Handbook of Research on Retailing
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Handbook of Research on Retailing

Edited by Katrijn Gielens and Els Gijsbrechts

The advent of e-commerce and the rise of hard discounters have put severe pressure on traditional retail chains. Boundaries are blurring: traditional brick & mortar players are expanding their online operations and/or setting up their own discount banners, while the power houses of online retail are going physical, and hard discounters get caught up in the Wheel of Retailing. Even successful companies cannot sit back and rest, but need to prepare for the next wave of change. In the face of this complexity, it is all the more important to take stock of current knowledge, based on insights and experience from leading scholars in the field. What do we know from extant studies, and what are the ensuing best practices? What evolutions are ahead, and will current recipes still work in the future? This Handbook sheds light on these issues.
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Chapter 6: Price image in retail management

Alexander Chernev and Ryan Hamilton

Abstract

Price image reflects customers’ perception of the overall level of prices at a given retailer. The authors propose a conceptual framework delineating price image antecedents and consequences, and discuss factors that are likely to influence the formation of price image. In doing so, the authors challenge the conventional wisdom that price image is determined solely by the prices of the items carried by a particular retailer and, consequently, that managing (lowering) price image merely involves managing (lowering) this retailer’s prices. Simply lowering prices without managing the other price image drivers might not be sufficient to produce a significant change in a retailer’s price image. To effectively manage price image, retailers must also optimize non-price factors, such as the dispersion of prices across the different offerings carried by the retailer, the rate and magnitude of price changes over time, price-related communications, the physical characteristics of the store, the level of service offered, and the retailer’s policies. In addition, the authors delineate two basic ways in which price image can influence consumers: by influencing consumer beliefs about the competitiveness and fairness of a retailer’s prices and by influencing such consumer behavior as which store to patronize, whether to make a purchase from a given store, and how much to purchase.

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