The Effect of Brand Class, Brand Awareness, and Price On Customer Value and Behavioral Intentions

Oh / CUSTOMER
JOURNAL VALUE AND

OF HOSPITALITY BEHAVIORAL
& TOURISM INTENTIONS
RESEARCH
THE EFFECT OF BRAND CLASS,

BRAND AWARENESS, AND PRICE
ON CUSTOMER VALUE AND
BEHAVIORAL INTENTIONS
Haemoon Oh
Iowa State University
The author introduces a comprehensive customer value framework and tests an extended
value model with lodging products. The extended value model in this study newly incorpo-
rates the concepts of brand awareness, as compared to brand or product class, and price
fairness. Based on Baron and Kenny’s guideline for mediation analysis, this study found
the traditional customer value process to be useful for lodging research and marketing. In
addition, brand awareness and price fairness concepts were found to play significant roles
in the customer value process. The article includes discussions on both managerial and re-
search implications.
KEYWORDS: customer value; brand; price; purchase; quality; consumer behavior;

lodging.
Recently, the concept of customer value has drawn increasing attention from
both industry executives and marketing academics as a barometer of long-term
business performance (e.g., Reichheld, 1993; Slater, 1997; Woodruff, 1997).
Characterized by slow growth and intense competition, today’s marketplace con-
tinues burdening firms in deriving new, as well as repeat, purchases. Along with
these business conditions, companies’ need to understand consumer behavior
becomes more desperate than ever before. The concept of customer value focuses
on the aspects of consumer purchase decision making that have not been consid-
ered by other similar thought paradigms, such as the widely adopted consumer
satisfaction or service quality model (see Iacobucci, Grayson, & Ostrom, 1994;
Oh & Parks, 1997; Yi, 1990). By offering new insight into consumer behavior sur-
rounding price-quality trade-offs, customer value may unveil deep-seated driving
forces of purchase decisions and brand loyalty.
Development of new theories to understand how consumers make their deci-
sions is also important to the hospitality industry. In recent years, customer brand
Author’s Note: This research was funded by Iowa State University’s Special Research Initiation
Grants. The author wishes to thank Nancy Brown, Roy Teas, Miyoung Jeong, and Mary Gregoire for
their helpful comments on many aspects in the research process.
Journal of Hospitality & Tourism Research, Vol. 24, No. 2, May 2000, 136-162
© 2000 International Council on Hotel, Restaurant and Institutional Education
136
Oh / CUSTOMER VALUE AND BEHAVIORAL INTENTIONS 137
loyalty has been seriously diluted in the lodging industry because of, in part, 50 to
60 new brands that entered the existing competition (Worecester, 1999). Com-
pared to the 1997 figure, an additional 10% of business travelers expressed their
willingness to switch brands, and overall 45% of leisure travelers are threatening
to try different lodging brands despite their satisfaction with the brand they tried
(Worecester, 1999). The lodging industry has also experienced declining cus-
tomer satisfaction levels and return rates (Hill, 1998; Worecester, 1999). Accord-
ingly, industry executives continue to emphasize customer loyalty as a key to sus-
taining long-term business success (Nozar, 1999). Such industrial developments
suggest that customer satisfaction alone may not be a sure promise of repeat busi-
ness and, at the same time, that lodging marketers need additional understanding
of changing consumer behavior.
Although several hospitality researchers have recently attempted to examine
the feasibility of customer value as an alternative concept to build a long-term
business performance in the lodging industry (e.g., Bojanic, 1996; Jayanti &
Ghosh, 1996; Mattila, 1999; Oh, 1999), their efforts were largely exploratory pro-
viding somewhat limited perspectives on the value process. Further efforts are
needed to develop hospitality-specific theories of customer value and consumer
behavior in general (Bowen & Sparks, 1998; Oh & Parks, 1997).
The present study reports the results of an experiment that was designed to test
a modified customer value theory in the lodging industry. Considering the need of
introductory work on customer value in the hospitality literature, this study tested
the general applicability of value theory with lodging products across high- and
low-end markets, as well as famous chain and unknown independent operations.
The investigation also focused on assessing the predictive validity of customer
value in imminent purchase decisions. The basic customer value theory (Dodds &
Monroe, 1985; Dodds, Monroe, & Grewal, 1991; Monroe & Chapman, 1987) was
modified according to the conceptual work by Martins and Monroe (1994) and to
lodging-specific factors such as multibranding and yield pricing strategies. Gen-
eral theses of customer value are reviewed, and research hypotheses are devel-
oped next. A web-based experimental study is introduced, along with the logic of
hypothesis test and study results. Finally, this study concludes with discussions on
managerial and research implications.
THEORY OF CUSTOMER VALUE
Concept of Customer Value

To date, an exact definition of customer value has been elusive to researchers.
The ambiguity of customer value is well reflected in various definitions given by
researchers. Zeithaml (1988) provides one of the most widely cited definitions of
customer value as “the consumer’s overall assessment of the utility of a product
based on perceptions of what is received and what is given” (p. 14). This definition
is highly abstract and encompassing, implying that value judgments are some-
thing more than mere price-quality comparisons. Monroe’s (1990) definition
gives a more concrete view of customer value, in that “buyers’ perceptions of
value represent a tradeoff between the quality or benefits they perceive in the
138 JOURNAL OF HOSPITALITY & TOURISM RESEARCH
product relative to the sacrifice they perceive by paying the price” (p. 46). Because
of the rather focused conceptualization, this definition is highly operationalizable,
as has been shown by Monroe and colleagues (e.g., Dodds et al., 1991; Grewal,
Monroe, & Krishnan, 1996, 1998; Monroe & Chapman, 1987). Consider here
another definition of customer value as “a customer’s perceived preference for
and evaluation of those product attributes, attribute performances, and conse-
quences arising from use that facilitate (or block) achieving the customer’s goals
and purposes in use situations” (Woodruff, 1997, p. 142). Notably, this later defi-
nitional effort dropped a comparative nature of the value process that had been a
key element in definitions by other researchers. Many other researchers still
hold somewhat different views of customer value (e.g., Butz & Goodstein, 1996;
Fornell, Johnson, Anderson, Cha, & Bryant, 1996; Gale, 1994).
Although it is difficult to reconcile different definitions of customer value into
a single verbiage, a close look at them seems to suggest several common threads
of the value concept. First, value judgments in marketing contexts are largely a
subjective, cognitive (and potentially emotional) evaluation given to a target pur-
chase. Second, the subjective, cognitive evaluation is relativistic in that it reflects
the outcome of dynamic comparison processes in consumption situations. Third,
the comparison process focuses on, from the consumer’s standpoint, (a) financial
investment or sacrifice as the “give” component and (b) benefits or quality as the
“take” component. These two components seem to serve each other as interactive
comparison standards that are dynamic across consumption situations. Finally,
the value concept is likely to be, in factor analysis terms, multidimensional at the
level of overall assessment. For example, Grewal et al. (1996; Grewal, Monroe, &
Krishnan, 1998) showed, relying on Thaler’s (1985) economic utility theory, that
consumers’ overall value judgments could be summarized by two dimensions:
acquisition and transaction values.
Antecedents of Customer Value

The majority of previous customer value studies have focused on identifying
the determinants of value perceptions. A converging theory is that consumers
perceive product/service quality based on their purchase experience or informa-
tion given in marketers’ads, and compare the quality perceptions to the sacrifice
they have made for the purchase (Dodds et al., 1991; Grewal et al., 1996; Gre-
wal, Monroe, & Krishnan, 1998; Monroe & Chapman, 1987; Rao & Monroe,
1989). The results of this cognitive comparison then form into value judgments.
Consumers’ value perceptions are enhanced with increasing levels of quality they
perceive and lowered with increasing levels of sacrifice they feel. Although
empirical investigations support this linear relationship (Dodds et al., 1991;
Zeithaml, 1988), whether the influence of both determinants (i.e., quality and sac-
rifice) is symmetric is unclear.
In the traditional value framework, perceived quality serves as a mediator of
the effects of many extrinsic cues on perceived (or customer) value (see Jacoby,
Olson, & Haddock, 1971; Szybillo & Jacoby, 1974; Valenzi & Andrews, 1971).
Consumers’ judgments of quality, for example, are likely to be affected by the
quality suggested by such extrinsic cues as brand name and price (Dodds et al.,
1991; Zeithaml, 1988). Consumers tend to infer product quality from extrinsic
cues, particularly when they have limited product knowledge or limited product
familiarity (Rao & Monroe, 1988). Researchers have also identified brand name,
price, store name/image, and country of origin as extrinsic cues to quality percep-
tions (Curry & Riesz, 1988; Dodds et al., 1991; Rao & Monroe, 1989; Teas &
Agarwal, 1997; Wheatley & Chiu, 1977; Zeithaml, 1988).
Although most extrinsic cues are directly related to quality perceptions, that is,
they affect value perceptions only through quality judgments, price has been
found to affect both quality and value perceptions through high levels of internal-
ized price impressions. Consumers first encode the product price as evaluated
information, based on a reasonable-expensive continuum, and then infer product
quality from the price information. The objective product price becomes mean-
ingful to the consumer only when it receives the consumer’s subjective interpreta-
tion. Reviews of the related literature found a positive link between perceived
price and quality (Monroe & Krishnan, 1985; Rao & Monroe, 1988). The impor-
tance of price as a quality cue was also found to have an inverse association with
prior knowledge and product familiarity (Rao & Monroe, 1988), and becomes
diminished at the availability of other quality cues such as brand name and store
image (Bonner & Nelson, 1985; Dodds et al., 1991; Olson, 1977).
Conceptual efforts have further shown that the evaluated price is stored into
memory as a deficit (i.e., perceived financial sacrifice) and elicited as a compari-
son standard against quality perceptions when consumers make value judgments
(Dodds & Monroe, 1985; Zeithaml, 1988). Thus, the mental trade-off between
price and quality occurs at a high level of internal representation in a way mean-
ingful to the consumer. Perceived price is positively associated with perceived
financial sacrifice, which, in turn, is inversely related to value perceptions.
Although researchers have conceptualized perceived sacrifice as a concept that
captures not only financial sacrifice but also other psychological and behavioral
investments in the purchase, the concept’s operationalization has been limited to
financial sacrifice induced largely by the product price (e.g., Teas & Agarwal,
1997).
Consequences of Customer Value

Although researchers have shown extensive efforts on conceptualizing and
testing the antecedents of customer value, their examination of its consequences
has been limited mostly to purchase intention (e.g., Dodds et al., 1991; Grewal,
Krishnan, Baker, & Borin, 1998; Monroe & Chapman, 1987). More recently,
Grewal et al. (1996, 1998) and Sirohi, McLaughlin, and Wittink (1998) incorpo-
rated search intention and store loyalty into their conceptual model of customer
value. When perceiving high levels of value from a pending purchase, consumers
tend to express high levels of willingness to buy eventually and low levels of will-
ingness to look for alternative purchases. Questions, however, still remain
whether these relationships would hold to the same extent for differing levels of
purchase involvement. That is, a high level of purchase involvement is likely to
weaken the relationships. For example, at the presentation of an expensive
cruise-trip package product, consumers may feel high levels of value and yet want
to examine other similar package products to assure an informed decision. Thus,

the level of purchase involvement may moderate the value-purchase intention and
value-search intention relationships. Most previous studies have examined the
relationships under relatively low to moderate purchase involvement situations.
Customer satisfaction is another potential consequence of value perceptions.
In particular, when recognizing high levels of value in product and service offer-
ings, consumers are likely to feel positive about their consumption experience. Oh
(1999) showed this plausibility in his study of consumers’ short-term evaluations
of lodging experience. In the long-term context, too, Fornell et al. (1996) evi-
denced that market satisfaction, repurchase intention, and switching behavior
were consequences of customer value. Nonetheless, the consequences of cus-
tomer value lack theoretical elaboration and await further empirical validation.
RESEARCH HYPOTHESES
The present study examined the validity of the customer value model in a
slightly modified form. The modification included testing the usefulness of two
widely adopted concepts within the value framework: brand awareness and price
fairness. Figure 1 presents the conceptual model that guided this research. In the
figure, the signs (+/–) and arrows indicate the direction of the hypothesized rela-
tionship among the eight key constructs. Although research focused on product
marketing situations has suggested that such variables as store name and country
of origin could be extrinsic cues to perceived quality, this study focused on brand
effects (i.e., brand class and brand awareness) for two reasons. First, in general,
the distribution channels (e.g., travel agencies) of lodging product does not play as
significant a selling role as those (e.g., retail stores) in product marketing. Second,
the effect of country name in the lodging industry is unclear, requiring perhaps
another full-scale preparatory study.
The effect of brand name in this study is partitioned into two separate effects:
brand class and brand awareness. For purposes of this study, brand class refers to
the level of product quality as can be shown in such product categorization as
upscale, midscale, and budget. Brand awareness refers to the degree of name rec-
ognition, regardless of product class but based on perceptual frequency (Hellofs &
Jacobson, 1999). In the lodging industry, for example, famous luxury hotel
chains, such as Ritz Carlton and Four Season, may have a brand-name image of
high product class as well as wide recognition. However, some motel chains, such
as Super 8 and Econo Lodge, seem to have a brand reputation based on wide rec-
ognition rather than an image of high product class. Thus, using brand name with-
out the distinction between brand awareness (or recognition) and brand class may
cause confounding effects and consequently reduce the value of strategic sugges-
tions derived from the study.
Both brand class and brand awareness are likely to have a positive influence on
quality perceptions. In the lodging industry, where both product and service can
become important quality cues, product differentiation is easily noticeable to the
consumers’ eyes. Thus, a brand with an image of high product quality is likely to
induce a high level of quality perceptions (Dodds et al., 1991; Teas & Agarwal,
Figure 1
A Conceptual Model of Brand and Price Effects on Perceived Quality,
Price Fairness, Perceived Value, and Purchase and Search Intention
1997). In addition, consumers are likely to buy, especially when lacking product
familiarity, popular brands because they “incur psychological benefits from using
brands that are popular” (Hellofs & Jacobson, 1999, p. 16, italics added). An
example is market share that has a positive relationship with consumers’ percep-
tions of quality. Carminal and Vives (1996) argued that consumers interpret a
higher market share as a signal of higher relative quality leading to future demand.
Here, market share can be interpreted as brand awareness at the aggregate level of
consumer brand perceptions. Hence,
Hypothesis 1: Perceived brand class (or product class) is positively associated with per-
ceived quality.
Hypothesis 2: Perceived brand awareness is positively associated with perceived quality.
The price-quality relationship has been a frequent research question in the

marketing literature. When judging product / service quality, consumers are
known to rely on numerous cues such as brand name and price. Price as a signal of
quality is particularly likely when the consumer is relatively unfamiliar with the
focal product or when the consumer has little experience with or knowledge about
the target product (Rao & Monroe, 1988). The relationship was also found to be
additive (Levin & Johnson, 1984) and synchronous over time (Curry & Riesz,
1988).
Hypothesis 3: Price is positively associated with perceived quality.
Price perception is essentially a comparative process (Monroe & Petroshius,

1981). Informed of the price of the focal product, consumers are likely to interpret
the price with reference to their internal price standard or competing prices. This
comparative evaluation gives rise to the concept of price fairness. According to

Martins and Monroe (1994), the price fairness construct may capture the evalu-
ated feeling consumers would have about the focal price. Sirohi et al.’s (1998)
conceptual work illustrates how this relative price evaluation affects consumer de-
cision making in a retail setting.
Consumer perceptions of price fairness is likely to be a combined function of
price, brand awareness, and perceived quality. Following Zeithaml (1988, p. 3),
perceived quality in this study is defined as the consumer’s judgment about the
product’s overall excellence or superiority. For an equal level of perceived quality,
a lower product price is compared to internal reference price more favorably
(positive fairness), whereas a higher price compares more negatively (negative
fairness). Note here that internal reference price is viewed as a stable cognitive
reference point for the product category under consideration (Klein & Ogle-
thorpe, 1987; Urbany, Bearden, & Weilbaker, 1988). Therefore,
Hypothesis 4: Price is inversely associated with price fairness.
Brand awareness is also likely to contribute to consumer perceptions of price

fairness. When the consumer is well aware of the popularity of the product, that
brand awareness helps the focal price fair positively with alternative prices or the
internal reference price. In contrast, a brand name unknown to the consumer is
likely to mitigate the comparability of the focal price to alternative prices, thereby
fairing negatively with the internal reference price. Furthermore, based on their
impressions with brand popularity and brand class, consumers form correspond-
ing perceptions of quality that, in turn, influence perceptions of price fairness.
Brand awareness, therefore, not only improves consumer perceptions of price
fairness directly, but it also exerts its influence on price fairness through quality
perceptions.
Hypothesis 5: Brand awareness is positively associated with price fairness.

Hypothesis 6: Perceived quality is positively associated with price fairness.
Consumer value perceptions are a result of the trade-off between product qual-
ity and price-based perceptions of consumer sacrifice (Dodds et al., 1991; Monroe &
Chapman, 1987). Customer value is positive when perceptions of quality are
greater than the perceptions of financial sacrifice, or vice versa. Price tends to
counteract quality perceptions toward customer value judgments, whereas price
fairness perceptions tend to enhance value judgments. Lodging industry consult-
ants also observe that price and value are negatively correlated (Shifflet & Bhatia,
1997).
Hypothesis 7: Perceived quality is positively associated with perceived value.

Hypothesis 8: Price is inversely associated with perceived value.
Hypothesis 9: Price fairness is positively associated with perceived value.
Two consequences of customer value are investigated in this study: purchase

intention and search intention. Researchers have examined purchase intention
frequently and found it to be an important consequence of value perceptions (e.g.,

Dodds et al., 1991; Teas & Agarwal, 1997). Also found in the lodging industry
was a positive value-loyalty relationship (Shifflet & Bhatia, 1997). Consumers
perceiving high product quality and price fairness tend to buy the product eventu-
ally. However, consumers will try to avoid buying the product or be likely to look
for an alternative product (i.e., search intention) when they do not perceive much
quality relative to the price charged (Grewal et al., 1996). As such, the higher cus-
tomer value perceptions, the higher their intention to buy the product, and the
lower their intention to search for alternative products.
Hypothesis 10: Customer value is positively associated with purchase intention.

Hypothesis 11: Customer value is inversely associated with search intention.
In summary, the proposed conceptual model (see Figure 1) builds on the find-
ings of the customer value process in previous research. Newly featured in this
study are mainly two sets of modifications. First, the effects of brand name were
partitioned into brand class and brand awareness effects, and they are separately
related to perceived quality and price fairness. Another important feature is that
this study empirically tested the role of price fairness within the existing customer
value framework. The effects of price and price fairness on customer value are
separately assessed in the same value framework. The proposed model further in-
corporates the recent conceptual work by Grewal et al. (1996) on search intention
as a consequence of customer value perceptions.
AN EXPERIMENTAL STUDY
Overview
This study chose an experimental approach to test the causal hypotheses of the
proposed model for several reasons (Kerlinger, 1992). First, an experiment could
provide relatively good control over the many extraneous influences that could
affect the independent and dependent variables. Second, because this study
aimed, in part, to explore the role of two new variables (i.e., brand awareness and
price fairness), related experimental manipulations could provide a high degree of
specificity in the operational definitions of these variables. Additionally, an
experiment could allow a relatively high degree of precision in both measurement
and outcome, which was desirable in this introductory work.
The experiment was conducted electronically by having undergraduate stu-
dents evaluate eight web sites that contained different treatment levels of the three
exogenous variables (see below). The experimental treatments were developed
based on pilot studies and discussions with 23 undergraduate students and 4 fac-
ulty members who were not included in the actual sampling. The student volun-
teers served as a pretest sample, whereas the faculty members served as expert
reviewers. Upon a series of revisions based on the pretest and reviews, the actual
sample evaluated a randomly assigned web site and provided responses via sys-
temized electronic mail. The length of participation was approximately 25 min-
utes. All participants were offered U.S.$5 for their cooperation.
Design of the Study

The experiment was a 2 × 2 × 2 quasi-between-subject complete factorial
design. The three exogenous factors each had two treatment levels, namely, high
and low. Table 1 shows the manipulation plan, and sample manipulations appear
in Appendix A. Specifically, brand awareness was manipulated based on name
recognition. Known names, Marriott and Motel 6, were used for the high brand
awareness level, whereas hypothetical names, Central Park Hotel (hereafter
referred to as Central Park) and Roadside Motel (hereafter Roadside) were used
for the low level of brand awareness. The product description (a) between Marri-
ott and Central Park and (b) between Motel 6 and Roadside was matched so that
the first pair (i.e., Marriott / Central Park) could reflect the upscale lodging market
and the latter pair (i.e., Motel 6/Roadside) reflect the budget-economy category.
This upscale-budget market classification followed closely the classification
scheme given by Henricksen and Rushmore (1997). In this way, the study results
could be generalized to both the upscale and budget category lodging industry.
Brand class was manipulated based on brand image and product quality. The
names Marriott and Central Park were used for the high brand class, whereas
Motel 6 and Roadside were used for the low counterpart. Because this experiment
was essentially a between-subject design, product descriptions for manipulation
effects remained unchanged across Marriott and Central Park and across Motel 6
and Roadside. Instead, data were aggregated in different ways to achieve desired
brand awareness and brand class effects. This method enhanced overall design
efficiency by simultaneously manipulating brand awareness and brand class
effects. Finally, price was manipulated by daily room rates posted for hypothetical
reservations (Oh, 1999). The room rates for Marriott and Central Park were
U.S.$350 for the high treatment and U.S.$110 for the low treatment levels,
respectively. For Motel 6 and Roadside, room rates of U.S.$80 and U.S.$21 were
used to derive desired high-low manipulation effects. To enhance realism
(Schwartz, 1999), the context of reservation situations was varied across the
upscale and budget category products, because it was thought that upscale and
budget products could serve different lodging-related needs (see Appendix A). In
addition, the high price levels for both product categories were quoted from the
actual web sites of Marriott and Motel 6, and the low levels were determined by
the pretest results.
A web site experimentation was chosen for several reasons. First of all, reser-
vations via the Internet is becoming an important source of lodging business
today. According to the Travel Industry Association’s 1998 Technology and
Travel report, nearly 34 million American travelers used the Internet to help plan a
trip in 1998 and 6.7 million of them made reservations online (“Front Desk,”
1999). As such, a total of eight web sites were developed and posted on the Inter-
net for access by the selected respondents. Each web site contained two pages.
The first page provided a reservation situation (see Appendix A), a treated
description of a lodging product, and price information. The second (i.e., linked)
page measured specific model constructs, along with a few demographic ques-
tions. Also included at the end of the questionnaire was the 20-item Personal
Table 1
Experimental Treatment Plan
Sample Product Brand Awareness Brand Class Price (U.S. dollars)
Marriott Hotel High High High (350), Low (110)

Central Park Hotel Low High High (350), Low (110)
Motel 6 High Low High (80), Low (21)
Roadside Motel Low Low High (80), Low (21)
Involvement Inventory to check the level of response involvement (Zaichkowsky,

1985).
The sample for this study was 263 nonhospitality undergraduate students ran-
domly drawn from the directory of a large university, with a response rate of
32.9%. Hospitality students were excluded to avoid potential education bias for
the products under examination. Although active lodging customers would be
ideal, several reasons supported use of student sample. First, because a between-
subject design was deemed appropriate for the tests of hypotheses, a relatively
homogeneous sample was desired. Second, the study results could be more valid
by minimizing potential experience effects, which led to choosing relatively nov-
ice consumers for the focal products. Third, the overall experiment focused on
information processing, for which a student sample could provide useful insights.
Students also are likely to be active Internet users in the future for hotel reserva-
tions. A total of 800 students were contacted via e-mail containing a description
about the study, and an equal number of students (100) were assigned randomly to
one of the eight web sites. Students who did not respond at the first notice received
up to two additional reminders about the study. Of the 263 participants, 129 were
male and the sample mean age was 22.6 with the median of 21. The majority of the
sample (65%) indicated that they have never stayed in a hotel/motel similar to the
one described in the treatment condition.
Measurement
Except for search intention, all other constructs were measured with multiple
items by closely following previous studies reviewed earlier (e.g., Bearden, Kai-
cher, de Borrero, & Urbany, 1992; Dodds et al., 1991; Grewal et al., 1996). The
specific scales appear in Appendix B. The manipulation effects of the three
exogenous variables, price fairness, and perceived customer value were 5-item
measures using 7-point rating scales. Perceived quality was measured with 6
items using again 7-point scales. Purchase intention was measured with 4 items, 3
of which were anchored on 7-point rating scales and the other on an 11-point
probability scale. Finally, search intention was a single item measure using a
7-point scale.
Analysis
The overall analysis method was based on Baron and Kenny’s (1986) sugges-
tions for mediation analysis. Because the proposed model contained hypothe-
sized direct, as well as indirect, linear effects, mediation analysis using regression
models was deemed an appropriate approach. Although Baron and Kenny illus-
trated mediation analysis using a case of single measures of the independent,
mediator, and dependent variables, their procedure can be generalized, without
losing information, to multivariate data analysis as follows:
1. Regress the mediators on the independent variables.

2. Regress the dependent variables on the independent variables.
3. Regress the dependent variables on both the independent variables and mediators.
Following Baron and Kenny (1986), the independent variables in the first two
models are expected to show statistical significance. The third model is expected
to show the insignificance of the independent variables and significance of the
mediator variables.
A total of eight regression models were estimated to test the proposed hypothe-
ses. First, the perceived quality equation is
PQ = β0 + β1BC + β2BA + β3AP + ε, (1)
where PQ = perceived quality, BC = brand class (as measured by multiple items to

check manipulation effects), BA = brand awareness (as measured by multiple
items to check manipulation effects), AP = price treatment (actual prices used for
manipulations), β = regression coefficients, and ε = error term. Although dummy
codes could be used for BC and BA to test the high-low treatment effects, this
study used the quantitative measures that were used to check manipulation effects
to improve precision in parameter estimates. Parallel analyses with dummy codes
for these variables produced essentially identical results. Hypotheses 1, 2, and 3
suggest that parameters β1, β2, and β3 should be statistically significant and their
signs positive.
The price fairness equation is
PF = β0 + β1BC + β2BA + β3AP + β4PQ + ε, (2)
where PF = price fairness and the other variables are as defined in Equation 1. Hy-
potheses 5 and 6 suggest that β2 and β4 are statistically significant and positive,
while Hypothesis 4 suggests that β3 is significant and negative. The proposed
model also suggests that β1 should be insignificant because brand class affects
price fairness only indirectly through perceived quality.
Two customer value equations are estimated. The first equation is the regres-
sion of customer value on the three exogenous variables only, and the second on
both the three exogenous and two mediator variables.
CV = β0 + β1BC + β2BA + β3AP + ε (3)
CV = β0 + β1BC + β2BA + β3AP + β4PQ + β5PF + ε, (4)

where CV = customer value, and the other variables are as defined in Equations 1
and 2. Equation 3 must show that β1, β2, and β3 are significant. Hypotheses 7 and 9
suggest that β4 and β5 are significant and positive, whereas Hypothesis 8 suggests
that β3 is significant and negative in Equation 4. It is also expected that β1 and β2
are insignificant, and that β3 is weaker in Equation 4 than that in Equation 3 (see
Figure 1).
Based on the same logic, two purchase intention equations are straightforward.
PI = β0 + β1BC + β2BA + β3AP + β4PQ + β5PF + ε (5)
PI = β0 + β1BC + β2BA + β3AP + β4PQ + β5PF + β6CV + ε, (6)
where PI = purchase intention and the other variables are as defined earlier. Only
β3, β4, and β5 are expected to be significant, with β3 being negative and β1 and β2
are expected to be insignificant in Equation 5. Hypothesis 10 and Figure 1 suggest
that only β6 is significant and positive in Equation 6, and all the other variable pa-
rameters are insignificant.
Finally, the specification of search intention equations is identical to that of
purchase intention:
SI = β0 + β1BC + β2BA + β3AP + β4PQ + β5PF + ε (7)
SI = β0 + β1BC + β2BA + β3AP + β4PQ + β5PF + β6CV + ε, (8)
where SI = search intention and the other variables are as defined earlier. Conse-
quently, the expected parameter significance is the same as was in Equations 5 and
6. However, Hypothesis 11 suggests that β6 is significant and negative.
RESULTS
Data Quality
Descriptive statistics of the variables appear in Table 2. The mean values
ranged from 3.96 for price perceptions to 5.35 for perceived quality, and the stan-
dard deviations ranged from 1.10 for perceived customer value to 2.16 for brand
awareness. Because the high and low levels of each variable were aggregated
across samples, the mean value range was somewhat as expected. The standard
deviation range also suggested that each variable had sufficient variation for sub-
sequent hypothesis tests. Cronbach’s alpha of reliability ranged from .85 to .97,
indicating that the multiple items of each variable consistently measured the pur-
ported construct.
Because one of the study objectives was to explore the role of brand awareness
and price fairness within the existing value framework, it was desired that these
variables were discriminated from similar constructs examined by other research-
ers. To this end, a common factor analysis (Maxwell, 1977) was employed to see
Table 2
Descriptive Statistics (N = 263)
Model Variable Scale Number of Items α M SD
Endogenous
Perceived quality 1-7 6 .95 5.35 1.12
Price fairness 1-7 5 .94 4.91 1.24
Perceived value 1-7 5 .85 4.90 1.10
Purchase intention 1-7, 1-11a 3, 1a .94 5.10 1.67
Search intention 1-7 1 NA 4.48 1.74
Exogenous
Brand class 1-7 5 .95 4.81 1.54
Brand awareness 1-7 5 .97 4.24 2.16
Price 1-7 5 .96 3.96 1.53
a. Three items were measured on a 7-point scale, whereas one item was measured on an
11-point scale.
whether (a) brand awareness could be discriminated from brand class and (b)
price fairness from perceived price used in this study to check the effects of price
manipulation (see Appendix B for specific scales). Based on an eigenvalue crite-
rion of one and a varimax rotation, the factor analysis of 10 brand class and brand
awareness items demonstrated a clear two-factor structure. The 5 brand class
items loaded on one factor (R2 = .48; the range of factor loading = .63 – .76),
whereas the 5 brand awareness items loaded on the other (R2 = .37; the range of
factor loading = .81 – .85). Similarly, the factor analysis of 10 price perception and
fairness items resulted in a distinct two-factor structure, with the 5 price percep-
tion items loading on one factor (R2 = .60; the loading range = .80 – .94) and the 5
price fairness items loading on the other (R2 = .22; the loading range = .72 – .90).
These results provided partial evidence of discriminant validity for the newly
introduced variables and scales.
Manipulation Check
The effects of manipulation were checked using MANOVAs based on the five
measurement items of brand awareness, brand class, and price. Table 3 presents
the results, along with cell mean scores and sample sizes. Because data were
aggregated across brand awareness and product (brand) class, the cell sizes
ranged from 114 to 146. As expected, the manipulation of the three exogenous
variables produced desired treatment effects that were statistically significant
(Wilks’s λ = .36 – .60, p < .001).
Response Involvement
Reasons, such as use of student sample, voluntary participation at distance,
and hypothetical purchase situation, could cause weak response involvement and
lower overall face validity of the study results. Thus, this study included
Zaichkowsky’s (1985) Personal Involvement Inventory (PII) to check response
integrity. The PII is a 20-item bipolar adjective scale designed to measure con-
sumer involvement in product evaluations, and was found to be reliable and valid
Table 3
Results of Multivariate Manipulation Check
Manipulated Variable High Low Wilks’s λ df n p Value
Brand class 5.85 (146) 3.50 (116) .36 5 256 .000

Brand awareness 5.83 (135) 2.52 (125) .37 5 254 .000
Price 4.82 (142) 2.89 (114) .60 5 250 .000
Note:The High and Low columns indicate the cell mean value, and the cell size is in parentheses.
for gathering information about brands, brand preferences, product categories,

and comparison of product attributes among brands. The reliability of the 20
items in this study was .96 and the involvement score was 95.34, which was in the
high involvement category according to Zaichkowsky’s two-group classification.
Regression Results
Prior to mediation analyses, further consideration was given to potential inter-
action effects of the three exogenous variables. To this end, a MANOVA was run
with the three exogenous variables and their interaction terms as the independent
variables and all the endogenous variables as the dependent variables. The results
in Table 4 showed that the two-way and three-way interactions of the exogenous
variables were not statistically significant (p > .05), indicating that they did not
affect the endogenous variables in general. Therefore, these interaction terms
were dropped from all subsequent analyses.
Table 5 presents the results of Equations 1 and 2. As hypothesized in Hypothe-
ses 1 and 3, brand class and price were found to exert a significant positive impact
on perceived quality (p < .05). However, the effect of brand awareness on per-
ceived quality was marginal (p < .10), thereby providing weak support for
Hypothesis 2. The three exogenous variables explained approximately 44% of
variance in perceived quality.
The effects of brand awareness, price, and perceived quality were also found to
affect price fairness significantly (p < .05). The effect of price was negative as
hypothesized in Hypothesis 4, whereas those of brand awareness and perceived
quality were positive as in Hypotheses 5 and 6, respectively. Note that as
expected, the effect of brand class on price fairness was insignificant. The model
explained about 15% of the variance in price fairness.
The results of perceived customer value (Equations 3 and 4) appear in Table 6.
When regressed directly on perceived value, brand class and price showed statisti-
cal significance ( p < .05). The price effect was negative, supporting Hypothesis 8.
However, brand awareness was found to be an insignificant direct antecedent of
perceived value. This equation produced an R2 of .09. In contrast, Equation 3
resulted in an insignificant brand class effect, and the effects of price, perceived
quality, and price fairness appeared to be significant, lending support for
Hypotheses 7, 8, and 9, respectively. Note that the price effect on customer value
was negative in both models, and its standardized estimates suggested that the
effect became much smaller when the two mediators were included in the model.
These findings are consistent with Baron and Kenny’s (1986) mediational condi-
Table 4
Multivariate Analysis of Variance Results
Experimental Treatment Wilks’s λ p Value
Brand class (BC) .51 .000

Brand awareness (BA) .95 .032
Price .68 .000
BC × BA .97 .244
BC × Price .98 .535
BA × Price .98 .427
BC × BA × Price .97 .243
Intercept .01 .000
Note: df = 5, N = 225. Dependent variables are perceived quality, price fairness, perceived
values, purchase intention, and search intention.
Table 5
Regression Estimates of the Perceived Quality and Price Fairness Equations
Partial Regression Coefficients

Independent Variable Unstandardized Standardized t Value
Perceived quality (Equation 1)

Brand class 0.60 .53 7.82***
Brand awareness 0.09 .08 1.72*
Price 0.14 .16 2.38**
Intercept 5.05 50.12***
R 2 (adjusted R 2) = .44 (.44)a
Price fairness (Equation 2)
Brand awareness 0.18 .14 2.43**
Brand class 0.14 .11 1.19
Price –0.47 –.50 –5.80***
Perceived quality 0.33 .29 3.79***
Intercept 3.90 8.56***
R 2 (adjusted R 2) = .16 (.15)a
a. F < .01.
*p < .10. **p < .05. ***p < .01.
tions. The five variables specified in Equation 4 accounted for about 49% of vari-
ance in perceived customer value (p < .01).
Purchase intention (Equations 5 and 6) also produced expected results, as pre-
sented in Table 7. The results of Equation 5 showed that price, perceived quality,
and price fairness were significant predictors of purchase intention (p < .05). As
expected, the price effect was negative, whereas the effects of perceived quality
and price fairness were positive. Also shown in the table is that brand awareness
and brand class are not significant ( p > .05), because their effects on purchase
intention were completely mediated by perceived quality and price fairness. This
Table 6
Regression Estimates of the Perceived and Price Value Equations

Perceived value (Equation 3)

Brand class 0.47 .42 4.90***
Brand awareness 0.07 .07 1.13
Price –0.36 –.43 –4.95***
Intercept 5.42 43.02***
R 2 (adjusted R 2) = .10 (.09)a
Perceived value (Equation 4)
Brand awareness –0.05 –.05 –1.03
Price –0.22 –.27 –3.73***
Price fairness 0.46 .52 10.47***
Intercept 0.82 8.56***
R 2 (adjusted R 2) = .50 (.49)a
a. F < .01.
***p < .01.
independent variables-only model entailed an R2 of .24. These results are consis-

tent with the implications suggested by the results in Table 6.
The results of Equation 6 indicate that customer value is a complete mediator
of all the independent variables. When introduced into the independent
variables-only model (i.e., Equation 5), customer value appeared to be the only
significant positive predictor of purchase intention. The previously significant
independent variables (i.e., price, perceived quality, and price fairness) became
insignificant. These findings support Hypothesis 10 and provide again strong
evidence of Baron and Kenny’s (1986) conditions for perfect mediation. This
mediator-included model accounted for about 52% of variance in purchase
intention.
Finally, search intention (Equations 7 and 8) showed patterns of the results that
were similar to those of purchase intention equations. Table 8 summarizes the
results. In the independent variables-only model (i.e., Equation 7), only price, per-
ceived quality, and price fairness appeared to be statistically significant predictors
of search intention. As expected, the effect of price was positive and those of
perceived quality and price fairness were negative. The R2 value of this equation
was .18.
Customer value again appeared to be a complete mediator of the five antece-
dents toward search intention. When customer value was additionally introduced
into Equation 7, all the independent variables became statistically insignificant.
The effect of price was only marginal ( p < .10). As hypothesized in Hypothesis
11, the effect of perceived customer value on search intention was negative. This
mediator-included model explained approximately 38% of variance in search
intention.
Table 7
Regression Estimates of the Purchase Intention Equations

Purchase intention (Equation 5)

Price –0.36 –.29 –3.25***
Price fairness 0.52 .36 5.79***
Intercept 1.21 1.76*
R 2 (adjusted R 2) = .26 (.24)a
Purchase intention (Equation 6)
Price –0.10 –.08 –1.05
Perceived quality –0.14 –.09 –1.14
Price fairness 0.09 .06 1.15
Perceived value 1.14 .70 11.60***
Intercept 0.02 0.04
R 2 (adjusted R 2) = .53 (.52)a
a. F < .01.
*p < .10. ***p < .01.
Table 8
Regression Estimates of the Search Intention Equations

Search intention (Equation 7)

Price 0.43 .33 3.66***
Perceived quality –0.37 –.24 –3.05***
Price fairness –0.32 –.36 –3.68***
Intercept 7.26 10.19***
R 2 (adjusted R 2) = .19 (.18)a
Search intention (Equation 8)
Price 0.20 .16 1.91*
Perceived quality 0.04 .02 0.28
Price fairness 0.12 .08 1.34
Perceived value –0.98 –.63 –8.92***
Intercept 8.10 12.90***
R 2 (adjusted R 2) = .39 (.38)a
a. F < .01.
*p < .10. ***p < .01.
DISCUSSION
Several design and analysis characteristics strengthened the usefulness of the

study results. First, the reliability alpha of each construct was sufficiently high,
indicating that the multiple items of each construct were internally consistent.
Second, the two newly introduced constructs (i.e., brand awareness and price fair-
ness) exhibited discriminant validity in factor analyses, which suggests that these
variables play an independent role in the decision context examined in this study.
Third, the results of this study were based on successful manipulation effects; all
three exogenous variables produced intended high-low treatment effects. Fourth,
response involvement was reasonably high, which could enhance face validity of
the results. In addition, the overall results of the study demonstrated nomological
validity by supporting most predictive hypotheses that were developed from pre-
vious studies, as well as related literature.
Customer value appears to be a full mediator of consumers’ price-quality
trade-off toward both purchase and search intentions. In other words, price, per-
ceived quality, and price fairness were completely mediated by customer value.
This finding supports the results of previous studies and suggests that perceived
value is an important summary of consumers’decision process surrounding brand
and price perceptions. This finding also adds to the existing literature in that cus-
tomer value mediates not only price-elicited feeling of sacrifice (e.g., see Dodds
et al., 1991) but also price fairness as speculated by Martins and Monroe (1994).
Thus, customer value is deemed a useful concept to lodging marketers whose pri-
mary strategies are focused on quality and pricing.
Brand name effects that were traditionally examined in previous value studies
could be interpreted mainly as product or brand class effects in the lodging indus-
try. One distinct characteristic of lodging product is that its quality is routinely
associated with product class. Apparently, upscale hotels such as Marriott and
Sheraton tend to offer more service features than budget or economy motels such
as Motel 6 and Econo Lodge, thereby creating superior quality perceptions among
customers. Nonetheless, many lodging companies build their unique brand name
and image (i.e., brand awareness) without being necessarily in the upscale market.
Thus, different from previous studies, this study separated brand name effects into
product (brand) class and brand awareness effects. The results generally support
that brand class leads primarily to quality perceptions, whereas brand awareness
is associated mainly with price comparisons (i.e., price fairness). The findings
related to brand class in this study are consistent with those related to brand name
effects in previous value studies. Therefore, traditional brand name effects could
be referred to as product class effects, perhaps regardless of the level of awareness
of the brand name.
Building high brand awareness may mitigate consumer perceptions of price-
related feelings of sacrifice. Although price has been examined widely in the mar-
keting literature, it has been done so mainly as a predictor of quality perceptions
and value judgments or as an extrinsic cue to general purchase decisions. Conse-
quently, its antecedents are relatively unknown. Brand awareness seems to be a
variable that contributes to positive perceptions of a charged price by helping con-
sumers compare the focal product price favorably with the prices of competitor
products. This constructive role of brand awareness has not been examined by
previous studies that have focused on product class. Thus, companies’ efforts to
build the awareness of their brand name seem to have beneficial consequences by
guiding consumers to internalize the product price in the positive direction.
Although this study found that price fairness plays a significant role in the
value process, the scales used in this study do not seem to have captured its prop-
erty fully. Quite a small amount of its variance was explained by brand awareness,
price, and perceived quality (R2 = .15). Nevertheless, the concept of price fairness
possesses several important characteristics from a theoretical standpoint. First, it
is likely to account for consumers’ prepurchase price comparisons for the prod-
ucts in the final stage of purchase decision making. Thus, inclusion of price fair-
ness in the model explicitly considers competitor products in an important way.
Studies devoted to investigating the role of price fairness are necessary. Second,
researchers have conceptualized price typically as a negative input to perceptions
of customer value. However, the nature of price information contained in price
fairness produces positive effects on customer value. This finding provides
another perspective on the versatility of price functions. Another important impli-
cation of price fairness is that lodging consumers do consider the price of the tar-
get, as well as its competitor, product when making a purchase decision. Thus,
consumer-oriented pricing strategies should receive further attention in the lodg-
ing industry, where rather computerized supply/demand-based pricing (i.e., yield
management) is popular.
CONCLUSION AND SUGGESTIONS
This study attempted to introduce and test a modified theory of customer value
in the lodging industry. Customer value theory postulates the behavior of price-
quality trade-off as its central concept. Added to the traditional value model were
two new concepts relevant to lodging consumption situations: brand awareness
and price fairness. Hypotheses were tested via an experimental study. The main
findings can be summarized as follows:
1. Brand class and brand awareness have different marketing implications. The former
is related mainly to quality perceptions, whereas the latter is associated with price
fairness.
2. Previously known brand effects can be interpreted as brand or product class effects.
3. Price signals quality, but counteracts perceptions of price fairness and value.
4. Consumers’ value perceptions fully mediate price and quality judgments toward
purchase and search intentions.
5. Purchase and search intentions are positive and negative consequences of customer
value, respectively.
Managerial Implications
Customer value seems to be a useful concept in marketing lodging products.
Although the lodging industry has invested heavily in improving customer satis-
faction and service quality for years, commensurate investment has not been
given to customer value-based strategy development. Customer value, as tested in

this study, appears to be a powerful predictor of a purchase and a critical deterrent
of search behavior. Lodging marketers should consider increasing consumer
value perceptions by counter-balancing between price and product offerings. In
addition, marketers might want to include measures of customer value percep-
tions so that the measures could serve as a guiding index in strategy formulation
efforts.
Price should receive a serious consideration in lodging marketing. This study
showed how price becomes involved in consumers’ value judgments. Consumers
consider not only the focal product price, but also the prices of alternative prod-
ucts (i.e., reference price). Nevertheless, the lodging industry’s current pricing
strategy is based, to a great extent, on the demand volume. The practice of this
demand-oriented pricing may neglect the impact that consumers’ psychological
feeling about the price may exert on whether to buy the product or to switch to
competitor products. Thus, marketers should develop a mechanism that can incor-
porate systematically into corporate pricing policies consumer price perceptions
of both the focal product and its competitor products, in addition to market
demand.
Establishing strong brand awareness among potential customers contributes to
enhanced value judgments, increased purchase intention, and decreased search
behavior. Lodging operators do not have to necessarily position their products in
higher product classes to succeed. Instead, by creating wide brand recognition
and executing carefully developed competitive pricing, marketers may be able to
direct customers to follow a price-oriented processing of the product. In some
cases, this price-oriented strategy may be sufficient to generate high customer
value perceptions that will result in increased product trials and market retention.
This type of strategy can be a fruitful defensive strategy, particularly in a highly
saturated lodging segment.
Limitations and Suggestions

Higher external validity of the study results can be achieved by using more
active lodging customers, testing the theory in an actual purchase setting, and
sampling a wider range of both customers and products. Although this study was
carefully designed to strengthen internal validity, the experimental nature prohib-
ited improving external validity to a greater extent. Thus, caution must be given to
interpreting and generalizing the findings to all lodging purchase decisions.
Examination of the proposed model in a field setting may complement the sam-
pling limitation of this study.
The proposed model can be extended to include price perceptions and per-
ceived sacrifice. This study focused on testing a modified value theory with lodg-
ing products; however, as found useful in previous product-oriented studies,
direct inclusion of price perceptions and perceived sacrifice in the proposed
model may enrich marketers’ understanding of the role of price in consumer
behavior. This is particularly true in the lodging industry, where the behavioral
perspective of price has rarely been studied. In conjunction with this line of
research, investigations of the concept of internal reference price (Monroe & Lee,
1999) warrant a productive avenue to increased understanding of the role of price

in consumer decision making.
Finally, the concept of brand awareness, as compared to brand class, needs to
receive further attention in marketing research. The results of this study provided
a useful beginning point for much more rigorous studies on the concept. Many
related questions await careful investigations: What is the role of brand awareness
relative to brand class in different industries? What are the effects of brand aware-
ness as nested in brand class? How can marketers build brand awareness, that is,
what improves brand awareness effectively and efficiently? Additional concep-
tual and qualitative studies are necessary to distinguish brand awareness effects
from those of similar concepts such as brand class.
APPENDIX A
The content of the sample web sites consisted mainly of four pieces of information (in
the order of presentation): (a) an experimental situation, (b) product description, (c) price
information, and (d) research questionnaire. To elicit increased realism, the description and
type of information given to the sample product closely followed the results of prelimi-
nary informal content analyses of several actual lodging web sites in the target product
categories.
Experimental Situation
Following Schwartz’s (1999) suggestions on context manipulations for different prod-
uct usage situations, this study varied the product usage situation that would achieve a
likely fit. The product usage situations in the study were developed based on the results of
preliminary discussion with the pretest sample. For the high-end products (i.e., Marriott
Hotel and Central Park Hotel), the following purchase situation was given:
Assume that YOU are planning to visit New York for a 3-day vacation during the
upcoming spring break [the spring break was only 4-5 weeks away when this
study was being conducted]. For this special vacation, you have saved money
diligently so that you can afford a good hotel. To reserve a hotel room, you
looked at hotels on the Internet and ran across the following web page of a hotel.
Please examine the information given and answer the questions attached.
The purchase situation for the low-end products (i.e., Motel 6 and Roadside Motel) was
as follows:
Assume that YOU are planning to visit one of your best friends in New Orleans
during the upcoming spring break. You decided to drive and stay overnight on
the road after about a 14-hour drive. To reserve a room in advance, you looked up
motels on the Internet and ran across the following web page of a motel. Please
examine the information given and answer the question attached.
Product Description
The sample product was described by both a colorful picture of the facade of a ho-
tel/motel and a list of amenities the hotel/motel offered. The product description was kept
constant within brand class. The picture showed a hotel/motel theme building that did not
characterize any particular brand in actuality. The list of amenities was presented in bullet
points for clear presentation, covering four general information areas: (a) hotel operation
information, (b) guestroom amenities, (c) facilities and services available, and (d) sur-
rounding attractions. Further details are available on request from the author.
Price Information
The price information was given at the end of product description. For the high-end
products, the price given was U.S.$350 for high and U.S.$110 for low levels. The prices for
the low-end products were U.S.$80 for high and U.S.$21 for low levels of treatment. The
price information was presented as follows:
Daily room rate for the reservation during the February-April period:
U.S.$_______.
Research Questionnaire
Immediately following the price information was a large, visible red-colored arrow
with an attached direction, “Please click the button.” The research questionnaire page was
linked to this arrow button. Then, the questionnaire began asking general questions down
to specific questions addressing the constructs of the proposed model. Included in the end-
ing part of the questionnaire was Zaichkowsky’s (1985) Personal Involvement Inventory.
The questionnaire was identical for all products, except for the actual name of the sample
hotel/motel. Detailed measurement items are shown in Appendix B.
APPENDIX B
The measurement items and scales used in this study are presented below in a concise
format, along with the general direction. A 7-point click-button scale was used for all items
but the one indicated. Whenever possible, questions for each construct were dispersed
across the questionnaire to prevent potential carryover effects.
Directions
Please read each question below and provide your answer by clicking a button on each
scale. Please do not miss any questions. Upon completion, please click the “Submit” button
at the bottom of the questionnaire.
Brand Class
What are the brand perceptions you have about XYZ?
Budget ... High priced
Low end ... High end
Very limited service ... Very extensive service
Bottom class ... Top class
Very limited amenities ... Very extensive amenities
Brand Awareness
The brand name XYZ is
Very unfamiliar ... Very familiar
Not known at all ... Very well known
Not visible at all ... Very visible
Never heard of ... Heard of a lot
Not famous at all ... Very famous
Perceived Price
The price charged by XYZ is
Very inexpensive ... Very expensive
A real bargain ... A real rip-off
Very low ... Very high
Not pricey at all ... Very pricey
Very reasonable ... Very unreasonable
Price Fairness
Given the description of XYZ and other similar hotels/motels like XYZ,
the price charged by the hotel/motel is
Unfair ... Fair
A poor match ... A good match
Not logical ... Logical
Inappropriate ... Appropriate
Irrational ... Rational
Perceived Quality
The expected product/service performance of XYZ is
Poor ... Excellent
Inferior ... Superior
Extremely unfavorable ... Extremely favorable
The overall expected product/service quality of XYZ is

Poor ... Excellent
Inferior ... Superior
Extremely unfavorable ... Extremely favorable
Customer Value
XYZ offers good value for the price.
Strongly disagree ... Strongly agree
XYZ will be worth the money.

The overall expected value of staying at XYZ is

Poor ... Excellent
XYZ is a good deal.

Purchase Intention
Would you choose XYZ for the given travel situation?
Definitely no ... Definitely yes
Very unlikely ... Very likely
Given your travel situation, the probability of your choosing this

hotel is
0% ... 100% (11-point scale)
Search Intention
Given your travel situation as above, would you consider choosing
a different hotel/motel?
Very unlikely ... Very likely
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Revision Submitted November 1, 1999
Accepted November 7, 1999
Refereed Anonymously
Haemoon Oh, Ph.D., is an assistant professor in the Department of Hotel, Restaurant, and
Institution Management, Iowa State University (11 MacKay Hall, Ames, IA 50011-1120;
e-mail: hmoh@iastate.edu).

The Effect of Brand Class, Brand Awareness, and Price On Customer Value and Behavioral Intentions

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Oh / CUSTOMER

JOURNAL VALUE AND

THE EFFECT OF BRAND CLASS,

KEYWORDS: customer value; brand; price; purchase; quality; consumer behavior;

THEORY OF CUSTOMER VALUE

Concept of Customer Value

Antecedents of Customer Value

Consequences of Customer Value

to examine other similar package products to assure an informed decision. Thus,

The price-quality relationship has been a frequent research question in the

Hypothesis 3: Price is positively associated with perceived quality.

Price perception is essentially a comparative process (Monroe & Petroshius,

comparative evaluation gives rise to the concept of price fairness. According to

Hypothesis 4: Price is inversely associated with price fairness.

Brand awareness is also likely to contribute to consumer perceptions of price

Hypothesis 5: Brand awareness is positively associated with price fairness.

Hypothesis 7: Perceived quality is positively associated with perceived value.

Two consequences of customer value are investigated in this study: purchase

frequently and found it to be an important consequence of value perceptions (e.g.,

Hypothesis 10: Customer value is positively associated with purchase intention.

Design of the Study

Sample Product Brand Awareness Brand Class Price (U.S. dollars)

Marriott Hotel High High High (350), Low (110)

Involvement Inventory to check the level of response involvement (Zaichkowsky,

1. Regress the mediators on the independent variables.

PQ = β0 + β1BC + β2BA + β3AP + ε, (1)

where PQ = perceived quality, BC = brand class (as measured by multiple items to

PF = β0 + β1BC + β2BA + β3AP + β4PQ + ε, (2)

CV = β0 + β1BC + β2BA + β3AP + ε (3)

CV = β0 + β1BC + β2BA + β3AP + β4PQ + β5PF + ε, (4)

PI = β0 + β1BC + β2BA + β3AP + β4PQ + β5PF + ε (5)

PI = β0 + β1BC + β2BA + β3AP + β4PQ + β5PF + β6CV + ε, (6)

SI = β0 + β1BC + β2BA + β3AP + β4PQ + β5PF + ε (7)

SI = β0 + β1BC + β2BA + β3AP + β4PQ + β5PF + β6CV + ε, (8)

Model Variable Scale Number of Items α M SD

Manipulated Variable High Low Wilks’s λ df n p Value

Brand class 5.85 (146) 3.50 (116) .36 5 256 .000

for gathering information about brands, brand preferences, product categories,

Experimental Treatment Wilks’s λ p Value

Brand class (BC) .51 .000

Partial Regression Coefficients

Perceived quality (Equation 1)

Partial Regression Coefficients

Perceived value (Equation 3)

independent variables-only model entailed an R2 of .24. These results are consis-

Partial Regression Coefficients

Purchase intention (Equation 5)

Partial Regression Coefficients

Search intention (Equation 7)

Several design and analysis characteristics strengthened the usefulness of the

CONCLUSION AND SUGGESTIONS

given to customer value-based strategy development. Customer value, as tested in

Limitations and Suggestions

1999) warrant a productive avenue to increased understanding of the role of price

The overall expected product/service quality of XYZ is

XYZ will be worth the money.

The overall expected value of staying at XYZ is

XYZ is a good deal.

Given your travel situation, the probability of your choosing this

Baron, R. M., & Kenny, D. A. (1986). The moderator-mediator variable distinction in

Submitted August 25, 1999

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