Postpurchase Implications of Low Price Guarantees and Consequences of Low Price Guarantee Default

Past research on consumer perceptions related to Low Price Guarantees (LPG) have primarily investigated effects of LPG on consumer search intentions, their perception of offer value and their purchase intentions. The present research had two major objectives: (i) to study the probable effect of LPG on consumers' intentions to search after the purchase and the boundary conditions of such effects; (ii) to study probable consequences of default of an LPG, that is, postpurchase discovery of lower prices in the marketplace despite promise to the contrary. It was shown that while LPG is likely to discourage prepurchase search it might encourage postpurchase search, subject to the level of penalty and consumer value and price consciousness. With respect to an LPG default, factors such as the location of the default ("within store" versus "between store"), the size of the default (the difference between the paid price and the later discovered lower price) and the time of the default (the period of time that elapsed between purchase and discovery of a lower price) are important and their effects on such consumer perceptions as attitude toward the retailer, perceived retailer credibility and repurchase intention were investigated subject to suitable boundary conditions. Two experiments were conducted to test proposed hypotheses. Theoretical and managerial contributions of the findings are discussed and suggestions for possible future research are provided.