Interaction effects of different price claims and contextual factors on consumers' reference price adaptation after exposure to a price promotion

• Consumers adapt their reference prices (RP) after exposure to a price promotion.
• Amount-off: stronger effect of initial RP on adapted RP with increasing exposure.
• Percentage-off: stronger effect of reduced price on adapted RP with increasing exposure.

This paper examines the effects of price claims on consumers' reference price (RP) adaptation for specific saving formats and after repeated exposure to a price promotion. The reduced (initial reference) price has stronger (weaker) effects with more exposures in the case of the percentage-off format. The initial reference (the reduced) price has stronger (weaker) effects with more exposures in the case of the amount-off format. The findings provide insights to retailers as to how they can avoid strong RP reductions subsequent to a price promotion. The theoretical contribution consists of presenting a new model that goes beyond previous studies that have focused on the direct effects.