Putting Customer Back into Customization: A Pricing Intervention

27 Pages Posted: 19 Aug 2021

See all articles by Marco Bertini

Marco Bertini

ESADE - Ramon Llull University

Luc Wathieu

Georgetown University McDonough School of Business

Date Written: May 29, 2012

Abstract

The benefits of customization are not always self-evident to consumers who seek to minimize decision costs or are generally uncertain of what they really want. We argue that the mere posting of a starting price can increase a consumer’s readiness to appreciate customized goods. We discuss this phenomenon in the context of a simple model of reference-dependent preferences and propose four experiments to support our predictions. In experiment 1 and 2, we show that announcing a starting price accentuates consumer sensitivity to the match quality and relevance of customization, respectively, enhancing purchase intent and perceived product value to the extent that these qualities are present. Experiment 3 reveals that the effect of starting prices implicates the judgments of novices more so than those of experts. In experiment 4, we revert the effect and demonstrate that consumers who seek conformism and avoid personalization will be more likely to reject customized products when exposed to a starting price.

Keywords: product customization, pricing, starting prices, reference-dependence, consumer engagement

JEL Classification: D12, D49, M31

Suggested Citation

Bertini, Marco and Wathieu, Luc, Putting Customer Back into Customization: A Pricing Intervention (May 29, 2012). Available at SSRN: https://ssrn.com/abstract=2069755 or http://dx.doi.org/10.2139/ssrn.2069755

Marco Bertini

ESADE - Ramon Llull University ( email )

Avinguda de la Torre Blanca, 59
Sant Cugat del Vallès, 08172
Spain

Luc Wathieu (Contact Author)

Georgetown University McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
180
Abstract Views
1,197
Rank
315,481
PlumX Metrics