Examining differences in consumer reactions to partitioned prices with a variable number of price components

Partitioned pricing is a tactic in which a seller presents multiple prices for a single product or service instead of one, all-inclusive price. This research investigates effects of partitioned prices containing a variable number of price components, under varying levels of seller trustworthiness, and with or without the presentation of the total price. The results indicate that partitioning into a large number of price components, relative to a small number of price components, negatively affects perceived fairness and purchase intentions for less trustworthy, but not more trustworthy, sellers when the total price is not presented. However, partitioning into a large number of price components positively affects fairness and purchase intentions, regardless of seller trustworthiness, when the total price is presented. The research also examines effects of partitioning on price estimation and recall.     

Price versus service: Can retailers beat showrooming with competence?

Showrooming is a behavior of information gathering in offline stores before purchasing from an online retailer (usually at a lower price). As showrooming is a serious problem for offline retailers, this study investigates how they can compensate a price disadvantage against the online channel with service strategies. Two experiments examine the effects of (1) offline price disadvantage levels and service usage and (2) service quality and availability on showrooming. Results indicate that mere service usage can partly compensate price disadvantages. While service quality reduces showrooming, service availability only shows an impact when quality is high. Price fairness mediates these effects.     

From ‘free’ to fee: Acceptability of airline ancillary fees and the effects on customer behavior

Businesses in various consumer service industries have begun to unbundle their service offerings by introducing numerous fees for products and services that were previously provided as “free.” Anecdotal evidence in the media indicates that these fees cause widespread public displeasure, frustration, and outrage. This paper develops a framework of fee acceptability, negative emotions, and dysfunctional customer behavior, which is tested using data from the airline industry. Findings identify the strongest effects on betrayal in the case of baggage fees, followed by charges for comfort. Also, betrayal has a direct effect on complaining, whereas anger mediates the relationship between betrayal and negative word of mouth.     

How price complexity takes its toll: The neglected role of a simplicity bias and fairness in price evaluations

Marketing managers commonly employ complex price plans. Surprisingly, limited and conflicting evidence reports how customers perceive and react to complex prices. This study examines perceptions about price complexity and shows that customers tend to prefer simple prices. Two experimental studies show that perceived price complexity negatively affects customer perceptions of price fairness and influences product choice because customers negatively evaluate the transparency of the firm's pricing practices and infer higher total prices. Customers comparing alternate offerings may therefore prefer simple over complex prices, even when the latter are less expensive. Study results suggest limiting price plan variations positively affects customer inferences about transparency and fairness, and thus customer choice.     

Partitioned pricing: Can we always divide and prosper?

The widespread use of partitioned pricing by marketers may be the result of perceptions that it enhances the perceived value of the offer. This research identifies boundary conditions for the effectiveness of partitioned pricing by examining the role of the reasonableness of a surcharge and the need for cognition in consumers’ processing of pricing information. Three studies, each consisting of two experiments, examine the effectiveness of partitioned versus combined pricing and show that for high need for cognition persons, partitioned pricing has a more favorable effect than combined pricing when the surcharges are reasonable; these effects reverse when the surcharges are unreasonable. The studies indicate no differences between partitioned and combined pricing across surcharge conditions for low need for cognition consumers. A fourth study incorporating both reasonable and unreasonable surcharges in one experiment substantiates the conclusions of the first three studies. Finally, detailed process measures provide evidence that high versus low need for cognition persons evaluate partitioned pricing information differently in distinct surcharge conditions.     

Consumer response to online/offline price differentiation

This research explores the impact of channel-based price discrimination on key consumer reactions. Three experimental studies provide evidence that price differentiation with lower online prices is feasible. Results indicate the effects observed depend on the size of the price difference and differ between product categories. The studies provide evidence on the interplay of two central cognitive effects when facing channel-based price differences: (a) implicit assumptions on higher costs running a conventional store which may justify differing prices versus (b) a general negative attitude towards price discrimination. Moreover, we show actively communicating additional value provided offline fosters acceptance of price discrimination.     

Economic and Non-economic Satisfaction as Outcomes of Micro-enterprises’ Perceived Value from Banking Relationships

ABSTRACT

Purpose

The purpose of this paper is to position economic and non-economic satisfaction as outcomes of micro-enterprises’ perception of value, and to determine the antecedents of perceived value within the business banking industry.     

承销费用、政府定价管制与 IPO 抑价--来自中国首次公开发行公司的经验证据

选择2001年11月1日至2012年12月31日的中国A股IPO公司为研究样本,分析承销费用与IPO抑价之间的关系及其在政府定价管制程度不同情况下对承销费用与IPO抑价关系的影响。结果显示,承销费用与IPO抑价呈正相关关系;而政府定价管制程度的提高会削弱承销费用与IPO抑价之间的正相关关系,甚至会使其转向负相关关系。     

A membership pricing policy to facilitate service scale-expansion

This paper proposes a multi-year membership pricing policy for a service business like a gym chain. In the pricing policy, the equivalent membership price per year is relatively low to attract customers, and the multi-year membership fees must be prepaid in full. The prepaid cash provides resources for scale-expansion by opening new stores. We develop a nonlinear mixed integer programming model to formulate the pricing decisions. Numerical experiments reveal that the multi-year membership pricing policy, from a long-term perspective, is substantially better than the business-as-usual pricing policy (1-year membership) in cash balance, profit, and market share. Yet, the performances of the two pricing policies do not differ much from a short-term perspective. These findings indicate that the multi-year pricing policy may be a good strategy, because it initially attracts less attention of competitors; suddenly it emerges and substantially outperforms its competitors in cash balance, profit, and market share.     

Multiple unit price promotions and their effects on quantity purchase intentions

Consumers often encounter multiple unit price promotions whereby a price reduction is presented as a reduced total price for multiple units of the same item (e.g., an item regularly priced at $1.25 each is promoted as “5 for $5”). In a series of experiments, we find that the positive effect of these promotions on quantity purchase intentions is contingent on the magnitude of the quantity specified in the offer and the rate of product consumption. However, offer effectiveness is not influenced by highlighting single unit prices, the unrestricted nature of these promotions, or aggregate savings. As predicted by the selective accessibility explanation, the effect of multiple unit price promotions on quantity purchase intentions is shown to be mediated by accessing anchor-consistent knowledge. An agenda for further research and the implications of our findings for retail practice are discussed.     

Price developments after a nominal shock: Benford's Law and psychological pricing after the euro introduction

Retail managers use psychological pricing to make the prices of goods appear to be just below a round number. The euro introduction in 2002, with its various exchange rates, distorted existing nominal price patterns while at the same time retaining real prices. We studied consumer prices before and after the introduction of the euro by using Benford's Law as a benchmark for price adjustments. Results indicate the usefulness of this benchmark for detecting irregularities in prices, and a clear trend towards psychological pricing after the nominal shock of the euro introduction. In addition, the tendency towards psychological prices results in different inflation rates in dependence of the price pattern.     

Many a little makes a mickle: Why do consumers negatively react to sequential price disclosure?

Drip pricing (DP) is distinct from partitioned pricing as it sequentially discloses surcharges to consumers. Critics see DP as a deceptive pricing tactic because it obscures the final price of an offer. We examine the effects of the timing of the final price disclosure and the number of sequentially presented surcharges on consumers' attention to the final price and, ultimately, perceived price fairness. In an eye‐tracking study with 225 participants, we find that the sequential (vs. up‐front) disclosure of the final price lowers perceived price fairness by increasing consumers' attention to the final price, in particular, when the number of surcharges is high. In addition, the sequential disclosure of the final price lowers perceived price fairness because of higher perceived price complexity and lower pricing transparency perceptions. The findings suggest that firms need to be aware of both attentional and cognitive effects of the final price disclosure when designing DP.     

Pricing of Mutual Fund Services in Retirement Plans: Evidence from Open-End Equity Funds

Management fees of mutual funds are more costly to investors than is often realized. Moreover, research indicates that in many cases, the fees are not related to performance, contrary to what might be expected from an efficient market. This study uses sample data to illustrate the consequences of inefficiency to an individual investor. It then turns to an empirical examination of the determinants of the ratio of management fees to total assets (MER), investigating market concentration, fund performance, and non-performance characteristics as explanatory variables. All of these classes of variables contributed to the variation of MERs . JEL Classification G23     

Consumers’ perceptions of the fairness of price-matching refund policies

This paper examines the antecedents and consequences of perceived price-matching policy fairness. Among the antecedents, we study the effects of the refund depth if a lower competitive price is identified, the degree that the retail product assortment is available at competing retailers, and the consumers’ inference as to the retailer's motive for the price-matching policy. Product assortment uniqueness is identified as a key driver of fairness perceptions, both directly and indirectly through inferred motive. The three experiments show that consumers’ perceptions of the fairness of a store's pricing policy influence their price fairness perceptions, consequently influencing their retail shopping intentions.     

A PRICING OPERATOR-BASED TESTING FOUNDATION FOR A CLASS OF FACTOR PRICING MODELS

This paper develops a cross-market version of factor pricing models. It is shown that exact factor pricing holds across two submarkets with respect to their common factors if and only if the unique pricing operator for the first submarket is equal to that for the other submarket with probability 1. We define an APT measure as the squared distance between the two pricing operators. Then, testing whether this measure is zero is equivalent to testing exact factor pricing across the two submarkets. Since the estimation of this measure does not require parameterizing and extracting the underlying factors, one can test factor pricing models without knowing any factors. In addition, we present a randomization procedure so that one can use it to conduct a more comprehensive investigation on the empirical robustness of factor pricing models.