Please use this identifier to cite or link to this item: http://hdl.handle.net/1783.1/800

A model of consumer price inertia

Authors Ramaswami, Seshan
Issue Date 1994-04
Summary Price inertia is defined as the tendency on the part of price-sensitive consumers to restrict their purchases brands within an acceptable range. A model that utilizes this construct to predict brand choice with different measures of the acceptable price range is tested against a common implementation of the reference price construct. It is shown that the fit of the model of price inertia matches or improves that of reference price models for three product categories, and is more consistent with behavioral research about consumer search and memory for brand price information. Managerial implications for the measurement of effectiveness of price promotions, and market segmentation, and implications for behavioral and modeling research on price sensitivity, consideration sets and market structure analysis are discussed.
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Language English
Format Working paper
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