Cross-Cultural Equivalence of Price Perceptions Across American, Chinese, and Japanese Consumers

1. Cross-Cultural Equivalence of Price Perceptions Across American, Chinese, and Japanese Consumers Juan (Gloria) Meng, Minnesota State University, Mankato Suzanne A. Nasco, Southern Illinois University at Carbondale BEHAVIORAL PRICING CONFERENCE Sep. 19-20, Philadelphia, PA

2. Introduction • Why “price perception”? • Economics Approach • Behavioral Science Approach • Why these three cultures? • The U.S. and Japan are the world’s largest consumer markets. • China will be at least the third largest consumer market by 2025 (McKinsey group, 2006)

3. Price Perception (Lichtenstein, Ridgway, and Netemeyer, 1993). • Negative • Value Consciousness • Price Consciousness • Coupon Proneness • Sale Proneness • Price Mavenism • Positive • Price-Quality Schema • Prestige Sensitivity

4. Cross-Cultural Differences in Price Perceptions • Tests of Existence of Lichtenstein et al. (1993) Constructs • Stringent Tests of Measurement Invariance of Lichtenstein et al. (1993) Constructs

5. Objectives • to test the external validity (generalizability) of Lichtenstein et al. (1993)’s price perception model in different cultural settings • to gain insights about how price perception factors differ across cultures • to examine the mean differences across cultures on the five price perception constructs

6. Hypotheses (Steenkamp and Baumgartner,1998) • Hypothesis 1: The constructs of price perception in Lichtenstein et al. (1993)’s model also exist cross-culturally: the same number of price constructs emerge for consumers in all cultures and the scale variables load on the same constructs for all cultures. • Hypothesis 2: The loadings between the indicators and the latent constructs are the same for consumers across all cultures. • Hypothesis 3: The correlations of error between any two indicators in the price perception model are invariant across cultures. • Hypothesis 4: The correlations between latent variables are equivalent in different cultural groups. • Hypothesis 5: The variances of latent variables are equal between different cultures.

7. Methodology • Measurement • Questionnaire Translation and Validation • Data Collection

8. Demographic Information

9. Fit Indices for the Price Perception Model

10. Summary of Invariance Tests across Cultures

11. Price Perception Subscale Means by Culture

12. 4 3.8 3.6 3.4 3.2 3 2.8 2.6 2.4 2.2 2 VALUE PRICE SALES QUALITY PRESTIGE Price Perception Subscales Mean Price Perception Subscale Differences across Cultures

13. Conclusions • Price perception constructs—exist across cultures. • Measurement model—invariant (partially) across cultures. • Means of price perception factors • No significant differences on the value and quality subscales • Significant differences on price sensitivity, prestige sensitivity, and sales proneness • Chinese consumers were significantly more sensitive to price and prestige. • U.S. respondents had higher sales proneness

14. Contributions • Theoretical • Methodological • Managerial • Limitations • Student Samples • Other relevant factors (e.g., Country-of-Origin)