An Empirical Study Examining a Mediated Moderated Model of Perceived Price Fairness, Brand Equity and Purchase Intention
Tran Trung Vinh1*, Tran Thi Kim Phuong1
1 University of Economics, The University of Danang, Danang, VIETNAM
*Corresponding Author: [email protected] Accepted: 15 July 2020 | Published: 31 July 2020
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Abstract: This study aims to provide theoretical support related to the interrelationship among perceived price fairness, brand equity and purchase intention in the smartphone industry. In particular, this work presents a better understanding of the effect of gender as a moderating variable on the relationships among these factors for the iPhone brand. The mediated moderated model was evaluated by applying Covariance-based SEM through data collected from 368 Vietnamese respondents who have used or know of the iPhone smartphone brand. The results indicate that: perceived price fairness has significant, positive and direct effects on brand equity; purchase intention is positively impacted by perceived price fairness and brand equity; brand equity plays a mediating role in the indirect effect of perceived price fairness on purchase intention; and the impacts of perceived price and brand equity on purchase intention are different for men and woman, with these effects stronger for female customers than for their male counterparts.
Keywords: perceived price fairness, brand equity, purchase intention, smartphone industry _________________________________________________________________________
1. Introduction
Modern scientific achievements brought about by practical scientific research have changed the face of the world and are the driving force behind human progress. One such phenomenon has been the development of information technology, in particular, the smartphone. As a result of the important role of this product in daily life and the current overabundance of smartphone brands flooding the market, customers are finding it not so easy to choose the one most suitable for themselves. Thus, it has led to fierce competition among these brands based on either non-price competition or price competition. In the battle to gain a competitive advantage, the customer itself is the decisive factor in the existence of a brand (Tran & Tran, 2017; Tran et al., 2019). From a behavioral perspective, brand equity creates value for both customer and company as well as the need to make a difference that leads to a competitive advantage based on non-price competition (Rambocas et al., 2018; Tran et al., 2019). In particularly, brand equity is a key dimension impacting a company's value and market value (Rios and Riquelme, 2010), and this in turn leads to brand strength in attracting new customers and retaining existing customers (Tran et al., 2019; Kiriri, 2019). In addition, building strong brand equity through positive impacts on consumer reaction to the brand has a positive effect on the performance of a company (Ali and Muqadas, 2015). Price is one of the most important factors affecting the purchase of products or services based on price competition (Setiawan et al., 2016). From a consumer perspective, price is defined as the amount of money or total value that a customer actually pays for product or service in exchange for the cumulative benefit from that product or service (Son and Jin, 2019).
Therefore, the concept of price can be more precisely defined as perceived price. Perceived
price is personal belief in price regarding the quality of the product (Wang et al., 2018).
Perceived price is an important concept in understanding how consumers interpret prices in reference to their internal price standard or competing prices (Oh, 2000); this comparative assessment gives rise to the definition of perceived price fairness (Chiang and Jang, 2007).
Furthermore, the concept of fairness in the context of price perception and intention to purchase is measured by perceived price fairness (Son and Jin, 2019). Regarding to the electronic market, setting up and adjusting the product prices will affect demand and profitability. Obviously, within same brand, different product lines will have different prices to suit each market segment (Roma et al., 2015). Customers thus try to find the best-priced goods and services that will bring maximum benefit. It is therefore important for companies to predict how consumers are likely to respond to different price points or price changes.
There is relationship between perceived price fairness and both consumer decision-making and buying behavior, and perceived price fairness has a major impact on consumer responses to strategic pricing decisions (Wang et al., 2018).
It can be said that examining the relationships among perceived price fairness, brand equity and purchase intention has become one of the most interesting topics in various areas (e.g., products, services). Previous studies investigated the relationships among three factors by looking at the direct impacts of perceived price fairness on brand equity (Al-Msallam, 2015;
Beristain and Zorrilla, 2011) and purchase intention (Setiawan et al., 2016; Son and Jin, 2019) plus brand equity on purchase intention (Aghaei et al., 2014; Schivinski and Dabrowski, 2014; Chakraborty, 2019). Regarding the process of examining the interrelationships among perceived price fairness, brand equity and purchase intention from, to the best of our knowledge, there is still little research that examines the mediating role of brand equity in the relationship between perceived price fairness and purchase intention.
Meanwhile, from a customer perspective, brand equity is a different effect of brand knowledge based on customer feedback on brand marketing activities (Keller, 1993).
Regarding marketing activities, pricing strategy has a strong influence on customer behavior.
In addition, brand equity is biased in preference, purchase intention, and consumer choice over the central brand in a range of brands having the same product category (Yasin et al., 2007). When customers feel the fit among price, brand image, and perceived quality, it increases brand equity in the minds of customers, thereby contributing to the creation of loyalty and consequently leading to their purchase intention. Thus, this study considers one important aspect whether or not brand equity mediates the relationship among perceived price fairness and purchase intention. Furthermore, companies have paid much attention to the perceptions, thoughts and intentions of customers (Wang et al., 2018). However, customer behavior is complex, so understanding the behavior of target customer is a huge challenge for marketers. In addition, the perceptions of consumers regarding brand, price or intention to select a particular smartphone brand depends on the different demographic characteristics of these customers, such as gender, age, income. In this case, the current study would like to focus on the differences among men and women in terms of the perception and evaluation of price fairness, and how it affects the way they perceive brand equity and their intention to buy a specific smartphone. Thus, the second important thing considered in this study is the effects of moderating variables (gender) on the relationships among these three factors.
From discussion above, this study aims to contribute to the extant marketing literature on the effects of mediating and moderating variables in interrelationships among perceived price fairness, brand equity and purchase intention. In order to do this, this study proposes a conceptual model that fully explains the interrelationships among these factors.
2. Literature Review 2.1 Research concepts
Perceived price fairness: is defined as consumer assessments and related emotions about the difference between the seller’s price and the price of another comparable party being reasonable, acceptable or justifiable (Xia et al., 2004). In addition, if customers perceive prices which are higher than their expectation, they feel that the purchasing situation is unfair (Wu et al., 2012). For example, a smartphone brand increases significantly in price for a new version while its features offer nothing more than the previous version or smartphones of other brands; in such a case, the consumer perceives price increase as unfair. Thus, if company proposes a relative low price, the consumer will consider it to be a fair price. This means that the consumer feels it is a highly suitable perceived price. In contrast, if a given price is high, the consumer will evaluate it as an unfair price, which indicates that it is considered as unfavorable perceived price (Chiang and Jang, 2007; Wang et al., 2018).
However, consumers also consider price as an indicator of product quality in some cases (Chiang and Jang, 2007; Lien et al., 2015). For example, some people might think a high price has added value and vice versa. In the smartphone context, customers usually compare the price given by a particular brand with that of its competitors, and subsequently form their perceptions of price. In the strongly competitive environment, fairness of price (acceptable or reasonable) helps brands gain a sustainable competitive advantage with their products.
Brand equity: is based on two main perspectives: financial and customer-based (Tran et al., 2015; Tran et al., 2019). From the financial perspective, brand equity can be considered as the value of assets created by brands and can be expressed as additional cash flow generated by a brand (Wang and Jiang, 2019; Tran et al., 2017). From the customer-based perspective, brand equity (also known as customer-based brand equity) is based on the customer's assessment of the brand (Leone et al., 2006). Compared with brand equity based on the financial perspective, customer-based brand equity is more widely supported by scholars if the brand does not have meaning to the customer, then no definition of brand equity is really meaningful (Tran et al., 2019). Thus, this topic focuses on customer-based brand equity.
From the customer-based perspective, according to Aaker (1991), brand equity is defined as
“a set of brand assets and liabilities linked to a brand, its name and symbol that add to or subtract from the value provided by a product or service to a firm and/or to a firm’s customers”. A better understanding of the phenomenon of brand equity requires the use of all components of equity, including brand awareness, brand associations, perceived quality and brand loyalty (Aaker, 1991). Although some later studies have modified some dimensions, compared with the concept and components of brand equity introduced by Aaker (1991), their content is quite similar (Chang and Liu, 2009). In addition, the model of Aaker (1991) is one of the models widely cited by many researchers and widely used for fieldwork as it demonstrates the full appreciation of customers for the brand and it can be easily understood by the customer (Tong and Hawley, 2009). Thus, the four components of brand equity from the model of (Aaker, 1991) will be considered in this work. As such, brand awareness is defined as “the ability of the potential buyer to recognize and recall that a brand is a member of a certain product category” (Aaker, 1991). Brand association is defined as “anything linked in memory to a brand” (Aaker, 1991). Perceived quality is defined as “customer’s perception of the overall quality or superiority of a product or service with respect to its intended purpose relative to alternatives” (Aaker, 1991). Finally, brand loyalty is defined as
“the attachment that a customer has to a brand” (Aaker, 1991).
Purchase intention: is involved in consumer buying behavior. It refers to the possibility of a consumer to purchase a particular product, meaning that the higher the purchase intention is, the higher the purchase probability will be (Nasution et al., 2019). Consumers prefer to buy a product when they find that they are in need of that product, or their attitudes and perceptions toward to the product are positive (Madahi and Sukati, 2012; Mohmed et al., 2013).
Differences in demographic characterictics such as gender, age, income, education, and personal preferences will affect the way consumers choose a product or service. As a result, it also influences the way brands define their products and services in line with their target market. The intention to purchase means that the consumer can purchase the product for the first time or will buy the product again after they evaluate the product and ascertain that the product is worth buying (Wang et al., 2018). In the context of smartphones, as brands continually improve their products, constantly updating new versions with technological superiority, the main purpose of increased purchase intention is to attract new customers using the product line of the brand and impact loyal customers’ continued use of the new version of the brand.
2.2 Relationships among research concepts
Price is considered as a marketing indicator, and as such has an important effect on brand equity (Yoo et al., 2000). Customers make judgements based on their own experiences or those of other customers. In addition, customers also have predefined ideas for a fair price range for a given product (Son and Jin, 2019), so if the price is deemed unfair, it will eventually led to lower brand equity (Abdul, 2017) and the willingness to buy decreases accordingly (Xia and Monroe, 2010). Previous studies confirmed that perceived price fairness has significant positive effect on brand equity and its components (Al-Msallam, 2015;
Beristain and Zorrilla, 2011).
The effect of perceived price fairness on purchase intention has been demonstrated in previous studies (Lee et al., 2011; Setiawan et al., 2016; Son and Jin, 2019; Wang et al., 2018). It can be concluded that the perception of price fairness is defined as a key predictor of purchase intention, as consumers often tend to compare price and quality in their purchase decision-making. Consumer attitudes toward value could be positive even when the relative evaluation of the price is high. Also, if a price is perceived as reasonable, consumers may tend to have a greater intention to purchase (Chiang and Jang, 2007). From that perspective, two hypotheses are formulated:
H1: Perceived price fairness has a positive direct effect on brand equity.
H2: Perceived price fairness has a positive direct effect on purchase intention.
Brand equity is a psychological structure associated with positive consumer behavior (Rambocas et al., 2018). Specifically, customers are more likely to have positive behavioral intention associated with repeat purchase and lower trend to switch to alternative brands when brand equity is high (Rambocas et al., 2018). Moreover, a study in consumer behavior identified that brand equity is the strongest element to directly affect brand purchases. This means that once the consumer has tried the product and service of a particular brand, it increases their clarity, which in turn leads to an increased purchase intention for the brand in the future (Ali and Muqadas, 2015). Several previous studies have pointed out that brand equity has a positive impact on purchase intention (Hakim et al., 2017; Rambocas et al., 2018; Shah et al., 2016). Hence, the following hypothesis is established:
H3: Brand equity has a positive direct effect on purchase intention.
Brand equity is closely related to the value of consumers. As a result, if a business creates a strong brand, it will increase awareness, reduce uncertainty and increase intention to use (Rambocas et al., 2018). Brand equity is especially important when customers' intentions are influenced by their perceptions, preferences and subjective attitudes (Hoeffler and Keller, 2003). Researchers have also confirmed the premise of marketing activities for brand equity (Rambocas et al., 2018). Yoo et al. (2000) confirmed that marketing activities can build or harm a brand. For example, promotions and product discounts can negatively affect customer perceptions of quality and brand image. Meanwhile, high prices or product image can enhance the image or quality of the brand (Rambocas et al., 2018). Brand equity has been extensively examined in relation to customer behavior; however, it has received very little research interest in evaluating the mediating role in relationships between marketing activities and customer behavior. In particular, very few previous studies have examined brand equity as a mediator in the relationships among perceived price fairness, brand equity and purchase intention. This study assumes that brand equity is defined as a mediator in the relationship between perceived price fairness and purchase intention. Hence, the following hypothesis is established:
H4: Brand equity mediates the relationship between perceived price fairness and purchase intention.
Gender is determined as a potential moderator in consumer behavior studies. Understanding the difference in a gender’s impact on customer purchase intent will help entrepreneurs create a more appropriate and effective sales strategy. Women are more susceptible to social and normative pressures than men (Nysveen et al., 2005). Besides, the ways of thinking and behaviors of men and women are different (Wang et al., 2017). For example, the difference in structure and ability to use the brain leads to the tendency for men to shop on demand or target purchases, while women tend to explore and easily adjust their initial goals depending on their emotions (Vu, 2018). Men often operate based on logic, convenience and necessity.
In order for male customers to choose a product, they give reasons and convincing evidence as to why they should buy it (Rambocas et al., 2018). Meanwhile, women are mostly emotional shoppers (Rambocas et al., 2018). Women want to understand more about a product, a brand, the style of the product and the emotions that the product induces in them (Rambocas et al., 2018). Thus, it is possible to infer that women tend to be more comprehensive, based on subjective perceptions and objective information from the brand on top of the customer's assessment, while men tend to favor objective information instead of subjective feelings. In addition, once men find a brand that meets their needs, they are more likely to stick with it; conversely, women have a higher brand loyalty if they experience impressive customer service (Vu, 2018). From the above arguments, this study realizes that women more strongly perceive price fairness and brand equity than men. This difference is based on differing moods, personalities, experiences, skills and behaviors between the genders. Perceived price fairness and brand equity are also considered as much more useful for women than men in terms of reducing perceived risk and increasing the willingness to make a purchase. Therefore, the assumption was made in this study that gender has a moderating role in the relationships among perceived price fairness, brand equity and purchase intention, as stated in the following hypotheses:
H5: The effect of perceived price fairness on brand equity is stronger for women than for men.
H6: The effect of perceived price fairness on purchase intention is stronger for women than for men.
H7: The effect of brand equity on purchase intention is stronger for women than for men.
A new adapted model is proposed in this work based on a review of the literature. The conceptual framework of this research is shown in Figure 1.
Figure 1: A conceptual framework
3. Methodology 3.1 Survey design
This work has adapted the observed variables from relevant studies. In particular, this study borrowed seven items adapted from Xia et al. (2004) used to measure perceived price fairness, while 12 items used to assess brand equity were adapted from Tong and Hawley (2009), and Yoo et al. (2000). Finally, the four items used to assess purchase intention were adapted from Teng and Laroche (2007).
To evaluate a theory, it is important to confirm the validity of its content (Hair et al., 2010).
This implies that all indicators need to meet dependability requirements (Allen and Yen, 1979) and have internal consistency (Nunnally, 1978). This study conducted a pilot study with a small sample of 20 respondents who have used iPhones in Vietnam. The purpose of this survey was to test the reliability of the factors before conducting a formal survey. The results of the reliability test showed that the Cronbach’s Alpha values were higher than 0.7, which implies that all factors ensure reliability.
The survey instruments were put into the questionnaire to adequately assure all constructs in the proposed model. Four components of brand equity are termed first-order factors operating as independent variables and considered to be one level. Brand equity is designated as a second-order factor which does not have its own set of measured indicators and is linked indirectly to those measuring the first-order factors (Byrne, 2010). The questions for this survey were designed to include six dimensions with 23 items. All factors were assessed based on a Likert scale (Likert, 1932) of five levels, from 1 (totally disagree) to 5 (totally agree). The survey was then translated into Vietnamese by a bilingual English-Vietnamese
speaker and then translated back into English by another person to ensure consistency in content and meaning between the two forms. The survey includes two parts, the first focuses on respondent’s information and the second is used to evaluate the research concepts of the model.
3.2 Data collection
Data were collected from March 2019 to April 2019 using an online survey and concentrated on a target sample of customers who have used or know of the iPhone smartphone brand in Vietnam. The questionnaires were distributed through Facebook and Google Plus where respondents would feel free and have enough time to answer the questionnaires. A total of 368 valid questionnaires were collected, then coded, and used in the analysis. The results of the respondents’ demographic information show that among the 368 valid respondents, females accounted for 54.34% of the respondents and the focus was mainly on three age groups: 23–40 years old (accounting for 53.53%); below 22 years old (accounting for 22.01%); and 41–60 years old (accounting for 20.92%). The greatest proportion of respondents were public servants, with the next being laborers, then students (accounting for 40.76%, 31.79%, and 22.01% respectively) while the marital status for most of the respondents was married (accounting for 54.2%). In addition, the annual incomes in order of the most-to-least predominant demographic ranged from $2500–5000, above $5000, and followed by under $2500 (accounting for 59.78%, 23.64%, and 16.58% respectively).
3.3 Data analysis
This study applied CB-SEM to examine how well-established theories fit reality (Fornell and Bookstein, 1982). Accordingly, SPSS 18 and Amos 21 were used to analyze the data. A consistent series of steps for data analysis included the analysis of the sample, an exploratory factor analysis, evaluation of the measurement model, and evaluation of the structural model.
4. Results
4.1 Exploratory factor analysis and Cronbach’s alpha analysis
EFA is used with the aim of identifying retained factors and valid observed variables. As such, the results of EFA showed that the total variance explained by the five factors was 63.588% (> 50%), with KMO = 0.849 (> 0.5) and Sig = 0.000 (<0.05), leading to the conclusion that all factors proposed in the research model should be retained. In addition, all observed variables measuring factors are guaranteed with a factor loading greater than 0.5, except for “P5-Prices conformed to the smartphone’s specifications”, which was deleted because of a conditioning failure.
Testing the reliability of the scales determined that the constant value of all seven factors was greater than 0.7. Specifically, Cronbach's alpha coefficients of brand awareness/associations, perceived quality, brand loyalty, perceived price fairnes, and purchase intention were 0.862, 0.841, 0.801, 0.875, and 0.831, respectively. Also, the item-to-total correlations of all observed variables were greater than 0.3. In conclusion, all factors in the model were determined to be of high confidence.
4.2 Confirmatory factor analysis
This study continued by applying CFA to confirm the quality of measurement models through the evaluation of convergent and discriminant validity. Convergent validity refers to
“the extent to which a measure correlates positively with alternative measures of the same construct” (Hair et al., 2014, p. 121). Criteria were used to assess convergent validity including standardized loadings, construct (composite) reliability (CR), and the average
variance extracted (AVE). First, standardized loadings should be greater than 0.7 (Hair et al., 1998), but the minimum level (0.5) is still acceptable (Bagozzi and Yi, 1988). Second, the CR and AVE need to obtain minimum levels of 0.7 and 0.5, respectively (Hair et al., 1998). The results of checking the convergent validity were assessed and are reported in Table 1. Upon assessing the criteria, it is evident that convergent validity was achieved.
Table 1: Convergent validity of the measurement model
Discriminant validity refers to “the extent to which a construct is truly distinct from other constructs by empirical standards” (Hair et al., 2014, p. 104). This study uses the Fornell- Larker criterion to test for differences between structures. The results are presented in Table 2, showing that all structures achieved discrimination, as the AVE value of each factor was higher than the correlations among research concepts (Fornell and Larcker, 1981).
Construct Standardized
loading
CR AVE
First-order constructs
Brand awareness/ associations (BA)
0.864 0.515
BA1- I know what an iPhone looks like. 0.683
BA2- I can recognize an iPhone among other competing brands.
0.743
BA3- I am aware of iPhones. 0.773
BA4- Some characteristics of the iPhone come to my mind quickly.
0.714 BA5- I can quickly recall the symbol or logo of the iPhone. 0.772 BA6- I have difficulty manifesting the iPhone in my mind. (r) 0.608 Perceived quality (PQ)
0.842 0.640 PQ1- I trust the quality of products from iPhone. 0.823
PQ2- The iPhone smartphone brand is of very good quality. 0.815 PQ3- The iPhone smartphone brand offers excellent features. 0.760 Brand loyalty (BL)
0.807 0.585 BL1- I consider myself to be loyal to the iPhone. 0.791
BL2- iPhone would be my first choice. 0.826
BL3- I will not buy other brands if the iPhone is available at the store.
0.668 Second-order
construct
Brand equity (BE)
0.750 0.503
BA- Brand awareness/ associations 0.732
PQ- Perceived quality 0.592
BL- Brand loyalty 0.790
Perceived price fairness
0.875 0.542
P1- Similar prices for everyone. 0.641
P2- Similar prices compared with the other dealers. 0.647 P3- Reasonable prices compared to similar smartphones. 0.853 P4- Conformity of price according to expectation. 0.821
P6- Knowing the price offered. 0.721
P7- Trust with the offered prices. 0.707
Purchase intention
0.883 0.560 PI1- I intend to purchase an iPhone in the future. 0.647
PI2- I would consider buying an iPhone rather than any other available brands.
0.624 PI3- I expect to buy an iPhone in the future. 0.879 PI4- I plan to buy an iPhone in the future. 0.813
Table 2: Discriminant validity of the measurement model
AVE/ R2 Brand awareness/
associations Perceived quality Brand loyalty Brand awareness/associations 0.515
Perceived quality 0.187 0.640
Brand loyalty 0.334 0.219 0.585
AVE/ R2 Perceived price
fairness Brand equity Purchase intention
Perceived price fairness 0.542
Brand equity 0.056 0.503
Purchase intention 0.106 0.078 0.560
4.3 An assessment of the structural model 4.3.1 The tests of model fit
This study used different criteria in order to examine the model fit. Results from CB-SEM analysis (Figure 2) showed that: χ2 = 416.03 (p = 0.00), df = 203, χ2/df = 2.050 (< 3), CFI = 0.942 (> 0.9), AGFI = 0.883 (> 0.8) and RMSEA = 0.053 (< 0.08). It was concluded that the model was completely consistent with real data.
Figure 2: The finalized SEM model
4.3.2 Evaluation of path relationships Direct relationships
As shown in Table 3, the results of the path analysis were used to test the proposed hypotheses. All paths were significant at p < 0.01. As hypothesized, perceived price fairness has a direct positive effect on brand equity (SEs = 0.236; p = 0.000), as identified by previous studies (Abdul, 2017; Al-Msallam, 2015). Perceived price fairness has a direct positive effect on purchase intention (SEs = 0.275; p = 0.000), also confirming previous research (Son and Jin, 2019; Wang et al., 2018). There is positive relationship between brand equity and purchase intention (SEs = 0.215; p = 0.002), consistent with other studies (Hakim et al., 2017; Rambocas et al., 2018; Shah et al., 2016).
Table 3: Hypotheses Testing (Direct Relationships)
Hypothesis Causal path Standardized estimates (SEs)
Standard
error CR p-value Test results
H1 P BE 0.236 0.045 3.321 *** Supported
H2 P PI 0.275 0.055 4.325 *** Supported
H3 BE PI 0.215 0.097 3.037 0.002 Supported
Note *** denotes p < 0.001
Indirect relationships
The mediation test was utilized to check the effect of brand equity as a mediator in the relationship between perceived price fairness and purchase intention (Byrne, 2010). As shown in Table 4, the total effect of perceived price fairness on purchase intention, which is the sum of the direct (SEs = 0.275) and indirect effects (SEs = 0.051) through brand equity’s impact on purchase intention, is 0.325 (partial mediation). However, the direct effect of brand equity on purchase intention is 0.215, and thus perceived price fairness has a greater impact than brand equity on purchase intention.
To evaluate the size of the indirect effect, the variance accounted for (VAF) was calculated by dividing the indirect effect by the total effect (Shrout and Bolger, 2002). The VAF value indicates that approximately 15.69% of the total effect of perceived price fairness on purchase intention is explained by the mediating effect of brand equity.
Table 4: Hypothesis Testing (Indirect Relationships)
Hypothesis Relationship Mediation Standardized
estimates (SEs)
AVF
(%) Test results
H4 P BE PI Partial mediation
Indirect effect 0.051
15.69 Supported Direct effect 0.275
Total effect 0.325
A multi-group analysis
This work used critical ratios critical ratios to access the the different impacts among gender groups (men and women) on the relationships among research concepts. This research is based on p-value (P < 0.1) to conclude whether the different impacts are based on moderators concerning these relationships. The results of the multi-group analysis indicated that:
perceived price fairness (estimate = 0.163 and p = 0.067) and brand equity (estimate = 0.103 and p = 0.288) do not have a significant impact on purchase intention for the male group, but there are positive impacts for the female group (estimate = 0.358 and p = 0.000; estimate = 0.308 and p = 0.003, respectively). Thus, there are differing effects based on gender related to the relationship between perceived price fairness and purchase intention as well as brand equity and purchase intention. Therefore, hypotheses 6 and 7 are supported, and the effect of perceived price fairness and brand equity on purchase intention is stronger for female users than for male users.
5. Conclusion
5.1 Research contribution
Examining the interrelationships among perceived price fairness, brand equity and purchase intention has attracted much academic interest in recent decades. However, there is still little existing research on interrelationships among these factors in the smartphone industry.
Therefore, this study aims to investigate the relationships among these research concepts for
one particular smartphone brand - the iPhone which is a line of smartphones designed and marketed by Apple Inc. and is known as a worldwide brand, leading the smartphone market in outcompeting all competitors in Vietnam. Furthermore, this work also examines the influence of gender as a moderating variable influencing significantly these relationships.
Based on synthetic literature reviews of prior research, this study proposed conceptual models and tested hypotheses on 368 Vietnamese respondents who have used or know of the iPhone smartphone brand. The empirical results of this study confirm that the proposed structural equation model created to simultaneously evaluate perceived price fairness, brand equity and purchase intention is suitable fit with the sample. In addition, this study contributes some important implications for marketers and managers of the iPhone brand.
The results of this study show that perceived price fairness has a positive impact on brand equity (0.236). Marketing-mix elements can contribute to the building process of brand equity (Yoo et al., 2000); price is considered to be a marketing indicator significantly affecting brand equity. This implies that when a brand decides upon a high or low pricing strategy, it not only affects sales, but also the perception of price fairness from the customer perspective. Specifically, with the given price, customers will compare and evaluate their options at hand to determine whether or not that price is fair or unfair; this process affects brand equity. If the price is perceived to be unfair, it will undermine the brand equity and vice versa. Brand equity has been measured in four dimensions as brand awareness, brand association, perceived quality, and brand loyalty. Thus, perceived price fairness affects each aspect of brand equity, leading to a significant impact on brand equity. In particular, when a customer perceives an offered price as fair, they will always remember that brand when it is time to make a purchase; thus, the perceived price fairness impacts positively on brand image (one dimension of brand equity), thereby raising brand equity. Furthermore, customers often compare the price with the quality of product. They feel price fairness when the product’s quality is beyond their expectations and it is thus worth the price which they pay. In the contrast, the price will be deemed unfair when the product is not outstanding, even being lower than the quality of products from competitors that customers have previously used. As such, perceived price fairness has a profound effect on perceived quality (dimension of brand equity), leading to increases or decreases in brand equity.
The results highlight the positive and direct effect of perceived price fairness (0.275) on purchase intentions, and are similar to those of previous studies (Son and Jin, 2019).
Customers tend to rely on reference prices to assess whether prices are fair before making any purchase decisions. This implies that customers have the ability to set benchmarks or depend on reference prices in a number of ways, such as the price of a previously purchased product, the price of a competitor's product, understanding the seller's cost or prices paid by other customers. As a result, customers make assumptions about whether prices are fair or not. As analyzed earlier, if customers perceive prices to be fair, it will help increase their purchase intention. On the contrary, if the price is unfair, it is likely to lead to negative consequences, such as the customer switching to another competing brand.
This study confirms the influence of brand equity (0.215) on purchase intentions and the results are also in line with previous studies (Hakim et al., 2017; Rambocas et al., 2018). This implies that there is an emotional relationship between the customer and the brand in the buying decision process. Specifically, customers will take positive actions towards brands with high brand equity. In other words, customers will form a positive purchase intention if they feel the brand equity has a tendency to rise and be positive. In addition, the findings also confirm that brand equity plays a mediating role in the indirect effect of perceived price
fairness on purchase intention. It can be explained in that if the perceived price is fair, it will enhance the brand equity, and subsequently lead to increased purchase intention. When customers feel that the price of the product is affordable and acceptable, they tend to develop loyalty and have positive associations with the brand. Therefore, perceived price fairness plays an important role in influencing the brand equity of the company and the purchase intention of customers. In addition, customers tend to form purchasing decisions after careful evaluation of the value they receive from products or services purchased when compared with different brands regarding price and quality of the product. Such a comparison will help them determine which brand to choose after considering the costs and benefits of the purchasing process.
In the mobile industry, every aspect of marketing strategy is focused on customer behavior and relational marketing in order to foster competitiveness amongst rival companies.
Therefore, managers should conduct research to identify the characteristics of mobile users so that the products of mobile brands are relevant and up to date. In particular, gender is one of the key differentiators of market segmentation in the information technology sector in general, and perhaps even more so within the mobile sector. When considering price and brand equity as powerful marketing strategies, it is thus vital to understand the characteristics of gender in building different strategies for products to appeal to men and women. This study found that gender might matter when making the decision to buy a product, as men and women have different processes related to ways of thinking and consumer behaviors. In particular, the impacts of perceived price fairness and brand equity on purchase intention are stronger for women than for men. This reflects the fact that women have a tendency to be more comprehensive based on subjective perceptions and objective information from the brand as well as the customer's assessment than men. It is demonstrated that perceived price fairness and brand equity are also considered much more useful for women than men in terms of reducing perceived risk and increasing the willingness to make a purchase.
The findings of this study provide meaningful managerial implications. Firstly, in today’s highly competitive environment, managers should not only concentrate on the quality of their product, but also carefully consider the level of customer perception related to the price strategy of their business in comparison with that of competitors. In fact, perceived price fairness also indicates the intention to buy a particular product in the future. Secondly, marketers should concentrate their efforts primarily on brand awareness, brand association, perceived quality and brand loyalty; it will have great significance in the construct of brand equity. In order to gain a competitive advantage in the smartphone market, the iPhone smartphone brand needs to generate unique, innovative, distinctive, and spectacular brand images to give customers a reason to choose the iPhone brand. In addition, Apple needs improve the quality of its product (nice design/useful features/smooth operation system) to build, position and develop its mobile brand in the minds of customers. Thirdly, marketers and managers should continue to create and maintain a positive reputation in the minds of consumers. In addition, smartphone brands must strengthen brand equity, as it is a key strategy for the iPhone to solidify its leading position in the smartphone market.
Consolidating and intensifying brand equity can be conducted by enhancing the components of brand equity discussed above. One important implication of this study for managers is that they need to accept these differences to focus on providing differentiated products relying on the gender of target customers, developing marketing policies consistent with the aims of users. In order to do this, marketers should carefully study the styles, moods, personalities, experiences, skills and behaviors which distinguish each gender, as brands must try anything
to conduct marketing efforts and provide products to suit the specific characteristics of target customer.
5.2 Limitations and future research
As with other studies, the present study is not without limitations. The first limitation of our study is that the research focuses on a single smartphone brand, that of iPhone brand, which limits the generalizability of the results. Therefore, it is suggested that future smartphone sector research should concentrate on expanding studies to multiple smartphone brands and compare those results with the findings of this study. The second limitation of our study is that the study only considers one moderating variable (gender). Therefore, future studies should examine the effects of more moderating variables to ascertain how different groups impact these relationships.
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