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Consumer evaluations of multiple price changes over time versus a single dollar equivalent price change
- Date Issued:
- 2001
- Summary:
- In many markets sellers have to make decisions on the rate of price change for a product. Prices can be increased or decreased by making a single large change, or as by making multiple smaller changes over time, leading to the same final price. The concern of sellers is the consumer response, in terms of the product's demand. With the exception of deliberate demarketing, sellers seek to minimize demand decreases in response to price increases, and maximize the positive impact in terms of increased purchases, when prices are decreased. Price changes can be made in a short period, or over a more extended duration. In some buying contexts the market may be characterized by highly fluctuating prices that create price uncertainty in the minds of the consumer. Further, consumers give varying levels of importance or weight to their past purchase experience when they make purchase decisions. This research develops theory and examines hypotheses to examine the effectiveness of single versus multiple price change strategies over time, in different contexts, using a prospect theory and reference price framework. The study finds (1) The greater the number of purchase occasions between successive price changes, the lesser is the impact on demand of a strategy of multiple price changes. (2) In situations of high price uncertainty strategies of multiple price increases lead to smaller demand decreases, and strategies of multiple price increases lead to higher demand increases, when compared to price certain situations. (3) The importance or weight assigned by consumers to the last purchase experience does not appear to significantly impact the outcomes of intertemporal price strategies. (4) The impact of price decreases appears to be more than that of price increases, in the two contexts of uncertainty, and a greater weight being assigned to the last purchase occasion. In previous research prospect theory has been used primarily in a static framework, and the prospect theory approach has used reference prices to analyze the impact of price changes in product bundling situations. This research extends the prospect theory and reference price framework to price change strategies over time, where reference prices vary and adapt.
Title: | Consumer evaluations of multiple price changes over time versus a single dollar equivalent price change. |
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Name(s): |
Tewari, Jitendra Kumar Florida Atlantic University, Degree Grantor Georgoff, David M., Thesis Advisor |
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Type of Resource: | text | |
Genre: | Electronic Thesis Or Dissertation | |
Date Issued: | 2001 | |
Publisher: | Florida Atlantic University | |
Place of Publication: | Boca Raton, Fla. | |
Physical Form: | application/pdf | |
Extent: | 153 p. | |
Language(s): | English | |
Summary: | In many markets sellers have to make decisions on the rate of price change for a product. Prices can be increased or decreased by making a single large change, or as by making multiple smaller changes over time, leading to the same final price. The concern of sellers is the consumer response, in terms of the product's demand. With the exception of deliberate demarketing, sellers seek to minimize demand decreases in response to price increases, and maximize the positive impact in terms of increased purchases, when prices are decreased. Price changes can be made in a short period, or over a more extended duration. In some buying contexts the market may be characterized by highly fluctuating prices that create price uncertainty in the minds of the consumer. Further, consumers give varying levels of importance or weight to their past purchase experience when they make purchase decisions. This research develops theory and examines hypotheses to examine the effectiveness of single versus multiple price change strategies over time, in different contexts, using a prospect theory and reference price framework. The study finds (1) The greater the number of purchase occasions between successive price changes, the lesser is the impact on demand of a strategy of multiple price changes. (2) In situations of high price uncertainty strategies of multiple price increases lead to smaller demand decreases, and strategies of multiple price increases lead to higher demand increases, when compared to price certain situations. (3) The importance or weight assigned by consumers to the last purchase experience does not appear to significantly impact the outcomes of intertemporal price strategies. (4) The impact of price decreases appears to be more than that of price increases, in the two contexts of uncertainty, and a greater weight being assigned to the last purchase occasion. In previous research prospect theory has been used primarily in a static framework, and the prospect theory approach has used reference prices to analyze the impact of price changes in product bundling situations. This research extends the prospect theory and reference price framework to price change strategies over time, where reference prices vary and adapt. | |
Identifier: | 9780493216317 (isbn), 11950 (digitool), FADT11950 (IID), fau:8868 (fedora) | |
Note(s): |
College of Business Thesis (Ph.D.)--Florida Atlantic University, 2001. |
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Subject(s): |
Prices Consumption (Economics) Consumer Behavior |
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Held by: | Florida Atlantic University Libraries | |
Persistent Link to This Record: | http://purl.flvc.org/fcla/dt/11950 | |
Sublocation: | Digital Library | |
Use and Reproduction: | Copyright © is held by the author with permission granted to Florida Atlantic University to digitize, archive and distribute this item for non-profit research and educational purposes. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder. | |
Use and Reproduction: | http://rightsstatements.org/vocab/InC/1.0/ | |
Host Institution: | FAU | |
Is Part of Series: | Florida Atlantic University Digital Library Collections. |