Price fairness perceptions and customer loyalty in a retail context

Unfairness in consumer services: Outcomes of differential treatment of new and existing clients

“…To attract first-time shoppers, firms frequently promote rebates for new customers. This practice is based on loyal customers' assumed high switching costs, attachment to the firm and low price sensitivity and its aim is to capitalize on the individual price acceptance of customers (Haws and Bearden, 2006;Martin et al, 2009;Santos and Basso, 2012;Weisstein et al, 2013). Those with a lower price acceptance (e.g.…”

“…However, while this strategy may be effective for gaining new business it may also have negative effects on existing customers, who are practically "punished" for their loyalty. Though existing customers may have a desire to maintain their relationship with the retailer and may respond positively to hardships, they expect retailers to reciprocate and believe they deserve a fair treatment (Martin et al, 2009). The idea that someone else is getting a better deal on the same offer can evoke dissatisfaction and stir up a consumer revolt (Feinberg et al, 2002).…”

“…Therefore, customers' perception of fairness of a retailer's action can affect customer retention (Chebat and Slusarczyk, 2003). Santos and Basso (2012) suggest that trust may mediate the relationship between price unfairness judgments and behavioural responses such as repatronage: if customers believe that the retailer is engaging in unfair practices, they may perceive the firm has broken the implicit trust in the relationship, leading to its dissolution (Sirdeshmukh et al, 2002;Martin et al, 2009). However, the role of trust on the relationship between fairness perceptions and repurchase intentions remains under-investigated.…”

“…Since research shows that present customers perceive greater unfairness if they receive a less favourable treatment than new customers (Feinberg et al, 2002;Tsai and Lee, 2007), the impact in terms of trust, satisfaction and repatronage may also be more damaging. However, despite such important consequences, little attention has been paid to understanding unfairness in differential pricing schemes and companies often underestimate the negative reactions these practices provoke among customers (Martin et al, 2009;Santos and Basso, 2012;Nguyen and Klaus, 2013).…”

The relationship between young people׳s transit use and their perceptions of equity concepts in transit service provision

“…Evidence shows that customer loyalty, willingness to pay and purchase intentions are associated with perceived fairness, because consumers are willing to pay higher prices, associate higher quality and switch to products that are linked to social corporate responsibility and fair trade (e.g., Martin et al, 2009;Reinstein and Song, 2012; e.g., Lotz et al, 2013). Moreover, consumers are willing to punish firms for perceived unfair prices (Schein, 2002) and socially irresponsible behavior (Arredondo Trapero et al, 2010).…”