REPORT ON ASSESSING THE IMPACT OF DYNAMIC PRICING ON PERCEIVED PRICE FAIRNESS, SATISFACTION, AND CUSTOMER LOYALTY

Abstract

By implementing the concepts showcasing the consumer behavior which encompases the equity theory and disributive justice, this research study tries to present a framework to explain how the influence of magnitude and temporal proximity of price difference impacts perceptions of a consumer on price fairness and how this perceptions leads to fluctuation in customer loyalty towards the brand. It also tries to study how customer satisfaction and their behavioral purchase intentions gets affected by price fairness perception. The experimental design for this research consisted of 4 way (2 magnitudes of price differences were selected i.e major and minor) multiplied by (2 time difference variation of price i.e short and long) multiplied by (1 product) integration of variables to acquire data. Respondents were mainly university students of india and some working professionals across India. Structural equation modelling (SEM) technique was utilised using SPSS Amos software to find the impact of dynamic pricing on the perceived price fairness of purchase. In the digital era, firms are employing dynamic pricing technique to optimize their profits. When a price discrepancy is found by the user it could lead to change in the levels of satisfaction with purchase, repurchase intentions, self protection intentions and revenge intentions of the individual. This study found, perception in fairness of price is negatively identified with price difference and temporal proximity i.e Customers view major increase in price as unfair and short duration of time in which there is price fluctuation occurs is also perceived as unfair by the customers. Next, it was found that perceived price fairness had strong association with repurchase intention i.e when customers perceive transaction to be fair then they are more like to make repurchases from the same platform and will decrease the self-protection behaviour as they feel that the firm is playing fair in terms of transactions. It was also found that, perceived price fairness has no impact on the revenge intentions. v Next, moderating role of customer loyalty was measured and analyzed and it was found that both loyal as well non-loyal customers found it unfair dynamic pricing in both cases that is temporal proximity and the magnitude change in price. Lastly, effect of satisfaction with purchase was analysed and it was found that satisfaction with purchase had strong and positive association with perceived price fairness. Thus, meaning that increase in satisfaction will lead to increase in customer perception of fairness. Satisfaction with purchase had weak relationship with other behavioral constructs, thus no impact on them