A Closer look at reference price: A commentary

In their historical overview of behavioral pricing research, Cheng and Monroe (2013) advanced five principles related to the concept of reference price: 1) there is a latitude of price indifference around a fuzzy reference price; 2) consumers may have a specific reference price for each product, sold at a particular channel, at a particular time or season, displayed amidst a particular array of other products; 3) the encounter of a new price results in the reference price shifting in the direction of the new price, resulting in an assimilation effect; 4) consumers are differentially sensitive to a price increase versus price decrease; 5) the sequential order and the distribution of prices have different effects on the reference price. This commentary highlights some of the interesting aspects of these concepts and discusses potential avenues for future research.