FAIRNESS AT A PRICE: UNDERSTANDING THE PSYCHOLOGICAL MECHANISMS BEHIND PRICE DISCRIMINATION

Abstract

This research examines how different price discrimination strategies influence consumers’ sense of fairness and their willingness to repurchase — one of the most decisive indicators of brand loyalty. In markets where competition and transparency are intensifying, pricing has become more than a financial decision; it is a statement of a firm’s ethics and respect for its customers. The study distinguishes between four major forms of price discrimination — time-based, location-based, quantity-based, and customer characteristics-based — and reveals that not all discrimination is perceived equally. Consumers accept time-based and customer-oriented differences when they perceive a clear logic or reward behind them, such as loyalty benefits or off-peak discounts. In contrast, arbitrary or opaque practices, especially those tied to location or purchasing volume, provoke perceptions of injustice and distrust. The findings demonstrate that fairness is not a secondary sentiment but the central bridge between pricing strategy and consumer behavior. When customers feel treated fairly, they do not merely repurchase — they internalize the brand’s values and advocate for it. The study underscores a crucial managerial insight: in the long term, fairness-driven pricing is not only ethically superior but strategically indispensable for sustaining competitiveness and trust in modern markets.