How Should Consumers’ Willingness to Pay Be Measured? An Empirical Comparison of State-of-the-Art Approaches

Krohmer, Harley; Zhang, Z. John; Hofstetter, Reto; Miller, Klaus (2011). How Should Consumers’ Willingness to Pay Be Measured? An Empirical Comparison of State-of-the-Art Approaches. Journal of Marketing Research, 48(1), pp. 172-184. American Marketing Association 10.1509/jmkr.48.1.172

[img] Text
Miller, Hofstetter, Krohmer, Zhang (2011).pdf - Published Version
Restricted to registered users only
Available under License Publisher holds Copyright.

Download (324kB) | Request a copy

This study compares the performance of four commonly used approaches to measure consumers’ willingness to pay with real purchase data (REAL): the open-ended (OE) question format; choicebased conjoint (CBC) analysis; Becker, DeGroot, and Marschak’s (BDM) incentive-compatible mechanism; and incentive-aligned choice-based conjoint (ICBC) analysis. With this five-in-one approach, the authors test the relative strengths of the four measurement methods, using REAL as the benchmark, on the basis of statistical criteria and decision-relevant metrics. The results indicate that the BDM and ICBC approaches can pass statistical and decision-oriented tests. The authors find that respondents are more price sensitive in incentive-aligned settings than in non-incentive-aligned settings and the REAL setting. Furthermore, they find a large number of “none” choices under ICBC than under hypothetical conjoint analysis. This study uncovers an intriguing possibility: Even when the OE format and CBC analysis generate hypothetical bias, they may still lead to the right demand curves and right pricing decisions.

Item Type:

Journal Article (Original Article)

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Business Management > Institute of Innovation Management > Marketing

UniBE Contributor:

Krohmer, Harley; Hofstetter, Reto and Miller, Klaus

Subjects:

600 Technology > 650 Management & public relations

ISSN:

0022-2437

Publisher:

American Marketing Association

Language:

English

Submitter:

Daniela Herzog

Date Deposited:

19 May 2015 14:32

Last Modified:

19 May 2015 14:32

Publisher DOI:

10.1509/jmkr.48.1.172

BORIS DOI:

10.7892/boris.68450

URI:

https://boris.unibe.ch/id/eprint/68450

Actions (login required)

Edit item Edit item
Provide Feedback