Innovating with pay-what-you-want : understanding the effects of duration on price consumers are willing to pay and consumers' fairness perception.

• Main Authors: Ng, Melissa Man Qi., Tan, Sharon Cheng Hui., Tan, Zhi Ling.
• Other Authors: Ng Sok Ling, Sharon
• Format: Final Year Project
• Language: English
• Published: 2013
• Subjects: DRNTU::Business::Marketing::Pricing; DRNTU::Business::Marketing::Consumer behavior
• Online Access: http://hdl.handle.net/10356/51417
• Institution: Nanyang Technological University

Our study aims to investigate how the duration of Pay-What-You-Want (“PWYW”) can be altered for business owners to fully utilize the benefits of PWYW as a sales promotional tool. In order to analyze the benefits, we look at two different factors: the price consumers are willing to pay and fairness, a behavioral and a psychological phenomenon respectively. In addition, we will look at how deal-proneness can interact with duration as a moderating variable. From our analysis, we found that a longer duration of PWYW has a significant positive effect on (a) the prices that respondents are willing to pay, and (b) the respondents’ fairness perceptions. While evaluating whether the level of deal-proneness in respondents influences the effect of duration on price willing to pay and perceived fairness, we found that (c) effect of duration on perceived fairness is affected by the individual’s level of deal-proneness but (d) deal-proneness level does not influence the effect of duration on prices that respondents are willing to pay. From our findings, it appears that a longer duration of PWYW is generally beneficial to business owners. However, business owners should seek to achieve an appropriate balance in determining the optimal PWYW duration, taking into account their business models and the consumer segments that they intend to target.