Towards the formation and measurement of ethnic price perception

Abstract

This research is the outcome of a preeminent interest in the topic of price perception. Pointedly, the perception of prices is part of the purchasing process, the same willingness to pay and the actual purchase behaviour, and is indubitably a perceptual construct. As such, perception is problematic to measure as it does not relate to an observable behaviour. On the other hand, pricing is regarded as an important variable in the marketing mix. This research contributes to theory by augmenting the current knowledge on the perception of prices including the methods used in the measurement of such perception. Moreover, this research addresses a gap in the understanding of how diverse ethnic groups perceive prices. The relationship set in this study between ethnicity and price perception is thought-provoking as it contributes to the current discussion around diversity in the marketplace. For example, the literature shows advances in areas such as multicultural and ethnic marketing and this research makes a significant contribution to these areas from price perception. Accordingly, this study involved a systematic review of the literature and presented a framework that suggested that the formation of price perception is affected by external factors such as culture and ethnicity. Furthermore, a qualitative study examined the formation of price perception around ethnic groups. Next, this research used a quantitative study that sought differences in price perception among ethnic groups. Thus, the quantitative study used a price perception scale (Lichtenstein et al., 1993) and a choice-based conjoint analysis. Also, the study adopted structural equation modelling (SEM) to measure differences among scales and the multinomial logit model to analyse the choice-based conjoint analysis. The findings of both the quantitative and the qualitative studies link to the systematic review and support the framework for the formation and measurement of price perception originally proposed.