The moderating effect of temporal distance on partitioned vs combined pricing

Abstract

PurposeThis paper aims to explore how temporal distance influences the evaluation of partitioned pricing.Design/methodology/approachThe effect of temporal distance on the effectiveness of partitioned pricing is tested using data collected through experiments in the USA.FindingsStudy 1 reveals that people perceive partitioned pricing as more attractive than combined pricing, but only for a distant event. Study 2 reveals that individuals predisposed to global information processing perceive partitioned pricing as more attractive than combined pricing. However, for individuals who commonly engage in local processing, combined pricing was equally attractive as partitioned pricing. In Study 3, the authors examine a boundary condition and find that the joint effect of temporal distance and partitioned pricing is attenuated when the purchase is made for a gift in which consumers are assumed to pay less attention to a surcharge. In Study 4, the authors examine how partitioned pricing influences a consumer’s choice in terms of temporal distance.Practical implicationsThe findings provide practical guidelines to business leaders looking for practical guidelines for pricing policy decisions.Originality/valuePrevious research shows that partitioned pricing is more effective in increasing consumers’ purchase intention and demand than combined pricing. In the present research, the authors introduce temporal distance as an important moderator that affects the effectiveness of partitioned pricing.