Putting service relations to the test: how can negative consumer reactions of price increases be reduced?

David M. Woisetschläger, Heiner Evanschitzky, Hartmut H. Holzmüller

Research output: Contribution to journalArticlepeer-review

Abstract

Price increases seem to be an adequate way to improve the earnings of companies. This fact becomes especially crucial because of increased price competition in many markets. Price increases might lead to negative customer reactions, such as a lower perceived utility or a lower loyalty intention. Therefore, the question for managers remains how prices can be increased without losing customers. Results of our experimental study suggest that customers of energy suppliers rate the perceived utility of the offer relatively better when the price increase is combined with an additional modification of the product or accompanied by a new service. It becomes clear that intensifying service relations can offset the negative effects of price increases.
Original languageEnglish
Pages (from-to)377-390
Number of pages14
JournalJournal of Relationship Marketing
Volume7
Issue number4
Early online date1 Dec 2008
DOIs
Publication statusPublished - 2008

Keywords

  • pricing
  • service relationships
  • price increase
  • consumer reactions
  • experimental research

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