How Do Implausible Tensile Price Claims Affect Consumer Perceptions of Deceptiveness and Consumer Willingness to Purchase in Online Environments?

Abstract

The study explores how and why an embedded implausible tensile price claim (TPC) affects consumers’ decisions as to whether to click on the associated online advertisement and their subsequent purchases. The authors conduct a field experiment by designing a structured set of search advertisements with implausible TPCs for a global apparel brand and launching them on Baidu, the largest search engine in China. Using a hierarchical Bayesian model, the authors quantify how implausible TPCs influence consumers’ two-stage decisions: clicking on the advertisement and purchasing the product. Using two laboratory experiments, the authors further demonstrate that the purchase decision is mediated by consumers’ perceptions of deception in the advertisement, despite the fact that the click decision is not. Results show that implausible TPCs in a search advertisement motivate consumers to click on the promotion. However, the discrepancy between the advertised and the actual discounts makes the advertisement seem deceptive to consumers, which reduces their likelihood of purchasing the product and leads them to search for other products and promotions. The results address advertising deception in online price claims, offer critical policy implications regarding implausible TPCs, and shed light on designing and executing implausible TPCs in online advertising.