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Article
Publication date: 9 September 2014

Outi Somervuori

The purpose of this paper is to provide an overview of behavioral pricing research, including the identification of the primary areas studied and a summary of the core…

Abstract

Purpose

The purpose of this paper is to provide an overview of behavioral pricing research, including the identification of the primary areas studied and a summary of the core findings in each based on previous literature.

Design/methodology/approach

This research examines 613 articles on the ISI Web of Science database and focuses on marketing journals that discuss behavioral pricing. The reviews of these articles use traditional literature review and research profiling methods.

Findings

The main subareas in behavioral pricing this study identifies are the price–quality relationship, reference price, price awareness, price elasticity estimation and price fairness. In general, the behavioral pricing field is relatively new, and all subareas would benefit from additional research.

Originality/value

For pricing researchers, this study offers integrative insights into the field based on previous literature and identifies the main contribution and main topic of each. The study also offers suggestions for new research ideas.

Details

Journal of Product & Brand Management, vol. 23 no. 6
Type: Research Article
ISSN: 1061-0421

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Article
Publication date: 31 May 2019

Aditya Sharma and Arya Kumar

This paper participates in the debate on market efficiency and correct approach for asset pricing through a comprehensive review of literature in favor, as well as against…

Abstract

Purpose

This paper participates in the debate on market efficiency and correct approach for asset pricing through a comprehensive review of literature in favor, as well as against the long held belief of market efficiency. The purpose of this paper is to understand emerging trends in behavioral finance and establish its future potential as a mainstream alternative theory of asset pricing.

Design/methodology/approach

The review and discussion of literature is mainly divided into three different sections that are –theories supporting efficient market hypothesis (EMH); studies providing evidences from the stock market on the failure of EMH and studies on behavioral finance, discussing separately investors’ behavioral biases keeping in mind their effect on stock prices; and providing empirical evidences on the effect of investor sentiment on stock prices.

Findings

The review of literature from both the point of views has helped in understanding the market efficiency issue and changing dynamics of asset pricing approach. This is achieved by highlighting the gaps in the concept of market efficiency and also suggesting how these gaps can be bridged with a superior approach such as behavioral finance. Through further discussion of emerging trends in behavioral finance, the paper also points out gaps and how these can be abridged, for behavioral finance to be accepted as a mainstream alternative approach to EMH.

Originality/value

This is an extensive and one of a kind study that discusses market efficiency through discussion of EMH and behavioral finance side by side. With the help of such a study, researchers can precisely understand the need and can focus on the future course of action to make behavioral finance a mainstream approach to asset pricing.

Details

Qualitative Research in Financial Markets, vol. 12 no. 2
Type: Research Article
ISSN: 1755-4179

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Article
Publication date: 31 August 2020

Ali Rama

The study aims to capture customers’ different price expectations by constructing a multidimensional price perception in Islamic banking setting and the impact on customer…

Abstract

Purpose

The study aims to capture customers’ different price expectations by constructing a multidimensional price perception in Islamic banking setting and the impact on customer satisfaction and behavioral intention, as a single price perception approach cannot reflect heterogeneity of price expectations. The study conceptualized customers’ price expectation into price reliability, price confidence, price transparency, relative price, price–quality ratio and price fairness.

Design/methodology/approach

An online questionnaire was distributed to Islamic banking customers in Indonesia to test seven proposed hypotheses of price perceptions on customer satisfaction and behavioral intention. The instrument used a five-point Likert-type scale to capture customer perception on the instrument variables and analyzed the functional relation of the model using multiple regression analysis.

Findings

Empirical findings reveal that customers experienced more price expectations in their banking decision-making process. The number and complexity of price expectations depend primarily on the customers’ interest, particularly on price transparency, relative price and price–quality ratio, and these dimensions affect satisfaction and behavioral intention. Islamic banking customers in Indonesia are highly aware of price transparency, have “relative thinking” on price differences and put price–quality ratio in their assessment.

Research limitations/implications

The study was conducted in Indonesian Islamic banking industry; the extension to other different countries may reveal difference in price complexity and implication to behavioral consequences. Any difference in customer attitude would bring managerial implication for different Islamic bank managers. Additionally, this study developed and examined five price dimensions, however, there may be additional price dimensions in different environment contexts. Further research is needed to identify any other price expectations that may affect customers’ behavior.

Practical implications

The results of this research allow bank practitioners to develop relevant pricing strategy to fulfil customers’ different price expectations in their decision-making process. Appropriate measures to different price expectations improve satisfaction, loyalty and, in turn, increase bank profits. Furthermore, this research provides useful information for future researchers in different settings.

Originality/value

This paper provides empirical analysis of pricing strategy by Indonesian Islamic banks and insights on customers’ experience toward different price expectations.

Details

Journal of Islamic Accounting and Business Research, vol. 11 no. 9
Type: Research Article
ISSN: 1759-0817

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Article
Publication date: 25 November 2020

Kim Piew Lai, Yee Yen Yuen and Siong Choy Chong

This paper aims to investigate the effects of service quality and perceived price (monetary and behavioural price) on the revisit intention of patients to hospitals, as…

Abstract

Purpose

This paper aims to investigate the effects of service quality and perceived price (monetary and behavioural price) on the revisit intention of patients to hospitals, as well as the mediating role of perceived price on the relationship between service quality and revisit intention.

Design/methodology/approach

This paper distributes questionnaires to outpatients in three major cities in Malaysia, namely, Penang, Melaka and Johor. Patients who were in the foyer, dispensary area and waiting area were intercepted where their responses were sought. The responses obtained from 400 patients were analysed using the structural equation modelling technique. Besides analysing the path coefficients, this study has examined the common method variance, bias and indirect effects of the relationships.

Findings

The results suggest that patients pay more attention to certain values in their search for the best health-care service and subsequently move on to new values. Pricing is an effective strategy to promote favourable behavioural intentions amongst patients. Better service quality is reflected in the reasonableness of monetary costs incurred by patients in acquiring health-care services. Patients who received poor services will be more likely to compare such services to the medical costs incurred to ascertain the worthiness of the amount paid. In addition, service quality also influences how patients perceive spending their time and efforts (waiting for nurses and physicians, as well as queueing in hospitals) as worthy and vice-versa. Their revisit intention will also be affected by the extent of which they invest their time, energy and efforts to search for relevant information.

Practical implications

The hospitals which desire to charge additional fees should enhance their service quality to reflect price equity. This is imperative in view of the pricing structure which can be relatively complex in subsequent follow-up treatments that may affect the decision of patients on the sources of health-care services.

Originality/value

Given the inevitable increase in medical fees, the perceived price can be a key determinant to the overall judgement patients had in terms of the health-care services received and the time and efforts sacrificed. However, the importance of monetary price and the behavioural price is still relatively unstudied, particularly their influence on revisit intention in the health-care setting.

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Article
Publication date: 20 November 2017

Hooman Estelami and Mohammad G. Nejad

While existing research has established various methods for pricing, the impact of a manager’s individual psychological profile on his/her price setting behavior is…

Abstract

Purpose

While existing research has established various methods for pricing, the impact of a manager’s individual psychological profile on his/her price setting behavior is relatively unexamined. This is especially critical in the context of pricing decisions implemented in response to competitive forces. This paper aims to explore how a manager’s price responses to price cuts by a competitor are affected by his/her cognitive style, gender and entrepreneurial attitudes.

Design/methodology/approach

In the first study, a simulation-based pricing environment is used in a lab setting to capture the dynamics of pricing decisions made in response to competitive price cuts. Participants’ price responses are captured in the form of the magnitude of price change implemented in a simulated environment in response to a competitor’s price reduction. The second study extends the scope of inquiry by using a national sample of business professionals and replicates and reinforces the findings of the first study by capturing participants’ attitudinal response on the decision to reduce prices in reaction to competitive price reductions.

Findings

The results of both studies indicate significant effects for cognitive style, gender and entrepreneurial attitudes. Individuals with stronger entrepreneurial attitudes and analytical cognitive styles, and females are less likely to engage in reactive price reductions.

Research limitations/implications

The findings of this study indicate that managers’ propensity to engage in price changes in reaction to competitors can be linked to their psychological profile and gender.

Practical implications

Given the existence of the relationship between price reactions of managers and their cognitive style and entrepreneurial attitudes, the training and development of pricing professionals may need to take these individual-level factors into account.

Originality/value

This is the first study that has linked managers’ propensity to engage in price changes in reaction to competitors to their gender and psychological profile.

Details

Journal of Product & Brand Management, vol. 26 no. 7
Type: Research Article
ISSN: 1061-0421

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Book part
Publication date: 19 November 2012

Hermann Simon

This chapter describes and discusses the coming of age of price consulting from the perspective of Simon, Kucher, and Partners, today the world’s leading price

Abstract

This chapter describes and discusses the coming of age of price consulting from the perspective of Simon, Kucher, and Partners, today the world’s leading price consultancy. Starting with modest beginnings of a predominantly theoretical and methodological nature, the field has evolved into many specializations along measurement, model building, and structural and industry lines. The current stage of development is characterized by an advanced integration of theory and practice. In spite of the big progress, large growth potentials are previewed for the future. Price consulting is today seen as a young adult who still has a lot to learn and can further contribute to the professionalization of price management.

Details

Visionary Pricing: Reflections and Advances in Honor of Dan Nimer
Type: Book
ISBN: 978-1-78052-996-7

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Article
Publication date: 6 November 2007

Paul Ingenbleek

In the face of increased pricing pressure, managerial attention for value‐informed pricing (in which a price is based on the customer's value perception) is on the rise…

Abstract

Purpose

In the face of increased pricing pressure, managerial attention for value‐informed pricing (in which a price is based on the customer's value perception) is on the rise. Although value‐informed pricing in its organizational context received a great deal of attention, the body of literature is fragmented and insights are often not cumulative. It is the aim of this article to review and integrate the empirical literature on pricing practices in order to pave the road for future research.

Design/methodology/approach

Empirical studies on pricing practices are collected and reviewed. Building on the resource‐based view of the firm, the findings from these studies are summarized in an integrative framework that includes testable research propositions.

Findings

Value‐informed pricing is the result of the deployment of informational resources such as market research, relationships and internal knowledge on customers. Firms should not only develop these information sources, but also secure the process by which they are deployed. The latter is among others influenced by the competitive context and organizational information processing that may evolve into a routine.

Originality/value

The article integrates the insights from a stream of research that thus far has been highly fragmented. It generates insights that may help firms to establish a value‐informed pricing process and it may help to develop a more mature body of research on value‐informed pricing.

Details

Journal of Product & Brand Management, vol. 16 no. 7
Type: Research Article
ISSN: 1061-0421

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Book part
Publication date: 11 June 2009

Gerald E. Smith and Arch G. Woodside

This paper includes an examination of two key issues on price decisions: (1) how should price decisions be made (the strategic and normative issue) within market contexts…

Abstract

This paper includes an examination of two key issues on price decisions: (1) how should price decisions be made (the strategic and normative issue) within market contexts, and (2) how are price decisions actually made (the execution and implementation of price decisions). The paper closes with some observations useful for applied research and strategies for making effective pricing decisions. The propositions and literature review show that one pricing strategy does not fit a brand in all market contexts that brand executives experience annually in managing brands. Setting specific price points requires continuing deliberate management responses to dynamic market contexts. This paper provides useful sense-making conjunctive steps to accomplish such deliberate thinking effectively relevant for different market contexts.

Details

Business-To-Business Brand Management: Theory, Research and Executivecase Study Exercises
Type: Book
ISBN: 978-1-84855-671-3

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Article
Publication date: 3 May 2019

Hasliza Hassan, Abu Bakar Sade and Muhammad Sabbir Rahman

Slimming centres have become a hot spot for people to reduce their size and reshape their body figure through the sophisticated and modern treatments that are provided by…

Abstract

Purpose

Slimming centres have become a hot spot for people to reduce their size and reshape their body figure through the sophisticated and modern treatments that are provided by the therapists. The purpose of this paper is to examine the influence of price, place and promotion on the behavioural intention to consume the slimming treatments.

Design/methodology/approach

This research is a cross-sectional study in which 308 primary data were collected for descriptive analysis, confirmatory factor analysis and structural equation modelling. The data were collected through a survey questionnaire that was distributed to respondents who have experience in consuming slimming treatment at a slimming centre.

Findings

The majority of slimming centre consumers are working women aged 25 and above from urban areas. As an attraction, the pricing strategy is a very important influence on consumers to consume the slimming treatment at slimming centres. Although the main target market for slimming centres is career women who are earning an above average income, an excessively high price might weaken the behavioural intention of the consumer to consume the service since Malaysian women are very price conscious. The findings also indicate that there is a significant correlation relationship between price and promotion as well as place and promotion.

Originality/value

This research is expected to contribute in terms of providing more knowledge about this industry, since there are still limited findings pertaining to slimming centres, especially in the Malaysian market.

Details

International Journal of Human Rights in Healthcare, vol. 12 no. 3
Type: Research Article
ISSN: 2056-4902

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Article
Publication date: 1 February 2016

Rajat Roy, Fazlul K. Rabbanee and Piyush Sharma

The purpose of this paper is to explore the mediating role of internal reference price (IRP) in a pay-what-you-want (PWYW) price setting. Specifically, it examines the…

Abstract

Purpose

The purpose of this paper is to explore the mediating role of internal reference price (IRP) in a pay-what-you-want (PWYW) price setting. Specifically, it examines the effects of altruism, social desirability and price consciousness as the antecedents of IRP and consumers’ willingness to pay (WTP), future purchase intention and attitude toward the seller as the outcomes of IRP.

Design/methodology/approach

The data for the study were collected from 272 respondents through a structured survey and analyzed through structural equation modeling technique using AMOS 22.0.

Findings

Altruism and social desirability positively influence IRP whereas price consciousness influences IRP negatively. IRP mediates the effects of altruism, social desirability and price consciousness on WTP, future purchase intention and attitude toward the seller.

Research limitations/implications

PWYW pricing strategy can help attract consumers with self-less characteristics or a desire to behave in a socially appropriate manner but not those who are highly price conscious as reflected by the differences in the way in which their IRPs influence their WTP, future purchase intention and attitude toward the seller.

Originality/value

This paper introduces a parsimonious framework to explain how three consumer characteristics influence consumers’ pricing decisions in PWYW context. The finding that the effects of antecedent variables on WTP, attitude and future purchase intention are mediated by IRP provides new insights that have not been explored earlier.

Details

Marketing Intelligence & Planning, vol. 34 no. 1
Type: Research Article
ISSN: 0263-4503

Keywords

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