This study sets out to investigate the price premium brand‐loyal customers would be willing to pay over expectations in order to remain loyal.
A total of 385 consumers were asked price expectations and brand preferences for ten different products. Non‐brand‐loyal consumers were asked whether they would buy the cheapest brand or the cheapest brand with a name they recognized. Brand‐loyal consumers were asked to imagine they went to buy each product only to discover a higher price than expected. These consumers gave the maximum price they would pay to buy their preferred brands under two conditions – time pressured and not.
For non‐brand‐loyal consumers, just 14‐43 percent (depending on the product) would buy the cheapest offering, while 57‐86 percent would buy the cheapest brand whose name they recognized. Brand‐loyal consumers would pay a mean of 15.4 percent more than expected (not rushed) or 37.0 percent (rushed). Findings differed by product category with HDTVs garnering just an 8.8 percent price premium (not rushed) and 19.1 percent (rushed), while shirts/blouses showed the highest (21.9 percent not rushed and 53.2 percent rushed).
It is unknown how consumers would respond to categories not studied.
Recognizable brand names are able to attract more buyers than lower‐priced unknown brands, even among “bargain shoppers”. Consumers are willing to pay more to buy preferred brands, and even more in rushed situations.
This study puts a dollar value on consumers' desires to avoid search under time pressure.
