Customers who found a retailer’s price-guarantee advertising more believable also reported greater trust in the business, according to research involving 1,219 loyalty-program members in New Zealand.
The study, published in the Journal of Retailing and Consumer Services, compared responses to a price-beating guarantee and an automatic price-adjustment promise. The researchers found that the automatic adjustment was perceived as more believable, while the price-beating format was associated with stronger pre-purchase value perceptions.
The survey involved customers of one automotive parts and accessories retailer. It measured perceptions and stated intentions, not a long-term record of actual repeat purchases. Its findings cannot prove that either promise causes shoppers to return.
Two ways to make a price promise
A price-beating guarantee generally offers a better price when a shopper finds an eligible competing offer. An automatic adjustment promise offers a price correction under specified conditions without requiring the same customer-initiated claim. Exact terms depend on the retailer.
Both can reduce uncertainty about paying too much, but each creates an operational obligation. A business needs to define eligible products, competing sellers, time limits and evidence requirements, and then deliver the remedy it advertises.
The researchers, Khim Kheong Hoo, Ben Wooliscroft and Megan Phillips of Auckland University of Technology, asked loyalty members to assess the two formats and reflect on their shopping experiences. More credible advertising was associated in their statistical model with greater trust, which in turn was associated with satisfaction and intentions to buy again.
The paper’s survey asked respondents to recall pre-purchase and post-purchase experiences within a single survey session. That design gives a view of customers’ reported experiences, but it cannot reliably establish which perception came first or what would happen if the retailer changed its policy.
Why terms can matter as much as the headline
A promise that looks generous in an advertisement can be difficult to use if exclusions, deadlines or verification requirements are hard to find. A customer may also encounter inconsistent answers when seeking a refund or adjustment.
Retailers can examine the entire process: how a customer finds the terms, what evidence is requested, whether staff can verify the claim and how quickly any correction is made. Automatic adjustments may reduce customer effort, but they require accurate transaction data and reliable systems.
Credibility depends on delivery as well as wording. A clear comparison policy is less persuasive if the business routinely rejects eligible claims or cannot explain its decisions. Conversely, a prominently displayed promise does not establish that its conditions are fair or that every shopper will benefit.
Our earlier reporting on what a star-rating average can conceal looks at a related issue: a short piece of marketing information can hide differences in individual customer experiences.
What the research can and cannot tell retailers
The respondents were members of one retailer’s loyalty program and were predominantly middle-aged or older men. They may not represent younger shoppers, nonmembers or customers in other product categories and countries.
Repurchase intention is a reported willingness to buy again. A retailer would need subsequent transaction data to see whether that intention translated into actual purchases. The authors recommend further work across sectors and markets, including behavioral data on redemption and loyalty activity.
For a business testing a guarantee, useful records include eligible claims, rejection reasons, time to resolution, refunds and complaints, alongside the cost of the policy. If the company changes the wording and the claim process at the same time, the results may not identify which change affected customer behavior.
A price promise is an operational commitment. The wording can attract attention, but the business still has to make its conditions understandable and apply them consistently.
