This paper addresses the issue of retail price image by offering an ex
planation for how and when stores can use their advertised prices to s
ignal the prices of other products in the store. A model of a two-prod
uct retail market is presented in which stores advertise the price of
one product and customers do not know the price of the other product b
efore selecting which store to visit. In a model with full customer in
formation, stores with different marginal costs charge. different pric
es for each product When customers do not know each store's marginal c
ost type, an opportunity arises for each store to signal its cost type
using its advertised prices. In such a model additional equilibria ex
ist. In particular, stores with different costs may charge the same ad
vertised price while continuing to charge different prices for the una
dvertised product. Data from competing drycleaning stores is generally
consistent with the model predictions. A number of additional propert
ies of the equilibria are discussed and possible extensions to the mod
el are proposed.