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ABSTRACT Research on the dual role of price has focused on the observation that price can simultaneously increase both consumer perceptions of quality and perceived sacrifice and not on whether these perceptions mediate the effects of price on consumer behavior. Further, no research has fully disentangled the role benefits play (i.e., increasing purchase intent) from the role costs play (i.e., decreasing purchase intent) for mediating price effects on consumer purchase intentions. To address these limitations, and based on our conceptual framework, we develop a measurement approach that we refer to as the Cost–Benefit Decomposition (CBD) Model that allows for moderated mediation tests of the dual role of price. We then employ the CBD model to test hypotheses that predict when product and consumer traits moderate cost and benefit indirect effects. In two experiments, we find moderation of the price effect on purchase likelihood was entirely the result of attenuating the benefit indirect effect. Finally, to illuminate the implications, we develop a CBD typology, which identifies six unique patterns of CBD model effects based on the relative effect sizes of the cost and benefit indirect effects. Primarily, the CBD model makes a methodological contribution, providing a tool to decompose the simultaneous indirect effects of price on purchase intentions and a theoretical framework through which to interpret them. Additionally, the model and resultant CBD typology are useful to managers who can adjust their marketing tactics based upon insights into the mechanisms driving purchase intentions for specific offerings stemming from using these tools.
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