Cheaper and smaller or more expensive and larger: how consumers respond to unit price increase tactics that simultaneous
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ORIGINAL EMPIRICAL RESEARCH
Cheaper and smaller or more expensive and larger: how consumers respond to unit price increase tactics that simultaneously change product price and package size Jun Yao 1
&
Harmen Oppewal 2
&
Di Wang 3
Received: 31 January 2018 / Accepted: 13 December 2019 # Academy of Marketing Science 2020
Abstract To increase the unit price of a product, marketers of packaged groceries generally either raise the retail price or reduce the package size. We describe two unit price increase tactics in which the retail price and package size of a product simultaneously increase or decrease. Five studies, including a field study conducted in a grocery store, show that when unit price information is available, consumer decisions are influenced more by changes in both retail price and unit price than by changes in package size. Consumers thus respond more favorably to simultaneous decreases than to simultaneous increases. We further show that when unit price information is unavailable, consumers focus on the observed retail price increase for simultaneous increases, whereas they tend to estimate the unit price increase for simultaneous decreases. Since both forms of processing result in the cognition of an increase in “price,” consumers respond similarly to the two tactics. Keywords Pricing tactics . Unit pricing . Simultaneous changes . Automatic and controlled processing . Package downsizing . Grocery shopping
Consumers are generally sensitive and averse to price increases. However, to maintain and improve profitability, it may be unavoidable for a firm to increase its product prices, for example, due to inflationary issues or increased costs. Dhruv Grewal served as Area Editor for this article. Electronic supplementary material The online version of this article (https://doi.org/10.1007/s11747-019-00716-z) contains, which is available to authorized users. * Jun Yao [email protected] * Harmen Oppewal [email protected] * Di Wang [email protected] 1
Department of Marketing, Macquarie Business School, Macquarie University, Balaclava Road, North Ryde, NSW 2109, Australia
2
Department of Marketing, Monash Business School, Monash University, 26 Sir John Monash Drive, Caulfield East, VIC 3145, Australia
3
School of Advertising, Marketing and Public Relations, QUT Business School, Queensland University of Technology, 2 George Street, Brisbane, QLD 4000, Australia
When they are required to increase the unit prices of their products, marketers of packaged groceries commonly rely on two tactics: they either (1) raise the retail price without altering the package size or (2) reduce the package size without changing the retail price (Kachersky 2011). Both practices are important and prevalent in consumer packaged goods markets. However, consumer advocates often dispute both tactics, particularly the latter tactic, which is also known as “The Grocery Shrink Ray” (Northrup 2017) (see Web Appendix A for examples of price–size tactics). One additional way to increase the unit price of a product is to
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