Understanding and enhancing price fairness perceptions of value-based pricing

Understanding the Antecedents to Customer Loyalty by Applying Structural Equation Modeling

This chapter delineates the antecedents of tourists’ perceptions of the extent to which they perceive the prices they pay as being fair. The study also tests the relative importance of overall price fairness perception, which is measured as the relative gap between the expected price and the perceived price. A model and hypothesis was developed and tested, with reference to existing theories. Data was collected from nine nature- and activity-based firms in Northern Norway. A regression analysis was performed, in order to test the relative effects and strengths of the antecedents of tourist perception of price fairness. The results revealed that both information and monetary antecedents affect perceptions of price fairness. In particular, monetary-related antecedents such as household income, payment in advance, and value for money affected perception of whether prices were fair. Interestingly, information-related antecedents such as previous experience affected negative perceptions of price fairness. The results are discussed in terms of their implications for the tourist industry.

PurposeThe aim of this research is to determine the price fairness of the social servicescape and the effect of price fairness on customer trust. In this context, first of all, the effect of the social servicescape on price fairness and then the effect of price fairness on customer trust were tested.Design/methodology/approachThe universe of the research consists of people who visit Starbucks coffee stores. In the study, data were collected from 338 people who visited Starbucks coffee stores. The relationships between the variables were analyzed using the Structural Equation Modeling (SEM) Technique.FindingsAs a result of the research, it was concluded that employees, other customers and social crowds, which are from the dimensions of the social servicescape, do not have a significant effect on price fairness, the interaction between employee and customer, which is from the sub-dimensions of the social servicescape, has an effect on customers' perception of price fairness, and price fairness also has an effect on customer trust.Originality/valueThe important point in this research is to determine the effect of the social servicescape on price fairness, which has not been studied in the literature before. Although the effect of physical servicescape on price justice has been investigated, the effect of social servicescape on price justice has not been investigated. When evaluated from this point of view, it is thought that the research will have an important contribution to the literature.

Consumers expect companies to practice fair pricing. Understanding the underlying cognitive mechanism that determines consumers’ price fairness perceptions is significant. It could help mitigate negative outcomes from unfairness perceptions and place firms in a better competitive position. This study examines the role of consumers’ thinking styles in perceived price fairness and purchase intention in a price increase situation. An online experiment was conducted wherein 171 participants across India, primarily from tier-1 cities frequently using car rental services, took part from September to December 2021. The majority of the participants (72) were 21-30 years old (42%). All involved participants met the initial criteria of using car rental services at least once a week. Proposed hypotheses were checked by one-way ANOVA following Tukey post hoc test and PROCESS. One-way ANOVA results shows a significant influence of thinking styles on cognitive attribution with large effect size, F(2, 168) = 28.04, p < .001, η2 = 0.25; presents a significant influence of thinking styles on perceived price fairness with large effect size, F(2, 168) = 30.07, p < .001, η2 = .0.26; demonstrates a significant influence of thinking styles on purchase intention F(2, 168) = 19.94, p < .001, η2 = .0.19. Findings revealed that, in the face of a price increase occurrence, consumers thinking holistically and analytically differ in perceived price fairness and purchase intention. Furthermore, holistic thinkers with higher cognitive attribution perceive a price increase as fairer. Thereby, they have higher purchase intention than analytic thinkers. Acknowledgment This study received support from Internal Grant Agency (project number IGA/FaME/2022/010), Tomas Bata University in Zlín.

Chapter 7 complements the previous analysis and explores consumers’ perceptions of price fairness and tests the correlation with the reforms. The estimation uses several waves of Eurobarometer data, a large cross-country yearly survey sponsored by the European Commission. This analysis is conducted for all three sectors considered in the above chapter: through a set of different empirical models. Some counter-intuitive results are found, which are broadly consistent with the objective evidence on price determinants. In countries that have embraced the reforms, after controlling for individual characteristics, consumers do not appear to be happier about the price they pay compared with consumers in the countries lagging behind.

In this research, we evaluate the response of Brazilian consumers to corporate social responsibility (CSR) initiatives accompanied by a price increase. We demonstrate that the extent to which Brazilian consumers perceive a company to be socially responsible (i.e., their CSR perceptions) is related to both the basic transactional outcome of purchase intentions as well as two relational outcomes: the likelihood to switch to a competitor and to complain about the CSR-based price increase. More interestingly, we find that these relationships are jointly mediated by the consumers’ perceptions of price fairness and feelings of personal satisfaction. Perhaps most interesting, we find that these mediating effects vary with consumer purchasing power; the mediating effect of price fairness on purchase intention is stronger for lower income than for higher income consumers, whereas the mediating effects of personal satisfaction on switching and complaining intentions are stronger for higher income than for lower income consumers.

This paper presents a two-period pricing model for perishable items via an advance selling strategy deployed within electronic businesses. This model is proposed by classifying consumers based on their shopping habits: strategic consumers and conventional consumers. The model was developed both with and without a consumer order cancellation variable. Numerical computation and sensitivity analysis were conducted to test and justify the theoretical model. The results demonstrate that the ratio of potential consumers in an advance selling period to that in regular selling period is the main factor affecting pricing decisions. Consumers' perception of price fairness and order cancellation have effect on sellers' total revenue. The best revenue and price is obtained by adjusting the length of the advance selling period.

ABSTRACTVoluntary pricing mechanisms, such as Pay-What-You-Want (PWYW), could be a better pricing strategy to substitute for cash discount promotions. They can effectively promote the sales of conventional goods and services, while being influenced by socio-psychological variables. However, there is no clarity on the relative assessment of the impact of pricing frames, such as PWYW and Mark-Off-Your-Own-Price (MOYOP), on the consumers’ purchase of green products, where the purchase consideration might vary as the environment protection (altruistic) consideration versus the self-interest (self-enhancing) consideration. Further, there remains ambiguity on when and why such pricing mechanisms will work. This study, through an experiment, examines the buyers’ varied responses for the PWYW price frame versus the MOYOP price frame versus the fixed price frame under the environment protection (altruistic) consideration versus the self-interest (self-enhancing) consideration. It shows that although buyers do not show any difference in the mean voluntary payment between PWYW versus MOYOP frames as such; they prefer PWYW price frame under the environment protection (altruistic) consideration and MOYOP price frame under the self-interest (self-enhancing) consideration. The results show that the perception of price fairness mediates the relationship between pricing mechanism and willingness to buy (WTB). Furthermore, this study finds that price consciousness impacts the indirect effect of pricing mechanisms on WTB via perceived price fairness. The present study is the first to examine and analyze different considerations when the buyers’ preference varied for the PWYW versus MOYOP pricing frames. This study has suggested the underlying role of the perception of price fairness and price consciousness in the participative pricing mechanism on purchase.

Perceptions of Price Fairness in the Age of the COVID-19 Pandemic: Tying Price Changes to Direct Costs

When a consumer who already owns a durable-type product in a category faces the trade-in opportunity to upgrade to a new, higher-quality product, the replacement decision is driven by stepwise comparisons of product-related information and depth of trade-ins. The first stage of comparison is about of consumers' past usage experiences. It is decided by the degree of consistency between expected and realized product evaluations consumers hold about the old one (trade-in product). The perceived risks and benefits of the new product (the upgraded product) should be a function of the consumer past usage experience. Moreover, based on the attributes of the new product, consumer engages in the second stage of comparison to differentiate its relative advantages from the old one. The relative advantages of the new product determine on consumer's perceived benefits, and in turn, along with depth of trade-ins, would result in impact on perceived price fairness, perceived transaction value and perceived acquisition value. Consumer's replacement decision then can be guided by the perceived risk and perceived value. Through a 3×2×2 between-subject factorial design on 383 college students, this study manipulates subjects' usage experiences (positive disconfirmation, no disconfirmation, and negative disconfirmation), the relative advantages of the new product (significant versus non-significant), and depth of trade-ins (high versus low), and incorporates in perceived risk and perceived value as endogenous variables; to explore the ways consumers undergo to make replacement decisions. Pretests are utilized to select a proper product category (i.e., electronic dictionary), identify the attributes and prices of the trade-in products, and deliberate the manipulations of independent variables. The experimental stimulus is presented in print ads supplemented with scenario descriptions. Respondents’ replacement intentions and their perceptions about the various endogenous variables are measured. The results show that as expected, buyers' perceptions of benefits or risks of the upgraded products are influenced by the disconfirmation between the expected and the realized performance they experienced about the trade-in products. In the case of positive disconfirmation, buyers expect the significantly higher benefits that the upgraded products will offer. And under such circumstances, the perceived risks they encountered are less evident. However, the negative relationship between perceived risks and product replacement intentions has not been supported. In terms of the relative advantages of the upgraded product, the study demonstrates that they have positive relationships with buyers' perceptions of benefits. And in turn, buyers' perceptions of benefits result in positive influences on perceived acquisition value and perceived price fairness. Similarly, these findings hold for the influence of depth of trade-in on perceived acquisition value and on perceived price fairness. As for the relationships among perceived price fairness, perceived transaction value, and perceived acquisition value, we have found that perceived price fairness is the major antecedent of perceived transaction value when buyers lack of internal reference price of the upgraded product. The perceived transaction value then has positive influence on perceived acquisition value, and in turn on buyers' replacement intentions. Given the favorable test results, except for the relationship between perceived risks and product replacement intentions, the study suggests that firms can enhance customer loyalty by offering the trade-in opportunity under such prerequisite conditions that consumers' past usage experiences are positive, the upgraded products have significantly relative advantages, and the depths of trade-in are considerable. The perceived value then is the major variable consumers concern in making replacement decisions. For inducing consumers to make positive replacement decision, firms should think higher of product performance, pay more attentions to product innovation, and deliberate the price competency to enhance customers' perceived value.

Purpose/Rationale: This paper examines how the magnitude of intra-weekly price differences for day passes affects perceived fairness and behavioral intentions across different pricing schemes. Design/Methodology/Approach: The data was collected through an online survey experiment among alpine skiers. We use ordinal logistic and least squares regressions to test the relationships between pricing schemes, fairness perceptions, and customer reactions. Findings: The magnitude of the price difference negatively affects perceived fairness. We also find that the price difference influences purchase and revenge intentions, but this effect depends on the size of the price difference across pricing scenarios. Practical implications: Managers in the service sectors considering introducing variable pricing can directly apply our recommendations presented in the article when considering introducing a more variable approach to pricing. Research Contribution: The research findings contribute to the literature by showing that the magnitude of price differences plays a vital role when examining both price fairness perceptions and purchase- and revenge intentions. Originality/Value: This research addresses a gap in the existing literature by conducting a comprehensive analysis of how variations in price magnitude under different pricing schemes influence perceived fairness, purchase intentions, and revenge within the alpine skiing industry.

The purpose of this study is to measure the agricultural product market efficiency of the three e-commerce platforms from the perspective of consumer price fairness perception, analyze the quality and price gap of invalid brands, and help agricultural products enterprises to formulate reasonable price strategies. The characteristics of farm products sold in e-commerce platforms(quality, origin, taste, safety level) were selected as output indicators and the prices of products were selected as input indicators to evaluate the efficiency of the market through DEA analysis. According to the analysis, JD mall has the largest proportion of effective brands, while YHD.com has the highest average market efficiency, and northeast rice has the largest difference in average efficiency among the three platforms. The results show that price inefficiencies still exist in the electronic market. The development of online market for agricultural products should pay attention to consumer price fairness and pay attention to the coordination between price and quality. The limitation of this paper is that it does not focus on the influence of words of mouth marketing in internet market and consumer experience, which can be the future research direction.

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

The purpose of this research is to determine the influence of trust, perceived value, perceived price fairness, and customer satisfaction on customer loyalty to environmentally friendly hair care products. The research method uses a quantitative research design by distributing questionnaires. A total of 254 respondents were sampled using purposive sampling technique. The research objects in this study were respondents aged 18-60 years in DKI Jakarta and had purchased environmentally friendly hair care products at least three times in the last year. This research uses SPSS version 26 software and SEM (Structural Equation Model) from AMOS software to analyze and process research data. The research results show that: first, trust, perceived value, and perceived price fairness have a positive and significant effect on customer satisfaction. Second, trust, perceived value, and customer satisfaction have a positive and significant effect on customer loyalty. Third, perceived price fairness has no influence on customer loyalty.

Firms typically treat their costs as tightly-guarded secrets. In six studies, we test the effect of firm disclosure of the costs to produce a given product (i.e., cost transparency) on purchase interest. We begin with a natural field experiment conducted with an online retailer, in which cost transparency increased sales (Study 1A). We subsequently replicate this field experiment in a controlled lab setting (Study 1B), and show that cost transparency is particularly potent in boosting purchase interest above other forms of transparency (Study 2). Guided by our theoretical framework, Studies 3 and 4 show that the effect is mediated by consumers’ trust in the firm, with Study 4 showing that this mediator explains variance above and beyond perceptions of price fairness. Finally, Study 5 demonstrates the critical role of the voluntary nature of the disclosure, by showing that cost transparency boosts purchase interest only when voluntarily instated by the firm, as opposed to involuntarily (e.g., as required by law). These results imply that the proactive revelation of costs can improve a firm’s bottom line.