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Hospitality Management 25 (2006) 146153 www.elsevier.com/locate/ijhosman

Research note

A cross-cultural comparison of perceived fairness and satisfaction in the context of hotel room pricing
Anna S. Mattila, Sunmee Choi
School of Hospitality Management, Pennsylvania State University, University Park, PA 16803, USA

Abstract In this study, we examined the role of culture in inuencing customer reactions to differential pricing policies. Specically, we investigated how two factors, price outcome (worse/same/better price) and information on the hotels pricing policy, inuence perceived fairness and satisfaction judgments of customers from two different culturesUSA (Western, individualistic culture) and South Korea (Eastern, collectivist culture). Our results indicate that US consumers seem to prefer equitable outcomes to better or worse price. Moreover, offering information on the hotels pricing policy had a more positive impact on Korean travelers than their American counterparts. r 2004 Published by Elsevier Ltd.
Keywords: Fairness; Cross-cultural; Satisfaction; Differential pricing

1. Introduction Rich research in social psychology indicates that psychological processes are culturally contingent (Fiske et al., 1998). Yet, most research in consumer behavior relies on theoretical frameworks developed in Western societies (e.g., Maheswaran and Shavitt, 2000). Consequently, relatively little is known about cross-cultural
Corresponding author. Tel.: +1 814 863 5757; fax. +1 814 863 4257.

E-mail addresses: asm6@psu.edu (A.S. Mattila), sc128@psu.edu (S. Choi). 0278-4319/$ - see front matter r 2004 Published by Elsevier Ltd. doi:10.1016/j.ijhm.2004.12.003

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generalizabilty of our current consumer behavior theories (e.g., Briley et al., 2000). The purpose of this study is to examine cross-cultural differences in East-Asian and American consumers perceptions of fairness in a context of hotel room pricing. Hotels commonly use differential pricing as a revenue management tool (Kimes, 2002). In this study, we wanted to investigate how different outcomes (worse/same/ better price) and pricing information inuence fairness and satisfaction judgments of customers from two different culturesUSA (Western, individualistic culture) and South Korea (Eastern, collectivist culture).

2. Conceptual background Perceived fairness has been shown to inuence important customer outcomes, including satisfaction (Kimes and Wirtz, 2003). Although the concept of justice is likely to be universal, its manifestations might differ based on cultural differences (Pillai et al., 2001; Greenberg, 2001). People in collectivist societies (e.g., South Korea) emphasize relationship harmony, put high value on face and avoid conicts (e.g., Morris and Leung, 2000). Conversely, subjective well-being is the main driver in individualistic cultures, including the US (Brockner et al., 2000). Given these fundamental differences in core values of the society, it is not surprising that peoples perceptions of fairness are culturally dependent (e.g., Leung, 1997; Hui and Au, 2001). Prior research in organizational justice shows that Western people tend to prefer the equity rule whereas Asian cultures emphasize group harmony (Kim et al., 1998; Steiner and Gilliland, 2001; Miles and Greenberg, 1993). Consequently, the notion of getting what I deserve is likely to t the mentality of highly individualistic Western customers. Translated into our context, we suggest that American consumers will prefer a price that is equitable (i.e., the same as last time or the same as received by someone else) over a price that is perceived as inequitable (better or worse). We extend these arguments to another outcome variable, that is, satisfaction with the reservation process. Due to their individualistic orientation (e.g., Hofstede, 1991), American consumers are likely to prefer an equitable outcome to positive or negative inequity (i.e. better price than last time or better price than someone else). Previous research in a Western context shows that receiving better outcomes than others induces feelings of guilt, thus reducing satisfaction (Van Den Bos et al., 1998). Conversely, the more group-oriented thinking common among East-Asian cultures should make them immune to our outcome manipulation (Triandis, 1995). Consequently, we propose the following: H1(a). American consumers will give higher fairness ratings to an equitable outcome compared to better or worse outcomes whereas no differences across outcome condition are expected among Korean consumers. H1(b). American consumers will be more satised with equitable outcomes than their Korean counterparts.

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Previous hospitality research has demonstrated that customer expectations differ between Asian and Western consumers, thus inuencing their satisfaction with hotel services (Armstrong et al., 1997; Mattila, 2000, Heo et al., 2004). In this paper, we argue that Korean consumers are prone to value pre-purchase information more than their American counterparts. In collectivist societies such as Korea, people tend to feel threatened by ambiguous situations (Hofstede and Geert, 1991). In individualistic societies, on the other hand, uncertainty exploration is highly valued (Triandis, 1995). In a consumer context, one way to reduce uncertainty is to search for information prior to purchase (e.g., Shimp and Bearden, 1982; Bao et al., 2003). Consequently, providing information on the hotels pricing policies should reduce ambiguity among Korean travelers, thus leading to enhanced satisfaction. The value of such information should be less among US consumers who are less threatened by uncertainty. As a result, we propose the following: H2. Koreans will be more satised with the reservation process when information on the hotels pricing policies is offered as opposed to a no information situation. Conversely, Americans are expected to be unaffected by such information.

3. Methodology A 2 (culture: American and Korean) 3 (Outcome: better/same/worse) 2 (information present/absent) quasi-experimental, between-subjects design was used to test our predictions. The subject pool was composed of travelers waiting for their planes at an airport in Washington, DC and in Seoul, Korea. Because knowledge of hotels pricing policies might intervene with respondents reactions, subjects selfdeclared knowledge was run as a covariate in the ANOVA analysis. The survey instrument was translated into Korean by a bilingual research assistant. In the outcome condition, customers price perceptions were manipulated by quoting a price that was better, same or worse than either the price they paid during their last visit to the hotel or price that was given to another guest. The three levels of outcome were crossed with two levels of information on the hotels pricing policy. Half of the scenarios included a detailed explanation for uctuations in room rates based on the time of reservation, day of week and seasonality while the other half had no information on the hotels pricing policy. Subjects were randomly assigned to one of the six experimental conditions. Perceived fairness was measured via a three item scale tapping into fairness with the reservation process, price and pricing policies, Cronbach alpha .92. A twoitem, seven-point Likert scale was used to capture satisfaction with the reservation process, Pearson correlation coefcient of .64. 3.1. Respondent prole A total of 289 American travelers and 302 South Korean travelers were recruited to participate. Sixty three percent of the total participants were male. In terms of age,

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26% belonged to the 1827 group, 31% were between 2838, 36% were between 3956 and 7% were over 57 yr of age. Overall, the respondents seem to be frequent users of hotels. Forty three percent of the participants indicated that they had stayed at a hotel over six times for business purposes during the past 12 months. The corresponding gure was slightly lower for leisure travel; 39% of the respondents had stayed at a hotel over six times.

4. Results The cell means by dependent variable and by experimental condition are shown in Table 1. The ANCOVA results for fairness indicate a signicant two-way interaction between outcome and culture, F 8:2; po:001: See Fig. 1. US consumers gave signicantly higher fairness ratings in the equitable outcome condition than in either better or worse outcome situation, M 4:78; 3:90 and 3:08 respectively. As expected, the planned contrasts between same and inequitable outcomes were signicant for the US sample, t 9:53 and t 4:87 for worse vs. same and better vs. same, respectively, po:05 for both. Conversely, Koreans were less inuenced by the outcome, M 3:17; 3:02 and 2:57; and for same, better and worse, respectively. The mean ratings between same and better conditions were not statistically different in the Korean sample. Overall, these ndings are congruent with H1(a). In addition, the information main effect was statistically signicant, F 33:42; po:001: Providing information on the hotels pricing policy had a positive impact on customers fairness perceptions, M 3:11 without information and M 3:77 with information. When satisfaction with the reservation process served as a dependent variable, all three interaction effects were signicant, outcome by culture, F 8:11; po:001; information by culture, F 5:92; po:05 and outcome by information, F 3:71; po:05: These interactions are shown in Figs. 24.

Table 1 Mean fairness, satisfaction and surprise scores by experimental condition Fairness US No info Worse Same Better With info Worse Same Better Korea Satisfaction US Korea

2.71 (1.11) 4.65 (1.04) 3.58 (1.35) 3.44 (1.48) 4.91 (1.19) 4.13 (1.32)

1.95 (1.08) 2.79 (1.59) 2.70 (1.51) 3.17 (1.61) 3.54 (1.26) 3.32 (1.63)

2.86 (.99) 4.84 (1.20) 4.28 (1.38) 3.30 (1.40) 5.09 (1.10) 4.34 (1.37)

2.11 (1.18) 3.34 (1.71) 3.14 (1.59) 3.80 (2.65) 3.80 (1.43) 3.65 (1.72)

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Estimated Marginal Means of FAIRNESS 5.0 Estimated Marginal Means 4.5 4.0 3.5 3.0 2.5 2.0 Worse

Culture
US Korea

Same OUTCOME

Better

Fig. 1. Culture by outcome interaction on fairness.

Estimated Marginal Means of Satisfaction 5.5 Estimated Marginal Means 5.0 4.5 4.0 3.5 Culture 3.0 2.5 Worse
US Korea

Same OUTCOME

Better

Fig. 2. Culture by outcome interaction with satisfaction.

As shown in Fig. 2, American consumers were more satised with the reservation process when the price quoted was the same as last time or equal to someones elses price, M 4:97; 3:08 and 4:33 with same, worse and better outcomes. As with fairness perceptions, the planned contrasts were signicant, t 10:47 and 3:61 for same vs. worse and same vs. better, respectively, po:001 for both. This inverted Ushape was not observed for Korean consumers who remained relatively dissatised with the process regardless of the outcome, M 3:56; 2:97; and 3:40 with same, worse and better outcome, respectively. Again, the comparison between same and better conditions was insignicant in the Korean sample. The planned contrast

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4.4 Estimated Marginal Means 4.2 4.0 3.8 3.6 3.4 3.2 3.0 2.8

Estimated Marginal Means of Satisfaction

Culture
US Korea

2.6 No Information

With Information

Fig. 3. Culture by information interaction on satisfaction.

5.0 Estimated Marginal Means 4.5 4.0 3.5 3.0 2.5

Estimated Marginal Means of Satisfaction

INFO
No Information With Information

2.0 Worse

Same OUTCOME

Better

Fig. 4. Information by outcome interaction on satisfaction.

between Korean and US consumers in the same outcome condition was signicant, t 7:1; po:001: These results provide support for H1(b). An investigation of the cell means indicates that providing information on the hotels pricing policy had a positive impact on Korean consumers satisfaction with the reservation process, M 2:86 without information and M 3:75 with information. Please refer to Fig. 3. Conversely, American consumers satisfaction levels were relatively unaffected by the information availability manipulation, M 4:00 without information and M 4:26 with information. These results support H2. Finally, our results suggest that the positive impact of information is most applicable to the worse outcome condition. As shown in Fig. 4, the combined means indicate that satisfaction with the reservation process went up from 2.48 to 3.55 when information was offered at the time of reservation.

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5. Discussion and managerial implications This research adds to our understanding of cross-cultural inuences on customer perceptions of fairness and satisfaction with hotel reservation processes. In this study, American consumers preferred equitable outcomes in pricing to either better or worse outcomes. This inverted U-relationship was observed for both overall fairness and satisfaction with the reservation process. Korean consumers, on the other hand, gave relatively low fairness and satisfaction ratings regardless of the outcome. Several cultural differences might enable us to understand these results. First, due to their individualistic orientation, American consumers tend to prefer equitable outcomes to conditions of either positive or negative inequity (better or worse outcome). Although getting a better deal than someone else might at rst glance produce positive reactions, such as inequitable outcomes can easily lead to feelings of guilt among Westerners (Van Den Bos et al., 1998). Group harmony rather than individual gains is the salient force in many Asian societies. Consequently, outcomes that enhance perceptions of equity at an individual level might not lead to favorable evaluations. Accordingly, it is not surprising that Koreans in this study failed to react to our outcome manipulations. Second, Korea ranks high in uncertainty avoidance (Hofstede, 1991). This strong uncertainty avoidance might explain why Korean consumers would prefer information on the hotels pricing policies. Hence, it is not surprising that offering information on the hotels pricing policy had a positive effect on Korean consumers satisfaction level while American travelers were relatively unaffected by such information. Taken together these results suggest that informing the guest about differential pricing policies is highly effective in the Korean context. Reservation agents interacting with Korean consumers should thus be trained to offer information regarding the hotels pricing policies. Finally, US consumers have been exposed to differential pricing practices for a relatively long time while revenue management is a more recent phenomenon in other parts of the world. As a result, US consumers are likely to be less inuenced by information explaining price uctuations. 5.1. Limitations As with any single piece of research, the ndings of this study should be interpreted with caution for several reasons. First, our stimuli involved written, hypothetical scenarios. Consequently, the nuances in communication style were ignored. Real-life interactions with a reservation agent might enhance the power of pricing information, in particular with East-Asian customers. Second, the sampling procedure limits the generalizability of the results. Data came from two samples (US and South Korea), and hence, replications across other cultural groups will be needed. References
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