New Product Pricing Strategy Under Customer Asymmetric Anchoring

International Journal of Research in Marketing, Forthcoming

45 Pages Posted: 15 Aug 2011

See all articles by Joo Heon Park

Joo Heon Park

Dongduk Women's University - Department of Economics

Douglas L. MacLachlan

University of Washington Foster School of Business

Edwin A. Love

Western Washington University - Department of Finance & Marketing

Date Written: April 19, 2011

Abstract

Potential customers’ willingness to pay (WTP) for a new product can be affected by their observing a posted price and this can be modeled in terms of an anchoring mechanism. A theoretical argument and mathematical proof is developed, showing that if customers use an asymmetric WTP anchoring mechanism, it will normally be optimal for firms to price higher than otherwise. Experimental evidence is provided supporting the notion that an asymmetric anchoring mechanism can be involved in purchase decisions.

Keywords: new product pricing, willingness to pay, anchoring mechanisms, price strategy

JEL Classification: M31, M21, D49, D21, D11, D12

Suggested Citation

Park, Joo Heon and MacLachlan, Douglas L. and Love, Edwin A., New Product Pricing Strategy Under Customer Asymmetric Anchoring (April 19, 2011). International Journal of Research in Marketing, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1815466

Joo Heon Park

Dongduk Women's University - Department of Economics ( email )

23-1 Wolgok-dong
Sungbuk-gu
Seoul
Korea
82-2-940-4435 (Phone)

Douglas L. MacLachlan (Contact Author)

University of Washington Foster School of Business ( email )

Seattle, WA 98195
United States
206-543-4562 (Phone)
206-543-7472 (Fax)

HOME PAGE: http://www.foster.washington.edu/centers/facultyresearch/facultyprofiles/Lists/Faculty%20Contact%20I

Edwin A. Love

Western Washington University - Department of Finance & Marketing ( email )

516 High Street
Bellingham, WA 98225
United States

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