Pricing strategy in multi-channel retailing and fairness perception: An examination of boundary conditions

This article aims to examine the boundary conditions that influence the relationship between pricing

strategy in multi-channel retailing and fairness perception, since past research has found controversial

results concerning this subject. In experiments 1 and 2, we show that differential pricing is perceived

as fairer for products in comparison to services. In experiment 3, we show that when the price difference

is justified by an explanation based on costs, it is perceived as fairer than an explanation based on

channel benefits. These studies help to elucidate the controversial relationship between price strategy

and perceived fairness, addressing boundary conditions that have not been tested before. We suggest

that product retailers should consider differential pricing strategy, since many benefits have been reported

in the literature, such as higher profitability. However, service managers should be careful

about using this strategy, because fairness perception influences returning intentions. Additionally,

whenever possible, the price difference should be justified by an explanation based on costs.