Customers’ behavioral responses to unfavorable pricing errors: the role of perceived deception, dissatisfaction and price consciousness

Abstract

Purpose Although unfavorable pricing errors (UPEs) cost customers billions of dollars each year, research has not yet examined customers’ reactions to UPEs. This paper aims to fill this gap by examining customers’ reactions to UPEs in terms of frequency, magnitude and the interaction between frequency and magnitude. Also, this study explores the moderated mediating role of price consciousness. Design/methodology/approach Three experimental studies were conducted to examine customers’ reactions to UPEs in terms of frequency, magnitude and the interaction between frequency and magnitude. PROCESS Model 6 and 84 along with multivariate regression analysis and MANOVA were used to test the hypotheses. Findings The results show that high-frequency and high-magnitude UPEs lead to increased perceived deception and dissatisfaction, resulting in a higher negative attitude toward the grocery store, decreased re-patronage intentions and increased negative word-of-mouth (NWOM). Also, results show that regardless of customers’ price consciousness level, customers display negative reactions when encountering UPEs. Research limitations/implications This paper only investigates UPEs in the brick and mortar setting; future studies should examine UPEs in different settings. Practical implications The findings show that UPEs can cause significant problems for grocery stores. Thus, managers should take precautionary measures (e.g. constantly checking shelves) to ensure that the advertised price and the checkout price match. Originality/value This paper represents the first attempt to empirically examine the relationship between UPEs frequency and magnitude, on the one hand, and perceived deception, dissatisfaction, customer attitude, re-patronage intentions, NWOM and price consciousness on the other.