When and whom should retailers offer price reductions in times of crisis?

Abstract

Purpose With a decrease in consumer spending during the coronavirus disease 2019 (COVID-19) pandemic, many retailers are offering price reductions to stimulate demand. However, little is known about how consumers perceive such price reductions executed during turbulent times. The authors examine whether the timing of price reductions and individual differences impact consumers' evaluations of the retailers offering such reductions. Design/methodology/approach Using a longitudinal design, the authors inquire into four retailers' motives that consumers may infer from a price decrease at two different times during the COVID-19 crisis. Findings The authors find that the timing of price reductions plays a key role in shaping consumers' inference of retailers' motives. The authors also uncover individual characteristics that affect consumers' inferences. Originality/value This research advances the literature by demonstrating the critical role of timing and individual characteristics in consumers' perceptions of price reductions during times of crisis. The authors findings also provide retailers with actionable insights for their pricing strategies. The findings may be generalizable to other types of crises that may arise in the future.

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