The Role of Price Perceptions in an Integrated Model of Behavioral Intentions

Abstract

Compared to the emphasis that service quality research has received in service marketing, much less work has been done on the role of price perceptions and their effect on customer retention. This article seeks to fill this gap in the literature. The authors build propositions of price’s role vis-à-vis customer value, satisfaction, and behavioral intentions and then test these propositions using empirical data from the banking industry in the United States and New Zealand. Their findings indicate that (a) price perceptions have a stronger influence on customer value perceptions than quality, and (b) price perceptions, when measured on a comparative basis, have a significant direct effect on customer satisfaction and behavioral intentions— over and above their mediated effect through the construct of customer value. These results indicate that price perceptions significantly affect customer retention and suggest that managers may benefit from actively managing consumers’ price perceptions, in addition to consumers’ quality perceptions.