Lowering consumers’ price image without lowering their internal reference price: the role of pay-what-you-want pricing mechanism

Wagner, Rafael Luis

doi:10.1057/s41272-018-00184-0

Cited by 6 publications

(4 citation statements)

References 48 publications

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“…For a product with higher perceived innovation, the average value of competing offers in the product category can act as a landmark for consumers' judgment about the focal product's price. On the contrary, for a product that is perceived as less innovative, consumers already have a well-built, memory-based "internal reference price" for this type of product (Choi and Mattila, 2018;Kuijken et al, 2017;Thomas and Menon, 2007;Wagner, 2019). Then, when a product with a lower level of perceived innovativeness is proposed at a relatively high price compared to this well-built, memorybased "reference price," the trade-off leads to perceived price unfairness.…”

Section: Effect Of the Types Of Coopetition On Price Fairness: The Moderating Role Of Perceived Innovationmentioning

confidence: 99%

When does coopetition affect price unfairness perception? The roles of market structure and innovation

Sabri

Djedidi

Hani

2020

JBIM

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Purpose This study aims to examine the critical role of types of coopetition (upstream/downstream), market structure (concentrated/competitive) and innovation (low vs high degree of innovation) that can affect the way consumers perceive the resulting price (un)fairness of new offerings. Design/methodology/approach Three between-subjects experiments involving different participant populations and product categories were conducted to test the research hypotheses. Findings The valence of the effect of types of coopetition (upstream/downstream) on price fairness is conditional on the market structure and the degree of innovation associated with the new product offering. Downstream (as opposed to upstream) coopetition is much more detrimental to perceptions of price fairness in a concentrated market than in a competitive and fragmented market. However, within a competitive market, downstream coopetition may lead to greater price fairness perception than upstream coopetition when the new product offering is highly innovative. Research limitations/implications The current study uses lab experiments with fictitious scenarios and focuses on two moderating variables: market structure and innovation perceptions. Future research may use field experiments and explore additional moderating variables that may annihilate the negative effect of downstream coopetition on price fairness perception, especially in a concentrated market. Practical implications In concentrated markets, firms should opt for upstream rather than downstream coopetition to limit the negative effect the announcement of coopetition has on price fairness evaluation. However, within a competitive market, when the new product offering resulting from coopetition is associated with a high perceived degree of innovation, firms should opt for downstream rather than upstream coopetition because of its positive impact on price fairness evaluation. Originality/value To the best of authors’ knowledge, this study is the first to demonstrate that new product development from coopetition has important implications for the perception of price fairness, leading to positive or negative effects depending on market structure and the degree of innovation of the new product offering. It then explores the conditions under which types of coopetition (upstream/downstream) might backfire.

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Section: Effect Of the Types Of Coopetition On Price Fairness: The Moderating Role Of Perceived Innovationmentioning

confidence: 99%

When does coopetition affect price unfairness perception? The roles of market structure and innovation

Sabri

Djedidi

Hani

2020

JBIM

View full text Add to dashboard Cite

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“…To increase the amount customers pay under PWYW and NYOP, retailers may use tactics such as providing ERPs (Isaac et al, 2015;Kim et al, 2009Kim et al, , 2014Soule & Madrigal, 2015;Wagner, 2019;Weisstein et al, 2016), reducing consumers' uncertainty about the appropriate price to pay (Narwal & Nayak, 2019). Although some researchers argue that ERPs may decrease the amount consumers will pay and cause them to perceive that they are being manipulated to pay more than they want (Johnson & Cui, 2013;Roy et al, 2021), the literature tends to emphasize positive rather than negative effects of ERPs.…”

Section: The Amount Of Money Consumers Intend To Paymentioning

confidence: 99%

Consumer reactions to pay‐what‐you‐want and name‐your‐own‐price mechanisms

Wagner

Pacheco

Basso

et al. 2022

J of Consumer Behaviour

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Pay-what-you-want (PWYW) and name-your-own-price (NYOP) participative pricing mechanisms are becoming more popular among firms. In response, researchers have examined separate outcomes for each mechanism. However, questions remain, especially regarding which mechanism is most beneficial for consumers and companies. Therefore, our main objective is to investigate the role of these participative pricing mechanisms on consumers' pricing satisfaction, pain of payment, and amount of money they intend to pay. We also explore perceived control as mediating the effect of pricing mechanism on pricing satisfaction and pain of payment. Results from two experimental studies indicate that consumers are more satisfied with the pricing mechanism and feel less pain of payment under PWYW offers rather than under NYOP offers, but they intend to pay less than they would have paid for NYOP. External reference prices (ERPs) act as a boundary condition. That is, in both PWYW and NYOP pricing conditions, when retailers use ERPs, consumers intend to pay more but they are less satisfied with pricing and feel more pain of payment. The article concludes with implications for retailers using participative pricing. | INTRODUCTIONRetailers know that when consumers perceive that prices are reasonable, they are more satisfied with their purchases and form increased

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“…This behavior was justified by two main factors, accessibility of the information and diagnostic perceptions. Wagner (2019) discussed the evil effects of monetary promotions on consumers' internal reference price. Later, they argued the applications of participative pricing mechanisms to solve the problem.…”

Section: Supply Chain Coordination and Participative Pricing Modelsmentioning

confidence: 99%

Participative pricing and donation programs in a socially concerned supply chain

Sabbaghnia

Heydari

Razmi

2022

Corp Soc Responsibility Env

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This study analyzes a participative pricing scheme, name‐your‐own‐price, as a practical marketing mechanism for a socially sustainable supply chain. There is an ongoing argument on the profitability of participative pricing. This study introduces a different approach in capturing optimal decisions of a corporate social responsibility practice. In the proposed approach, the manufacturer is willing to donate as long as, (I) business image is improving; thus, the potential market size is expanding and, (II) consumers are also donating through the proposed donation scheme. Results indicate that not only the total earnings are increasing, the market participation is also boosted. Further, operational decisions are coordinated successfully with a revenue‐sharing contract. Findings imply that there is a minimum threshold for manufacturer's participation ratio to ensure the profitability of the proposed scheme, not to mention consumer's donation size. Sensitivity analysis is conducted to prove the applicability of the proposed mechanism in real‐world applications.

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Lowering consumers’ price image without lowering their internal reference price: the role of pay-what-you-want pricing mechanism

Cited by 6 publications

References 48 publications

When does coopetition affect price unfairness perception? The roles of market structure and innovation

When does coopetition affect price unfairness perception? The roles of market structure and innovation

Consumer reactions to pay‐what‐you‐want and name‐your‐own‐price mechanisms

Participative pricing and donation programs in a socially concerned supply chain

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