The effects of buyer identification and purchase timing on consumers’ perceptions of trust, price fairness, and repurchase intentions

Abstract

The ease of use and commercial feasibility of Internet-enabled technologies for price segmentation have found increased managerial applications as well as a concurrent rise in questions about fairness and legality. We examine the role of two price segmentation tactics and assess their effects on consumer perceptions of trust, fairness of the price differences, and repurchase intentions using two studies. We find that consumers report lower levels of trust, price fairness, and repurchase intentions when Internet-enabled buyer identification techniques are used (as compared to purchase timing tactics) to segment consumer markets. Our experimental results also suggest that the difference between these two tactics is more pronounced when firms do not provide an explanation for the price differences. The results also indicate that the size of the price difference has a significant effect on trust, fairness, and willingness to buy.