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Consumer reaction to price increase: an investigation in gasoline industry

Audhesh K. Paswan (Department of Marketing and Logistics, College of Business Administration, University of North Texas, Denton, Texas, USA)
John C. Crawford (Department of Marketing and Logistics, College of Business Administration, University of North Texas, Denton, Texas, USA)
Waros Ngamsiriudom (Department of Marketing and Logistics, College of Business Administration, University of North Texas, Denton, Texas, USA)
Thuy Nguyen (Department of Marketing and Logistics, College of Business Administration, University of North Texas, Denton, Texas, USA)

Journal of Product & Brand Management

ISSN: 1061-0421

Article publication date: 13 May 2014

Abstract

Purpose

The aim of this study is to investigate the impact of increase in price of an essential product (i.e. gasoline) toward the focal product and other seemingly non-related products.

Design/methodology/approach

A self-administered survey was used to collect data from the drivers at a large metroplex in Southwest USA. Multiple regression and scanning electron microscope procedures were used to analyze and test the proposed hypotheses.

Findings

When consumers notice the increase in gas prices, they become very anxious. This anxiety is positively associated with average gas bought in gallons and negatively associated with threshold price. Further, this consumer anxiety has the strongest influence on lifestyle changes, followed by automobile technology change and transportation mode change, and has the weakest influence on gasoline brand/type change.

Research limitations/implications

We focus on only anxiety as a mediator between increase in gas prices and the behavioral outcomes, and collect data from only one location.

Practical implications

Managers must be cognizant that a price increase in essential goods not only influences the demand for focal products but also for products that may not seem related to the focal products.

Social implications

Increase in gasoline price will not only affect the demand for gasoline, but also the demand for alternate forms of transportation, fuel efficient vehicles, and other aspects of life.

Originality/value

This study is the first to look at the role of anxiety as a mediator and looks at the effects of increase in gas prices in a holistic manner.

Keywords

Citation

K. Paswan, A., C. Crawford, J., Ngamsiriudom, W. and Nguyen, T. (2014), "Consumer reaction to price increase: an investigation in gasoline industry", Journal of Product & Brand Management, Vol. 23 No. 3, pp. 220-229. https://doi.org/10.1108/JPBM-09-2013-0377

Publisher

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Emerald Group Publishing Limited

Copyright © 2014, Emerald Group Publishing Limited