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Saving on Discounts through Accurate Sensing – Salespeople's Estimations of Customer Price Importance and Their Effects on Negotiation Success

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  • Alavi, Sascha
  • Wieseke, Jan
  • Guba, Jan H.

Abstract

Discount negotiations are prevalent in retailing and serve as key instruments for adjusting retail prices to the individual customer. Accurate perception of the importance the customer attaches to price, which the authors label as customer price importance (CPI) sensing, should be critical to retail salespeople's negotiation performance. However, prior research has neither conceptually nor empirically investigated the role of CPI sensing in customer–salesperson interactions. Addressing this research void, this study analyzes both antecedents and consequences of salespeople's accurate CPI sensing in discount negotiations with customers. The authors use a four-sources multilevel data set from the B2C automobile retailing context that comprises data on 537 salesperson–customer interactions. Results provide evidence that through accurate CPI sensing, salespeople are able to substantially reduce the discounts they grant to customers (on average by $616 per transaction). Moreover, with respect to CPI sensing accuracy, results show that retail salespeople misperceive CPI owing to reliance on heuristic customer cues.

Suggested Citation

  • Alavi, Sascha & Wieseke, Jan & Guba, Jan H., 2016. "Saving on Discounts through Accurate Sensing – Salespeople's Estimations of Customer Price Importance and Their Effects on Negotiation Success," Journal of Retailing, Elsevier, vol. 92(1), pages 40-55.
    • Handle: RePEc:eee:jouret:v:92:y:2016:i:1:p:40-55
    DOI: 10.1016/j.jretai.2015.08.002
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    References listed on IDEAS

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    4. Pranav Jindal & Peter Newberry, 2022. "The Profitability of Revenue-Based Quotas Under Price Negotiation," Management Science, INFORMS, vol. 68(2), pages 917-940, February.
    5. Pizzi, Gabriele & Vannucci, Virginia & Aiello, Gaetano, 2020. "Branding in the time of virtual reality: Are virtual store brand perceptions real?," Journal of Business Research, Elsevier, vol. 119(C), pages 502-510.
    6. Ryari, Hanaa & Alavi, Sascha & Wieseke, Jan, 2021. "Drown or Blossom? The Impact of Perceived Chronic Time Pressure on Retail Salespeople's Performance and Customer–Salesperson Relationships," Journal of Retailing, Elsevier, vol. 97(2), pages 217-237.
    7. Pascal Güntürkün & Till Haumann & Laura Marie Edinger-Schons & Jan Wieseke, 2023. "How attributions of coproduction motives shape customer relationships over time," Journal of the Academy of Marketing Science, Springer, vol. 51(5), pages 990-1018, September.
    8. Sascha Alavi & Johannes Habel & Marco Schwenke & Christian Schmitz, 2020. "Price negotiating for services: elucidating the ambivalent effects on customers’ negotiation aspirations," Journal of the Academy of Marketing Science, Springer, vol. 48(2), pages 165-185, March.
    9. Johannes Habel & Sascha Alavi & Nicolas Heinitz, 2023. "A theory of predictive sales analytics adoption," AMS Review, Springer;Academy of Marketing Science, vol. 13(1), pages 34-54, June.
    10. Sascha Alavi & Johannes Habel & Paolo Guenzi & Jan Wieseke, 2018. "The role of leadership in salespeople’s price negotiation behavior," Journal of the Academy of Marketing Science, Springer, vol. 46(4), pages 703-724, July.
    11. Roland Kassemeier & Sascha Alavi & Johannes Habel & Christian Schmitz, 2022. "Customer-oriented salespeople’s value creation and claiming in price negotiations," Journal of the Academy of Marketing Science, Springer, vol. 50(4), pages 689-712, July.
    12. Sheng-Wen Liu & Ying-Chieh Yang & Ralph Norcio, 2017. "Explore the Buffering Effects of Perceived Hidden Inflation on Survival of Mobile Phone Service Providers in Taiwan," Sustainability, MDPI, vol. 9(4), pages 1-12, April.

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