Price promotion framing effects on consumers' perceptions of dynamic pricing

The applicability of online dynamic pricing practices is still debatable given that contradictory findings have been reported in both modeling and behavioral pricing research. The different conclusions from research raise two important questions: if dynamic pricing is practiced, how can consumers' negative reactions be minimized? Can firms charge regular (or loyal) customers higher prices than other customers without upsetting them? Three experiments are conducted in this dissertation to examine whether framing price promotions can mitigate consumers' negative perceptions of dynamic pricing across different product-price levels, customer segments, price inequity situations, and price promotion comparisons of varying magnitudes.;The conceptual model is an extension of the previous price fairness model and also designed with the objective to investigate the causal relationship of fairness and its outcomes. Three laboratory experiments were conducted using college students to test and assess the proposed hypotheses. Results of the experiments suggest that price promotion framing, compared to no framing, significantly reduces price-disadvantaged consumers' perceived price unfairness. Perceived transaction dissimilarity was further identified as an important antecedent of perceived price fairness. Perceived trust and purchase satisfaction partially mediated the relationship between price fairness and repurchase intentions.;Price-disadvantaged consumers responded differently to price promotion framing across different price levels, customer segments, and price deal comparisons. Free gift framing is more effective in high-priced product category while percentage off framing is more effective in low-priced product category than other framing formats in mitigating price-disadvantaged consumers' negative perceptions of dynamic pricing. In addition, consumers in the regular customer segment responded more favorably toward reward framing tactics (e.g., free gift and free gift certificate) while consumers in the prospective customer segment tended to favor discount framing tactics (e.g., dollar off or percentage off). Finally, the findings indicate that price-disadvantaged consumers' perceived price unfairness can be significantly reduced when their transaction and their comparison party's were in different deal comparisons (i.e., different product base price and promotion formats).;This research contributes to consumer research by verifying that perceived transaction dissimilarity is an important antecedent of fairness perceptions and offering a more comprehensive view of the overall price fairness model. The research demonstrates that different consumer segments' responses to dynamic pricing are distinct and that different price framing tactics influence consumers differently across product-price levels in different price inequity situations and with different price comparison situations.