In-Store Experimental Approach to Pricing and Consumer Behavior

Abstract

This study assessed how, and to what extent, it is possible to use behavioral experimentation and relative sales analysis to study the effects of price on consumers' brand choices in the store environment. An in-store experiment was performed in four stores to investigate the effects of different prices of a target brand on consumers' relative buying behavior using an alternating treatment design with baseline. The intervention consisted of periodically reducing the target brand's price by 17–26%. Price reductions generally had none or minor effects. However, data for one store showed lower relative sales for the price reduction condition. These are surprising results and they underline the need to examine all of the marketing mix factors, not only price.

Keywords:

• alternating treatment design
• brand price
• consumers' buying behavior
• in-store experiments

Gratitude goes to the executives and store managers of Hagar in Reykjavik for access to the retail outlets used as an experimental setting. Valdimar Sigurdsson acknowledges the support provided by a postdoctoral grant from Rannís, The Icelandic Centre for Research.