Pricing strategy in multi-channel retailing and fairness perception : an examination of boundary conditions

Abstract

This article aims to examine the boundary conditions that influence the relationship between pricing strategy in multi-channel retailing and fairness perception, since past research has found controversial results concerning this subject. In experiments 1 and 2, we show that differential pricing is perceived as fairer for products in comparison to services. In experiment 3, we show that when the price difference is justified by an explanation based on costs, it is perceived as fairer than an explanation based on channel benefits. These studies help to elucidate the controversial relationship between price strategy and perceived fairness, addressing boundary conditions that have not been tested before. We suggest that product retailers should consider differential pricing strategy, since many benefits have been reported in the literature, such as higher profitability. However, service managers should be careful about using this strategy, because fairness perception influences returning intentions. Additionally, whenever possible, the price difference should be justified by an explanation based on costs.