• Industrial Engineering and Management Systems
• /
• v.12 no.2
• /
• pp.95-102
• /
• 2013

It is difficult to determine an appropriate discount price for daily perishable products to increase profit from a long-term standpoint. Even if the discount pricing is efficient to increase profit of the day, consumers memorize the sales price and they might hesitate to purchase the product at a regular price the following day. The authors discussed the inventory clearance pricing for a single period in our previous study by constructing a mathematical model to derive an optimal sales price to maximize the expected profit by considering the reference price effect of demand. This paper extends the discussion to handle the discount pricing for multiple periods. A mathematical analysis is first conducted to reveal the properties on an objective function, which is the present value of total expected profits for multiple periods. An algorithm is then proposed to derive an optimal price for asymmetric consumers. Numerical experiments investigate the characteristics of the objective function and optimal pricings.

• Culinary science and hospitality research
• /
• v.13 no.2
• /
• pp.123-135
• /
• 2007

This study intended to determine how price-ending types used for menu products affected consumers' price evaluation and value perception and such behavioral intentions as purchase intention and search intention. The collected data went through statistical processing, including frequency analysis, factor analysis, T-test and ANOVA using an $SPSS/PC^+$ 12.0 statistical package. The results can be summarized as follows: First, as for differences in internal reference price by ending, internal reference price was lower if menu ending was an odd number than it was an even number, which indicates that consumers tend to consider the price of the menu products to be lower if the ending of menu products is an odd number. Second, menu price-ending was found to have significant differences on consumers' purchase intention, search intention, and value perception. But the results of two-way ANOVA showed that price ending by restaurant types had no effect on consumers' search intention and restaurant type. This study suggested a desirable external reference price-ending type for menu products as one of sales promotion strategies to menu products planners and drew up a concrete plan to determine which price-ending type is useful by consumers' personal properties.

• Asia Marketing Journal
• /
• v.14 no.1
• /
• pp.53-81
• /
• 2012

Constructing attractive bundle offers depends on more than an understanding of the distribution of consumer preferences. Consumers are also sensitive to the framing of price information in a bundle offer. In classical economic theory, consumers' utility should not change as long as the total price paid stays same. However, even when total prices are identical, consumers' preferences toward a bundle product could be different depending on the format of price presentation and the locus of price discount. A weighted additive model predicts that the impact of a price discount on the overall evaluation of the bundle will be greater when the discount is assigned to the more important product in the bundle(Yadav 1995). Meanwhile, a reference dependent model asserts that it is better to assign a price discount to a tie-in component that has a negative valuation at its current offer price than to a focal product that has a positive valuation at its current offer price(Janiszewski and Cunha 2004). This paper has expanded previous research regarding price discount presentation format, investigating the reasons for mixed results of prior research and presenting new mechanisms for price discount framing effect. Prior research has hypothesized that bundling is used to sell a tie-in component with an offer price above the consumer's reference price plus a focal product of the same offer price with reference price(e.g., Janiszewski and Cunha 2004). However, this study suggests that bundling strategy can be used for increasing product's attractiveness through the synergy between components even when offer prices of bundle components are the same with reference prices. In this context, this study employed various realistic bundle sets with same price between offer price and reference price in the experiment. Hamilton and Srivastava(2008) demonstrated that when evaluating different partitions of the same total price, consumers prefer partitions in which the price of the high-benefit component is higher. This study determined that their mechanism can be applied to price discount presentation formats. This study hypothesized that price discount framing effect depends not on the negative perception of tie-in component with offer price above reference price but rather on the consumers' perceived consumption benefit in bundle product. This research also hypothesized that preference for low-benefit discount mechanism is that perceived consumption benefit reduces price sensitivity. Furthermore, this study investigated how consumers' concern for quality in a price discount--a factor not considered in previous research--influences price discount framing. Yadav(1995)'s experiment used only one magazine bundle of relatively low quality uncertainty and could not show the influence of perceived uncertainty of quality. This study assumed that as perceived uncertainty of quality increases, the price sensitivity mechanism for assigning the discount to low-benefit will increase. Further, this research investigated the moderating effect of uncertainty of quality in price discount framing. The results of the experiment showed that when evaluating different partitions of the same total price and the same amount of discounts, the partition that discounts in the price of low benefit component is preferred to the partition that decreases the price of high benefit component. This implies that price discount framing effect depends on the perceived consumption benefit. The results also demonstrated that consumers are more price sensitive to low benefit component and less price sensitive to high benefit component. Furthermore, the results showed that the influence of price discount presentation format on the evaluation of bundle product varies with the perceived uncertainty of quality in high consumption benefit. As perceived uncertainty of quality gradually increases, the preference for discounts in the price of low consumption benefit decreases. Besides, the results demonstrate that as perceived uncertainty of quality gradually increases, the effect of price sensitivity in consumption benefit also increases. This paper integrated prior research by using a new mechanism of perceived consumption benefit and moderating effect of perceived quality uncertainty, thus providing a clearer explanation for price discount framing effect.

• Journal of Global Scholars of Marketing Science
• /
• v.9
• /
• pp.47-75
• /
• 2002

The purpose of this study is to identify the effects of reference price, price rationale and price-quality inference of consumer on the evaluation of apparel quality. The experimental materials developed for this study were a set of stimulus and response sheet. The stimuli were six print ads, which was manipulated by reference price and price rationale for a jacket of national brand. This study used a 2(reference price: offer and non offer)$\times$3(price rationale: non offer, stock disposal, sales promotion) $\times$2(price-quality inference of consumer: high and low level) between-subjects experiment. Subjects were 371 female university students. The data were analyzed by factor analysis, ANOVA and t-test. The results were as follows. First, three apparel attributes were identified: sewing/fabrics and label by factor analysis. Second, the significant interaction effects of reference price, price rationale and price-quality inference of consumer were found on evaluating quality of sewing/fabrics and label of apparel. So, reference price effect differed to depending on type of price rationale and levels of price-quality inference. Third, the significant main effect of price-quality inference of consumer existed on evaluating construction quality of apparel.

• The Journal of the Korea Contents Association
• /
• v.8 no.9
• /
• pp.124-132
• /
• 2008

Price is an important marketing issue in current competitive environment characterized by various distribution channels such as economic circumstance and the Internet. Many companies, for their best profits, use a price discrimination strategy such as price discount that reinforces consumer's purchasing behavior and they employ advertising strategy by presenting reference price with information of price discount in advertisements. Accordingly, many research verifies the advertising effects of presented reference price in advertisements, this study tries to expand the existing study area which is limited on reference price of product by examining the its effects on service area. It also aims to verify the effects of reference price advertisements by the level of service reputation. For this experiment, a factorial design with service reputation and presented method of reference pricewas used. The result of this study is that attitude toward price and use intention on presented reference price in service advertisements are higher than not presented it. In the case of high service reputation, advertising effect on presented reference price in service advertisements are greater than presented price discount rates in service advertisements. And in the case of low service reputation, advertising effects can be much greater by just presented reference price in service advertisements. Therefore, in service advertisements, strategic views on presented methods of reference price by the level of service reputation are essentially needed.

• Journal of the Korean Society of Clothing and Textiles
• /
• v.40 no.1
• /
• pp.148-157
• /
• 2016

In this study, the notion of payment intention price was introduced and examined in relation with self-image congruence, clothing preference and two types of reference price: expected price and fair price. One hundred samples of female collegiate students participated in the group survey and responded to the instrument including variables of clothing image evaluation, clothing preference, reference price, payment intention price toward a one-piece dress as the stimulus, and ideal self-image perception. Descriptive statistics, correlations, and regressions were applied on data analysis. The results were as follow. Payment intention price was determined by clothing preference and fair price, and the explaining power of fair price was greater than clothing preference. One confirmatory path was observed that self-image congruence effects clothing preference, and then clothing preference effects payment intention price. The other confirmatory path was from expected price to fair price and fair price to payment intention price.

• Asia Marketing Journal
• /
• v.8 no.1
• /
• pp.1-17
• /
• 2006

A couple of previous studies have warned against the use of homogeneous choice models in assessing the effect of reference price since unaccounted for response heterogeneity may result in spurious reference price effects(Chang, Siddarth and Weinberg 1999; Bell and Lattin 2000). According to Meyer and Kahn(1991), not accounting for consideration set heterogeneity may also bias the effect parameters in the choice model. Therefore, failure to account for these two sources of bias, in fact, have cast doubt on the empirical support for reference price effects in general. In view of aforementioned potential sources of bias, the author investigates the robustness of loss aversion effect in the reference-dependent model after accounting for heterogeneity in response as well as consideration set. The proposed model defines individual household's consideration set based on the posterior distribution of preference obtained from the Empirical Bayes approach. In addition, the same posterior distribution is used to form household-specific reference prices. Response heterogeneity correction is carried out via the Latent Class approach. The proposed model outperforms the Reference-Dependent model that includes the reference price measure most often employed in the previous studies. This implies that as a way of simplifying decision task, consumers restrict their consideration set to a subset of available brands not only in making a brand choice but also in forming reference prices.

• The Research Journal of the Costume Culture
• /
• v.27 no.5
• /
• pp.524-537
• /
• 2019

The aim of this study was to explore the effect of combinations of diverse methods notifying price discounts (i.e., reference price, odd price, and discount rate signs) and the relationships among product attribute perception, discount perception, attitude toward product, and purchase intention of product. Experiments were conducted where 12 stimuli of different price discount information notifications regarding T-shirt advertisements were presented to 352 informants. The results showed that notification of each type of discount information increased discount perception, whereas no effect due to the size of letters used in the discount rate notification was found. As more price discount information notifications were used, discount perception tended to become stronger. The results of ANOVA analysis show that both product attribute perception and discount perception affected attitude toward the product. In addition, product purchase intention was determined by attitude toward the product as well as price discount perception. Based on these findings, marketers may want to use a combination of methods of price discount notifications in advertisements to deliver price discount information clearly to consumers. Confirmation of discount information using multiple cues would help consumers to notice and perceive price discount information provided by retailers more effectively. Discount information is crucial for increasing both purchase intention and favorable attitude, therefore, diverse strategies regarding discount information presentations should be developed, tested and applied in the real world of retailing.

• Journal of Global Scholars of Marketing Science
• /
• v.10
• /
• pp.91-110
• /
• 2002

The purpose of this research is as follows; First, the reference price ads are to investigate how the price cues and prior knowledge of service products have an effect on consumers' perception by the type of information. Second, this study suggests some marketing strategy guides to service marketing managers for price promotion strategy. To achieve these research goals, the hypothesis was established through reviewing the previous studies and the data collected from the experimental design. The experiment of this study was a 2$\times$2$\times$2 among the subject factorial design in which the factors were present in price cue presentation (presentation/non- presentation), the level of prior knowledge(high/low), and the type of information(positive/negative). The major findings of this research can be summarized as follows; First, there are some significant statistical differences in the consumers' perception value by level of price cues(hypothesis 1). Second, there are some significant statistical differences in the consumers' price-quality perception by level of price cues(hypothesis 2). Third, there are some significant statistical differences in the price-quality perception by the level of prior knowledge and the type of information(hypothesis 3).

• Korean Management Science Review
• /
• v.32 no.3
• /
• pp.55-70
• /
• 2015

The main objective of this study is to investigate the moderating roles of the competitor's pricing strategy and the degree of consumer's risk-aversion on perceived risk and perceived benefit in responding to price increases and package downsizing. Based on Prospect Theory, several prior researches find that consumers perceive increased price as more loss than package downsizing and perceive package downsizing as more benefit than increased price. We extend these behavioral economics approach using the reference effect of competitor's pricing strategy. We focus on consumer heterogeneity on risk-aversion, measure the degree of consumer's risk-aversion, and divide the consumers into two groups of high levels of risk-aversion vs. low levels of risk-aversion. We find that the firm's pricing strategies of both price increases and package downsizing do not significantly influence the perceived benefit for relatively low risk-aversion consumers. We find that when the firm reduce the package size, relatively high risk-aversion consumers perceived more benefit and had higher purchase intention compared to price increases. We also find that the competitor's pricing strategies do not significantly influence the consumer's response for relatively low risk-aversion consumers. For relatively high risk-aversion consumers, they perceived more loss when the firm has different pricing strategy from the competitor's.