Advertised reference price effects on consumer price estimates, value perception, and search intention

Research suggests that consumers respond to reference prices relative to some internal standards developed from experience. In dispute, however, is whether reference prices that are implausible produce the same effects on consumers as plausible reference prices. The two integrative reference prier models available in the literature predict conflicting results, and empirical studies have not provided consistent support for either. Based upon a three-stage study invoking prices for tennis shots and telephones, results of this research support a differential response between plausible and implausible advertised reference price exposure conditions. Findings suggest that implausible prices have no effect on consumer's internal price continuum, perception of value, or intention to search. Furthermore, the findings suggest that plausible reference prices affect a consumer's price continuum differently than previous models predict. The authors discuss these findings, propose a modified reference price model, and provide practical implications for marketers. (C) 2000 Elsevier Science Inc. All rights reserved.