The Impact of Various Source of Funds (Paying with Company’s Funds Against Personal Funds) on How to Judge the Price Fairness and the Intention of Subsequent Purchases

Subject Areas : Jounal of Marketing Management

Mahsa  Zibaian ¹ (Master of Business Administration, Science and Research Unit, Islamic Azad University, Tehran, Iran)
Shahrzad  Chitsaz ² (Assistant Professor, Department of Business Administration, Yadgar Imam Khomeini Unit, Rey City, Islamic Azad University, Tehran, Iran)
Hamid  Saeedi ³ (Assistant Professor, Department of Business Administration, Yadgar Imam Khomeini Unit, Rey City, Islamic Azad University, Tehran, Iran)

Received: 2019-01-17 Accepted : 2019-02-03 Published : 2017-04-21

Keywords: Factorial Design, Fair process effect, Ethical business, Consumer psychology, Price fairness, pricing, price unfairness, Consumer ethics, Cognition, Experimental design,

Abstract :

This article contributes to scholarly understanding of the significance of procedural fairness in pricing contexts. with the importance of price fairness and the relative equity of the fair and what should managers do in terms of pricing? Till that people do not feel they have been abused. Because people behavior is from their perceptions, and their belief both fault and correct can change consumer behavior before buying, at the time of purchase, after the purchase, also these perceptions at different times, and also these belief and response are different when paid from different source‌. This research aims to examine how source of funds (paying with company’s funds versus personal funds) affects buyer’s judgments of price fairness and via these judgments, buyer’s response to prices. A scenario-based experiment is used (N _ 224). To test the hypotheses, the authors run moderated mediation regression analyses with SPSS.22. This resulted in a 2x2x2 between-subjects experiment in which the type of preferential pricing practice (offering lower price to frequent customers versus to an employee’s friends, (magnitude of price difference [low (10 per cent), high (30per cent)] and source of funds (personal funds, company’s funds) were manipulated. After reading the scenario, participants responded to questions that measure perceived price difference, economic impact of price difference, social acceptability, price fairness and buyer’s response. Findings – Drawing on fairness heuristics theory, the authors hypothesize and find that relative to when paying with personal funds, when paying with company’s funds, the perceived price difference plays a less significant role, whereas the perceived social acceptability of the pricing practice underlying the price difference plays a more important role in shaping price fairness judgments and, via these judgments, buyer’s response to prices. The findings generate advice for companies that serve both the business and personal segments (e.g. airlines and hotels). Buyers in the personal segment typically pay with their own money. To persuade these buyers that a price is fair, it is crucial to show that the price represents a good deal for them. Buyers in the business segment often pay with company’s fund. Companies have more flexibility in charging different prices, but they should make sure that the reasons for the price difference are socially acceptable. Conclusion– The research findings point to the significance of the non-instrumental aspect of consumer’s demand for ethical (fair pricing) behavior and the need for companies to assess the fairness of their pricing practices from the consumer perspective. also how the relative role of price difference versus social acceptability in price fairness judgments varies as a function of source of funds and how an inconsistency between price difference and its economic impact affects price fairness judgments.