Gurumurthy Kalyanaram, NYIT , former professor and Dean, presents a short report on latitude of price acceptance and price range.
The reference price range, also known as latitude of price acceptance, denotes one spread measure around the reference price. The width of the latitude of price acceptance depends on the three main factors – acceptable price level, purchase frequency and brand loyalty (Gurumurthy Kalyanaram & Little, 1994). Lichtenstein, Bloch, and Black (1988) found that reference price level and knowledge about prices significantly affect the latitude of acceptance. They suggest that higher reference price leads to wider latitude of acceptance. Consumers with greater knowledge of price distributions of the brands are more likely to observe deviations from their reference prices, thus leading to narrow latitude of price acceptance. Similarly, Rao and Sieben (1992) found that moderately knowledgeable consumers display wider latitude of price acceptance than more knowledgeable consumers.
The reference price range, also known as latitude of price acceptance, denotes one spread measure around the reference price. The width of the latitude of price acceptance depends on the three main factors – acceptable price level, purchase frequency and brand loyalty (Gurumurthy Kalyanaram & Little, 1994). Lichtenstein, Bloch, and Black (1988) found that reference price level and knowledge about prices significantly affect the latitude of acceptance. They suggest that higher reference price leads to wider latitude of acceptance. Consumers with greater knowledge of price distributions of the brands are more likely to observe deviations from their reference prices, thus leading to narrow latitude of price acceptance. Similarly, Rao and Sieben (1992) found that moderately knowledgeable consumers display wider latitude of price acceptance than more knowledgeable consumers.
