The importance of meeting price expectations: linking price to service quality

Abstract

Purpose The purpose of this research paper is to investigate the role of price and price expectations in service quality evaluations based on a study of the US hotel sector. Design/methodology/approach The paper is based on an experimental study to test service quality and price congruency through randomly assigned treatments to a quota sample of 120 students. Findings The research shows that the degree to which subjects' price expectations are met influences their evaluations of service quality. This is especially true in the case of a price loss; when the actual price exceeds the expected price. However, when there is a price gain, subjects' evaluations of service quality were not affected. Research limitations/implications The experiment sacrificed external validity for internal control; an artificial stimulus was used in a carefully controlled experimental setting to control the subjects' exposure to price and service manipulations. A small sample size of student subjects was used; only 20 subjects in each treatment group. The results obtained were based on subjects' evaluation of a written script, and not an actual service encounter. By virtue of using an experimental design, the experiment did not consider a broad range of potential factors. Originality/value The paper uses an experiment to test the effects of price gains and price losses on consumers' perceptions of the quality of a service encounter.

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