PRICING STRATEGY & PRACTICE“Why did you do that?” The important role of inferred motive in perceptions of price fairness

Abstract

There is research evidence that suggests that perceptions of price unfairness give rise to consumer resistance to prices and result in decreased profit to the firm. However, it is as yet unclear what factors influence perceptions of unfairness. Answers the question, “What is fair?” by proposing that consumers sometimes infer a firm’s motive for a price and that the inferred motive influences perceived price fairness. A study provides evidence that consumers use contextual information to infer a firm’s motive. When consumers infer a negative motive, the price is perceived to be unfair and when consumers do not infer a negative motive, the same price is perceived to be fair. Suggests that marketers should: provide reasons for prices; consider consumers’ likely inferences of motive and either avoid taking actions that are likely to give rise to inferences of negative motive or manage the motive inferred; and consider the inferences that consumers may make for other marketing actions in addition to price.

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