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Transparent pricing: Theory, tests, and implications for marketing practice
Abstract
In today’s retail markets, products display opaque pricing, i.e., a single number that provides no information about the allocation
of the retail proceeds among agents who bring the product to market. We study transparent pricing, which is an alternative strategy in which allocation information is revealed. We differentiate transparent pricing from related
marketing practices such as social marketing, cause-related marketing, and pay-what-you-want. Using controlled experiments
in multiple product categories with diverse sampling frames, we find that transparent prices systematically alter consumer
utility functions and stated choice behavior. Our results support explanations drawn from both neoclassical and behavioral
economic theory, including inequity aversion, procedural justice, and altruism. Classical theory predicts that price transparency
should have little effect on consumer behavior. However, results from behavioral economics suggest that consumers may relax
“self-interest” in the face of transparent prices, leading to counter-intuitive preferences. For example, in one set of studies
we observe a significant proportion of consumers selecting the more expensive of two replicates of the same product. In another
study, a subset of motorists willingly pays higher gasoline taxes for the same gallon of gas, increasing the overall price
per gallon. We explain this behavior via parameterized utility functions that contain both self-interested and other-interested
components moderated by characteristics of the decision-maker and characteristics of the choice context.
KeywordsDifference aversion-Discrete-choice-Fairness-Price transparency-Cost transparency-Supply-chain
... del Bosque Rodríguez, Agudo, & San Martín Gutiérrez, 2006), along with insights from equity theory (e.g. Carter & Curry, 2010) and studies on the benefits of information utilisation in supply chains (e.g. Davis & Golicic, 2010), this paper develops a research model on how customers' perception of suppliers' ITenabled information utilisation influences customer satisfaction in B2B markets. ...
... On the contrary, when suppliers lower their prices while keeping product/service quality constant, this tends to increase customers' satisfaction (Hidayat et al., 2019). Interestingly, studies have also shown that customers may be willing to accept a relatively high price as long as they perceive pricing formation to be transparent (Carter & Curry, 2010) and fair (Homburg et al., 2013). ...
... However, equity theory suggests that transparent pricing can enhance perceptions of fairness when it comes to prices (Carter & Curry, 2010). Interestingly, Homburg et al. (2014) have found that although an increase in price generally leads to a decrease in customer satisfaction, when pricing is transparent, this is not always the case. ...
Background
Despite the recognised benefits of IT, we still know very little about how the perceived utilisation of IT-enabled information by suppliers is linked to customer satisfaction in B2B markets.
Objectives
To address this gap, this study develops a research model, which is then tested through a web-based survey of transport firms’ customers.
Methods/Approach
A web-based survey was conducted in Slovenia. The target population for this study was all export firms that utilise transport services.
Results
The study makes two key contributions to B2B marketing literature. First, results show that the more a supplier is perceived to utilise IT-enabled information in the service process, the less emphasis its customers place on prices when it comes to determining their satisfaction. Second, the results suggest that customers view the utilisation of IT-enabled information by suppliers of B2B services as a value-adding capability that boosts service quality perceptions.
Conclusions
Interestingly, although we expected that perceived utilisation of IT-enabled information would also increase the importance of service quality in forming customer satisfaction, the results suggested that this was not the case. Drawing on service quality literature, the study offers possible explanations.
... In general, transparency supports the establishment of brand trust by providing information that alleviates concerns associated with perceived risk, which can arise from uncertainty surrounding the appropriateness of product cost. Transparent pricing can thus help consumers rationalize their decisions about whether or not the cost is in line with what they want to pay and relax their self-interest (Carter and Curry, 2010;Maxwell, 1995). It can also help consumers ascertain adherence to social norms (Heyman and Mellers, 2008) while supporting the construction of trust between company and consumer in the process (Bertini and Gourville, 2012). ...
... Opaque pricing typically provides little information about cost distribution and a variety of other production factors. When brands provide information regarding price determination by outlining the costs associated with labor, materials and other extraneous costs (Carter and Curry, 2010) or accurate outcome price (Bertini and Gourville, 2012), consumers' perceptions of procedural justice and price fairness have been shown to improve (Carter and Curry, 2010). ...
... Opaque pricing typically provides little information about cost distribution and a variety of other production factors. When brands provide information regarding price determination by outlining the costs associated with labor, materials and other extraneous costs (Carter and Curry, 2010) or accurate outcome price (Bertini and Gourville, 2012), consumers' perceptions of procedural justice and price fairness have been shown to improve (Carter and Curry, 2010). ...
Purpose
This study aims to understand the effects of brands’ transparent communication (i.e. production transparency and cost transparency) on consumers’ perceptions of a brand’s perceived transparency and authenticity, as well as how such perceptions impact consumers’ attitude, trust and behavioral intentions.
Design/methodology/approach
Two between-participants factorial design experiments ( n = 176 for Study 1 and n = 169 for Study 2) were conducted to examine consumers’ responses to a brand’s cost transparency and production transparency.
Findings
The results revealed that transparency in the focal brand’s communication of production and cost would increase consumers’ perceptions of the brand’s transparency and authenticity because of its perceived information sensitivity. Such positive effects were found to similarly impact consumers’ attitude, trust and behavioral intention toward the brand.
Practical implications
The results point to the importance of brand transparency in marketing communication, specifically as it pertains to the influence that the inclusion of transparent cost and production information can have on consumers’ perceptions of authenticity, trust and attitude, as well as how these perceptions translate into behavioral intention.
Originality/value
To the best of the authors’ knowledge, this study is among the first to explore the differences between production transparency and cost transparency in influencing consumer responses and the underlying mechanisms. The findings also expand to the literature on brand transparency and brand authenticity.
... Thus, pride aligns with how cost transparency signals a unique level of disclosure that can be seen by consumers as a socially (and morally) orientated business accomplishment. This is because such transparency increases perceptions of justice and fairness (Carter and Curry 2010), and can be seen as a form of competitive advantage (Singh 2015). A sense of pride is also associated with socially responsible and transparent business practices (Sullivan et al. 2013), and especially for employees, resulting in increased engagement (Solis and Lavoy 2015). ...
... In particular, transparent pricing can be influential in terms of consumer perceptions of price fairness (i.e., a subjective evaluation of price in comparison to competitors' prices) (Miao and Mattila 2007;Ferguson and Scholder Ellen 2013). Notably, cost transparency informs and supports economic and social perspectives of price fairness (Carter and Curry 2010). Specifically, neoclassical theory indicates that consumers should be indifferent to transparent pricing as they will select the least expensive option (considering they are all perfect substitutes) (Carter and Curry 2010). ...
... Notably, cost transparency informs and supports economic and social perspectives of price fairness (Carter and Curry 2010). Specifically, neoclassical theory indicates that consumers should be indifferent to transparent pricing as they will select the least expensive option (considering they are all perfect substitutes) (Carter and Curry 2010). However, in the case of the social perspective, price transparency may increase perceptions of justice and preferences for fairness (Carter and Curry 2010). ...
In the era of consumer distrust of corporations, transparency is becoming a must rather than an option. While prior research has explored why businesses should disclose their costs and how consumers may react to such cost transparency, it is still unclear how marketers can best communicate cost transparency. The present research offers a practical examination of how and when cost transparency is effective, specifically, by examining the moderating role of authentic and hubristic pride on the effectiveness of cost transparency. Across two experimental studies, the effectiveness of cost transparency is leveraged using authentic pride, whereas hubristic pride decreases it. Further, we empirically demonstrate the mediating role of moral elevation. Overall, the results demonstrate that marketing messages that elicit authentic pride can increase the effectiveness of cost transparency. Hence, the current research highlights how marketers and brands can effectively combine specific emotional appeals with cost transparency to obtain favorable consumer evaluations.
... Perception of whether a specific organization is transparent (or its trademark, since the names of organizations and their activity are often related with the trademark of an organization, through the perception of external subjects), occur from the knowledge, of what a specific organization has done and not what it would have done in an ideal case (what real actions have been made by a certain organization, but not its promises, and also whether there is a big gap between its real actions and promises) (Bernstein, 2009). Business organizations, which are open for external subjects get benefit from consumers, who look at the trademark of such organizations more favourably (Arens et al., 2011), perceive organization as trustworthy (Brown, Michael, 2002), believe in price transparency of goods and fairness of its delivery procedures (Carter, Curry, 2010;Miao, Mattila, 2007), receive bigger satisfaction buying goods from an organization or using its services (Eggert, Helm, 2003), assign bigger value to goods and services of an organization (Carter, Curry, 2010;Eggert, Helm, 2003), trust in an organization more (Beulens, et al., 2005;Jahansoozi, 2006) and have intentions to buy goods and services in the future (Bhaduri, Ha-Brookshire, 2011). Transparency in the relationship with the members of logistics chain, impacts bigger effectiveness of supply chain, while coordinating material and raw material flows (Hultman, Axelsson, 2007), encourages cooperation (Beulens et al., 2005) and mutual trust (Beulens et al., 2005). ...
... Perception of whether a specific organization is transparent (or its trademark, since the names of organizations and their activity are often related with the trademark of an organization, through the perception of external subjects), occur from the knowledge, of what a specific organization has done and not what it would have done in an ideal case (what real actions have been made by a certain organization, but not its promises, and also whether there is a big gap between its real actions and promises) (Bernstein, 2009). Business organizations, which are open for external subjects get benefit from consumers, who look at the trademark of such organizations more favourably (Arens et al., 2011), perceive organization as trustworthy (Brown, Michael, 2002), believe in price transparency of goods and fairness of its delivery procedures (Carter, Curry, 2010;Miao, Mattila, 2007), receive bigger satisfaction buying goods from an organization or using its services (Eggert, Helm, 2003), assign bigger value to goods and services of an organization (Carter, Curry, 2010;Eggert, Helm, 2003), trust in an organization more (Beulens, et al., 2005;Jahansoozi, 2006) and have intentions to buy goods and services in the future (Bhaduri, Ha-Brookshire, 2011). Transparency in the relationship with the members of logistics chain, impacts bigger effectiveness of supply chain, while coordinating material and raw material flows (Hultman, Axelsson, 2007), encourages cooperation (Beulens et al., 2005) and mutual trust (Beulens et al., 2005). ...
... It is said, that organizations, which are transparent internally and externally, have bigger competitive advantage Vogelgesang, Lester, 2009). What is more, transparency helps to expand the point of view of a company towards competition itself as a phenomenon , and this allows to improve differentiation of products and reach targeted consumers for organizations (Carter, Curry, 2010). This benefit increases more co-operating with partners (Jahansoozi, 2006). ...
... Organizations that are transparent with their external stakeholders benefit from customers who have more favorable attitudes toward the brand (Arens et al., 2011), perceive the firm as more credible (Brown and Michael, 2002), perceive greater price fairness and procedural justice (Carter and Curry, 2010;Miao and Mattila, 2007), have greater customer satisfaction (Eggert and Helm, 2003), perceive greater value of the firm's products (Carter and Curry, 2010;Eggert and Helm, 2003), trust the organization more (Beulens, et al., 2005;Jahansoozi, 2006), and ultimately have a greater purchase intention (Bhaduri and Ha-Brookshire, 2011). Transparency with supply chain members results in greater supply chain efficiencies in flow of materials (Hultman and Axelsson, 2007), cooperation (Beulens et al., 2005), and trust (Beulens et al., 2005). ...
... Organizations that are transparent with their external stakeholders benefit from customers who have more favorable attitudes toward the brand (Arens et al., 2011), perceive the firm as more credible (Brown and Michael, 2002), perceive greater price fairness and procedural justice (Carter and Curry, 2010;Miao and Mattila, 2007), have greater customer satisfaction (Eggert and Helm, 2003), perceive greater value of the firm's products (Carter and Curry, 2010;Eggert and Helm, 2003), trust the organization more (Beulens, et al., 2005;Jahansoozi, 2006), and ultimately have a greater purchase intention (Bhaduri and Ha-Brookshire, 2011). Transparency with supply chain members results in greater supply chain efficiencies in flow of materials (Hultman and Axelsson, 2007), cooperation (Beulens et al., 2005), and trust (Beulens et al., 2005). ...
... Organizations that are internally and externally transparent are said to have a greater competitive advantage Vogelgesang and Lester, 2009). Transparency enhances organization-wide understanding of the competition , which allows organizations to improve differentiation of their product offerings to targeted consumers (Carter and Curry, 2010). This benefit is further facilitated by greater collaboration and cooperation with stakeholders ( Jahansoozi, 2006). ...
Purpose
– The purpose of this paper is to critically review the relevant literature on transparency, provide a comprehensive definition of transparency, and present a new framework for facilitating the adoption of transparency as an ethical cornerstone and pragmatic strategy for organizational responsible business management.
Design/methodology/approach
– A systematic literature review – a methodology adopted from medical sciences to eliminate research bias – was conducted. In doing so, the definitions, antecedents, and consequences of transparency are accessed and synthesized.
Findings
– Based upon this process transparency is defined as the extent to which a stakeholder perceives an organization provides learning opportunities about itself. A conceptual framework emerged from the data. It describes when transparency is especially important, what organizations can do to be more transparent, and the potential benefits of transparency.
Practical implications
– The transparency framework can be used as a guide for organizations attempting to change their behavior, image, and performance by adopting transparency as a value in their organization. In addition, the framework can be used to create and adopt a universal (i.e. industry-wide or even societal-wide) code of conduct. Furthermore, this review, definition, and framework provide a template for academics to advance transparency theory, and empirically test the construct’s application.
Originality/value
– As a new research field, transparency has lacked a concise definition as well as a conceptual framework. This is the first comprehensive summary of transparency. In addition, this study contributes to the methodology of evaluating construct definitions to advance empirical research.
... The general (and sometimes irrational) preference for transparency has been discussed in the behavioral finance literature as "ambiguity aversion" [Camerer and Weber 1992:325], meaning that individuals appreciate "ambiguous" situations (having no information about the probability distribution) less than "risky" situations (knowing the probability distribution of the event), and are normally willing to pay to avoid ambiguity [Stracca 2004:382]. Carter and Curry [2010] find similar evidence in their research on transparent pricing, showing that individuals prefer products with transparent prices (showing allocation of costs to different supply-side parties) over their non-transparent counterparts and are willing to pay premium prices for such products. Andersson and Holm [1998] theoretically explain this behavior with the improved falsifiability of transparent information (analogous to Popper's postulation that scientific theories need to be falsifiable). ...
... Second, we also assume that improving transparency should increase the client's overall satisfaction with the client-advisor encounter. It has previously been suggested that individuals prefer transparent situations over their untransparent counterparts [Andersson and Holm 1998;Carter and Curry 2010], such that establishing transparency should lead to favorable perception of the vis-à-vis and increase satisfaction [Eggert and Helm 2003;Inbar and Tractinsky 2011]. In order to evaluate the utility of our design artifact in achieving these improvements, the evaluation was aimed to compare artifact-supported investment advisory encounters with traditional pen and paper investment advisory encounters, corresponding to current advisory practice in Switzerland. ...
... Increased client comprehension may compel companies and their advisors to be more convincing and persuading regarding their own products -at the advantage of potential competitive differentiation and increased client satisfaction. Also, as research has shown [e.g., Carter and Curry 2010], transparency may positively influence the clients' willingness to pay for advice, paving the way to alternative business models, e.g., separating feebased advice from its implementation with products. ...
Investment advisory encounters are strained by information, knowledge and interest asymmetries between client and advisor. These are detrimental to advisory quality and client satisfaction, leading to an unfavorable client perception of investment advisory services. This situation is disadvantageous for both clients and financial service providers. Clients increasingly turn to other information sources and fail to reap advisory services’ potential benefits for their investment decisions; financial service providers fail to exploit personalized advisory services as one the most promising differentiation strategies against competitors and struggle with low client satisfaction and retention.This dissertation suggests a novel approach for these issues: addressing asymmetries in investment advisory encounters with transparent, shared IT artifacts. Hence, it is based on the following thesis: Shared collaborative IT artifacts are a feasible and useful means to improve transparency of investment advisory encounters and, thus, to increase client satisfaction.The dissertation supports this thesis along three research essays: Essay I provides an empirical investigation of the status quo of Swiss investment advisory services. It suggests that investment advisory encounters are asymmetric and affected by a lack of transparency regarding the process and its information, leading to poor advisory quality and low client satisfaction. To overcome these issues, the dissertation introduces the solution approach of shared collaborative IT artifacts. While Essay I presents the basic building blocks of such an approach, Essay II and III demonstrate the feasibility of addressing process, information and cost transparency with such artifacts, presenting their underlying design considerations as well as their prototypical implementations. Furthermore, they provide experimental evidence of such artifacts’ usefulness – results show that the constructed shared collaborative IT artifacts indeed are useful means to improve transparency in investment advisory encounters; they also demonstrate that providing such artifacts relates to increased client satisfaction compared to traditional investment advisory encounters.
... On the one hand, clients show increased satisfaction with the cost-transparent encounter. On the other hand, and supporting Carter and Curry's (2010) notion of an individual's economic and social perspective on product pricing, in such encounters clients indeed tend to prefer less expensive products (economic perspective) but in turn exhibit increased willingness to pay for the service received (social perspective). These findings may challenge the common belief of FSPs that transparent, fee-based advisory services would neither be accepted by clients nor be economically viable. ...
... Research suggests that individuals appreciate "ambiguous" situations (having no information about the probability distribution) less than "risky" situations (the probability distribution of the event is known), and are normally willing to pay to avoid ambiguity (Stracca 2004, p. 382). Carter and Curry (2010) find similar evidence in their research on transparent pricing, showing that individuals prefer products with transparent prices (providing allocation of costs to different supply-side parties) over their non-transparent counterparts and are willing to pay premium prices for such products. ...
... FSPs are not very eager to provide cost transparent advisory services because of their implied effects on existing business models. Research on price transparency (Carter and Curry 2010), however, suggests that clients not only prefer transparent settings but may also be willing to pay premium prices compared to non-transparent scenarios. We therefore assume that clients will show higher willingness to pay for cost-transparent advisory settings: ...
Investment advisory services of financial service providers (FSPs) exhibit several characteristics that are detrimental to advisory quality. The interaction of advisor and client is strained by a lack of transparency regarding the advisory process (what activities are performed and why) and the information used therein (what information is used for what purpose and with what effect), as well as regarding the precise costs of the service and the recommended products. In prior research, we suggested that process and information transparency issues may be appropriately addressed with collaborative information technology (IT) artifacts. In this paper, we argue that collaborative, transparent artifacts may also be a premise of enabling cost transparency. To this end, we describe a complete research cycle of designing, implementing, and evaluating a shared cost-transparent IT artifact to support client-advisor interaction in investment advisory encounters. Evaluation results suggest the efficacy of our design in improving the clients’ perceived cost transparency as well as increase their satisfaction and their willingness to pay for the received investment advice. These findings may also challenge the common belief of FSPs that transparent, fee-based advisory services would neither be accepted by clients nor be economically viable. Practical implications of these findings for designing advisory encounters with supportive IT are discussed.
... The distribution of prices paid under PWYW was similar to what is found in behavioral economics; that is, many people want to pay nothing in a PWYW setting (complete greed), but some will pay as much as their WTP (complete fairness) (Jang and Chu, 2012). Carter and Curry (2010) found that consumers tend to show counter-intuitive preferences (i.e., buying the gallon of gas with higher gasoline taxes, buying the more expensive of two identical products) when the payment-allocation information is provided. These findings suggest that behavioral economics should be better than classical economic theory as a theoretical lens through which to view consumer behavior in value-based pricing like PWYW (Carter and Curry, 2010). ...
... Carter and Curry (2010) found that consumers tend to show counter-intuitive preferences (i.e., buying the gallon of gas with higher gasoline taxes, buying the more expensive of two identical products) when the payment-allocation information is provided. These findings suggest that behavioral economics should be better than classical economic theory as a theoretical lens through which to view consumer behavior in value-based pricing like PWYW (Carter and Curry, 2010). ...
This study proposes a conceptual framework to clarify what leads to successful implementation of the pay what you want (PWYW) pricing mechanism. Psychological factors from the behavioral economics perspective are included in the framework based on the proposition that they play a role in determining how much a consumer will pay. PWYW refers to a participative pricing model in which a consumer can take full control over the price. The goals of this value-based pricing strategy are in line with the goals of revenue management—increasing the opportunity for greater revenues and higher customer satisfaction by understanding consumers’ perceived value. A meta-analysis of real-world examples identifies components, including price fairness perception that can lead people to pay something greater than zero under PWYW.
... An earlier lawsuit in 2006 alleged that Starbucks exploited its monopoly power in the specialty retail coffee market (CNN Money, 2006). Carter and Curry (2010) still find that consumers express a willingness to buy the more expensive of two identical items. As a result, Starbucks has no inclination to reduce its price. ...
... Starbucks' advertisement reinforced the notion that there is more to a cup of coffee than just the coffee. Although Starbucks has gone further than most companies to explain its cost structure by describing the allocation of price among its supply-side agents (Carter and Curry, 2010), a number of consumers continue to subscribe to Starbucks' notion of value. ...
Purpose
– The purpose of this paper is to present a critical viewpoint on the negative aspects of market, price and cost transparencies to consumers in terms of its costs.
Design/methodology/approach
– It adopts an inter-disciplinary approach from the marketing, economics and accounting literature. The paper explores market transparency in the ever-changing world and uses brand names like Starbucks and iPhone to illuminate instances where imperfect markets are supported by consumers.
Findings
– Recognizing the role that the Internet plays in promoting price transparency, it espouses how extant information can add costs and risks to the consumer’s value judgement. Finally, the paper advocates that arbitrary judgements existing in cost accounting make it difficult to compare unit cost. This could result in consumers paying extra money to benefit from cost transparency.
Practical implications
– This paper argues that three main issues may arise in providing unit cost to the consumers. First, transparency entails built-in costs, whether they are in taxes or product prices. Second, in accounting, unit cost information is currently not equitable between businesses. Finally, the paper argues that extra time and effort in making sense of unit cost information lead to questions about the viability of transparent costing.
Originality/value
– The arguments for transparency have been widely discussed, supported and promoted by many. While negative aspects are known to businesses, few consider the consumer’s perspective. By amalgamating evidence and arguments from different disciplines, this paper lends value, providing a critical perspective where transparent unit cost revelation can be more costly and less viable than what is assumed.
... The American coffee company Starbucks, for example, ran an advertising campaign that indirectly responded to consumers' calls for companies to demonstrate their trustworthiness. Starbucks decided to provide customers with detailed information about the company's costs for sourcing and supplying a cup of coffee with the goal of increasing price fairness perceptions among its customers (Carter & Curry, 2010). Such initiatives for increasing price transparency, however, cannot only evoke further criticisms (Carter & Curry, 2010), but even a significant backlash. ...
... Starbucks decided to provide customers with detailed information about the company's costs for sourcing and supplying a cup of coffee with the goal of increasing price fairness perceptions among its customers (Carter & Curry, 2010). Such initiatives for increasing price transparency, however, cannot only evoke further criticisms (Carter & Curry, 2010), but even a significant backlash. In early 2012, JC Penney decided to offer everyday low prices instead of silently marking up prices to then mark them down for sales offers, coupons, and clearing racks. ...
... Most PWYW pricing studies have collected data using experimental methods. Experiments are highly effective and valid in evaluating the effects of pricing strategies (Barros & Sousa, 2019;Carter & Curry, 2010). Since the literature has limited studies in the PWYW pricing domain, it is essential to use this method in new research. ...
This study aims to systematically examine the Pay-What-You-Want (PWYW) pricing model, which has become increasingly popular among innovative strategies. The PWYW model offers an unconventional approach by giving consumers the power to determine the price they want for the goods or services provided. However, the scattered nature of existing research makes it challenging to understand this model's dynamics fully. Using the PRISMA protocol, this systematic review of 106 articles reveals the key actors, theoretical frameworks used, and methodological trends in the known aspects of the field. In addition, the findings highlight the potential advantages of PWYW pricing (e.g., transparency and customer preference) while revealing critical gaps in the current knowledge. This study is important because it provides a holistic perspective on the PWYW pricing model literature, which seems to be a significant deficiency. The study emphasizes the need to investigate understudied areas, such as the sustainability of PWYW and the interaction of factors affecting payment behaviors. This review guides how PWYW practices can be managed effectively in a changing business world, helping businesses navigate their future implementation.
... Les recherches ont montré que les produits portant des labels éthiques, tels que les produits Fairtrade, présentent souvent des effets indirects sur les intentions d'achat et les préférences, les consommateurs s'appuyant sur d'autres signaux que le label Fairtrade pour se forger une meilleure opinion du produit (e.g., Bodur et al., 2016). D'un point de vue sociétal, la transparence des coûts pourrait contribuer à améliorer les perceptions de justice (Carter et Curry, 2010). Il apparaît donc utile d'étudier l'impact différencié que celle-ci peut avoir sur différents types de produits (i.e., produit conventionnel versus produit plus engagé sur le plan éthique). ...
Une information et une compréhension insuffisantes des éléments constitutifs du prix d’un produit peuvent conduire à des perceptions négatives de la justice du prix et à des comportements négatifs envers le produit. La transparence des coûts est un moyen de dévoiler ces éléments. Les recherches antérieures testent rarement le rôle de la justice des prix dans le processus de transparence des coûts et privilégient l’étude des produits conventionnels sans prendre en compte d’autres types de produits (e.g., produits Fairtrade). En outre, l’étude de l’effet modérateur de caractéristiques des consommateurs (e.g., le niveau de représentation) est absente. Pour combler ces lacunes, nous menons deux expérimentations en ligne. Nos résultats montrent que la justice des prix joue un rôle clé dans la relation entre la transparence des coûts et l’intention d’achat. Cet effet est plus fort pour les produits Fairtrade que pour les produits conventionnels. Enfin, cet effet est plus important pour les consommateurs ayant un niveau de représentation élevé.
... Research has proved that products with ethical labels, such as Fairtrade products, often have indirect effects on the purchase intention and the preferences, with consumers relying on additional cues apart from the Fairtrade label to form a better opinion of the product (e.g., Bodur et al. 2016). Looking at it from a societal standpoint, cost transparency could assist in enhancing perceptions of justice and fairness (Carter and Curry, 2010). Therefore, it is worthwhile to study the differentiated impact cost transparency may have on different product types (i.e., conventional versus more ethically committed product). ...
Insufficient information and understanding regarding a product’s price components can lead to negative perceptions of the fairness of the price and subsequent negative behaviors toward the product. Cost transparency is a way to disclose these components and enhance price fairness and, in turn, behaviors. Previous research rarely tests the role of price fairness in the cost transparency process and limits itself to studying conventional products without considering other product types (e.g., Fairtrade products). Moreover, the moderating effect of consumers’ characteristics (such as the construal level) is also lacking. To fill these gaps, we run two online experiments. We find that price fairness fully mediates the cost transparency-purchase intention relationship. We further find that this effect is stronger for Fairtrade products than for conventional products and that this enhanced effect is stronger for consumers with high construal level compared to consumers with low construal level. We discuss theoretical and managerial implications.
... Aussi, il est important pour les consommateurs de savoir si l'augmentation des prix est liée à une intention volontaire de la part du vendeur (accroissement de ses marges) ou si elle est subie par celui-ci (une variation des cours mondiaux de la matière première) (Xia et al., 2004). Contrairement à la théorie néoclassique qui postule que les consommateurs sont indifférents face à des informations transparentes sur les prix et qu'ils tendent à choisir l'option la moins chère, les perspectives sociales permettent une meilleure compréhension de la réponse des consommateurs au prix et de l'évaluation de son degré d'équité (Carter & Curry, 2010). Selon cette approche, les individus peuvent modifier leurs choix de produits pour garantir un résultat perçu comme équitable, même si le choix leur coûte plus cher. ...
Cette recherche s’intéresse à un sujet très peu exploré dans la littérature, celui de l’effet de la décomposition des prix sur la préférence des consommateurs. L’enjeu de transparence est particulièrement important dans le cas des produits durables au vu des valeurs de responsabilité qu’ils véhiculent. Une investigation empirique, combinant une double approche qualitative et quantitative, et portant sur le chocolat équitable, a été conduite. Les résultats confirment que si les consommateurs sont, en général, sceptiques vis-à-vis des prix élevés, la décomposition de ces derniers favorise la préférence et tend ainsi à accroitre l’acceptabilité des chocolats équitables premium. Par ailleurs, une analyse de clusters a mis en exergue le rôle des valeurs prosociales et de l’expérience avec les produits équitables dans la préférence pour une information détaillée autour des prix.
... Consumers will not accept suggested prices that exceed the highest fair price p max f . Empirical research suggests that higher price suggestions could even have adverse effects as they might appear nontransparent and trigger selfish behavior (Carter and Curry 2010). ...
Pay as you wish (PAYW) pricing offers a radical shift from posted pricing schemes. Modeling consumer behavior under PAYW pricing promises insights into conditions under which PAYW is profitable. Firstly, this paper extends an established model that builds on inequity-averse consumers and models their behavior in PAYW as well as the seller’s profits. The paper uses a comprehensive approach to describe consumers with low fairness concerns and points to a new segment of consumers who were not considered in previous PAYW models. They are characterized by a decision not to buy a good under a PAYW pricing policy, even if they can get it for free, and are not strongly averse to advantageous inequity. Secondly, the paper discusses the profitability of PAYW with a suggested price when the seller’s ability to suggest high prices is limited. Thirdly, the paper incorporates the effect of disadvantageous inequity aversion on PAYW with a minimum price. Finally, the paper offers guidelines on how a seller should choose the optimal pricing policy.
... It's agreed widely that performance results are positively affected by organizational transparency (Berggren & Bernshteyn, 2007;Bernstein, 2012). Stronger competitive advantages relate to organizational transparency in companies , as well as the ability to differentiate products to the consumers (Carter & Curry, 2010), to offer safer products to the market (Beulens et al., 2005), to develop a favourable brand image , to be more persuasive in marketing (Miao & Mattila, 2007), and to increase sales and profit margins (Parris et al., 2014). According to Bennis et al. (2008), devastating results are often got when an organizational culture is not transparent. ...
The study was conducted to find out whether the organizational culture of Lithuanian companies is sufficiently transparent and how to develop transparent organizational culture. The literature was examined on levels and components of transparent organizational cultures. Quantitative research was conducted to determine whether the instruments used by organizations to disclose transparency, clarity and accuracy was sufficient to develop a transparent organizational culture. According to the results of the study, most Lithuanian companies disclose their conduct through values and beliefs, although disclosure through artifacts was rated lower. Not enough of clarity was acknowledged, and it was better achieved through values and less through artifacts, but there was no basis for this at the level of assumptions. Finally, the highest means were found in the accuracy component of organizational transparency, although it could be better expressed at the level of artifacts, where the score was lower.
... Additionally, it stands out that the primary concern in this pricing strategy is to determine the factors that affect the amount of payment. For example, existing of internal-external reference prices (Gross et al. 2021;Rabbanee et al. 2022;Roy et al. 2021), information (Carter and Curry 2010;Feldhaus et al. 2019), altruism (Mak et al. 2015;Proeger and Blankenberg 2017;Sharma and Nayak 2020), fairness (Sleesman and Conlon 2017;Tripathi and Pandey 2019). Figure 6 shows the themes of these 136 articles. ...
Pay-What-You-Want (PWYW), is a pricing strategy increasingly applied in many different industries, both profitable and not. This study aims to identify influential cited works in PWYW research, determine the current status, and indicate the extent to which influential works have shaped the field addressing this concern, a set of bibliometric analyses conducted in this paper. The analysis was carried out on 136 research papers published between 2009 and 2022 have been analyzed based on Web of Science Core Collection (WoS) results. In order to identify the most cited authors and works, the co-citation analysis was applied. To scrutinize the intellectual structure of the field, bibliometric coupling was applied, to show the network structure of the themes, co-word analysis was applied. Building upon the results, this study suggests future research paths.
... This resulted in 291 articles. We read the abstract of these articles to ascertain whether they dealt with the topic of focus; those which fell outside the scope of CRM (For example, Carter and Curry (2010) was removed because it dealt with transparent pricing, but not CRM) and the duplicate entries were removed which resulted in 279 articles. We subjected these 279 articles to the final bibliometric analysis. ...
Cause-Related Marketing (CRM) as a promotional tool among marketers and research topic among researchers has existed for over three decades. A considerable amount of literature has accumulated during this period that needs to be consolidated. This study takes the bibliometric approach to consolidate the CRM literature. We apply document co-citation analysis and document bibliographic coupling analysis techniques to a sample of data systematically drawn from the Scopus database covering 279 articles spanning three decades. We use bibliometrix package in R software and VOSviewer to generate and analyze the networks. Document co-citation analysis yielded four clusters, each capturing a dominant theme. Cluster 1: consumer and cause characteristics affecting CRM response; cluster 2: foundational work on CRM; cluster 3: price discounts, donations, and tradeoffs in consumer decision making; cluster 4: rooting and delineating CRM from CSR. Similarly, document bibliographic coupling analysis yielded four clusters, each capturing a dominant theme. Cluster 1: literature reviews and CRM in different contexts; cluster 2: company-cause-consumer congruence in CRM; cluster 3: donation and price-related factors in CRM; cluster 4: consumer skepticism in CRM. Together these eight clusters form the intellectual structure of CRM research. We hope this study will serve researchers in overviewing the intellectual structure of the CRM field. Further, we augmented the findings of studies in these clusters with recent articles published in leading marketing journals to establish a future research agenda under four themes: impact of company characteristics on CRM; effects of individual consumer differences on CRM response; the negative impact of CRM and CRM from NPO perspective.
... Although buyers can pay any price under PWYW, they do not try to maximize their utility function by paying nothing, contrary to the standard economic perspective (Kim et al., 2009). Past research explains this seemingly "irrational" behavior by arguing that it may be guided by social exchange norms and non-economic considerations, reciprocity, cooperation, and distribution (Heyman & Ariely, 2004), rather than rational considerations prevalent in typical money-market relationships (Ariely et al., 2009;Carter & Curry, 2010;Kim et al., 2009). Extant research shows that people are less willing to violate social norms as such actions would normally result in distress and social disapproval (Ariely et al., 2009). ...
This paper investigates social influences on Pay-What-You-Want (PWYW) pricing decisions by combining a socio-psychological phenomenon, called 'spotlight effect' (defined as an egocentric bias while estimating the salience of one's own behavior and external appearance), with the well-established 'anchoring and adjustment' perspective. We test our hypotheses with one field study and two lab experiments. Findings show that when making a payment in PWYW setting, customers perceive greater attention on self (vs. others) and in the presence of distant (vs. close) others, which makes them initially anchor the price they are willing to pay on their internal reference price. However, this anchoring effect is adjusted downwards (i.e., reduced) in the presence of external reference prices. Our findings would help managers understand the factors influencing customers' PWYW pricing decisions, based on their internal and external reference prices. Managers can further use this knowledge to develop more effective strategies to drive higher PWYW prices.
... Since very few studies to date have empirically investigated the effect of price transparency, this study aims to investigate the impact of transparent pricing on consumers' perceptions of the brand and intentions to purchase its product. Recent research indicates that characteristics of the product could impact the effectiveness of price transparency (Carter & Curry, 2010). For example, Mohan, Buell, and John's study (2018) suggests that cost transparency becomes less effective as product price increases. ...
... Moreover, the chain affiliation, hotel facilities, technological resources, room size, and parking availability were also found to influence hotel price (Sánchez-Pérez et al., 2019). ABP signals the price transparency that reveals information on how price is allocated to each attribute of the total room price (Carter and Curry, 2010). ...
Aside from marketing information on traditional room rates, hotels and online travel agents (OTAs) are trying a new pricing technique based on the attributes of guestrooms. This research investigates how attribute-based room pricing (ABP) differs from traditional room pricing (TRP) in influencing consumer reactions when consumers receive a price change alert before (vs. after) sales. Through a series of experiments, we found that TRP and ABP result in similar alert attitude, brand attitude, and visit intention for presale price change alert. However, ABP leads to more favorable results for postsale price change alert. We examined the underlying mechanism and found that perceived fairness mediates the effect of pricing strategy on brand attitude, price alert attitude, and visit intention for postsale alert only. This research provides hotel managers and OTA marketers with guidance on when to send either type of price change message to consumers.
... The separated frame is successful in improving utility perceptions to impact brand evaluations, whereas no such effects are observed in the consolidated frame. Framing alters perceptions of outcomes that influences behavior (Kees, 2011) and separating provides transparency that activates dormant aspects of utility (Carter and Curry, 2010) which the consolidated frame does not benefit from. Moreover, feelings of skepticism do not affect brand evaluations in the separated frame (the effect is not significant), showing that the separated frame is superior in reducing skepticism (skepticism affects brand evaluations in the consolidated frame). ...
Purpose
The purpose of this paper is to demonstrate cause-related marketing (CRM) promotions as a brand-oriented international market entry strategy that can leverage an unfamiliar brand in a new international market. One of the challenges CRM promotions face is skepticism toward the campaign and for that reason, many brands form alliances with well-known charities familiar to the consumer, hoping that the trust and goodwill generated by the charity will be transferred to the brand. The authors manipulate price and donation presentation formats to show an alternative means for overcoming skepticism.
Design/methodology/approach
The research is undertaken in two studies. Study 1 uses a sample collected on Amazon’s MTurk, whereas study 2 is undertaken in the real world with participants from Norway. Analysis of variance and partial least square are, respectively, used to test the hypotheses.
Findings
The first study shows that presenting the donation explicitly vis-à-vis the price makes a less familiar charity produce the same trustworthy effects as that a well-known one does. Moreover, the second study shows that it strengthens utility from the transaction and weakens skepticism of CRM promotions to impact brand evaluations.
Research limitations/implications
The primary focus of the research was consumers’ familiarity with the charity but other variables could have a significant impact in judgments. For instance, the importance consumers attach to the cause that the charity supports, spatial distance of the brand and charity, brand familiarity. Manipulating these in future studies would not only contribute to the CRM literature but also to that of international marketing.
Practical implications
Firms in international markets can derive competitive advantages with the help of CRM campaigns. Moreover, alliances with familiar charities that are local can help combat nationalistic feelings prevalent in many markets. The separated presentation format can also help overcome some of the additional skepticism found in international markets.
Social implications
The findings support the Better Business Bureau’s Standards for Charity Accountability that seek transparency in communicating CRM promotions. The explicit presentation of price and donation, in addition to providing this transparency, also gives consumers a clear understanding of the CRM promotions’ details, which will increase their self-efficacy in making more informed decisions.
Originality/value
This research contributes to strengthening knowledge on donation-price formats, offers brands entering international markets a singular way of gaining credibility and competitive advantage, and empirically confirms the proposed outcomes of a theoretical model for promotions.
... In fact, when seller pricing strategies are not observable to the buyers, evaluating whether a pricing process was fair is more difficult for the buyer and it could lead to a lower willingness to purchase. Price transparency defined as "information revealing the allocation among agents in a supply-chain of proceeds from the sale of a product or service" by Carter and Curry (2010), would avoid the consequences of informational asymmetry. In a trasparent pricing scenario, the buyers are capable of judging the seller"s pricing effort as "in conformity to rules" and they could be willing to pay a premium price. ...
A fairer and sustainable distribution of added value and information along the food supply chain is becoming a relevant issue. Extensive literature has analyzed the development of distributions models, commonly called Alternative Food Networks (AFNs), that short-circuit the long, complex and rationally organized industrial chain, emphasizing their meanings in terms of economic, environmental and social sustainability. The purpose of this paper is to present some preliminary results from an on-going research that aims to investigate on rules and criteria for a fairer market. In particular we propose an analysis of AFNs in Italy, using Fair Trade as benchmark, according to their capacity to carry out fairer relationships between producers and consumers. AFNs evaluation, based on a qualitative analysis carried out looking for a representative sample of cases, has been done considering their results in terms of: distribution of value along the chain; price fairness and transparency; access to markets for small producers; compliance of products to social standards; relationships between consumers and producers (involvement, stability and trust). Three types of AFNs are discussed: Direct selling, Farmers’ Markets, Partnership between producers and consumers (in the form of Solidarity Purchasing Groups).
... According to Bradford (2015), money in Marketing is still under-researched. Yet, the appropriate choice of a payment or consideration model can have a significant impact on a customer's willingness to pay and therefore revenues to the firm (Carter & Curry, 2010). However, much of Marketing literature around both financial and non-financial exchange tend to focus on platforms (as the manifestation of two-or multi-sided markets). ...
This paper presents a review of the Internet-of-Things (IoT) through four conceptualizations: IoT as liquification and density of information of resources; IoT as digital materiality; IoT as assemblage or service system; and IoT as modules, transactions, and service. From the conceptualizations, we provide a definition of IoT and present its implications and impact on future research in Marketing that interfaces with information systems, design and innovation, data science and cybersecurity, as well as organizational studies and economics. By integrating the implications of IoT with extant literature, we then propose a set of priorities for future research in this area.
... Moreover, even slight variations to traditional pricing models have been shown to have significant effects on consumer evaluations. For example, simply increasing the transparency of traditional pricing resulted in consumer preferences counter to classical economic theory (Carter & Curry, 2010). ...
Despite the rapid proliferation of nonmonetary pricing models in the marketplace, no existing research examines consumer inferences derived from these prices. In two studies, we find that consumers perceive products (mobile applications) with monetary prices as being less novel than products featuring a nonmonetary price (banner advertisements). Additionally, the combination of a nonmonetary and a monetary price produces negative novelty inferences similar to those of a single monetary price. Negative inferences derived from a combination of a monetary and nonmonetary price are moderated by a belief in money as a symbol of success, such that those high in this belief form stronger negative inferences regarding product novelty. These inferences regarding product novelty are positively associated with, and fully mediate, the effects of these prices on customer purchase intent.
... However, when brands have heterogeneous prices, the likelihood to choose the cause-related product increases along with the motivation of the company to support social causes. One way to achieve a positive response may be to set a transparent pricing strategy to expose social concerns along the company's supply chain (Carter and Curry, 2010). Results from Krishna and Rajan (2009) also show that if a company pairs one of its disadvantaged products with a cause, it can raise prices on other products of its portfolio leading to an increased profit. ...
Cause-related marketing (C-RM) has risen to become a popular strategy to increase business value
through profit motivated giving. Despite the growing number of articles published in the last decade, no comprehensive analysis of the most discussed constructs of cause-related marketing is available. This paper uses an advanced Text Mining methodology (a Bayesian contextual analysis algorithm known as Correlated Topic Model, CTM) to conduct a comprehensive analysis of 246 articles published in 40 different journals between 1988 and 2013 on the subject of cause-related marketing. Text Mining also allows quantitative analyses to be performed on the literature. For instance, it is shown that the most prominent long-term topics discussed since 1988 on the subject are “brand-cause fit”, “law and Ethics” and “corporate and social identification”; while the most actively discussed topic presently is “sectors raising social taboos and moral debates”. The paper has two goals: first, it introduces the technique of CTM to the Marketing area, illustrating how Text Mining may guide, simplify and enhance review processes while providing objective building blocks (topics) to be used in a review; second, it applies CTM to the C-RM field, uncovering and
summarizing the most discussed topics. Mining text, however, is not aimed at replacing all subjective decisions that must be taken as part of literature review methodologies.
... disclosure of allocation of proceeds between agents) over opaque pricing (i.e. no allocation information provided), suggesting social considerations were elicited within the decision context when the allocation information was presented and also indicated an willingness to pay price premiums (Carter and Curry 2010). This study suggests that the context of information presented at the point of choice influences how consumers may think about the decision. ...
Overview This chapter explores and discusses related literature concerning three overarching aspects as it relates to consumers enacting environmentally significant behavior; the informational context of stimuli presented to inform behavior, mediating/moderating factors that may influence how consumers process and evaluate information presented, and the behavioral responses that may ensue after attending and processing the information. Environmental psychologists conceptualize this process within a stimulus
... However, when brands have heterogeneous prices, the likelihood to choose the cause-related product increases along with the motivation of the company to support social causes (Barone et al. 2000). One way to achieve a positive response may be to set a transparent pricing strategy to expose social concerns along the company's supply chain (Carter and Curry 2010). Results from Krishna and Rajan (2009) also show that if a company pairs one of its disadvantaged products with a cause, it can raise prices on other products of its portfolio leading to an increased profit. ...
Cause-related marketing (C-RM) has risen to become a popular strategy to increase business value through profit-motivated giving. Despite the growing number of articles published in the last decade, no comprehensive analysis of the most discussed constructs of cause-related marketing is available. This paper uses an advanced Text Mining methodology (a Bayesian contextual analysis algorithm known as Correlated Topic Model, CTM) to conduct a comprehensive analysis of 246 articles published in 40 different journals between 1988 and 2013 on the subject of cause-related marketing. Text Mining also allows quantitative analyses to be performed on the literature. For instance, it is shown that the most prominent long-term topics discussed since 1988 on the subject are “brand-cause fit”, “law and Ethics”, and “corporate and social identification”, while the most actively discussed topic presently is “sectors raising social taboos and moral debates”. The paper has two goals: first, it introduces the technique of CTM to the Marketing area, illustrating how Text Mining may guide, simplify, and enhance review processes while providing objective building blocks (topics) to be used in a review; second, it applies CTM to the C-RM field, uncovering and summarizing the most discussed topics. Mining text, however, is not aimed at replacing all subjective decisions that must be taken as part of literature review methodologies.
Purpose
The purpose of this paper is to discuss the consumerism movement in health care and the implications of price transparency for the cause. A document analysis of supplier-side sentiments suggests health-care organizations are concerned this move will hinder not help consumers.
Design/methodology/approach
Document analysis of a supplier community has been applied in an analysis of policy-related communication between the US Government and hospital associations.
Findings
Empirical findings suggest that at both the institutional and cultural level, responsibility for health decision-making is obscured with easily misunderstood price information.
Originality/value
This paper explores the applicability of document analysis as a tool to understand cultural and institutional narratives.
In economic psychology, the principle of Dual Entitlement asserts that buyers are entitled to reference price and sellers are entitled to reference profit. Sellers are not permitted to increase their price solely to increase their profit because such action would be deemed unfair by buyers. But what if the cost of production or operation rises, putting the reference profit at risk? Buyers will perceive it as fair when the sellers’ decision to increase their price is aimed at protecting their reference profit. Previous studies on consumer perception of fairness and profit protection have focused on price increases as sellers’ strategy to protect their reference profit. What about an alternative strategy of reducing the amount of refunds given to buyers? Does price framing, consolidated versus disaggregated, affect consumer’s fairness perception? The current experimental utilized a 2 (profit protect strategy: price increase vs. refund reduction) X 2 (price information: consolidated vs. disaggregated price) between-subject design involving 207 participants (age range 18-23 years; Median age = 19; 81% female) to examine consumer perception of fairness towards the airline’s profit protection strategy. The result showed that both increasing prices and reducing refunds were considered equally fair by participants even after controlling their perception of Indonesian sellers’ pricing practices. However, when taking price information into consideration, the disaggregated price increase was considered more fair compared to the consolidated one. Interestingly, the case wasn’t the same with refund reduction as participants perceived disaggregated price disclosure less fair than consolidated one. Implications and suggestions for further research are discussed..Dalam psikologi ekonomi, prinsip Dual Entitlement menyatakan bahwa pembeli berhak atas harga patokan dan penjual berhak atas laba patokan. Penjual tidak diperkenankan untuk menaikkan harga semata-mata untuk menambah keuntungan karena tindakan tersebut akan dipersepsikan pembeli sebagai perilaku tidak adil. Lalu bagaimana jika ongkos produksi atau operasional penjual membengkak dan laba patokan terancam? Pembeli dapat memahami tindakan penjual menaikkan harga hanya jika hal tersebut bertujuan untuk melindungi laba patokan. Studi terdahulu mengenai persepsi keadilan pembeli terhadap strategi melindungi laba berfokus pada menaikkan harga sebagai strategi utama penjual. Bagaimana dengan alternatif strategi mengurangi jumlah refund yang dikembalikan pada pembeli? Selain itu, apakah cara penjual menyajikan informasi harga secara total ataupun rinci berpengaruh pada persepsi keadilan? Eksperimen ini menggunakan desain 2 (strategi melindung laba: menaikkan harga vs. penurunan refund) X 2 (penyajian informasi harga: total vs. harga rinci) dan melibatkan 207 partisipan (rentang usia 18-23 tahun; Median usia = 19; 81% perempuan) untuk menguji persepsi keadilan pembeli terhadap strategi melindungi laba yang dilakukan oleh maskapai penerbangan. Hasilnya, baik menaikkan harga maupun pengurangan refund dengan cara penyampaian informasi harga total maupun rinci dipersepsikan sama adilnya oleh partisipan, bahkan setelah mempertimbangkan persepsi terhadap pricing practice penjual di Indonesia yang tidak adil. Namun, ketika mempertimbangkan bagaimana informasi harga disajikan, menaikkan harga dengan informasi rinci dipersepsikan lebih adil dibandingkan secara total. Menariknya, pengurangan refund secara rinci justru dipersepsikan tidak lebih adil dibandingkan secara total. Implikasi dan saran studi lanjutan dibahas dalam penelitian ini.
With the recent rise of the metaverse, blockchain, and nonfungible token (NFT) technologies, luxury brands have embraced these concepts to expand their portfolios. To boost NFT sales, marketers often link them to specific physical products, creating digital twins.
While this strategy may enhance perceptions of NFTs, its impact on consumer responses to the associated physical products remains unclear.
Across six experiments, including one preregistered, we explore how merely mentioning NFT versions of luxury products influences consumer responses to their physical counterparts. We find that the availability of an NFT version negatively influences consumer responses to the associated physical product, an effect mediated by reduced perceived luxuriousness. This effect is particularly pronounced in the luxury domain, most relevant when the NFT is associated with a specific product (digital twin) and is not inherently applicable to all new technologies.
Natural gas is becoming a crucial energy source worldwide, especially in developing economies that are transitioning towards cleaner and more effective energy systems. Nevertheless, implementing suitable pricing structures poses distinctive difficulties in these circumstances. The price of natural gas is a crucial factor for emerging nations seeking to establish strong energy sectors while assuring both economic growth and energy security. This chapter explores the fundamental components of natural gas pricing systems designed for developing markets, with a specific focus on the difficulties, tactics, and important factors involved. In addition, the main elements of natural gas pricing mechanisms, with a focus on market dynamics, supply–demand fundamentals, transportation costs, and regulatory frameworks were highlighted. The significance of market liberalization and deregulation in promoting transparent and competitive pricing regimes will be emphasized. To promote sustainable energy development and economic progress in emerging nations, policymakers and industry players may effectively negotiate the intricacies of natural gas pricing by comprehending these dynamics.
As the need for business to address pressing social and ecological issues intensifies, so does the importance of enhancing the development of sustainable marketing. The current dominant approach to sustainable marketing is based on a Triple Bottom Line (TBL) profit‐centric worldview, which suggests that firms can simultaneously improve their financial well‐being as they reduce negative social and ecological externalities. However, whereas the scope of TBL marketing is limited to sustainability initiatives that enhance profits, there is a growing need for—and interest in—developing a sustain‐centric approach to marketing that relaxes the need to maximize financial well‐being in order to optimize social and ecological well‐being. Even so, because of the dominance of the profit‐centric worldview, hallmarks of sustain‐centric marketing practices remain under‐developed and may even lend themselves to becoming inauthentically mimicked on a piecemeal basis by greenwashing profit‐centric firms. We provide an exploratory empirical study of marketing practices evident in two sustain‐centric firms and draw implications to advance theory for both sustain‐centric and profit‐centric marketing.
This research explores the effects of the DART model of value co‐creation on customer retention. To do so, the current research examines the moderating role of types of customer (i.e., corporate vs. retail) and the mediating effect of customer engagement. Two studies were conducted through structured surveys among 362 bank customers (Study 1) and 316 hotel customers (Study 2). Partial least‐squares‐based structural equation modeling (PLS‐SEM) was employed to analyze the data. The results of Study 1 show that each element of the DART model significantly influences customer retention. The effects of dialog, risk assessment, and transparency on customer retention are found to be higher (lower) for corporate (retail) customers, while the effect of access on customer retention is higher (lower) for retail (corporate) customers. Study 2 further identified customer engagement as a mediator explaining the underlying mechanism in the links between each element of the DART model and customer retention. Theoretical contributions and managerial implications of the findings are discussed.
This study investigates the impact of cost transparency on consumers’ perceptions of the brand and intentions to purchase its products. It also examines whether product-related attributes (product price and country-of-origin (COO) and consumer characteristics (socially responsible consumer behavior) moderate the effectiveness of cost transparency. Findings show that providing consumers with detailed cost breakdowns would lead to higher perceived quality and value and a more favorable brand attitude when compared to the conditions in which detailed cost information is not provided. The results also indicate that the cost transparency strategy is an effective way to generate a more favorable brand attitude, especially for lower-priced brands. Consumers who are more socially responsible in their behaviors perceived higher quality and expressed higher purchase intention for brands engaging in cost transparency practices. Theoretical and practical implications were also discussed.
La Administración de las Relaciones con los Clientes (CRM) se ha convertido en
una herramienta de soporte para las organizaciones, por su capacidad de combinar
estrategias, procesos y sistemas de información como un medio importante para
gestionar las interacciones y relaciones duraderas con los clientes. Por ende el objetivo
de este material es exponer los conceptos fundamentales que sustentan la evolución,
desarrollo e integración de esta herramienta en la gestión empresarial. Entonces, la
obra comienza con la exposición de los principios evolutivos del CRM, desde el
marketing enfocado al cliente; luego se delinea la contribución de las tecnologías de
la información y las comunicaciones, particularidades de la integración a la empresa
y guías metodológicas para implementarlo y medir su impacto; hasta culminar en la
presentación de casos prácticos que redondean la comprensión de esta herramienta. Derivado de esto resulta que el marketing relacional se desarrolla desde una perspectiva de largo plazo y busca atender las necesidades de clientes individuales, y esto marca el tránsito desde un marketing centrado en el producto o la marca, hacia un enfoque basado en el cliente. La puesta en práctica del CRM va acompañada de las tecnologías de la información y las comunicaciones para optimizar las interacciones con los clientes. Los cuatro pilares básicos en una empresa: estrategia, personas, procesos y tecnología , constituyen la base para integrar eficazmente el CRM con instrumentos como la planificación de recursos empresariales, la gestión logística y de cadenas de suministro e incluso con la gestión del conocimiento.
We investigate when and why the disclosure of cost information by firms can increase consumers’ purchase interest.
This research examines the important but unexamined effects of salesperson attractiveness on consumer bargaining behavior in retail contexts. In line with our theorizing, three studies demonstrate that the effect of salesperson attractiveness on consumer bargaining depends on their general beliefs regarding the impact of labor costs on retail prices. While consumers bargain less with an attractive salesperson when their labor costs-to-price (LP) ratio beliefs are relatively low, they bargain harder with an attractive, as opposed to a less attractive salesperson, when their LP ratio beliefs are relatively high. As well, we provide evidence for the process, based on the salesperson’s perceived trustworthiness and consumers’ consequent bargaining stance towards her.
La Administración de las Relaciones con los Clientes (CRM) se ha convertido en
una herramienta de soporte para las organizaciones, por su capacidad de combinar
estrategias, procesos y sistemas de información como un medio importante para
gestionar las interacciones y relaciones duraderas con los clientes. Por ende el objetivo
de este material es exponer los conceptos fundamentales que sustentan la evolución,
desarrollo e integración de esta herramienta en la gestión empresarial. Entonces, la
obra comienza con la exposición de los principios evolutivos del CRM, desde el
marketing enfocado al cliente; luego se delinea la contribución de las tecnologías de
la información y las comunicaciones, particularidades de la integración a la empresa
y guías metodológicas para implementarlo y medir su impacto; hasta culminar en la
presentación de casos prácticos que redondean la comprensión de esta herramienta.
Derivado de esto resulta que el marketing relacional se desarrolla desde una
perspectiva de largo plazo y busca atender las necesidades de clientes individuales,
y esto marca el tránsito desde un marketing centrado en el producto o la marca, hacia
un enfoque basado en el cliente. La puesta en práctica del CRM va acompañada de las
tecnologías de la información y las comunicaciones para optimizar las interacciones
con los clientes. Los cuatro pilares básicos en una empresa: estrategia, personas,
procesos y tecnología , constituyen la base para integrar eficazmente el CRM con
instrumentos como la planificación de recursos empresariales, la gestión logística y
de cadenas de suministro e incluso con la gestión del conocimiento.
This paper presents a novel conceptualization of the most common techniques firms use to communicate prices. First, we classify existing price communication techniques based on the type of action taken by firms. We then develop a framework to understand the influence of the different techniques in our classification on the ongoing relationship between firms and their customers—a perspective that extends the more transactional, one-shot view dominant in the literature. Specifically, we take a language philosophy approach and use conversation theory to formulate predictions regarding the impact of a given price communication technique on the quality of the relationship. Our conceptualization allows scholars, professionals, and policy makers to contrast and judge the different techniques on a common basis. Finally, we offer directions for future research and implications for marketing practice.
Purpose
The purpose of this paper is to use the game theory combined with Monte Carlo simulation modelling to support the analysis of different retail marketing strategies, in particular, using payoff matrices for modelling the likely outcomes from different retail marketing strategies.
Design/methodology/approach
Theoretical research was utilised to develop a practical approach for applying game theory to retail marketing strategies via payoff matrices combined with Monte Carlo simulation modelling.
Findings
Game theory combined with Monte Carlo simulation modelling can provide a formal approach to understanding consumer decision making in a retail environment, which can support the development of retail marketing strategies.
Research limitations/implications
Game theory combined with Monte Carlo simulation modelling can support the modelling of the interaction between retail marketing actions and consumer responses in a practical formal probabilistic manner, which can inform marketing strategies used by retail companies in a practical manner.
Practical implications
Game theory combined with Monte Carlo simulation modelling can provide a formalised mechanism for examining how consumers may respond to different retail marketing strategies.
Originality/value
The originality of this research is the practical application of game theory to retail marketing, in particular the use of payoff matrices combined with Monte Carlo simulation modelling to examine likely consumer behaviour in response to different retail marketing approaches.
This article aims to provide a critical review of the published literature related to retail marketing strategies and brand management in the global retail industry. The literature review covers the overview of marketing strategies; retail marketing strategies and technological utilization; international retail marketing strategies in the global retail industry; retail marketing strategies and internationalization; the challenges of retail marketing strategies in the fashion retail industry; the overview of brand management; and the significance of brand management in the global retail industry. Effective marketing is necessary to compete in the ever-growing worldwide retail industry sector. The improved retail profits are within reach with the purposeful retail marketing strategies. Brand management means defining the brand, positioning the brand, and delivering the brand. The literature review analysis provides both practitioners and researchers an important understanding about retail marketing strategies and brand management in the global retail industry.
This chapter explores the roles of corporate marketing strategies and brand management in the global retail industry, thus describing the concepts of marketing strategy, international retail marketing strategy, retail marketing mix, and internationalization; the relationship between corporate marketing strategies and internationalization; the challenges of retail marketing mix in the fashion retail industry; the overview of brand management; and the significance of brand management in the global retail industry. The implementation of corporate marketing strategies and brand management is critical for modern organizations that seek to serve suppliers and customers, increase business performance, strengthen competitiveness, and achieve continuous success in global business. Therefore, it is necessary for modern organizations to examine their corporate marketing strategies and brand management applications, create a strategic plan to regularly check their practical advancements, and rapidly respond to the corporate marketing strategies and brand management needs of customers in the global retail industry.
This chapter explores the roles of corporate marketing strategies and brand management in the global retail industry, thus describing the concepts of marketing strategy, international retail marketing strategy, retail marketing mix, and internationalization; the relationship between corporate marketing strategies and internationalization; the challenges of retail marketing mix in the fashion retail industry; the overview of brand management; and the significance of brand management in the global retail industry. The implementation of corporate marketing strategies and brand management is critical for modern organizations that seek to serve suppliers and customers, increase business performance, strengthen competitiveness, and achieve continuous success in global business. Therefore, it is necessary for modern organizations to examine their corporate marketing strategies and brand management applications, create a strategic plan to regularly check their practical advancements, and rapidly respond to the corporate marketing strategies and brand management needs of customers in the global retail industry.
This paper aims to discuss Fair Trade as an alternative economic model, that aims to help producers in developing countries to make better trading conditions and promote sustainability, enforceable in economic and social contexts other than its traditional scope. The paper analyzes the critical issues facing developing countries in their participation in international trade. It then describes the key elements of the Fair Trade and its main impact. Finally the working principles of Fair Trade which could be properly implemented in domestic food systems of developed countries are underlined.
Investment advisory services of financial service providers (FSPs) exhibit several characteristics that are detrimental to advisory quality. The interaction of advisor and client is strained by a lack of transparency regarding the advisory process (what activities are performed and why) and the information used therein (what information is used for what purpose and with what effect), as well as regarding the precise costs of the service and the recommended products. In prior research, we suggested that process and information transparency issues may be appropriately addressed with collaborative information technology (IT) artifacts. In this paper, we argue that collaborative, transparent artifacts may also be a premise of enabling cost transparency. To this end, we describe a complete research cycle of designing, implementing, and evaluating a shared cost-transparent IT artifact to support client-advisor interaction in investment advisory encounters. Evaluation results suggest the efficacy of our design in improving the clients’ perceived cost transparency as well as increase their satisfaction and their willingness to pay for the received investment advice. These findings may also challenge the common belief of FSPs that transparent, fee-based advisory services would neither be accepted by clients nor be economically viable. Practical implications of these findings for designing advisory encounters with supportive IT are discussed.
Il presente contributo ha l’obiettivo di proporre alcune riflessioni sul Commercio Equo come modello alternativo, che ha consentito ai piccoli produttori dei Paesi in via di sviluppo di trarre vantaggio dalle esportazioni attivando un processo di sviluppo sostenibile, replicabile anche in contesti economici e sociali diversi dal suo tradizionale campo di applicazione. Nel lavoro, dopo aver discusso le criticità incontrate dai PVS nella loro partecipazione al commercio internazionale, sono analizzati gli elementi qualificanti del Commercio Equo ed evidenziati suoi principali risultati. Il lavoro si chiude con alcune considerazione sui principi operativi del Commercio Equo che potrebbero essere implementati nei mercati domestici dei sistemi agroalimentari dei paesi avanzati.
This paper aims to discuss Fair Trade as an alternative economic model, that aims to help producers in developing countries to make better trading conditions and promote sustainability, enforceable in economic and social contexts other than its traditional scope. The paper analyzes the critical issues facing developing countries in their participation in international trade. It then describes the key elements of the Fair Trade and its main impact. Finally the working principles of Fair Trade which could be properly implemented in domestic food systems of developed countries are underlined.This paper aims to discuss Fair Trade as an alternative economic model, that aims to help producers in developing countries to make better trading conditions and promote sustainability, enforceable in economic and social contexts other than its traditional scope. The paper analyzes the critical issues facing developing countries in their participation in international trade. It then describes the key elements of the Fair Trade and its main impact. Finally the working principles of Fair Trade which could be properly implemented in domestic food systems of developed countries are underlined.
Recent news coverage on pricing portrays the importance of price fairness. This article conceptually integrates the theoretical foundations of fairness perceptions and summarizes empirical findings on price fairness. The authors identify research issues and gaps in existing knowledge on buyers' perceptions of price fairness. The article con-cludes with guidelines for managerial practice.. Jennifer L. Cox is Associate Brand Man-ager, John Deere Worldwide Commercial & Consumer Equipment (e-mail: CoxJenniferL@JohnDeere.com). The authors gratefully acknowl-edge the support of the anonymous JM reviewers for their helpful sugges-tions and for their support during the development of this article. T he issue of price fairness has become newsworthy as concerns about gasoline prices, prescription drug prices, physicians' retainer fees, smart vending machines, hidden fees and charges, or Amazon.com's dynamic pricing test have become public knowledge. The uproar that occurred when an Amazon.com customer dis-covered that the price of same-title DVDs differed across purchase occasions was a public relations nightmare for the firm (Adamy 2000). This example shows that both the price offered and the rationale for offering a certain price may lead to perceptions of price unfairness. Perceptions of price unfairness may lead to negative consequences for the seller, including buyers leaving the exchange relationship, spread-ing negative information, or engaging in other behaviors that damage the seller (e.g., Campbell 1999). Why do consumers at times believe that they are being treated unfairly? Given increasing public concern, it seems appropriate to explore further the theoretical bases and empirical findings to clarify what is known about the causes of perceived price unfairness and how the perceptions influ-ence customers' behaviors. Various conceptualizations have been developed and adapted to explain the phenomenon of fairness. However, each approach tends to address a specific reason for price fairness. For example, the dual entitlement principle emphasizes the influence of supply and demand changes and the sellers' profit orientation (Kahneman, Knetsch, and Thaler 1986b). Equity theory and distributive justice emphasize the importance of equality of outcomes between two parties in an exchange (Adams 1965; Homans 1961). In contrast, procedural justice focuses on the influ-ence of the underlying procedures used to determine the outcomes on fairness perceptions (Thibaut and Walker 1975). In this article, we present a conceptual framework for price fairness that integrates the conceptualizations and organizes existing price fairness research. We then use the framework to identify gaps in existing research and to offer guidance for further research. As we proceed, we develop a set of propositions for new research. We conclude with some practical prescriptions for pricing managers.
This study extends research on strategic alliances by exploring independent and combined effects of distributive, procedural, and interactional justice in these alliances. An integrated framework links cooperation payoffs with organizational justice as perceived by boundary-spanning alliance executives, through whom justice perceptions become parent actions. Analysis of 127 alliances demonstrates that when goal differences between parties are high, the joint effect on alliance performance of procedural and distributive justice is significantly positive. When interactional justice is high, procedural justice exerts a stronger performance effect. This perspective enriches alliance research, especially regarding procedural formalization, incentive structure, and interparty attachment.
Many theories of consumer behavior involve thresholds and discontinuities. In this paper, we investigate consumers' use of screening rules as part of a discrete-choice model. Alternatives that pass the screen are evaluated in a manner consistent with random utility theory; alternatives that do not pass the screen have a zero probability of being chosen. The proposed model accommodates conjunctive, disjunctive, and compensatory screening rules. We estimate a model that reflects a discontinuous decision process by employing the Bayesian technique of data augmentation and using Markov-chain Monte Carlo methods to integrate over the parameter space. The approach has minimal information requirements and can handle a large number of choice alternatives. The method is illustrated using a conjoint study of cameras. The results indicate that 92% of respondents screen alternatives on one or more attributes.
This book describes the new generation of discrete choice methods, focusing on the many advances that are made possible by simulation. Researchers use these statistical methods to examine the choices that consumers, households, firms, and other agents make. Each of the major models is covered: logit, generalized extreme value, or GEV (including nested and cross-nested logits), probit, and mixed logit, plus a variety of specifications that build on these basics. Simulation-assisted estimation procedures are investigated and compared, including maximum simulated likelihood, method of simulated moments, and method of simulated scores. Procedures for drawing from densities are described, including variance reduction techniques such as anithetics and Halton draws. Recent advances in Bayesian procedures are explored, including the use of the Metropolis-Hastings algorithm and its variant Gibbs sampling. No other book incorporates all these fields, which have arisen in the past 20 years. The procedures are applicable in many fields, including energy, transportation, environmental studies, health, labor, and marketing.
We use attribution theory to understand consumers' perceptions of fairness of price increases. Using the dual entitlement (DE) principle, researchers in the past have suggested that price increases will be perceived as fairer if they are cost-justified. In this study, we empirically demonstrate that this is not universally true. We conduct three experiments to examine the fairness perception on two attributional dimensions — locus of cause and controllability. We find empirical evidence to conclude that even cost-justified price increases can be perceived as less fair when the locus of causality is internal to the seller and/or when the price increase is within the volitional control of the seller. For example, when competitors' prices stay the same or when the cost increase is directly attributable to the seller's actions, even cost-justified price increases are seen as less fair. Implications of these findings for managers and policymakers are discussed.
There is strong evidence that people exploit their bargaining power in competitive markets but not in bilateral bargaining
situations. There is also strong evidence that people exploit free-riding opportunities in voluntary cooperation games. Yet,
when they are given the opportunity to punish free riders, stable cooperation is maintained, although punishment is costly
for those who punish. This paper asks whether there is a simple common principle that can explain this puzzling evidence. We show that if some people care about equity the puzzles can be resolved. It turns
out that the economic environment determines whether the fair types or the selfish types dominate equilibrium behavior.
Economics can be distinguished from other social sciences by the belief that
most (all?) behavior can be explained by assuming that agents have stable,
well-defined preferences and make rational choices consistent with those preferences
in markets that (eventually) clear. An empirical result qualifies as an
anomaly if it is difficult to "rationalize" or if implausible assumptions are
necessary to explain it within the paradigm. This column will resume, after a
long rest, the investigation of such anomalies.
The financial crisis of 2008, which started with an initially well-defined epicenter focused on mortgage backed securities (MBS), has been cascading into a global economic recession, whose increasing severity and uncertain duration has led and is continuing to lead to massive losses and damage for billions of people. Heavy central bank interventions and government spending programs have been launched worldwide and especially in the USA and Europe, with the hope to unfreeze credit and boltster consumption. Here, we present evidence and articulate a general framework that allows one to diagnose the fundamental cause of the unfolding financial and economic crisis: the accumulation of several bubbles and their interplay and mutual reinforcement has led to an illusion of a ``perpetual money machine'' allowing financial institutions to extract wealth from an unsustainable artificial process. Taking stock of this diagnostic, we conclude that many of the interventions to address the so-called liquidity crisis and to encourage more consumption are ill-advised and even dangerous, given that precautionary reserves were not accumulated in the ``good times'' but that huge liabilities were. The most ``interesting'' present times constitute unique opportunities but also great challenges, for which we offer a few recommendations.
A series of studies demonstrates that consumers are inclined to believe that the selling price of a good or service is substantially higher than its fair price. Consumers appear sensitive to several reference points--including past prices, competitor prices, and cost of goods sold--but underestimate the effects of inflation, overattribute price differences to profit, and fail to take into account the full range of vendor costs. Potential corrective interventions--such as providing historical price information, explaining price differences, and cueing costs--were only modestly effective. These results are considered in the context of a four-dimensional transaction space that illustrates sources of perceived unfairness for both individual and multiple transactions. Copyright 2003 by the University of Chicago.
There is strong evidence that people exploit their bargaining power in competitive markets but not in bilateral bargaining situations. There is also strong evidence that people exploit free-riding opportunities in voluntary cooperation games. Yet, when they are given the opportunity to punish free riders, stable cooperation is maintained, although punishment is costly for those who punish. This paper asks whether there is a simple common principle that can explain this puzzling evidence. We show that if some people care about equity the puzzles can be resolved. It turns out that the economic environment determines whether the fair types or the selfish types dominate equilibrium behavior. © 2000 the President and Fellows of Harvard College and the Massachusetts Institute of Technology
The canonical model in economics considers people to be rational and self-regarding. However, much evidence challenges this
view, raising the question of when “Economic Man” dominates the outcome of social interactions, and when bounded rationality
or other-regarding preferences dominate. Here we show that strategic incentives are the key to answering this question. A
minority of self-regarding individuals can trigger a “noncooperative” aggregate outcome if their behavior generates incentives
for the majority of other-regarding individuals to mimic the minority's behavior. Likewise, a minority of other-regarding
individuals can generate a “cooperative” aggregate outcome if their behavior generates incentives for a majority of self-regarding
people to behave cooperatively. Similarly, in strategic games, aggregate outcomes can be either far from or close to Nash
equilibrium if players with high degrees of strategic thinking mimic or erase the effects of others who do very little strategic
thinking. Recently developed theories of other-regarding preferences and bounded rationality explain these findings and provide
better predictions of actual aggregate behavior than does traditional economic theory.
Focusing on the many advances that are made possible by simulation, this book describes the new generation of discrete choice methods. Researchers use these statistical methods to examine the choices that consumers, households, firms, and other agents make. Each of the major models is covered: logit, generalized extreme value, or GEV (including nested and cross-nested logits), probit, and mixed logit, plus a variety of specifications that build on these basics. The procedures are applicable in many fields, including energy, transportation, environmental studies, health, labor, and marketing.
We demonstrate that a simple model, constructed on the premise that people are motivated by both their pecuniary payoff and their relative payoff standing, organizes a large and seemingly disparate set of laboratory observations as one consistent pattern. The model is incomplete information but nevertheless posed entirely in terms of directly observable variables. The model explains observations from games where equity is thought to be a factor, such as ultimatum and dictator, games where reciprocity is thought to play a role, such as the prisoner's dilemma and gift exchange, and games where competitive behavior is observed, such as Bertrand markets.
There is strong evidence that people exploit their bargaining power in competitive markets but not in bilateral bargaining situations. There is also strong evidence that people exploit free-riding opportunities in voluntary cooperation games. Yet, when they are given the opportunity to punish free-riders, stable cooperation is maintained although punishment is costly for those who punish. This paper asks whether there is a simple common principle that can explain this puzzling evidence. We show that if some people care about equity the puzzles can be resolved. It turns out that the economic environment determines whether the fair types or the selfish types dominate equilibrium behavior. 1 I.
Pay what you want (PWYW) is a new participative pricing mechanism in which consumers have maximum control over the price they pay. Previous research has suggested that participative pricing increases consumers’ intent to purchase. However, sellers using PWYW face the risk that consumers will exploit their control and pay nothing at all or a price below the seller's costs. In three field studies, the authors find that prices paid are significantly greater than zero. They analyze factors that influence prices paid and show that PWYW can even lead to an increase in seller revenues.
The principal aim of this paper is to present an evolutionary model based on a simple inequality system which shows how altruism can increase exchanges of goods and services, in order to study the conditions which can permit the emergence and prevalence of altruistic behaviors. We will show that given certain conditions, and even without considering group selection, kin selection or reciprocal altruism, altruists may have a greater probability of survival than egoists.
There is much euphoria about the possibilities offered by e-commerce. Consumers envision lower prices and easy shopping; investors imagine cashing in on Internet IPOs; and start-ups want their business model to be the one that transforms an industry. But beneath all the excitement lies a sobering reality: the Internet represents the biggest threat thus far to a company's ability to brand its products, extract price premiums from buyers, and generate high profit margins. Indrajit Sinha explains that this threat comes from what economists call cost transparency, a situation made possible by the abundance of free, easily obtained information on the Internet. Pricing information is the most prevalent, but consumers can also find a wealth of material about product quality, supplier reliability, service offerings, and much more. All that information makes sellers' costs more transparent to buyers. It lets them see through manufacturing costs and determine whether those costs are in line with the prices being charged. That will make it much harder for companies, whether they are on-line or not, to impose large price premiums. What can companies do to fight back? Sinha suggests several options. One is to implement creative pricing strategies that go beyond traditional price cutting. Another is bundling -packaging a product with other goods and services in order to obscure the product's costs. But the best way of countering cost transparency is through innovation, Sinha says. Consumers will always reward makers of new and distinctive products that improve their lives.
Pay what you want (PWYW) is a new participative pricing mechanism in which consumers have maximum control over the price they pay. Previous research has suggested that participative pricing increases consumers' intent to purchase. However, sellers using PWYW face the risk that consumers will exploit their control and pay nothing at all or a price below the seller's costs. In three field studies, the authors find that prices paid are significantly greater than zero. They analyze factors that influence prices paid and show that PWYW can even lead to an increase in seller revenues.
Presents the findings of a study designed to investigate the effect of odd pricing on respondents’ purchase probabilities for six products ranging in price from 100. The products tested were a block of cheese, a frozen chicken, a box of chocolates, a hair dryer, an electric kettle and a food blender, and the data were collected in a mall intercept of 300 household shoppers. For each product a demand curve was estimated and the differences between expected and actual purchase probabilities at each odd price level examined. For all six products, demand was higher than expected at one or both of the odd price points tested. This effect was particularly marked for the lower-priced food items (cheese, chicken and chocolates) and for prices ending in the digit 9. Provides support for the assumption that odd pricing generates greater than expected demand and for the common practice of setting retail prices which end in 99 cents or $99.
Fair price judgments are one type of reference price used by consumers in evaluating a seller's price. In this study, dual entitlement theory and equity theory were the two conceptual frameworks used to identify factors that may influence consumers fair price perceptions. Data collected from businesses purchasing a service was analyzed to investigate the relative influence of these factors. Knowledge of seller's costs, perceptions of product benefit, and prices of other competing products contributed to consumers' fair price perceptions, whereas prior year's price, perceived cost or sacrifice, and prices paid by other buyers were not influential. The relative importance of these factors in fair price judgments did not change when the pricing environment changed from regulated to deregulated.
1. Choosing as a way of life Appendix A1. Choosing a residential telecommunications bundle 2. Introduction to stated preference models and methods 3. Choosing a choice model Appendix A3. Maximum likelihood estimation technique Appendix B3. Linear probability and generalised least squares models 4. Experimental design 5. Design of choice experiments Appendix A5. 6. Relaxing the IID assumption-introducing variants of the MNL model Appendix A6. Detailed characterisation of the nested logit model Appendix B6. Advanced discrete choice methods 7. Complex, non-IID multiple choice designs 8. Combining sources of preference data 9. Implementing SP choice behaviour projects 10. Marketing case studies 11. Transportation case studies 12. Environmental valuation case studies 13. Cross and external validity of SP models.
While there is substantial research examining how recipients react to allocations that vary in procedural fairness (Colquitt, Conlon, Wesson, Porter, & Ng, 2001), previous research has not examined how those dividing resources among themselves and others manipulate procedural fairness (Tyler & Smith, 1998). In this paper, we introduce a measure that allows us to compare procedural fairness across resource allocations, and we use an experimental procedure in which participants vary the procedural fairness of their allocations. In three studies, we show that those dividing resources make proactive tradeoffs between distributive and procedural fairness. Participants increased the procedural fairness of their allocations when they knew recipients would observe their procedures, but they were less likely to divide the resources equally among recipients. The decreased emphasis on distributive fairness when procedures were observable resulted in higher joint outcomes, suggesting that the observability of procedures has important implications for the efficiency of resource allocation in groups. Copyright © 2006 John Wiley & Sons, Ltd.
Many marketing problems require accurately predicting the outcome of a process or the future state of a system. In this paper, we investigate the ability of the support vector machine to predict outcomes in emerging environments in marketing, such as automated modeling, mass-produced models, intelligent software agents, and data mining. The support vector machine (SVM) is a semiparametric technique with origins in the machine-learning literature of computer science. Its approach to prediction differs markedly from that of standard parametric models. We explore these differences and benchmark the SVM's prediction hit-rates against those from the multinomial logit model. Because there are few applications of the SVM in marketing, we develop a framework to position it against current modeling techniques and to assess its weaknesses as well as its strengths.
Essential Concepts from Distribution TheoryThe Goal of Inference and Bayes' TheoremConditioning and the Likelihood PrinciplePrediction and BayesSummarizing the PosteriorDecision Theory, Risk, and the Sampling Properties of Bayes EstimatorsIdentification and Bayesian InferenceConjugacy, Sufficiency, and Exponential FamiliesRegression and Multivariate Analysis ExamplesIntegration and Asymptotic Methods
Importance SamplingSimulation Primer for Bayesian ProblemsSimulation from Posterior of Multivariate Regression Model
Understanding and predicting the behaviour of decision makers when choosing among discrete goods has been one of the most fruitful areas of applied research over the last thirty years. An understanding of individual consumer behaviour can lead to significant changes in product or service design, pricing strategy, distribution channel and communication strategy selection, as well as public welfare analysis. This graduate and practitioner guide deals with the study and prediction of consumer choice behaviour, concentrating on stated preference (SP) methods - placing decision makers in controlled experiments that yield hypothetical choices - rather than revealed preferences (RP) - actual choices in the market. It shows how SP methods can be implemented, from experimental design to econometric modelling, and suggests how to combine RP and SP data to get the best from each type. The book also presents an update of econometric approaches to choice modelling.
I suppose that people react with anger when others show themselves not to be minimally altruistic. With heterogeneous agents, this can account for the experimental results of ultimatum and dictator games. Moreover, it can account for the surprisingly large fraction of individuals who offer an even split with parameter values that are more plausible than those that are required to explain outcomes in these experiments with the models of Levine [Levine, D.K., 1998. Modeling altruism and spitefulness in experiments. Review of Economic Dynamics 1, 593–622], Fehr and Schmidt [Fehr, E., Schmidt, K.M., 1999. A theory of fairness, competition and cooperation. Quarterly Journal of Economics 114, 817–868], Dickinson [Dickinson, D.L., 2000. Ultimatum decision making: a test of reciprocal kindness. Theory and Decision 48, 151–177] and Bolton and Ockenfels [Bolton, G.E., Ockenfels, A., 2000. ERC: a theory of equity, reciprocity, and competition. American Economic Review 90, 166–193].
This research tests the effect of rule-based price fairness (as opposed to fairness in the sense of “cheap”). In the first study, perceived rule-based price fairness is shown to influence the inferred fairness of the seller's pricing process which affects buyers' attitude toward the seller and willingness to purchase. In the second study, consumers are provided information as to whether the seller has followed a rule-based pricing process. The results indicate that the knowledge of how a price has been determined has a significant effect on how the price is perceived. The conclusion is that not just the price tag itself but how that price has been determined affects consumers' perceptions of fairness and willingness to purchase.
People deviate from the predictions of game theory in two systematic ways. They are not purely self-interested (they care about fairness and try to cooperate with others), and they do not always consider what other players will do before making choices. However, with experience, these deviations sometimes disappear. People learn when they can afford to be unfair and what others will do; their behavior often converges to a game-theoretic equilibrium. A behavioral game theory that explains the initial deviations (and their disappearance) could be useful, especially if the learning process is modeled carefully and better data are gathered.
Departures from self-interest in economic experiments have recently inspired models of “social preferences.” We design a range
of simple experimental games that test these theories more directly than existing experiments. Our experiments show that subjects
are more concerned with increasing social welfare—sacrificing to increase the payoffs for all recipients, especially low-payoff
recipients—than with reducing differences in payoffs (as supposed in recent models). Subjects are also motivated by reciprocity:
they withdraw willingness to sacrifice to achieve a fair outcome when others are themselves unwilling to sacrifice, and sometimes
punish unfair behavior.
The impact of the paper "A Theory of Fairness, Competition and Cooperation" by Ernst Fehr and Klaus Schmidt (Quarterly Journal of Economics, 1999), has been tremendous, and the theory of inequity aversion has been widely used in varying fields of economics. Here, the merits of inequity aversion as a theory of fairness and as an explanation of human behavior are critically examined. I argue that the theory has weak points in both areas. First, it provides no deeper understanding of why and when people exhibit other-regarding preferences. Second, the outcome-based nature of the theory ignores the fundamental role of procedures, both in the theoretical literature on fairness, and in experiments regarding actual human behavior. Finally, I suggest an alternative way of understanding the puzzling behavior of humans in economic experiments, based on the potentially conflicting norms of individual property rights and social sharing. Many modern theories of fairness essentially amount to promoting an efficient mix of these two norms.
Water demand management is a key focus area for most water managers and even more so in developing countries since improved access to water is important to the poor. Different policies have been introduced to ensure a water management system th at cares for the poor, among them the Increasing Block Tariff (IBT) structure. Studies demonstrate that it is very important to know the shape of the demand curve when deciding on the IBT structure. This paper adds to the understanding of the factors that influence water consumption. The focus is on how water demand patterns vary with the level of income among urban dwellers. The results support the hypothesis that pricing is an ineffective measure to manage water consumption among the poor, while it is relatively more effective for the richest group. Therefore, redistribution using water pricing policy will hardly work. Copyright (c) 2006 The Authors. Journal compilation (c) 2006 Economic Society of South Africa.
Corruption in the public sector erodes tax compliance and leads to higher tax evasion. Moreover, corrupt public officials abuse their public power to extort bribes from the private agents. In both types of interaction with the public sector, the private agents are bound to face uncertainty with respect to their disposable incomes. To analyse effects of this uncertainty, a stochastic dynamic growth model with the public sector is examined. It is shown that deterministic excessive red tape and corruption deteriorate the growth potential through income redistribution and public sector inefficiencies. Most importantly, it is demonstrated that the increase in corruption via higher uncertainty exerts adverse effects on capital accumulation, thus leading to lower growth rates.
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Progressive’s ‘name your price’ tool aims for cost transparency
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Wal-Mart battles labels over CD prices
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Culture of cost transparency a goal of new MSMA president
- L Lofton
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What makes a price increase seem “fair”? Pricing Strategy and Practice
- S Maxwell