IDEAS home Printed from https://ideas.repec.org/a/eee/joreco/v27y2015icp126-139.html
   My bibliography  Save this article

One firm, one product, two prices: Channel-based price differentiation and customer retention

Author

Listed:
  • Vogel, Julia
  • Paul, Michael

Abstract

Every multichannel retailer must decide whether and how to apply channel-based price differentiation. This study identifies channel-related price differentiation instruments and considers their effects on customer retention. It empirically tests hypotheses using a laboratory experiment and analytically investigates feasibility conditions. Results show that channel-based price differentiation positively affects customers through perceived value but harms retention through price unfairness and limited self-determination. The mobile communications retailer in this study would require 5.1% lower operating costs online to ensure its profitability. These results indicate that multichannel retailers with channel-based price differentiation should carefully select their price instruments and meet the feasibility conditions.

Suggested Citation

  • Vogel, Julia & Paul, Michael, 2015. "One firm, one product, two prices: Channel-based price differentiation and customer retention," Journal of Retailing and Consumer Services, Elsevier, vol. 27(C), pages 126-139.
    • Handle: RePEc:eee:joreco:v:27:y:2015:i:c:p:126-139
    DOI: 10.1016/j.jretconser.2015.07.007
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969698915300102
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jretconser.2015.07.007?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. Fitzsimons, Gavan J, 2000. "Consumer Response to Stockouts," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 27(2), pages 249-266, September.
    2. Wolk, Agnieszka & Ebling, Christine, 2010. "Multi-channel price differentiation: An empirical investigation of existence and causes," International Journal of Research in Marketing, Elsevier, vol. 27(2), pages 142-150.
    3. Alba, Joseph W, et al, 1999. "The Effect of Discount Frequency and Depth on Consumer Price Judgments," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 26(2), pages 99-114, September.
    4. Lichtenstein, Donald R & Bloch, Peter H & Black, William C, 1988. "Correlates of Price Acceptability," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 15(2), pages 243-252, September.
    5. Cassie Mogilner & Tamar Rudnick & Sheena S. Iyengar, 2008. "The Mere Categorization Effect: How the Presence of Categories Increases Choosers' Perceptions of Assortment Variety and Outcome Satisfaction," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 35(2), pages 202-215, June.
    6. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-741, September.
    7. Troutman, C Michael & Shanteau, James, 1976. "Do Consumers Evaluate Products by Adding or Averaging Attribute Information?," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 3(2), pages 101-106, Se.
    8. Nelson Granados & Alok Gupta & Robert J. Kauffman, 2012. "Online and Offline Demand and Price Elasticities: Evidence from the Air Travel Industry," Information Systems Research, INFORMS, vol. 23(1), pages 164-181, March.
    9. Neslin, Scott A. & Shankar, Venkatesh, 2009. "Key Issues in Multichannel Customer Management: Current Knowledge and Future Directions," Journal of Interactive Marketing, Elsevier, vol. 23(1), pages 70-81.
    10. Alba, Joseph W, et al, 1994. "The Influence of Prior Beliefs, Frequency Cues, and Magnitude Cues on Consumers' Perceptions of Comparative Price Data," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 21(2), pages 219-235, September.
    11. MacKenzie, Scott B, 2001. "Opportunities for Improving Consumer Research through Latent Variable Structural Equation Modeling," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 28(1), pages 159-166, June.
    12. Pradeep K. Chintagunta & Junhong Chu & Javier Cebollada, 2012. "Quantifying Transaction Costs in Online/Off-line Grocery Channel Choice," Marketing Science, INFORMS, vol. 31(1), pages 96-114, January.
    13. Ratchford, Brian T., 2009. "Online Pricing: Review and Directions for Research," Journal of Interactive Marketing, Elsevier, vol. 23(1), pages 82-90.
    14. Grewal, Dhruv & Janakiraman, Ramkumar & Kalyanam, Kirthi & Kannan, P.K. & Ratchford, Brian & Song, Reo & Tolerico, Stephen, 2010. "Strategic Online and Offline Retail Pricing: A Review and Research Agenda," Journal of Interactive Marketing, Elsevier, vol. 24(2), pages 138-154.
    15. Tenenhaus, Michel & Vinzi, Vincenzo Esposito & Chatelin, Yves-Marie & Lauro, Carlo, 2005. "PLS path modeling," Computational Statistics & Data Analysis, Elsevier, vol. 48(1), pages 159-205, January.
    16. Xubing Zhang, 2009. "Retailers' Multichannel and Price Advertising Strategies," Marketing Science, INFORMS, vol. 28(6), pages 1080-1094, 11-12.
    17. Fornell, Claes & Robinson, William T, 1983. "Industrial Organization and Consumer Satisfaction-Dissatisfaction," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 9(4), pages 403-412, March.
    18. Zhang, Jie & Farris, Paul W. & Irvin, John W. & Kushwaha, Tarun & Steenburgh, Thomas J. & Weitz, Barton A., 2010. "Crafting Integrated Multichannel Retailing Strategies," Journal of Interactive Marketing, Elsevier, vol. 24(2), pages 168-180.
    19. Cassie Mogilner & Tamar Rudnick & Sheena Iyengar, 2008. "The Mere Categorization Effect: How the Presence of Categories Increases Choosers' Perceptions of Assortment Variety," Economics Working Papers 0070, Institute for Advanced Study, School of Social Science.
    20. Hui, Michael K & Bateson, John E G, 1991. "Perceived Control and the Effects of Crowding and Consumer Choice on the Service Experience," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 18(2), pages 174-184, September.
    21. Konuş, Umut & Verhoef, Peter C. & Neslin, Scott A., 2008. "Multichannel Shopper Segments and Their Covariates," Journal of Retailing, Elsevier, vol. 84(4), pages 398-413.
    22. Xia, Lan & Kukar-Kinney, Monika & Monroe, Kent B., 2010. "Effects of Consumers’ Efforts on Price and Promotion Fairness Perceptions," Journal of Retailing, Elsevier, vol. 86(1), pages 1-10.
    23. Xinshu Zhao & John G. Lynch & Qimei Chen, 2010. "Reconsidering Baron and Kenny: Myths and Truths about Mediation Analysis," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 37(2), pages 197-206, August.
    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. Du, Shaofu & Wang, Li & Hu, Li, 2019. "Omnichannel management with consumer disappointment aversion," International Journal of Production Economics, Elsevier, vol. 215(C), pages 84-101.
    2. Lichters, Marcel & Wackershauser, Verena & Han, Shixing & Vogt, Bodo, 2019. "On the applicability of the BDM mechanism in product evaluation," Journal of Retailing and Consumer Services, Elsevier, vol. 51(C), pages 1-7.
    3. Huang, Wen-Hsien & Shen, George C. & Liang, Che-Ling, 2019. "The effect of threshold free shipping policies on online shoppers' willingness to pay for shipping," Journal of Retailing and Consumer Services, Elsevier, vol. 48(C), pages 105-112.
    4. Jiang, Yuqing & Liu, Fan & Lim, Andrew, 2021. "Digital coupon promotion and platform selection in the presence of delivery effort," Journal of Retailing and Consumer Services, Elsevier, vol. 62(C).
    5. Cheah, Jun-Hwa & Lim, Xin-Jean & Ting, Hiram & Liu, Yide & Quach, Sara, 2022. "Are privacy concerns still relevant? Revisiting consumer behaviour in omnichannel retailing," Journal of Retailing and Consumer Services, Elsevier, vol. 65(C).
    6. Schüren-Hinkelmann, Andrea & Ziehe, Nikola, "undated". "Herausforderungen beim Pricing im Multi-Channel-Retailing: Identifikation von Lösungsansätzen unter besonderer Berücksichtigung der Nachfragersicht [Pricing challenges in multi-channel retailing: I," Duesseldorf Working Papers in Applied Management and Economics 45, Duesseldorf University of Applied Sciences.
    7. Salmani, Yasamin & Partovi, Fariborz Y. & Banerjee, Avijit, 2018. "Customer-driven investment decisions in existing multiple sales channels: A downstream supply chain analysis," International Journal of Production Economics, Elsevier, vol. 204(C), pages 44-58.
    8. Xiaoxia Chen & Xiaofeng Su & Zhongbin Li & Jingjing Wu & Manhua Zheng & Anxin Xu, 2022. "RETRACTED ARTICLE: The impact of omni-channel collaborative marketing on customer loyalty to fresh retailers: the mediating effect of the omni-channel shopping experience," Operations Management Research, Springer, vol. 15(3), pages 983-997, December.

    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. Homburg, Christian & Lauer, Karin & Vomberg, Arnd, 2019. "The multichannel pricing dilemma: Do consumers accept higher offline than online prices?," International Journal of Research in Marketing, Elsevier, vol. 36(4), pages 597-612.
    2. Fassnacht, Martin & Unterhuber, Sebastian, 2016. "Consumer response to online/offline price differentiation," Journal of Retailing and Consumer Services, Elsevier, vol. 28(C), pages 137-148.
    3. Du, Shaofu & Wang, Li & Hu, Li, 2019. "Omnichannel management with consumer disappointment aversion," International Journal of Production Economics, Elsevier, vol. 215(C), pages 84-101.
    4. Herhausen, Dennis & Binder, Jochen & Schoegel, Marcus & Herrmann, Andreas, 2015. "Integrating Bricks with Clicks: Retailer-Level and Channel-Level Outcomes of Online–Offline Channel Integration," Journal of Retailing, Elsevier, vol. 91(2), pages 309-325.
    5. Campo, Katia & Breugelmans, Els, 2015. "Buying Groceries in Brick and Click Stores: Category Allocation Decisions and the Moderating Effect of Online Buying Experience," Journal of Interactive Marketing, Elsevier, vol. 31(C), pages 63-78.
    6. Kumar, V., 2010. "A Customer Lifetime Value-Based Approach to Marketing in the Multichannel, Multimedia Retailing Environment," Journal of Interactive Marketing, Elsevier, vol. 24(2), pages 71-85.
    7. Zhang, Jie & Farris, Paul W. & Irvin, John W. & Kushwaha, Tarun & Steenburgh, Thomas J. & Weitz, Barton A., 2010. "Crafting Integrated Multichannel Retailing Strategies," Journal of Interactive Marketing, Elsevier, vol. 24(2), pages 168-180.
    8. Melis, Kristina & Campo, Katia & Lamey, Lien & Breugelmans, Els, 2016. "A Bigger Slice of the Multichannel Grocery Pie: When Does Consumers’ Online Channel Use Expand Retailers’ Share of Wallet?," Journal of Retailing, Elsevier, vol. 92(3), pages 268-286.
    9. Vaishnav, Bharat & Ray, Sourav, 2023. "A thematic exploration of the evolution of research in multichannel marketing," Journal of Business Research, Elsevier, vol. 157(C).
    10. Peng Vincent Zhang & Seoyoung Kim & Anindita Chakravarty, 2023. "Influence of pull marketing actions on marketing action effectiveness of multichannel firms: A meta-analysis," Journal of the Academy of Marketing Science, Springer, vol. 51(2), pages 310-333, March.
    11. Melis, Kristina & Campo, Katia & Breugelmans, Els & Lamey, Lien, 2015. "The Impact of the Multi-channel Retail Mix on Online Store Choice: Does Online Experience Matter?," Journal of Retailing, Elsevier, vol. 91(2), pages 272-288.
    12. Li, Xi & Dahana, Wirawan Dony & Li, Tongmao & Yuan, Jingbo, 2021. "Behavioral changes of multichannel customers: Their persistence and influencing factors," Journal of Retailing and Consumer Services, Elsevier, vol. 58(C).
    13. Thai, Nguyen T. & Yuksel, Ulku, 2017. "Too many destinations to visit: Tourists’ dilemma?," Annals of Tourism Research, Elsevier, vol. 62(C), pages 38-53.
    14. Kondo, Fumiyo N. & Okubo, Taishi, 2022. "Understanding multi-channel consumer behavior: A comparison between segmentations of multi-channel purchases by product category and overall products," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    15. Betancourt, Roger R. & Chocarro, Raquel & Cortiñas, Monica & Elorz, Margarita & Mugica, Jose Miguel, 2016. "Channel Choice in the 21st Century: The Hidden Role of Distribution Services," Journal of Interactive Marketing, Elsevier, vol. 33(C), pages 1-12.
    16. Verhoef, Peter C. & Venkatesan, Rajkumar & McAlister, Leigh & Malthouse, Edward C. & Krafft, Manfred & Ganesan, Shankar, 2010. "CRM in Data-Rich Multichannel Retailing Environments: A Review and Future Research Directions," Journal of Interactive Marketing, Elsevier, vol. 24(2), pages 121-137.
    17. Pizzi, Gabriele & Scarpi, Daniele, 2013. "When Out-of-Stock Products DO Backfire: Managing Disclosure Time and Justification Wording," Journal of Retailing, Elsevier, vol. 89(3), pages 352-359.
    18. Pauwels, Koen & Neslin, Scott A., 2015. "Building With Bricks and Mortar: The Revenue Impact of Opening Physical Stores in a Multichannel Environment," Journal of Retailing, Elsevier, vol. 91(2), pages 182-197.
    19. Ran Pan & Juan Feng & Zhenling Zhao, 2022. "Fly with the wings of live‐stream selling—Channel strategies with/without switching demand," Production and Operations Management, Production and Operations Management Society, vol. 31(9), pages 3387-3399, September.
    20. Hu, Xiaojian & Qiu, Ju & Zhao, Ju & Li, Yang, 2023. "Can in-store recommendations for online-substitutive products integrate online and offline channels?," Journal of Retailing and Consumer Services, Elsevier, vol. 70(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:joreco:v:27:y:2015:i:c:p:126-139. 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: https://www.journals.elsevier.com/journal-of-retailing-and-consumer-services .

    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.