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Does price sensitivity and price level influence store price image and T
repurchase intention in retail markets?
⁎
Ana Paula Graciola , Deonir De Toni, Vinicius Zanchet de Lima, Gabriel Sperandio Milan
University of Caxias do Sul, Business and Social Sciences, Department of Business Administration, 1130, Francisco Getúlio Vargas, Caxias do Sul, Rio Grande do Sul
95070-560, Brazil
A R T I C LE I N FO A B S T R A C T
Keywords: In today's competitive price environment, customers are more sensitive to store price image as a driver of the
Retail price image decision of where to buy. This paper addresses the impact of store price image on repurchase intentions in the
Repurchase intention context of retail markets in the south of Brazil. The moderating effects of price sensitivity and price level are also
Price level analyzed. A comprehensive model reports determinants of repurchase intentions. A descriptive quantitative
Price sensitivity
research study is undertaken, based on an applied survey. Partial least squares–structural equation modeling
(PLS–SEM) is used, supported by Smart-PLS 3.2.7. The model sample includes 207 customers, university students
who had experienced retail purchases in different formats of supermarkets. The data analysis yields surprising
findings. Results show that store price image positively impacted on customer repurchase intentions, with low
and high price levels moderating these effects. Price sensitivity also presented moderating effects as another
important variable acting on the relation between store price image and repurchase intentions for both low and
high price sensitivity customers. The implications of these findings are discussed with suggestions for future
research.
1. Introduction better perceived shopping value (Diallo et al., 2015). Furthermore, the
opening of new stores or new retailers in a specific marketplace may
To achieve competitiveness, retail industry markets need to respond offer disruptive market price levels. In this perspective, with these
urgently with innovative strategies to recent modifications in customer perceptions of modified and varied market prices, customers may make
behavior (Ferguson, 2014; Kim et al., 2014; Diallo et al., 2015). A few cross-retail comparisons based on acquired market knowledge (Urbany
decades ago, the food retail market was dominated by high–low pricing et al., 1996).
strategies, with large and comprehensive stores offering wide assort- In this context, Zielke (2011) pointed out that future research
ments. Nowadays, emerging retail formats such as convenience stores should better comprehend the formation of emotions as part of a re-
and hard discount stores are modifying the retail industry (Dolbec and tailer's price image. Zielke (2014) presented the management implica-
Chebat, 2013). In seeking to understand consumer behavior, retailers tions of dealing with discount retailers in low-price environments. Fu-
should observe their customers’ purchasing power, spending patterns, ture research should study in depth how customers interpret low or
shopping trips, and increasing environmental awareness (Kim et al., high prices, and to which causes they attribute these low and high
2014) to better fit the customers’ needs. prices (Zielke, 2014). So, in this study, low and high prices are posited
Retailers’ evaluation of price image is an important tool to in- as a moderator of the relations under investigation. Furthermore, cus-
vestigate their price positioning in the customers’ minds, to predict a set tomers tend to be sensitive to the dispersion of prices within a store's
of customer priorities and, if necessary, derive appropriate measures to assortment, rather than just the overall price level (Alba et al., 1994;
meet these priorities (Zielke, 2006). Customers assess a service or Hamilton and Chernev, 2013). This means that adding high prices can
product through a sequence of evaluation and choice tasks. They have either raise or reduce a store's overall price image (Hamilton and
to compare the alternative price to a reference price, making it essential Chernev, 2010). Thus, price advertising contributes to increasing price
to understand how the reference price is shaped (Peschel et al., 2016). sensitivity by allowing the customers to focus more on prices than
Also, in periods of crisis, customers look for low prices in association shopping (Kaul and Dick, 1995; Hamilton and Chernev, 2013).
with good quality and positive social interaction, as an example of Overall store price image influences repurchase intentions (Chang
⁎
Corresponding author.
E-mail addresses: anagraciola@gmail.com (A.P. Graciola), deonirdt@terra.com.br (D. De Toni), vinizanchet@gmail.com (V.Z. de Lima), gabmilan@terra.com.br (G.S. Milan).
https://doi.org/10.1016/j.jretconser.2018.06.014
Received 2 November 2017; Received in revised form 10 May 2018; Accepted 25 June 2018
0969-6989/ © 2018 Elsevier Ltd. All rights reserved.
A.P. Graciola et al. Journal of Retailing and Consumer Services 44 (2018) 201–213
and Wang, 2014). From this viewpoint, the main aim of this article is to (Zeithaml, 1988; Sànchez-Fernández and Iniesta-Bonillo, 2007). Seven
verify the relation between store price image and the repurchase in- dimensions have thus been identified as influencing retail price image,
tention in the context of retail markets in the south of Brazil. Moder- namely: quality, perceived value, price level perception, price fairness,
ating effects of price sensitivity and price level are added to this fra- positive emotions, negative emotions, and symbolic factors. Below, the
mework. The remainder of this paper is organized as follows: the next constructs that make up the retail price image will be examined in turn.
section presents the theoretical framework in the fields of retail price
image and repurchases intentions. An empirical survey based on cus- 2.1.1. Quality
tomers (a student sample) as the method, detailed data analysis, and The broadly accepted positive relation between perceptions of high
main results are the presented. Finally, the paper ends with a general price with good quality (Völckner and Hofmann, 2007; Zeithaml, 1988;
discussion of the main findings, implications for theory and manage- Diallo et al., 2015). Conversely, when a service or product is cheap and
ment, limitations, and the outlook for future research. offers poor value, customers may conclude that the store's service or
product quality is low, or interpret it as a sign of negative relations
2. Theoretical framework between price and different quality aspects (Zielke, 2011, 2014; Diallo
et al., 2015). Also, for Hellier et al. (2003), perceived quality is asso-
2.1. Disentangling store price image multidimensionality ciated with the customer's overall assessment of the service delivery
process.
Price is one of the most relevant market signs of retail competition Customers believe that price and quality are positively related, and
(Lichtenstein et al., 1993; Zielke, 2006). The prominence of price is a price may be seen as an indicator of quality in a competitive environ-
given in all purchase situations. Moreover, price is a complex stimulus ment market (Grewal et al., 1998). From the service quality perspec-
and many customers also perceive price more broadly, for example, tive, Parasuraman et al. (1988) define service quality as the bond be-
customers use price to indicate product quality (Lichtenstein et al., tween the customer's expectations of the service and their perception of
1993). the active experience (Kitapci et al., 2014).
Price image formation is a complex process, because it depends on
different factors, such as limited knowledge and information mechan- 2.1.2. Perceived value
isms for obtaining prices; price evaluation being a subjective process, For Emery (1969), value for money is the association between price
each price evaluation of a single product should be analyzed together and quality rating. Zeithaml (1988) points out that customer see value
with the overall price image of the whole store (Zielke, 2006). In this in different ways. Some of them define it simply as low price, others see
field, Zielke (2006) defined price image as a multidimensional attitude only the benefits they receive, and still others evaluate quality as a
toward the retailer's price level, value, price fairness, and frequency of value derived from the product or service that they paid for, or look at
sales (Hamilton and Chernev, 2013). Dickson and Sawyer (1990) value as what they get for what they give. In this context, Dodds and
commented that consumers are heterogeneous when it comes to their Monroe (1985) clarify perceived value as the balance between per-
attention and response to prices and price promotions. ceived quality and sacrifice, and these dimensions are influenced by the
Price image is defined as a fundamental marketing phenomenon, products’ prices (Zielke, 2006).
with antecedents and consequences that influence consumer decision Perceived value is the overall evaluation of the net worth of the
behavior. It is related to other constructs, such as reference price or service, and is related to the customer's assessment of what is received
store image, for example. Price image is often defined as the overall (benefits) and what is given (costs or sacrifice) (Zeithaml, 1988; Hellier
level of prices that customers match with a specific seller. In other et al., 2003). Zielke (2011) states that value for money presents positive
words, price image is a unidimensional construct that reflects a custo- impacts of enjoyment and negative impacts of distress, anger, fear,
mer's overall impression of the retailer's prices and is not analyzed in an contempt, and shame. In other words, low prices may reduce distress
isolated situation (Hamilton and Chernev, 2013). and anger if the perceived value is favorable; cheap prices may over-
Another vein of thought says that store price image is developed by come anger and distress by offering value. Low prices may therefore
a dynamic process (Hamilton and Cherney, 2013; Alba et al., 1994). As increase shopping intentions if the customer's distress and anger are
customers visit a store and are exposed to and informed by the actual reduced by value (Zielke, 2011).
prices in that store, they gradually update their store price beliefs
(Büyükkurt, 1986; Mägi and Julander, 2005; Nyström, 1970; 2.1.3. Price level perception
Feichtinger et al., 1988; Lourenço et al., 2015). This kind of “learning Zielke (2010) found that price image is a multidimensional con-
process” may be understood when customers are looking for price cues struct, with price level and price value image acting as the main di-
that result in updating store price knowledge (Gauri et al., 2008; mensions of store price image (Zielke, 2006, 2010, 2014). However,
Urbany et al., 1996). price level image refers only to the amount of money paid for the same
A relevant implication about price image found by Hamilton and product or service, while the price value image reflects product quality
Chernev (2013) is that it is not defined by prices alone, but depends on and store attributes. A discount store can be seen as cheap in terms of
all the marketing-mix variables. As a key marketing function, the pro- price level, but not automatically in terms of value (Zielke, 2006).
vision of information is essential to a retailer's strategic positioning. For Retailers should pay more attention to price-level image, which
Büyükkurt (1986), customers assemble perceived product prices into an means how cheap or expensive the store is in the customers’ view.
overall retail price image; thus, a positive product price perception can Value for money is the relationship between the returns customers get
influence all price–value dimensions of retail (Diallo et al., 2015). for the prices they pay (Zielke, 2010). However, for Hamilton and
The importance of price in retailing introduces a multidimensional Chernev (2013), customers can evaluate the same price as less favor-
retail price image concept as a latent variable (Zielke, 2011; Diallo able when it is related to a low store price image, compared with a high
et al., 2015). In this context of multidimensionality, Zielke (2006) re- store price image. Also, sellers should be able to evaluate the price
cognized several price image dimensions, but price level and value reference levels in the market; it is likely that the retailer's price image
perception seem to be the constructs that best represent price image. may adjust to comparisons of price (Hamilton and Chernev, 2013).
Others researchers have analyzed the theoretical structure of price
image, with studies related to price image, brand, and retail environ- 2.1.4. Price fairness
ment (Zielke, 2006, 2010, 2010; De Toni et al., 2014), symbolic factors In considering price level and price value image, the dimension that
of price image (Allen, 2006; De Toni and Mazzon, 2013; De Toni and differentiates between them is price fairness. Price fairness is therefore
Mazzon, 2014), price fairness (Campbell, 2007) and perceived value commonly combined with an assessment of how fair a price adjustment
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A.P. Graciola et al. Journal of Retailing and Consumer Services 44 (2018) 201–213
is perceived to be. Furthermore, the fairness concept depends on the Netemeyer, 1999; Zielke, 2006). When prices impress and/or surprise
context of how price adjustments are implemented and whether dif- customers in a negative way, they may leave the establishment with a
ferences in prices can be justified by the selling companies. sense of coldness. Furthermore, when customers feel afraid of paying
Transparency of prices can be seen as part of price fairness, with cus- too much (Zielke, 2006), they can experience negative emotions, as will
tomers often claiming that sellers try to mask price information (Zielke, be discussed below.
2006).
The concept of price fairness has been defined as the judgment of a 2.1.6. Negative emotions
price as being reasonable, acceptable, or fair (Bolton et al., 2003; Xia Narrowly defined, price perception represents the sum of money
et al., 2004). The cognitive definition of price fairness derives from that needs to be delivered for particular goods or services. Higher prices
comparisons to references or norms. People compare specific prices generally negatively affect purchase probabilities. However, customers
between two kinds of products or services and then consider the overall perceive price more broadly as a complex stimulus, rather than acting
range of prices. The conceptual meanings they achieve can be under- strictly just in a “negative role” in the disbursement of economic re-
stood from the several aspects of price fairness (Finkel, 2001; Xia et al., sources (Lichtenstein et al., 1993). For Diallo et al. (2015), pricing
2004). By experiencing a particular event, people may know what is strategies should be exercised with attention, because the results for
unfair, but it is more difficult to distinguish what fairness really is (Xia each regional service's or product's price perceptions may have negative
et al., 2004). Xia et al. (2004) defined price fairness as the customer's effects on emotions toward the store. A lower price image may con-
associated emotions in comparing a retailer's price with others as rea- tribute to negative emotions (Diallo et al., 2015).
sonable, acceptable, or justifiable, having as references for comparison Customers may be embarrassed to buy from cheap retailers, or even
their own selves, other customers, or different retailers. consider that cheap prices could be a result of unethical retailer policies
Understanding price fairness is necessary to avoid the negative (Zielke, 2011). In this context, emotions seem to be an obvious part of
consequences of perceived unfair price policies. Price unfairness leads retail price image. Furthermore, customers’ own experiences may be
to negative consequences for the retailers, by provoking negative word associated with feelings like anger, excitement, and unhappiness that
of mouth, abandonment of the store, and so on (Campbell, 2007; Xia are related to particular retail prices (Zielke, 2011). In this vein, ne-
et al., 2004; Hamilton and Chernev, 2013). Moreover, price image can gative emotions may vary in type and intensity, and can be associated
influence fairness judgments through comparative offers to customers with price fairness (Xia et al., 2004).
who judge a price as unfair compared with goods or services at the
same level, but with higher prices. In the same vein, customers can 2.1.7. Symbolic dimension
compare a price as being unfair if the comparison occurs between two Cognitive price image impacts on price-related emotions. These
sellers both with low store price images, as opposed to comparisons emotions also derive from social prestige and social responsibility, for
made between retailers with low store price image and high store price example, from saving money (Zielke, 2011). As a symbolic dimension,
image (Hamilton and Chernev, 2013). cheap prices are related to saving money, but this may potentially be
incongruent with the goals of social status and social responsibility if
2.1.5. Positive emotions customers associate cheap prices with inferior quality and unethical
Price image multidimensionality involves emotions, which form an practices of sellers (Roseman, 1984; Roseman et al., 1990; Zielke,
essential part of this construct. Cognitive price image dimensions can 2011).
influence several specific price-related emotions and analyzing these Discounted prices can increase the congruence with status goals and
can contribute to understanding the customer's reactions to cognitive also reduce negative feelings of contempt and shame by selling luxury
price perceptions (Zielke, 2011). Emotions play an important role in items at very competitive prices. This attitude will attract customers
price-related contexts (O’Neill and Lambert, 2001); appraisals of si- from wider social classes to these retailers and raise the social accept-
tuations or beliefs evoke a specific range of emotions (Roseman and ability of buying in such stores (Zielke, 2011).
Smith, 2001). The assortment of items on offer has a relation with price image as a
Integrating emotions to understand retail price image is essential in function of the degree to which products that compose the assortment
perceiving a customer's reactions to the retailer's pricing activities. Also, can produce a specific symbolic meaning for customers. The assortment
retail price images are multidimensional latent variables and are de- represents not only the variety of items, but expresses the retailer's
fined as price-related emotions (Zielke, 2011). The multidimensionality identity (Aaker, 1999; Akerlof and Kranton, 2000; Hamilton and
of a price image is an “entire array of associations” related to an object; Chernev, 2013). Furthermore, products/services can be associated with
these associations may involve both cognition and emotions (Blackwell customers’ self-expression when it comes to higher prices (Chernev
et al., 2001). In this direction, some researchers argue that price fair- et al., 2011).
ness, in a price comparison context, leads to both positive and negative
feelings (Xia et al., 2004; Zielke, 2011). Emotional states and/or reac- 2.2. Relating store price image and repurchase intention
tions are related to the pricing policies of sellers, and customers can feel
happy, angry, or surprised when they perceive prices from retail stores Customers’ choices, their purchasing decisions and attitudes are
(Zielke, 2006; O’Neill and Lambert, 2001). guides in using holistic constructs to evaluate how cheap or expensive
Positive emotions tend to result in positive shopping intentions and specific stores are (Arnold et al., 1983; Mazumdar et al., 2005;
negative emotions lead to negative shopping intentions (Zielke, 2011). Hamilton and Chernev, 2013; Lourenço et al., 2015). Emotions as part
For Barlow and Maul (2000), customers’ positive experiences from re- of retail price image have an impact on goal-oriented behavior (Bagozzi
tailers’ products/services are defined by emotional value (Ariffin et al., et al., 1998). Also, the emotional dimension may have an essential
2016). For Bagozzi et al. (1999), specific emotions may increase pur- impact on shopping intentions beyond price-level perceptions or value
chase intentions and customers may repurchase if they are satisfied (Xia for money.
et al., 2004). Future purchase intentions are related to customer sa- Some researchers consider repurchase intention as subsequent re-
tisfaction (Durvasula et al., 2004). purchase behavior (Bemmaor, 1995; Mittal and Kamakura, 2001;
As a positive emotion, the state of pleasure is experienced as a Morwitz et al., 1993; Hellier et al., 2003). The concept of repurchase
feeling of enjoyment and positive reinforcement. Excitement is rated on intention is approached by Lee et al. (2011) as the revisit intention that
a single dimension, ranging from the sleep level to frantic excitement, associates positive bonds with service quality and satisfaction (Kitapci
and is related to the extent to which one feels unrestricted or free to act et al., 2014). Furthermore, service quality perceptions are a precursor
in different ways (Mehrabian and Russell, 1974; Bearden and to word-of-mouth recommendations and repurchase intentions
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A.P. Graciola et al. Journal of Retailing and Consumer Services 44 (2018) 201–213
(Anderson, 1998; Kitapci et al., 2014). Choi and Kim (2013), Wu and on a product's or service's attractiveness or utility. While product's price
Chen (2014), and Ariffin et al. (2016) confirm that the customer's sensitivity is often observed individually, its impact has not been en-
perceived quality positively impacts on repurchase intentions. In gen- tirely explored when it comes to the location where the customer is
eral, higher perceived quality leads to stronger repurchase intentions situated (Shrivastva et al., 2016).
(Ariffin et al., 2016). A survey applied to Indian customers found out that price sensitivity
Price image or overall store price image may thus become a critical is one of the strongest consumer behaviors. In India, there are many
issue for retailers (Chang and Wang, 2014). In that repurchase inten- prudent customers who are sensible to the prices and will not be
tions are influenced by perceived price, which includes store price “ripped off” by the sellers. The young Indian male population presented
image, rather than by actual price only (Dodds et al., 1991). So, we more price sensitivity, a useful insight for marketing managers (Gupta,
propose: 2011).
Price information can be related to customers who are more or less
H1. Store price image impacts positively on repurchase intention.
price-conscious (Lichtenstein et al., 1990; Wakefield and Inman, 2003).
In the same way, researchers have studied the influence of demo-
graphics on price elasticity (Hoch et al., 1995) or psychographics psy-
2.3. Price level and price sensitivity as moderating variables
chographics (Urbany et al., 1996) on price sensitivity (Wakefield and
Inman, 2003). However, the specific effect of social situations on cus-
Several studies show clearly that many consumers use price as an
tomer's price sensitivity has not been examined by researchers.
indication of product or service quality. Price level is perceived in a
Wakefield and Inman (1993) examined the conjunction between
“positive role,” in other words, higher prices positively affect purchase
consumption occasion (hedonic/functional) and social context (non-
intentions (Erickson and Johansson, 1985; Lichtenstein et al., 1988;
social/social) in boosting sensitivity. They found that customers are
Tellis and Gaeth, 1990; Zeithaml, 1988; Lichtenstein et al., 1993). The
relatively less sensitive to price for hedonic products than for functional
use of price as an indicator of product or service quality clearly varies
products. Also, customers with lower levels of price sensitivity are in-
depending on the situation (Monroe and Krishnan, 1985; Lichtenstein
sensitive to either hedonic and functional services or goods. However,
et al., 1993).
as the price sensitivity increases, the difference between functional and
Journal selections from MSI in 2014 (MSI, 2014) point to the fra-
hedonic price sensitivity is remarkable (Wakefield and Inman, 2003).
mework developed by Hamilton and Chernev (2013) that shows the key
According to Hamilton and Chernev (2013), while consumer-spe-
drivers of price image formation and their consequences for consumer
cific factors can affect price image and lead to price sensitivity, this
behavior. Furthermore, they highlight the overall level of prices, where
dynamic depends on the consumers’ style of processing information and
a retailer can define a low price image even having high prices, or
their familiarity with market prices (Hamilton and Chernev, 2013; MSI,
conversely, retailers can have a high price image despite the fact that
2014). The focus of this paper is to therefore understand customers’
they are offering a low price level for products and/or services
perceptions of supermarket environments with different levels of price
(Hamilton and Chernev, 2013; MSI, 2014). Therefore, when it comes to
(high and low) and with differing price sensitivity (high and low).
high and low price levels, we hypothesize that they present moderating
When it comes to high and low price sensitivity, we posit that it has the
effects as follows:
following moderating effects:
H2a. If the price level is low, then the relation between the store price
H2c. If the price sensitivity level is low, the relation between the store
image with the repurchase intention will be positive, but weaker.
price image and the repurchase intention will be positive, but weaker;
H2b. If the price level is high, then the relation between the store price
H2d. If the price sensitivity level is high, the relation between the store
image with the repurchase intention will be positive and stronger.
price image and the repurchase intention will be positive and stronger.
Price sensitivity can be seen as the weight and/or influence con-
joined to price in a consumer's evaluation of a service or product
(Erdem et al., 2002). Price sensitivity refers to the way that customers
2.4. Proposed theoretical model
perceive and respond to changes or differences in products’ or services’
prices (Monroe, 1973; Wakefield and Inman, 1993) and influences
Based on the theoretical review, Fig. 1 shows the relations between
routine decisions in response to changes in price (Bucklin, Gupta and
constructs and their respective hypotheses.
Han, 1995; Wakefield and Inman, 2003). Erdem et al. (2002) point out
that customers’ price sensitivity must have increased in recent years,
because they are now more aware of substitutes (Erdem et al., 2002) QL
and/or competitors. Furthermore, a firm's past customers may be more MODERATORS
Price sensitivity
price sensitive because they believe that they deserve preferential PV Price Level
treatment (Lee and Fay, 2017).
A premium or high level price is associated with higher quality. The H2a (+) | H2b (+)
H2c (+) | H2d (+)
relationship between consumer price sensitivity and marketing mix has PL
frequently been investigated (Erdem et al., 2002). For Erdem et al.
(2002), price sensitivity may be moderated by the sensitivity of con- Store Price Repurchase
PF
sumers to uncertainty about a given product's attributes. In other Image H1(+) Intention
words, customers that perceived or expected higher quality may have
their price sensitivity decreased; consistent higher perceived quality PE
can lead to lower price sensitivity (Erdem et al., 2002).
Shrivastva et al. (2016) find that in the ways customers perceive
price gains and price losses, the impact of price sensitivity on con- NE
sumption shows significant differences between populations, in this
case, urban and rural. There is also variation in price sensitivity towards
a product or service across different stores and chains. Consumer be- SY
havior related to price changes is an important dynamic input for
companies’ strategic decisions. Furthermore, price sensitivities depend Fig. 1. Proposed theoretical model.
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A.P. Graciola et al. Journal of Retailing and Consumer Services 44 (2018) 201–213
Table 1 Table 2
Sources of store price image scale. Sample characteristics.
Source: Literature review by Scopel (2014).
Variable Frequency Percentage
Constructs Sources scales adapted from
Gender
Quality (QL) Zeithaml (1988), Zielke (2010) Female 108 52.1
(four items) Sweeney et al. (1999), Male 95 45.9
Perceived Value (PV) Rust et al. (2001), Missing Value 4 1.9
(five items) Sirdeshmukh et al. (2002), Age (years old)
Zeithaml (1988), Zielke (2006), 18–22 47 22.7
Sheth et al. (1991), Cross and Dixit (2005), 23–27 84 40.6
De Toni and Mazzon (2013) 28–32 26 12.6
Price Level (PL) Zielke (2006, 2010, 2011), 33–37 22 10.6
(six items) Winer (1986), Rajendran and Tellis (1994), 38–42 7 3.4
De Toni and Mazzon (2013) > 43 9 4.3
Price Fairness (PF) Bolton et al. (2003), Missing Value 12 5.8
(four items) Xia et al. (2004), Family monthy income
Munnukka (2006), Zielke (2010) < $ 500,32 22 10.6
Positive Emotions (PE) Lazarus (1991), Zielke (2011) $ 500,63–750,48 38 18.4
(four items) O’Neill and Lambert (2001), Sweeney and Soutar $ 750,79–1250,79 58 28.0
(2001), $ 1251,11–2501,59 52 25.1
Peine et al. (2009), $ 2501,90–3809,52 22 10.6
Negative Emotions (NE) Lazarus (1991), Zielke (2011) $ 3809,84–5003,17 6 2.9
(seven items) O’Neill and Lambert (2001), > $ 5003,49 8 3.9
Sweeney and Soutar (2001), Missing Value 1 0.5
Peine et al. (2009), Monthy spending on grocery shopping
Symbolic Dimension (SY) Vinson et al. (1977), < $ 158,73 47 22.7
(four items) Levy (1981), Dichter (1985), $ 159,05–253,97 71 34.3
Rucker and Galinsky (2008) $ 254,29–825,40 78 37.7
$ 825,71–1428,57 7 3.4
> $ 1428,89 1 0.5
Missing Value 3 1.4
3. Method and data
This study is based on a survey that was conducted among custo- The data were analyzed using the partial least squares–structural
mers who had experienced retail purchases in different kinds of su- equation modeling (PLS–SEM) approach supported by SmartPLS® 3.2.7.
permarkets, with high and low levels of price, within the last 12 PLS–SEM is a nonparametric method that minimizes the amount of
months. We used a convenient customer sample of management un- unexplained variance. The technique differs from the method of max-
dergraduate students from the south of Brazil. An important concern for imum likelihood-based (CB-SEM), which requires a normal distribution
the research is to obtain a sampling equivalence (Malhotra et al., 2012). of data and assumes normally distributed residuals (Ringle et al., 2015;
Participants were invited to remember and register a recent purchase. Thiele et al., 2015; Hair et al., 2017).
First of all, the instrument was structured to measure the store price
image, as a formative second-order factor, using the following con-
structs and measurement scales already pretested by Scopel (2014) in 4. Data analysis and results
the Brazilian context (see Table 1).
Furthermore, this study analyzed the relation of these constructs 4.1. Sample and measurement
with the Repurchase Intention (RI) (five items) from Noyan and Simsek
(2012). All these constructs include the moderation level of price (high Table 2 shows the descriptive analysis of the demographic char-
and low), so customers answered a single research question for two acteristics of the respondents. A total of 239 cases were obtained as the
types of supermarket, with low and high prices. These items can be seen initial student sample. However, only 207 valid and usable ques-
in the scales described in the Appendix A. tionnaires were considered. Thirty-two cases were eliminated, as they
As another moderating construct, the customers were then asked to presented more than 5% of missing data. Mean value replacement with
answer questions about their Price Sensitivity (PS) (five items), using a SmartPLS® 3.2.7 should only be used when the dataset exhibits ex-
scale adapted from Gupta (2011) and Shrivastva et al. (2016). All the tremely low levels of missing data, with less than 5% of values missing
constructs’ scales range from 1 = strongly disagree to 7 = totally agree. per indicator (Hair et al., 2017). Therefore, only cases with missing
Respondents were asked about their frequency of purchase. Finally, the values below 5% were kept in this research. Out of this total of 207
respondents answered questions about their profile, such as gender, age, cases, 108 (52.1%) were female and 95 (45.9%) were male; 84 (40.6%)
schooling, monthly income, and amounts spent on purchases in super- were between 23 and 27 years old. Monthly family income varied from
markets. $750.79 to $1250.79, comprising 58 (28%) respondents. Fifty-two re-
After the questionnaire was developed, content validation was per- spondents (25.1%) had a family income from $1251.11 to $2501.59.
formed to understand the relation of the content with the construct under Furthermore, 78 respondents (37.7%) had a monthly spend on grocery
analysis (Hair et al., 2010). The data collection instrument was submitted shopping from $254.29 to $825.40, while 71 (34.3%) respondents had
to a small group of experts who analyzed and checked the suitability of a monthly spend from $159.05 to $253.97.
the indicators selected to represent the constructs discussed. Moreover,
the pre-test was applied to 60 respondents through auto-fill.
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Table 3 stages were performed in PLS–SEM for the measurement of the re-
Results for reflective measurement models. flective-formative model: evaluation of the measurement model and the
Variables Items Convergent Validity Internal Consistency structural model (Hair et al., 2017).
Reliability
Table 4
Exploratory factor analysis for eight factors items loadings and cross loadings.
Factor Items Quality Perceived Value Price Level Price Fairness Positive Emotions Negative Emotions Symbolic Dimension Repurchase Intention
Table 4 (continued)
Factor Items Quality Perceived Value Price Level Price Fairness Positive Emotions Negative Emotions Symbolic Dimension Repurchase Intention
Note: Bold values are items loadings higher than 0.700 at SmartPLS® 3.2.7.
Table 5
Correlation and average variance extracted (AVE).
Constructs 1 2 3 4 5 6 7 8
(1) Symbolic Dimension 0.912 0.250 0.265 0.009 0.320 0.126 0.277 0.141
(2) Positive Emotions 0.250 0.865 − 0.116 0.643 0.530 0.532 0.110 0.392
(3) Negative Emotions 0.265 − 0.116 0.859 − 0.313 − 0.132 − 0.319 0.038 − 0.192
(4) Price Level 0.009 0.643 − 0.313 0.793 0.348 0.564 − 0.130 0.421
(5) Perceived Value 0.320 0.530 − 0.132 0.348 0.774 0.522 0.412 0.485
(6) Price Fairness 0.126 0.532 − 0.319 0.564 0.522 0.893 0.263 0.530
(7) Quality 0.277 0.110 0.038 − 0.130 0.412 0.263 0.889 0.365
(8) Repurchase Intention 0.141 0.392 − 0.192 0.421 0.485 0.530 0.365 0.890
Note: The average variance extracted (AVE) of each construct are values in diagonal, below the diagonal line are the shared values variances (r squared) and above
the diagonal are the correlations values at SmartPLS® 3.2.7.
Table 6
Confidence intervals for HTMT.
lower than 2,5% upper than 97,5% Sig. HTMT confidence interval does not include 1
Table 7
Structural model assessment procedure.
Collinearity Assessment Significance of the path coefficients Level of R2 f2 effect size
VIF Hypothesized relationships R2 f2
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4.4. Evaluation of the structural model capabilities. In this way, the collinearity analysis tests for variance in-
flation factor (VIF) values below 5. In this study, all VIF values were
The structural model's predictive capabilities and the relationship below 5. The hypothesized relationships exist among the constructs, so
between the constructs were tested by running the coefficients of standardized values between − 1 and 1 measure these relations, with
determination R2 (explained variance) and f2 (effect size) (Hair et al., estimated path coefficients close to + 1 representing strong positive
2016). Table 7 shows the steps to determine the model's predictive relationships and vice versa for negative values.
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The coefficient of determination (R2 value) represents a measure of low sensitivity respectively. This was tested with multi-group analysis
in-sample predictive power (Rigdon, 2012; Sarstedt and Mooi, 2014; in Smart-PLS 3.2.7, by splitting up the moderator into two dummy
Hair et al., 2016). R2 values of 0.20 are considered high in disciplines variables, which were then included in the model (Hair et al., 2016).
such as consumer behavior (Hair et al., 2016). In this analysis, R2 Based on the sample of 207 cases, 83 (40.1%) customers presented low
presented a value of 0.370; this means that 37% of repurchase intention sensitivity, 82 (39.6%) customers had high sensitivity, and 42 (20.3%)
was explained by the store price image. The f2 effect size measures the customers were eliminated, resulting in a final sample of 165 re-
strength of each variable in explaining endogenous variables; this spondents. This counterbalance was used in the research of
means it represents the evaluation of the R2 values of all endogenous Zaichkowsky (1985). So, using an average of a seven-point scale for
constructs (Hair et al., 2016). According to Hair et al. (2016), effect size each customer's scale sensitivity, the scale was divided into three parts.
values below 0.02 represent weak effects or indicate that there is no The first quintile (40% sample) represents customers with low sensi-
effect. Finally, Hair et al. (2016) suggest that the goodness-of-fit index tivity, the middle one (20%) was eliminated, and the third quintile
should not be used to determine model fit. (40% sample) represents customers with high sensitivity. This moder-
Fig. 2 presents the SmartPLS model and results yielded by PLS al- ating variable allowed an understanding of the effects of customer price
gorithm. This illustration relates to the findings of Tables 3–7. sensitivity on grocery environments as presented at Table 10.
Table 8 shows the latent variable R2 for repurchase intention is Interesting results were found in Table 10 about the moderating
0.370 in the general framework, which means that store price image effect of price sensitivity. First, the store price image (low sensitivity)
explains 37% of repurchase intention. In this vein, H1 is validated impacted on repurchase intention (β = 0.544, p = 0.000, R2 = 0.296,
(β = 0.609, p = 0.000, 95% CI = 0.530–0.672). Furthermore, it was 95% CI = 0.288–0.659). Hence, H2c is validated. It was possible to
possible to verify that the dimension of store price image present sig- verify that negative emotions (NE) toward the store price image did not
nificant correlations as a second-order construct. present significant relations when moderated by the price sensitivity,
Table 8
General model resolution by SmartPLS using PLS algorithm and Bootstrapping.
Hypotheses Path Coefficient Standard Error t-value p-value R2 Confidence Intervals Results
General Framework
Note: t-value should be greater than 1.96 (positive or negative) to be significant at < 0.05. Confidence interval neither of the relations includes the value zero.
4.5. The moderating effect of price level for both high price sensitivity (β = −0.155, p = 0.061, 95% CI = −
0.254 to 0.068) and low price sensitivity (β = − 0.233, p = 0.229,
The moderating effect of price level was checked by splitting the 95% CI = − 0.395 to 0.238). In addition, the symbolic dimension (SY)
sample into two groups, with high and low price levels respectively. This did not present significant relations in the model when moderated by
was tested by running analyses in Smart-PLS 3.2.7 (Hair et al., 2016). the price sensitivity for low price sensitivity (β = 0.081, p = 0.277,
Each respondent replied for both price levels (low and high prices), so 95% CI = − 0.095 to 0.231).
both groups comprised 207 customers. Table 9 presents all indexes. Furthermore, a significant link was found between store price image
The moderating effect of price level, for Sobel (1982), is seen when (high sensitivity) and repurchase intention (β = 0.704, p = 0.000, R2
the value for the critical ratio for the difference is above or below 1.96, = 0.495, 95% CI = 0.592–0.788). Thus, H2d is strengthened. For cus-
p < 0.05, which means that there is an indirect effect of price level. tomers with both lower and higher price sensitivity, the store price
Table 9 shows that only the negative emotions (NE) did not present image impacted on repurchase intentions. However, based on the R2
significant differences associated with price level, for both low price values for low and high price sensitivity, it was found that 49.5% of
level and high price level. repurchase intention was explained by the store price image when
However, the store price image (low price level) impacted on re- customers presented high price sensitivity. On the other hand, 29.6% of
purchase intention (β = 0.445, p = 0.000, R2 = 0.198, 95% repurchase intention was explained by the store price image when
CI = 0.304–0.565). Hence, H2a is validated. In addition to this, a sig- customers presented low price sensitivity.
nificant link occurred between store price image (high price level) and
repurchase intention (β = 0.650, p = 0.000, R2 = 0.422, 95% 5. General discussion
CI = 0.563–0.725). Thus, H2b is strengthened. So, customers at high
price levels present stronger impacts on the relation between the store 5.1. Theoretical contributions and managerial implications
price image and repurchase intentions. Customers at low price levels
decrease the impact, or present a weaker impact on the relation be- First, we identified the relevant findings of research related to direct
tween the store price image on repurchase intentions, because the R2 effects within the theoretical framework. The price level and perceived
value (R2 = 0.198) is lower in comparison with that of the high price value better explained the price image, as pointed out by Zielke (2006).
level (R2 = 0.422). Using the general framework of this study, the price level was found to be
the most representative construct of store price image, as a reflective-
4.6. The moderating effect of price sensitivity formative second-order construct, followed by price fairness, positive
emotions, and the perceived value. The perceived value was the fourth
The moderating effect of price sensitivity was checked by splitting construct that best explained the store price image. However, in the case of
the sample in two groups according to price sensitivity, with high and high price levels, perceived value better explained the store price image,
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Table 9
Moderating effect of price level.
Hypotheses Path coefficient Standard Error t-value p-value R2 Confidence intervals Results
Note: t-value should be greater than 1.96 (positive or negative) to be significant at < 0.05. Confidence interval neither of the relations includes the value zero.
Table 10
Moderating effect of price sensitivity.
Hypotheses Path Coefficient Standard Error t-value p-value R2 Confidence Intervals Results
Note: t-value should be greater than 1.96 (positive or negative) to be significant at < 0.05. Confidence interval neither of the relations includes the value zero.
following by price fairness and positive emotions. Negative emotions did fairness in different ways for low and high price level stores. In parallel,
not impact on store price image at either low or high price levels. This positive emotions also presented a significant difference between both
result about negative emotions was also found by Scopel (2014). On the price levels, for low and high price stores. An interesting definition by
other hand, at low price levels, positive emotions best explained the store Xia et al. (2004) for price fairness is that customers display emotions
price image, following by price fairness and price level. when a retailer's price is reasonable, acceptable, or justifiable, in com-
Zielke (2011) indicated, for future research, the formation of emo- parison with those of competing retailers (Xia et al., 2004). As con-
tions as part of a retailer's price image. Therefore, as a contribution to tributions of this research, these positive emotions could be related to
this research, positive emotions are seen as bonds that support both the price fairness. As noted by Zielke (2006), when customers feel afraid to
general and the moderating frameworks. However, for negative emo- pay too much, they may feel negative emotions.
tions, the general framework showed relations being supported, while The first hypothesis examined the impact of store price image on
low price and high price levels did not support bonds. So, this result can repurchase intention. It tested the relations between perceived higher
be related to the idea supported by Lichtenstein et al. (1993), which quality and stronger repurchase intentions (Choi and Kim, 2013; Wu
highlights customers’ perception more broadly and in a more complex and Chen, 2014; Ariffin et al., 2016). To understand the overall store
way than playing just a “negative role.” price image may become a critical issue for retailers (Chang and Wang,
This study sought to answer the research questions proposed by 2014).
Zielke (2014) and provide greater depth in understanding how customers The second hypotheses (H2a and H2b), examined the direct effects
respond to low and high prices. As feedback on this issue, the moderating of store price image on repurchase intentions, with moderating effects
price level is seen to present different values for low and high levels of that can provide a wider and more comprehensive vision of the con-
prices. Specially, the relations between store price image and price sumer behavior under study. Thus, besides the hypotheses tested by the
fairness, and store price image and positive emotions, showed significant general framework, stores with low or high store price image presented
differences between the multi-group analyses. According to these find- significant further hypotheses, showing that overall store price image
ings, it is possible to support the idea that customers perceived price (low/high level) will impact positively on repurchase intentions. These
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findings are corroborate in the literature; for Dodds et al. (1991), re- price image, as argued by Hamilton and Chernev (2013). Furthermore,
purchase intentions are conducted by perceived value, more than just a qualitative approach may ask customers about overall price level,
the actual price, while for Chang and Wang (2014), the dimensions of price image, comparative judgment, and so on. Going further, future
price image, as price value, price fairness, and price pleasure, impact on studies could examine customers’ acquisition of store price image be-
repurchase intentions. However, the main finding of this research is liefs in the context of conflicting information from retailers (Hamilton
that customers with low price level perceptions decrease this impact, and Chernev, 2013).
presenting a weaker impact on the relation between the store price In addition, future research should consider the use of a longitudinal
image on repurchase intention, in comparison with customers with high approach, to better understand how the store price image evolves over
price level perceptions. time; this approach could also contribute to retailer managers better
With regard to the moderating effect of price sensitivity, the second understanding changes in customer behavior. Furthermore, a biblio-
hypotheses (H2c and H2d), show that the store price image will impact metric review of store price image could be produced, to better com-
on repurchase intention with weaker or stronger relations, depending prehend new research possibilities, fresh construct relations, and also
on the moderating effects of price sensitivity. Also, as pointed out by new signs of research gaps.
Hamilton and Chernev (2013) and MSI (2014), the customers’ in- In this vein, future research could focus on brand retail credibility as
formation processing style and familiarity with market prices is one of related to price sensitivity. Beyond that, others studies may investigate
the factors that influences the relation with price sensitivity. Possession strong and/or weak brand valuations and their relation to price pre-
of information can contribute to the customer having more or less price miums. For this reason, Erdem et al. (2002) suggested that consumers
sensitivity. As argued in the theoretical section—by Erdem et al. with higher price sensitivity are consistent across brands in their be-
(2002), for example—low price sensitivity can be associated with havior; however, stronger brands tend to command premium prices.
higher perceived quality; customers who expected higher quality may From this study, stronger retail brands will be interpreted as operating
exhibit less price sensitivity. Furthermore, experienced higher quality with higher store price images that command premium prices.
can lead to lower price sensitivity (Erdem et al., 2002). This means that Another research line that should be broadened and deepened is the
a customer who is easily influenced by higher quality impressions tends focus on the impact of negative emotions on store price image, to un-
to have lower price sensitivity. derstand better why these bonds were not supported in this research for
both low and high price level stores. In this vein, Lichtenstein et al.
5.2. Future research and limitations (1993) argued that negative emotions are a complex stimulus, with
customers perceiving price through a broad range of influences.
Future research could focus on understanding the formation of store
Appendix A
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