Price as an Indicator of Quality: Report on an Enquiry

Abstract

I. Introduction It is generally accepted that price may enter into the determination of consumers' choice in two ways: as an indicator of cost and as an indicator of quality. Contemporary demand theory rests heavily on the first of these two functions while the second tends to be treated as if it were an exceptional and anomalous phenomenon, to be mentioned only in order to be dismissed as unimportant. Indeed, it is of considerable analytical convenience to ignore price as a quality indicator, because if this is not done, the utility function of the individual must be formulated so as to incorporate an additional set of independent variables, namely the prices of all the commodities in the market. The problem is not intrinsically insoluble but it leads to difficulties which can be avoided simply by denying the relevance of this aspect of price.

Pricing Strategies for Information Technology Services: A Value-Based Approach

“…They are not willing to spend time searching for purchase-relevant information. Since they are not well informed they tend to associate high prices with high quality [27] or to buy randomly at higher prices. Others may search somewhat more actively to take advantage of discounts.…”

“…The primary goal is to exploit scale economies to penetrate the market by pricing below competitors. Consumers tend to equate higher prices with higher quality if the price cues are more readily available than quality cues [27][45] [46]. i.…”

An investigation of competitive pricing among apparel retailers and brands

“…Store brands, also referred to as private label, private brand, distributor brand or house brand, are owned, controlled and merchandised by a retailer and sold in its own stores (Kotler, 2003). Gabor and Granger (1966) indicate that consumers use price to evaluate the quality of a brand. Initially developed to cut costs and gain control over merchandising, retailers have since come to recognize store Consumer price index for apparel (1996( -March 2005 Investigation of competitive pricing brands as significant contributors to market positioning, differentiation, and fostering of consumer loyalty.…”

“…Price defines a firm's competitive position in the market and consumers use price to evaluate quality of a brand or retailer (Dolan and Simon, 1996;Gabor and Granger, 1966). Apparel retailers operate in an intensely rivalrous and highly saturated market environment, with slow sales growth and high price competition (Standard and Poor's, 2004a).…”

Farmers' Buying Selection Criteria of Agricultural Inputs

“…Studies by French et al (1972), and Gabor and Granger (1966) suggested that income level influences decisions to purchase and apparently, assessments of quality. Shapiro (1973), and Tull et al (1964) found relationships between educational level and purchase decisions, and thus, quality perceptions.…”