The Effect of Denomination on Purchase Decision Making: Focusing on the Construal Level Theory
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Price information is important for consumers when they make a purchase decision and it has twofold roles. One role is ‘cost’ in the process of payment and the other is ‘quality signal’ as a result of a payment. Depending on how much consumers focus on the price role of ‘cost’ their perception on monetary sacrifice as well as purchase decision making will change. To understand consumer’s point of view to the role of price, we focused on the money consumers’ hand which is closely related to payment. Especially we suggest that the denominations of money one possesses can influence perceived monetary sacrifice and attitude toward a product, based on previous research on a category and construal level. To be specific, a large denomination triggers relatively abstract representation similar to a function of broad category, which makes consumers focus more on the role of price as a quality signal rather than the other role of price as a cost. On the other hand a small denomination triggers relatively concrete representation similar to a function of narrow category, which makes consumers focus more on the role of price as cost. To test our assumption we conducted 2 main studies. In study 1 we demonstrated that participants perceived less monetary sacrifice when they owned the same amount of money in a large denomination(￦10,000 bill) than in a small denomination(10 of ￦1,000 bills). In addition, we examined this denomination effect on participants’ attitude toward product in study 2. The result reveals that participants who owned money in a large denomination(￦10,000 bill) showed more positive attitude toward a target product than who owned money in a small denomination(10 of ￦1,000 bills). Furthermore, we certified that this phenomenon is mediated by a representation which is induced by a denomination (study 2). Our research shows the importance of considering the factor related to consumers’ monetary possession, especially the denomination of money consumers are having at the moment of payment to understand the consumer's purchase decision making.
Abstract
Price information is important for consumers when they make a purchase decision and it has twofold roles. One role is ‘cost’ in the process of payment and the other is ‘quality signal’ as a result of a payment. Depending on how much consumers focus on the price role of ‘cost’ their perception on monetary sacrifice as well as purchase decision making will change. To understand consumer’s point of view to the role of price, we focused on the money consumers’ hand which is closely related to payment. Especially we suggest that the denominations of money one possesses can influence perceived monetary sacrifice and attitude toward a product, based on previous research on a category and construal level. To be specific, a large denomination triggers relatively abstract representation similar to a function of broad category, which makes consumers focus more on the role of price as a quality signal rather than the other role of price as a cost. On the other hand a small denomination triggers relatively concrete representation similar to a function of narrow category, which makes consumers focus more on the role of price as cost. To test our assumption we conducted 2 main studies. In study 1 we demonstrated that participants perceived less monetary sacrifice when they owned the same amount of money in a large denomination(￦10,000 bill) than in a small denomination(10 of ￦1,000 bills). In addition, we examined this denomination effect on participants’ attitude toward product in study 2. The result reveals that participants who owned money in a large denomination(￦10,000 bill) showed more positive attitude toward a target product than who owned money in a small denomination(10 of ￦1,000 bills). Furthermore, we certified that this phenomenon is mediated by a representation which is induced by a denomination (study 2). Our research shows the importance of considering the factor related to consumers’ monetary possession, especially the denomination of money consumers are having at the moment of payment to understand the consumer's purchase decision making.
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