Emerald | Journal of Product & Brand Management

Evolving pricing practices: the role of new business models

Dhruv Grewal, Anne L. Roggeveen, Larry D. Compeau, Michael Levy — 2011-11-01 00:00:00.0

Abstract

Purpose – In this brief paper, the aim is to highlight three important pricing areas: the business strategies and pricing models that have evolved over the past 20 years of research, the customers that have been targeted, and the role of the internet on pricing. The advent of social media, mobile marketing and display technologies are likely to encourage researchers to pursue additional research on these topics. Design/methodology/approach – The current paper is an essay aimed at stimulating pricing research in three major domains. Findings – The authors review illustrative current practices and research findings pertaining to emerging pricing business models, customer target marketing and price dispersion on the web. Research limitations/implications – The paper highlights areas that need empirical investigation. Practical implications – Managers need to explicitly understand the role of these emerging technologies (e.g. social media, mobile media, and web-application) and appropriately incorporate them into their pricing strategies. Originality/value – The paper's central contribution is to stimulate additional research on key pricing areas.

When children confront prices: an approach based on price presentation

Coralie Damay, Nathalie Guichard, Amélie Clauzel — 2011-11-01 00:00:00.0

Abstract

Purpose – This paper seeks to examine how young consumers attribute and select product prices according to their presentation (i.e. format and ending). Design/methodology/approach – A questionnaire, administered to a sample of children between six and 12 years of age, reveals that children's allocation of prices and children's choices depend on different price formats (i.e. non-decimal versus decimal prices and varied price endings). Findings – Children tend to prefer round prices and to choose a 0-ending in the decimal portion of decimal prices. However, their preferences also depend on their position as either a salesperson or a buyer. Originality/value – Research into the relationship between children and price is a relatively new field. This study uses recent works as a basis and extends the field with new insights.

Understanding cultural influence on price perception: empirical insights from a SEM application

Juan (Gloria) Meng — 2011-11-01 00:00:00.0

Abstract

Purpose – The purpose of this paper is to review and understand the underlying structure of price perception, to recognize how cultural factors influence price perception, and to develop and empirically test a model of cultural differences and price perception. Design/methodology/approach – This project gathered data from both China and the USA. Using the LISREL 8.52 program, a proposed model was tested and modified in order to obtain a parsimonious underlying structure explaining cultural influences on consumers' price perceptions. Findings – Results of the data analysis show that culture factors do have significant effects on price perception. Internal reference price has a consistent and negative effect on the overall price perception of both goods and services purchase and durable and non-durable goods purchase. However, the significant associations between price perception factors and overall price perception were only found in the services and non-durable goods purchase but not in the durable goods purchase. Practical implications – This study helps international marketers understand the cross-cultural consumer behavioral differences in general and the price perception differences in particular. It also provides a series of guidelines for international pricing strategy and international promotion strategy on an operational level. Originality/value – Theoretically, the paper integrates the solid base of work on domestic pricing from the Lichtenstein et al. study on price perception as well as work on culture from anthropology and sociology, international business, international marketing, and Hofstede's culture theory.

Online price dispersion – more than imperfect information

Maria Petrescu — 2011-11-01 00:00:00.0

Abstract

Purpose – The objective of this study is to analyze price dispersion in the context of internet based shopping malls and assess which of the main informational elements available online about sellers affect online price dispersion. Design/methodology/approach – The author collected data for 100 models of watches from seven major brands and 100 models of cameras from nine major brands available for sale on Amazon. Statistical regression of price dispersion against average price, number of stores, shipping charge variation, average number of customer reviews, variation in the percentage of positive reviews and a dummy variable of product type were performed. Findings – It is shown that price dispersion is present even in an online shopping mall. The conclusion significantly adds to the online pricing research, by showing that price dispersion is influenced by the average product price and product type and shipping charges. The number of stores does not affect price dispersion because there is no obstacle impeding the customer from finding the prices for all stores. A key finding is that the number of customer reviews significantly influences online price dispersion. Research limitations/implications – The study only analyzes price dispersion for two products using secondary data. Future studies can analyze different types of goods and focus on which elements affect the buyers' store selection by using primary data. Practical implications – Managers can see that there are numerous other elements of information besides price that influence buying decisions. Practitioners need to note the importance of customer reviews in online settings, including the significance of the number of reviews as signal of experience and reliability. Originality/value – The paper shows that online price dispersion exists even in the context of practically inexistent search costs. Even though the buyers have instant access to all prices of a product, they use a combination of elements in order to decide the seller selection. A key contribution of the study shows that the amount of information available about the seller and the customer reviews significantly influence online price dispersion.

Simplifying difficult calculations: consumer choice of two-part tariffs

Joseph P. Redden, Stephen J. Hoch — 2011-11-01 00:00:00.0

Abstract

Purpose – This paper aims to outline a decision process for how consumers choose among two-part tariffs which consist of a flat fee plus a per unit charge for usage over an allowance. The paper also seeks to examine what types of decision aids help consumers choose lower cost tariffs. Design/methodology/approach – The approach used is two experimental studies. Findings – Most consumers do not choose a tariff by calculating an expected cost because of usage uncertainty. They instead rely on simple comparisons of the overage rate, usage allowance, and flat fee attributes. These heuristics lead to systematic biases, beyond what actual true cost justifies, for favorable comparisons on these attributes. An online calculator improved choice of the lower cost option from 65 percent to 80 percent, yet this increased to 91 percent if people were also forced to consider a range of usage levels. Practical implications – Consumers struggle to choose the lowest cost tariff, especially with uncertain usage. Consumers should realize the biases in their decision shortcuts and use the presented decision aids. Firms can leverage these biases by offering larger usage allowances (often done) and smaller overage rates (often not done), or correct them with decision aids. Originality/value – Much work on tariffs assumes consumers calculate a cost, but the authors question this assumption, and show that consumers instead use simple attribute comparisons to deal with uncertain usage. An understanding of the specific heuristic consumers use allows the authors to better account for past effects, predict and establish new effects, and design effective decision aids. Results indicate tariff biases largely result from information processing shortcomings.

Branded: Branding in Sport Business

2011-11-01 00:00:00.0

Longer Lasting Products. Alternatives to the Throwaway Society

2011-11-01 00:00:00.0

Service Innovation: How to Go from Customer Needs to Breakthrough Services

2011-11-01 00:00:00.0

Introduction

2011-11-01 00:00:00.0