Influences on What

Consumers Know and What

They Think They Know
Regarding Marketer
Pricing Tactics
Jay P. Carlson
Union Graduate College

William O. Bearden
University of South Carolina

David M. Hardesty
University of Kentucky

ABSTRACT

Although a considerable amount of research has investigated con-

sumer knowledge of individual prices, consumer knowledge of mar-
keter pricing tactics (e.g., partitioned prices, pennies a day) has
received only limited attention. In the current research, a model
depicting hypothesized antecedents of consumer knowledge (both
accurate and self-perceived) regarding pricing tactics marketers use is
proposed and then investigated in two studies. Tests of the model pro-
vided support for the hypothesized antecedents of both objective and
subjective pricing tactic knowledge and suggested that experience is a
key moderator of the objective pricing tactic knowledge–subjective
pricing tactic knowledge relationship. © 2007 Wiley Periodicals, Inc.

Sellers have considerable flexibility in terms of how to present price-

related information and claims in the marketplace. Indeed, sellers often
Psychology & Marketing, Vol. 24(2): 117–142 (February 2007)
Published online in Wiley InterScience (www.interscience.wiley.com)
© 2007 Wiley Periodicals, Inc. DOI: 10.1002/mar.20155
117
employ a variety of pricing tactics, that is, tactics used by sellers to gen-
erate favorable price perceptions regarding their brands, stores, and/or
offerings. Examples of such pricing tactics include “MSRP $99.99, sale
price $59.99” (i.e., manufacturers’ suggested retail prices used as exter-
nal comparisons), “$29.95 plus $5.00 shipping & handling” (i.e., parti-
tioned pricing), “For only 72¢ a day” (i.e., pennies-a-day pricing), and
“always low prices” (i.e., everyday low pricing).
Consumers have undoubtedly encountered a number of pricing tactics
as a result of their lifetime shopping experiences, and in the process, may
have developed knowledge regarding these tactics. Although prior research
has investigated consumer responses to individual pricing tactics (e.g.,
pennies a day—Gourville, 1998; partitioned pricing—Morwitz, Greenleaf,
& Johnson, 1998), less is known regarding consumer knowledge of mar-
keter pricing tactics. Most research studies that have investigated con-
sumer knowledge within the pricing domain have focused on assessing con-
sumer knowledge of individual prices (e.g., Dickson & Sawyer, 1990;
Vanhuele, Laurent, & Dreze, in press). The focus of the present research
is upon consumer knowledge of marketer pricing tactics.
Recently, Hardesty, Bearden, and Carlson (2006) examined the effects
of varying levels of objective persuasion knowledge regarding pricing
tactics by investigating the effects of such knowledge on responses to
marketplace offers. As a subdomain of overall consumer persuasion
knowledge (Friestad & Wright 1994), pricing tactic persuasion knowl-
edge was defined as knowledge of pricing tactics used by sellers to gen-
erate favorable price perceptions regarding their brands, stores, and/or
offerings. Hardesty et al. (2006) found that consumer responses to pric-
ing tactics were affected by the level of accurate/inaccurate knowledge
held for such tactics. For example, in one of their studies, consumers high
in pricing tactic persuasion knowledge were less interested in purchas-
ing an item offered with a tensile price claim than consumers low in such
knowledge.
Although Hardesty et al. (2006) demonstrated the effects of objective
pricing tactic persuasion knowledge on responses to marketplace offers,
no study has investigated factors related to this knowledge. If consumers
possessing greater pricing tactic persuasion knowledge are less suscep-
tible to being influenced by marketplace pricing offers, an investigation
of those factors likely to lead to the development of such knowledge is war-
ranted. Furthermore, entities attempting to increase consumer persua-
sion knowledge in order to facilitate better purchasing and/or consump-
tion practices could benefit from such research.
Importantly, the Alba and Hutchinson (2000) review of knowledge cal-
ibration supports the contentions of prior researchers (e.g., Brucks, 1985;
Park, Mothersbaugh, & Feick, 1994) that objective and subjective knowl-
edge are two important but distinct knowledge constructs that differen-
tially impact information search and consumer evaluations. Differences
between measures of objective and subjective knowledge occur when peo-

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Psychology & Marketing DOI: 10.1002/mar
ple do not accurately perceive how much or how little they actually know
(Brucks, 1985, p. 2). Although distinct conceptually, objective and sub-
jective knowledge have been often found to be empirically related, but cer-
tainly not always and rarely at levels approaching perfect congruence.
For example, prior research examining the relationship between objec-
tive and subjective knowledge has typically found it to be positive, but
sometimes it is not. In the latter cases, consumers are arguably more
susceptible to harm, as what they think they know does not correspond
with what they know. Because no research has studied objective and
subjective persuasion knowledge in any domain, an assessment of objec-
tive and subjective pricing tactic persuasion knowledge seems necessary
in terms of (a) completeness for examining knowledge in this domain, (b)
assessing if consumers are at risk in terms of what they think they know
potentially not being aligned with what they know regarding pricing tac-
tics, and (c) providing potential additional insights regarding the objec-
tive–subjective knowledge relationship in general, which remains not
well understood.
As such, the objective of the current research is to test a set of hypoth-
esized factors that influence two important knowledge constructs regard-
ing the persuasive aspects of marketer pricing tactics (cf. Park et al.,
1994; Radecki & Jaccard, 1995). The first of these constructs is objective
knowledge or accurate information stored in long-term memory. The sec-
ond construct is subjective knowledge or self-assessed perceptions regard-
ing what consumers think they know. Formally, objective (subjective) pric-
ing tactic persuasion knowledge is defined as accurate knowledge of
(what consumers think they know regarding) the persuasive aspects of
pricing tactics used by sellers to generate favorable price perceptions
regarding their brands, stores, and offerings (cf. Alba & Hutchinson,
2000; Park et al., 1994).
To address this objective, the present article describes the results of
two studies that investigated both objective and subjective pricing tac-
tic knowledge. In Study 1, a model is tested that extends prior research
by investigating both objective and subjective knowledge as two con-
cepts related to the persuasion knowledge domain of marketer pricing
tactics. Briefly, the model depicts a series of hypothesized determinants
of both objective and subjective knowledge, as well as prior experience
as a moderator of the objective–subjective knowledge relationship. By
assessing pertinent consumer characteristics and marketplace experi-
ence, as well as social influence, in terms of their relationships with the
amount of objective pricing tactic knowledge and/or subjective pricing
tactic knowledge other consumers possess, the current research inves-
tigates a fairly broad spectrum of factors of both theoretical and man-
agerial importance. In Study 2, the robustness of the relationship
between objective pricing tactic knowledge and subjective pricing tac-
tic knowledge, as well as the moderating influence of experience on that
relationship, are assessed.

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Psychology & Marketing DOI: 10.1002/mar
MODEL AND HYPOTHESES

The model that was used to guide the empirical work and that summa-
rizes the hypotheses is presented in Figure 1. The model depicts the rela-
tionship between objective and subjective pricing tactic persuasion knowl-
edge, as well as the influence of experience, age, need for cognition, and
perceived pricing tactic knowledge of a best friend on one or both of the
knowledge constructs. These antecedents were identified after a review
of the pricing, knowledge, and persuasion knowledge literatures sug-
gested they would be likely influences on pricing tactic persuasion knowl-
edge (objective and/or subjective). The rationale for each variable’s inclu-
sion is provided in more detail below.

Influences on Objective Pricing Tactic Persuasion Knowledge

Consistent with the argument that experience can result in the acqui-
sition of knowledge (e.g., Wood & Lynch, 2002), consumer experience
with pricing tactics is expected to be positively related to objective pric-
ing tactic persuasion knowledge. Experience with pricing tactics is defined
as experience gained from encountering pricing tactics (e.g., seeing a
pennies-a-day offer in a television advertisement) and purchases involv-
ing pricing tactics (e.g., buying a product from an Internet retailer and

Figure 1. Hypothesized influences on objective and subjective pricing tactic

persuasion knowledge.

120 CARLSON, BEARDEN, AND HARDESTY

Psychology & Marketing DOI: 10.1002/mar
having to pay a partitioned price) (definition adapted from Park et al.,
1994, p. 73). These experiences are expected to give consumers opportu-
nities to develop accurate knowledge regarding pricing tactics. That is,
consumers are more likely to accurately learn about the persuasive intent
behind pricing tactics upon greater exposure to them in the marketplace.
Prior researchers, such as Park et al. (1994), have found a positive rela-
tionship between experience and objective knowledge. Based on the above
rationale, the following prediction is made:

H1: Experience with pricing-related selling tactics is positively related

to objective pricing tactic persuasion knowledge.

Age is also expected to be positively related with objective pricing tactic

persuasion knowledge. As persuasion knowledge is thought to develop
over time, older consumers should have greater objective knowledge than
younger consumers (Friestad & Wright, 1994; Wright, Friestad, & Boush,
2005). However, recent research suggests that the age range of the respon-
dent population could impact predictions regarding age effects. For exam-
ple, recent evidence suggests the possibility of a curvilinear (i.e., inverted
U) relationship between age and the use of persuasion knowledge (Kir-
mani & Campbell, 2004). Specifically, in a study investigating consumer
usage of response strategies consistent with persuasion knowledge when
agents attempted to persuade them, consumers between the ages of 30
and 60 used a greater number of response strategies than consumers
under the age of 30, as well as consumers over the age of 60 (Kirmani &
Campbell, 2004, p. 579).
For the age range of undergraduate student respondents studied in the
current research, though, the prior research of Kirmani and Campbell
(2004) described above suggests that a positive relationship should be
observed. Thus, the following prediction is made:

H2: Age is positively related to objective pricing tactic persuasion

knowledge.

Need for cognition (NFC; Cacioppo & Petty, 1982), or the propensity to
engage in thought, is also expected to be an antecedent of objective pric-
ing tactic persuasion knowledge. This expectation is based on the intu-
itive notion that increased thinking should lead to increased knowledge.
More specifically to the domain of pricing tactics, increased elaboration
regarding the pricing tactic information made by high-NFC individuals
vis-à-vis low-NFC individuals should result in greater knowledge of the
persuasive intent behind pricing tactics. This expectation is consistent
with the Inman, McAlister, and Hoyer (1990) findings that high-NFC
individuals were only positively influenced by in-store promotions with
accompanying price cuts, whereas low-NFC individuals were positively
influenced by in-store promotions, regardless of the presence or absence
of price cuts. These results suggest that high-NFC individuals more care-
INFLUENCES ON WHAT CONSUMERS KNOW 121
Psychology & Marketing DOI: 10.1002/mar
fully processed the information within in-store promotion claims than the
low-NFC individuals. Thus, the following is posited:

H3: Need for cognition is positively related to objective pricing tactic

persuasion knowledge.

Influences on Subjective Pricing Tactic Persuasion Knowledge

Experience is predicted to directly affect subjective knowledge. Con-
sumers who have considerable experience with pricing tactics are
expected to perceive themselves to be knowledgeable regarding the
persuasive aspects of such tactics, regardless of their actual knowl-
edge. Indeed, Park et al. (1994) found a strong relationship between
experience and consumer subjective product knowledge and provided
evidence that the ease of accessibility of experiences in consumers’
memories causes this influence. Overall, then, prior research findings
suggest that prior experience is positively related to subjective knowl-
edge (Park et al., 1994; Raju, Lonial, & Mangold, 1995). As such, the fol-
lowing is predicted:

H4: Experience with pricing tactics is positively related to subjective

pricing tactic persuasion knowledge.

Social comparison theory acknowledges that others provide an impor-

tant source of information about one’s own abilities and opinions (Fes-
tinger, 1954). Recent evidence suggests that such comparisons are made
automatically (Gilbert, Giesler, & Morris, 1995) and that comparison
standards (i.e., the person or persons one compares himself/herself with)
may be routinely utilized when evaluating the self (Mussweiler & Ruter,
2003). An important routine comparison standard for college students are
“best friends” (Mussweiler & Ruter, 2003, p. 469), as they are particu-
larly salient at this point in life.
Mussweiler and Ruter (2003) found that respondents assimilated (pro-
vided similar) evaluations for both themselves and their routine com-
parison standard(s) when making self-evaluations. As such, it is argued
here that individuals within a college student sample view themselves
as similar to members of their social network, resulting in high subjec-
tive self-perceptions when close friends are perceived to be knowledge-
able, and low subjective knowledge self-perceptions if friends are believed
to possess limited knowledge. The results of Radecki and Jaccard (1995)
in two different domains (i.e., nutrition r ⫽ 0.49 and birth control r ⫽ 0.65)
with an undergraduate student sample also provide support for the pre-
diction that a positive relationship exists between self-evaluations of
knowledge and beliefs about what significant others know. Thus, it is
hypothesized that:

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Psychology & Marketing DOI: 10.1002/mar
 H5: Perceived knowledge regarding pricing tactics for one’s best friend is
positively related to subjective pricing tactic persuasion knowledge.

The Relationship Between Objective and Subjective Pricing

Tactic Knowledge
Intuitively, beliefs about what one thinks he or she knows should be a func-
tion of what the individual actually knows, but as suggested by Alba and
Hutchinson (2000), prior research provides mixed support for this relation-
ship. Some studies have found a positive correlation between objective and
subjective knowledge. For example, Brucks (1985) found a correlation of 0.54
between objective and subjective knowledge for sewing machines using a
sample of adult females. In contrast, other research has found more modest
or even nonsignificant relationships between measures of objective and sub-
jective knowledge. For example, Ellen (1994) found a nonsignificant corre-
lation of 0.08 for objective and subjective knowledge regarding environ-
mentally friendly disposition methods based upon a nonstudent sample.
These somewhat varying results prompted a detailed review of this lit-
erature. The results of this review suggest that most of the obtained cor-
relations between objective knowledge and subjective knowledge have
been positive. To begin, several studies that have reported correlations
between objective knowledge and subjective knowledge are summarized
in Table 1. Most of these studies were identified through a search of the
marketing and consumer research outlets (e.g., Psychology & Market-

Table 1. Studies Reporting Correlations between Objective and Subjective

Knowledge.

Study Correlation(s) Reported Issue(s) Studied

Brucks, 1985 0.54 Sewing machines

Cole, Gaeth, & Singh, 1986 0.47, 0.56 Board games
Cordell, 1997 0.31 Cameras
Ellen, 1994 0.08 Disposition methods
Kanwar, Grund, & Olson, 1990 0.43, 0.25 Nutrition
Mitchell & Dacin, 1996 0.68 Motorcycles
Moorman et al., 2004 –0.15, 0.05, –0.16 Nutrition
Park & Moon, 2003 0.60, 0.26 Computers, blue jeans
Park et al., 1994 0.64, 0.65, 0.61 CD players
Philippe & Ngobo, 1999 0.46 Wine
Phillips, 1993 0.35, 0.49 AIDS transmission
Radecki & Jaccard, 1995 0.45, 0.05 Birth control, nutrition
Raju et al., 1995 0.59 VCRs
Selnes & Gronhaug, 1986 0.38 Personal computers
Spreng & Olshavsky, 1990 0.56, 0.66, 0.37, 0.32, 0.54, Cameras
0.27, 0.04, 0.24, 0.26, 0.49,
0.48, 0.42, 0.65, 0.55, 0.70,
0.47, 0.39, 0.43, 0.56

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Psychology & Marketing DOI: 10.1002/mar
ing, Journal of Consumer Research), as well as keyword searches in the
ABI Inform database. Additional studies were identified by searching
the references of initially identified articles. Of note, the studies in the
identified set of articles exclude papers that assessed objective knowledge
and subjective knowledge but did not report correlations between the
two types of knowledge. An analysis of the 42 correlations reported
between objective knowledge and subjective knowledge revealed an aver-
age correlation of 0.40, with a range of –0.15 to 0.68. After adjusting for
differences in the sample size associated with each reported correlation,
the average correlation was slightly higher at 0.41 (Hunter & Schmidt,
1990, p. 100). Thus, it is expected that:

H6: Objective and subjective pricing tactic persuasion knowledge are

positively correlated.

Experience with pricing tactics is also expected to weaken the effect

hypothesized in H6. Specifically, it is argued that the relationship between
objective and subjective pricing tactic persuasion knowledge may be atten-
uated by experience. Thus, although increased experience is expected to
result in increased objective knowledge (cf. H1) and increased subjective
knowledge (cf. H4), experience is also predicted to cause the relationship
between the two knowledge constructs to become more dissociated.
The rationale for this counterintuitive proposition is as follows: Park
et al. (1994) argued that experiential information is more accessible than
other stored knowledge information when consumers make assessments
of their own knowledge. Thus, consumers with low experience (in terms
of encountering different pricing tactics or purchasing items offered via
pricing tactics) cannot easily retrieve experiential information regarding
pricing tactics, and are likely to perceive themselves as being relatively
unknowledgeable. Moreover, and as predicted in H1, such individuals
have fewer opportunities to develop pricing tactic knowledge and are
thus more likely to lack accurate knowledge regarding such tactics. Thus,
consumers with low experience will likely possess low objective knowl-
edge and perceive themselves as having low knowledge. As a result, con-
sumers with low experience are likely to have subjective knowledge that
corresponds with their objective knowledge.
More experienced consumers may tend to perceive themselves as being
knowledgeable about the persuasive aspects of pricing tactics, due to the
ease of retrieving such experiences from memory. However, there are
two reasons why these perceptions are less likely to correspond with
actual knowledge when experience is high. First, the pricing tactic per-
suasion knowledge consumers do hold is likely the result of incidental
learning. For example, consumers are probably much more likely to be
shopping for either functional or hedonic reasons, and not in efforts to
understand why marketers use particular pricing tactics. As a result,
many consumers gain experience without elaborating on why price infor-

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mation has been framed in varying formats. Mitchell and Dacin (1996)
note that individuals must actively interpret their experiences in order
to gain “correct” knowledge. Unfortunately, highly experienced consumers
may be more susceptible to beliefs that they have learned much about
such tactics when they may actually have not, confusing familiarity with
actual knowledge (Hoch, 2002).
Second, sellers seldom, if ever, explain to consumers the persuasive
intent behind their pricing offers and claims before, during, or after con-
sumer exposure to them. Thus, consumers are unlikely to receive feed-
back regarding the accuracy of their pricing tactic persuasion knowl-
edge during their marketplace experiences. Hoch (2002) more generally
argues that most experiences consumers have are ambiguous, giving no
clear feedback. Without this feedback, consumers’ self-perceived knowl-
edge may be unrelated to their objective knowledge (Kanwar et al., 1990).
Together, the incidental learning nature of consumer pricing tactic knowl-
edge development and the lack of feedback consumers receive regard-
ing the accuracy of their knowledge is expected to result in more expe-
rienced consumers having objective knowledge that is less likely to
correspond with their subjective knowledge.
Therefore, experience should interact with objective knowledge such
that:

H7: The relationship between objective and subjective pricing tactic

persuasion knowledge is weaker when experience is high than
when experience is low.

OVERVIEW OF STUDIES

Two studies were conducted to evaluate the relationships hypothesized

and depicted in Figure 1. In Study 1, all seven hypotheses were tested.
In Study 2, the relationship between objective and subjective pricing tac-
tic persuasion knowledge (H6), as well as the moderating effect of expe-
rience (H7), were reinvestigated to assess the robustness of these rela-
tionships.

STUDY 1

Research Method
Sample. Data were collected in two phases from a sample of 191 under-
graduate students in a classroom setting; the students received extra
course credit for their participation. This number excludes approximately
27 participants who only completed the first phase survey and were
dropped from the study. Females comprised 55% of the sample; the aver-
age age was 21. In Phase 1, measures of subjective pricing tactic per-
suasion knowledge, objective pricing tactic persuasion knowledge, and

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Psychology & Marketing DOI: 10.1002/mar
experience with pricing tactics were gathered. In Phase 2, collected 1
week later, measures of age, perceived pricing tactic knowledge of best
friend, need for cognition, and gender were obtained.

Phase 1 Measures. Objective pricing tactic persuasion knowledge was

operationalized as the number of correct responses from the 17-item
pricing tactic persuasion knowledge measure, developed by Hardesty et
al. (2006), as shown in the Appendix. The items assessed knowledge of
frequently used tactics, such as partitioned pricing (Morwitz et al., 1998)
and pennies-a-day offers (Gourville, 1998). All of the tactics were per-
suasive in nature. For example, people who buy high-priced items offered
at a skimming price could be, in part, buying prestige, in that other con-
sumers cannot afford to obtain such items. Thus, a price skimming tac-
tic persuades some consumers to buy, for such reasons as signaling to oth-
ers that they are “big spenders” when buying high-priced items
(Lichtenstein, Ridgway, & Netemeyer, 1993).
In the development of this measure, Hardesty et al. (2006) began by
specifying the domain of pricing tactic persuasion knowledge and then
created an initial pool of items based on the pricing literature and open-
ended responses from a large sample of consumers. Correct statements for
each of the items were obtained from the extant pricing literature specif-
ically discussing these tactics (e.g., Monroe, 2003). Following the deletion
of some items that failed to enhance the quality of the scale, evidence was
provided regarding the test–retest reliability, convergent validity, and
known group validity of the 17-item knowledge index. For example, in a
study of 71 adult consumers, following two administrations separated by
1 month, a test–retest correlation of 0.72 provided evidence of reliability
(Hardesty et al., 2006). As the items comprising this measure were form-
ative in nature, test–retest reliability assessments are appropriate for
evaluating reliability (MacKenzie, 2003, pp. 324, 326).
With the use of the data in the present research, and following the Dia-
mantopoulos and Winklhofer (2001) recommendations for assessing the
quality of formative measures, a dummy-variable multiple-regression analy-
sis, using the latent-variable objective knowledge as the dependent variable
and each item as independent variables, suggested no multicollinearity
among the items (maximum VIF ⫽ 1.43, less than the recommended cut-
off of 10—Neter, Kutner, Nachtsheim, & Wasserman, 1996, p. 387). Thus,
there does not appear to be any significant redundancy among the 17 form-
ative items (Diamantopoulos & Winklhofer, 2001, p. 272). Reliability was also
assessed using the proportional reduction in loss (PRL) measure developed
by Rust and Cooil (1994). Values of PRL range from 0.00 to 1.00, with higher
values representing greater reliability. The PRL estimate of reliability for
objective pricing tactic persuasion knowledge was 0.87, further supporting
the reliability of the objective measure used in the current research.
Experience with pricing tactics was measured via 34 items, 2 items for
each of the 17 pricing tactics in the objective measure. Specifically, for each

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pricing tactic, respondents were asked to indicate their experience in
encountering the pricing tactic in the marketplace: 1 ⫽ never, 7 ⫽ many
times, as well as their purchase experience with the pricing tactic 1 ⫽
never, 7 ⫽ many times. Encountering experience was expected to cap-
ture consumers’ experience with the tactics as a result of casual exposure
in the marketplace and/or incidentally while searching for product/serv-
ice information (Park et al., 1994). In addition, consumers’ experiences
with such tactics were expected to be enhanced via consumers’ purchase
experiences (e.g., Moorthy, Ratchford, & Talukdar, 1997). As the experi-
ence measure was also comprised of a series of formative indicators, a
dummy-variable multiple-regression analysis was again performed to
assess the potential of redundancy among the indicators (Diamantopoulos
& Winklhofer, 2001, p. 272). With the latent variable experience used as
the dependent variable and the items as independent variables, the
regression results revealed that VIFs for all items were less than 4.78,
less than the cutoff of 10 (Neter et al., 1996, p. 387). Thus, there does not
appear to be any redundancy among the experience items (Diaman-
topoulos & Winklhofer, 2001, p. 272). Also of note, the mean response to
the experience questions was 4.75, which is somewhat closer to the many
times scale endpoint than the never endpoint.
The responses to a series of five items were averaged for the measure
of subjective pricing tactic persuasion knowledge (see the Appendix). These
subjective knowledge items contained a mix of response format options
(e.g., one of the least–most knowledgeable, strongly disagree–strongly agree).
The statements were similar in wording to the global items employed ear-
lier by Brucks (1985) and were operationalized employing a nine-place
response format. The coefficient-alpha estimate of internal consistency
reliability for the subjective knowledge measure was 0.84.

Phase 2 Measures. Age was assessed via a simple open-ended ques-

tion. Ages ranged from 19 to 42; however, 96% of the study participants
were between the ages of 19 and 24. Best friend’s perceived knowledge
was operationalized as the average of two nine-point strongly dis-
agree–strongly agree items reflecting judgments regarding each respon-
dent’s perceptions of their “closest friend’s knowledge” of marketer pric-
ing tactics (cf. Radecki & Jaccard, 1995, p. 119). The direction of the two
items was varied to inhibit response bias; after reverse-scoring one of
the items, the simple correlation between the two was 0.80 (p ⬍ .01).
Need for cognition was measured via the average of the five items
employed by Wood and Swait (2002). The coefficient alpha estimate for
the measure of need for cognition was 0.85.

Results
Tests of H1–H6. The simple correlations among the six variables inves-
tigated in Study 1 are presented in Table 2. Each of the predicted corre-

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Psychology & Marketing DOI: 10.1002/mar
Table 2. Correlations in Study 1.

Variable 1 2 3 4 5 6

1. Objective knowledge 1.000

(OK)
2. Experience 0.361a 1.000
(EXP)
3. Age 0.178b –0.019 1.000
(AGE)
4. Need for cognition 0.204a 0.137 0.024 1.000
(NFC)
5. Perceived knowledge
of best friend (KBF) 0.059 0.092 0.081 0.076 1.000
6. Subjective knowledge
(SK) 0.317a 0.314a -0.040 0.153b 0.186a 1.000
Notes: a Significant at p ⬍ .01. b Significant at p ⬍ .05.

lations among the variables was significant (all ps ⬍ .05) and positive as
hypothesized. Importantly, the coefficients were derived from measures
employing varying operational procedures and, in most instances (i.e., H1,
H2, H3, H5), separated across two survey administrations. As such, the
potential for common methods variance as an explanation for the corre-
lation results is lessened (Podsakoff, MacKenzie, Lee, & Podsakoff, 2003,
pp. 887–888).
The hypothesized model was tested using path analysis. The path coef-
ficients and fit statistics were based upon analysis of the variance/covari-
ance matrix. The path coefficients from fitting the hypothesized model
are depicted in Figure 2. The overall chi-square fit statistic was 10.48 (7
df, p ⫽ .16). The GFI and AGFI fit statistics were 0.98 and 0.95. The
comparative fit index and the root-mean-square error of approximation
(RMSEA) were 0.95 and 0.05, respectively. These estimates suggest that
the model provides a reasonable approximation to the data.
As shown in Figure 2, the path coefficients (with some attenuation in
significance for the direct paths involving H3, H4, and H6) mirror the sim-
ple correlation results and provide support for the hypothesized influences
on objective and subjective knowledge. Briefly, and in support of H1, the
path coefficient between experience and objective pricing tactic persua-
sion knowledge was 0.35 (p ⬍ .01). Age (␥ ⫽ 0.19, p ⬍ .01) and need for
cognition (␥ ⫽ 0.15, p ⬍ .05) were also positively related to objective
knowledge, as predicted in H2 and H3. The direct effect of experience on
subjective pricing tactic persuasion knowledge (␥ ⫽ 0.21, p ⬍ .01) offers
support for H4. The hypothesized effect of perceived knowledge regard-
ing pricing tactics of significant others on subjective knowledge was 0.16
(p ⬍ .01), which provides support for the prediction embodied in H5.
Lastly, objective pricing tactic persuasion knowledge was positively cor-
related to subjective pricing tactic persuasion knowledge (␤ ⫽ 0.24, p ⬍
.01), as predicted in H6.

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 Notes: Goodness-of-fit statistics: ␹2 ⫽ 10.48 (7 df), p ⫽ 0.16; GFI ⫽ 0.98; AGFI ⫽ 0.95; RMSEA ⫽ 0.05; CFI
⫽ 0.95. aPath coefficient significant at p ⬍ .01. bPath coefficient significant at p ⬍ .05.

Figure 2. Path analysis results: Study 1.

Tests of H7. In order to assess the predicted moderating effect of expe-

rience on the objective–subjective knowledge relationship, a test for sig-
nificant differences between independent correlations was conducted
(Bruning & Kintz, 1977, pp. 214–215). To investigate the potential influ-
ence of experience on the relationship between objective and subjective
knowledge, a median split of the sample was performed with the use of
the experience measure, and then correlations were estimated between
objective and subjective knowledge for low- and high-experience respon-
dents. First, a significant correlation between objective knowledge and
subjective knowledge was obtained for low-experience individuals (r ⫽
0.36, p ⬍ .01), as predicted. In contrast, a nonsignificant correlation
between objective and subjective knowledge was found for high-experi-
ence individuals (r ⫽ 0.01, p ⫽ .91). Following the Bruning and Kintz
(1977) procedure, a z test revealed a significant difference between these
two independent correlations (z ⫽ 2.44, p ⬍ .01). Thus, and as predicted
in H7, high experience with pricing tactics resulted in less association
between objective and subjective knowledge. More specifically, the cor-
relation between objective and subjective measures was nearly zero when
experience was high, whereas it was positive and significant when expe-
rience was low.

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Psychology & Marketing DOI: 10.1002/mar
 The results of a 2 ⫻ 2 analysis-of-variance test, plotted in Figure 3, pro-
vide further insights into the moderating effect of experience on the
objective knowledge–subjective knowledge relationship for pricing-related
selling tactics. First, in this ANOVA, median-split variables for experi-
ence and objective knowledge, as well as their interaction, were all related
to subjective knowledge—experience (p ⬍ .01), objective knowledge (p
⬍ .05), and interaction (p ⫽ .07). As can be seen in the upward sloping
line in Figure 3, when experience was low, subjective knowledge was sig-
nificantly higher for high objective knowledge individuals (M ⫽ 6.10)
than for low objective knowledge individuals (M ⫽ 5.22; t93 ⫽ 2.92, p ⬍
.01). In contrast, the flatter line in Figure 3 suggests that subjective
knowledge did not differ between high objective knowledge individuals
(M ⫽ 6.55) and low objective knowledge individuals (M ⫽ 6.44; t94 ⫽ .38,
p ⫽ .70) when experience was high. Interestingly, and as discussed later,
these results, as well as the previously described correlation results, sug-
gest the potential for greater miscalibration among more experienced
consumers (cf. Alba & Hutchinson, 2000).

Additional Results. Lastly, the correlations listed in Table 2 were exam-

ined in order to investigate the significance of any nonhypothesized rela-
tionships among the factors and knowledge structures being studied. As
shown in Table 2, one noteworthy result was obtained for nonhypothe-
sized relationships. Specifically, a positive pairwise correlation was
observed for the need for cognition and subjective knowledge relation-
ship (r ⫽ 0.15, p ⬍ .05). The potential for subjective knowledge perceptions
to increase based on one’s level of need for cognition is interesting; per-
haps, consumers who like to think are more likely to assume that they

Figure 3. Study 1: Interactive effect of experience on the relationship between

objective and subjective knowledge.

130 CARLSON, BEARDEN, AND HARDESTY

Psychology & Marketing DOI: 10.1002/mar
know a lot. As such, another path analysis was executed, which included
a need for cognition–subjective knowledge path. The results of this analy-
sis suggested an adequate fit (chi-square fit statistic ⫽ 9.60 [6 df, p ⫽
.14]; GFI ⫽ 0.98; AGFI ⫽ 0.94; CFI ⫽ 0.95; RMSEA ⫽ 0.06), but resulted
in a nonsignificant path for need for cognition–subjective knowledge (␥ ⫽
0.06, p ⫽ .35). Moreover, the path coefficients for all other paths in this
model remained significant (p ⬍ .05) and nearly identical to those obtained
for the original model.

Summary
Several factors were found to be related to objective and/or subjective
pricing tactic persuasion knowledge. Specifically, consumers having
greater experience with pricing tactics, age, and need for cognition also
possessed higher objective knowledge. Also, experience with pricing tac-
tics, perceptions of best friend’s knowledge regarding pricing tactics, and
objective knowledge were positively related to subjective knowledge.
The correlation between objective knowledge and subjective knowl-
edge in Study 1 (r ⫽ 0.32) was positive but directionally weaker than
the average correlation observed in the prior studies summarized in
Table 2 (r ⫽ 0.40) or the sample-size adjusted correlation from those
studies (r ⫽ 0.41). Thus, it may be that, in the domain of pricing tactics,
the relationship between objective knowledge and subjective knowledge
is weaker than in other knowledge domains. The moderating impact of
experience provides some insights regarding this possibility. When con-
sumers are highly experienced with pricing tactics, their level of sub-
jective knowledge is unrelated to their objective knowledge. In contrast,
when consumers have relatively little experience, their subjective knowl-
edge is positively related with their objective knowledge. This pattern of
results occurred in spite of group mean differences that were as expected.
Specifically, the average knowledge scores for both objective knowledge
and subjective knowledge were significantly higher for the high-experi-
ence groups in Study 1, as would be expected (Mobjective knowledge–high experience
⫽ 11.63 vs. Mobjective knowledge–low experience ⫽ 9.66, t189 ⫽ 5.30, p ⬍ .01; Msub-
jective knowledge–high experience ⫽ 6.52 vs. Msubjective knowledge–low experience ⫽ 5.61, t189
⫽ 4.52, p ⬍ .01).

STUDY 2

In an effort to replicate these interesting experience effects, another

study was conducted to investigate further the relationship between
objective pricing tactic knowledge and subjective pricing tactic knowledge
and the effect of experience on that relationship (see again Figure 1). As
such, this second study enabled the retesting of H6 and H7, and pro-
vided additional evidence regarding the objective knowledge–subjective
knowledge relationship and the interactive effect of experience.
INFLUENCES ON WHAT CONSUMERS KNOW 131
Psychology & Marketing DOI: 10.1002/mar
Research Method
Data were collected from a sample of 79 students. Females comprised
71% of the sample; the average age was 21. Subjective knowledge, objec-
tive knowledge, and experience were measured as described previously
in Study 1. As in Study 1, multicollinearity was not evident among the
objective knowledge items (maximum VIF ⫽ 1.87) or the experience
items (maximum VIF ⫽ 7.97), suggesting no significant problems with
redundancy among each formative item set (Diamantopoulos & Winkl-
hofer, 2001, p. 272). Also, the PRL reliability estimate for objective knowl-
edge in Study 2 was 0.87. The coefficient alpha estimate for subjective
knowledge was 0.81.

Results
In Study 2, the simple correlation between objective and subjective knowl-
edge was statistically significant (r ⫽ 0.25, p ⬍ .05, one-tailed), provid-
ing additional support for H6. To investigate the potential influence of
experience on the relationship between objective knowledge and sub-
jective knowledge, a median split of the sample was again performed
with the use of the experience measure, and then correlations were
obtained between objective and subjective knowledge for the low- and
high-experience subsamples. As in Study 1, a significant positive corre-
lation between objective and subjective knowledge was obtained for low-
experience individuals (r ⫽ 0.34, p ⬍ .05, one-tailed), whereas a non-
significant correlation between objective knowledge and subjective
knowledge was found for high-experience individuals (r ⫽ –0.09, p ⫽
.58). Moreover, these two independent correlations were significantly dif-
ferent from each other (z ⫽ 1.89, p ⬍ .05) (Bruning & Kintz, 1977). Con-
sistent then with the results of Study 1, the correlation between objec-
tive and subjective knowledge was not significant when experience with
pricing tactics was high, whereas it was positive and significant when
experience was low. These results again support H7. As before, this pat-
tern of correlations occurred in spite of group mean differences that were
as expected. Specifically, the average knowledge scores for both objec-
tive knowledge and subjective knowledge were significantly higher for the
high-experience groups in Study 2, as would be expected (Mobjective knowl-
edge–high experience ⫽ 11.59 vs. Mobjective knowledge–low experience ⫽ 10.14, t77 ⫽ 2.64,
p ⬍ .01; Msubjective knowledge–high experience ⫽ 6.94 vs. Msubjective knowledge–low experience
⫽ 6.06, t77 ⫽ 3.61, p ⬍ .01).
The results of contrast analyses again corroborated the effects of expe-
rience on the objective knowledge–subjective knowledge relationship for
pricing-related selling tactics. As can be seen in the upward-sloping line
in Figure 4, when experience was low, subjective knowledge was signif-
icantly higher for high objective knowledge individuals (M ⫽ 6.43) than
for low objective knowledge individuals (M ⫽ 5.87; t40 ⫽ 1.58, p ⫽ .06).
In contrast, subjective knowledge did not differ between high objective

132 CARLSON, BEARDEN, AND HARDESTY

Psychology & Marketing DOI: 10.1002/mar
Figure 4. Study 2: Interactive effect of experience on the relationship between
objective and subjective knowledge.

knowledge individuals (M ⫽ 6.83) and low objective knowledge individ-

uals (M ⫽ 7.09; t35 ⫽ –0.73, p ⫽ .47) when experience was high (see the
flatter line in Figure 4). These results, when coupled with the results of
Study 1, suggest the possibility of greater miscalibration among more
experienced consumers (cf. Alba & Hutchinson, 2000).

GENERAL DISCUSSION

The current research extends the emerging literature on persuasion knowl-

edge (e.g., Friestad & Wright, 1994; Kirmani & Campbell, 2004; Wright et
al., 2005) by investigating consumer persuasion knowledge in the domain
of pricing tactics. Although consumers’ product knowledge has been stud-
ied fairly extensively (e.g., Brucks, 1985; Park et al., 1994), less is known
regarding consumer persuasion knowledge. As argued by Friestad and
Wright (1994), persuasion knowledge is not tantamount to product (i.e., one
form of topic) knowledge. For example, some consumers may be more
knowledgeable regarding marketers’ persuasion behaviors than about
individual products, but the opposite could be true for other consumers.
In the present research, antecedents of accurate, as well as self-per-
ceived, pricing tactic persuasion knowledge, were studied in order to bet-
ter understand what factors are likely to affect each type of knowledge.
In addition, the relationship between both knowledge structures was
examined in the domain of pricing tactics. Importantly, the current effort
was the first to simultaneously investigate both subjective persuasion

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Psychology & Marketing DOI: 10.1002/mar
knowledge and objective persuasion knowledge in any marketing tactic
domain (e.g., pricing, advertising). Interestingly, the correlation between
the two in the present research was found to be directionally lower (rs
⫽ .32 in Study 1 and .25 in Study 2) than observed on average in prior
research (r ⫽ .41), which has largely studied product knowledge. One
possible explanation for this difference is that consumers are much more
likely to learn incidentally (rather than intentionally) about pricing tac-
tics in the marketplace. In contrast, consumers are more likely to inten-
tionally learn about at least some products in order to buy “the right
thing,” and, thus, have developed more “correct” knowledge (cf. Mitchell
& Dacin, 1996). As a result, people who think they are knowledgeable are
indeed much more likely to be knowledgeable for products rather than
regarding pricing tactics. The present research suggests that consumers
are more at risk in acting on what they think they know regarding pric-
ing tactics than in other knowledge domains (on average).
The dangers of experience noted by Hoch (2002) were manifest in the
present inquiry, as experience was beguiling in the domain of pricing tac-
tics. A particularly interesting finding obtained in both studies was that,
when experience was low, a positive relationship between what con-
sumers know (i.e., objective knowledge) and what they think they know
(i.e., subjective knowledge) regarding pricing tactics was observed, but
when experience was high, that positive relationship was not found. As
such, it appears that miscalibration effects may well occur for the most
experienced and knowledgeable in the domain of pricing tactic knowl-
edge. It may be that many consumers are overconfident (i.e., they think
they know more than they actually know) based on the extent of expe-
riences with pricing tactics that consumers have had (Alba & Hutchin-
son, 2000). The potential for overconfidence to influence consumer
response to price information presented by marketers is worthy of future
research attention.
The effect of experience on the objective pricing tactic knowledge–sub-
jective pricing tactic knowledge relationship has important managerial
implications. Although experience is positively related with objective
knowledge, it also appears that situations where consumers have rela-
tively high experience are those where their accurate knowledge and
subjective knowledge may be unrelated. For example, store owners should
not assume in negotiations and other dealings with customers who fre-
quently browse their stores that those customers possess as much pric-
ing tactic knowledge as they think they do. The results for age have sim-
ilar importance, particularly for marketers targeting college-aged
consumers (e.g., college bookstores, fast food restaurants). The results of
the present research, coupled with that of Hardesty et al. (2006), suggest
that older college students will be more knowledgeable regarding pric-
ing tactics than younger college students and will be less susceptible to
the persuasive impact of such tactics. Thus, the use of various pricing
tactics by managers as a way of persuading college students to buy is

134 CARLSON, BEARDEN, AND HARDESTY

Psychology & Marketing DOI: 10.1002/mar
likely to be more successful in regards to younger college students ver-
sus older college students.
Collectively, the results of the current research also suggest that what
consumers know regarding such tactics is related to individual differ-
ences in information processing and experience, whereas what consumers
think they know in this domain is associated with individual differences
in information processing and experience, as well at least one social fac-
tor (perceptions of best friend’s knowledge regarding pricing tactics).
Particularly noteworthy among these effects was the result consistent
with an assimilation interpretation of the effect of perceived knowledge
regarding one’s peers on subjective knowledge (Radecki & Jaccard, 1995).
Specifically, a higher level of what a best friend’s knowledge regarding
pricing tactics was perceived to be was associated with greater self-per-
ceived knowledge. Relatedly, this finding is consistent with recent health-
risk research demonstrating that a person’s own perceived level of risk
regarding certain diseases is similar to that of what he or she thinks his
or her best friend’s level of risk is (e.g., Chandran & Menon, 2004).
For consumer researchers, examining conditions in which comparison
effects might be reversed is worthy of further study. For example, it may
be that feedback regarding one’s objective knowledge (which could be
manipulated to be high or low, leading to either high or low subjective
knowledge perceptions—cf. Moorman et al., 2004) coupled with feedback
regarding a best friend’s knowledge (which could be manipulated to be
low or high) that is clearly at odds with one’s knowledge is necessary to
demonstrate such a reversal. For public policy makers, the results of the
present research (i.e., the assimilation effect) suggest that the effective-
ness of efforts undertaken to educate persons regarding deficiencies
involving pricing tactic knowledge could arguably be enhanced by pre-
senting instances where close friends lack such knowledge.
A limitation of the current studies is that they provided only correla-
tional evidence to support hypothesized relationships among antecedents
and consequences. Future research should also examine the relation-
ships tested here by using other methodological paradigms to provide
further evidence regarding the causal direction for these relationships.
For example, the moderating effect of experience on the objective knowl-
edge–subjective knowledge relationship could be assessed via an exper-
iment in which experience is manipulated rather than measured. In
addition, a longitudinal design could be used to attempt to demonstrate
further how the factors hypothesized here influence objective and/or sub-
jective knowledge regarding pricing tactics. Another limitation is that
undergraduate students comprised both samples, and persuasion knowl-
edge in the domain of pricing tactics may differ across other demographic
segments. Moreover, the potential for a curvilinear relationship between
age and persuasion knowledge seems more likely to be observed when the
age range of the respondents includes individuals over the age of 60 (Kir-
mani & Campbell, 2004).

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Psychology & Marketing DOI: 10.1002/mar
 The review of prior research investigating both objective knowledge and
subjective knowledge provides evidence that it is more likely that the
direct relationship between the two will be positive than not. However,
in light of the results of the current research, future researchers should
consider and assess the effects of experience and/or other potential mod-
erating factors on the objective knowledge–subjective knowledge rela-
tionship when examining that relationship in other domains. To that
end, one direction to take in future research is the conduct of a complete
meta-analysis of research that has measured both objective and subjec-
tive knowledge in order to provide further insights into both substan-
tive and methodological factors that may moderate this relationship. For
example, results described in Park and Moon (2003, p. 986) suggest that
the relationship between objective knowledge and subjective knowledge
may be stronger for utilitarian products (e.g., computers) than hedonic
products (e.g., blue jeans).
Future research should also investigate the moderating effect of expe-
rience on the objective knowledge–subjective knowledge relationship in
other domains, particularly those where learning is likely to be inciden-
tal rather than intentional during such experiences and feedback regard-
ing the accuracy of one’s knowledge is not likely to occur. In such cases,
consumers with more experience may have subjective knowledge that
is not related with their objective knowledge. For example, consumers hav-
ing health problems requiring many visits to physicians may perceive
themselves to be highly knowledgeable regarding the competence of
health care providers, when, in fact, their accurate knowledge regarding
that competence may not be particularly high. As the results obtained
here indicate, the knowledge consumers perceive themselves to have
may be biased by experience, such that the accurate knowledge they pos-
sess is not significantly related to their self-perceived knowledge.
In the present research, objective knowledge was found to be more
strongly related to need for cognition than subjective knowledge. Very
recent research investigating the need for cognition scale provided evi-
dence that it may be multidimensional (Lord & Putrevu, 2006). By rean-
alyzing the 34 items developed in the Cacioppo and Petty (1982) scale,
Lord and Putrevu (2006) identified subdimensions that include enjoyment
of cognitive stimulation, preference for complexity, and confidence in cog-
nitive ability. Recall that in the present research, need for cognition had
been measured with the use of a reduced five-item measure employed by
Wood and Swait (2002). To assess the dimensionality of these five items,
factor analysis with varimax rotation (cf. Lord & Putrevu, 2006) was exe-
cuted, revealing a single factor (Factor 1 eigenvalue ⫽ 3.129; all other
eigenvalues ⬍ .65). This result, coupled with the results obtained by Lord
and Putrevu (2006), suggested that the five need for cognition items
probably tapped an “enjoyment of cognitive stimulation” dimension of
need for cognition. Future researchers investigating the relationship
between need for cognition and both types of knowledge (objective and
subjective) should consider assessing all 34 NFC items in order to assess
136 CARLSON, BEARDEN, AND HARDESTY
Psychology & Marketing DOI: 10.1002/mar
potential NFC subdimension effects on each type of knowledge. It is pos-
sible that NFC items tapping a dimension like “confidence in cognitive
ability” might be more strongly related to subjective knowledge versus
objective knowledge, whereas the results of the present research sug-
gest that a dimension such as “enjoyment of cognitive stimulation” is
more strongly related to objective knowledge than subjective knowledge.
Finally, future research is needed to evaluate other potential
antecedents and consequences of objective and subjective pricing tactic
persuasion knowledge. For example, the relevance of price information
to individuals is likely to positively impact both objective and subjective
pricing tactic persuasion knowledge (cf. Radecki & Jaccard, 1995). Price
mavens, individuals who are a source of price information to others,
should have higher levels of objective pricing tactic persuasion knowledge
(Lichtenstein et al., 1993). In addition, product-specific knowledge may
be an important antecedent of both objective and subjective pricing tac-
tic knowledge, with the latter knowledge being potentially affected by
availability heuristic influences (Lawson & Baghat, 2002). Future
researchers could create an index of knowledge for the products included
in the objective pricing tactic persuasion knowledge items (e.g., fast food,
razor blades) to assess the potential of this relationship.

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Correspondence regarding this article should be sent to: Jay P. Carlson, School
of Management, Union Graduate College of Union University, Schenectady, NY
12308 (carlsonj@union.edu).

INFLUENCES ON WHAT CONSUMERS KNOW 139

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APPENDIX

Objective and Subjective Pricing Tactic Persuasion Knowledge

Objective knowledge (correct answers bolded):

1. Captive pricing—“$3.00 for a nondisposable, easy-grip razor, and

$10.00 for a package of 8 replacement razor blades.” Captive pricing
is used by marketers in order to take advantage of the fact that, even-
tually, consumers will need to purchase the high-priced replacement
components if they want to continue using the product. TRUE FALSE
DON’T KNOW

2. Customer value pricing—“$0.79 for a hamburger on the value menu

at a fast-food restaurant chain.” Customer value pricing is used by
marketers to attract consumers who seek low prices. TRUE FALSE
DON’T KNOW

3. Everyday low pricing—“Always low prices at store XYZ.” Everyday low

pricing is used by marketers so that they will be perceived as having
really low prices on some items and higher prices on others. TRUE
FALSE DON’T KNOW

4. Image pricing—“$100.00 for a brand of wine (Brand X). The same

wine is currently sold for $20.00 a bottle under the name Brand Z.”
Image pricing is used by marketers in order to have a higher-priced
version of a product available for consumers who view higher-priced
goods as having higher quality, and a lower-priced version of the same
product available for consumers who strongly desire lower prices.
TRUE FALSE DON’T KNOW

5. Invoice external reference prices—“New automobile—only $500 over

invoice.” Invoice external reference prices are used by marketers to
persuade consumers to seek out complete price information for a
product. TRUE FALSE DON’T KNOW

6. Loss-leader pricing—“Box of a dozen Grade A eggs for $0.80.” Loss-

leader pricing is used by marketers to get consumers to purchase not
only the low-priced item, but also other regularly priced items within
the store. TRUE FALSE DON’T KNOW

7. MSRPs (manufacturer’s suggested retail prices)—“A new 19-in. color

television (with remote control): MSRP $300, sale price $200.” MSRPs
are used by marketers in efforts to cause consumers to perceive that
the sale price looks attractive. TRUE FALSE DON’T KNOW

140 CARLSON, BEARDEN, AND HARDESTY

Psychology & Marketing DOI: 10.1002/mar
 8. No-haggle pricing—“All automobiles for sale at the lowest price pos-
sible—no haggling!!” No-haggle pricing is used by marketers in order
to convince buyers that negotiations will be fair. TRUE FALSE DON’T
KNOW

9. No-interest pricing offers—“Buy a dining room set today and pay no

interest for 12 months.” No-interest pricing offers are used by mar-
keters to persuade consumers that the price has been reduced. TRUE
FALSE DON’T KNOW

10. Partitioned pricing—“$30.00 for a button-up, 100% cotton long-sleeve

shirt, plus $5.00 shipping and handling.” Partitioned pricing is used
by marketers to persuade consumers that the marketer is offering an
attractive shipping and handling rate. TRUE FALSE DON’T KNOW

11. Penetration pricing—“A four-pack of a new brand of batteries—$2.00.”

In penetration pricing marketers set prices low so that consumers
will be encouraged to try the product. TRUE FALSE DON’T KNOW

12. Pennies a day—“Just $1.00 per issue for a 1-year subscription to

sports magazine XYZ.” Pennies a day is used by marketers to provide
price information in the most understandable format to consumers.
TRUE FALSE DON’T KNOW

13. Price bundling—“Computer having a 1.1 GHz processor and 128 MB

memory and laserjet printer for $1,100.” Price bundling is used by
marketers in order to increase revenue over what would have been
obtained had the products been priced separately. TRUE FALSE
DON’T KNOW

14. Price signaling—“A new pair of running shoes—$140.00.” Price sig-

naling is used by marketers because consumers may make quality
judgments for products or services based on price (i.e., high price ⫽
high quality, low price ⫽ low quality). TRUE FALSE DON’T KNOW

15. Price skimming—“Brand new product—videophone $500.” Price skim-

ming is used by marketers to appeal to consumers who are willing to
pay a high price for a new product. TRUE FALSE DON’T KNOW

16. Random discounting—“A brand of orange juice’s (64 oz. or 1/2 gal-
lon) price over a 4-week time period was as follows: Week 1, $2.50;
Week 2, $2.50; Week 3, $1.50; Week 4, $2.50.” Random discounting
is used to obtain sales from both consumers who carefully search
for low prices and consumers who do not check prices carefully.
TRUE FALSE DON’T KNOW

INFLUENCES ON WHAT CONSUMERS KNOW 141

Psychology & Marketing DOI: 10.1002/mar
 17. Tensile price claims—“Products X, Y, and Z: Up to 50% off.” Tensile
price claims are used by marketers in order to take advantage of
consumers who may inadvertently perceive most or all products to
be discounted by the stated amount (i.e., 50% off). TRUE FALSE
DON’T KNOW

Subjective knowledge
1. Please rate your knowledge of marketers’ pricing tactics as compared
to most of the people you know.

One of the least One of the most

knowledgeable 1 2 3 4 5 6 7 8 9 knowledgeable

2. In general, I am quite knowledgeable about marketers’ pricing

tactics.

Strongly Strongly
disagree 1 2 3 4 5 6 7 8 9 agree

3. I don’t really know much about marketers’ pricing tactics.

Strongly Strongly
disagree 1 2 3 4 5 6 7 8 9 agree

4. I am knowledgeable of the different pricing tactics that marketers can

use to make a product offer look attractive.

Strongly Strongly
disagree 1 2 3 4 5 6 7 8 9 agree

5. I have little knowledge regarding the pricing tactics that marketers use.

Strongly Strongly
disagree 1 2 3 4 5 6 7 8 9 agree

142 CARLSON, BEARDEN, AND HARDESTY

Psychology & Marketing DOI: 10.1002/mar