The effect of external reference price on consumer’s price perception
DOI:
https://doi.org/10.15170/MM.2022.56.KSZ.01.02Keywords:
anchoring, reference point, reference price, cognitive bias, pricingAbstract
THE AIM OF THE PAPER
Consumers tend to simplify their decision-making processes with the help of heuristics. One of these identified heuristics is called the anchoring effect. In case of products, their price can act like an anchor or so-called reference point. The aim of our study is to investigate the effect of external reference prices on the price perception and price evaluation of consumers in case of products they know well and buy frequently.
METHODOLOGY
An online experimental survey method was used to collect data for this study. 2158 people filled out the questionnaire and respondents were divided into two groups. The groups’ survey differed only in the prices of products respectively. In our research we investigated the effect of the rage of internal reference prices and also the effect of bait product on consumers’ price perception and decision-making. The participants were divided into two random groups. The two groups received similar but not the same stimuli pictures during the experiment. Based on the differences in the responses of the two groups, we tried to assess the impact of external reference prices on the perceptions and evaluation of prices.
MOST IMPORTANT RESULTS
The results showed that the effect of external prices can be identified even in case of frequently purchased, well-known products like milk or a bottle of mineral water. We found differences between the price perceptions of the two groups, which supports the idea that the range of other products’ prices and bait prices play a huge role in the decision-making process of consumers. However, bait prices did not influence consumers’ decision in the way we assumed, as they did not change the choice towards the product we expected. Understanding this phenomena requires to implement quantitative research methods in the future.
RECOMMENDATIONS
Based on our results, it can be said that the prices of products have a great influence on the decision, so marketing professionals should pay special attention to product placement in the store and on the shelves. Furthermore, it is worth considering and applying the effect of bait prices in advertisements and promotional newspapers when they would like to sell a certain product.
References
Antal-Pomázi K. (2020), „A differenciált árazással kapcsolatos ösztönzőkről”, Közgazdasági szemle, 67(3), 244-262. https://doi.org/10.18414/ksz.2020.3.244
Ariely, D. (2008), Predictably Irrational: The Hidden Forces That Shape Our Decisions, New York: HarperCollins
Biswas, A. and Blair, E. A. (1991), “Contextual Effects of Reference Prices in Retail Advertisements”, Journal of Marketing, 55(3), 1-12. https://doi.org/10.2307/1252143
Hámori B. (2003), Érzelemgazdaságtan, Szeged: Kossuth Kiadó
Janiszewski, C. and Lichteinstein, D. R. (1999), “A Range Theory Account of Price Perception”, Journal of Consumer Research, 25(4), 353-368. https://doi.org/10.1086/209544
Kahneman, D. (2011), Thinking, Fast and Slow, New York: Farrar, Straus and Giroux
Kahneman, D. and Tversky, A. N. (1984), “Choices, Values and Frames”, American Psychologist, 39(4), 341-350. https://doi.org/10.1037/0003-066X.39.4.341
Kotler, P. and Keller, L. K. (2012), Marketingmenedzsment, Budapest: Akadémiai Kiadó
Monroe, K. B. (2003), Pricing: Making Profitable Decisions, Illinois: McGraw-Hill/Irwin
Niedrich, R. W., Sharma, S. and Wedell, D. H. (2001), “Reference Price Perceptions: A Comparison of Alternative Models”, Journal of Consumer Research, 28(3), 339-354. https://doi.org/10.1086/323726
Rabin, M. (2008), Pszichológia és közgazdaságtan, Budapest: Alinea kiadó
Rekettye G. (2011), Multidimenzionális árazás, Budapest: Akadémiai Kiadó
Rekettye, G. and Liu, J. (2018), Pricing The New Frontier, London: Transnational Press
Sherif, M. and Hovland, C. I. (1961), Social Judgement, London: Yale University Press
Simon, H. A. (1982), Models of bounded rationality, Cambridge: The MIT Press
Tversky, A. M. and Kahneman, D. (1974), “Judgement Under Uncertainty: Heuristics and Biases” Science, 185(4157), 1124-1131. https://doi.org/10.1126/science.185.4157.1124
