How to Attract Customers by Giving Them the Short End of the Stick
Alison King Lo
Massachusetts Institute of Technology (MIT) - Sloan School of Management; Duke University - Graduate School
John G. Lynch Jr.
University of Colorado-Boulder, Leeds School of Business
Duke University - Fuqua School of Business
October 13, 2005
Several influential streams of research in marketing, psychology, and economics conclude that, holding constant the offer a seller makes to a buyer, the buyer will be repelled by learning that some other group of buyers is getting a better price for the same benefits or receiving more benefits for the same price. Past work has attributed this repulsion to perceptions that the offer is inequitable, fits others better than oneself, or that the offer suggests that the core product is of low value. In six experiments, we show conditions under which exactly the opposite can occur: consumers judge the same offer to be more attractive when a seller offers a better price or more benefits to another group rather than treating everyone equally.
Number of Pages in PDF File: 44
Keywords: fairness, targeted promotion, consumer behavior, product quality
JEL Classification: C91, D63, D82, L15, M31working papers series
Date posted: October 31, 2005
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