An empirical analysis of internal and external reference prices using scanner data

Article Abstract:

Single-source yogurt data are used to examine whether both internal and external reference prices affect purchase decisions. Internal reference prices are memory-resident prices based on actual, fair, or other price concepts. External reference prices are observed stimuli, such as "regular prices," that stores may display along with a sale price for comparability. Discrete choice models with variables representing the two types of reference prices are estimated, and both types of variables are found to have significant effects on purchase probabilities. This suggests that consumers may use multiple reference points in evaluating price in purchase decisions. In addition, a model using an indicator of a sale price discount explains purchase probabilities as well as one that models the actual discount, which suggests that consumers may be reacting to the indication of savings rather than to the amount of the discount. (Reprinted by permission of the publisher.)

Prices

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An empirical analysis of price endings with scanner data

Article Abstract:

Several consumer behavior theories have been offered to explain the preponderance of prices that end in the digit 9. This study attempts to incorporate these proposed behaviors into the implicit utility function of consumer choice models, resulting in both a more accurate tool for managerial decision making and additional insights into how consumers actually behave toward price endings. An attempt is made to compensate for both level effects (those effects in which consumers may underestimate the value of a price) and image effects (those effects in which consumers may infer meaning from the right-hand digits). The models are estimated using scanner panel data for two frequently purchased products, tuna and yogurt. The results support the importance of accounting for the digits in consumer choice models, providing evidence for both image effects and level effects. (Reprinted by permission of the publisher.)

Models, Pricing, Consumer behavior

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The influence of purchase quantity and display format on consumer preference for variety

Article Abstract:

We propose that what consumers buy can be systematically influenced by how much they buy. We hypothesize that, as the number of items purchased in a category on a shopping occasion increases, a consumer is more likely to select product variants (e.g., yogurt flavors) that s/he does not usually purchase. We used yogurt scanner data to support this hypothesis. This study also revealed that consumers were more likely to select their regular brands when purchasing more containers of yogurt on a given occasion. A laboratory experiment showed that this reflects the combined impact of purchase quantity and product-display format (i.e., the by-brand display of yogurt in supermarkets) on consumer choice. (Reprinted by permission of the publisher.)

Brand choice, Displays (Marketing)

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