Retailers’ Use of Partially Comparative Pricing: From Across-Category to Within-Category Effects

Abstract

Prior research suggests that partially comparative pricing—in which a retailer provides price comparisons for some, but not all, of its products—is a double-edged sword. On the one hand, such pricing improves beliefs about the retailer's competitive price advantage on comparatively priced products for which its prices are compared with a competitor. On the other hand, it has been shown to damage perceptions of the retailer's noncomparatively priced products relative to those charged by the competition. However, this latter outcome is based on evidence examining the influence of partially comparative pricing across different product categories. The authors propose and demonstrate in five studies that price comparisons may actually improve relative price beliefs about the noncomparatively priced brands within the same product category. They further show this improvement to be attenuated as the number of price comparisons increase or when the price comparison is attached to a brand perceived as less typical of the product category. The authors conclude by drawing managerial implications and offer suggestions for further research.