This research was conducted in order to examine the effect of comparative price on consumers’ reactions to service failure in the loyalty program. The current study finds that under condition of lower level of persuasion knowledge, compared to single retail price, comparative price would mitigate consumers’ negative emotion in the context of service failure, which in turn improves customers’ tolerance. The authors test this prediction in two experiments. Experiment 1 aimed to provide an initial exploration of hypothesis by employing a between-subjects design. This experiment recruited undergraduate students at Suzhou University to complete an online survey. After reading the scenario of service failure, participants were asked to answer a series of questions about their intension of spreading negative word of mouth (NWOM). A one-way ANOVA on intention of spreading NWOM suggested that the NWOM activity was significantly lower in the group of comparative prices than in the group of single retail price. In experiment 2, the authors measured angry and intension to complain when participants finished reading the scenario of service failure. Furthermore, one week later the authors measured price tactic persuasion knowledge of participants. The bootstrap method (number of bootstrap samples = 5000, level of confidence = .95) was used. The results showed that customers’ angry level mediated the effect of comparative price on intension of complaint. The authors further conducted a mediated moderation analysis with the participants in the high- and low-persuasive-knowledge conditions. The results indicated the indirect effect of the comparative price on intention to complain was mediated by customers’ angry when they have low persuasive knowledge, whereas the mediation effect of customer’s angry level was no longer significant in the higher persuasive-knowledge condition. To summarize, this research suggested that comparative price would exert a marked impact on the tolerance of members of loyalty program in the context of service failure. The present paper adds to the existing comparative price literatures by confirming its impact on consumers’ judgment in the context of service failure even if they are all members of loyalty program and informed with information of discounted size in advance. Given the special meaning of NWOM and complaint, current paper provides implications for marketing practices.

• Hailong Yang(Suzhou University, China)
• Yuanyu Zhang(Renmin University of China, China)
• Liangjing Che(Renmin University of China, China)