Dynamic Changes in Inbound Tourists’ Internal Reference Prices for Japanese Products:

This study examines how inbound touristsʼ internal reference prices for Japanese products are updated as their length of stay in Japan increases.To test the proposed hypotheses, an intercept survey was conducted at popular tourist destinations in Tokyo, targeting inbound tourists from China, South Korea, and Hong Kong.The survey included questions about internal reference prices for beer, soft drinks, and railway fares in Japan.By estimating a model incorporating an exponential convergence process using Markov chain Monte Carlo methods, empirical evidence was obtained supporting the following findings: (1) Inbound tourists' internal reference prices are updated from price levels on the basis of their home region standards toward price levels on the basis of Japanese standards as their length of stay increases, and (2) the updating speed in downward adjustment contexts, where product prices in the home country are higher than those in Japan, is faster than the updating speed in upward adjustment contexts, where product prices in the home country are lower than those in Japan.The findings of this study provide guidance for pricing strategies developed by marketers in local governments and businesses at tourist destinations targeting inbound tourists.