THE LOWER THE PRICE, THE WORSE THE IMAGE?

Abstract

The purpose of this thesis is to investigate the dynamics of price image formation and consumers’ image perceptions in the context of grocery retail. The study seeks to find out the key drivers of price image formation. In addition, the concepts of store image and store personality are explored. Furthermore, the empirical research of this thesis will focus on the Finnish retail grocery stores Prisma and Lidl.

The empirical research was conducted by using quantitative research and the sample of 201 responses was collected with a survey questionnaire. The research hypotheses were created based on the theoretical findings and tested by using several statistical analysis methods with SPSS software.

The empirical research showed that there is a significant difference in the price image of Prisma and Lidl. Furthermore, the study found that Lidl has lower price image, however, Prisma is perceived more positively on store image and store personality. The study strengthened some of the earlier findings about the relationship between nonprice drivers and price image. The results showed a link between Prisma’s price image and physical attributes. In addition, between Lidl’s price image and store assortment. Finally, the study demonstrated that price image and store attributes have an impact on consumer satisfaction and store patronage intention.