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Getting better or getting worse? Consumer responses to decreasing, constant, and ascending multi-dimensional price profiles

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Abstract

This research investigates consumer preferences for different multi-dimensional price profiles. Drawing on research on price affect, we investigate whether consumers prefer descending monthly installments (e.g., 40, 30, 20, 10) over constant (e.g., 25, 25, 25, 25), or ascending ones (e.g., 10, 20, 30, 40). Results of a field experiment with a sample of 1,628 German car buyers corroborate the hypothesized profile effect. In the experiment, participants were asked to evaluate different finance offers for a new car that all had the same present value but differed in terms of how the installments unfolded over time. Consistent with the hypotheses, decreasing monthly installments are evaluated more favorably than constant installments, which, in turn are evaluated more favorably than ascending installments. Furthermore, the results provide evidence for the underlying process by showing that the impact of different MDP profiles is mediated by positive affect. Finally, it was hypothesized that consumers’ individual differences (i.e., debt aversion, financial expectations, and product category knowledge) would exert a moderating influence on evaluations of different price profiles; these hypotheses, however, were only partially confirmed. Theoretical and managerial implications are discussed.

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Acknowledgments

The authors would like to thank two anonymous reviewers and the editor for their helpful comments and suggestions.

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Authors and Affiliations

  1. Bain & Company, Rothbuchstrasse 46, 8037, Zurich, Switzerland

    Klaus Peine

  2. University of St. Gallen, Bahnhofstr. 8, 9000, St. Gallen, Switzerland

    Daniel Wentzel & Andreas Herrmann

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  1. Klaus Peine
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  2. Daniel Wentzel
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  3. Andreas Herrmann
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Correspondence to Andreas Herrmann.

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Peine, K., Wentzel, D. & Herrmann, A. Getting better or getting worse? Consumer responses to decreasing, constant, and ascending multi-dimensional price profiles. Rev Manag Sci 6, 81–101 (2012). https://doi.org/10.1007/s11846-010-0050-5

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  • DOI: https://doi.org/10.1007/s11846-010-0050-5

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