When a retailer puts a sign on a product that says "reduced" or a retailer points a sign on a product that says "compare to XXX at $10.00 more," the retailer is encouraging what kind of pricing psychology for its shoppers?
A) price leadership
B) psychological discounting
C) reference pricing
D) going-rate pricing
E) price cues

Question

When a retailer puts a sign on a product that says "reduced" or a retailer points a sign on a product that says "compare to XXX at $10.00 more," the retailer is encouraging what kind of pricing psychology for its shoppers?
A) price leadership
B) psychological discounting
C) reference pricing
D) going-rate pricing
E) price cues

Quizplus · Accepted Answer

The retailer is encouraging reference pricing, which is when the shopper compares the price of the product to a similar product or a suggested retail price. The use of the "reduced" or "compare to" sign is meant to create a reference point that the shopper can use to evaluate the price of the product.

When a Retailer Puts a Sign on a Product That