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<p>Firms often use a pricing strategy in which they partition the total price of a product and/or service into two or more mandatory components, such as parts and shipping. In this research, we examine how dividing the same total price differently across the components affects customers’ reactions. In a series of studies, we show that customers systematically prefer partitions of the same total price in which the price of low benefit components (e.g., shipping) is lower and the price of high benefit components (e.g., parts) is higher. Thus, for effective pricing, markups on components that consumers believe provide a high degree of benefit should be higher than markups on components that consumers believe provide less benefit </p>
</abstract>

Firms often use a pricing strategy in which they partition the total price of a product and/or service into two or more mandatory components, such as parts and shipping. In this research, we examine how dividing the same total price differently across the components affects customers’ reactions. In a series of studies, we show that customers systematically prefer partitions of the same total price in which the price of low benefit components (e.g., shipping) is lower and the price of high benefit components (e.g., parts) is higher. Thus, for effective pricing, markups on components that consumers believe provide a high degree of benefit should be higher than markups on components that consumers believe provide less benefit

When 2 + 2 Is Not the Same as 1 + 3: Understanding Customer Reactions to Partitioned Prices

Ass. Professor of Marketing, Robert H. Smith School of Business, University of Maryland, Washington/College Park, USA

NIM Marketing Intelligence Review

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Firms often use a pricing strategy in which they partition the total price of a product and/or service into two or more mandatory components, such as parts and...

When 2 + 2 Is Not the Same as 1 + 3: Understanding Customer Reactions to Partitioned Prices

Pubblicato online: 19 lug 2014

Pagine: 24 - 31

DOI: https://doi.org/10.2478/gfkmir-2014-0075

Parole chiave
Pricing Systems, Consumer Behavior, Price perception, Price Sensitivity

© 2014

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

When 2 + 2 Is Not the Same as 1 + 3: Understanding Customer Reactions to Partitioned Prices

Pubblicato online: 19 lug 2014

Pagine: 24 - 31

DOI: https://doi.org/10.2478/gfkmir-2014-0075

Parole chiavePricing Systems, Consumer Behavior, Price perception, Price Sensitivity

© 2014

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Parole chiave
Pricing Systems, Consumer Behavior, Price perception, Price Sensitivity