Flat-rate pricing, as opposed to charging customers for actual usage, dominates many service industries (e.g., telecommunications, health clubs, and music streaming), and customers often express a flat-rate bias and choose flat rates even if a pay-per-use tariff would be less expensive for them. However, evidence of the effect of this bias on churn is mixed. The competitive market position of a service provider may represent a relevant contingency factor related to this effect; building on attribution theory, the current study predicts that customers attribute their flat-rate bias differently, depending on service providers’ strategic positioning, which leads to varying churn behavior. A survival analysis of approximately 2 years’ transactional data gathered from 21,490 customers of a premium Internet service provider affirms that a flat-rate bias leads to churn in the premium segment. Two experimental studies show that customers of premium service providers attribute their flat-rate bias more externally and exhibit lower fairness perceptions but increased churn intentions compared to low-cost customers who make internal attributions and who thus have less negative perceptions and lower churn intentions. Therefore, premium service managers must proactively manage customers who exhibit flat-rate biases to prevent their negative reactions. Low-cost providers generally have less need for such action and can benefit from flat rates without risking increased churn, despite higher price sensitivity of their customers.

Radio Frequency Identification (RFID) is a hot topic in retail supply chain management [Behrenbeck, Küpper et al. 2004]. Yet, a recent study predicts "that the true benefits of RFID for retailers will be in enhanced marketing opportunities" [Sharpless 2005]. Research on RFID for marketing purposes is still rare giving the opportunity for more specific research on how RFID will influence business to consumer (B2C) marketing and services [Curtin, Kauffman et al. 2005]. Apparel retailing will most likely be one of the first industries to adopt item level tagging and thus benefit from those new marketing opportunities [Chappell, Durdan et al. 2003; Kurt Salmon Associates 2005]. This paper investigates the opportunities of RFID to enhance B2C marketing of apparel retailers. The paper presents six out of 17 developed RFID applications that support relationship marketing of apparel retailers to better recruit, retain, and recover customers. The RFID applications are classified by the marketing goals they fulfill and the marketing phase they support. The authors describe the use of each RFID application exemplified, and evaluate the additional value for the customer company relationship as well as the feasibility for apparel retailers to implement the application into practice.

Flat rates are a dominant pricing scheme in many consumer service industries that largely benefit service providers: Many customers exhibit a bias and choose flat rates even though a pay-per-use plan would be less expensive for them. Yet, whereas the degree of flat-rate bias varies strongly across services, no study has determined whether consumers’ consumption goals might influence its extent. The authors argue and show that consuming services to attain hedonic gratification leads to a significantly higher flat-rate bias than using services to fulfill utilitarian needs. The three well-known flat-rate bias effects (taximeter, insurance, and overestimation) fully mediate the relationship between the consumption goal and flat-rate bias. In three experimental studies, the authors consistently show that these findings apply across different services, for a service that relies on natural variance in customers’ consumption goals, and for the same service framed as hedonic, utilitarian, or a hybrid. These findings show that managers need to be aware of major “natural” industry differences in the level of flat-rate bias. However, service providers can also actively manage and increase consumers’ hedonic consumption goals for their services and thus increase their share of flat-rate contracts. A further experiment shows that the hedonization tactic has no negative side effects on consumers’ price perceptions in terms of willingness to pay (WTP). Service providers can benefit from hedonizing their services as long as it is compatible with their value proposition.