Believability and consumer perceptions of implausible reference prices in retail advertisements

Abstract

Based on results from three studies, this research addresses questions relating to the role of perceived believability of a reference price set at an implausible level. Compared to effects of more plausible levels of reference prices, an implausible reference price is shown to be capable of positively influencing both perceptions of a fair price and the highest price that would be paid for an advertised product, as well as more evaluative dependent variables such as perceived value of the advertised offer and purchase willingness estimates. The perceived believability of the price offer is associated with a stronger impact on evaluative dependent variables than price-related estimates. Results indicate the importance of scrutiny of retailers' use of advertised reference prices by public policy advocates, and suggest implications for theoretical bases used to address reference pricing issues. © 1996 John Wiley & Sons, Inc.

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