Reference Pricing Patterns in Grocery Retailing

Price plays a very important role in any consumer buying decision process. One of the attempts to explain the consumer behavior vis-à-vis pricing involves the idea of reference pricing. It is very common to find practices of external reference pricing or advertised reference pricing by the grocery retailers. The paper attempts to offer a framework to understand possible patterns in reference and offer prices. It also proposes a framework to understand possible consumer response arising out of pricing patterns created by the practice of reference pricing. The paper also proposes a metrics to measure consumers' expectations of possible price change pattern in the future on the basis of past pricing points. The paper also attempts to provide practitioners a way of thinking and practicing reference pricing in a more effective manner