Question

One possible reason as to why consumers respond to sales is that by displaying a "high" regular price and a "low" sale price, sales provide consumers with a reference point to interpret the prices being offered. True False

Answer 1

True

Step-by-step explanation:

Experiments regarding consumer behavior have shown that consumers usually expect a product to have a certain price that serves as a reference price that they use to determine if a retailer's price is high (more expensive than the reference price) or low (cheaper than the reference price).

It is normal (but unethical) that some retailers increase their prices a little before starting a sales campaign, since a higher reference price will make consumers believe that the offer is even better.