The Price Knowledge and Search of Supermarket Shoppers

Author(s): Peter R. Dickson and Alan G. Sawyer

Source: Journal of Marketing, Vol. 54, No. 3 (Jul., 1990), pp. 42-53
Published by: American Marketing Association
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 Peter R. Dickson & Alan G. Sawyer

The Price and

Knowledge Search
of Supermarket
Shoppers
A model of grocery shopper response to price and other point-of-purchase information was developed
and hypotheses were tested by using observations and interviews. The findings suggest that shoppers
tended to spend only a short time making their selection and many did not check the price of the item
they selected. Perhaps as a consequence, more than half could not correctly name the price of the item
just placed in the shopping cart and more than half of the shoppers who purchased an item that was
on special were unaware that the price was reduced. Other results on point-of-purchase information pro-
cessing and behavior are discussed.

THE point-of-purchase behavior of grocery shop-
pers is of interest to three major disciplines. In
classical economics, consumers are assumed to have
high knowledge at the point of purchase about the price
of at least the chosen alternative. Marketing science
models of choice behavior assume, at least implicitly,
that shoppers are aware of both price and any tem-
porary price reduction (e.g., Guadagni and Little 1983;
Gurumurthy and Little 1987; Raman and Bass 1989;
Winer 1986). Finally, psychological theories of con-
sumer information processing propose that price in-
formation at the point of purchase will be encoded,
evaluated, and integrated into memory. For example,
psychological models of price perception such as the
Weber-Fechner law of just noticeable differences
PeterR.Dickson is the CraneProfessor of Marketing,
TheOhioState
University.AlanG.Sawyeris Professor of MarketingandDepartment
Chair,Universityof Florida.Theauthorsthankthe Marketing Science
Insititue
forpartial
fundingof the project. Bothauthorsalsoreceived
support fromTheOhioStateUniversity Collegeof Administrative
Sci-
enceintheformof a Dean'sResearch Grantanda Marketing Faculty
Research Grant.TheyalsothankJoeAlba,ChrisJaniszewski, Rosemary
Kalapurakal,RichLutz,JohnLynch, DianeSchmalensee,
LeighMcAlister,
BartWeitz, andfouranonymous JMreviewers forusefulcommentsand
criticismson draftsof the article.Finally,
theythankthe supermarket
company managers andthestoremanagers whopermittedthestudy.
(Monroe 1971), adaptation level (Helson 1964), as-
similation-contrast (Sherif 1963), acceptable range
(Gabor and Granger 1961), and prospect theory
(Kahnemann and Tversky 1979) explicity posit the
existence of referent prices that form the basis for per-
ceptions of new prices (see reviews by Monroe 1973,
Nagle 1987, Sawyer and Dickson 1984, and Winer
1986).
The price knowledge results of past studies (e.g.,
Allen, Harrell, and Hutt 1976; Conover 1986, Pro-
gressive Grocer 1964, 1975) have suggested that about
50% of shoppers know the exact price of items they
have purchased. The consistent reaction of research-
ers is surprise and concern that knowledge is so low.
In reviewing these studies, Zeithaml (1988, p. 10) re-
marked that price knowledge appears to be "consid-
erably lower than necessary for consumers to have ac-
curate internal reference prices for many products."
One explanation for this low knowledge is that shop-
pers may note price at the point of purchase but do
not try to remember it for any length of time. In pre-
vious studies shoppers were asked to recall price at
least several minutes after item choice. Thus shop-
pers' price knowledge at the point of choice may be
high but quickly drops as the shopper progresses to
considering the next purchase.
We examine the behavior of supermarket shoppers

Journal of Marketing
42 / Journalof Marketing,July 1990 Vol. 54 (July 1990), 42-53

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at the point of purchase. The study objectives are to
describe price checking and price knowledge imme-
diately after the shopper has chosen an item and to
assess the level of awareness of whether the chosen
item was on special (a temporaryreduction).The con-
sistent finding from past research that price knowl-
edge is not high is curiousgiven shoppers'statedhigh
importance of price (Progressive Grocer 1975, 1981;
Zbytniewski 1979), the many studies that find strong
price sensitivity (e.g., Guadagni and Little 1983;
Wilkinson, Mason, and Paksoy 1982), and the price
knowledge and search assumptions underlying most
economic and psychological theories of price usage
and perception.Our study was designed to updatethe
results of past studies undertakenin informationen-
vironments very different from those in today's su-
permarketsand to improveon their methods (Dickson
and Sawyer 1986a). Asking shoppersabouttheirprice-
checking behavior and price knowledge immediately
afterthey had selected the item in questionminimized
any measurementlag biasesdue to forgetting.Ourstudy
is the first field study to investigate shoppers'knowl-
edge about the presence and size of price deals and
to comparedifferencesin price knowledgefor regular-
priced and special-priceditems.
A Conceptual Model of Price
Encoding and Knowledge
The conceptualmodel underlyingthe hypothesestested
is illustratedin Figure 1. It is a modificationof Jacoby
and Olson's (1977) informationprocessingmodel (see
also Zeithaml 1982, 1984), which makes an important
distinctionbetween objective and psychological price
information.The shopper's psychological price may
be representedin the shopper'smind as a quantitative
price estimate and/or a subjective image.
We include store advertisingof a special price and
the point-of-purchase label as additionalobjectiveprice
cues in Jacoby and Olson's model. The initial cate-
gorizationand perceptionof an item's price as either
a special (temporary)reduction or regular is high-
lightedin our priceinformationprocessingmodel. Such
perceptualcategorizationwill precede and influence
any evaluative categorizationof the acceptability of
the price (see Cohen and Basu 1987). As the attitu-
dinal categorizationof price will influence behavior,
the initial perceptionof the price as special or regular
is likely to have a vital role in determiningindividual
behavior and aggregatedemand.
The coding of an item's price as regularor special
may or may not requirethe processing of the item's
actualprice. A featureof the item in an advertisement
or flier, a special supermarket aisle displayof the item,
or a special shelf price tag all may enable a shopper
to conclude that the item is selling at a "special"price
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without attending to or evaluating its actual price
(Inman, McAlister, and Hoyer, in press). The Figure
1 feedback loop from encoding and categorizationto
attentionto the objective price occurs because point-
of-purchasesignalsof a specialpricemay lead to greater
checking of the item's price against the prices of al-
ternatives. However, the different sources of objec-
tive informationabout the price statusand price of an
item may be informationsubstitutes.For example, if
noting an item's special price status in an advertise-
ment leads to a purchaseintention, it may reducelater
in-store price search.
The amount of attention paid to the price, the
memorabilityof characteristicsof the price, and the
use of the price in makingthe purchasedecision affect
both the encoding into memory and recall from mem-
ory of the price information.This storedprice, either
alone or combined with past prices, then becomes the
expected or reference price (see Helson 1964). Sev-
eral price perception theories posit the existence of
internalreference prices that form the basis for eval-
uation of new prices, helping the shopperjudge the
price of a new brandand the extent of any price dis-
count (see reviews by Monroe 1973, Monroe and
Petroshius 1981, and Sawyer and Dickson 1984).
Several models that explain individual shopping
behavior over time provide indirect evidence that
shoppersrememberprices and develop internalstan-
dards. For example, Winer (1986) reportedthat the
addition of the consumer's normal reference price of
coffee brands, as mathematicallyestimatedfrom past
actualprices paid, improveda brandchoice model that
originallycontainedonly the observedprice at the time
of purchase. Raman and Bass (1989) similarly as-
sumed quantitative reference prices in consumers'
minds. They found supportfor predictionsfrom pros-
pect theorythatthe negativepurchasereactionsto prices
above reference prices would be larger than the pos-
itive reactions to prices lower than the assumed ref-
erence prices.
The outcome of comparing, contrasting, and as-
similating the psychological price with the internal
referencepriceand otheritems' prices(see Sherif 1963)
may influence the long-term storage of the psycho-
logical price. This effect is reflected in the feedback
loops in the lower half of the model in Figure 1. For
example, if the price is contrasted,viewed to be very
low, and hence evaluated positively, it may be re-
memberedbetter. Hence, in the aggregate, a special
price may be recalled better than a regularprice. If
the past reference price is not replaced but instead
merely adjusted by the most recent price paid, as
Winer's and Raman and Bass' mathematicalmodels
suggest, exact recall of price last paid will be poor,
butapproximaterecallof pricelast paidshouldbe good.
The reasonis thatafterassimilationof the psychologi-
PriceKnowledge
andSearchof Supermarket
Shoppers
/43
 FIGURE 1
Conceptual Model of Price Encoding and Knowledge

ObjectiveAdvertising

ObjectivePrice QbjectivePoint-of-Purchase
label

\-,T /
Attentionto ObjectivePrice
* Checkedprice
* Recognizedpricelabel

.,I

'1 Enco&
Encod
ing andCategorization
of ObjectivePrice
.II ^. . Encodedit as special(reduced)priceor regular x.--..

,------------------- Storageof PsychologicalPrice

* Pricerecallaccuracy -:-;;, -------:-. - ----
* Speedof response
* Pricedifferencerecallaccuracy --- -

-S, AttitudeTowardPsychologicalPriceandCategorization
of PriceImage
* Brandpriceimage
* Storepriceimage

- ... Integration
of PsychologicalPricewithOtherPriceInformation

V
Volume Comparisions
/
BrandandStoreComparisions

Purchase

44 / Journalof Marketing,
July1990

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cal price shoppers have only the resulting reference
price available to estimate the item's price. The mem-
ory trace of the actual price paid will decay quickly
and be lost because all of its useful information has
been incorporated into updating the reference price.
However, because the psychological price was assim-
ilated rather than contrasted, the reference price should
be close to the actual price paid.
When an item is offered at a special price, the dif-
ference between the recalled regular price and the cur-
rent special price also may be computed. Accurate re-
call of this price difference requires the accurate noting
of both the objective regular price and special prices
(at least in the information environment in our study)
and an accurate computation of the difference. The
measurement of price difference recall accuracy in-
dicates how sensitively shoppers process the amount
of a price reduction. If the amount of a price reduction
is an importantdeterminantof behavior, that fact should
be reflected in accurate recall of the price difference.
This measure is also relevant to Thaler's (1985) trans-
action utility theory, which argues that shoppers de-
rive utility from buying an item at a bargain price.
The amount of this utility is a direct function of the
difference between the perceived regular and special
prices.
Point-of-purchase price information obviously is
used to help decide whether to purchase the product.
It also may lead to an evaluation of the price image
of the item and the store. An item's psychological price
may be compared with the price of other brands and
of other sizes of the same brand if the benefit of such
price comparisons is expected to exceed the effort (see
Blattberg, Eppen, and Lieberman 1981; Stigler 1961).
In the following section we develop several hy-
potheses based on the preceding conceptualization of
information processing at the point of purchase and
several economic theories of search.
Hypotheses
The signal of a special price at the point of choice
may trigger some shoppers to switch among sizes and
brands. Such switching may be preceded by more ac-
tive price search and value-for-money analysis at the
point of choice. The presence of an unusual signal at
the point of choice may also precipitate an increase
in price search among regular buyers of the brand.
This notion is based on the classic behavioral premise
that anything out of the usual in a choice environment
will arouse attention and lead to an increase in search.
Thaler's (1985) theory of transaction utility requires
the noting of the bargain price so it can be compared
with the external or internal standard price. If Thaler's
theory holds in grocery shopping, it provides another
reason why shoppers who purchase an item at a spe-
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cial price should have greater price accuracy. Several
of the quantitative models of the effect of price pro-
motions on purchase behavior also assume that the
amount of the price reduction is noted by the shopper.
The measures we expect to be affected are price
checking of the chosen brand, price checking of other
brands and sizes, use of unit price information, rec-
ognition of the presence of the distinctive price special
label, time spent at the point of choice, and price re-
call accuracy. Hence:
Hi: Shopperswho buy a special-priceditemdo moreprice
checkingand have greaterprice recall accuracythan
shopperswho buy a regular-priced item.
Frequent buyers have a greater economic stake in
purchasing the product and thus should be more price
sensitive. They also have been exposed more fre-
quently and recently to category prices so their inter-
nal adaptation price level will be narrower, reflecting
their superior current knowledge of category prices (see
Sawyer and Dickson 1984). Thus they will be more
discriminating and sensitive to price (Lichtenstein,
Bloch, and Black 19188). Hence:
H2: Frequentbuyersof a productcategorydo moreprice
checkingand have greaterprice recall accuracythan
shopperswho are less frequentbuyersof the product
category.
It follows from Stigler's (1961) cost/benefit the-
ory of search that some search activities should be
substitutes rather than complements. For example, time
spent searching for price specials in the store adver-
tising prior to shopping should reduce the incremental
benefit of further search at the point of purchase. If
the purchase decision is made while reading the ad-
vertising, there will be little further search other than
some confirmatory checking of the special price. Hence:
H3: Shoppers who note the item is at a special price in
store advertising spend less time at the point of pur-
chase, do less price checking, and have lower price
recall accuracy.
In the conceptual framework depicted in Figure 1,
objective price information may affect relative price
judgments and evaluations (see Zeithaml 1982). Both
the fact that the item is actually on special and the
perception that the item is on special may have such
an effect. Hence:
H4: The presence and recognition of a special price influ-
ence the price image of both the brand and the store.
According to Stigler's cost/benefit search theory,
label recognition should be higher than price recall
accuracy because it takes less effort to find and rec-
ognize the presence of a distinctive special price point-
of-purchase label than to note the actual price. The
incremental value of encoding the special price after
PriceKnowledgeand Searchof SupermarketShoppers/45
noting that the item is on special may also be low for
many shoppers. Hence:
H5: The accuracy of the recognition of the item's regular
versus special price status is higher than the accuracy
of actual price recall.
Accordingto the cost/benefit theoryof search,one
of the majorreasons for noting price is to assess price
variabilityby comparingprices across differentbrands
and stores. Therefore in-store price checking should
be related to recency of interstoreprice search (see
Figure 1). There may also be a general price sensi-
tivity shoppingtraitthat links price comparisonshop-
ping between brandswith price comparisonshopping
between stores. Hence:
H6: Interstore price vigilance is related positively to in-
store price vigilance.
Method
Observers with clipboards were stationed in super-
markets at the point of purchasefor particularitems
and were instructedto give the appearanceof under-
taking some stocktakingactivity, a common sight in
a supermarket.On each tenth minute of the hour the
observerrecordedthe behaviorof the first shopperto
choose a brandof the target product. This procedure
involved timing the intervalbetween when the shop-
pers turnedtheir attentionto the display and when the
item was placed in the shopping cart. The numberof
different brandsand sizes physically touched and in-
spected, including the chosen item, also was noted.
The shopperwas interceptedimmediatelyafterthe
item was placed in the cart. The interviewerpointed
to a universitylapel label and said, "Excuse me, I am
from University. May I ask you a few ques-
tions about the item you just chose? In return, as a
token of appreciation,I would like to give you this
one dollar bill." The refusal rate was less than 1%.
The interviewerthen asked: "Off the top of your head,
without checking, can you tell me what the price is
of the [productname] you just chose?" Thus shoppers
were asked to recall the price of the item within 30
seconds of selecting the item and placing it in the
shopping cart.
Awarenessof whetherthe price of the selecteditem
was regularor special was assessedin two ways. First,
the shopper was asked whether the price of the item
was lower than the usual price (i.e., on special). The
second measureof awarenessof the item's price status
involved shelf-label recognition. The supermarketin
the study used a standardprice label that had black
printon white with the unit price presentedin a shaded
gray box. The label also contained the brand name,
weight, and SKU (stock-keepingunit) code. A special
price was signaled by placing a bright yellow label
46 / Journalof Marketing,July 1990
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with the title "Cost CutterBonus Buy" and a picture
of a pair of scissors symbolizing the price reduction
beside the standardprice label. The special label pre-
sented the new special price and unit price but did not
give the amountof the pricereduction.The "CostCutter
Bonus Buy" phraseand the scissors symbol had been
used for several years in the supermarket'snewspaper
and TV advertising. Most shopperswere expected to
at least recognize the slogan and symbol because the
supermarkethad a large marketshare and advertised
heavily. The shopperwas shown a cardwith the three
differentshelf labels and asked to identify the correct
pricing label for the chosen item in a recognitiontest
and then explain the meaningand significanceof each
label. The full interview included several other ques-
tions and took four to five minutes. On completion
the interviewerrecordedthe actual price of the item,
whetherit was on special, and the amountof any price
reduction.
Four stores in a large supermarketchain were in-
cluded in the study. Initially, two stores were chosen
because they served communities with similar de-
mographicprofiles representativeof the entirearea(of
more than 1 million people). The majora priori dif-
ference of interest was that one store used both item
and shelf pricing, but the other had just abandoned
item pricing and provided only shelf pricing.' After
completingthe interviewsin these stores, we received
permission to extend the study to include two other
stores. To assess the generalizabilityof the resultsfrom
the two demographically typicalstores, we chose stores
representing two extremes: a store in an upscale res-
idential white suburband a downtown innercitystore
that served a poor, less educated, primarily black
community. The latter interviews were deliberately
undertakenin late January,the time of the year and
month (accordingto store managers)when the store's
patronswould be most financially strappedand there-
fore presumably most motivated to be price con-
scious.2
Four products were chosen after discussion with
the supermarketchain's regional merchandisingand
advertisingmanagers.They were selected to represent
relatively low (coffee and toothpaste)and high (mar-
garine and cold cereal) turnoverproducts and infre-
quently (cold cereal and toothpaste) and frequently
(margarineand coffee) price-promotedproductgroups.
An attemptwas made to gathera sample that was rep-
'The study results determined that the item pricing was not missed
by the shoppers and had little, if any, effect on point-of-purchase
shopping behavior and price perception. This result is contrary to pre-
dictions of shoppers before item prices were dropped (Harrisand Mills
1980).
2The shoppers in this store were significantly less accurate in their
price estimates than the shoppers at the other three stores (see Dickson
and Sawyer 1986b).
resentativeof shopperbehavior by undertakingmore
observations and interviews at peak shopping times
(such as Thursdaynight, Friday night, and Saturday
morning). Fifty interviews for each of the four prod-
ucts were conducted in each of the four stores. The
total numberof shoppersinterviewed was 802.
Price recall accuracy was calculated by the fol-
lowing formula (see Zeithaml 1984).
objective price - recalled price
price recall accuracy =
objectiveprice
This average price recall accuracy measured the
percentagedeviationof the recalledprice from the ob-
jective price, whether high or low. Price knowledge
bias was calculated in the same way, but was mea-
sured as an algebraic difference ratherthan an abso-
lute difference. It establishedwhetherthere was a sys-
tematicdirectionalbias in the subjects'price estimates.
Analyses of varianceand covariancewere used to
analyzethe metricdependentvariables(e.g., time spent
at point of purchase). The nonmetric categorical re-
sponses (e.g, correctlabel recognition)were analyzed
with chi squareand loglinearmodel tests. The average
statistical power of the tests (probabilityof rejecting
a false null hypothesis) was generally high because
the sample size for most of the analyses was between
600 and 800.
Results
Several general statistics provide interestingperspec-
tives on what occurredat the point of purchase. The
average time between arrivingat and departingfrom
the productcategorydisplay was less than 12 seconds.
About 42% of shoppers spent five seconds or less;
25% spent more than 15 seconds. In 85% of the pur-
chases only the chosen brandwas handled, and 90%
of the shoppers physically inspected only one size.
These time and price comparisonresultsare consistent
with those of Hoyer (1984).
Consistent with the short time spent at the point
of purchase,the numberof shopperswho reportedprice
checkingwas not high. Slightlymorethanhalf (57.9%)
of the shoppersclaimed to have checked the price of
the chosen item and fewer than one in four (21.6%)
reportedchecking the price of an alternativebrand.
Several differentreasons were given for checking the
price of the chosen item. The most common un-
promptedreasongiven by shopperswho checkedprice
was "simple habit" (44%), followed by price check-
ing to "help make a brandchoice" (31.7%), "decide
how much to buy" (28.7%), and "decide whether to
buy or not buy from the category" (21.5%). Only
13.9% said they checked prices to "rememberuntil
next time" and 12.8% checked the price to compare
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prices between supermarkets.Shoppers who claimed
not to have checked prices were most likely to explain
either that "this was a case where price was not that
important"(67.8%) or they "already knew the ap-
proximateprice"(40.0%). Otherreasonsincluded"too
rushed"(11.9%), "used a coupon" (10.1%), and "al-
ready knew the exact price" (6.9%).
Price Recall Accuracy
We expected price recall accuracyto be much higher
in this study than in past studies in which the shopper
was questionedminutes, hours, and even days (rather
thanseconds) aftermakingthe purchasechoice. How-
ever, it was not. One in five of the shoppers(21.1%)
did not even offer a price estimate; they seemed to
have no idea of the price of the item they had chosen.
Less than half (47.1%) were able to state the correct
exact price (55.6% gave a price within 5% of the ob-
jective price), and 31.8% gave a price estimate that
was inaccurate.Price estimates of those who were in-
accuratewere off by an average of 30 cents (about a
15%error).Finally, there was a systematicbias in the
incorrectestimates;the recalled price was on average
10 cents lower (4.2%) than the actual price.
The amount of the price reduction was not dis-
played when an item was offered at a special price in
the studiedstore environment.The shopperhad to see
the special price and calculate the differencefrom the
normal price that was also displayed. Consequently,
it is not surprisingthatthe accuracyof knowledgeabout
the amount of the price reduction was considerably
lower (13%) than the price recall accuracy (49.1%).
Only 41.9% of special shoppers gave an estimate of
the amount of the price reduction, and their average
price reductionestimate was off by 47%.
Purchases at Regular and Special Prices
Table 1 contraststhe behavior and price perceptions
of the 232 shopperswho chose an item with a special
price with those of the 570 shoppers who chose an
item with a regular price. Consistent with HI, the
shoppersbuying an item at a special price claimed to
undertakemore search and price checking. They also
more frequentlychecked price to make a brandchoice
and to decide whetheror not to buy from the product
category. However, inconsistentwith Hi, they did not
spend more time at the point of purchase, nor were
their price estimates more accurate.In fact, a system-
atic underestimationbias is found for the special price
that is not present for a regular price. On average,
shopperswho purchaseda special-priceditem and gave
an inaccurateprice estimatebelievedthatthe pricethey
were paying was 10% lower than the actual special
price, whereas the price estimate bias was negligible
for the counterpartshoppers who purchasedan item
at its regularprice.
PriceKnowledgeand Searchof SupermarketShoppers/ 47
 TABLE 1
Reported Shopping Behavior, Price Knowledge, and Price Perceptions of Shoppers
Buying at Special and Regular Prices
Actual Price Status (%)
Regular Special
(n = 570) (n = 232)
Behavior
Reported noticing choice in ads 3.1 17.1b
Reported checking price at point of choice 54.0 67.5b
Reasons for checking price
Habit 46.3 39.6
To choose the brand 26.4 42.2c
To decide how much to buy 28.4 29.9
To decide whether to buy or not 18.2 27.9c
To compare prices between stores 15.0 8.4
Reported checking price of other brands 18.1 30.7c
Reported using unit price information
To compare brands 4.4 9.5b
To compare sizes 8.4 8.6
Made supermarket price comparisons
Within last week 20.7a 29.7b
Within last month 19.1 15.5
Sometime in the past 15.3 20.3
Never 44.9 34.5
Price Knowledge and Perceptions
Reduced perception
Special price 11.1a 49.1b
Usual price 50.0 26.7
Not aware/not sure 38.9 24.1
Price estimate of chosen item was
No estimate 22.8 16.8C
For those who estimated a price, price estimate of chosen item was
Exactly right 60.0 59.1
Wrong 40.0 40.9
Relative brand price perception of selected item
Lower 19.5w 30.2b
About the same 53.5 50.7
Higher 19.5 13.8
Don't know 7.5 5.2
Store's prices in comparison with those of other stores
Lower 36.0 36.2
About the same 46.3 40.1
Sometimes higher, sometimes lower 7.7 14.7c
Higher 3.9 4.7
Don't know 6.1 4.3
Average price recall accuracy 5.2 6.0
Average price estimate bias
All shoppers -.6 -4.1
Shoppers giving incorrect price estimate -1.5 -10.0o
test of differencebetweentwo distributions;all others are a test of differencebetweentwo proportionsor means.
aSignificance
bStatisticallysignificant at p < .005.
cStatisticallysignificant at p < .05.

Behavior of Frequent Shoppers physical inspection of different sizes of the product,

reported reasons for checking and not
H2 is not supported. The more frequent buyers of the and reported checkin and not checking
check
e Thee buyers
price. ers whoo purchased once
one a month
oh or less
product category did not undertake more price check-
often spent more tFme at the po of puhase 14.2
ing and were not more accurate in their price knowl-
edge.3 However, frequency of purchase is related to vsp 10e8 secondsi F2795 3s46, p <w05) and in-
the amount of time spent at the point of choice, the spected more sizes than the shoppers who purchased
the product three or more times a month (1.20 vs.
3The shoppers in this store were significantly less accurate in their
1.05 sizes,
sizes F2795 = 12.86,
F2,795 1286 p << .001).
01) The more fre-
price estimates than the shoppers at the other three stores (see Dickson quent buyers of an item were more likely to check
and Sawyer 1986b). prices to compare with other stores' prices (17.7% vs.

48 / Journalof Marketing,July 1990

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8.4% for the less frequentbuyers; X2= 6.77, 2 d.f.,
p < .05). The less frequent buyers more often gave
the use of a coupon as a reason for not checking the
item's price thandid the more frequentbuyers (16.1%
vs. 5.6%: X2(d.f.) = 7.64, p < .05).
Effect of Noting Item In-Store Advertising
The use of the supermarket'sweekly advertisingwas
not related to behavior at the point of purchase, con-
trary to the prediction of H3. Shoppers who claimed
they had noted the item in the advertisingdid not spend
less time at the point of purchase or engage in less
price checking or physical inspection of other brands
and sizes. The hypothesisthatdifferentsourcesof price
informationare used as substitutesis not supported.
Effect of Price Special on Brand and Store
Price Image
Interestingly,93.1% of shoppersoffered an answer to
the question, "Comparedto other brands of similar
size, is the item you just chose a high-priced,average-
priced, or low-priced brand?" Consistent with the
propositionthat the qualitativecoding of the relative
price of an item may be an easier task for the shopper
thanthe coding of the item's actualprice (see Zeithaml
1984), this percentageis significantlygreaterthan the
78.9% of shopperswho could provide an actual price
estimate (z = 4.53, p < .001).
H4 predictsthatboth the presenceof a special price
and the perceptionof a special price are relatedto the
price image of the brandand the store. A relationship
between the presence of a special price and brand im-
age is observed, but no importantrelationshipis found
for store image. Table 1 indicates that a special price
was accompaniedby more frequentperceptionthat the
chosen brandwas low priced (30.2% vs. 19.5%). For
store price perceptions, the only statistically signifi-
cant difference for a purchaseat a special price is the
percentage of shoppers who believed that the super-
market'sprices were sometimes lower and sometimes
higher than competitors' prices.
Given that half of the special shoppers were not
even aware they had purchased the item at a lower
than normal price, we wondered about the relation-
ship between the perception that the chosen item was
reducedin price (ratherthan the reality) and the price
image of the brand and store. The results are consis-
tent with H4. When the shopperperceived the item to
be at a special price, the relative price image of both
the brand (X2 = 79.5, 6 d.f., p < .0001) and store
(X2= 22.2, 8 d.f., p < .01) was lower. For example,
35% of shopperswho perceivedthe price to be special
categorizedthe price of the brandboughtas lower than
averageversus 20.5% of those who perceivedthe price
to be a regularprice.
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Price Status Recognition
We expected that shoppers would be more likely to
recognize correctlywhetherthe item was at a regular
or special price than to recall the price accurately.In
fact, only 53.6% recognized the correct shelf price
label for the chosen item and only 49.7% were cor-
rectlyawareof price status.These percentagesare only
a few percentagepoints higherthanthe 47.1% for ac-
curate recall of the price, and the difference is not
statisticallysignificant. H5 is not supported.
General Price Vigilance
As predicted by H6, there is evidence of significant
positive relationships between whether the shopper
checked the price of the selected item and within-store
price search (X2 = 46.3, 3 d.f., p < .0001) and be-
tween-store search (X2 = 27.2, 3 d.f., p < .0001).
The shopperswho claimed to have checked the price
of the chosen item and those who checked the price
of other brands were both more likely to have com-
pared prices recently between supermarkets.For ex-
ample, 53.1% of those who did not check the price
of the selected item could not rememberever making
pricecomparisonsbetweenstoresversus33.8%of those
who did claim to have checked the price of the se-
lected item. Hence H6 is supported.
Discussion
When presentedto the marketingexecutives of lead-
ing packaged goods companies and interestedacade-
micians, our findings have been received with sur-
prise and concern. It is not that practitioners or
academiciansbelieve that grocery shoppersmake de-
cisions on the basis of perfect information;what is
surprisingis just how imperfectinformationattention
and retentionare at the very point of purchase. The
fact is that less than half of the shopperscould recall
the price of the item they hadjust placed in theirshop-
ping basket, and less than half were aware they had
selected an item that was selling at a reduced price.
Only a small minorityof those who bought a special
knew both its price and the amount of the price re-
duction.
The average percentage error in shoppers' price
estimates of the item they had just chosen may not
seem large until it is consideredwithin the price en-
vironment.The shopperswho gave an incorrectprice
estimatewere off by an averageof 30 cents above and
below the average observed selling price in the study
of $2.00. The average range in actual prices across
the alternativebrandsof a given size, as estimatedby
interviewersfrom shelf checks, was in most instances
smaller than the range of the price estimates. That is,
for an averageprice of $2.00, the lowest pricedbrand
was rarelyless than$1.70 and the highestpricedbrand
rarelymorethan$2.30. This fmdingsuggeststhatsome
PriceKnowledgeand Searchof SupermarketShoppers/ 49
of the shoppers had a price in mind for the chosen
item that was not only inaccurate,but higher or lower
than all of the actual prices in the brandchoice set.
Given that we asked shoppers to recall prices of
items that had just been selected and placed in their
shopping carts, it seems unlikely that shoppersnoted
the price and forgot it in the short intervening time.
However, despiteour convictionthatquestioningabout
price immediately after the item had been placed in
the shopping cart would result in higher accuracy of
price knowledge, a comparisonof the price recall ac-
curacy found in our study with that found in previous
studies revealed that the results are not very different
(see Dickson and Sawyer 1986b). In fact, the per-
centage recall is slightly lower in our study than that
in several other studies. After discussing the limita-
tions of our research, we explore its managerialand
theoreticalimplications.
Research Limitations
Thoughwe believe our methodis an improvementover
those used in previous studies of price search and
knowledge (Dickson and Sawyer 1986a), our study
has many limitations. We studied only four product
categories in four stores of one majornational super-
marketchain in one largeMSA. We also reliedheavily
on self-reportdata. Though observation was used to
measuresearchamong brandsand sizes, we could not
use observationsto corroborateself-reportsaboutprice
checking and knowledge. Also, though pretests in-
dicated high reliability, we did not assess the reli-
ability of our observersin the study itself because we
used only one observerper shopper. We also did not
ascertain whether shoppers in different demographic
categoriesdifferedin theirbehavioror knowledge. Fi-
nally, we did not obtainindependentinformationabout
external store factors such as the amountof advertis-
ing, advertisedprice specials, or distributionof cou-
pons.
As in previous studies, we used open-endedrecall
to measure price knowledge. Monroe, Powell, and
Choudhury(1986) argue that recognition and not re-
call is the appropriatemeasure of the effects of inci-
dental as well as intentionallearning of prices. Rec-
ognition measures may result in higher estimates of
price knowledge. We did use a simple recognitiontest
of the price label, and correct label recognition was
no better than price recall. We consequently find it
unlikely that price recognition would be high at the
point of purchase.
Managerial Implications
Apparently,many reducedprices at the point of pur-
chase are not noticed. Even though currentmerchan-
dising practices used to identify price specials at the
50 / Journalof Marketing,July 1990
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point of purchaseappearto be conspicuous, they seem
not to communicatetheir message to the many shop-
pers who undertakeminimal search and information
processing at the point of purchase. Our observation
of low use of price andprice statusinformationis sim-
ilarto thatfor otherpoint-of-purchaseinformation(e.g.,
Achabal et al. 1987; Russo et al. 1986).
Better promotion and identificationof price spe-
cials might benefit both the consumer who wants the
best deals and the manufacturerwho wants to increase
the impact of its promotions. Shoppers who claimed
to have checked price while makingtheirchoice were
much more likely to recall exactly the price of their
chosen item than shoppers who claimed to have not
checkedprice(70.7%vs. 17.3%).They werealso much
more likely to perceive correctlythat the chosen item
was at a special price (60.4% vs. 25.7%) and rec-
ognize the special price label (73.6% vs. 38.5%).
The majorproblemis thatonly 58.9% even claimed
to have checked the price. Hutchinson(1989) found
thattemporaryprice specials thatreceive no otherpro-
motional aid such as displays or advertisingfeatures
are less profitablethan maintainingregularprices. One
explanationis thatmany shopperswill not notice either
the special price statusor the amountof the price dis-
count unless their attentionis drawnby somethingbe-
yond a mere shelf label. Futureprice researchshould
test ways of increasingshopperprice checking at the
point of purchase.Studiesof methodsof calling greater
attention to prices, such as different labels or shelf
talkers, shelf space allocation, video carts, or dis-
plays, should include measuresof theireffect on price
checking and recall, as well as sales, to gain a fuller
understandingof the sales results (see Quelch and
Cannon-Bonventre 1983; Wilkinson, Mason, and
Paksoy 1982).
The preceding suggestions are based on the as-
sumption that the manufacturerwants to improve
communicationof its special price. In the long term,
a manufacturermay preferto have its loyal consumers
not notice when the item is on special. Loyal cus-
tomers who are unawareof the amountthat could be
saved at a special price or are not even attentive to
whether the item is at a special price may buy more
often at the regularprice. The issue is a tradeoff be-
tween the benefit of using a better promoted special
to attract nonloyal shoppers and the forgone profit
marginfrommakingregular,loyal shoppersmoreaware
of and sensitive to price promotions (see McAlister
and Lattin 1983).
Our results are consistent with the notion that a
coupon promotion may be much more effective and
efficient thana point-of-purchasespecial promotionin
reachingthe price-sensitivesegment (see Narasimhan
1984). With coupons a manufacturergives away mar-
gin only to shoppers who are aware and appreciate
that the coupon is giving them a price break. This
selective margin cut to coupon users contrasts with
point-of-purchaseprice specials that give everyone a
price breakwhetheror not they are aware of it or care
aboutit. However, the manufacturermust balancethis
potential savings to nonusers of coupons against the
likely greatercosts of distributingthe coupons.
Anotherimplication of our findings is that it may
be better for both manufacturerand retailerto reduce
the amountof the price reductionon grocery specials
and invest more in promotingthe special, particularly
at the point of purchase. Given that the perceived
presenceof a price reductionenhancesthe price image
of the brand and store, it may also be advisable to
have more frequentbut shallowerprice reductions(see
Alba and Marmorstein1987; Buyukkurt1986).
Theoretical Implications
The underestimationbias we observed in the special
shoppers'priceestimatessupportsGaudagniandLittle's
(1983) finding that a price promotion has a positive
relationshipwith choice beyond that due to the total
price and the amountof the price reduction.The prime
effect of a special price may be as a "good buy" signal
(Inman, McAlister, and Hoyer, in press). The very
low accuracyof estimates of the amountof reductions
made available by special prices suggests that few
shoppers compute the amount of the price reduction
and/or most of those who do are very inaccurate.This
result raises a question about the applicability of
Thaler's (1985) theoryof transactionutility to grocery
shopping,because the amountof the utilityin Thaler's
theoryis based on the differencebetweenregularprice
and speical price. At a minimum, this result suggests
that transactionutility is based on the perceived dif-
ference between regularand special price and not nec-
essarily the actual difference. If transactionutility is
derived from grocery shopping as Thaler suggests, it
is often based on a gross miscalculationof the price
reduction.
We did not attemptto operationalizeand measure
internalreferenceprices. However, the results for one
question in our study are at least tangentiallyrelevant
to the issue of whetherreferenceprices commonly ex-
ist or are spontaneouslyutilized by shoppers. Imme-
diately after the price recall question, shoppers who
gave a price were asked, "How did you know the
price?". Of 802 shoppers, 169 or 21.1% would not
even offer a price; 415 or 51.7% claimed to have re-
lied on the point-of-purchase(shelf or item) price in-
formation;and only 218 or 27.2% reliedon what might
be interpretedas an internal reference price. These
findings suggest that reference prices are either not
coded as precise quantitativeprices in the shoppers'
minds or not retrievedvery accurately(if at all) from
memory. Furtherresearchto measuredirectly the ex-
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istence and form of internalreferenceprices (includ-
ing the updatingof the reference price) and identify
the situations and ways in which such price percep-
tions are used by shoppers at the point of purchase
would be informative.
Our study provides a static depiction of what is
clearly a dynamic process. Much remains unknown
aboutthe distributionof price-checkingbehavioracross
differentgrocery shoppersand differentshoppingtrips
by the same shopper. Shoppers may initially check
many prices in deciding what brand to buy at a su-
permarketand then only occasionally recheck prices
to ascertainany changes. The issue here is the level
of discontinuityin consumerprice sensitivity. For ex-
ample, we found that aboutone in five shopperscom-
pared prices among brands. This result could be pro-
duced by a segment of careful shoppers who always
compareprices on all the items they buy or by a larger
numberof shopperswho infrequentlycompareprices.
However, the fact that segmentationstudies based on
consumers' claimed buying habits and attitudeshave
found a similar percentageof price-comparisonshop-
pers in several productclasses (Calantoneand Sawyer
1978; Freedman1989; Tigert 1988) suggests that the
formerpossibility is more likely. What is clear is that
shoppersare very heterogeneousin terms of their at-
tention and reaction to price and price promotions.
Though our research emphasizes the number of
shopperswho did not check or know the price of cho-
sen items, the fact is that nearly half of the shoppers
did know the price. Researchis needed to learn more
about these price-vigilant shoppers. Presumablythis
segment's behavioris a prime driverof the price sen-
sitivity observed in aggregate scanner data studies
(Tellis 1988). Other shopperswho use nonpricecues
at the point of purchaseto identify a promotionalprice
also contributeto the observed aggregate price sen-
sitivity.
Though more research obviously is needed for a
full understandingof supermarketshoppers' infor-
mationprocessing at the point of purchase,the results
of our study provide some common-sense explana-
tions. Shoppersdo not always check or know the price
for several reasons: a lack of time, a belief that the
price is satisfactoryor not very different from when
it was last checked, brand loyalty or habitualrepeat
purchasing,difficulty in finding the shelf price label
of the item, or the belief that the limited total savings
from checking prices is not worth the time or effort.
However, the degree of error in shoppers' infor-
mation processing of special prices is surprising.We
found only limited evidence that special-price-item
purchasingwas relatedto more careful shopping, and
special-price-itembuyers were no more accuratethan
shopperswho boughtat a regularprice. Shoppersseem
to use the presence of a special price as an indicator
PriceKnowledgeand Searchof SupermarketShoppers/ 51
of a good deal. However, they overestimate the sav-
ings from these price discounts. This may be one rea-
son for the sales effects of a price promotion beyond
the amount of the price reduction (Gaudagni and Little
1983). Moreover, shoppers' assessments of whether
the item is at a special price are remarkably inaccu-
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