The Impact of Innovative Product Reference Price on the Distribution of Consumers' Willingness to Pay

It is well accepted in the behavioral pricing literature that consumer's willingness to pay is influenced by the reference price in the mind of the consumer. However, the innovative product always has the distinct characters compared with the same kind of products already existing in the market. The price of these products will influence the willingness to pay of the innovative product, which could be regard as the anchoring point and the consumer will adjust from this point and form their willingness to pay of the innovative product. The different anchoring points consumers adopt and different adjustment range cause the divergency of the distribution of consumers' willingness to pay. The degree of convergency of the distribution of WTP is not only influenced by the digital format of reference price, and it lies on the similarity between innovative product and the same kind of precuts existing on the market.