Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
MEMOIRE DE RECHERCHE
2014 / 2015
CALANDRO, GUIDO
SUJET DU MEMOIRE
La diffusion de ce recueil
est strictement rserve
ESCP Europe
CONFIDENTIEL:
Non
Table of contents
LIST OF ABBREVIATIONS...................................................................................III
LIST OF TABLES .................................................................................................IV
LIST OF FIGURES.................................................................................................V
1. INTRODUCTION ................................................................................................1
1.1 RESEARCH FOCUS AND APPROACH
1.2 OUTLINE
8
9
9
10
11
12
15
16
17
22
4. METHODOLOGY .............................................................................................24
4.1 RESEARCH APPROACH
24
25
25
4.2.2 Pre-testing
26
26
29
4.3.1 Fairness
29
30
30
31
33
34
35
36
36
36
37
38
5. RESULTS .........................................................................................................40
5.1 PRELIMINARY ANALYSIS
40
40
41
43
44
51
52
54
55
6. DISCUSSION ...................................................................................................57
6.1 SUMMARY OF FINDINGS
57
58
59
6.4 CONCLUSION
60
BIBLIOGRAPHY ..................................................................................................61
APPENDIX ...........................................................................................................66
AFFIDAVIT ..........................................................................................................83
ADDITIONAL AFFIRMATION .............................................................................84
II
List of abbreviations
AVE
CR
Composite reliability
CFA
CLV
CRM
GoF
Goodness of fit
LTV
Life-time value
OLS
PLS
RM
Revenue management
SE
Standard error
SEM
WOM
Word of mouth
III
List of tables
Table 1
Table 2
27
Table 3
33
Table 4
Table 5
41
Table 6
42
Table 7
45
Table 8
46
Table 9
47
48
Table 11 Cross factor analysis for the consumer goods and digital services 49
outer models
Table 12 Cross factor analysis for healthcare and utilities outer models
50
52
53
55
57
IV
List of figures
Figure 1 Conceptual model
15
17
19
43
55
VI
1. Introduction
Dynamic pricing tactics are as old as business. They were born at the same time.
The concept of adapting the price that has to be charged to customers based of
their willingness to pay was implicitly known since the first entrepreneur started to
run his business, even though it was translated only a few centuries ago by Adam
Smith into a market economics principle, called the invisible hand: the resulting
process of price formation when supply and demand forces match. Following the
principle of the rational profit-maximizing firm, it is achievable, among other ways,
through a full understanding of market demand and how much the consumers value
the products or services.
The way a firm decides prices studying the demand market curve is called demandmanagement. It includes tactics like non-linear pricing, bundling, segmentation, and
optimizing in the presence of asymmetric information between buyers and sellers
(Talluri & Van Ryzin, 2004). Ideally, thanks to demand-management, a firm eventually
would charge a different price for each costumer, because each one of them has its
own demand curve, and the firm could find the optimal match with its supply curve,
actually directing A.Smiths invisible-hand and thus earning the maximum profit
margin achievable in every transaction. In reality, this is not possible, because it
would be too costly for a firm to micromanage every sale.
However, thanks to technology innovation, big steps towards ideal profitability have
been taken: in the late seventies in US, an airline company invented a technique
called revenue management (RM); it is an intensely operational method to
micromanage as much as possible airline fares, using advanced softwares in order
to forecast demand at a granular level. That was a real revolution in the business
world, because it turned out that RM was a very effective way to improve the bottom
line without changing anything in the offer but the price. As at that time Robert
Crandall, CEO of American Airlines said, Yield management is the single most
important technical development in transportation management since we entered
deregulation. Finally, a systematic and quantitative way to improve profit though
pricing was invented, and an entire industry was benefiting from it. It is estimated
that, in the airline industry, RM accounted for three billion dollars revenues after 5
years since its introduction (Cross, 1997). Through overbooking, inventory control,
and discount allocation, airline companies know with great accuracy when to raise
and discount fares, how to segment seats among economy, business and first class,
and thus how to improve their bottom line without increasing their fixed assets nor
variable costs.
The reason why this apparently magic tool has not been implemented in every
industry yet, it is because there are some prerequisites a product/service must have
in order to activate RM, which are mainly the perishability of products and
purchasing opportunities, seasonal and other demand peaks, and product wastage
(Cross, 1997). So far, those prerequisites have been fulfilled only in a few industries,
such as airlines, cruises, car rental, and hotels. They are nowadays the only ones
that fully exploit the concept of RM, and have been educated to deeply understand
their market demand and how to adapt to it.
But what if dynamic pricing was adopted systematically in unconventional
industries? With the advent of the internet and big data era, firms have access to
terrific amounts of information and cheap, yet incredibly fast ways to compute and
analyze it. Both traditional and innovative sectors, from utilities and healthcare, to
digital services can find new ways to price more intelligently their products or
services, and yet they dont do it. They often limit themselves to just segment the
market and charge different prices to different cohorts, without taking advantage of
a powerful concept like RM, combined with the easy access to computing that it is
available nowadays. One of the reasons why they are stuck in the same static
pricing techniques, it is because they worry about how customers would perceive
fairness in the transactions. There is a vast literature about price fairness
perceptions, and it will be reviewed in the next chapter. There are many studies that
demonstrate a positive correlation between fairness and satisfaction, and between
satisfaction and repurchasing intentions. Briefly, a customer who perceives a
transaction as unfair, could potentially be unsatisfied, and could take some revenge
against the firm, like negative word of mouth, or more simply abandoning any
purchase intention towards the firm (Xia, Monroe & Cox, 2004).
Every firm must avoid dissatisfaction and revenge from its own customer, since this
would be against the profit-maximization rationale. Nevertheless, in airlines, cruises,
hotels and car rentals, RM and more in general dynamic pricing techniques are
widely accepted by customers, not only because customers got used to them, but
mainly because firms found a good compromise between maximizing revenues and
reducing customer dissatisfaction. Furthermore, nowadays technologies and
businesses are changing, and customer behavior and firms are changing
accordingly, introducing an unpredictability factor to the future pricing best
practices, and putting urgency for further research in this field.
The aim of this study goes in that sense: it wants to determine whether customers
are ready to accept dynamic pricing techniques in some brand new contexts,
ranging from traditional to hi-tech industries, from public to private goods/services.
There is the big data phenomenon today, there are new products/services that are
completely twisting some centuries year-old industries, and there is a big pressure
for companies to increase profitability. Mixing these three elements today brings to
potential new trends in how companies will price their products/services in the near
future, and their price strategy will have to align short-term and long-term profitability
expectations: here comes the second aim of the study, that is to assess a
compatibility between RM, that is a short-term driver for incrementing profits, and
customer relationship management (CRM) which is long-term oriented. A good
balance of the two elements is fundamental for a sustainable growth and lasting life
of the firm, and this study will go in depth finding a link between perceived price
fairness and repurchasing intention.
1.1 Research focus and approach
The interdependencies among perceived price fairness, customer trust towards the
company, and long-term customer relationship management have already been
studied in the past, but sometimes their importance is too often overlooked by
managers (McMahon-Beattle, 2005). Trust is indeed an essential component to
establish a customer-company relationship. It is the engine that ensures continuative
purchases over time by the same customers, and increases the life-time value (LTV).
Trust can be built in a customer thanks to several factors: a determinant one is
indeed the perceived price fairness. There are several studies that have researched
in depth the price fairness components: Ferguson & Ellen (2013) propose a split in
procedural and distributional fairness, which eventually suggests more transparency
to company in the price-setting phase. There are also some studies that suggest an
integration between revenue management and CRM, like Von Martens & Hilbert
(2009), in order to ensure the company maximum profitability in the long term.
The focus of this study though, is to assess the validity and feasibility of a customervalue based yield management in some new contexts. In fact, the current research
focuses generally on industries where RM is widely used, like airlines and hotels, but
the idea in this study is to approach some not completely explored sectors, which
are consumer goods, digital services, healthcare and utilities. These four sectors
have been selected trying to find a good mix between tradition and innovation,
sensible services/products (also of public utility, like healthcare) and FMCGs.
This study will test the findings of the previous research mentioned above in these
four sectors, trying to demonstrate whether it is valid outside the conventional
schemes. Also, giving the unpredictability at which consumer behavior patterns
change nowadays, it will be a useful update on perceived price fairness at the time
of 2015. Real or potential customers will be surveyed proposing some case studies,
in which some perceptions will be assessed, like price fairness, greediness of the
company, and attitude towards the pricing policy. These perceptions will be
moderated then by price-setting transparency.
1.2 Outline
The paper starts with a review of the existing literature in chapter two. It will review
research about yield management story and practices, revenue management and
dynamic pricing system techniques, price fairness and CRM, and integration
between short term and long term profitability. In chapter three, the conceptual
model will be presented. The choice of the selected variables will be explained. The
hypothesis derived from the conceptual model will be described. The methodology
underlying this study will be described in chapter four, focusing on the research
approach and experimental design, as well as the sampling and analytical
procedures chosen to gather and evaluate the data set. Chapter five then presents
the results obtained from empirical analyses of the research framework. Preliminary
analyses are presented first, before the hypothesized model is subjected to
estimation and statistical tests. The paper concludes with a discussion and
interpretation of the findings with regard to their relevance for managerial practice
(Chapter 6). This final section also points out the papers limitations along with future
research suggestions.
2. Literature review
This chapter will show how the present study is grounded in the academic literature.
It begins delineating the research branch, that is perceived price fairness, and the
delineation of scope. Then, it continues reviewing the existing literature of the
chosen research field, zooming in the relation between price fairness and revenue
management techniques. Consequently, the section exposes the current research
on finding compromises between short-term and long-term pricing strategies.
Finally, the chapter finds the current research gap in literature, and proposes the
research question that will lead the rest of this paper.
2.1 Overview of research field and delineation of scope
The main research field of the present study is perceived price fairness. It is a
brunch of consumer behavior and psychology, and has deep connections with
other brunches like customer satisfaction, with companies strategies like price
setting, and with managerial disciplines like customer relationship management.
There is an extensive literature about this field and many conceptual frameworks
have been proposed: the highest-cited ones take in account different determinants
of perceived fairness, like social norms (Maxwell, 2007), price comparisons (Xia,
2004), company reputation and consequences on company profits (Campbell,
1999), trust towards the company (McMahon-Beattie, 2010), and price setting
procedures (Ferguson, 2014). In the scope of this paper, perceived price fairness is
assessed though procedural fairness, impact on company profits and overall
fairness. Also, it is assessed in a precise event, that is the introduction of a pricebased revenue management technique by a company in its offer (Talluri & Van
Ryzin, 2005). Finally, a minor part of the paper enters the field of customer
satisfaction, more specifically the repurchasing intention. The purpose is to find a
connection between introduction of RM techniques and negative effects on longterm profitability in a company, following a relative new approach called customer
value based revenue management (Von Martens & Hilbert, 2009).
2.2 Existing literature on Revenue management
As already said in the introduction, yield management is as old as business.
Nevertheless, a more operational, quantitative, systematic approach has been
6
underline the difference between quantity and price based RM: the first one is
applied when inventory control is possible. A classical example is in airlines, where
revenue managers decide how many seats to allocate between economy and
business class. The second type is the most typical in retail or manufacturing: it
applies when prices rather quantity controls are the primary variables to manage
demand. The latter is the wider expression of dynamic pricing: companies use it
when they discount products, trade coupons, or auctions and price negotiations.
Generally speaking, it is easier and more flexible to activate price based RM tactics,
as it is easier to vary prices instead of quantities: if you take the example of a retail
store, it would be too costly to reallocate stocks from a shop to another; it is cheaper
to discount the existing goods. Nevertheless, the difference between the two RMs
can be sometimes blurred: in airlines for example, closing the availability of a
discount class can be considered equivalent to raising the products price to that of
the next highest class (Talluri & Van Ryzin, 2005). It is important to remind that in the
scope of this research only the price based RM will be taken in account, as the
paper focuses in some unconventional sectors and industries, which are very
different from airlines, cruises, hotels or car rentals, where traditionally quantity
based RM takes place.
2.2.1 Current fields of application of RM
Keeping the differentiation of price-based and quantity-based RM, any industry that
can have control of customer demand is eligible for RM application, no matter the
seven requirements mentioned above. Industries can be then categorized in a 2x2
matrix that takes in account what mix of the two RM approaches is used. In Table 1
this matrix is represented, and each quadrant is filled in with a summary of the
industries that have introduced RM as a standard in their competitive field (Kimes
and Wirtz, 2002). The central lines are blurred on purpose since, as already said,
quantity and price based RM are sometimes the same thing. Therefore for instance,
industries in the first quadrant are more quantity based oriented, since they allocate
seats/quantities following a customer segmentation. In the forth quadrant on the
other hand, prices are more often controlled because time slots cannot be allocated
precisely. Nowadays, industries who actively adopt one or both RM approaches are
limited, although a positive trend of successful RM introductions in non traditional
industries has been noticed. Financial services, media/telecom, distributors are just
8
the most evident examples, and soon more and more other industries will fill in the
matrix.
Price
Fixed
Quadrant 1:
Predictable/
Controllable
Theatres
Stadiums/Arenas
Convention centres
Variable
Quadrant 2:
Hotels
Airlines
Rental cars
Cruise lines
Duration/
Quantity
Quadrant 3:
Unpredictable/
Uncontrollable
Quadrant 4:
Restaurant
Golf courses
Internet Service providers
Health services
an economic transaction, and are usually not noticed until violated. They refer not
only to the price itself, but also what is priced and who sets the price, and can vary
depending on the society and culture. Social norms differ between personal and
social fairness. In the first case they are descriptive norms, and they are
comparisons with past purchases. Instead, the social norms of social fairness are
prescriptive norms. They stipulate how people should behave based on societys
values. Prescriptive norms are consensually agreed upon rules of society. Examples
of prescriptive norms of pricing include charging all customers the same price, not
sneaking in hidden surcharges, not exploiting customers in need. When these
prescriptive norms are violated, it is not just personally but socially unfair. (Maxwell,
2009).
The other factor is emotional response. The intensity of emotion felt by the customer
can modify his perceived price fairness. The intensity of emotion differs depending
on the kind of unfairness: violating a descriptive norm brings a mild reaction,
typically dissatisfaction. At the contrary, a social unfairness brings a very harsh
reaction, like customer revenge.
Finally, it has been suggested that fairness is the emotional part of economic
decision making. It is an innate judgement and without it a consumer could not
make the decision to buy (Damasio, 1994).
2.3.2 Perceived price fairness of revenue management techniques
Perceived fairness of RM has been extensively researched throughout the years
since its first implementation in US airlines in late seventies. Widely recognized as a
very effective way to improve the bottom line, the business world has always been
cautious about using it though, given the potential customer backlash. In fact,
industry actors are usually worried about doing price discrimination on customers,
since it could undermine the trust relationship with the company, and have a direct
impact on long-term profitability and long lasting life of organizations (McMahonBeattie, 2009). Building a relationship based on trust is indeed a current major
concern for companies, as a strong relation among fairness, satisfaction, trust and
repurchasing intentions has been found. After decades since the RM introduction,
companies feel the benefits of its application, but do not know how to convert the
sense of RM seen as something done to the customer, instead of something done
10
for the customer (McMahon-Beattie, 2009). Several ways have been found to
mitigate this difference though: one of the first and more general principles that
helps in that sense is the theory of dual entitlement, which suggests that perceived
unfairness results when a price is increased such that a firm increases the profit, but
an increased price is perceived as fair when it maintains the firms existing level of
profit (Kahneman, Knetsch, and Thaler, 1986). In addition to that, and more in
relation to RM, other good practices have been suggested to managers involved in
the price-setting process. They can be grouped under three different categories or
research fields: motivations for a company to adopt RM, the way (or the procedure)
adopted to apply RM, and the company values transmitted to the customer when
RM is applied. The first field regards the dual entitlement principle mentioned above:
a company is most likely to keep customers satisfied if it shows the inevitability of
using RM in order to keep profitability and survive in the long-term, and not only to
exploit customers. The second field is mainly about being transparent: for instance,
a lack of information regarding discounts is an issue of concern to buyers (Kimes,
1994); also having a clear pricing policy helps to maintain customer satisfied Rohlfs
and Kimes (2005). The last field regards many of the social values mentioned in the
previous paragraph: a company is likely to succeed more in applying RM when it
shows values of equity, trustworthiness, and justice. A way to transmit justice is for
instance being consistent in the application of RM across individuals and time and
ensuring that accurate and complete information is exchanged (Colquitt et al, 2001;
Guiltinan, 2006).
In conclusion, recent research suggests that variable pricing in itself does not cause
trust/mistrust (McMahon-Beattie, 2009). This is a notable finding, since it opens the
door to RM for spreading in the future in more and more new contexts and
industries. Nowadays RM is a must in industries like airlines, cruises, hotels and
car rental, and it becomes clearer and clearer that consumers may come to trust a
business use of variable pricing as a legitimate business practice.
2.3.3 Moderating factors
Summing up a bit what already said in the previous two paragraphs, there are
several factors that buffer customers perceived price fairness. A first, crucial one is
trust: as a customer purchases time by time at the same seller, a mutual relationship
11
builds up between them; the customer compares previous purchases with the
current one, expecting a certain seller behavior in price-setting. Once a certain
number of transactions is done and the selling price has been consistent, the
customer stops paying attention too much to prices as he trusts the seller (Xia,
2004). Thus, the stronger the trust to the seller, the less likely the customer will
perceive unfairness. The same logic applies to firm reputation (Campbell, 1999): a
customer will give the benefit of the doubt to a company when he cannot justify the
price change. Procedural fairness mediates too, and it refers to the adherence of the
company to social norms (Maxwell, 2009). It means for example that the company
increased prices because of an increase in costs; in general, the less the company
plays in its self-interest in setting prices, the higher the procedural fairness will be
and the higher the consumer will perceive a price as fair (dual entitlement theory).
Another moderating factor is transaction similarity. If a company applies different
prices over time on the same products/services, it can reduce the perceived
unfairness by tailoring its offer to determined consumer segments (Xia, Monroe &
Cox, 2004). An example would be to price differently based on the age group of
consumers: a museum can discount tickets to students or retired people without
being perceived unfair by other age groups.
2.4 Research gap and derivation of research question
The review of current literature suggests that in perceived price fairness of RM
techniques is mostly dedicated to traditional industries like airlines and hotels.
Although scholars like Van Ryzin say that RM will be a standard practice in every
business as much as CRM or ERP, the business world has just started to exploit all
its potential. The advent of internet, the pressure on margins in retailing,
deregulations in the energy sector and healthcare privatization are just examples of
a whole series of major economic events that are happening and evolving
nowadays, often disrupting entire industries and creating new business
opportunities.
At date, in many industries where RM has not been vastly implemented yet, there
are no structured/standard pricing strategies or best pricing practices commonly
adopted. Although positive impacts of RM on the bottom line are widely recognized,
consequences on potential customer dissatisfaction or customer equity value are
12
almost unknown. For instance, Benning and Dellaert studied how much demandmanagement is perceived fair in healthcare, and actually they found room for
implementation the industry when social norms are respected, but they did not
pushed research further on repurchasing intentions, and therefore on LTV (2013).
Utilities sector is another hot topic in price fairness studies, as it comprises several
industries of public utility. There is some relevant research about it: Heino and Takala
have studied the water services industry, finding again a compatibility with dynamic
pricing systems (2015). However, that study has no connections with systematic and
operational RM techniques neither. Another very interesting sector is digital services:
a huge scandal occurred when Amazon in 2000 charged different prices for the
same CD music album in US, ranging randomly from $80 to $100 with the sole
purpose of studying the demands curve for that precise item. The public opinion
was so shocked that the company eventually refunded all the overcharged
customers. Once again, another company in this sector misbehaved in December
2013: Uber, an innovative transportation services online company, charged more
than fifteen times the usual price for a ride in New York City during a blizzard. Two
years later, enraged customer still talk about it and Uber still tries to persuade that
they have good reasons for price surges. While the companys pricing policy is still
questioned, it has never been more clear than today that companies know too a little
about Internet pricing.
The purpose of this paper then is twofold: from one side, it investigates whether
current research on perceived price unfairness is always generalizable, also in
sensible sectors like healthcare or utilities, or an innovative one like digital services.
The second purpose is trying to find a cause-effect relation between RM techniques
and long-term profitability, using as proxy customers repurchasing intentions.
Thus, the research question that this study will try to answer can be translated as
follows:
What are the implications on perceived price fairness when price-based revenue
management techniques are introduced in unconventional industries, and what are
the consequences on companies long-term profitability?
13
In order to answer this research question, this paper will conduct an empirical study
on customer behavior in the consumer goods, digital services, healthcare and
utilities sectors.
14
3. Hypothesis development
This chapter will first expose the conceptual framework that will be tested in the
study. Then, a theoretical background will support every construct and relations
among constructs, which are the basis where the eight formulated hypothesis come
from.
3.1 Research framework
Figure 1 shows the conceptual model. As first remark, the first two hypothesis are
not related to the structural equation model. They rather test whether all the four
16
17
their assessment of which action is most likely to restore equity with the least cost
(Xia, Monroe & Cox, 2004). Lastly, in case of strong negative emotions, customer
may feel that leaving the relationship or complaining would not be enough. In this
case, a feeling of anger rather than dissatisfaction is felt by the customer, and would
bring to an aggressive behavior. Then, the reaction would be even irrational and
taking place at customers expense, like switching to the direct competitor, or
switching to a sub-optimal choice (Bechwati and Morrin 2003). Also, they would be
more likely to spread negative WOM with the precise intent of damaging the seller,
which is not the case in the other types of reactions above.
In the more recent years research has continued, extending Xias framework with a
new definition of price fairness as function of overall price fairness, procedural
fairness and distributive fairness (Ferguson, Ellen, Bearden, 2013) (Figure 3). The
latter is something assimilable to Xias framework, that is a process of price
comparison between the customers outcome and anothers outcome, and tells the
customer whether he saved or lost money. Instead, procedural fairness is the
consumers assessment on whether the seller played fair by adhering to social
norms when setting the price (Maxwell, 2002). Lastly, overall price fairness (or
perceived price fairness) focuses on the assessment of the fairness of the overall
price offer (Campbell 1999a, b). It is a personal judgement done by the customer,
who asks himself whether the price is justifiable, acceptable, or reasonable (Xia,
2004). Although is not clear how exactly procedural and distributive fairness affect
Suspicion of the
seller
Procedural
Fairness
Distributive
Fairness
Overall Price
Fairness
Intention of
Spreading
Negative WOM
Figure 3: A model of procedural fairness, distributive fairness, and overall price fairness
overall price fairness, existing research indicates that there are positive relations
among the components. For instance, fair perception is increased if the seller has
19
no control over price or when increased prices are aligned with increased costs
(high procedural fairness). Eventually, it has been suggested that consumers
consider procedural fairness only when perceive distributive unfairness, and that
transparency in price-settings increases procedural and overall price fairness
(Ferguson, Ellen, Bearden, 2013). Following this last framework, it is possible to
compare customers fairness perceptions proposing in the survey two possible
scenarios, one with high, the other one with low procedural fairness. The formulated
hypothesis would be then:
Hp2: When companies are transparent about pricing, customers perceive fairness
more positively.
3.4 The links between customers perceptions and repurchase intention
Repurchase intention has been widely researched in the past but mostly using
stochastic and deterministic approaches to customer retention analysis (Ehrenberg,
1988; Howard, 1977; Lilien et al., 1992). One of the first and most cited works that
used a comprehensive, empirically tested, structural model of the customer
retention process was the one made in 2002 by Hellier, Geursen, Carr, Rickard. In
their general structural equation model, they take in account several variables,
which are:
a. Brand preference: The extent to which the customer favors the designated
service provided by his or her present company, in comparison to the
designated service provided by other companies in his or her consideration set.
b. Expected switching cost: The customers estimate of the personal loss or
sacrifice in time, effort and money associated with the customer changing to
another service provider.
c. Customer loyalty: The degree to which the customer has exhibited, over recent
years, repeat purchase behavior of a particular company service; and the
significance of that expenditure in terms of the customers total outlay on that
particular type of service.
d. Customer satisfaction: The degree of overall pleasure or contentment felt by the
customer, resulting from the ability of the service to fulfill the customers desires,
expectations and needs in relation to the service.
20
e. Perceived value: The customers overall appraisal of the net worth of the service,
based on the customers assessment of what is received (benefits provided by
the service), and what is given (costs or sacrifice in acquiring and utilizing the
service).
f.
Before their study, customer satisfaction was supposed to be a major driver for
repurchase intention (Anderson and Sullivan, 1993; Bolton, 1998; Cronin and Taylor,
1992; Fornell, 1992; Oliver, 1980; Patterson and Spreng, 1997; Rust and Zahorik,
1993; Selnes, 1998; Swan and Trawick, 1981; Taylor and Baker, 1994; Woodside et
al., 1989). However, as the authors criticize, that is only one of the many variables
that can impact upon customer repurchase intention. Eventually, the study findings
are astonishing: customer satisfaction influences repurchase intention only indirectly,
via brand preference as intervening variable. Moreover, the study found that
perceived value is more important than customer satisfaction as a factor influencing
brand preference. Not only: in general, perceived value may well have a greater
direct effect on brand preference than either loyalty or expected switching costs.
Most importantly, the researchers found a positive correlation between perceived
equity and perceived value. In short, they summarize: the study suggests that
organizations need to orientate their strategies towards superior customer value and
equity delivery. The implication is that when programs are being developed to
attract potential long-term customers, management needs to identify exactly what
customers do value and how to continuously create net worth for them. To retain
customers, management strategies also need to concentrate on, and improve,
customers perceived fairness and justice of the service. Given this last authors
statement, the present study finds fully legitimate to hypothesize a more direct
positive correlation between fairness and repurchase intention, and a negative
correlation between greediness of the company and repurchase intention. The
hypothesis can be then formulated as the following:
Hp3: An increase in perceived fairness affects positively customers repurchase
intention.
21
Hp4: Customers attitude toward the pricing policy is positively correlated with their
repurchase intention.
Hp5: An increase in perceived greediness of the company affects negatively
customers repurchase intention
3.5 Transparency as moderator of repurchase intentions
The meaning of word transparency refers to when companies provide a cost
explanation for price differences. In 2003, Bolton had already demonstrated that
providing detailed information regarding costs could have a modest positive
influence on consumers ability to estimate profits. Interestingly, the role of
transparency is controversial in literature. While Ferguson, Ellen and Bearden (2013)
and Hellier (2002) stress the importance of having a high procedural fairness and
showing it to customer as much as possible, on the contrary, according to Grewal,
Hardest and Iyer (2004), When the firm highlights price differences with a cost
explanation, an individual may be more likely to make negative external attributions
about the firm. In 2003 instead, Bolton demonstrated that providing detailed
information regarding costs could have a modest positive influence on consumers
ability to estimate profits. In this case, consumers would like to know price
differences are present as it enables them to better evaluate the goodness of the
offer. More specifically, Grewal demonstrates that when there are internal negative
attribution regarding the firm, cost explanations help lessen the negative effects
associated with the segmentation-based pricing tactic. On the contrary, firms need
not to emphasize cost increases if the attributions being made by customers are
likely internal. Following Grewals findings, the present study tries to use
transparency as moderator of repurchase intention, using a pricing tactic that makes
external attributions toward the customer. The hypothesis can be then formulates as
the followings:
Hp6: Transparency moderates the relationship between perceived fairness and
repurchase intention, such that when companies have transparent pricing the
positive effect is stronger
22
23
4. Methodology
This chapter will describe the methodological approach and provide underlying
rationales for the choices made. Specifically, this chapter will focus on the research
approach, experimental design, construct measurement, sampling and analytical
procedure.
4.1 Research approach
In order to test the hypothesis formulated in the previous chapter, this study follows
an experimental research approach. Respondents were randomly and evenly
assigned to one of the two scenarios conditions for each economy sector taken in
consideration in the conceptual model. The two possible scenarios differed by the
transparency policy adopted in communicating the reasons behind the RM strategy
introduction in the offer. By manipulating the variables of interest (Transparency of
RM strategy introduction in the offer and economy sectors) in a controlled setting,
experimental research ensures high internal validity of results as it rules out
alternative explanations for the observed findings (Bryman, 2004). Consequently,
experimental research allows for the identification and interpretation of causal
effects, which would otherwise be difficult to ascertain via observations of real world
events (Bryman, 2004). The high standardization reached in building the eight
scenarios (a transparent and a not transparent one for each one of the four
sectors), the consistent use of scales in the measurement process, and the order
randomness in showing scenarios and scales allow great comparability within the
model.
The scenario-based experimental approach is also in line with methodologies
employed in prior research on customer behavior (Haenlein & Kaplan 2010, 2011a,
2011b, 2012), and tends to work well as it puts the respondent in a potential real
purchasing situation (Smith, Smith, & Allred, 2006). It also makes easier to
understand the following questions as it gives context and purpose to them.
Scenarios can be also tailored to the single respondent, giving a certain degree of
customization, and thus improving the readability and comprehension of the context
and the following questions. A better explication will be given in the next
subchapters.
24
questionnaire, which was administered via the Internet. The following subsections
present the survey platform selected to create the instrument, and provide
information on pre-tests as well as the final structure of the questionnaire.
4.2.1 Choice of the survey platform
The experiment was set up using the tools of the online survey platform
www.qualtrics.com. Online survey platforms have several advantages. First of all,
Qualtrics lets the user organizing questions grouping them in blocks. Then, through
the randomization logic is possible to show or not to show block to respondents.
This perk allows the single-factor experimental design; in fact, the survey built for
this study generated eight different blocks, but no one respondent answered to all of
them at the same time. Randomization is an important perk for another reason too. It
allows to show questions and blocks in a different order for each respondent: this
comes very useful in avoiding biased answers for questions asked at the very end of
the questionnaire, when a respondent might be tired and less focused. Thanks to
randomization, the average time spent in answering each block tends to be uniform.
Another interesting tool is text piping: it allows to reference previous answers in the
following questions/scenarios, making them unique and tailored for each
respondent. For instance, in this studys survey one of the scenarios was located in
a gas station, and Qualtrics could add in its description text the actual name of the
most known gas station brand in the mind of the respondent, since it had been
asked in a question before. Another customization perk present in Qualtrics is geotargeting: the software reads respondents devices IP address, and track their
longitude and latitude. Therefore, the scenario description text can specify the city
or country in which respondents live. Another interesting perk is the skip logic
functionality. This allows the creation of eligibility checks. They are like entrance
gates to scenarios: if a respondent does not succeed the question test, a certain
scenario will not be showed to him. This increases the validity of the study, because
it allows only those respondents who know what the product or service is about to
1
Only the transparency in introducing the RM strategy in the offer was manipulated across
experimental groups. Respondents were randomly assigned to one of two levels
representing transparency and not transparency in the RM strategy.
25
answer the related questions, reducing random responses. Online survey platforms
have improved accessibility too: in fact, Qualtrics includes a translator that allows
the creation of multiple languages surveys. Also, it is possible to add images in the
survey, making the questions more language-free and more readable. An example is
the heat map question type: respondents are showed an image in which they just
need to click on it; then the software will show to the researcher the hottest and more
clicked parts of the image. Qualtrics is mobile friendly too: the layout is automatically
optimized for any device running a standard browser. This improves surveys
conversion rate. Finally, Qualtrics provides by default an automatized tool that
makes basic analysis (it calculates mode, mean, variance, standard deviation, but
also cross variable analysis) and comes useful when there is no need of advanced
statistical analysis softwares. In conclusion, online survey platforms make the survey
process much faster and cost efficient, and above all they allow an increased
standardization of results, as it is possible to randomize blocks and questions.
4.2.2 Pre-testing
In order to gain access to a broader sample, the experiment was designed in both
English and Italian language. Respondents were able to indicate their desired
language in the introductory section of the survey instrument. In order to ensure
comparability of results across languages and minimize translation bias, a bilingual
tested the survey questions and scenario descriptions within the scope of a pre-test
(cf. Cooper & Schindler, 2006). Minor adjustments were made to the wording, before
a second pre-test round with six respondents was launched to identify potential
hindrance to the effective data collection process (cf. Cooper & Schindler, 2006).
They spotted as major issues the excessive length and excessive question
randomization, that made the survey a bit confusing. Therefore, a fine tuning was
made in order to fix those issues. The number of questions showed were reduced
by 25% and the randomization limited to blocks and questions. The items order was
not randomized. The forecasted churn rate was estimated to be around 20%. The
estimated survey duration was eleven minutes.
4.2.3 Structure of the survey instrument
Table 2 illustrates the logical flow and structure of the survey instrument. The first
two steps welcomed the respondent to the survey, thanked him in advance for his
26
participation, and explained to him the purpose of the study, the survey flow and
scenarios procedure. Consequently, the survey formally started with the eligibility
checks: in this block there were four questions, one for each economy sector, that
asked the respondent whether he had already a purchasing experience with the
Welcome page
Introduction to
the experiment
Explication of the purpose of the study and the underlying variables, the
survey flow and type of questions expected. Invitation to empathize with the
scenarios
Eligibility
checks
Scenario
introduction
Provision of
additional
information on
the pricing
policy adopted
(Even
distribution)
Additional information
provided: transparency
of pricing policy
Fairness
Constructs,
randomly sorted
No additional
information provided:
intransparency of pricing
policy
OR
Fairness
Greediness of the
company
Greediness of the
company
Repurchasing intention
Repurchasing intention
Demographic
questions
Participation in
raffle
product or service object of the scenario. If he had not, the skip logic did not show
to him the scenario he was not eligible for. In the hypothetical case in which the
respondent was not eligible for none of the scenarios, he would have skipped
directly to the demographic block. Only age, income and education level were
27
asked there. When eligibility checks succeeded, the following path would have
been shown to the respondent, for each of the four economy sectors: scenario
description and three out of four constructs, that are perceived fairness, attitude
towards the pricing policy, greediness of the company, and repurchasing intention.
Thanks to the randomization logic, the questions were evenly distributed. That
guaranteed a balanced response number for each question (please refer to the next
subchapter for the measurement scales adopted).
Specifically, the scenario description followed a standardized scheme. In the first
two or three lines, it reminded the respondent how past purchasing experience had
been, giving a reference history price he could compare from. Then, the scenario
story brought the respondent to purchase again the same product or service, but
with different price setting, due to the introduction of dynamic pricing strategies. Of
course, when applicable, piped text and geo-targeting were used, in order to make
the purchasing experience more realistic and to identify the respondent with the
scenario story (Smith et al., 2006). Finally, each sector had two possible description
endings. In the first one, a few lines were added at the end of the text, in which the
reasons behind the price change were explained. In the second one, no further
explication was given, and scale items started straight after. The two possible
scenarios, called transparent and not transparent ones, were evenly distributed.
A section with demographic questions concluded the experiment. Only age, annual
net income and educational level were asked. The rather sensitive nature of such
questions led to the decision to place them at the end of the survey (Cooper &
Schindler, 2006). Those wishing to participate in a raffle of 5 x 10 Zalando and 5 x
20 Blacklane vouchers were invited to submit their email address at this point. The
vouchers were given away to incentivize participation. Following Frick, Bchtiger,
and Reips (2001), such incentivization also serves to reduce dropout from the
survey. Upon completion of the questionnaire, respondents received a last Thank
you! note that highlighted the value of their contribution and reassured them of the
confidentiality of all data (cf. Cooper & Schindler, 2006).
For more detailed reference, the full questionnaire in English in language is available
in the appendix.
28
9. Satisfactory
10. Acceptable
In the present study, the items #4, #5, #9 and #10 were not used, after pre-testing
suggesting that the items were redundant. The construct itself appeared to pretesters somehow boring because of the too many items. Eventually however, the
balance between reverse and not reverse items was respected. Also, at the contrary
to previous studies, respondents were asked to give answer using a 5-Point-LikertScale (instead of 7 point). Respondents rated their agreement ranging from
strongly disagree (1) to strongly agree (5). Finally, the stem employed was the
same used by Kukar-Kinney, Xia, and Monroe (2007) in study 2 when they measured
price fairness. It was the following: "I think the price I would have to pay if I bought
the product from this store would be.
4.3.2 Attitude toward the pricing policy
The scale is composed of unipolar items that are intended to measure a person's
opinion of a company's pricing strategy. The scale was used by McGraw, Schwartz,
and Tetlock (2012) in Study 7. The source of the scale was not stated and was
probably created by them for the study. Participants in that study were 237
undergraduate students. The scale's alpha was 0.81. The scale items were the
following:
1. This is a fair pricing strategy.
2. I support the use of this pricing strategy.
3. I am upset by this pricing strategy. (r)
Again, at the contrary to McGraw, Schwartz, and Tetlock studies, respondents were
asked to give answer using a 5-Point-Likert-Scale (instead of 7 point). Respondents
rated their agreement ranging from strongly disagree (1) to strongly agree (5).
The stem used was: My opinion regarding their pricing policy is. It represents an
original implementation, since it was not employed in the aforementioned studies.
4.3.3 Greediness of the company
The scale is composed of three, seven-point Likert-type items that measure the
extent to which a customer questions the motives of a particular business entity
because of the belief that it took advantage of him/her. Although Grgoire, Laufer,
30
and Tripp (2010) drew inspiration from studies by Campbell (1999) as well as
Reeder et al. (2002), the scale seems to be original to them. Due to the importance
of this construct to their studies, they gave special attention to its measurement. The
authors used CFA to make sure that the measure of greed was distinct from those
measuring trust and blame. The tests supported the unidimensionality and
distinctiveness of the greed scale. Alphas of .90 and .92 were reported by Grgoire,
Laufer, and Tripp (2010) for the scale in Studies 1 and 2, respectively. The scale
items were the following:
1. The firm: did not intend to take advantage of me / intended to take advantage of
me.
2. The firm was primarily motivated by: my interest / its own interest.
3. The firm: did not try to abuse me / tried to abuse me.
4. The firm had: good intentions / had bad intentions.
Keeping consistency with previous constructs, a 5-Point-Likert-Scale was used.
4.3.4 Repurchase intention
The scale is composed of unipolar items that are intended to measure a persons
likelihood of buying a particular brand of product again. While this measure may be
tapping into some aspects of loyalty, it does not seem to be directly measuring that
construct. Although not explicitly stated, Heitmann, Lehmann and Herrmann (2007)
appear to have developed this scale after drawing inspiration from a variety of past
measures. Speaking of reliability, the Cronbachs alpha for the scale was 0.81. Using
confirmatory factor analysis (CFA), the researchers provided evidence of
convergent and discriminant validity for the scale. The scale items were the
following:
1. It is very likely that I would purchase this same product again
2. I am willing to pay a price premium over competing products to be able to
purchase this product again
3. I would only consider purchasing this product again, if it would be substantially
cheaper (r)
4. Commercials regarding competing brands are not able to reduce my interest in
buying the same product again
31
5. I would purchase this product again, even if it receives bad evaluations by the
media or other people
Again, to keep consistency with previous constructs, respondents were asked to
give answer using a 5-Point-Likert-Scale (instead of 7 point like previous studies).
Respondents rated their agreement ranging from strongly disagree (1) to strongly
agree (5). The stem used was: My opinion regarding my repurchase intention is. It
represents an original implementation, since it was not employed in the
aforementioned studies.
32
Construct
Fairness
Origin
Haws and
Bearden
(2006)
derived
from
Darke and
Dahl
(2003)
and Xia
and
Monroe
(2004)
Measurement items
I think the price I would have to pay if I bought
the product from this store would be
Scale
Reliability
(Cronbachs
alphas)
1-5
0.89 to 0.93
1-5
0.81
1-5
0.90 to 0.92
1-5
0.81
1. Fair
2. Unreasonable (r)
3. Honest
4. Unacceptable (r)
5. Questionable (r)
6. Justified
Attitude
toward the
pricing
policy
Greediness
of the
company
McGraw,
Schwartz,
and
Tetlock
(2012)
Grgoire,
Laufer,
and Tripp
(2010)
Repurchase Heitmann,
intention
Lehmann
and
Herrmann
(2007)
33
An intelligence quotient, or IQ, is a score derived from one of several standardized tests
designed to assess human intelligence. The human population has an average score of 100,
normally distributed. The Mensa association has only members with a score equal or above
132. The standard deviation is 15. (Source: Wikipedia)
34
case, since sample age and income resulted normally distributed), then the second
sample group generated from the Mensa association can be representative of the
Italian population.
4.4.2 Sample Characteristics
The survey was started by 433 respondents. 120 of them were excluded from further
analysis because they did not completely answer the questionnaire. The completion
rate was therefore of 72,3%. Out of 313 completed questionnaires, the first sample
group (students and friends) had an average age of 25.5 years old and was
composed of 103 respondents; the second sample group (Mensa Italian members)
of 39.9 years old and 210 respondents. In addition to not completed questionnaires,
27 more were excluded because respondents took a too little time to answer. More
specifically, any questionnaire answered in less than 6.5 minutes was excluded. The
average response time without outliers was 11 minutes and 50 seconds. In
conclusion, 284 questionnaires were taken in account for further analysis.
Consumer goods
Digital services
Healthcare
Utilities
98%
49%
100%
94%
Eligibility check
success
rate
Transparency
Transparent
Not
transparent
Transparent
Not
transparent
Transparent
Not
transparent
Transparent
Not
transparent
Fairness
101
99
59
52
99
97
99
98
Attitude
toward
the
pricing
policy
103
97
50
55
100
99
101
94
Greediness of
the
company
122
108
59
49
111
115
102
109
Repurchase
intention
105
104
54
58
101
97
103
91
Table 4 gives more insights about eligibility rate, number of responses by construct
and by economy sector. Digital services resulted the least known sector, as only the
35
49% of respondents have experienced an Uber ride (see the Appendix to read
scenarios descriptions). Healthcare was the only sector that had a 100% eligibility
rate. This because the eligibility check was built in order not to allow a check failure.
The assumption behind was that everyone has experienced a medical analysis at
least once in life. Finally, it is worth to remind that respondents were not shown each
one of the four constructs, but only three of them, randomly and evenly distributed.
4.5 Analytical procedure
The analytical procedure covers the most part of a standard quantitative research
approach. It begins with screening and cleaning the data collected through the
survey. Then, latent variables are individuated, and consistency and validity of the
model are confirmed. Path analysis of the constructs and multi-groups moderation
follow. There is also a part of the analysis not required in quantitative research: it
consists of t-tests made among constructs for each of the economy sectors studied.
4.5.1 Case screening
In addition of the uncompleted responses, another problem has been addressed.
That is unengaged responses. As Gaskin (2014) said, if respondents exhibit a very
low standard deviation (like less than 0,500 on a 5-point scale, or 0,700 on a 7-point
scale), then they are probably not paying attention, and their responses are useless
anyway since they don't exhibit any variance. The present study addresses the
problem eliminating any scale that exhibited variance inferior to 0,450 (all construct
are measured with a 5-point-scale). No analysis on outliers was necessary, since
likert scales accept as normal every response made in the scale.
4.5.2 Variable screening
The data used for this study suffered the missing values issue. In fact, for each
economy sector, respondents were exposed to only three out of four constructs.
That implied the non feasibility of a grouped path analysis, since there was no row in
the database in which there was a response for all the construct items. In order to
the address the problem and build only one path analysis instead of three for each
sector, several solutions to replace the missing values were evaluated:
a. Linear interpolation.
More sophisticated than using median or mean averages, it assured the
36
37
Before starting the exploratory factor analysis, all the constructs were compared to a
fixed value (i.e. the scale mean = 3,00) and to each other. Using the additive
technique, the mean of each variable was calculated, and then the construct mean
was calculated using the mean of each variable. Then, t-student test were made, in
order to assess the statistically significant difference between the construct means.
This gave some exploratory insights about how consumer perceptions differ
depending on the economy sectors.
4.5.4 Structural model
Following these preliminary insights and tests, the study employed a Partial Least
Squares (PLS) estimation procedure to test the conceptualized path model. As
nicely explained by Brandt (2014), The PLS approach belongs to the family of
structural equations models and represents an efficient multivariate estimation
techniques for the analysis of complex relationships among various variables
(Haenlein & Kaplan, 2004). Conceptually, structural equation models constitute
formal systems of equations that express theoretical models of causal effects
between variables of interest. Complex PLS analysis first emerged during the 1970s
(Wold, 1975) and has recently experienced increased application in research
especially as it is most suitable when alternative SEM approaches may have their
limitations (Haenlein & Kaplan, 2004). It can best be described as a multi-step
estimation procedure that first derives construct values for latent variables from the
data set by weighing their underlying measurement items in a way that minimizes
the observed variance in the indicators (Haenlein & Kaplan, 2004). The resultant
scores are subsequently used as inputs for regression analyses to estimate the
parameters of the structural model. In contrast to covariance-based SEM
procedures (e.g. LISREL or AMOS), PLS analysis minimizes the variance of
measurement errors and constructs to closely approximate the underlying data
structure. It is thus also referred to as a variance-based type of SEM analysis.
The decision to use PLS instead of covariance-based types of SEM was driven by
several advantages that literature on the issue has pointed out. A major driver for
this choice was the relatively small number of observations for each one of the path
analysis to run (ranging from 29 to 55 observations). Whilst covariance-based SEM
approaches require minimum sample sizes of n > 100 (some even call for sample
38
sizes greater than n = 200), PLS has been shown to be applicable for much smaller
samples (Haenlein & Kaplan, 2004). In fact, Chin, Marcolin, and Newsted (1996)
specify the minimum sample size for PLS models to be ten times the greater of (1)
the scale with the largest number of formative (i.e. causal indicators) [...] or (2) [...]
the largest number of structural paths directed at a particular construct in the
model. For the path model under consideration, following this rule of thumb leads to
a minimum sample size ranging from 60 to 30, that this study has respected. An
additional advantage of PLS estimation lies in the fact that it does not assume
specific distributional characteristics for the sample data, but instead relies on
bootstrapping to allow for inferential statistics (Henseler, Ringle & Sinkovic, 2009).
As such, not multi-normally distributed variables do not represent a problem for the
highly robust PLS estimation technique. The conceptualized model could
alternatively have been estimated in a piecemeal fashion, using separate unilateral
ordinary least squares regressions on the variables. However, structural equations
modeling represents a much more efficient approach as it simultaneously considers
all of the models measurement items, observed and latent variables, as well as the
hypothesized paths among them (Haenlein & Kaplan, 2004). Accordingly, PLS does
not restrict variables to be either independent or dependent, but allows for
interdependencies and intervening variables. Of course, before testing correlations
among variables, an exploratory factor analysis was made in order to discover latent
variables and to assess measurement scales reliability and discriminant validity.
Finally, a multi group moderation was run between transparent and not
transparent scenarios. All the hypothesis about correlation and moderation were
tested through bootstrapping.
39
5. Results
Preliminary analyses and statistical tests were conducted with the software package
SPSS 22. The path model was estimated using SmartPLS, which was developed by
Ringle, Wende, and Will (2005). The level of significance for hypothesis rejection
was defined as the 5% threshold of strong statistical evidence (Bowerman,
O'Connell, & Murphee, 2008).
5.1 Preliminary analysis
5.1.1 T-tests vs. fixed mean
The first part of the analysis process consisted of assessing differences in the
constructs means versus the scale mean, which was 3.00. The purpose of these
tests was to understand whether consumer perceptions are in average negative or
positive for each construct and for each sector. Table 5 below shows the results. In
general, overall consumers perceptions are not positive toward the introduction of a
dynamic pricing system in the product/service offer. The majority of the tests (23 out
of 32, or 72%) expressed negative perceptions. Digital services in particular
suffered the smallest averages. At the contrary, utilities was the sector that
performed better, with only three constructs out of eight that showed negative
perceptions. It is also interesting to notice that in a mathematical sense (not yet
statistical, which will be assessed in the next paragraph) perceptions improve in a
certain degree thanks to the transparent scenario. Again something interesting to
notice is that, whilst according to the theory an increase of procedural fairness
(transparency) positive correlates with fairness perceptions, on the contrary
transparency negatively correlates in digital services sector for the greediness of the
company construct. For all the other ones though, the correlation remains positive.
Speaking of single constructs, fairness and attitude toward the pricing policy
performed better, with four negative perceptions out of eight each. On the other
hand, repurchase intention was the only one that suffered only negative perceptions
for each one of the eight averages.
The next paragraph will assess instead all the statistical differences among the
constructs. It has basically the purpose of ascertaining all the assumptions made in
the current paragraph.
40
Consumer
goods
t-test
Digital
services
t-test
Transparent
2,94
41,77%
2,54
0,06%
Fairness
Not
transparent
2,80
2,57%
2,43
0,00%
Attitude
toward the
pricing
policy
Transparent
2,80
6,64%
2,53
0,08%
Not
transparent
2,58
0,01%
2,29
0,00%
Greediness
of the
company*
Transparent
3,43
0,00%
3,71
0,00%
Not
transparent
3,62
0,00%
3,63
0,00%
Transparent
2,61
0,00%
2,13
0,00%
Not
transparent
2,51
0,00%
2,27
0,00%
t-test
t-test
30,34%
Utilities
3,40
0,00%
Repurchase
intention
Transparent
Healthcare
3,10
Fairness
Not
transparent
2,56
0,00%
2,89
17,86%
Attitude
toward the
pricing
policy
Transparent
3,01
91,99%
3,51
0,01%
Not
transparent
2,51
0,00%
3,04
74,31%
Greediness
of the
company*
Transparent
3,53
0,00%
2,98
79,48%
Not
transparent
3,61
0,00%
3,33
0,02%
Repurchase
intention
Transparent
2,62
0,00%
2,69
0,00%
Not
0,00%
0,00%
2,61
2,68
transparent
*Greediness of the company is the only reverse construct: the higher the value, the more negative
the respondent`s perception
Test treshold: 5%
values negative perceptions/intentions
values positive perceptions/intentions
not significant differences - neutral perceptions/
values
intentions
Table 5: T-Tests Of Means Vs Fixed Value (3,00)
41
42
43
44
45
46
47
48
Table 11: Cross Factor Analysis For The Consumer Goods And Digital Services Outer Models
49
Table 12: Cross Factor Analysis For Healthcare And Utilities Outer Models
50
point of 0.4 (Henseler et al., 2009). Beyond this, all associated t-statistics3 are highly
significant, which lends additional support to the reliability of the measurements
employed. In addition to criteria of internal consistency, reflective measurement
models need to be evaluated in terms of their validity. In particular, construct validity
encompasses both convergent and discriminant validity considerations. As a
measure of convergent validity (unidimensionality), the average variance extracted
(AVE) describes how well a variable explains its indicators. Following Henseler et al.
(2009), a good construct should, on average, be able to explain at least half of the
total variance of its reflective measurement items (AVE 0.5). In this light, the
measurement model exhibits highly satisfactory results (average AVE = 0,560).
Apart from good performance in terms of convergent validity, all of the endogenous
latent constructs possess high discriminant validity, as is illustrated by an analysis of
cross-loadings (see Tables 11 and 12 above). The tables showed that the factor
loading was always greatest for the associated construct (Chin 1998; Gtz, LiehrGobbers, & Krafft, 2009; Henseler et al, 2009).
Even though the Fornell-Larcker Criterion4 was not calculated in the present study,
these results provide overall strong evidence for the appropriateness of the outer
model. Having established reliable and valid measures, the key condition for
ensuing interpretations of structural model results is satisfied.
5.2.2 Structural model evaluation (inner model)
Before interpreting path coefficients, Henseler et al. (2009) caution to evaluate the
inner models goodness-of-fit. Tenenhaus, Esposito Vinzi, Chatelin, and Lauro (2005)
suggest the geometric mean of average AVE and R-Square values to represent a
global goodness-of-fit (GoF) index for estimated PLS models (reported in Table 13)
(cf. Wetzels, Odekerken-Schrder & van Oppen, 2009; Vidal, 2012). Following the
authors classification scheme (>0.36 = substantial; >0.25 = moderate; >0.1 =
weak) the hypothesized model possesses good overall fit (Average GoF = 0.369 >
0.36).
3
The analysis consists of assuring that the AVE for each of the endogenous latent variables
is greater than the squared correlation of the other latent variables. Thus, the variance
explained by a construct should thus be highest for the reflective measurement items
associated with it.
51
Path
AVE
GoF
0,437
0,572
0,500
0,447
0,543
0,493
Greediness
0,097
0,685
0,258
Fairness
0,199
0,480
0,309
0,432
0,473
0,452
Greediness
0,189
0,567
0,327
Fairness
0,355
0,529
0,433
0,305
0,596
0,426
Greediness
0,280
0,520
0,382
Fairness
0,200
0,617
0,351
0,414
0,589
0,494
0,200
0,490
0,313
AVE
GoF
0,142
0,416
0,243
0,283
0,609
0,415
Greediness
0,290
0,510
0,385
Fairness
0,325
0,686
0,472
0,145
0,718
0,323
Fairness
Consumer Goods
Digital Services
Healthcare
Utilities
Pricing policy
Pricing policy
Pricing policy
Pricing policy
=>
=>
=>
=>
Repurchase intention
Repurchase intention
Repurchase intention
Repurchase intention
Greediness
Controlled / Not transparent inner model
Sector
Path
Fairness
Consumer Goods
Digital Services
Pricing policy
Pricing policy
=>
=>
Repurchase intention
Repurchase intention
Greediness
Fairness
Healthcare
Utilities
0,241
0,460
0,333
0,275
0,684
0,434
Greediness
0,038
0,464
0,133
Fairness
0,198
0,561
0,333
0,390
0,631
0,496
0,061
0,533
0,180
Pricing policy
Pricing policy
Greediness
=>
=>
Repurchase intention
Repurchase intention
Hypothesized / Transparent
SE
0,661
0,677
0,065
10,134
0,000
0,667
0,704
0,084
7,942
0,000
-0,306
-0,328
0,197
1,559
0,120
0,446
0,545
0,191
2,338
0,020
0,657
0,691
0,190
3,460
0,001
Greediness
0,435
0,424
0,357
1,218
0,224
Fairness
0,596
0,641
0,059
10,079
0,000
0,553
0,610
0,149
3,721
0,000
Greediness
-0,530
-0,600
0,074
7,149
0,000
Fairness
0,447
0,493
0,134
3,338
0,001
0,644
0,676
0,093
6,904
0,000
-0,447
-0,472
0,166
2,700
0,007
Fairness
Pricing policy
=>
Repurchase
intention
Greediness
Fairness
Pricing policy
Healthcare
Pricing policy
Pricing policy
Utilities
=>
=>
=>
Repurchase
intention
Repurchase
intention
Repurchase
intention
Greediness
Original
Sample
Coeff.
SE
0,376
0,276
0,446
0,844
0,399
0,532
0,573
0,082
6,510
0,000
Greediness
-0,538
-0,572
0,077
7,007
0,000
Fairness
0,570
0,612
0,126
4,533
0,000
0,380
0,449
0,311
1,221
0,223
Path
Fairness
Digital
Services
Pricing policy
Pricing policy
=>
=>
Repurchase
intention
Repurchase
intention
Greediness
Fairness
Healthcare
Utilities
Bootstrap samples
Coeff (w)
Sector
Consumer
Goods
Coeff.
Path
Digital
Services
Coeff (w)
Sector
Consumer
Goods
Bootstrap samples
0,491
0,553
0,095
5,176
0,000
0,525
0,558
0,139
3,772
0,000
Greediness
-0,196
-0,142
0,384
0,510
0,611
Fairness
0,445
0,477
0,205
2,167
0,031
-0,625
-0,646
0,155
4,029
0,000
0,247
0,289
0,256
0,964
0,335
Pricing policy
Pricing policy
Greediness
=>
=>
Repurchase
intention
Repurchase
intention
54
55
only has a significant effect, but also inverts the sign. Specifically, when the scenario
is not transparent, the correlation between attitude toward the pricing policy and
repurchase intention becomes negative. On the contrary, the correlation between
greediness of the company and repurchase intention becomes positive when the
company has a not transparent pricing. These two exceptions are clearly against
logic and not consistent with the other results. The factor that most probably caused
them was a failure in the PLS model construction and reflective indicators selection.
In the case the second exception however, that more simply happened because
one of the path was already not working or without significant effect (t= 0,335), and
therefore affected the moderation giving weird results. Conversely, assuming that
the PLS model worked well, then the cause has to be found in the survey and more
precisely in the scenario description. Probably some involuntary mistakes produced
a bias that changed completely the mind of the consumer. The message of
increased procedural fairness and other-attribution (vd. Chapter 3) did not pass, but
even worse the increased transparency backfired the company. If this was true
however, the effect between fairness and repurchase intention should have changed
as well, but it did not happen, increasing the inconsistency of the two exceptions.
No significant differences were found when economy sectors moderate, and anyway
this was just an exploratory analysis, not covered by the hypothesis built in chapter
3. For reference, the table showing the calculation can be found in the appendix.
56
6. Discussion
This chapter concludes the study. After concisely reporting the findings, the most
relevant managerial implications will be exposed. Furthermore, limitations pertaining
to this studys methodological choices and research scope will be pointed out along
with further avenues for research.
6.1 Summary of findings
Table 16 summarizes the research findings. On the contrary of what expected, Hp1
has been rejected. Consumers tend to perceive more fair an introduction of demand
management pricing techniques in sensible sectors like utilities. The controversial
finding is even more accentuated by the fact that the digital services sector had the
poorest results in terms of perceived fairness. However, more transparency in the
pricing offer demonstrated to improve fairness equally across every sector. Thus,
Hp2 is supported. Speaking of the structural model, all the direct effects have been
either strongly or partially supported. Hp4 tends to be the most supported one,
Hypothesis
Hp1
Result
Rejected
Hp2
Supported
Hp3
Supported
Hp4
Customers attitude toward the pricing policy is positively correlated with their
repurchase intention
Supported
Hp5
Partially
supported
Hp6
Rejected
Rejected
Rejected
Hp7
Hp8
since the positive correlation between attitude toward the pricing policy and
repurchase intention had the highest R-square, when controlling by both economy
sector and degree of transparency. By the way, Hp3 is supported almost as much
as Hp4, since all the path coefficients were at the same level, with the exception that
Hp3 failed one t-test more. More concerns upon Hp5 validity raised, since a
negative correlation between greediness of the company and repurchase intention
did not provide robust results when controlling by degree of transparency. Anyway,
the correlation is supported in the hypothesized model. Speaking of moderation
effects, the analysis showed that transparency never moderates between the
constructs objects of the study. Therefore, Hp6, Hp7 and Hp8 have been rejected.
However, when moderation is controlled by economy sector, transparency gave
strong results for the utilities sector, even inverting the correlation signs for attitude
toward the pricing policy and greediness of the company. It is important to notice
though, that these results are controversial and exceptional. Therefore they cannot
support Hp7 and Hp8.
6.2 Managerial implications
Speaking of perceived price fairness of revenue management techniques, this study
pretty much disrupted our previous beliefs and stereotypes about consumer
behavior. The most important lesson learned is that we cannot know until we
discover it: an enterprise should not be afraid of introducing a dynamic pricing
system only because managers believe that customers will feel deceived for that. In
fact, sensible sectors like healthcare and utilities, in which there are public interests
too, showed to be ready to receive a flexible pricing more than consumer goods or
digital services. The suggestion of this study is that consumers do not bother to pay
different prices for the same product or service, if companies give the right
motivations for doing that, and convince consumers of not being opportunists. The
study showed that there is a great potential for companies to improve the bottom
line through demand management pricing, if they are good at communicating why
and how they do it. If companies manage to persuade customers of trying to
provide a better service, or because they are obliged to change prices, or they can
shift attribution of increased profits to other entities, the degree of perceived fairness
can shift up to one standard deviation, as the present study demonstrates. The
58
59
the present study. Also, scenarios might be biased by the researcher, and therefore
respondents might be influenced. Thirdly, the way the questionnaire has been built
did not allow to run a PLS analysis among more than two constructs at a time. Of
course it would be very interesting to know whether there are interaction or
mediation effects among fairness, attitude toward the pricing policy and greediness
of the company.
6.4 Conclusion
This study gave some suggestions on how to make transaction-based and
relationship-based pricing strategies compatible. The current problem in business is
in fact that companies are missing profit opportunities because scared of
customers reactions when using dynamic pricing strategies. This study contributed
to this matter making companies understand that every industry is potentially
eligible for adopting revenue management techniques without jeopardizing the CLV,
as long as companies focus on being transparent in the pricing policy and
persuade customers to be in good faith. The near future is expected to see more
and more industries adopting dynamic pricing systems in their offer, still maintaining
customers happy. There are nowadays more and more exigent customers, but also
many opportunities to profile more precisely customer segments and discover
purchase behavior by analyzing Big data. The revenue management revolution
occurred in the airline industry in the 80 because advanced software allowed them
to do that, and managers were brave enough to introduce that innovation. The next
big pricing revolution is about to come, because new technologies allow it. The last
step is making managers brave enough again.
60
Bibliography
Anderson, E.W. and Sullivan, M.W. (1993), The antecedents and consequences of
customer satisfaction for firms, Marketing Science, Vol. 12 No. 2, pp. 125-43.
Austin, W., McGinn, N. C., & Susmilch, C. (1980). Internal standards revisited:
Effects of social comparisons and expectancies on judgments of fairness and
satisfaction. Journal of Experimental Social Psychology, 16(5), 426-441.
Bechwati, N. N., & Morrin, M. (2003). Outraged consumers: Getting even at the
expense of getting a good deal. Journal of Consumer Psychology, 13(4).
Benning, T. M., & Dellaert, B. G. (2013). Paying more for faster care? Individuals'
attitude toward price-based priority access in health care. Social Science &
Medicine, 84, 119-128.
Bolton, L. E., Warlop, L., & Alba, J. W. (2003). Consumer perceptions of price (un)
fairness. Journal of consumer research, 29(4), 474-491.
Bolton, R.N. (1998), A dynamic model of the duration of the customers
relationship with a continuous service provider: the role of satisfaction,
Marketing Science, Vol. 17 No. 1, pp. 45-65.
Boshoff, C. and Leong, J. (1998), Empowerment, attribution and apologising as
dimensions of service recovery, International Journal of Service Industry
Management, Vol. 9 No. 1, pp. 24-47.
Bowerman, B. L., O'Connell, R. T., & Murphee, E. S. (2008). Business Statistics in
Practice. New York: McGraw-Hill.
Brandt (2014). Insights into the Management of Unprofitable Customers. ESCP
Europe
Bryman, A. (2004). Social research methods. New York: Oxford University Press.
Campbell, M. C. (1999). Perceptions of price unfairness: antecedents and
consequences. Journal of marketing research, 187-199.
Campbell, M. C. (1999). PRICING STRATEGY & PRACTICE Why did you do that?
The important role of inferred motive in perceptions of price fairness. Journal
of Product & Brand Management, 8(2), 145-153.
Chen, H., Lee, Y. L., & Weiler, B. (2014). Exploring perceived fairness in hotel
service recovery: the case of Kingdom plaza, Wuhan. Asia-Pacific Journal of
Innovation in Hospitality and Tourism, 3(1).
Chin, W. W. (1998). The partial least squares approach to structural equation
modeling. In G. A. Marcoulides, Modern methods for business research (pp.
295-358). Mahwah, NJ: Lawrence Erlbaum Associates.
Chin, W. W., Marcolin, B. L., & Newsted, P. R. (1996). A partial least squares latent
variable modelling approach for measuring interaction effects: results from a
Monte Carlo simulation study and voice mail emotion/adoption study.
Proceedings of the Seventeenth International Conference on Information
Systems, (pp. 21-41). Cleveland (OH).
61
Cooper, D. A., & Schindler, P. S. (2006). Marketing Research. New York: McGrawHill.
Cronin, J.J. Jr and Taylor, S.A. (1992), Measuring service quality: a reexamination
and extension, Journal of Marketing, Vol. 56 No. 3, pp. 55-68.
Cross, R. G. (2011). Revenue management. Crown Business.
Damasio, A. R., & Sutherland, S. (1994). Descartes' error: Emotion, reason and the
human brain. Nature, 372(6503), 287-287.
David, M., & Sutton, C. D. (2011). Social research - an introduction. London: SAGE
Publications Ltd.
Denscombe, M. (2007). The good research guide for small-scale social research
projects. Maidenhead, Berkshire, England: Open University Press.
Ehrenberg, A.S.C. (1988), Repeat-Buying: Facts, Theory and Applications, new
ed., Charles Griffen and Company, London.
Ferguson, J. L., Ellen, P. S., & Bearden, W. O. (2014). Procedural and distributive
fairness: determinants of overall price fairness. Journal of business ethics,
121(2), 217-231.
Fornell, C. (1992), A national customer satisfaction barometer: the Swedish
experience, Journal of Marketing, Vol. 56 No. 1, pp. 6-21.
Frick, A., Bchtiger, M. T., & Reips, U. D. (2001). Financial incentives, personal
information and dropout in online studies. In U. D. Reips, & M. Bosnjak,
Dimensions of Internet science (pp. 209-219)
Garbarino, E., & Maxwell, S. (2010). Consumer response to norm-breaking pricing
events in e-commerce. Journal of Business Research, 63(9), 1066-1072.
Gaskin (2014). Gaskination's StatWiki. Wikipedia
Gebhardt, G. F. (2008). Social justice in marketing: Fairness, satisfaction and
customer lifetime value. Marketing Science Institute Special Report.
Gtz, O., Liehr-Gobbers, K., & Krafft, M. (2009). Evaluation of structural equation
models using the partial least squares (PLS) approach. In V. Esposito Vinci, W.
W. Chin, J. Henseler, & H. Wang, Handbook of partial least squares:
concepts, methods, and applications (pp. 691-712). Berlin: Springer.
Grewal, D., Hardesty, D. M., & Iyer, G. R. (2004). The effects of buyer identification
and purchase timing on consumers' perceptions of trust, price fairness, and
repurchase intentions. Journal of Interactive Marketing, 18(4), 87-100.
Haenlein, M., & Kaplan, A. M. (2004). A beginner's guide to partial least squares
analysis. Understanding Statistics, 3 (4), 283-297.
Haenlein, M., & Kaplan, A. M. (2010). An empirical analysis of attitudinal and
behavioral reactions toward the abandonment of unprofitable customer
relationships. Journal of Relationship Marketing, 9 (4), 200-228.
62
63
Lilien, G.L., Kolter, P. and Moorthy, K.S. (1992), Marketing Models, Prentice-Hall,
Englewood Cliffs, NJ.
Martins, M. O. (1995). An experimental investigation of the effects of perceived
price fairness on perceptions of sacrifice and value (Doctoral dissertation,
University of Illinois at Urbana-Champaign).
Maxwell, S. (2008). The price is wrong. Understanding what makes a price seem
fair and the true cost of unfair pricing, Hoboken.
McGraw, A. P., Schwartz, J. A., & Tetlock, P. E. (2012). From the commercial to the
communal: Reframing taboo trade-offs in religious and pharmaceutical
marketing. Journal of Consumer Research, 39(1), 157-173.
McMahon-Beattie, U. (2011). Trust, fairness and justice in revenue management:
Creating value for the consumer. Journal of Revenue & Pricing Management,
10(1), 44-46.
Milla, S., & Shoemaker, S. (2008). Three decades of revenue management: What's
next?. Journal of Revenue & Pricing Management, 7(1), 110-114.
Oliver, R.L. (1980), A cognitive model of the antecedents and consequences of
satisfaction decisions, Journal of Marketing Research, Vol. 17, November,
pp. 460-9.
Ordez, L. D., Connolly, T., & Coughlan, R. (2000). Multiple reference points in
satisfaction and fairness assessment. Journal of Behavioral Decision Making,
13(3), 329-344.
Patterson, P.G. and Spreng, R.A. (1997), Modelling the relationship between
perceived value, satisfaction and repurchase intentions in a business-tobusiness, services context: an empirical examination, International Journal of
Service Industry Management, Vol. 8 No. 5, pp. 414-34.
Ringle, C. M., Wende, S., & Will, A. (2005). SmartPLS. Hamburg: www.smartpls.de.
Rust, R.T. and Zahorik, A.J. (1993), Customer satisfaction, customer retention and
market share, Journal of Retailing, Vol. 69 No. 2, pp. 193-215.
Selnes, F. (1998), Antecedents and consequences of trust and satisfaction in
buyer-seller relationships, European Journal of Marketing, Vol. 32 No. 3/4, pp.
305-22.
Smith, S. M., Smith, J., & Allred, C. R. (2006). Advanced techniques and
technologies in online research. In R. Grover, & M. Vriens, Handbook of
market research: uses, misuses and future advances (pp. 132-158).
Thousand Oaks: Sage Publications.
Swan, J.E. and Oliver, R.L. (1989), Postpurchase communications by consumers,
Journal of Retailing, Vol. 65 No. 4, pp. 516-33.
Talluri, K. T., & Van Ryzin, G. J. (2006). The theory and practice of revenue
management (Vol. 68). Springer Science & Business Media.
64
Taylor, S.A. and Baker, T.L. (1994), An assessment of the relationship between
service quality and customer satisfaction in the formation of consumers
purchase intentions, Journal of Retailing, Vol. 70 No. 2, pp. 163-78.
Tenenhaus, M., Esposito Vinzi, V., Chatelin, Y.-M., & Lauro, C. (2005). PLS path
modeling. Computational Statistics & Data Analysis, 48 (1), 159-205.
Urbany, J. E., Madden, T. J., & Dickson, P. R. (1989). All's not fair in pricing: an
initial look at the dual entitlement principle. Marketing Letters, 1(1), 17-25.
Vidal, D. (2012). Does loyalty make customers blind? The impact of relationship
quality on channel members attributions and behaviors following negative
critical incidents. Journal of Business-to-Business Marketing, 19 (2), 97128.
Von Martens & Hilbert (2011). Customer-value-based revenue management.
Journal of Revenue & Pricing Management, 10(1), 87-98.
Wang, X. L., & Brennan, R. (2014). A framework for key account management and
revenue management integration. Industrial Marketing Management, 43(7),
1172-1181.
Wetzels, M., Odekerken-Schrder, G., & van Oppen, C. (2009). Using PLS path
modeling for assessing hierarchical construct models: guidelines and
empirical illustration. Management Information Systems Quarterly, 33 (1),
177-195.
William O. Bearden, & Richard G. Netemeyer (Eds.). (1999). Handbook of
marketing scales: Multi-item measures for marketing and consumer behavior
research. Sage.
Woodside, A.G., Frey, L.L. and Daly, R.T. (1989), Linking service quality, customer
satisfaction, and behavioral intention, Journal of Health Care Marketing, Vol.
9 No. 4, pp. 5-17.
Xia, L., & Monroe, K. B. (2004). Comparative References, Trust, and Perceived
Price Fairness. University of Illinois, UrbanaChampaign, IL, working paper.
Xia, L., Monroe, K. B., & Cox, J. L. (2004). The price is unfair! A conceptual
framework of price fairness perceptions. Journal of marketing, 68(4), 1-15.
Xia, Lan, and Kent B. Monroe (2004), "Comparative References, Trust, and
Perceived Price Fairness," working paper, Department of Business
Administration, University of Illinois at Urbana-Champaign.
65
Appendix
67
82
66
67
Do you remember, on the last time you refueled a vehicle, which gas retailer you went to?
Yes I do, it was: ____________________
Erg
Total
Esso
Agip
Q8
I never refueled a vehicle
Imagine that you take the metro every day to go to work, since years. There is a vending
machine on the platform and sometimes you buy an ice cream from it that you like very
much, and it costs 1.80.You know its price because you always hope to have the right
amount of coins in your pocket when you want to buy it. Now, since last year, a little panel
appeared at the bottom of the vending machine, saying: "Dear customer, thank you for
buying our products. We are committed to always ensure you the freshest and best quality
ice creams. Please notice that in order to keep this promise, we must increase by some
cents our prices when it's hotter, given the increased energy costs to maintain our ice creams
well frozen. However, when it's colder, we will lower them accordingly. Enjoy!" Eventually,
you will buy the same ice cream during winter down to 1.00, and up to 2.60 during
summer, but the prices can vary slightly every day.Now please answer the following
questions:
I think the price I would have to pay if I bought the ice cream would be...
Strongly
Disagree
Disagree
Neither
Agree nor
Disagree
Agree
Strongly
Agree
Fair
Unreasonable
Honest
Unacceptable
Questionable
Justified
68
Disagree
Neither Agree
nor Disagree
Agree
Strongly
Agree
This is a fair
pricing
strategy
I support the
use of this
pricing
strategy
I am upset by
this pricing
strategy
The firm:
1
69
Imagine that you take the metro every day to go to work, since years. There is a vending
machine on the platform and sometimes you buy an ice cream from it that you like very
much, and it costs 1.80. You know its price because you always hope to have the right
amount of coins in your pocket when you want to buy it. Now, since last year, you started to
notice that the price of that ice cream is not always the same: it ranges from 1.00, up
to 2.60. You noticed higher prices are given during the summer, and lower ones during
winter, and they can vary slightly every day.Now please answer the following questions:
I think the price I would have to pay if I bought the ice cream would be...
Strongly
Disagree
Disagree
Neither
Agree nor
Disagree
Agree
Strongly
Agree
Neither Agree
nor Disagree
Agree
Strongly
Agree
Fair
Unreasonable
Honest
Unacceptable
Questionable
Justified
Disagree
This is a fair
pricing
strategy
I support the
use of this
pricing
strategy
I am upset by
this pricing
strategy
The firm:
1
70
It has been another cool night out with your friends and now it's time to come back home.
You opt for using Uber instead of public transport, and you already expect a fare price of
about 10, given your past experience.You are ready to book it, but an unusual additional
message appears, saying that prices have increased by 2.25x. It means that you now you
expect to pay 22.50 for the same route. The message also says: "Demand is off the charts!
Fares have increased to get more drivers on the road".Now please answer to the following
questions:
I think the price I would have to pay if I bought the Uber ride would be...
Strongly
Disagree
Disagree
Neither
Agree nor
Disagree
Agree
Strongly
Agree
Fair
Unreasonable
Honest
Unacceptable
Questionable
Justified
71
Disagree
Neither Agree
nor Disagree
Agree
Strongly
Agree
This is a fair
pricing
strategy
I support the
use of this
pricing
strategy
I am upset by
this pricing
strategy
The firm:
1
Neither
Agree
nor
Disagree
Agree
Strongly
Agree
72
It has been another cool night out with your friends and now it's time to come back
home. You opt for using Uber instead of public transport, and you already expect a fare price
of about 10, given your past experience.
You are ready to book it, but an unusual
additional message appears, saying that prices have increased by 2.25x. It means that you
now you expect to pay 22.50 for the same route. The message also says: "Demand is
off the charts! Fares have increased to get more drivers on the road".
They are
basically telling you that they are finding a new balance between supply and demand: there
are too many ride requests from people, and this would produce a shortage of drivers,
increasing the queuing time for customers. Thanks to the increased price, you will pay more
but for a better service. Now please answer to the following questions:
I think the price I would have to pay if I bought the Uber ride would be...
Strongly
Disagree
Disagree
Neither
Agree nor
Disagree
Agree
Strongly
Agree
Fair
Unreasonable
Honest
Unacceptable
Questionable
Justified
Neither
Agree
nor
Disagree
Agree
Strongly
Agree
73
Disagree
Neither Agree
nor Disagree
Agree
Strongly
Agree
This is a fair
pricing
strategy
I support the
use of this
pricing
strategy
I am upset by
this pricing
strategy
The firm:
1
Disagree
Neither
Agree nor
Disagree
Agree
Strongly
Agree
Fair
Unreasonable
Honest
Unacceptable
Questionable
Justified
74
Disagree
Neither Agree
nor Disagree
Agree
Strongly
Agree
This is a fair
pricing
strategy
I support the
use of this
pricing
strategy
I am upset by
this pricing
strategy
The firm:
1
Neither
Agree
nor
Disagree
Agree
Strongly
Agree
75
Disagree
Neither
Agree nor
Disagree
Agree
Strongly
Agree
Neither Agree
nor Disagree
Agree
Strongly
Agree
Fair
Unreasonable
Honest
Unacceptable
Questionable
Justified
Disagree
This is a fair
pricing
strategy
I support the
use of this
pricing
strategy
I am upset by
this pricing
strategy
76
The firm:
1
Neither
Agree
nor
Disagree
Agree
Strongly
Agree
77
I think the price I would have to pay if I refueled my vehicle would be...
Strongly
Disagree
Disagree
Neither
Agree nor
Disagree
Agree
Strongly
Agree
Fair
Unreasonable
Honest
Unacceptable
Questionable
Justified
78
Disagree
Neither Agree
nor Disagree
Agree
Strongly
Agree
This is a fair
pricing
strategy
I support the
use of this
pricing
strategy
I am upset by
this pricing
strategy
The firm:
1
Disagree
Neither
Agree nor
Disagree
Agree
Strongly
Agree
Fair
Unreasonable
Honest
Unacceptable
Questionable
Justified
79
Disagree
Neither Agree
nor Disagree
Agree
Strongly
Agree
This is a fair
pricing
strategy
I support the
use of this
pricing
strategy
I am upset by
this pricing
strategy
80
The firm:
1
Now tell us a bit more about you! What's your age? (only numbers)
Which education level will you have reached by the end of the year 2015?
High school diploma
Bachelor
Master's degree
PhD (doctorate)
What is your net yearly income in euro approximately? In case you are not employed,
replace it with your household one. (Do not worry about privacy, this information will be
visualized only at an aggregated level)
0 - 19.999
20.000 - 39.999
40.000 - 59.999
60.000 +
As previously mentioned, all participants in this study have the chance to win one of five 10
Zalando or one of five 20 Blacklane vouchers. Winners will be drawn upon completion of
the survey in approximately two to three weeks.
Should you wish to participate in this raffle, please indicate your email address in the
following text box. This information shall only serve to contact the winners and will not be
shared with any third party. If you do not wish to indicate your email address,you can simply
skip this section.
Thank you very much for your participation in this survey. Your contribution is very valuable
to my study and will be treated with utmost confidentiality!
Ps. If you are curious about the results of this study, you can come back to me in one month
and ask me for the findings!
Guido
81
82
Affidavit
ESCP Europe
I, the undersigned, do hereby state that I have not plagiarized the paper enclosed
and that I am the only author of all sentences within this text. Any sentence included,
which was written by another author, was placed within quotation marks, with explicit
indication of its source. I am aware that by contravening the stated ESCP Europe
rules on plagiarism, I break the recognized academic principles and I expose
myself to sanctions upon which the disciplinary committee will decide.
I also confirm this work has not previously been submitted during studies prior to
ESCP Europe. If this work has been written during studies conducted in parallel to
my time at ESCP Europe, I must state it.
I accept full responsibility for the content of this paper.
................................................................ (signature)
Guido CALANDRO
................................................................
(print name)
12/05/2015
................................................................
(day/month/year)
83
Additional Affirmation
Hereby I confirm that I will not give or sell this thesis for publication to any institution.
Furthermore I will not publish this thesis in the Internet.
In the case that I plan to publish this thesis I can only do so with written consent of
my supervisor.
Paris, 12/05/2015
........................................................................................... [Place, Date & Signature]
84