Consumer Perception of Price Quality and Value

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Consumer Perceptions of Price, Quality, and Value: A Means-End Model and Synthesis ofEvidenceAuthor(s): Valarie A. ZeithamlSource: Journal of Marketing, Vol. 52, No. 3 (Jul., 1988), pp. 2-22Published by: American Marketing AssociationStable URL: http://www.jstor.org/stable/1251446.

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Valarie A. Zeithaml

Consumer Perceptionsf P r i c eQuality n d Value Means EndModel n d Synthesis o f Evidence

Evidence from past research and insights from an exploratory investigation are combined in a conceptualmodel that defines and relates price, perceived quality, and perceived value. Propositions about the con-cepts and their relationships are presented, then supported with evidence from the literature. Discussioncenters on directions for research and implications for managing price, quality, and value.

THOUGH consumer perceptions of price, quality,and value are considered pivotal determinants ofshopping behavior and product choice (Bishop 1984;Doyle 1984; Jacoby and Olson 1985, Sawyer andDickson 1984, Schlechter 1984), research on theseconcepts and their linkages has provided few conclu-sive findings. Research efforts have been criticized forinadequate definition and conceptualization (Monroeand Krishnan 1985; Zeithaml 1983), inconsistentmeasurement procedures (Monroe and Krishnan 1985),and methodological problems (Bowbrick 1982; Olson1977; Peterson and Wilson 1985). One fundamentalproblem limiting work in the area involves the mean-ing of the concepts: quality and value are indistinctand elusive constructs that often are mistaken for im-precise adjectives like goodness, or luxury, or shi-niness, or weight (Crosby 1979). Quality and valueare not well differentiated from each other and fromsimilar constructs such as perceived worth and utility.Valarie .Zeithamls Associate rofessor,uquachool f Business,DukeUniversity.heauthorratefullycknowledgeshefinancialup-port ndcooperationrovidedor hisresearchytheMarketingci-ence nstitutendoneofitscorporateponsors.heauthorlso hanksOrville .Walker,r.,Richardutz, .Whan ark, iane chmalensee,A.Parasuraman,nd hreeanonymousMreviewersorhelpfulom-ments ndrafts f themanuscript.

Because definition is difficult, researchers often de-pend on unidimensional self-report measures to cap-ture the concepts (Jacoby, Olson, and Haddock 1973;McConnell 1968; Shapiro 1973) and thus must as-sume shared meanings among consumers.What do consumers mean by quality and value?How are perceptions of quality and value formed? Arethey similar across consumers and products? How doconsumers relate quality, price, and value in their de-liberations about products and services? This articleis an attempt to provide answers to these questions by:

* defining the concepts of price, quality, and valuefrom the consumer's perspective,* relating the concepts in a model, and* developing propositions about the concepts, ex-

amining the available evidence in support of thepropositions, and suggesting areas where re-search is needed.To accomplish these objectives, a review of previousresearch was augmented by an exploratory investi-gation of quality and value in the product category ofbeverages. Company interviews, a focus group inter-view, and 30 in-depth consumer interviews conductedby free-elicitation approaches generated qualitative data

Journal of MarketingVol. 52 (July 1988), 2-22.2 / Journalof Marketing,uly 1988

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thatsupplementedpreviousresearchand served as thebasis for 14 propositions.The Exploratory StudyIn the exploratory phase of the research, company,focus group, and in-depthconsumerinterviews wereconducted to gain insight into consumerperceptionsof qualityand value. Cooperationwas obtainedfrom

a nationalcompanythat markets hreedistinctproductlines of beverages:a line of 100%fruit-flavored hil-dren's drinks, a line of 100%fruitjuices, and a lineof tomato-baseduices. In-depth nterviewswere heldwith the marketingresearchdirector,the seniorprod-uct managerfor juices, two company strategic plan-ners, and the presidentof the company's advertisingagency. Open-endedquestionspertainedo issues suchas companyknowledge aboutquality and value per-ceptionsof consumers,ways the companydeterminedthose perceptions, and how quality and value werecommunicated o consumers.A focus group interviewon the topics of qualityand value in beverageswas held in a metropolitanreain the Southeast.The focus groupwas formedin ac-cordancewith guidelines traditionally ollowed in themarketingresearchfield (Bellenger, Bernhardt,andGoldstucker1976). Participantswere recruitedto fitthe demographicprofileof purchasersof fruit- and to-mato-basedbeverages. All participantswere womenbetweenthe ages of 25 and 49 andall had at least onechild youngerthan 10 years of age. Participantswerescreenedto ensurecurrentor recentusageof fruit- andtomato-basedbeverages. The identity of the partici-

patingfirm was not revealedin the interview;discus-sion aboutprice, quality, andvalue centeredon con-sumerexperiencesandperceptions elating o beveragesin general ratherthan to the specific brandsof thesponsoringcompany.The moderator'squestionscov-ered such topics as the meaningof qualityandvalue,the attributesused to evaluatequalityand value, andthe role of price in quality and value judgments.A totalof 30 in-depth nterviewswith female con-sumerswere held in three metropolitanareas (one inthe Southwest,one on the East Coast, and one in theMidwest). Free-elicitationapproachesrecommendedby Olson and Reynolds (1983) were used to obtaininformationabout the cognitive structuresof con-sumers.These techniques ncludedtriadsorts andlad-dering. In the triad sorts, similarbrandsin the bev-erage category were divided into sets of three andsubjectswereprobed or distinctions mongthem.Thisinitialprocessuncovered he important istinctions hatrespondentsused to discriminate mongproducts.Theladderingprocess, which followed the triadsorts, in-volved a sequenceof in-depthprobesdesignedto forcethe consumerup the ladderof abstraction.As these

procedureshad successfully elicited the more impor-tant higher levels of abstraction n previous studies(Gutmanand Alden 1985; Reynolds, Gutman, andFiedler1984;ReynoldsandJamieson1985), they wereused to reveal the links among product attributes,quality, and value. After these indirectmethods, sub-jects responded o open-endedquestionscoveringsuchtopics as informationneededto make udgmentsaboutqualityandvalue, impactof related factors (e.g., ad-vertising and packaging)on perceptions,and defini-tions of the concepts. Beforedebriefing, demographicandbeverage usage data were collected from respon-dents.As is typical in exploratorystudies using means-end chains (e.g., Olson andReynolds 1983), the datageneratedwere not numerical.Instead,the datawerein the form of protocolsand means-endmaps for in-dividual consumers. Patterns of responses and ob-served similarities across individuals form the re-sults of thistypeof exploratory tudy.Whencombinedwith the descriptivedata from the executive and focusgroup interviews, the observationsand insights pro-vide a frameworkfor speculatingabout the conceptsand theirrelationships Figure 1).

The ModelFigure 1, an adaptationof a model first proposedbyDodds and Monroe(1985), affordsan overviewof therelationshipsamong the concepts of price, perceivedquality, and perceived value. In the following sec-tions, relevant literatureand evidence from the ex-ploratory nvestigationareused to define and describeeach concept in the model. To differentiatebetweenproposedrelationshipsand empiricallysupportedre-lationships,discussion of each proposition s dividedinto two parts. First, propositionsare developed onthe basis of the qualitativedatafrom the exploratorystudy and otherconceptualwork from the literature.Second, for each proposition,empiricalevidence thatsupportsand refutes the proposition s reviewed.The Concept of Perceived Quality

Quality can be defined broadlyas superiorityor ex-cellence. By extension, perceivedqualitycan be de-fined as the consumer'sjudgmentabout a product'soverallexcellence or superiority.1Perceivedqualityis(1) different from objective or actual quality, (2) ahigherlevel abstraction ather hana specific attributeof a product, 3) a globalassessment hat n some cases'Lewin's (1936) field theoretic approach to evaluating the instru-mentality of actions and objects in achieving ends could be viewedas a foundation for this definition. In his view, instrumentalityis theextent to which an object or action will achieve an end. In this case,quality could be viewed as instrumentality.

ConsumerPerceptions f Price,Quality,andValue 3



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FIGUREA Means-End Model Relating Price, Quality, and Value

I

I Lower-level attributesPerceptions of lower-level attributes

GOHigher-level attributes

resemblesattitude,and (4) a judgmentusually madewithin a consumer's evoked set.Objective quality versus perceived quality. Sev-eralresearchersDoddsandMonroe1984;Garvin1983;HolbrookandCorfman1985;Jacobyand Olson 1985,Parasuraman,Zeithaml, and Berry 1986) have em-phasized the difference between objective and per-ceived quality.HolbrookandCorfman 1985), for ex-ample, distinguishbetweenmechanisticand humanisticquality: . .. mechanistic [quality] involves an ob-jective aspect or feature of a thing or event; human-istic [quality] nvolves the subjective responseof peo-ple to objects and is therefore a highly relativistic

phenomenon that differs between judges (p. 33).Objective quality is the term used in the literature(e.g., Hjorth-Anderson1984; Monroe and Krishnan1985) to describe the actual technical superiorityorexcellence of the products.As it has been used in the literature, he term ob-jective quality refers to measurableand verifiable su-periority on some predetermined deal standardorstandards.Publishedqualityratingsfrom sources suchas ConsumerReports are used to operationalizetheconstructof objective quality in researchstudies (see

Curryand Faulds 1986). In recentyears, researchershave debated the use of these measuresof qualityonmethodological grounds (Curry and Faulds 1986;Hjorth-Anderson1984, 1986; Maynes 1976; Sproles1986). Concerncenterson the selection of attributesand weights to measureobjectivequality;researchersandexperts(e.g., ConsumerReports)do not agreeonwhat the ideal standard r standards hould be. Others(such as Maynes 1976) claim that objective qualitydoes not exist, that all qualityevaluations are subjec-tive.The term objectivequality s relatedclosely to-but not the same as-other conceptsused to describetechnicalsuperiorityof a product.For example, Gar-vin (1983) discusses product-basedqualityand man-ufacturing-based uality. Product-based ualityrefersto amounts of specific attributesor ingredientsof aproduct. Manufacturing-based uality involves con-formance to manufacturing pecificationsor servicestandards. In the prevailing Japanese philosophy,quality means zero defects-doing it right the firsttime. Conformance to requirements Crosby 1979)andincidenceof internalandexternalfailures(Garvin1983) are otherdefinitions that illustratemanufactur-ing-orientednotions of quality.

4 / Journalf Marketing,uly1988



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These conceptsarenot identical to objectivequal-itybecausethey, too, are based on perceptions.Thoughmeasures of specifications may be actual (rather hanperceptual),the specifications themselves are set onthe basis of what managersperceive to be important.Managers'views may differ considerablyfrom con-sumers'or users' views. ConsumerReportsratingsmaynotagreewithmanagers'assessments n termsof eithersalientattributesor weights assignedto the attributes.In a research tudyforGeneralElectric,Morgan 1985)points out striking differences between consumer,dealer, andmanagerperceptionsof appliancequality.When asked how consumersperceive quality, man-agers listed workmanship,performance,and form ascriticalcomponents.Consumersactuallykeyed in ondifferent components:appearance, cleanability, anddurability.Similarly, companyresearchers n the ex-ploratory tudymeasuredbeveragequalityin terms offlavorroundedness and astringency whereas con-sumers focused on purity (100% fruit juice) andsweetness.

To reiterate, perceived quality is defined in themodel as the consumer'sjudgmentabout the superi-ority or excellence of a product. This perspectiveissimilar to the user-basedapproachof Garvin (1983)and differs from product-basedand manufacturing-based approaches.Perceivedquality is also differentfromobjective quality, which arguablymay not existbecause all quality is perceived by someone, be itconsumersor managersor researchersat ConsumerReports.Higher level abstraction rather than an attribute.The means-endchain approachto understanding he

cognitive structureof consumersholds that productinformations retained n memoryat several levels ofabstraction Cohen 1979; Myers and Shocker 1981;Olson and Reynolds 1983; Young and Feigen 1975).The simplest level is a product attribute; he mostcomplex level is the value or payoff of the product othe consumer.Young andFeigen (1975) depictedthisview in the Greybenefitchain, whichillustrates owa productis linked througha chain of benefits to aconcept called the emotionalpayoff.Product-> Functional >Practical-> EmotionalBenefit Benefit Payoff

Related conceptualizations (Table 1) pose the sameessential idea: consumers organize information at var-ious levels of abstraction ranging from simple productattributes (e.g., physical characteristics of Myers andShocker 1981, defining attributesof Cohen 1979,concrete attributesof Olson and Reynolds 1983) tocomplex personalvalues. Quality has been includedin multiattributemodels as though it were a lower levelattribute criticismsof this practicehave been leveledby Ahtola 1984, Myers and Shocker 1981, and oth-

ers), but perceived quality is instead a second-orderphenomenon:an abstractattribute n Olson and Rey-nold's (1983) terms, a B attribute somewhat ab-stract, multidimensional but measurable) in Myers andShockers' (1981) formulation.Global assessment similar to attitude. Olshavsky(1985) views quality as a form of overall evaluationof a product, similar in some ways to attitude. Hol-

brook and Corfman (1985) concur, suggesting thatquality is a relatively global value judgment. Lutz(1986) proposes two forms of quality, affective qual-ity and cognitive quality. Affective quality par-allels Olshavsky's and Holbrook and Corfman's viewsof perceived quality as overall attitude. Cognitivequality is the case of a superordinatenferentialas-sessment of quality interveningbetween lower ordercues and an eventual overallproductevaluation(Lutz1986). In Lutz's view, the higher the proportion ofattributes hat can be assessedbeforepurchase searchattributes) to those that can be assessed only duringconsumption(experienceattributes),the more likelyit is thatqualityis a higherlevel cognitive judgment.Conversely, as the proportion of experience attributesincreases, quality tends to be an affective judgment.Lutz extends this line of reasoning to propose that af-fective quality is relatively more likely for servicesand consumer nondurable goods (where experienceattributes dominate) whereas cognitive quality is morelikely for industrial products and consumer durablegoods (where search attributes dominate).Judgment made within consumer's evoked set.Evaluations of quality usually take place in a com-

parison context. Maynes (1976) claimed that qualityevaluations are made within the set of goods which. . . would in the consumer's judgement serve thesame general purpose for some maximum outlay. Onthe basis of the qualitative study, and consistent withMaynes' contention, the set of products used in com-paring quality appears to be the consumer's evokedset. A product's quality is evaluated as high or lowdepending on its relative excellence or superiorityamong products or services that are viewed as sub-stitutes by the consumer. It is critical to note that thespecific set of products used for comparison dependson the consumer's, not the firm's, assessment of com-peting products. For example, consumers in the ex-ploratorystudy compared the quality of different brandsof orange juice (which would be the comparison con-text of the firm), the quality of different forms (re-frigerated vs. canned), and the quality of purchasedversus homemade orange juice.Figure 2 depicts the perceived quality componentof the conceptual model in Figure 1.

PQI: Consumers use lower level attribute cuesto infer quality.ConsumerPerceptions f Price,Quality,andValue 5



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Selected Means-End Chain Models TABLE 1and Their Proposed Relationships with Quality and ValuePersonal ValueScheme Attribute Level Quality Level Value Level Level

Young and Feigin(1975) Functional benefits Practical benefit Emotional payoffRokeach (1973) Product attributes Choice criteria Instrumental values Terminal valuesHoward (1977)Myers and Physical characteristics Pseudophysical Task or outcome User referentShocker (1981) characteristics referentGeistfeld, Sproles, Concrete, Somewhat abstract, Abstract, multidimensional, and difficultand Badenhop unidimensional, and multidimensional but to measure attributes (A)(1977) measurable measurable (B)attributes (C)Cohen (1979) Defining attributes Instrumental attributes Highly valuedstatesGutman and Attributes Consequences VaReynolds (1979)Olson and Concrete attributes Abstract attributes Functional Terminal valuesReynolds (1983) consequencesPsychosocial

consequencesInstrumentalvalues

Holbrook and Corfman (1985) note that early phi-losophers used the word quality to refer to explicitfeatures (i.e., properties or characteristics) of an ob-ject as perceived by a subject (e.g., Austin 1964, p.44; Russell 1912). Olshavsky (1985) terms this ten-dency to infer quality from specific attributes sur-rogate-based preference forming behavior and citesexamples of product categories in which a given sur-rogate is highly associated with quality (e.g., size sig-nals quality in stereo speakers, style signals quality incars and clothes). In the exploratory study, consumersrepeatedly associated quality in fruit juices with purity(e.g., 100% fruit juice with no sugar added) or fresh-ness. In these and other product categories, one or afew attributes from the total set of attributes appearto serve as reliable signals of product quality.Attributes that signal quality have been dichotom-ized into intrinsic and extrinsic cues (Olson 1977; Ol-son and Jacoby 1972). Intrinsic cues involve the phys-ical composition of the product. In a beverage, intrinsiccues would include such attributes as flavor, color,texture, and degree of sweetness. Intrinsic attributescannot be changed without altering the nature of theproduct itself and are consumed as the product is con-sumed (Olson 1977; Olson and Jacoby 1972). Extrin-sic cues are product-related but not part of the phys-ical product itself. They are, by definition, outside theproduct. Price, brand name, and level of advertisingare examples of extrinsic cues to quality.The intrinsic-extrinsic dichotomy of quality cuesis useful for discussing quality but is not without con-

ceptual difficulties.2 A small number of cues, mostnotably those involving the product's package, aredifficult to classify as either intrinsic or extrinsic.Package could be considered an intrinsic or an extrin-sic cue depending on whether the package is part ofthe physical composition of the product (e.g., a drip-less spout in detergent or a squeezable ketchup con-tainer), in which case it would be an intrinsic cue, orprotection and promotion for the product (e.g., a card-board container for a computer), in which case it wouldbe an extrinsic cue. For purposes of the model, pack-age is considered an intrinsic cue but the informationthat appears on the package (e.g., brand name, price,logo) is considered an extrinsic cue.

Evidence. Researchers have identified key lowerlevel attributes used by consumers to infer quality inonly a few product categories. These lower level cuesinclude price (Olson 1977; Olson and Jacoby 1972),suds level for detergents, size for stereo speakers (01-shavsky 1985), odor for bleach and stockings (Laird1932), and produce freshness for supermarkets (Bon-ner and Nelson 1985).

2Othermethods of classification could have been used for these cues.Possible alternative classification schemes include (1) tangible/intan-gible, (2) distal/proximal (Brunswick 1956), and (3) direct/inferen-tial. However, each of these dichotomies has the same fuzzy setproblems that are inherent in the intrinsic/extrinsic dichotomy. No-tably, with each scheme, some cues (particularly package) would bedifficult to classify. Because the intrinsic/extrinsic dichotomy has aliteratureunderpinning it, because it is widely used and recognized,and because it has clear managerial implications, it was retained inthis review.




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FIGUREThe Perceived Quality Component

Perceived Quality

I I Extrinsic AttributesIntrinsic AttributesO Perceptions of lower-level attributes

) Higher-level abstractions

PQ2: The intrinsic product attributes that sig-nal quality are product-specific,but di-mensions of quality can be generalizedto productclasses or categories.Generalizing boutqualityacrossproductshas beendifficult for managers and researchers. Specific orconcrete intrinsic attributesdiffer widely acrossprod-ucts, as do the attributes onsumers use to inferqual-ity. Obviously, attributesthat signal quality in fruitjuice are not the same as those indicating quality inwashing machines or automobiles. Even within a

productcategory, specific attributesmay providedif-ferent signals about quality. For example, thicknessis related to high quality in tomato-based uices butnot in fruit-flavoredchildren's drinks. The presenceof pulp suggests high quality in orangejuice but lowquality in apple juice.Though the concrete attributes hat signal qualitydiffer across products, higher level abstract dimen-sions of quality can be generalized to categories ofproducts.As attributes ecome more abstract i.e., are

higher in the means-endchains), they become com-mon to more alternatives. Garvin(1987), for exam-ple, proposesthatproductqualitycan be captured neight dimensions:performance,features, reliability,conformance,durability, erviceability,aesthetics,andperceived quality (i.e., image). Abstractdimensionsthatcapturediverse specific attributeshave been dis-cussedby Johnson 1983) andAchrol, Reve, andStem(1983). In describing the way consumers comparenoncomparablealternatives(e.g., how they choosebetween such diverse alternatives as a stereo and aHawaiianvacation), Johnsonposited that consumersrepresentthe attributes n memory at abstract evels(e.g., using entertainment alue as the dimension onwhich to compare stereos and Hawaiianvacations).Similarly, Achrol, Reve, and Ster proposedthat themultitudeof specific variablesaffectinga firm in theenvironmentcan be captured n abstractdimensions.Rather than itemizing specific variables that affectparticular irms in differentindustries undervaryingcircumstances,they proposedconceptualizing he en-vironment n terms of its abstractqualitiesor dimen-

Consumererceptionsf Price,Quality,ndValue 7



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sions (e.g., homogeneity-heterogeneity, stability-in-stability, concentration-dispersion, and turbulence).Olson (1978) pointed out that consumers may useinformational cues to develop beliefs about productsand that task response (i.e., choice or evaluation) maybe a direct function of these mediating beliefs. Ac-cording to Olson, these beliefs may be of two types:descriptive, which involve a restatement of the orig-inal information in more abstract terms (e.g., accel-erates from 0 to 60 in 5 seconds generates the beliefhigh performance ) and inferential, which involvean inference to information missing in the environ-ment (e.g., accelerates from 0 to 60 in 5 secondsgenerates the belief probablycorers well, too ). Thisdistinction roughly parallels Alba and Hutchinson's(1987) distinction between interpretive and embellish-ment inferences and both dichotomies illustratethe levelat which dimensions of quality can be conceptualized.Interviews with subjects in the exploratory studysuggested that specific intrinsic attributes used to inferquality could not be generalized across beverages, butthat higher level abstract dimensions could capture themeaning of perceived quality in whole categories orclasses of beverages. Purity, freshness, flavor, andappearance were the higher level abstract dimensionssubjects discussed in defining quality in the beveragecategory.

Evidence. In a study of quality in long distancetelephone, banking, repair and maintenance, and bro-kerage services, Parasuraman, Zeithaml, and Berry(1985) found consistent dimensions of perceived qual-ity across four consumer service industries. These ab-stract dimensions included reliability, empathy, as-surance, responsiveness, and tangibles. Similarly,Bonner and Nelson (1985) found that sensory signalssuch as rich/full flavor, naturaltaste, fresh taste, goodaroma, and appetizing looks-all higher level abstractdimensions of perceived quality-were relevant across33 food productcategories. Brucks and Zeithaml (1987)contend on the basis of exploratory work that six ab-stract dimensions (ease of use, functionality, perfor-mance, durability, serviceability, and prestige) can begeneralized across categories of durable goods. Thoughempirical research has not verified the generalizabilityof dimensions for categories of packaged goods otherthan food products, for durable goods, or for indus-trial goods, abstract dimensions spanning these cate-gories could be conceptualized, verified, and then usedto develop general measures of quality in product cat-egories.

PQ3:Extrinsic cues serve as generalized qual-ity indicators across brands, products, andcategories.Extrinsic attributes (e.g., price, brand name) are

not product-specific and can serve as general indica-tors of quality across all types of products. Price, brandname, and level of advertising are three extrinsic cuesfrequently associated with quality in research, yet manyother extrinsic cues are useful to consumers. Of spe-cial note are extrinsic cues such as product warrantiesand seals of approval(e.g., Good Housekeeping). Price,the extrinsic cue receiving the most research attention(see Olson 1977 for a complete review of this liter-ature), appears to function as a surrogate for qualitywhen the consumer has inadequate information aboutintrinsic attributes. Similarly, brand name serves as ashorthand for quality by providing consumers witha bundle of information about the product (Jacoby etal. 1978; Jacoby, Szybillo, and Busato-Schach 1977).Level of advertising has been related to product qual-ity by economists Nelson (1970, 1974), Milgrom andRoberts (1986), and Schmalensee (1978). The basicargument holds that for goods whose attributes are de-termined largely during use (experience goods), higherlevels of advertising signal higher quality. Schmalen-see argues that level of advertising, rather than actualclaims made, informs consumers that the companybelieves the goods are worth advertising (i.e., of highquality). Supporting this argument is the finding thatmany subjects in the exploratory study perceivedheavily advertised brands to be generally higher inquality than brands with less advertising.The exploratory investigation of beverages pro-vided evidence that form of the product (e.g., frozenvs. canned vs. refrigerated) is an additional importantextrinsic cue in beverages. Consumers held consistentperceptions of the relative quality of different formsof fruit juice: quality perceptions were highest for freshproducts, next highest for refrigerated products, thenbottled, then frozen, then canned, and lowest for dryproduct forms.

Evidence. The literature on hedonic quality mea-surement (Court 1939; Griliches 1971) maintains thatprice is the best measure of product quality. Consid-erable empirical research has investigated the rela-tionship between price and quality (see Olson 1977for a review of this literature in marketing) and hasshown that consumers use price to infer quality whenit is the only available cue. When price is combinedwith other (usually intrinsic) cues, the evidence is lessconvincing.In forming impressions about quality of merchan-dise, respondents in a study by Mazursky and Jacoby(1985) selected brand name more frequently than anyother information. Gardner (1970, 1971) found sig-nificant main effects on quality perceptions due to brandname.Kirmani and Wright (1987a,b) found empiricalsupport for the relationship between level of spending




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on advertisingand quality inferences. Manipulatingexpenditureson mediabudgetsand on production le-ments in advertisements,they found significant ef-fects of both on consumers'quality perceptions.Bonner and Nelson (1985) confirm that productformrelatesto qualityperceptions.An empirical tudyrevealed he samehierarchy f quality n package orm(fresh, refrigerated, rozen, bottled,canned,dried)aswas found in the exploratorystudy. Bonner and Nel-son conclude: The sensory maintenanceability ofpackagingdiffers by type and those packagingformsthat can best deliver a rich/full flavor, natural andfresh taste, good aroma, and an appetizing appear-ance, are likely to gain marketshare (p. 75).PQ4:Consumersdependon intrinsicattributesmore than extrinsic attributes(a) at the point of consumption,(b) in prepurchasesituations when in-trinsicattributes re searchattributes(ratherthan experience attributes),and(c) whenthe intrinsicattributes avehighpredictivevalue.Whichtype of cue-intrinsic or extrinsic-is moreimportant n signaling quality to the consumer?Ananswer o thisquestionwouldhelpfirmsdecidewhetherto investresources n product mprovements intrinsiccues) or in marketing extrinsiccues) to improveper-ceptions of quality. Finding a simple and definitiveanswerto this question s unlikely,but theexploratorystudysuggeststhe type of attributehatdominatesde-pends on several key contingencies.The first contingency relates to the point in thepurchasedecision and consumptionprocess at whichquality evaluation occurs. Consumersmay evaluatequality at the point of purchase(buying a beverage)or at the point of consumption drinkinga beverage).The salienceof intrinsicattributesat the pointof pur-chase depends on whether they can be sensed andevaluatedat that time, that is, whetherthey containsearch attributes Nelson 1970). Where search attri-butes are present(e.g., sugarcontentof a fruitjuiceor color or cloudiness of a drinkin a glass jar), theymay be importantqualityindicators.In theirabsence,consumersdependon extrinsiccues.At the point of consumption,most intrinsicattri-butes can be evaluatedand thereforebecome acces-sible as qualityindicators.Manyconsumers n the ex-ploratorystudy on beveragesused taste as the signalof qualityat consumption.If a beveragedid not tastefreshor tasted tinny or too thin, the evaluationwasthatqualitywas low.Consumersdependon intrinsicattributeswhen thecues have high predictive value (Cox 1962). Manyrespondents n the exploratorystudy, especially those

expressingconcernfor theirchidren'shealthandteeth,unequivocally stated that purity (100% juice, no sugar)was the criterion hey used to judge qualityacross thebroad fruitjuice category. The link between qualityand this intrinsic attributewas clear and strong: allfruit beverages with 100% juice were high qualitybeveragesand all others were not.Evidence. Researchers addressing this question

(Dardenand Schwinghammer1985; Etgar and Mal-hotra1978;Olson andJacoby 1972;Rigaux-Bricmont1982; Szybillo andJacoby 1974) have concluded thatintrinsic cues were in generalmore important o con-sumers in judging quality because they had higherpredictivevalue than extrinsic cues. This conclusiondoes not account for the fact that many assessmentsaboutquality are made with insufficient informationabout intrinsiccues. Selected individualstudies(e.g.,Sawyer, Worthing,and Sendak1979) have shown thatextrinsiccues canbe moreimportanto consumers hanintrinsic cues. Conflictingevidence about the impor-tance of intrinsic and extrinsic cues becomes clearerif the conditions under which each type of cue be-comes importantare investigated.

PQ5:Consumers depend on extrinsic attri-butes more than intrinsicattributes(a) in initial purchase situations whenintrinsiccues arenot available(e.g.,for services),(b) when evaluationof intrinsiccues re-quiresmore effort and time than theconsumer perceives is worthwhile,and(c) when quality is difficult to evaluate(experienceand credencegoods).

Extrinsic cues are posited to be used as qualityindicatorswhen the consumer s operatingwithoutad-equate informationabout intrinsicproductattributes.This situationmay occur when the consumer(1) haslittle or no experience with the product, (2) has in-sufficient time or interest to evaluatethe intrinsicat-tributes,and (3) cannot readilyevaluatethe intrinsicattributes.At point of purchase, consumers cannot alwaysevaluaterelevant ntrinsicattributesof a product.Un-less free samples arebeing provided,consumerscan-not tastenew food productsbeforebuyingthem. Con-sumersdo not know for certainhow long a washingmachine or automobile will last until they purchaseand consume it. In these and similar situations, theconsumerrelies on extrinsic attributessuch as war-ranty,brandname, and packageas surrogates or in-trinsicproductattributes.At other times, intrinsic attributeson which toevaluatequalityare availablebut the consumeris un-




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willing or unable to expend the time and effort toevaluate them. Working women, men, and singleshoppers, for example, have been reported to use su-permarket product information significantly less thanother demographic segments (Zeithaml 1985), in partbecause these segments are more time-conscious thanother segments (Zeithaml 1985; Zeithaml and Berry1987). Working women interviewed in the explora-tory study reportedthat they shopped quickly and couldnot study nutritional information carefully on bever-age containers. They selected beverages on the basisof the freshness or quality conveyed by packages orbrand names.In other situations, intrinsic product attributes in-dicating quality are simply too difficult for the con-sumer to evaluate. Evaluation may be difficult priorto purchase, as with haircuts, restaurant meals, andother experience goods. Complex stereo equipment,insurance policies, and major auto repairs are exam-ples of products that for many consumers are difficultto evaluate even after purchase and consumption. Forthese credence goods (Darby and Karni 1973), con-sumers may rely on extrinsic cues because they aresimpler to access and evaluate.

Evidence. Research has shown that price is usedas a quality cue to a greater degree when brands areunfamiliar than when brands are familiar (Smith andBroome 1966; Stokes 1985). Research also has shownthat when perceived risk of making an unsatisfactorychoice is high, consumers select higher priced prod-ucts (Lambert 1972; Peterson and Wilson 1985; Shap-iro 1968, 1973).PQ6: The cues that signal quality change overtime because of

(a) competition,(b) promotional efforts of companies,(c) changing consumer tastes, and(d) information.As improved technology and increasing competi-tion lead to the development of technically better

products, the features that signal superiority change.The exploratory study suggested that the attribute cuessignaling quality in beverages are not static, but in-stead change over time. The shift from canned orangejuice to frozen orange juice to refrigeratedorange juiceis one example of the evolving standards of quality inbeverages. The replacement of saccharin with Nutra-sweet in beverages is another.Harness (1978, p. 17) illustratesthe forces of changeand the responses made by Procter & Gamble to keepTide detergent the highest quality brand in the pack-aged soap category:

Since Tide was first introducedn 1947, consumershavechanged,washingmachineshavechanged, ab-

rics have changed, laundry habits have changed, andcompetition has changed. . . . These are just a fewof the more significant changes in the householdlaundry market, and every one of these changes hasa meaningfor the performanceand the marketingplansfor Tide. The product which we are selling today isimportantlydifferent from the Tide productwhich weintroduced in 1947. It is different in its cleaning per-formance, in sudsing characteristics, aesthetics,physical properties, packaging. In total, there havebeen 55 significant modifications in this one brandduring its 30-year lifetime.

The Concept of Perceived PriceFrom the consumer's perspective, price is what is givenup or sacrificed to obtain a product. This definition iscongruent with Ahtola's (1984) argument against in-cluding monetary price as a lower level attribute inmultiattribute models because price is a give com-ponent of the model, rather than a get component.Defining price as a sacrifice is consistent with con-ceptualizations by other pricing researchers (Chapman1986; Mazumdar 1986; Monroe and Krishnan 1985).

Figure 1 delineates the components of price: ob-jective price, perceived nonmonetary price, and sac-rifice. Jacoby and Olson (1977) distinguished be-tween objective price (the actual price of a product)and perceived price (the price as encoded by the con-sumer). Figure 1 emphasizes this distinction: objec-tive monetary price is frequently not the price encodedby consumers. Some consumers may notice that theexact price of Hi-C fruit juice is $1.69 for a 6-pack,but others may encode and remember the price onlyas expensive or cheap. Still others may not en-code price at all.A growing body of research supports this distinc-tion between objective and perceived price (Allen,Harrell, and Hutt 1976; Gabor and Granger 1961;Progressive Grocer 1964). Studies reveal that con-sumers do not always know or remember actual pricesof products. Instead, they encode prices in ways thatare meaningful to them (Dickson and Sawyer 1985;Zeithaml 1982, 1983). Levels of consumer attention,awareness, and knowledge of prices appear to be con-siderably lower than necessary for consumers to haveaccurate internal reference prices for many products(Dickson and Sawyer 1985; Zeithaml 1982). Dicksonand Sawyer reported that the proportions of con-sumers checking prices of four types of products(margarine, cold cereal, toothpaste, and coffee) at pointof purchase ranged from 54.2 to 60.6%. Among thegroups of consumers not checking prices in thesestudies, a large proportion (from 58.5 to 76.7% in thefour product categories) stated that price was just notimportant. Another recent study indicates that priceawareness differs among demographic groups, thegreatest levels of awareness being in consumers whoare female, married, older, and do not work outside

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thehome(Zeithaml ndBerry1987).Attention o pricesis likelyto be greaterorhigherpricedpackagedgoods,durablegoods, and services than for low pricedbev-erages, but other factors in these categories-com-plexity, lack of price information,andprocessing imerequired-may interferewith accurateknowledge ofprices. An additionalfactor contributingto the gapbetween actual and perceived price is price disper-sion, the tendency for the same brandsto be priceddifferentlyacross stores or for productsof the sametype andqualityto have wide pricevariance(Maynesand Assum 1982).Ppl: Monetary price is not the only sacrificeperceivedby consumers.Fullpricemodelsin economics(e.g., Becker1965)acknowledgethatmonetaryprice is not the only sac-rifice consumersmake to obtainproducts.Timecosts,searchcosts, andpsychic costs all entereitherexplic-itly or implicitly into the consumer's perceptionofsacrifice. If consumers cannot find productson the

shelf, or if they must traveldistancesto buy them, asacrifice has been made. If consumersmust expendeffort to assembledurableproductsor time to preparepackagedgoods, and if this time and effort does notprovide satisfactionto the consumerin the form ofrecreationor a hobby, a sacrifice has been made.Evidence. Research n economics, home econom-ics, andmarketing upports he proposition hat othercosts-time, effort, search, psychic-are salient toconsumersDown 1961;Gronau1973;Leibowitz1974;Leuthold1981;Linder1970;Mabry1970;Mincer1963;Nichols, Smolensky,andTideman1971;Zeithamland

Berry 1987).The Price-QualityRelationship

Nearly 90 researchstudies in the past 30 years havebeen designed to test the general wisdom that priceand qualityarepositively related.Despite the expec-tation of a positive relationship,resultsof these stud-ies have providedmixed evidence.PPQI:A general price-perceived quality re-lationshipdoes not exist.Price reliance is a generaltendencyin some con-sumersto dependon price as a cue to quality (Lam-bert 1972; Shapiro 1968, 1973). The body of litera-ture summarizedby Olson (1977) is based on theassumption hata generalprice-perceived qualityre-lationshipexists. Despite a multitudeof experimentalstudieson the topic, however, the relationshiphas notsurfacedclearly except in situationswhere methodo-logicalconcerns uchas demandartifactsSawyer1975)could offer alternativeexplanations for the results

(Monroeand Krishnan1985; Olson 1977). Bowbrick(1982) questionedthe universalityof the price-per-ceived qualityrelationship,called the stream of stud-ies on the topic pseudoresearch, nd claimed thatthe price-perceived qualityhypothesis is too generaland untestableto produceanythingother than trivialresults. Peterson and Wilson (1985) arguethat the re-lationshipbetween price and perceivedquality is notuniversalandthat the directionof therelationshipmaynot always be positive.Evidence. Monroe and Krishnan 1985) concludedthata positiveprice-perceivedqualityrelationship oesappear o exist despitethe inconsistencyof the statis-tical significance of the researchfindings. They alsonoted, however,thatmultipleconceptualproblemsandmethodologicallimitationscompromisedpreviousre-search.Monroe and Dodds (1988) describe these lim-itationsin greaterdetail and delineate a researchpro-gramfor establishingthe validityof the price-qualityrelationship.Many empiricalstudieshave producedresultsthatconflict with Monroe and Krishnan'sassessmentof a

positiverelationship.n severalstudies Friedman 967;Swan 1974), overall association between price andperceived quality is low. Otherstudies show the re-lationship o be nonlinear Peterson1970;PetersonandJolibert 1976), highly variable across individuals(Shapiro 1973), and variable across productsbeingjudged (Gardner1971). Otherresearch, summarizedby Olson (1977), shows thatprice becomes less im-portantas a qualityindicatorwhen otherproductqual-ity cues, such as brandname (Gardner1971) or storeimage (Staffordand Enis 1969), are present.Explor-atory and surveyresearch(Bonnerand Nelson 1985;Parasuraman,eithaml,andBerry1985) indicates hatprice is amongthe least importantattributes hatcon-sumers associate with quality.Related studies (summarizedby Hjorth-Anderson1984) have consistentlyshown price to be correlatedonly weakly with objective (ratherthan perceived)quality. Typical of these studies is work by Sproles(1977), who correlatedthe prices of products withqualityratingsobtained hroughConsumerReportsandConsumers' Research Magazine. Though a positiveprice-objective qualityrelationshipwas foundin 51%of the 135product ategories,no relationshipwas foundin 35%and a negativerelationshipwas foundin 14%.Similarly, Riesz found the mean rankcorrelationbe-tween price and objective quality to be .26 for 685productcategoriesreported n ConsumerReportsbe-tween 1961 and 1975 and .09 for 679 brandsof pack-aged foods (Riesz 1978). Geistfeld(1982) foundvari-abilityamong marketsand across storesin the price-objectivequalityrelationship.Most recently,Gerstner(1985) assessed the correlationbetween quality and




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price for 145 productsand concluded that the rela-tionshipappeared o be product-specificandgenerallyweak.Both Peterson and Wilson (1985) and Olshavsky(1985) arguethat the emphasis n price-quality tudiesshould not be on documenting he generalprice-per-ceived qualityrelationship,but on the conditions un-der which price informations likely to lead to an in-ference aboutproductquality. One possibility is thatsome individualsrely heavilyon priceas a quality sig-nal whereasothersdo not. Petersonand Wilson sortedrespondents nto groupson the basis of their havinga price-relianceschema and confirmed in an experi-ment that schematics perceive a strongerrelation-ship between price and quality than aschematics.This general tendencyon the partof some consumersto associate price and quality has been examined inthe contextof covariation ssessmentby Roedder-John,Scott, and Bettman(1986), who confirmedthat con-sumers differ in theirbeliefs about the associationbe-tween the price and quality variables. These studiesprovideevidence thatsome consumershave a schemaof price reliance, rather hanindicatinga generalizedtendencyin consumersto associateprice andquality.

PPQ2: he use of priceas an indicatorof qual-ity dependson(a) availabilityof othercues to quality,(b) price variation within a class ofproducts,(c) productquality variation within acategoryof products,(d) level of price awareness of con-sumers, and(e) consumers'ability to detect qualityvariation n a groupof products.

MonroeandKrishnan1985)contend hatmostpastprice-perceivedqualityresearchhas been exploratoryandhasnotsucceeded n resolving hequestionof whenprice is used to inferquality. Contingenciesaffectingthe use of price as a quality indicatorfit into threegroups:informational actors, individualfactors, andproductcategoryfactors.The firstcategoryof factorsbelieved to affect theprice-perceived qualityrelationshipconsists of otherinformationavailableto the consumer.Whenintrinsiccuesto qualityarereadilyaccessible,when brandnamesprovideevidence of a company'sreputation,or whenlevel of advertisingcommunicates he company'sbe-lief in thebrand,the consumermayprefer o use thosecues insteadof price.Several individualdifferencefactorsmay accountfor the variation n the use of priceas a qualitysignal.One explanatoryvariable is price awareness of theconsumer:consumersunawareof productprices ob-viously cannotuse price to infer quality. Anotherin-

dividual difference is consumers' ability to detectqualityvariationamong products(Lambert1972). Ifthe consumerdoes not have sufficientproductknowl-edge (or perhapseven interest)to understand he vari-ation in quality (e.g., French,Williams, and Chance1973), price and otherextrinsiccues may be used toa greaterdegree.Consumersappearto depend more on price as aqualitysignal in some productcategoriesthanin oth-ers. One explanationfor this variationmay be differ-ences in price-objective qualityrelationshipsby cat-egory (e.g., the low priceof Japaneseautomobilesdoesnot diminishthe well-establishedperceptionof qualityin the category). Anotherexplanationmay be pricevariation n a category. In packagedgoods categories(suchas beverages)whereproductsdiffer ittlein price,theconsumermaynot attributehigher qualityto prod-ucts that cost only a few cents more than those ofcompetitors.Respondentsn the exploratory tudy, forexample, did not associate beverageprice with qual-ity. Stillanother ategory-specificontingencys qualityvariation: in categories where little variation is ex-pected among brands(such as salt or papersandwichbags), pricemay functiononly as an indicationof sac-rifice whereasin categorieswherequalityvariation sexpected (such as canned seafood or washing ma-chines), price may function also as an indicationofquality.

Evidence. Olson (1977) showed that availabilityof intrinsic and extrinsic cues other than price typi-cally results in weighting those factors (e.g., brandname) as more importantthan price. He concludedthat brandname is a strongercue thanprice for eval-uatingoverallquality (Gardner1971; Jacoby, Olson,and Haddock 1973; Smith and Broome 1966; Stokes1985).Studies have indicated thatuse of price as a qual-ity indicator differs by productcategory. Except forwine andperfume,mostpositivelinkshavebeen foundin durablerather than in nondurableor consumableproducts(Gardner1970; Lambert1972; PetersonandWilson 1985). In an experimentaletting,PetersonandWilson documented the relationship between pricevariationand price-perceived qualityassociation:thegreater hepricevariation,the greater he tendencyforconsumersto use price as a quality indicator.In a recentmeta-analysisof 41 studies investigat-ing the associationbetweenprice andperceivedqual-ity, Rao and Monroe (1987) found that the type ofexperimentaldesign and the magnitudeof the pricemanipulationsignificantly influenced the size of theprice-perceived qualityeffects obtained.The numberof cues manipulated ndthe pricelevel werenot foundto have a significanteffect. Becauseof constraintsm-posed by themeta-analysis,hereviewers ncludedonly

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consumer products and eliminated several studies asoutliers, so the full range of prices and types of prod-ucts was not investigated.Considerable empirical research supports individ-ual differences in consumer knowledge of prices.Consumers are not uniformly aware of prices and cer-tain consumer segments (such as working women andmen) are less aware of prices than other segments(Zeithaml 1985; Zeithaml and Berry 1987; Zeithamland Fuerst 1983). Price awareness level has not beenstudied as it relates to quality perceptions, though Rao(1987) documented the impact of prior knowledge ofproducts on the use of price as a quality cue.

The Concept of Perceived ValueWhen respondents in the exploratory study discussedvalue, they used the term in many different ways, de-scribing a wide variety of attributes and higher levelabstractions that provided value to them. What con-stitutes value-even in a single product category-appearsto be highly personal and idiosyncratic. Thoughmany respondents in the exploratory study agreed oncues that signaled quality, they differed considerablyin expressions of value. Patterns of responses from theexploratory study can be grouped into four consumerdefinitions of value: (1) value is low price, (2) valueis whatever I want in a product, (3) value is the qual-ity I get for the price I pay, and (4) value is what Iget for what I give. Each definition involves a dif-ferent set of linkages among the elements in the modeland each consumer definition has its counterpart in theacademic or trade literature on the subject. The di-versity in meanings of value is illustrated in the fol-lowing four definitions and provides a partial expla-nation for the difficulty in conceptualizing andmeasuring the value construct in research.

Value is low price. Some respondents equated valuewith low price, indicating that what they had to giveup was most salient in their perceptions of value. Intheir own words:* Value is price-which one is on sale.* When I can use coupons, I feel that the juice isa value.* Value means low price.* Value is whatever is on special this week.

In industry studies, Schechter (1984) and Bishop (1984)identified subsets of consumers that equate value withprice. Other industry studies, including Hoffman's(1984), reveal the salience of price in the value equa-tions of consumers.Value is whatever I want in a product. Other re-

spondents emphasized the benefits they received fromthe product as the most importantcomponents of value:

* Value is what is good for you.* Value is what my kids will drink.* Little containers because then there is no waste.* Value to me is what is convenient. When I cantake it out of the refrigerator and not have tomix it up, then it has value.

This second definition is essentially the same as theeconomist's definition of utility, that is, a subjectivemeasure of the usefulness or want satisfaction that re-sults from consumption. This definition also has beenexpressed in the trade literature. Value has been de-fined as whatever it is that the customer seeks inmaking decisions as to which store to shop or whichproduct to buy (Chain Store Age 1985). Schechter(1984) defines value as all factors, both qualitativeand quantitative, subjective and objective, that makeup the complete shopping experience. In these defi-nitions, value encompasses all relevant choice crite-ria.

Value is the quality I get for the price I pay. Otherrespondents conceptualized value as a tradeoff be-tween one give component, price, and one getcomponent, quality:* Value is price first and quality second.* Value is the lowest price for a quality brand.* Value is the same as quality. No-value is af-fordable quality.

This definition is consistent with several others thatappear in the literature (Bishop 1984; Dodds andMonroe 1984; Doyle 1984; Shapiro and Associates1985).Value is what I get for what I give. Finally, somerespondents considered all relevant get componentsas well as all relevant give components when de-scribing value:

* Value is how many drinks you can get out of acertain package. Frozen juices have more be-cause you can water them down and get moreout of them.* How many gallons you get out of it for whatthe price is.* Whatever makes the most for the least money.* Which juice is more economical.0 Value is what you are paying for what you aregetting.* Value is price and having single portions so thatthere is no waste.

This fourth definition is consistent with Sawyer andDickson's (1984) conceptualization of value as a ratioof attributes weighted by their evaluations divided by




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priceweighted by its evaluation. This meaningis alsosimilarto the utility per dollar measure of value usedby Hauser and Urban (1986), Hauser and Simmie(1981), Hauser and Shugan(1983), and others.These four consumerexpressionsof value can becaptured n one overall definition:perceivedvalue isthe consumer's overall assessmentof the utility of aproductbased on perceptionsof what is received andwhat is given. Thoughwhat is received varies acrossconsumers(i.e., some may wantvolume, othershighquality, still others convenience) and what is givenvaries(i.e., some are concernedonly with money ex-pended,others with time andeffort), value representsa tradeoff of the salient give and get components.

Value and quality. In the means-endchains, value(like quality)is proposedto be a higherlevel abstrac-tion. It differs from qualityin two ways. First, valueis more individualisticand personalthan quality andis therefore a higher level concept than quality. Asshown in Table 1, value may be similar to the emo-tional payoff of Young and Feigen (1975), to ab-stract, multi-dimensional, difficult-to-measure attri-butes of Geistfeld, Sproles, and Badenhop (1977),and to instrumental alues of Olson and Reynolds(1983). Second, value (unlike quality) involves atradeoffof give and get components. Though manyconceptualizationsof value have specified quality asthe only get componentin the value equation, theconsumermay implicitly include other factors, sev-eral that are in themselves higher level abstractions,such as prestigeand convenience (see HolbrookandCorfman 1985 for a discussion of the difficulty in-volved in separatingthese abstractions n the valueconstruct).

Pv1: The benefitcomponentsof value includesalient intrinsic attributes,extrinsic at-tributes,perceivedquality,and otherrel-evant high level abstractions.Differences among the benefit or get componentsshownin the model and listed in Pvl can be illustratedby findingsfromthe exploratorystudyof fruitjuices.As discussed before, perceivedquality in fruitjuiceswas signaled by the attribute 100% fruit juice plussensoryattributes uch as taste and texture.Some intrinsicattributes f fruit uices-other thanthose signalingquality-were cited as providingvalueto respondents.Color was one importantntrinsic at-tribute.Most mothersknew which colors or flavorsof juice theirchildrenwould drink;only those flavorswere considered to be acceptable to the child andtherefore o have value for the mother. Other ntrinsicattributes e.g., absence of pulp and visible consis-tency of the drinks)also affected value perceptions.In additionto perceivedqualityand these intrinsic

attributes,other higher level abstractionscontributedto perceptions f value. A frequentlymentionedhigherlevel abstraction or fruit uice was convenience.Someconsumersdid not wantto reconstitute hejuice. Oth-ers wantedself-servecontainersso thatchildrencouldget juice fromthe refrigerator y themselves. Forthisreason,smallcans with difficult-to-open ops were notas convenient as little boxes with insertable straws.Fully reconsituted,ready-to-serve,and easy-to-opencontainerswere keys to addingvalue in the category.Theseintrinsicandextrinsic owerlevel attributes ddedvalue throughthe higher level abstractionof conve-nience.Anotherhigherlevel abstractionmportantn pro-viding value in children's fruit juices was apprecia-tion. When childrendrankbeveragesthe mothers se-lected, when they mentioned them to mother orevidenced thanks, the mothers obtained value. Thisparticularpsychological benefit was not evoked di-rectly in any of the consumer interviews, but camethroughstronglyin the ladderingprocess. The valueperceptionsfiltered throughthe higher level abstrac-tion of appreciationand did not come directly throughintrinsicor extrinsicattributes.This indirect nferenc-ing process illustratesa major difficulty in using tra-ditional multiattribute r utility models in measuringperceived value. The intrinsic attributes themselvesare not always directly linked to value, but insteadfilter throughother personalbenefits that are them-selves abstract.

Evidence. Thoughno empiricalresearchhas beenreportedon the pivotal higher level abstractionsre-lated to value, severaldimensionshave been proposedin selected categories. Bishop (1984), for example,claimed thatvalue in supermarket hoppingis a com-posite of the higherlevel abstractionsof variety, ser-vice, and facilities in additionto quality and price.Doyle (1984) identified convenience, freshness, andtime as major higher level abstractions hat combinewith priceandqualityto producevalueperceptions nsupermarket onsumers.

Pv2: The sacrifice components of perceivedvalue include monetary prices and non-monetaryprices.Consumers sacrifice both money and other re-sources(e.g., time, energy, effort)to obtainproductsand services. To some consumers,the monetarysac-rifice is pivotal: some supermarket hopperswill in-vest hoursclippingcoupons, readingfood advertisingin the newspaper,and travelingto differentstores toobtain the best bargains. To these consumers, any-thingthatreduces the monetarysacrificewill increasethe perceived value of the product. Less price-con-scious consumerswill find value in store proximity,




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ready-to-serveoodproducts,andhomedelivery-evenat the expense of highercosts-because time and ef-fort are perceivedas more costly.Evidence. Recent researchreveals thatsavingtimehas become a pivotal concernof consumersin super-marketshoppingand cooking. Supermarket hoppershave cited fast checkout as more important han lowpricesin selecting grocerystores(Food Marketing n-

stitute1985, 1986). Studiesalso show that consumersare willing to spend money to get more convenientpackagingin food products(Morris 1985).Pv3:Extrinsicattributesserve as value sig-nals and can substitute for active

weighing of benefits and costs.How carefullydo consumers evaluate these com-ponentsof products n makingassessments of value?To judge from the product category of beverages,cognitive assessment is limited. Rather hancarefullyconsideringprices andbenefits, most respondentsde-

pended on cues-often extrinsic cues-in formingimpressions of value. A few respondentscarefullycalculatedthe cheapestbrand n their set on a regularbasis, but most seemed to follow Langer's(1978) no-tion of mindlessness:most respondents bought bev-erages with only minimalprocessingof available in-formation.They repeatedlyboughta brand heytrustedor used extrinsic value cues to simplify their choiceprocess.These value triggerswerepresentregardlessof theway consumers defined value. Many consumerswhodefinedvalue as low pricereportedusing a couponasa signal to low price withoutactuallycomparingthereducedprice of the couponedbrandwith the pricesof other brands,or they reportedthat cents-off oreverydaylow price signs or a private label brandtriggeredthe value perception.Respondentswho de-fined value in termsof what they wantedin productscited small containers, single-serving portions, andready-to-servecontainers. Consumers who definedvalue as the quality they get for the price they payused signals such as 100% fruit juice on special orbrand name on special. Finally, consumers who de-fined value as what they get for what they pay de-pended on form (frozen vs. cannedjuice) and econ-omy-sized packages as signals.Not all consumersresponded n this mindless way-many saw their role as economical shopperto beimportantenough to spend time and effort to weighcarefully the give and get components in their ownequationsof value. Moreover,not all productsare assimple or inexpensive as beverages. One would ex-pect to find more rationalevaluationin situations ofhigh informationavailability, processingability, timeavailability,and involvement in purchase.

Evidence. To date, no reportedempiricalstudieshave investigatedthe potentialof triggersthatlead toperceptionsof value.Pv4: The perceptionof value dependson theframe of reference in which the con-sumer is makingan evaluation.HolbrookandCorfman 1985) maintain hatvalue

perceptionsare situationaland hinge on the contextwithinwhich an evaluativeudgmentoccurs. This viewmay help explain the diversityof meaningsof value.In the beveragecategory, for example, the frame ofreference used by the consumer in providingmean-ings includedpointof purchase,preparation, ndcon-sumption.Value meantdifferent hingsat eachof thesepoints. At the point of purchase, value often meantlow price, sale, or coupons. At the point of prepa-ration, value often involved some calculation aboutwhether heproductwas easy to prepare nd how muchthe consumer could obtain for what she paid. At con-sumption,value was judged in terms of whetherthechildrenwould drinkthe beverage, whethersome ofthe beveragewas wasted, or whether the childrenap-preciatedthe mother for buying the drinks.

Evidence. No empirical studies have been con-ductedto investigatethe variation n valueperceptionsacross evaluation contexts.Pv5:Perceived value affects the relationshipbetween qualityand purchase.As Olshavsky(1985) suggested,not all consumerswant to buy the highest quality item in every cate-

gory. Instead,quality appearsto be factored into theimplicit or explicit valuation of a productby manyconsumers (Dodds and Monroe 1985; Sawyer andDickson 1984). A given productmay be high quality,but if the consumerdoes not have enough money tobuy it (or does not want to spend the amount re-quired), its value will not be perceived as being ashigh as thatof a productwithlowerqualitybut a moreaffordableprice. In other words, when geta - givea> getb - giveb but the shopper has a budget con-straint,then givea > budget constraints> giveb andhence b is chosen. The same logic may applyto prod-ucts thatneed morepreparationime than the consum-er's time constraintallows.The respondents n the beverage study illustratedthis point as they discussed their typical purchasingbehavior. Forrespondentswith severalchildren,bev-erages accounted for a large portionof their weeklyfood bill. Thoughmost believed that purefruitjuicewas of higherqualitythanfruitdrinks,manyof theserespondentsdid not buy only purefruitjuice becauseit was too expensive. They tended to buy some pro-portionof purefruitjuice, then roundout these more




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expensive purchaseswith fruit drinks. In their eval-uation,highqualitywas notworth ts expense,so lowerlevels of quality were toleratedin a portion of theweekly beverages. These consumers obtained morevalue from the lower quality juices because the lowcosts compensated or the reduction n quality.Evidence. Several empiricalstudies have inves-tigatedthe relationshipbetweenqualityandpurchase,

but no empiricalstudies have investigated explicitlythe roleof value as aninterveningactorbetweenqualityandpurchase.However,studieson the use of unitpriceinformation e.g., Aaker and Ford 1983;Dickson andSawyer 1985;Zeithaml1982) suggest thatmanycon-sumersuse unit price information i.e., a measure ofvalue) in making productchoices in supermarkets.Research Implications

The precedingpropositions aisequestionsaboutwaysin which quality and value have been studied in thepast and suggest avenues for future research.Current Practices in Measuring QualityAcademic research measuring quality has dependedheavily on unidimensional rating scales, allowingquality to be interpreted n any way the respondentchooses. This practice does not ensure that respon-dents are interpretingquality similarlyor in the waythe researcherntends.Hjorth-Anderson1984) claimsthat unidimensionalscales are methodologically in-valid by showing that the concept of overall qualityhas manydimensions.Holbrookand Corfman(1985)call for ambiguousquality measuresto be replacedwith scales based on conceptualdefinitionsof quality.An example of the approachthey recommendis il-lustrated y Parasuraman,eithaml,andBerry(1985),who investigatedservice quality in an extensive ex-ploratory tudy,conceptualized t in dimensionsbasedon thatinvestigation,and operationalizedt using theconceptualdomainspecified in the first phase (Para-suraman,Zeithaml, and Berry 1986). In that streamof research,qualitywas defined as a comparisonbe-tween consumerexpectationsand perceptionsof per-formancebasedon thosedimensions,an approachhatallows for individualdifferencesacrosssubjects n theattributes hat signal quality.The researchapproachused by Parasuraman,Zei-thaml, and Berry (1985) could be used in differentcategoriesof products(e.g., packagedgoods, indus-trialproducts,durablegoods) to find the abstractdi-mensionsthatcapturequality n thosecategories.Suchanattempt s currentlyunderwayby Brucksand Zeith-mal (1987) for durablegoods. Studiesalso areneededto determinewhichattributes ignalthesedimensions,when andwhy they areselectedinsteadof othercues,

and how they are perceived and combined (see alsoGutmanandAlden 1985, Olson 1977, and Olson andJacoby 1972 for similar expressions of needed re-search). Finally, the relationshipbetween the con-structsof attitudeandqualityshouldbe examined.Theinstrumentality f a product eature(Lewin 1936) andthe quality ratingof such a feature in separatelyde-terminingchoice may be an interestingresearch ssue.The convergentand discriminantvalidity of the con-structs of attitude and quality also warrant nvestiga-tion. Qualitymeasurement cales remain to be devel-oped and validated.Current Practices in Modeling ConsumerDecision MakingThreeaspectsof modelingconsumerdecision makingcan be questionedif the propositionsprove to be ac-curaterepresentations:he tendencyto use actual at-tributesof productsrather hanconsumerperceptionsof those attributes,the practice of duplicating andcomingling physical attributeswith higher order at-tributes Myers and Shocker 1981), andthe failure todistinguishbetween the give and get (Ahtola 1984)componentsof the model.Howard(1977, p. 28) clearlystates the first prob-lem.

It is essential o distinguish etween he attributes erse andconsumers'perceptions f theseattributes, e-cause consumersdiffer n theirperceptions. t is theperception hat affectsbehavior,not the attributet-self. Attribute s often used to mean choice crite-ria, but this leads to confusion. To use attributewhen you meannot the attributetself but the con-sumer'smental mageof it, is to reifywhat s in theconsumer'smind.Jacoby and Olson (1985) concur, claiming that the fo-cus of marketersshould not be objective reality butinstead consumer perceptions, which may be alteredeither by changing objective reality or by reinterpret-ing objective reality for consumers.Myers and Shocker (1981) point out that comin-gling quality, a higher level abstraction, with lowerlevel physical attributes in models limits the validityand confounds the interpretation of many studies, es-pecially when this practice duplicates lower level at-tributes. Therefore, it is necessary to use attributesfromthe same general classification or level in the hier-archy in modeling consumer decision making. Ahtola(1984) confirms that when the hierarchical nature ofattributes is not recognized in consumer decisionmodels, double and triple counting of the impact ofsome attributes results. Techniques to elicit and or-ganize attributes, n his opinion, shouldprecedemod-eling of the attributes.Myers andShocker(1981) dis-cuss differentconsumerdecision models appropriatefor the levels andways attributes houldbe presentedin research nstrumentsand analyzedlater.Huberand




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McCann 1982) reveal the impactof inferentialbeliefson productevaluations and acknowledge that under-standingconsumer inferences is essential both in get-ting information rom consumers and in giving infor-mation to consumers.Finally, Ahtola (1984) calls forexpandingandrevisingmodels to incorporatehe sac-rifice aspectsof price. Sacrifice should not be limitedto monetarypricealone, especiallyin situationswheretime costs, search costs, and convenience costs aresalient to the consumer.Methods Appropriatefor Studying Qualityand ValueThe approachused in the exploratory nvestigationisappropriateor investigatingquality in otherproductcategories. Olson and Reynolds (1983) developedmethodsto aggregate the qualitativedata from indi-vidual consumers. Aggregate cognitive mapping,structuralanalysis, cognitive differentiationanalysis,and value structuremapping are all techniques de-signed especially to analyze and representhigheror-der abstractions uch as quality.These techniquesaremore appropriate han preference mapping or mul-tiattributemodeling for investigating concepts likequalityand value (for a complete discussion and ex-plicationof these techniques, see Gutmanand Alden1985 or Reynolds and Jamieson 1985).Several researchershave developed approaches olink productattributes o perceptionsof higher levelabstractions. Mehrotraand Palmer (1985) suggest amethodological approach o relating productfeaturesto perceptionsof qualitybased on the work of OlsonandReynolds(1983). In theirprocedure, ists of cuesand benefits are developed from focus groups or in-depth interviews with consumers, semantic differen-tial scales are constructedto capturethe benefits, atradeoff procedureis used to determine the impor-tance of the cues, and respondents match cues toproduct concepts. Throughthis type of analysis, de-gree of linkage (betweencues andbenefits), value ofa cue, and competitive brand informationare pro-vided.

Mazurskyand Jacoby (1985) also recognizedtheneed for procedureso track he inferenceprocessfromconsiderationof objectivecues to the higherlevel im-age of quality. Insteadof free-elicitationprocedures,theyused a behavioralprocessingsimulationwherebythey presentedattributenformation o respondents ndasked themto form animpressionof qualityby choos-ing any information hey wished. Thoughthis methodcan be criticizedas unrealistic, t provides nsights ntothe types of information hatconsumersbelieve signalquality. Modifications of the methodto make the en-vironmentmorerealistic(suchas by Brucks1985) arealso possible.Otherresearchershave described analytic proce-

dures to link attributeswith perceptions. Holbrook(1981) providesa theoreticalframeworkand analyticprocedure orrepresentinghe interveningrole of per-ceptions in evaluativejudgments. Neslin (1981) de-scribes the superiorityof statisticallyrevealedimpor-tance weights over self-statedimportanceweights inlinking productfeatures to perceptions.Researching ValueA majordifficulty in researchingvalue is the varietyof meaningsof value held by consumers.Building amodelof valuerequires hat the researcherunderstandwhich of many(at least of four)meaningsareimplicitin consumers'expressionsof value. Utilitymodelsarerich in terms of methodological refinements (seeSchmalensee andThisse 1985 for a discussion of dif-ferentutility measures andequations),but do not ad-dress the distinctionbetween attributes ndhigher evelabstractions.They also presumethat consumerscare-fully calculate the give and get componentsof value,an assumptionthat did not hold true for most con-sumersin the exploratorystudy.Price as a QualityIndicatorMost experimentalstudies relatedto qualityhave fo-cused on price as the key extrinsicqualitysignal. Assuggestedin the propositions, price is but one of sev-eral potentiallyuseful extrinsic cues; brand name orpackage maybe equallyor moreimportant, speciallyin packagedgoods. Further,evidenceof a generalizedprice-perceived quality relationship s inconclusive.Qualityresearchmay benefit from a de-emphasisonpriceas the main extrinsicqualityindicator.Inclusionof otherimportantndicators,as well as identificationof situations in which each of those indicators s im-portant, may providemore interestingand useful an-swers about the extrinsic signals consumersuse.

Management ImplicationsAn understanding f what qualityand value mean toconsumersoffers the promiseof improvingbrandpo-sitionsthroughmoreprecisemarketanalysisand seg-mentation,productplanning,promotion,and pricingstrategy. The model presentedhere suggests the fol-lowing strategiesthat can be implementedto under-standand capitalizeon brandqualityand value.Close the Quality Perception GapThough managersincreasinglyacknowledgethe im-portanceof quality,manycontinueto define and mea-sure it from the company's perspective. Closing thegap between objective and perceived quality requiresthat the companyview qualitythe way the consumerdoes. Researchthat investigates which cues are im-portantand how consumersformimpressionsof qual-

ConsumererceptionsfPrice, uality,ndValue 17



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ity based on those technical, objective cues is nec-essary. Companies also may benefit from research thatidentifies the abstract dimensions of quality desired byconsumers in a product class.Identify Key Intrinsic and Extrinsic AttributeSignalsA top priority for marketers is finding which of themany extrinsic and intrinsic cues consumers use tosignal quality. This process involves a careful look atsituational factors surrounding the purchase and useof the product. Does quality vary greatly among prod-ucts in the category? Is quality difficult to evaluate?Do consumers have enough information about intrin-sic attributes before purchase, or do they depend onsimpler extrinsic cues until after their first purchase?What cues are provided by competitors? Identifyingthe important quality signals from the consumer'sviewpoint, then communicating those signals ratherthan generalities, is likely to lead to more vivid per-ceptions of quality. Linking lower level attributeswiththeir higher level abstractions ocates the drivingforceand leverage point for advertising strategy (Olsonand Reynolds 1983).Acknowledge the Dynamic Nature of QualityPerceptionsConsumers' perceptions of quality change over timeas a result of added information, increased competi-tion in a product category, and changing expectations.The dynamic nature of quality suggests that marketersmust track perceptions over time and align productand promotion strategies with these changing views.Because products and perceptions change, marketers

may be able to educate consumers on ways to evaluatequality. Advertising, the information provided inpackaging, and visible cues associated with productscan be managed to evoke desired quality perceptions.Understand How Consumers EncodeMonetary and Nonmonetary PricesThe model proposes a gap between actual and per-ceived price, making it important to understand howconsumers encode prices of products. Nonmonetarycosts-such as time and effort-must be acknowl-edged. Many consumers, especially the 50 millionworking women in the U.S. today, consider time animportant commodity. Anything that can be built intoproducts to reduce time, effort, and search costs canreduce perceived sacrifice and thereby increase per-ceptions of value.Recognize Multiple Ways to Add ValueFinally, the model delineates several strategies foradding value in products and services. Each of theboxes feeding into perceived value provides an ave-nue for increasing value perceptions. Reducing mon-etary and nonmonetary costs, decreasing perceptionsof sacrifice, adding salient intrinsic attributes, evok-ing perceptions of relevant high level abstractions, andusing extrinsic cues to signal value are all possiblestrategies that companies can use to affect value per-ceptions. The selection of a strategy for a particularproduct or market segment depends on its customers'definition of value. Strategies based on customer valuestandards and perceptions will channel resources moreeffectively and will meet customer expectations betterthan those based only on company standards.

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Consumer Perception of Price Quality and Value

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