New Product Pricing Strategy Under Customer Asymmetric Anchoring
International Journal of Research in Marketing, Forthcoming
45 Pages Posted: 15 Aug 2011
Date Written: April 19, 2011
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: Suggested Citation