great interest to conduct
these studies also in countries, where unit prices became mandatory only recently, such as in Australia. Here the effects of unit price presentation on consumers
behavior possibly differ from the results observed among German consumers.
A second limitation is the samples used for the experiments. Although the online
experiments had a more diverse sample than the student sample in the laboratory
experiments, better educated and lower earning respondents are slightly
overrepresented. Future studies should therefore analyze more thoroughly if
lower income customers (which have to be more price conscious) or customers
with lower education (may having more trouble comparing prices) behave differently.
A third limitation is the limited number of products used as stimuli in these studies. In the first experiment salami and tomatoes were used as stimuli. These
stimuli were chosen based on a qualitative pretest, where participants were asked
which product categories they frequently purchase as unpackaged goods. The
second, third and fourth experiment focus on prepackaged goods. However, these
product categories are just examples and give limited insights about how consumer behavior concerning other product categories.

244

Concluding Remarks

Furthermore, all studies utilized an experimental setting. Although great effort


was put into creating scenarios as realistic as possible, it cannot be ruled out that
customers behave differently in a real purchase environment, due to influences
not included in the experiments. Nevertheless, it would be a valuable contribution, if further studies test these hypotheses also in a real shopping environment.
An additional advantage thereof would be that a possibly larger customer sample
could statistically confirm trends the data indicates, for example, that more
prominent unit prices lead to a more positive store price image.
Another limitation is that different types of experiments were conducted at the
expense of comparability. For example, while experiment 1 and 3 were conducted in a laboratory environment, experiments 2 and 4 were conducted online. This
has the advantage that consumers with different demographic characteristics
were able to participate in the experiments. However, it cannot be ruled out that,
for example, differences in the results between experiment 1 and 2 are exclusively based on the difference in consumers behavior in regard to unpackaged and
prepackaged products, but also based on the experimental design. However, a
comparison of experimental results was not intended, as also different product
categories were used for both experiments. Furthermore, also experiment 3 and 4
do not show significant differences in the results that can be assigned to the different types of experiments. The only relationship tested with both experiments
is the influence of unit price prominence on store price image and both experiments only show a weak influence of unit price prominence on store price image.
An additional limitation is that in experiment 3 and 4, store price image is measured immediately after the consumers first encountered the prices and price labels of the displayed stores. In reality, store price image develops over time and
has to be seen as a dynamic process, as the image adapts to newly acquired information (Loureno/Gijsbrechts, 2013, p. 369). Therefore, future research
should measure the influence of unit prices on store price image of the same
consumers at different points in time, in order to better account for the dynamic
nature of store price image. If it is not possible to measure the store price image
of the same consumers at different points in time, an alternative would be to
measure the store price image of consumers not immediately after observing the

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stimuli. In this way, the store price image can develop the image measured at a
later point in time might better represent the actual store price image.
A last limitation for all four experiments is that in the experiments only one store
type was considered. The product shelf displayed resembled a product shelf in a
supermarket. However, the influence of unit price format on price-level perception and purchase intention may be different at other stores. For example, a high
price-level perception may have a positive influence on purchase intention at
more exclusive retailers. Furthermore, Zielke (2010, pp. 761762) points out that
for different store types the individual store price image dimensions influence
each other and influence shopping intentions in different ways. In order to exclude any effects of store type, future research should also display price labels
that are typical for other types of stores, such as discounters, exclusive retailers,
organic food stores or weekly markets.

5.3

Future Research

This thesis addresses a number of important gaps in unit price research. However, unit price research offers new avenues for further research. Aspects future
research should address are (1) the unit price layout as predictor of unit price
awareness and unit price usage, (2) the objective measurement of unit price
awareness, (3) unit price storage and its usage as a reference price, and (4) unit
pricing of services. In the following, each of these research gaps is explained and
its relevance is substantiated.
(1) Unit Price Layout as Predictor of Unit Price Awareness and Unit Price
Usage
On the product level, future research needs to address the influence of unit price
format, such as the position of the unit price information relative to the overall
price on the price tag, the size of unit price information, the color of unit price
information relative to the overall price.
The format of information presentation is an important aspect in retailing and
behavioral pricing literature. One aspect frequently assessed in general consumer
behavior literature is the influence of color. It has been demonstrated that color is

246

Concluding Remarks

related to physical attraction (Bellizzi et al., 1983, p. 34). For example, when
shown pictures of young women, men perceive these women as more attractive
if the background in the picture is red (Schwarz/Singer, 2013, p. 163). Transferring these findings to pricing, Crowley (1993, p. 68) shows that color can affect
consumer perceptions of products at the point of purchase. Consumer activation
by color follows a U-shaped course for color wavelength, implying that consumer activation is highest for extremely long-waved and extremely short-waved
colors. Consequently, activation is highest for red and violet. In contrast, color
wavelength has a linear positive influence on price evaluation (Crowley, 1993, p.
65). By observing individuals during experiments in which colors are manipulated, Bagchi/Cheema (2013, p. 951) demonstrate that in auctions, individuals that
are exposed to the color red show higher jumps in their bids than those exposed
to blue color. Furthermore, they show that in the course of negotiations participants that are exposed to red color make lower offers than those exposed to blue
color.
This just being some examples for the influence of formal aspects on consumer
behavior, it is also relevant to test the influence of other formal characteristics,
such as font size, and the position of unit price information on the price label, on
the consumer behavior in regard to unit prices. While regulations make unit
pricing for many retailers mandatory, the unit price layout has not been further
determined by legislation. It can be assumed that unit price layout influences unit
price awareness and unit price evaluation in a way that consumers are more
aware of unit prices in large font sizes and red color, because of increased visual
fluency. It has been shown that visual fluency has a positive influence on perceptual fluency (Winkielman et al., 2003, p. 77) that, hence, can influence unit price
awareness and usage positively. The knowledge of how consumers react to different unit price formats is useful for retailers planning to emphasize certain unit
prices more than others or to increase price processibility in general.
(2) Objective measurement of unit price awareness
For the phase of unit price awareness, previous literature assesses unit price
information awareness based on self-reported consumer data. Researchers asked
how confident consumers are of having seen price labels displaying unit prices at

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the point of purchase (Manning et al., 2003, p. 371; Miyazaki et al., 2000, p.
102). Another method research used is that researchers showed participants price
labels displaying unit prices and ask participants if they had seen these labels
before (McCullough/Padberg, 1971, p. 16). Self-reported data offers valuable
insights to consumers perceived unit price awareness and unit price usage. However, due to this research method, the nature of the recorded answers has to be
considered as subjective and can be biased, because of participants confusion, a
low level of introspection, social desirability (van Trijp, 2009, p. S47), forgetting, and the trend towards exaggerating behavior in order to improve their selfimage (Aaker/Ford, 1983, p. 121; Russo, 1977, p. 193). These factors lead to a
unit price awareness measurement that possibly results in inflated levels of unit
price awareness rather than measuring the actual unit price awareness among
consumers (error type I). Therefore, it would be of great value to assess unit
price information awareness with the help of a more objective methodology. One
option to measure price awareness more objectively is to track eye movements
(saccades) and fixations. This can be achieved either by stationary eye-tracking
technology attached to a computer tracking the movement of the participants
eyes, or mobile eye tracking cameras in the form of glasses that record the environment as well as the participants eye movements and sets both in relation to
each other. In both ways researchers can assess which information on a price
label an individual observes, the duration of the individual information cues
observation, as well as the order of observation. This results in information about
an individuals awareness degree in regard to the displayed unit price and the
duration of information assessment. Eye tracking is becoming an accepted method and is more and more common for objectively observing consumers attention
to labels displaying product information, such as nutrition labels (Graham et al.,
2012, p. 378).
Eye tracking is seen as less susceptible and leads to individuals more instinctive
behavior not being influenced by striving for conformity with social desirability
and popular behavior (Graham et al., 2012, p. 379). Also, eye movements and
fixations are difficult to misrepresent, as well as detailed (Russo/Rosen, 1975, p.
268). Furthermore, data derived from eye-tracking is more difficult to censor

248

Concluding Remarks

than consumer interviews and offers a detailed trace of an individuals information search (Bettman et al., 1991, p. 74). Especially in situations when protocols cannot be used, such as if the process occurs rapidly or is automated, tracing
eye movements is useful. Also visual stimuli can be hard to verbalize, as these
stimuli oftentimes can hardly be disambiguated without other stimuli of the environment (Ericsson/Simon, 1985, p. 278). Furthermore, eye movements require
less time and effort than, for example, retrieving a card when using display
boards. Therefore, eye movement data shows more information acquisitions and
is seen as the most detailed method for tracing processes (Russo, 1978, p. 565).
However, critics see this method also as being obtrusive and therefore subjects
may also be biasing their information acquisition behavior (Lehmann/Moore,
1980, p. 450). The disadvantage of tracking eye movements and fixations is that
this method for data collection is still immensely time-consuming, expensive,
only allows for small sample sizes and can be, depending on the apparatus, obtrusive. Furthermore, eye fixations represent information-seeking processes rather than information acquisition and therefore, these fixations not necessarily
exhibit details of consumers information processing (Graham et al., 2012, p.
379; Bettman et al., 1991, pp. 7475). Nevertheless, eye tracking is seen as less
obtrusive than other methods, such as accompanied shopping and think-aloud
techniques (Graham et al., 2012, p. 379).
A second method of a more objective measurement of unit price awareness is the
use of display boards. The method of using information display boards has been
found to produce consistent and valid results (Lehmann/Moore, 1980, p. 458).
Information display boards employ an information board structured as a matrix
array. Oftentimes rows represent different brands and columns represent attributes such as price, material, ingredients etc. (Bettman et al., 1991, p. 73). Unit
prices can be used as an attribute with this methodology. With this method, the
consumer has to ask specifically for information about specific product attributes, but unconscious consideration of price information cannot be recorded.
A third alternative for the objectified measurement of unit price usage are verbal
protocols. When using this method, individuals are asked to think out loud when

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249

preforming the experimental task, such as choosing between different product


alternatives when unit prices are displayed (Bettman et al., 1991, p. 73).
(3) Unit price storage and its usage as a reference price
Another concept extensively discussed in behavioral pricing literature is the
reference price. The unit price was introduced to act as reference price for comparing different alternatives. The unit price can be used in two different ways
when evaluating different product alternatives. First the unit price of different
product alternatives available at the point of purchase can be used to determine
the best-value product available. Second, previously encountered unit prices that
were stored in the consumers long-term memory can be used to evaluate products unit prices at later purchase occasions. If and how consumers form reference prices based on observed unit prices is an important research question.
Furthermore, it is important to see, whether the usage of unit prices in general
are used, and if this usage differs between consumer segments. However, the
questions how the unit price is evaluated, how consumers create reference prices
based on unit prices, and how they are used remain unanswered. Only one article
addresses the influence of unit prices on reference price recall (Mndez Garca
de Paredes et al., 2013, p. 415). No one article addresses the role of remembered
unit prices as reference prices. With this knowledge, product decision processes
can be anticipated more accurately.
Information about unit price knowledge and its subsequent use as reference price
is of high managerial relevance. For example, package downsizing is a frequently applied tool to increase unit prices without changing the overall price
dDNU%DODJWDV  S  . By reducing the package content, while keeping
item price constant, the unit price increases. If the consumer has no unit price
knowledge, he will not realize the increased unit price unless attention is invited
to this price increase by consumerists. Therefore, the unit price knowledge level
should be assessed taking into account potential moderating variables, such as
product group and customer segment. Only if unit price knowledge is low, product downsizing will not influence sales. A consumers unit price knowledge can
be assessed when conducting surveys before, during, or after a purchase situation, depending on the chosen conceptualization of unit price knowledge.

250

Concluding Remarks

(4) Unit pricing of services


Previous unit pricing literature focusses on the unit price for products. The unit
price of services has been widely neglected. Addressing the unit price of services
will be even more relevant in the future as three Member States of the EU, namely Portugal, Luxembourg, and Sweden, already introduced legislation concerning
the unit price for services, or are planning to do so in the near future (Snijders et
al., 2004, p. 6). Previous research has not addressed the unit pricing of services.
It remains therefore unclear whether conclusions in regard to consumer reactions
to unit prices of services can be drawn from results of behavioral pricing research addressing unit prices of products.
There are a number of differences in the nature of products and services that
must not be neglected. Important to mention here is the immateriality and the
integrativity of services (Flie, 2009, pp. 9-11). Due to their immateriality, services are hard to store. However, services are never purely immaterial but contain material and immaterial components in different proportions. Integrativity
stands for the inevitable participation of the consumer in the service creation
process and can be seen as its most important characteristic. Because of the consumer participation, as well as the objects and information the consumer contributes to the service creation, services are highly heterogeneous (Flie, 2009, p.
14).
This heterogeneity may be one reason why unit prices are used less often for
services than for products. Even if unit prices are given (e.g., price of a service
per minute), services are hard to compare because of their heterogeneity. Due to
the novelty and impact on the consumers, unit prices for services are a promising
field for research. Descriptive as well as causal research designs are able to show
the consumers attitude towards unit prices for services in general and can highlight differences among consumer groups and between service types. It would be
also interesting to see if the degree of immateriality and the degree of consumer
participation in the service creation process act as moderators for the perceived
attractiveness and usage of unit prices for services.
Addressing these further gaps of unit price research helps consumerists and legislature to better understand consumer behavior in regard to unit prices and to

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251

adapt legislature accordingly. Furthermore, addressing these research gaps helps


retailers to actively employ unit prices as a pricing instrument they can use in
their favor, instead of considering unit prices as mere legislative duty retailers
have to comply with.

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287

Appendices
Appendix 1: Measurement of control variables in experiments 1 and 2

288

Appendix 2: Moderating variables on unit price format price-level


perception relationship (Salami)

293

Appendix 3: Moderating variables on price level quality relationship


(Salami)

294

Appendix 4: Moderating variables on unit of measure price-level perception


(Tomatoes)

295

Appendix 5: Moderating variables on price level quality relationship


(Tomatoes)

296

Appendix 6: Moderating variables on unit price format price-level


perception relationship (Jam)

297

Appendix 7: Moderating variables on price level quality relationship (Jam) 298


Appendix 8: Moderating variables on unit price format price-level
perception relationship (Paint)

299

Appendix 9: Moderating variables on price level quality relationship (Paint)300

Springer Fachmedien Wiesbaden 2016


L. Himbert, Unit Pricing,
DOI 10.1007/978-3-658-13476-1

288

Appendices

Appendix 1: Measurement of control variables in experiments 1 and 2


Variable
name

Store Brand
Choice

Item
name

Items

Reference

Sto_Bra

I frequently
purchase store
brands (e.g.,
Gut & Gnstig, Ja!)

McGoldrick/Marks
(1985)

Bra_Loy1

For most
supermarket
items, I have
favorite
brands and
limit my
purchase to
them.

.8
5

.8
7

Mittal (1994)

Bra_Loy2

In most
supermarket
categories in
the supermarket, there are
certain brands
for which I
(and my
family) have a
definite
preference.

Bra_Loy3

I and my
family will
consume only
certain
brands, not
others.

Bra_Con1

I usually
purchase
brand name
products.

Bra_Con2c

Store brands
are of poor
quality.

.4
1

.2
1

Donthu/Gilliland
(1996)

Bra_Con3c

All brands are


about the
same.

P_Q_Infe

A product that

.62**

.54**

Kukar-Kinney et

Brand Loyalty

Brand Consciousness

Price-Quality

Appendices

289

Beliefs

costs more
will give you
better service.

al. (2012),
Lichtenstein et al
(1993)

The old
saying you
get what you
pay for is
generally true.

Quality Consciousness

Striving for
Prestige

Qua_Con2

When it
comes to
purchasing
products, I try
to get the very
best or perfect
choice.

Qua_Con3

In general, I
usually try to
buy the best
overall quality.

Qua_Con4

I make special
effort to
choose the
very best
quality products.

Str_Pre

It is important
to me that I
own expensive products.

Pri_Con1

I am very
concerned
about low
prices for the
products I
buy.

Price Consciousness

Shopping
Complexity

Pri_Con2

It is important
for me to get
the best price
for the products I buy.

Sho-Comp

Before shopping I give


thought to the
planned
purchases.

.8
1

.8
5

Shim/Gehrt
(1996)

Vlckner (2006)

.74**
*

.70**
*

Vlckner (2008)

Vlckner (2006)

290

Appendices

Unit Price
Awareness in
Experiment

UP_Aw_E
x

The unit price


was indicated
on the price
tag

Manning et al.
(2003)
Miyazaki et al.
(2000)

Unit Price
Awareness in
General

UP_Aw_G
e

Unit prices
are indicated
on price tags
of most
retailers.

Manning et al.
(2003)
Miyazaki et al.
(2000)

UP_Compr

I know how to
determine the
product with
the best valuefor-money
relationship
based on the
unit price.

UP_Usag

I use the unit


price frequently when
shopping.

Manning et al.
(2003)

Bra_Dif1c

Differences
among brands
are large

Bra_Dif2

Differences
among brands
are hard to
judge.

.6
0

.4
9

Van Trijp et al.


(1996)

Bra_Dif3

The best
brand is hard
to judge.

Com_Pri1

I read price
tags of the
grocery
products that I
buy.

Com_Pri2

I check the
prices of the
grocery
products that I
purchase.

.8
5

.9
1

Putrevu/Ratchford
(1997)

Com_Pri2

Before buying
a product, I
check the
price.

Unit Price
Comprehension

Unit Price
Usage

Brand Differences

Comparison
Shopping
Check prices

Appendices

Comparison
Shopping Unit Prices

Unit Price
Importance

Financial
Constraints

291

Com_UP1

I compare unit
prices across
different
package sizes.

Com_UP2

I compare unit
prices across
brands.

Com_UP3

I check unit
prices of
products I
buy.

Com_UP4

Before buying
a product, I
check the unit
price.

UP_Impor

I think it is
important that
retailers
indicate unit
prices.

Fin_Cons1

I frequently
have problems making
end meet.

Fin_Cons2

My budgeting
is always
tight.

Fin_Cons3

I often have to
spend more
money than I
have available.

Tim_Pre1

I wish I would
have more
time to relax.

Tim_Pre2

I always seem
to be in a
hurry.

Nee_Sim1

I do not like
tasks that
require much
thinking

Time Pressure

Need for
Simplification
of Cognitive
Tasks

Nee_Sim2

It is important
for me that

.8
9

.9
3

Putrevu/Ratchford
(1997)

Mathews (1974)

.8
9

.8
7

Urbany et al.
(1996)

.66**
*

.75**
*

Vlckner (2008)

.6
3

Vlckner (2008)

292

Appendices
my purchase
decision
making is fast
and uncomplicated.

Risk Aversion

Nee_Sim3

In purchase
decision
making, I
often rely on
easily available attribute
information.

Ris_Ave1

I would rather
be safe than
sorry.

Ris_Ave2

I want to be
sure before I
purchase
anything.

Ris_Ave3

I avoid risky
things.

a
in experiment 1 b in experiment 2
** p < .05 *** p < .01

.7
2

reverse scaled

Donthu/Gilliland
(1996)

Appendices

293

Appendix 2: Moderating variables on unit price format price-level perception relationship (Salami)
t (3,146)

coefficient

Striving for Prestige

-.45

-.10

Shopping Complexity

-.51

-.07

-2.00**

-.58

Comparison Shopping - Check Unit Prices

-1.37

-.34

UP Awareness Here

-.10

-.03

UP Awareness General

-1.29

-.33

UP Importance

-.36

-.11

UP Comprehension

-.37

-.06

UP Usage

-1.31

-.28

Price Consciousness

-3.87***

-.74

Price Quality Beliefs

-.52

-.11

Financial Constraints

.13

.02

Quality Consciousness

-.92

-.21

Brand Loyalty

1.86

.31

Time Pressure

-1.04

-.17

Risk Aversion

.41

.09

Household Size

.26

.05

Shopping Frequency

-.62

-.23

Income

-.49

-.09

Gender

-.91

-.48

Age

-.81

-.08

Education

.06

.03

Comparison Shopping - Check Prices

Dependent Variable: Quality Perception


*** p < .01
** p < .05

294

Appendices
Appendix 3: Moderating variables on price level quality relationship (Salami)
t(3, 146)

coefficient

Striving for Prestige

-.76

-.07

Shopping Complexity

.14

.01

Comparison Shopping - Check Prices

-1.27

-.10

Comparison Shopping - Check Unit Prices

-.27

-.01

UP Awareness Here

-.46

-.20

UP Awareness General

-.48

-.04

UP Importance

1.37

.10

UP Comprehension

-1.21

-.10

UP Usage

1.24

.06

Price Consciousness

-.59

-.03

Price Quality Beliefs

.46

.03

Financial Constraints

2.27**

.09

Quality Consciousness

-1.37

-.09

Brand Loyalty

-.40

-.02

Time Pressure

.69

.03

Risk Aversion

-1.05

-.07

Household Size

-1.07

-.08

Shopping Frequency

.04

.00

Income

-.08

.00

Gender

-.34

-.05

Age

.86

.02

Education

1.65

.08

Dependent Variable: Quality Perception


** p < .05

Appendices

295

Appendix 4: Moderating variables on unit of measure price-level perception (Tomatoes)


t(3, 147)

coefficient

Striving for Prestige

.77

.18

Shopping Complexity

1.94

.26

Comparison Shopping - Check Prices

.67

.21

Comparison Shopping - Check Unit Prices

.55

.11

UP Awareness Here

-1.15

-.16

UP Awareness General

-.28

-.08

UP Importance

.97

.23

UP Comprehension

.94

.16

UP Usage

.33

.08

Price Consciousness

.84

.17

Price Quality Beliefs

-.86

-.18

Financial Constraints

-.38

-.06

2.23**

.43

Brand Loyalty

-.40

-.07

Time Pressure

.77

.12

Risk Aversion

-.13

-.03

Household Size

.86

.17

-1.09

-.31

Income

.77

.12

Gender

.54

.27

Age

.76

-.08

Education

.69

.30

Quality Consciousness

Shopping Frequency

Dependent variable: Price-level perception


** p < .05

296

Appendices
Appendix 5: Moderating variables on price level quality relationship (Tomatoes)
t(3, 145)

coefficient

Striving for Prestige

-.89

-.05

Shopping Complexity

.47

.02

-1.27

-.07

-2.16**

-0.13

UP Awareness Here

-.90

-.08

UP Awareness General

-.79

-.07

UP Importance

-.23

-.02

UP Comprehension

.67

.05

UP Usage

-.69

-.03

Comparison Shopping - Check Prices


Comparison Shopping - Check Unit Prices

Price Consciousness

.12

.01

Price Quality Beliefs

.94

.05

Financial Constraints

1.40

.06

Quality Consciousness

.33

.02

Brand Loyalty

-.91

-.04

Time Pressure

-.17

-.01

Risk Aversion

.99

.03

Household Size

-.43

-.03

Household Type

-1.19

-.09

Shopping Frequency

.09

.01

Income

-.37

-.01

Gender
Age
Education
Dependent variable: Quality perception
** p < .05

-.79

-.11

-2.20**

-0.06

-.38

-.07

Appendices

297

Appendix 6: Moderating variables on unit price format price-level perception relationship (Jam)
t(3,146)

coefficient

Striving for Prestige

-.38

-.08

Shopping Complexity

.26

.05

Comparison Shopping - Check Prices

2.08**

.53

Comparison Shopping - Check Unit Prices

2.04**

.47

UP Awareness Here

.91

.30

UP Awareness General

2.72**

.73

UP Importance

1.75

.49

UP Comprehension

.70

.21

UP Usage

1.52

.32

Price Consciousness

.30

.08

Price Quality Beliefs

.14

.04

Financial Constraints

-.94

-.21

Quality Consciousness

1.27

.33

Brand Loyalty

1.28

.30

Time Pressure

.67

.16

Household Size

-.31

-.10

Shopping Frequency

-1.61

-.61

Income

1.15

.21

Gender

-.72

-.44

Age

-.76

-.08

Education

-.92

-.31

Dependent Variable: Price-level perception


** p < .05

298

Appendices
Appendix 7: Moderating variables on price level quality relationship (Jam)
t(3, 146)

coefficient

Striving for Prestige

1.13

.15

Shopping Complexity

.32

.02

Comparison Shopping - Check Prices

-.54

-.05

Comparison Shopping - Check Unit Prices

-.24

-.02

UP Awareness Here

-1.41

-.08

UP Awareness General

.05

.01

UP Importance

.16

.02

-2.51**

-.14

UP Usage

-.41

-.03

Price Consciousness

-.34

-.03

Price Quality Beliefs

.05

.01

Financial Constraints

-.95

-.07

Quality Consciousness

-.95

-.09

Brand Loyalty

.13

.01

Time Pressure

.43

.04

Household Size

-.78

-.11

Shopping Frequency

1.04

.17

Income

.17

.01

Gender

-.69

-.18

Age

-.17

-.01

Education

-.62

-.14

UP Comprehension

Dependent Variable: Quality perception


** p < .05

Appendices

299

Appendix 8: Moderating variables on unit price format price-level perception relationship (Paint)
t(3,146)

coefficient

Striving for Prestige

-.37

-.10

Shopping Complexity

.22

.04

Comparison Shopping - Check Prices

1.18

.33

Comparison Shopping - Check Unit Prices

.57

.16

UP Awareness Here

2.11**

.47

UP Awareness General

2.79***

.66

UP Importance

.80

.18

UP Comprehension

.91

.21

UP Usage

.85

.15

Price Consciousness

-.49

-.13

Price Quality Beliefs

-.07

-.01

Financial Constraints

-.34

-.07

Quality Consciousness

.04

.01

Brand Loyalty

-.41

-.10

Time Pressure

.20

.05

Household Size

1.49

.45

Shopping Frequency

-.52

-.31

Income

-.76

-.14

Gender

.95

.60

Age

-1.05

-.10

Education

-.43

-.19

Dependent variable: Quality perception


*** p < .01
** p < .05

300

Appendices
Appendix 9: Moderating variables on price level quality relationship (Paint)
t(3, 146)

coefficient

Striving for Prestige

.99

.12

Shopping Complexity

-.52

-.03

Comparison Shopping - Check Prices

-.59

-.05

Comparison Shopping - Check Unit Prices

-.05

.00

UP Awareness Here

-1.11

-.07

UP Awareness General

.13

.02

UP Importance

-.03

.00

UP Comprehension

-1.40

-.10

UP Usage

-.36

-.03

Price Consciousness

-.84

-.07

Price Quality Beliefs

-.19

-.02

Financial Constraints

-.35

-.03

Quality Consciousness

-1.80

-.14

Brand Loyalty

.19

.01

Time Pressure

.20

.02

2.08**

.18

Shopping Frequency

-.36

-.05

Income

-1.07

-.08

Gender

.83

.21

Age

-.39

-.01

Education

.13

.03

Household Size

Dependent Variable: Quality Perception


** p < .05