THE SIGNIFICANT RELATIONSHIP OF CONSUMER’S ATTITUDE AND PRICE

INFLATION IN DAVAO CITY

Martini Espinosa

Jea Anne Cahagnaan

Hannah Cheryl Orbeta

INTRODUCTION

Food Inflation is very rampant in our country nowadays and we can’t deny the

fact that Food price Inflation is really affecting the Customer’s attitude. We researchers

wanted to study this kind of phenomenon for us to know how to solve this specific

problem.

Food prices frequently arouse consumers’ attention. Increase in food prices

usually generates a public debate on consumers’ resistance to high food prices, the

demand for low-priced food, or the unfairness of premium pricing, and attitudinal

evaluations related to these factors are usually included. According to neoclassical

economic theory consumers are willing to make rational choices and maximize utility by

looking for the lowest acceptable price. However, some consumers seem to make

irrational choices preferring high-priced products to ones with a lower price (Thaler

1985), or perhaps may even refuse the deal totally if the price is perceived as unfair

(Kahneman et al. 1986). Understanding the consumers’ subjective price evaluations is

challenging.
 Consumers’ ability to search for price information and to remember earlier

prices has been a matter of academic theoretical investigation. In several decades.

Consumers’ price knowledge seems to be quite limited especially with low-involved

products such as foods (see Monroe 1973; Rao and Monroe, 1988; Monroe and Lee,

1999). Similarly, for several decades marketers and marketing researchers have been

trying to understand consumers’ price evaluations in order to predict consumers’ buying

behaviour more accurately. Therefore, consumers’ acceptance of prices is an important

issue to consider in competitive pricing strategies. However, in Finland, using price as a

competitive attribute in food markets became relevant as recently as 1988 when a

general price control was abandoned and food was allowed to have price alterations

(Reimavuo 2003, 56).

Inflation deteriorates living standard but not for all, yet, it blesses too, e.g.

debtors, and is a contributing factor of motivation to earn more and more to cope

with the phenomenon. In Pakistan, inflation particularly food inflation reducing the

economic capabilities of people and they are rapidly falling into the ditch of poverty.

Chani, I.Muhammad et. Al. (2011) argued that the inflation and trade openness

have caused an increase in poverty in Pakistan. With the passage of time

increasing inflation became one of the major influential problems of Pakistan. In such

days of inflation the poor thinks it better to die than to live in such schizophrenic

situation emerged among regular people. Multan, being a city of Pakistan, is not

exceptional. .
According Fuji 2013. They simulate the impact of food inflation between June 2006 and

June 2008 on poverty across different areas and between agricultural and non-

agricultural households. We explicitly treat the spatial heterogeneity in food inflation and

the differences in consumption and production patterns across households by merging

household expenditure survey and price datasets at the provincial level or lower.

Although some of the poor agricultural households may have escaped poverty, the

poorest of the poor, whether they are in an agricultural household or not, are severely

and adversely affected by the food inflation.

RESEARCH QUESTIONS

This study aims to know the perception of consumer towards price inflation and it's

positive and negative effect towards consumers attitude.

1. How do customers react to the food price inflation?

 Negative

 Positive

2. How do consumers percieve in

 Expensiveness

 Cheapness

3. What is the significant relation between Consumer’s attitude and Price Inflation?
 Hypothesis

This study is guided by the null hypothesis tested at 0.05 level of significance

Ho1: There is no significant difference in the Level of Consumer’s Attitude and Price

Inflation in Davao City.

Ho2: There is no significant difference in the Level of Consumer's Attitude and Price

Inflation in Davao City.

Ho3: There is no significant relationship between Consumer’s Attitude and Price

Inflation in Davao City.

Ho4: There is no significant relationship between the indicators of Consumer’s Attitude

when correlated to the Price Inflation in Davao City.

Conceptual Framework

The study will be guided by the conceptual framework below:

Customer’s attitude Price inflation

 Negative •Expensiveness

 Positive •Cheapness

METHODOLOGY
RESEARCH DESIGN

Quantitative Research is a type of study that involves the process of analyzing

numerical data using statistical techniques. The researchers will use a descriptive-

correlational type of research. The descriptive method will be used to determine the

level of Consumer’s Attitude and Price Inflation .The Correlation method will determine

the significant relationship between the Consumers’ Attitude and Price Inflation in

Davao City.

RESEARCH RESPONDENTS

The respondents of this study will take a sample of 10-20 consumers that

chosen through random sampling. The consumers will be from Davao City. An informed

will be included in the survey to protect their identity as respondents.

RESEARCH INSTRUMENT

The first instrument will make use of an adapted and modified questionnaire

from Thaler (1985) and Kahneman et al. (1986) to collect data from Consumer’s Attitude

and Price Inflation . The instrument undergone validity and reliability to ensure accuracy

of data for the results and discussion.

STATISTICAL TREATMENT
 This study will use the following statistical treatment:

Paired T-test will be used to determine the significant difference in the Consumer's

Attitude and Price Inflation

Pearson R Correlation will be used to determine the correlation between Consumer’s

Attitude and Price Inflation.

Two-way ANOVA will be used to determine which among the indicators of Consumer’s

Attitude significantly correlates to the Price Inflation.

 REFERENCES

Thaler, R. H. 1985. Mental accounting and consumer choice. Marketing Science,

4(3):199- 214.

Kahneman, D, Knetsch, J. L. & Thaler, R. H. 1986. Fairness and the assumptions of

economics. Journal of Business, 59(4):S285-S300.

Ollila, S, Tuomi-Nurmi,S. & Immonen, H. 2004. Suomalisten kulutajien halukkuus ostaa

terveysvaikutteisia elintarvikeitta. VTT Research notes 2241 (In finish, abstract in

English). Espoo

Monroe, K. B. 1973. Buyers’ subjective perceptions of price. Journal of Marketing

Research, 10(February):70-80.

Reimavuo, S. 2003. Competition acts as the engine for regulation reform in Finland. In

publication: Finnish Competition Authority, Yearbook 2003. Helsinki. 55-60.

Fujii, T. (2013). Impact of food inflation on poverty in the Philippines. Food policy, 39,

13-27.

Fredrickson, B. L. (2001). The role of positive emotions in positive psychology: The

broaden-and-build theory of positive emotions. American psychologist, 56(3), 218.

Sinha, I., & Batra, R. (1999). The effect of consumer price consciousness on private

label purchase. International journal of research in marketing, 16(3), 237-251.

 Item Statement
NEGATIVE
I feel annoyed when price increasing.
I always feel conscious about the price.
Reference / RRL
moments in which they are plagued
by negative emotions—such as
anxiety, sadness, anger, and despair.

Prices are sometimes unfair. Fredrickson, B. L. (2001). The role of

positive emotions in positive
price increases have led consumer's feel anxious. psychology: The broaden-and-build
theory of positive emotions.
I think the increases of demand can affect the prices. American psychologist, 56(3), 218.

POSITIVE
I am okay with the prices.
I feel so excited when there is a promo.
I disregard the prices as long as it has good quality.
I understand the reason why price suddenly increase.
I am happy when price increase.
EXPENSIVENESS
Expensive price yet satisfying.
I always look for a nice product though prices are
expensive.
Price define how good the product is.
I feel that it is right in increasing the price.
Positive emotions serve as markers
of flourishing, or optimal well-being.
Certainly moments in people's lives
characterized by experiences of
positive emotions—such as joy,
interest, contentment, love, and etc.
Fredrickson, B. L. (2001). The role of
positive emotions in positive
psychology: The broaden-and-build
theory of positive emotions.
American psychologist, 56(3), 218.
The degree to which a higher price
implies higher
quality, and how this diagnosticity
varies across
contexts, has been a topic of
considerable research in
marketing

Sinha, I., & Batra, R. (1999). The

I always look how expensive the price is before I buy.
effect of consumer price
consciousness on private label
purchase. International journal of
research in marketing, 16(3), 237-
251.
CONSUMERS ATTITUDE ITEM INVENTORY FOR QUESTIONNAIRE

CONSUMER’S ATTITUDE ITEM INVENTORY FOR QUESTIONNAIRE

 Name: _________________ (Optional)

Age: ______

Directions: Please read each statement carefully and decide if you ever feel this way
about your job and the company itself. Kindly tick (/) the appropriate response based on
your perception or view of the statements below.

5 – ALWAYS 4 – OFTEN 3 – SOMETIMES 2 – RARELY 1 – ALMOST

NEVER

STATEMENT 5 4 3 2 1
1. I feel annoyed when price is increasing.
2. I feel conscious about the price.
3. Prices are sometimes unfair.
4. Price increase have led Consumers feel anxious.
5. I think increasing of demands can affect the prices.
6. I am okay with the prices.
7. I feel so excited when there is a promo.
8. I disregard prices as long as it has good quality.
9. I understand the reason why price sudenly increase.
10. I am happy when price increase.
11. Expensive price yet satisfying.
12. I always look for nice product though price are expensive.
13. Price define how good the product is.
14. I feel that it is right in increasing the price.
15. I always look how expensive the price is before I buy.

SCALING AND DESCRIPTIVE INTERPRETATTION

CONSUMER’S ATTITUDE
Range of Descriptio Interpretation
Mean n
4.21 - 5.00 Always This means that the consumer is Highly Relate with the
statement.
3.41 - 4.20 Often This means that the consumer is Moderately Relate with
the statement.
2.61 - 3.40 Sometimes This means that consumer is Neutrally Relate with the
statement.
1.81 - 2.60 Rarely This means that the consumer is Moderately Relate with
the statement.
1.00 - 1.80 Almost This means that the employee is Strongly can’t Relate
Never with the statement.

PRICE INFLATION

Range of Descriptio Interpretation

Mean n
4.21 - 5.00 Always This means that the consumer is Highly Agree with the
statement.
3.41 - 4.20 Often This means that the consumer is Moderately Agree with
the statement.
2.61 - 3.40 This means that the consumer is Neither Agree Nor
Sometimes
Disagree with the statement.
1.81 - 2.60 Rarely This means that the consumer is Moderately Not Agree
with the statement.
1.00 - 1.80 Almost This means that the consumer is Never Agree with the
Never statement.

PROFILE DISTRIBUTION OF THE RESPONDENTS

Group f %
18-20 15 27.27
21-25 13 23.64
Age 26-30 12 21.82
30 above 15 27.27
n= 55 100.00
Entry Level 30 54.55
Supervisor 20 36.36
Position
Managerial 5 9.09
n= 55 100.00
6 mons - 1 yr 35 63.64
1.5 yr - 2 yr 10 18.18
Yrs of Service
2.5 yr above 10 18.18
n= 55 100.00