Perceptions Of Price Unfairness Research Articles

Is uniform pricing by competing retailers perceived as fair?

AbstractDespite the enormous negative economic influence on consumer well‐being, price‐fixing remains a largely unexplored area in consumer research. Previous research showed that consumers perceive different prices for the same product as unfair. However, our findings counterintuitively indicate that consumers may also perceive uniform prices as unfair. Two experimental studies examined the effect of price uniformity (uniform/nonuniform) and price patterns over time (increase/no change) on the perception of price unfairness and third‐party complaint intention. The findings show that consumers perceive prices as unfair when retailers increase a uniform price simultaneously. This pricing strategy by retailers increases consumers' intention to report suspected price‐fixing activities to authorities, that is, third‐party reporting. Based on the findings, implications for marketing practices and tactics to enhance public policy are discussed.

Consumers’ Intentions to Spread Negative Word of Mouth About Dynamic Pricing for Services: Role of Confusion and Unfairness Perceptions

This paper examines the effects of dynamic pricing versus simple price differentiation for services through price confusion and price unfairness perceptions on price-disadvantaged consumers’ intentions to spread negative word of mouth (WOM); we additionally differentiate between these customers based on specific service purchase frequency. To test our hypotheses regarding price confusion as an important driver of undesirable consumer reactions to differential pricing for services and as a precedent of price unfairness perceptions, we conduct one qualitative study and three quantitative studies. The findings provide key theoretical insights indicating that 1) dynamic pricing leads to more price confusion than simple differential pricing and 2) price confusion triggers price unfairness perceptions that increase consumers’ intentions to spread negative WOM. For frequently purchased services, the pricing tactic’s effects on intentions to spread negative WOM are based mainly on price confusion; for infrequently purchased services, the intentions to spread negative WOM are based primarily on unfairness perceptions. The major managerial insight of our findings is that dynamic pricing should be avoided or limited when there is a high likelihood of reputation damage through negative WOM among price-disadvantaged customers.

The mitigating role of nostalgia for consumer price unfairness perceptions in response to disadvantageous personalized pricing

In the wake of the ability to analyze big customer data, personalized pricing is an interesting way for firms to increase profits. However, consumers often perceive these pricing practices as unfair, especially upon learning that they have paid more than other consumers. Thus, managers can either avoid personalized pricing altogether or attempt to mitigate such consumer perceptions. The present research proposes and finds that consumer nostalgia plays a mitigating role that firms might utilize when engaging in personalized pricing. Two lab experiments and one online experiment examine situations in which consumers become aware of disadvantageous personalized pricing for themselves when compared to other lower paying customers. The results provide evidence that the negative effect of disadvantageous personalized pricing (vs. equal pricing) on price fairness perceptions is counteracted by high consumers’ nostalgia proneness via their perceptions of loneliness.

Customer captivity, negative word of mouth and well-being: a mixed-methods study

PurposeWhen customers feel that they have no choice but to stay with their current provider to obtain a service that they need, they feel captive. This study aims to investigate customer captivity as a type of vulnerability and evaluate its effects on customers’ service evaluation and word-of-mouth (WOM) behavior, as well as to identify solutions that reduce customers’ feelings of captivity and improve their well-being.Design/methodology/approachThis sequential, quantitative–qualitative, mixed-methods study draws from a survey of 1,017 customers and a qualitative analysis of 20 in-depth semi-structured interviews. Moderated mediation analysis is used to test the quantitative hypotheses; a thematic analysis explores the qualitative data.FindingsThe results of the quantitative study show that captivity emotions and price unfairness perceptions are two manifestations of customer captivity, which directly and indirectly affect service evaluations and WOM behavior. The findings of the qualitative study highlight how captive customers use emotional support-seeking negative word-of-mouth (NWOM) as a solution to reduce their captivity emotions and improve their well-being, by reinforcing their social ties and regaining a sense of control.Research limitations/implicationsThis study advances transformative service research by demonstrating how captivity affects customers’ well-being and customer vulnerability literature by investigating captivity as a type of vulnerability. It contributes to service marketing literature by identifying customer captivity as a boundary condition for generic service evaluation models.Practical implicationsCaptive customers seek emotional support and consequently spread NWOM. Therefore, it is critical for service providers to reduce customers’ captivity feelings and implement adequate solutions to prevent NWOM and decrease the risk of negative impacts on their profitability.Originality/valueAny customer can become vulnerable, due to contextual circumstances. This study focuses on customer captivity as a type of vulnerability and proposes adapted solutions to improve customers’ well-being.

Why should I pay more? Testing the impact of contextual cues on perception of price unfairness for the price-disadvantaged segment in dual pricing

Abstract The practice of dual pricing is ubiquitous in the field of tourism. However, extant research has not focused on minimising the perception of price unfairness among the price-disadvantaged tourists. This study uses equity theory (Adams, 1965), categorisation theory, and the principle of dual entitlement to understand the impact of price as well as non-price related contextual cues on the perception of price unfairness among the price-disadvantaged (international) tourists. The results demonstrate that transaction similarity between the two (domestic and international) segments can be reduced by expressing international tourists’ entrance fees in international currencies, and by including a service element, which would decrease their perception of price unfairness. Furthermore, providing a legitimate rationale behind the increased entrance fee would further decrease their perception of price unfairness. Implementing these findings will help tourist sites in reducing the negative impact of the perception of price unfairness.

I Paid More than You (Before)?! The Effects of Self-Construal and Comparison Target on Price Unfairness Perceptions

Previous research suggests that when consumers encounter discrepant prices due to dynamic pricing, a social comparison evokes stronger unfairness perceptions than a temporal comparison does. In this paper, the authors show how this effect may vary depending on consumers’ self-construal. Two experiments find that while independent consumers perceive stronger price unfairness when paying more than other consumers, interdependent consumers perceive stronger price unfairness when paying more than what they did in the past. These effects occur because consumers are differentially sensitive, as a function of their self-construal, to social versus temporal comparisons in their self-appraisal. Our results show that self-construal affects consumers’ means for maintaining their self-appraisal and alters the relevance of different comparison targets in price unfairness perceptions.

I guess that is fair: How the efforts of other customers influence buyer price fairness perceptions

AbstractPast research has demonstrated that consumers' price fairness judgments are influenced by comparisons between the offer price they receive and the prices paid by other consumers for the same product offering. In today's digital age, reference points for purchases are more prevalent than ever. However, investigations on how certain inputs of the transaction affect these judgments is lacking. Specifically, extant research has failed to account for how the purchase efforts of other consumers can influence one's own price fairness evaluations. Moreover, relatively little empirical research has endeavored to understand the simultaneous cognitive and affective processes that explain how consumers arrive at price fairness judgments. To address these gaps in the literature, we introduce two studies aimed at understanding the process through which the salient efforts of referent consumers serve to mitigate perceptions of price unfairness when two customers pay different prices for the same product. The findings support a dual‐process model whereby the efforts of other (referent) customers serve to simultaneously reduce buyer anger and increase buyer understanding of the price disparity, ultimately mitigating perceptions of price unfairness.

What is a fair fare? Exploring the differences between perceived price fairness and perceived price unfairness

Price is the cost consumers pay to stay with the manufacturer. In turn, the firms should make the consumers feel that their sacrifice is fair. Marketers should understand the differences between price fairness and unfairness. Most research manipulates causes price unfairness and assumes reverse is fairness. We study overall price (un)fairness as an aggregate of distributive, procedural, informational, and interpersonal justice and study what differences exist between price fairness and unfairness. Consumer’s sense of equity from the transaction and their understanding of the pricing policy contribute equally toward creating price fairness perceptions. Violation of equity has the greatest impact on price unfairness perceptions, followed by consumer's inability to understand procedures. For services, both distributive and procedural dimensions are equally important. Consumers display stronger preference to stay with the service provider in case of fair price perceptions than their preference to leave because of unfairness. Customers show a status quo bias. Positive communication influences them to repurchase.

To Ban or not to ban rate parity, that is the question… or not?

Considering the heated debate in the hotel industry about the rate parity clause and the appropriateness of its ban to give rise to rate disparity, this article analyzes the hotel performance that has resulted from the rate parity prohibition established in some European countries, by looking into the market value of the hotels involved. The empirical analysis conducted on a sample of hotel companies trading on the stock exchange in Germany and France shows that the approval of the rate parity ban generates positive abnormal returns. However, an increase in risk is detected. It seems that, while the prospects of greater autonomy to set prices in the hotel industry and stronger competition in the online distribution industry are looked at positively, the hotels will have to deal with a customer’s potential higher perception of price unfairness, less control over its own brand and a greater likelihood of price wars.

Et tu, Brute? How unfair!

Marketing literature has consistently suggested that retailers should invest in building trust, as customers’ trust in the retailer results in a number of benefits for the retailer. The objective of this article is to understand the impact of buyers’ prior trust in retailers on their price unfairness perceptions. To investigate this, we conduct three experiments; the findings of the first experiment suggest that buyers’ prior trust in retailer has a dual impact (forgiveness and betrayal) on their perception of price unfairness. Trust helps to reduce price unfairness perceptions when the magnitude of the price increase is small, but accentuates this when the price increase is large. Moreover, forgiveness acts as a mediator between price increase and perceived price unfairness. This mediation effect of forgiveness depends upon a shopper's prior trust in the store. The second experiment replicates these findings in a real life experimental setting and thus establishes the robustness of the findings in real life contexts. The third experiment extends the boundaries of this research by demonstrating that the effect of trust on price unfairness perception depends on the nature of comparisons, i.e., whether the price comparison is made with one's own past price or with a price paid by someone else.

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.

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.

I Paid More Than You (Before)?! The Effect of Self-Construal and Comparison Target on Unfairness Perceptions and Willingness to Pay

The present research explores how self-construal interacts with social versus temporal comparison target in shaping consumer perceptions of price unfairness and willingness to pay. Three experiments find that independent consumers perceive stronger price unfairness when paying more than other consumers do, whereas interdependent consumers perceive stronger unfairness when paying more than they themselves paid in previous transactions. These effects occur because consumers are differentially sensitive to social versus temporal comparisons in their self-appraisal as a function of their self-construal. The sensitivity to social (temporal) comparison among independent (interdependent) consumers also affects their willingness to pay. These results show that self-construal affects consumers’ respective means for maintaining their self-appraisal and alters the relevance of different comparison targets.

A laboratory exploration for multi-period perishable food pricing

Purpose – The purpose of this paper is to put forward a multi-period dynamic pricing strategy for perishable food considering consumers’ price fairness perception. The impacts of the multi-period retail price, food freshness and inventory shortage risk on consumers’ heterogeneous willingness to pay (WTP) and their strategic purchasing behaviours are studied. Design/methodology/approach – The authors present a price optimization model for perishable food, and conduct a laboratory experiment to justify the theoretical model. The data collected are analysed by correlation analysis and nonparametric test. Findings – The results obtained reveal, first, food freshness and inventory shortage risk have effect on consumers’ heterogeneous WTP. Second, different retail prices lead to consumers’ strategically purchasing behaviours. Finally, consumers’ intertemporal price fairness perception and the food retailer’s long-term utility maximization can be achieved by developing multi-period dynamic pricing strategy. Practical implications – This study suggests the perishable food retailer to apply a step-by-step price markdown strategy. It aims at eliminating price unfairness perceptions caused by loss of freshness and high shortage risk of the perishable food in the subsequent selling periods within the shelf life. Some valuable managerial insights towards perishable pricing for food retailers are discussed. Originality/value – This study serves as the first step to utilize a laboratory experiment to dig out consumers’ intertemporal WTP towards perishable food. It also presents a novel way for describing consumers’ intertemporal price fairness perception by equalizing consumers’ average utilities considering consumer surplus, food freshness and shortage risk at different selling periods. The line of research on dynamic pricing concerning consumers’ price fairness perception is quite new in academic research, and has arisen due to its importance for food retailers of maximizing their long-term revenues and also of constructing mutual benefit and lasting connections with the consumers.

Store image influences in consumers’ perceptions of store brands: the moderating role of value consciousness

Purpose – The purpose of this study is to develop and test a conceptual model of the moderating effect of customers’ value consciousness (CVC) on the relationship of store image (SI) with four dimensions of the perceived risk associated to the purchase of a store brand over a manufacturers’ brand, and the direct effect of those variables on the perceived unfairness of manufacturers’ brand prices. Design/methodology/approach – A mall-intercept survey of 600 shoppers in Colombia (South America) gathered data on their consumption experiences of a store brand and manufacturer’s brand across six product categories and two supermarket chains. Findings – Results suggest that SI exerts different influences on the four categories of perceived risk, the strength of which varies with value-consciousness. Perceptions of the price unfairness of manufacturers’ brands are attenuated by the financial and functional risk of buying store brands but increased by the social and psychological risk. Research limitations/implications – The findings may not be generally applicable to other shopping contexts or customers. The functional perspective on SI may mean that the results are not directly comparable with other studies adopting different perspectives. Practical implications – For retailers, the key implications concern awareness and management of customers’ perceptions of relative risks and the impact of value-consciousness on the use of SI as a heuristic decision-making cue. For manufacturers, they are the need to demonstrate clear product differentiation as a rationale for higher prices. Originality/value – This is the first study to encompass value-consciousness, SI, perceived risk and perceptions of price unfairness in a single field survey.

How Power States Influence Consumers' Perceptions of Price Unfairness

The present research explores how the power state interacts with comparative references in shaping consumer perceptions of price unfairness. Five experiments found that high-power consumers perceive stronger price unfairness when paying more than other consumers do, whereas low-power consumers perceive stronger unfairness when paying more than they themselves paid in previous transactions. The distinction occurs because consumers experience a threat to their self-importance from different types of disadvantaged comparisons depending on their power states. These results show that the state of power determines consumers' respective channels for maintaining their self-importance and alters the relevance of different comparative standards.

Perceptions of Price (Un)Fairness in a Channel Context

This article extends prior research on perceptions of price (un)fairness by attempting to disentangle where in the marketing channel (un)fairness inferences lie. Extant research in this area overwhelmingly considers (un)fairness perceptions with respect to the pricing action only, ignoring attributions aimed at specific channel actors. This article illustrates differences in (un)fairness inferences with respect to retailers and manufacturers given price increases accompanied by decreased product supply, increased demand, or increased variable costs. We show that a retailer is considered relatively more unfair than a manufacturer given a price increase accompanied by a demand increase, as well as when no explicit reason is given for the price increase. Conversely, a manufacturer is considered relatively more unfair given a price increase accompanied by a supply decrease. Both channel entities are considered equally fair given a price increase accompanied by a channel (both retailer and manufacturer) or manufacturer cost increase, while a retailer is deemed relatively more unfair given a price increase accompanied by a retailer cost increase. This research generally suggests that inferences of causality for specific pricing actions may differentially skew toward upstream or downstream channel entities depending on the particular economic circumstances of the price change.

Implementing price increases in turbulent economies: Pricing approaches for reducing perceptions of price unfairness

Consumer frustration over having less money in their pockets and, at the same time facing higher prices for products and services in the marketplace, arises during turbulent economic times (e.g., post-2007). Sellers suffer increased costs and pass along increases by raising prices to consumers. The current article discusses trends in the pricing literature and in practice that sellers utilize in limiting perceptions of price unfairness, particularly when increasing price in turbulent economic times. Specifically, engaging in transparency in pricing by revealing information about price changes to the consumer during poor economic times potentially reduces perceptions of price unfairness. Using industry-common price-setting practices, shrinking product volume, providing automatic rebates promotions, or offering price-matching promotions also likely reduces perceptions of price unfairness.

Price unfairness: the indirect effect on switching and negative word‐of‐mouth

PurposeThis study aims to present and test a conceptual framework for the consequences of price unfairness, positing trust and emotions as two important mediators of the perception of price unfairness and its relationship to switching and negative word‐of‐mouth intentions.Design/methodology/approachAn experiment with one factor with three levels (price unfairness: no price unfairness vs low price unfairness vs high price unfairness) is applied to 253 participants. The mediation analysis is made using bootstrapping procedure.FindingsThe findings reveal that existing customers that compare their price to a lower price offered to prospective customers experience the perception of price unfairness that, in turn, triggers negative behavioral intentions toward the company, through trust (cognitive driver) and negative emotions (emotional driver).Practical implicationsThe findings indicate that companies should consider the damage that targeted promotions to new customers may do among existing customers in the long run. They also highlight the importance of the companies' strategies to build consumer trust over time as this construct seems only partially affected by perceived price unfairness and is a key determinant of customers' behavioral intentions.Originality/valueThis study contributes to the understanding of price unfairness perception and its negative behavioral consequences, testing and validating a parallel mediating process with trust and negative emotions as mediators.

The Insights on Perceived Price-Quality

This research employs four theories; absolute and relative price differences (Theory-1), a free product (Theory-2), consumer perception of price unfairness (Theory-3), and consumer perception of price as an indicator of product quality (Theory-4). All of these are integrated and synthesizal in order to applicable provide an interpretation framework.Using Consistency Test and phenomenological approach, the author analyzes the participants responses around the issues of price and benefit to get some insights on perceived price-quality.DOI :https://doi.org/10.21632/irjbs.4.3.229-251Keywords: perceived price-quality