The Effect of Correlation between Price and Quality on Consumer Choice

Research output: Contribution to journalArticle

26 Citations (Scopus)

Abstract

According to the price-expectancy model of consumer choice, consumers evaluate products by comparing the actual price with a reference or expected price determined from (a) product's quality and (b) the price-quality correlation of the product category. Choices between hypothetical products of beer are used to test the model against a model without a reference price. Consistent with the price-expectancy model, product preferences varied with the subjective correlation between price and quality: the relative preference for higher priced/higher quality products over lower priced/lower quality products increased as the subjective correlation increased. For some pairs, the correlation between price and quality created a preference reversal across contexts: the higher priced/higher quality product was chosen over the lower priced/lower quality product in the higher correlational context, but the lower priced/lower quality product was chosen over the higher priced/higher quality product in the lower correlational context. An additional study provided evidence that the price - quality correlation affects reference price, rather than reference quality, formation.

Original languageEnglish (US)
Pages (from-to)258-273
Number of pages16
JournalOrganizational Behavior and Human Decision Processes
Volume75
Issue number3
DOIs
StatePublished - Sep 1998
Externally publishedYes

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Consumer choice
Product quality
Expectancy
Reference price
Preference reversal
Consumer products
Product category

ASJC Scopus subject areas

  • Organizational Behavior and Human Resource Management
  • Strategy and Management
  • Psychology(all)
  • Applied Psychology

Cite this

The Effect of Correlation between Price and Quality on Consumer Choice. / Ordonez, Lisa D.

In: Organizational Behavior and Human Decision Processes, Vol. 75, No. 3, 09.1998, p. 258-273.

Research output: Contribution to journalArticle

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