Impact of High Quality, Low Price Appeal on Consumer Evaluations

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1 Journal of Promotion Management ISSN: (Print) (Online) Journal homepage: Impact of High Quality, Low Price Appeal on Consumer Evaluations Miyuri Shirai To cite this article: Miyuri Shirai (2015) Impact of High Quality, Low Price Appeal on Consumer Evaluations, Journal of Promotion Management, 21:6, , DOI: / To link to this article: Miyuri Shirai. Published with license by Taylor & Francis Miyuri Shirai Published online: 14 Dec Submit your article to this journal Article views: 4666 View related articles View Crossmark data Citing articles: 2 View citing articles Full Terms & Conditions of access and use can be found at

2 Journal of Promotion Management, 21: , 2015 Published with license by Taylor & Francis Group, LLC ISSN: print / online DOI: / Impact of High Quality, Low Price Appeal on Consumer Evaluations MIYURI SHIRAI Keio University, Tokyo, Japan Marketers frequently adopt a high quality, low price appeal in advertisements. However, the price quality inference theory implies that this contextual appeal may not be well-accepted by consumers because it contains two contradictory cues: high quality and low price. This article investigates how consumers evaluate this appeal through two laboratory experiments. Study 1 shows that the appeal leads to favorable price perceptions and purchase intentions when the product price is high; it leads to high quality perceptions when the price is low. Study 2 shows that these effects are salient when consumers have a weak price quality schema or a low need-forcognition. KEYWORDS advertising appeal, consumer evaluations, need for cognition, price quality inference INTRODUCTION Marketers employ various kinds of appeals to make products appear more attractive for consumers. Consumers also pay attention to and rely on these appeals to decide whether to purchase the products, to look for other products, or to visit other stores for comparisons (Anderson & Simester, 2003). One of the appeals frequently utilized in retail advertisement is a wording appeal, high quality, low price (HQLP appeal). For example, Safeway claims Check out our brands! You will find high quality brands at low prices and Miyuri Shirai Address correspondence to Miyuri Shirai, 79-4 Tokiwadai, Hodogaya-ku, Yokohama, Kanagawa Japan. shirai@ynu.ac.jp This is an Open Access article. Non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly attributed, cited, and is not altered, transformed, or built upon in any way, is permitted. The moral rights of the named author(s) have been asserted. 776

3 High Quality, Low Price Appeal 777 H&M claims their business concept such as fashion and quality at the best price. This type of appeal is used over a wide range of product and service categories such as clothing, cosmetics, furniture, housing, rent-a-car, and so on. The prevalence of this appeal indicates that marketers must consider it a success; however, it has been largely neglected by marketing researchers although a considerable amount of studies focused on effectiveness of available information regarding products for consumers. Thus far, numerous studies analyzed effects of product-related attributes on consumers quality perceptions (e.g., Monroe & Dodds, 1988; Olson, 1977). The effect of third-party rating on quality perceptions was examined by Akdeniz, Calantone, and Voorhees (2013). Van Herpen, Pieters, and Zeelenberg (2009) found that for scarce products, information about excess demand influenced consumers inferences of popularity and information about limited production quantities influenced consumers inferences of exclusiveness. Aguirre-Rodriguez (2013) also examined these scarce appeals for coupon scarcity. Furthermore, a stream of research focused on contextual appeals that were indicated in retail advertisements. Various types have been examined, but they were mostly for price promotions. The research has examined restriction on purchase quantity or time (e.g., Howard & Kerin, 2006; Inman, Peter, & Raghubir, 1997; Manning & Sprott, 2007; Raghubir, 1992; Suri, Kohli, & Monroe, 2007; Wansink, Kent, & Hock, 1998), price comparison (e.g., Burton, Lichtenstein, & Herr, 1993; Darke & Chung, 2005), multiple-unit price (e.g., Manning & Sprott, 2007; Wansink et al., 1998), and tensile price claim (e.g., Biswas & Burton, 1993; Mobley, Bearden, & Teel, 1988), sale sign (Anderson & Simester, 2003), and rationales for providing price discounts (Bobinski, Cox, & Cox, 1996). This study investigates consumers responses to the contextual HQLP appeal. As described above, little research has focused on it, and consequently, no empirical studies have so far been reported. This appeal is intriguing because it contains two cues: high quality and low price. As consumers usually prefer to obtain high quality products at lower costs, this appeal seems to meet consumers needs and resonate with them. However, following the price quality inference theory (e.g., Monroe & Dodds, 1988; Olson, 1977), we considered the possibility that these cues contradict each other because the theory essentially implies that high quality equals to high price. It is, therefore, interested in how consumers psychologically evaluate this appeal. If consumers accept such an appeal, then questions arise regarding their responses. Do consumers really perceive that the advertised products have the high quality advertised? Do consumers really perceive that the prices are low? Do consumers really believe high quality equals low price? The purpose of this research, therefore, is to try to answer the above research questions. We next discuss the concept of consumers price quality inferences and monetary sacrifice, and explore how these concepts help explain the effect of the HQLP appeal on consumers evaluations. Then, we present our

4 778 M. Shirai hypotheses and describe our two studies and results. Study 1 investigates whether consumers quality perceptions, price perceptions, and purchase intentions are influenced by this appeal. Study 2 further investigates what type of consumer accepts this appeal more easily. The individual differences focused are price quality schema, price consciousness, and need for cognition. Previous studies found that these characteristics play an important role in consumers evaluations (e.g., Inman, McAlister, & Hoyer, 1990; Lichtenstein, Block, & Black, 1988; Lichtenstein, Ridgway, & Netemeyer, 1993). Finally, we conclude with a discussion of the findings and implications from our studies. CONCEPTUAL BACKGROUND Price Quality Inferences Consumers frequently use retail price as an indicator of product quality. Higher-priced products are believed to possess higher quality than lowerpriced products. This notion is referred to as price quality inferences and primarily introduced by Scitovszky ( ). Ever since Leavitt (1954) empirically tested this consumers tendency, it has long attracted researchers attention, and a considerable number of studies have been reported. This inference was found to be used more for low-similarity products than highsimilarity products (Tull, Boring, & Gonsior, 1964) and more for durables than nondurables (Lichtenstein & Burton, 1989). Z. V. Lambert (1972) showed that participants who chose high-priced items tended to have more confidence in the price quality inference and perceive large quality variations within the product category. Multiple cues studies extended earlier studies by including not only price, but also other cues in their analyses. These cues have been dichotomized into intrinsic and extrinsic cues (e.g., Miyazaki, Grewal, & Goodstein, 2005;Zeithaml, 1988). Intrinsic cues are an integral part of and are inseparable from the physical product (e.g., flavor, color, or texture for foods), whereas extrinsic cues are not physical components of the product, and changes have no material effects on the actual product (e.g., price or brand name). Wheatley and Chiu (1977) compared three extrinsic cues (price, store prestige, and carpet color) and found that price had the strongest effect, followed by store prestige, then color. Olson (1977) reviewed 24 studies and concluded that price cue effects were inconsistent. D. R. Lambert (1980) also reviewed 14 studies and concluded that price was not the most important quality cue, but other extrinsic cues (store image, brand name, and country of manufacturer) were also associated with quality perceptions. Then, Wheatley, Chiu, and Goldman (1981) found that physical cues (product samples) exerted a more pronounced effect than price. Rao and Monroe (1988) showed that low- and high-familiarity participants tended to use price while

5 High Quality, Low Price Appeal 779 moderately-familiar participants tended to employ intrinsic cues (quality related information) to assess product quality. A meta-analysis of 36 studies reporting 85 effects of three extrinsic cues (price, brand name, store name) was conducted by Rao and Monroe (1989). Their results showed that the effect of price was slightly smaller than the effect of brand name; meanwhile, the store name did not affect quality perceptions. A similar result was also demonstrated by Dodds, Monroe, and Grewal (1991). More recently, Walters and Long (2012) found that experts who have nutrition knowledge generated higher quality perceptions and purchase intentions when the extrinsic cue ( all natural ) was consistent with the intrinsic cue (ingredient). However, the extrinsic cue positively influenced novices evaluations despite the intrinsic cue. Finally, Akdeniz et al. (2013) showed that brand reputation exerted the strongest effect, with product warranty of a car coming second, and price the weakest. Taken together, the findings of these studies suggest that consumers tend to use price as an indicator of quality, especially when they feel uncertain on quality judgments or purchase decisions, although its influence varies depending on the presence of other cues. Monetary Sacrifice and Purchase Intentions The issue of monetary sacrifice should not be neglected when considering purchase intentions. Price is known to have a dual role, first as an indicator of quality, as discussed above, and second, as an indicator of monetary sacrifice. Monetary sacrifice is a consumer s perception of what must be given up in order to purchase a product or a perception of making a sacrifice by paying a specific price. Monroe (2003) developed a conceptual model incorporating this dual role in which higher prices lead customers first to perceive higher quality, then perceive a higher value, and finally to be more willing to pay. At the same time, higher prices lead to a higher monetary sacrifice, which in turn leads to perceptions of lower value, and finally, to a lower willingness to pay. Clearly, perceived value represents a tradeoff between perceived quality and monetary sacrifice. Teas and Agarwal (2000) verified this model and demonstrated that the effects of extrinsic cues (price, brand name, store name, and country of origin) on perceived value can be mediated by perceived quality and sacrifice. Suri et al. (2007) confirmed that perceived quality and monetary sacrifice exist in opposition; that is, perceived quality is high, monetary sacrifice is low and vice versa. Zeithaml (1988) posited that the monetary sacrifice is pivotal for price conscious consumers because they would perceive an increase in value as their sacrifice declined. Finally, by using the construal level theory (e.g., Kardes, Cronley, & Kim, 2006), Bornemann and Homburg (2011) found consumers used price as an indicator of quality in a distant perspective and used price as an indicator of sacrifice in

6 780 M. Shirai a near perspective. Taken together, perceived quality and monetary sacrifice are the key factors determining perceived value and purchase intentions. Hypotheses Development The hypotheses presented in this article are based on a comparison of three types of appeals: the HQLP appeal, an appeal with the wording high quality (HQ-only appeal), and an appeal with the wording low price (LP-only appeal). Both the HQ-only appeal and LP-only appeal are often adopted in retail advertisements. Their effects on quality perceptions, price perceptions, and purchase intentions are discussed here. Following the price quality inference theory, the HQLP appeal apparently contains two contradicting cues, high quality and low price, essentially indicating high quality equals low price. It is postulated that these two cues elicit confusion in consumers and they are not accepted as they are. Although the high quality cue might tempt consumers belief, the alternate cue of low price may evoke cognitive dissonance that hinders acceptance of this second cue. Similarly, consumers first attracted by the low price cue, the high quality cue may likewise evoke cognitive dissonance that hinders acceptance. In such a situation, consumers are likely to use heuristics in order to reduce this cognitive dissonance, and such heuristics would take the form of discounting both cues. That is, consumers would be likely to conclude that the quality is not as high as promised and/or the price of products is not as low. For example, with respect to quality, consumers may infer that raw materials or construction quality may not be as good as in truly high-quality products. With respect to price, consumers may conclude that the price may be not as low as true low-priced products due to costs incurred from providing better quality. However, we presume that occurrences of these discounting depend on the level of price. The discounting of the two cues is expected to occur for high priced products since consumers are usually more involved with their decision makings and price quality inferences are likely to be utilized to judge given information. For low priced products, the two cues are expected to be accepted since consumers are more concerned with risks of obtaining low quality from low priced products and likely to have preferences for high quality low price products. Thus, the HQLP appeal would not be accepted in the case of high priced products whereas the appeal would be accepted in the case of low prices. Subsequently, when firms individually implement the HQ-only appeal, the quality claims are likely to be accepted more easily as no other information hinders their acceptance. This generates an increase of quality perceptions; however, the appeal does not influence perceptions of price. In the same way, when firms adopt the LP-only appeal, claims of low price are likely to be accepted and generate favorable price perceptions, but this

7 High Quality, Low Price Appeal 781 appeal does not influence perceptions of quality. Accordingly, we conjecture that, in the context of high price, the HQLP appeal will generate perceptions of lower quality than the HQ-only appeal and perceptions of higher price than the LP-only appeal. In the context of low price, the HQLP appeal will generate the same level of quality perceptions with the HQ-only appeal and the same level of price perceptions with the LP-only appeal. With respect to purchase intentions, we hypothesize that the HQLP appeal will generate higher scores than either the HQ-only appeal or LPonly appeal when prices are high. The two appeal points, high quality and low price, contained in the HQLP appeal are likely to bring about two benefits to consumers; they are an increase of perceived quality due to the high quality appeal and a decrease of monetary sacrifice due to the low price appeal. We expect that these two simultaneous benefits will lead to higher purchase intentions, although the HQLP appeal discounts the perceptions of high quality and low price, as discussed. On the other hand, the HQ-only appeal and LP-only appeal each evoke only one benefit so that purchase intentions would not be as high as with the HQLP appeal. When prices are low, an increase of perceived quality becomes more important since monetary sacrifice should be reduced. Hence, the HQLP appeal will generate scores similar to the HQ-only appeal and higher than the LP-only appeal. On the basis of this reasoning, the following three hypotheses are offered: H1. Perceptions of quality generated from the HQLP appeal will be less favorable than the HQ-only appeal when the price is high. The perceptions will be as favorable as the HQ-only appeal when the price is low. H2. Perceptions of price generated from the HQLP appeal will be less favorable than the LP-only appeal when the price is high. The perceptions will be as favorable as the LP-only appeal when the price is low. H3. Purchase intentions generated from the HQLP appeal will be more favorable than the HQ-only appeal or LP-only appeal when the price is high. The perceptions will be as favorable as the HQ-only appeal and more favorable than the LP-only appeal when the price is low. STUDY 1 Study 1 is designed to test H1 through H3 using a controlled experimental method. We manipulated contextual appeal and price in a print advertisement for a particular product.

8 782 M. Shirai Design and Stimulus A laptop computer was selected as the experimental stimulus. This product category was selected based on the following criteria. First, it is usually of particular interest to the target participants. Second, most participants possess some knowledge about product features and prices. Third, prices and quality vary among brands. The experiment employed a 3 (contextual appeal) 2 (price) betweensubjects design. The three levels of contextual appeal conditions were HQLP appeal, HQ-only appeal, and LP-only appeal; the two levels of price were high and low. These two factors were manipulated in a print advertisement so that crossing contextual appeal and price resulted in six print advertisements. In an advertisement, each contextual appeal was displayed in a prominent headline. A fictitious brand name, Brand X, was used. In the HQLP appeal condition, the headline read A high quality and low price laptop computer and the tagline was Brand X, a brand-new laptop computer with high quality and low price launched. For the HQ-only appeal condition, the headline and tagline read A high quality laptop computer and Brand X, a brand-new laptop computer with high quality launched ; for the LP-only appeal condition, the headline and tagline respectively read A low price laptop computer and Brand X, a brand-new laptop computer with low price launched. All conditions provided a product description below the tagline. To determine price levels, we ran a pretest (n = 26) and measured prices that participants thought expensive, reasonable, and inexpensive. The mean price was JPY149,423 (SD = JPY48,956) for an expensive price, JPY93,192 (SD = 23,667) for a reasonable price, and JPY47,115 (SD = 15,202) for an inexpensive price. The Japanese yen (JPY) approximately converts to $1 = JPY100. These three prices significantly differed (all t(25)s > 4.0, p <.0001). We also checked an internet shopping site (Kakaku.com) that allows consumers to make price and brand comparisons of laptops of various online stores; we then found that laptops made by large Japanese manufacturers varied in price between JPY35,100 and JPY372,964. Based on these data, JPY145,000 was selected as the high price level and JPY45,000 was selected as the low price level. To avoid an effect of price ending, both prices ended with 5,000. Participants and Procedures In all, 152 undergraduate students enrolled in a business course at a major university participated in this study in exchange for extra credit. We created six versions of questionnaire including one of the six print advertisements and questions regarding the advertisement. Participants were randomly assigned to one of the six questionnaires. The number of participants in each questionnaire ranged from 24 to 27.

9 High Quality, Low Price Appeal 783 TABLE 1 Means for Dependent Variables: Study 1 Quality perception Price perception Purchase intention Appeal High price Low price High price Low price High price Low price HQLP HQ-only LP-only A scenario approach was adopted and participants were asked to imagine that they were planning to purchase a new laptop computer and had happened that day to see a printed advertisement for a new laptop computer made by a Japanese manufacturer. After reading the scenario, participants were presented with an advertisement containing a headline, tagline, a brief description of a product s features and price. After reviewing the ad, participants were asked to assess several measures regarding the featured product. Measures All items were measured on a seven-point scale from one to seven. Participants answered questions regarding the advertised product in terms of quality perceptions, price perceptions, and purchase intentions. For quality perceptions, participants rated the advertised laptop on the scale of very bad to very good and very unreliable to very reliable. Responses were averaged to form a quality perception index (r = 0.68, p <.0001). Next, participants rated their perceptions of price on the scale of very expensive to very inexpensive and not at all attractive to extremely attractive. Responses were averaged to form a price perception index (r = 0.89, p <.0001). Respondents then indicated their purchase intentions by answering the questions: Would you like to purchase this laptop computer? and Would you like to use this laptop computer yourself? Answers to both questions were assessed on a scale of not at all to very much. Responses were averaged to create a purchase intention index (r = 0.61, p <.0001). Results Table 1 shows the means by condition. Hypotheses were tested using ANOVA including main effects of contextual appeal and price as well as the two-way interaction between them. For the effects on quality perceptions, the results revealed the main effects stemmed from contextual appeal (F(2, 146) = 61.13, p <.0001) and price (F(1, 146) = 24.96, p <.0001), and an interaction between them (F(2, 146) = 1.26, p <.1). We then conducted one-way ANOVA for each price level. The main effect of contextual appeal

10 784 M. Shirai was observed at both prices (F(2, 75) = 28.97, p <.0001 for the high price; F(2, 71) = 34.84, p <.0001 for the low price). Follow-up Tukey tests indicated that for the high price condition, the HQ-only appeal was highest, with the HQLP the second strongest, the LP-only appeal the least; for the low price condition, the HQ-only and HQLP appeals had similar levels of quality perceptions and they were higher than the LP-only appeal. Hence, H1 is supported for both prices. For price perceptions, the results revealed the main effects of contextual appeal (F(2, 146) = 8.6, p <.001) and price (F(1, 146) = , p <.0001), and an interaction between them (F(2, 146) = 6.28, p <.01). ANOVA conducted at each price level determined that the main effect from contextual appeal was observed only for high price (F(2, 75) = 13.26, p <.0001). Inconsistent with H2, Tukey tests indicated that the HQLP and LP-only appeals had similar levels of price perceptions and they were more favorable than the HQ-only appeal. This implies that the low price cue of the HQLP appeal was not discounted and the HQLP appeal and LP-only appeal were viewed similarly in terms of price perceptions. With respect to low price, price perceptions did not differ among the three appeals and were influenced by price more than contextual appeal. An analysis on purchase intentions revealed the main effects of contextual appeal (F(2, 146) = 7.16, p <.01) and price (F(1, 146) = 20.54, p <.0001), and a marginal interaction between them (F(2, 146) = 2.97, p <.06). ANOVA conducted for each price level again revealed the main effect of contextual appeal only for high price (F(2, 75) = 11.08, p <.0001). Inconsistent with H3, follow-up Tukey tests indicated that the HQLP and HQ-only appeals had similar levels of purchase intentions and the HQLP appeal had higher purchase intentions than the LP-only appeal. With respect to low price, purchase intentions did not differ among the three appeals and were influenced by price more than contextual appeal. We note that the main effects of price on these three dependent variables all manifested in expected directions. The low price condition generated lower perceptions of quality, more favorable perceptions of price, and higher purchase intentions than the high price condition. Discussion Study 1 demonstrated that the contextual appeal influenced quality perceptions more strongly than price perceptions and purchase intentions; the effect of the contextual appeal on quality perceptions was even stronger than the effect of price. As expected, the effect differs depending on the price level. When the price was high, perceptions of quality generated by the HQLP appeal was lower than with the HQ-only appeal. This implies that the price quality inferences were used and the high quality cue of the HQLP appeal was discounted because of the mismatch between the high

11 High Quality, Low Price Appeal 785 quality and low price cues. On the other hand, when the price was low, the HQLP appeal generated quality perceptions at levels similar to those from the HQ-only appeals. This implies that the price quality inferences were not adopted here and instead, the HQLP appeal helped to reduce perceived risks of having low quality. Apparently, the HQLP appeal has an ability to raise consumers quality perceptions more in the context of low price than high price. In the case of price perceptions, the HQLP and the LP-only appeals generated the same level of perceptions when the price was high. Contrary to our expectation, the discounting of low price cue of the HQLP appeal was not observed here. The low price cue of the HQLP appeal and the LP-only appeal were viewed similarly. This indicates that low price appeals are taken in the same way regardless of how they are framed. This may have occurred because low price appeals are uncommon in the context of high price. Purchase intentions generated by the HQLP appeal were similar to those generated by the HQ-only appeal and it was more favorable than those generated from the LP-only appeal when the price was high. Although the HQLP excels the HQ-only appeal in monetary sacrifice perception, the HQ-only appeal excels the HQLP appeal in quality perception. As a result, purchase intentions of the HQLP appeal did not exceed purchase intentions of the HQ-only appeal. In sum, the HQLP appeal has two attractive cues, high quality and low price, but consumers seem to place value on one cue more than the other. Consumers are likely to value more on the high quality cue in the case of low price while they are likely to value more on the low price cue in the case of high price. Accordingly, the HQLP appeal generated higher quality perceptions in the case of low price and generated more favorable price perceptions and purchase intentions in the case of high price. The only effect found to be negative was that the HQLP appeal lowered quality perception of high priced products. This is a critical problem because this negative effect is much larger than the positive effects. Consumers generally require high quality for high priced products and the high prices are not well-justified if quality perceptions are reduced. The use of the HQLP appeal for high priced products; therefore, needs to be careful. Overall, the HQLP appears to be an effective appeal for low prices more than high prices. STUDY 2 Study 2 tests the moderating role of important individual difference variables: price quality schema, price consciousness, and need for cognition. It adopts a similar experimental design to Study 1 to see if the results of Study 1 will be replicated.

12 786 M. Shirai Price Quality Schema (PQ-schema) As mentioned earlier, price quality inference theory predicts that consumers often perceive prices as an indicator of quality. Peterson and Wilson (1985) showed that consumers who made such an inference possessed a price quality schema (PQ-schema). Following Lichtenstein et al. (1993), we define this schema as the generalized belief across product categories that the level of price is positively related to product quality. Prior research has demonstrated that consumers who have a strong PQ-schema had tendency to prefer higher-priced products (Lichtenstein et al., 1988; Peterson & Wilson, 1985; Tellis & Gaeth, 1990), have a lower accuracy of price recall (Lichtenstein et al., 1993), and lower attitudes toward private label brands (Burton, Lichtenstein, Netemeyer, & Garretson, 1998). It was also found that PQschema adherence varied among consumers and product categories (Lichtestein & Burton, 1989). Considering the extent of consumers PQ-schema, we expect that consumers with a strong PQ-schema would be more aware of the contradiction inherent in the HQLP appeal and feel more negative about the appeal than consumers who have a weak schema. Additionally, consumers possessing a strong schema are likely to prefer the HQ-only appeal because they consider the purchase of high priced products as a way to acquire high quality products. We therefore expect that consumers having a strong PQ-schema evaluate the HQ-only appeal more highly than the consumers with a weak price quality inference. Thus, we hypothesize: H4a. Quality perceptions, price perceptions, and purchase intentions generated by the HQLP appeal would be more favorable for consumers having a weak PQ-schema than for consumers having a strong PQ-schema. H4b. Quality perceptions, price perceptions, and purchase intentions generated by the HQ-only appeal would be more favorable for consumers having a strong PQ-schema than for consumers having a weak PQ-schema. Price Consciousness Price consciousness refers to the degree to which consumers exclusively focus on paying low prices (Lichtenstein et al., 1993). Prior research has found that highly price-conscious consumers have a tendency to purchase increased quantities of sale products, and spend more money on sale products (Burton et al., 1998; Lichtenstein et al., 1993). These consumers also have lower price acceptability levels and narrower latitudes of acceptable prices (Lichtenstein et al., 1988), and have a higher attitude on private label brands (Burton et al., 1998). Based on these findings, we predict that highly price conscious consumers evaluate the LP-only appeal more favorably because they are considered looking for indications of low or discount prices in general and the LP-only appeal meets their needs. However, they may also evaluate the HQLP appeal highly because of interest in obtaining higher quality possibly at a lower price. Hence, we hypothesize:

13 High Quality, Low Price Appeal 787 H5: Quality perceptions, price perceptions, and purchase intentions generated by the HQLP and the LP-only appeals would be more favorable for consumers having a high price consciousness than for consumers having a low price consciousness. Need for Cognition (NFC) NFC refers to an individual s tendency to engage in and enjoy effortful cognitive endeavors (Cacioppo & Petty, 1982). High NFC consumers intrinsically enjoy thinking, whereas low NFC consumers tend to avoid cognitive work requiring effort (Haugtvedt, Petty, & Cacioppo, 1992). High NFC consumers are more likely to form attitudes based on evaluations of product attributes whereas low NFC consumers are more likely to form judgments based on simple peripheral cues inherent in the advertisements (Haugtvedt et al., 1992). Low NFC consumers tend to react to firms promotional message more readily than high NFC consumers. For example, Inman et al. (1990) showed that low NFC consumers showed increased likelihood to purchase a product based on only a signal (e.g., Crest $ ) with no accompanying price cut while high NFC consumers were unaffected by this signal. Inman et al. (1997) demonstrated that low NFC consumers were also influenced by purchase limit restrictions on deals (e.g., limit one per customer) whereas high NFC consumers were unaffected. Ailawadi, Neslin, and Gedenk (2001) showed that low NFC consumers used out-of-store promotions (flyers and newspaper coupons) more frequently than high NFC consumers. Finally, Suri and Monroe (2001) showed that the acceptable price range was wider for high NFC consumers than for low NFC consumers because high NFC consumers use price quality inference and low NFC consumers consider monetary sacrifice more than product quality. Based on these finding, we predict that high NFC consumers focus more on the two contradicting cues in the HQLP appeal than low NFC consumers. Accordingly, we set the following hypothesis: H6. Quality perceptions, price perceptions, and purchase intentions generated by the HQLP appeal would be more favorable for low NFC consumers than for high NFC consumers. Design and Procedures As in Study 1, a laptop computer was selected as the experimental stimulus. The experiment utilized a 3 (contextual appeal) 2 (price) between-subjects design. The contextual appeals are the same as Study 1; the two prices were moderately high and low. Based on the pretest run in Study 1, JPY115,000 was selected as the moderately high price and JPY45,000 was selected as the low price. An additional pretest (n = 12) by using a four-point scale

14 788 M. Shirai with anchors very inexpensive and very expensive indicated they were appropriate levels (M moderate = 3.25, M low = 1.38, t(11) = 7.64, p <.0001). In all, 159 undergraduate students who were enrolled in a business course at a major university participated in this study in exchange for extra credit. The number of participants in each group ranged from 25 to 28. Questionnaire administration was conducted the same as in Study 1. Independent Variables All items were measured on a seven-point scale. The PQ-schema was assessed by a 4-item scale (Burton et al., 1998; Lichtenstein et al., 1993). These items were averaged to form a PQ-schema index (α = 0.92). To create a clear difference between the strong and weak PQ-schema groups, subjects whose scores fell in the middle third of the distribution of PQ-schema scores were not included in the analyses. After the exclusion, the mean score of PQ-schema became 6.04 in the strong group and 3.65 in the weak group. Price consciousness was assessed on a 3-item scale (e.g., Lichtenstein et al., 1988). These items were averaged to form a price consciousness index (α = 0.89). Excluding the middle third of the distribution of price consciousness scores, the mean score in the high group was 6.34 and the mean score in the low group was NFC was assessed by an 18-item NFC scale (Cacioppo, Petty, & Kao, 1984). These items were averaged to form a NFC index (α = 0.87). Excluding the middle third of the distribution of NFC scores, the mean score in the high group was 5.37 and the mean score in the low group was Dependent Variables The same dependent variables used in Study 1 were measured: quality perceptions, price perceptions, and purchase intentions. All items were measured on a seven-point rating scale from one to seven. The same two items were averaged to form a quality perception index (r = 0.83, p <.0001), price perception index (r = 0.86, π<.0001), and purchase intention index (r = 0.74, π<.0001). Results and Discussion Two-way ANOVA using contextual appeal and price as factors was conducted for each dependent variable and the results were analogous to those found in Study 1. We next conducted three-way ANOVAs including the PQschema as a moderator. A three-way interaction was obtained on quality perception (F(2, 109) = 2.95, p <.05). Figure 1A and 1B shows two-way

15 High Quality, Low Price Appeal 789 FIGURE 1A Interactive effect on quality perception for high PQ-inf group: Study 2. interactions on quality perception for each group. The interaction was significant for strong PQ-schema group (F(2, 50) = 11.77, p <.0001), but not for weak PQ-schema group (F(2, 59) = 1.07, n.s.). Strong PQ-schema group had the highest quality perception when the HQ-only appeal was used and the price was moderately high whereas they had the lowest quality perception when the LP-only appeal was used and the price was low. The HQ-only appeal was favored more by strong PQ-schema group than weak PQ-schema group only when price was moderately high (t(21) = 5.02, p <.0001). On the other hand, weak PQ-schema group generated quality perception from the HQLP appeal similar to the HQ-only appeal. The HQLP appeal was favored more by weak PQ-schema group than strong PQ-schema group regardless of price level (t(19) = 2.5, p <.05 for moderately high price; t(20) = 4.18, p <.005 for low price). Another three-way interaction was obtained on purchase intention (F(2, 109) = 3.43, p <.05). Figure 2A and 2B shows two-way interactions on FIGURE 1B Interactive effect on quality perception for low PQ-inf group: Study 2.

16 790 M. Shirai FIGURE 2A Interactive effect on purchase intention for high PQ-inf group: Study 2. purchase intention for each group. The two-way interaction was significant for strong PQ-schema group (F(2, 50) = 6.82, p <.01), but not for weak PQschema group (F(2, 59) = 0.16, n.s.). The HQ-only appeal was favored more by strong PQ-schema group than weak PQ-schema group only when price was moderately high (t(21) = 4.72, p <.0001). The HQLP appeal was favored more by weak PQ-schema group than strong PQ-schema group regardless of price level (t(19) = 3.19, p <.005 for moderately high price; t(20) = 9.4, p <.0001 for low price). Price perception was not influenced by PQschema. There results indicate that H4a was supported for quality perception and purchase intention. H4b was also supported for quality perception and purchase intention, but in the case of moderately high price. Next, H5 was tested. We conducted three-way ANOVAs including price consciousness as a moderator for each dependent variable. The results revealed no three-way interaction on all dependent variables. Price consciousness only interacted with price on purchase intention (F(1, 108) = 6.51, p <.05); high price-conscious group lowered purchase intention more than FIGURE 2B Interactive effect on purchase intention for low PQ-inf group: Study 2.

17 High Quality, Low Price Appeal 791 FIGURE 3A Interactive effect on quality perception for high NFC group: Study 2. low price-conscious group when the price was moderately high. Hence, H5 is not supported. Finally, we tested H6. Three-way ANOVAs including NFC as a moderator were conducted. A marginal interaction was confirmed on quality perception (F(2, 90) = 2.93, p <.06). Figure 3A and 3B shows two-way interactions on quality perception for each group. The interaction was significant for high NFC group (F(2, 41) = 5.55, p <.01), but not for low NFC group (F(2, 49) = 0.27, n.s.). High NFC group generated lower quality perception from the HQLP appeal when the price was moderately high, whereas low NFC group generated quality perception from the HQLP appeal similar to the HQ-only appeal for both moderately high and low prices. The HQLP appeal was favored more by low NFC group than high NFC group when price was moderately high (t(15) = 3.46, p <.01). Purchase intention also obtained a marginal three-way interaction (F(2, 90) = 2.53, p <.06). Figure 4A and 4B shows two-way interactions on purchase intention for each group. A two-way interaction was significant for FIGURE 3B Interactive effect on quality perception for low NFC group: Study 2.

18 792 M. Shirai FIGURE 4A Interactive effect on purchase intention for high NFC group: Study 2. high NFC group (F(2, 41) = 8.17, p <.001), but not for low NFC group (F(2, 49) = 1.16, n.s.). The HQLP appeal was favored more by low NFC group than high NFC group regardless of price level (t(15) = 3.46, p <.01 for moderately high price; t(20) = 1.69, p <.1 for low price). High NFC group seems to prefer the HQ-only appeal more than the HQLP and LP-only appeals. Price perception was not influence by NFC. There results indicate that H6 was supported for quality perception and purchase intention. The results of Study 2 extend those of Study 1. The HQLP appeal influences consumer evaluations; however, this relationship has at least two moderators: PQ-schema and NFC. Most of the moderating effects of both the PQ-schema and NFC were observed in quality perceptions and purchase intentions. The HQLP appeal was less effective when the PQ-schema was stronger and when NFC was higher. Thus, PQ-schema and NFC hinder acceptance of the HQLP appeal. Also, the HQ-only appeal was effective for consumers with a strong PQ-schema. Price consciousness was not a modera- FIGURE 4B Interactive effect on purchase intention for low NFC group: Study 2.

19 High Quality, Low Price Appeal 793 tor; price conscious consumers paid attention to the actual level much more than the contextual appeal. GENERAL DISCUSSION Owing to tremendous interest retailers and manufacturers have in the role of contextual appeals, a substantial body of empirical evidence has been accumulated. However, little scholarly research has examined wording appeals particularly used for non-discounted prices. This research has sought to address this void and specifically focused on the commonly-used HQLP appeal. We intended to understand the psychological impact of this appeal on consumer evaluations and shed light on how this relationship is moderated by the consumers characteristics. The results of Study 1 show that the effects of the HQLP appeal vary depending on the level of product prices. In the case of high prices, the appeal leads to perceptions of lower quality than the HQ-only appeal, but higher quality than with the LP-only appeal, as expected. Since price quality inferences are evoked when evaluating high priced products, the appeal is not capable of leading consumers to perceive high quality. However, it still has some abilities to raise favorable price perceptions and purchase intentions. In the case of low prices, the HQLP appeal does not influence price perceptions and purchase intentions, but can still raise quality perceptions. Study 2 provides evidence that the HQLP appeal s effectiveness appears on quality perceptions and purchase intentions when consumers have a weak price quality schema and low need for cognition. Overall, the present research suggests that the HQLP appeal works differently depending on product prices and consumer characteristics. The primary contribution of this research is to provide additional understanding of contextual appeals that may influence consumers evaluations. In particular, it confirms the usefulness of appeals expressed only with words, a subject that has been the focus of relatively few scholarly studies. To the best of our knowledge, this research is the first to reveal the specific role of the HQLP appeal by showing its ability to attract consumers in the absence of price discounts. Moreover, this research shows that when consumers observe attractive, but inconsistent cues simultaneously, they are likely to focus on one cue more. When observing the HQLP appeal, they seem to value more on the high quality cue in the case of low price while they seem to value more on the low price cue in the case of high price. The former leads to higher quality perceptions and the latter leads to better price perceptions. Thus, the HQLP appeal may strengthen weak points of high priced and low priced products respectively. Furthermore, we also theorized that consumers belief of a positive relationship between price and quality moderates the impact of this appeal. The effect of this belief on contextual appeals has not previously been examined so that this study extends prior studies by show-

20 794 M. Shirai ing the existence of a new moderator. The present work also contributes to an understanding of the mechanism by which need-for-cognition moderates the impact of this appeal. This finding was consistent with research that suggests high NFC individuals do conduct cognitive work and evaluate information more cautiously than low NFC individuals (Haugtvedt et al., 1992; Inman et al., 1990). The effect of this concept and a similar concept on contextual appeals was analyzed by Inman et al. (1997) and Suri et al. (2007), but with a focus on restriction cues. This research provides additional information about the relationship between consumer characteristics and contextual appeals. In sum, this research offers theoretical contributions while adding to the growing literature documenting the impacts of various contextual appeals on consumers evaluations. This research has some implications for marketers. This research suggests that consumers pay attention to the HQLP appeal even though price discounts are not provided. This appeal has two attractive cues high quality and low price that many consumers seek to simultaneously obtain. Thus, despite the seeming contradiction inherent in this claim, consumers seem to favor it. Although its effect may be moderated by some consumers characteristics, it remains worthwhile to consider as an effective appeal in order to increase consumers attention or improve their attitude toward products, services, and stores. However, the use of the HQLP for high priced products should be adopted with caution as it can generate consumer perceptions of lower quality, although it may generate better price perceptions or purchase intentions. Perhaps, providing reasons for appealing low price with high quality or detailed information explaining how the low price was achieved while maintaining high quality. If retailers plan to emphasize mainly on high quality and wish to attract consumers who seek for high quality, then the use of HQ-only appeal might be more suitable. The current research also has several limitations that should be the focus of future research. First, joint effects of the HQLP appeal with discounted prices or other contextual appeals need to be examined. Discounts have been found to lead to lower quality perceptions (Raghubir & Corfman, 1999); however, providing a message assuring product quality helps counter this negative perception (Darke & Chung, 2005). Therefore, the HQLP appeal may also help to counter such negative quality perceptions. Moreover, as joint use of different contextual cues was found to be effective (e.g., Howard & Kerin, 2006), the effect of the HQLP appeal might be magnified when presented with other cues. Second, our subject pool consisted of a homogeneous student sample. Although we selected a product category after carefully considering the participants of our studies, the fact remains that shopping experiences, income levels, and interests differ. Analyses including adult, fully employed members of society are needed to confirm the general applicability of our findings. Finally, other product classes should be targeted and field experiments are necessary to confirm the results.

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