Pricing practices: A critical review of their effects on consumer perceptions and behaviour |
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Institution: | 1. Department of Marketing, Guanghua School of Management, Peking University, Beijing 100871, PR China;2. Department of Marketing, Faculty of Business and Economics, Monash University, PO Box 197, Caulfield East, VIC 3145, Australia;1. College of Business, Embry-Riddle Aeronautical University Address: 600 S. Clyde Morris Blvd. Daytona Beach, FL 32114;2. Department of Marketing, Monte Ahuja College of Business, Cleveland State University, 2121 Euclid Ave, Cleveland, OH, 44115, USA;3. Department of Marketing, School of Business, University of Kansas,1300 Sunnyside Ave, Lawrence, KS, 66045, USA |
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Abstract: | With the present challenge to compete on price or product assortment, retailers and manufacturers are increasingly focusing on state-of-the-art pricing strategies which have their roots in behavioural economics and psychology. The current review is an empirical investigation on the relative effectiveness of various pricing practices on consumer perceptions and behaviour. Six pricing strategies were reviewed; drip pricing, reference pricing, the use of the word ‘free’, bait pricing, bundling and time-limited offers. The review shows that the former three have received a significant amount of attention and have a robust impact on consumer perceptions and behaviour. There is less research on the latter three; however, the available evidence does suggest that they, too, may be capable of influencing consumers’ choices. Finally, it is also clear that the effects of pricing practices can be moderated by a variety of factors. Overall, the current review indicates that sellers are able to influence perceptions and purchase decisions of consumers based on the manner in which prices are displayed. The implications of these findings for retailers, policy makers and researchers are discussed. |
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Keywords: | Pricing practices Critical review Behavioural economics Consumer psychology |
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