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Divide and Prosper: Consumers' Reactions to Partitioned Prices
Vicki G. Morwitz, Eric A. Greenleaf and Eric J. Johnson
Journal of Marketing Research
Vol. 35, No. 4 (Nov., 1998), pp. 453-463
Published by: American Marketing Association
Stable URL: http://www.jstor.org/stable/3152164
Page Count: 11
You can always find the topics here!Topics: Consumer prices, Market prices, Total costs, Surcharges, Prices, Brands, Pricing strategies, Heuristics, Consumer research, Consumer psychology
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Many firms divide a product's price into two mandatory parts, such as the base price of a mail-order shirt and the surcharge for shipping and handling, rather than charging a combined, all-inclusive price. The authors call this strategy partitioned pricing. Although firms presumably use partitioned pricing to increase demand and profits, there is little clear empirical support that these prices increase demand or any theoretical explanation for why this should occur. The authors test hypotheses of how consumers process partitioned prices and how partitioned pricing affects consumers' processing and recall of total costs and their purchase intentions and certain types of demand. The results suggest that partitioned prices decrease consumers' recalled total costs and increase their demand. The manner in which the surcharge is presented and consumers' affect for the brand name also influence how they react to partitioned prices.
Journal of Marketing Research © 1998 American Marketing Association