The Structure of Consumer Responses to Newspaper Price Advertisements

ABSTRACT - Newspaper price advertisements for a convenience product (aspirin) and a shopping product (camera) were presented to 549 adult consumers. Response data were collected on eleven product and price related dimensions. Factor analyses of these dimensions for each product revealed diverse response structures in regard to the price dimensions. For the convenience product, price appeared to be a unitary concept with all price dimensions loading on a single factor. For the shopping product the response structure was more complex. The paper concludes with an application of these findings for retail price advertising.

Citation:

John R. Walton and Eric N. Berkowitz (1980) ,"The Structure of Consumer Responses to Newspaper Price Advertisements", in NA - Advances in Consumer Research Volume 07, eds. Jerry C. Olson, Ann Abor, MI : Association for Consumer Research, Pages: 524-528.

Advances in Consumer Research Volume 7, 1980     Pages 524-528

THE STRUCTURE OF CONSUMER RESPONSES TO NEWSPAPER PRICE ADVERTISEMENTS

John R. Walton, University of Minnesota

Eric N. Berkowitz, University of Minnesota

ABSTRACT -

Newspaper price advertisements for a convenience product (aspirin) and a shopping product (camera) were presented to 549 adult consumers. Response data were collected on eleven product and price related dimensions. Factor analyses of these dimensions for each product revealed diverse response structures in regard to the price dimensions. For the convenience product, price appeared to be a unitary concept with all price dimensions loading on a single factor. For the shopping product the response structure was more complex. The paper concludes with an application of these findings for retail price advertising.

INTRODUCTION

Newspaper price advertisements present consumers with a diverse array of product-related and price-related information. As the consumer is processing this information, a number of intervening cognitive responses may occur. Depending upon the nature of these responses, outcomes may include a modification in the consumer's product-related belief structure and/or behavior tendencies (Wright, 1974).

The focus of this research is on the types of cognitive responses that may occur and the structure of those responses. Specifically, the purpose of this study is to determine the manner in which price-related and other product-related cognitive responses to newspaper price advertisements are perceived and integrated by consumers.

LITERATURE REVIEW

The initial task of this study was to determine an appropriate set of cognitive responses. This choice was limited to response dimensions for which: (1) extant research was available and/or (2) had a high degree of face validity. The set of dimensions used in the study are described below.

The quality response has been researched in a large number of price-oriented consumption situations. An excellent review of many of these studies has been provided by Olson (1977). While the results of these studies, as reported by Olson, are far from consistent, it seems clear that an evaluative quality response may be expected in reaction to price-related cues.

Less research has been performed on other response dimensions. However, some literature support can be found for the following dimensions: price acceptability (Gabor and Granger, 1970; Kamen and Toman, 1970), brand attractiveness (+lander, 1970), perceived worth (Rao, 1972; Szybillo and Jacoby, 1972), and social significance of the choice (Lambert, 1972). Additionally, several other responses not directly assessed in the literature have some face validity. These include brand preference, brand importance, trust in information, satisfaction with information, performance expectation, and value for the money. These eleven dimensions represented the domain of cognitive responses analyzed in this study. Each of these dimensions and the bipolar adjectives and/or phrases which defined those dimensions is shown in Figure 1.

FIGURE 1

One relevant finding from consumer price research should be considered. Recent data show that individual respondent characteristics may impact on how an individual responds to price oriented stimuli (French, Williams, and Chance, 1972; Wheatley and Chiu, 1977). The clear implication of these findings is that homogeneous student samples should be used with caution in price oriented research studies.

Based on this literature, two research questions were addressed in this study. These questions were:

1. Does a meaningful structure of these cognitive responses exist?

2. How does this structure vary for different types of products?

The methodology employed in providing answers to these questions is described in the following section.

METHODOLOGY

Subjects used in this study consisted of 549 consumers from a major midwestern metropolitan area. These people were members of community and volunteer groups chosen to represent a range of income, age, and education levels. Groups were paid $2.00 for the participation of each member.

The subjects were told that their task was to evaluate newspaper stories taken from local newspapers. Packets of three newspaper stories (actually taken from local newspapers) and two experimental advertisements were presented to subjects. The advertisements included a convenience product (a nationally advertised headache remedy) and a shopping product (an instamatic-type camera). To control for creative variances, composite advertisements were developed which were approximately the same size and included an illustration of the product, an actual price cue, a comparison price cue, and a store name. Figure 2 is an example of the advertisement for the headache remedy. In this experiment, percentage discounts and store names were identical across products and treatments. To control for order bias, advertisement position for each product was rotated in the packets.

FIGURE 2

SAMPLE ADVERTISEMENT

Following each advertisement, subjects were asked to rate that advertisement on the eleven response dimensions previously identified. Each dimension was measured on a seven point, bipolar scale (See Figure 1). The newspaper stories were also followed by a set of bipolar response scales to preserve task believability.

For each product, a principal components factor analysis was performed. All factors with eigenvalues greater than 1.0 were included and oblique rotations (Quartimin) were used. Finally, all variables with factor loadings of .40 or greater were used in interpreting individual factors. In these analyses, only pattern loadings matrices were used (Rummel, 1972, p. 397).

ANALYSIS AND DISCUSSION

The factor loadings and communality estimates for the aspirin advertisement are shown in Table 1. As can be seen, three factors were identified. The amount of variance in the eleven response dimensions explained by these factors was approximately 21.4, 17.6, and 15 percent, respectively. [The variance estimates are approximate because of the oblique rotation. For further elaboration, see Rummel p. 148.]

TABLE 1

FACTOR LOADINGS AND COMMUNALITIES FOR ASPIRIN ADVERTISEMENT

Factor 1 seems to depict a general product/brand evaluation. Trust and satisfaction with information in the advertisement, brand preference, and brand quality load highest on this factor. It is interesting to note that the price responses are generally excluded from this factor. The only exception is value for the money.

Factor 2 is exclusively price-oriented. All price responses load strongly on this factor while the loadings of the remaining dimensions are negligible. Of the four price responses, perceived savings loads the highest on this factor. This greater emphasis on perceived savings may be the result of greater price awareness on the part of these consumers for highly advertised, repetitively purchased brands. In this situation, greater price awareness may lead to greater confidence in judging the amount of savings from price advertisements.

The correlation between Factors 1 and 2 was -.39. This relationship suggests that high factor scores for Factor 1 tend to be associated with low factor scores on Factor 2, and vice versa. That is, when consumers have a more favorable evaluation of the product/brand, they tend to discount price. Conversely, when the product/brand evaluation is less positive, price dimensions are given greater weight.

The responses which load on Factor 3 indicate an emphasis toward brand performance. Brand importance, performance expectation, friend's opinion of the brand, and brand quality load substantially on this factor. Again, none of the price responses is part of this factor. Finally, the correlations between Factors 1 and 3 (r = -.09) and Factor 2 and 3 (r = .17) were smaller. Therefore, this factor seems to be relatively independent of the other two factors.

The factor loadings and communality estimates for the camera advertisement are shown in Table 2. Once again, three factors were identified. These factors explained approximately 22.5, 20.0, and 12.7 percent of the variation in the response dimensions.

TABLE 2

FACTOR LOADINGS AND COMMUNALITIES FOR CAMERA ADVERTISEMENT

While the same number of factors were observed in both analyses, substantial differences in the constituents of those factors were obvious. For example, Factor 1 still included performance expectation, satisfaction with information, and brand quality, but also contained two price dimensions (perceived worth and perceived savings). These five responses seem to encompass specific product/price information.

Factor 2 contained the price acceptability, value for the money, trust in information, and brand preference responses. Taken together, these responses seem to suggest a price/brand evaluation factor. This greater emphasis on price evaluation may be the result of less price awareness for infrequently purchased, relatively expensive shopping products. In this situation, less price awareness may lead to greater concern about the price information that is provided in the advertisement.

Again, the correlation between Factors 1 and 2 was negative and reasonably large (r = -.33). Given this relationship, higher factor scores on the product/price information factor tended to be associated with a lower score on the price/brand evaluation factor, and vice versa. Apparently, for this shopping product, more product related information resulted in less evaluative concern about the price.

Factor 3 contained only two responses, brand importance and friend's opinion of the brand. This factor seemed to reflect brand salience to the consumer. There were no price responses associated with this factor and the correlations with Factor 1 (r = .18) and Factor 2 (r = .00) were negligible. Figure 3 summarizes the factors in each analysis.

FIGURE 3

A SUMMARY OF THE FACTORS IN EACH ANALYSIS

CONCLUSIONS

In terms of the research questions stated previously, a meaningful structure of cognitive responses was observed in both analyses. Additionally, these structures varied for the shopping and convenience products.

The principal difference in these structures occurred in the consumer's perception of price. Specifically, price appeared to be a unitary concept for the convenience product. That is, the four price dimensions were perceived as being related to each other and unrelated to the non-price responses. This was not the case for the shopping product. In this analysis, such objective dimensions as buy for the money and amount of savings were perceived differently from evaluative dimensions like fairness and trust.

The convenience price response structure suggests that a newspaper price advertisement should be concerned largely with such objective concerns as the discount level. A favorable response on this dimension should be reflected positively on such subjective dimensions as fairness.

The shopping good response structure, however, indicates that both objective and subjective concerns may be relevant. In this situation, large discounts will not be automatically reflected in positive subjective responses. Retailers should be concerned about advertising strategies which are oriented toward price discounts and methods of presentation which communicate a positive price evaluation. Kieser and Krum (1976) and Barnes (1974) have shown that particular presentation strategies may have such an impact.

In this study consumers exhibited diverse response structures for price advertisements for a convenience product and a shopping product. More research needs to be done to determine the generalizability of these findings.

REFERENCES

Barnes, J. G. "Factors Influencing Consumer Reaction to Retail Newspaper Sale Advertising." In R. Curhan (Ed.), Proceedings of the American Marketing Association. Chicago: American Marketing Association, 1974.

French, N. D., Williams, J. J. and Chance, W. A. "A Shopping Experiment on Price-Quality Relationships." Journal of Retailing, 48 (3), 3-16.

Gabor, A. and Granger, C. "The Attitude of the Consumer to Prices." In B. Taylor and G. Wills (Eds.), Pricing Strategy. Princeton, NJ: Brandon/Systems Press, 1970.

Kamen, J. M. and Toman, R. J. "Psychophysics of Prices." Journal of Marketing Research, 1970, 7, 27-35.

Keiser, S. K. and Krum, J. R. "Consumer Perceptions of Retail Advertising With Overstated Price Savings." Journal of Retailing, 1976, 52 (3), 27-36.

Lambert, Z. V. "Price and Choice Behavior." Journal of Marketing Research, 9, 35-40.

+lander, F. "The Influence of Price on the Consumer's Evaluation of Products and Purchases." In B. Taylor and G. Wills (Eds.), Pricing Strategy. Princeton, NJ: Brandon/Systems Press, 1970.

Olson, J. C. "Price as an Information Cue: Effects on Product Evaluations." In A. Woodside, J. Sheth, and P. Bennett (Eds.), Consumer and Industrial Buying Behavior. New York: Elsevier North-Holland, THC., 1977.

Rao, V. R. "Marginal Salience of Price in Brand Evaluations." In M. Venkatesan (Ed.), Proceedings of the Association for Consumer Research. Chicago: Association for Consumer Research, 1972.

Rummel, R. J. Applied Factor Analysis. Evanston, IL.: Northwestern University Press, 1970.

Szybillo, G. J. and Jacoby, J. "The Relative Effects of Price, Store, Image, and Intrinsic Product Differences on Product Quality Evaluation." In M. Venkatesan (Ed.), Proceedings of the Association for Consumer Research. Chicago: Association for Consumer Research, 1972.

Wheatley, J. J. and Chiu, J. S. "The Effects of Price, Store Image, and Product and Respondent Characteristics on Perceptions of Quality." Journal of Marketing Research, 14, 181-186.

Wright, P. L. "On the Direct Monitoring of Cognitive Response to Advertising." In G. Hughes and M. Ray (Eds.), Buyer/Consumer Information Processing. Chapel Hill: The University of North Carolina Press, 1974.

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