Perceived Price Fairness Research Articles

How do consumers react to price reduction of innovative products? An empirical investigation of price fairness perceptions of past purchase

This study focuses on consumers’ price fairness perception of past purchase (PFPoPP) in situations of price reduction of innovative consumer durables. The proposed model of the study includes perceived firm innovativeness (PFI), perceived loss of uniqueness (PLU) and customer justification for price reduction (CJ) as antecedents to PFPoPP and, brand loyalty (BL) and positive word of mouth (PWoM) as outcomes. A survey was conducted among 202 consumers who own a smartphone and the data were analysed using partial least squares structural equations modelling (PLS-SEM). The findings suggest that PFI and CJ positively associate with PFPoPP and PLU negatively associates with PFPoPP. Furthermore, the findings also suggest that PFPoPP positively associates with BL and PWoM. The study contributes to the price fairness perceptions research from a post-purchase perspective and implies that the firms in innovative consumer durable industry need to identify appropriate conditions for price reduction.

Price reduction strategy

PurposeThe purpose of this paper is to address consumers’ post-purchase perceptions toward the brand when it adopts price reduction strategy. The study specifically conceptualizes the effect of consumers’ price unfairness perceptions of past purchase (PUPoPP) on customer-based brand equity (CBBE) with a moderating effects of elapsed time since purchase (ETSP) and magnitude of price reduction (MPR) in situations where consumers were aware of the reduction in price of the product that they had purchased earlier.Design/methodology/approachA survey was conducted among consumers who were aware of the reduction in the price of the computer laptop which they had purchased earlier. A sample size of 214 respondents was utilized for the study. The hypotheses were tested by using partial least squares-structural equations modeling.FindingsThe results of the study show that there is a significant negative impact of PUPoPP on CBBE and the ETSP was found to enhance CBBE and also weaken the negative effect of PUPoPP on CBBE. Furthermore, the MPR was found to strengthen the negative effect of PUPoPP on CBBE.Originality/valueThe findings of this study are unique and contribute to both pricing and branding areas of research. While extant research in these areas has focused on price fairness perceptions in situations where the price of future purchase increases, particularly for frequently purchased non-durable goods, this study explored PUPoPP in situations where the firm reduces the price of a durable good such as a computer laptop.

It’s not all about money: the role of identity in perceived fairness of targeted promotions

PurposeThis paper aims to examine the effect of targeted promotions on perceptions of fairness from the perspective of consumers who are not targeted.Design/methodology/approachA scenario-based approach is used. Three studies manipulating promotion selectivity and various bases for promotion selection were conducted. A total of 403 people participated in the studies.FindingsResults showed that these consumers consider targeted promotions unfair, and the primary reason is centered more on damage to relational identity than the economics of reduced perceived value. The effect is moderated by how the targeted promotion is delivered (buyer-discovered vs seller-delivered) and different basis for selection.Practical implicationsAs companies adopting the practice of dynamic pricing such as targeted promotion, it is important to manage relationship with their consumers. Framing targeted promotions that reduce the salience of seller’s role and provide explanations that not attributed to buyer-seller relationship are important in reducing the potential damage of targeted promotion on relational identity.Originality/valueExisting research on perceptions of price fairness has focused on the role of perceived value. This research tested the relative effect of perceived value, relational identity and personal identity in the context of targeted promotion and identified relational identity as the major mechanism.

Antecedents of Perceived Value and Repurchase Intention of Organic Food

ABSTRACTThe rise of the natural and organic products market follows a global trend of increasing demand largely due to the growth of environmental awareness and the concern of having a healthier diet. Thus, the objective of this study is to propose and test a theoretical model based on antecedent constructs of perceived value and repurchase intention on the consumption of organic products. The results, based on 256 consumers of organic products, confirm the positive relationship between environmental awareness and perceived quality, healthy consumption, and perceived price fairness. Moreover, they underpin the influence of healthy consumption, perceived price fairness and perceived quality on perceived value, and lastly, the influence of perceived value on repurchase intention. Therefore, this study can help practitioners and consumers comprehend in a more systematic way the buying behaviour of this food category.

Impacts of product type and representation type on the perception of justice and price fairness

Consumers make purchasing decisions every day. This paper investigates perceptions of justice and price unfairness, where the product (hedonic vs. utilitarian) is presented either in a more abstract (verbal) or a more concrete (photo) way in a context of discriminatory pricing—a widely-employed marketing practice. Two experimental studies were completed. Results show an interaction between product and representation types. When consumers pay more than others to purchase utilitarian products that are concretely represented, participants perceive more unfairness when compared to hedonic products. However, when consumers pay more than others to purchase utilitarian products abstractly represented, the perception of unfairness decreased compared to hedonic products. For consumers and practitioners, this study offers important contributions—it presents situations in which a discriminatory price can result in a different perception of injustice or price unfairness to informed consumers. Accordingly, implications of these findings for the literature, consumers, and managers are discussed.

Price fairness and PWYW (pay what you want): a behavioral economics perspective

This study proposes a conceptual framework to clarify what leads to successful implementation of the pay what you want (PWYW) pricing mechanism. Psychological factors from the behavioral economics perspective are included in the framework based on the proposition that they play a role in determining how much a consumer will pay. PWYW refers to a participative pricing model in which a consumer can take full control over the price. The goals of this value-based pricing strategy are in line with the goals of revenue management—increasing the opportunity for greater revenues and higher customer satisfaction by understanding consumers’ perceived value. A meta-analysis of real-world examples identifies components, including price fairness perception that can lead people to pay something greater than zero under PWYW.

Perceived Price Fairness in Pay-What-You-Want: A Multi-Country Study

The present study investigated perceived price fairness (PPF) and aimed to reveal determinants of PPF within the participative pricing mechanism paywhat-you-want (PWYW). Results support the hypothesis that PPF in PWYW conditions is higher than PPF in ordinary price setting (OPS) conditions. Determinants of PPF in PWYW conditions were identified to include both the price level and the degree of social interaction. Whereas the results conform to previous research that PPF correlates negatively with the price level in OPS conditions, this study reveals a positive correlation between the price level and PPF in PWYW conditions, which suggests that the buyer’s mental model of PPF varies with the process of price determination. Therefore, future research should re-examine consequences of PPF in PWYW conditions. Additionally, results show cross-country differences of PPF and the influence of the price level on PPF.

Partitioned pricing, price fairness perceptions, and the moderating effects of brand relationships in SME business markets

Partitioned pricing effects on price perceptions have been studied in the consumer (B2C) market context, but not in the business (B2B) market, and particularly not in the small- and medium-sized enterprise (SME), context. The current research investigates SME managers' affective and cognitive (e.g., price fairness perceptions) responses to partitioned pricing and extent of relationship with the selling brand. The first of three experimental studies finds that a partitioned price generates greater price fairness perceptions than an all-inclusive price. Study 2 finds that SME buyers elicit the greatest positive affect and the lowest negative affect when the buyer's firm has an established relationship with the brand and the seller partitions the price. The third study further examines the effects of relationship with the brand by separating brand mandate (i.e., when the buying firm requires employees to purchase from a specific brand) and relationship longevity.

The Effect of Global Logistics Firms’ Engagement in Social Responsibility on Customers’ Perception of Price Fairness -Experimental Evidence in Korea-

일반적으로 고객들은 기업의 사회적 책임 활동에 대해 긍정적인 반응을 나타내는 것으로 알려져 있다. 기존 문헌들 역시 기업의 사회적 책임활동이 기업 경영의 바람직한 성과에 대한 긍정적인 영향을 미치는 것을 입증해 왔다. 그러나 글로벌 배송기업의 사회적 책임활동이 고객 애호도와 같은 바람직한 성과의 원동력인 될 수 있는 고객들의 지각된 가격 공정성에 미치는 영향에 대한 검증은 미비하다. 특히, 글로벌 배송기업의 서비스 가격에 이러한 기업의 사회적 책임활동 수행비용이 포함되는 경우 이를 고객들이 어떻게 받아들일지에 대한 검증이 필요하다. 본 연구에서는 글로벌 배송기업의 사회적 책임활동과 고객들의 지각된 가격 공정성의 관계와 이 관계가 고객들에게 내재된 기업의 사회적 책임활동에 대한 속성에 의해 조절되는지를 검증하였다. 이러한 검증을 위해 피실험자 간 실험 디자인을 통해 수집된 자료를 바탕으로 실증분석이 이루어졌다. 본 논문에서는 이론적으로 글로벌 배송기업의 사회적 책임활동과 고객들의 지각된 가격 공정성, 그리고 고객들의 사회적 책임활동에 대한 내재적 속성의 관계를 설명하는 개념적 모형이 제시되었다. 또한 실무적으로 글로벌 배송기업들에게 고객들의 지각된 가격 공정성에 대한 기업의 사회적 책임 활동의 효과를 최적화하기 위한 전략이 제시되었다.Although many logistics firms engage in corporate social responsibility (CSR) activities, prior research has little investigated the effects of those firms’ engagement in CSR on customers’ perception of price fairness. Drawing on the social exchange theory and the instrumental stakeholder theory, the author develops a conceptual framework that can explain the effect of global logistics firms’ CSR engagement on perceived price fairness and the moderating role of customers’ intrinsic attribution of CSR. A between-subjects scenario experiment was conducted to manipulate participants’ perceived level of a global logistics firm’s engagement in CSR. The effects of the experimental treatment were analyzed with an analysis of variance. The results of the analysis shows that customers’ perception of price fairness is significantly lower in the experiment group than in the control group and that customers’ perception of price fairness is significantly higher for high intrinsic CSR attribution than for low intrinsic CSR attribution. The findings of the present study propose an underlying psychological mechanism liking global logistics firms’ engagement in CSR to customers’ perception of price fairness, in which the perception depends crucially on customers’ CSR attribution. Finally, the author suggests strategies for global logistics firms to optimize the effect of CSR engagement on customers’ perception of price fairness.

The Influence of Price Fairness to Customer Satisfaction

The objective of this research is to analyze the influence of price fairness, customer satisfaction, empirically demonstrate the influence of perceived price fairness that can be broken down into price perception, consumer vulnerability, price offer fairness and price procedure fairness. Methodology used in this research is descriptive analysis, which is to identify characteristics of variables under certain circumstances and to scribal down the response of automobile customers in Jakarta, Bekasi, Depok, and Tangerang. Variables measurement ranked from price perception, consumer vulnerability, price offer fairness, price procedure fairness, satisfied with dealer's service, satisfied with delivery car and satisfied with purchase that the result would be used as information to manage automobile sales. The collected data was analyzed using multiple regression analysis. This research concluded that variable of price perception and perceived vulnerability has a significant impact toward price offer fairness, variable of price offer fairness and price procedure fairness has no effect toward satisfied with purchase, and variable of satisfied with dealer's service and satisfied with delivery car significantly affect the satisfied with purchase variable.

Sustainable development in higher education through service quality and price fairness: empirical evidence from private universities in Syria

The purpose of this research is to develop a model which examines the relationship between adapted dimensions of service quality scale and customer satisfaction and perceived price fairness, building on previous measurement instrument developed by (A. Parasuraman, Zeithaml, & Berry, 1988b). The research paper investigates the instrument at higher education in Syria. The planned methodology for the research employs a quantitative approach where the service quality instrument developed by (A. Parasuraman, Zeithaml, & Berry, 1988a) is employed in this research. The sample of the study follows a non-probability sampling approach. The unit of analysis in this research is undergraduate students of private universities in Syria. Online self-administered questionnaires were distributed to undergraduate students in 3 private universities in Syria. The adjusted instrument scale employed a 5 points Likert scale where 1 indicates strongly disagree and 5 strongly agree. The level of analysis investigates reliability and validity tests. Exploratory factor analysis (EFA) is employed to measure relationships between measured variables. The exploratory factor analysis produced three dimensions. Cronbach alpha test is employed to measure the internal consistency of the scale. The adapted service quality scale comprises of three dimensions namely institution task orientation, institution relationship orientation and institution tangibles orientation. The instrument consists of 12 items. The research recommends the measurement scale to be applied for service quality in Higher Education environment.

Hitting the Nail on the Head! Insight into Consumer Assessment of Sustainability-Related Innovations

Innovation has long been known to drive growth. There is a growing body of evidence that firms that work to be responsible and produce more sustainable products also receive positive benefits, but how and why these benefits accrue is less well established. Our research addresses this knowledge gap and furthers an understanding of the conditions under which consumers will pay a premium price. We compare consumer responses to a price increase for an innovation with individual, societal, or mutual benefits. We examine a more holistic model than those previously examined, and test for mediation and moderation so that the importance and relative impact of the different factors can be better understood. Our findings have relevance for practitioners and academics. With regard to the latter, we extend the literatures on perceptions of price fairness and equity theory, salience, and pro-social behavior.

Product Line Extension in Consumer Software Markets in the Presence of Free Alternatives

Hypercompetitive consumer software markets pit incumbents against free alternatives and pirates. Although the extant literature has studied firm level strategic responses to consumer heterogeneity and piracy, there is a lack of understanding of consumer reactions to digital goods choice sets that include firm product extensions such as the introduction of premium or free alternatives. With context-dependent preferences as the theoretical basis, this study systematically examines the impact of piracy controls and product line extensions on welfare in a consumer software market context (i.e., willingness to pay (WTP) and changes in consumer and producer surplus). In two controlled experiments using double-bound-dichotomous-choice WTP elicitation, we investigate how piracy controls and product line extensions impact two different platforms of the same software (PC Adobe applications and mobile Adobe applications) in terms of propensity to pirate and WTP. We show that introducing a premium or free vertical extension has different impacts on consumers’ WTP for the focal product depending on whether it is a low-cost or high-cost market even when controlling for individual differences, such as price fairness perceptions, product feature value, brand perceptions, etc. By contrast, piracy controls reduce piracy rates but have a limited impact on consumer WTP for the focal product in both contexts. By calculating the overall welfare of the market, we show that there is alignment in consumer and producer interests at current and estimated optimal price levels in both high-cost and low-cost markets. However, the introduction of a free product extension leads to a higher surplus in the high-cost market, whereas the introduction of the premium product extension leads to a higher surplus in the low-cost market.

서비스 가격차별화 전략과 소비자의 가격공정성 지각에 관한 연구

Price discrimination is widely adopted by service sectors for the purpose of attracting market segments with different price sensitivity, yet underlying this price strategy is a caveat that customers' price fairness perception may decrease as a result. This study investigated the impact of service price discrimination methods and price differences on customers' perception of price fairness and their cognitive and behavioral consequences. The results show a strong evidence that price discrimination based on customer groups significantly lowers customers' perception of price fairness in comparison with price discrimination based on purchase time or purchase quantity. This study also found that the price difference range is also an important preceding variable of price fairness perception. Consumers' price fairness perception determines the level of cognitive and affective corporate trust, which in turn significantly influences consumers' repurchase intention.

Optimal markdown policy of perishable food under the consumer price fairness perception

Markdown policies are widely used by retailers to sell perishable food. Consumers purchase food at different prices during different sales periods. Some consumers may compare their experience with others who purchase the same items. Price unfairness or inequity is perceived when different prices are quoted without reasonable explanations. This study develops an optimal markdown model for perishable food pricing to optimise the food retailer revenue and enable a maximum aggregated consumer utility considering individuals’ price fairness perception. The model serves as the first step in evaluating trade-offs between food retailer revenue and consumer utility. In addition, it enables consumer utility to be depicted through perceived price fairness by including the effects of food perishability and scarcity. Another innovative feature is the equalisation of the consumer average aggregated utility during different sales periods as a condition of intertemporal price fairness perception. The proposed model is compared with two benchmark models to justify the effectiveness and advantages in the example. Finally, a sensitive analysis based on the food deterioration rate, consumer food desire rate and consumer average reservation price is conducted to justify the manner in which these factors influence the optimal pricing policy, and managerial insights are suggested for food retailers.

Exploring price fairness perceptions and their influence on consumer behavior

The price fairness concept is gaining in relevance in the marketing field, as it can be seen as a restraint on unfair exploitation, particularly regarding dynamic pricing techniques. The present paper explores the restraining nature of price fairness perceptions while testing the characteristic behavioral reactions of consumers who perceive price difference as unfair. Furthermore, this study describes the consequences of price fairness perceptions as consumer coping strategies. This study applies an experimental design: 288 participants assess the price fairness of given shopping scenarios and use those assessments to determine their agreement with different kinds of consequential behaviors. This experimental study confirms that price fairness influences not only the intention to buy but also some forms of negative behaviors that directly harm the seller, e.g., negative word of mouth, complaints, and leaving the seller. Findings also confirm that the intensity of price fairness perception correlates with the severity of consequences and that differences exist among consumers with different income levels. The main contribution is in the empirical research of previously merely theoretical propositions concerning factors and consequences of price fairness perceptions. Study confirms that social comparisons play an integral part in determining fairness in the shopping context, reveal that consumers accept and positively assess price increases over time in terms of fairness, and confirm the importance of personal income in both price fairness assessments and in consumers' reactions to unfair prices.

Shoppers' acceptance and perceptions of electronic shelf labels

The emergence of online grocery retailers challenges the pricing strategies of bricks-and-mortar supermarkets. Retailers can use electronic shelf labels (ESLs) to adopt dynamic pricing strategies, to reduce price adjustment costs, and to decrease the error potential associated with wrong prices. To date, no study has investigated consumer perspective on ESLs. The present research employs a field experiment to investigate consumers' acceptance and perceptions of ESLs. In line with the technology acceptance model, the findings reveal that shoppers perceive ESLs as easy to use; however, they are largely unaware of the benefits of ESLs. Furthermore, ESLs provide an easy way to identify a product's price. The results also indicate that ESLs positively influence product quality inferences and store image but do not affect price fairness perceptions.

The Differential Effects of Self and Other Comparisons on Price Fairness Perceptions Depending on Power States

The Differential Effects of Self and Other Comparisons on Price Fairness Perceptions Depending on Power States

Warm Glow or Extra Charge? The Ambivalent Effect of Corporate Social Responsibility Activities on Customers’ Perceived Price Fairness

Prior research has firmly established that consumers draw benefits from a firm's engagement in corporate social responsibility (CSR), especially the feeling of a “warm glow.” These benefits positively affect several desirable outcomes, such as willingness to pay and customer loyalty. The authors propose that consumers do not blindly perceive benefits from a firm's CSR engagement but tend to suspect that a firm's prices include a markup to finance the CSR engagement. Taking customers’ benefit perceptions and price markup inferences into account, the authors suggest that CSR engagement has mixed effects on consumers’ evaluation of price fairness and, thus, on subsequent outcomes such as customer loyalty. The authors conduct one qualitative study and four quantitative studies leveraging longitudinal field and experimental data from more than 4,000 customers and show that customers indeed infer CSR price markups, entailing mixed effects of firms’ CSR engagement on price fairness. The authors find that perception critically depends on customers’ CSR attributions, and they explore the underlying psychological mechanisms. They propose communication strategies to optimize the effect of CSR engagement on perceived price fairness.

While Number Superstitions Exist: The Influence of Prices on Mobile Phone Consumers Purchase Intentions

This study tests a conceptual model of the effects of number superstitions and price on perceived price fairness and purchase intentions in Taiwan. The mediating effects of perceived price fairness on purchase intentions are also explored. The experimental results indicate that, for auspicious mobile numbers with a price premium, consumers will perceive price fairness which positively influences their purchase intentions. On the other hand, consumers show low purchase intentions with regards to inauspicious mobile numbers with a price discount because they may believe in using inauspicious mobile numbers will bring bad luck. Thus, number superstitions are significant in the Taiwan mobile telecommunication market. Through a discussion of the integration of number superstition and price in consumers’ purchase process, this research helps the mobile telecommunications industry understand the phenomenon and adopt a suitable price policy. The work concludes with suggestions for future research.