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The direct effects of price perception constructs and internal reference price on consumers's price perception.
Subject:
Pricing (Analysis)
Pricing (Influence)
Consumer behavior (Analysis)
Authors:
Meng, Juan "Gloria"
Nasco, Suzanne A.
Clark, Terry
Pub Date:
06/22/2008
Publication:
Name: European Journal of Management Publisher: International Academy of Business and Economics Audience: Academic Format: Magazine/Journal Subject: Business, international Copyright: COPYRIGHT 2008 International Academy of Business and Economics ISSN: 1555-4015
Issue:
Date: Summer, 2008 Source Volume: 8 Source Issue: 2
Topic:
Canadian Subject Form: Consumer behaviour Computer Subject: Product price
Product:
Product Code: 9914170 Pricing Policy; 9914412 Consumer Behavior
Geographic:
Geographic Scope: United States Geographic Code: 1USA United States

Accession Number:
182924508
Full Text:
ABSTRACT

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 reference price.

1. INTRODUCTION

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 country-of-origin effect.

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 perception

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 perception

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 Bergen, 1992).

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 price perception.

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 alone.

4. METHODOLOGY

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 agree."

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 "price perception."

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 questionnaire.

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 our data.

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 price perceptions.

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 price perceptions.

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.

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AUTHOR PROFILES:

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, USA

Suzanne A. Nasco, Southern Illinois University, Carbondale, Illinois, USA

Terry Clark, Southern Illinois University, Carbondale, Illinois, USA
APPENDIX: LABELS AND CONTENT

Value Consciousness

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
      money's worth.
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.

Price Consciousness

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
      low prices.
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
      effort.

Sale Proneness

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
      good deal.
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
      on special.

Price-Quality Schema

P19   Generally speaking, the higher the price of a product, the higher
      the quality.
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.

Prestige Sensitivity

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
      classy.
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

Price Perception

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
     Variables           Loading

Value Consciousness
         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
Price Consciousness
         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
   Sale Proneness
        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
Price-Quality Schema
        P19                .80        .07     11.58
        P20                .66        .07      9.04        .82
        P21                .81        .07     11.90
        P22                .70        .07      9.68
Prestige Sensitivity
        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
 Internal Reference
       Price
         S8                .68        .09      7.45
         S9                .83        .10      8.57        .66
        S10                .42        .08      4.90
  Price Perception
        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

                     Hypotheses                            Path
                                                        Coefficient

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

* p<.05
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