Advertised reference prices in an Internet environment: Effects on consumer price perceptions and channel search intentions

Abstract

This research examines the effects of inclusion of a reference price in an Internet advertisement on consumer price perceptions and price-search intentions both (1) on the Internet and (2) in brick-and-mortar retail channels. Proposed differences between Internet sites and brick-and-mortar channels are examined across three studies using different methodologies: (1) a survey administered in a classroom setting, (2) an Internet survey, and (3) a mail panel survey. Findings show that both price perceptions and price-search intentions differ for the Internet and brick-and-mortar retail channels. There is mixed evidence for the prediction that the reference price impact on price perceptions for the brick-and-mortar retailer is attenuated for the Internet channel. Finally, respondents with Internet access had different price perceptions and price-search intentions than those without access.