EMPIRICAL GENERALIZATIONS FROM REFERENCE PRICE RESEARCH

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.