Title

The effect of price on a product's perceived quality: The case of shopping goods

Date of Award

1996

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Business Administration

Advisor(s)

Clint B. Tankersley

Keywords

marketing, price cues, quality perception

Subject Categories

Marketing

Abstract

In this dissertation, the relationship between price and product perceived-quality was investigated. The product used was a shopping good, domestic carpet. A non-probability sample, composed of 193 adults, split between males and females was chosen from the metropolitan Syracuse area.

In this study, it was demonstrated that price (P) has a positive relationship with product perceived-quality. Two other product cues were also used in this study. They were the number of stitches per square inch (ST) and the brand name (BN) of the manufacturer of the yarn used in the carpet. Each of the three experimental variables (P, ST, and BN) was used, in the experiment, at three different levels. That is, in this study a factorial design of 3 x 3 was employed. The design is a fixed-effect type since all the three experimental were specifically chosen to represent one intrinsic and two extrinsic product cues.

Also the product-knowledge (PK) level of the participants was considered, either as an experimental or as a control variable. PK was measured according to one of three indices, each measuring a different dimension thereof. Those three dimensions are subjective, experience, and objective. The index that measures PK according to the latter dimension seemed to be more reliable, as per the results of the study.

The over-all results of the study support the following: (i) Price does have an impact on the subjects while perceiving the product quality. This remains to be the case, whether price was the only cue given to the subjects or along with either of the other two product cues cited above. Therefore, price can be labeled as a product quality signal. (ii) As the other cues were made known to subjects, price loses some strength as a product quality signal. (iii) The PK level of the subjects did reveal a moderating effect on their perception of product quality. Subjects, with high PK level, gave subjective evaluations to the product that are closer to the objective evaluations as provided by market experts.

Most of the results, arrived at in this study, provide valuable implications to the marketing managers. The marketing activities impacted by these implications are several, such as pricing strategy, promotional efficiency, and market segmentation. In addition, various future research opportunities were identified.

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