The Empirical Model on The Relationship among Price, Service Quality and Customer Purchasing Decision: The Case of the Dili Tais Market in Timor-Leste.
Keywords:
Price, service quality, purchasing decision, customer, Dili.
Abstract
Price, service quality and purchasing decisions are played important roles in tourism market management. Therefore, many empirical studies have been carried out to enhance customer purchasing decisions through price and service quality. Nonetheless, there is a limited number of studies in emerging tourism destinations and marketing. This study aims to analyse the influence of price and service quality on customers’ purchasing decisions. This research was carried out at the Tais Market, Kolmera, Dili. Data was collected by using questionnaires distributed to 395 respondents using accidental sampling technique, and hypotheses were tested using SMART-PLS 3.0. The results showed that both price and service quality have significant impacts on customers’ purchasing decisions. This study enriches the empirical studies on price, service quality and customers’ purchasing decisions, particularly in emerging tourism destinations and markets. This study implies that to enhance customers’ purchasing decisions, the Tais Market needs to offer products at a reasonable and fair price as well to keep improving the tangible and intangible services.
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References
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Jun, S. P., & Park, D. H. (2016). Consumer information search behavior and purchasing decisions: Empirical evidence from Korea. Technological Forecasting and Social Change, 107, 97–111.
Jung, H. S., & Yoon, H. H. (2012). Why do satisfied customers switch? Focus on the restaurant patron variety-seeking orientation and purchase decision involvement. International Journal of Hospitality Management, 31(3), 875–884.
Kasiri, L. A., Guan Cheng, K. T., Sambasivan, M., & Sidin, S. M. (2017). Integration of standardization and customization: Impact on service quality, customer satisfaction, and loyalty. Journal of Retailing and Consumer Services, 35(December 2016), 91–97.
Kaswengi, J., & Lambey-Checchin, C. (2019). How logistics service quality and product quality matter in the retailer–customer relationship of food drive-throughs: The role of perceived convenience. International Journal of Physical Distribution and Logistics Management.
Kotler, P., Armstrong, G., Ang, S. H., Leong, S. M., Tan, C. T., & Ho-Ming, O. (2012). Principles of marketing: an Asian perspective. Pearson/Prentice-Hall.
Kotler, P. (2000). Marketing management: The millennium edition (Vol. 199). Upper Saddle River, NJ: Prentice Hall.
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Kotler, P., Keller, K. L., Manceau, D., & Dubois, B. (2016). Marketing Management, 15e édition. New Jersy: Pearson Education.
Kukar-Kinney, M., Ridgway, N. M., & Monroe, K. B. (2012). The Role of Price in the Behavior and Purchase Decisions of Compulsive Buyers. In Journal of Retailing (Vol. 88, Issue 1, pp. 63–71).
Lee, S., & Kim, E. K. (2017). The Effects of Korean Medical Service Quality and Satisfaction on Revisit Intention of the United Arab Emirates Government Sponsored Patients. Asian Nursing Research, 11(2), 142–149.
Lim, J., & Lee, H. C. (2020). Comparisons of service quality perceptions between full service carriers and low cost carriers in airline travel. Current issues in Tourism, 23(10), 1261-1276.
Marcal, A. R., Saldanha, E. D. S., & Amaral, A. M. (2020). Examining the Structural Relatiosnhips of Product Price, Product Quality and Customer Purchasing Decision. In Timor Leste Journal of Business and Management (Vol. 2, pp. 1–9).
Maslowska, E., Malthouse, E. C., & Viswanathan, V. (2017). Do customer reviews drive purchase decisions? The moderating roles of review exposure and price. In Decision Support Systems (Vol. 98, pp. 1–9).
Meesala, A., & Paul, J. (2018). Service quality, consumer satisfaction and loyalty in hospitals: Thinking for the future. Journal of Retailing and Consumer Services, 40, 261–269.
Özkan, P., Süer, S., Keser, İ. K., & Kocakoç, İ. D. (2019). The effect of service quality and customer satisfaction on customer loyalty: The mediation of perceived value of services, corporate image, and corporate reputation. International Journal of Bank Marketing.
Parasuraman, A. ., Zeithaml, V. A. ., & Berry, L. L. (1988). SERVQUAL: a Multiple-item Scale for Measuring Consumer Perceptions of Service Quality. Retailing: Critical …, 64(1), 12–40.
Parasuraman, A., Zeithaml, V. A., & Berry, L. L. (1994). Alternative scales for measuring service quality: A comparative assessment based on psychometric and diagnostic criteria. Journal of Retailing, 70(3), 201–230.
Parasuraman, B., Leonard L, & Zeithaml, V. A. (1991). Perceived service quality as a customer‐based performance measure: An empirical examination of organizational barriers using an extended service quality model. Human Resource Management, 30(3), 335-364.
Ramayah, T., Samat, N., & Lo, M.-C. (2011). Market orientation , service quality and organizational performance in service organizations in Malaysia. Asia-Pacific Journal of Business Administration, 3(1), 8–87.
Razak, I., Nirwanto, N., & Triatmanto, B. (2017). The Impact of Product Quality and Price on Customer Satisfaction with the Mediator of Customer Value Ismail. Journal of Marketing and Consumer Research, 3(11), 1240–1248.
Saldanha, E. de S. (2019). The Mediation Effects of Business Strategy on the Relations between Industrial Competition and Performance. Timor-Leste Journal of Business and Management, 1(1), 1–11.
Saldanha, E. de S., Rahyuda, I. K., Yasa, N. N. K., & Sukaatmadja, I. P. G. (2018). The Role of Business Strategy in Mediating the Relationship Between Industrial Competition and Performances : A Study in the Higher Education Industry in Timor-Leste. European Jorunal of Business and Management, 10(8), 152–172.
Silvestri, C., Aquilani, B., & Ruggieri, A. (2017). Service quality and customer satisfaction in thermal tourism. TQM Journal, 29(1), 55–81.
Son, J., & Jin, B. E. (2019). When do high prices lead to purchase intention? Testing two layers of moderation effects. Asia Pacific Journal of Marketing and Logistics, 31(5), 1516–1531.
Song, M., Lee, W. S., & Moon, J. (2019). Exploring effective price presentation format to reduce decision difficulty and increase von Helversen decision satisfaction. In Tourism Management Perspectives (Vol. 32).
Subrahmanyam, A. (2017). Relationship between service quality, satisfaction, motivation and loyalty: A multi-dimensional perspective. Quality Assurance in Education, 25(2), 171–188.
von Helversen, B., Abramczuk, K., Kopeć, W., & Nielek, R. (2018). Influence of consumer reviews on online purchasing decisions in older and younger adults. Decision Support Systems, 113(March), 1–10.
Waller, M. A., & Ahire, S. (1996). Management perception of the link between product quality and customers’ view of product quality. International Journal of Operations and Production Management, 16(9), 23–33.
Wang, Y., Lo, H. P., & Hui, Y. V. (2003). The antecedents of service quality and product quality and their influences on bank reputation: Evidence from the banking industry in China. Managing Service Quality: An International Journal, 13(1), 72–83.
Zameer, H., Tara, A., Kausar, U., & Mohsin, A. (2015). Impact of service quality, corporate image and customer satisfaction towards customers’ perceived value. International Journal of Bank Marketing, 33(4).
Zhu, G., Wu, Z., Wang, Y., Cao, S., & Cao, J. (2019). Online purchase decisions for tourism e-commerce. Electronic Commerce Research and Applications, 38(July).
Zietsman, M. L., Mostert, P., & Svensson, G. (2019). Perceived price and service quality as mediators between price fairness and perceived value in business banking relationships: A micro-enterprise perspective. International Journal of Bank Marketing, 37(1), 2–19.
Anderson, J. C., Thomson, J. B. L., & Wynstra, F. (2000). Combining value and price to make purchase decisions in business markets. International Journal of Research in Marketing, 17(4), 307–329.
Asadi, A., Pool, J. K., & Jalilvand, M. R. (2014). The effect of perceived price fairness through satisfaction and loyalty on international tourists’ price acceptance of Islamic-Iranian art products. Education, Business and Society: Contemporary Middle Eastern Issues, 7(4), 201–215.
Beneke, J., Flynn, R., Greig, T., & Mukaiwa, M. (2013). The influence of perceived product quality, relative price and risk on customer value and willingness to buy: A study of private label merchandise. Journal of Product and Brand Management, 22(3), 218–228.
Borishade, T. T., Ogunnaike, O. O., Salau, O., Motilewa, B. D., & Dirisu, J. I. (2021). Assessing the relationship among service quality, student satisfaction and loyalty: the NIGERIAN higher education experience. Heliyon, e07590.
Cakici, A. C., Akgunduz, Y., & Yildirim, O. (2019). The impact of perceived price justice and satisfaction on loyalty: the mediating effect of revisit intention. Tourism Review, 74(3), 443–462.
Carvalho, H. de F., Saldanha, E. de S., & Amaral, A. M. (2020). The Mediation Effects of Customer Satisfaction on the Relations Between Product Price, Service Quality and Purchasing Decision.pdf. Timor-Leste Journal of Business and Management, 2(1), 14–26.
Cavallone, M. (2017). Mauro Cavallone Marketing and Customer Loyalty.
Chen, A., Lu, Y., & Wang, B. (2017). Customers’ purchase decision-making process in social commerce: A social learning perspective. International Journal of Information Management, 37(6), 627–638.
Chen, T. Y., Chang, P. L., & Chang, H. S. (2005). Price, brand cues, and banking customer value. International Journal of Bank Marketing, 23(3), 273–291.
Cheung, C. M. K., Xiao, B. S., & Liu, I. L. B. (2014). Do actions speak louder than voices? the signaling role of social information cues in influencing consumer purchase decisions. Decision Support Systems, 65(C), 50–58.
Chien, L. H., & Chi, S. Y. (2019). Corporate image as a mediator between service quality and customer satisfaction: difference across categorized exhibitors. Heliyon, 5(3).
Conti, E., Vesci, M., Crudele, C., & Pencarelli, T. (2019). Design-driven innovation, quality, and customer value in manufacturing companies. TQM Journal, 31(6), 968–986.
De Medeiros, J. F., Ribeiro, J. L. D., & Cortimiglia, M. N. (2016). Influence of perceived value on purchasing decisions of green products in Brazil. Journal of Cleaner Production, 110, 158–169.
Djatmiko, T., & Pradana, R. (2016). Brand Image and Product Price; Its Impact for Samsung Smartphone Purchasing Decision. In Procedia - Social and Behavioral Sciences (Vol. 219, pp. 221–227).
Flores, A. F., Saldanha, de S. S., & Vong, M. F. (2020). The effect of customer satisfaction Mediation on the relationship between service quality and customer loyalty. Timor-Leste Journal of Business and Management, 2(1), 56–65.
Hair, J. F., Sarstedt, M., Hopkins, L., & Kuppelwieser, V. G. (2014). Partial least squares structural equation modeling (PLS-SEM). European Business Review, 26(2), 106–121.
Ham, C. L. (2003). Service quality, customer satisfaction, and customer behavioral intentions in higher education. Nova Southeastern University.
Hanna, R. C., Lemon, K. N., & Smith, G. E. (2019). Is transparency a good thing? How online price transparency and variability can benefit firms and influence consumer decision making. In Business Horizons (Vol. 62, Issue 2, pp. 227–236).
Hati, S. R. H., Zulianti, I., Achyar, A., & Safira, A. (2021). Perceptions of nutritional value, sensory appeal, and price influencing customer intention to purchase frozen beef: Evidence from Indonesia. Meat Science, 172, 108306.
Henseler, J., Ringle, C. M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the Academy of Marketing Science, 43(1), 115–135.
Jahanshahi, Gashti, Mirdamadi, N. and K. (2011). Study of the Effects of Customer Service and Product Quality on Customer Satisfaction and Loyalty PhD Scholar in Business Administration. International Journal of Humanities and Social Science, 1(7), 253–260.
Jain, M., Rao, A. B., & Patwardhan, A. (2018). Consumer preference for labels in the purchase decisions of air conditioners in India. Energy for Sustainable Development, 42, 24–31.
Jun, S. P., & Park, D. H. (2016). Consumer information search behavior and purchasing decisions: Empirical evidence from Korea. Technological Forecasting and Social Change, 107, 97–111.
Jung, H. S., & Yoon, H. H. (2012). Why do satisfied customers switch? Focus on the restaurant patron variety-seeking orientation and purchase decision involvement. International Journal of Hospitality Management, 31(3), 875–884.
Kasiri, L. A., Guan Cheng, K. T., Sambasivan, M., & Sidin, S. M. (2017). Integration of standardization and customization: Impact on service quality, customer satisfaction, and loyalty. Journal of Retailing and Consumer Services, 35(December 2016), 91–97.
Kaswengi, J., & Lambey-Checchin, C. (2019). How logistics service quality and product quality matter in the retailer–customer relationship of food drive-throughs: The role of perceived convenience. International Journal of Physical Distribution and Logistics Management.
Kotler, P., Armstrong, G., Ang, S. H., Leong, S. M., Tan, C. T., & Ho-Ming, O. (2012). Principles of marketing: an Asian perspective. Pearson/Prentice-Hall.
Kotler, P. (2000). Marketing management: The millennium edition (Vol. 199). Upper Saddle River, NJ: Prentice Hall.
Kotler, P., & Keller, K. L. (2018). Excerpt from Marketing Management, 15th Global Edition, Philip Kotler & Kevin Lane Keller. Pearson.
Kotler, P., Keller, K. L., Manceau, D., & Dubois, B. (2016). Marketing Management, 15e édition. New Jersy: Pearson Education.
Kukar-Kinney, M., Ridgway, N. M., & Monroe, K. B. (2012). The Role of Price in the Behavior and Purchase Decisions of Compulsive Buyers. In Journal of Retailing (Vol. 88, Issue 1, pp. 63–71).
Lee, S., & Kim, E. K. (2017). The Effects of Korean Medical Service Quality and Satisfaction on Revisit Intention of the United Arab Emirates Government Sponsored Patients. Asian Nursing Research, 11(2), 142–149.
Lim, J., & Lee, H. C. (2020). Comparisons of service quality perceptions between full service carriers and low cost carriers in airline travel. Current issues in Tourism, 23(10), 1261-1276.
Marcal, A. R., Saldanha, E. D. S., & Amaral, A. M. (2020). Examining the Structural Relatiosnhips of Product Price, Product Quality and Customer Purchasing Decision. In Timor Leste Journal of Business and Management (Vol. 2, pp. 1–9).
Maslowska, E., Malthouse, E. C., & Viswanathan, V. (2017). Do customer reviews drive purchase decisions? The moderating roles of review exposure and price. In Decision Support Systems (Vol. 98, pp. 1–9).
Meesala, A., & Paul, J. (2018). Service quality, consumer satisfaction and loyalty in hospitals: Thinking for the future. Journal of Retailing and Consumer Services, 40, 261–269.
Özkan, P., Süer, S., Keser, İ. K., & Kocakoç, İ. D. (2019). The effect of service quality and customer satisfaction on customer loyalty: The mediation of perceived value of services, corporate image, and corporate reputation. International Journal of Bank Marketing.
Parasuraman, A. ., Zeithaml, V. A. ., & Berry, L. L. (1988). SERVQUAL: a Multiple-item Scale for Measuring Consumer Perceptions of Service Quality. Retailing: Critical …, 64(1), 12–40.
Parasuraman, A., Zeithaml, V. A., & Berry, L. L. (1994). Alternative scales for measuring service quality: A comparative assessment based on psychometric and diagnostic criteria. Journal of Retailing, 70(3), 201–230.
Parasuraman, B., Leonard L, & Zeithaml, V. A. (1991). Perceived service quality as a customer‐based performance measure: An empirical examination of organizational barriers using an extended service quality model. Human Resource Management, 30(3), 335-364.
Ramayah, T., Samat, N., & Lo, M.-C. (2011). Market orientation , service quality and organizational performance in service organizations in Malaysia. Asia-Pacific Journal of Business Administration, 3(1), 8–87.
Razak, I., Nirwanto, N., & Triatmanto, B. (2017). The Impact of Product Quality and Price on Customer Satisfaction with the Mediator of Customer Value Ismail. Journal of Marketing and Consumer Research, 3(11), 1240–1248.
Saldanha, E. de S. (2019). The Mediation Effects of Business Strategy on the Relations between Industrial Competition and Performance. Timor-Leste Journal of Business and Management, 1(1), 1–11.
Saldanha, E. de S., Rahyuda, I. K., Yasa, N. N. K., & Sukaatmadja, I. P. G. (2018). The Role of Business Strategy in Mediating the Relationship Between Industrial Competition and Performances : A Study in the Higher Education Industry in Timor-Leste. European Jorunal of Business and Management, 10(8), 152–172.
Silvestri, C., Aquilani, B., & Ruggieri, A. (2017). Service quality and customer satisfaction in thermal tourism. TQM Journal, 29(1), 55–81.
Son, J., & Jin, B. E. (2019). When do high prices lead to purchase intention? Testing two layers of moderation effects. Asia Pacific Journal of Marketing and Logistics, 31(5), 1516–1531.
Song, M., Lee, W. S., & Moon, J. (2019). Exploring effective price presentation format to reduce decision difficulty and increase von Helversen decision satisfaction. In Tourism Management Perspectives (Vol. 32).
Subrahmanyam, A. (2017). Relationship between service quality, satisfaction, motivation and loyalty: A multi-dimensional perspective. Quality Assurance in Education, 25(2), 171–188.
von Helversen, B., Abramczuk, K., Kopeć, W., & Nielek, R. (2018). Influence of consumer reviews on online purchasing decisions in older and younger adults. Decision Support Systems, 113(March), 1–10.
Waller, M. A., & Ahire, S. (1996). Management perception of the link between product quality and customers’ view of product quality. International Journal of Operations and Production Management, 16(9), 23–33.
Wang, Y., Lo, H. P., & Hui, Y. V. (2003). The antecedents of service quality and product quality and their influences on bank reputation: Evidence from the banking industry in China. Managing Service Quality: An International Journal, 13(1), 72–83.
Zameer, H., Tara, A., Kausar, U., & Mohsin, A. (2015). Impact of service quality, corporate image and customer satisfaction towards customers’ perceived value. International Journal of Bank Marketing, 33(4).
Zhu, G., Wu, Z., Wang, Y., Cao, S., & Cao, J. (2019). Online purchase decisions for tourism e-commerce. Electronic Commerce Research and Applications, 38(July).
Zietsman, M. L., Mostert, P., & Svensson, G. (2019). Perceived price and service quality as mediators between price fairness and perceived value in business banking relationships: A micro-enterprise perspective. International Journal of Bank Marketing, 37(1), 2–19.
Published
2021-12-20
How to Cite
Saldanha, E., Silva, A., Seran, A. and Brites da Silva, H. (2021) “The Empirical Model on The Relationship among Price, Service Quality and Customer Purchasing Decision: The Case of the Dili Tais Market in Timor-Leste.”, Timor Leste Journal of Business and Management, 3(2), pp. 17-25. doi: 10.51703/bm.v3i2.51.
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Articles
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