The effects of digital promotion on PWYW price - Case: Digital smartphone app

Abstract

In this age of digitalization when consumers are increasingly more resistant to downstream advertisement, Pay-What-You-Want (PWYW) rises up as an innovative pricing opportunity that can differentiate firm from its competitors. In theory, PWYW is categorized as a participative pricing mechanism where the buyers will name the price and the sellers cannot withdraw from the offers. Despite the obvious risk involved, PWYW has been increasing gaining popularity among industries, from food, beverage to restaurant and other services.

While the recent literature has been focusing on understanding the causality effect of PWYW mechanism, few have tapped into the potential of PWYW under digital conditions. As a result, this thesis focuses on investigating the effect of digital marketing strategy, in particular promotional activity, on PWYW price. The objective of the thesis is to reveal any main effects of digital promotion on PWYW price as well as their interaction effects.

The thesis employs deductive approach and utilizes quantitative method to analyse and quantify results. Primary data was collected from experimental surveys with eight conditions varied across three variables, each variable had its own two categories. Secondary data was reported from existing literature in publications such as journals, books, electronic database and the Internet.

Findings from the study indicate that digital promotion has statistically significant effects on PWYW price paid for digital goods. The main effects of three variables involved as well as their interaction effects (two-way and three-way) were found from the data. To conclude, the author assesses the research to be highly reliable and valid. Acknowledgement of limitation and future research suggestions are pointed out, particularly in the direction of accompanying the digital marketing mix as a holistic approach to PWYW price paid.