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How do price range shoppers differ from reference price point shoppers?

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  • Moon, Sangkil
  • Voss, Glenn

Abstract

Existing research demonstrates that reference price models can explain a significant amount of the variation in customers' price perceptions and purchase behaviors. This study extends the reference price literature by introducing the price range model, which proposes that price judgments are based on a comparison of the market price to the entire range of currently available prices. Our results demonstrate that the fit of a structural heterogeneity finite mixture model improves when the price range model is included along with internal and external reference price models and that the price range model explains a substantial proportion of customers' purchase histories in the toilet tissue category. Profile analysis indicates that internal reference price shoppers switch brands much less frequently than the other two segments and respond to feature promotions for their preferred brand(s). External reference price shoppers have an intermediate level of brand preference and respond significantly less than the other two segments to feature and display promotions. Price range shoppers have the lowest brand loyalty and respond most strongly to both feature and display promotions.

Suggested Citation

  • Moon, Sangkil & Voss, Glenn, 2009. "How do price range shoppers differ from reference price point shoppers?," Journal of Business Research, Elsevier, vol. 62(1), pages 31-38, January.
  • Handle: RePEc:eee:jbrese:v:62:y:2009:i:1:p:31-38
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    2. Johnson, Jennifer Wiggins & Cui, Annie Peng, 2013. "To influence or not to influence: External reference price strategies in pay-what-you-want pricing," Journal of Business Research, Elsevier, vol. 66(2), pages 275-281.
    3. Nicolas de Roos & Vladimir Smirnov, 2020. "Collusion with intertemporal price dispersion," RAND Journal of Economics, RAND Corporation, vol. 51(1), pages 158-188, March.
    4. Kwon, Kyoung-Nan & Schumann, David W. & Fairhurst, Ann, 2010. "Consideration of an expected future deal in assessing the value of a present deal: Forward-looking bargain shopping," Journal of Business Research, Elsevier, vol. 63(1), pages 84-90, January.
    5. Chu, Hsunchi & Liao, Shuling, 2010. "Buying while expecting to sell: The economic psychology of online resale," Journal of Business Research, Elsevier, vol. 63(9-10), pages 1073-1078, September.
    6. Nunan, Daniel & Di Domenico, MariaLaura, 2022. "Value creation in an algorithmic world: Towards an ethics of dynamic pricing," Journal of Business Research, Elsevier, vol. 150(C), pages 451-460.
    7. Merja Halme & Outi Somervuori, 2013. "Choice behavior of information services when prices are increased and decreased from reference level," Annals of Operations Research, Springer, vol. 211(1), pages 549-564, December.
    8. Bambauer-Sachse, Silke & Massera, Laura, 2015. "Interaction effects of different price claims and contextual factors on consumers' reference price adaptation after exposure to a price promotion," Journal of Retailing and Consumer Services, Elsevier, vol. 27(C), pages 63-73.
    9. Paul Mills & César Zamudio, 2018. "Scanning for discounts: examining the redemption of competing mobile coupons," Journal of the Academy of Marketing Science, Springer, vol. 46(5), pages 964-982, September.

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