Adjacent Price Anchoring and Consumer’s Willingness to Pay: A Bayesian Approach

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dc.contributor.author Adhikari, Atanu
dc.date.accessioned 2017-05-19T06:20:54Z
dc.date.available 2017-05-19T06:20:54Z
dc.date.issued 2016-12
dc.identifier.citation Associate Professor of Marketing Management Area, IIM Kozhikode en_US
dc.identifier.uri http://hdl.handle.net/2259/937
dc.description.abstract Considerable research on consumers' use of psychological reference points exists in pricing literature. Researchers examining brand choice have reasoned that reference point is based on past prices of the brand. We argue that consumers’ reference prices is motivated by the adjacent price of the product at point of display rather than any other reference prices in the context. This research studies the effect of adjacent price on consumers’ willingness to pay and purchase intention. This research considers consumer level heterogeneity since price sensitivity and consumers’ willingness to pay vary among individual. Hierarchical Bayes methodology is used to incorporate heterogeneity. This study shows significant difference in consumers’ willingness to pay when a medium priced brand is placed adjacent to a high priced brand as against adjacent to a moderately priced brand. en_US
dc.description.abstract Considerable research on consumers' use of psychological reference points exists in pricing literature. Researchers examining brand choice have reasoned that reference point is based on past prices of the brand. We argue that consumers’ reference prices is motivated by the adjacent price of the product at point of display rather than any other reference prices in the context. This research studies the effect of adjacent price on consumers’ willingness to pay and purchase intention. This research considers consumer level heterogeneity since price sensitivity and consumers’ willingness to pay vary among individual. Hierarchical Bayes methodology is used to incorporate heterogeneity. This study shows significant difference in consumers’ willingness to pay when a medium priced brand is placed adjacent to a high priced brand as against adjacent to a moderately priced brand. en_US
dc.language.iso en en_US
dc.publisher Indian Institute of Management en_US
dc.relation.ispartofseries ;IIMK/WPS/215/MM/2016/27
dc.subject Brand-choice decision en_US
dc.subject Willingness to pay en_US
dc.subject internal reference price en_US
dc.subject Consumer heterogeneity en_US
dc.subject Hierarchical Bayes en_US
dc.subject Hierarchical Bayes en_US
dc.title Adjacent Price Anchoring and Consumer’s Willingness to Pay: A Bayesian Approach en_US
dc.type Working Paper en_US


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  • 2016 [9]
    Working Papers Published in the year 2016

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