How Consumers’ Make Purchase Decisions with the Use of Reference Points

Abstract

How consumers form their preferences has been triggered the notion of scientists as many internal and external influencing variables interact jointly during the decision-making process. One such influence variable is the use of consumer referents or reference points. Till today, the examination of reference hasn’t been examined thoroughly from the domain of consumer decision-making process, as in the literature; there is a lack of research to examine the use of reference points in a wider variety of attributes, targeted to specific decision-making sequences. As such, the current research introduces a new approach on trying to examine the effects of reference points (RPs) on consumer buying decision process that rely on three time frame dimensions, ex-ante, ex-interium and ex-post. Most prior research on reference points from a consumer perspective has focused on the effects of possible prospects following the principles of what is called in the scientific community “prospect theory” or “mental accounting theory”.The methodology that has been adopted is a case study analysis following the principles of Bayesian analysis that tries to bring out the effects of reference points in the consumer purchasing decision process. The results indicate that consumer’ preferences of reference points are determined and structured during the whole buying decision process and can be altered according to potential signals and biased ways. These implications lead us to examine the laddering of RPs beyond the physical or tangible attributes. Knowledge of the consumers’ assessment, about the use of the triangle framework of reference points, could be effectively used by different policy makers, in order to promote and guide consumers in a more efficient way. Therefore, several future avenues for casual modeling practice have opened. Keywords: Reference Points, prospect theory, cognition, Bayesian Analysis DOI: 10.7176/JMCR/68-05 Publication date: May 31 st 2020