Buyer behavior and procedural fairness in pricing: exploring the moderating role of product familiarity

Abstract

PurposeThis research proposes studying how consumers' familiarity with products impacts the degree to which consumers are sensitive to a seller's violation of procedural fairness norms in pricing. Past research has either studied the role of familiarity or the role of fairness in influencing consumer behavior. However, it is unclear how familiarity and fairness combine to influence consumer behavior. The present research proposes filling this gap.Design/methodology/approachAn experiment is designed to manipulate consumers' perceptions of procedural fairness of a seller's pricing tactic, and consumers' levels of familiarity with a product. Each variable is manipulated to be either high or low. Thus, outcomes are observed for four purchase conditions.FindingsResults indicate that the degree to which consumers rely on procedural fairness to evaluate a product is related to consumers' level of familiarity with a product. Consumers who are less familiar with a product are more likely to rely on procedural fairness to form purchase intentions. Also, unlike their more knowledgeable counterparts, consumers who are less familiar with a product are more likely to equate procedural fairness with perceived quality.Research limitations/implicationsThe research stresses the need to differentiate between the roles played by procedural and distributive fairness in shaping consumer behavior. The authors study only procedural fairness, but a natural next step for future research is to study simultaneously the role of both facets of fairness.Practical implicationsThe results of our study underscore the importance of following procedural fairness norms especially for retailers who deal in product categories where the pace of innovation is so rapid that it creates a large dispersion in knowledge of product attributes among consumers. The study' findings suggest that in such situations, consumers may rely excessively on cues that signal a seller's adherence to or violation of social norms relevant to business practices. Thus, the authors encourage sellers to monitor keenly levels of product knowledge among their customer base. This would enable sellers to identify situations that merit an enhanced sensitivity to upholding social norms such as procedural fairness.Originality/valueThe paper brings to attention the interaction between consumers' familiarity with a product and procedural fairness in pricing. Although an expectation of procedural fairness underlies all exchanges this research identifies consumers' familiarity as a variable that influences the degree to which procedural fairness is relied on in shaping consumer behavior.

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