Do Perceptions of Price Fairness Differ Significantly Between B2B and B2C Markets?
The purpose of this bachelor's thesis was to identify if perceptions of price fairness significantly differ between business-to-business and business-to-consumer markets.
Ambrozio Sergio, 2017
Bachelor Thesis, een consulting GmbH
Betreuende Dozierende: Mathias Binswanger
Keywords: Fairness, Pricing, Behavioral Economics
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"een consulting", a consulting firm in pricing B2B, was interested in understanding if and how perceptions of fairness in pricing would manifest in B2B markets. It was known from empirical evidence that some classical models of market equilibrium did not take into account the role of fairness. However, it was not clear whether the conclusions of these studies could be extrapolated to the B2B markets. As a result, a need to research the B2B markets, combined with the particular B2B focus of the een consulting, made this work viable.
After defining our research question, we established that B2B data needed to be collected in order to better understand fairness in pricing. Firstly, a literature review was conducted compiling the state of current knowledge on the topic. Secondly,
two surveys were designed using the theoretical framework as a basis.
In the first survey, 38 people answered the questionnaire focusing specifically on the B2B markets. In the second survey, 43 people responded questions focusing only on the B2C markets. Finally, the results of both surveys were analyzed and compared leading us to the final conclusions outlined in the next section.
In general, we observed a higher tolerance for price increases in the business-to-business markets with some exceptions. In particular, we identified that for the examples of airline dynamic pricing and car sharing dynamic pricing, there is a significant difference between the B2B and B2C markets. Due to reasons supported by the Prospect Theory of Kahneman et al (1979), B2B participants tend to accept more the increase in prices than private consumers.
Moreover, a correlation between fairness and social norms in pricing was identified in accordance with the work of Maxwell (1995). We inferred that the more uncommon a pricing practice is, the more likely to be perceived by both consumers and professionals as unfair. Building on our observation, we proposed a framework - that we called "fairness-normality relationship" - suggesting that if companies can influence to change the boundaries of a particular social norm in pricing, perceptions of (un)fairness may substantially change. Therefore, as per above-mentioned implications, this work can add value to the client.
Studiengang: Business Administration International Management (Bachelor)
Fachbereich der Arbeit: Volkswirtschaft