The Effect of Consumer Participation on Price Sensitivity

Abstract

This study examined the noneconomic factors affecting consumers’ participation in purchase decisions, focusing in particular on the social aspect of the buyer‐seller interaction. In addition, we attempted to clarify the association between consumer participation and price sensitivity. Of the four social dimensions of consumer participation—preparation, relationship building, information exchange, and intervention—our results indicated that the first three dimensions are negatively associated with price sensitivity but the intervention dimension is not. Additionally, we also found that, given the same level of preparation, industries typically characterized by higher participation, such as hair salons, are associated with lower consumer price sensitivity as compared to those typically characterized by lower participation, such as fast food restaurants. Similarly, given the same level of relationship building, information exchange, and intervention, industries typically characterized by higher participation have lower consumer price sensitivity than those typically characterized by lower participation.

Antecedents of the importance of price in purchase decisions

“…If the emotional aspect is taken into account, a greater participation in purchasing can create bonds between customer and supplier (covering social or relational needs in the case of highly interactive goods or services), which could lead to a reduced price sensitivity of buyers (HSIEH et al, 2004).…”

“…Finally, it is noteworthy that although different research have found little or no relationship between demographic variables and price sensitivity (KIM et al, 1999), such factors should be included in studies in order to prevent potential interference in results (HSIEH et al, 2004).…”

“…Involvement degree (higher for durable goods and services) should be therefore incorporated into the analysis; further analysis should be conducted for other categories of product, particularly durable goods and services, in order to study different levels of involvement in the purchase (HSIEH et al, 2004;SHANKAR and KRISHNAMURTHI, 1996).…”

“…Three levels were defined for the variable "frequency of purchase" (HSIEH et al, 2004): 1. One person responsible for household shopping -maximum frequency; 2.…”

Organization Participation in Place Branding: From Institutional Perspective

“…Customer participation refers to the behavior and involvement in terms of the spirit and material aspects of customers in the process of accepting products or services [5]. Most scholars believe that customer participation can be divided into multiple dimensions, including mainly the customer's efforts and inputs in mental, intellectual, physical, emotional and other aspects [5,6]. To sum up, we can largely divide the customer participation into two major aspects of customer participation psychology and customer participation behavior, the customer participation psychology mainly refers to the psychological process of cognition and emotion [7], participation is the behavior commonly created value behavior through the cooperation with the relevant departments [8].…”