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Willing to pay more, eager to pay less : the role of customer loyalty in price negotiations
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Wieseke, Jan, Alavi, Sascha and Habel, Johannes (2014) Willing to pay more, eager to pay less : the role of customer loyalty in price negotiations. Journal of Marketing, 78 (6). pp. 17-37. doi:10.1509/jm.13.0104
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Official URL: http://dx.doi.org/10.1509/jm.13.0104
Abstract
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 company's 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 customer's 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.
| Item Type: | Journal Article | ||||||
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| Subjects: | H Social Sciences > HF Commerce | ||||||
| Divisions: | Faculty of Social Sciences > Warwick Business School > Marketing Group Faculty of Social Sciences > Warwick Business School |
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| Library of Congress Subject Headings (LCSH): | Pricing, Consumers | ||||||
| Journal or Publication Title: | Journal of Marketing | ||||||
| Publisher: | Sage Publications, Inc. | ||||||
| ISSN: | 0022-2429 | ||||||
| Official Date: | 1 November 2014 | ||||||
| Dates: |
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| Volume: | 78 | ||||||
| Number: | 6 | ||||||
| Page Range: | pp. 17-37 | ||||||
| DOI: | 10.1509/jm.13.0104 | ||||||
| Status: | Peer Reviewed | ||||||
| Publication Status: | Published | ||||||
| Reuse Statement (publisher, data, author rights): | Wieseke, Jan, Alavi, Sascha and Habel, Johannes (2014) Willing to pay more, eager to pay less : the role of customer loyalty in price negotiations. Journal of Marketing, 78 (6). pp. 17-37. doi:10.1509/jm.13.0104. Copyright © 2014, American Marketing Association. Reprinted by permission of SAGE Publications. http://dx.doi.org/10.1509/jm.13.0104 | ||||||
| Access rights to Published version: | Restricted or Subscription Access |
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