When do high prices lead to purchase intention? Testing two layers of moderation effects

Abstract

Purpose Most marketing practices assume that consumers will buy when prices are low. This assumption, however, may not always hold true. Employing equity theory and Veblen’s theory of the leisure class, this study tested two moderating effects to ascertain the relationship between perceived price and purchase intention. The purpose of this paper is threefold: first, to examine the relationship between perceived price and willingness to purchase; second, to discover the effects of two moderators (perceived price fairness and vanity) on this relationship; and third, to compare how these moderating effects differ by consumers’ brand familiarity. Design/methodology/approach A total of 287 usable data sets were collected from college students in the southeastern region of the USA. Findings The findings showed no negative relationship between perceived price and willingness to purchase. Only perceived price fairness was found to moderate the perceived price–purchase intention relationship. Furthermore, the moderating effect of price fairness was only confirmed in the high brand familiarity group, while the moderating effect of vanity was only confirmed in the low brand familiarity group. Research limitations/implications Generalization of the findings is cautioned because findings may vary by demographic backgrounds. Practical implications Since purchase intention increases when price is fair even though price is high, marketers should put efforts into promoting and creating the perception of fair price of their products and brands. Originality/value This study extends price perception research by incorporating two theories (equity theory and Veblen’s theory of the leisure class) that help further elaborate the relationship between perceived price and willingness to purchase.

The Mediation Effects of Customer Satisfaction on the Relations Between Product Price, Service Quality and Purchasing Decision

“…The results of this study also confirms the previous empirical studies (Djatmiko and Pradana, 2017;Jain et al, 2018). Conversely, this study is not in line with the study of Son and Jin (2019) who found that perceived price has a negative impact on customer purchasing decision.…”

“…This has been confirmed by numerous empirical studies that purchasing decisions were significantly influenced by price (Kukar-Kinney et al, 2012;Maslowska et al, 2017;Song et al, 2019), service quality, brand loyalty, organization ability to retain brand switching and customer commitment (Papafotikas et al, 2014). However, some empirical studies also revealed that perceived price is negatively influence by consumer intention to buy a product/service (Son and Jin, 2019).…”

“…Price is the amount of money that customers pay to use a product or service (Anderson et al, 2000;Kukar-Kinney et al, 2012;Foster, 2016;Djatmiko and Pradana, 2017). Customers make a payment in return for the product or service that they get (Cakici et al, 2019), therefore, price is an important factor which contributes to the consumers' purchasing decision processes (Son and Jin, 2019).…”

The Impact of Ethnic Restaurant Menu Visual Appeal and Informativeness on Customers’ Desire to Order

“…Increasing customers' desire to order or to purchase has been a consistent focus for businesses and marketing companies (Lee & Ferreira, 2011). Customers' desire to order can be influenced by price (Son & Jin, 2019), quality (Chiu, Liu, & Tu, 2016), and features of products or services (Lee & Ferreira, 2011). In the restaurant industry, the desire to purchase can also be influenced by numerous variables.…”

Efficient food service chain management considering substitute products

“…Convenience stores or hypermarkets can also be considered as substitutes for restaurants. Son and Jin (2019) investigated the relationship between price and purchase intention. The authors stated that perceived price fairness affects purchase intention significantly.…”