The Effect of Perceived Price Fairness on Customer Satisfaction and Loyalty

ABSTRACT: The purpose of this thesis is to develop a conceptual model that examines the relationship between customers perceived price fairness, satisfaction and loyalty, incorporating two outcomes of loyalty, affective loyalty and behavioral loyalty. Perceived price fairness is the customer’s perception of a sales transaction and outcome being just, acceptable and reasonable. It is believed that the perception of customers influences their judgment thereby increasing satisfaction and loyalty outcomes. The aforementioned relationships were examined via data obtained from customers of hotels in Nigeria using hierarchical multiple regression analysis. These hotel customers are chosen from the users of online reservation system of the hotel for booking accommodation. According to the result of the study, perceived price fairness has a significant positive effect on customer satisfaction, similarly, the results showed that perceived price fairness has a significant positive effect on affective and behavioral loyalty; therefore, perceived price fairness increases customer satisfaction and loyalty. Furthermore, the results of the study indicate that customer satisfaction positively influences customer loyalty lending support to customer satisfaction as a factor of predicting customers repeat purchase. Finally, the results demonstrate the mediating effect of customer satisfaction between perceived price fairness and loyalty. Thus, perceived price fairness is positively related to affective and behavioral loyalty directly and indirectly through customer satisfaction. Accordingly, managerial implications are provided based on the study results, information with regards to the study limitations and suggestion for further research is presented in the thesis. Keywords: perceived price fairness, customer satisfaction, affective loyalty, behavioral loyalty, pricing, Nigeria, online customers. …………………………………………………………………………………………………………………………