Price Variations for Refrigerators Among Retail Store Types and Cities

This study investigated differences in prices of refrigerators among 5 different types of retailers in 11 different major U.S. cities. Significant differences in price among retailers were found with appliance stores and furniture stores offering the lowest prices. Discount department stores quoted lower prices than did conventional department stores. Some cities had lower average prices than others. There were considerable variations in price among all classes of retailers and among all cities. Dealers that serviced appliances quoted prices similar to those quoted by dealers that did not service appliances. Prices did not vary by the size of the store.     

Erratum to: Competitive price-matching guarantees under imperfect store availability

This paper analyzes the role of verification of product availability in the context of competitive price-matching guarantees (PMGs). PMGs involve a retailer matching any lower price offered by competition for an identical item. Until now, researchers focused on the scenario where customers can receive the lower price with a simple proof (e.g., weekly flyers). However, in reality, retailers reserve the right to verify the availability at the competitor location; if the product is not available there, then the price-match request might be declined. We develop a price competition model to investigate the effects of verification of availability on price decisions and profit levels of competing retailers. In our model, demand is driven by the availability levels of retailers as well as the price-search cost and store-switching cost incurred by customers. Price-search cost leads to two customer segments: uninformed ones who have no knowledge about prices, and informed ones who are knowledgeable about prices. On the other hand, store-switching cost determines how many customers search for the product at an alternative location because of high price or unavailability at their preferred retailers. Our analysis reveals, among others, that the outcome of availability verification is linked to three factors: price-search cost, store-switching cost, and the reservation prices of customer segments. Verification of availability allows retailers to price discriminate customers who could not be discriminated otherwise, specifically those belonging to the informed customer segment. Furthermore, it is a significant profit-enhancing mechanism only if there are switching customers in the market. Interestingly, even though customers view the verification of availability as a hassle, it can actually result in them paying lower retail prices by increasing the level of retail price competition.     

Book Reviews

Since the Reformation, the established Church had monopolised the English burial trade. In London, in the 1830s, burial conditions posed a serious threat to public health and a number of limited liability companies were licensed by Parliament to provide new facilities for the interment of the dead on the edges of the city, before the main responsibility was then transferred to local government. The paper examines the changes in government thinking that lay behind these policy shifts and explains why private sector capitalists were unable to meet the various expectations of customers in the London burial market, its own stakeholders and society more generally.     

Why offer lower prices to past customers? Inducing favorable social price comparisons to enhance customer retention

Price discrimination policies vary widely across companies. Some firms offer new customers the lowest price; others give preferential prices to their past customers. We contribute to the literature on price discrimination in behavior-based pricing by exploring how customers’ social price comparisons, i.e., comparing one’s price to that received by similar peers, impact the optimal structure of price discrimination. Social price comparisons have a negative (positive) impact on customers’ transaction utility if the price charged to past customers is higher (lower) than a new customer’s price. Using an analytical model with vertically differentiated firms, we show that a firm with relatively large market share will reward its past customers with relatively low prices when social price comparisons have a sufficiently large impact on utility. Furthermore, we find that social price comparisons lead to a relaxation of the price competition for new customers. Thus, both firms can earn higher profits when such comparisons are made than when they are absent. We also examine how other factors, such as horizontal competition and strategic customers, interact with social price comparison concerns to impact pricing strategies. Finally, we show how pricing behavior differs when price comparisons are based on historic reference prices rather than on peers’ prices.     

Perceived power imbalance and customer dissatisfaction

This study explores the causes of customer dissatisfaction in service interactions in which customers perceive a status of lower power than the service providers. Characterizing such service encounters as encounters between powerful service providers and subordinate customers, the study attempts to identify the service providers' specific actions that caused customers to experience memorable dissatisfaction. For contexts of the study, professional, judgemental, and governmental services are used. The customers' dissatisfying experiences with these services were studied by using the critical incident technique to uncover and classify the causes of dissatisfaction as well as their post-encounter behaviours. During the data analysis, 10 causes of dissatisfaction emerged. In addition, customers' reactions to their dissatisfaction were noted and classified. Implications for practitioners and academicians are provided.     

Temporal Reframing of Prices: When Is It Beneficial?

Prior studies provide mixed results pertaining to the effectiveness of temporal reframing of prices. This study examines the conditions in which such temporal reframing to a shorter period of time is more or less beneficial than aggregate prices. Investigations of the role of four moderating variables—price endings, price level, time periods, and calculation affinity—show that reframed prices are more beneficial than aggregate prices for high-priced products, especially in combination with even price endings, an aggregate price that normally refers to a comparatively short time period, or customers with poor calculation affinity. Aggregate prices offer more benefits than reframed prices for low-priced products, odd price endings, aggregate prices that refer to longer periods, and customers with excellent calculation affinities.     

The Economic Burden of Health Care,Funeral, and Burial Expenditures at the End of Life

Research suggests that widows and wodowers experience substantial economic vulnerability. Using nationally representative data from the Consumer Expenditure Surveys 1980–2000, we describe pre‐widowhood shifts in medical and funeral/burial expenditures and discuss how these changes may affect post‐widowhood economic well‐being. Our analyses suggest that funeral/burial and medical expenditures, when combined, typically constitute a 63.1% income share for recently widowed households. Discussion focuses on what role consumer educators can play in helping families better manage end‐of‐life expenditures.     

Price matching and product differentiation strategies considering showrooming

Showrooming, a phenomenon in which customers use brick-and-mortar stores to assess products and then purchase them from online retailers (o-retailers) for lower prices, is considered a great threat to traditional retailers (t-retailers). To combat showrooming, many t-retailers have executed price matching which enables customers to pay o-retailers' lower prices for the identical product. To avoid direct competition with t-retailers who execute price matching, many o-retailers have begun to sell differentiated products from t-retailers, which weakens the information advantage to customers from practicing showrooming. Motivated by these observations, we construct a duopoly game, where a t-retailer and an o-retailer sell products in a same category, to study the profitabilities of product differentiation and price matching in the context of showrooming. The results show that in the scenario without price matching, the o-retailer is likely to benefit from product differentiation only when the o-retailer's differentiated product is more popular with customers than the t-retailer's product. However, in the price matching scenario, the o-retailer also has the opportunity to benefit from product differentiation when the o-retailer's differentiated product is less popular with customers than the t-retailer's product, and product differentiation can be a win-win strategy for the two retailers under certain conditions. Considering the o-retailer's product differentiation decision, the t-retailer is only likely to execute price matching if the non-digital attributes of the product category sold by two retailers are not very obvious.     

Price recall: Brand and store type differences

Price is among the most important choice criteria for customers, whose price knowledge is often surprisingly inaccurate. This study aims at providing new insights into differences in price recall across brands and store types, and their potential effect on marketing efficiency and customers’ store choice. Towards this aim, we analyze the price recall of consumers for 51 food items by a random-effects panel estimation employing a survey with 715 participants. Our results show that customers recall national brand prices better than private labels, almost irrespectively of the store type; consumers overestimate store brand prices in both store types; the effect, however, is much higher for the convenience store. These outcomes have consequences for the marketing strategy: despite a price-matching guarantee for the store brands in the convenience store, the price image is still in favor of the discounter. This result raises doubts on the effectiveness of the price-matching guarantee, at least in this context. The everyday low price strategy of the discounter seems to pay off in terms of the price image. Though both stores charge the exact same prices for their store brands, prices at the discounter are on average perceived to be significantly lower.     

Triadic relationship between customers,service providers and government in a highly regulated industry

This study investigates the triadic interplay among the government, service providers and customers in a highly regulated environment in a centrally planned economy influenced by communist political ideology. In order to answer the research question, we conducted two studies: Study 1 is a qualitative study aiming at exploring various aspects of the triadic interplay among customers, service providers and the regulatory framework, and Study 2 employed a quantitative approach to validate some findings in Study 1. It was found that the relationships between the three main entities in the market were not balanced. Service providers were more passive in their relationship with regulators. In addition, communications between customers and regulators were limited and not well-established. Customers had not been sufficiently engaged and thus, had little voice in the formulation of regulations. Furthermore, the perception of a firm's service quality and innovativeness was different among customers with different levels of perceived regulatory control and regulatory knowledge. As regulatory control and knowledge increased, customers were more likely to perceive a higher level of service quality and innovativeness. The research extends the domain of relationship marketing by incorporating the influence of the government or regulatory framework in the relationship between customers and service providers. The findings of this study can provide practical insights for policymakers and help service providers to effectively manage the relationships with their customers and regulatory bodies.     

Competitive resource sharing by Internet Service Providers

We look at non-cooperative resource sharing (a generalization of paid peering) among Internet Service Providers (ISPs), where individually rational providers who not only compete for customers but also participate in resource sharing, in order to utilize underlying complementarities in cost structures. In particular, we are interested in the following question: would simple, easy-to-implement access pricing mechanisms guarantee ex-ante participation in resource sharing even by providers who, subsequent to deciding participation, engage in competition for customers, set access prices and make routing decisions? We first show that, in presence of linear access pricing, participation in the sharing arrangement is possible, but not guaranteed. We then show that a two-part tariff guarantees participation in the sharing agreement—this is not obvious given that resource sharing alters customer bases. We also show that our mechanism is robust to providers mis-reporting their types. Next, we show that, though both providers choose strictly positive customer bases, one of the them has no incentive to utilize the resources of the other and effectively acts as a resource supplier, whereas the other provider utilizes both resources. Finally, we show the robustness of our results to different cost structure and game forms, and provide some policy implications. Our results have significant implications not only for policy design since they suggest that paid peering should be encouraged but also for design of realistic traffic engineering protocols.     

Competitive price-matching guarantees under imperfect store availability

This paper analyzes the role of verification of product availability in the context of competitive price-matching guarantees (PMGs). PMGs involve a retailer matching any lower price offered by competition for an identical item. Until now, researchers focused on the scenario where customers can receive the lower price with a simple proof (e.g., weekly flyers). However, in reality, retailers reserve the right to verify the availability at the competitor location; if the product is not available there, then the price-match request might be declined. We develop a price competition model to investigate the effects of verification of availability on price decisions and profit levels of competing retailers. In our model, demand is driven by the availability levels of retailers as well as the price-search cost and store-switching cost incurred by customers. Price-search cost leads to two customer segments: uninformed ones who have no knowledge about prices, and informed ones who are knowledgeable about prices. On the other hand, store-switching cost determines how many customers search for the product at an alternative location because of high price or unavailability at their preferred retailers. Our analysis reveals, among others, that the outcome of availability verification is linked to three factors: price-search cost, store-switching cost, and the reservation prices of customer segments. Verification of availability allows retailers to price discriminate customers who could not be discriminated otherwise, specifically those belonging to the informed customer segment. Furthermore, it is a significant profit-enhancing mechanism only if there are switching customers in the market. Interestingly, even though customers view the verification of availability as a hassle, it can actually result in them paying lower retail prices by increasing the level of retail price competition.     

An Investigation of Trust,Satisfaction, and Commitment on Repurchase Intentions in Professional Services

Abstract

The predictive ability of trust, satisfaction, and commitment regarding a customer's intent to retain professional service providers is explored. Trust, in business relationships, is typically perceived as a consequent of satisfaction and experience. However, professional service customers may be unable to commence relationships without trusting their providers; thus, the stance that trust leads to commitment may not hold. Given the difficulty that professional service customers have regarding their ability to assess their providers' trustworthiness, customers may take trust for granted once the relationship begins. Regression analyses suggest that professional service customers utilize satisfaction and commitment, rather than trust, to determine repurchase intentions.     

The effects of social justice and stigma-consciousness on gay customers' service recovery evaluation

This study examines how social justice and the stigma-consciousness level of gay customers influence their service recovery perceptions. The results, based on an experiment involving 379 gay respondents, indicate that distributive justice, procedural justice, and interactional justice significantly affect gay customers' service recovery evaluations (satisfaction) and post-complaint behavioral intentions (negative word-of-mouth and repatronage). Also, higher stigma-consciousness gay customers show more negative service recovery evaluations and behavioral intentions than those with lower stigma-consciousness. Service providers who are interested in attracting and maintaining gay customers should create awareness among their employees about stigma-consciousness.     

PRICE SETTING OF MARKET MAKERS: A FILTERING PROBLEM WITH ENDOGENOUS FILTRATION

This paper studies the price‐setting problem of market makers under risk neutrality and perfect competition in continuous time. The classic approach of Glosten–Milgrom is followed. Bid and ask prices are defined as conditional expectations of a true value of the asset given the market makers' partial information that includes the customers' trading decisions. The true value is modeled as a Markov process that can be observed by the customers with some noise at Poisson times. A mathematically rigorous analysis of the price‐setting problem is carried out, solving a filtering problem with endogenous filtration that depends on the bid and ask price processes quoted by the market maker. The existence and uniqueness of the bid and ask price processes is shown under some conditions.     

Cartelization,Cartel Breakdown,and Price Behavior: Evidence from the German Cement Industry

We use a unique dataset of about 340,000 market transactions from 36 smaller and larger customers of German cement producers to study the price behavior before and after the breakdown of a German cement cartel. We find that, first, while the cartel agreement was active, cartel members set higher list prices than non-cartel members; however, larger rebates granted by the cartel members led to similar transaction prices. Second, after the cartel breakdown, both cartel- and non-cartel members reduced transaction prices to a far larger extent than list prices. We build on these results and discuss implications for competition policy.     

Fabric speciality stores: travel behaviour of female customers

This consumer travel behaviour study examined (i) the distance female customers travel from their home to the fabric speciality store they most often shop in, and (ii) the effects of selected factors on the travel behaviour of these customers. The procedure was to select 10 fabric speciality stores at random in the Phoenix (Arizona) metropolitan area and have 25 female customers complete the questionnaire at each store. The 250 questionnaires were analysed by examining the distances the respondents travelled in various situations and by chi-square tests to determine the relationships among the variables. The results indicated that the majority of respondents travelled 3 miles or less (oneway) from their home to the fabric speciality store they most often shopped in; however, the actual number of miles travelled in this situation was found to be dependent on the respondents' level of education. It was also found that many respondents were willing to travel farther than the distance from their home to the fabric speciality store they most often shopped in to (i) purchase a specific fabric; or (ii) seek a greater variety of fabrics and related items, lower fabric prices and helpful/knowledgeable salespeople.     

The cost (and the value) of customer attire: linking high- and low-end dress styles to service quality and prices offered by service employees

This study tests the impact of customer dress on the price of goods and services offered and on service quality. Mystery shoppers visited stores in three different business contexts. For each context, 30 mystery shoppers paid three visits each, once in sloppy, once in casual, and once in fashionable attire. Supporting research hypotheses, dress had conflicting effects on employees: customers wearing fashionable/casual clothing received better service than those dressed sloppily, while the latter were offered goods and services at lower prices. The findings imply that organizations should reconsider their customer discrimination policies, and engage customers in developing accepted dress codes.     

The Often‐Forgotten Nonfuneral Consumer Grief for the Grieving

Consumer protection advocates and resulting government regulation of the death care industry tend to focus on the most obvious problems, those caused by deceptive sales practices of funeral service providers. However, a spotlight on the funeral’s large expenses overshadows the myriad of other consumption activities that heirs must undertake. Survivors must navigate confusing complex situations for which they are unprepared, at a time when grief increases their vulnerability.     

Switching behavior of U.S. mobile phone service customers after providers shift from contract to no contract mobile phone service plans

The study examines the impact of the recent shift of the mobile phone service providers in the U.S., from contract to no contract mobile phone service offerings, on the switching behavior of customers in different age groups. Consistent with previous research, the findings ascertain that switching barriers related to relational benefits, availability and attractiveness of alternatives, service recovery and retention in the mobile phone industry are perceived differently by customers in different age groups. However, counter to previous research in the retail banking industry, the research finds that younger customers in the mobile phone service industry are more likely to perceive relational benefits, the effort providers exert to recover a service and are less likely to switch to other providers than older customers. The research findings have implications to theory and practice.