Reference price effect on consumer choice in online and traditional supermarkets: An application of discrete choice model on home scan data

Reference price effect on consumer choices is an acknowledged phenomenon in marketing literature. Several studies have explored this issue using both observational studies and choice experiments. Furthermore, evidence exists on different consumer behaviour when shopping in traditional stores and online. Hence, question arises on whether and how consumers take into account reference price when shopping online. This study aims to analyze and compare consumer behaviour in online stores and traditional stores. A definition of reference price based on past prices is adopted and a discrete choice model is proposed, which includes gain and losses as additional product attributes, with individual-specific coefficients. The model is applied on observed cola purchases (home scan data) in traditional supermarkets and in an online store. Results indicate that loss aversion does play a role in online choices, but the effect is smaller if compared to choices in traditional stores.