Turning Unplanned Overpayment into Status Signals: Benefits of Mentioning the Price Paid
Marketing Letters, Forthcoming
24 Pages Posted: 25 Jul 2015
Date Written: July 23, 2015
We investigate how mentioning the price paid to others (which we refer to as price-dropping) can be used to the negative experience that occurs when consumers realize they unintentionally overpaid for a product. Specifically, we show that by engaging in price-dropping, consumers re-appropriate the overpayment into a conspicuous consumption signal that improves their satisfaction. Two studies demonstrate that the effect of price-dropping is mitigated when consumers who had overpaid have low sensitivity to status cues, and also when the audience of the price-drop is unreceptive to status cues. We discuss how price-dropping has implications for retailer pricing policies and the customer experience, along with avenues for future research.
Keywords: conspicuous consumption, pricing, overpayment, status, retailing
JEL Classification: M30, M31, M37, M39
Suggested Citation: Suggested Citation