Dynamic Pricing Strategy, Impacts of Fair Pricing Perception on Consumer Reaction

This research examines the relationship between dynamic pricing, fair pricing perception, and willingness to buy. The theoretical contribution of this research is to provide a conceptual framework and empirical evidence for understanding the complex relationships between constructs. The study also examines the moderating effect of price position, internal reference price, price sensitivity, industrial norm, brand image on the relationship between dynamic pricing and fair pricing perception. In frame of the research, 387 undergraduate students have been surveyed about their airline ticket buying behaviour. Dynamic pricing strategies and price positions were applied as stimuli in a quasi-experimental setting. Results show that the effect of dynamic pricing strategies has a significant effect on perceived fair pricing and, through this, on the willingness to buy. It was investigated that price position moderates the association between dynamic pricing strategy with decreasing trend and fair pricing perception. In the case of a relative higher market price, this effect is stronger. The brand image is also a key concept in marketing. It has an influence on consumers attitude towards the brand and therefore effects the information the consumers select and let it or, on the other hand, filter out during the process of perception. The current study supported that the negative effects of dynamic pricing are weaker when the brand image is positive in the mind of consumers. Norms could heavily effect consumer behavior and its influence has been revealed in several studies. However, studies investigating the moderation role of industry norm in dynamic pricing context are rare. As this moderation effect was examined between the subdimensions of dynamic pricing and fair pricing perception, the outcome of the research is also novel to the literature. Limited research has been conducted on consumer perceptions of price fairness in the context of dynamic pricing. Examining the relationship between perceived price fairness and consumer purchasing propensity in the context of dynamic pricing is the purpose of the present study. The results of the study build upon prior research while also presenting contradictory findings. The findings cast light on the formation of price fairness perceptions in dynamic pricing and the influence of these perceptions on consumer purchase intent. This study contributes in two ways to the literature on price fairness. First, it combines two significant antecedents - price volatility and price change trends - with an outcome dimension, namely purchasing propensity, into a single conceptual model. Second, the research identifies potential moderator variables, including price position, consumer price sensitivity, industry norm, and brand image.