Lower pricing for new customers: consequences of perceived pricing unfairness among current customers

Abstract

This study examines the relations that result from perceptions of pricing unfairness triggered by comparisons with the lower price paid by new clients in promotional situations. An experiment was conducted with a sample that consisted of 200 undergraduate students. The data was analyzed using structural equation modeling. The findings indicate that the perception of unfair pricing is positively succeeded by negative emotions, and by the intent to switch immediately or in the future. Moreover, trust is affected by the perception of unfair pricing, since this perception may violate a client's trust in the company. Supporting the distinction of immediate and future switching intentions, the study found that negative emotions and trust have different impacts on these two types of switching intentions. Negative word-of-mouth intention was also found to be an important consequence of the emotions that stem from the perceived injustice and from trust feelings, indicating that strong negative emotions and lower levels of trust are related to higher levels of negative word-of-mouth. This study also discusses the managerial and academic contributions of these results and the implications for future studies.