Fairness perception of ancillary fees: Industry differences and communication strategies. (July 2020)

• Record Type: Journal Article
• Authors: Chu, Wujin; Lee, Jeongmin; Baumann, Chris; Kang, Christine
• Is Part Of: Journal of retailing and consumer services. Volume 55(2020)
• Publication Date: 2020-07
• Subjects: Service design -- Ancillary fees -- Price fairness -- Dual entitlement -- Partitioned pricing -- Service industry; Retail trade -- Periodicals; Service industries -- Periodicals; Customer services -- Periodicals; Commerce de détail -- Périodiques; Service à la clientèle -- Périodiques; Customer services; Retail trade; Periodicals; 658.87
• DOI: 10.1016/j.jretconser.2020.102092
• Languages: English
• ISSNs: 0969-6989

Abstract

Abstract: This study examines fairness perception of ancillary fees across different industries, and ways to communicate ancillary fees in a way that reduces customers' feeling that they are being unfairly treated. Through surveys and consumer experiments, we show that consumers' perception of fairness decreases as the level of ancillary fees increases, with differences across industries. Also, when the customer is given a cue that the ancillary fees are necessary for low base prices, fairness perception increases, explained by the "dual entitlement" concept. Another effective communication strategy is early disclosure, as opposed to late disclosure which decreases fairness perception and willingness to recommend.