Pricing Fairness in a Pandemic: Navigating Unintended Changes to Value or Cost

Journal of the Association for Consumer Research, Forthcoming

41 Pages Posted: 9 Jul 2020 Last revised: 25 Sep 2020

See all articles by Elizabeth Friedman

Elizabeth Friedman

Columbia University - Columbia Business School

Olivier Toubia

Columbia Business School - Marketing

Date Written: September 24, 2020

Abstract

The recent pandemic has caused many businesses to alter their offerings, at times providing inferior value to their customers or incurring higher costs. Many classes moved online, leading to a lower-value offering without significant cost reductions, and many firms adopted costly hygiene measures, such as stringent cleaning or reducing capacity to maintain social distancing. This article explores consumers’ fairness perceptions regarding pricing decisions made in response to unique scenarios caused by the pandemic. We present three key findings: (i) maintaining prices following a product downgrade is viewed as less fair than maintaining prices following an equivalent decrease in costs; (ii) price decreases following a product downgrade are viewed as more fair when positioned as passing on a cost saving rather than making up for decreased value; and (iii) price increases due to hygiene measures are perceived as more fair when they result from direct (compared with indirect) cost changes.

Keywords: Pricing, Fairness, COVID-19

Suggested Citation

Friedman, Elizabeth and Toubia, Olivier, Pricing Fairness in a Pandemic: Navigating Unintended Changes to Value or Cost (September 24, 2020). Journal of the Association for Consumer Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3646581 or http://dx.doi.org/10.2139/ssrn.3646581

Elizabeth Friedman

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

Olivier Toubia (Contact Author)

Columbia Business School - Marketing ( email )

New York, NY 10027
United States

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