This research addressed some actual marketing practices of product-line advertisement, and discussed some possible interaction between ads and reference price further. Overall, the impact of advertisement on reference price is not always positive. The analyses list as follow and the implications of these findings will be discussed in later sections:
1. The brand advertisement with low-end product decreases the reference price toward the high-end product buyers. On the contrary, the brand advertisement with high-end product increases the reference price toward the low-end
product buyers.
2. The brand advertisement with one certain product in horizontal product line decreases the reference price toward the buyers who is going to buy another product within the same product line.
3. The informational advertisement with low-end product increases the reference price toward the high-end product buyers. On the contrary, the brand advertisement with high-end product may not consistently increase the reference price toward the low-end product buyers.
4. The informational advertisement with one certain product in horizontal product line decreases the reference price toward the buyers who is going to buy another product within the same product line.
The Impact of Brand Advertisement
The results of this experiment can be summarized as follows. First, as predicted by Hypothesis 1a, the brand advertisement resulted in the increase of reference price, however, this research found there is another significant effect of brand ads resulted in the decrease of reference price. Obviously, one factor existed to mediate the impact of advertisement here. The outcome of Hypothesis 2 may offer one explanation for this inconsistent impact. The test of H2 showed the brand advertisement with low-end product may cause less increase of reference price than that with high-end product, supporting H2. Besides, it indicated more truth than what this research expected originally. The outcome represented the brand advertisement with low-end products not only caused “less increase” of reference price, but “decreased” it apparently. The strong impact resulting in the decrease of reference price may conform to prior study.
Loken and Roedder (1993) and Sullivan (1990) both indicated when a low-end is introduced into product line, consumers perceive less brand equality. Since the low-end products in vertical product line are gradually considered as low-end products, it may account for the results of brand advertisement with low-end product resulting lower brand equity and decreasing reference price.
Second, the brand advertisement with one certain horizontal product line products significantly decreased the reference price toward the consumer who would like to buy “another” product within the same product line, not supporting Hypothesis 1b. Much previous research focused the relationship between horizontal product line and brand association (Aaker and Keller 1990, Boush and Loken 1991). Some study had proved that when a brand attempts to extend its goods into similar categories, brand associations carry over to the extension (Rangaswamy, Burkem and Loiva 1993).
Table 9
The Results of Experiments toward Hypotheses
Ads Advertisement Stimuli Subjects Reference Price H1
a
Brand ads with vertical product line product
Brand ads with horizontal product line product
Brand ads with low-end product
High-end product buyers
Decrease H2
Brand ads with high-end product
It seems strong brand association exists in horizontal extension, but had not proved that it also existed in advertisement stimuli or product compare. The failure of H2 indicated brand advertisement not always brings the positive impact on reference price. When manufacture merely deliver the brand advertisement with one product in horizontal product line, the buyer who decide to buy another product within the same horizontal product line, may consider his target purchase is not the main product and decrease his willingness of purchase.
The impact of informational advertisement
This research applied the concept of attitude theory (Fishbein and Ajzen 1975) into the impact of informational advertisement. As a result of experiment 2, it demonstrated the concrete interactions among product-line advertisement and consumers. First, the results showed the informational advertisement associated with low-end product increases reference price toward high-end product buyers. It conformed the inference mentioned based on attitude theory. That is to say since the high-end product buyer sees the ads with low-end product and know its specification;
he may increase the evaluation of salient beliefs toward high-end product. High-end product buyers would find out how good quality of planned purchase after comparing with low-end product.
However, informational advertisement with high-end product displayed the inconsistent impact that this research did not expect originally. The results showed the informational advertisement with high-end product lets low-end product buyers increase or decrease their reference price. Two kinds of outcomes may both occur
after advertisement stimuli possibly. As mentioned in literature review, the decrease of reference price can be proved upon attitude theory. It is considered that the low-end product buyers may decrease their evaluation of their planned purchase as they see the ads associated with high-end product, because they lower their value of certain product attribute or add more product functions considered into their attitude model after compare.
Besides, the impact of informational advertisement with high-end product causing the increase of reference price is ignored before the experiments. Since experiment 1 had found the high-end product may display the positive impact on brand image, plus in the past literature, high-end product was strongly associated with good quality and high brand value for consumers, this unexpected increase can be explained in this way.
In other words, although the informational advertisement used in this research was not designed with brand association on purpose, for some subjects, they may be easily conscious of high-end product representing high quality or high brand prestige and transferred it on their target purchase, the low-end product. Thus, they increased their original reference price.
Table 10
The Results of Experiments toward Hypotheses
Ads Advertisement Stimuli Subjects Reference Price H3
Brand ads with one certain horizontal product line
Several important findings can give suggestions for future marketing practice.
First, the used of product-line advertisement with one product may hurt evaluation of another product. This unexpected outcome should be concerned before ads delivery.
Secondly, regarding the brand advertisement, it is better to associate high-end product
with brand image since low-end product easily decreases the reference price toward high-end product buyer. It may let manufactures lose the important customers who are willing buy the high-price products and result in more serious loss. Third, for high-end product buyers, seeing the informational advertisement with low-end product can let them increase their reference price. On the other side, the impact of the informational advertisement with high-end product is inconsistent. Some consumers would decrease their evaluation of low-end product because the high-end product ads emphasize the advantages that low-end product does not have. To avoid decreasing the willingness of purchase toward low-end product buyers, manufactures are suggested to show the high-end products in brand advertisement rather than in ads with lots of detailed specification, according the results of experiments.