How to Attract Customers by Giving Them the Short End of the Stick

44 Pages Posted: 31 Oct 2005

See all articles by Alison King Lo

Alison King Lo

Massachusetts Institute of Technology (MIT) - Sloan School of Management; Duke University - Graduate School

John G. Lynch

University of Colorado-Boulder, Leeds School of Business - Center for Research on Consumer Financial Decision Making

Richard Staelin

Duke University - Fuqua School of Business

Date Written: October 13, 2005

Abstract

Several influential streams of research in marketing, psychology, and economics conclude that, holding constant the offer a seller makes to a buyer, the buyer will be repelled by learning that some other group of buyers is getting a better price for the same benefits or receiving more benefits for the same price. Past work has attributed this repulsion to perceptions that the offer is inequitable, fits others better than oneself, or that the offer suggests that the core product is of low value. In six experiments, we show conditions under which exactly the opposite can occur: consumers judge the same offer to be more attractive when a seller offers a better price or more benefits to another group rather than treating everyone equally.

Keywords: fairness, targeted promotion, consumer behavior, product quality

JEL Classification: C91, D63, D82, L15, M31

Suggested Citation

Lo, Alison King and Lynch, John G. and Staelin, Richard, How to Attract Customers by Giving Them the Short End of the Stick (October 13, 2005). Available at SSRN: https://ssrn.com/abstract=826785 or http://dx.doi.org/10.2139/ssrn.826785

Alison King Lo (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States
617-519-4088 (Phone)

Duke University - Graduate School ( email )

Durham, NC 27708-0097
United States

John G. Lynch

University of Colorado-Boulder, Leeds School of Business - Center for Research on Consumer Financial Decision Making ( email )

Leeds School of Business
Boulder, CO 80309-0419
United States
919-971-5201 (Phone)

HOME PAGE: http://https://www.colorado.edu/business/john-g-lynch-jr

Richard Staelin

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
919-660-7824 (Phone)
919-660-7990 (Fax)

HOME PAGE: http://www.fuqua.duke.edu/faculty/alpha/rstaelin.h

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