Pacific B usiness R eview I nternational

A Refereed Monthly International Journal of Management Indexed With Web of Science(ESCI)
ISSN: 0974-438X
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RNI No.:RAJENG/2016/70346
Postal Reg. No.: RJ/UD/29-136/2017-2019
Editorial Board

Prof. Mahima Birla
(Editor in Chief)

Dr. Khushbu Agarwal
(Editor)

Dr. Asha Galundia
(Circulation Manager)

Editorial Team

A Refereed Monthly International Journal of Management

       A Study of Price Perception with Respect to Buying Through Food Delivery App

 

 

Satnam Kaur Ubeja

Assistant Professor (Senior Grade)

Prestige Institute of Management and Research,

Indore MP

Anukool Manish Hyde

Professor

Prestige Institute of Management and Research,

Indore MP

 

ArpitLoya

Assistant Professor

Prestige Institute of Management and Research,

Indore MP

 

Edwin  Antony

Alumni

Prestige Institute of Management and Research,

Indore MP

 

 

Abstract

Internet has amplified the e-commerce industry not only in India but across the globe. People get food at their door step by making orders online with the help of development of E-commerce Sector. Customers can place order for themselves and for others also with the help of food delivery app which is very convenient for customers to get food/snack in few minutes and sellers can get their product sold easily. Food apps have made our lives little simper as one can order food as per our choice from any of the hotels/restaurants when we do not feel like eating home cooked food. Marketers have created so many attractions for the customers to order the food from online and celebrate the life; as people are more dependent on online food apps while ordering the food.  They have different perception towards these online app services, especially with respect to pricing.  Ordering food from online apps is now a -days very common process in urban areas for youngsters. Ordering food is status symbol for the youngsters but at the same time they want to gain more advantages of pricing promotions.   This study has attempted to see the price perception of consumers of Indore (Madhya Pradesh) towards online food ordering services. The study would be helpful for marketers, whether customers’ thinking of price perception is match with marketers’ approach or not.

Keywords:  Price Perception, Value, Food Delivery, Purchase decision, changing lifestyle, online food apps.

 

Introduction

Technology has created a boom everywhere and it has given a platform to the businesses for their growth and success in every manner (Rathore Suryadev Singh and Chaudhary Mahik, 2018). Electronic information system (EIS) has given wider aspects to the business man especially in the form of smart phones. EIS has given a common platform of various dimensions to all the business’, to develop new ideas and grow in the market (Rathore Priyadharshini, 2017). With the help of EIS now logistics, supply chain management, customer relationship, and fast digital payments are possible and every developing countries are also growing (Tribhuvan, 2020). This technology implementation and usage has possible because of optimum utilizations of data and its transmission from various sources of the customers (Singhet.al., 2017).

Hotel industry is of the most dependable industry towards online technology and smart phone. Earlier people used to go and have food in the hotels or restaurants because they wanted to enjoy the ambiance and other facilities of the service sector (Trivedi Soham, 2018). However, people like this enjoyment in present scenario also but due to busy schedule of professional life, distance and traffic problems in urban areas and also more attractions of online ordering, created by marketers for the customers (Kimes S.E., 2011). People are now gradually increasing the usage of online services of food apps and enjoying also outside food and home safe environment.

Online food delivery services are the processes of receiving orders of food from online app, via restaurants’ name and delivering the food to the customers’ place. In India online food ordering apps are very helpful for customers and sellers too. For marketer; it gives more opportunity to start-ups, minimum cost both food providers and delivery websites, i.e. online apps could start their business and deliver the food to the customers (Achadinha, 2014). Online apps or EIS has given more opportunities to the Indian Market to sustain in the lower cost with minimum investment, also able to give more benefits of low pricing to the customers.

Online ordering food is witnessing a rise in business in restaurants which is very popular across the country. Mobile applications like Zomato, Swiggy, Uber Eats (now merged with Zomato) give the purchasers countless options of dishes from different nearby hotels, restaurants and customers can easily place the order.
Online food ordering and delivering services is gaining popularity steadily and  users expectations are also increasing. Online food ordering app has given business to many new entrants/start-ups also if they have attracted customers with attractive website and by serving a quality food stuff. In this internet era online food ordering app has made the life simpler for those people who are extremely busy in their work places or who do not want to cook food  because of illness or want to have a different taste.

As per Visakhapatnam News, 2020, The Indian online food industry is expected to increase to $12.3 billion by 2023. In India   the online food delivery segment  is rising at a rate of 15% though world-over growth is 9.01 percent . Swiggy’s sales  has $1.5 billion and Zomato sales is at $800 million. Zomato and Swiggy  have catered the needs jointly, 96 million orders from April 2017 to March 2018. As per Business Insider, 2020,  the rise in family income , eating patterns & change in lifestyle have to take a lead to a proliferation in growth of market. Food apps demand are increasing very fast with inexpensive prices and this has increased the growth of the online food supply business.

Our country has the record across the world standing at 27 years with the average age for being one of the youngest populations. The mixture of a young demography and disposable income has increased the demand for food apps. This has given increased to impetuous buying power because the readiness to attempt new services or products is quite high, which is leading to the development of food apps in India (Inc42 Media, 2020) (Business Insider, 2020).

Literature Review

Change in lifestyle and eating patterns have led to boom in market growth because of the increase in family members’ income. The food apps demand are increasing and combined with reasonable prices and it has led to the progression of the venture. (Business Insider, 2020).The use of food apps, has become imperative for the commerce to convert and captivate current consumers. There is very little sign as to how the technology has retained customers in satisfying their requirements  by making an order from their preferred hotel. (Park, C. H. and  Kim, Y. G.2003). This research talks about consumers' outlook regarding the using food apps, and how theapps have a system of planning, purchasing and socially enjoying foodstuffs and snacks (Levin, Heath, and LeVangie, 2015). All age and income groups use food apps, and they are happy with the service quality, hygiene, and packaging system, which make people order from food Apps (Tribhuvan, 2020). People are using food apps because of fastest way of ordering (Wu et al. , 2009). The students are managing their time better by using food apps (Trivedi, 2018). Young crowd wanted to have enjoyment with any cost for that they never focus on place (Beliya, 2019). Technology Acceptance Model is as useful for online food ordering process and also used as per the e-tailer requirements, it depends on all external factors of innovation of technology (Alagoz et.al. 2012).  Online food apps also better to manage time frame as per the requirement of customers (Sethu H. S. and  Saini, B., 2016). For every class of income pricing is biggest issue to using online food apps services in different aspects (Victor Vijay et al. , 2018). Low income people had more focused towards low prices (Waterlander et al., 2011). However; other class group also wanted to enjoy coupons and discounts always (Gentile, C., Spiller, N., Noci, G, 2007). Different people have different priorities and if they received the same priorities in terms of services, they feel satisfaction (Hannu et al., 2014).Some factors like: timely delivery, range of food, cash back and discounts are commonly more attractive while ordering food by online apps (Bagla, et. al., 2017). Many studies have found that ordering food by online apps from known and branded restaurant plays another important role as a variable (Kim, 2020,  Karthika I.,  A. Manojanaranjani, 2018 and  Singh, 2017).  With the help of  right and updated use of digital marketing, Online food industry has got the push in the market and because of that many companies like Zomato one of them also has perform remarkable push in the industry (Parashar, 2002). This service is getting more trustfulness because of optimum and remarkable use of social media promotion, which give attraction to the customer, again in terms of social status; if they received the awareness from social media and they order the food from that app (Sethi Harleen Kaur, 2017). In the comparison of different apps people like Zomato most as compare to Uber eats, Swiggy and food panda. Discount was the most attracted factor in this comparison and again focused was based on social status (Das, 2018). Everything is possible, because of technology has given the bigger peace in the customers’ mind to get better quality from famous restaurants and everything is on their doorstep (Kwong et al., 2017, Dang, 2018). Customers’ perceptions are so different level regarding meals and services. They judged all this perceptions on the basis of, their desires of getting famous restaurant food from online app with maximum benefits (Donkoh, 2012). Negative comments about online services also give right direction to sustain in the market with improvement of marketing and pricing strategies (Lan  et. al.,2016). Demographic variable also play a important role towards usage and success of online food apps. Young people more attracted towards online food services and discount offers (Laddha, 2019).

Research Methodology

  1. Universe : For the study, Universe is Pan India.
  2. Sampling Technique : Purposive sampling technique has been used for research.
  3. Sampling Unit: Respondents were students, service class people, businessmen etc.
  4. Sample Size: Questionnaires were sent to 350 respondents through online method but completely filled responses were 247 across India.
  5. Tools for data collection: Primary data has been collected with the help of The Price Perception Scale developed by Linchtestein Ridgway and Netemeyer (1993). Secondary data has been collected with the help of journals, magazines, websites etc.
  6. Tools for data analysis: The data was analysed using Reliability Analysis, Factor Analysis, CFA, T-Test and ANOVA Test.

Table 1

Statistical Test

Criteria Evaluated

Supporting References

Chi square T-tests

P value significance at <0.05

Sekaran (1992)

Reliability analysis

Cronbach alpha above 0.7

Hair at al. (1998), and Nunnally and Bernstein (1994), both suggest the generally accepted level is 0.7.

Factor analysis

Tests for the appropriateness of undertaking Factor Analysis:

·         K.M.O. measure of sampling adequacy over 0.05

·         Bartlett's test significant at 0.05

Assessment of results

·         Item loadings over 0.05

·         Models explaining over 0.5 of total variance

·         Eigen values over 1.00 and scree plot showing clear break

All taken from Hair et al. (1998).

Regression Analysis

R2 results interpreted as follows:

·         0 – 0.30 weak relationship

·         .31 - .69 moderate relationship

·         .70 – 1.0 strong relationship

Tabachnik and Fidell (1996), and

Mason and Lind (1996).

Structural Equation

Models using AMOS

P >0.05

GFI over .8

AGFI over .8

RMSEA under .08

CMIN / DFunder 3.0

Homburg and

Rudolph (2001) and Arbuckle (2011).

 

 

 

 

 

 

 

 

 

 

Table 2 : Data Outcome

Factor

Literature

Statement No.

 

Component

 

 

Statement

Factor Loading

Eigen Value

Factor Reliability

Self Esteem

O'Dea, J. A., & Abraham, S. (2000). Behaviors of young male and female adolescents, eating attitudes,Improving the body image: A new educational approach that focuses on self‐esteem. International Journal of Eating Disorders, 28(1), 43-57.

S27

Buying the most expensive food in the menu makes me feel classy

.765

4.669

0.866

S28

I enjoy the prestige of buying a high priced food item

.735

S31

I think others make judgment about me by the kinds of restaurants I choose to buy food from

.724

S30

My friends will think you are cheap if you consistently buy the lowest priced version of a food item

.700

S29

Says something to people when you purchase a high priced kind of a food item

.688

S32

Even for a relatively inexpensive food item, I feel that it is impressive when buying from a costly restaurant

.630

S19

The price of the food indicates its quality

.564

S18

In my opinion higher the price, higher will be the quality of the food which I will receive

.544

S25

People notice when you buy food from expensive restaurants

.520

S17

I have my preference for the restaurant but most of the time I buy food online from the restaurant which has a discount sale

.438

Perceived Value

Yeo, V. C. S., Goh, S. K., & Rezaei, S. (2017). Consumer experiences, attitude and behavioral intention toward online food delivery (OFD) services. Journal of Retailing and Consumer Services, 35, 150-162.

S4

When I acquire food online I like to be certain that I am getting what I paid for

.732

3.082

0.767

S3

While procuringfood online I constantlyattempt to the fullest  the quality I get for the money I spent.

.667

S6

While online food purchasing I compare price of same restaurant at different apps to be assured I receive  the top value for the money.

.666

S2

while online food purchasing I compare prices at different restaurants to be sure I get the best value for the money

.616

S1

Are you concerned about low prices, about equally corncerned about food quality

.579

S5

I usually buy lower priced food online, but they still must meet certain quality requirements.

.547

Awareness

Choi, K., & Forster, J. (2013). Characteristics associated with awareness, perceptions, and use of electronic nicotine delivery systems among young US Midwestern adults. American journal of public health, 103(3), 556-561.

S20

People enquire from me  different sorts of restaurants

.629

2.950

0.74

S21

I am considered somewhat of an expert when it comes to knowing about the best ongoing deals

.627

S22

For varieties of food, I will be able than most of people to tell someone from where to best buy

.606

S23

I like helping people in choosing the best food at best price

.581

S8

I will purchase from the same restaurant at different apps to take advantage of lower price

.561

S24

my friends think of me as a good source of price information

.463

Purchase decision

Gupta, A., Su, B. C., & Walter, Z. (2004). An empirical study of consumer switching from traditional to electronic channels: A purchase-decision process perspective. International Journal of Electronic Commerce, 8(3), 131-161.

S11

Time it takes to catch the low prices is generally not cost the effort

-.678

1.730

0.502

S9

Money saved by finding inferior prices is ordinarily not worth the effort

-.590

S16

When there is a discount on some restaurants then I feel like I am getting a good deal

.489

Deal Proneness

Martínez, E., & Montaner, T. (2006). The effect of consumer's psychographic variables upon deal-proneness. Journal of Retailing and Consumer Services, 13(3), 157-168.

S13

When I use coupons, I sense like I am receiving a good deal

.571

1.587

0.472

S15

If an app is providing a good discount, that can be a reason for me to buy food from them

.551

Positivity

Achadinha, N. M. J., Jama, L., & Nel, P. (2014). The drivers of consumers’ intention to redeem a push mobile coupon. Behaviour & Information Technology, 33(12), 1306-1316.

S12

Redeeming coupons make me feel happy

.728

1.507

0.489

S14

I adore using coupons irrespective of the quantity I save by doing so

.455

Effort Negation

Vigil, P. J. (1983). The psychology of online searching. Journal of the American Society for Information Science, 34(4), 281-287.

S7

I am not eager to go to further effort to find lesser price

.723

1.506

0.496

S10

I will never do shopping from more than one app to find lower price

.507

 

 

Confirmatory Factor Analysis

The model displays a close fit but the CFA analysis drops the factor of Purchase Decision for it loads negative value.

CMIN/DF: 1.460, GFI: .877, AGFI: .851, RMSEA: 0.43

 

Discussion

In the present study, after applying factor analysis we have found six factors of price perception of the customers while ordering the food. Research explains self-esteem is most important factor for customers while purchasing by online food app and in which more price gives them more pride and status symbol to purchase by online.  (Victor, 2018) found in the research that  dynamic pricing is the important attraction while ordering food by online. Self-esteem and perceived value both factors were found in the present study, Inexpensive food from branded restaurant and worth of purchasing and money from branded restaurant , consumers give more preference in the purchasing decision by online app. In the support (yasri yasri, 2020), also found the brand preference has significant role during purchasing food by online app. (Ebrahim et al., 2016) supported that customers willingness to pay high due to brand preference. Researcher have found that if income is increasing then consumption also increase (Kazmi, 2012). Perceived brand preference is directly correlated to price perception of consumer towards consumption ( Krbova, 2016).  Awareness was another most important factor towards price perception of customers towards online food app. Customers always wanted to enjoy the discount and cashback offers during because of that they purchase from online (Das, 2018). Ratings from others and reference group preference also crate the awareness to the customers to purchase from online food apps (Tribhuvan Aditya, 2020).  After getting all awareness customer usually take purchase decision on the basis of different price and discount offers. Best offers and discount always give motivation to customers to order food from online app ( Kronrod and Huber,2019). Word of mouth gives more positive impact towards price perception and quality of food, while taking decision of online purchasing (Liu and Lee, 2016). Good deal is inner satisfaction and always related to price and customers have mind-set to order from online when only they get best deal in terms of discount and offers.  Consumers play different roles, depending on the product category, there is variation in the factors. “Four consumer characteristics are identified i.e. value consciousness, price conscious, consumer innovation, perceived price variation  (Jin& Suh,2005). People are  particular about brand preference and taste or food quality so they never find some positivity for lower price search but they enjoy and feel positivity in cash coupons or getting discounts. Taste is more important as compared to identify the low price from online consumers (Yeung et al., 2001).

CFA analysed the model fit of customer’s price perception with respect to all six factors. Self-esteem was the most important observed variable for the consumers. Consumers always give first preference to the self-esteem which includes: brand, taste, status, rating, for all these priorities, ready to pay higher price by online purchasing. Customers feel that Lower price would not give them assurance about  the quality but at the same time use to coupons, discounts and cash backs gives them pleasure. Supported to CFA many other studies have defined the construct more demanding and explained  more dimensions of EFA and techniques of CFA (Diana D.S., 2006) (Mimi et al. , 2010).Model fit explained that people are more conscious regarding self-esteem, brand preference, quality, value of time and also wanted to enjoy the coupons and discounts but for lower price they never want to shift the other apps if they are finding taste and good reviews from the other reference groups.  Consumers prefer online food ordering process because they want good food (taste) with good quality and also because of status symbol and they are ready to spend money if they are receiving all these from online Customers  also use online services because of different attractions of sales promotion mix. Model defines the positive direction of consumers towards price perception of online food any app.

Conclusion

The research leads to a completely new outlook that today the consumers are more directed towards self- esteem when ordering food online but it also does not negate the importance of perceived value which can only be reached with Awareness and Decision. Consumers are more dependent to social media updates and rating about the online services. They are more focused  to the image of the service apps which are available in the market and prefer to take reference group opinions before using the services. As consumers are conscious about self-esteem so they are willing to pay price for the services they are going to get. Perceived value and awareness about low prices now secondary preference for the consumers (Sethu H. S. and  Saini, B., 2016) discount and offers available on online food delivery app are the most attractive factor but the same time quality of food is also very important (Trivedi, 2020). Overall, study reflects that companies can also influence customers with deals as they enhance the perception of consumers towards positivity and does not lead to negating decision making.

Implications

Managerial Implications

Authors have explored that consumers are very choosy now a days. They believe that when consumers are spending money on buying food through food apps then they have to be sensitive towards self- esteem, price, food quality etc. which is supported by the data analysis. It can be said that gone are the days when consumers were not that conscious about what they are paying for but now they are very much alert and more demanding.  Consumers are looking forward for discount coupons as well to satisfy themselves as they could save some amount of money. Customers need to be offered variety of products with various offers including service quality and food quality.

Theoretical Implications

This study offers distinct contributions concerning the price perception towards buying food through food apps: It:

  • Explores factors which are significantly contributing in buying food through food apps.
  • It explains how customers have changed their perception while buying food with the help of food apps.
  • It gives message to the food sellers to adopt strategies to catch customers and retain them.

Limitations

Study has taken into consideration 247 respondents but it could have been more if researchers waited for more number of days. Researchers might have not reached to many respondents who are frequent buyers of online food which could have given a different outlook to the study, which would have contributed more or different factors while buying online food through apps.

 

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