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

Abstract

<p>This article aims to examine the boundary conditions that influence the relationship between pricing</p><p> </p><p>strategy in multi-channel retailing and fairness perception, since past research has found controversial</p><p> </p><p>results concerning this subject. In experiments 1 and 2, we show that differential pricing is perceived</p><p> </p><p>as fairer for products in comparison to services. In experiment 3, we show that when the price difference</p><p> </p><p>is justified by an explanation based on costs, it is perceived as fairer than an explanation based on</p><p> </p><p>channel benefits. These studies help to elucidate the controversial relationship between price strategy</p><p> </p><p>and perceived fairness, addressing boundary conditions that have not been tested before. We suggest</p><p> </p><p>that product retailers should consider differential pricing strategy, since many benefits have been reported</p><p> </p><p>in the literature, such as higher profitability. However, service managers should be careful</p><p> </p><p>about using this strategy, because fairness perception influences returning intentions. Additionally,</p><p> </p><p>whenever possible, the price difference should be justified by an explanation based on costs.</p><p></p><p><br /></p>