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Store price promotion strategies: an empirical study from Chile

Store price promotion strategies: an empirical study from Chile PurposeThe purpose of this paper is to examine two popular price promotion strategies – price matching guarantees (PMGs) and everyday low prices (EDLP) – and their effects on Chilean consumer behavior in terms of consumer perceptions of low prices, search behavior and purchase intention.Design/methodology/approachA quasi experiment with three scenarios was conducted to test price promotion effects. Subjects were instructed to respond a questionnaire that included the dependent variables.FindingsResults show that EDLP and PMG strategies increase perceptions of low prices and affect purchase intentions. These effects are significantly higher for stores offering EDLP than PMG. However, when consumers are exposed to two or more price promotion strategies (rather than one) they reduce their purchase intentions for a specific store and increase their search intentions.Research limitations/implicationsThis is an initial study exploring the effects of price promotion strategies on consumers. Future research could test the hypotheses advanced in the study across different samples and contexts (supermarkets, department stores, convenience stores, and other retailers) and might privilege external validity, using experiments mimicking decisions with real consequences.Practical implicationsRetailers and marketers in Latin America – particularly those companies stressing price or value as their differential advantage – should consider the use of price promotions when designing marketing strategies. On the other hand, retailers should be aware that an intensive use of these of promotions could lead to increases in consumer search behavior.Originality/valueWhile findings from the USA suggest that price promotion strategies can be effective in several contexts, there has been a limited number of studies addressing whether such strategies are effective in other countries, particularly in Latin America and emerging nations. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Academia Revista Latinoamericana de Administración Emerald Publishing

Store price promotion strategies: an empirical study from Chile

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1012-8255
DOI
10.1108/ARLA-07-2013-0093
Publisher site
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Abstract

PurposeThe purpose of this paper is to examine two popular price promotion strategies – price matching guarantees (PMGs) and everyday low prices (EDLP) – and their effects on Chilean consumer behavior in terms of consumer perceptions of low prices, search behavior and purchase intention.Design/methodology/approachA quasi experiment with three scenarios was conducted to test price promotion effects. Subjects were instructed to respond a questionnaire that included the dependent variables.FindingsResults show that EDLP and PMG strategies increase perceptions of low prices and affect purchase intentions. These effects are significantly higher for stores offering EDLP than PMG. However, when consumers are exposed to two or more price promotion strategies (rather than one) they reduce their purchase intentions for a specific store and increase their search intentions.Research limitations/implicationsThis is an initial study exploring the effects of price promotion strategies on consumers. Future research could test the hypotheses advanced in the study across different samples and contexts (supermarkets, department stores, convenience stores, and other retailers) and might privilege external validity, using experiments mimicking decisions with real consequences.Practical implicationsRetailers and marketers in Latin America – particularly those companies stressing price or value as their differential advantage – should consider the use of price promotions when designing marketing strategies. On the other hand, retailers should be aware that an intensive use of these of promotions could lead to increases in consumer search behavior.Originality/valueWhile findings from the USA suggest that price promotion strategies can be effective in several contexts, there has been a limited number of studies addressing whether such strategies are effective in other countries, particularly in Latin America and emerging nations.

Journal

Academia Revista Latinoamericana de AdministraciónEmerald Publishing

Published: Nov 18, 2013

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