THE EFFECTS OF VARIABLE PRICING ON BRAND TRUST IN CAPACITY CONSTRAINED SERVICE INDUSTRIES

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

Abstract

Variable pricing is widely practiced in capacity constrained services where fixed costs are high relative to variable costs, allowing discriminatory prices to appeal to buyers with differing levels of price elasticity. Facilitating this further, developments in databases have allowed companies to finely tuning their price/product offer to individual customers. However, this may lead to the perception by customers of unfavourable treatment where the price that they have paid is perceived as less favourable than the best price being offered by the company. Trust is trust as a key attribute of a brand, yet there is a possibility that variable pricing may undermine trust in a brand. 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 in a brand, 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 - 2008
EventThought Leaders International Conference on Brand Management - Birmingham Business school
Duration: 1 Jan 2008 → …

Conference

ConferenceThought Leaders International Conference on Brand Management
Period1/01/08 → …

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Pricing
Brand trust
Service industries
Data base
Distrust
Longitudinal study
Price elasticity
Hotels
Buyers
Pricing rules
Variable cost
Industry
Fixed costs

Cite this

@inproceedings{9ca6fde201254170b7cd51091cb2b66c,
title = "THE EFFECTS OF VARIABLE PRICING ON BRAND TRUST IN CAPACITY CONSTRAINED SERVICE INDUSTRIES",
abstract = "Variable pricing is widely practiced in capacity constrained services where fixed costs are high relative to variable costs, allowing discriminatory prices to appeal to buyers with differing levels of price elasticity. Facilitating this further, developments in databases have allowed companies to finely tuning their price/product offer to individual customers. However, this may lead to the perception by customers of unfavourable treatment where the price that they have paid is perceived as less favourable than the best price being offered by the company. Trust is trust as a key attribute of a brand, yet there is a possibility that variable pricing may undermine trust in a brand. 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 in a brand, 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: Aaker, D.A., Dimensions of Brand Personality, Journal of Marketing Research 1997, 43(3): 347-357 Armistead, C.G. and Clark, G.,The “Coping” Capacity Management Strategy in Services and the Influence on Quality Performance. International Journal of Service Industry Management 1994, 5(2): 5-22 Belk, R., Possessions and the Extended Self, Journal of Consumer Research 1988, 15(2): 139-168 Bigley, G.A. and Pearce, J.L., Staining for Shared Meaning in Organization Science: Problems of Trust and Distrust. Academy of Management Review 1998, 23(3): 405-421 Butler, J.K.,Toward Understanding and Measuring Conditions of Trust. Evolution of a Conditions of Trust Inventory. Journal of Management 1991, 17 (3): 643-663 Chow, S. and Holden, R., Toward and Understanding of Loyalty: The Moderating Role of Trust, Journal of Managerial Studies 1997, 9 (3): 275-298 De Chernatony, L. and Mc Donald, M. Creating Powerful Brands. 3rd Edn., Oxford: Butterworth-Heinemann, 2003 Doctors, R., Reopel, M., Sun, J.M. and Tanny, S., Capturing the Unique Value of Service: Why Pricing of Services is Different. Journal of Business Strategy 2004, 25(2): 23-28 Doney, P.M., Barry, J.M. and Abratt, R.,Trust Determinants and Outcomes in Global B2B Services. European Journal of Marketing 2007, 41 (9/10): 1096-1116 Doney, P.M. and Cannon, J.P., An Examination of the Nature of Trust in Buyer-Seller Relationships. Journal of Marketing 1997, 61 (April): 35-52 Elliott, R. and Yannopoulou, N.,The Nature of Trust in Brands: A Psychosocial Model. European Journal of Marketing 2007, 41 (9/10): 988-998 Garbarino, E. and Lee, O.F., Dynamic Pricing in Internet Retail: Effects on Consumer Trust. Psychology and Marketing 2003, 20 (6): 495-513 Gabarro, J.J., The Development of Trust Influence and Expectations. In: Athos, A,G., And Gabarro, J.J., editors. Interpersonal Behaviour: Communication And Understanding In Relationships, Englewood Cliffs, NJ: Prentice Hall, 2003 Geyskens, I., Steenkamp, J-B. E.M., And Kumar, N., Generalisations about Trust in Marketing Channel Relationships Using Meta-Analysis. International Journal of Research In Marketing 1998, 15(3): 223-248 Kimes, S.E., A Strategic Approach to Yield Management. In: Ingold, A and McMahon-Beattie, U, editors. Yield Management: Strategies for the Service Industries, 2nd Edition, London: Thomson, 2000. pp. 3-14 Kleine, R.E., Kleine, S.S. and Kerman, J.B., Mundane Consumption and the Self: A Social-Identity Perspective, Journal of Consumer Psychology 1993, 2(3): 209-227 Larzelere, R.E. and Huston, T.L. The Dyadic Trust Scale: Towards Understanding Interpersonal Trust in Close Relationships, Journal of Marriage and Family 1980, 42 (August): 595-604 Levy, S.J.,Dreams, Fairytales, Animals and Cars. Psychology and Marketing 1985, 2(2): 67-81 Lipsey, R.G. and Chrystal, A., Economics ,11th Edition, Oxford: Oxford University Press, 2007 Morgan, R.M. and Hunt, S.D. The Commitment-Trust Theory of Relationship Marketing,” Journal of Marketing 1994, 58 (July): 20-38 McMahon- Beattie, U. and Yeoman, I. (Eds), Revenue Management and Pricing , London: Thomson Learning 2004 Nijs ,V., Dekimpe, R., Marnik, G.; Steenkamp J.-B. and Hanssens, D.M. The Category-Demand Effects of Price Promotions Marketing Science 2001, 20(1):1-22 Palmer, A., Principles of Services Marketing. 5th Edition, Maidenhead: McGraw-Hill, 2008 Ring, A., Schriber, M. and Horton, R.L., Some Effects of Perceived Risk on Consumer Information Processing. Journal of Academy of Marketing Science 1980, 8(3); 255-263 Rohlfs, K.V. and Kimes, S.E Best-Available-Rate Pricing at Hotels: A Study of Customer Perceptions and Reactions, CHR Reports, 7, 2005, www.TheCentreForHospitalityResearch.org Streitfeld, D., On the Web, Price Tags Blur, Washington Post, 27 September 2000, A01. Talluri, T. and Van Ryzin, G.J., The Theory and Practice of Revenue Management. New York: Springer, 2004 Varki , S. and Colgate, M., The Role of Price Perceptions in an Integrated Model of Behavioral Intentions, Journal of Service Research 2001, 3(3) : 232-240 Wolverton, T., Some Amazon.com customers are fuming over random discounts on some of the e-tailer's most popular DVD's, News.Com 2002, available at http://news.com.com/2100-1017-245326.html?tag=rn [accessed on 7 November 2007].",
year = "2008",
language = "English",
booktitle = "Unknown Host Publication",

}

McMahon-Beattie, U & Palmer, A 2008, THE EFFECTS OF VARIABLE PRICING ON BRAND TRUST IN CAPACITY CONSTRAINED SERVICE INDUSTRIES. in Unknown Host Publication. Thought Leaders International Conference on Brand Management, 1/01/08.

THE EFFECTS OF VARIABLE PRICING ON BRAND TRUST IN CAPACITY CONSTRAINED SERVICE INDUSTRIES. / McMahon-Beattie, Una; Palmer, A.

Unknown Host Publication. 2008.

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

TY - GEN

T1 - THE EFFECTS OF VARIABLE PRICING ON BRAND TRUST IN CAPACITY CONSTRAINED SERVICE INDUSTRIES

AU - McMahon-Beattie, Una

AU - Palmer, A

N1 - Reference text: Aaker, D.A., Dimensions of Brand Personality, Journal of Marketing Research 1997, 43(3): 347-357 Armistead, C.G. and Clark, G.,The “Coping” Capacity Management Strategy in Services and the Influence on Quality Performance. International Journal of Service Industry Management 1994, 5(2): 5-22 Belk, R., Possessions and the Extended Self, Journal of Consumer Research 1988, 15(2): 139-168 Bigley, G.A. and Pearce, J.L., Staining for Shared Meaning in Organization Science: Problems of Trust and Distrust. Academy of Management Review 1998, 23(3): 405-421 Butler, J.K.,Toward Understanding and Measuring Conditions of Trust. Evolution of a Conditions of Trust Inventory. Journal of Management 1991, 17 (3): 643-663 Chow, S. and Holden, R., Toward and Understanding of Loyalty: The Moderating Role of Trust, Journal of Managerial Studies 1997, 9 (3): 275-298 De Chernatony, L. and Mc Donald, M. Creating Powerful Brands. 3rd Edn., Oxford: Butterworth-Heinemann, 2003 Doctors, R., Reopel, M., Sun, J.M. and Tanny, S., Capturing the Unique Value of Service: Why Pricing of Services is Different. Journal of Business Strategy 2004, 25(2): 23-28 Doney, P.M., Barry, J.M. and Abratt, R.,Trust Determinants and Outcomes in Global B2B Services. European Journal of Marketing 2007, 41 (9/10): 1096-1116 Doney, P.M. and Cannon, J.P., An Examination of the Nature of Trust in Buyer-Seller Relationships. Journal of Marketing 1997, 61 (April): 35-52 Elliott, R. and Yannopoulou, N.,The Nature of Trust in Brands: A Psychosocial Model. European Journal of Marketing 2007, 41 (9/10): 988-998 Garbarino, E. and Lee, O.F., Dynamic Pricing in Internet Retail: Effects on Consumer Trust. Psychology and Marketing 2003, 20 (6): 495-513 Gabarro, J.J., The Development of Trust Influence and Expectations. In: Athos, A,G., And Gabarro, J.J., editors. Interpersonal Behaviour: Communication And Understanding In Relationships, Englewood Cliffs, NJ: Prentice Hall, 2003 Geyskens, I., Steenkamp, J-B. E.M., And Kumar, N., Generalisations about Trust in Marketing Channel Relationships Using Meta-Analysis. International Journal of Research In Marketing 1998, 15(3): 223-248 Kimes, S.E., A Strategic Approach to Yield Management. In: Ingold, A and McMahon-Beattie, U, editors. Yield Management: Strategies for the Service Industries, 2nd Edition, London: Thomson, 2000. pp. 3-14 Kleine, R.E., Kleine, S.S. and Kerman, J.B., Mundane Consumption and the Self: A Social-Identity Perspective, Journal of Consumer Psychology 1993, 2(3): 209-227 Larzelere, R.E. and Huston, T.L. The Dyadic Trust Scale: Towards Understanding Interpersonal Trust in Close Relationships, Journal of Marriage and Family 1980, 42 (August): 595-604 Levy, S.J.,Dreams, Fairytales, Animals and Cars. Psychology and Marketing 1985, 2(2): 67-81 Lipsey, R.G. and Chrystal, A., Economics ,11th Edition, Oxford: Oxford University Press, 2007 Morgan, R.M. and Hunt, S.D. The Commitment-Trust Theory of Relationship Marketing,” Journal of Marketing 1994, 58 (July): 20-38 McMahon- Beattie, U. and Yeoman, I. (Eds), Revenue Management and Pricing , London: Thomson Learning 2004 Nijs ,V., Dekimpe, R., Marnik, G.; Steenkamp J.-B. and Hanssens, D.M. The Category-Demand Effects of Price Promotions Marketing Science 2001, 20(1):1-22 Palmer, A., Principles of Services Marketing. 5th Edition, Maidenhead: McGraw-Hill, 2008 Ring, A., Schriber, M. and Horton, R.L., Some Effects of Perceived Risk on Consumer Information Processing. Journal of Academy of Marketing Science 1980, 8(3); 255-263 Rohlfs, K.V. and Kimes, S.E Best-Available-Rate Pricing at Hotels: A Study of Customer Perceptions and Reactions, CHR Reports, 7, 2005, www.TheCentreForHospitalityResearch.org Streitfeld, D., On the Web, Price Tags Blur, Washington Post, 27 September 2000, A01. Talluri, T. and Van Ryzin, G.J., The Theory and Practice of Revenue Management. New York: Springer, 2004 Varki , S. and Colgate, M., The Role of Price Perceptions in an Integrated Model of Behavioral Intentions, Journal of Service Research 2001, 3(3) : 232-240 Wolverton, T., Some Amazon.com customers are fuming over random discounts on some of the e-tailer's most popular DVD's, News.Com 2002, available at http://news.com.com/2100-1017-245326.html?tag=rn [accessed on 7 November 2007].

PY - 2008

Y1 - 2008

N2 - Variable pricing is widely practiced in capacity constrained services where fixed costs are high relative to variable costs, allowing discriminatory prices to appeal to buyers with differing levels of price elasticity. Facilitating this further, developments in databases have allowed companies to finely tuning their price/product offer to individual customers. However, this may lead to the perception by customers of unfavourable treatment where the price that they have paid is perceived as less favourable than the best price being offered by the company. Trust is trust as a key attribute of a brand, yet there is a possibility that variable pricing may undermine trust in a brand. 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 in a brand, 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 - Variable pricing is widely practiced in capacity constrained services where fixed costs are high relative to variable costs, allowing discriminatory prices to appeal to buyers with differing levels of price elasticity. Facilitating this further, developments in databases have allowed companies to finely tuning their price/product offer to individual customers. However, this may lead to the perception by customers of unfavourable treatment where the price that they have paid is perceived as less favourable than the best price being offered by the company. Trust is trust as a key attribute of a brand, yet there is a possibility that variable pricing may undermine trust in a brand. 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 in a brand, 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”.

M3 - Conference contribution

BT - Unknown Host Publication

ER -