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Is transparency a good thing? How online price transparency and variability can benefit firms and influence consumer decision making

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  • Hanna, Richard C.
  • Lemon, Katherine N.
  • Smith, Gerald E.

Abstract

The internet has empowered consumers and changed the way they search and shop for products and services by increasing the availability and transparency of pricing and other comparative information. However, what is less clear from a managerial perspective is just how transparent pricing information should be. While it might seem that increasing price transparency would reduce consumer search, we find that it may actually increase search and delay. In this article, we review the use of firms’ application of price transparency in practice and propose that specific types of information can influence how transparent prices are to consumers, and how such transparency can influence consumer decisions in a way that is beneficial for the firm. We focus on a specific form of transparency: whether or not the consumer knows the range of pricing. We also discuss whether a high variability pricing approach versus a low variability pricing approach influences consumer decision making—and whether this influence is moderated by transparency.

Suggested Citation

  • Hanna, Richard C. & Lemon, Katherine N. & Smith, Gerald E., 2019. "Is transparency a good thing? How online price transparency and variability can benefit firms and influence consumer decision making," Business Horizons, Elsevier, vol. 62(2), pages 227-236.
    • Handle: RePEc:eee:bushor:v:62:y:2019:i:2:p:227-236
    DOI: 10.1016/j.bushor.2018.11.006
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    References listed on IDEAS

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    2. Florina BRAN & Roxana SARBU & Dumitru Alexandru BODISLAV & Corneliu GUTU & Cristina Carol GOMBOS, 2020. "Decision-Making Transparency - A Goal Achievable Through Use The Internet By Public Administrations," Proceedings of Administration and Public Management International Conference, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 16(1), pages 45-50, October.
    3. David Bürgin & Robert Wilken, 2022. "Increasing Consumers’ Purchase Intentions Toward Fair-Trade Products Through Partitioned Pricing," Journal of Business Ethics, Springer, vol. 181(4), pages 1015-1040, December.
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    5. Shiu-Li Huang & Ming-Yen Kuo, 2020. "Critical success factors in the sharing economy: a customer perspective," Service Business, Springer;Pan-Pacific Business Association, vol. 14(4), pages 553-576, December.
    6. Leo-Paul Dana & Demetris Vrontis & Ranjan Chaudhuri & Sheshadri Chatterjee, 2023. "Entrepreneurship Strategy through Social Commerce Platform: An Empirical Approach Using Contagion Theory and Information Adoption Model," Sustainability, MDPI, vol. 15(16), pages 1-16, August.
    7. Wasfi Alrawabdeh, 2022. "Seasonal balancing of revenue and demand in hotel industry: the case of Dubai City," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(1), pages 36-49, February.
    8. 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.

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