Price Fairness Perception on the AI Algorithm Pricing of Fashion Online Platform

Purpose This study aims to examine the critical role of types of coopetition (upstream/downstream), market structure (concentrated/competitive) and innovation (low vs high degree of innovation) that can affect the way consumers perceive the resulting price (un)fairness of new offerings. Design/methodology/approach Three between-subjects experiments involving different participant populations and product categories were conducted to test the research hypotheses. Findings The valence of the effect of types of coopetition (upstream/downstream) on price fairness is conditional on the market structure and the degree of innovation associated with the new product offering. Downstream (as opposed to upstream) coopetition is much more detrimental to perceptions of price fairness in a concentrated market than in a competitive and fragmented market. However, within a competitive market, downstream coopetition may lead to greater price fairness perception than upstream coopetition when the new product offering is highly innovative. Research limitations/implications The current study uses lab experiments with fictitious scenarios and focuses on two moderating variables: market structure and innovation perceptions. Future research may use field experiments and explore additional moderating variables that may annihilate the negative effect of downstream coopetition on price fairness perception, especially in a concentrated market. Practical implications In concentrated markets, firms should opt for upstream rather than downstream coopetition to limit the negative effect the announcement of coopetition has on price fairness evaluation. However, within a competitive market, when the new product offering resulting from coopetition is associated with a high perceived degree of innovation, firms should opt for downstream rather than upstream coopetition because of its positive impact on price fairness evaluation. Originality/value To the best of authors’ knowledge, this study is the first to demonstrate that new product development from coopetition has important implications for the perception of price fairness, leading to positive or negative effects depending on market structure and the degree of innovation of the new product offering. It then explores the conditions under which types of coopetition (upstream/downstream) might backfire.

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A dynamic perspective on consumers’ price fairness perception: Empirical evidence from the airline industry

Die Unternehmung ◽

10.5771/0042-059x-2020-4-403 ◽

2020 ◽

Vol 74 (4) ◽

pp. 403-425

Author(s):

Mark Friesen

Keyword(s):

Airline Industry ◽

Repeated Measures ◽

Service Industries ◽

Price Fairness ◽

Fairness Perception ◽

Reference Prices ◽

External Reference ◽

Perceived Price ◽

Dynamic Perspective ◽

Static Approach

This paper investigates the concept of perceived price fairness and its dynamic alteration along the customer buying cycle. Today, variable pricing is widespread in many service industries. Besides the current sales price, customers are extensively exposed to varying external reference prices (for example, advertised prices). Thus, this pricing practice risks being perceived as unfair at some stage along the purchasing process, and negative consumer reactions cannot be ruled out. However, previous research has adopted a quite static approach, which only offered an incomplete picture of fairness perceptions with a specific service offer. To better capture the dynamics, this study conducted a scenario-based experiment with 459 airline customers encompassing repeated measures. The results provide evidence that the perception of distributive and procedural fairness significantly varies with the exposure to changing external reference prices along the buying cycle. Therefore, marketers should be cautious regarding price variations and advertised prices.

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The Effect of Glucose Consumption on Customers’ Price Fairness Perception

Schmalenbach Business Review ◽

10.1007/bf03396917 ◽

2014 ◽

Vol 66 (S5) ◽

pp. 7-49 ◽

Cited By ~ 2

Author(s):

Marc Linzmajer ◽

Mirja Hubert ◽

Tim Eberhardt ◽

Thomas M. Fojcik ◽

Peter Kenning

Keyword(s):

Glucose Consumption ◽

Price Fairness ◽

Fairness Perception ◽

Effect Of Glucose

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A laboratory exploration for multi-period perishable food pricing

British Food Journal ◽

10.1108/bfj-12-2014-0434 ◽

2015 ◽

Vol 117 (9) ◽

pp. 2214-2233 ◽

Cited By ~ 2

Author(s):

Xiaohuan Wang ◽

Zhi-Ping Fan ◽

Yiming Wang ◽

Manning Li

Keyword(s):

Laboratory Experiment ◽

Dynamic Pricing ◽

Nonparametric Test ◽

Pricing Strategy ◽

Price Fairness ◽

Content Type ◽

Fairness Perception ◽

Food Retailers ◽

Food Freshness

Purpose – The purpose of this paper is to put forward a multi-period dynamic pricing strategy for perishable food considering consumers’ price fairness perception. The impacts of the multi-period retail price, food freshness and inventory shortage risk on consumers’ heterogeneous willingness to pay (WTP) and their strategic purchasing behaviours are studied. Design/methodology/approach – The authors present a price optimization model for perishable food, and conduct a laboratory experiment to justify the theoretical model. The data collected are analysed by correlation analysis and nonparametric test. Findings – The results obtained reveal, first, food freshness and inventory shortage risk have effect on consumers’ heterogeneous WTP. Second, different retail prices lead to consumers’ strategically purchasing behaviours. Finally, consumers’ intertemporal price fairness perception and the food retailer’s long-term utility maximization can be achieved by developing multi-period dynamic pricing strategy. Practical implications – This study suggests the perishable food retailer to apply a step-by-step price markdown strategy. It aims at eliminating price unfairness perceptions caused by loss of freshness and high shortage risk of the perishable food in the subsequent selling periods within the shelf life. Some valuable managerial insights towards perishable pricing for food retailers are discussed. Originality/value – This study serves as the first step to utilize a laboratory experiment to dig out consumers’ intertemporal WTP towards perishable food. It also presents a novel way for describing consumers’ intertemporal price fairness perception by equalizing consumers’ average utilities considering consumer surplus, food freshness and shortage risk at different selling periods. The line of research on dynamic pricing concerning consumers’ price fairness perception is quite new in academic research, and has arisen due to its importance for food retailers of maximizing their long-term revenues and also of constructing mutual benefit and lasting connections with the consumers.

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