Search results
1 – 10 of 115Linda Bitsch, Jon Henrich Hanf and Jens Rüdiger
Due to high competition in the agricultural industries and heterogeneous products, the setting of prices for direct sales to consumers is difficult. In recent years…
Abstract
Purpose
Due to high competition in the agricultural industries and heterogeneous products, the setting of prices for direct sales to consumers is difficult. In recent years, pay-what-you-want (PWYW) is discussed as an innovative pricing strategy. This study analyses whether the implementation of a pay-what-you-want strategy can be successful and if there is a willingness to pay from the consumers for wine touristic offers. Furthermore, the study analyses, in general, how suitable experiments are as a research tool.
Design/methodology/approach
A PWYW mechanism creates a situation of strategic decision- making that can be modelled as a game. This can be transferred to an experimental setting. The results were analysed with a two-sided MWU test (Stata, ranksum) in order to determine whether the differences are statistically significant.
Findings
Participants pay positive prices, although theory predicts the opposite. PWYW is a good strategy to analyse the willingness-to-pay for heterogeneous and homogenous services or products. Information or reference prices have no clear influence on the willingness to pay, confirming results of other studies. There is no influence of gender and age on the payments.
Practical implications
In general, consumers have a willingness to pay positive prices for wine- touristic offers. The willingness to pay is not different for people with or without wine knowledge. For the chosen variable information and reference price, wine producers do not have to address target groups differently.
Originality/value
It is the first study which analyses the pay-what-you-want mechanism as a tool for wine touristic activities. In addition, an experimental approach was used to analyse an innovative, consumer-based price-setting strategy.
Details
Keywords
Thowayeb Hassan and Mahmoud Ibraheam Saleh
The study aims to investigate how attribution theory in the context of pricing strategies can help tourism destinations recover from the negative impacts of the COVID-19 pandemic.
Abstract
Purpose
The study aims to investigate how attribution theory in the context of pricing strategies can help tourism destinations recover from the negative impacts of the COVID-19 pandemic.
Design/methodology/approach
The study adopted a qualitative research design using semi-structured interviews to address the lack of research in this area. Interview participants included tourists and tourism customers. The interview responses were then analyzed using “Nvivo” qualitative data analysis software to identify critical themes regarding applying attribution theory to pricing strategies.
Findings
The findings revealed that tourists prefer bundled and hedonic pricing strategies that integrate the service providers' pricing strategies' locus of control, stability and controllability. Tourists do not favor dual pricing strategies unless the reasons for price controllability or stability are justified. Tourists also prefer the controllable pay-what-you-want pricing strategy. Although tourists accept dynamic pricing, certain conditions related to price locus, stability and controllability must be met.
Practical implications
The research shows tourists prefer pricing strategies that give them control and flexibility, like bundled packages and pay-what-you-want models. Service providers should integrate pricing strategies that transparent costs and justify price fluctuations. While dynamic pricing is accepted if necessitated by external factors, tourists are wary of unnecessary price changes. Providers can build trust and satisfaction by explaining pricing rationale and offering controllable options like bundles.
Originality/value
The study contributes to the theory by applying attribution theory to the context of pricing strategies in tourism. It also provides innovative recommendations for tourism managers on how to use pricing strategies after the COVID-19 pandemic. The findings offer new insights that extend beyond previous research.
Details
Keywords
Yves Van Vaerenbergh, Annelies Costers and Anja Van den Broeck
The optimal level of customer participation is an important factor in service design. However, researchers know little about the impact of customer participation for their…
Abstract
Purpose
The optimal level of customer participation is an important factor in service design. However, researchers know little about the impact of customer participation for their willingness to pay and hence organizations’ financial outcomes. This paper examines the impact of customer participation in a pay-what-you-want (PWYW) pricing system, allowing customers to pay any price they want for a product or service.
Design/methodology/approach
This paper reports the results of three experiments, in which the authors manipulated the level of customer participation (Study 1: Low versus high, Study 2: Medium versus high, Study 3: Low versus medium versus high) and measured customers' PWYW payments (Studies 1–3), customer satisfaction (Studies 1–3), perceived equity (Study 3) and perceived enjoyment (Study 3). Studies 1 and 3 were scenario-based experiments, while study 2 was a field experiment. Study 3 was preregistered.
Findings
The results support a direct effect of customer participation in service production on customer PWYW payments, yet only when comparing low to high levels of customer participation. High levels of customer participation lead to a decrease in perceived equity and an increase in perceived enjoyment, which in turn spilled over to customer PWYW payments through customer satisfaction.
Originality/value
This research provides causal evidence at the individual level of analysis for the relationship between customer participation in service production and financial results. The paper also provides insights into its underlying mechanisms.
Details
Keywords
Arvind Shroff, Bhavin J. Shah and Hasmukh Gajjar
Pay-what-you-want (PWYW) is a pricing strategy implemented in a variety of settings like supermarkets and museums, in which consumers determine the price they are willing to pay…
Abstract
Purpose
Pay-what-you-want (PWYW) is a pricing strategy implemented in a variety of settings like supermarkets and museums, in which consumers determine the price they are willing to pay for a product or service based on their perceived utility. The authors propose an analytical model to investigate the impact of PWYW delivery pricing on the online food delivery (OFD) platforms.
Design/methodology/approach
Using a game-theoretic model, the authors characterize the equilibrium as a function of the platform's average delivery cost and the consumer's social preferences parameters like fairness and reciprocity. The authors derive the parametric conditions under which PWYW generates higher profits for the platform compared to the traditional pay-as-asked delivery pricing.
Findings
For the PWYW strategy to be profitable, the average delivery cost to the platform should be low. Therefore, OFD platform managers should focus on reducing delivery costs. The authors also identify the feasible region in which the platform managers need to maintain the consumer's social preferences.
Practical implications
Under PWYW, the authors recommend that the platform managers impose a minimum delivery fee which consumers can use as a benchmark to minimize zero delivery fee payments and consumers' free-riding tendencies simultaneously. This allows OFD platforms to extract online orders from highly price-conscious consumers.
Originality/value
This is one of the first studies to explore the innovative application of PWYW to a particular segment of delivery pricing in OFD platforms. The authors establish that the overall consumer surplus and social welfare are higher under the PWYW strategy, forming a solid ground for its implementation in OFD platforms.
Details
Keywords
Preeti Narwal and Jogendra Kumar Nayak
The purpose of this paper is to explore the applicability of Pay-What-You-Want (PWYW) pricing multi-channel retailing. Specifically, the impact of PWYW endogenous price…
Abstract
Purpose
The purpose of this paper is to explore the applicability of Pay-What-You-Want (PWYW) pricing multi-channel retailing. Specifically, the impact of PWYW endogenous price discrimination on consumers’ price fairness perception of and reactions to PWYW is investigated.
Design/methodology/approach
Three empirical studies with different product categories were conducted through lab experiments with student sample using scenario-based experimental approach.
Findings
Results indicate the viability of PWYW with lower suggested external reference price. The impact of PWYW endogenous price discrimination is dependent upon the magnitude of price deviation from regular market price and product category. Consumers’ negative perceptions of price differentiation interacted with their underlying beliefs about the retailer’s cost of products across different channels. PWYW acceptance can be fostered in multi-channel by communication of additional-value generated in offline selling.
Originality/value
The current research is possibly the first to explore PWYW viability in the multi-channel context by exploring the consumer’s price perception process and critical consumer reactions through a well-structured research framework.
Details
Keywords
Rajat Roy, Fazlul K. Rabbanee and Piyush Sharma
The purpose of this paper is to investigate the direct and indirect effects of social visibility (private vs public), purchase motivation (intrinsic vs extrinsic vs altruistic…
Abstract
Purpose
The purpose of this paper is to investigate the direct and indirect effects of social visibility (private vs public), purchase motivation (intrinsic vs extrinsic vs altruistic) and external reference price (ERP) (absent vs present) on consumers’ pricing decisions in pay-what-you-want (PWYW) context.
Design/methodology/approach
Two empirical studies with a fitness gym as the research setting were used to test all the hypotheses; first, a lab experiment with undergraduate student participants and, the second, an online experiment with a consumer panel.
Findings
Both studies show that consumers allocate a higher share (RATIO) of their internal reference prices (IRPs) to the prices to be paid (PTP) in PWYW context, in private under intrinsic purchase motivation and in public under extrinsic or altruistic motivation and this effect is more pronounced in the absence of ERP.
Research limitations/implications
Future research may validate and extend the findings of this paper with other product or service categories, different manipulations for the key variables, other research methods such as field experiments and expand our model by including other relevant variables.
Practical implications
The findings of this paper will help managers understand how individual customers’ purchase motivation and the social visibility in the PWYW setting affect their pricing decisions and how providing external pricing cues may moderate these effects.
Originality/value
Prior research on PWYW shows mixed findings about the direct effects of many variables on consumers’ pricing decisions, but it ignores the differences in consumers’ purchase motivations and offers mixed evidence about the influence of social visibility and ERPs on payment decisions. The authors address all these gaps in this paper.
Details
Keywords
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 effects of…
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
Keywords
Preeti Narwal and Jogendra Kumar Nayak
This paper aims to investigate consumer behaviour in response to social norms under pay-what-you-want (PWYW) pricing. Specifically, it explores the critical role of social norms…
Abstract
Purpose
This paper aims to investigate consumer behaviour in response to social norms under pay-what-you-want (PWYW) pricing. Specifically, it explores the critical role of social norms such as norm priming and consumer prior trust in the retailer on consumers’ perceived price fairness, trust, willingness to pay, purchase intentions and intentions to spread negative word of mouth about the retailer.
Design/methodology/approach
Data on dependent measures were collected through the scenario-based online experimental approach and assessed using MANOVA analysis.
Findings
Results confirm the significance of norms by indicating the critical role of norm belief on consumer responses. Also, increasing the salience of norms by priming them usually intensifies negative behaviour, and pre-existing trust in the retailer serves as an imperfect cushion against consumer negative reactions to norm violation, but this effect is observed to be decreasing with increase in prior trust.
Research limitations/implications
Further research should consider the contextual (time, place, media) influences and assumptions to increase the generalizability of the findings.
Originality/value
To the best of the authors’ knowledge, this is the first paper to explicitly examine the effects of social-norm compliance by sellers on consumer behaviour in the context of PWYW pricing.
Details
Keywords
Pay what you want (PWYW) is a participative pricing mechanism that permits customers complete freedom to choose prices. PWYW literature reports the influence of external reference…
Abstract
Purpose
Pay what you want (PWYW) is a participative pricing mechanism that permits customers complete freedom to choose prices. PWYW literature reports the influence of external reference price (ERP) on customers' price decisions and payments. The current research examines the influence of ERP presence, salience and understanding at the seller level by analysing customers' perceptions of seller price image dimensions and purchase intentions.
Design/methodology/approach
Study 1 tests the impact of ERP presence and salience in controlled lab settings while Study 2 takes this investigation further by including the moderating effect of ERP understanding on seller price image dimensions and purchase intentions in online settings.
Findings
Results illustrate the positive impact of ERP presence on all seller price image dimensions excluding the perceived price level. Perceived price fairness mediates the impact of ERP presence on perceived value. ERP salience positively impacts price processability. ERP presence and salience attached to it positively impact customers' purchase intentions through seller price image dimensions.
Originality/value
This is possibly the first paper to investigate the ERP effect on seller price image dimensions in a PWYW context that lacks fixed posted prices.
Details
Keywords
Nathalie Kron, Jesper Björkman, Peter Ek, Micael Pihlgren, Hanan Mazraeh, Benny Berggren and Patrik Sörqvist
Previous research suggests that the compensation offered to customers after a service failure has to be substantial to make customer satisfaction surpass that of an error-free…
Abstract
Purpose
Previous research suggests that the compensation offered to customers after a service failure has to be substantial to make customer satisfaction surpass that of an error-free service. However, with the right service recovery strategy, it might be possible to reduce compensation size while maintaining happy customers. The aim of the current study is to test whether an anchoring technique can be used to achieve this goal.
Design/methodology/approach
After experiencing a service failure, participants were told that there is a standard size of the compensation for service failures. The size of this standard was different depending on condition. Thereafter, participants were asked how much they would demand to be satisfied with their customer experience.
Findings
The compensation demand was relatively high on average (1,000–1,400 SEK, ≈ $120). However, telling the participants that customers typically receive 200 SEK as compensation reduced their demand to about 800 SEK (Experiment 1)—an anchoring effect. Moreover, a precise anchoring point (a typical compensation of 247 SEK) generated a lower demand than rounded anchoring points, even when the rounded anchoring point was lower (200 SEK) than the precise counterpart (Experiment 2)—a precision effect.
Implications/value
Setting a low compensation standard—yet allowing customers to actually receive compensations above the standard—can make customers more satisfied while also saving resources in demand-what-you-want service recovery situations, in particular when the compensation standard is a precise value.
Details