Dynamic Pricing Perception and Purchase Behaviour

This paper looks at consumers' perceptions of dynamic pricing and its impact on purchasing intentions by way of a thorough literature analysis and analysis of primary survey data collected from a group of young Indian consumers. The literature shows how the use of reference price effects, consumer strategy, loss aversion, and perception of fairness affects consumers' reactions towards algorithmic pricing; tactics like markdown skimming, price guarantee, and price frame were found to be highly useful in reducing adverse consumer reactions. An analysis of survey data (responses based on the Likert scale) using multiple regression showed that reference price compatibility proved to be the strongest positive determinant of purchasing intention, while retailer trust was found to have a surprisingly negative impact in tune with the "dark side of reputation." While loyalty programs were seen to be appreciated, strategic waiting was found to be prevalent.