The implications of individual differences in reference price utilization for designing effective price communications

This paper examines how consumers' involvement with a product category affe cts the process by which they utilize multiple internal references to evalu ate a retail price offering. Two alternative processes (unitized and non-un itized) suggested in earlier research are examined. Results indicate that t he process of reference price utilization is not affected by involvement. H owever, the number and types of internal reference prices (IRPs) used to de termine the value of an offer are strongly affected by consumers' levels of involvement with the product category. These findings suggest that manager s must pay close attention to individual differences in reference price uti lization when designing price communication strategies, and emphasizes the need for market segmentation based on reference price utilization. The opti mal price communication strategy depends on which reference prices are used to determine offer-value, and is affected by consumers' levels of involvem ent with the product category. (C) 2001 Elsevier Science Inc. All rights re served.