Edward A. Blair, Judy Harris and Kent B. Monroe

The research presented in this article examines when the use of "regular price" claims in retail advertisements might be damaging to a store's price image. The results suggest that retailers should not cite regular prices in advertisements for branded shopping goods if those prices are not competitive with offering prices at other stores.

Previous research has shown that citing a regular price along with a sale price can increase consumers' estimates of the regular price, and, by inference, their estimates of the lowest price in town for the advertised item. As a result, the regular price claim has the effect of (1) increasing the perceived value of the deal relative to regular price and (2) decreasing perceptions of savings to be gained by additional shopping. Both of these are positive outcomes for a retailer.

In this research, we demonstrate that these findings are modified when consumers have access to price information from competing stores (which we call shopping information). When consumers have access to shopping information, an advertised claim about the store's regular price continues to influence their estimates of that price, but has less influence on their estimates of the lowest price in town. As a result, if a store uses regular price claims to certify the value of its offering prices, and those regular prices are higher than offering prices at other stores, the claims may have the unintended and unfortunate effect of convincing shoppers that the store's regular prices are high without convincing them that its sale prices are low.

We demonstrate these effects in three experimental studies. In Study One, participants estimated the regular and sale prices of a VCR in response to a retail advertisement with or without a "regular" price claim. Some participants provided these estimates before shopping at stores for a VCR, and some provided the estimates after shopping. In the pre-shopping condition, the use of a "regular" price claim raised participants' estimates of both the store's regular price and the lowest price in town, as has been found in previous research. In the post-shopping condition, the use of a regular price claim continued to raise participants' estimates of the store's regular price, but did not influence their estimates of the lowest price in town.

In Study Two, we replicated this pattern of effects using advertising from competing retailers instead of store visits as the source of shopping information.

Study Three extended the findings from price estimates for a single product to ratings of a store's general pricing. Participants were shown a week-by-week series of ads for color inkjet printers. Half of the subjects saw ads only for a focal store (without shopping information), and half saw ads for the focal store and a competitor. The focal store's ads either did or did not use regular price claims. The results showed that when shopping information was not available, the use of "regular" price claims resulted in perceptions that the focal store's sale prices were lower compared with other retailers, without significantly raising perceptions of the store's regular prices. This result is desirable for a retailer. However, when shopping information was available, "regular" price claims resulted in higher perceptions of the focal store's regular prices without affecting perceptions of its sale prices. This result is undesirable.

The results of these studies imply that "regular" price claims may be harmful for retailers in certain situations. When consumers have access to information about prices at competing retailers, the use of regular price claims may convince them that a store's regular prices are higher without convincing them that its sale prices are lower. The implication for retailers is that regular price claims should not be used for branded shopping goods when the price is easy to compare across stores, unless the regular price itself (rather than just the sale price) is competitive. Instead, retailers should consider dropping comparative prices from their ads, or replacing regular price claims with other forms of comparative prices such as a manufacturer's suggested retail price or a "sold by others at _______" claim.