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ABSTRACT
How do consumers cope with the decisions they must make, some of which involve
difficult tradeoffs? In general, it has been argued that the decision making process
significantly depends on the value perceptions that results from the cognitive tradeoff
between perception of quality and sacrifice. Perceived sacrifice is defined as: consumer’s
perceptions of the degree of pain originated to acquire the product from the amount of
money paid, and the time and labor spent. In this study, a measurement system for
perceived sacrifice and its components is developed for electronic product class. A total of
five items were generated. The scale met standards for the measurement of reliability and
validity. Confirmatory factor analysis was performed to assess the validity whether the scale
INTRODUCTION
It has been argued that perception of value results from the cognitive tradeoff
between perceptions of quality and sacrifice. Cox (1962) was one of the first
value and confidence value. Predictive value reflected the probability that the cue was
associated with an attribute of the product. Confidence value reflected the certainty
that the consumer felt about his ability to interpret and use that cue. Since then,
2
several researchers have tested models of consumers’ perceptions of value with regard
to using several different types of cues. In the past couple of decades a large number of
articles, perhaps more than any other cues, conveyed evidence of price as the indicator
of quality and perception of value (Curry and Riesz 1988; Dodds and Monroe 1985;
Grewal et al. 1998; Monroe and Krishnan 1985; Monroe 1976; Shimp and Bearden 1982;
Szylillo and Jacoby 1974; Wheatley and Chiu 1977). It has been argued that price is
what is given up or sacrificed to obtain a product.1 The role of price has been studied in
skimming with other different perspectives. However, recent price models acknowledge
that monetary price is not the only sacrifice made by consumers to acquire a product 2 .
Time costs, search costs, and physic costs all enter either explicitly or implicitly into the
pivotal: some buyers will invest hours traveling to different stores to obtain the best
bargains. To these consumers, anything that reduces the monetary sacrifice will
increase the perceived value of the product. Less price-conscious consumers will find
value even at the expense of higher costs because time and effort are perceived as
more costly. Many consumers, especially working people in the first world, consider
time an important commodity (Aoki 1994; Bearden and Shimp 1982; Dodds, Monroe,
and Grewal 1991; Zeithaml 1988). Therefore, monetary sacrifice is not the only
to acquire a product.
How do consumers cope with the decisions they must make, some of which
choice has argued that rational choice theory3 is incomplete and/or flawed as an
approach for understanding how consumers actually make decisions (Bettman, Luce,
3
and Payne 1998). The sequential model, as described by Peter and Olson (1993), shows
purchase occurs when consumers come into contact with information about products,
talking to sales persons and friends. Thus, consumers’ start sacrificing when they start
suitable store, getting contact with products, acquire the product in exchange of
money, and last of all make the consumption. Here, it seems that the stage “acquiring
the product in exchange of money” directly related to the sacrifice that consumers
make in a purchase. But, a careful look on all the stages reveals that other stages also
require time and energy. These are also the sacrifice that consumers are employing in
order to obtain a product. Previous studies only have considered perceived sacrifice in
long as the sacrifice is concerned, research should incorporate sacrifices made with
regard to time, effort and search in addition to price consumers employ in a deal. Thus,
perceived sacrifice based on the above discussion is defined in this study as:
Consumer’s perception of the degree of pain originated to acquire the product from the
BACKGROUND
study and other conceptual work from the literature. She argued that there is a
remarkable gap between actual price and perceived price, making it important to
4
time and effort- must be acknowledged. Anything that can be built into products to
reduce time, effort, and search costs can reduce perceived sacrifice and thereby
parts. First, propositions are developed on the basis of the qualitative data from an
exploratory study and other conceptual work from the literature. Second, for each
proposition, empirical evidence that supports and reflects the proposition is reviewed.
Dodds, Monroe, and Grewal (1991) proposed a model in which they afford that
(a) perceived quality and perceived sacrifice are the antecedents of perceived value,
i.e., consumers’ perceptions of value are based on a trade-off between product quality
and monetary sacrifice; and, (b) brand name, store name, and price are the
of product quality and monetary sacrifice can be based on extrinsic cues, such as price,
brand, and store name. Dodds et al. tested direct and indirect relationships between
three extrinsic product cues and two evaluative variables suggesting that price, brand
name, and store name are associated with quality and value perceptions. The design of
the experiment allowed analysis of the relative differential impacts of price, brand
name, and store name on the three dependent variables. They found that when price
was the only extrinsic cue available, the subjects clearly perceived quality to be related
positively to price. When other extrinsic information was present, the results were less
persuasive. Finally, they argued and presented the conceptual basis for: (1) isolating
the theoretical reasons for when buyers use price, brand, store, or intrinsic product
value perceptions, purchase intentions, and product choice, and (3) how monetary and
and choice.
Teas and Agarwal (2000) tested a model in which perceived quality and
perceived sacrifice mediate linkages between (a) brand name, store name, and price
and (b) consumers’ perceptions of value. They used two 5-point items (strongly
(1) If I purchased the (watch/calculator) for the indicated price, I would not be able to
purchase some other products I would like to purchase now; and (2) If I purchased the
(watch/calculator) for the indicated price, I would have to reduce the amount of money I
spend on other thinks for a while. Teas and Agarwal (2000) extended the Dodds et al.
(1991) study by examining linkages specified but not tested in the Dodds et al (1991)
study (i.e., linkages involving perceived sacrifice) and by examining the degree to
which perceived quality and sacrifice mediate the relationships between the extrinsic
cues and perceived value. In their model, country name was specified as an extrinsic
cue and as a moderator variable. Their empirical results demonstrate that price, brand
name, and store name are associated with quality and value perceptions. Their study
results revealed that price continues to be a significant quality cue in the presence of
other extrinsic quality cues. The country of origin cue was found to have a significant
main effect on the perceived quality but failed to find support on effects of country of
conceptual studies, two dimensions of perceived sacrifice can be offered (see Table 1).
6
THE PROBLEM
constructs on the basis of the conceptual work and qualitative data from an explorative
study. Primarily, she obtained evidence from the past research and then made
and in-depth consumer interviews. The questions pertained to issues such as company
knowledge about quality and value perceptions of consumers, ways the company
determined those perceptions, and how quality and value were communicated to
consumers. Although the model developed our knowledge about producers’ value
judgment and consumers’ value perceptions, still the study contains certain caveats
the relationship between give and get components of the model. Moreover, her
exploratory study results merely confirm the causal relationships, determinants and
describing their model they argued that price can be an indicator of the amount of
value but surprisingly neither they included non-monetary sacrifice in their model nor
The only study in this sphere that operationalized perceived sacrifice in the
experiment is the article by Teas and Agarwal (2000). The concept of sacrifice was
they measured perceived sacrifice from a budget constraint perspective. This measure
allowed them to assess the possibility that the perception of sacrifice will vary
depending on an individual’s financial situation. Thus, they used two items to tap the
study are quite insightful, they also did not consider all facets of this construct.
Therefore, to date, no study has appeared that test and validate an all-
inclusive theory of perceived sacrifice construct. To test the adequacy of the theory and
METHODOLOGY
Measures with regard to monetary sacrifice of this study will be the same as
measure scales used in the research by Teas and Agarwal (2000). Sacrifice, other than
monetary those are related to time and effort will be constructed for this study (see
Table 2). The test was performed with a total of 103 students from the Faculty of
Business Administration at YNU with a prior permission of the Professor. Data collected
on three products, computer, TV, and camera because of their familiarity to student
products, students were first asked if they ever bought products from that category. All
the students received questionnaire but who did not have experience of buying the
product were requested to refrain from answering. Respondents were then instructed to
express their perception of sacrifice. The questionnaire took about 5 minutes to answer.
Two third of the total sample was males and one third was females. Around 11% of the
likely to have been exposed to the concepts considered in this study. The probability
that the students could have anticipated hypothesis being tested, conceivably
producing biased results for the study. To confirm that such bias did not occur, an
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ANOVA was conducted in which responses of all business majors were compared to the
neither of the mean differences was deemed large enough to produce any bias in the
overall results of the study. Henceforth, it was concluded that no bias was introduced
the study were developed considering the theoretical explanations provided by Abe
(1987, 1993). Procedurally, reliability of the scales was assessed first and when the
reliability of the measures had been established, a structural model was tested. In
A total of five items were generated. First two of these questions about
monetary sacrifice were borrowed from the article of Teas and Agarwal (2000) and the
rest about non-monetary sacrifice were constructed for this study. Because perceived
reliability was first checked for each dimension. Alpha values were .7870 for monetary
sacrifice items, .8903 for non-monetary items, and .7803 when all the items were
As can be seen in the Table that the alpha values indicate good internal
consistency among items within each dimension (Cronbach 1951). Furthermore, the
combined reliability for the 5-item scale was quite high8 . Therefore, the 5-item scale
single summated scale will show whether all items within the summated scale load on
the same construct, or whether the summated scale actually measures more than one
dimensions, as well as suggesting items for deletion and places where items should be
added. A factor analysis using the principal component method can be used to identify
and measure the intensity of the common element. The researcher can specify both the
number of dimensions in the construct and the specific items or scales that are
with clear factor patterns. All the items for the same dimension loaded high on the
scores on a test instrument (predictor) and an objective outcome (the criterion). The
is the correlation between predictor and criterion scores. An item was constructed
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served as criterion variable. The item was used to check criterion-related validity by
correlating average scores of all the perceived sacrifice measure items with scores for
Zeichkowsky 1985). Correlation between average scores of all the items and perceived
overall sacrifice was .79 (significant at the 0.01 level). A reasonably high value of the
correlation between average scores of all the items and perceived overall sacrifice
performed with ratings of the overall sacrifice measure as treatment variable and the
average values of the 5-items as the dependent variable. More specifically, the
overall perceived sacrifice to buy the product. Respondents rated overall perceived
sacrifice by checking one of seven categories – “extremely likely to-----not likely at all”.
Duncan’s Multiple Range Test revealed differences between groups although all the
groups were not significantly different from each other. Each mean was different from
those of the others (see Table 5). This confirms the convergent validity of the items was
particular construct or trait should be measurable by at least two, and preferably more,
different methods. Otherwise the researcher has no way of knowing whether the trait is
anything but an artifact of the measurement procedure (pp. 70).” The results of any
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single analysis are always less than perfectly dependable. The problem is especially
pernicious because the results of a single factor analysis usually look plausible. But
plausibility is no guarantee of validity or even stability (Wells and Sheth 1971). Thus,
Confirmatory Factor Analysis using Amos 4.0 was performed to determine the construct
validity (see Figure 1). If the five-items included in the instrument measure the two
distinct dimensions identified in the previous sections, then the survey data should
The two dimensions identified in Figure 1 are not directly observable; they are
theoretical constructs called common factors. The model supposes the first two items
(Item 1 and Item 2) depend on the unobserved variable called monetary sacrifice. In
addition, the rest of the items (Item 3, Item 4, and Item 5) depend on the other variable
called non-monetary sacrifice. Err 1 through Err 5 are unique factors those represent
any and all influences on the variables that are not shown elsewhere in the path
diagram. The path coefficients leading from the common factors to the observed
variables are often called factor loadings. In the confirmatory factor analysis, the fit of
If the data fit the model, confirmatory factor analysis can supply estimates of the factor
loadings, the correlations among the factors, and the variances of the observed items.
proposed models. It is computed under the null hypothesis that the observed
covariances among the answers came from a population that fits the model. A
statistically significant value in the goodness-of-fit test would suggest that the data do
As the Chi-square value (7.125, p = .129) shown at the upper right corner of
the figure, the model fits the data reasonably well. The squared multiple correlations
can be interpreted based on the variance explained with regard to the specific items.
Bagozzi and Yi (1988) suggest that variance extracted should be greater than or equal
to .50. 70%, 61%, 57%, 77%, and 89% of the variance of the items respectively are
accounted for by the variance in the common factors (Monetary and Non-monetary).
The remaining percentage of the variance cannot be explained by this model and are
attributed to the unique factors (Err 1 through Err 5). In this model, Item 2 and Item 3
reliability (Anderson 1987). However, Factor weights (.84, .78, .76, .88, and .95) of all
because of its indistinct characteristics. Sometimes we wish to go for having our dinner
to a distant place but sometimes not, sometimes we spend 2000 yen for our dinner but
sometimes that seems very costly. The purpose of this study was to clarify perceived
sacrifice based on its monetary and non-monetary dimensions and to create a reliable
and valid measure for the facets of perceived sacrifice. Scale items were developed
based on Teas and Agarwal (2000) and other literature. Internal scale reliability was
obtained to check the internal consistency of the items, Criterion-related validity of the
scale were checked to investigate the empirical relationship between the scores on the
predictor and the criterion and convergent validity to see the extent to which the score
converged with other methods designed to measure the same construct. Finally,
validity was assessed whether the scale is an appropriate operational definition of the
13
construct. From the data analysis, we conclude that the perceived sacrifice profile
Scale items those measured monetary sacrifice were borrowed from Teas and
Agarwal (2000) and the items those measured non-monetary sacrifice were constructed
based on published discussions of perceived sacrifice (Dodds et al. 1991; Monroe and
Chapman 1987; Teas and Agarwal 2000; Zeithaml 1988). Therefore, missing from the
scale development is the test of content validity. However, one of the purposes of this
study was to see empirically the construct that could lead to evolving knowledge and a
construct might be improved over time by further theory building and theory
verification. However, the findings are based on a limited set of brands and hence
important limitation lies on the student sample that has been used in this study. Some
scholars have generally cited threats to external validity as their primary concern,
arguing that students are atypical of the “general population”, and that any findings
However, some scholars disagree on this issue arguing that this situation is particularly
desirable when researchers are engaged in theory testing, or are testing specific
theoretical predictions (Oakes 1972). All that is required is that the sample be chosen to
allow a test of the theoretical predictions under consideration. Because the primary
focus of this study was a theory test and not effects generalization, considerations of
internal validity were paramount and a student sample was appropriate (Calder et al.
1982; Cook and Campbell 1975). Concerns about external validity were secondary.
and examine the construct validity based on the theory developed. In the current study,
two dimensions of perceived sacrifice have been considered and found significant
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categories.
15
Table 1
Table 2
Description of the Item Scale
Monetary Sacrifice:
Non-monetary Sacrifice:
beginning to learn about the product that would have to reduce my energy I
4.
the product at more than one store before the deal that would have to reduce
5.
If I purchased the product, I would have to search for the better product that
would have caused the reduction of my time I could use for other purposes.
Table 3
Corrected
Deleted
17
Table 4
n
Item 1 .126 .896 .819
Item 2 .107 .907 .834
The principal component factor analysis results show that all the 5 items loaded on 2 factors
Table 5
7.00 8 5.7000
Means for groups in homogeneous subsets are displayed. The group sizes are
unequal.
.
19
Figure 1
Standardized Estimates of
the Confirmatory Factor Analysis
.70
Monetary
Sacrifice .61
.78
Item2 Err 2
.26
.57
Item3 Err 3
.76
.77
Nonmenetary .88
Sacrifice Item4 Err 4
.95
.89
Item5 Err 5
a) Latent variables are circled and operationalizations of those latent variables are within rectangles.
NOTES
20
REFERENCES
Abe Shuzo (1987), “Construct Validity and LISREL,” in Marketing Theory and
Measurement, Okuda Kazuhiro and Abe Shuzo ed. Chuo Keizai Sha 27-46
Anderson, James C. (1987), “An Approach for Confirmatory Measurement and Structural
525-41
Bagozzi, Richard P. and Youjae Yi (1988), “On the Evaluation of Structural Equation
Bearden, William O. and Terence A. Shimp (1982), “The Use of Extrinsic Cues to
Bettman, James R., Mary F. Luce, and John W. Payne (1998), “Constructive Consumer
Calder, J. Bobby, Lynn W. Philips and Alice M. Tybout (1982), “The Concept of External
Cook, T. and D. Campbell (1975), “The Design and Conduct of Experiments and Quasi-
Cronbach, Lee J. (1951), “Coefficient Alpha and the Internal Structure of Tests,”
Curry, David J. and Peter C. Riesz (1988), “Prices and Price/Quality Relationships: A
Dodds, William B. and Kent B. Monroe (1985), “The Effect of Brand and Price
Research, 12, Elizabeth Hirschman and Morris Holbrook, eds. Provo, UT:
Dodds, William B., Kent B. Monroe, and Dhruv Grewal (1991), “Effects of Price, Brand,
Grewal, Dhruv, Kent B. Monroe, and R. Krishnan (1998), “The Effects of Price-
Jacoby, Jacob and Jerry C. Olson (1977), “Consumer Response to price: An Attitudinal
Yoram Wind and Marshall Greenberg, eds. Chicago, IL: American Marketing
Association, 73-86
Monroe, Kent B. (1976), “The Influence of Price Differences and Brand Familiarity on
Monroe, Kent B. and Joseph D. Chapman (1987), “Framing Effects on Buyers’ Subjective
Monroe, Kent B. and R. Krishnan (1985), “The Effect of Price on Subjective Product
22
Oakes, W. (1972), “External Validity and the Use of Real People as Subjects,” Americal
Peter J. Paul and Jerry C. Olson (1993), Consumer Behavior and Marketing Strategy, 3rd
Shimp, Terence A. and William O. Bearden (1982), “Warranty and Other Extrinsic Cue
(June): 38-46
Szylillo, George J. and Jacob Jacoby (1974), “Intrinsic versus Extrinsic Cues as
(1), 74-78
Teas, R. Kenneth and Sanjeev Agarwal (2000), “The Efeects of Extrinsic Product Cues on
Wheatley, John J. and John S. Y. Chiu (1977), “The Effects of Price, Store Image, and
Wells, William D. and Jagdish N. Sheth (1971), “Factor Analysis in Marketing Research,”
23
22
This paper was presented at the 23rd Japan Association for Consumer Studies (JACS) Conference,
Oct. 2001. The author would like to thank Professor Shuzo Abe for valuable comments on this
paper. However, all errors are the responsibility of the author.
1
) Price has both objective external properties and subjective internal representations that are
derived from the perceptions of price, thus resulting in some meaning to consumers (Jacoby and
Olson 1977)
2
) Convenience, freshness, and time are major higher-level abstractions that combine with price
and quality to produce value perceptions in supermarket consumers.
3
) Rational choice theory assumes that decision makers possess well-defined preferences that do
not depend on particular descriptions of the options or on the specific methods used to elicit
those preferences. Each option in a choice set is assumed to have a utility, or subjective value,
which depends on the option.
4
) Despite the consistency in the main focus of this definition with the previous literature, it
includes all the facets of the construct.
5
) Marketers are much better served with multidimensional with multi-item than unidimensional
and single item measures of their constructs, and they should take the time to develop them.
This is particularly true for those investigating behavioral relationships from a fundamental as
well as applied perspective, although it applies also to marketing practitioners (Churchill 1979).
6
) The book (written in Japanese) contains the procedures that should be followed in validating
constructs and testing construct validity using LISREL.
7
) The article is about methodological problems in cross-cultural consumer research (in Japanese).
8
) In the findings of a meta-analysis, Peterson (1994) mentioned, “Across 4286 alpha coefficients,
1030 samples, and 832 studies investigated, the mean coefficient alpha was .77. Seventy-five
percent of the observed alpha coefficients were .70 or grater.
9
) Confirmatory factor analysis is based on the correlation matrix when the data are standardized.