I Saved a Hundred Thousand Rupiahs on That Camera! Attitude Change Following Price Reductions in an Unfamiliar Currency

ABSTRACT - How does an American tourist respond to a price differential of a million rupiahs in Indonesia, as opposed to the roughly equivalent value of eleven euros in Spain? Are consumers who shop around in foreign markets acting rationally when they compare prices in an unfamiliar currency? We address this issue by examining how consumers from different countries respond to such price differentials. We develop hypotheses regarding the impact of currency denomination familiarity on consumers’ attitudinal response to changes in prices. The results of an experimental study conducted in Italy and the United States support our proposition that consumers who are more familiar with the foreign currency’s denomination will be more influenced by price differentials than those consumers who are less familiar with the foreign currency’s denomination. We discuss the implications of our findings for pricing strategies in regional trade zones, international tourism, and global e-marketing.

Citation:

Dawn Lerman (2003) ,"I Saved a Hundred Thousand Rupiahs on That Camera! Attitude Change Following Price Reductions in an Unfamiliar Currency", in E - European Advances in Consumer Research Volume 6, eds. Darach Turley and Stephen Brown, Provo, UT : Association for Consumer Research, Pages: 382.

European Advances in Consumer Research Volume 6, 2003      Page 382

I SAVED A HUNDRED THOUSAND RUPIAHS ON THAT CAMERA! ATTITUDE CHANGE FOLLOWING PRICE REDUCTIONS IN AN UNFAMILIAR CURRENCY

Michael Callow, Morgan State University, USA

Dawn Lerman, Fordham University, USA

ABSTRACT -

How does an American tourist respond to a price differential of a million rupiahs in Indonesia, as opposed to the roughly equivalent value of eleven euros in Spain? Are consumers who shop around in foreign markets acting rationally when they compare prices in an unfamiliar currency? We address this issue by examining how consumers from different countries respond to such price differentials. We develop hypotheses regarding the impact of currency denomination familiarity on consumers’ attitudinal response to changes in prices. The results of an experimental study conducted in Italy and the United States support our proposition that consumers who are more familiar with the foreign currency’s denomination will be more influenced by price differentials than those consumers who are less familiar with the foreign currency’s denomination. We discuss the implications of our findings for pricing strategies in regional trade zones, international tourism, and global e-marketing.

----------------------------------------