Price unfairness: The indirect effect on switching and negative word-of-mouth

Abstract

Purpose: This study aims to present and test a conceptual framework for the consequences of price unfairness, positing trust and emotions as two important mediators of the perception of price unfairness and its relationship to switching and negative word-of-mouth intentions. Design/methodology/approach: An experiment with one factor with three levels (price unfairness: no price unfairness vs low price unfairness vs high price unfairness) is applied to 253 participants. The mediation analysis is made using bootstrapping procedure. Findings: The findings reveal that existing customers that compare their price to a lower price offered to prospective customers experience the perception of price unfairness that, in turn, triggers negative behavioral intentions toward the company, through trust (cognitive driver) and negative emotions (emotional driver). Practical implications: The findings indicate that companies should consider the damage that targeted promotions to new customers may do among existing customers in the long run. They also highlight the importance of the companies' strategies to build consumer trust over time as this construct seems only partially affected by perceived price unfairness and is a key determinant of customers' behavioral intentions. Originality/value: This study contributes to the understanding of price unfairness perception and its negative behavioral consequences, testing and validating a parallel mediating process with trust and negative emotions as mediators. © Emerald Group Publishing Limited.