Introduction
Marketing research habitually claims that customers are willing to pay a price premium for fair-trade products, for environmental-friendly production and other environmental or social matters. We question this paradigm by asking for contextual variables. We identify under which circumstances consumers perceive price increases caused by social reasons as more fair. In particular, we examine the role of individualism as a key trait influencing price fairness perception. Our empirical study (n>400) shows that the subdimensions of individualism differently impact perceptions of price increase fairness: consumer competition decreases fairness perception for social price increase reasons, uniqueness increases fairness perception caused by environmental-friendly production and consumer independence has a neutral effect.
Theoretical Development
In our study, we reason that different types of individualism differently influence fairness perception of price increase reason because of different social reasons. First, independence reflects an individual’s value of autonomy in judgment, decision making, and actions (e.g., Markus & Kitayama, 1991). We expect that people who feel independent put more emphasis on their person’s freedom and do not feel strong connections to others. Consumer competition represents an interpersonal comparison between the self and others and the individual’s desire to get ahead of others and striving for individual achievements (e.g., Triandis & Gelfand, 1998). Consumers also compete for the costs and benefits of higher prices. Thus, we expect that consumer competition reduces fairness perception for all subdimensions of individualism. Uniqueness is the perceived importance of developing the self’s unique identity and expressing characteristics that are different from others (e.g., Markus & Kitayama, 1991). People who feel unique typically strive for lifestyles to show their uniqueness by purchasing items, which are socially visible and symbolic of identity (Berger & Heath, 2007). They might also be willing to pay more for products and services, which support this uniqueness such as a more environmental-friendly production of products.
Research Design
We test the hypotheses using a paper-and-pencil survey approach in Germany because in Germany, price increases for CSR topics were very common in many industries in the past few years. We measured the three dimensions of individualism using the scale by Chen and West (2008). The fairness measurement of three types of price increase justifications follows the study by Homburg, Hoyer and Koschate (2005) using established 7-point Likert scales. The sample consists of more than 400 respondents.
Results and Conclusion
As assumed, results show no significant impact of consumer independence on fairness perception of price increases caused by higher payments for suppliers and environmental-friendly production. Furthermore, the effect for price increases caused by better employee payment is positive, but only small and marginally significant. These results support our hypotheses, assuming a neutral effect of independence. As expected, consumer competition decreases price fairness perception for all price increase reasons, which supports our hypotheses. Perceived uniqueness has no influence on fairness perceptions of price increases caused by higher payment for suppliers and better payment for employees, but increases fairness perception of price increases caused by environmental-friendly production. Age and gender as control variables have mainly no influence on price fairness perception. Our work contributes to marketing theory by originally showing that differences in cultural orientations within a country can explain fairness perceptions of socially justified price increases. Simple country comparisons often neglect heterogeneity in the population. Nevertheless, our results should also be generalizable for country comparisons. Secondly, consumer competition has a negative impact on price fairness for all price increase justifications, while independence has mostly neutral influences and, uniqueness partly even positive effects. This suggests to differentiate dimensions of individualism. Thirdly, the effects differ across social price increase justifications. Thus, consumers seem to evaluate carefully what benefits they personally get from a specific price increase reason. For example, uniqueness increases fairness perceptions if the company refers to an environmental-friendly production, but not for better payment of suppliers and employees. Hence, customers might perceive a higher signaling benefit from buying and consuming environmental-friendly produced products. These findings deepen our knowledge on effects of price increase justifications.

• Doreen Pick(Merseburg University of Applied Sciences, Germany)
• Stephan Zielke(University of Wuppertal, Germany)