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Consumer Normal Price Estimation: Market versus Personal Standards

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  • Urbany, Joel E
  • Dickson, Peter R

Abstract

In reference-price models, internal reference price is typically estimated from actual market prices. Given the generally poor price knowledge consumers have exhibited in prior research, the question is whether it is reasonable to use actual market prices to estimate consumers' internal reference-price standards. The initial answer provided in this research, surprisingly, is yes. Although internal reference prices are measurable and do affect consumer price perception, the gains in measuring and using those standards in predicting brand choice for frequently purchased products may not be worth the costs. Reasons why the surrogate price measure may work and implications for the measurement of internal reference-price standards are considered. Copyright 1991 by the University of Chicago.

Suggested Citation

  • Urbany, Joel E & Dickson, Peter R, 1991. "Consumer Normal Price Estimation: Market versus Personal Standards," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 18(1), pages 45-51, June.
    • Handle: RePEc:oup:jconrs:v:18:y:1991:i:1:p:45-51
    DOI: 10.1086/209239
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    Cited by:

    1. Dungchun Tsai & Hsiao-Ching Lee, 2007. "Demographics, psychographics, price searching and recall in retail shopping," The Service Industries Journal, Taylor & Francis Journals, vol. 29(9), pages 1243-1259, December.
    2. Marco Bertini & Luc Wathieu, 2008. "Research Note—Attention Arousal Through Price Partitioning," Marketing Science, INFORMS, vol. 27(2), pages 236-246, 03-04.
    3. Ali Pilehvar & Wedad J. Elmaghraby & Anandasivam Gopal, 2017. "Market Information and Bidder Heterogeneity in Secondary Market Online B2B Auctions," Management Science, INFORMS, vol. 63(5), pages 1493-1518, May.
    4. Caputo, Vincenzina & Lusk, Jayson L. & Nayga, Rodolfo M., 2018. "Choice experiments are not conducted in a vacuum: The effects of external price information on choice behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 335-351.
    5. Murthi B. P. S. & Haruvy Ernan & Zhang He, 2007. "The Effect of Variability in Price on Consumer Brand Choice," Review of Marketing Science, De Gruyter, vol. 5(1), pages 1-26, November.
    6. Vincenzina Caputo & Jayson L Lusk & Rodolfo M Nayga, 2020. "Am I Getting a Good Deal? Reference‐DependentDecision Making When the Reference Price Is Uncertain," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(1), pages 132-153, January.
    7. Lillian L. Cheng & Kent B. Monroe, 2013. "An appraisal of behavioral price research (part 1): price as a physical stimulus," AMS Review, Springer;Academy of Marketing Science, vol. 3(3), pages 103-129, September.
    8. Kim, Wonjoon & Kim, Minki, 2015. "Reference quality-based competitive market structure for innovation driven markets," International Journal of Research in Marketing, Elsevier, vol. 32(3), pages 284-296.
    9. Vanhuele, Marc & Damay, Coralie, 2005. "Connaissance du prix par les enfants de 5 à 13 ans : une étude exploratoire," HEC Research Papers Series 820, HEC Paris.
    10. 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.
    11. Zhu, Hong & Zhou, Yayu & Wu, Yening & Wang, Xin, 2022. "To smile or not to smile: The role of facial expression valence on mundane and luxury products premiumness," Journal of Retailing and Consumer Services, Elsevier, vol. 65(C).
    12. Loy, Jens-Peter & Ceynowa, Christian & Kuhn, Lena, 2020. "Price recall: Brand and store type differences," Journal of Retailing and Consumer Services, Elsevier, vol. 53(C).
    13. Piggott, Nicholas E. & Wright, Vic, 1992. "From Consumer Choice Process To Aggregate Analysis: Marketing Insights For Models Of Meat Demand," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 36(3), pages 1-16, December.
    14. Chandrashekaran, R., 2001. "The implications of individual differences in reference price utilization for designing effective price communications," Journal of Business Research, Elsevier, vol. 53(2), pages 85-91, August.
    15. Suzanne Fogel & Dan Lovallo & Carmina Caringal, 2004. "Loss Aversion for Quality in Consumer Choice," Australian Journal of Management, Australian School of Business, vol. 29(1), pages 45-63, June.
    16. Jensen, Birger Boutrup & Grunert, Klaus G., 2014. "Price Knowledge During Grocery Shopping: What We Learn and What We Forget," Journal of Retailing, Elsevier, vol. 90(3), pages 332-346.
    17. Ordonez, Lisa D., 1998. "The Effect of Correlation between Price and Quality on Consumer Choice," Organizational Behavior and Human Decision Processes, Elsevier, vol. 75(3), pages 258-273, September.
    18. Wolfgang Gaul & Michael Löffler, 1999. "Zur Charakterisierung von Preisspielräumen," Schmalenbach Journal of Business Research, Springer, vol. 51(11), pages 1056-1074, November.
    19. Scheidegger, Gianluca & Linzmajer, Marc & Rudolph, Thomas, 2020. "Price discount strategies in times of increasing price transparency: How price consciousness and price comparison moderate the effect of discount strategy on store price image," Die Unternehmung - Swiss Journal of Business Research and Practice, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 74(4), pages 384-402.
    20. Hruschka, Harald, 2002. "Market share analysis using semi-parametric attraction models," European Journal of Operational Research, Elsevier, vol. 138(1), pages 212-225, April.
    21. Friesen, Mark, 2020. "A dynamic perspective on consumers’ price fairness perception: Empirical evidence from the airline industry," Die Unternehmung - Swiss Journal of Business Research and Practice, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 74(4), pages 403-425.
    22. Madhavi Venkatesan & Fenner Dreyfuss-Wells & Anjali Nair & Astrid Pedersen & Vishnu Prasad, 2021. "Evaluating Conscious Consumption: A Discussion of a Survey Development Process," Sustainability, MDPI, vol. 13(6), pages 1-19, March.
    23. VANHUELE, Marc & DREZE, Xavier, 2000. "Do consumers really know if the price is right ? Direct measures of references price are their implications for retailing," HEC Research Papers Series 711, HEC Paris.
    24. Pechtl, Hans, 2004. "Das Preiswissen von Konsumenten: eine theoretisch-konzeptionelle Analyse," Wirtschaftswissenschaftliche Diskussionspapiere 01/2004, University of Greifswald, Faculty of Law and Economics.

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