Comparing the Incomparable? How Consumers Judge the Price Fairness of New Products

International Journal of Research in Marketing, 2015 Forthcoming

49 Pages Posted: 9 Oct 2014

See all articles by Sabine Kuester

Sabine Kuester

University of Mannheim, Department of Marketing & Innovation

Sven Feurer

Karlsruhe Institute of Technology (KIT), Institute of Information Systems and Marketing (IISM)

Monika Schuhmacher

Justus-Liebig-University Gießen, Department of Technology, Innovation, and Start-up Management

Dominik Reinartz

University of Mannheim, Department of Marketing & Innovation

Date Written: January 10, 2014

Abstract

The present article explores price fairness perceptions in the specific setting of new product launch prices. In this context, the process of forming price fairness judgments by comparing the price to be judged with the price in a reference transaction is thwarted by the fact that reference transactions are not readily available. Following the conceptual logic on the development of price fairness judgments, results from three experimental consumer studies reveal that price fairness is the key link between launch price and adoption intention but that this relationship is moderated by transaction similarity and social norms. More specifically, transaction similarity, captured by the degree of product newness and future expected price change, determines the comparators consumers will use in their evaluative effort and mitigates the negative launch price-perceived price fairness relationship. In consequence, consumers use existing products to judge prices of incrementally new products. Given the reduced similarity of reference transactions for really new products, consumers rather rely on future prices in their price fairness judgments providing evidence for consumers’ forward-looking evaluation. The present study captures social norms by the concept of consumer innovativeness and results demonstrate that due to the inherent uncertainty of really new products, consumer innovativeness influences the extent to which individuals engage in price comparisons when judging the fairness of launch prices of these products. The authors conclude by deriving implications for the price setting of new products.

Keywords: price fairness, reference price, new product adoption, product newness, future price expectations, consumer innovativeness

JEL Classification: M31

Suggested Citation

Kuester, Sabine and Feurer, Sven and Schuhmacher, Monika and Reinartz, Dominik, Comparing the Incomparable? How Consumers Judge the Price Fairness of New Products (January 10, 2014). International Journal of Research in Marketing, 2015 Forthcoming, Available at SSRN: https://ssrn.com/abstract=2507149

Sabine Kuester (Contact Author)

University of Mannheim, Department of Marketing & Innovation ( email )

Germany

Sven Feurer

Karlsruhe Institute of Technology (KIT), Institute of Information Systems and Marketing (IISM) ( email )

Karlsruhe, 76131
Germany

Monika Schuhmacher

Justus-Liebig-University Gießen, Department of Technology, Innovation, and Start-up Management ( email )

Licher Str. 62
Gießen, 35394
Germany

Dominik Reinartz

University of Mannheim, Department of Marketing & Innovation ( email )

Mannheim, 68131
Germany

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