Revenue Management and Its Impact On Consumer Trust

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

Revenue management is widely practiced in services where fixed costs are high relative to variable costs, allowing discriminatory prices to appeal to buyers with differing levels of price elasticity. However, price discrimination which is implicit in Revenue Management systems may undermine trust in an organisation, when buyers perceive that they have been treated less fairly than other buyers. Trust is at the heart of Relationship Marketing strategies, therefore there would appear to be a potential conflict between the aims of Relationship Marketing and Revenue Management. This paper reports on the interim results of an ongoing longitudinal study involving 2273 customers on a hotel chain’s database, who were divided into a test group (variable prices for a specified product offer) and a control group (constant prices). Initial results suggest that variable pricing may not itself be a cause of distrust, but rather trust/mistrust is likely to derive from individuals’ prior experience, which leads to expectations based on knowledge of an organisation’s or industry sector’s pricing “rules”.
LanguageEnglish
Title of host publicationUnknown Host Publication
Number of pages0
Publication statusPublished - 2007
EventEuropran Marketing Association Conference (EMAC) - Reykjavik
Duration: 1 Jan 2007 → …

Conference

ConferenceEuropran Marketing Association Conference (EMAC)
Period1/01/07 → …

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Buyers
Revenue management
Consumer trust
Data base
Pricing
Management system
Distrust
Price elasticity
Variable cost
Industry
Fixed costs
Longitudinal study
Marketing strategy
Hotels
Pricing rules
Price discrimination
Marketing management

Cite this

McMahon-Beattie, U., & Palmer, A. (2007). Revenue Management and Its Impact On Consumer Trust. In Unknown Host Publication
McMahon-Beattie, Una ; Palmer, A. / Revenue Management and Its Impact On Consumer Trust. Unknown Host Publication. 2007.
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title = "Revenue Management and Its Impact On Consumer Trust",
abstract = "Revenue management is widely practiced in services where fixed costs are high relative to variable costs, allowing discriminatory prices to appeal to buyers with differing levels of price elasticity. However, price discrimination which is implicit in Revenue Management systems may undermine trust in an organisation, when buyers perceive that they have been treated less fairly than other buyers. Trust is at the heart of Relationship Marketing strategies, therefore there would appear to be a potential conflict between the aims of Relationship Marketing and Revenue Management. This paper reports on the interim results of an ongoing longitudinal study involving 2273 customers on a hotel chain’s database, who were divided into a test group (variable prices for a specified product offer) and a control group (constant prices). Initial results suggest that variable pricing may not itself be a cause of distrust, but rather trust/mistrust is likely to derive from individuals’ prior experience, which leads to expectations based on knowledge of an organisation’s or industry sector’s pricing “rules”.",
author = "Una McMahon-Beattie and A Palmer",
note = "Reference text: Bull , C. (2003), Strategic issues in customer relationship management (CRM). implementation, Business Process Management Journal, 9 (5), 592 – 602 Butler, J.K. (1991), “Toward Understanding and Measuring Conditions of Trust. Evolution of a Conditions of Trust Inventory”, Journal of Management, 17 (3), 643-663. Chow, S. and Holden, R. (1997) “Toward and Understanding of Loyalty: The Moderating Role of Trust”, Journal of Managerial Studies, 9 (3), 275-298. Doney, P.M. and Cannon, J.P. (1997) An Examination of the Nature of Trust in Buyer-Seller Relationships, Journal of Marketing, 61 (April), 35-52. Dwyer, F. Robert, Paul H. Schurr, and Sejo Oh (1987), {"}Developing Buyer-Seller Relationships,{"} Journal of Marketing, 51 (April), 11-27. Garbarino, E. and Lee, O.F. (2003) Dynamic Pricing in Internet Retail: Effects on Consumer Trust, Psychology and Marketing, 20 (6), 495-513. Gabarro, J.J. (1978), “The Development of Trust Influence and Expectations. In. Athos, A,G., And Gabarro, J.J. (Eds.), Interpersonal Behaviour: Communication And Understanding In Relationships, Englewood Cliffs, NJ: Prentice Hall. Ganesan, Shankar (1994), {"}Determinants of Long-Term Orientation in Buyer-Seller Relationships,{"} Journal of Marketing, 58 (April), 1-19. Grayson, K. and Ambler T., (1999) “The dark side of long-term relationships in marketing services”, Journal of Marketing Research, 36 (1) ,132 . Larzelere, R.E. and Huston, T.L. (1980) The Dyadic Trust Scale: Towards Understanding Interpersonal Trust in Close Relationships, Journal of Marriage and Family, 42 (August), 595-604. Luck, D. and Lancaster, G., (2003), E-CRM: customer relationship marketing in the hotel industry, Managerial Auditing Journal ,18 (3), 213 – 231. Morgan, Robert M. and Shelby D. Hunt (1994), {"}The Commitment-Trust Theory of Relationship Marketing,” Journal of Marketing, 58 (July), 20-38. McMahon-Beattie, U, Yeoman, I Palmer, A and Mudie, P (2002) Customer Perception of Pricing and the Maintenance of Trust, Journal of Revenue and Pricing Management, 1 (1), 25-34 McMahon- Beattie, U. and Yeoman, I. (2004), Revenue Management and Pricing , Thomson Learning. Muther, A. (2002), Customer Relationship Management. Electronic Customer Care in the New Economy, Journal of Consumer Marketing, 19 (6), 532 – 533 Rohlfs, K.V. and Kimes, S.E (2005) Best-Available-Rate Pricing at Hotels: A Study of Customer Perceptions and Reactions, CHR Reports, 7, www.TheCentreForHospitalityResearch.org Streitfeld, D (2000) On the Web, Price Tags Blur, Washington Post, September 27, p. A01. Varey, R. and Ballantyne, D. (2006), Relationship Marketing and the Challenge of Dialogical Interaction, Journal of Relationship Marketing, in press. Wolverton, T., (2000) Some Amazon.com customers are fuming over random discounts on some of the e-tailer's most popular DVD's, News.Com, available at http://news.com.com/2100-1017-245326.html?tag=rn [accessed on 7 November 2002].",
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McMahon-Beattie, U & Palmer, A 2007, Revenue Management and Its Impact On Consumer Trust. in Unknown Host Publication. Europran Marketing Association Conference (EMAC), 1/01/07.

Revenue Management and Its Impact On Consumer Trust. / McMahon-Beattie, Una; Palmer, A.

Unknown Host Publication. 2007.

Research output: Chapter in Book/Report/Conference proceedingConference contribution

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AU - Palmer, A

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N2 - Revenue management is widely practiced in services where fixed costs are high relative to variable costs, allowing discriminatory prices to appeal to buyers with differing levels of price elasticity. However, price discrimination which is implicit in Revenue Management systems may undermine trust in an organisation, when buyers perceive that they have been treated less fairly than other buyers. Trust is at the heart of Relationship Marketing strategies, therefore there would appear to be a potential conflict between the aims of Relationship Marketing and Revenue Management. This paper reports on the interim results of an ongoing longitudinal study involving 2273 customers on a hotel chain’s database, who were divided into a test group (variable prices for a specified product offer) and a control group (constant prices). Initial results suggest that variable pricing may not itself be a cause of distrust, but rather trust/mistrust is likely to derive from individuals’ prior experience, which leads to expectations based on knowledge of an organisation’s or industry sector’s pricing “rules”.

AB - Revenue management is widely practiced in services where fixed costs are high relative to variable costs, allowing discriminatory prices to appeal to buyers with differing levels of price elasticity. However, price discrimination which is implicit in Revenue Management systems may undermine trust in an organisation, when buyers perceive that they have been treated less fairly than other buyers. Trust is at the heart of Relationship Marketing strategies, therefore there would appear to be a potential conflict between the aims of Relationship Marketing and Revenue Management. This paper reports on the interim results of an ongoing longitudinal study involving 2273 customers on a hotel chain’s database, who were divided into a test group (variable prices for a specified product offer) and a control group (constant prices). Initial results suggest that variable pricing may not itself be a cause of distrust, but rather trust/mistrust is likely to derive from individuals’ prior experience, which leads to expectations based on knowledge of an organisation’s or industry sector’s pricing “rules”.

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McMahon-Beattie U, Palmer A. Revenue Management and Its Impact On Consumer Trust. In Unknown Host Publication. 2007