Asymmetric response to price in consumer brand choice and purchase quantity decisions

Article Abstract:

The study investigates whether consumers exhibit asymmetry (i.e., different sensitivity) to negative ("loss") and positive ("gain") differences between the reference price and the purchase price in brand choice and purchase quantity decisions. Using panel data for two frequently purchased products with three brands in each product category, we find that consumers loyal to a brand ("loyals") respond to gain and loss with the same sensitivity in brand choice decisions. However, consumers not loyal to any brand ("switchers") respond more strongly to gains than to losses. In purchase quantity decisions, brand-loyal consumers are found to respond asymmetrically to gains and losses, but the direction of the assymetry depends on whether the decision is made before or after the household inventory reaches a stock-out level (i.e., the level at which the household inventory needs to be replenished). When the decision is made after a stock-out, brand-loyal consumers are more responsive to a gain in the price of their favorite brand than to a loss. In contrast, when the quantity decision is made before a stock-out, loyals are more sensitive to a loss than to a gain. In only two of the six brands examined do we find evidence of asymmetry in switchers' quantity decisions. In both cases, switchers respond more strongly to a price loss than to a gain, regardless of whether the purchase decision is made before or after a stock-out. (Reprinted by permission of the publisher.)

---

A comparative analysis of reference price models

Article Abstract:

The effect of reference price on brand choice decisions has been well documented in the literature. Researchers, however, have differed in their conceptualizations and, therefore, in their modeling of reference price. In this article, we evaluate five alternative models of reference price of which two are stimulus based (i.e., based on information available at the point-of-purchase) and three that are memory based (i.e., based on price history and/or other contextual factors). We calibrate the models using scanner panel data for peanut butter, liquid detergent, ground coffee, and tissue. To account for heterogeneity in model parameters, we employ a latent class approach and select the best segmentation scheme for each model. The best model of reference price is then selected on the basis of fit and prediction, as well as on the the basis of parsimony in cases where the fits of the models are not very different. In all four categories, we find that the best reference price model is a memory-based model, namely, one that is based on the brand's own price history. In the liquid detergent category, however, we find that one of the stimulus-based models, namely, the current price of a previously chosen brand, also performs fairly well. We discuss the implications of these findings. (Reprinted by permission of the publisher.)

Models, Pricing

---

The Effect of Time Pressure on Consumer Choice Deferral

Article Abstract:

This article investigates the effect of time pressure on choice deferral. Recent research suggests that the likelihood of deferral is contingent on the ease of making the selection decision (which option to choose) as well as the overall attractiveness of the selected alternative.

Similar abstracts:

• Abstracts: The sacred and the profane in consumer behavior: theodicy on the odyssey. Heaven on Earth: consumption at Heritage Village, USA
• Abstracts: Perceived control and the effects of crowding and consumer choice on the service experience. An anchoring and adjustment model of spousal predictions
• Abstracts: Experiments in constrained choice. Factorial preference structures
• Abstracts: The influence of anticipating regret and responsibility on purchase decisions. A reference price model of brand choice for frequently purchased products
• Abstracts: The effect of turnover on work satisfaction and mental health: support for a situational perspective. Comments and recommendations regarding the hypothesis testing controversy

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.