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The role of external reference price in pay-what-you-want pricing: An empirical investigation across product types

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  • Weisstein, Fei L.
  • Choi, Pilsik
  • Andersen, Peter

Abstract

This research aims to investigate the effectiveness of the adoption of external reference price (ERP) in influencing consumers' pay-what-you-want (PWYW) final payments across different product types. Results from two experiments show the effectiveness of using ERP as an anchor heavily depends on the nature of the product category. For hedonic products, the absence of an ERP, compared to the presence of one, leads to higher perceived quality and PWYW payments. The results are the opposite for utilitarian products. This study contributes to PWYW literature by investigating how product types affect consumers’ perceived quality of the product offered and their PWYW payments.

Suggested Citation

  • Weisstein, Fei L. & Choi, Pilsik & Andersen, Peter, 2019. "The role of external reference price in pay-what-you-want pricing: An empirical investigation across product types," Journal of Retailing and Consumer Services, Elsevier, vol. 50(C), pages 170-178.
  • Handle: RePEc:eee:joreco:v:50:y:2019:i:c:p:170-178
    DOI: 10.1016/j.jretconser.2019.05.017
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    References listed on IDEAS

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    Cited by:

    1. Vaidyanathan, Rajiv & Aggarwal, Praveen, 2020. "Does MSRP impact women differently? Exploring gender-based differences in the effectiveness of retailer-provided reference prices," Journal of Retailing and Consumer Services, Elsevier, vol. 54(C).
    2. Narwal, Preeti & Nayak, J.K., 2020. "How consumers form product quality perceptions in absence of fixed posted prices: Interaction of product cues with seller reputation and third-party reviews," Journal of Retailing and Consumer Services, Elsevier, vol. 52(C).

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