Effects of Advertised Pricing on Brand Image for an On-Line Retailer

This study presents a conceptual framework on price endings and their effects on brand image and perceived quality and empirically tests several of the proposed relationships by using an experimental design. This research extends the work of Schindler and Kibarian (2001) who studied the use of 99 and 00-price endings as an important communication variable. The factorial design used a combination of price endings and perceived quality of the retailer as treatments to test three behavioural outcome variables: price image, quality image of the products and quality image of the retailer. Respondents viewed a simulated experimental webpage and provided feedback via an on-line survey entered through a point and click interface. This study contributes to the increasingly growing body of research on price endings and quality perceptions. It provides insights on the way subjects respond to price as a way of expressing quality image perceptions. In contrast to prior literature, the results suggest that respondents have a more favourable attitude towards 99-price endings. However, for a higher quality retailer the price difference may not be as important. Naipaul and Parsa (2001) found that respondents use 99-price endings as a cue for value, which suggests that adopting a specific pricing strategy does generate some key communication outcomes for a brand or retailer. Implications of these findings are reviewed and discussed