A substantial body of research evidence has now accumulated in the reference price literature. One stream of research has identified the antecedents of reference price and has assessed their effects through experimentation. Others have calibrated a variety of reference price models on panel data and reported the effects on brand choice and other purchase decisions. In this article, the authors review the published literature on reference price in both the behavioral and modeling streams. They offer an integrative framework to review prior research on (1) the formation of reference price, (2) retrieval and use of reference price, and (3) influences of reference price on various purchase decisions and evaluations. In doing so, the authors examine the influences of consumers' prior purchase history and contextual moderators, such as specific purchase occasions, promotional environment of the store, and product category characteristics. They summarize the key findings, identify the unresolved issues,...

https://www.jstor.org/stable/pdfplus/30166553.pdf

Reference Price Research: Review and Propositions

The effects of discount level, price consciousness and sale proneness on consumers' price perception and behavioral intention

Pricing is one of the most crucial determinants of sales. Besides the actual price, how the price offering is presented to consumers also affects consumer evaluation of the product offering. Many studies focus on “price framing,” i.e., how the offer is communicated to the consumer —is the offered price given along with a reference price, is the reference price plausible, is a price deal communicated in dollar or percentage terms. Other studies focus on “situational effects,” e.g., is the evaluation for a national brand or a private brand, is it within a discount store or a specialty store. In this article, a meta-analysis of 20 published articles in marketing examines the effects of price frames and situations on perceived savings. The results reveal many features that significantly influence perceived savings. For instance, while both the percent of deal and the amount of deal positively influence perceived deal savings, deal percent has more impact. Further, the presence of a regular price as an external reference price enhances the offer value of large plausible deal and implausible deals, but not of small plausible deals. Thus, high value deals should announce the regular price, but not low value deals. Overall, the results have several useful insights for designing promotions.

A Meta-Analysis of the Impact of Price Presentation on Perceived Savings

Consumer evaluations of different promotion types and price presentations: the moderating role of promotional benefit level

While several studies have examined how the specific wording (i.e., semantic cue) used to communicate a price offer affects consumers' perceptions of value, this area of research has not produced a set of consistent findings. To resolve the apparent inconsistencies, the current article builds on past research and explains why a consumer's response to a semantic cue depends on the situation (or decision context) and the discount size. The results of two studies are reported. The first experiment provides evidence that the relative effectiveness of two widely used types of semantic cues depends on both consumers' decision context and the level of processing evoked by the discount size. The second experiment replicates the semantic cue by situation interaction and demonstrates the robustness of this effect across store familiarity.

Communicating Price Information through Semantic Cues: The Moderating Effects of Situation and Discount Size

This article examines the differential effects of two types of semantic cues: (1) cues connoting that an advertised price discount exhibits low consistency over time, and (2) cues connoting that an advertised discount is highly distinctive vis-a-vis competitors. Results suggest that, for manipulations of external reference prices with offering price held constant, semantic cues that connote high distinctiveness are more effective in influencing consumers' price-related evaluations when the external reference price is otherwise implausibly high than are semantic cues that connote low consistency. For manipulations of offering prices with external reference price held constant, however, semantic cues connoting high distinctiveness exert more relative influence on price-related cognitions when offering prices are high.

The Effect of Semantic Cues on Consumer Perceptions of Reference Price Ads

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The Effect of Semantic Cues on Consumer Perceptions of Reference Price Ads