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In what condition is a price increase perceived as fair? : An empirical investigation in the cable car industry
ISBN
978-1-86295560-8 (CD-Rom)
Type
conference paper
Date Issued
2010-02-10
Abstract
This paper investigates the concept of customers' perceived price fairness in the context of different price increase conditions. Several tourism service industries seem reluctant to systematically vary or occasionally rise prices, mostly because of potential negative consumer responses. Previous studies in behavioral pricing confirm that a price increase may be perceived as highly unfair and, with this, may lead to negative consequences for the firm. However, there is some evidence that not all price increase events are perceived equally and that consumers' fairness perception depends on the situational conditions of the respective price event. Drawing on the principle of dual entitlement and attribution theory, the results of a standardized survey with 1530 cable car customers in Switzerland reveal that cost-based reasons seem to legitimate a price increase, rather than excess demand conditions. Still, within cost conditions, an increase in internally controllable costs is perceived as a less fair reason for raising prices as opposed to an exogenously caused and uncontrollable cost increase. Interestingly, increasing prices without any communicated reason is perceived as the most unfair condition, indicating the crucial role of price communication.
Language
English
Keywords
price increase
perceived price fairness
cable car industry
HSG Classification
contribution to scientific community
Refereed
Yes
Book title
CAUTHE 2010: Challenge the Limits
Publisher
CAUTHE
Publisher place
Melbourne
Start page
12
Event Title
20st Council for Australian University Tourism and Hospitality Education (CAUTHE) conference
Event Location
Hobart, Tasmania
Event Date
08.-11.02.2010
Subject(s)
Division(s)
Eprints ID
62714