 Revisiting low price guarantees: Does consumer versus retailer governance matter?Adilson Borges () and Barry Babin () Marketing Letters, 2012, vol. 23, issue 3, 777-791 Abstract: Retailers often use low price guarantees (LPG) as a signal to attract consumers and increase sales. Consumers interpret LPGs as a signal that a particular retailer is committed to low prices. However, if more and more retailers employ LPGs, their effectiveness as a price signal wears off. As a result, retailers adapt increasingly extreme guarantees to get an advantage over the competition. Retailers, for instance, are experimenting with taking on the responsibility of looking for lower prices and automatically refunding consumers when a competitor offers a lower price for the same product. This research shows that automatic price protection of this sort might backfire under certain conditions. Three studies show that LPGs alone are not enough to signal low prices and that retailers combining large refunds with a retailer-enforced LPG obtain less favorable reactions than those implementing other types of LPGs. Copyright Springer Science+Business Media, LLC 2012 Keywords: Low price guarantee; Behavioral pricing; Signaling theory; Automatic price protection (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:kap:mktlet:v:23:y:2012:i:3:p:777-791 Ordering information: This journal article can be ordered from DOI: 10.1007/s11002-012-9178-1 Access Statistics for this article Marketing Letters is currently edited by Joel Steckel and Peter Golder More articles in Marketing Letters from Springer |
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