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Does Demand Fall When Customers Perceive That Prices Are Unfair: The Case Of Premium Pricing for Large Sizes, Marketing Science

Abstract

We analyze a large-scale field test conducted with a mail-order catalog firm to investigate how customers react to premium prices for larger sizes of women's apparel. We find that customers who demand large sizes react unfavorably to paying a higher price than customers for small sizes. Further investigation suggests that these consumers perceive that the price premium is unfair. Overall, premium pricing led to a 6% to 8% decrease in gross profits.

Type

Article

Author(s)

Eric T. Anderson, Duncan Simester

Date Published

2008

Citations

Anderson, Eric T., and Duncan Simester. 2008. Does Demand Fall When Customers Perceive That Prices Are Unfair: The Case Of Premium Pricing for Large Sizes. Marketing Science. 27(3): 492-500.

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