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New product pricing strategy under customer asymmetric anchoring

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  • Park, Joo Heon
  • MacLachlan, Douglas L.
  • Love, Edwin

Abstract

Potential customers' willingness to pay (WTP) for a new product can be affected by their observing a posted price and this can be modeled in terms of an anchoring mechanism. A theoretical argument and mathematical proof are developed, showing that if customers use an asymmetric WTP anchoring mechanism, it will normally be optimal for firms to price higher than otherwise. Experimental evidence is provided supporting the notion that an asymmetric anchoring mechanism can be involved in purchase decisions.

Suggested Citation

  • Park, Joo Heon & MacLachlan, Douglas L. & Love, Edwin, 2011. "New product pricing strategy under customer asymmetric anchoring," International Journal of Research in Marketing, Elsevier, vol. 28(4), pages 309-318.
    • Handle: RePEc:eee:ijrema:v:28:y:2011:i:4:p:309-318
    DOI: 10.1016/j.ijresmar.2011.04.003
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    References listed on IDEAS

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