The moderating effect of bundling in perceived fairness towards dynamic pricing in restaurant industry
Abstract
Given the widespread use of dynamic pricing by airlines and hotels during the past decade, restaurant managers are looking for a method to adapt dynamic pricing strategy without provoking customers' feelings of unfairness. The present research investigates the role of bundling on customer fairness perception towards demand-based pricing practice in the restaurant industry. Extending mental accounting principal and prospect theory, the results indicate that bundling significantly enhances perceived fairness and higher bundling level was associated with higher perceived fairness rating. Price changes can be acceptable to customers when bundling was used as a moderator and people tend to consider this strategy fairer in fine dining restaurants than casual dining restaurants. Practical guidelines and suggestions for restaurant managers regarding their pricing strategies are provided.
Degree
M.S.
Advisors
Tang, Purdue University.
Subject Area
Management
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