Consumer price evaluation strategies: Internal references, external references, and price images in consumer price perception

Consumers have available to them several potential strategies they might use to evaluate a given price. Research suggests they might compare an observed price to internal reference prices (IRPs) drawn from memory. Alternatively, consumers might evaluate a price relative to external reference prices (ERPs) available in the immediate environment. Finally, a consumer might use the seller's price image (PI), the overall impression that consumers form of the price level of a store, as a heuristic to evaluate prices. This paper briefly reviews previous research on these three evaluation strategies, as well as work investigating how these strategies interact with each other. Building on previous work, these insights are organized into a framework for predicting the factors likely to influence consumers' use of each of these strategies. It is argued that the selection of a price evaluation strategy will be based on the relative accessibility and perceived diagnosticity of IRPs, ERPs, and PIs, as well as the consumers' motivations and type of judgment the consumers are making.