Price cues and customer price knowledge

A price cue is defined as any marketing tactic used to persuade customers that prices offer good value compared to competitors' prices, past prices or future prices. In this chapter, we review the academic literature that documents the effectiveness of different types of prices cues. The leading economic explanation for why price cues are effective focuses on the role of customer price knowledge and the ability of customers to evaluate whether prices offer good value. We survey the evidence supporting this theory, including a review of the literature on customer price knowledge. Finally, we document the boundaries of when price cues are effective and identify several moderating factors.