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Junha Kim Dissertation 04-18-23.pdf (3.43 MB)

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Essay on Pricing

Kim, Junha
http://orcid.org/0000-0002-7276-1365
http://rave.ohiolink.edu/etdc/view?acc_num=osu1681474102715459

Abstract Details

2023, Doctor of Philosophy, Ohio State University, Business Administration.
Pricing is one of the most important tools in a marketing manager’s toolbox (Kotler and Armstrong 2010), and at least 80% of consumer choices are influenced by price (Forbes 2017, June 14). Unsurprisingly, extant research studied the effectiveness of many pricing strategies, establishing the effectiveness of strategies like just-below prices (Manning & Sprott, 2009; Thomas & Morwitz, 2005), range pricing (Biswas and Burton 1993; Fan, Li, and Jiang 2018; Haws and Bearden 2006) and price promotions (Foubert and Gijsbrechts 2007; Gupta 1988; Kahn and Louie 1990; Van Heerde, Gupta, and Wittink 2003), and examining how such strategies influence consumer’s attitude toward prices and brand, price perceptions, and purchase intention. Building on this extant literature, I examine the nuances of these effects, moderators, and the unique consequences that have not been previously studied. Together, three chapters in this essay contribute to our understanding of how different pricing strategies influence consumer psychology of price perceptions and choices. The first chapter examines the effectiveness of just-below pricing in a context where consumers consider a within-brand upgrade decision, where the company’s goal is to encourage upgrades. The first chapter demonstrates that when a base product is priced at or just-above a threshold (e.g., $20.00), consumers are more likely to upgrade and spend more money than when a base product is priced just-below a threshold (e.g., $19.99) because they perceive the upgrade option as less expensive, and they place less weight on price. Further this effect is mitigated under sequential choice and when an upgrade price crosses an upper threshold. The second chapter examines the effectiveness of the increasingly popular strategy of range pricing, where retailers present prices as a range (e.g., $19.99 – $29.99) rather than a specific price point (e.g., $19.99 or $29.99). The second chapter demonstrates that consumers have optimistic price expectations in range pricing. Thus, when purchase prices fall on the higher end of the range consumers perceive it to be unfair and are less willing to make a purchase, compared to having seen the same price (as a specific point) from the beginning. The effect is mitigated when retailers provide a justification for a high price (e.g., ‘a popular item’) and when price differences are based on vertical differentiations (e.g., better performance). The third chapter examines the effectiveness of a buy-one-get-one-free (BOGO) promotion on adventurous product choices (controlling for the quantity purchased). I propose that a BOGO (vs. a 50% off) promotion provides consumers with enough reason to explore, which increases the choice share of adventurous options. Seven studies provide empirical support for these predictions by demonstrating that a quantity discount (i.e., BOGO) increases the choice of adventurous options compared to a similar pricing promotion (i.e., 50% off), while also testing the proposed process based on reason-based choices.
Joseph Goodman (Committee Co-Chair)
Selin Malkoc (Committee Co-Chair)
Grant Donnelly (Committee Member)
Priya Raghubir (Committee Member)
Rebecca Reczek (Committee Member)
182 p.
Business Administration; Marketing
pricing; promotion; threshold; range; just-below; optimism; BOGO; discount; reason-based

Recommended Citations

Citations

  • Kim, J. (2023). Essay on Pricing [Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1681474102715459

    APA Style (7th edition)

  • Kim, Junha. Essay on Pricing. 2023. Ohio State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1681474102715459.

    MLA Style (8th edition)

  • Kim, Junha. "Essay on Pricing." Doctoral dissertation, Ohio State University, 2023. http://rave.ohiolink.edu/etdc/view?acc_num=osu1681474102715459

    Chicago Manual of Style (17th edition)

osu1681474102715459
163
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This open access ETD is published by The Ohio State University and OhioLINK.