New product pricing strategy under customer asymmetric anchoring

Joo Heon Park, Douglas L. MacLachlan and Edwin Love

International Journal of Research in Marketing, 2011, vol. 28, issue 4, 309-318

Abstract: Potential customers' willingness to pay (WTP) for a new product can be affected by their observing a posted price and this can be modeled in terms of an anchoring mechanism. A theoretical argument and mathematical proof are developed, showing that if customers use an asymmetric WTP anchoring mechanism, it will normally be optimal for firms to price higher than otherwise. Experimental evidence is provided supporting the notion that an asymmetric anchoring mechanism can be involved in purchase decisions.

Keywords: New product pricing; Willingness to pay; Anchoring mechanisms; Price strategy (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ijrema:v:28:y:2011:i:4:p:309-318

DOI: 10.1016/j.ijresmar.2011.04.003

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