This article discusses a model that demonstrates the role of reference prices and how consumers use this information to inform and guide their purchase decisions.
There is a direct relationship between these concepts, as internal reference prices are formed through continual exposure to external reference prices.
Reference prices are an important concept in marketing. Reference prices are the expected and acceptable price range that a consumer will pay for a particular product and/or brand. If a product is priced well above or well below the expected price range, then the consumer is unlikely to see value in the product and is unlikely to purchase
Internal reference prices are a handy heuristics tool for consumers to allow them to make fast decisions, whereas external reference prices are more important in high involvement purchases.
A reference price is the expected and acceptable price range that a consumer is willing to pay for a particular product and/or brand. There are two types of reference prices that marketers need to be aware of. These are: internal reference prices and external reference prices.
Need help with your ATAR forecast for your new product launch? Let’s dig into the details of prices, margins, costs, and purchase volume and frequency.
The ATAR forecasting model is designed for marketing purposes. So let’s explore the key advantages and benefits of using this forecasting model for new products and marketing.
The ATAR forecasting model is generally used to help marketers forecast sales volumes, sales revenue and profit contribution, primarily for new products, but it can be used for any marketing campaign or project.
Price premium refers to the brand’s price to the consumer relative to a key competitors price or relative to the average price charged in the marketplace. There are two ways to calculate price premium, depending upon whether or not we have access to market share information.