Effectiveness of Exaggerated Advertised Reference Prices: The Role of Decision Time Pressure

Despite the prevalence of exaggerated advertised reference prices (ARPs) in retail ads and the potential for consumer vulnerability to false reference prices, research identifying boundary conditions to the effectiveness of exaggerated ARPs is scarce. We demonstrate that exaggerated ARPs are much more effective in favorably influencing consumers’ perceptions of retail offers when they feel time pressure while evaluating such offers. Further, although past research indicates that high promotion frequency weakens the effectiveness of exaggerated ARPs, we show that this is not observed when time pressure is present. We discuss the implications of this research and provide directions for future research.

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► Identifying boundary condition to the effectiveness of exaggerated ARP.
► Exaggerated ARPs are more effective in favorably influencing consumers’ perceptions of retail offers under time pressure.
► In the presence of time pressure, high promotion frequency does not weaken the effectiveness of exaggerated ARPs.
► Managerial and public policy implications are discussed.