Role of customer attributes on absolute price thresholds

Saloni Firasta Vastani, Kent Bourdon Monroe

Research output: Contribution to journalArticle

Abstract

Purpose: This paper aims to examine how customer heterogeneity influences absolute price thresholds in a service industry. Design/methodology/approach: Customer purchase behavior is studied in the context of a firm’s and competitor’s price changes. Customer purchase behavior is further examined in the context of specific customer attributes such as loyalty, motivation, online purchase channel, gender and frequency of purchase. The study uses a longitudinal data set spanning over 44 months and tracks over 13,000 of a firm’s customers, totaling over 200,000 transactions from a parking services provider. Findings: Results show that absolute price thresholds affect purchasing decisions. Customers are willing to pay a range of prices for a considered purchase, and when a price is within customers’ acceptable price range, it does not induce a change in their purchase behavior. However, specific identifiable customer attributes influence the propensity to continue buying and influence the acceptable price range. Practical implications: Knowledge from this study can be applied to developing a deeper understanding of customers and their price thresholds to improve customer retention and firm performance after a price change. Originality/value: For a better understanding of the consumer choice process, it is essential to understand what factors affect price thresholds. Additionally, very few studies are using transaction-level data to empirically validate concepts from behavioral price research in the service industry, and none that do it at an individual customer level over three years.

Original languageEnglish (US)
Pages (from-to)589-601
Number of pages13
JournalJournal of Services Marketing
Volume33
Issue number5
DOIs
StatePublished - Sep 9 2019

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Keywords

  • Analytics
  • Behavioral price
  • Perceptions
  • Price thresholds
  • Service industry

ASJC Scopus subject areas

  • Marketing

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