Analysis of Sales Promotion Effects on Household Purchase Behavior

compared to a perceived benchmark – a reference price – and that comparison yields
consumer perceptions <strong>of</strong> saving. The general notion is that consumer judgments are made
relative to some base case. This notion is the foundation <strong>of</strong> prospect theory (Kahneman and
Tversky 1979). Prospect theory proposes that consumer decisions are based on how they
value the potential gains or losses. Applying prospect theory in the context <strong>of</strong> prices,
consumers would compare the observed point-<strong>of</strong>-purchase price with the reference price.
An unanticipated nonzero difference would affect purchase probabilities for brands, with
losses having greater effect on purchase probabilities than equally sized gains.
Kalwani and Yim (1992) empirically revealed that different price promotion
schedules have different impacts on brands’ expected prices. Mayhew and Winer (1992)
tested the hypotheses that both internal (prices stored in memory on the basis <strong>of</strong>
perceptions <strong>of</strong> actual, fair, or other price concepts) and external reference prices (provided
by observed stimuli in the purchase environment, i.e. shelf tags containing information
about the suggested retail price) will influence the probability <strong>of</strong> purchase.
2.3.3.3 Attitude Models
Attitude models specify the link between consumer beliefs and behavior (e.g., Fishbein and
Ajzen 1975). We mention just a small number <strong>of</strong> complex processes identified in these
attitude models. The consumer decision process (CDP) as described in these types <strong>of</strong>
models comprise <strong>of</strong> several interacting, complex processes taking place within the
consumer (therefore falling within the category <strong>of</strong> stimulus-organism-response models).
Although attitude models and economic utility arise from very different theoretical bases,
attitude models are <strong>of</strong>ten indistinguishable from economic utility theory (both assuming
rationality <strong>of</strong> consumer decision-making). One distinctive characteristic <strong>of</strong> attitude models,
however, is the explicit attention to views <strong>of</strong> relevant others. This is a factor generally
unrelated to the intrinsic utility <strong>of</strong> the product. A second philosophical difference between
attitude models and economic utility models is that in the former, price is considered to be
another attribute, no different from quality, reliability, or effectiveness, whereas in
economic models, price is given an explicit role in a budget constraint and seen as a critical
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