Exploring the Role of Information and Trust in Price Fairness Judgments

Recent marketing literature examines the antecedents and consequences of perceptions of price fairness (Campbell 1999; Xia et al., 2004), noting that price fairness refers to a customer’s judgment of whether or not the seller’s price is reasonable, acceptable, or just (Bolton et al., 2003). Price fairness has important consequences, in that it affects the firm’s image among customers and determines their repurchase intentions. However, little research investigates how prices affect satisfaction (Matzler et al., 2004). The central importance of price in purchase decisions and post-purchase behavior makes the neglect of price aspects in customer satisfaction measures surprising. Price influences both purchasing and post-purchasing processes. For example, in a qualitative study focusing on switching behavior in services, Keaveney (1995) reports that more than half of the customers switched because of poor price perceptions (compared with competitors), and Varki and Colgate (2001) arrive at similar results in their study of the banking industry; specifically, they note that price perceptions directly influence customer satisfaction, the likelihood of switching, and the likelihood of recommendations to others.