Measuring the Price Knowledge Shoppers Bring to the Store

Reference price research suggests that consumers memorize and recall price information when selecting brands for frequently purchased products. Previous price-knowledge surveys, however, indicate that memory for prices is lower than expected. In this study, we show that these priceknowledge surveys actually provided imperfect estimates of price knowledge because they focused only on recall and short-term memory. We propose, instead, to use a combination of price recall, price recognition, and deal recognition to measure the degree to which consumers use auditory verbal, visual Arabic, or analogue magnitude representations to memorize prices. We show how the combination of these three measures provides a much richer understanding of consumer’s knowledge of prices. Our results suggest that the price knowledge involved in reference prices may often not be accessible to recall but shows up in price recognition and deal recognition. In addition we identify consumer and product characteristics that explain the variations in price knowledge. We find, for instance, that frequent promotions increase the ability of consumers to remember regular prices and that store switchers do not possess a better price knowledge than other shoppers.