"Reference price: Perception of price as high, medium (fair priced) or low: The reference price is defined as a base price that a consumer uses to compare against another price. Reference prices may be internal and external. Internal reference prices are prices that are internal to the consumer, stored in his memory and retrieved from the memory bank, when required. For example, a lady bought sugar in July at the rate of Rs. 30 per kg. When she goes to buy sugar again after two months in the month of September, the shopkeeper asks her for Rs. 36 per kg. Her immediate reaction would be to comment that sugar has become expensive; this comment that she makes would be based on information retrieved from her memory bank and would be referred to as the internal reference price. External reference prices are used by the advertiser who communicates with the customer by mentioning that the product is sold elsewhere at a much higher price, than what it is being by this product brand or by this store brand. In other words, it is denoted as being sold at a higher rate in other places (like for example, “sold at other places as…..,we sell much lower at 20% discount). This communication is persuasive in nature to influence the consumer that the offer is a good buy and that the deal is a good one. Prices are also perceived as high, medium or low. When studied in terms of internal and external, as well as high, medium or low, price is defined as plausible low, plausible high, and implausible high. When prices fall well within the range of market prices, they are referred to as plausibly low; when prices are such that are near the outer limits of the range, but within reasonable limits, within believability, they are referred to as plausibly high; and when, prices are such that they lie much above the realm of reasonableness, and the consumer's perceived range of acceptability, they are referred to as implausibly high. As long as the marketer’s advertised price falls within a consumer’s acceptable range, i.e. it is plausibly low or plausibly high, it would be assimilated; else, it would be contrasted and negated and would not qualify as a reference point. Source: http://in.docsity.com/en-docs/Consumer_Needs_and_Involvment_-_Consumer_Behavior_-_Solved_Quiz_"
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