The Impact of Advertising Positioning Strategies on Consumer Price Sensitivity
Citation: Ajay Kalra, Ronald Goodstein (1998) The Impact of Advertising Positioning Strategies on Consumer Price Sensitivity. Journal of Marketing Research (RSS)
DOI (original publisher): 10.2307/3151849
Semantic Scholar (metadata): 10.2307/3151849
Sci-Hub (fulltext): 10.2307/3151849
Internet Archive Scholar (search for fulltext): The Impact of Advertising Positioning Strategies on Consumer Price Sensitivity
Download: http://www.jstor.org.proxy.library.georgetown.edu/stable/3151849
Tagged: Marketing Research (RSS)
Summary
This paper studies how nonprice advertising positioning strategies affect brand equity and category price importance and sensitivity. The authors identified certain types of nonprice advertising positioning that have different impacts on both, suggesting that tests of effective advertising should extend beyond just brand attitudinal measures and that the relationship between advertising and price effects depends on the positioning strategy used by the advertiser.
The first study focused on the effects of four advertising positioning strategies employed by a minor brand in a product market for machines: control, value positioning, comparative positioning, and unique attribute positioning. The hypotheses based on the latter three positioning strategies are as follows:
1. Advertising utilizing a value positioning for a minor brand will decrease the price consumers are willing to pay for the brand and increase the importance of prices. 2. Advertising comparing a minor brand with a premium brand will increase the price consumers are willing to pay for the brand and increase the importance of price. 3. Advertising positioned around a unique brand attribute for a minor brand will increase the price consumers are willing to pay for the brand and decrease the importance of price.
The experiment modified the control advertisement for washing machines to account for the three positions above, meaning four advertisements in total were created. Study participants’ were broken into four groups, given one of the advertisements, and asked to determine how informative the advertisements were and how much they were willing to pay for the product. Results showed that Hypothesis 1 was accurate: when advertisements focused on brand value, participants indicated a lower acceptable price for the brand and placed higher importance for price. Findings were also consistent with Hypothesis 2: when advertisements were based on a comparative position, participants were willing to pay more for the brand and placed less importance on price. Results also indicated consistency with Hypothesis 3: participants given the advertisement with the unique attribute position were willing to pay more and placed less importance on price.
Study 2 essentially replicated study 1 and examines three additional position strategies: meaningless attribute positioning, celebrity brand endorsements, and premium versus premium brand comparisons. The additional hypotheses tested are summarized below:
4. Advertising positioned around a meaningless, but unique, brand attribute for a minor brand will increase the price consumers are willing to pay and decrease category price sensitivity 5. Advertising positioned around a relevant celebrity endorsement for a minor brand will increase the price consumers are willing to pay and decrease category price sensitivity 6. Advertising comparing a premium brand with another premium brand will increase the price consumers are will to pay and increase category price sensitivity
This experiment used seven advertisements for single lens reflex cameras broken down by control and the six positioning strategies that have thus been described. The results showed that subjects were willing to pay less for brands positioned on value (Hypothesis 1) and more for brands positioned on premium comparison (Hypothesis 2), therefore replicating the results of study 1. Additionally, results failed to support Hypothesis 4, as there was no significant difference found between a control advertisements and one with a meaningless attribute. Hypothesis 5 and 6 were supported as results showed that subjects were willing to pay more for a celebrity endorsed brand and a premium brand which compared itself to another premium brand. Hypotheses 1, 2, and 6 showed increased price sensitivity whereas Hypotheses 3, 4, and 5 showed decreased price sensitivity. Overall, this study showed that advertising positioning strategies affect pricing measures of brand equity and brand comparisons lead to the highest willingness to pay, followed by celebrity endorsements. Value positioning leads to a reduced willingness to pay, as consumers may view the brand as lower quality.
Theoretical and Practical Relevance
Advertising effectiveness should be measured at both brand and category levels. Premium brand advertisers should using comparative advertising to rein in a higher price should be aware that consumers are likely to become more sensitive to price in the category because of the reference to a similar competitor.
