Socialize More, Pay Less: Randomized Field Experiments on Social Pricing

• 成果类型: Article
• 署名作者: Gao, Haibing; Kumar, Subodha; Tan, Yinliang (Ricky); Zhao, Huazhong
• 署名单位: Renmin University of China; Pennsylvania Commonwealth System of Higher Education (PCSHE); Temple University; University of Houston System; University of Houston; City University of Hong Kong
• 刊物名称: INFORMATION SYSTEMS RESEARCH
• ISSN/ISSBN: 1047-7047
• DOI: 10.1287/isre.2021.1089
• 发表日期: 2022
• 页码: 935-953
• 关键词: word-of-mouth; consumers; network; strategies; IMPACT; deal; DISCRIMINATION; EVOLUTION; commerce; BEHAVIOR

摘要

A growing number of online retailers have started to mesh their pricing strategies with consumers' social networks. Specifically, they allowconsumers to invite peers fromsocial media to request a discount for their purchases. Inspired by this phenomenon, we propose social pricing, a novel pricing framework underwhich consumerswith higher social capital enjoy a better price. Conceptually, social pricing enables firms to achieve price discrimination based on a consumer's social value. This is in sharp contrast with traditional price discrimination strategieswhere price differentiation typically hinges on consumers' personal value (individual willingness to pay). Although social pricing has been popular in practice, whether it works, why it works, and how it works remain unclear because of a lack of rigorous academic research. To address this gap, we design and conduct two randomized field experiments on a leading online fresh food retailer to understand the value of social pricing. Social pricing has been commonly credited for its effectiveness in new customer acquisition. Interestingly, our study reveals that it is also highly effective on existing consumers. Our analysis shows that social pricing can increase an online retailer's profit by 40% solely fromexisting consumers, compared with regular firm-offered discounts. Exploration of the underlying mechanisms reveals that perceived engagement and social cost are the main drivers here, which not only help to increase purchasing frequency but also induce higher order value per purchase. In a follow-up experiment, we vary the rules of social interactions by requiring heterogeneity in consumers' purchasing frequencies. The results suggest that a heterogeneity-based strategy can further amplify the benefits of social pricing. In summary, our study conceptualizes a novel pricing scheme, social pricing, and provides valuable guidance to both researchers and practitioners by offering actionable insights regarding the design of social pricing strategies.