Vulnerability to Low-Price Signals: An Experimental Study of the Effectiveness of Genuine and Deceptive Signals

Low-price guarantees help buyers make inferences about retailers’ prices. However, researchers are concerned that consumers might be vulnerable to relying on guarantees associated with high market prices. Furthermore, truly low-priced retailers that issue low-price guarantees might be vulnerable to consumers’ discounting of such guarantees. This article experimentally assesses these concerns and finds that the effects of adding a low-price guarantee to a low or high offer price on consumers’ pre-purchase perceptions depend on consumers’ confidence in their product category price knowledge and their decision involvement. The article explores the implications of the findings and provides directions for further research.

Graphical abstractFigure optionsDownload full-size imageDownload as PowerPoint slideHighlights► Retail low-price guarantees (LPG) act as signals of low prices. ► Therefore, LPGs associated with low (high) offer prices are genuine (deceptive). ► Consumers with low price confidence respond favorably to genuine or deceptive LPG. ► A genuine LPG does not affect perceptions of more confident consumers. ► However, a deceptive LPG favorably affects their perceptions.