The Effects of Lower Price Restraints on Consumer Choice

Lower price restraints are floor prices below which consumers, based on their general knowledge about the product, believe the product will lack acceptable quality. The current research investigates the downstream consequences of lower price restraints on consumer choice. Across five studies, it is found that lower price restraints increase the choice share of the cheapest alternative above the restraint. It is further shown that thinking of a lower price restraint shifts the consumer’s attention from quality to cost through a categorisation process.