The Influence Of History Price Graph-External Reference Price-on Consumers’ Purchase Intention

The growing number of people have experienced online shopping, especially young consumers who perhaps have rich online shopping experience. Comparison online websites are designed for comparing various prices of the same brand product provided by different retailers. With the help of the comparison online websites, consumers can easily get the price distribution of one product then select the most attractive retailers. Moreover, the comparison online websites provide history price graphs which exhibit everyday’s price of the target product. Consumers can know the lowest price, the highest price and every price change from the history price graph. Therefore, the online retailers should be careful to change price since consumers who are sensitive to price know all the price information. The purpose of this research is to explore the influence of history price graphs on consumers’purchase intention. According to planned behavior theory, purchase intention directly affects purchase behavior, so exploring the change of purchase intention has important guiding implication to understand purchase behavior.Prior literature demonstrates that consumers form internal reference price of a product based on the prior shopping experience and current shopping context. Consumers compare the current price with the internal reference price in order to judge the price. Dickson and sawyer (1990) find out that prices encountered beyond two or three prior shopping occasions have negligible influence on internal reference price. That is, the influence of prior purchase experience on internal reference price has recency effect. Range-frequency theory indicates that consumers have acceptable price range and frequency distribution of prices to the products. If the offer price is in the acceptable price range, consumers can accept it easily. The more frequently the price appears, the more easily the consumers can accept it. Thus, this paper focuses on whether the influence of history price graphs on consumers’ purchase intention is as the same logic as in the offline purchase context.The lowest and highest price in the history price graphs is similar with the price range from the logic perspective, and the duration of the price is similar with the frequency. If range-frequency theory is applicable to history price graphs, the price range and duration should affect consumers’ purchase intention. Then we propose hypothesis 1 and 2. Hypothesis 3 is a corollary based on hypothesis land 2. The contribution of this study is to extend the application scope of range-frequency theory. In addition, this paper divides price increase and price decrease to investigate the effect of history price graphs because consumers are more sensitive to price increase than price decrease according to asymmetric reference price effect.This study does the experiment in order to test hypothesis. ANOVA analysis finds out that the duration has no effect to consumers’purchase intention and that consumers are more sensitive to price decrease, compared with price increase. The price duration doesn’t influence consumers’ purchase intention since it does not directly influence the traits of the products. Moreover, because consumers are not interesting to the products in the experiment, the original purchase intention is low. The negative effect of price increase can’t be significant since consumers don’t care about the products, while the large price decease can promote the purchase since the original purchase intention is negative. The large price decrease not only can promote purchase in the short term, but also can positively affect purchase in the long run since the duration doesn’t affect purchase intention. So it is more sensible that online retailers devise a large price decrease than several small price decreases. In summary, range-frequency theory is not applicable to explain the effect of history price graphs. Future research can explore some mediators, such as product attitude, considering the duration and loss aversion effect separately when the product attitude is high or low.