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An exploration of initial purchase price dispersion and service-subscription durationoa mark
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Publication Year
2019-05-01
Journal
Sustainability (Switzerland)
Publisher
MDPI
Citation
Sustainability (Switzerland), Vol.11 No.9
Keyword
Price dispersionPrice unfairnessService durationSocial price comparisonSustainable pricing
All Science Classification Codes (ASJC)
Geography, Planning and DevelopmentRenewable Energy, Sustainability and the EnvironmentEnvironmental Science (miscellaneous)Energy Engineering and Power TechnologyManagement, Monitoring, Policy and Law
Abstract
Despite the readily available consumer price information, price dispersion persists for products and services and has been extensively researched. However, there is scant literature on the influence of price dispersion on consumer behavior. The present study uses actual consumer purchase data of software service subscriptions and applies range-frequency principles to investigate how a customer's price and relative position along a distribution at initial subscription might impact their subscription lifetimes. The study findings reveal that, in general, consumers paying higher initial prices retain their subscriptions longer, confirming the relationship between a consumer's service value expectation and search cost. However, the amount of a consumer's paid prices relative to that of other consumers' can be helpful in predicting subscription duration. Consumers paying a relatively high price compared with others with similar subscription beginning dates have shorter subscription durations, which raise a concern regarding use of individual customer's price information. The study suggests that principles of range-frequency theory are useful for comprehensively integrating price dispersion information. One interesting and counterintuitive implication of our analysis is that advantaged-price inequities (where the focal customer's paid price is lower compared to another customer's paid price) can also raise concerns about unfairness.
ISSN
2071-1050
Language
eng
URI
https://aurora.ajou.ac.kr/handle/2018.oak/30751
https://www.scopus.com/inward/record.uri?partnerID=HzOxMe3b&scp=85066948961&origin=inward
DOI
https://doi.org/2-s2.0-85066948961
Journal URL
https://res.mdpi.com/sustainability/sustainability-11-02481/article_deploy/sustainability-11-02481.pdf?filename=&attachment=1
Type
Article
Funding
Funding: This research was funded by Ajou University.
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Lee, Seung Hwan이승환
Department of Business Administration
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