Considerable theoretical justification for consumers' use of psycholog
ical reference points exists from the research literature, From a mana
gerial perspective, one of the most important applications of this con
cept is reference price, an internal standard against which observed p
rices are compared. In this paper, we propose three empirical generali
zations that are well-supported in the marketing literature. First, th
ere is ample evidence that consumers use reference prices in making br
and choices. Second, the empirical results on reference pricing also s
upport the generalization that consumers rely on past prices as part o
f the reference price formation process. Third, consistent with other
research on loss aversion, consumers have been found to be more sensit
ive to ''losses,'' i.e. observed prices higher than reference prices,
than ''gains.'' We also propose topics for further research on referen
ce prices.