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Title: Low-price guarantees as advertisement strategy and compensation policy: The more, the better?
Authors: Haesevoets, Tessa
Van Hiel, Alain
Onraet, Emma
Joosten, Anne
De Cremer, David 
Keywords: Fairness
General attitudes
Low-price guarantees
Refund depth
Issue Date: Sep-2017
Publisher: Wiley
Citation: Haesevoets, Tessa, Van Hiel, Alain, Onraet, Emma, Joosten, Anne, De Cremer, David (2017-09). Low-price guarantees as advertisement strategy and compensation policy: The more, the better?. Journal of Consumer Behaviour 16 (5) : 389-402. ScholarBank@NUS Repository.
Abstract: Companies sometimes employ a “lowest price or more than the difference back” policy (i.e., a price-beating guarantee). We investigated whether such a policy is more effective to attract and retain customers than when the exact price difference is promised (i.e., a price-matching guarantee). The first study revealed that about 60% of the marketers and shop owners in our sample thought that beating price differences is a more effective strategy than matching price differences. However, the four subsequent studies challenged this assumption. Specifically, the advertisement as well as the provision of price-beating refunds did not have an incremental positive effect on customers' general attitudes in terms of trust, brand perception, loyalty, and shopping intentions beyond the level that was already reached by price-matching refunds. Moreover, our mediation analyses revealed that the null effect of price-matching versus price-beating was mediated by fairness perceptions. From a theoretical perspective, these results are in line with a fairness account, which holds that people do not only evaluate the economic value of an outcome, but also take equality considerations into account. Because price-beating is literally more expensive than price-matching, from a practical point of view, companies should be informed that the employment of a price-beating guarantee is a cost-ineffective advertisement strategy and compensation policy. Copyright © 2017 John Wiley & Sons, Ltd.
Source Title: Journal of Consumer Behaviour
ISSN: 14720817
DOI: 10.1002/cb.1639
Appears in Collections:Staff Publications

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