Turning Unplanned Overpayment into Status Signals: Benefits of Mentioning the Price Paid

24 Pages Posted: 25 Jul 2015

See all articles by Aaron Garvey

Aaron Garvey

University of Kentucky

Simon J. Blanchard

Georgetown University - Robert Emmett McDonough School of Business

Karen Page Winterich

Pennsylvania State University - Mary Jean and Frank P. Smeal College of Business Administration

Date Written: July 23, 2015

Abstract

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

Garvey, Aaron and Blanchard, Simon J. and Winterich, Karen Page, Turning Unplanned Overpayment into Status Signals: Benefits of Mentioning the Price Paid (July 23, 2015). Marketing Letters, Forthcoming; Georgetown McDonough School of Business Research Paper No. 2635259. Available at SSRN: https://ssrn.com/abstract=2635259

Aaron Garvey

University of Kentucky ( email )

Lexington, KY 40506
United States

Simon J. Blanchard (Contact Author)

Georgetown University - Robert Emmett McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States

Karen Page Winterich

Pennsylvania State University - Mary Jean and Frank P. Smeal College of Business Administration ( email )

University Park, PA 16802
United States

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