Impact of Reference Prices on Product Positioning and Profits

• 成果类型: Article
• 署名作者: Mehra, Amit; Sajeesh, Sajeesh; Voleti, Sudhir
• 署名单位: University of Texas System; University of Texas Dallas; University of Nebraska System; University of Nebraska Lincoln; Indian School of Business (ISB)
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/poms.13144
• 发表日期: 2020
• 页码: 882-892
• 关键词: transaction utility; reference prices; hotelling models; product positioning

摘要

The existence of reference price effects in consumer decision making is well documented in prior research, but few studies focus on its implications for firms' strategic behavior. Using a competitive model, we address this gap by examining how firms' product positioning and pricing strategies in a non-durable goods market (where consumers repeatedly purchase products from the category) are affected compared with a benchmark situation in which reference price effects are not pertinent. In a model with internal reference price effects, we find that as the salience of reference price effect increases, (a) product differentiation first decreases and then increases; and (b) firm profits first decrease and then increase. Using data from Information Resources, Inc. (IRI) dataset, we empirically validate our findings. We contribute to the product positioning literature by uncovering the role of internal reference price effects on product positioning and profits.