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Title: Reference dependence and loss aversion in brand consideration and choice
Authors: Han, Sangman
Vanhonacker, Wilfried R.
Keywords: Reference dependence
Loss aversion
Brand consideration
Brand choice
Issue Date: Nov-1999
Series/Report no.: Marketing Working Paper Series ; MKTG 99.147
Abstract: Using the brand last chosen as a reference point, we empirically investigate the role played by multiattribute reference points in the evaluations that underlie brand consideration and brand choice. The results establish that reference dependence effects are present in evaluations, but the nature of those effects differs by task (brand consideration versus brand choice) and by consumer. When considering brands, frequent buyers seek gains in quality while infrequent buyers focus on avoiding losses in quality (quality loss aversion). However, when it comes to actually choosing a brand, all buyers focus on avoiding losses in terms of price (price loss aversion). We discuss these results as a basis for market segmentation.
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