Managers are likely to have greater success raising prices by 1) targeting consumer segments high (vs. low) in PDB, 2) activating a high PDB via ads, slogans, or POP material, 3) heightening the need for closure using contextual cues, or 4) increasing social density in stores.
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Lee, Hyejin, Ashok K. Lalwani, and Jessie J. Wang (2020), “Price No Object!: The Impact of Power Distance Belief on Consumers’ Price Sensitivity,” Journal of Marketing, forthcoming.
The role of culture in consumers’ price search and behavior has received limited attention in the literature. In the present research, the authors examine how the cultural dimension of power distance belief (PDB) – the extent to which people accept and endorse hierarchy – influences consumers’ price sensitivity. The authors propose that consumers high (vs. low) in PDB are less price sensitive because they have a higher need for closure (NFC), which motivates them to “seize and freeze” on a current offer, and quickly arrive at the final purchase decision, rather than search for a better price. Accordingly, the relationship between PDB and price sensitivity is moderated by variables that alter consumers’ need for closure, such as social density. Six studies (and five more summarized in the Web Appendices) using a variety of operationalizations of the key variables provide robust support for the relationship between PDB and price sensitivity, and shed light on the underlying mechanisms and boundary conditions. Theoretical and managerial implications are discussed.
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