ABSTRACT
A firm's reputation for pricing is known formally as its price image, defined as the impression that consumers form about the overall price level of a retailer or manufacturer. And research dating back at least as far as the 1960s has found that consumers are surprisingly inaccurate in their price image impressions. These inaccuracies are caused by two different sources of bias. The first source of bias is the way that people process price information. Research suggests that not all prices are equally important when forming a price image, and in particular, the prices that receive more attention, such as those of purchased items, will be more influential. The second source of bias that can cause consumers to form inaccurate price image impressions is the non-price information they incorporate into their impressions. From the moment customers walk into a store for the first time, they are bombarded with information that they can use to anticipate the store's prices.
