Do lower prices always increase willingness to purchase? a comprehensive understanding toward the role of perceived price

UNCG Author/Contributor (non-UNCG co-authors, if there are any, appear on document)
Junghwa Son (Creator)
Institution
The University of North Carolina at Greensboro (UNCG )
Web Site: http://library.uncg.edu/
Advisor
Byoungho Jin

Abstract: Today, most firms assume that low price increases the likelihood of purchase. However, is this assumption always true? If the answer is no, when does the negative relationship between perceived price and willingness to purchase not hold true? This study systematically investigates the relationship between perceived price and willingness to purchase, incorporating three existing theories (i.e., signaling theory, equity theory, and Veblen's theory of the leisure class). A conceptual research model consists of Phase I and Phase II: Phase I includes the antecedents of perceived price (i.e., symbolic brand benefits, perceived brand globalness, and perceived brand quality), and Phase II includes the moderators (i.e., perceived price fairness, vanity, and consumer sophistication) of the relationship between perceived price and willingness to purchase. Both Phase I and Phase II are tested in the U.S. and India, separately. Using a questionnaire survey with college students in the U.S. and India, 543 usable responses (287 from the U.S. and 256 from India) were analyzed for this study. Before analyzing the proposed hypotheses, measurement invariance tests were conducted to decide whether each construct measured the same factor structure and factor loadings across the U.S. and India. In both Phase I and II, the two countries revealed sharply contrasting results. In Phase I, four hypotheses were tested in each country. Of the three antecedents of perceived price, only perceived brand quality (ã =.23) had a positive relationship with perceived price among U.S. respondents. The additional paths suggested by modification indices indicated that symbolic brand benefits (ã =.16) and perceived brand globalness (ã =.20) had positive relationships with willingness to purchase in the U.S. In contrast, the path between perceived brand quality and willingness to purchase was not supported in the U.S. Surprisingly, none of antecedents of perceived price turned out to be significant for Indian consumers. Among the three additional paths suggested by modification indices, only perceived brand quality and willingness to purchase (ã =.21) was found to be significant in India. The negative relationship of perceived price-willingness to purchase was supported both in the U.S (â = -.37) and India (â = -.22). In Phase II, three hypotheses were tested in each country. Among the three moderators, perceived price fairness (â = .271) and vanity (â = .271) moderated the perceived price-willingness to purchase relationship in the U.S. Consumer sophistication did not have a moderating effect on the perceived price-willingness to purchase relationship. In the Indian data, none of the three moderators of the relationship between perceived price and willingness to purchase were supported. This study is one of the earliest attempts to examine the relationship between perceived price and willingness to purchase comprehensively in multiple countries (i.e., the U.S. and India). Findings from this study suggest that 1) marketers should pay attention to perceived brand quality in order to maintain a higher price in the U.S. and high purchase intention in India; 2) symbolic brand benefits and brand globalness should be promoted and stressed when marketers introduce products to U.S. consumers; 3) in order to increase purchase intention, building a concept of price fairness should be emphasized in the U.S.; and 4) marketers should intrigue and target consumers who have a high level of vanity in the U.S.

Additional Information

Publication
Dissertation
Language: English
Date: 2013
Keywords
Antecedents of perceived price, Perceived Price, The U.S. and India comparison, Willingness to purchase
Subjects
Consumer behavior $v Cross-cultural studies
Willingness to pay $v Cross-cultural studies

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