Answer to Question 1
d
Answer to Question 2
When we evaluate a product's price to determine whether we think the price being charged is fair, we compare the price to some reference, either an externally available price or an internally (mentally) stored price. Sometimes a product's price tag will offer this comparison to encourage the consumer to believe that the current price is a good deal, such as, MSRP is 49.99, now available for 35.99 Other external reference forms are popular during sales; e.g., Now 14.99, regularly priced at 35.00 Or some companies position themselves as having an EDLP (everyday low price) when they state, Our price 34.99, compare at 45.00 Whenever we refer to someone experiencing sticker shock, the idea is that the price on the sticker is much higher than the referent.
The reference price point can also be internal. The expectation regarding how much the product costs comes from a variety of sources, including the buyer's experience. For example, if the product being purchased is one that consumers buy a lot, they would be familiar with the product's typical price. Internal references can, of course, be faulty or not very relevant; e.g., how much you paid for your last car (even though that was 5 years ago, and it was an economy car vs. the luxury model you're now buying). Internal references can also be based on inferences, e.g., is the store an upscale one, leading us to believe that perhaps the prices of the store's service are a bit inflated? Or do the high prices imply high-quality brands?
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