Abhijit Guha

Consumer Evaluations of Sale Prices: Role of the Subtraction Principle

How exactly does the display location of a sale price relative to the original price affect consumers’ evaluations? Across multiple studies, including field studies with actual choices and studies with nonstudent samples, this article shows that consumer evaluations are a function of the display location of the sale price, but such evaluations are moderated by discount depth. First, presenting the smaller number to the right (vs. left) makes it easier to initiate the subtraction task, a phenomenon the authors refer to as the “subtraction principle.” Second, given that evaluating sale prices inherently involves a subtraction task, locating sale prices to the right (vs. left) of the original price facilitates calculation of discount depth, increasing evaluations for moderate discounts but not for low discounts. These effects are potentially reversed in cases of both very low discounts and exaggerated discounts. The findings in this article offer novel and nonintuitive insights into how sale price display locations and discount depth interact to influence numerical cognitions, processing of sale prices, and subsequent evaluations.

Leader-Focused Search: The Impact of an Emerging Preference on Information Search

This article examines the influence an emerging preference (i.e., a leader) has on predecisional information search. We explore two possibilities. First, decision makers may seek information they expect will support their leader (leader-supporting search). Second, decision makers may seek information about their leader, irrespective of the expected valence of the information (leader-focused search). Across various studies, product domains and experimental designs, we consistently find that decision makers engage in leader-focused search, not leader-supporting search. We also find that leader-focused search can steer decision makers towards information sources that are less important, less credible, and objectively suboptimal.

Reframing the Discount as a Comparison Against the Sale Price: Does It Make the Discount More Attractive?

Sales induced through price promotions depend heavily on discount depth, so firms create mechanisms to influence perceptions of discount depth. Typically, consumers compute discount depth as the difference between the sale price and the original price, with this difference compared against the original price. But thus far, no research has examined the effect of reframing this difference by comparing the discount depth against the sale price. Multiple studies, including a field study across four grocery stores, show that framing the discount depth by comparing it against the sale price increases consumers’ discount depth perceptions and thus increases purchase intentions. As evidence of the underlying process, the authors identify boundary conditions related to both individual differences (numeracy) and managerially relevant factors (discount depth size). In addition to contributing to research on price promotions, behavioral pricing, and numeric processing, the article offers implications for both practitioners and policy makers focused on consumer welfare.

An Empirical Analysis of the Joint Effects of Shoppers’ Goals and Attribute Display on Shoppers’ Evaluations

This article develops a decision-making framework that highlights how display of numeric attribute information (e.g., display of calorie information) and shoppers’ goals (i.e., having a diet focus vs. a taste focus) jointly influence shoppers’ choices and preferences. Across two sets of studies, including a field study involving the launch of a new Coca-Cola product, the authors show that when food items are displayed in an aligned manner (i.e., when food items with lower-value calorie information are displayed below food items with higher calorie values), shoppers assign more importance weight to calorie gap information. In turn, higher importance weight assigned to calorie gap information leads diet-focused shoppers to relatively prefer low-calorie food items but leads taste-focused shoppers to relatively prefer higher-calorie food items. The third set of studies shows that this decision-making framework has widespread applicability and is relevant in any domain in which advertising, retail, and online displays show comparisons of numeric attribute information.

Special Session: Retailing and Pricing Cues

Dhruv Grewal (Ph.D. Virginia Tech) is the Toyota chair in Commerce and Electronic Business and a professor of Marketing at Babson College. His research and teaching interests focus on direct marketing/e-business, retailing, global marketing, pricing, and value-based marketing strategies. He has published over 100 articles in journals such as Journal of Retailing, Journal of Marketing, Journal of Consumer Research, Journal of Marketing Research, and Journal of the Academy of Marketing Science, as well as other journals. He currently serves on numerous editorial review boards.

Leader Focused Search: Influence of a Tentative Preference on Information Selection

Early information in a choice process leads consumers to develop a tentative preference for one of the options. This article examines the influence that tentative preferences have on information search. We consider two possibilities. First, that consumers will seek information they expect will support their tentative preference. We refer to this as leader-supporting search. Second, that consumers will seek information about their tentatively preferred option, irrespective of the expected valence of the information, which we refer to as leader-focused search. Across six studies, including one study which involved a real choice, we find strong evidence of leader-focused search, and little or no evidence of leader-supporting search. We also find that the tendency to engage in leader-focused search can steer consumers towards information sources that are objectively less credible. We conclude with a discussion of the implications of leader-focused search.