Setting fair prices - fundamental principle of sustainable marketing (original) (raw)
Related papers
Exploring price fairness perceptions and their influence on consumer behavior
Journal of Business Research, 2016
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.
Consumer perceptions of price (un) fairness
Journal of consumer research, 2003
A series of studies demonstrates that consumers are inclined to beiieve that the selling price of a good or service is substantiaily higher than its fair price. Consumers appear sensitive to several reference points-including past prices, competitor prices, and cost of goods soid-but underestimate the effects of infiation, overattribute price differences to profit, and faii to take into account the full range of vendor costs. Potential corrective interventions-such as providing historical price information, expiaining price differences, and cueing costs-were oniy modestiy effective. These results are considered in the context of a four-dimensional transaction space that iilustrates sources of perceived unfairness for both individual and multiple transactions.
Perceptions of Price Fairness: An Empirical Research
Business & Society, 2007
This paper researches factors that influence price fairness judgements. The empirical literature suggests several factors: reference prices, the costs of the seller, a self-interest bias and the perceived motive of sellers. Using a Dutch sample, we find empirical evidence that these factors significantly affect perceptions of fair prices. In addition, we find that the perceived fairness of prices is also influenced by other distributional concerns that are independent of the transaction. In particular, price increases are judged to be fairer if they benefit poor people or small organisations rather than benefiting rich people or big organisations.
Factors Influencing Perception of Price Fairness and Customer Response Behaviors
The corpus of literature affirms that revenue management may give hotels a competitive edge. However, the issue of unfairness in pricing is critical within the hotel industry. A focus on profit while neglecting customers’ feelings could lead to long term organizational failure. There has been increasing aggressiveness in the hotel businesses given the mushrooming of hotels. The intense rivalry among hotels has led to greater customer-orientation and this has undoubtedly accorded the customers with more options to choose their hotel. This study investigates empirically the factors influencing perceived price fairness and identifies the most influential factor in measuring customer response behaviors. Four factors were extracted from the study results: (1) treatment experience, (2) price knowledge, (3) price expectation, and (4) price information. Results also revealed that price knowledge is the major factor affecting customers’ reaction and customers would not respond negatively if they have adequate price knowledge. These results provide useful insights to hotel operators on more effective yield management and the need to be alert to customers’ response behaviors.
Price fairness versus Pricing fairness
This research note discusses the distinction between these two concepts of perceptions of fairness, based on the theory of distributive justice and procedural justice, in order to helps understand consumer behavior. With a sample of 250 tourists in French Polynesia and a structural equation model, tourists do not confuse price fairness and pricing fairness. The theoretical implications are that future research should use two distinct scales. For managers, the study suggests that the attention devoted to explaining the fairness of the pricing has more impact on consumer satisfaction than some attempts to explain the price.
Influence Perceptions of Price Fairness
2014
Three experiments show that the source of price change information–i.e., whether human or inanimate–can influence consumers ’ perceptions of price fairness. When processing is unconstrained, a price increase is perceived as more unfair when presented by a human than an inanimate communication; there is no effect of source for a price decrease. When processing is constrained, a human source of a price increase results in greater price unfairness relative to an inanimate source, and a human versus inanimate source of a decrease leads to greater price fairness. In addition to demonstrating that the source of price information, moderated by the direction of the price change, influences fairness perceptions, the studies also provide strong evidence that affect induced by these variables influences perceptions of price fairness. 3 Price fairness is often of concern to consumers, policy makers, politicians, and firms. Whether motivated by ethics or by beliefs that consumer perceptions of u...
Business & Society, 2007
This article researches factors that influence price fairness judgments. The empirical literature suggests several factors: reference prices, the costs of the seller, a self-interest bias, and the perceived motive of sellers. Using a Dutch sample, we find empirical evidence that these factors significantly affect perceptions of fair prices. In addition, we find that the perceived fairness of prices is also influenced by other distributional concerns that are independent of the transaction. In particular, price increases are judged to be fairer if they benefit poor people or small organizations rather than rich people or big organizations.
Effects of Consumers’ Efforts on Price and Promotion Fairness Perceptions
Journal of Retailing, 2010
This research examines how consumers' efforts as a non-monetary sacrifice influence their price and promotion fairness perceptions in the context of price promotions. Multiple studies using different price promotion tactics demonstrate that consumers' perceived level of effort to obtain a reduced price negatively influences their fairness perceptions when they are denied the promoted price. Exploring the underlying mechanisms of this effect, we show that the amount of effort consumers exert to obtain a promoted price leads to their feeling of deservingness and entitlement. When the promoted price is denied, this feeling of entitlement is violated, causing unfairness perceptions to occur. The research demonstrates that, in addition to retailers' actions such as price changes, consumers' actions, in the form of their effort input, are also an important determinant of fairness perceptions.
2009
This paper aims to develop a measure of price fairness perception by extending price fairness conceptualisation to a multi-scale measure, thereby capturing its complexity in a mass service context. The service context is becoming increasingly competitive, particularly in the telecommunication industry, where a variety of service options is offered (e.g., mobile phone services). A review of price fairness perception literature usually focuses on the equity and social exchange theory and upon findings from exploratory research of the current market situation. In this article, the measure is conceptualised to entail a more extensive set of dimensions. These dimensions include the following: flexible price, reasonable price, acceptable price and superior price. Previous researchers have used actual price to focus on the structure and price comparison of competitors within the service industry. In contrast, this research has focused on the price comparison in terms of relative price. Additionally, we use a survey to elicit responses from 998 individual users of prepaid mobile phone services in Thailand. The results indicate a valid and reliable measure of price fairness perception, permitting us to understand how customers perceive that a price offered by service providers is fair. This understanding will help managers (and their respective organisations) to design an appropriate price strategy that fits what their customer's wants and needs while fostering a long-term relationship with them.