Relationship between product groups' price perceptions, shopper's basket size, and grocery store's overall store price image

Abstract This research investigates how consumers form an overall store price image (OSPI) of grocery stores. Whereas prior research on this topic has explored the influence of the number of products offered at lower prices and of the magnitude of such price reduction, this study addresses the following two questions: How do the (lower) prices offered on different types of products influence OSPI? Does such influence vary across consumers, and, if so, how? A general framework of product‐price saliency on consumers' OSPI is developed and tested. Specifically, based on two product‐related factors— consumption span (length of time required to finish the consumption of a standard unit of the product) and unit price, grocery‐store products are classified into four exhaustive and mutually exclusive product groups, and the relationship between OSPI and group‐level price perceptions across the four product groups is examined. The framework also examines to what extent this relationship is moderated by consumers' shopping‐basket size. Consistent with the proposed framework, this research finds strong empirical evidence of a systematic but differential relationship between OSPI and product group‐level price perceptions and also a systematic interaction effect with consumers' basket size. The findings help to identify focal product categories across distinct consumer segments and thus hold important strategic implications for category management and target marketing that are likely to increase the overall effectiveness of retail promotional strategies. © 2003 Wiley Periodicals, Inc.