Understanding Antecedents of Price Tolerance

Abstract

Price increase is important to any business for its inevitability as well as its potential for jeopardising a consumer base. The practical question is: how much of a price increase can consumers tolerate before they modify their shopping behaviours. Hence, the present study took the perspective of consumers, and focused on price tolerance, which was defined as the maximum price increase an individual consumer could tolerate before changing their shopping behaviour. The central research questions were: (1) what factors would cause some consumers to have a larger price tolerance than others, and (2) how do those factors influence price tolerance, and interact with each other? The present study was designed to contribute to business practices by providing theoretical guides; and to contribute to the literature of price tolerance by providing a conceptual framework with a holistic view. To understand various impacts, which price tolerance received from antecedents as well as interactions among those antecedents, the present study proposed a framework containing five antecedents of price tolerance. Three antecedents were reported in previous studies: consumer involvement, satisfaction, and consideration set size; whereas two were newly proposed: perceived motive fairness and convenience orientation. A survey was conducted among 277 students. Data were analysed in SPSS 16 and AMOS 16 using a structural equation modelling approach. Results of the present study confirmed some findings in previous literature. More importantly, new insights into price tolerance were gained through previously unreported findings: (1) Perceived motive fairness had a positive impact on price tolerance (2) Convenience orientation had a positive impact on price tolerance A final conceptual framework was proposed according to the findings of the present study. Future research could further explore the relationship between consideration set size and price tolerance through quantitative approaches. In addition, convenience orientation and its impact on price tolerance provided a fruitful ground within which future studies could further explore consumers' concerns over nonmonetary costs.

Date of Award	31 Dec 2013
Original language	English
Awarding Institution	The University of Manchester
Supervisor	Jikyeong Kang (Supervisor) & Rui Da Silva (Supervisor)