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Perceived unfairness of prices resulting from yield management practices

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  • Jean-Michel Sahut
  • Lubica Hikkerova
  • Sandra Camus

Abstract

If yield management is commonly used, studies dealing with customers reactions are not frequent. Yield management techniques, which aim to optimize firm returns, leads often to disadvantageous situations for customers. The object of this article is to study the consumer perception of Yield Management (YM) with an example in the hotel sector. Hotels use these practices in order to increase their incomes. However, the economic literature suggests that if YM practices are considered to be unfair, they are likely to influence customers’ purchasing intentions negatively, in particular for loyal customers. We explore four YM practices that might be suitable in hotel context through an empirical study of the behavior of 505 customers. We use non parametric tests to analyze the perception of YM practices and Anova tests to identify some relationship between the variables which can explain the behavior of customers. Our empirical analysis shows that the assumption that the YM induces dissatisfaction in all circumstances is rejected. But when a practice of YM is perceived as unfair, it causes a loss of customers. However, the manner of presenting the YM practices to consumers (positive or negative frame) has a considerable infl uence on their perception. Lastly, the price changes induced by the YM are not perceived more unfavorably by the loyal customers. From this point of view, there are several managerial levers in the communication of tariff practices and the management of loyalty programs to avoid or reduce the conflicts with customers.

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Bibliographic Info

Paper provided by Department of Research, Ipag Business School in its series Working Papers with number 2014-166.

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Length: 9 pages
Date of creation: 25 Feb 2014
Date of revision:
Handle: RePEc:ipg:wpaper:2014-166

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Keywords: Equity; fair price; perceived unfairness; price sensibility; yield management.;

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  1. Bolton, Lisa E & Warlop, Luk & Alba, Joseph W, 2003. " Consumer Perceptions of Price (Un)Fairness," Journal of Consumer Research, University of Chicago Press, vol. 29(4), pages 474-91, March.
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