The Effect of Implicit versus Explicit Comparisons on Temporal Pricing Claims

Abstract

Existing research has investigated the "pennies-a-day" strategy of reframing an "aggregate" expense as a "per day" expense (Nagle & Holden, 1995; Price 1995; Gourville 1998). This paper extends this research by considering the incremental impact on compliance of explicitly comparing the cost of a transaction to a specific petty cash expense (e.g., a cup of coffee). We show that in the presence of a ‘per day’ framing of price (e.g., $1 per day), an explicit comparison provides little added value. However, we also show that in the presence of an ‘aggregate’ framing of price (e.g., $350), an explicit comparison to a petty cash expense is sufficient to generate a "pennies-a-day" perspective. We conclude that it is not the ‘per day’ framing, per se, which drives "pennies-a-day" effectiveness, but the petty cash comparisons that such a framing either implicitly or explicitly generates.