How unit price awareness and usage encourages grocery brand switching and expenditure

https://doi.org/10.1016/j.jretconser.2019.04.010Get rights and content

Abstract

Previous research has suggested that unit price information encourages shoppers to switch to the cheapest products available to reduce grocery expenditure, something that is rarely a commercial goal for retailers or manufacturers. Further, past unit pricing research has largely not considered other factors, like brand dominance or the range of product alternatives available within a category, despite these being likely to influence switching behaviour. Accordingly, this current study examines longitudinal field experiment data to explain how unit prices impact brand switching and overall grocery expenditure. In contrast to the commonly held belief that consumers ‘save’ money once educated about unit pricing, findings demonstrate shoppers select mid-range unit priced products and reinvest ‘savings’ back into their weekly grocery budget. Further, our results also show substantial product category differences in switching behaviour. The study offers theoretical insights and important practical implications for retailers and product manufacturers.

Section snippets

Unit pricing research

Diffusion of unit pricing research began in line with the promotion of unit price programs among several large supermarkets in the United States during the early 1970s (Isakson and Maurizi, 1973; Monroe and LaPlaca, 1972; Kilbourne, 1974). It remains topical today with researchers examining both consumer and retailer impacts (Johnston and Cortez, 2018; Roth et al., 2017; Yao and Oppewal, 2016; Weeks et al., 2016). Scholars initially sought to measure consumer knowledge, awareness,

Brand switching

Brand switching behaviour has been examined in a range of settings, including services (Keaveney, 1995; Pick, 2014; Tesfom et al., 2016), automotive retailing (Sambandam and Lord, 1995), banking and finance (Chakravarty et al., 2004; Mohsan et al., 2011) and retail channels (Chiu et al., 2011; Mutum et al., 2014; Reardon and McCorkle, 2002). More commonly however, it has been studied within the realm of grocery stores and supermarkets, where the frequency and low involvement nature of

Theoretical framework and hypothesis development

In contrast to classic economic theory, which assumes transitive preferences and utility maximization, research in judgement and decision-making reveals that consumers regularly do not have fixed and well-defined rankings of preferences, do not always make rational decisions in relation to those preferences, and often make choices only at the time a decision is required (Bettman and Park, 1980; Slovic, 1995). Choices can be dependent on the presence or absence of other alternatives (i.e.,

Methodology

To test our hypotheses, we provide a new analysis of the dataset recently reported in Weeks et al. (2016). That work involved a field experiment examining the value of providing consumer education to shoppers about unit pricing and how to use it, and observing impacts on real grocery expenditure longitudinally across 20 weeks. It was found that while a no-education control group tended to display roughly the same average spend per item each week, two experimental groups receiving consumer

Dataset and method of collection

The dataset to be analysed was collected as part of research reported in Weeks et al. (2016). It is based on approximately 15,600 grocery receipts provided by 302 household shoppers across a 20-week longitudinal field experiment. Shoppers were recruited through an advertisement in national newspapers in Australia for a study on “grocery shopping habits”. They were individuals aged over 18 years who were the regular shopper for a household, and who purchased groceries on a weekly or near-weekly

Results

To address H1, which predicts that shoppers sensitized to unit pricing will switch to a new product that has a middle-ground unit price (not simply be the cheapest available), we documented the range of unit prices paid within the dataset for each of our eight product categories. We then considered where the average final unit price paid by our shoppers fell within this range, as an indicator of magnitude of the unit price of purchased product. In support of H1, for each product type in all

Discussion

Previous research has raised concern that the provision of unit pricing encourages shoppers to switch to the cheapest products available and reduce grocery expenditure (Isakson and Maurizi, 1973; Manning et al., 2003; McGoldrick and Marks, 1985). Our research does not support this view. In our analysis we found for products in all eight categories examined, the average final unit price paid by shoppers educated about unit pricing was at a middle-ground within the range of unit prices available

Limitations and future directions

While this study contributes to current literature and practice by examining the effects of how unit price driven brand switching behaviour is moderated by characteristics of the product category, limitations exist that provide opportunities for further research. Firstly, while across the 20-week dataset we observed a range of switching behaviour, these observations were constrained to the eight packaged grocery categories chosen (teabags, instant coffee, sauce/ketchup, fresh eggs,

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