Price negotiating for services: elucidating the ambivalent effects on customers’ negotiation aspirations

Abstract

Although customers frequently negotiate the prices of both goods and services, academic research has mostly examined negotiations in goods contexts, neglecting the fact that negotiations for services may be different. This study examines the consequences of customers' price negotiation behavior relating to services as compared to goods. Using five empirical studies with field and experimental data, the authors show that services exert ambivalent effects. First, the heterogeneity intrinsic to services leads customers to aspire to better negotiation outcomes because customers perceive higher risk and regard negotiation as more legitimate, particularly if services are customized. Second, the inseparability of services leads customers to lower their negotiation aspirations because they fear negative consequences, particularly if customers are closely integrated in the service process. Building on these findings, the authors conceptualize and test communication strategies that diminish customers' negotiation aspirations. Study results provide actionable recommendations for managers and salespeople in service industries.

Customer–Salesperson Price Negotiations During Exceptional Demand Contractions

“…It is also consistent with other price negotiation studies which adopt a similar approach to utilizing this type of outcome measure (e.g. Alavi et al 2020).…”

“…Even more broadly, against the backdrop of SEW theory, sales research could more frequently examine the influence of SEW dimensions on phenomena such as price negotiations (e.g. Alavi et al 2018Alavi et al , 2020, digital selling (Chaker et al 2022), value and relational selling (e.g. Delpechitre et al 2018;Habel, Alavi, and Linsenmayer 2021b), and sales leadership (Badrinarayanan et al 2020;Guenzi et al 2019).…”

“…For example, prior research has shown that negotiated prices depend on negotiation tactics (Lawrence et al 2021;Wieseke, Alavi, and Habel 2014) as well as buyer and seller firm characteristics (e.g. Alavi et al 2018Alavi et al , 2020Kassemeier et al 2022;Wieseke, Alavi, and Habel 2014). Notwithstanding these important contributions, the sales literature remains silent about the impact of the economic context on customer-salesperson price negotiations.…”

Role of Framing towards Islamic Business Engagement in Asia: A Case of Pakistan

“…Research illustrates that framing affects the assessment of choices in so many different situations, these involve; financial responsibility (Baily & Harris, 2019;Bay, 2011), investment in the strategic assets (Coff & Laverty, 2001; Pan, Li, Chen, & Chen, 2020), economic experimentation (Elliott & Hayward, 1998;Roelvink, 2020), rational choice (Tversky & Kahneman, 1986; van Aaken & Kurtz, 2019), complex financial decisions (Endres, Chowdhury, & Alam, 2008;Stein, Wiedemann, & Bouten, 2019), price negotiation (Alavi, Habel, Schwenke, & Schmitz, 2020;Ghosh & Boldt, 2006), marketing and sales (Jäger & Weber, 2020;Tuk, Verlegh, Smidts, & Wigboldus, 2009), and conflicting environment (Kobayashi, 2019;Pellow, 1999).…”

How do we measure the intangible? Overcoming the measurement challenge in services

“…Service scholars have mostly employed the Likert scale in the extant literature to measure intangibility (Alavi et al, 2020; Ding & Keh, 2017), or its constituent dimensions, for example, MI (Heller et al, 2019). The Likert scale requires respondents to indicate their degree of agreement (or, otherwise) with a series of statements about the given stimulus, typically ranging from “strongly disagree” to “strongly agree.” A high (or low) score should reliably reflect a favorable (or unfavorable) response (Malhotra & Dash, 2011; OECD, 2013).…”