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intention. To conclude, findings are expected to provide insights and guidance to the entrepreneurs on
the effect of reference price in order to enhance customer purchase intention.

Keywords: Reference price, Customer purchase intention

 1.0 INTRODUCTION

Price is one of the most flexible elements in the marketing mix (Kemmer & Boden, 2013) for
Restaurant Vegetarian S.I Jin Wei in selling their products to the final customers as well as retailers. It
is a charge that must be paid by the customer in order to receive a product or service. Addition to that,
price is one of the marketing variables which is the easiest part to change and copy by other
competitors. Customers will seek particular products or services to satisfy their needs and wants. Thus,
customers will judge the value based on how much they are willing to spend and the price they are
willing to pay to satisfy their needs and wants. Generally, customers are not willing to pay higher and
want to pay as little as possible. Before making a purchase decision, customers will set their own
price expectations towards certain products or services. Price expectations are always used as the
reference points to compare the price. It is human nature to compare, judge the value based on the
comparisons. Most of the customers will consider purchasing something if the price of the products or
services matched with their perceived value.
Reference pricing is one of the ways that framing a price can change customer perception of its
value. Reference price is defined as the amount or value expected by customers to pay against the
actual price of the product (Bruno, Hai & Dutta, 2012; Kopalle, Kannan, Boldt & Arora, 2012; Kumar
1998; Rajendran & Tellis 1994). There is an assumption that customers only rely on reference prices
instead of the absolute price of the products or services (Kopalle, Kannan, Boldt & Arora, 2012; Thaler,
1985). Sometimes, reference prices also can come from the subconscious level and even the price of
unrelated products in relation to affect customer perceived value towards the products and services.
Reference prices can come from the internal part as well as the external part (Mayhew & Winer, 1992)
A majority of researchers have assumed that internal reference price is based on memory for prices
encountered by customers on previous observations, stored in customers’ memory, recalled and
reevaluated as occasion demand. Past experiences come out with a reasonable expectation on how
much a product or service should cost. However, some customers may have little experience with
certain products, especially in services where intangibility and heterogeneity make it difficult for the
customer to judge the appropriate price. External reference price is formed at the point of purchase and
it doesn’t relate to customers’ past information in memory. External reference price can be influenced
by the choice of environment and its product category. Some consumers may be sensitive to the drivers
other than price, but it’s true that price is one of the major variables that might influence customers'
purchase decisions. This is because price information influences the perceived cost and perceived value
of the products or services (Abrate et al., 2019; Bornemann and Homburg, 2011). Normally, customers
will make their product choice by comparing the actual price of the product with the internal and
external reference price.

 1.1 PROBLEM STATEMENT

The World Health Organization (WHO) declared the outbreak of coronavirus disease 2019 (Covid-19)
as pandemic on March 11, 2020. Keep the pandemic under control and restrain the spread of the virus
becoming the top international priority (Huang et al., 2020; Paules, Marston, & Fauci, 2020; Wang,
Wang, et al., 2020). Covid-19 pandemic has changed our lives. Many countries around the world
adopted unprecedented enforcement to restrict the public and stop the community from spreading.
Today’s companies have to confront an overwhelming, competitive and challenging environment. In
response to the Covid-19 pandemic, the Malaysian government enforced a

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