The effects of advertised exclusivity on consumer behavior

Retailers routinely counter price competition by matching or beating competitors’ prices. However, in addition to offering price-matching guarantees many retailers are increasingly adopting a differentiation or product assortment strategy of using “advertised retailer exclusive products” (AREPs) that are not directly comparable to competitor offerings. Such goods may offer added utilitarian and hedonic benefits to the consumer. With this tactic, products are advertised and labeled as “exclusive,” but the nature of the exclusivity may range no further than an exclusive label to more pronounced differences, such as unique or additional features. However, the effectiveness of such tactics at: (1) decreasing search motivations for lower prices and/or alternative versions of the product, (2) shaping perceived value (both utilitarian and hedonic), and (3) influencing consumers’ purchase decisions, is relatively unknown. Furthermore, while AREPs are a fairly new trend in retailing, the idea of “exclusive” products is a well-worn marketing idea. Luxury goods, in particular, are associated with exclusivity. However, exclusivity, especially the explicit, advertised exclusivity associated with AREPs, is different from the implied exclusivity of luxury goods. Therefore, this dissertation also presents a continuum and classification scheme of exclusivity to assist in differentiating between the types of exclusivity appeals and products. With the various forms of exclusivity classified, this dissertation gives a refined definition of “exclusivity” in a marketing context. Next, this dissertation discusses commonly accepted reference price models (e.g. Urbany et al. 1988, Alford and Engelland 2000) and suggests ways in which AREPs might influence these models and convince consumers to pay more for an “exclusive” product. An alternative model specifically addresses ways in which AREPs attempt to suppress or enhance parts of the traditional reference price model to increase purchase intention. AREPs, by their very nature, have no identical products available for comparision. However, other retailers may offer extremely simlar versions of the same products. Rather than competing on price, AREPs use a combination of scarcity, whether real or perceived, prestige pricing, and additional hedonic (i.e. emotional) or utilitarian (i.e. practical) value to make the sale price more attractive. This unique combination of exclusive features and attributes may increase the likelihood of customer lock-in, in which customers must visit the retailer, and perhaps pay a slightly higher price, in order to obtain the additional “exclusive” attributes. Overall, this dissertation focuses on the nature of exclusivity in a marketing context, both in the retail marketplace and in the academic literature. While AREPs as a retailing strategy are discussed in-depth, other forms of exclusivity are also discussed to better define exclusivity and differentiate between the forms that exclusivity takes in the marketplace. Last, an experiment testing consumer reactions to “exclusivity” promotions provides insight into the effectiveness of such promotions and gives a better understanding of how consumers perceive exclusive product promotions. The experiment was conducted using a web survey at a university in the southern United States. After cleaning the data, 321 valid responses remained. MANCOVA was used to analyze the results of the survey, and exclusivity promotions alone appeared to have had little impact on consumer perceptions. When exclusivity and additional product attributes were both present, exclusivity promotions significantly lowered the subjects’ attitudes toward the product in some manipulations. Overall, exclusivity promotions and their effects seem related to the type of attributes that are combined with the exclusivity promotion, and these effects appear to vary across product class. APPROVAL FOR SCHOLARLY DISSEMINATION The author grants to the Prescott Memorial Library of Louisiana Tech University the right to reproduce, by appropriate methods, upon request, any or all portions of this Dissertation. It was understood that “proper request” consists of the agreement, on the part of the requesting party, that said reproduction was for his personal use and that subsequent reproduction will not occur without written approval of the author of this Dissertation. Further, any portions of the Dissertation used in books, papers, and other works must be appropriately referenced to this Dissertation. Finally, the author of this Dissertation reserves the right to publish freely, in the literature, at any time, any or all portions of this Dissertation.