Effects of Expiration Date-Based Pricing on Brand Image Perceptions

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Journal of Retailing 88 (1, 2012) 72–87

Effects of Expiration Date-Based Pricing on Brand Image Perceptions

Aristeidis Theotokis a,∗, Katerina Pramatari b,1, Michael Tsiros c,d,2

a Leeds University Business School, Maurice Keyworth Building, The University of Leeds, Leeds LS2 9JT, UKb Department of Management Science and Technology, Athens University of Economics and Business, Athens, Greece

c School of Business Administration, University of Miami, United Statesd Tassos Papastratos Research Professor, ALBA Graduate Business School, Athens, Greece

bstract

Expiration date-based pricing (EDBP) occurs when a grocery retailer reduces the price of a perishable product according to its remaining shelfife. While, conventional wisdom suggests that this practice leads to negative consumer evaluations of brand quality, a series of field experimentseveal negative effects on brand quality perceptions only among loyal consumers and those who perceive low risk associated with perishables. Theffect is also mediated by consumer distrust (Study 1). In addition, EDBP has no effect on brand quality image if consumers are already familiarith this pricing practice (Study 2), and it may even generate positive consumer evaluations when framed as a cause-related marketing activity

o reduce waste (Study 3). Additional evidence indicates that psychological contract violation perceptions provide the underlying mechanism forxplaining consumer responses to EDBP (Study 4). This article ends with an agenda for further research and implications for retail practice.

2011 New York University. Published by Elsevier Inc. All rights reserved.

eywords: Pricing; Grocery retailing; Perishables; Expiration date; Psychological contract violation

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Many grocery retailers discount perishable products as theypproach their expiration date, in an attempt to reduce wasteDonselaar et al. 2006). The advent of new technologies thatan automatically identify and transmit product-related infor-ation gives retailers broader opportunities for applying this

ractice (Eckfeldt 2005; Pramatari and Theotokis 2009). Mar-eting researchers also note the importance of expiration datesor retailing and consumer research, in that consumers take thisroduct characteristic into account when making purchase andonsumption decisions about perishables (Harcar and Karakaya005; Sen and Block 2009; Tsiros and Heilman 2005).

We investigate expiration date-based pricing (EDBP), whiche define explicitly as a pricing tactic in which a retailer chargesifferent prices for the same perishable products, according to
heir respective expiration dates. Retailers often consider EDBPn effective revenue management tool that increases demand andeduces waste. Yet despite its potential benefits, limited research
∗ Corresponding author. Tel.: +44 0113 343 0706.E-mail addresses: [email protected] (A. Theotokis),

[email protected] (K. Pramatari), [email protected] (M. Tsiros).1 Tel.: +30 2108203663.2 Tel.: +1 305 284 5950.

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022-4359/$ – see front matter © 2011 New York University. Published by Elsevier Ioi:10.1016/j.jretai.2011.06.003

o date examines how consumers perceive the practice or itsikely effect on brand quality image.

In general though, pricing and promotion literature suggestshat price discounts may lead to negative consumer evaluationsn terms of perceived brand quality (Grewal et al. 1998) anduture purchase intentions (DelVecchio, Henard, and Freling006). Existing research on dynamic pricing and price discrim-nation also suggests that price differences for the same productr service seem unfair to consumers (Haws and Bearden 2006;imes and Wirtz 2003; Xia, Monroe, and Cox 2004) and canave negative effects on consumer trust (Garbarino and Lee003), even if the prices decrease due to demand (Xia, Kukar-inney, and Monroe 2010). Thus discounting perishables could

ead to negative product quality inferences, with harmful resul-ant effects on store or brand image as well. Thus, Tsiros andeilman (2005, p. 128) conclude their study by noting that “man-

gers should weigh the trade-offs between the potential benefitsf discounting perishables to sell inventory and its potential neg-tive effects on store image” and calling for further research tonvestigate the question. Yet their initial empirical evidence indi-ates that discounting perishables does not have a negative effect
n store or brand image and that consumers’ willingness to payor a perishable decreases with its shelf life. Further empiri-al evidence shows that the short- and long-run effectiveness of
nc. All rights reserved.

dx.doi.org/10.1016/j.jretai.2011.06.003

mailto:[email protected]



dx.doi.org/10.1016/j.jretai.2011.06.003

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A. Theotokis et al. / Journal

rice promotions is greater for perishable goods than for otherategories (Nijs et al. 2001).

These conflicting results, and the importance of brand qualitymage for perishables, make it difficult for managers to imple-

ent EDBP. They require a better understanding of the short-nd long-term effects of this practice on consumer perceptions;ccordingly, we aim to advance knowledge about whether, how,nd in which conditions EDBP affects consumer perceptions inerms of perceived brand quality.

Specifically, building on existing research on expirationates and social exchange theory (Blau 1964), we propose thatonsumers perceive product quality conformance before thexpiration date as a psychological contract (Rousseau 1995;ousseau and Tijoriwala 1998). A psychological contract existshen one party believes that another is obligated to perform

ertain behaviors (Rousseau 1995); it differs from the broaderoncept of an expectation because contracts have a promis-ory character (Rousseau and Tijoriwala 1998). Thus, from auyer’s standpoint, psychological contracts reflect perceptualeliefs about the seller’s contractual obligations (Pavlou andefen 2005), and psychological contract violation (PCV) ariseshen people believe they are not getting what they expected

ccording to the contractual agreement (Morrison and Robinson997; Robinson 1996; Robinson and Morrison 2000).

In addition, we recognize that a price discount before theroduct’s expiration date may function as a signal of decreasinguality (Baker et al. 2002; Grewal, Gotlieb, and Marmorstein994). Therefore, we propose that PCV between the consumernd the brand provides the underlying mechanism that explainsonsumer reactions to EDBP. For perishables, unlike otherroduct categories, consumers may perceive product qualityonformance as a contractual agreement that is expressed by thexpiration date. Thus their exposure to discounting for perish-bles may prompt a perception of PCV that leads the consumer toistrust the brand and negatively influences brand quality image.

Motivated by this theoretical approach, we suggest that theffect of EDBP is contingent on several conditions that mod-rate the existence of a PCV. For example, the expiration dateisk, or the perceived risk associated with consuming or pur-hasing a perishable product approaching its expiration dateSen and Block 2009; Tsiros and Heilman 2005), together withrand loyalty, likely define the existence and nature of a psy-hological contract. In addition, as consumers become moreamiliar with this practice, the signal that EDBP sends may bettenuated, which decreases PCV. Moreover and in line with cor-orate social responsibility (CSR) literature (Fornell et al. 1996;oon, Gürhan-Canli, and Schwarz 2006), we suggest that fram-

ng EDBP as a “green marketing” practice may reverse its effectn brand quality image by creating positive CSR (i.e., reducedaste) associations.We conduct four empirical studies to test these propositions.

tudy 1 consists of a field experiment in which we implement,n collaboration with a western European dairy company, EDBP
or milk products in two stores of a supermarket chain. Wehow that EDBP, compared with regular pricing, has a negativeffect on brand quality image, though only among loyal con-umers or those who perceive low levels of risk associated with
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tailing 88 (1, 2012) 72–87 73

erishables. This effect is also mediated by consumer distrust.tudy 2 is a field study in a supermarket chain that already appliesDBP for its meat category; we thus investigate how consumer

amiliarity with the practice affects responses. In Study 3, weonduct another field study to investigate the effect of EDBPraming on consumer reactions. Tsiros and Heilman (2005)uggest retailers should frame EDBP as a cause-related mar-eting activity by presenting it as an alternative to throwingway products and therefore a means to reduce environmentalaste. We consider whether this framing may mitigate or reverse

he negative effects of EDBP. Finally, in Study 4, we replicateur findings and provide more direct support of the theoreticalxplanation of psychological contract violation. That is, in a lab-ratory experiment, we manipulate the pricing tactic and captureonsumer thoughts about the brand. The results show that in theypothesized conditions, EDBP invokes a significant number ofCV thoughts among consumers.

In the next section, we define the EDBP concept and our the-retical background. We then present the four studies in detail.inally, we conclude with a discussion of the research findingsnd their implications for managers and researchers.

Research background

xpiration date-based pricing

Variable pricing or price discrimination is a tactic in which“retailer charges different prices for identical products and/or

ervices sold to different customers” (Levy and Weitz 2006, p.18). Price discrimination tactics are usually classified accord-ng to the rate fence used, that is, the rules that the company useso determine who gets which price and what determinants can besed to help differentiate one transaction from another (Kimesnd Wirtz 2003). Rate fences can be physical (e.g., seat locationn a theater, size and furnishings of a hotel room) or nonphysicale.g., senior citizen, quantity or frequency of purchase; time ofooking) characteristics.

Expiration date-based pricing is a particular form of second-egree price discrimination, in which the expiration dateepresents a physical rate fence that discriminates pricesDesiraju and Shugan 1999; Elmaghraby and Keskinocak 2003;allego and van Ryzin 1994; Kimes and Wirtz 2003); it also

onstitutes a sales promotion that provides a temporary incen-ive to encourage the purchase of a perishable. However, EDBPas some particular characteristics that distinguish it from otherrice discrimination or promotion practices. First, it is a self-elected price discrimination technique (Levy and Weitz 2006),hich means that it clearly provides consumers with options.nlike revenue management practices in the services industry

e.g., airlines), consumers can select whether they will buy aiscounted, older item or a regularly priced, fresher version ofhe product. Second, in contrast with in-store promotion prac-ices, the discounted product in EDBP appears right next to
resher, nondiscounted items. Consequently, this form of promo-ion presents the price–quality trade-off directly to consumers.hird, the rate fence that EDBP uses is a distinguishing productharacteristic, the expiration date, that may function as a signal

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tacteet al. 2009; Pavlou and Gefen 2005; Russel and Anthony 2007).From a buyer’s standpoint, psychological contracts consist ofperceptual beliefs about the seller’s contractual obligations

4 A. Theotokis et al. / Journal

f product quality (Sen and Block 2009; Tsiros and Heilman005) or an attribute that defines the value of the product.hereas price discrimination in other industries usually tries to

iscriminate identical products (e.g., tickets for the same jour-ey, identical hotel rooms), the products in an EDBP scheme areot identical, since their expiration dates differ. Fourth, EDBPan be applied solely to perishable product categories, which isargely specific to, and critical for, grocery retailers’ profitabilitynd image (Tsiros and Heilman 2005).

odeling consumer responses to EDBP

Academic researchers have studied consumer responses toany pricing and price promotion tactics, including every-

ay low prices (EDLPs) and Hi-Lo pricing (Darke andhung 2005), comparative pricing (Blair, Harris, and Monroe002), multiple-unit price promotions (Manning and Sprott007), price-matching guarantees (Kukar-Kinney, Walters, andacKenzie 2007; Kukar-Kinney, Xia, and Monroe 2007),

steadily decreasing discounting” (Tsiros and Hardesty 2010),nd even “pay what you want” pricing (Kim, Natter, and Spann009). Of the variables used to model consumer responses touch promotional tactics, extant literature suggests brand imageerceptions are important outcomes that indicate post promo-ion brand preferences and predict the long-term effects of aricing tactic (DelVecchio, Henard, and Freling 2006). Studieseasuring brand image thus typically gauge shifts in consumers’

verall perceptions of brand quality after their exposure to a salesromotion (e.g., Dawar and Sarvary 1997; Raghubir 2004).

Similarly, we attempt to model the process by which con-umers formulate perceptions of brand quality after theirxposure to an EDBP practice. This process may be differ-nt and somehow independent of the purchase decision processDelVecchio, Henard, and Freling 2006). That is, the purchaseecision in a EDBP setting (buy the “cheaper” or the “fresher”roduct) is an important and under-researched outcome, but weonsider the long-term effects of this practice, in terms of branduality perceptions, even more important. For example, retailersnd producers of perishables tend to avoid using EDBP, despitets potential to increase short-term sales, for fear of its negativeong-term effects on brand image. Furthermore, consumer per-eptions of brand quality are critical for perishables and closelyelated to high quality consciousness (Harcar and Karakaya005; Krider and Weinberg 2000). Therefore, focusing on con-umer perceptions of brand image as an outcome of EDBP isoth theoretically meaningful and managerially relevant.

Another important issue in this context is the distinctionetween the retailer’s (store) versus the supplier’s (manufac-urer) brand image. Sales promotion research suggests that ann-store promotion can affect both retailer and supplier imagesGrewal et al. 1998). In the case of EDBP, either the retailerr the producer provides the discount, and depending on theirgreement, the retailer may be fully or partially reimbursed
or unsold quantities. However, for unbranded or private-labelerishables, the cost of waste accrues directly to the retailer.hus, a manufacturer may be motivated and responsible for theDBP in the case of branded perishables, but the retailer takes
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tailing 88 (1, 2012) 72–87

esponsibility in the case of unbranded or private-label perish-bles, and we predict that EDBP affects the brand image of theesponsible party. With this logic, we hypothesize that EDBPffects the producer’s brand image when applied to brandedroducts (Studies 1, 3 and 4),3 but the impact centers on theetailer’s (store) image when unbranded products are discountedStudy 2). We conceptualize under a similar logic all the otherariables included in studies (e.g., distrust, loyalty), as well.

heoretical background: a psychological contract violationpproach

Marketing literature has established the role of consumerxpectations as central to any understanding of consumeresponses (Zeithaml, Berry, and Parasuraman 1993). Especiallyn the case of perishables and private-label products, consumerxpectations regarding product quality are key (Batra and Sinha000; Chan Choi and Coughlan 2006; Sprott and Shimp 2004).ithin the context of organizational relationships, researchers

hus suggest the concept of a psychological contract (Morrisonnd Robinson 1997; Robinson 1996; Robinson and Morrison000), which exists if one party believes that another is obli-ated to perform some behaviors (Rousseau 1995). Consumers’xpectations of perishables’ quality before the expiration dateay take the form of such a psychological contract, between

he consumer and the perishable manufacturer or retailer. Weypothesize that this psychological contract is critical to under-tanding consumer responses to EDBP.

Furthermore, social exchange theory (Blau 1964) requirescareful distinction between a psychological contract and the

roader concept of expectation in that “although all psycholog-cal contracts entail expectations that a person or a firm willct in a particular way, not all expectations are contractual”Rousseau and Tijoriwala 1998, p. 80). In a psychological con-ract, the constitutive beliefs result from promises. Therefore,sychological contracts, unlike expectations, have a promissoryharacter. Furthermore, the perceptual, unwritten and implicitature of psychological contracts distinguishes them from legalontracts (Argyris 1960). Therefore, psychological contracts areuch broader than economic and legal contracts and include per-

eptual aspects that cannot be formally incorporated into legalontracts.

Violations of psychological contracts arise if people thinkhey are not getting what has been promised by a contractualgreement. Most examinations of the concept of psychologicalontract violation (PCV) appear in the context of organiza-ional relationships, though recently researchers have proposedxtending it to buyer–seller relationships (Goles et al. 2009; Hill

3 In the case of branded products, we assume that consumers attribute theiscount and overall practice to the brand manufacturer, not the retailer. Wenclude store image measures in Studies 1 and 3 to test this assumption and findnsignificant main or interaction effects of EDBP on store image.

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qtbetween the consumer and brand. As we outline in Fig. 1, con-sumers who associate high risk with perishables do not expectthe quality to remain stable across the entire shelf life (No PCV),

4 For instance, consumer perceptions about brand image can be affected byvalue perceptions. In this case, consumers from households with higher con-


Pavlou and Gefen 2005), so every buyer–seller interaction cane characterized by the psychological contract that features buy-rs’ expectations of the seller, which are not included in theormal legal terms of the exchange. A buyer may perceive PCVf a seller fails to fulfill its contractual obligations, due to fraud,roduct misrepresentation, contract default, delivery delay, oreneging on product guarantees and payment policies (Pavlound Gefen 2005).

Importantly, casual attributions, that is inferences about theeasons or motives that led to PCV—are considered as a criti-al factor that determines the consequences of PCV. Attributionheory suggests that people are likely to search for causal expla-ations for an event when the event is surprising, negative, oroth. Thus, Morrison and Robinson (1997) made a concep-ual distinction between perceived contract breach, which is

perception, and the experience of contract violation whichs more an affective or emotional state that may or may notccompany that perception. They argued that, immediately fol-owing the perception of a contract breach, employees engage incognitive process through which they attempt to infer motives

egarding this breach. This interpretation process, in turn, mod-rates the relationship between perceived breach and feelingsf violation. Therefore, causal attributions regarding the PCVetermine the intensity of negative emotions that the employeeill experience (Robinson and Morrison 2000). In other words,

nferred motives are considered to be an integral part of theCV development process by actually defining the outcome of

his process.Based on the literature that has examined the critical role

f PCV and its negative impact on organizational relationshipsMorrison and Robinson 1997; Robinson 1996; Rousseau 1989),e propose that PCV is central to an understanding of the

ffects of EDBP on consumer perceptions. When consumers buyerishables, they clearly have a perceptual expectation—whichmplies a psychological contract between them and the retailerr producer—that the perishables will perform according to cer-ain standards prior to their expiration date. The appearance ofhe expiration date on perishables’ packaging symbolizes thissychological contract. Before the date, the product should con-inue to offer the same or similar quality, which is why expirationates are often denoted using the working “best before” (Tsirosnd Heilman 2005). The legal obligation states only that the per-shable product must be consumable up to the expiration date;he psychological obligation is more demanding: The producthould be of equal quality.

In parallel, pricing and promotion literature reveals that pricesually functions as quality cue (Baker et al. 2002; Grewal,otlieb, and Marmorstein 1994). Therefore, discounting perish-

bles before their expiration date may signal that their quality hasecreased prior to the expiration date, which represents a viola-ion of the psychological contract of persistent quality before thexpiration date. However, we also posit that both the existencend nature of a psychological contract depend on consumers’
erceptions of expiration date risk and brand loyalty; further-ore, we anticipate that the strength of the signal that EDBP
ends is moderated by consumers’ familiarity and promotionraming.

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tailing 88 (1, 2012) 72–87 75

We depict the suggested mechanism of consumer responseso EDBP in Fig. 1. The figure could be decomposed into threearts: The left side part, the upper right part and the lower rightart. The left side of the figure shows that EDBP may signalonsumers that the quality of perishables decreases before thexpiration date. However, this signal weakens if consumers arelready familiar with the practice or if it is framed in a positiveay (e.g., green marketing). The upper right side of the figure

epresents consumer expectations about product quality beforehe expiration date. For consumers who perceive lower risk asso-iated with perishables, their expectations may take the form of asychological contract. This contract should be stronger amongrand-loyal consumers.

Consistent with the psychological contract paradigm fromrganizational relationships, the lower right side of Fig. 1 showshat the level of discrepancy between consumer expectationsnd brand signals through EDBP practices defines the level andxistence of PCV. If discrepancy exists between the brand sig-al and consumer expectations (i.e., the EDBP signal is strongnd consumers’ expectations form a psychological contract),onsumers perceive their exposure to EDBP as a PCV that neg-tively affects their trust and brand quality image. If the EDBPignal is weak or consumers’ expectations do not take the formf a psychological contract, we anticipate no PCV and con-umers perceptions’ of brand quality should derive instead fromther information cues and perceptions.4 Based on this mech-nism, we develop next our formal arguments using relevantheories and thereby offer specific research hypotheses regardinghe effects of EDBP.

oderating role of expiration date risk and brand loyalty

According to Tsiros and Heilman (2005, p. 119), productuality or expiration date risk “captures the perceived risksssociated with product quality as a perishable approaches itsxpiration date and the associated health risks.” In general, per-eived risk is the expected negative utility associated with theurchase of a particular brand or product; prior literature notests effects on consumer decisions (Grewal et al. 2007). Recentvidence shows that consumer willingness to pay for a perish-ble decreases more for higher risk product categories (Tsirosnd Heilman 2005). That is, when consumers have higher expi-ation date risk perceptions, they expect the quality of a producto decrease as it approaches its expiration date.

We use the term expiration date risk to denote the perceiveduality risk associated with the expiration date, and we postulatehat it actually defines the existence of a psychological contract

umption rates would perceive high value associated with discounted product andherefore could develop favorable attitudes towards the brand. Future researchould investigate how the perceived value of the discounted product and thectual purchase decision could affect brand image.

76 A. Theotokis et al. / Journal of Retailing 88 (1, 2012) 72–87

Brand Loyalty

Psychological contract between buyer and seller

Expira�on Date Risky y

Brand loyalty affects the nature of psychological

ED risk defines the existence of psychological

ED is a promise from the seller

that perishables’ quality remains

Familiarity with the i

contract contract

Familiarity Quality of

quality remains the same

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(PCV)Quality of perishables

decreases before ED

EDBP

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EDBP Framing

(PCV)The level of the discrepancy between

EDBP signal and consumer expecta�ons define the level and existence of PCV

Distrust

CRM-framed EDBP induces posi�ve associa�ons that

a�enuate the signal

No PCV Low or High PCV

Distrust

Brand Quality Image

Consumers use addi�onal cues to formulate percep�ons

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hereas consumers with low expiration date risk perceptions5

xpect them to retain same quality for their shelf life (Low origh PCV). According to the suggested theoretical framework,DBP thus may lead to negative consumer perceptions if theyxperience PCV, but if there is no PCV, consumers use othernformation cues to formulate their expectations of brand qual-ty, so the effect of EDBP on brand evaluations is insignificant.

e thus hypothesize:

1. Expiration date risk moderates the effect of EDBP onrand quality image. Exposure to EDBP has a negative effecthen consumers perceive a lower expiration date risk, but the

ffect is weaker (or insignificant) if consumers perceive a higherxpiration date risk.

Psychological contracts may be transactional or relational inature (Robinson 1996). A contract at the transactional end ofhe continuum consists of specific, short-term obligations thatemand limited involvement by the parties. A contract at theelational end instead entails broad, open-ended, long-term obli-ations. Therefore, different consumer segments likely perceive
ifferent types of psychological contracts with a brand.
Lewicki, McAllister, and Bies (1998) suggest that in an earlytage of a buyer–seller relationship, both parties are regulated by

5 We conceptualize expiration date risk as a consumer-related characteristic,ecause our field studies examine one specific product category each, and exist-ng research suggests that different consumers perceive different risk levels forhe same product categories (Sen and Block 2009; Tsiros and Heilman 2005).owever, expiration date risk can also be conceptualized as a product-specificariable.

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quality image

ponses to EDBP.

he potential benefits of their promises, the costs of cheating, oroth (i.e., calculus-based trust). Over repeated interactions, theirelationship develops, and the two parties begin to know eachther (i.e., knowledge-based trust). Consequently, for estab-ished buyer–seller relationships, such as exist for brand-loyalonsumers; the psychological contract should be stronger andore relational in nature, whereas for less loyal consumers itay be weaker and transactional. In turn, PCV should havestronger impact on the evaluations of loyal consumers, whoay feel betrayed, or mistreated (Feinberg, Krishna, and Zhang

002). We hypothesize:

2. Brand loyalty moderates the effect of EDBP on branduality image. The negative effect of EDBP is weaker (ornsignificant) among nonloyal consumers.

ediating role of distrust

Customer trust constitutes a mediating variable in severalontexts and disciplines (Sirdeshmukh, Singh, and Sabol 2002);rice discrimination literature also suggests trust is an importantutcome of consumers’ exposure to dynamic pricing (Garbarinond Lee 2003) and an antecedent of perceived price fairness (Xia,onroe, and Cox 2004). Existing research further indicates that

he main outcome of PCV is decreased trust or the appearance ofistrust (Morrison and Robinson 1997; Pavlou and Gefen 2005;obinson 1996).

Distrust is related but qualitatively different from trust (Cho006; Kramer 1999; Lewicki, McAllister, and Bies 1998). Con-eptually, it refers to a mindset that suggests the trustee shoulde avoided; if unavoidable, the trustee should be treated with

A. Theotokis et al. / Journal of Retailing 88 (1, 2012) 72–87 77

F ili itFamiliarity

H4

Pricing Tac�cRegular Pricing vs.

Expira�on Date Based Pricing (EDBP)

DistrustBrand Image

Perceived Brand Quality

H3

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EDBP FramingPromo�on-framed vs.

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H5

Brand Loyalty

Expira�on Date Risk

Study 1,4

Study 2

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istinct attempts to minimize potential vulnerabilities. The mainifference between trust and distrust is that trust involves a beliefhat the trustee will probably behave in an acceptable mannerSirdeshmukh, Singh, and Sabol 2002), whereas distrust rulesut this belief upfront and therefore provokes a strong focus onotential vulnerabilities (Gefen, Benbasat, and Pavlou 2008).

Although trust builds over time, distrust can arise imme-iately after a negative experience (Parkhe 1998). Capturinghifts in consumer distrust is thus easier than capturing trust,hich usually requires longitudinal research designs. Similarly,decrease in trust may have a negative effect on consumer eval-ations in the long-term, but distrust effects are more obviousn the short-term. For these reasons, we use distrust, instead ofrust, as a direct outcome of consumers’ perceptions of PCV dueo an exposure to EDBP and predict that this outcome can gener-te negative brand image evaluations. Accordingly, we proposeCV as the underlying mechanism that explains the effects ofDBP, expiration date risk and loyalty on brand image, whereasistrust is the intervening variable that mediates the effects, ande propose:

3. Distrust mediates the effects of EDBP, expiration date risk,nd loyalty on brand quality image (mediated moderation).

We provide our conceptual model in Fig. 2; we formallyevelop H4 and H5 in Studies 2 and 3, respectively.

Study 1: EDBP effects on distrust and brand quality image

We used a field experiment to compare consumer reactionso the presence versus absence of an EDBP practice, takingnto account the hypothesized moderating factors. This experi-

ent, conducted in May 2008, featured two supermarket stores

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responses to EDBP.

n Athens, Greece. In collaboration with a market leader dairyrand, we applied expiration date-based pricing to the milk cat-gory. According to previous interviews with managers, thisricing tactic has been applied very rarely in supermarkets inreece, so consumers should not be familiar with it. Greece

herefore offers an appropriate, real-world context in whicho compare consumer responses before and after exposure toDBP.

xperimental design

We applied a between-subjects experimental design, in whiche manipulated consumer exposure to EDBP as a between-

ubjects factor. After our discussion with brand and storeanagers, we decided to apply EDBP by discounting the price

n milk one day before its expiration date. As we show in Fig. 3,he milk products of this brand offered five days of shelf lifefter pasteurization. The night of the fourth day, a merchan-iser would remove products from the shelf. For this study,n the morning of the fourth day, we applied a discount of5%, which was a common discount depth offered by this brandn other dairy products. We detail the experimental design inable 1.

ata collection and sample

The data collection took place in stores, for two weeks beforehe implementation and two weeks during the EDBP imple-

entation. For the experimental period, all other activity (e.g.,umber of staff) in the store remained constant. In addition, thereere no other promotions in the milk category. The researchers

ntercepted respondents in stores just after they checked out

78 A. Theotokis et al. / Journal of Retailing 88 (1, 2012) 72–87

25% OFF Regular Price

Day5

Expira�on

Day4

Day3

Day2

Day1

Shelf

Day0

Milk Expira�on DateOn ShelfOn ShelfOn Shelf

Shelf Placement

Milk Pasteuriza�on

Fig. 3. Application of EDBP for milk: Study 1.

Table 1Experimental design: Study 1.

Pre-exposure Post-exposure

Time/place T1 (Weeks 1 and 2),Stores A and B

T2 (Weeks 3 and 4),Stores A and B

Sample size N = 337 N = 367Manipulated variable EDBP absence

(regular pricing)EDBP presence (25%off one day beforeexpiration)

Measured variables Expiration date riskBrand loyaltyBrand quality imageDistrust

Expiration date riskBrand loyaltyBrand quality imageDistrust

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Table 2Variable descriptive results: Study 1.

T1Regular pricing

T2EDBP

Expiration Date Riska 3.28 (1.22) 3.25 (1.01)Brand Loyaltyb 30% 32%Distrusta 2.11 (.854) 2.15 (.802)Brand Quality Imagea 3.4 (.978) 3.5 (.988)

a Mean and standard deviation in parentheses, five-point scale, higher numbersm

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study variables. The results pertaining to consumer perceptionsof expiration date risk and brand loyalty remained consistentover the two experimental periods. In Table 3, we summarize

6 To minimize any influence of common method variance, we implementedmore straightforward measures for brand loyalty (Rossiter 2002). Consistent

nd adopted a face-to-face, personal interview method. The dataollection occurred on low-, medium-, and high-peak shoppingays (Bush and Hair 1985). A screening question ensured thatll respondents had bought milk during this shopping trip andhus were exposed to the milk section of the store. During thef EDBP (T2) period, an additional screening question asked ifespondents had noticed the practice. Overall, we collected 704sable questionnaires, 337 (48%) before (T1) and 367 (52%)uring the EDBP implementation (T2). Of the respondents, 69%ere women and 56% were married. The sample was balanced

n terms of the age groups represented: 51% were in the 25–44ears group, and approximately one-third were older than 44ears. Moreover, in terms of gender, age, and marital status, theample was similar for both experimental periods and generallyepresentative of the Greek supermarket shoppers, according tohe retail managers of five chains.

easurement

Respondents indicated their perceptions of the involved dairy
rand’s quality using two items adopted from Grewal et al.1998). The distrust measure was a three-item scale adapted fromho (2006). We measured loyalty to the specific brand with aummy variable, equal to 1 if consumers indicated that their
wSnt

ean higher variable levels.b Percentage of respondents who indicate focal brand as their main dairy brand.

rimary brand was the study brand, and 0 otherwise6 (Rossiter,002; Sloot, Verhoef, and Franses 2005). The respondents alsoompleted a scale to measure their expiration date risk, adoptedrom Tsiros and Heilman (2005). We used a median split anal-sis to divide the sample to low and high expiration date riskroups.

We assessed the psychometric properties of the measures withonfirmatory factor analysis and found acceptable psychometricroperties for the scale reliabilities. The coefficient alpha valuesere between .85 and .90, and the composite reliabilities wereetween .75 and .85. We provide detailed measures in Appendix. The interviews also included measures of consumers’ milkurchases (i.e., brand, package size, and price), which served asontrol variables in our analysis.

esults

Table 2 contains a summary of consumer responses to the

ith similar studies that investigate consumer responses in a field context (e.g.,loot, Verhoef, and Franses 2005), we used a behavioral measure (primary brand,o/yes) instead of a self-reported Likert-type item (e.g., “I consider myself loyalo this brand”).

A. Theotokis et al. / Journal of Retailing 88 (1, 2012) 72–87 79

Table 3Purchase decision data: Study 1.

T1, Regular Pricing T2, EDBP

Milk purchase N = 337 N = 367Brand purchase Focal brand Other brands Focal brand Other brands

112 (33%) 225 (67%) 120 (32%) 247 (68%)E

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DBP purchase EDBP Regular pricing– 112 (33%)

he purchase decision data; 33% and 32% of respondents haveurchased milk from the focal brand during T1 and T2 respec-ively, and during the EDBP implementation (T2), 10% of theotal sample (or 30% of those who purchased the focal brand)urchased discounted milk approaching its expiration date.

To analyze the brand quality image responses, we used a 2pricing tactic: EDBP vs. regular) × 2 (expiration date risk: lows. high) × 2 (brand loyalty: loyal vs. nonloyal) between sub-ects analysis of variance (ANOVA). Exposure to EDBP andxpiration date risk had nonsignificant main effects (p > .1) onrand image quality, whereas brand loyalty had a significantain effect (F1, 697 = 12.45, p < .05). That is, loyal consumers

xpressed higher perceptions of brand quality (M = 3.8) than didonloyal consumers (M = 3.2). Regarding the interactions, weound that exposure to EDBP interacted with both brand loyaltyF1, 697 = 92.55, p < .05) and expiration date risk (F1, 697 = 55.20,< .05). As we show in Fig. 4, follow-up contrasts revealed that

or consumers who perceive higher levels of expiration date risk,his pricing tactic does not affect their brand image perceptionignificantly (Mregular = 3.32, MEDBP = 3.45), but for consumersith lower levels of expiration date risk, exposure to EDBP hadnegative effect on brand image (Mregular = 3.5, MEDBP = 2.8,< .05), in support of H1. Similarly, the effect of EDBPas significantly negative for loyal consumers (Mregular = 4.1,EDBP = 3.2, p < .01) but insignificant for nonloyal consumers

Mregular = 3.3, MEDBP = 3.1), in support of H2. The three-waynteraction effect (pricing practice, expiration date risk, andrand loyalty) was also significant (F1, 697 = 10.09, p < .05),hough we did not formally establish this hypothesis.

We tested for the effects of purchase decision (brand, size,
nd price) on consumer perceptions of brand quality as well.s expected, consumers who have purchased the focal brand
ndicated higher perceptions of brand quality (M = 3.8) than

vath

Fig. 4. Moderating effect of expiration da

EDBP Regular pricing36 (10%) 84 (22%)

onsumers who purchased other brands (M = 3.2). This results consistent with the effect of brand loyalty on brand image. In

separate analysis of the effect of the purchase decision dur-ng the EDBP period among consumers who have purchasedhe focal brand, we found no significant difference, in terms ofrand quality perceptions, between the group of consumers whohose to purchase the cheaper, nearly expired milk and thoseho purchased the fresher, more expensive milk. This result is

onsistent with existing literature (e.g., DelVecchio, Henard, andreling 2006; Grewal et al. 1998) that suggests that the short-

erm effect of a promotion (i.e., consumer purchase decision)ay be independent of the long-term effect (i.e., brand image).

ediated moderation tests

Our theoretical development, especially H3, proposes a medi-ted moderation (Baron and Kenny 1986; Muller, Judd, andzerbyt 2005), in which the moderating effect of brand loy-

lty and expiration date risk is mediated by distrust. That is, weave predicted that brand loyalty and expiration date risk mod-rate the effect of EDBP on distrust, which in turn influencesrand quality perceptions.

There are three models available to examine mediated mod-ration (Muller, Judd, and Yzerbyt 2005). The first is the one weested previously, with brand quality as the dependent variablemodel A). The significant interaction effect of the independentariable (pricing tactic) with the two moderators (expiration dateisk and brand loyalty) on brand image provides initial sup-ort for mediated moderation. To test distrust as a mediating
ariable, we next examined the same model but with distrusts the dependent variable (model B). This analysis revealedhat pricing practices, brand loyalty, and expiration date riskad no significant main effects on distrust (p > .05), but we
te risk and brand loyalty: Study 1.

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frSsabn“Discounting perishables as the expiration date approaches is acommon practice for grocery retailers,” with “strongly agree”and “strongly disagree” as endpoints.7 We used a median split

7 We conceptualize EDBP familiarity as consumer perceptions about how


ound a significant interaction effect of EDBP with brand loyaltyF1, 704 = 34.03, p < .05) and expiration date risk (F1, 704 = 32.03,< .05). Because the results from model B follow the same pat-

ern as those in model A, the initial variables are likely correlatedith the mediator (Baron and Kenny 1986). Finally, with the

hird model (model C), we examined if the mediator (distrust)ffected the outcome variable (brand image) when we controlledor the effects of the initial variables (pricing tactic, brand loy-lty, expiration date risk, and the interactions). We found aignificant effect of distrust on brand image (F1, 704 = 58.45,< .05) and a nonsignificant effect of the initial variables. There-

ore, in the presence of the mediator, the effect of the initialariables became insignificant. This pattern of results indicateshat distrust is a mediator of the effects of the pricing tactic,xpiration date risk, and brand loyalty on brand quality imageMuller, Judd, and Yzerbyt 2005), in support of H3.

In summary, Study 1 provides initial empirical support for1 and H2 by confirming that EDBP effects on brand imageiffer between low and high expiration date risk conditionsut also between loyal and nonloyal consumers. Additionally,tudy 1 supports H3 by showing that EDBP affects distrust and

hrough distrust it affects brand image. A limitation of Studyis that EDBP has been tested in a country that this prac-

ice is applied very rarely and therefore consumers are quitenfamiliar with it. We conducted Study 2 to provide furthermpirical support for the research hypotheses by testing con-umer responses in a context that EDBP is already applied. Inhis way, we are also able to investigate the effects of EDBP inong-term.

Study 2: long-term effects of EDBP

Study 2 extends the findings of Study 1 in three ways. First,e test if the results of Study 1 are also valid for consumers who

re already familiar with EDBP. In so doing, we also extend ourodel beyond the short-term consumer responses to EDBP intudy 1 to determine if long-term exposure to EDBP influencesrand quality image over time and how this effect may changes consumers become more familiar with the practice. Second,hough milk is a good representative of perishable product cat-gories, previous studies have shown that consumer responseso expiration dates differ across categories (Tsiros and Heilman005). Therefore, in Study 2 we test another product category.hird, in Study 1 the EDBP was applied to a manufacturer brand;ecause retailers also might discount their private-label perish-bles, we also examine the managerially relevant question ofhether consumer responses to EDBP differ when a retailer

mplements the practice.

oderating role of familiarity

Promotion literature offers conflicting results regarding theong-term effects of a promotion. Several researchers suggesthat a price promotion, regardless of consumers’ choice at the
ime it is offered, has negative long-term effects because it dam-ges brand equity (Grewal et al. 1998). Conversely, perhaps salesromotions increase brand preference (Pauwels, Hanssens, andiddarth 2002). DelVecchio, Henard, and Freling (2006), in a
faef

tailing 88 (1, 2012) 72–87

eta-analysis of 51 studies, show that the long-term effectsf promotion for the brand can be either positive or negative,epending on the characteristics of the promotion and the pro-oted product.Yet according to the pricing literature, as a market becomes

ore familiar with alternative pricing practices such as priceiscrimination, consumers’ negative perceptions of those prac-ices decline (Wirtz and Kimes 2007). Customers are affectedy community norms regarding prices and pricing schemes, soheir perceptions of pricing schemes are likely to develop rela-ive to community norms. Customers who are unfamiliar with aricing scheme, in turn, should be more likely to perceive it asnfair and develop negative attitudes towards the company thatmplemented it.

In turn, we postulate that psychological contract violationerceptions, developed after an exposure to EDBP, decreasehen consumers are more familiar with this practice. Thus weropose:

4. Familiarity moderates the effect of EDBP on brand qualitymage. The effects of EDBP are weaker for consumers who are

ore familiar with this practice.

ethod

We conducted Study 2 in two supermarkets in Ireland whosearent company applies expiration date-based pricing to itsrivate-label meat category. Specifically, the chain applied arice discount of 20–25% for minced-packaged-meat two daysefore its expiration date; the retailer had been using this tacticor three years at the time of our study. Store managers revealedhat the implementation involved placing a discount sticker onhe product without any additional communication (e.g., shelfag). Therefore, consumers who usually purchase meat from thisrocery retailer, even as their primary brand, might not be awaref the practice, and we compared consumer perceptions of branduality across consumers aware of the practice and those whoere not. We conducted face-to-face interviews with consumersf two representative grocery stores; the data collection lastedor two weeks and led to a final sample of 403 shoppers.

A filter question confirmed if respondents had shopped in theocal category. The measures of category-specific loyalty to theetailer and expiration date risk were similar to those used intudy 1. Two items from Grewal et al. (1998) served to mea-ure store image perceptions, the dependent variable. Customerslso indicated if they were aware of the EDBP practice appliedy the store, which represented our measure of EDBP aware-ess. Familiarity with EDBP used a five-point Likert scale item:

amiliar (i.e., commonly or generally known or seen) is the EDBP practice (Wirtznd Kimes, 2007) rather than how much a consumer knows (i.e., consumerxpertise) about the EDBP practice, which is used more to describe the brandamiliarity concept (Alba and Hutchinson 1987; Park and Lessig 1981).

A. Theotokis et al. / Journal of Re

Table 4Variable descriptions: Study 2.

EDBP awarenessa 58%Brand loyaltyb 34%Expiration date riskc 4.1 (1.98)EDBP familiarityc 2.5 (1.2)Store imagec 3.4 (.88)

a Percentage of respondents who say that they are aware that the retailer appliesEDBP.

b Percentage of respondents who indicated the retailer’s private-label brand astheir primary brand.

c Mean and standard deviation in parentheses, five-point scale, higher numbersmean higher levels of the variable.

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Fig. 5. Moderating effect of consumer familiarity: Study 2.

nalysis to divide the sample into groups according to expira-ion date risk, EDBP awareness and familiarity. The measuresppear in Appendix A.

esults

In total, 58% of the sample was aware of the EDBP practices,nd 35% indicated the retailer brand as their primary brand ofeat, as we detail in Table 4.Our analysis of consumer responses to store image relied

n a 2 × 2 × 2 × 2 ANOVA, with EDBP awareness, EDBPamiliarity, brand loyalty, and expiration date risk as theetween-subjects factors. The results revealed a significantirect effect of brand loyalty (F1, 392 = 19.75, p < .05), but allther direct effects were insignificant. The expiration dateisk (F1, 392 = 55.75, p < .05) and brand loyalty (F1, 392 = 32.75,< .05) measures interacted significantly with EDBP awareness.he follow-up contrast indicated that the pattern of results forxpiration date risk and brand loyalty were consistent with thatrom Study 1. Familiarity with EDBP also had a significant inter-ction effect with EDBP awareness (F1, 392 = 95.75, p < .05). Ase show in Fig. 5, EDBP awareness exerted a negative effect

mong consumers less familiar with this practice (Maware = 2.7,nonaware = 3.4, p < .05), but it was insignificant for consumersho were familiar with EDBP (M = 3.4, M = 3.35).
aware nonawarehus, H4 is confirmed. We found no significant three- or four-ay interactions.
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tailing 88 (1, 2012) 72–87 81

Study 2 provides additional empirical support for H1 and H2y showing a consistent with Study 1 pattern of results regard-ng the effect of expiration date risk and brand loyalty, althoughDBP was applied for another product category and for a pri-ate label-brand. Additionally, Study 2 shows that the effects ofDBP for the brand image become insignificant if consumers arelready familiar with this pricing practice. In summary, Study 1nd Study 2 identify conditions under which the potential neg-tive effects of EDBP for brand image are mitigated. Actually,hese results provide managers with guidance on the ways thatDBP should be applied so as to minimize negative effects

or the brand. We conducted Study 3 to investigate whetherhe managerial practice of framing EDBP as a green market-ng activity is another way to mitigate or even reverse the effectf EDBP.

Study 3: EDBP framing: sales promotion vs. greenmarketing

Previous research suggests that grocery retailers have anption to frame EDBP as a cause-related marketing activityBarone, Norman, and Miyazaki 2007) by presenting it as anlternative to throwing away products and therefore a means toeduce environmental waste (Tsiros and Heilman 2005). Withtudy 3, we investigate whether and how this EDBP framingffects consumer evaluations of brand image.

xpiration date-based pricing framing

In developing their price promotions, managers make deci-ions related not only to promotion depth but also to how torame the discount. Existing promotion research suggests thatraming affects consumers’ estimates of the promotion’s value,urchase decisions, future purchase intentions, and price expec-ations (DelVecchio, Krishnan, and Smith 2007). In the casef EDBP, grocery retailers and perishable producers have twoain framing options: as a sales promotion practice that involvesprice discount for perishables (i.e., promotion frame) or as a

ause-related marketing (CRM) action that provides consumersith the ability to participate actively in environment protectiony reducing waste (i.e., CRM frame). Although existing researchas investigated the effect of promotion framing on consumeresponses (DelVecchio, Krishnan, and Smith 2007), no researchonsiders a comparison between CRM versus promotion fram-ng. To examine the psychological processes that relate to theffects of EDBP framing on consumer perceptions, we draw onur previous theoretical justifications, as well as on corporateocial responsibility (CSR) literature.

SR associations and EDBP framing

Manufacturers and retailers have long participated in CRMampaigns, such as when they make specified donations to

rau 2010)). Consumers usually infer that altruistic motivesrompt firms to engage in CRM campaigns (Barone, Norman,

8 of Retailing 88 (1, 2012) 72–87

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nd Miyazaki 2007); existing literature thus suggests that theain benefit of CRM for a brand is that it induces positive CSR

ssociations (Brown and Dacin 1997; Sen and Bhattacharya001). Such CSR associations constitute an element of overallorporate associations, distinct from attribute-level informationbout products, such that they can enhance product evaluationshrough consumers’ overall evaluation of the company (Sen andhattacharya 2001).

Previous studies have investigated whether CSR-relatedctivities, and their positive effects on CSR associations (Brownnd Dacin 1997), interact with corporate ability associationselated to elements of a firm’s expertise and competency tonfluence consumer evaluations (Handelman and Arnold 1999).

hen firms suffer from poor corporate ability perceptions,SR can significantly enhance consumer attitudes (Handelmannd Arnold 1999); positive CSR associations even can mit-gate the effects of a product harm crisis (Klein and Dawar004). Furthermore, existing research has shown that inferredotives are strongly related with the outcome of PCV percep-

ions (Robinson and Morrison 2000); while previous researchhows that consumer response to price discrimination is definedy their inferred motives behind this practice (Campbell 1999).

As we showed in the preceding studies, under specific condi-ions, EDBP induces negative associations regarding corporatebilities by affecting consumer distrust. However, if EDBP isramed as CRM, it should induce positive brand associationsnvolving CSR (Sen, Bhattacharya, and Korschun 2006). There-ore, we postulate that positive CSR associations induced byRM framing function in two ways. First, positive inferredotives—this practice is attributed to CSR-should mitigate the

egative signal of the EDBP tactic and thus decrease or elimi-ate psychological contract violation perceptions (see Fig. 1).econd, if PCV still exists, the positive halo effect of CSRssociation may compensate for its negative effects (Klein andawar 2004). In any case, positive CSR associations induced byCRM-framed EDBP should enhance product quality percep-

ions and mitigate PCV perceptions, creating an overall positiveor at least less negative) effect of EDBP on brand quality image.hus, we propose:

5. EDBP framing moderates the effect of EDBP on branduality image. The effects of EDBP (compared with regularricing) are insignificant or positive if EDBP is framed as aause-related marketing activity.

ethod

To test this hypothesis empirically, we adopted a between-ubjects experimental design and manipulated EDBP framing

8
s a between-subjects factor. The site and context of Study 3ere similar to those of Study 1, though we applied a three-
evel manipulation of the pricing practice (regular pricing vs.

8 A possible limitation of Study 3 is that it uses the same site with Studynd consumers had probably already gained familiarity with EDBP. In order toddress this, in Study 3 we have filtered consumers who have participated oroticed EDBP during Study 1.

setta

Fig. 6. Effect of EDBP framing: Study 3.

RM-framed EDBP vs. promotion-framed EDBP). In theegular pricing and promotion-framed EDBP conditions, thereatments were the same as in Study 1. For the CRM-framedDBP condition, we used a shelf talker and package sticker

hat informed consumers that EDBP was designed to help pro-ect the environment by reducing waste. In the Appendix, weecreate these tools. We applied each EDBP treatment to twoepresentative stores of the retailer for two weeks, and the dataollection relied on face-to-face interviews. The final sampleeatured 603 consumers, 201 in each treatment. We measuredonsumer perceptions of brand quality using the same scale asn Study 1.

esults

We compared consumer assessments of brand image acrosshe three between-subjects experimental conditions (CRM-ramed EDBP vs. promotion-framed EDBP vs. regular).onsistent with Study 1, consumers exposed to promotion-

ramed EDBP expressed brand quality image perceptions similaro those who were exposed to regular pricing (Mregular = 3.48,

promotion = 3.41). According to the results in Fig. 6, EDBPraming had a significant effect on brand quality. Theroup exposed to the CRM-framed EDBP indicated signif-cantly higher brand image perceptions (MCRM = 4.0) thanhe promotion-framed EDBP (Mpromotion = 3.41; F1, 601 = 42.23,< .05) and regular pricing (Mregular = 3.48; F1, 601 = 35.21,< .05) groups, in support of H5.

Study 4: EDBP effects on psychological contract violation

Finally, to improve the internal validity of our resultsnd evaluate the suggested theoretical rationale behind con-umer responses to EDBP more directly, we conducted a labxperiment allowing us to capture consumer thoughts after
heir exposure to EDBP.9 Thus, Study 4 has the purpose toest whether consumers develop negative PCV-related thoughtsfter an exposure to EDBP and more importantly whether the
9 We thank an anonymous reviewer for this suggestion.

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umber of this type of thoughts differs according to the hypoth-sized moderating variables.

To empirically test the theoretical explanation behind ourypotheses, we collected data from 163 undergraduate andostgraduate business students in a U.K University. Using thendings from Study 3, we manipulated the EDBP framingpromotion-framed vs. CRM-framed) between subjects. Partic-pants first received a scenario of a grocery-shopping trip thatnvolved the purchase of milk and then read the following intro-uction: “During your grocery shopping, you are in front of theilk shelf and you are considering purchasing milk. Then, you

ealize that a milk brand provides you with the following twoptions for the same package size.” The two options (for a hypo-hetical brand of milk) were regularly priced milk with six daysefore it expires and discounted milk that would expire in oneay. In contrast with Studies 1–3, we used a hypothetical prod-ct brand in Study 4 to avoid any brand-related effects, whichight constitute a limitation of the other studies. However, con-

istent with the other studies, we used a fixed 25% discount forilk one day before its expiration date. The regular price levelas determined through a discussion with a milk manufacturer

s representative of the average milk price at the time of thexperiment. In the CRM-framed EDBP condition, we includedext that informed consumers that this promotional activity hadhe purpose of protecting the environment by reducing waste,imilar to Study 3. We allocated respondents randomly to onef the two experimental conditions. We provide examples of thexperimental stimuli in Appendix A.

After reading the scenario and the EDBP stimuli, participantsesponded to an open-ended question that asked them to describeheir thoughts regarding the brand, in relation to this pricingractice. We also assessed their perceived expiration date riskor milk using the same scale as in Study 2 (see Appendix A).

e used a median split analysis to divide the sample to lownd high expiration date risk groups. We did not include brandoyalty measures because we had used a hypothetical brand.10

esults

Two independent coders content analyzed the participants’esponses to the open-ended question. In the rare cases thathe coders disagreed, they resolved the conflict through jointiscussion. The responses were coded according to their polar-ty (Noriega and Blair 2008) into the following categories: (1)
egative/PCV-related, (2) Other Negative/non-PCV related, (3)ositive, and (4) Neutral. We have provided coders as a guidance
10 We have also measured consumer familiarity with EDBP in order to compareCV thoughts between familiar and unfamiliar consumer as in Study 2. Resultshow that the majority (80%) of respondents were highly familiar with EDBPractice and therefore we did not include this variable in our analysis. This wasxpected since EDBP is used extensively from grocery stores in UK. However,onsistently with Study 2 results, high familiarity can be an explanation for theelatively high number of the total neutral thoughts expressed by respondents.et, we were still able to find significant difference on the number of PCV-related

houghts across experimental variables.

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tailing 88 (1, 2012) 72–87 83

o identify PCV-related thoughts with a brief session explaininghe concept of PCV.

Overall, 26% of consumer responses were classified asPCV-related thoughts” and examples include expressions ofishonesty associations with brand such as: “It makes you feelike the use by date is not true” or “I was thinking that they arerying to fraud me by selling me rubbish”, distrust feelings suchs: “I don’t trust the quality of the product if it is discounted” oregative inferred motives: “. . .They try to get rid of their wastey presenting it as promotion” or “They discount the item asoon as its quality is no longer the same”. Coders classified 18%f responses as “Other Negative Thoughts” of which examplesnclude purchase decision-related thoughts such as “I would noturchase a product that I can’t consume it by tomorrow” or prod-ct value-related “This discount is not enough for purchasing aroduct expiring in a day”. It is important to note that the mainifferences between this type of responses and the previous cat-gory (PCV-related) is that the target of thought (Noriega andlair 2008) is more the product itself rather than the brand and

hat they do not include inferred motives.11

On the other hand, 24% of the responses were classified asPositive”. Examples mainly include positive CSR-related attri-utions (in the CRM-framed EDBP condition) such as: “Thisromotion shows me that this company is interested in the envi-onment, in practice”, but also value-related thoughts: “It is aery good opportunity to buy discounted milk; I am alwaysooking for discounted items when going for grocery”. Finally, aart (32%) of consumer responses was classified as neutral suchs: “This is a common practice; I can’t say anything about therand”.

We have compared the number of PCV-related thoughtscross the following groups: EDBP framing: CRM vs. Promo-ion, Expiration Date Risk: Low vs. High. As expected, theumber of such thoughts was greater (smaller) for consumersho perceived lower (higher) expiration date risk (17% vs.%, χ2 = 9.2, p < .05) and for the promotion- (CRM-) framedDBP (18% vs. 8%, χ2 = 6.2, p < .05). The number of positive

houghts did not differ significantly across high and low expi-ation date risk but, we noticed significantly higher number ofpositive” thoughts in the CRM-framed EDBP condition than inhe promotion-framed EDBP condition (18% vs. 6%, χ2 = 25.5,< .01). This is also consistent with our argumentation behind5 suggesting that framing EDBP as a green marketing activityay be associated with positive inferred motives and CSR attri-

utions. The number of “Other negative thoughts” did not differignificantly across experimental conditions.

Results of Study 4 show that consumers develop PCV-relatedhoughts after their exposure to EDBP and the number of those
houghts differ according to their expiration date risk, and theraming of EDBP. Consequently, Study 4 shows that the PCVramework can be a viable explanation for the effects of EDBPn brand image perceptions.
11 Consistently with the conceptualization of PCV in the literature, inferredotives are an integral part of PCV-related thoughts (Robinson and Morrison

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Discussion

Our research focuses on the pervasive but largely unexploredetail tactic of expiration date-based pricing and investigates howonsumers respond to it. Specifically, we focused on the effectsf EDBP on consumer perceptions of brand quality. Buildingn social exchange theory (Blau 1964) and literature pertain-ng to pricing and expiration dates, we propose that consumers’xpectations regarding perishables’ quality take the form of asychological contract, as expressed by their expiration date. Wentroduce the concept of psychological contract violation (PCV)nd suggest that EDBP induces PCV-related perceptions. In sooing, we propose a mechanism underlying consumer responseso EDBP and develop hypotheses regarding the effects of EDBPn brand quality image, which should vary according to mod-rating conditions. Finally, we suggest that consumer distrustediates these effects.To test our hypotheses and support our theoretical framework,

e conducted three field experiments and a lab experiment.verall, the results suggest that the effect of EDBP on brand

mage varies and this variance can be explained by the under-ying consumer perceptions of psychological contract violation.

ith Study 1, we showed that the effect of EDBP is weakerr insignificant when consumers perceive higher levels of riskssociated with perishables and are not loyal to the brandhat uses the EDBP. Although common sense suggests thatoyal consumers and consumers with lower risk perceptionshould be more reluctant to undergo a negative experienceith the brand, the PCV explanation suggests that in the casef EDBP, the negative effect is more prominent for existingather than new consumers. That is, the effect depends on thexistence and nature of the psychological contract betweenonsumers and their brand. In addition, Study 1 revealed thathe effects of EDBP are mediated by consumers’ distrust.tudy 2 confirmed that as consumers become more famil-

ar with EDBP, its negative effects decline, which impliesnsignificant long-term effects. With Study 3, we investigatedhether framing EDBP as a cause-related marketing activity

hat reduces waste generates more positive consumer evalua-
ions. These results showed that a CRM-framed EDBP generates
ore positive consumer evaluations than a promotion-framedne.

icH

able 5esult summary and managerial implications.

ypotheses Factors/variables Findings

1 Expiration date risk For consumers with high expiration daterisk, exposure to EDBP has an insignificeffect on brand image.

2 Brand loyalty Exposure to EDBP has an insignificant efor nonloyal consumers.

3 Distrust The effects of EDBP on brand image aremediated by distrust.

4 Familiarity The negative effects of EDBP on brandquality perceptions are weaker for consumwho are already familiar with this practic

5 EDBP framing Framing EDBP as a CRM activity leadspositive effects.

tailing 88 (1, 2012) 72–87

Thus, EDBP has a negative effect on brand image only foroyal consumers, when consumers perceive low risk related tohe expiration date, or if they are unfamiliar with this practice.he effect of EDBP on brand image is insignificant among non-

oyal consumers, when consumers perceive high expiration dateisk, or if they are already familiar with it. Finally, we confirmhat EDBP can have a positive effect if framed as a CRM activity.

The findings thus give managers some recommendations (seeable 5) regarding how to implement EDBP, and perhaps otherrice discrimination practices, successfully. Although the con-entional wisdom suggests EDBP destroys brand image, ouresults show that under specific conditions, it can provide a suc-essful waste reduction and revenue management practice witho negative effects for brand image. In addition, the Study 2esults indicate that as consumers become increasingly famil-ar with this practice, it stops having negative effects on brandmage. That is, as consumers accept the practice, they distin-uish it from their brand image perceptions; in the long-term,anagers should focus on the positive aspects of EDBP, such as

ower prices. This pricing practice can be particularly successfulor categories with high expiration date risk, which are the sameategories that generate the most waste for retailers, becauseonsumers tend to avoid purchasing products near their expira-ion date. If they were to apply EDBP to these high-risk products,etailers could reduce waste significantly without harming theirrand image. Finally, framing EDBP as a green marketing prac-ice generates positive brand image perceptions, as we showedmpirically in Study 3.

Additional research should address some limitations of ournvestigation and build on its findings. Although brand images a significant outcome of consumer responses to a pricingactic, purchase intentions or decisions offer other importantariables to be examined. It would be of particular importanceo study what drives consumers’ decision between a fresherersus a cheaper perishable product. Furthermore, the long-termffect of this pricing practice on future price expectation wouldlso be important to be examined (Tsiros and Hardesty 2010).or example, the promotion literature suggests that this pricingractice may be harmful in the long-term because it will signif-
cantly lower price expectations and therefore consumers willonstantly seek the cheaper version of perishables (DelVecchio,enard, and Freling 2006). Although we examined two
Implications

antEDBP should be targeted to consumer segments, productcategories, or both that involve higher expiration date risk.

ffect EDBP may be used to attract new consumers and as a market shareexpansion strategy.Managers should focus on building and establishing trust betweenthe brand and consumers before applying EDBP.

erse.

Managers could introduce an EDBP practice more easily if thispractice were already applied by competitors or in other similarproduct categories.

to When targeting existing consumers, EDBP should be applied tohigh risk categories and framed as a green marketing activity.

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ifferent product categories, it would be useful to test for differ-nces across several other perishable product categories such asresh fruit and vegetables. Furthermore, it would be interestingo examine how existing trust to the perishables’ seller may mod-rate the effect of EDBP. Moreover, in the experimental designf Study 3, the CRM concept was tied with the pricing practice,n order to investigate a managerially relevant way suggested byrevious research (Tsiros and Heilman 2005) to reduce possi-le negative effects of EDBP. It is possible however, that anyype of CSR appeal may have a similar effect, according to rel-vant literature (Klein and Dawar 2004). Future research couldnvestigate more holistically the role of CSR on EDBP.12 In con-rast with most research into consumer–retailer relationships thatocuses on trust, we propose distrust as an alternative and con-eptually different construct for modeling consumer responses.urther research might apply it in various contexts. Finally, theCV approach could provide a strong theoretical framework fortudying consumer responses to other marketing actions in envi-onments that may be characterized by any kind of contractualgreements between consumers and a brand.

Acknowledgments

This work has been partly funded by the International Com-erce Institute (ICI)—Unilever Research Grant. The authorsould like to thank ICI and Unilever Europe for their financial

upport, as well as the Vivartia SA and the Greek Retailer MetroA for their support to the field experiments.

Appendix A.

tudy 1. Measures

xpiration Date Risk (Tsiros and Heilman 2005)ow likely is it that milk will not meet your expectations as it approaches itsexpiration date?

ow likely is it that the quality of milk gets worse as the product approachesits expiration date?

rand Loyalty (Sloot, Verhoef, and Franses 2005)ndicate your primary milk brand.

istrust (Cho 2006)Brand name] is not trustworthy.Brand name] will exploit customers’ vulnerability given the chance.Brand name] will engage in damaging and harmful behavior to customers to

pursue its own interest.

rand Quality Image (Grewal et al. 1998; Tsiros and Hardesty 2010)y image for [brand name] is positive.

he [brand name] appears to be of high quality.

tudy 2. Additional Measures

DBP Awareness

12 We thank an anonymous reviewer for this suggestion.

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tailing 88 (1, 2012) 72–87 85

ave you noticed the practice of [retailer name] to discount meat asapproaching expiration date?

DBP Familiarityiscounting perishables as the expiration date approaches is a commonpractice for grocery retailers.

tore Image (Grewal et al. 1998; Tsiros and Hardesty 2010)y image of the [store name] is positive.

Store name] carries high-quality merchandise.

tudy 3. Field Experiment Stimuli Material and CRM-Framed EDBP

Main Message: “Help the Environment by Paying Less”ext: “By selecting to purchase the [Brand name] Milk with the same [Brandname] quality seal but with less days to expire, you do more than justpurchasing your favorite milk cheaper (D-0.30 per 1 l and D-0.45 per 2 l):You also contribute from your side to reducing product waste and, therefore,to lower environmental burden caused by packaging material.

tudy 4. Experimental Stimuli Example for Promotion-Framed EDBP

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Documents

Effects of Expiration Date-Based Pricing on Brand Image Perceptions