40% of German companies vary their prices dynamically on the internet. This strategic tool helps them to exploit the consumer's maximum willingness to pay. Studies confirm that these companies are able to reach higher profits through dynamic pricing. But the federal ministry of consumer protection sees the price transparency for consumers at risk.
This publication shows how new and existing customers react to dynamic pricing techniques. It examines if regular customers have a different price fairness perception than new customers.
Customers often react with dissatisfaction and complaining when they notice a disadvantage due to dynamic pricing. Their dissatisfaction can have a long-term impact on the buyer-seller relationship as well as the company's reputation and profits. Therefore, price fairness perception is crucial for dynamic pricing strategies.
Keywords:
- Dynamic Pricing;
- Status-based Dynamic Pricing;
- Consumer Dissatisfaction;
- Price Transparency;
- New Customers;
- Regular Customers
Table of Contents
1 Introduction
2 Theoretical Foundation and Literature Review
2.1 Definition and Classification of Dynamic Pricing
2.2 Literature Review
2.3 Identified Research Gap
3 Derivation of Hypotheses and Conceptual Model
3.1 Consumer Reactions on Dynamic Pricing
3.2 Status-based Dynamic Pricing
3.3 Influence Factors on Price Fairness Perception
3.4 Consumer Reactions on Price Fairness Perception
3.5 Control Variable
3.6 Conceptual Model
4 Design of Empirical Study
4.1 Survey Method
4.2 Survey Scenarios
4.3 Survey Items
5 Data Analysis and Results
5.1 Survey Sample
5.2 Measurement Reliability
5.3 Hypotheses Testing
5.4 Further Analyses
6 Concluding Discussion
6.1 Discussion of Results
6.2 Managerial Implications
6.3 Limitations and Further Research
Objectives and Topics
This thesis examines how different customer status groups (new vs. existing) react to status-based dynamic pricing in e-commerce, specifically investigating the impact of price fairness perception on repurchase intention and the role of various moderating factors.
- Status-based dynamic pricing in digital environments
- Consumer price fairness perception
- Repurchase intention in e-commerce
- The role of buyer-seller and buyer-buyer relationship quality
- Moderating factors like norm belief, price sensitivity, and prior experience
Auszug aus dem Buch
1 Introduction
During the last decade, companies had to set their strategic focus on digital transformation in order to fulfill the market’s need. It is nowadays almost inevitable for firms to digitize their corporate infrastructure, processes, products and services in order to increase market segment share (Bharadwaj et al. 2013).
According to the Global Pricing Study 2016 of Simon-Kucher & Partners, 60% of the participating companies see the growing online business as a significant opportunity to increase their sales. However, also 60% of the companies perceive the digitization as a threat to their prices and margin.
To address this threat, 40% of German companies vary their prices dynamically on the Internet and the trend is ongoing (Kohn 2017; Wenk-Fischer and Zirbes 2016). Dynamic pricing in the online environment is a strategic pricing tool, in which businesses flexible adapt their prices based on algorithms over time, across customer segments or depending on supply and demand (Haws and Bearden 2006; Krämer and Kalka 2017, p. 92). It is recognized as a possibility for companies to exploit the consumers’ maximum willingness to pay (WTP) (Grewal et al. 2011) resulting in an overall increase in the companies’ profits (Elmaghraby and Keskinocak 2003; Kohn 2017; Sahay 2007). Studies confirm those findings and state that companies which use dynamic pricing tools were able to reach 27% higher profits as the competition (Global Pricing Study 2016).
Summary of Chapters
1 Introduction: Discusses the growing importance of digital transformation and the strategic role of dynamic pricing, while highlighting the potential for consumer dissatisfaction and the research focus on status-based pricing.
2 Theoretical Foundation and Literature Review: Provides a comprehensive overview of dynamic pricing definitions, explores behavioral price research, and identifies gaps concerning the influence of customer status and relationship factors.
3 Derivation of Hypotheses and Conceptual Model: Utilizes equity theory to develop hypotheses regarding consumer reactions to dynamic pricing and presents a conceptual model with various moderating variables.
4 Design of Empirical Study: Outlines the methodology of the web-based survey, including the experimental design of the eight scenarios and the selection of survey items.
5 Data Analysis and Results: Details the statistical evaluation of the gathered survey data, testing the hypotheses through ANOVA, regression, and mediation analyses.
6 Concluding Discussion: Interprets the findings in relation to marketing literature, discusses managerial implications, and identifies limitations and directions for future research.
Keywords
Dynamic Pricing, Status-based Dynamic Pricing, Online Business, Price Fairness Perception, Repurchase Intention, Equity Theory, Consumer Behavior, E-Commerce, Prior Trust, Relationship Quality, Price Sensitivity, Norm Belief, Prior Experience, Consumer Status, Digitalization
Frequently Asked Questions
What is the core focus of this research?
The research focuses on the impact of status-based dynamic pricing on consumer behavior, specifically examining how new versus existing customers perceive price fairness and how this affects their intention to repurchase.
What are the primary themes covered in the study?
Key themes include dynamic pricing strategies, the influence of relationship quality and prior trust on price fairness, the role of individual consumer characteristics, and the mediating role of perceived price fairness on repurchase intention.
What is the main research objective?
The aim is to investigate how new and existing customers react to status-based dynamic pricing techniques to provide e-commerce managers with insights on how to adapt their pricing strategies while minimizing negative consumer reactions.
Which scientific methods are applied in this work?
The study utilizes a web-based empirical survey with a 2 x 2 x 2 between-subjects design. Data analysis includes ANOVA, ordinary least squares (OLS) regression, and mediation analysis using the PROCESS tool.
What content is discussed in the main chapters?
The work covers theoretical foundations (equity theory), develops a conceptual model with various moderators (relationship quality, prior trust, norm belief, etc.), describes an empirical experimental study, and analyzes the results to offer managerial implications.
Which keywords characterize this thesis?
Core keywords include Dynamic Pricing, Price Fairness, Repurchase Intention, Consumer Behavior, Equity Theory, and E-Commerce.
How do new customers compare to existing customers regarding fairness perception?
The study finds that new customers perceive higher price fairness and demonstrate higher repurchase intentions compared to existing customers when subjected to status-based dynamic pricing.
Does relationship quality influence the perception of dynamic pricing?
Based on the data analysis conducted, the study could not confirm a significant moderating effect of relationship quality (friend vs. stranger) on the relationship between dynamic pricing and price fairness perception.
- Quote paper
- Anonym (Author), 2018, Dynamic Pricing in Online Business. What Pricing Strategy Should Be Used in Digital Business?, Munich, GRIN Verlag, https://www.grin.com/document/425082
