Loyalty differences in the use of internal and external reference prices

Tridib Mazumdar, Purushottam Papatla

Research output: Contribution to journalArticle

50 Scopus citations

Abstract

Recent findings in reference price research suggest that consumer characteristics may affect whether they use an internal reference price (IPR) or an external reference price (ERP) in price judgments. In this paper, we investigate the role of one such characteristic, brand loyalty, in the use of either type of reference price. Specifically, we employ a latent class-type approach to divide consumers on the basis of their brand loyalty into an ERP and an IRP segment. Analysis of the margarine and liquid detergents categories shows that consumers who are highly loyal to a brand are likely to use external reference prices whereas less brand-loyal consumers rely on internal reference prices. We discuss the implications of this finding and suggest directions for future research.

Original languageEnglish (US)
Pages (from-to)111-122
Number of pages12
JournalMarketing Letters
Volume6
Issue number2
DOIs
StatePublished - Mar 1 1995

Keywords

  • Internal reference price
  • brand loyalty
  • external reference price
  • segmentation

ASJC Scopus subject areas

  • Business and International Management
  • Economics and Econometrics
  • Marketing

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