In this study, we reviewed Lichtenstein et al. (1993)'s price
perception model and applied it to a particular product context
(Sony's CD player). Utilizing LISREL 8.7 program, we found that the
price perception constructs--value consciousnesses, price consciousness,
sale proneness, price-quality schema and prestige sensitivity--have no
significant direct effects on consumers' overall price perceptions.
In addition, internal reference price (IRP) was added to the model and
tested along with the overall model fit testing. The acceptable fit
indices suggested that internal reference price is a very relevant
factor in building consumers' price perceptions. Moreover, the
significant relationship between internal reference price and price
perception supports that no matter the external inference price
(advertised selling/reference price) is presented or not, the effect of
internal reference price is significant in forming and influencing
consumers' price perception. A comprehensive model, the integration
of Lichtenstein et al.'s (1993) model and IRP, was found to be a
better prediction of consumer' price perception than either of them
alone. Managerial insights and theoretical contribution were discussed.
Keywords: Price, Price perception, Consumer behaviors, Internal
Price, arguably one of the most important marketplace cues, is a
pivotal consumption variable because of its presence in virtually every
purchasing situation (Monroe, 1979). It is well accepted in behavioral
pricing research that price is one of the most important informational
cues consumers use in the decision making process (Helgeson and Beatty,
1987). Moreover, what is revealed in these literatures is a general
agreement that what actually influences consumer behavior, especially
final consumers' behaviors, is not objective price but subjective
price, also referred to as perceived price or price perceptions
(Lichtenstein et al., 1988; Lichtenstein et al., 1993; Zeithaml, 1988).
Furthermore, the literature also reveals a complex picture of price
as a cue; price has been deemed a multidimensional stimulus affecting
consumers' purchase intentions (Dodds et al., 1991). Lichtenstein
et al. (1993) proposed and empirically tested a price perception model
in a retailing setting that included five constructs (value
consciousnesses, price consciousness, coupon proneness, sale proneness,
and price mavenism) that had a negative impact on overall price
perception, and two constructs (price-quality schema and prestige
sensitivity) with positive relationships with price perception. They
argued that whether a consumer perceived a price as high/low,
acceptable/not acceptable, or a good value/not a good value depended on
these seven constructs. This model became the basis of much price
perception research and has been applied and confirmed in retail
management in varied consumer segments and different cultural settings
(Zhou and Nakamaoto, 2001).
However, all seven constructs reflect the underlying personality
and psychology of the consumer, and are mostly studied with respect to
how the constructs influence consumers' general price perceptions.
It still is unclear how these price perception constructs affect
consumers' overall price perceptions towards a specific product or
in a specific purchase setting. Another insufficiency of this
7-construct price perception model is that it did not include other
important factors that influence the formation of a consumer's
overall price perception, such as brand name, reference price, and
The goal of this research is to further investigate the direct
relationship between price perception constructs and consumers'
overall price perceptions. In addition, we examine the effect of a
consumer's internal reference price (with no external advertised
selling/reference price mentioned) on his/her price perception. Finally,
we propose a more comprehensive underlying structure of price perception
by incorporating internal reference price with other previously proposed
constructs into the price perception model and testing the fit of our
model with structural equation modeling techniques.
2. CONCEPTUAL BACKGROUND
2.1 Price Perception
Price is one of the most important product information cues used by
consumers. Price perception is the process by which consumers translate
prices into meaningful mental cognitions and has interested researchers
for several decades (Lichtenstein et al., 1988, 1993; Lichtenstein et
al., 1990). In conceptualizing this translation process, Jacoby and
Olson (1974) employed a stimulus-organism-response (S-O-R) model to
consumer price perception. Based on the S-O-R model, if the same
stimulus (e.g., the objective or actual price of a product) leads to a
significantly different response (e.g., a consumer's purchasing
behavior), then "organism" (e.g., the consumer) is the only
possible explanation of the behavioral differences. More specifically,
if consumers are exposed to the same price information (e.g., a
McDonald's meal priced at $4.35), they may, nevertheless, assign
unique meaning to the objective price while translating it into a
perceived or psychological price. This cognitive process explains why
the same price may be perceived as "high" by one consumer and
"low" by another.
In this study, as a dependent factor, price perception indicates
the overall assessment of product benefit and monetary sacrifice
associated with the purchase. It is the mixed consequence directed by
both the negative and positive roles of price cue. In simpler words,
this is the general and overall perception or evaluation in the
consumer's mind of whether the objective price is cheap or
expensive, of whether the money spent on the purchase was well spent,
and of whether the value for the money associated with this purchase is
high or low.
In the early stages of marketing science, a significant subset of
research investigated the effect of price on a consumer's overall
product evaluation. However, much of this research regarded price as a
unidimensional cue (Chang and Wildt, 1996) and suggested that price was
simply an economic index of the sacrifice a consumer has to make to
obtain goods or services (e.g., price was simply considered the
"cost" of a product). Lichtenstein et al. (1993), however,
argued that price was a multidimensional phenomenon, composed of
consumer-level personality variables that had positive and negative
influences on perceived price. This was the first study on consumer
price perception to propose multiple price cues that could both
negatively and positively associate with consumers' general price
perceptions. Lichtenstein et al. (1993) identified seven constructs that
affect a consumer's overall price perception: value consciousness,
coupon proneness, price consciousness, sales proneness, price mavenism,
price-quality schema, and prestige sensitivity.
2.2 Factors Influencing Price Perception
2.2.1 Lichtenstein et al. (1993) factors negatively affecting price
Value Consciousness. Perception of the price cue for some consumers
can be characterized by a concern with the "appropriateness"
or "fairness" of the ratio of perceived quality received and
price paid in a purchase transaction. Numerous studies have defined the
concept of "value" in terms consistent with this perspective
(e.g., Lichtenstein et al., 1990; Tellis and Gaeth, 1990; Thaler, 1985;
Zeithaml, 1988). Consequently, value consciousness is conceptualized as
reflecting a concern for price paid relative to quality received.
Price Consciousness. Related to "value consciousness,"
perceptions of price can be characterized more narrowly as reflecting
"price consciousness." Though the term "price
consciousness" has been used by different researchers to refer to a
variety of price-related cognitions (Zeithaml, 1984), in this study, it
was used in a very narrow sense to refer to the degree to which the
consumer focuses on paying low prices to the exclusion of all other
considerations. This definition is consistent with those employed by
several researchers (e.g., Erickson and Johansson, 1985; Lichtenstein et
al., 1988; Monroe and Petroshius, 1981; Tellis and Gaeth, 1990).
Coupon Proneness. The form in which the price cue is presented to
consumers can also affect price perception; Cotton and Babb (1978) found
some empirical support for this notion. Lichtenstein et al. (1990)
referred to this heightened sensitivity to the price form as reflecting
"coupon proneness" and defined the construct as "... an
increased propensity to respond to a purchase offer because the coupon
form of the purchase offer positively affects purchase evaluations"
(p. 56). Therefore, coupon proneness leads to high price sensitivity and
negatively influences price perception.
Sale Proneness. Similar to "coupon proneness",
"sales proneness" suggests that for some consumers, an
increased sensitivity to price is related to the price being in sales
form, that is, a discount from the regular selling price (e.g.,
"regular price $1.99, sale price $1.29".) On the basis of the
deal-proneness conceptualization of Lichtenstein et al. (1990),
Lichtenstein et al. (1993) defined sale proneness as "an increased
propensity to respond to a purchase offer because the sale form in which
the price is presented positively affects purchase evaluations."
Therefore, similar to coupon proneness, sale proneness also negatively
influences price perception.
Price Mavenism. Price perceptions may also be influenced by
consumers' desires to be informed about prices, in order to pass
such information on to other people. Lichtenstein et al. (1993) defined
price mavenism as the degree to which an individual is a source for
price information for many kinds of products and for places to shop for
the lowest prices, initiates discussions with consumers, and responds to
requests from consumers for marketplace price information.
2.2.2 Lichtenstein et al. (1993) factors positively affecting price
Price-Quality Schema. Product quality is one of the most important
concepts in marketing strategy, as it is believed to be positively
related to a product's competitive advantage over its competitors
(Schnaars, 1991; Molz and Gielnik, 2006). Buyers judge product quality
in terms of overall product superiority, compared to substitute products
in their evoked sets (Zeithaml, 1988). To perform this judgment task,
they focus on and evaluate product attributes. Not all product
attributes lead to a quality assessment before purchase (Nelson, 1970;
Karni and Darby, 1973), thus, buyers sometimes rely on extrinsic
attributes, such as store name, brand name, and advertising intensity,
as a summary measure of the level of product quality prior to purchase.
Therefore, these extrinsic attributes affect buyers' assessments of
product quality through their role as quality signals (Martins and
Monroe, 1994). Price is often interpreted by the consumer as being
positively correlated to quality (i.e., higher prices indicate higher
quality). This positive relationship of price and quality is referred to
as the price-quality schema. To the degree consumers perceive price in
this way, they will view higher prices more favorably because they
believe that increases in product quality are necessarily associated
with additional monetary outlays (Lichtenstein et al., 1988; Rao and
Prestige Sensitivity. Price perceptions are also influenced by what
the price signals to other people about the purchaser. Prestige
sensitivity is associated with favorable perceptions of price, based on
the feelings of prominence and status that higher prices signal to other
people about the purchaser. Branding strategy frequently takes advantage
of this positive aspect of price to add premium value into products
because the higher the price, the higher the prestigious level perceived
by the consumers (Lichtenstein et al., 1990).
2.3 Internal Reference Price
As previous research on consumer information processing has shown,
price cues are important, but the relative importance of the cues varies
depending on the purchase context (Alexis, 1968; Bettman, 1970). Among
these cues, reference price is very critical. It has long been
recognized that consumers use some standard or reference point to
evaluate the purchase price of a product (Emery, 1970; Monroe, 1973).
The reference price function in consumer choice can be theoretically
explained by a psychological concept--adaptation-level (AL). In a
pricing context, adaptation-level theory suggests price perception
depends on the actual price and the individual's reference price or
AL. According to adaptation-level theory (Helson, 1964), an
individual's behavioral response to stimuli represents modes of
adaptation to environmental and organism forces. These forces are not
random, and the pooled effect of three classes of cues--focal,
contextual, and organic--determines the adjustment or AL underlying
behavior. Focal cues are the stimuli the individual is directly
responding to such as the price. Contextual or background cues are all
other stimuli in the behavioral situation providing the context within
which the focal cues are operative.
Within the marketing literature, there are two streams of research
on reference price. The first centers around consumers' reactions
to advertised (external) reference prices (Chandrashekaran and Jagpal,
1995; Smith and Sinha, 2000), while the second research stream focuses
on internal reference price. Internal reference price is commonly
defined as "a price (or price scale) in buyers' memories that
serves as a basis for judging or comparing actual prices" (Grewal
et al., 1998, p. 47).
According to Urbany et al., (1988), internal reference price is
influenced by the range of normal prices and the range of lowest prices
a consumer perceives to exist in the marketplace, in addition to the
internal reference price range and the latitude of price acceptance.
Other examples of internal reference price definitions include lowest,
highest, and normal market prices (Lichtenstein et al., 1988; Urbany and
Dickson, 1991; Biswas and Sherrell, 1993); past price (Kalwani et al.,
1990; Mayhew and Winer, 1992), expected price (Winer, 1986), and
expected future price (Jacobson and Obermiller, 1990). Helgeson and
Beatty (1987) and Grewal et al. (1998) argued that internal reference
price is the key to understanding how consumers judge actual prices and
how price cues affect consumer product evaluation and buying behavior.
Furthermore, recent empirical evidence suggests that consumers can use
multiple reference prices in making price comparisons (Rajendran and
Tellis, 1994; Chandrashekaran and Jagpal, 1995).
There is a significant body of literature to support the notion
that "individuals make judgments and choices based on the
comparison of observed phenomena to an internal reference price"
(Kalyanaram and Winer, 1995, p. 161). It is generally accepted that
consumers compare a market price to an internal reference price when
judging the attractiveness of the market price (Janiszewski and
Lichtenstein, 1999). Moreover, Grewal et al. (1998) developed a
comprehensive model of internal reference price, applied it to a bicycle
purchase setting, and empirically tested its significant effect on
consumer's "willingness to buy" and "search
intentions". These authors found that IRP was negatively related to
consumers' price perceptions.
Although the research on internal reference price has been
fruitful, the research scope is flawed to some degree. More
specifically, as presented in Grewal et al's (1998) research, the
majority of internal reference price literature investigated the effect
of internal reference price on a consumer's purchase intention in
contexts where an external reference price also was presented to
respondents, such as stated reference price in a newspaper (Haynes,
1991). This concomitant presentation of dual reference prices is
obviously biased because internal reference price generally exists
across all kinds of purchase settings, while advertised
selling/reference price is only utilized in some periods and for some
products. A consumer's internal reference price can exist
independently from external reference price in many situations; past
research, however, has not addressed the effects of internal reference
price on consumers' purchase intentions in a context where
influences from advertised selling/reference price are excluded.
In addition, internal reference price research does not usually
include measures of individuals' personality factors, such as price
consciousness, value consciousness, and inclination to take risk. Grewal
et al. (1988) presented a call to researchers to look at such
personality effects more closely, which provided a rationale for
integrating Lichtenstein et al.'s (1993) price perception model
with an internal reference price factor in the present project, to
discover these factors' simultaneous effects on consumers'
overall price perceptions.
Therefore, the study presented here is arguably the first to
incorporate IRP without the presence of external reference price into
price perception constructs, to apply proposed comprehensive model into
a real product (Sony's CD player) purchase setting, and to
empirically test the model fit and path significance.
3. OBJECTIVES AND HYPOTHESES
Based on the existing literature on price perception, we tested the
theoretical model presented in Figure
1. In the present study, two of Lichtenstein et al.'s (1993)
original factors, coupon proneness and price mavenism were excluded. The
rationale for excluding coupon proneness was that, for the specific
product used in this study (a Sony CD player), coupons are rarely used
during purchasing. Additionally, price mavenism was not included because
it is not a theoretical predictor of the market place
responses/behaviors (Lichtenstein et al., 1993). In this study, two
positive price perception factors (price-quality schema and prestige
sensitivity) and three negative price perception factors (value
consciousness, price consciousness, sale proneness) represented work by
Lichtenstein and colleagues. In addition, internal reference price was
also included as an exogenous indicator of price perception. Price
perception represented a consumer's overall assessment of product
benefit and monetary sacrifice associated with the purchase.
[FIGURE 1 OMITTED]
The objectives of this study were three-fold. One was to examine
whether the price perception constructs influenced consumers'
overall price perceptions for a specific product purchase (e.g., a
Sony's CD player), rather than a general product category. The
second objective was to measure the effect of internal reference price
on consumers' price perceptions in a setting where external
reference price (advertised selling/reference price) was not presented.
Finally, we wanted to address limitations in both Lichtenstein et
al.'s personality pricing research (which did not include an
internal reference price factor) and the internal reference price
literature (which has not included a consumer's personality
variables). Therefore, the third objective was to address these
substantive limitations by integrating an internal reference price
factor into Lichtenstein et al.'s (1993) price perception model.
The following hypotheses were proposed and tested using structural
equation modeling (SEM) techniques.
H1: The higher the level of value consciousness, the lower the
level of price perception.
H2: The higher the level of price consciousness, the lower the
level of price perception.
H3: The higher the level of sale proneness, the lower the level of
H4: The higher the level of price-quality schema, the higher the
level of price perception.
H5: The higher the level of prestige sensitivity, the higher the
level of price perception.
H6: The higher the level of internal reference price, the lower the
level of price perception.
H7: A model INCLUDING internal reference price with Lichtenstein is
a significantly better fit to the data than the Lichtenstein model
4.1 Measurement of the Constructs in the Model
Lichtenstein et al. (1993)'s measurement model has been
replicated many times and been applied to different cultures; therefore,
all the scales corresponding to the five included price perception
constructs in the model (value consciousness, price consciousness, sale
proneness, price-quality schema, and prestige sensitivity) were utilized
without revision. Respondents indicated their level of agreement with
each of the 31 items on a 5-point, Likert-type scale, with 1 indicating
"strongly disagree" and 5 indicating "strongly
The dependent construct of "price perception" was
operationalized with four items consistent with Berkowitz and Walton
(1980), namely "perceived worth", "price
acceptability", "perceived saving", and "value for
the money" (p. 352). Although "willingness to buy" was
included in the original Berkowitz and Walton (1980) measurement of the
"price perception" construct, we excluded it from the present
study because it has become accepted in the marketing literature that
"willingness to buy" is a qualitatively different concept than
The only construct in the model which was not measured by
previously published scales was internal reference price. This study
derived three items directly from the AL theory and the definition of
"internal reference price" given by Grewal et al. (1998) to
measure subjects' internal reference price for a specific product
(a Sony CD player). Responses to these items were measured on a 5-point
scale, with 1 indicating "extremely low," and 5 indicating
"extremely high." See Appendix for the 38 items comprising our
4.2 Data Collection and Sample Characteristics
Questionnaires were distributed to two undergraduate marketing
courses at a large public university in the Midwest, where the majority
of students enrolled in the course were majoring in business. Subjects
were asked to imagine that they were planning to buy a CD player for
their own use. One hundred and eighty-nine questionnaires were
collected, but after eliminating surveys with missing data, 172 valid
responses remained. The average age of sample respondents was 22.4, and
the numbers of male and female respondents were well-balanced (51.7%
male and 48.3% female).
4.3 Statistical Analysis
We used the two-step structure equation modeling approach suggested
by Anderson and Gerbing (1988): the measurement model was examined first
and items measuring each construct were purified prior to conducting
tests of the structure model. Using LISREL 8.7, model fit was assessed
through Chi-square tests, error levels (RMSEA and RMR), and multiple fit
indices, such as IFI, CFI, NNFI and GFI. All hypotheses were tested
using this structural equation modeling approach.
5. RESULTS AND DISCUSSION
5.1 Measurement Model Testing
A confirmatory factor analysis (CFA) was conducted to test the
measurement model. We modeled the 38 items onto the proposed seven
constructs (correlation allowed). One item measuring "price
perception" (S14) demonstrated a low, non-significant path
coefficient and, since there were three other items measuring
"price perception", we deleted this item during the
measurement model purification process. The resulting measurement model
showed a relatively good model fit. Although the chi-square value was
significant ([x.sup.2](608) = 1025.68, p < .011), goodness of fit
indices were all higher than the .90 threshold, (NNFI = .91, CFI = .92,
and IFI = .92). Moreover, the RMSEA and RMR measures of error were low,
as desired, .058 and .075, respectively, which were lower than the .08
threshold (Hair, Anderson, Tatham, and Black 1998). All path loadings of
the purified model were significant at to .05 level. The five constructs
from Lichtenstein et al. (1993) showed high reliabilities, all over .80.
The reliability for the price perception construct (Berkowitz and Walton
1980) was .78 and the reliability for the internal reference price items
was .66. The purified scales, factor loadings of related items, and
scale reliabilities are presented in Table 1.
5.2 Structure Model Testing
Structural model testing was the core of this study; the proposed
theoretical model was tested and the hypothesized critical paths were
examined. The decision of whether to accept or reject a structural model
should be made through the evaluation of three groups of statistical
information. For this model, the ratio of the Chi-square statistic to
the degrees of freedom was 1.69, lower than the suggested 3.0 threshold
(Hayduk, 1987), and the error indices (RMSEA and RMR) were lower than
the suggested .08 threshold (.058 and .075 respectively). Finally,
goodness of fit measures, such as the NNFI, the CFI, and the IFI were
all higher than .90, (.91, .92, and .92 respectively). Considering this
information, we concluded that our model provided an acceptable fit to
Surprisingly, as displayed in Table 2, the paths from all five
price perception constructs drawn from Lichtenstein et al. (1993)--value
consciousness, price consciousness, sale proneness, price-quality
schema, and prestige sensitivity--and overall price perception were not
significant (H1-H5 were not supported). The path from value
consciousness to price perception was marginally significant, but in the
opposite direction than expected based on past research (path = .21, t =
1.59, p < .1). The path between internal reference price and overall
price perception was significant and negative (path = -.21, t = -2.16, p
< .05); thus H6 was supported.
5.3 Nested Model Testing
Nested model testing was conducted by fixing the path between IRP
and price perception factor at 0. The purpose of this testing was to see
whether adding the IRP into the Lichtenstein et al. (1993)'s price
perception model significantly increased model fit (H7). The LISREL
output of nested model testing still suggested a good model fit with all
the fit indices almost identical as full model (proposed model) testing.
However, by deleting the path between IRP and price perception,
although we gained 1 degree of freedom (df = 608 in the full model,
while df = 609 in the nested model), Chi-square also increased from
952.08 in the full model to 1029. 37 in the nested model. The changing
Chi-square (Chi-square difference) of 77.29 is significant at 1 degree
of freedom changing. This result indicates that nested model is
significantly worse than the full model, which strongly supported H7
that IRP is an important factor influencing consumers' overall
6. CONCLUSION AND IMPLICATIONS
Since Lichtenstein et al. (1993) published their classical work on
price perception constructs, researchers have expanded our knowledge of
price perception in order to understand the many roles that price plays
in consumer decision making. This work made efforts in an understudied
aspect of price perception, namely how general price constructs affect
price perceptions for a specific product. Utilizing the purified
measurement model, the fit of our proposed structural model was tested
in a Sony CD player purchase setting. Opposite to what has been
proposed, the price perception constructs of value consciousnesses,
price consciousness, sale proneness, price-quality schema and prestige
sensitivity had no significant direct effects on consumers' overall
The non-significant paths between the Lichtenstein et al. (1993)
price constructs and overall price perception should not be interpreted
that price perception constructs are irrelevant to consumer's
overall price perception. Moreover, this study does not suggest that
researchers and managers should neglect the effects of these constructs.
Rather, our results suggested that, as representative of a
consumer's price-relevant personality traits, these price
perception constructs have little direct effects on his/her overall
price perception for a specific product. For instance, when a consumer
is judging a specific consumer product, he/she will not perceive the
price of the specific product more negatively simply because that same
consumer is more value conscious, price conscious, and/or sales prone.
Likewise, the consumer will not perceive the price of the specific
product more positively only because he/she has a strong price-quality
schema and/or prestige sensitivity. Instead, it is possible that these
general constructs may become significant when they are mediated by
other factors, such as brand name, advertising effects, or
country-of-origin variables. It is also possible that these
consumer-level personality factors might predict consumers' overall
price perceptions of a specific product for certain target markets but
not for others. Consumer demographic variables might act as moderators
of the general price constructs-specific product price perception
relationship. Although these moderator/mediator effects were beyond the
scope of the present project, we suggest that these potential
relationships be explored in the future.
Our study also was the first one that we know of to integrate
internal reference price into a model with general price constructs. The
fit indices of our model suggested that internal reference price was a
very relevant factor in influencing consumers' price perceptions.
In addition, the path analysis further suggested a negative relationship
between internal reference price and overall price perceptions, which
means that the higher a consumer's internal reference price for a
specific product, the lower the consumer's overall assessment of
product benefit and monetary sacrifice. This finding is consistent with
previous research on reference price (Helgeson and Beatty, 1987, Grewal
et al., 1998).
In addition, our research methodology did not present respondents
with an external reference price, such as the suggested retail price or
an advertised selling price. The absence of such information is unique
in the internal reference price literature, and we found that the effect
of internal reference price is significant in forming and influencing
consumers' price perception even with this absence. Therefore, our
results provide managerial insights on pricing strategies that recognize
how influential consumers' internal reference prices are in price
perceptions. More importantly, this result also revealed the complexity
of price perception and should encourage researchers to expand the
theoretical price perception model in Lichtenstein et al.'s (1993)
study by adding the internal reference price factor.
In sum, the finding of this study provided strong evidence for the
implementation of IRP in retailing management. IRP is a relevant factor
influencing consumer's price perception with or without the
presence of ERP. Moreover, the classic Lichtenstein et al. (1993)'s
model will become better and stronger in analyzing and predicting
consumer's price perception if IRP is added.
Some limitations in our research were that we only examined a
tangible consumer good that is bought infrequently, namely a CD player,
our measure of internal reference price only showed moderate reliability
([alpha] = .66), and our respondent sample, although representative of
the target market for CD players, was not very generalizable to a
broader population. Future research should test the expanded price
perception model in other specific purchase contexts, such as service
purchases or frequent convenience goods purchases. We also content that
additional factors relevant to price perceptions be added to our
already-expanded price perception model in order to examine potential
mediational or moderated relationships between price constructs and
internal reference price with overall price perception. Furthermore,
these models should also be tested with consumers from other countries,
rather than just examining American consumers in order to increase the
generalizability of our proposed model.
Alexis, Gerhard T., "A Discipline for Deacons", American
Notes & Queries, Vol. 7 (December), 1968, 5455.
Berkowitz, Eric N. and Walton, John R., "Contextual Influences
on Consumer Price Responses: An Experimental Analysis", Journal of
Marketing Research, Vol. 17 (August), 1980, 349-358.
Bettman, James R., "Information Processing Models of Consumer
Behavior," Journal of Marketing Research, Vol. 7 (August), 1970,
Biswas, Abhijit and Sherrell, Daniel L., "The Influence of
Product Knowledge and Brand Name on Internal Price Standards and
Confidence," Psychology & Marketing, Vol. 10 (Jan/Feb), 1993,
Chandrashekaran, Rajesh and Harsharanjeet, Jagpal, "Is There A
Weil-Defined Internal Reference Price?" Advances in Consumer
Research, Vol. 22 (1), 1995, 230-235.
Chang, Tung-Zong and Wildt, Albert R., "Impact of Product
Information on the Use of Price as a Quality Cue", Psychology &
Marketing, Vol. 13 (January), 1996, 55-75.
Cotton, B.C. and Babb, Emerson M., "Consumer Response to
Promotional Deals", Journal of Marketing, Vol. 42 (July), 1978,
-- and Chapman, Joseph D., "Framing Effects on Buyers'
Subjective Product Evaluations", in Advances in Consumer Research,
Vol. 14, Melanie Wallendorf and Paul Anderson, eds. Provo, UT:
Association for Consumer Research, 1987, 193-197.
Dodds, William B., Monroe, Kent B., and Grewal, Dhruv,
"Effects of Price, Brand, and Store Information on Buyers'
Product Evaluations", Journal of Marketing Research, Vol. 28, 1991,
Emery, Fred E., "Some Psychological Aspects of Price", in
Pricing Strategy, Bernard Taylor and G. Willis, Princeton, NJ: Brandon
System, 1970, 89-97.
Erickson, Gary M. and Johansson, Johny K., "The Role of Price
in Multi-Attribute Product Evaluations", Journal of Consumer
Research, Vol. 12 (September), 1985, 195-199.
Grewal, Dhruv, Monroe, Kent B., and Krishnan, R., "The Effects
of Price-Comparison Advertising on Buyers' Perceptions of
Acquisition Value, Transaction Value, and Behavioral Intentions",
Journal of marketing, Vol. 62 (2), 1998, 47-59.
Helgeson, Jame G. and Beatty. Sharon E., "Price Expectation
and Recall Error: An Empirical Study", Journal of Consumer
Research, Vol. 14 (3), 1987, 379-386.
Janiszewski, Lichtenstein, Chris and Donald R., "A Range
Theory Account of Price Perception", Journal of Consumer Research,
Vol. 25 (March), 1999, 353-368.
Jacobson, Robert and Obermiller, Carl, "The formation of
expected future price: A reference price for forward-looking
consumers", Journal of Consumer Research, Vol. 16 (March), 1990,
Kalwani, Manohar U., Yim, Chi Kin, Rinne, Heikki J., and Sujita,
Yoshi, "A Price Expectation Model of Consumer Brand Choice",
Journal of Marketing Research, Vol. 27 (August), 1990, 251-262.
Kalyanaram, Gurumurthy and Little, John D.C., "An Empirical
Analysis of Latitude of Price Acceptance in Consumer Packaged
Goods", Journal of Consumer Research, Vol. 21 (December), 1994,
Karni, Michael R. and Darby, Edi., "Free Competition and the
Optimal Amount of Fraud", Journal of Law & Economics, Vol. 16
(April), 1973, 67-88.
Lichtenstein, Donald R., Bloch, Peter H., and Black, William C.,
"Correlates of Price Acceptability", Journal of Consumer
Research, Vol. 15 (September), 1988, 243-52.
-- and Burton, Scot (1989), "The Relationship Between
Perceived and Objective Price-Quality", Journal of Marketing
Research, Vol. 26 (November), 429-443.
--, Netemeyer, Richard G., and Burton, Scot "Distinguishing
Coupon Proneness from Value Consciousness: An Acquisition-Transaction
Utility Theory Perspective", Journal of Marketing, Vol. 54 (July),
--, Ridgway, Nancy M., and Netemeyer, Richard G., "Price
Perceptions and Consumer Shopping Behavior: A Field Study", Journal
of Marketing Research, Vol. 30 (2), 1993, 234-245.
Martins, Marielza and Monroe, Kent B., "Perceived Price
Fairness: A New Look at an Old Construct", Advances in Consumer
Research, Vol. 21, 1994, 75-78.
Mayhew, Glen E. and Winer, Russell S., "An empirical Analysis
of Internal and External Reference Price Using Scanner Data",
Journal of Consumer Research, Vol. 19 (June), 1992, 62-70.
Monroe, Kent B., "Buyers Subjective Perceptions of
Price", Journal of Marketing Research, Vol. 10 (February), 1973,
--, Pricing: Making Profitable Decision, New York: McGraw-Hill Book
-- and Petroshius, Susan M., "Buyers' Perceptions of
Price: An Update of the Evidence", in Perspectives in Consumer
Behavior, H. Kassarjian and T. S. Robertson, eds., Glenview, IL: Scott,
Foresman and Company, 1981, 43-55.
Rajendran, K. N. and Tellis, Gerard J., "Contextual and
Temporal Components of Reference Price", Journal of Marketing, Vol.
58 (January), 1994, 22-34.
Schnaars, Steven P., "Forecasting, Planning and Strategy for
the 21st Century (Book)", International Journal of Forecasting,
Vol. 7 (May), 1991, 105-116.
Tellis, Gerard J. and Gaeth, Gary J., "Best Value,
Price-Seeking, and Price Aversion: The Impact of Information and
Learning on Consumer Choices", Journal of Marketing, Vol. 54
(April), 1990, 34-45.
Thaler, Richard, "Mental Accounting and Consumer Choice",
Marketing Science, Vol. 4 (Summer), 1985, 199-214.
Urbany, Joel E.; Bearden, William O. and Weilbaker, Dan C.,
"The Effect of Plausible and Exaggerated Reference Prices on
Consumer Perceptions and Price Search", Journal of Consumer
Research, Vol. 15 (1), 1988, 95-110.
-- and Dickson, Peter R., "Consumer Normal Price Estimation:
Market versus Personal Standards", Journal of Consumer Research,
Vol. 18 (June), 1991, 45-51.
Winer, Russell S., "A Reference Price Model of Brand Choice
for Frequently Purchased Products", Journal of Consumer Research,
Vol. 13 (Spring), 1986, 250-256.
Zeithaml, Valarie A., "Issues in Conceptualizing and Measuring
Consumer Response to Price", in Advances in Consumer Research, Vol.
11, Thomas C. Kinnear, ed. Provo, UT: Association for Consumer Research,
--, "Consumer Perceptions of Price, Quality, and Value: A
Means-End Model and Synthesis of Evidence", Journal of Marketing,
Vol. 52 (July), 1988, 2-22.
Zhou, Zheng, and Nakamoto, Kent, "Price Perceptions: A
Cross-National Study between American and Chinese Young Consumers",
Advances in Consumer Research, Vol. 28, 2001, 161-168.
Dr. Juan (Gloria) Meng is an Assistant Professor of Marketing at
Minnesota State University, Mankato. She completed 12-year education in
China, earned her B.A. and M.A. degree in Japan, and received her Ph. D.
in Marketing from Southern Illinois University at Carbondale.
Dr. Suzanne A. Nasco is an Assistant Professor of Marketing at
Southern Illinois University. She received her Ph.D. in Social
Psychology from the University of Notre Dame and completed a
Postdoctoral research program in Marketing at the University of Florida.
Dr. Terry Clark is a Professor of Marketing and Department Chair at
Southern Illinois University. He received his Ph.D. in Marketing from
the Texas A&M University and has served on the faculty at the
University of Notre Dame and Emory University.
Juan (Gloria) Meng, Minnesota State University, Mankato, Minnesota,
Suzanne A. Nasco, Southern Illinois University, Carbondale,
Terry Clark, Southern Illinois University, Carbondale, Illinois,
APPENDIX: LABELS AND CONTENT
P1 I am very concerned about low prices, but I am equally concerned
about product quality.
P2 When grocery shopping, I compare the prices of different brands
to be sure I get the best value for the money.
P3 When purchasing a product, I always try to maximize the quality I
get for the money I spend.
P4 When I buy products, I like to be sure that I am getting my
P5 I generally shop around for lower prices on products, but they
still must meet certain quality requirements before I buy them.
P6 When I shop, I usually compare the "price per ounce' information
for brands I normally buy.
P7 I always check prices at the grocery store to be sure I get the
best value for the money I spend.
P8 I am not willing to pay extra effort to find lower prices.
P9 I will grocery shop at more than one store to take advantage of
P10 The money saved by finding low prices is usually not worth the
time and effort.
P11 I would never shop at more than one store to find low prices.
P12 The time it takes to find low prices is usually not worth the
P13 If a product is on sale, that can be a reason for me to buy it.
P14 When I buy a brand that's on sale, I feel that I am getting a
P15 I have favorite brands, but most of the time I buy the brand
that's on sale.
P16 One should try to buy the brand that's on sale.
P17 I am more likely to buy brands that are on sale.
P18 Compared to most people, I am more likely to buy brands that are
P19 Generally speaking, the higher the price of a product, the higher
P20 The old saying "you get what you pay for" is generally true.
P21 The price of a product is a good indicator of its quality.
P22 You always have to pay a bit more for the best.
P23 People notice when you buy the most expensive brand of a product.
P24 Buying a high prices brand makes me feel good about myself.
P25 Buying the most expensive brand of a product makes me feel
P26 I enjoy the prestige of buying a high priced brand.
P27 It says something to people when you buy the high priced version
of a product.
P28 Your friends will think you are cheap if you consistently buy the
lowest priced version of product.
P29 I have purchased the most expensive brand of a product just
because I knew other people would notice.
P30 I think others make judgments about me by the kinds of products
and brands I buy.
P31 Even for a relatively inexpensive product, I think that buying a
costly brand is impressive.
Internal Reference Price
S8 Compared to the average price of a CD player on the market, a CD
player made by Sony is
S9 Cpmpared to the average cost of electronic products, a CD player
made by Sony is
S10 Compared to the average cost of Japanese products, a CD player
made by Sony is
S12 Perceived worth of a Sony CD player is
S13 Price acceptability of a Sony CD player is
S14 Perceived saving of a Sony CD player is
S15 Value for the money of a Sony CD player is
TABLE 1: MEASUREMENT MODEL RESULTS
Factors Standardized S.E. t-value Reliability
P1 .50 .08 6.51
P2 .79 .07 11.74
P3 .62 .07 8.48
P4 .70 .07 9.92 .81
P5 .58 .07 7.86
P6 .49 .08 6.37
P7 .75 .07 10.76
P8 .52 .08 6.91
P9 .69 .07 9.75
P10 .77 .07 11.35 .84
P11 .64 .07 8.89
P12 .90 .06 14.33
P13 .45 .08 5.92
P14 .56 .07 7.56
P15 .72 .07 10.47 .83
P16 .70 .07 10.00
P17 .91 .06 14.77
P18 .73 .07 10.65
P19 .80 .07 11.58
P20 .66 .07 9.04 .82
P21 .81 .07 11.90
P22 .70 .07 9.68
P23 .43 .08 5.78
P24 .89 .06 14.56
P25 .91 .06 15.28
P26 .81 .06 12.70
P27 .65 .07 9.38 .87
P28 .46 .07 6.19
P29 .53 .07 7.19
P30 .44 .08 5.83
P31 .69 .07 10.06
S8 .68 .09 7.45
S9 .83 .10 8.57 .66
S10 .42 .08 4.90
S12 .90 .08 11.73
S13 .64 .08 8.23
S14 ** .78
S15 .66 .08 8.58
* All factor loadings are significant at .01 level
** Item deleted from the measurement model.
TABLE 2: SUMMARY OF HYPOTHESES TESTING RESULTS
H1: The higher the level of value consciousness, the
lower the level of rice perception. .21
H2: The higher the level of price consciousness, the
lower the level of rice perception. -.05
H3: The higher the level of sale proneness, the lower -.01
the level of rice perception.
H4: The higher the level of price-quality schema, the
higher the level of rice perception. .16
H5: The higher the level of prestige sensitivity, the
higher the level of rice perception. -.09
H6: The higher the level of internal reference price,
the lower the level of rice perception. -.21
Hypotheses t-Value Sig.
H1: The higher the level of value consciousness, the
lower the level of rice perception. 1.59 N
H2: The higher the level of price consciousness, the
lower the level of rice perception. -.44 N
H3: The higher the level of sale proneness, the lower -.13 N
the level of rice perception.
H4: The higher the level of price-quality schema, the
higher the level of rice perception. 1.51 N
H5: The higher the level of prestige sensitivity, the
higher the level of rice perception. -.96 N
H6: The higher the level of internal reference price,
the lower the level of rice perception. -2.16 Y