The Mediation Effects of Customer Satisfaction on the Relations Between Product Price, Service Quality and Purchasing Decision

Abstract

This research has two main objetives: (1) to examine the effect of price, service quality and costumer satisfaction on costumer’s purchasing decision, (2) to test the mediation effects of the costumer satisfaction on the relations between product price and service quality on purchasing decision. Data was collected from 82 insurance company’s costumers using questionnaire, and hypothesis was tested using Smart- PLS 3.0. The findings reveal that (1) price, service quality and costumer satisfaction have direct and significant effect on costumer purchasing decision, (2) costumer satisfaction has an indirect and significant effect on the relationship between service quality and costumer’s purchasing decision, and (3) costumer satisfaction has no significant effect on the relationship between product price and costumer’s purchasing decision. The study enriches the existing empirical studies on product price, service quality, costumer satisfaction and purchasing decision in emerging market. The study also provides practical implications to service industry managers to enhance costumer satisfaction and purchasing decision, ultimately increasing market share and organisation profits by considering service quality and product price.