Conference Proceeding

A Context-Dependent View of Anchoring: The Effect of Consumer Adaptation of Incidental Environmental Anchors on Willingness to Pay

Dogerlioglu-demir, Kivilcim, Koçaş, Cenk

2014

Overview

A fairly common form of managing consumer price expectations is when companies use numbers in their marketing communications (e.g., product model numbers, numbers in product or place names, and numbers on license plates). In some cases, increasing numbers reflect better items. In others, they do not. For instance, a Canon A530 is not superior to an A460 digital camera. Likewise, Nokia 6110 is inferior to Nokia 6102. Though an average consumer is not knowledgeable about those numbers and how they are assigned to specific models (Gunasti and Ross Jr. 2010), we argue that they are there to serve a strategic mission. Those numbers potentially act as attempts at price guidance. Consider BMW that uses car images with a European license plate displayed prominently in its print ads in Europe where the licenses are all in the format L LL XXXX where Es are letters and Xs are numbers. There is clearly a correlation between the numbers in the license plates and the price of the cars. Specifically, if a zero is added to the number on the plate, the resulting number seems to be generally higher than the price for low and mid-priced models and generally lower than the price for high priced models. It is almost as if there is a not so subtle attempt at price guidance in the choice of numbers for the license plates. This paper explores the effect of seemingly random numbers in marketing communications on consumers willingness to pay (WTP). More specifically, we examine the differential effect of incidental environmental anchors (IEA) on consumers WTP as a function of the product category. We suggest that although consumers are not aware of the link between the numbers and the price of the product, not only do they base their WTP on the random number but also adjust the numbers to resemble acceptable prices for a given product category. Taking a context-dependent view of anchoring, we suggest that consumers alter and adapt the anchors to fit them into appropriate value range and that range changes from context to another. In a series of experimental studies, we test and demonstrate that individuals price expectations, thus their WTPs, are affected by those adapted incidental numbers.

• Publisher: Association for Consumer Research
• Subject: Consumer behavior / Consumers / Prices / Willingness to pay