Do Buyers Really Know Prices? An International Perspective on Price Knowledge

Abstract

Price knowledge is a complex mental process that involves implicit and explicit memory, conducting to special representation of price information. The present paper outlines the coordinates of mental processing of price, as numerical stimulus, necessary to understand buying behaviour. According to this process, there were designed several research methods that investigate the way in which price knowledge is operationalized. There were also identified the main factors that influence price knowledge, factors related to characteristics of buyer, of product category, of store type or to other specific situations. In the paper are analysed some studies conducted in several countries that report different results concerning price knowledge. These differences might be caused by the methodology used, by product category, by buyer's personal characteristics or by other factors, specific to each buying context. The main idea of these studies is buyers have a low level of price knowledge, irrespective of country they belong, even when they were exposed to price information very short time before the research interview. These findings are opposite to general belief that shoppers know well prices and do buying decisions dominated by rationality. There are some managerial implications of price knowledge research, related to price format, to the ways used to communicate price changes or to the manner in which is suitable to set price ranges within product category.