Marketing Letters

, Volume 23, Issue 3, pp 719–730 | Cite as

To divide or not to divide? The impact of partitioned pricing on the informational and sacrifice effects of price

  • Franziska Völckner
  • Alexander Rühle
  • Martin Spann


Firms often partition a product’s price into two mandatory parts (e.g., the base price of a mail-order DVD and the surcharge for shipping and handling) instead of charging one all-inclusive price. This study examines whether and to what extent partitioned pricing (compared to one all-inclusive price) influences the informational and sacrifice effects of price. We empirically show that partitioned pricing oppositely affects these two distinct roles of price: the informational effect of price (i.e., price as an indicator of quality) increases, while the sacrifice effect (i.e., price as a measure of sacrifice) becomes more negative. In product categories with substantial price–quality inferences, the positive impact of partitioned pricing on the informational effect can overcompensate for its negative impact on the sacrifice effect, making partitioned prices the preferable strategy.


Partitioned pricing Price response of demand Dual role of price Price-perceived quality inference 



The authors would like to thank Henrik Sattler for his helpful comments on previous versions of this manuscript and Sven Theysohn for his help with the data collection. The authors are also grateful for the constructive feedback received during the presentation of this paper at the European Marketing Academy Conference in Nantes.


  1. Allenby, G. M., & Lenk, P. J. (1994). Modeling household purchase behavior with logistic normal regression. Journal of the American Statistical Association, 89(428), 1218–1231.CrossRefGoogle Scholar
  2. Alpert, M. I. (1971). Identification of determinant attributes: A comparison of methods. Journal of Marketing Research, 8(2), 184–191.CrossRefGoogle Scholar
  3. Arora, N., Huber, J., Mick, D. G., & Kamakura, W. (2001). Improving parameter estimates and model prediction by aggregate customization in choice experiments. Journal of Consumer Research, 28(2), 273–283.CrossRefGoogle Scholar
  4. Bertini, M., & Wathieu, L. (2008). Research note: Attention arousal through price partitioning. Marketing Science, 27(2), 236–246.CrossRefGoogle Scholar
  5. Bornemann, T., & Homburg, C. (2011). Psychological distance and the dual role of price. Journal of Consumer Research, 38(3), 490–504.CrossRefGoogle Scholar
  6. Brucks, M., Zeithaml, V. A., & Naylor, G. (2000). Price and brand name as indicators of quality dimensions for consumer durables. Journal of the Academy of Marketing Science, 28(3), 359–374.CrossRefGoogle Scholar
  7. Burman, B., & Biswas, A. (2007). Partitioned pricing: Can we always divide and prosper? Journal of Retailing, 83(4), 423–436.CrossRefGoogle Scholar
  8. Carlson, J. P., & Weathers, D. (2008). Examining differences in consumer reactions to partitioned prices with a variable number of price components. Journal of Business Research, 61(7), 724–731.CrossRefGoogle Scholar
  9. Cheema, A. (2008). Surcharges and seller reputation. Journal of Consumer Research, 35(1), 167–177.CrossRefGoogle Scholar
  10. Cronley, M. L., Posavac, S. S., Meyer, T., Kardes, F. R., & Kellaris, J. J. (2005). A selective hypothesis testing perspective on price-quality inference and inference-based choice. Journal of Consumer Psychology, 15(2), 159–169.CrossRefGoogle Scholar
  11. Darke, P. R., & Chung, C. M. J. (2005). Effects of pricing and promotion on consumer perceptions: It depends on how you frame it. Journal of Retailing, 81(1), 35–47.CrossRefGoogle Scholar
  12. Diehl, K., Kornish, L. J., & Lynch, J. G. (2003). Smart agents: When lower search costs for quality information increase price sensitivity. Journal of Consumer Research, 30(1), 56–71.CrossRefGoogle Scholar
  13. Erickson, G. M., & Johansson, J. K. (1985). The role of price in multiattribute product evaluations. Journal of Consumer Research, 12(2), 195–199.CrossRefGoogle Scholar
  14. Forsythe, S., & Shi, B. (2003). Consumer patronage and risk perceptions in Internet shopping. Journal of Business Research, 56(11), 867–875.CrossRefGoogle Scholar
  15. Greene, W. H. (2008). Econometric analysis (6th ed.). New Jersey: Pearson Education.Google Scholar
  16. Hamilton, R. W., & Srivastava, J. (2008). When 2 + 2 is not the same as 1 + 3: Variations in price sensitivity across components of partitioned prices. Journal of Marketing Research, 45(4), 450–461.CrossRefGoogle Scholar
  17. Huber, J., & Zwerina, K. (1996). The importance of utility balance in efficient choice designs. Journal of Marketing Research, 33(3), 307–317.CrossRefGoogle Scholar
  18. Huber, J., Wittink, D. R., Fiedler, J. A., & Miller, R. (1993). The effectiveness of alternative preference elicitation procedures in predicting choice. Journal of Marketing Research, 30(1), 105–114.CrossRefGoogle Scholar
  19. Iyengar, R., Jedidi, K., & Kohli, R. (2008). A conjoint approach to multipart pricing. Journal of Marketing Research, 45(2), 195–210.CrossRefGoogle Scholar
  20. Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47(2), 263–291.CrossRefGoogle Scholar
  21. Kardes, F. R., Cronley, M. L., Kellaris, J. J., & Posavac, S. S. (2004). The role of selective information processing in price-quality inference. Journal of Consumer Research, 31(September), 368–374.CrossRefGoogle Scholar
  22. Kardes, F. R., Cronley, M. L., & Kim, J. (2006). Construal-level effects on preference stability, preference-behavior correspondence, and the suppression of competing brands. Journal of Consumer Psychology, 16(2), 135–144.CrossRefGoogle Scholar
  23. Lal, R., & Sarvary, M. (1999). When and how is the internet likely to decrease price competition? Marketing Science, 18(4), 485–503.CrossRefGoogle Scholar
  24. Lee, Y. H., & Han, C. Y. (2002). Partitioned pricing in advertising: Effects on brand and retailer attitudes. Marketing Letters, 13(1), 27–40.CrossRefGoogle Scholar
  25. Lichtenstein, D., & Burton, S. (1989). The relationship between perceived and objective price-quality. Journal of Marketing Research, 26(4), 429–443.CrossRefGoogle Scholar
  26. Liu, M. W., & Soman, D. (2008). Behavioral Pricing. In C. P. Haugtvedt, P. M. Herr, & F. R. Kardes (Eds.), Handbook of consumer psychology (pp. 659–681). New York: Psychology Press.Google Scholar
  27. Lynch, J. G., & Ariely, D. (2000). Wine online: Search costs affect competition on price, quality, and distribution. Marketing Science, 19(1), 83–103.CrossRefGoogle Scholar
  28. Morwitz, V. G., Greenleaf, E. A., & Johnson, E. J. (1998). Divide and prosper: Consumers’ reactions to partitioned prices. Journal of Marketing Research, 35(4), 453–463.CrossRefGoogle Scholar
  29. Orme, B. (2006). SSI Web v5: Software for web interviewing and conjoint analysis. Sequim: Sawtooth Software, Inc.Google Scholar
  30. Orme, B. (2004). The CBC/HB system for hierarchical Bayes estimation version 3.2. Sequim: Sawtooth Software, Inc.Google Scholar
  31. Rao, A. R., & Monroe, K. B. (1988). The moderating effect of prior knowledge on cue utilization in product evaluations. Journal of Consumer Research, 15(2), 253–264.CrossRefGoogle Scholar
  32. Rao, V. R. & Sattler, H. (2003). Measurement of price effects with conjoint analysis. Separating informational and allocative effects of price. In: Conjoint measurement: methods and applications. Eds. Gustafsson, A., Herrmann, A., & Huber, F., 3rd ed., Berlin et al., Springer, 47–66.Google Scholar
  33. Sheng, S., Bao, Y., & Pan, Y. (2007). Partitioning or bundling? Perceived fairness of the surcharge makes a difference. Psychology & Marketing, 24(12), 1025–1041.CrossRefGoogle Scholar
  34. Shiv, B., Carmon, Z., & Ariely, D. (2005). Placebo effects of marketing actions: Consumers may get what they pay for. Journal of Marketing Research, 42(4), 383–393.CrossRefGoogle Scholar
  35. Thaler, R. (1985). Mental accounting and consumer choice. Marketing Science, 4(3), 199–204.CrossRefGoogle Scholar
  36. Theysohn, S., Klein, K., Völckner, F., & Spann, M. (2011). Dual effect-based market segmentation and price optimization. Journal of Business Research, available online 16. December 2011 ( 10.1016/j.jbusres.2011.11.007).
  37. Tukey, J. W. (1977). Exploratory data analysis. Reading: Addison Wesley.Google Scholar
  38. Völckner, F. (2008). The dual role of price: Decomposing consumers’ reactions to price. Journal of the Academy of Marketing Science, 36(3), 359–377.CrossRefGoogle Scholar
  39. Völckner, F., & Hofmann, H. (2007). Perceived price–quality relationship. A meta–analytic review and assessment of its determinants. Marketing Letters, 18(3), 181–196.CrossRefGoogle Scholar
  40. Ward, M. R., & Lee, M. J. (2000). Internet shopping, consumer search and product branding. Journal of Product & Brand Management, 9(1), 6–20.CrossRefGoogle Scholar
  41. Xia, L., & Monroe, K. B. (2004). Price partitioning on the internet. Journal of Interactive Marketing, 18(4), 63–73.CrossRefGoogle Scholar
  42. Yan, D., & Sengupta, J. (2011). Effects of construal level on the price-quality relationship. Journal of Consumer Research, 38(2), 376–389.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2012

Authors and Affiliations

  1. 1.Department for Marketing and Brand ManagementUniversity of CologneCologneGermany
  2. 2.Munich School of ManagementLudwig-Maximilians-University MunichMunichGermany

Personalised recommendations