A Consumer Perspective on Price-Matching Policies: Effect on Price Perceptions and Search Behavior

12 Pages Posted: 18 May 2007

See all articles by Joydeep Srivastava

Joydeep Srivastava

University of Maryland - Robert H. Smith School of Business

Nicholas H. Lurie

University of Connecticut School of Business

Abstract

Although price-matching refund policies are common in many retail environments, the impact of such policies on consumers has largely been ignored. This article reports the results of three studies that examine price-matching policies from a consumer perspective. Study 1 shows that consumers perceive price-matching policies as signals of low store prices and that the presence of a refund increases the likelihood of discontinuing price search. Contrary to the predictions based on signaling theory in information economics, studies 2 and 3 show that when search costs are low, the number of stores searched increases in the presence versus absence of a price-matching policy. When search costs are high, consumers appear to accept the price-matching signal at face value and search less in the presence of a refund. The article concludes by discussing the theoretical implications of the findings and suggesting directions for future research.

Keywords: Price matching, pricing, information search, decision making

Suggested Citation

Srivastava, Joydeep and Lurie, Nicholas H., A Consumer Perspective on Price-Matching Policies: Effect on Price Perceptions and Search Behavior. Journal of Consumer Research, Vol. 28, September 2001, Available at SSRN: https://ssrn.com/abstract=987325

Joydeep Srivastava

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

Nicholas H. Lurie (Contact Author)

University of Connecticut School of Business ( email )

Storrs, CT CT - Connecticut 06269
United States

HOME PAGE: http://www.business.uconn.edu/person/nicholas-lurie/