How Does Local–Global Identity Affect Price Sensitivity?

Abstract

The authors propose that when consumers’ local identity is accessible, they are less likely to be price sensitive because of a sacrifice mindset. Six studies using divergent measures of the independent and dependent variables as well as diverse samples (students and nonstudents, U.S. and Chinese residents, primary and secondary data) produce consistent results. Furthermore, the authors demonstrate the mediating role of a sacrifice mindset by both measuring and manipulating this construct; they also identify boundary conditions of the association between a consumer's local identity and price sensitivity. Previous research has shown that consumers with a local identity display lower price sensitivity to brands with a local origin. In contrast, the results from this research show that consumers with a local identity display lower price sensitivity even to products with an ambiguous origin. Firms using a globalization strategy can try to activate consumers’ local identity to make them less price sensitive to their brands, without having to position the brands as local.