Divide and Prosper: Consumers' Reaction to Partitioned Prices

Journal of Marketing Research, Vol. 35, pp. 453-463, November 1998

Posted: 24 Jun 2009

See all articles by Vicki Morwitz

Vicki Morwitz

New York University (NYU) - Department of Marketing

Eric Greenleaf

New York University (NYU) - Department of Marketing

Eric J. Johnson

Columbia Business School - Marketing

Date Written: 1998

Abstract

Many firms divide a product's price into two mandatory parts, such as the base price of a mail-order shirt and the surcharge for shipping and handling, rather than charging a combined, all-inclusive price. The authors call this strategy partitioned pricing. Although firms presumably use partitioned pricing to increase demand and profits, there is little clear empirical support that these prices increase demand or any theoretical explanation for why this should occur. The authors test hypotheses of how consumers process partitioned prices and how partitioned pricing affects consumers' processing and recall of total costs and their purchase intentions and certain types of demands. The results suggest that partitioned prices decrease consumers' recalled total costs and increase their demands. The manner in which the surcharge is presented and consumers' affect for the brand name also influence how they react to partitioned prices.

Suggested Citation

Morwitz, Vicki and Greenleaf, Eric and Johnson, Eric J., Divide and Prosper: Consumers' Reaction to Partitioned Prices (1998). Journal of Marketing Research, Vol. 35, pp. 453-463, November 1998. Available at SSRN: https://ssrn.com/abstract=1423970

Vicki Morwitz (Contact Author)

New York University (NYU) - Department of Marketing ( email )

Henry Kaufman Ctr
44 W 4 St.
New York, NY
United States

Eric Greenleaf

New York University (NYU) - Department of Marketing ( email )

Henry Kaufman Ctr
44 W 4 St.
New York, NY
United States

Eric J. Johnson

Columbia Business School - Marketing ( email )

New York, NY 10027
United States

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