Behavioral response to online pricing: empirical and managerial insights

Abstract

Purpose Pricing is always a fundamental marketing element. In the digital marketing/e-commerce context, there are two universal phenomena: desire to micro-segment and customize, and the adverse reaction upon unfair perception of price. A third related question is how should firms consider price increases and decreases? Specifically, this paper aims to address the following three research and practice questions: What are the theoretical underpinnings of perception of fairness/unfairness in pricing, and what are the findings? What are the theoretical underpinnings of response to price increases and decreases? What should be online pricing strategy, consistent with the findings on (un)fairness perception of pricing and response to price increases and decreases? Design/methodology/approach The present approach is integrative review and critical analyses, and synthesis. The review dates back to 1960s, and is inter-disciplinary, including apposite findings in behavioral science, economics, marketing and operations management/research. The authors search for insights with significant empirical support to address these questions. Findings Perception of unfair price impacts consumer choice, probability of purchase, intent to buy and attitude to product/service/firm adversely. Consumers react differently to perceived unfair and fair prices. Consumers react more strongly and negatively to perceived unfair prices (compared to prices perceived to be fair) in their intent to buy and other related metrics. Consumers react differently to price increases and price decreases relative to the reference price. Consumers react more strongly to price increases than to price decreases. There is substantial heterogeneity in the magnitude of loss-aversion effect, depending on the product/service category and estimation methods. Originality/value The authors review and discuss potential viable pricing strategies. Based on the generalizable findings, this study provides actionable insights to managers for pricing in digital marketing context. Also, the authors provide useful directions for future research.

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“…Dicho concepto (PTPK) involucra hallazgos interdisciplinarios del comportamiento, investigación de operaciones, economía, marketing y gestión, entre otras que buscan identificar cómo reaccionan los consumidores ante diferentes percepciones de precio, ¿Eres lo que pagas? Análisis de conocimiento de precios y perfiles de consumidores Retos,14(27),69-83 ISSN impreso: 1390-6291; ISSN electrónico: 1390-8618 incluso aquellos etiquetados por el consumidor como injustos -en comparación con precios percibidos como justos-es un hecho que los consumidores reaccionan de manera diferente ante aumentos o caídas en los precios de referencia de los productos (Kalyanaram et al, 2022).…”

“…La segmentación de mercados guía decisiones en mercadotecnia permitiendo adaptar estrategias y grados de estandarización según los mercados (Hajibaba et al, 2020), incluso en contextos como el del e-commerce, existe un deseo de micro segmentar (Kalyanaram, et al, 2022). Autores como Gisches et al (2021) señalan que, en mercados con periodos de venta múltiples, se asume la presencia de consumidores miopes, pero existen otros tipos en el mercado.…”

“…Considerar factores como demanda, potencial de crecimiento, servicio percibido, elasticidad de precios y calidad percibida ayuda a crear estrategias de precios más efectivas (Chen et al, 2020) como precios dinámicos, no obstante, en ausencia de interacción física directa, el precio se convierte en un indicador decisivo de las cualidades del producto (Wang et al, 2020;Kalyanaram et al, 2022). Especialmente en los precios dinámicos personalizados (PDP, por sus siglas en inglés, Personalized Dynamic Pricing) implica ajustes basados en oferta, demanda y competencia y se respalda en evidencia que sugiere que los clientes consideran el precio como un indicador fiable de la calidad del producto (Priester et al, 2020), la percepción de equidad juega un papel vital en la aceptación del precio, influyendo en actitudes que van desde considerarlo razonable hasta justo (Priester et al, 2020;Theysohn et al, 2013).…”

Predicting Indonesian Consumers’ Intention to Buy Green Cosmetics Using The Modified TPB Framework

“…In the context of marketing, business, or management in general, perceived price had been undoubtedly perceived and considered by many business-related researchers as an important variable which could ultimately determine whether or not consumers will perform actual buying or purchase behavior toward certain products or services that they want to buy (Kalyanaram et al, 2022;Unal and Tscioglu, 2022;Jeong et al, 2022). In this case, perceived price could be understood as consumers' individual judgement and evaluation concerning whether or not the price of certain product or service that consumers are interested in buying was deemed as "logical", "reasonable" in accordance with the beliefs or expectations that consumers had regarding the right price for such product or service.…”

Guest editorial: Digital marketing trends

“…In a theoretical paper on the dynamic and controllable issue of price, Kalyanaraman et al (2022) use an inter-disciplinary review to examine the underpinnings of fairness/unfairness perception in pricing and secondly the response to price increases/decreases, and then relate the two to online pricing strategy. The integrative review draws from behavioral science, economics, marketing and operations research.…”