How do product involvement and prestige sensitivity affect price acceptance on the mobile phone market in Vietnam?
| Pages | 379-398 |
| Published date | 19 December 2019 |
| DOI | https://doi.org/10.1108/JABS-07-2017-0096 |
| Date | 19 December 2019 |
| Author | Ngoc Minh Nguyen,Huyen Thi Nguyen |
| Subject Matter | Strategy,International business |
How do product involvement and prestige
sensitivity affect price acceptance on the
mobile phone market in Vietnam?
Ngoc Minh Nguyen and Huyen Thi Nguyen
Abstract
Purpose –The aim of this paper is to incorporatethe theoretically and practically appropriateaffecting
factors of customers’ price acceptance to develop an integrated model explaining customers’ price
acceptanceon the mobile phone market in Vietnam.
Design/methodology/approach –This current research appliedthe cross-sectional design. Data was
collected via questionnairesand 605 responses were left after refining. The exploratory factor analysis,
confirmatory factor analysis and structural equation modeling methods were applied to analyze the
collecteddata.
Findings –Prestige sensitivity and productinvolvement positively affect product knowledge and price
mavenism. In turn, these two latter factors together with prestige sensitivity positively affect price
acceptance. Besides, product knowledge and price mavenism mediated the effects of product
involvement and prestige sensitivity on price acceptance in the context of complex products, rapid
product innovation,social setting of using mobile phones, highly competitivemarket, the low purchasing
power of customersand the typical cultural values of Vietnam.
Practical implications –The high product involvement and high prestige sensitivity customers could
make up attractive market segments, especially important in the case of launching new products;
concentrating marketing efforts on building product knowledge and price knowledge for these market
segments may enhance price acceptance, speed up market penetration as well as improve price
communication.
Originality/value –This is one of the first studies explaining price acceptance on the mobile phone
market in Vietnam and clarifying the mediating effects of knowledge (product knowledge and
price mavenism) on the causalrelationships between product involvement/prestige sensitivity and price
acceptance.
Keywords Vietnam, Product involvement, Product knowledge,Prestige sensitivity, Price acceptance,
Price mavenism
Paper type Research paper
1. Introduction
The mobile phone industry could be characterized by technical complexity and high
product innovation rate. The number of new mobile phones has remarkably increased over
time. The technical featuresof mobile phones have noticeably improved with the continuous
introductions of new functionalities on both the hardware and the software sides (Cecere
et al., 2015). These characteristics have resulted in quick drops in mobile phoneprices and
required more customers’ efforts to capture new knowledge of mobile phones and mobile
phone prices to make the right buying decision. This industry condition may suggest that
providing customers with sufficient product/price information and especially improving
customers’ price acceptance is important for marketers to succeed in the mobile phone
industry.
Ngoc Minh Nguyen is
based at the School of
Trade and International
Economics, National
Economics University,
Hanoi, Vietnam.
Huyen Thi Nguyen is based
at the Faculty of
Economics, Pham Van
Dong University, Quang
Ngai, Vietnam.
Received 1 July 2017
Revised 17 August 2018
20 February 2019
Accepted 28 October 2019
DOI 10.1108/JABS-07-2017-0096 VOL. 14 NO. 3 2020, pp. 379-398, ©Emerald Publishing Limited, ISSN 1558-7894 jJOURNAL OF ASIA BUSINESS STUDIES jPAGE 379
Vietnam is one of the largest mobile phone markets in Asia due to a large population
with a high mobile phone usage rate. Vietnam has a population of about 95.5 million,
ranked the fourteenth in the world and the eighth in Asia (PopulationOf2017, 2017).
Importantly, 95 per cent of the population in major cities and 89 per cent of
the population in rural areas use mobile phones (Nielsen, 2017). However, the mobile
phone market in Vietnam is highly competitive. There are more than 120 mobile phone
brands available just only on three popular online stores (thegioididong.com, www.
lazada.vn and Vatgia.vn). The highly competitive market, in turn, leads to the higher
bargaining power of customers. In addition, Vietnam is rated as a lower middle-income
country with per capita GDP of about US$2,343 in 2017 (World Bank, 2018). The cost of
buying a mobile phone, thus, accounts for a significant fraction of personal income of
the majority of Vietnamese customers and may result in low price acceptance.
Consequently, price acceptance becomes more important for marketers to speed up
market penetration.
The above situation implies that it is important for marketers to understand customers’
price acceptance as well as the roles of product/price knowledge in explaining
customers’ price acceptance on the mobile phone market, especially in Vietnam. By
nature, price acceptance is the result of a judgment of price based on a comparison of
price cue to a range of acceptable prices stored in memory (Lichtenstein et al., 1988).
Therefore, customers’ product/price knowledge potentially affect price acceptance.
Helson (1964),Sherif and Hovland (1961) directly confirmed or indirectly implied that
product knowledge may affect price acceptance. Rai and Sieben (1992) found positive
effects of product knowledge on price acceptance or willingness to pay.
Some extant studies found product involvement affecting price acceptance. According to
Pride and Ferrell (2016) and Lichtenstein et al. (1988), product involvement reflects the
degree of interest in a product and the importance an individual place on that product.
Lichtenstein et al. (1988) found thatcustomers who are higher on product involvement often
focus more on product benefits than on price. Therefore, higher product involvement
resulted in higher price acceptance(Ramirez and Goldsmith, 2009;Goldsmith et al.,2010).
Extant literature also suggests that prestige sensitivity may affect price acceptance.
According to Lichtenstein et al. (1993), the prestige sensitivity customers believe that
product price is an indicator of prestige and stands for the benefits and social significance
that customers are expected from buying and using the product. As a result, these
customers have a stronger tendency to accept the offered price. In a similar vein,
Goldsmith et al. (2010) suggested that status motivates customers to pay more for
products.
Some other research found other factors (such as customer satisfaction, brand loyalty) as
the affecting factors of price acceptance. For example, in the hotel service sector, Huber
et al. (2001) found the more satisfied customers are more likely to accept price because
they benefit more from the service. In the hospitality industry in China, Ali et al. (2016) found
customer satisfaction has a positive effect on price acceptance. In the Islamic–Iranian art
industry, Asadi et al. (2014) found customer satisfaction and loyalty have positive effects on
price acceptance of internationaltourists.
The effects of product involvement on product knowledge and price mavenism and the
effects of prestige sensitivity on product knowledge are not so questionable in the literature
(Andrews et al.,1990;Peter et al.,2009;Ferreira and Coelho, 2015). However, the effect of
prestige sensitivity on price mavenism is still controversial. Lichtenstein et al. (1993)
believed that prestige sensitivity and price mavenism are the opposite price perceptions;
whereas Byun and Sternquist (2010) found a very strong, significant and positive effect of
prestige sensitivity on price mavenism when they treated price mavenism as the “know”
dimension of price perception (priceknowledge).
PAGE 380 jJOURNAL OF ASIA BUSINESS STUDIES jVOL. 14 NO. 3 2020
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