Reference Price
The remembered or nearby figure against which a buyer judges whether an asking price is high or low.
What it is
Tridib Mazumdar, S. P. Raj and Indrajit Sinha reviewed the research on it in 2005 and set out how a reference price forms, how it is retrieved and used, and how it shapes purchases and deal evaluations. On this site it is read alongside Reference Point, Price Fairness and Mental Accounting.
In effect
The same price can read as a bargain to a shopper who remembers a higher figure and as a stretch to one standing beside a cheaper alternative. The 2005 review describes purchase history, the purchase occasion, in-store promotions and product category as moderators of the effect.
What it does not say
It is not the same thing as Reference Point, which sits close to it on this site but describes a different part of how people decide. It also does not say that the finding reaches every product, buyer or setting; where this page goes beyond the cited research, the step is an inference and is labelled as one.
Sources
- Tridib Mazumdar is first author, with S. P. Raj and Indrajit Sinha, of Reference price research: Review and propositions, published in the Journal of Marketing in 2005.