A new study from the September issue of the Journal of Consumer Research shows that consumers align material goods and services separately when considering explanations for price hikes. Consumers think it is fair to raise the price of a good when the cost of obtaining that good also increases for the vendor, for example with produce during a low-yield season. Similarly, consumers think raising the cost of a service is fair when the cost of providing that service increases. However, consumers do not consider it fair if the price of a good is raised in conjunction with an increase in service cost to the vendor, or vice versa.
"We show that inherent differences between goods and services can exert a large influence on perceived fairness," write Lisa E. Bolton (University of Pennsylvania) and Joseph W. Alba (University of Florida). "Goods provide consumers with a link between the offering and the vendor's costs, such as the material costs to a manufacturer or cost of goods sold to a retailer."
When the price of a good goes up but material costs do not, consumers infer greater profits and less fair prices. Services do not have material costs – such as the price for raw material – to serve as a price comparison point against the price to consumers.
Thus, less tangible cost increases – such as overhead – are not necessarily deemed fair reasons for producers to increase prices. It seems that consumers feel that some costs are aligned with service and not with the material good, and "in the face of increased costs, not all efforts to maintain profit are viewed equally."
"Inasmuch as fairness is a driver of customer satisfaction, our findings describe occasions on which consumers will be particularly dissatisfied with goods and services," explain the authors.
Suzanne Wu | EurekAlert!
Innovative genetic tests for children with developmental disorders and epilepsy
11.07.2018 | Christian-Albrechts-Universität zu Kiel
Oxygen loss in the coastal Baltic Sea is “unprecedentedly severe”
05.07.2018 | European Geosciences Union
A new manufacturing technique uses a process similar to newspaper printing to form smoother and more flexible metals for making ultrafast electronic devices.
The low-cost process, developed by Purdue University researchers, combines tools already used in industry for manufacturing metals on a large scale, but uses...
For the first time ever, scientists have determined the cosmic origin of highest-energy neutrinos. A research group led by IceCube scientist Elisa Resconi, spokesperson of the Collaborative Research Center SFB1258 at the Technical University of Munich (TUM), provides an important piece of evidence that the particles detected by the IceCube neutrino telescope at the South Pole originate from a galaxy four billion light-years away from Earth.
To rule out other origins with certainty, the team led by neutrino physicist Elisa Resconi from the Technical University of Munich and multi-wavelength...
For the first time a team of researchers have discovered two different phases of magnetic skyrmions in a single material. Physicists of the Technical Universities of Munich and Dresden and the University of Cologne can now better study and understand the properties of these magnetic structures, which are important for both basic research and applications.
Whirlpools are an everyday experience in a bath tub: When the water is drained a circular vortex is formed. Typically, such whirls are rather stable. Similar...
Physicists working with Roland Wester at the University of Innsbruck have investigated if and how chemical reactions can be influenced by targeted vibrational excitation of the reactants. They were able to demonstrate that excitation with a laser beam does not affect the efficiency of a chemical exchange reaction and that the excited molecular group acts only as a spectator in the reaction.
A frequently used reaction in organic chemistry is nucleophilic substitution. It plays, for example, an important role in in the synthesis of new chemical...
Optical spectroscopy allows investigating the energy structure and dynamic properties of complex quantum systems. Researchers from the University of Würzburg present two new approaches of coherent two-dimensional spectroscopy.
"Put an excitation into the system and observe how it evolves." According to physicist Professor Tobias Brixner, this is the credo of optical spectroscopy....
13.07.2018 | Event News
12.07.2018 | Event News
03.07.2018 | Event News
20.07.2018 | Power and Electrical Engineering
20.07.2018 | Information Technology
20.07.2018 | Materials Sciences