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Price satisfaction is an influential factor in competitive performance and business success. Strong price satisfaction enhances and sustains high quality business relationships, leading to improved profits for chain participants. The purpose of this paper is to explore the dimensions of price satisfaction in the context of the Malaysian dairy industry. The aim is to determine which dimensions of price satisfaction affect relationship performance between Malaysian dairy producers and the dairy processers who purchase their milk.

In total, eight hypotheses are tested using partial least square methods on survey results from 133 dairy producers in Malaysia.

The study results suggest that relative price, price‐quality ratio and price fairness influence producers' loyalty and improved business relationship performance.

To achieve long‐term, sustainable business relationships involving consistent high quality supplies, milk buyers need to understand and capture the price satisfaction dimensions.

The paper provides insights into the important linkages between price satisfaction and business performance in an agriculture industry.

Research on buyer‐seller relationships in the agricultural sector receives little attention. A growing body of evidence suggests that strengthening buyer‐seller relationships fosters more efficient supply chains. Much of the long‐term relationship literature tends to treat suppliers as a homogeneous group when identifying motivations, strategies and incentives to enhance the quality of buyer‐seller relationships. This article aims to explore the role of long‐term relationships between buyers and sellers in Malaysia's dairy industry, taking into consideration the heterogeneous nature of producers.

The study examines variation in relationship quality (trust, satisfaction, and commitment), loyalty and price satisfaction dimensions, using data from a survey of 133 dairy producers.

Cluster analysis suggests two well‐defined groups differing in terms of demographic characteristics and relationship perceptions about their buyers.

The study results highlight ways milk buyers can develop and promote more appropriate and efficient marketing strategies with milk producers.

This study provides evidence of producer relationship segmentation in an agricultural industry of an emerging economy.