-
WILLIAM B. DODDS, KENT B. MONROE, and DHRUV GREWAL*
The authors report a study of the effects of price, brand, and
store informationon buyers' perceptions of product quality and
value, as well as their willingness tobuy. Hypotheses are derived
from a conceptual model positing the effects of ex-trinsic cues
(price, brand name, and store name) on buyers' perceptions and
pur-chase intentions. Moreover, the design of the experiment allows
additional analyseson the relative differential effects af price,
brand name, and store name an thethree dependent variables. Results
indicate that price had a positive effect on per-ceived quality,
but a negative effect on perceived value and willingness to
buy.Favorable brand and store information positively influenced
perceptions of qualityand value, and subjects' willingness to buy.
The major findings are discussed and
directions for future reseorch are suggested.
Effects of Price, Brand, and Store Informationon Buyers' Product
Evaluations
Until recently. little formal conceptual effort has beendirected
toward isolating theoretical reasons for the price-perceived
quality relationship, or how such a relation-ship influences
buyers' perceptions of value or their pur-chase intentions or
choices (Monroe and Krishnan 1985;Monroe and Rao 1987; Zeithaml
1988). Though mar-keting managers are interested in what influences
con-sumers' perceptions of vaiue. researchers rarely have
in-vestigated or measured the concept of perceived value.One reason
for this deficiency is that value is an abstractconcept that is
highly interrelated and frequently con-fused with the concepts of
quality, benefits, and price(Rockefeller 1986; Zeithaml 1988).
Moreover, as is evident from recent assessments of
theprice-perceived quality research domain and the rec-ommendations
for additional research, very little is knownabout the relationship
between price and buyers' assess-ments of product quality (Monroe
and Dodds 1988; Zei-
*Williani B. Dtxlds is AssislanI Professor of Marketing.
BostonCollcgL'. Ken! B. Monr(c was ttie Robert O, Gotxtykoontz
Professorof Marketing. Virginia Polytechnic tn.stilute and State
University, atthe time the research was carried out. He is
currently the J. M. JonesProfessor of Marketing at the University
of Illinois, Urbana-Cham-paign. Dhnjv Grewal is Assistant Professor
of Marketing, Universityof Miami.
The authors thank the Editor and the three anonymous JMR
re-viewers for their helpful comments.
thami 1988). Until recently, empirical research on
theprice-perceived quality relationship could be character-ized as
haphazard, with little accumulation of results,leading Peterson and
Wilson (1985, p. 246) to concludethat "the price-perceived quality
relationship is neitherparticularly general nor robust." Despite
the number ofstudies that directly or indirectly examine the
price-per-ceived quality relationship, it is unclear whether we
havedetermined the boundaries of when, and under what con-ditions,
buyers impute quaiity on the basis of price andother information
(Monroe and Dodds 1988; Peterson andWilson 1985). Moreover, the
quality-price relationshipremains an enigma for economic theorists
and "resultsin a profound alteration of many of the basic
conclusionsof the standard paradigm" (Stiglitz 1987, p. 41).
We extend a basic conceptualization of the price-pjroduct
evaluation relationship (Dodds and Monrcje 1985)to include the
extrinsic cues of brand and store name,and report an empirical test
of the effects of those threecues on perceptions of quality, value,
and consumers'willingness to buy. An intricate experimental design
andtest are reported that replicate previous research and
con-tribute new information on the effects of price, brand,and
store information on buyers' product evaluations.
A CONCEPTUAL MODEL FOR PRODUCTEVALUATIONS
Scitovszky (1945) observed that the use of price as anindicator
of product quality is not irrational, but repre-
307
Journal of Markelinf> ResearchVol. XXVIU (August 1991),
307-19
-
308 JOURNAL OF MARKETING RESEARCH, AUGUST 1991
sents a belief that price in the marketplace is determinedby the
interplay of the forces of competitive supply anddemand. Such
forces would lead to a "natural" orderingof competing products on a
price scale, resulting in astrong actual positive relationship
between price andproduct quality. Thus, given the belief that price
andquality are positively related, it is naturai that
consumerswould use price as an indicator of quality.
Subsequently,other economic and marketing theorists expanded the
ar-gument to include other signals of product quality suchas brand
and store names and advertising expenditures.
Perceptions of Price, Quality, and Value
Monroe and Krishnan (1985), using Monroe's
(1979)conceptualization of perceived value, provided a
modelrelating price, perceived quality, perceived
sacrifice,perceived value, and willingness to buy (Figure lA).
Inthat model, actual price is an objective external char-acteristic
of a product that consumers perceive as a stim-ulus. Therefore,
price has both objective external prop-erties and subjective
internal representations that arederived from the perceptions of
price, thus resulting insome meaning to consumers (Jacoby and Olson
1977).This dichotomy of information suggests that a $39.(K)price
for a business-use calculator may be coded cog-nidvely as
"expensive" for some consumers and "cheap"for others, in addition
to $39.00. Clearly, perceptions of
Figure 1CONCEPTUAL MODEL OF THE EFFECT OF PRICE, BRANDNAME, AND
STORE NAME ON PRODUCT EVALUATION
A. Concspiual Relationship ol Pries Ellecl
B. EitandodConcsptuallzaiionui Include Brand Nama andStore
Kami
the same price stimulus may vary across consumers and,for one
consumer, across products, purchase situations,and time (Cooper
1969b).
Price can be both an indicator of the amount of sac-rifice
needed to purchase a product and an indicator ofthe level of
quality. Higher prices lead to higher per-ceived quality and
consequently to a greater willingnessto buy. At the same time, the
higher price represents amonetary measure of what must be
sacrificed to pur-chase the good, leading to a reduced willingness
to buy.The cognitive tradeoff between perceptions of quality
andsacrifice results in perceptions of value (Figure 1).
Thattradeoff was observed by Scitovszky (1945) as a para-doxical
situation in which a commodity offered at a lowerprice than
competing commtxiities would be both moreattractive to the consumer
because it is cheaper and lessattractive because of its suspected
inferior quaiity. Stig-litz (1987) extends this paradox to other
markets, suchas labor and capital, with similar observations.
Perceived Value and Choice
The link between perceived quality, evaluation, andchoice can be
explained in part by the acceptable pricerange concept. Buyers
generally have a set of prices thatare acceptable to pay for a
considered purchase, ratherthan a single price (Monroe 1979; Monroe
and Petrosh-ius 1981). Therefore, people not only may refrain
frompurchasing a product when they consider the price toohigh, but
also may be suspicious of the quality of a prod-uct if its price is
too much below what they consideracceptable (Cooper 1969a).
Finally, if a price is unac-ceptable to pay, the inference is that
the offer must havelittle or no net perceived value.
The perception of value in turn directly influenceswillingness
to buy. Szybillo and Jacoby (1974) sug-gested such a relationship
when hypothesizing that valuefor the money would have a stronger
relationship to per-ceived likelihood of purchase than would
perceivedquaiity. Hence, perceptions of value would increase
asprice increases from below the buyers" lower acceptableprice
limit to some acceptable price within their accept-able price
range. However, as price increases beyond theacceptable range,
perceptions of value would decline.Thus, the relationship between
price and perceived valueshould also be curvilinear.
Price. Brand, and Store Effects on ProductEvaluations
If price, as an external cue, is perceived differentlythan its
"objective" characteristic, buyers are likeiy touse similar
perceptual processes for both brand and storenames. Therefore, we
suggest that the external cues ofprice, brand name, and store name
are three cues thatinfluence perceptions of product quality and
value, andhence willingness to buy (Zeithaml 1988; Figure IB).
The effects of the three cues have been studied withinconsistent
statistical results, but with convergence onsome relationships.
Both price and brand name have been
-
EFFECTS O N BUYERS' PRODUCT EVALUATIONS
shown to have a significant but moderate effect on buy-ers"
perceptions of quality, whereas store name has hada small and
nonsignificant effect (Rao and Monroe 1989b).However, the effects
of price, brand, and store infor-mation on perceptions of value or
willingness to buy haverarely been studied. No studies on the
brand-pwrceivedvalue or store-perceived value relationships have
beenpublished.
The primary effect of the additional cues of brand andstore name
is seemingly to enhance the effect of priceon buyers' quality
perceptions. Monroe and Krishnan's(1983) meta-analysis found a more
positive effect for pricewhen brand information is present than
when it is absent.The implication of their finding is not that
brand namedominates the influence of price, but rather that
brandname enhances the influence of price on quality percep-tions.
Rao and Monroe (1989b) found that muiticue studiesgenerate larger
price-perceived quality effects than single-cue studies, though the
difference was statistically non-significant.
One might expect that, with additional extrinsic in-formation,
buyers would rely less on price informationfor their quality
judgments. The extent of such an effectdepends on the degree to
which buyers are familiar withor knowledgeable of the product
category (Rao andMonroe 1988) and the degree to which the extrinsic
cuesprovide similar or dissimilar information about the prod-uct
(Monroe and Rao 1987).
Much research has examined the price-perceivedquality
relationship, but little research has addressed theprice-perceived
value and price-willingness to buy re-lationships when additional
extrinsic information isavailable. Dodds and Monroe (1985) found
stronger priceeffects on perceived value when only price was
present(T) = .39 and .35) than when brand name was also pres-ent
with price information {TI' = .27 and .27). The effectof brand name
on willingness to buy was not conclusive;the effect sizes were .17
and .02 in price-only situations,and were .07 and .13 when brand
name was includedwith price.
Three studies have specifically examined the individ-ual and
combined effects of price, brand name, and storename on quality
perceptions (Andrews and Valenzi 1971;Gardner 1974; Render and
O'Connor 1976). As shownin Table 1. two of the studies suggest that
price produceda .stronger effect than either brand or store
information.However, the third study (Gardner 1974) showed a
rel-atively moderate effect for both price and brand name.Given the
diversity of products and prices examined, theimportance of price
in relation to other extrinsic cuessuch as brand and store name may
depend on the natureof the products, their price ranges, and the
researchmethods used.
Following Hedges and OIkin's (1985) procedures, wecombined the
results of the three studies and obtained aweighted average effect
(i ) for each cue: . 16 for price,.11 for brand name, and .06 for
store name. By Cohen's(1977) criteria for the behavioral sciences,
the effects
309
were large for price, moderate for brand name, and smallfor
store name.
Besides the obvious limitation of having only threeindependent
studies, our research has limitations due tocertain aspects of
those studies. First, without descrip-tive data, the significant
three-way interaction in An-drews and Valenzi's study cannot be
completely inter-preted. Second, a post hoc calculation of power
for theRender and O'Connor study reveals that there was onlya 30%
chance of finding statistical significance, imply-ing a low power
research design. Finally, as Gardnerused single indicators of
perceived quality and wiiling-ness to buy, we cannot assess the
reliability of the mea-sures used and therefore the attenuation of
effects due tomeasurement error. Because of the relatively low
effectsizes observed in his study, attenuation of effects maybe a
plausible explanation for his results. The researchlimitations
(three studies, significant interactions, lowpower, and single-item
measures) preclude defmitiveconclusions. Moreover, the degree to
which brand nameand store name combine with price in influencing
notonly buyers' perceptions of quality, but also their per-ceptions
of value and willingness to buy, remains un-clear.
Summary
The basic conceptualization of the price-perceivedquality
relationship in terms of its effect on buyers" per-ceptions of
value and willingness to buy is extended toinclude the effects of
the extrinsic cues of brand and storenames on perceptions of
quality, value, and willingnessto buy. A review of the empirical
evidence on the in-dividual and combined effects of those extrinsic
cues in-dicates that multiple, and consistent, extrinsic cues
mayhave a stronger effect on perceived quality than singlecues.
However, the individual and combined effects ofthe cues on
perceptions of value and willingness to buyhave yet to be examined
empirically. Moreover, hy-potheses from current price-quality-value
conceptuali-zations remain untested. We develop and test eight
hy-potheses stemming from the conceptual arguments andlimited
empirical evidence.
HYPOTHESES
The preceding conceptualization, as well as the lim-ited
empirical evidence, suggests several direct relation-ships between
price, brand name, and store name andbuyers' perceptions of product
quality. We also posit someindirect, but important, relationships
between those cuesand perceptions of value and willingness to buy
(Hj-H3). Furthermore, the conceptualization suggests
certaininterrelationships between perceived quality,
perceivedvalue, and willingness to buy (H4-HS). Finally, for
theeffect of an information cue on product evaluations
andwillingness to buy, we compare the results from a single-cue
design with those from a multiple-cue design (H^,-H )
-
310 JOURNAL OF MARKETING RESEARCH, AUGUST 1991
o ft-
o -g
k- U . , i >? u >
0000 0000
A A A A
o 5
A A A A
0 8
O S^=::i ao03
s o o c>
.s o
-
EFFECTS O N BUYERS' PRODUCT EVALUATIONS
Hi: As price increases from a low priced model to a higherpriced
model, ceterts paribus,(a) the relationship between price and
perceived
quality will be positive,(b) the relationship between price and
perceived value
will be quadratic (inverted U), and(c) the relationship between
price and willingness to
buy will be quadratic (inverted U).H;: When perceptions of brand
name are more favorable
(vs. less favorable), ceteris paribus,(a) buyers' perceptions of
quality are higher.(b) buyers" perceptions of value are greater,
and(c) buyers' willingness to buy is greater.
Hs: When perceptions of store name are more favorable(vs. less
favorable), ceteris paribu.s,(a) buyers' perceptions of quality are
higher,(b) buyers' perceptions of value are greater, and(c) buyers'
willingness to buy is greater.
H4: The relationship between buyers' perceptions of qualityand
their perceptions of value is positive.
H5: The relationship between buyers' perceptions of valueand
their willingness to buy is positive.
H(,: When other information is included with price in-fonnation
(i.e.. multiple cues: price-brand, price-store,price-brand-store),
ceteris paribus, the price effect isstronger than in a price-only
condition (i.e., singlecue: price) on:(a) buyers' perceptions of
quality,(b) buyers' perceptions of value, and(c) buyers'
willingness to buy.
H7: When other information is included with brand in-formation
(i.e., multiple cues: brand-price, brand-store, brand-price-store),
ceteris parihus, the brandeffect on buyers' perceptions of quality
is strongerthan in a brand-only condition (i.e., single cue:
brand).
HH: When other information is included with store in-formation
(i.e., multiple cues: store-price, store-brand,store-price-brand),
ceteris paribus. the store effecton buyers' perceptions of quality
is stronger than ina store-only condition (i.e., single cue:
store).
RESEARCH METHOD
Research Design
We tested the hypotheses by using a 5 x 3 x 3 between-suhjects
factorial design (Figure 2) with five price levels(iow, medium,
high, too high, and absent), three brandlevels (low, high, and
absent), and three store levels (low,high, and absent). This design
made possible a partialreplication of previous price-perceived
quality studiesand a test of the hypotheses. Also. Ihe research
designcould address two issues:
1. The design (Figure 2) could be partitioned into subde-signs
to replicate the results of previous studies of price(design D),
price-brand (B), price-store (C), and price-brand-store (A), but in
a situation where product, samplept>pulation, and independent
treatments were the same.Additionally, the design enabled us to
examine the rel-ative influence of brand and store information (E),
brandonly (F). and store only (G), in the absence of price
in-formation, on subjects' perceptions of product quality.
2. We were able to examine price, brand name, and storename
effects in the presence of all possible combinations
Figure 2RESEARCH DESIGN^
311
Brandname
HighHighLowLow
HighLow
NoNo
No
Toohigh
16
1116
2126
3136
41
Higf
Price
I Medium
A. Price, brand, andstore design
2 37 8
12 1317 18
B. Price and branddesign
22 2327 28
C. Price and storedesign
3237
D.
42
3338
Price-ontydesign
43
Low
49
1419
2429
3439
44
Noprice
E. Brand artdstore design
5101520
F. Brand-onlydesign
2530
G. Store-onlydesign
3540
H. Noinformation
45
Storename
HighLowHighLow
NoNo
HighLow
No
'The number in each cell represents a cell number.
of brand and store cues. No previous single study hasexamined
all combinations of the price, brand, and storename cues.
From five pretests, we determined a population ofproducts, brand
names, and store names recognizable tothe subjects and
distinguishable on the basis of perceivedquality, and subjects'
acceptable price ranges. The pre-tests also enabled us to refine
and purify the measure-ment scales. The pretests led to the
selection of twoproducts (calculators and stereo headset players),'
fourbrand names (Hewlett Packard and Royal for calculatorsand Sony
and Grand Prix for stereo headset players), andfour store names
(Campus Bookstore and Roses for cal-culators and Best and K-Mart
for stereo headset play-ers).^ On the hasis of the pretests, three
prices deter-
The selection of ihe two products was guided by the criteria
that(I) subjects be potential purchasers. (2) the products
reprcseni dif-ferent price ranges to test the repUcability of the
finilings acmss prod-uct categories, and (3) the pnxlucts be used
by both men and women.
Brand name and store name were operationaiized according
towhether subjects' perceptions of the cues were favorable or not.
Ac-tual brand names were chosen from a population of familiar
brandnames for each product category On the basis of the pretests,
thebrand names were selected such that the subjects viewed them as
beingsignificantly different in terms of their perceptions of
quality, as wellas their familiarity and knowledge. This
manipulation allowed the twobrand names to be compared in the
analysis as low and high perceivedquality brands. Similarly, actual
store names were chosen from a pop-ulation of store names known to
the subjects. The store names metthe criteria of being
significantly different in the pretest on perceivedquality of the
products carried, overall store quality, and subjects"satisfaction
witli the store. This manipulation allowed tbe two storenames to be
compared in the analysis as low and high perceived qual-ity
stores.
-
312 JOURNAL OF MARKETING RESEARCH, AUGUST 1991
mined to be perceptively different, yet within the
subjects'acceptable price ranges, were positioned as a high price,a
medium price, and a low price for each product. Ad-ditionally, one
price treatment (too high) was above sub-jects' acceptable price
ranges to test whether perceptionsof value and willingness lo buy
would show nonlineartendencies. The price levels selected for the
calculatorwere $17.00, $28.00, $39.00, and $50.00 and for thestereo
headset player were $34.00, $61.00, $88.00, and$115.00. They
represented the low, medium, high, andtoo high price levels,
respectively.^
Research Procedure
In the 5 x 3 x 3 factorial design, we used 585 un-dergraduate
students (13 subjects per cell) enrolled inmarketing courses at a
large state university. Each sub-ject was exposed to two products
(calculator in experi-ment 1 and stereo headset player in
experiment 2). Twoseparate studies (eaeh a 5 x 3 x 3 design) were
con-ducted at the same time. Subjects were assigned ran-domly to
one of 45 treatment cells for the first product,then assigned
randomly to a cell for the second productcontaining the same type
of information (i.e., a subjectassigned randomly to a cell
containing priee and storeinformation would be assigned randomly to
a treatmentcell for the second product containing only price and
storeinformation, but not necessarily to the same treatmentceil).
This procedure avoided the potential introductionof an artifact
whereby the subject might assume, for ex-ample, that the store name
in the first product treatmentis implied for the second when in
fact no store infor-mation is intended. The second study ( 5 x 3 x
3 designfor stereo headset player) was conducted to replicate
thefiret study ( 5 x 3 x 3 design for calculator), thus en-hancing
tile generalizability of the Fesults.
Dependent Variables
Subjects evaluated product quality, value, and will-ingness to
buy on multi-item 7-point scales that weredeveloped from previous
research and purified during thepretests. As shown in the Appendix,
perceived value wasoperationaiized in relation to monetary
exchange, not interms of desirability, importance, or intrinsic
worth. Thus.when brand and/or store information was given in
theabsence of price, subjects were asked to evaluate onlythe
quality of the product.
Following the procedures suggested by Churchill(1979), we
developed the indicators and assessed themfor internal and extemal
consistency by using correlationanalysis, factor analysis, and
Cronbach's alpha. The re-sults of an exploratory factor analysis
with varimax ro-tation produced three factors consistent with the
three
Mn a pretest, subjects were dsked to indicate acceptable prices
(intenns of whether they would consider paying them). After
markingacceptable prices on a continuum, subjects categorized those
pricesas low but acceptable, high but acceptable, neither too high
nor toolow, and unacceptably high.
dependent variables, accounting for more than 80% ofthe variance
for both product experiments. The valuesof coefficient alpha were
.95 for perceived quality (av-erage interitem correlations .78 and
.80), .93 for per-ceived value for both products (average interitem
cor-relations .73 and .72), and .97 and .96 for willingnessto buy
(average interitem correlations .85 and .83).
RESULTS AND ANALYSES
Manipulation Checks
At the end of the experiment, subjects evaluated theprice (very
high to very low), brand natnc (very highquaiity to very poor
quaiity), and store name (very highquality to very poor quaiity) on
7-point rating scales.Analysis of the manipulation checic mean
scores sug-gested that the manipulations of the three
independentvariables were perceived as intended. A one-wayANOVA was
used to assess the impact of the four pricelevels on the price
manipulation ciieck (calculator: F3 4 4= 24.88, p < .001; stereo
headset player: F34, = 48.43.p < .001). For both products, the
contrast estimates be-tween each pair of means for the four price
levels wereall significant (p < .05). A one-way ANOVA for
thebrand quality manipulation indicated that tiie high levelbrand
was perceived as being of higher quality than thelow ievel brand
(calculator; Fi.37(, = 230.13, p < .001;stereo headset player; f
,j5g = 465.57, p < .001). Sim-ilarly, a one-way ANOVA for the
store quality manip-ulation indicated that the high level store was
perceivedas being of higher quality than the low level store
(cal-culator; Fl 3H0 - 71.47, p < .001; stereo headset
player;F,.336 = 116.70, p < .001).
Hypothesis Tests
The multivariate analysis of variance and the univar-iate
results ( 4 x 3 x 3 design) from testing the hy-potheses are
reported in Table 2 and the mean scores arereported in Tables 3 and
4. The results of the MANOVAindicate significant main effects for
price, brand, and storefor the calculator and the stereo headset
piayer. The re-sults for the 5 x 3 x 3 design for perceived quality
aresimilar to the results for the 4 x 3 x 3 design and arereported
in Table 2. To provide for and to interpret thevarious individual
and combined effects (H^-HH) , a se-ries of specific subdesign
analyses were conducted (Ta-ble 5).
Price effects (H,). Trend analyses (Hays 1973; Ro-senthal and
Rosnow 1984) were conducted to determinewhether linear and
quadratic trends were present be-tween priee and perceived quality,
perceived value, andwillingness to buy. For the calculator, the
results supporta positive linear trend of price on buyers'
perceptions ofquality (Hi,: F|.43z = 25.65, p < .001). The
results donot support a quadratic trend of price on buyers'
per-ceptions of value or willingness to buy, but do supporta
negative linear trend of price on buyers' perceptionsof value (Hibi
^,432 = 89.51,/? < .001) and willingnessto buy (H,,; ,.432 =
25.21, p < .001).
-
EFFECTS ON BUYERS' PRODUCT EVALUATIONS 313
Effects
CalculatorPrice (P)Brand (B)Store (S)P X BP X SB X SP X B X
SResidual
Siereo headset playerPrice (P)Brand (B)Store (S)P X BP X SB X SP
X B X SResidual
MANOVA (4 X J XWilks
.71
.79
.93
.98
.97
.96
.93
.75
.75
.96
.94
.98
.96
.94
d.f.
9,1046.666.8606,860
18.1216.7118.1216.7112,1137.9636,1271.21
9,1046.666.8606,860
18.1216.7118.1216.7112,1137.9636,1271.21
ANALYSIS
3 design)F-value
17.29'17.49"5.28'
.55
.781.51.93
14.28*22.18'2.78"1.53.50
1.65.72
Table 2OF VARIANCE RESULTS
d.f.
322664
12432
322664
12432
ANOVA (4x3x3
Quality
9.68'49.56'7.89'
.26
.162.23
.82
5.42=65.42'5.68'2.51"
.663.05"
.66
Value
29.95'20.19'5.29*
.231.42.87
1.06
34.26'11.57'2.21
.97
.551.93.87
design)'
Witlinsnessto buy
9.or24.66'7.66'
.26
.882.54"
.67
1
16.02'22.02'5.14'1.18
.511.08
.98
ANOVA (5x3x3design}'
d.f.
422884
16S40
422884
16S40
Quality
9.54'62.92'9.IT
.32
.142.38"
.81
14.36'
88.81'7.99'2.00"
.553.46"
M'
'Table entries reflect ANOVA F-vaiues."Significant M p <
.05.'Significant al p < .01.
Table 3CELL MEANS' AND STANDARD DEVIATIONS FOR PERCEIVED OUAUTY,
PERCEIVED VALUE, AND WILLINGNESS TO BUY
(PRODUCT: CALCULATOR) ,
Price
Too high High Medium Low No priceBrand name Mean S.D. Mean S.D.
Mean S.D. Mean S.D. Mean S.D. Store name
High
High
Low
Low
High
Low
No
No
No
1.803.323.851.882.943.182.853.854.823.184.284.971.863.233.632.623.403.522.403.774.342.913.354.382.324.114.40
.50"1.201.39
.651.251.67
.781.211.52
.951.101.10
.71
.841.12
.871.491.63
.901.26l.ll.74
1.061.54.67
1.231.31
1.712.693.382.022.512.682.853.604.033.063.774.772.142.492.822.582.853.262.423.143.693.173.894.372.632.863.20
.581.361.60.62
1.121.27.70
1.741.88.76
1.271.45.75
1.0)1.391.051.061.40.69.95
M l.79.90
1.35.97
1.161.63
1.882.343.322.292.342.943.292.893.833.093.434.621.661.691.982.912.713.352.222.973.623.433.234.573.082.283.40
.651.211.74.96.90
1.681.701.482.141.081.701.95.67.62
M l1.001.141.52.74
1.521.95M 91.171.221.04.80
1.53
2.461.712.512.631.952.283.312.223.973.662.383.542.141.832.323.372.553.602.772.253.033.543.123.773.582.173.02
.41
.63
.43
.78
.44
.55
.53
.01
.9897.55.80.03.15.34.40.90.55.92.89.25.16.51.91.39.78.49
1.78 .92
1.80
2.52
3.08
1.89
2.42
2.48
2.92
2.66
.70
.57
1.11
.84
High
Low
High
Low
No
.85
.83
.65
.74
No
HighI
IL o w
No
'Means are on a 7-point scale. I being high and 7 being
low."First row values for perceived quality, second row values for
perceived value, and third row values for williogoess to buy.
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314 JOURNAL OF MARKETING RESEARCH, AUGUST 1991
Table 4CELL MEANS' AND STANDARD DEVIATIONS FOR PERCEIVED
QUALITY, PERCEIVED VALUE, AND WILLINGNESS TO BUY
{PRODUCT: STEREO HEADSET PLAYER)
Brand name
High
High
Low
Low
High
Low
No
No
No
Too
Mean
2.003.914.091.884.064.782.914.084.853.514.785.512.023.824.433.154.715.322.313.683.772.553
634.282.294.494.85
high
S.D.
.66"1.201.67
.881.431.781.281.301.551.121.241.21
.521.201.701.351.171.60
,721.241.23
.731.061.34
.76
.851.10
High
Mean
L693.!73.622.123.403.833.084.144.803.554.655.422.093.623.832.914.204.982.493.694,082.834.094.982.683.954.11
S.D.
.511.081.62.78
1,211.66
.921.271.421.15!.O81.11
.761.221.82
.981.411.45,65
1,041,041141.251.55.74
!.5I1.71
Price
Medium
Mean
2.063.253.511.742,543,022,852,913.953.884.065.422.112.773.282.853.184.112.373.153.463,423,954,632.683,464.03
S.D.
.611.201.23.59
1.181.321.151,201.991,051,18,90.80,89
1.48.78
1.111.55.72
1.521.821,221.171.18,79
1.221.52
Low
Mean
2.342.522.781.922.342.752.882.483.033.483.174.032.262.292.433,433,144,483,282,973.823.652.633.633.572.583,58
S.D.
.701.191.32.80.91
1.23.84.90
1.371.491.852.11
.65
.941.05
,991.201.73
.88
.891.381.351.311.711.411.031.66
No price
Mean
1.711.94
3.17
3.49
2.09
2.97
2.51
3.18
2.62
S.D
.66
.72
1.12
1.24
.79
.50
.68
.83
.54
Store name
High
Low
High
Low
No
No
High
Low
No
'Means arc on a 7-point scale. 1 being high and 7 being
low.^First mw values for perceived quality, second row values for
perceived value, and third row values for willingness to buy.
For the siereo headset player, the results of the priceeffect on
buyers' perceptions of quality (Hu) were in-terpreted within brand
levels (significant price-brand in-teraction). The price effect is
not significant in the highbrand nanie level (F, 4,2 = -88) or low
brand name leve!( 1.432 = 11)> but is significant in the brand
absent levei( 1,432 = 27.30, p < .001). A quadratic trend of
priceon buyers' perceptions of value or willingness to buy isnot
supported, but there is support for a negative lineartrend of priee
on buyers' perceptions of value (Hit: / i.432= 100.06, p < .001)
and willingness to buy (H,,: Fy^^i= 46.97, p < .001).
Brand effects (H^). For the calculator, the results sup-port a
significant brand name effect on buyers' percep-tions of quality
(Hja: / i.432 = 86.33,/7 < .001) and value(Hjt: F,.432 = 32.86,
p < .001). The results for brandname effect on buyers'
willingness to buy (Hj^) wereinterpreted within store levels
(significant brand-store in-teraction). The brand effect is
significant within all threestore levels (H2c: store high: F, 432 =
9.24, p < .005;store low: F1432 = 33.70, p < .001; store
absent: ^1432= 6.38, p < .03).
For the stereo headset player, the results for the brand
name effect on buyers' perceptions of quality (Hj^)
wereinterpreted within price levels and store levels (signifi-cant
price-brand and brand-store interactions). The brandeffect is
significant within all four price levels (price toohigh: F,.432 =
33.52, p < .001; price high: f, 432 = 32.44,p < .001; price
medium: ^1432 = 32.98./? < .001; pricelow: F|,432 26.33, p <
.001) and all three store levels(store high: F1.432 = 24.47, p <
.(X)l; store low: F, 4,2= 83.39, p = .001; store absent: F,.^,; =
27.23, p MC weighted averageTi" = .05, stereo headset player SC TI"
= .08 < MCweighted average T ^ .11).
Brand effects in single-cue versus multiple-cue de-signs (Hy).
The hypothesized brand effect on perceivedquality was analyzed for
each of the four brand designs(subdesigns A, B, E, and F). The
effect of brand nameon perceived quality is greater in a
multiple-cue designthan in a single-cue design for the calculator
(SC 11 =.09 < MC weighted average TI = .24), but not for
thestereo headset player (SC t^ = .32 = MC weighted av-erage Ti =
.32).
Store effects in single-cue versus multiple-cue designs(Hg).
Similarly, the hypothesized store effect on per-ceived quality was
analyzed for the four store designs(subdesigns A, C, E, and G).
Contrary to the hypothesis,the results suggest that the effect of
store name on per-ceived quality is greater in a single-cue design
than in a
-
316 JOURNAL OF MARKETING RESEARCH, AUGUST 1991
multiple-cue design (calculator SC TI~ = .09 > MCweighted
average ry = .06; stereo headset player SC t)^= .18 > MC
weighted average ly = .03).
DISCUSSION
We tested direct and indirect relationships between
threeextrinsic product cues (price, brand name, and store name)and
Iwo evaluative variables (perceived quality and per-ceived product
value), as well as buyers' willingness tobuy. The design of the
experiment also allowed analysisof the relative differential
impacts of price, brand name,and store name on the three dependent
variables, ln thissection we discuss the results.
Price and Perceived Quality
Overall, when price was the only extrinsic cue avail-able, the
subjects clearly perceived quality to be relatedpositively to
price. When other extrinsic information waspresent, the results
were less persuasive. For the cal-culator, the hypothesized
positive relationship is sup-ported in all four designs (Table 5,
price linear trendresults). For the stereo headset player, the
price effect issignificant in the absence of brand information
(i.e., price-alone and price-store designs). The pretest analysis
in-dicated that the Sony stereo headset player was over-whelmingly
favorable on all attributes measured. Thoughthe Hewlett Packard
calculator was the favored product,it was not so universally
perceived on all attributes. Thedifference in brand favorability
likely accounts for thedifferences in the findings across the two
products.
Price, Perceived Value, and Willingness to Buy
Perceived value, conceptualized as a cognitive trade-off between
perceived quality and sacrifice, decreasedwhen price increased,
suggesting that the perceived sac-
rifice component became stronger in relation to per-ceived
quality at higher prices. The conceptual argumentsuggests that, as
price increases from a low priced modelto a higher priced model,
buyers' perceptions of valuewill increase and then decrease. In all
the design situa-tions, a negative price-perceived value trend is
statis-tically significant. Similarly, the results support a
neg-ative price-willingness to buy relationship.
Influence of Brand Name and Store Name
Brand and store names, as hypothesized, had a posi-tive effect
on perceptions of quality, value, and willing-ness to buy. The
strength of these effects in relation toprice are discussed
next.
Effect Sizes (Single-Cue vs. Multiple-Cue Designs)
Monroe and Krishnan (1985) indicated that the rela-tive effect
of price on perceived quality was larger in thepresence of brand
information than when alone. How-ever, in our study, the combined
price-alone effect islarger than any other combined price cue
effect (Table6). Though there is a large price-alone/perceived
qualityeffect, the effect of price with brand or with brand
andstore name is small, and the price effect with store
nameinformation is moderate. The effect of brand name in-formation
on quality perceptions is large in all condi-tions. Indeed, the
brand name effect is larger in the pres-ence of price and store
information than it is by itself.Hence, price and store information
appears to have beenconsistent with the brand image and augmented
percep-tions of product quality. This result provides
strategicimplications for brand management. However, store namehas
a moderate effect on quality perceptions when pre-sented alone, and
diminishes in effect as price and brandinformation are
provided.
Table 6AVERAGE A^AIN EFFECTS OF INDEPENDENT VARIABLES
Independentvariables
Price
Brand
Store
Treatmentcondition
AloneWith brand ^ _ ^With store "With brand and storeWeighted
average
AloneWith priceWith storeWith price and storeWeighted
average
AloneWith priceWiih brandWith price and brandWeighted
average
Perceivedquality
.190
.040
.095
m^- .
jm.029.015.054
Combined effect size (rf'}
Perceivedvalue.335.210.110.195.195
.080
.090
.087
.020
.010
.013
Willingnessto buy.105.090.055.105.091.105
.135-125
.050
.015
.027
-
EFFECTS O N BUYERS' PRODUCT EVALUATIONS 317
The negative effect of price on perceptions of valuewas reduced
as either brand or store name informationwas provided.
Nevertheless, the combined impact of priceon perceptions of value
is large, whereas the positiveimpact of brand and store name is
moderate and weak,respectively. This result is consistent with
positive brandequity brands competing effectively while charging
apremium price. As expected, given these effects on per-ceptions of
value, the relationships between the three in-dependent variables
and willingness to buy are similarin that brand and store
information combine with priceto provide small to moderate positive
effects on buyingintentions.
CONCLUSIONS
ZeithamI (1988) argued that research on how con-sumers evaluate
prtxiuct alternatives should be expandedbeyond the price-perceived
quality relationship. Our re-search is the first empirical effort
to examine the effectsof the extrinsic cues of price, brand, and
store on per-ceptions of quality and value as well as purchase
inten-tions. Consequently, the results reported here representan
important step forward in unraveling the intricate price,quality,
and value relationships. Based on a simple modelof the linkages
between the constructs, the overall re-search resuits support the
conceptual model.
The Product Evaluation Model
Though perceptions of monetary sacrifice were notmeasured
explicitly and the functional form of percep-tions of value is not
as hypothesized, the model as orig-inally diagrammed by E>odds
and Monroe (1985), andas extended here and by Monroe and Chapman
(1987)and ZeithamI (1988), holds promise as a conceptualframework
for studying the relationships. Such a con-ceptual framework lays
the basis for (1) isolating the the-oretical reasons for when
buyers use price, brand, store,or intrinsic product information as
indicators of quality,(2) determining how quality perceptions
infiuence valueperceptions, purchase intentions, and product
choice, and(3) how monetary and nonmonetary perceived
sacrificesinfiuence value perceptions, purchase intentions,
andchoice.
An immediate concern with the model is that the studydid not
detect the curvilinear price-perceived value re-lationship as
hypothesized. Possibly the manipulations inthe experiment were not
set wide enough to demonstrateconclusively whether there is a
positive relationship be-tween perception of value and prices
perceived to be rel-atively low. Analysis of the price manipulation
checkconfirmed this limitation. The too-high price manipula-tion
was perceived to be slightly high and the low pricemanipulation was
perceived to be slightly low. Specif-ically, a price point below
the subjects' acceptable pricerange was not tested because of
sample size constraints.The addition of more price points at both
ends of theprice continuum would provide a stronger test for
thepredicted curvilinear price-perceived value relationship(Monroe
and Dodds 1988).
Combined Effects of Price, Brand Name, and StoreName
Methodologically, we used an intricate experimentaldesign to
isolate the individual and combined effects ofprice, brand, and
store name on the dependent variables.Within the design, we were
able to replicate analyticallyprevious single-cue and multiple-cue
price-perceivedquality research using common measures, samples,
andproducts. That approach eliminated some potentialmethodological
reasons for inconsistent results acrossprevious studies. We
developed and tested the dependentmeasures for their internal
consistency and convergentvalidity, thus overcoming an important
fiaw in previousprice-perceived quality research (ZeithamI
1988).
The hypotheses that brand and store name enhance theprice effect
were derived from the findings of Rao andMonroe (1989b) and Monroe
and Krishnan (1985) in theirmeta-analyses. Their results provide an
estimate of the"average" effect size across a distribution of
results. Thedistribution of effects comprises studies involving
dif-ferent experimental designs (within vs. between), dif-ferent
numbers of cues (single vs. multiple), varyingstrengths of price
manipulations (some above, within,and below the subjects'
acceptable price range, othersall within the subjects' acceptable
price range), and dif-ferent price levels (from very expensive to
inexpensiveproducts). We were able to compare the relative
effectsof combining price, brand name, and store name by us-ing
relatively higher price and infrequently purchasedproducts. As
argued subsequently, the findings reportedhere do provide evidence
of some boundary conditionsfor when brand and store name do not
enhance priceeffects.
Monroe and Rao (1987) suggested that as price levelincreases,
the risk of an incorrect assessment increasesbecause buyers are
less familiar with a product that isinfrequently purchased. Our
findings suggest that con-sumers are less likely to rely on the
presence of a price-quality relationship for a particular product
class in orderto rely more on the familiar information cues of
brandand store name to assess the product's worth. Hence, wecan
expect that for higher priced products that are pur-chased
infrequently, the strength of the price cue maybe diminished in the
presence of other, more well-knowncues. For example, a consumer who
has never bought astereo headset player or who bought a calculator
five yearsago may use price to categorize the product as very
highquality, average quality, or poor quality if only price
in-formation is available. However, a consumer who lacksknowledge
about the product may use store and brandname information, if
available, to make the quality as-sessment, relying less on the
price cue. This observationis consistent with Monroe's (1976)
finding about thestrength of brand familiarity when buyeni are not
equallyfamiliar with alternative product choices, and with
in-ferences stemming from emerging price-signaling liter-ature.
Thus, our study shows that the price-perceived qual-
-
318 JOURNAL OF MARKETING RESEARCH, AUGUST 1991
ity relationship was not enhanced, but rather was dimin-ished,
by the cues of brand and store name. This resultis not necessarily
a refutation of the meta-anaJyses. Ourfindings suggest that for
infrequently purchased, higherpriced consumer products,
relationships may be differentfrom those found in the
meta-analyses.
In the conduct of our study, subjects were not givenspecific
model or attribute/feature information. For in-stance. Sony
produces a wide assortment of models thatcover several different
price levels. Whether our oper-ationalization of brand name was a
limitation is debat-able. To give specific model information may
direct thestudy to be more a test of familiarity (persons who
arefamiliar with a particular model and those who are not)than of
the quality information inherent in the brand per-ception.
Obtaining a sample that is homogeneous in fa-miliarity with a
particular model would be more difficultthan obtaining a sample
that is homogeneous in famil-iarity with a brand name in general.
Not having modelinformation, subjects may use different reference
pricesrelated to their own experiences. However, the manip-ulation
checks support the choice not to include partic-ular models in the
study.
Future Research
Future research must meet the objectives of integrat-ing
knowledge from previous research efforts to estab-lish the general
izabi I ity of the conceptual model. Brin-berg and McGrath's (1985)
validity network schema, asapplied to the price, perceived quality,
and perceived valuerelationships by Monroe and Dodds (1988).
suggestsneeded directions for such research.
Replication. Research is needed to replicate the orig-inal
findings as well as to extend the range of the find-ings. Rosenthal
and Rosnow (1984) suggested that aminimum of 15 studies are
necessary to demonstrate thata single statistically significant
result was tolerant of un-published null results on the same
relationship. It re-mains important to replicate previous research
within therealm of pioneering research.
Robustness and boundary search. Because price-per-ceived quality
studies generally have focused on lowpriced products, future
studies must explore how the un-derlying conceputal model works for
a wider range ofproducts, prices, situations, settings, and
populations (Raoand Monroe 1989b). A finding's failure to replicate
isevidence of a limit to the generalizability of the
relation.However, when a finding does replicate, the scope ofthe
relation is extended. In any event, uncertainty aboutthe relation
is extended or the relation is shown to belimited.
In conclusion. It is apparent that both price and brandname are
important determinants of product quality per-ceptions, and that
the effect of store name, though pos-itive, is small. The relative
effect of these three variableson perceptions of value and purchase
intentions clearlywarrants additional research, as does their
effect on ac-tual choice.
APPENDIXDESCRIPTION OF MULTI-ITEM INDICATORS
Perceived Quality Indicators1. The likelihood that the product
would be reliable is: (very high to
very low)2. The workmanship of product would be: (very high lo
very low).T. This product should be of: (very good quality to very
ptior quality)4. The likelihood that this product is dependable is:
(very high to very
low)5. This produet would seem to be durable (strongly agree to
strongly
disagree)
Perceived Value Indicators1. This producl is a: (very good value
for the money to very poor
value for the money)2. At the price shown the product is: (very
economical lo very un-
economical)3. The product is considered to be a good buy
{strongly agree to Mrongly
disagree)4. The price shown for the product is: (very acceptable
to very un-
acceptable)5. This product appears to be a bargain (strongly
agree to strongly
disagree)
Willingness to Buy Indicators1. The likelihood of purchasing
this product is: (very high to very
low)2. If 1 were going to buy this product, I would consider
buying this
model at the price shown (strongly agree to strongly disagree)3.
At the price shown, I would consider buying the product
(strongly
agree to strongly disagree)4. The probability that I would
consider buying the product is: (very
high to very low)5. My willingness to buy ihe product is: (very
high to very low)
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