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

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  • Moon, Sangkil
  • Voss, Glenn
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    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.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Business Research.

    Volume (Year): 62 (2009)
    Issue (Month): 1 (January)
    Pages: 31-38

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    Handle: RePEc:eee:jbrese:v:62:y:2009:i:1:p:31-38

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    Web page: http://www.elsevier.com/locate/jbusres

    Related research

    Keywords: Price range model Reference price Price perception Customer segmentation and profiling;

    References

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    Cited by:
    1. 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.
    2. 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.
    3. 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.

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