The moderating role of subjective norms and self-congruence in customer purchase intentions in the LCC market: Do not tell me I am cheap

Abstract

Low-cost carriers (LCCs) have matured and influenced the global airline industry with their low fares. Because competitors can easily match prices, however, LCCs find it more challenging to hold on to their market position with this competitive edge. Whereas the low price is an important factor driving sales, it might communicate inferior service quality to customers and limit potential sales increases, particularly under severe market competition. Therefore, this study investigates the factors that moderate the perception of LCCs' services under the low-price condition to avoid this dilemma. We examine two perception-related variables, subjective norms and self-congruence, as moderators of the relationship between customers' purchase intention and service offerings. We find that these moderators negatively influence the positive relationship between purchase intention and service offerings, such as SERVQUAL (service quality) and customized service. This finding suggests that low prices form an unfavorable perception, such as being “cheap,” which in turn limits or negatively affects customers' purchase intention. Therefore, LCCs are recommended to target the right customers, establish appropriate custom-brand identification, and appeal the functional value of the services that they provide. This will help them to turn customers' attention from the price to other service dimensions.