Abstract

This study examines the impact of transparent pricing on consumers’ perceptions of the brand and intentions to purchase its products. Our study also explores the moderating role of product price and country of origin on the effectiveness of price transparency. We collected a total of 210 responses, 191 responses were considered valid and were used in the study. The results of this study showed that when a company provides consumers with detailed price information for its products, consumers tend to perceive its products to be of higher quality. Transparent pricing can also help the company create a higher perceived value for its products and generate a more favorable brand attitude. The results also suggest that price transparency strategy is an effective way to generate a more favorable brand attitude, especially for high-end brands made in the US and for low-end brands not made in the US.

Highlights

  • Research Design and Methodology The experiment we conducted used a 2 x 2 x 2 fractional factorial design

  • The results of multivariate analysis of variance (MANOVA) suggest that there is a significant interaction between price transparency and Made in USA for perceived product quality

  • The subsequent analysis and simple effects tests indicate that with the detailed cost information provided for the product, consumers infer higher quality when the product is made in USA than not made in USA

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Summary

Introduction

Research Design and Methodology The experiment we conducted used a 2 x 2 x 2 fractional factorial design. Four scenarios were developed to manipulate three independent variables: transparent pricing, price, and Made in USA (see Table 1). The cost information (detailed cost information is not available or detailed cost information is available), product price ($68 or $204), and country of origin information (Not made in USA or Made in USA) was embedded in each ad along with a picture of the product. Participants who met eligibility criterion were recruited to complete an online survey through the MTurk platform.

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