The impact of consumer expectations and familiarity on deceptive pricing in advertising: a view from drip pricing practice

Abstract

Drip pricing practice, which involves promoting a seemingly low initial price and then introducing add-on price components without upfront disclosures, is commonly seen as a deceptive advertising practice that can lead to negative associations. Here, we provide an alternative perspective by investigating that whether consumers form positive or negative opinions about drip pricing depends on their expectation of encountering it and their overall familiarity with this practice. That is, this research reveals that when consumers’ general familiarity with drip pricing is low, higher expectations of drip pricing create greater perceptions of price fairness and purchase intentions. Moreover, our findings indicate that higher consumer expectations of drip pricing lead to positive attributions and evaluations of the detailed pricing information, resulting in higher perceptions of price fairness, which, in turn, increases purchase intentions. Further, we show that when consumers have high expectations of encountering drip pricing, they evaluate ­pricing information more positively and deception less harshly, resulting in greater purchase intentions than when they do not expect it.