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”.
| Original language | English |
|---|---|
| Title of host publication | Unknown Host Publication |
| Publisher | University of Birmingham |
| Number of pages | 0 |
| Publication status | Published (in print/issue) - 2008 |
| Event | Thought Leaders International Conference on Brand Management - Birmingham Business school Duration: 1 Jan 2008 → … |
Conference
| Conference | Thought Leaders International Conference on Brand Management |
|---|---|
| Period | 1/01/08 → … |
Bibliographical note
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