chapter  2
Effectiveness of Price Discount Levels and Formats in Service Industries
Pages 20

Services play a major role in the world economy. In the United States, services were estimated to account for 70 percent of the gross domestic product (GDP) in 2003 (Messinger, 2003). However, the unique characteristics of services cause difficulties in pricing and promotion. Because services are intangible, consumers have difficulty accessing exactly what they are paying for. In the absence of available cues, consumers often use price as key to expect the quality of products and make purchase decisions (Kurtz and Clow, 1998). Hence, the way service providers set up the prices and promotions of the services affects consumers’ purchase decisions.