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The Role of Internal Reference Points in the Category Purchase Decision

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  • Bell, David R
  • Bucklin, Randolph E

Abstract

The authors study the role that reference effects play in the category purchase decision for consumer nondurable products. Category purchase behavior is represented by a nested logit model that is estimated on purchase records of shoppers in two Universal Product Code (UPC) scanner panels. A series of hypotheses are developed, modeled, and tested regarding the effects that internal reference points for product category attractiveness are likely to have on the decision to buy in a product category on a store visit. The authors hypothesize that the difference between a shopper's reference point for category attractiveness and the current level of category attractiveness will affect the purchase decision. In particular, the extent of purchase postponement caused by a loss (i.e., a negative discrepancy) should exceed the acceleration caused by a gain (i.e., a positive discrepancy). Reference effects on the category purchase decision are also hypothesized to interact with the shopper's familiarity with the store visited on a given trip. In particular, the impact of losses is predicted to be higher in unfamiliar than in familiar stores. The authors present model estimates and test results from two product categories (saltine crackers and liquid laundry detergent) and find all hypotheses to be supported. Copyright 1999 by the University of Chicago.

Suggested Citation

  • Bell, David R & Bucklin, Randolph E, 1999. "The Role of Internal Reference Points in the Category Purchase Decision," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 26(2), pages 128-143, September.
    • Handle: RePEc:oup:jconrs:v:26:y:1999:i:2:p:128-43
    DOI: 10.1086/209555
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    1. Singh, Kamaljit Anand & Sinha, Piyush Kumar, 2008. "Store Format Choice in an Evolving Market . A TPB Approach," IIMA Working Papers WP2008-12-02, Indian Institute of Management Ahmedabad, Research and Publication Department.
    2. Prakash, David & Spann, Martin, 2022. "Dynamic pricing and reference price effects," Journal of Business Research, Elsevier, vol. 152(C), pages 300-314.
    3. Rosa Diaz, Isabel Maria & Rondán Cataluña, Francisco Javier, 2011. "Antecedentes da importância do preço nas decisões de compra," RAE - Revista de Administração de Empresas, FGV-EAESP Escola de Administração de Empresas de São Paulo (Brazil), vol. 51(4), July.
    4. Baucells, Manel & Weber, Martin & Welfens, Frank, 2007. "Reference Point Formation Over Time: A Weighting Function Approach," Sonderforschungsbereich 504 Publications 07-43, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    5. Teo, Thompson S. H. & Yeong, Yon Ding, 2003. "Assessing the consumer decision process in the digital marketplace," Omega, Elsevier, vol. 31(5), pages 349-363, October.
    6. Kwangpil Chang & S. Siddarth & Charles B. Weinberg, 1999. "The Impact of Heterogeneity in Purchase Timing and Price Responsiveness on Estimates of Sticker Shock Effects," Marketing Science, INFORMS, vol. 18(2), pages 178-192.
    7. Ying Zhu & Haipeng (Allan) Chen, 2017. "A tale of two brands: The joint effect of manufacturer and retailer brands on consumers’ product evaluation," Journal of Brand Management, Palgrave Macmillan, vol. 24(3), pages 284-306, May.
    8. Chandrashekaran, Rajesh & Grewal, Dhruv, 2006. "Anchoring effects of advertised reference price and sale price: The moderating role of saving presentation format," Journal of Business Research, Elsevier, vol. 59(10-11), pages 1063-1071, October.
    9. Hung, Hui-Hsi & Cheng, Yin-Hui & Chuang, Shih-Chieh & Yu, Annie Pei-I & Lin, Yu-Ting, 2021. "Consistent price endings increase consumers perceptions of cheapness," Journal of Retailing and Consumer Services, Elsevier, vol. 61(C).
    10. Choi, S. Chan & Turut, Ozge, 2023. "National brand’s competition with premium private labels: The role of context-dependent preferences," Journal of Business Research, Elsevier, vol. 165(C).
    11. David R. Bell & James M. Lattin, 2000. "Looking for Loss Aversion in Scanner Panel Data: The Confounding Effect of Price Response Heterogeneity," Marketing Science, INFORMS, vol. 19(2), pages 185-200, May.
    12. 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.
    13. Bogard, Jonathan E. & Delmas, Magali A. & Goldstein, Noah J. & Vezich, I. Stephanie, 2020. "Target, distance, and valence: Unpacking the effects of normative feedback," Organizational Behavior and Human Decision Processes, Elsevier, vol. 161(S), pages 61-73.
    14. Shi, Lijia & Gao, Zhifeng & Chen, Xuqi, 2014. "The cross-price effect on willingness-to-pay estimates in open-ended contingent valuation," Food Policy, Elsevier, vol. 46(C), pages 13-21.
    15. Kang, Young Sik & Min, Jinyoung & Kim, Jeoungkun & Lee, Heeseok, 2013. "Roles of alternative and self-oriented perspectives in the context of the continued use of social network sites," International Journal of Information Management, Elsevier, vol. 33(3), pages 496-511.
    16. Emrich, Oliver & Paul, Michael & Rudolph, Thomas, 2015. "Shopping Benefits of Multichannel Assortment Integration and the Moderating Role of Retailer Type," Journal of Retailing, Elsevier, vol. 91(2), pages 326-342.
    17. Bauer, Johannes C. & Kotouc, Alexander J. & Rudolph, Thomas, 2012. "What constitutes a “good assortment†? A scale for measuring consumers' perceptions of an assortment offered in a grocery category," Journal of Retailing and Consumer Services, Elsevier, vol. 19(1), pages 11-26.
    18. Ashish Pandey, 2021. "Reference Prices and Turnover: Evidence from Small-Capitalization Stocks," JRFM, MDPI, vol. 14(1), pages 1-14, January.

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