Confidence and Price Knowledge: the Case of Advertised Food Specials

ABSTRACT - In this research, shopper price knowledge of advertised food specials and specific self-confidence (confidence in making price judgments) were positively related. Overall, shopper price knowledge was low even though self-confidence was high. Both price knowledge and self-confidence were influenced by characteristics of advertised food specials. Specifically, price judgments were more accurate for items advertised at their regular price. Shopper self-confidence was influenced by the frequency with which the item had been advertised in the past.

Citation:

J. B. Wilkinson, J. Barry Mason, Christie H. Paksoy, and Richard M. Durand (1980) ,"Confidence and Price Knowledge: the Case of Advertised Food Specials", in NA - Advances in Consumer Research Volume 07, eds. Jerry C. Olson, Ann Abor, MI : Association for Consumer Research, Pages: 772-775.

Advances in Consumer Research Volume 7, 1980     Pages 772-775

CONFIDENCE AND PRICE KNOWLEDGE: THE CASE OF ADVERTISED FOOD SPECIALS

J. B. Wilkinson, The University of Akron

J. Barry Mason, The University of Alabama

Christie H. Paksoy, University of North Carolina--Charlotte

Richard M. Durand, The University of Alabama

ABSTRACT -

In this research, shopper price knowledge of advertised food specials and specific self-confidence (confidence in making price judgments) were positively related. Overall, shopper price knowledge was low even though self-confidence was high. Both price knowledge and self-confidence were influenced by characteristics of advertised food specials. Specifically, price judgments were more accurate for items advertised at their regular price. Shopper self-confidence was influenced by the frequency with which the item had been advertised in the past.

INTRODUCTION

As stated by John Howard, "Confidence in making a brand choice, . . . is a central construct in explaining buying behavior" (Howard 1974). He elaborates on this theme by theorizing that confidence is (1) positively linked to intention which in turn exerts an effect on overt action, (2) inversely related to the arousal aspect of the buyer's motives thereby regulating search effort, and (3) influenced by brand comprehension and satisfaction. In an empirical test of these relationships, Farley and Ring (1970) supported the confidence/ intention proposition and found a positive correlation between brand comprehension and confidence. Other studies have also concluded that confidence as a moderator variable is positively related to purchase intention (Bennett and Harrell 1975; Day 1970; Ostlund 1973; Warland and Sample 1973).

Central to the confidence/intention proposition, however, is the motive/brand comprehension/confidence relationship. Howard (1974) suggests that in the case of a new product, the buyer's motive and low confidence activates search for information. As the buyer receives information, his confidence rises and he formulates an intention to buy. This basic proposition has been upheld in a study by O'Brien (1974).

The opportunity to contribute situation-specific empirical support for the hypothesized relationship between confidence and knowledge inspired the analyses reported by this paper. Rather than examine the influence of a broad spectrum of potential knowledge or "denotive facts" (as termed by O'Brien 1974) on confidence, this study concentrated on price knowledge and specific self-confidence [Specific self-confidence in this research conformed to the definition by Cox and Bauer (1964), and referred to the respondent's confidence in making a price judgment (specific task).] about advertised supermarket items. The rationale for selecting this type of situation for exploring the knowledge/confidence relationship is as follows:

(1)  Most advertised grocery items are frequently purchased products with brand alternatives and many product substitutes. This characteristic along with the recent rate of increase in food costs, [Food prices rose about 37 percent between 1971 and 1974 while all prices, as measured by the Consumer Price Index, increased by approximately 22 percent (Federal Trade Commission 1975).] raises the level of price motive for buyers. In the year preceding this research, Progressive Grocer reported a recent SAMI (Selling Areas-Marketing Inc.) study which showed increased demand for products which serve as substitutes for products whose prices were rising at faster rates and decreased demand for products with high price increases. In that same article, Robert F. Dietrich commented on the "mass of recent research that proves consumers are not robots who carbon copy the same 'market basket' list every week. They are ingenious copers, ready to switch to less meat, cheaper meat, no meat, couponed products, store specials, house brands, or whatever other substitute will help them keep their inflation-torpedoed household budgets above the waterline" (Dietrich 1975).

(2)  Price consciousness has been found to be consistently high across income levels and social class in the selection of supermarket products (Murphy 1978; Trier et al. 1960).

(3)  The problem of varying levels of product familiarity was minimized because of the frequently purchased grocery items used (Olson 1977).

According to Howard's model one would expect that an increased interest in saving on the grocery bill would lead to search for price information which in turn would increase the buyer's self-confidence in making price judgments.

In this research, newspaper advertisements were considered to be the most important promotional medium which offers price information to buyers. The ability of buyers to correctly interpret price information in the context of a newspaper advertisement and feel confident in their judgments is important if they are to be an effective economic force in the market place. As observed by Monroe (1973, 1977) price perception research should consider the effects of contextual variables on price perception. Olson (1977) also recommended that pricing research study the independent and interactive effects of other cues vis-a-vis price cues "consistent with the way such cues are experienced in natural settings." Therefore, a secondary objective of this study was to explore the relationship of selected advertisement characteristics to price knowledge and specific self-confidence for the purpose of providing insights into marketer-dominated influences on these concepts.

METHOD

Subjects

Personal, in-home interviews were conducted with 67 individuals who considered themselves to be the major food shopper for their household. The Ss were selected on the basis of a two-stage cluster sampling procedure. A random sample of 12 census tracts from a southeastern SMSA was chosen. Census blocks from these tracts were then selected proportionate to size, and households were identified for interview using a systematic sampling plan.

Procedure

Each S was shown a newspaper advertisement and asked to specify the advertised price level and degree of confidence about her (his) price judgment for 32 supermarket items. Appropriate responses for a price level judgment were "regular," "reduced," and "higher than regular.'' Responses for confidence level were "extremely confident," "somewhat confident," "unsure," "somewhat unconfident," and "extremely unconfident."

Instrument

Newspaper advertisements were selected as the vehicle for the experiment because supermarket shoppers consult the newspaper for food advertisements more frequently than any other medium (Supermarket News, May 30, 1977). McCann-Erickson reports that 55% of all shoppers check newspaper ads before making food purchases (Kalland 1978). Shoppers also plan ahead and make more frequent use of newspaper ads in developing a systematic approach to shopping which allows for fewer unplanned or "impulse'' purchases (Supermarket News, June 13, 1977). Based on a nationwide survey of more than 1400 personal in-home interviews, the USDA's Economic Research Service reports that consumers are becoming more aware as shoppers and are checking ads before doing their shopping (Byrne 1977).

The general design and composition of the advertisement were influenced by a 10-week observation study of supermarket ads in the local newspaper. Thus, the total number of items typically advertised in a two-page spread and their price/prominence/frequency of past advertising attributes were used to formulate four versions of the survey advertisement. Each version contained the same 82 items and featured a reduced price for 43 items and a regular price for 39 items. [In the 10-week observation study, 48 percent of all advertised grocery items were featured at their regular price. Of these, 24 percent were prominently displayed. Fifty-two percent of all items were featured at a reduced price; 38 percent of these items were assigned to a prominent position. The advertisement formulated for this research conformed to these parameters.] All reduced prices in each version were based on a 15 percent markdown from regular price. [Uhl (1970) found that a 5 percent experimental price change was correctly identified by shoppers 64 percent of the time while a 15 percent reduction was correctly identified 84 percent of the time.] However, each of the four versions of the advertisement corresponded to a major chain store group in the community and reflected the regular price charged by a particular chain store group for each of the 82 items in the ad. The appropriate version was shown to a shopper after she (he) identified the store in which she (he) bought most of her (his) groceries during the previous month. Shoppers who purchased most of their groceries in stores not affiliated with one of the four major chains were dropped from the sample.

Thirty-two of the 82 items contained in the ad were selected for price and confidence evaluation. As indicated by the conceptual model shown in Table 1, these 32 items constitute a factorial design with Display Prominence, Frequency of Past Advertising, Advertised Price Level, and Type of Product as the major factors (2 x 2 x 2 x 4).

TABLE 1

A CONCEPTUAL PARADIGM OF THE INTRA-AD EXPERIMENTAL DESIGN

RESULTS

In order to test the relationship between a shopper's knowledge about prices and self-confidence in making price judgments, two scores for each respondent were calculated--percent correct and percent confident. [The number of items for which a respondent correctly identified the advertised price level divided by 32 constituted a price accuracy score. A respondent's confidence score was determined by the number of confident price judgments divided by 32. The respondent's confidence level for each price judgment was self-determined. Responses of "extremely confident" and "somewhat confident'' were treated as "confident." "Unsure," "somewhat unconfident," and "extremely unconfident" were classified as "unconfident."] Pearson's coefficient of correlation for these two variables was .5589, p < .01, which indicates that roughly 31 percent of the variance in confidence can he explained by knowledge and that price knowledge and confidence are positively related. Overall, though, confidence scores were relatively high compared to accuracy scores. The average confidence score was 70 percent with a standard deviation of 21.4 percent, while the average price accuracy score was 36 percent with a standard deviation of 13.8 percent.

As further support for the relationship between price knowledge and specific self-confidence, a chi square test was performed by classifying all responses for the entire sample as either "correct" or "incorrect" and "confident" or "not confident" (See Table 2). The five categories of confidence were collapsed into two because of the apparent lack of distinction between the categories. Collapsing the categories into two or three categories, depending on the distribution of responses, has also been done in operationalizing the construct in other studies: for example, by Lampert (1974), Sample and Warland (1973), and Bennett and Harrell (1975).

TABLE 2

OBSERVED FREQUENCIES FOR CORRECT AND CONFIDENT PRICE JUDGMENTS

The results of this test (x² = 87.7, p<.01) show that price knowledge and self-confidence are not independent concepts. The nature of the relationship in this research was as follows:

Those who were correct about an item were more confident than expected. Those who were incorrect about an item were less confident than expected.

Overall, 30 percent of the responses were both correct and confident. About 24 percent of the responses were classified as not correct and not confident.

Intra-ad Influences

Intra-ad influences were determined separately for price accuracy and specific self-confidence by analysis of variance for a factorial design with one observation per cell (proportion correct or proportion confident). For each ANOVA, Tukey's test of nonadditivity was used to specify the correct model (Cramer 1976; Winer 1971). In each case, an additive model was indicated. A summary of the ANOVA's for intra-ad influences is provided by Table 3.

For price accuracy, advertised price level was significant at the .05 level. Specifically, 39 percent of the price judgments for items advertised at a regular price were correct compared to 33 percent for items featured at a reduced price.

TABLE 3

ANALYSIS OF VARIANCE SUMMARY FOR PERCENT CORRECT, PERCENT CONFIDENT, PERCENT CORRECT/CONFIDENT, AND PERCENT NOT CORRECT/NOT CONFIDENT

Specific self-confidence was significantly related to frequency of past advertising at the .01 level. Confidence scores were higher for items which had been heavily advertised in the past (80 percent) than for items infrequently advertised in the past (60 percent).

The composite variables such as correct/confident and not correct/not confident were also significantly related to frequency of past advertising. For instance, 34 percent of the responses for items heavily advertised in the past were correct and confident, compared to 26 percent for items not advertised frequently. Responses for infrequently advertised products were more likely to be incorrect and not confident (31 percent) than for items heavily advertised in the past (18 percent).

DISCUSSION

In this research, shopper price knowledge and specific self-confidence (confidence in making price judgments) were positively related. Shoppers who demonstrated higher levels of price knowledge were more confident about their price judgments. In addition, price knowledge and confidence were influenced by different advertisement characteristics, thereby supporting the thesis that knowledge and confidence are separate concepts.

Based on the findings of this research, price judgments are more accurate for items advertised at their regular price. However, this phenomenon may reflect the difficulty of updating price information in periods of inflation. Day (1970, 1974) indirectly offers an explanation for price knowledge which is less dependent on the shopper's environment in his discussion of the relationship between confidence, involvement or interest, and information. In the context of this research, Day's explanation would imply that shoppers who have a strong interest in saving on their grocery bill (motive) are more likely to obtain the necessary information and experience to recognize advertised supermarket bargains. Some support for this view can be found in Arieh Goldman's study on consumer knowledge of food prices. Goldman (1977) found that lower-income consumers tend to display a higher price knowledge level for three substitute meat products.

Unfortunately, the relationship between price motive and knowledge could not be adequately tested in this study. Many shoppers eagerly endorse the importance of price in their grocery shopping decisions regardless of actual behavior. Moreover, price motive may or may not be identified with an economic characteristic of the shopper. Finally, in this study price knowledge as measured by accuracy was uniformly low for all respondents, perhaps reflecting the rigor of the respondents' task and/or the inflationary environment.

Shopper self-confidence in making price judgments was associated with frequency of past advertising (consistency). Shoppers were more confident about their price judgments for items which had been advertised frequently in the past. Other experiments (Howard 1977) indicate that shoppers should feel more confident about price judgments for items which have higher price reductions (distinctiveness) and price judgments which have support from others (consensus). Finally, empirical studies which have investigated the effect of newspaper advertisement source and price expression on credibility and purchase intention suggest that source credibility and high price information content (advertisement states both regular and sale price) should also affect shopper self-confidence in making price judgments about advertised items (Anderson 1974; Barnes 1975; Fry and McDougall 1974; Keiser and Krum 1976).

Since self-confidence as a moderator variable has been successfully related to purchase intention, the high level of self-confidence (70 percent) exhibited by shoppers in this study is disturbing, considering their low level of price knowledge (36 percent). Only 30 percent of their responses to advertised supermarket items were both correct and confident. Thus, only 30 percent of their behavioral responses (purchase) to the advertisement would be desirable economic consequences, discounting all other influences on behavior and assuming a favorable attitude toward all products.

Approximately 40 percent of their behavioral responses (not correct and confident) are likely to be undesirable economic consequences, i.e., shoppers purchasing an item at regular price thinking it reduced or not purchasing an item advertised at a reduced price because they incorrectly perceive the advertised price to be regular. The findings of this research indicate that such mistakes are less likely to happen for frequently advertised items. Yet, any solution designed to substantially improve shopper response to supermarket ads must focus on increasing the consumer's level of price knowledge. Clearly, research directed toward improving the behavioral model for price knowledge is needed. As Oxenfeldt comments (1968), ". . . little is known about the perception and interpretation of price. More specifically, . . . the validity of consumers' perceptions and interpretations of price--a matter of major concern in economies that rely upon free consumer choice."

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