Effects of Price and User-Generated Content on Consumers’ Prepurchase Evaluations of Variably Priced Services

Abstract

The role of price in prepurchase evaluations for variably priced services has not been widely examined. Increased consumer awareness of variable pricing practices, coupled with growing availability of user-generated content (UGC) at the point of purchase in the online environment, may be changing the way that consumers use price in purchase decisions. This article examines the relative roles of price and UGC, specifically consumer reviews and aggregate consumer ratings, on consumers’ prepurchase evaluations in the context of the purchase of hotel accommodation, a service to which variable pricing is typically applied. Results indicate that, in the presence of UGC, price does not have a significant impact on perceived quality. Price and UGC have significant effects on perceived value, although consumers rely more on reviews than ratings when evaluating price–benefit trade-offs. These results suggest that, rather than simply competing on price, managers must also understand consumers’ perceptions of their firm versus the competition.

The effect of availability heuristics in online consumer reviews

“…Further support for the negativity bias was obtained in Study 2, in which pictures influenced decisions for positive but not negative reviews. This finding adds visual cues to the list of factors that are overpowered by negative reviews, including price (Book et al, ; Noone & McGuire, ) and preexisting attitudes (Tanford & Montgomery, ).…”

The Effects of Social Influence and Cognitive Dissonance on Travel Purchase Decisions

“…Using an experimental design, Noone and McGuire (2013) found that reviews were more influential than price or ratings on perceptions of a hotel's perceived value. Customers were willing to pay a premium for hotels with a higher reputation according to Booking.com's service scores, which were derived from traveler reviews (Yacouel and Fleischer 2012).…”

Understanding Consumers’ Inferences from Price and Nonprice Information in the Online Lodging Purchase Decision

“…RM practice is only just beginning to assess the potential conversion power of nonprice information. Prior research has examined how lodging consumers use nonprice information such as brand image or consumer reviews along with price in prepurchase evaluations (Bian and Liu 2011, Chiang and Jang 2007, Kim and Perdue 2013, Noone and McGuire 2014 and in eventual hotel choice McGuire 2013, Pan et al 2013). However, there has been little attention focused on precisely how consumers use FGC and UGC during different phases of the purchase choice process.…”