Does demand fall when customers perceive that prices are unfair? the case of premium pricing for large sizes

Eric T. Anderson, Duncan I. Simester

Research output: Contribution to journalArticle

55 Scopus citations

Abstract

We analyze a large-scale field test conducted with a mail-order catalog firm to investigate how customers react to premium prices for larger sizes of women's apparel. We find that customers who demand large sizes react unfavorably to paying a higher price than customers for small sizes. Further investigation suggests that these consumers perceive that the price premium is unfair. Overall, premium pricing led to a 6% to 8% decrease in gross profits.

Original languageEnglish (US)
Pages (from-to)492-500
Number of pages9
JournalMarketing Science
Volume27
Issue number3
DOIs
StatePublished - May 1 2008

Keywords

  • Experimental economics
  • Fairness
  • Price discrimination
  • Price promotion
  • Product line pricing

ASJC Scopus subject areas

  • Business and International Management
  • Marketing

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