Marketing Letters

, Volume 6, Issue 2, pp 111–122 | Cite as

Loyalty differences in the use of internal and external reference prices

  • Tridib Mazumdar
  • Purushottam Papatla
Article

Abstract

Recent findings in reference price research suggest that consumer characteristics may affect whether they use an internal reference price (IPR) or an external reference price (ERP) in price judgments. In this paper, we investigate the role of one such characteristic, brand loyalty, in the use of either type of reference price. Specifically, we employ a latent class-type approach to divide consumers on the basis of their brand loyalty into an ERP and an IRP segment. Analysis of the margarine and liquid detergents categories shows that consumers who are highly loyal to a brand are likely to use external reference prices whereas less brand-loyal consumers rely on internal reference prices. We discuss the implications of this finding and suggest directions for future research.

Key words

Internal reference price external reference price brand loyalty segmentation 

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Copyright information

© Kluwer Academic Publishers 1995

Authors and Affiliations

  • Tridib Mazumdar
    • 1
  • Purushottam Papatla
    • 2
  1. 1.Department of Marketing, Crouse-Hinds School of ManagementSyracuse UniversitySyracuse
  2. 2.Department of Marketing, School of Business AdministrationUniversity of Wisconsin-MilwaukeeMilwaukee

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