An Examination of Construal Effects on Price Perceptions in the Advance Selling of Experience Services

Abstract

Service research in the advance selling of experience services is limited in regard to how individual and situational differences influence price information processing. Applying construal-level theory in the context of advance selling of tickets for experience services, this research demonstrates that who (near vs. far social distance), when (near vs. far temporal distance), and where (spatial distance) influence price sensitivity and perceived value of the experience service. Study 1 finds that consumers are more price sensitive when they consider the advance purchase of events taking place further in the future, unless they are experienced, as Study 2 finds. Across both studies, buyers perceive greater value when the time and location of the event are psychologically near. Compared to when social distance is near (self-reference), consumers construe other average buyers in the market to be relatively more price sensitive and to perceive relatively higher value for experience services. Since an important factor at work in the minds of buyers is other buyers, the results imply that service providers should frame offers in reference more to others than the self for experiences. The effects of time and distance suggest managers should carefully geo-target offers customized to when and where customers are when buying tickets. As experienced buyers have learned to be price sensitive for tickets, managers should identify these individuals to provide relevant value-added offers.

Keywords

construal-level theory psychological distance price sensitivity perceived value experience service

The true price of anything you do is the amount of time you exchange for it.

Henry David Thoreau Services are often sold in advance, and price fluctuations are common with the influx of intermediaries in secondary markets (e.g., StubHub) that facilitate the resale of all kinds of experiences. How do buyers process price information about experiences closer or farther away in terms of for whom, when, and where the event occurs? We examine price information processing in the context of the advance selling of experience services.

Construal-level theory (CLT) suggests that individuals travel across time, space, and social contexts by forming abstract mental pictures of distal objects (Liberman and Trope 1998; Trope and Liberman 2010). Consider the purchase of tickets to a concert, play, sporting event, or other performances and events with set capacities on given dates. Individuals predict or perceive the value depending on whether the event will take place sooner or later (temporal distance), what they believe about the value of the tickets personally relative to how others in the market value the tickets (social distance), and whether the event is located nearby or far away (spatial distance). We investigate how these aspects of psychological distance influence perceived value and price sensitivity in two field studies involving the advance selling of tickets.

Advance selling by service providers and resellers has increasingly drawn attention from service researchers (Geng, Wu, and Whinston 2007; Moe and Fader 2009) at the aggregate but not at the individual level. Specifically, Chandler and Lusch (2015) call for research on the role of time and context in determining how individual consumers perceive value propositions for experience services. Yet, to date, no research has examined individual differences in consumer processing of prices for advance purchases. Prior investigations in advance selling have treated consumer uncertainty as relatively homogeneous among rational consumers (Prasad, Stecke, and Zhao 2011; Shugan and Xie 2005; Xie and Shugan 2001). Research has made some effort to examine elements of buyer-seller perceptions but, in reference to advance selling, concluded that sellers are blind to consumer valuations (Fay and Xie 2010), with little regard to other factors that could reveal individual consumer perceptions of value and price.

We examine differences in perceived value and price sensitivity in the context of the advance selling of hedonic experience services. These services may be repeatedly purchased; yet limited inventory or capacity exists for any given date. Examples include ski and vacation resorts, performing arts, sporting events, movie theaters, amusement parks, and various hospitality services. Employing CLT (Liberman and Trope 1998), we present theoretical expectations and empirical evidence to understand who might perceive greater value and be price sensitive to admissions to future experiences and when and where this may occur. Fundamentally, CLT holds that individuals construe psychologically distant events in the abstract and evaluate events perceived as near (in time, in space, or in person) in concrete terms (Trope and Liberman 2003). Figure 1 illustrates the proposed framework.

Figure 1.

Construal effects on perceived value and price sensitivity of experience services: A proposed framework.

This research contributes to the field of advance selling of services by applying CLT to examine multiple sources of psychological distance while accounting for individual differences that may interact and explain perceived value of and price sensitivity to such purchases. Prior service research (e.g., Pizzi et al. 2015) has focused only on temporal distance. Although Liberman and Trope (2014, p. 364) claim that much of people’s lives “revolve around things that are not happening to [them] right now,” little is known about how psychological distance influences price information processing in advance selling contexts in which time, person, and space variations are inherent.

In Study 1, we find that temporal, social, and spatial distance influences perceived value and price sensitivity among consumers considering buying tickets in advance across a range of professional sporting events. In Study 2, the focus turns to performing arts among past buyers considering prices for performances in the near versus distant future, considering self-perceptions of price or those of others and considering the effects of spatial distance (those who live nearby vs. far away) in that market. We find temporal distance effects on price sensitivity dissipate among experienced buyers, but other construal-level effects are consistent with the first study. Service marketers in advance selling scenarios may benefit by more effectively promoting and pricing experiences according to likely consumer psychological dispositions. Doing so should increase advance selling to end consumers (over brokers), allowing service marketers to better control inventory and maximize profits. Researchers may benefit by better understanding the interplay of multiple dimensions of psychological distance and responses to the advance selling of experience services.

Literature Review and Hypotheses

Price Perceptions

Perceived value precedes purchase intentions for experience services (Wakefield and Barnes 1996). An individual exchanges time, effort, and money in return for admission to an experience, comparing the total utility with what is given for it—this is the perceived value (Zeithaml 1988). The transactional components of giving and receiving is the ratio of quality to price (Monroe 1990) conceptualized as value-for-money (Sweeney and Soutar 2001). In short, the perceived value is the benefits received for the price paid (Perera and Vlosky 2013).

Price sensitivity is the extent to which an individual changes behavior in response to a change in price based on the individual’s subjective scale (Gabor and Granger 1966). In early empirical work, Gabor and Granger (1966) identified three subjective responses to a given price within a reasonably homogeneous population: those who find the price “too cheap,” those who find the price “too expensive,” and those who do not view price as an obstacle to buying at the given price. In the case of a product/service for which the consumer is familiar and considers essential or somewhat essential, the effect of price as an indicator of quality becomes less important, and the consumer is generally less price sensitive (Sowter, Gabor, and Granger 1971).

CLT and Price Perceptions

Liberman and Trope (2014, p. 365) suggest that “it is ever important whether an object is real or imagined, certain or probable, present, future or past, mine or somebody else’s.” CLT proposes that individuals construe, or interpret, experiences from different perspectives according to psychological distance in terms of time, space, or other people (Trope and Liberman 2010). Fundamentally, a higher level construal constitutes abstract mental processes, while a lower level construal denotes concrete thoughts. Individuals operate at higher construal levels when psychological distance increases which entails any way an object could be removed from the self (Trope and Liberman 2010). Table 1 contains the characteristics of low- and high-level construal derived from the work of Trope and Liberman (2003, 2010; also Liberman and Trope 2014) applied to experience services that form the basis for our CLT-related hypotheses.

Table 1.

Distinguishing High- and Low-Level Construal and Psychological Distance in Advance Selling of Experience Services.

High-Level Construal	Low-Level Construal
Abstract	Concrete
Simple	Complex
Structure, coherent	Unstructured, incoherent
Decontextualized	Contextualized
Primary, core	Secondary, surface
Superordinate	Subordinate
Goal relevant	Goal irrelevant
Desirability	Feasibility
Ends	Means
High psychological distance	Low psychological distance
Temporal (far)	Temporal (near)
Purchase far in advance of the event	Purchase close to the time of the event
Social (others)	Social (self)
What a buyer believes others think of prices	What a buyer thinks of prices
Spatial (far away)	Spatial (nearby)
How a buyer thinks about distant places	How a buyer thinks about places close by

Note. Adapted from Trope and Liberman (2003, 2010) and Liberman and Trope (2014).

Three recognized psychological distances are temporal, social, and spatial (Trope and Liberman 2010). Temporal psychological distance is near the closer the experience is to the present time and farther as the event extends into the future. If considering tickets for an event (e.g., movie, sporting event, and concert) commencing in a matter of minutes, temporal distance is very near. In contrast, buying in advance for next month or next year (e.g., vacations) is more distant and requires higher level construal. Social psychological distance can be near for a personal experience or far if it is someone else’s experience; personal experience is interpreted at low construal levels in concrete terms and at high construal in abstract terms when considering the point of view of others. Others in distal groups are regarded holistically, in abstract form, characterized by stereotypes (Liberman and Trope 2014). Spatial distance is often considered with respect to the perceived physical distance or space between the self and others but may also include the degree of space between the self and some other physical place (Williams and Bargh 2008). Experiments examining spatial distance typically involve manipulations of objects within view, such as words, pictures, and other people (e.g., Amit, Algom, and Trope 2009). Less frequently studied are spatial distances between consumers and places they have seen or visited. Fujita et al. (2006) find that spatially distant events are associated with high-level construal, but Trope and Liberman (2010) suggest that the perception of distance between objects does not necessarily follow a linear function but is subjective, dependent on psychological characteristics of the individual and physical characteristics of the object/place considered. Similarly, thinking about personally purchasing in advance (near social distance) or thinking of how others perceive prices (far social distance) leads to differing types of reasoning. Considering opinions (self vs. others) and timing (sooner vs. later), buyers might perceive prices differently depending on psychological distance.

Psychological distance can influence price information processing for products. Bornemann and Homburg (2011) suggest that price sensitivity can be explained in terms of construal level and psychological distance. When psychologically distant, consumers use price information to make quality inferences (Bornemann and Homburg 2011; Yan and Sengupta 2011) and to determine their preferences for products based on desirability (Lee and Zhao 2014). Chen (2009) argues that reference prices have differential effects depending on whether consumers consider the perspective of others. However, beyond a study on charitable giving (MacDonnell and White 2015), researchers have not examined the role of psychological distance when individuals process price information for advanced purchases in the service industry and experience services in particular.

Hypotheses

Temporal

Temporal distance of an event alters the evaluations, predictions, and choices people make daily (Trope and Liberman 2003). Applying construal characteristics to advance purchases of experiences, temporally distant tasks or goals are perceived with more optimism than those same tasks to be completed sooner (Pennington and Roese 2003). Finding a better price among a variety of (ticket) purchase options for an event in the distant future seems more likely than for a limited supply of seats available for an event this weekend. In the near term, buyers access relatively concrete information regarding availability and consciously consider the complexities of the immediate buying situation (e.g., limited search time), resulting in less price sensitivity. In contrast, in the context of the more distant and nebulous future, they think in abstract terms and overestimate ability and the time available to accomplish the price search task (i.e., the planning fallacy; Kahneman and Tversky 1977).

Consumers think in more abstract and simple terms with respect to future events because of increased confidence in their ability to successfully complete a task in the future rather than in the present or near future (Gilovich, Kerr, and Medvec 1993). This confidence is partly accounted for by the discounting of potential obstacles (Kahneman and Tversky 1977; Newby-Clark et al. 2000). An affective explanation is also associated with how one feels about near or distant events (Sanna 1999), but temporal construal is the cognitive explanation for the increased (decreased) confidence in achieving goals for future (proximate) events (Pennington and Roese 2003). Applied to price search, in general, consumers believe that they will have the time and ability to find better prices in the more distant future, but pessimism sets in closer to the date of the event when they focus more on specific obstacles to finding lower prices (Sweeny and Krizan 2013).

Hypothesis 1: Price sensitivity is higher when temporal distance is far than when it is near.

Perceived value of an experience increases as the time to consume draws nearer. Concrete attributes are mentally stored and play a role in making subsequent judgments. Thoughts about monetary expenditures comprise concrete thinking and lead to more concrete construal about related actions (MacDonnell and White 2015). If the time of a purchase is near to the consumption experience, the consumer’s perceptions of gain include explicit thoughts. For example, during the week preceding a football game, a fan may recall specific images associated with the event, such as pregame tailgating, wearing of team colors, or the exciting stimuli (e.g., food, drinks, facilities, lighting, sounds). For temporally distant events, the perceived value of the purchase is diminished as the buyer draws on more abstract benefits (e.g., enjoyment) versus the concrete benefits that come with immediacy.

Proximal events are more attractive than more distant events (Jhang and Lynch 2015), as individuals become more focused on what is about to happen now as they near the commencement and completion of consumption goals. Individuals are less willing to give up slack time to achieve the goal when the event is coming sooner than later (Jhang and Lynch 2015; Lynch et al. 2010). With respect to CLT, such consumption experiences are considered more valuable in the near term, when concrete details are available in the present context, compared to the abstracted, decontextualized view of the distant future. From a practical standpoint, as the consumption experience draws nearer, less is left to the imagination as potential buyers access concrete information pertaining to the reality of experiencing the event. Thus:

Hypothesis 2: Perceived value is higher when temporal distance is near than when it is far.

Social

Social distance exists if the prediction, evaluation, or choice is for anyone other than the self. Decisions for the self are concrete, specific, and relatively more complex than the high levels of construal necessary when one considers how others may evaluate an experience. Social distance is a lens that psychologically alters evaluations such that for socially distal people, one speculates what “seems to be the case” versus “what is the case” for one’s self (Stephan, Liberman, and Trope 2010).

Consideration of the opinions and actions of others is inherent in advance selling contexts. For example, when considering a ticket several months in advance of the concert of a favorite artist, a buyer may think about how many others will buy tickets the first day of release, wait until closer to the event, or not buy at all. The buyer speculates on the beliefs and actions of others and the impact on ticket availability.

In the high-level construal context of considering how others (the average consumer) might evaluate and respond to prices for an experience, we expect that individuals will generalize or predict that others will perceive relatively high value for hedonic experience services. In high construal, individuals resort to stereotypes of group identities (Liberman and Trope 2014). While social distance may reduce positivity about an opposing out-group (Liberman, Trope, and Wakslak 2007), positive attributions are likely for desirable out-groups insofar as they are accessible and aspirational (Dimofte, Goodstein, and Brumbaugh 2015).

With respect to socially desirable experiences, such as cruise ships, professional sporting events, popular concerts, and ski trips, individuals think popular experiences are just that—popular and positively perceived among the event’s clientele, even if the individual sees little personal value. Individuals perceive high-status brands (purchased by others) as having higher symbolic and social value than low-status brands (Stockburger-Sauer and Teichmann 2013). Just as individuals believe others place high value on a Rolex watch or Porsche car, even though they may not own one, we expect they will construe that others will perceive high value for hedonic experience services under purchase consideration.

Conversely, when social distance is near—when one personally considers the value received for a selected experience service—other concrete personal factors come into play. Liberman and Trope (2014) maintain that focus shifts to situational factors that may differ from the global abstractions attributed to the group of consumers who typically enjoy the experience. Among a cross-section of potential buyers considering advance purchases, some may not enjoy the experience or, at least, enjoy the experience less than the ideal associated with the typical experiences of others who ski, take cruises, or attend concerts, theater, operas, and sporting events. Individuals who see themselves as further (different) from those highly identified with consuming the experience are likely to access personal, concrete opinions that represent lower perceptions of value than the average consumer who identifies with the provider of the consumption experience (e.g., fans of a sports team, musical artist, or performers). Thus:

Hypothesis 3: Perceived value is higher when social distance is far than when it is near.

Distal others are stereotyped as highly sensitive to differences in prices. Regardless of their own behaviors, cultural norms may lead individuals to believe that others highly regard price-sensitive, frugal behaviors (Borrayo and Jenkins 2003; Schmidt and Boland 1986). As Westacott (2016, p. 1) explains, “Each year new books appear urging us to live more economically, advising us how to spend less and save more, critiquing consumerism….. Websites and blogs devoted to frugality…are legion.” Consistent with Irmak, Wakslak, and Trope (2013), in the superordinate approach associated with high construal, consumers assume that others fit the mold and will pay attention to prices rather than ignore prices. Accordingly, when individuals are asked how others might respond to price variations (i.e., willingness to seek lower prices), we expect the stereotype of price sensitivity to prevail in the far social context. Thus:

Hypothesis 4: Price sensitivity is higher when social distance is far than when it is near.

Spatial

Individuals considering advance purchases for experience services are likely to evaluate the distance required to get to the destination. In keeping with CLT, that which is more accessible will be perceived more positively (Agrawal and Maheswaran 2005). Spatially near events are associated with low-level construal (Fujita et al. 2006) such that individuals living nearby will perceive the feasibility of attending an event as more likely than those living far away. Thus:

Hypothesis 5: Perceived value is higher when spatial distance is near than when it is far.

Study 1

The purpose of Study 1 is to assess temporal, social, and spatial distance on perceptions of price sensitivity and perceived value when purchasing hedonic experience services in advance. We test each hypothesis in the context of buying advance tickets to professional sports events.

Method

Sample

We investigate consumer response to prices in an advance selling context within (1) the category of advance sales of admissions to spectator sports, (2) the topic of related advance selling studies at the aggregate level (e.g., Geng, Wu, and Whinston 2007; Moe and Fader 2009), and (3) a setting important to services researchers (Grove et al. 2012). We used a nationwide online panel to obtain a sample of 281 adult participants representing all markets containing professional teams (National Football league [NFL], National Basketball Association [NBA], National Hockey League [NHL], Major League Baseball [MLB], and Major League Soccer [MLS]). Respondents were predominantly Caucasian (84.0%), 55.5% were men, and the average age was 33 years (range: 20–67 years). The sample represented households of lower (<$30,000, 32.4%), middle ($30,000–$69,999, 48.8%), and upper ($70,000+, 19.8%) income levels.

We collected data in two waves during the respective seasons of each sport. One wave occurred in November and asked respondents to select an NFL, NBA, or NHL team geographically closest to their current residences. The second wave (collected in May) asked respondents to select the geographically closest MLB or MLS team. Respondents were instructed to select a single team if two teams were equal distance from their residences. Respondents represented individuals in the markets of all 32 NFL teams (N = 115) and all 30 MLB teams (N = 97) as well as 16 NBA teams (N = 40), 13 NHL teams (N = 19), and 9 MLS teams (N = 10). One quarter of the respondents lived within 13 miles of the team selected and 51.6% within 35 miles; thus, respondents represented both local and regional consumer markets.

Procedure

To manipulate psychological distance, we employed a 2 (temporal distance: near vs. distant) × 2 (social distance: near vs. distant) between-subjects design. Respondents were randomly assigned to one of four scenarios in which the team name provided by the respondent was inserted into the setting. With respect to temporal distance, we asked respondents to consider the purchase for this weekend in the near condition¹ versus buying a ticket the same time of the year next season in the far condition. To manipulate social distance, we asked those in the near condition, “What do you think about ticket prices?” We asked those in the far condition, “What do you think the average fan of the [team] thinks about ticket prices?” The exact wording of the items appears in Table 2. A separate panel (N = 337) of recent ticket buyers found that 65.8% agree or strongly agree that they consider the ticket-buying behavior of other fans in deciding when and what to buy; only 18.1% reported they do not consider the buying behavior of others when buying. Thus, asking what people believe about the average fan is relevant among ticket buyers.

Table 2.

Study 1 Construct Items, Means, and Standard Deviations.

Item (*Reverse scored)		M (SD)
Perceived value: When you think about buying a ticket to a (team) game for (time/date) what do you think (the average fan thinks) about ticket prices? (a = .906)
PV1	Bad buy/Good buy	4.45 (1.53)
PV2	Not worth the money/Worth the money	4.50 (1.72)
PV3	Too high for the quality of entertainment/Not too high for the quality of entertainment	4.19 (1.73)
Price sensitivity: With respect to buying a ticket for (time/date), what do you think (the average fan thinks) about ticket prices? (a = .836)
PS1	I (The average fan) will make an extra effort to find a low price for a ticket to the game.	4.21 (1.54)
PS2	I (The average fan) will change what I (s/he) had planned to buy in order to take advantage of a lower price for a ticket to the game.	4.07 (1.49)
PS3	I (The average fan) am (is) sensitive to differences in prices of tickets to the game	4.32 (1.38)
Perceived distance: Think about the scenario of buying tickets to the game. Did you picture the place as being: (a = .959)
SD1	Someplace nearby*	3.09 (1.74)
SD2	Close to me*	3.11 (1.80)
SD3	Somewhere in close proximity*	3.12 (1.78)
SD4	Far away from me	2.98 (1.83)

The temporal distance scenario (buying for this weekend vs. same time next year) comes from prior CLT experiments (Bornemann and Homburg 2011; Liberman and Trope 1998) to fit the context of this experience service. Bornemann and Homburg (2011) provide evidence that asking individuals to consider purchase situations for themselves versus for the average person produces distinct social distance. In advance selling contexts, both buyers and sellers speculate about the behavior of the average customer to determine acceptable prices (Happel and Jennings 2002). Like other CLT studies (e.g., Kim, Zhang, and Li 2008), we measured motivation to complete the survey tasks with high levels of care (M = 6.84; 7-point scale) and found no differences (p > .40) across the four scenarios.

We measured perceived spatial distance by asking respondents to think about the buying scenario and where they pictured the place of the experience. We captured responses with 4 items (a = .96) from Zhang and Wang (2009) that describe spatial distance in terms of being nearby,” “close to,” “in close proximity,” and “far away from me (reversed).” Thus, we measured perceived distance as a function of naturally occurring phenomenon with respect to variations in distances traveled. Respondents also reported the actual distance in miles from their residences to the venues, which correlates with spatial distance perceptions (r = .366, p < .01).

Prior research has tested the dependent measures in hedonic service contexts. We adapted price sensitivity (a = .84) from Wakefield and Inman (2003) and captured perceived value (a = .88) with items drawn from Wakefield and Barnes (1996). Table 2 lists the items, means, and SDs. As does other CLT work (Fujita et al. 2006; MacDonnell and White 2015; Zhao and Xie 2011), we account for affinity of the service provider via social identification (Mael and Ashforth 1992) as well as accounting for individual differences (demographics).

Analysis and Results

We conducted a 2 (temporal: near/far) × 2 (social: near/far) multivariate analysis of covariance (MANCOVA) to test the hypotheses. The dependent variables were price sensitivity and perceived value, with perceived spatial distance included as a covariate. The results confirming each hypothesis appear in Table 3.

Table 3.

Study 1 MANCOVA: Multivariate (Wilks’s Lambda) and Univariate Between-Subjects Effects.

	Variables
H's	Independent	Dependent	F	df	df error	p	Adjusted Means		η²
	Temporal distance		5.85	2	265	.003	Near	Far	.042
H1	Price sensitivity		6.41	1	266	.012	4.23	4.45	.024
H2	Perceived value		3.97	1	266	.047	5.06	4.90	.015
	Social distance		12.21	2	265	.001	Near	Far	.084
H4	Price sensitivity		13.95	1	266	.001	4.22	4.45	.048
H3	Perceived value		13.51	1	266	.001	4.66	5.30	.050
	Continuous independent variable						β	t-value
	Spatial distance		4.98	2	265	.007			.035
H5	Perceived value		9.48	1	266	.002	−.126	−2.74	.034

Note. H = hypothesis; MANCOVA = multivariate analysis of covariance. Means adjusted for covariates of spatial distance, identification, age, and household income.

Discussion

Study 1 represents an initial effort to understand how differences in psychological distance with respect to who (self vs. others), when (sooner vs. later), and where (spatially near/far) influence price information processing in advance selling of hedonic experience services. Confirming Hypothesis 1, consumers considering ticket purchases for the coming weekend were significantly (p = .012) less price sensitive (M = 4.23) than those considering a ticket for use in the distant future (M = 4.45). As anticipated, those in the near temporal condition perceived significantly (p = .047) higher value for the ticket to use in the near term (M = 5.06) than in the distant future (M = 4.90), in support of Hypothesis 2. Confirming Hypothesis 3, consumers considering ticket prices for themselves perceived significantly (p < .001) lower value (M = 4.66) than those asked about the opinions of what distant others perceived the value of a ticket to be (M = 5.30). In support of Hypothesis 4, price sensitivity was significantly (p < .001) lower for those in the psychologically near social condition considering the self (M = 4.22) than for those in the far social condition construing the price sensitivity of others in the market (M = 4.45). Spatial distance produced a significant overall effect (p = .007), indicating the farther away respondents perceived the venue to be from their residences, the less value they placed on the ticket (β = −.126, t = −2.74). Thus, Hypothesis 5 is supported. Overall, including the individual differences, the model explains 38.2% of variance in perceived value and 16.3% in price sensitivity.

Our findings indicate that individuals process price information differently depending on the extent to which they rely on concrete versus abstract construal. The key implication for (ticket) sellers is that the multidimensional mental frame of the buyer alters the acceptance of a price as a good value and influences willingness to search for a better price. We discuss related managerial issues more fully following Study 2.

Study 2

The cross-section of individuals surveyed in the context of sporting events in Study 1 gives rise to several issues. First, sports tickets constitute a major market for advance selling, but are sports a special case? Although we account for different leagues and seasons, the context of sports may not transfer to other advance selling contexts. Second, compared to the exchange of money for many goods and services, the decision to consume hedonic experiences involves an exchange of time, money, and effort (Zeithaml 1988); effort can be both physical and cognitive (Van Beuningen, de Ruyter, and Wetzels 2010). In Study 1, we measured perceived value in terms of an exchange of money but did not account for time and effort. Third, the temporal manipulation of buying a year in advance effectively creates a low- and high-level construal context, and though this may fit some buying situations (e.g., season ticket renewal offers begin before the current season is complete), it overlooks more frequent, realistic buying situations among buyers. Fourth, examining the demographics, few respondents in Study 1 reported frequent game attendance (11.4%), and approximately one-half (48.4%) lived more than 35 miles away from the venue. Thus, the sample largely represents those apt to have an abstract view of others who may frequently attend and live closer to the venue. Given that more than one-third of the market buys tickets within 72 hours of the event (Hall 2015), Study 2 aims to understand how temporal distance influences such purchase decisions among buyers with more concrete information within a particular market that allows for some control of externalities.

To address the questions raised in Study 1, we turn to the performing arts to assess consumer response to advance ticket sales. Aside from the year-round Broadway productions in New York City, theaters offer subscriptions and individual tickets in advance similar in number to the sports settings in Study 1 (except for baseball). In this study, we take the perspective of the experience service provider to assess the price perceptions of the subscriber base and individual ticket buyers. The sample (N = 1,023) includes individual ticket buyers (93.4%) with at least one ticket-buying experience at the theater from the previous 12 months. As in Study 1, we expect to find the same relationships with respect to social distance (Hypotheses 3 and 4) and spatial distance (Hypothesis 5).

Temporal Distance

While we anticipate the same temporal distance effects on perceived value (Hypothesis 2), we expect a reversal of temporal effects on price sensitivity due to experience. In the cross-section of individuals in Study 1 with limited concrete buying experiences across 100 different buying markets and five sports, we surmised that low construal in the near-temporal condition would lead to less price sensitivity as potential buyers focused on feasibility (secondary features) more than desirability (primary features). However, previous buyers, who have ready access to recent concrete information regarding tickets for a specific type of experience (theatre), may behave differently.

As noted previously, ticket purchases in the secondary market frequently occur in the days immediately preceding the event. Although ticket scalping exceptions generate publicity in special cases (White 2016), prices for individual tickets in the secondary market for performing arts generally increase immediately after release, followed by a slow, steady decline, including drops of 21%–37% on the day of the event (Grant 2015). With increased ticket-buying experience in markets in which prices tend to decline closer to the event date, experienced buyers may perceive the ticket marketplace less in the abstract but in richer detail from incidents in which price search produces relative gains in the near condition.

Low-level construal includes specific incidents within the context of events (Stephan, Liberman, and Trope 2010). Experienced buyers will recognize the pattern of price fluctuations by organizations using dynamic pricing as well as the changes in the secondary markets for tickets sold by individuals and brokers as the event draws near. Armed with this knowledge, experienced buyers should construe that prices will decline over time such that lower prices are typically worth the search whether the event is coming sooner or later. Benning, Breugelmans, and Dellaert (2012) find that recent experience overruled temporal distance effects when considering health-care services. Kyung, Menon, and Trope (2014) show that those more experienced and knowledgeable more easily retrieve judgments, and this fluency or salience moderates temporal distance effects. We expect the same in our context. In a specific ticket market of experienced buyers, we revise Hypothesis 1 to account for experience.

Hypothesis 6: Among experienced buyers, price sensitivity is higher when the time of the event is psychologically near than when it is psychologically distant. As experience increases, temporal distance effects decrease.

Method

The selected experience service is the largest theater house (capacity exceeds 3,000) in one of the five largest metropolitan areas in the United States. The theater is in the downtown theater district, among other theaters and clubs. Subscriptions for the theater include up to 12 productions, with Thursday through Sunday shows for at least 2 weekends, for each performance. Standard prices range from $37.75 (rear gallery) to more than $114 for premium seats (with additional donations necessary for best seats).

In cooperation and mutual interest in the findings, the theater independently recruited a sample (N = 1,633) to complete an online survey, including prospective buyers in the market with no recent experiences (last 12 months) at the theater (N = 93). No incentive was offered to members of the theater database. Altogether, 92.4% completed the survey (comparing favorably with other web surveys; Albaum et al. 2010), producing usable responses from 1,509 people, reflective of the demographics of season ticket holders (N = 486) and previous individual buyers and prospects (N = 1,023).

Procedure

Study 1 manipulated social distance (self vs. average customer) and temporal distance (this weekend vs. 1 year later); however, the purchase of a ticket 1 year in advance may also enhance hypothetical distance, which could alter choice (Liberman, Trope, and Wakslak 2007). To address this issue, the service provider offered insight into realistic advance buying situations, given the administration of the survey in early fall after the season-opening performances. Respondents were randomly assigned to one of four scenarios regarding ticket prices for the service provider. With respect to temporal distance, respondents were asked to consider buying a ticket today in advance for one of the next performances (3 or 4 weeks away) in the near condition versus in advance for a performance the following May (7 months away) in the far condition. To manipulate social distance, respondents were instructed with clear reference points in the near condition (“We are interested in what you think about ticket prices”) and the far condition (“We are interested in your perception of what the average theatre customer thinks about ticket prices”). As in Study 1, we framed the associated perceived value and price sensitivity items with the appropriate reference to the self (i.e., “I will change what I planned to buy”) or others (i.e., “The average theatre customer will change what s/he planned to buy”). Manipulation checks for temporal and social distance indicated that respondents recognized the appropriate conditions (see Table 4).

Table 4.

Study 2: Manipulation Checks.

Item	Temporal		Social
Item	Near	Far	Near	Far
T1: To use soon—To use much later	3.47	4.27	3.80	3.94
T2: To attend this year—To attend next year	3.45	4.56	3.83	4.18
S1: About ticket prices for yourself—About what others think of ticket prices	2.85	2.99	2.06	3.78
S2: What I personally think about prices—My opinion of what others think about prices	2.88	2.98	2.05	3.81

Note. All 7-point scales. Shaded/bold print all significant at p < .001.

Measures

The measure for price sensitivity (a = .82) is the same as in Study 1, with a slider scale (0–100; disagree/agree) employed to more precisely capture responses. To address perceived value (a = .86) as more than a financial exchange, respondents indicated whether the ticket is worth the (1) time it takes to attend, (2) money spent, and (3) effort it would take to attend. Slider scales (0–100) were anchored by not at all worth it and completely worth it.

As in Study 1, respondents were asked the actual distance in miles of their residences from the theater district as well as perceived distance with 3 items (nearby, close to you, and far away [reversed]; a = .88). A positive curvilinear relationship between miles and perceived distance suggests a strong linear relationship between reality and perception up to approximately 35 miles, where perceived distance plateaus and then increases at a decreasing rate. With this analysis, we examined spatial distance between 2 groups: those living within the metropolitan area within 35 miles of the theater and those living outside the beltway (more than 35 miles). We obtained significant results with perceived distance as a covariate (continuous variable), but the two-group analysis allows for mean comparison.

Following other CLT research (e.g., Fujita et al. 2006), we accounted for attitudes toward the service provider as a fundamental alternative explanation to variations in perceived value and price sensitivity in the advance selling of tickets. We measured passion for the leisure activity (Vallerand et al. 2003), which accounts for the degree to which individuals love, value, and invest time and energy in an activity. We also accounted for perceived quality of performances and attendance at other performing arts (ballet and symphony) in the arts district as well as demographics.

Analysis and Results

We employed a 2 (temporal: near/far) × 2 (social: near/far) × 2 (spatial: near/far) MANCOVA design, including the entire sample of season ticket holders and individual buyers and prospects, which confirmed all hypotheses, except that temporal distance did not significantly (p < .20) affect perceived value (Hypothesis 2). However, given our interest in patrons considering buying individual tickets in advance, rather than those who already bought in advance in the form of season tickets, we ran another model excluding season ticket holders. The remainder of the analysis focuses on these individual buyers. Together, the independent variables explain 32.3% of the variance in perceived value and 19.6% in price sensitivity.

Table 5 contains the relevant results of the multivariate analysis of variance for individual buyers with perceived value and price sensitivity as the dependent variables and temporal distance, social distance, and spatial distance as factors. We account for the number of ticket purchase experiences in the previous 12 months (range: 0–5 or more) as a main and interaction effect on the dependent variables to determine the moderating role of experience on temporal distance effects (Hypothesis 6).

Table 5.

Study 2 MANCOVA: Multivariate (Wilkes’s Lambda) and Univariate Between-Subjects Effects.

	Variables
H's	Independent	Dependent	F	df	df error	p	Adjusted means		η²
	Temporal Distance		3.66	2	978	.026	Near	Far	.007
H6	Price sensitivity		5.44	1	979	.002	65.43	60.83	.006
H2	Perceived value		4.00	1	979	.046	69.15	66.05	.004
	Social distance		12.76	2	978	.001			.025
H4	Price sensitivity		25.19	1	979	.001	58.19	68.03	.025
H3	Perceived value		4.14	1	979	.042	66.02	69.17	.004
	Spatial distance		8.24	2	978	.001			.017
H5	Perceived value		11.04	1	979	.001	70.38	64.82	.011
	Interaction
	Temporal × Past Experiences*		2.38	5	979	.038			.012
H6	Price sensitivity		2.27	5	979	.046			.011

Note. H = hypothesis; MANCOVA = multivariate analysis of covariance. Means adjusted for passion for theater, age, prior ticket purchases of other performing arts, perceived performance quality, and years of residence in community.

*Roy’s largest root

Hypotheses 2–5 were supported, confirming the findings of Study 1. For Hypothesis 6, among active ticket buyers, price sensitivity was significantly (p = .002) higher in the temporally near condition (M = 65.43) than in the far condition (M = 60.83) as expected. As Figure 2 illustrates, recent ticket experiences significantly (p = .046) interacted with temporal distance. Temporal effects influenced those with less experience but disappeared as buyers searched for and bought five or more tickets in this market. Hypothesis 6 is supported.

Figure 2.

Interaction between past experience and temporal distance.

General Discussion

To our knowledge, these studies are the first to examine consumer perceptions of advance selling of experience services, offering insight into the mind-set of consumers in advance selling of services (Xie and Shugan 2001) and answering the call to focus on the dynamics of the who, when, and where of experience services. Specifically, Chandler and Lusch (2015) propose five properties of service engagement that asks researchers to examine consumers’ temporal (when) and relational (who) connections with past, present, and future dispositions toward the service. Within the framework of CLT, we confirm that what people perceive today is based on how they perceive the self and others in specific future settings as well as on past consumption experience.

Contributions to Theory and Implications for Further Research

We extend research on the effects of psychological distance to services research and price information processing. Prior work employing CLT has not explored the effects on price perceptions (Bornemann and Homburg 2011) or the associations among multiple sources of psychological distance (Liberman and Trope 2014). The current research contributes on both fronts, showing that the concrete means (feasibility) and abstract ends (primary goal) corresponding to low- and high-construal contexts (temporal, social, and spatial) influence price sensitivity and perceived value.

Bornemann and Homburg (2011, p. 502) find that increased psychological distance causes consumers to “construe price according to its high-level implications for quality and [that they are] less likely to focus on its role as monetary sacrifice.” We find that consumers can experience increased psychological distance and still construe price as sacrificial for experience services. Specifically, in Study 1, those in the far temporal condition were more price sensitive. In Study 2, theater patrons with less experience were more price sensitive in the short run but increasingly price sensitive (for both near and far conditions) as they gained more experience in the market. Furthermore, in both studies, increased social distance increased price sensitivity, as respondents perceived other patrons as sensitive to changes in prices. Future studies applying CLT should consider the effects in realistic field settings in which the consumption context is repeated or routine (not novel) and consumer resources (time and money) vary.

Study 2 shows that experienced consumers may more easily retrieve price information that mitigates temporal effects. Inexperienced consumers may lack price knowledge but be confident in successfully completing a task in the future (Gilovich, Kerr, and Medvec 1993) and optimistic about finding a more acceptable price, given the time to search. Conversely, as the date nears, individuals focus on concrete obstacles (Sweeny and Krizan 2013), which may inhibit price search for inexperienced buyers. Buyers with recent and recurring experiences in purchasing the service, however, may be more fluent with salient market dynamics and be less vulnerable to temporal effects. Prior CLT studies (e.g., Goodman and Malkoc 2012; Zhang, Zhang, and Li 2016) have focused on novel (e.g., new restaurants or online retailers) or isolated (e.g., buying ice cream on the way to a vacation) product choices and cases when consumers lack experience (e.g., selling coffee mugs to others), but our work confirms that recent experience reduces psychological distance effects (Benning, Breugelmans, and Dellaert 2012) for frequently repeated hedonic services. In line with Kyung, Menon, and Trope (2014), we suggest that future CLT work find other ways experience moderates psychological distance effects.

As Shugan and Xie (2004) emphasize, service providers can increase profitability by selling in advance (vs. spot pricing) when customers are uncertain. Our studies confirm that consumers face a great deal of uncertainty, and the application of CLT provides theoretical support for why uncertainty arises. Buyers face uncertainty about price perceptions of others (social distance), which influences availability and prices; about the value, which depends on the amount of time between the present and the event (temporal distance); and about the real and perceived spatial distance between themselves and the physical location of the event. We expect psychological distance to influence price perceptions of other services in advance selling opportunities. One potential area for research is the possible interaction with mobile devices, as research (Hein, O’Donohoe, and Ryan 2011) suggests that users perceive the device as an extension of and, thus, close to the self. Does using mobile devices and apps from the service provider reduce psychological distance in advance selling? Do consumers perceive prices differently, all else being equal, when presented on a mobile app by the service provider versus by intermediaries or on difference devices? Such research could facilitate pricing models for service providers and intermediaries.

Given advance selling, consumers of hedonic experience services have much to gain by considering how others perceive price. The decisions of others affect price dispersion and availability in dynamic markets. Thus, we introduce an important decision factor in the advance selling of experience services that may not be present in other buyer-seller contexts. Our studies demonstrate that individuals construe others to more highly value tickets to sporting events and theater performances than when they reference self-perceptions. In a collective sense, this suggests buyers overestimate the market’s value for a given ticket. This bias, which we argue is based on high construal of stereotypical responses to patrons of hedonic experiences, may explain why individuals may buy a ticket at a price higher than if based on self-reference alone. This type of bias is apt to be present in dynamic markets but seems less likely for grocery store shopping or utilitarian services in which individuals are less concerned about what others think of prices and have little fear of inventory depletion. However, further research might extend our work to the advance selling of utilitarian services to determine such psychological distance effects. Temporal, social, and spatial distance may influence perceptions of value for services with high opportunity costs regarding the time customers must wait to be served if considering advance selling (appointments) versus on the spot (walk-in). Examples include tire service, hair styling, retail phone carriers, cable and dish television providers, and departments of motor vehicles.

Across both studies, perceived value was higher when temporal distance and spatial distance were near. While other CLT studies often examine psychological distance effects in isolation of each other, our studies suggest that individuals who live nearby and are considering an event coming soon are apt to perceive higher value than in either case alone. Although not a significant interaction effect, in the theater context the perceived value for respondents in the near temporal and spatial conditions (M = 74.23) was higher than it was for those who lived nearby considering a distant-future ticket (M = 72.81), for those considering a ticket for an event coming soon but living farther away (M = 70.30), and for those who lived far away considering a ticket for the distant future (M = 69.55). Additional research could include experimental and field settings that account for multiple dimensions of psychological distance that may alter the magnitude or direction of results, particularly with respect to advance selling versus spot selling.

Managerial Implications

Service marketers can benefit from this research by gaining a better understanding of how to promote hedonic experience services in advance selling scenarios. First, as Shugan and Xie (2004) note, to effectively use advance selling, service providers benefit by limiting the resale of tickets. Because the growth of the secondary market makes this less feasible, adding value through other means (e.g., experiences, concession vouchers, and souvenirs) to individual ticket owners could persuade buyers to forgo financial gain in favor of psychological gain through the enhanced experience. Alternatively, some service firms (e.g., Philadelphia 76ers, New York Yankees, and Golden State Warriors) have partnered with resellers (e.g., StubHub and Ticketmaster) to provide more control and to share risk and revenue. This practice can be risky, though, as some resellers may gain too much control and encounter antitrust lawsuits (Novy-Williams and Smythe 2016).

Understanding the effects of psychological distance can help service providers identify circumstances when buyers perceive less value—those temporally distant, socially near, or spatially distant. Service providers account for temporal distance by offering incentives for purchasing far in advance or renewing in the off-season. However, digital or personal messages could frame the purchase situation to prompt buyers to access more concrete information with respect to temporal (“What happened the last time you waited to buy tickets?”), social (“Customers like you bought tickets…”), and spatial (“When was the last time you came to town?”) distance. To reach those who see little value from a personal standpoint, marketers could use a seeding strategy, in which influencers spread messages in online social networks (Hinz et al. 2011). The effects of time and distance suggest managers should carefully geo-target offers customized to when and where customers are when buying tickets.

Since an important factor at work in the minds of buyers is other buyers, the results imply that service providers should frame offers in reference more to others than the self for experiences. Hedonic experience services often promote with a “reward yourself” or “you deserve it” theme. However, from a pricing promotion standpoint for tickets, customers may perceive higher value when they think of how much others desire the tickets and are searching for good seats. StubHub, with its “Your ticket out” campaign may do well to cue the thought of others in its messaging, such as, “When everyone wants to go, it’s your ticket out.”

As experienced buyers have learned to be price sensitive for tickets, managers should identify these individuals in the database to provide relevant value-added offers to increase purchases. An example for theatres for select performances or ticket bundles is to offer a post-show red carpet gala with complimentary food, beverages, music, and photo opportunities as they meet and greet with the cast and creative team. Cobranding with partners can add value to attract experienced, more frequent buyers by providing extras (e.g., team or theatre cobranded water bottles) for making additional purchases (e.g., buy 4 or more to receive the offer) without reducing prices.

Service providers may try to attract single-event buyers by providing adequate incentives to combat the learned behavior of shopping secondary market sites. While salespeople often have inadequate knowledge of the competition (Johnston and Marshall 2016), it may also be the case that they have not offered the proper incentives to price-sensitive consumers. According to Study 2, inexperienced prospects are likely to be less price sensitive for an event coming sooner and are optimistic of finding a lower price for an event farther into the future. Informal interviews with senior executives from major resellers and service providers (professional sports and performing arts) reveal that the original seller (e.g., the team and theater) often has unsold inventory at prices below secondary market values. Thus, salespeople and service providers, in general, need to educate buyers in ways that recognize the convenience factor of intermediaries while providing more intuitive and convenient ways to do business with the original seller. One avenue for improvement is the online buying experience. Consumers are accustomed to clicking once (Amazon.com) or twice (StubHub) to purchase. However, for many service providers in these sectors, the process often takes eight or more clicks.

Conclusion and Limitations

The findings add to the service marketing and CLT literature and the sparse investigations of price information processing in advance selling contexts. To date, CLT studies have focused on packaged goods, with less attention paid to services and the advance selling of experience services.

While Hypotheses 2–5 hold in both studies, we proposed, tested, and found that temporal distance effects on price sensitivity reverse course in Study 2 among experienced buyers. We reasoned that as buyers gain experience, they access concrete price information that leads to greater price sensitivity in the near term than when accessing abstract price dispersion in the more distant future. However, Vallacher and Wegner (1989) suggest that buyers differ depending on individual differences related to low or high levels of personal agency. Future work might examine the interaction between CLT effects and personal agency styles.

This research provides the basis for other research streams in addition to those already noted. First, tangential to our work is the understanding of scarcity effects, which may interfere or moderate consumer response (Suri, Kohli, and Monroe 2007), considering different states of psychological distance. Second, we did not explicitly account for consumer knowledge or accurate recall of prices (Monroe and Lee 1999), which might also moderate CLT effects. Third, the field settings provide external validity but less control of other factors that might prove useful in experimental designs to confirm and extend our findings. Fourth, our study is limited to sports and performing arts. Future work in other settings and an examination of consumer characteristics with actual purchase data would be fruitful. Fifth, although not our focus, others might further explore the effects of covariates included in our models (identification and passion) on price perceptions. Sixth, our study did consider probabilistic distance (Liberman, Sagristano, and Trope 2002). Although our scenarios presumed purchase (Study 1) and included previous buyers (Study 2), by controlling for attitudes toward the provider, further research might discover that those who find ticket purchase improbable (e.g., just thinking about it) behave differently than those predetermined to purchase in advance.

Changes in psychological distance influence perceived value and price sensitivity. Perceived value and price sensitivity increase as individuals take the perspective of others likely to patronize the service provider. Perceived value is greater when the time of consumption and the location is nearer. Study 2 helps answer the question of which buyers wait until the last 72 hours to purchase—that is, experienced buyers are more price sensitive as the date of the event draws nearer (vs. those with little or no experience). In summary, who (near vs. far social distance), when (near vs. far temporal distance), and where (spatial distance) influence price sensitivity and perceived value of the experience service in advance selling contexts.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

Note

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