Marketers know that price image—a consumer's impression of the overall price level of a retailer—is important. But they don’t have a clear picture of how price images are formed and how they influence consumer behavior. Ryan Hamilton and Alexander Chernev develop a framework of the key drivers of price image formation and their consequences for consumer behavior.
What you see is not what you get with prices: A retailer can have a low price image despite having relatively high average prices, and vice versa.
They identify several price-related and non-price factors that contribute to price image formation, such as store location and service levels. They find that under some conditions these non-price factors can overcome the impact of average price level, resulting in a low price image despite a retailer's relatively high prices, as well as conditions in which a retailer has a high price image despite its relatively low average price level.
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Low Prices Are Just the Beginning: Price Image in Retail Management by Ryan Hamilton and Alexander Chernev, Journal of Marketing (November 2013)
