The Influence of the Dominance Perceived At the Point-Of-Sale on the Price-Assessment

ABSTRACT - On the one hand, a commercial enterprise offering a unique service is able to work out a price-political freedom making it possible to withdraw from the low-cost competition at the point-of-sale. On the other hand, even those differentiation-retailers have to be aware of the danger of being reputed to sell at excessive prices. It stands to reason that to use differentiation-strategies in merchandise binds inevitably more financial means in store-design and merchandise-presentation than price-leaderships, since the advantage of differentiation can often only be visualized by the store-ambience. However, often luxurious, palatial shopping locations are built in which the consumers get the impession of being cheatedBeven if the retailers objectively ask for Afair@ prices. In these cases, the particular differentiation-performance is not honored. Instead, the consumers ascribe an exaggerated price standard to the shopping location. In the following article the question is asked which effect the store-atmosphere should have on the mood of the consumers to create a positive value-for-money-image preventing a usurious image. Therefore, an environmental-psychology-orientated study is presented. The results show that the center of a successful differentiation strategy is consistent customer-orientation and not the preciousness of the store-design.



Citation:

Andrea Groeppel-Klein (1998) ,"The Influence of the Dominance Perceived At the Point-Of-Sale on the Price-Assessment", in E - European Advances in Consumer Research Volume 3, eds. Basil G. Englis and Anna Olofsson, Provo, UT : Association for Consumer Research, Pages: 304-311.

European Advances in Consumer Research Volume 3, 1998      Pages 304-311

THE INFLUENCE OF THE DOMINANCE PERCEIVED AT THE POINT-OF-SALE ON THE PRICE-ASSESSMENT

Andrea Groeppel-Klein, European University Viadrina, Frankfurt (Odes)

ABSTRACT -

On the one hand, a commercial enterprise offering a unique service is able to work out a price-political freedom making it possible to withdraw from the low-cost competition at the point-of-sale. On the other hand, even those differentiation-retailers have to be aware of the danger of being reputed to sell at excessive prices. It stands to reason that to use differentiation-strategies in merchandise binds inevitably more financial means in store-design and merchandise-presentation than price-leaderships, since the advantage of differentiation can often only be visualized by the store-ambience. However, often luxurious, palatial shopping locations are built in which the consumers get the impession of being cheatedBeven if the retailers objectively ask for "fair" prices. In these cases, the particular differentiation-performance is not honored. Instead, the consumers ascribe an exaggerated price standard to the shopping location. In the following article the question is asked which effect the store-atmosphere should have on the mood of the consumers to create a positive value-for-money-image preventing a usurious image. Therefore, an environmental-psychology-orientated study is presented. The results show that the center of a successful differentiation strategy is consistent customer-orientation and not the preciousness of the store-design.

1. THE CURRENT STRATEGIC BASIS IN RETAILING

The food retailer is hardly shocked by the price-competitions of the rivals.

"Anyway, it was sensational news when Bremke & Hoerster (1.4 billion DM overall turnover) opened up a new FrizBlow-price-hypermarket. 100 g of chocolat was sold there for 0.20 DM for the first time in German postwar-history. "That is less than the prewar-price." (Giersberg 1995, p.29).

In many industrialized countries discounts are the winner of the century. The discounts in Germany were able to increase their market share from 8.9 per cent to 15.5 per cent from 1983 until 1993. For the year 2000 a market share of about 20 per cent is forecasted according to Nielsen (Fikenscher 1995). The triumph of the discounts, which is not restricted to the food-trade, is carried out particularly at the cost of the traditional specialist stores. This form of business (in the former Western Germany states) had to face a drastic loss of the market share (1980: 55.4%B1995: 35.4%, Mnller-Hagedorn 1995, p.250).

The waves of internationalization have not become shallow yet and an increase in the number of foreign businesses in German non-food-trade is to be expected (Zentes/ Ferring 1995,p. 434). The British department-store-branch of Marks & Spencer will probably enter Germany with 20 outlets (4000 sq.m. of selling space each) in the course of its European expansion (LZ 1995, p.4).

"To shop for clever bargains" is a shopping motive that can be observed on an international level and is relevant for all income classes. Compared to the 80s, the consumers shop more price-orientated, also in respect of brand-name-articles. "Bargain-guides" containing addresses of factory-outlets which sell brand-name-articles giving price-reductions find a ready market.

Conclusion: Retailing has entered a decisive stage of competition which not all participants will pass without harm. Many retail businesses complain about extrem yield losses. The small-scale retailers in particular have to fear losing their livelihood, the less so since many of them survive just because they live in their own houses paying no rent or they do not pay real management wages.

The search for solutions in this precarious situation is a special challenge for marketing and leads to dealing with Michael E. Porter’s "competetive strategies" (1980, 1982). The application of this typology is discussed any time the competitive powers become more important in periods of stagnating economic growth (Nieschlag/ Dichtl/ H÷rschgen 1991, p.884). Porter’s theses have not only become wide-spread in many publications about strategic management, and have initiated a lot of empirical studies, but have also called up a few critics (e.g. Miller and Dress 1993).

2. PORTER’S COMPETITIVE STRATEGIES

Porter discusses three potentiall successful strategic approaches for companies to outdo the competitors: overall cost leadership, differentiation and focus. The focus should be dealt with either by overall cost leadership or by differentiation. To follow up one of these generic strategies consistently is a major competitive advantage according to Porter’s view. Porter argues that companies pursuing either a strategy of cost leadership or a strategy of differentiation are in essence more successful than companies which cannot decide on either one startegy and are therefore "stuck in the middle", as Porter puts it.

Within the scope of two empirical studies, Gr÷ppel (1993 and 1996) analysed the hypotheses whether Porter’s (1992) competitive strategies in non-food-retailing can be identified and whether retailers realizing a competitive advantage in the sense of Porter are significantly more successful than companies that are "stuck in the middle". The hypotheses have been verified. The empirical findings show that it is particularly recommendable for specialist stores to stringently follow up a strategy of differentiation.

The goal of differentiation strategy is to create a unique image which the consumers bear in mind clearly and consistently, and which is distinctive from other stores in that location. By applying a unique image the retailer’s prices cannot be compared with those of competitive retailers. Therefore, differentiation is a strategy which is "able to survive" because the uniqueness of this performance reduces the price-sensitiveness of the customers so higher prices and a higher profit margin can be obtained (Porter 1992, p.42). Nevertheless, the costs have to be taken into consideration as well when applying a differentiation strategy. The uniqueness of the store can often only be experienced by the customer through the design of the store-interior. Generally speaking, the costs of store-design and merchandise-presentation are higher for differentiation strategies than for overall cost leadership strategies. Talking about merchandise differentiation, it is often understood as building bombastic "castles of marble and glas". As a result, extreme financial means are fixed in the building or on store-design. The investments cannot be amortized within the short cycles to the following store erosion. As a consequence, either the higher profit margins are lost or high costs for the interior of the store or the building result in selling the goods at excessive prices which are not competitive. Even if a trade company offers a very elegant store-interior, high-quality merchandise and an excellent service at a fair price seen from an objective point of view, a demand problem can arise. If apparantly exclusive materials have been used for the store-design, this can have a boomerang-effect, irrespective of the objective prices asked for. The effect of an apparent store-design on the price-image can be explained by an attributional theoretical point of view (see Gr÷ppel 1996). This means, the atmosphere perceived at the point-of-sale does not evoke a longer stay or willingness to buy but causes the customers to think of a "usury-image" of the shopping location and to refrain from buying there. This induces the question of how exclusive the design of a store should be or must be to give the target group aimed at by the concept the impression of moving about in a unique buying-atmosphere on the one hand, and where fair and absolutely not excessive prices are demanded on the other hand. The fact that the customers entering a store have different demands has to be respected as well. This leads to the question which store-atmosphere generates positive price-images for the customers?

3. PRICE-IMAGES OF STORES

The price-image of a store (Diller 1991; Mnller-Hagedorn 1993; Simon 1992) can be defined as the buyer’s individual assessment of the pricing of merchandise with respect to Nystroem (1970), irrespective of whether the store does really sell products at obectively low price or not. Price-images are of long-term stable, but changeable character and can determine behaviour the same way as general images do. The price-image has a significant meaning because it can influence the choice of shopping location and the number of sales (Simon 1992, p.534; Lenzen 1984). The influence of the price-image is particularly high if the consumer has a low knowledge of prices.

The knowledge of prices varies because of different motives and different levels of information from individual to individual, from assortment to assortment (Mnller-Hagedorn 1993, p.216; Diller 1988). The average consumer knows the prices of everyday essentialsBespecially of foodBbetter, or has more specific images of fair product prices than regarding non-food-items of shopping-goods and specialty-goods. Price-images of goods purchased occasionally do exist, although there is no code on a metric scale but in many cases just some point on an ordinal scale (A is more expensive than B). In addition to this, a store’s price-image for shopping goods and specialty-goods is not generated according to the price-information only. Evaluating, consumers do look for items to assess in the range of other marketing-mix-instruments of the point-of-sale (store-design, merchandise-presentation, sales personnel, etc).

Therefore, price-images are being brought into existance according to the product branch, or the knowledge of the consumers based on different information. Diller (1992, p.906) suggests to specify the term "price-image" more precisely than Nystroem (1970) and to deal with different ways of price-evaluation. The subjective price-assessments are differentiated once more into "value-for-money-assessments" and "cheaper-price-assessments". Explicit definitions of these terms are stated by Lenzen (1984):

A cheaper-price-assessment is the "currently present and assessed result of a price comparison, respectively the currently present subjective assessment of the prices of the relevant assortment of a store carried out and taken over by the consumer (i.e. the assessment of individual prices and/ or of the price range of the totalities of an article)" (Lenzen 1984, p.36). For the cheaper-price-assessment only the price comparison is carried out disregarding the quality-assessments (product A is cheaper than product B).

The value-for-money-assessment is different. Value-for-money-assessments are based on price-assessments regarding the given performance and therefore represent cost-effectiveness. That is the reason why Lenzen (1984, p.37) defines value-for-money as the currently present subjective assessment of the prices of the relevant assortment of a store carried out and taken over by the consumer in connection with components regarding quality: The quality of an article as well as the details of the purchase that are not related to the price. The details of buying include the equipment of the selling space and of the store-windows, the share of self-service or the assortment given, for example.

Conclusion: Price-assessments can be differentiated between cheaper-price-images and value-for-money-images. If subjective price-assessments are generalized, we speak of price-images. The generic term price-image sums up two different types of images: A value-for-money-image is a long-term stable attitude towards the cost-effectiveness of a business based on value-for-money-assessments. A cheaper-price-image is based on the generalization of cheaper-price-assessments, which means that price comparisons (spot checks) occasionally carried out coin the attitude towards the business. Price-images are as dynamic as attitudes and adjust themselves to the relevant new price-experiences. There is no clear dividing line between the two types of price-images.

Diller (1984 and 1991, p.282f.) suggests adjusting the pricing-policy to value-for-money to those retailers who wish to profile applying a differentiation strategy. If the store succeeds in having the effect of seeming unique from the customers’ point of view, the store does not have to fear getting entangled in competitiv pricing. Cheaper-price-assessments cannot be carried out due to the uniqueness of the price and the missing comparing measurements. This does not mean that retailers can sell their goods at any excessive price. Consumers do have a threshold concerning their willingness to spend money their willingness to buy and have subjective views on fair price-performance-ratios (Schmalen 1995, p.11). A shopping location applying a differentiation strategy should aim at imposing a clear, positive value-for-money-image in the minds of its customers.

4. ENVIRONMENTAL PSYCHOLOGICAL CONTRIBUTIONS TO EXPLAIN VALUE-FOR-MONEY-IMAGES

4.1. Environmental Psychological Contributions to In-store Marketing

Environmental psychology is a field aiming at finding out whether physical (material) environment (e.g. buildings, landscapes, items of furniture) influences the behaviour of the people living in this environment and in what way the environment can be arranged to influence human behaviour. Environmental psychology proceeds from the assumption that an individual strives for taking over its surrounding, i.e. it tries to find its way in an unknowm surrounding to categorize it and to be able to state an emotional overall impression. The interaction of mankind and environment is arranged by mental (cognitive and emotional) processes (Graumann/Schneider 1988, p.17).

Depending on whether more cognitive or more emotional processes evoked by the environment, are subject of scientific interest, we speak of a primarily cognitive or a primarily emotional approach of environmental psychology. Environmental psychology does not seperate cognitive and affective theories being aware of the fact that most psychological processes have cognitive as well as emotional features (Kroeber-Riel 1992, p.427). The adjective "primarily" is used to state which inner process predominates.

Environmental psychology analyses which cues people use to draw conclusions from the objects and people in the respective environment. Environmental psychological considerations have been useful for marketing of shopping locations and still are (Gr÷ppel 1995). Not being informed about or not having a manifest attitude towards the service quality or the assortment quality of a store, consumers try to get information for their purchasing decisions from the store-environment (Bloom/ Reve 1990; Nisbett and Ross 1980; Zeithaml 1982 and 1988; Baker, Grewal and Parasuraman 1994). This information about environment can be used for decisive heuristics. Gardner and Siomkos (1985) have found out in an empirical study that consumers assess a perfume presented in a noble shopping atmosphere significantly better than the same perfume sold in a discount atmosphere. The customers should perceive the music played in a store as being "adequate" for the shopping situation, according to a study by Areni and Kim (1993). For example, an American winery was able to obtain significantly higher turnovers playing classical music (Mozart, Chopin, Vivaldi) than choosing the current top-forty-chart as background music. Explanation: The consumption of wine is experienced as being very sophisticated and is therefore connected to a higher prestige in the USA. That is why classical music is perceived as being most adequate for the purchase of wine.

Not exclusiveness but the appropriateness of the store-interior seems to be a key to success. A study by Baker, Berry and Prasuraman (1988) shows that if a bank has a very expensive and luxurious fitting, the American customers think that the bank is wasting the money of its customers. A precious fitting is not assessed as a sign of high performance but of prodigality by the customers. The study evaluates which effects the environmental stimuli given and perceived at the point-of-sale have on the perceived price-performance-rato. The fact that people are used to a more or less luxurious environment in different ways and that therefore people have different standards of demand has to be taken into consideration as well.

In order to answer this question the environmental psychological behaviouristic model by Mehrabian and Russel (1974) can be considered: Different environmental stimuli, characterized by the so-called "information rate", evoke states which determine the response ("approach" or "avoidance") to the environment as intervening variables. Objectively the same stimuli can lead to different response as a result of different personal predispositions. Mehrbian and Russel blame three different intervening variables for the response of approach or avoidance in their model: pleasure, arousal and dominance. According to Mehrabian (1987, p.24) arousal means how "active, excited, stimulated, over-excited, fidget" you feel. "Pleasure" in the sense of Mehrabian is used to state that you are joyful and in a good mood. "Dominance" states that you "feel superior, you feel like you have a lot of influence, you are unhindered and important or you feel like you handle the situation" (Mehrabian 1987, p.24). Those environments result in a maximum shopping behaviour, an increase of arousal, an increase of pleasure and a feeling of dominance (ibid p.173).

In Donovan’s and Rossiter’s study (1982), which has to be considered a "classic" by now, the model by Mehrabian and Russel (1974) was transfered to the environment "shopping location" for the first time. 30 test subjects picked coincidentally were inquired about their impressions of the relevant tested object as well as their willingness to spend money, to stay in the store, and whether they wanted to come back or not. They revealed that especially pleasure evoked at the point of sale and the arousal preceived there are responsible for a longer stay and willingness to spend money. Donovan and Rossiter (1982) could not verify the significant effect of the emotional dimension "dominance" on a response of approach or avoidance in their study.

Having weighed the scientific arguments (Rossiter 1982; Donovan/Rossiter 1982; Russel/Pratt 1980, p.313; Donovan et al. p.284) are of the opinion that the variable "dominance" has to be taken into consideration when analysing the effect of the store-design on the price-performance-ratio perceived:

If not only motoric (e.g. duration of stay), but also verbal affective and cognitive output-sizes (e.g. the value-for-money-assessment) are measured regarding reactions at the point-of-sale, it seems to make sense to keep at least one of the intervening variables with a more cognitive orientation in the model to oppose it to prevailing cognitive reactions. Reasons regarding contents support a causal connection of the dominance perceived at the point-of-sale and the price-assessment of a store.

4.2. The influence of the intervening variable "dominance" on the price-image

At the point-of-sale "dominance" means that the consumer feels free, secure, superior or strong. Such a feeling is needed to feel at ease in a store. The consumer must not be intimidated by the in-store-factors (Mehrabian 1987).

On the one hand, an extremely luxurious store-ambience could lead to negative reactions, if the consumer staying in this environment feels helpless or does not know how to handle the situation anymore and how to behave at all at the point-of-sale. We can assume that if a consumer becomes aware of being inferior, this generates a desire to leave the store resulting in a negative attitude towards the store. The latter may relate to the price-assessment, that is the consumers may get the impression of having to pay excessive prices (danger of usury-image). On the other hand, an exclusive store-interior may lead to positive reactions and may be appreciated. This is the case if the consumers feel dominant. It is not essential for that which follows whethe the consumers prefer more or less exclusive stores or not, due to their different standards of demand or their habits. It is essential whether they feel free, secure and superior at the point-of-sale. The "perceived dominance" might represent a construct to explain why some people prefer a very exclusive store-environment whereas others avoid it, irrespective of their standards of demand. All the time we assume that the intervening variable "dominance" is influenced by the style of store-design. The dominance perceived at the point-of-sale can influence the appearance and behaviour of the sales personnel to a considerable amount. This aspect is not to be analysed empirically and consequently shall not be dealt with any further. The hypothesis to be examined is the following:

(1) The stronger the consumers’ perception of dominance at the point-of-sale, the stronger positive the price-assessment at the point-of-sale.

The cause and effect connection shall not be analysed as an isolated feature but as part of the environmental-psychological behaviouristic model. Hence, the other states must not be neglected:

The dominance perceived and the dependent variable "price-assessment" should not only be connected in a significantly positive way, but in addition to this, the dominance perceived at the point-of-sale should be the size influencing the price-assessment the most. Only by comparing it with the remaining two emotional states of the Mehrabian and Russel-model the actual relevance of the variable "dominance" can be determined.

Within the scope of this thesis the value-for-money-images are defined as generalizations of price-performance-assessments. To generate a positive value-for-money-assessment, it has to be guaranteed that dominance does not only have a positive effect on the price-assessment but also on the evaluation of the performance given at the point-of-sale or at least that it does not impair the latter. It has to be checked whether a positive sign can be added to the relationship "dominance" ¦ "performance-assessment".

According to a study by Donovan and Rossiter (1982, 1994) the emotional state of "pleasure/desire" evoked at the point-of-sale influences the in-store-behaviour the most. Hence, it can be assumed that there is a connection of this variable on the one hand and the reactions at the point-of-sale on the other hand.

The results of the empirical study at hand on the transfer of the model by Mehrabian and Russel to the concrete environment "shopping location" suggest a modification of the model. Empirical studies by Bost (1987) and Gr÷ppel (1991) reveal that consumers are able to experience a relaxed atmosphere at the point-of-sale. Thus, an optimized store-interior presents interaction of activating and de-activating stimuli. The state of "arousal" must not be increased to the state of "hectic". Because of these results, the emotional dimension "relaxation", experienced at the point-of-sale by the consumers, should not be neglected in further studies. Therefore, it would be possible to analyse the intervening variable "desire/ pleasure" instead of the dimensions desire (= pleasure) and arousal analysing the effect of store-atmosphere. Such an approach would be appropriate, since arousal automatically goes hand in hand with the variable "desire/pleasure", e.g. operationalized by "in a good mood", "joyful", etc.. Positive activation is registered in this construct implicitly. Hence, we suggest including the emotional dimension "relaxation" as a third intervening variable. This modified model is still to be proven empirically valid. In other words: Do the three emotional dimensions pleasure, dominance and relaxation make an individual contribution to explain he reactions at the point-of-sale? So, the second hypothesis which is to be examined is the following:

(2) The stronger the consumers’ perception of dominance, relaxation and desire at the point-of-sale, the stronger positive the reactions at the point-of-sale (overall impression, duration of stay). The emotional dimension pleasure has a positive effect on the performance-assessmnet.

Both hypotheses shall be tested applying a causal model. Only by doing so we can find out whether the generation of positive value-for-money-images can be explained by environmental psychological means.

5. AN EMPIRICAL STUDY TO MEASURE THE INFLUENCE OF INTERVENING VARIABLES ON THE VALUE-OF-PRICE

5.1. Design of the study

To determine the connection of intervening variables (especially the dominance perceived) of the model by Mehrabian and Russel and the value-of-money-image a household survey was carried out: People from all classes of age, income and education were picked. To examine the dominance-hypothesis a household survey was prefered to a field-experiment.

Visual material was arranged taken from the textile- and furnishing-branch to simulate store-environment. All in-store-furnishings are classified upper-class. Some photographs do show very exclusive environments, though. This experimental setting was needed to satisfy the range of different standards of demand of the people interviewed. The stimulus material can therefore be divided into two groups with two variants each. For the first group, photographs of textile-retailing were chosen. Variant A shows a fashion boutique where the textiles are shown in joint presentation. The presentation gives an impression of competence. The merchandise is presented on racks with "concrete-stone"-optics, though, renouncing consciously any exclusive ambience. On the contrary, the photographs of variant 2 present a very noble atmosphere. A fashion boutique was chosen in this case as well, but its fittings are of glas, marble and brass. An extra picture is supposed to show the viewer also the environment of the store which is an extremely exclusive shopping center. The photographs of the group 2 show a black leather three-piece-suite which is located in an uncommonly elegant exhibition hall. The variant 1 only reveals a section of the noble hall whereas the items of furniture are presented with the background of the entire luxurious hall. You see, for example, a precious fireplace and a luxurious wainscoting. Each person interviewed obtained just one or the picture(s) of one variant. They were told that the photographs were merchandise presentations from existing shopping locations. Overall 264 people were asked about their impressions and opinions.

5.2 Operationalization of the Variables and Results of the Causal Analysis

To evaluate the hypotheses a causal analysis was carried out using the LISREL-program 8.0 for windows. In the case at hand the structural model consists of the exogenous variables dominance, pleasure and the latent endogenous variables price-performance-assessment and reactions at the point-of-sale. The connection of the variable dominance and the price-assessment is of prior interest for the evaluation of the first hypothesis. Furthermore, we have to examine whether there are positive paths not only between the latent exogenous variables pleasure, relaxation and dominance, but also between the intervening variables and the assessment of the other performance proposals. This is necessary to determine all of the effects of the exogenou variables.

To evaluate the second hypothesis the direct influence of each intervening variable on the reactions at the point-of-sale is to be estimated. Finally, the relations of price-performance-assessment (= independent variables) and the latent variable "reactions at the point-of-sale" (= dependent variable) is examined. The latent variables are operationalized by the following indicators in Tables 1 and 2.

5.3 Interpretation of the Results

See appendix for the evaluation of the model qualitative value. The results of the causal analysis at hand prove that both hypotheses can be considered verified.

The three modified intervening variables of the model by Mehrabian and Russell known as "pleasure, relaxation and dominance" can be identified as being latent exogenous variables in the path diagram. The perceived dominance which is the state of feeling "superior", "secure", and "free" at the point-of-sale influences the price-assessment the most. The latter is measured valid by the statements "They definitely do not offer merchandise at excessive prices in here" as well as "The retailer passes on fair prices to the customers". The relevant gamma-path of the latent variables "dominance" and "price-assessment" is located at about 0.81.

The gamma-path of the latent exogenous variable "relaxation" and the endogenous variable "price-assessment" at +0.55 is high as well. This result shows that a lack of stress leads to a positive assessment of a price range. The gamma-relation of "relaxation" on the one hand and the "performance-assessment" and the "reactions at the point-of-sale" on the other hand have positive signs as well. They illustrate that also the performance-assessment and finally the overall impression and the duration of stay profit from the customer being at ease.

The variable "pleasure" operationalized by the items "joyful" and "in a good mood" has a positive influence on the price-assessment. It is striking that the variable influences the assessment of the performance dimension and the reactions at the point-of-sale strongly: The greater the pleasure perceived at the point-of-sale, the stronger the appraisal of the quality offered and of the advice given, the stronger positive the overall assessment and the longer the duration of stay. This result supports once again the findings of the first analysis by Donovan and Rossiter (1982) and also the second analysis of the importance of store-environment concerning the consumers’ reaction at the point-of-sale. There are positive, but not strongly marked paths between the reactions at the point-of-sale and the assessment of price and performance. The direct influence of the intervening variables of the Mehrabian and Russell-model turns out to be stronger. For the latent variables "relaxation, dominance and pleasure" and the reactions at the point-of-sale a path-coefficient ranging from 0.35 to 0.63 was determined. This result confirms as well the relevance of the Mehrabian-Russell-model for in-store-behavior. Likewise, it supports the results of the second analysis by Mehrabian and Russell et al. (1994), which yielded that the intervening variables make a contribution of their own to the explanation of the reactions at the point-of-sale, irrespective of the price-performance-assessment.

TABLE 1

OPERATIONALIZATION OF LAMBDA-X-VARIABLES

TABLE 2

OPERATIONALIZATION OF LAMBDA-X-VARIABLES

Conclusions: The modified environmental psychological behavioristic model containing the three intervening variables "dominance, pleasure and relaxation" has stood the test of functioning as an explanation background for the generation of value-for-money-images: Retailers who succeed in conveying the customer a perception of dominance do not have to fear gaining a usury-image. The more superior, secure and free the customer at the point-of-sale, the stronger his opinion of the prices being fair. Likewise does a relaxed shopping atmosphere promote a positive price-assessment. Furthermore, this empirical study confirms once again that the pleasure perceved at the point-of-sale has a positive effect on price-assessment, overall impression and duration of stay. Hence, the study proves that the generation of positive value-for-price-images can be explained from an environmental psychological point of view.

FIGURE 1

PATH DIAGRAM

6. DISCUSSION

Retailers who want to profile applying a differentiation strategy need to communicate their specific competitive advantage to the consumers in a credible way. Differentiation-retailers should strive for a positive value-for-money-image which is based on generalization of price-performance-assessments. The performance proposal of a retailer does not only refer to the assortment but to service and store-design as well. The estimation of these marketing instruments adds to the value-for-money-image. In many cases, value-for-money-images are not induced by a successive examination of price and quality, but by striking information within the store-environment ("cues"). Differentiated businesses have to face the danger of being appraised a "usury-image", especially if they want to achieve a positioning applying the dimension "exclusiveness". This means the consumers get the impression of being cheated. The empirical findings based on environmental psychology illustrate that the dominance perceived at the point-of-sale presents a significant determining size for the price-assessment by consumers. The more superior, secure and free the customer at the point-of-sale, the stronger positive the assessment of the price-level. On the contrary, a usury-image is probable, if the store-atmosphere evokes a feeling of being restricted and inferior. From a pricing-political point of view, every differentiation-retailer should check if the target group aimed at the point-of-sale perceives high dominance.

APPENDIX

EVALUATION OF THE MODEL

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Authors

Andrea Groeppel-Klein, European University Viadrina, Frankfurt (Odes)



Volume

E - European Advances in Consumer Research Volume 3 | 1998



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