IDEAS home Printed from https://ideas.repec.org/a/eee/jbrese/v141y2022icp73-84.html
   My bibliography  Save this article

Pay-what-you-want versus pick-your price: The interplay between participative pricing strategies and consumer's need for cognition

Author

Listed:
  • Rathore, Himanshu
  • Jakhar, Suresh Kumar
  • Kumar, Satish
  • Kumar, Madhumitha Ezhil

Abstract

We examined the interaction between the need for cognition and participative pricing strategies and their influence on pricing effort, purchase intention, price paid, and sales volume. Using two vignette-based experiments and two field experiments, we manipulate participative pricing strategy at three levels- pay-what-you-want, pick-your-price, and fixed price. Results suggest that- High need for cognition individuals have a higher purchase intention for pay-what-you-want while low need for cognition individuals have a higher intention for pick-your-price. Higher (lower) pricing efforts elicit high purchase intention for individuals with a higher (lower) need for cognition. The average price paid by both low and high need for cognition consumers is not significantly different from the market price. Participative pricing generates more sales volume than a fixed price. The study’s findings have practical implications. Retailers can choose to boost purchase intention by offering participative pricing strategies that match the cognitive orientation of the consumer.

Suggested Citation

  • Rathore, Himanshu & Jakhar, Suresh Kumar & Kumar, Satish & Kumar, Madhumitha Ezhil, 2022. "Pay-what-you-want versus pick-your price: The interplay between participative pricing strategies and consumer's need for cognition," Journal of Business Research, Elsevier, vol. 141(C), pages 73-84.
    • Handle: RePEc:eee:jbrese:v:141:y:2022:i:c:p:73-84
    DOI: 10.1016/j.jbusres.2021.12.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0148296321009140
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jbusres.2021.12.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Karla I. Mendoza-Abarca & Hillary N. Mellema, 2016. "Aligning economic and social value creation through pay-what-you-want pricing," Journal of Social Entrepreneurship, Taylor & Francis Journals, vol. 7(1), pages 101-125, March.
    2. Sana El Harbi & Gilles Grolleau & Insaf Bekir, 2014. "Substituting piracy with a pay-what-you-want option: does it make sense?," European Journal of Law and Economics, Springer, vol. 37(2), pages 277-297, April.
    3. Ju-Young Kim & Katharina Kaufmann & Manuel Stegemann, 2014. "The impact of buyer–seller relationships and reference prices on the effectiveness of the pay what you want pricing mechanism," Marketing Letters, Springer, vol. 25(4), pages 409-423, December.
    4. Riener, Gerhard & Traxler, Christian, 2012. "Norms, moods, and free lunch: Longitudinal evidence on payments from a Pay-What-You-Want restaurant," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(4), pages 476-483.
    5. Cowley, Elizabeth & Mitchell, Andrew A, 2003. "The Moderating Effect of Product Knowledge on the Learning and Organization of Product Information," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 30(3), pages 443-454, December.
    6. Adaval, Rashmi & Monroe, Kent B, 2002. "Automatic Construction and Use of Contextual Information for Product and Price Evaluations," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 28(4), pages 572-588, March.
    7. Martin Spann & Robert Zeithammer & Marco Bertini & Ernan Haruvy & Sandy D. Jap & Oded Koenigsberg & Vincent Mak & Peter Popkowski Leszczyc & Bernd Skiera & Manoj Thomas, 2018. "Beyond Posted Prices: the Past, Present, and Future of Participative Pricing Mechanisms," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 5(1), pages 121-136, March.
    8. R. H. Strotz, 1955. "Myopia and Inconsistency in Dynamic Utility Maximization," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 23(3), pages 165-180.
    9. Kelly L. Haws & William O. Bearden, 2006. "Dynamic Pricing and Consumer Fairness Perceptions," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 33(3), pages 304-311, October.
    10. Johnson, Jennifer Wiggins & Cui, Annie Peng, 2013. "To influence or not to influence: External reference price strategies in pay-what-you-want pricing," Journal of Business Research, Elsevier, vol. 66(2), pages 275-281.
    11. Xu, Xianying & Huang, Yinghua, 2019. "Restaurant information cues, Diners’ expectations, and need for cognition: Experimental studies of online-to-offline mobile food ordering," Journal of Retailing and Consumer Services, Elsevier, vol. 51(C), pages 231-241.
    12. Michael J. Barone & T. J. Bae & Shanshan Qian & Jason d’Mello, 2017. "Power and the appeal of the deal: how consumers value the control provided by Pay What You Want (PWYW) pricing," Marketing Letters, Springer, vol. 28(3), pages 437-447, September.
    13. Sucharita Chandran & Vicki G. Morwitz, 2005. "Effects of Participative Pricing on Consumers' Cognitions and Actions: A Goal Theoretic Perspective," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 32(2), pages 249-259, September.
    14. Weisstein, Fei L. & Kukar-Kinney, Monika & Monroe, Kent B., 2016. "Determinants of consumers' response to pay-what-you-want pricing strategy on the Internet," Journal of Business Research, Elsevier, vol. 69(10), pages 4313-4320.
    15. Stangl, Brigitte & Kastner, Margit & Prayag, Girish, 2017. "Pay-what-you-want for high-value priced services: Differences between potential, new, and repeat customers," Journal of Business Research, Elsevier, vol. 74(C), pages 168-174.
    16. Kunter, Marcus, 2015. "Exploring the Pay-What-You-Want payment motivation," Journal of Business Research, Elsevier, vol. 68(11), pages 2347-2357.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Juan Li & Xixiang Sun & Canwei Hu, 2022. "The Role of Skepticism and Transparency in Shaping Green Brand Authenticity and Green Brand Evangelism," Sustainability, MDPI, vol. 14(23), pages 1-22, December.
    2. Ang, Dionysius & Diecidue, Enrico & Dewitte, Siegfried, 2022. "To deliberate or not? The effects of anticipated regret and deliberation on willingness-to-pay," Journal of Business Research, Elsevier, vol. 151(C), pages 563-578.
    3. Ali Sabbaghnia & Jafar Heydari & Jafar Razmi, 2023. "Participative pricing and donation programs in a socially concerned supply chain," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(1), pages 146-164, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wang, Cindy Xin & Yuan, Hong & Beck, Joshua T., 2022. "Too tired for a good deal: How customer fatigue shapes the performance of Pay-What-You-Want pricing," Journal of Business Research, Elsevier, vol. 144(C), pages 987-996.
    2. Reisman, Richard & Payne, Adrian & Frow, Pennie, 2019. "Pricing in consumer digital markets: A dynamic framework," Australasian marketing journal, Elsevier, vol. 27(3), pages 139-148.
    3. Gerpott Torsten J., 2016. "A review of the empirical literature on Pay-What-You-Want price setting," Management & Marketing, Sciendo, vol. 11(4), pages 566-596, December.
    4. Guang Yang & Mulin Liu & Mei Cai & Qihua Yin, 2024. "An analytical game perspective model for pay-what-you-want pricing schemes considering consumer fairness," Information Technology and Management, Springer, vol. 25(4), pages 345-365, December.
    5. Greiff, Matthias & Egbert, Henrik, 2016. "A Survey of the Empirical Evidence on PWYW Pricing," MPRA Paper 68693, University Library of Munich, Germany.
    6. Rabbanee, Fazlul K. & Roy, Rajat & Sharma, Piyush, 2022. "Contextual differences in the moderating effects of price consciousness and social desirability in pay-what-you-want (PWYW) pricing," Journal of Business Research, Elsevier, vol. 141(C), pages 13-25.
    7. Stangl, Brigitte & Kastner, Margit & Prayag, Girish, 2017. "Pay-what-you-want for high-value priced services: Differences between potential, new, and repeat customers," Journal of Business Research, Elsevier, vol. 74(C), pages 168-174.
    8. Greiff Matthias & Egbert Henrik, 2017. "The Pay-What-You-Want game: What can be learned from the experimental evidence on Dictator and Trust Games?," Management & Marketing, Sciendo, vol. 12(1), pages 124-139, March.
    9. Preeti Narwal & J. K. Nayak, 2020. "Investigating relative impact of reference prices on customers’ price evaluation in absence of posted prices: a case of Pay-What-You-Want (PWYW) pricing," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(4), pages 234-247, August.
    10. Rafael Luis Wagner, 2019. "Lowering consumers’ price image without lowering their internal reference price: the role of pay-what-you-want pricing mechanism," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 18(4), pages 332-341, August.
    11. Greiff, Matthias & Egbert, Henrik, 2016. "The Pay-What-You-Want Game and Laboratory Experiments," MPRA Paper 75222, University Library of Munich, Germany.
    12. Vahid Ashrafimoghari & Jordan W. Suchow, 2022. "A Game-theoretic Model of the Consumer Behavior Under Pay-What-You-Want Pricing Strategy," Papers 2207.08923, arXiv.org.
    13. Ma, Xuejing & Wang, Zetao & Liu, Hongju, 2022. "Do long-life customers pay more in pay-what-you-want pricing? Evidence from live streaming," Journal of Business Research, Elsevier, vol. 142(C), pages 998-1009.
    14. Roy, Rajat & Das, Gopal, 2022. "The role of contextual factors in increasing Pay-What-You-Want payments: Evidence from field experiments," Journal of Business Research, Elsevier, vol. 139(C), pages 1540-1552.
    15. Emili Vizuete-Luciano & Oktay Güzel & José M. Merigó, 2023. "Bibliometric research of the Pay-What-You-Want Topic," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 22(5), pages 413-426, October.
    16. Di Domenico, Giandomenico & Premazzi, Katia & Cugini, Antonella, 2022. "“I will pay you more, as long as you are transparent!”: An investigation of the pick-your-price participative pricing mechanism," Journal of Business Research, Elsevier, vol. 147(C), pages 403-419.
    17. Weisstein, Fei L. & Kukar-Kinney, Monika & Monroe, Kent B., 2016. "Determinants of consumers' response to pay-what-you-want pricing strategy on the Internet," Journal of Business Research, Elsevier, vol. 69(10), pages 4313-4320.
    18. Narwal, Preeti & Rai, Shivam, 2022. "Individual differences and moral disengagement in Pay-What-You-Want pricing," Journal of Business Research, Elsevier, vol. 149(C), pages 528-547.
    19. Sharma, Piyush & Roy, Rajat & Rabbanee, Fazlul K., 2020. "Interactive effects of situational and enduring involvement with perceived crowding and time pressure in pay-what-you-want (PWYW) pricing," Journal of Business Research, Elsevier, vol. 109(C), pages 88-100.
    20. Mukherjee, Sudipta & Pandelaere, Mario, 2023. "The influence of self-decided prices on expected quality," Journal of Business Research, Elsevier, vol. 160(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbrese:v:141:y:2022:i:c:p:73-84. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbusres .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.