Sascha Alavi

Willing to Pay More, Eager to Pay Less: The Role of Customer Loyalty in Price Negotiations

This article is the first to empirically examine the effect of customer loyalty in retail price negotiations. Across three field studies and one negotiation experiment, the authors establish what they call the “loyalty–discount cycle”: in price negotiations with salespeople, loyal customers receive deeper discounts that, in turn, increase customer loyalty, resulting in a downward spiral of a companys price enforcement. The reason for the positive effect of customer loyalty on discount is twofold: (1) loyal customers demand a reward for their loyalty and invoke their elevated perceived negotiation power, and (2) to retain loyal customers, salespeople grant discounts more willingly. Furthermore, the mechanisms are moderated by the basis of a customers loyalty (price vs. quality) and the length of the relationship between the salesperson and the customer. To escape the loyalty–discount cycle, salespeople can use functional and relational customer-oriented behaviors. The study helps managers and salespeople optimize their price enforcement and servicing of loyal customers.

Warm Glow or Extra Charge? The Ambivalent Effect of Corporate Social Responsibility Activities on Customers’ Perceived Price Fairness

Prior research has firmly established that consumers draw benefits from a firms engagement in corporate social responsibility (CSR), especially the feeling of a “warm glow.” These benefits positively affect several desirable outcomes, such as willingness to pay and customer loyalty. The authors propose that consumers do not blindly perceive benefits from a firms CSR engagement but tend to suspect that a firms prices include a markup to finance the CSR engagement. Taking customers’ benefit perceptions and price markup inferences into account, the authors suggest that CSR engagement has mixed effects on consumers’ evaluation of price fairness and, thus, on subsequent outcomes such as customer loyalty. The authors conduct one qualitative study and four quantitative studies leveraging longitudinal field and experimental data from more than 4,000 customers and show that customers indeed infer CSR price markups, entailing mixed effects of firms’ CSR engagement on price fairness. The authors find that perception critically depends on customers’ CSR attributions, and they explore the underlying psychological mechanisms. They propose communication strategies to optimize the effect of CSR engagement on perceived price fairness.

How Leaders’ Motivation Transfers to Customer Service Representatives

Motivating customer service representatives (CSRs) to their highest performance levels is a major task of service unit managers. However, previous studies focused on the impact of leader behavior on follower motivation, while the influence of leader motivation on follower motivation has not been investigated yet. Thus, the authors develop and test a multilevel framework for the motivation spillover principle, which holds that the three components of Vroom’s motivation theory transfer from managers to CSRs. The authors apply this framework to the context of service technology adoption and test it with a matched multilevel sample of 387 service unit managers, 1,018 CSRs, and objective company records. The results support the notion of a motivation spillover from managers to CSRs, which exists incrementally beyond the direct effect of manager’s adoption behavior on CSR’s adoption. However, not all motivation components transfer unconditionally but are contingent on charismatic leadership and manager-CSR similarity——a finding that implies for researchers that an undifferentiated view of motivation in multilevel settings might not suffice. For organizations, the findings suggest that managers are important multipliers of motivation and thus organizations should direct their motivation efforts toward middle-level managers, as they might turn into serious roadblocks to CSR motivation.

Gambled Price Discounts: A Remedy to the Negative Side Effects of Regular Price Discounts

In the context of price discounts, a special type of price promotion, in which savings depend on the outcome of a gamble and are thus uncertain, has recently achieved some popularity. The question arises as to whether such gambled price discounts (GPDs) incur the negative reference price effect—that is, a downward shift in customers’ internal reference price (IRP)—which is often associated with regular price discounts (RPDs). From several studies, including two longitudinal field experiments, the authors find that GPDs indeed alleviate the negative reference price effect: IRPs and actual repurchasing tend to be lower for RPDs than for GPDs and a no-discount control condition. Moreover, the authors explore the psychological underpinnings of these effects and show that the different consequences of GPDs versus RPDs on IRPs are more pronounced if information regarding product quality is limited. The authors demonstrate that findings are robust to variations of GPD discount levels and the probability of winning.

When Do Customers Get What They Expect? Understanding the Ambivalent Effects of Customers’ Service Expectations on Satisfaction:

Extant research established that customers’ expectations play an ambivalent role in the satisfaction formation process: While higher expectations are more difficult to meet and thus cause dissatisfaction, they simultaneously increase satisfaction via customers’ perceived performance owing to a placebo effect. However, to date, knowledge is scarce on the question under which conditions either the positive or negative effect of expectations on satisfaction prevails. Building on information processing theory, the authors hypothesize that an essential contingency of the indirect, placebo-based effect is the degree to which customers are able and motivated to process a service experience. Three studies with a total of over 4,000 customers in different service contexts provide strong evidence for this hypothesis. Thus, managers are well advised to provide a realistic or even understated prospect if the service context favors customers’ ability or motivation to evaluate. Conversely, if customers are neither able nor motivated to evaluate the service, increasing customer expectations represents a viable strategy to enhance satisfaction. Relatedly, if customers hold low service expectations, managers should foster customers’ ability and motivation to evaluate the service. In contrast, if service expectations are high, managers may benefit from reducing the likelihood that customers overly focus on the service performance.

Professionalisierung des Preismanagements auf Business-to-Business-Märkten: Die Rolle der Marktorientierung und der Unternehmenskultur

ZusammenfassungAuf Business-to-Business-Märkten besteht für viele Unternehmen ein hoher Professionalisierungsbedarf im Preismanagement. Die bisherige Forschung jedoch hat das Preismanagement auf diesen Märkten, insbesondere hinsichtlich der Erfolgsfaktoren intraorganisationaler Preisprozesse, weitgehend vernachlässigt. Daher untersucht die vorliegende Arbeit den Zusammenhang zwischen der Kultur und preisbezogenen Informations- und Koordinationsprozessen als Facetten eines marktorientierten Preismanagements und deren Auswirkungen auf zentrale Erfolgsgrößen. Auf Grundlage einer großzahligen, branchenübergreifenden Stichprobe zeigen wir, dass die Marktorientierung von preisbezogenen Informations- und Koordinationsprozessen den preisbezogenen Erfolg erhöht, der wiederum zu einer höheren Umsatzrentabilität führt. Darüber hinaus identifizieren wir zentrale Gestaltungsfaktoren, die den Zusammenhang zwischen der Marktorientierung des Preismanagements und den Erfolgsgrößen moderieren und so wichtige Implikationen für Unternehmen bieten.AbstractMany firms operating in business-to-business-markets face the need for a more professional, systematic pricing. However, prior research has neglected industrial pricing, especially with regard to successful pricing practices. Therefore, this study examines the link between price-related information and coordination processes as facets of a marketoriented pricing and their impact on firm performance. Drawing on a cross-industry sample of 230 business units, we show that market-oriented pricing increases the pricing performance and thus enhances a firm’s profits. With regard to organizational culture, we find an ambivalent effect of a competitor-oriented culture on pricing performance as it positively affects market-oriented pricing and negatively affects pricing performance. Furthermore, we consider key contextual factors which moderate the link between marketoriented pricing and pricing performance and therefore provide important insights for managers.

The Role of Service Engineering and Sales-Cooperation – The Ambivalent Impact of Cooperation Quality in Developing Customized Solutions

This paper empirically examines the relationship between sales-service cooperation quality and annual total salesperson profit. Moreover, this paper investigates the moderating role of salesperson’s attitude towards service engineers. Based on qualitative interviews, the authors developed a conceptual model. To test the proposed model, the authors analyzed survey data from almost 300 salespeople of a solution provider in the construction industry.

Besonderheiten im persönlichen Verkauf von Luxusmarken1

Obwohl Luxusmarken primar uber personlichen Verkauf vertrieben werden, wurden bislang keine Erfolgsfaktoren in diesem Verkaufskontext untersucht. Der vorliegende Beitrag adressiert diese Forschungslucke erstmalig. Die Autoren fuhrten zwei Studien durch, um die Wirkung von in Forschung und Praxis etablierten Verkaufsstrategien (Informationsaustausch, inspirierende Appelle, Wertversprechen, Beziehungsaufbau) fur Luxusmarken und Nicht-Luxusmarken zu vergleichen. Hierzu wurden zunachst Tiefeninterviews mit zehn Luxus-Experten durchgefuhrt. Darauf aufbauend wurden Daten von 277 Kunden erhoben und mittels einer Pfadanalyse ausgewertet. Die Ergebnisse zeigen, dass die Verkaufsstrategien bei Luxusmarken grundsatzlich anders mit Kundenwertwahrnehmungen zusammenhangen als bei Nicht-Luxusmarken: wahrend inspirierende Appelle in Kombination mit Informationsaustausch bei Nicht-Luxusmarken in positiver Beziehung zu Kundenwertwahrnehmungen stehen, sollten Verkaufsberater bei Luxusmarken keine inspirierenden Appelle einsetzen; zudem hangen bei Luxusmarken Wertversprechen nur in Verbindung mit begleitendem Beziehungsaufbau positiv mit der Kundenwertwahrnehmung zusammen, bei Nicht-Luxusmarken scheint diese Kombination jedoch nachteilig zu sein. Die Studie diskutiert die Grunde dieser Mechanismen sowie die Implikationen fur Forschung und Praxis.