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THE EFFECTS OF VARIABLE PRICING ON BRAND TRUST IN CAPACITY CONSTRAINED SERVICE INDUSTRIES

McMahon-Beattie, Una and Palmer, A (2008) THE EFFECTS OF VARIABLE PRICING ON BRAND TRUST IN CAPACITY CONSTRAINED SERVICE INDUSTRIES. In: Thought Leaders International Conference on Brand Management, Birmingham Business school. Birminham Business School. [Conference contribution]

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Abstract

Variable pricing is widely practiced in capacity constrained services where fixed costs are high relative to variable costs, allowing discriminatory prices to appeal to buyers with differing levels of price elasticity. Facilitating this further, developments in databases have allowed companies to finely tuning their price/product offer to individual customers. However, this may lead to the perception by customers of unfavourable treatment where the price that they have paid is perceived as less favourable than the best price being offered by the company. Trust is trust as a key attribute of a brand, yet there is a possibility that variable pricing may undermine trust in a brand. This paper reports on the interim results of an ongoing longitudinal study involving 2273 customers on a hotel chain’s database, who were divided into a test group (variable prices for a specified product offer) and a control group (constant prices). Initial results suggest that variable pricing may not itself be a cause of distrust in a brand, but rather trust/mistrust is likely to derive from individuals’ prior experience, which leads to expectations based on knowledge of an organisation’s or industry sector’s pricing “rules”.

Item Type:Conference contribution (Paper)
Faculties and Schools:Ulster Business School > Department of Hospitality and Tourism Management
Ulster Business School
ID Code:29332
Deposited By: Professor Una McMahon-Beattie
Deposited On:28 Apr 2014 13:32
Last Modified:28 Apr 2014 13:32

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