Effects of Complex Price Communication on Fairness: Case of a Sequential Communication

Abstract

Nowadays, pricing is one of the most challenging tasks for marketers. Despite its importance for both academics and practitioners, consumers' reactions to prices remain not clear, especially with the emergence of new forms of prices, among which we can highlight the use of complex prices, which is becoming increasingly popular. Complex prices' perception is highly dependent on the way they are communicated; consequently, complex prices communication plays a crucial role in shaping perception. This study is a continuity of previous researches that have validated the perceptual effects of complex prices communication. It attempts to show the effects complex prices communication has on its perceived fairness. In addition, the effects of the moderating variables; Seller Credibility and Responsibility Attribution (i.e., inferred motive) are studied. One hundred thirty-five undergraduate students participated in the study. They were randomly assigned to 2 (sequential communication of complex price vs non sequential communication of complex price) x2 (credible seller vs less credible seller) conditions. Manipulation consisted of presenting a scenario of buying an online air ticket. The results of our research highlight that sequential complex price communication has a significant effect on its perceived fairness. In particular, the results show that the perceived fairness of price is more negatively affected when the seller lacks credibility according to consumers. Also, it has been proved that the delayed communication of some of the complex price components could be perceived as a way to get a higher profit, which deepens the negative perceived fairness.

Working out the best deal: the role of consumer numerical skills within a grocery shop

“…However, as a substantial number of the population have below average numerical skills (OECD, 2012), it is important that retailers are conscious to implement promotions which are as clear as possible for consumers, minimising risk of confusion, especially for those who may struggle to calculate the best deal (Competition and Markets Authority, 2015). Complex pricing strategies can be viewed negatively by consumers (Amor, 2016). Therefore, clarity around pricing and clear promotions can positively affect how consumers view a retailer and simplify their shopping decisions improving customer satisfaction and increasing repeat store visits.…”

“…This is problematic due to the link between lower education and lower income (Stryzhak, 2020), as complex promotional calculations which are misjudged by consumers could result in some spending more than they anticipated. This suggestion is justified by study findings which demonstrate that consumers will make more purchases and generate more revenue/profit for retailers when more complex promotional pricing strategies are used, such as sequential percentage discounts as opposed to single percentage discounts (Chen and Rao, 2007; Competition and Markets Authority, 2015; Amor, 2016). Difficulty calculating the best “deal” or best value option may be particularly problematic for those who are shopping within a particular specified budget for a household.…”