Are Men Seduced by Red?

The Effect of Red

Versus Black Prices on Price Perceptions
Nancy M. Puccinelli, Rajesh Chandrashekaran,
Dhruv Grewal, Rajneesh Suri
Retailers devote a lot of time and money churning out
weekly circulars and store advertisements to attract
customers to their stores. These yers and ads are lled
with pictures of products, salient product attributes, and
price information. A common way to highlight prices
in these yers is to use either red or black font, though
little is known about the impact of these specic colors
on consumers price perceptions.
The current research therefore examines consumer judg-
ments of savings at a retailer when product prices in
the store advertisement appear in red versus in a tradi-
tional black color. Because the color red often serves as
a heuristic cue in judgments, red prices in ads seemingly
should affect consumers overall judgments of savings
at the retailer. Furthermore, men may be more suscep-
tible to such heuristic effects and likely to rely on red
prices to judge savings offered by a retailer. Women,
as more thorough processors in general, instead may be
less likely to base their judgments on the use of color in
prices in store advertisements.
In a series of studies, this research shows that when
prices appear in red, men evaluate savings at the
store more favorably than when they appear in black.
However, when men are required to process the adver-
tisement in more depth, the incremental effects of red
prices disappear. Furthermore, compared with women,
men have more positive feelings when evaluating red
prices in a store ad, which inuences their judgments
of savings at the store. In contrast, women, with their
tendencies to process advertisements in greater depth,
appear immune to such effects. In conclusion, retailers
should carefully test and examine the effectiveness of
their yers by understanding and incorporating the psy-
chological effects of price cues. It is possible that they
could achieve signicant cost savings and market share
benets by using color strategically in their promotional
materials.
Effects of opening and closing stores on chain
retailer performance
Raji Srinivasan, Shrihari Sridhar,
Sriram Narayanan, Debika Sihi
A key element of a chain retailers marketing strategy is
the number of stores it operates to reach its consumers.
These decisions not only affect the retailers perfor-
mance, but also rm value, as investors pay attention to
such strategic decisions. Opening stores has a different
strategic emphasis (e.g., revenue expansion and enter-
ing markets) from closing stores (e.g., cost reduction
and exiting markets), with different implications for the
retailers performance.
The authors examine factors which inuence the effects
of a chain retailers opening and closing store decisions
on rm value. Specically, the authors hypothesize
effects of the chain retailers market share, advertising
intensity (advertising stock to sales ratio), age, and size
on the relationships between the number of store open-
ings and closings on its rm value. They use data from
132 large, publicly listed US chain retailers from 1998
to 2009 to test their hypotheses. The ndings indicate that
As a chain retailers market share and advertis-
ing intensity increase, opening stores decreases
the retailers market value, while closing stores
increases it.
A retailers age does not impact the effect of open-
ing stores on rm value, but as a retailers age
increases (get older), closing stores increases its
rm value.
Finally, when a chain retailers size increases, open-
ing and closing stores both decrease rm value;
however, the negative effect of opening stores
on rm value is larger than the negative effect of
closing stores.
Executive Summaries
This section provides a concise, nontechnical summary of each article in the current issue of JR focusing on its strategic implications for management.
Journal of Retailing 89 (2, 2013) P1P6
P2 Executive Summaries/ Journal of Retailing 89 (2, 2013) P1P6
The authors also develop an approach to analyze the
impact of a retailers opening and closing decisions
on its rm value, relative to industry competitors. A
key insight is that most chain retailers appear to be
uni-dimensional with respect to achieving superior
performance through their decisions to open and close
stores. For example, some rms (55% of the sample)
are unable to obtain above-industry (average) rm value
from opening stores, while others (27%) are unable to do
so through store closures. Yet others (16%) are unable
obtain above average-industry rm value from either
opening or closing stores. Overall, there appear to be
opportunities for chain retailers to improve the impact of
their store opening and closing decisions on rm value.
Chain retailers (and investors) can use this approach
(which is relatively simple to implement in Microsoft
Excel) to estimate whether a chain retailers will obtain
less than, the same, or more rm value benet from
opening and closing stores compared to the other chain
retailers.
Loss leaders and cross-category retailer
pass-through: A Bayesian multilevel analysis
Joseph Pancras, Dinesh K. Gauri,
Debabrata Talukdar
Retailers maximize prots across the portfolio of prod-
ucts stocked in their stores. They commonly use deep
discounts on some frequently purchased categories such
as carbonated soft drinks to attract consumers to their
store, the rationale being that these consumers will also
end up buying some other categories which are more
protable for the retailer once they visit the store. This
loss leader strategy has been studied in both academic
and practitioner literature. An important related channel
issue in the area of pricing is the extent to which price
promotions by the manufacturer is passed through to
consumers by the retailer. While earlier literature has
studied this phenomenon of retailer pass-through as a
within-category pricing phenomenon across brands, in
this paper we utilize the concept of pass-through to
study whether retailers strategically co-ordinate promo-
tional pass-throughs across product categories. Own
pass-through is a well-established empirical phenom-
enon, whereby wholesale price cuts for a brand result
in retail price cuts for the same brand, and we show that
a similar result holds at the category level. Since loss
leader strategies are often initiated by manufacturer pro-
motional price cuts, we also analyze whether such cuts
in loss-leader categories could be accompanied by price
increases in more protable categories such as sandwich
bread.
Previous research has not examined this phenomenon
due to limitations of data and methods, since there
could be a large number of cross category effects to be
estimated. Using a unique dataset across ten product
categories and with a estimation method using advanced
Hierarchical Bayesian statistical techniques, we study
this phenomenon that we label cross-category pass-
throughs. We nd that cross category pass-throughs
tend to be negative (about 18% as compared to 9% posi-
tive), that is, price cuts in a focal category being accom-
panied by price increases in other categories. We nd
that wholesale price cuts in loss leader categories such as
carbonated soft drinks and potato chips are accompanied
by increases in retail prices of more protable categories
such as sandwich bread. This indicates that the retailer is
cushioning the impact of price cuts in loss leader catego-
ries with price increases in the other categories. We also
nd evidence of the existence of positive cross-category
pass-throughs for protable categories and vice versa for
unprotable categories. We also nd the evidence of the
existence of a systematic relationship between the occur-
rence of negative cross category pass-throughs and the
characteristics of the focal category for which the retailer
is introducing retail price cuts. Category characteristics
such as price elasticity and proportion of loss leaders
increase the probability of negative cross-category pass-
throughs.
Our results challenge the practice of CM which has
been widely accepted in the retail industry, but the ef-
ciency of which has been questioned in recent theoretical
work, based on reasoning similar to our inspiration for
undertaking this research, that is, that retailers maximize
prots across a basket or portfolio of categories rather
than for a category at a time, and pay attention to how
their pricing decisions affect overall store trafc (a key
motivator behind the use of loss leader categories). We
nd that the cross-category phenomenon appears to play
an important role in retailer strategies well beyond the
previous category manager effects that have been stud-
ied so far. Our results also point to how the retailer atten-
tion to overall store trafc and overall store prots create
strategic linkages across categories that go beyond the
more obvious complement/substitute demand linkages
that have thus far dominated cross-category research
in the eld. Our paper also uses some well-established
statistical model checking criteria that could be used in
future studies of a similar scope and nature. Our results
could also pose a quandary for grocery manufacturers
who may have limited control over multiple categories
that have cross-category pass-through linkages. Further
research could yield theoretical insights on our empirical
results, and study whether there are signicant cross-
category pass-through timing issues.
Executive Summaries/ Journal of Retailing 89 (2, 2013) P1P6 P3
Orchestrating rituals through retailers: An
examination of gift registry
Tonya Williams Bradford, John F. Sherry Jr.
Consumers engage marketers, and particularly retail-
ers, to facilitate various life projects, including wedding
celebrations. The exchange of wedding vows is quite a
straightforward task which, on its own, can be completed
within fteen minutes. Yet wedding celebrations have
become highly social occasions lasting several hours
with events spanning weeks or even months. An area
of most relevance to retailers is that of gift giving, a
prominent component of wedding celebrations. These
celebrations provide the bride and groom with oppor-
tunities to negotiate a new family identity. And they do
so with explicit invitations for participation to family
members and friends through gift registry, a process
whereby retailers guide families in navigating complex
social exchange relationships to outt the newlyweds
home. Where retailers once created gift registry as a
mechanism to increase sales, gift registry is now an inte-
gral ritual within wedding celebrations. We focus on the
roles for retailers, service providers and their brands as
consumers create new families through rituals.
We nd gift giving to be a ritual that reects market-
created and -sanctioned practices beyond the scope of
traditional gift giving, inclusive of various consumer
and retailer roles. Further, we nd that brands serve as
signals between participants as couples and gift-givers
co-create anew family identity with the couple. The
registry provides ample opportunities for retailers to
interface with consumers at multiple levels (e.g., brand,
brand portfolio, acquisition channel) in physical and vir-
tual spaces to enact the registry ritual. More specically,
as the registry builds patronage for the retailer, which
benets both from immediate sales and referrals from
satised customers, it also provides a signicant face-
saving benet for consumers. gift-givers experience
relief as the burden of extensive thought or search effort
is eliminated. And gift recipients experience less disap-
pointment as they receive what they desire.
We nd transitional life events, such as marriage, may
trigger an opportunity to learn about brands as individu-
als face a clean slate upon which to craft a new identity.
Furthermore, brand adoption within new families may
reect early or late brand learning and provides oppor-
tunities for retailers to retain existing consumers and
encourage others through switching behaviors in support
of family identity presentation. This nding suggests
an opportunity for retailers to educate consumers about
brands within the portfolio which may support distinct
life transitions. As consumers transition through life
stages, retailers should demonstrate how different brands
within the portfolio may facilitate the performance of
various family roles, such as spouse, parent, or host. We
nd how consumers learn about brands is inuenced by
the choice of channel, and specically the retail outlet.
For retailers participating as orchestrators of the registry
ritual, we nd it is necessary to have a distinct service
point of view, and to provide essential employee training
to capture revenues from a (somewhat) captive audi-
ence of gift-givers. Finally, the registry ritual facilitates
interpersonal relationships in support of life transitions
through the marketplace. As transition becomes a modal
consumer experience, marketers have an opportunity to
extend the registry franchise to a variety of signicant
life passages.
The market is prevalent in wedding celebrations, and
especially gift giving which facilitates the forging of
social bonds between the betrothed, kin and kith. In the
present study, we nd roles for marketers generally, and
retailers specically, in the registry ritual which promote
efcacy in gift giving, and provide glue for interpersonal
relationships. There are many ceremonies of transition
that lend themselves to ritual. e expect that market-
ers will identify additional opportunities to exploit the
power of gift giving to enrich social relations, and sacral-
ize commercial institutions at an accelerated pace in the
experience economy.
Trademark Strategy in the Internet Age:
Customer Hijacking and the Doctrine of Initial
Interest Confusion
Clifford D. Scott
Initial Interest Confusion (IIC) is a legal doctrine affect-
ing any rm doing business on the Internet. Traditional
trademark law concerned itself with confusion at the
instant of product purchase, only. The doctrine of Initial
Interest Confusion greatly expands the scope of trade-
mark protection by considering confusion at any point
within the customers purchase process. The law now
recognizes what Marketers have discussed and dissected
for decades: purchase is a process, not an instant. Making
use of anothers trademark to sidetrack a consumer at
any point in that process may now be considered legally
actionable. This doctrinal shift brings legal reasoning
far more in line with established Marketing thought and
extends the rms ability to protect its trademarks and its
customer franchise.
IIC may come into play any time a customer uses
a search engine to locate a product or rm. Internet
search engines allow rapid access to customers -and the
P4 Executive Summaries/ Journal of Retailing 89 (2, 2013) P1P6
potential for rapid loss of customers. Certain search
engine optimization techniques can allow a new rm
to co-opt an established rms customer equity. These
techniques harness the established rms trademarks,
directly using this intellectual property to divert custom-
ers of the established rm prior to the moment of sale.
For example, one popular technique involves sprinkling
a sites hidden HTML code, or text within the site itself,
with the market leaders trademarks. Search engines will
often respond to these keywords by displaying the new
rms site when a consumer searches for the established
rms trademark, effectively leveraging the established
rms customer equity to a competitors gain.
In this article, IIC is explained and illustrated using sev-
eral recent business cases. Defenses to an IIC claim are
also explained. In light of the potential claims and poten-
tial defenses, specic tactical suggestions are offered,
both for the rm attempting to protect its trademarks,
and for the rm attempting to break into a new market.
Building-Up versus Paring-Down: Consumer
Responses to Recommendations When
Customizing
Brent Coker, Anish Nagpal
The emergence of the internet as a retail channel has
given rise for rms to offer customization of their
products. By offering customization of their products,
rms are able to more closely match their offerings to
customer needs. Dell for example identied a unique
opportunity to offer customers customized computers,
and Nike began offering customized shoes. Nowadays it
is possible to customize a wide variety of products online
from cars to apparel.
When offering a set of options from which to choose
from, rms will often make recommendations to ease
decision making. For example, Dell might recommend
certain levels of memory and processor speed for a
customized computer. In this research we examined
how decisions to customize products are inuenced by
these recommendations. In four experiments we found
that people will customize products differently depend-
ing on the customization strategy used, and where the
recommendation is made in comparison to the base
conguration.
One customization strategy for a vendor to offer is a
base model, where a customer is able to add options
as they desire. If the vendor offers a recommendation
mid-way between the base conguration and the highest
most expensive option available, we nd that the person
customizing will tend to choose a more expensive option
than if no recommendation was given. However, if the
vendor offers a recommendation past the mid-way point,
and closer to the maximum price option, then mistrust
sets in and the customizer does not accept the recom-
mendation. The result is a customized product about the
same price as if no recommendation is offered.
Another customization strategy is to offer a fully fea-
tured model, and invite the customer to remove features
until they reach their desired conguration. If the vendor
offers a recommendation mid-way between the most
expensive option and least expensive option, we nd that
the customizer does not respond to the recommendation.
The result is a congured option that is no different to
when no recommendation is offered at all. However,
if the vendor offers a recommendation that is past the
mid-point, and closer to the cheapest option, we nd the
customizer does respond to the recommendation, result-
ing in a much cheaper congured product than when no
recommendation is offered.
Collectively our results suggest caution to vendors who
offer customized products and recommendations, to
avoid mistrust. If the aim of the vendor is to maximize
prots, then the preferred strategy is to offer a recom-
mendation no higher than mid-point when offering
the cheapest model to add features to. If the vendor is
offering a fully featured model with options to remove
features, then the preferred strategy is to not offer a rec-
ommendation below the point.
Engaging Dissatised Retail Employees to Voice
Promotive Ideas: The Role of Continuance
Commitment
Jeffrey P. Boichuk, Bulent Menguc
A recent industry survey, conducted by Mercer LLC
at the end of 2010, suggests that employee satisfaction
remains a major concern in business today an estimated
32 percent of U.S. employees are ready to quit. Another
survey, conducted globally by BlessingWhite Inc. in
2011, similarly found that only 31 percent of employees
feel engaged in their jobs. We propose that institutional
factors such as low pay and limited upward mobility
are contributing to an epidemic of dissatised retail
employees and that studies need to begin uncovering
mechanisms through which retailers can engage these
employees.
Engaging Dissatised Retail Employees to Voice
Promotive Ideas: The Role of Continuance Commitment
is the rst study of this kind. The form of engagement
that we place under the microscope is retail employees
voice behaviors, or voluntary communication efforts
directed at challenging the status quo of a work unit
through the suggestion of creative and promotive solu-
tions. Retail employees who raise their voices in this
manner are critical to the longevity of retail organiza-
tions, because such feedback constitutes an active and
constructive response to job dissatisfaction. Alternative
responses that are undesirable include quitting and
disengagement.
The problem we tackle is that dissatised retail employ-
ees are generally less likely to engage in voice behaviors
than their satised counterparts. How, then, can retailers
engage dissatised retail employees to speak up and
share their ideas for improvement? A reasonable outlet
would seem to be through supervisors support. That is,
a retailer could ask its supervisors to actively seek out
retail employees problems and expect these employees
to voice their ideas in return. However, our results, from
a eld study and a controlled experiment, suggest that
support should only be provided if dissatised retail
employees are also committed to their organization
out of necessity. Otherwise, support ends up inducing
levels of retail employee voice that are not signicantly
different than would be the case had the support been
withheld, yielding the support a misallocation of effort.
This form of commitment that we nd to be crucial,
continuance commitment, differs from affective com-
mitment (i.e., caring about the fate of an organization)
and normative commitment (i.e., feeling a sense of
obligation to an organization). It is a retail employees
calculative attachment to his or her organization. It is
the feeling of being stuck in ones current organiza-
tion, either because alternative employment options
are unavailable or because organization-specic skills
or investments are high. According to our results, this
form of commitment is necessary to ensure that retail
employees are receptive to supervisor support. As such,
we advise retail managers to continuously conduct
mental checklists to determine whether their supportive
efforts should be provided to retail employees who are
dissatised. Such a checklist should take into consider-
ation the economic conditions of their industry and the
retail employees level of organization-specic skills
and investments. Since our results suggest that retail
employees with one foot out the door will be unrecep-
tive to supervisor support, supervisors should allocate
their efforts elsewhere if the continuance commitment
of a given retail employee is deemed to be low. Further
recommendations and details about the eld study and
controlled experiment employed in this paper can be
found within the article.
Examining the Role of Franchisee Normative
Expectations in Relationship Evaluation
Debra Grace, Scott Weaven, Lorelle Frazer,
Jeff Giddings
Franchising is the preferred business model for many
prospective small business owners as buying into an
established brand, with established business systems/
processes and customer base, signicantly reduces the
perceived risk associated with small business start-up.
In fact, many individuals are often sold on the idea of
franchising (as a business model) long before they are
sold on an individual franchisor (brand). On this basis,
there is signicant onus on the franchising business
format to perform as expected, regardless of the chosen
franchising system (i.e., brand).
Maximizing franchisee satisfaction and minimizing per-
ceptions of conict is of critical importance to franchi-
sors who strive to build sustainable franchising rela-
tionships. However, to date, the literature has not fully
considered these key relational outcomes within the
context of a franchisees expectations regarding the key
advantages afforded by the franchising business model
(referred to as normative expectations). To this end, the
present investigation was designed to examine how a
franchisees perception of relational outcomes (i.e., sat-
isfaction and conict) and their antecedents (perceived
support and communication openness) is evaluated in
light of their (dis)conrmation of normative expectations
(i.e., expectations of the franchising business model). In
order to orchestrate this investigation, a national on-line
survey was conducted and this resulted in 339 complete
responses from Australian franchisees.
The ndings indicate that the expectations that franchi-
sees have of the franchising business model do, indeed,
effect their subsequent evaluations of the franchise
system (i.e., brand) they have bought into. This makes
sense, given that the only frame of reference franchisees
have, in evaluating their chosen business model, resides
within the performance of their individual franchi-
sor. This creates a challenge for franchisors, who are
(unknowingly) faced with the problem of not only deliv-
ering on the promises that they have explicitly made
to their franchisee, but also to the promise implicitly
perceived by the franchisee in relation to franchising
(i.e., the business model). The ndings demonstrate that
factors (i.e., franchisee expectations of franchising),
which are not fully controlled by the franchisor, may
well erode potential satisfaction of their franchisees and
enhance the frequency and intensity of conict within
the relationship.
Executive Summaries/ Journal of Retailing 89 (2, 2013) P1P6 P5
The nding prompts the following question. Are the very
characteristics of the franchising business model, that
make it so attractive to potential entrepreneurs, partially
responsible for relational break-downs, often reported
in the franchising literature? We argue, here, that the
promises (i.e., advantages) of the franchising busi-
ness model may, in fact, breed complacency on the part
of the franchisee. For example, due to the franchisees
perception of operating within a comfort zone of a
tried and tested business arrangement, it may be that,
unknowingly, their own lack of contribution or personal
effort within the business is, partially responsible for
any conict escalation, relational dissatisfaction, or both
states, they may experience. Future research needs to
investigate this notion.
P6 Executive Summaries/ Journal of Retailing 89 (2, 2013) P1P6