Perceived price and trustworthiness of online reviews: different levels of promotion and customer type

Abstract

Purpose Prior hospitality studies have reviewed review trustworthiness and perceived price as predictors of restaurant selection. However, the impacts of these two factors may vary by sales promotion and customer types. This study aims to determine whether sales promotions and customer type are the key elements that facilitate behavioral intentions by moderating the linkage between perceived price and behavioral intentions as well as the linkage between online review trustworthiness and behavioral intentions. Design/methodology/approach Analysis of the responses of 533 individuals familiar with the Michelin Guide for restaurants in Seoul provided evidence supporting a sales promotion theory wherein promotions signal benefits in consumers’ minds. Findings The findings show that when perceived price is positive and the trustworthiness of online reviews is high, repeat customers prefer mixed coupons to price discounts. Notably, the results indicate that when the trustworthiness of online reviews is high, first-time customers also prefer mixed coupons to price discounts. Furthermore, the findings suggest that negative evaluations of perceived price increase the impact of mixed coupons by signaling to first-time customers that given restaurants’ offerings provide monetary benefits regardless of their intentions to revisit said restaurants. Research limitations/implications The study findings provide insights that should help managers better understand various levels of promotion. Managers can design their pricing strategies to strengthen customers’ motivations to visit their restaurants – the very thing customers often seek in sales promotions. Originality/value This study provides indisputable evidence for a sales promotion theory, wherein promotions signal benefits in consumers’ minds; however, it also shows that first-time and repeat customers do not respond equally to sales promotions.