EFFECT OF BRAND NAME AND PRICE ON CONSUMER PRODUCT EVALUATIONS

8/13/2019 EFFECT OF BRAND NAME AND PRICE ON CONSUMER PRODUCT EVALUATIONS

1/31

IRJMST Volume 5 Issue 1 Online ISSN 2250 - 1959

International Research Journal of Management Science & Technologyhttp:www.irjmst.com Page 73

EFFECT OF BRAND NAME AND PRICE ON CONSUMER PRODUCT

EVALUATIONS

AUTHORED BY: SHIVANI GARG

Assistant professor, Ramjas college, Delhi University

[email protected]

+91-9999352421

C0-AUTHORED BY: SHWETA GARG

Research aspirant, Department of Commerce, Delhi School of economics, DU

[email protected]

+91-9711967507

Introduction

Many marketers are looking for better ways to manage the informational cues of price and brand

name to create more effective and efficient behavior in the marketplace by both consumers andmarketers (Dodds 1991). Over the years, efforts has been made to understand the intricate

relationships that exist between market cues such as price, store and brand names, and to further

define consumers' cognitive evaluations of these cues in terms of monetary sacrifice, perceived

risk, product quality, value, and buying intentions. Marketers use these market cues as perceptual

indicators to influence consumer behavior, and consumers need to be better informed so that they

can handle those influences. (Dodds & Grewal, Effects of Price, Brand, and Store Information on

Buyers' Product Evaluation, 1991)

The purpose of present study is to test effect ofbrand name and price on consumers judgment of

quality, sacrifice, risk which act as mediating variables between consumers perception ofmarketing cues and their perceptions of value. Several researches have shown that perceived

value directly affects consumers willingness to buy and their purchase intentions. Management

of cues assumes importance in affecting consumers purchase intentions. In the end, the paper

discusses the findings and proposes implications for managers assisting them in formulation

and management of cues inmarketing mix strategies.
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


2/31



Cues and Marketing Cues

In the disciplineofpsychology, cues are referred to as a stimulus either consciously

or unconsciously perceived that elicits or signals a type of behaviour. It is anything

that excites one to action. Marketing discipline construct cues as any characteristics

or attribute supported and promoted by a marketer, with a view to elicit a responsefrom the consumer. The response can be in the form of a) attention b) consideration

c) prioritization and d) purchase. Marketer supports and promotes the cues believing

that it would consciously or unconsciously be perceived and stimulate consumer to

respond by entering their cognitive processes. Several researches have suggested that

consumers often respond to cues such as the brand name (Dodds & Grewal, 1991),

the price (Dodds & Grewal, 1991; Wheatley, Chiu, & Goldman, 1981), or the

country of origin (Chao, 1993; Darling & Arnold., 1988; Hann & Terpstra, 1988) of

the product being evaluated. Hence, overtime different cues have been posed as

stimuli to consumer behavior. The effect of specific cues on valuation of a product

has been laid out over several years of exploratory study. Herein the attempt is made

to study the effects of brand name and price levels perceptions on product

evaluations and consumer search behavior. Before attempting to review the effect of

brand name and price on consumers valuation classification of cues merits attention.

INTRINSIC and EXTRINSIC CUES

On the basis of meta-physical analysis (Olson & Jacoby, 1972; Olson J. C., 1977)

cues are dichotomized as intrinsic or extrinsic. Intrinsic cues are internal physical

attributes or operational featuresofaproduct such as memory, processing speed of a

computer, whereas extrinsic cues are product related but not a part of the physicalproduct. They are, by definition, outside the product such as price, brand name,

country of origin. Both are suggestive in nature, when diagnosed, and generally

provides certain product associative information. For instance, TATA sells many

automobiles with brand name TATA and product specific attributes such as engine

capacity, airbags. These trigger some information about the product. Hence, these

may be regarded as informative cues.

Intrinsic cues are utilitarian, tangible, and specific to a particular product and are

inbuilt into the product itself. However, extrinsic cues are non-utilitarian, intangible,

more general, applicable to a wider range of products, and are outside the product.For example the attributes such as engine capacity for a specific TATA automobile is

an intrinsic cue, and brand name TATA is an extrinsic cue. Hence it is believed that

consumers are more familiar with extrinsic cues than intrinsic cues and tend to rely

more heavily on extrinsic cues. The belief is substantiated by past studies too (Dodds


3/31



& Grewal, 1991; Hann & Terpstra, 1988). This paper herein focuses on exploration

of extrinsic cues, that is, brand name and price effects.

Marketing scholars and practitioners increasingly have recognized that price is an

important extrinsic cue affecting perceptions for both quality and sacrifice (Bearden

& Shimp, 1982; Dodds & Monroe, 1985; Dodds & Grewal, 1991; Zeithaml, 1988).Research indicates that brand names (Dodds & Monroe, 1985; Stokes, 1985) store

names (Wheatley & Chiu, 1977), country of origin (Bilkey & Edk, 1982; Han, 1989),

(Hann & Terpstra, 1988) are also classified as extrinsic quality cues. Warranties as

extrinsic cue have been recently suggested by several scholars. These are posited to

influence perceptions for value by affecting risk perceived (Bearden & Shimp,

1982).

Existing literature indicates that extrinsic cues may affect consumer product

evaluations and their search beahviour. Consumer may infer product quality and

products ability to deliver benefits (Brown & Carpenter, 2000; Meyvis &Janiszewski, 2002) from cues such as brand name and price levels perceived.

CONSUMERS INTEREST IN MARKET CUES

Marketing cues act as an input to consumers perceptual process. Exposure to

cues stimulates sensory receptors and begins the process of decision making by

selectively attending and processing the stimuli. During this process consumers

infer value from the cues presented. Their judgments of value get integrated in

their choice decision process which shall ultimately affect willingness of

consumers to buy. People respond on the basis of their perception of reality and

not on basis of objective reality. It has been argued that consumer behaviour is,

at root, driven by perceptions of a product and not the objective reality.

Advancing the argument further, it has often been stated that there exists no

concept as objective reality as every task situation is a perception of the

decision maker. Perceptions provide grounds for purchasing decisions. Stimulusaffecting consumer perceptions and evaluations is hence of interest both to

marketer and to the consumer.

Over the years there has been a shift in consumer behavior in product

evaluations. The market environment has certainly become more complex for


4/31



the consumer. Maynes (1985) suggest that three key factors underlie the

present-day shopping environment.

The overabundance of brands in the marketplace leads to information

overload.

The technical complexity of many goods makes quality assessment

virtually impossible for the average consumer.

The urbanization of our society creates an environment where there are

too many stores offering similar goods.

These factors rendered the consumers unable or unwilling to conduct an

exhaustive search. The market chaos often lead consumers to rely on simple

rules as brand as an indicator for quality, hence depicting consumers higherbiasness towards extrinsic rather than intrinsic cues. Consumers have thus

shifted from evaluating intrinsic to extrinsic attributes such as price, store

name, and brand name. The focus of present paper is to study perception for

brand name and price levels affecting consumers search and product

evaluations.

Consumers search behavior involves the search characteristics consumers pay

attention to while searching for the product, the search time undertaken to formperceptions and the search source consumers resort to during pre-evaluation

stage. Each of the dimensions is proposed to affect consumers evaluation.

MARKETERS INTEREST IN MARKET CUES

A highly competitive environment demands formulation of strategies by a

typical firm. A firm decides product specification, price, production location,

targeted distribution areas and the nature of information disseminated in

promotions.Consumers demand for products depends on their perceptions of

the attended parameters, which in turn, lead to construction of their preferences

for arriving at choice decision through a cognitive or intuitive decision making

process. Firms continually choose product specifications by 'locating' on the


5/31



attribute space relevant to the consumers. Incorporation and delivery of

attributes crucial to consumers is critical for marketer to adopt in its overall

strategy. It is one of the main challenges facing a marketer. A marketer is

required to present consumers with characteristics to base their decisions.

Presenting such characteristics is not simple as marketers usually have a vast

amount of product associated information. Limited information processing

capacity of consumers requires marketer to present information appropriate and

favorable to consumers value perceptions. Superfluous information would

impede consumers ability to make good decisions (Bettman, Johnson, &

Payne, 1991). Marketers must focus on exposing consumers to cues which are

favourably evaluated and attempt to decrease the saliency of negative attributes.

A larger market segment of the target market may be hence reached

successfully.

Positioning a product with respect to different cues is all the more important in

todays competitive business scenario. Even in many instances, cues act as a

quick tool in adjusting marketing strategies. For instance, marketers

understanding of how price as a cue works on consumers perceptions of value,

enable it to formulate a pricing strategy for the target consumers. In view of

competition marketer can choose to adjust price accordingly. Also, marketers

use cues for varied situational promotions. For instance, existing literature

suggests that extrinsic cues are often effective in promoting products to

consumers highly knowledgeable about a product category, and having

enduring involvement with the product (Hawkins 2001).

Consumers today form the core for business and market-orientation stresses

consumer advocacy. Consequently, reliance by consumers on extrinsic and

trivial cues makes it vital for marketers to focus on the role cues play in

influencing consumers behaviour. Marketers need to direct focus on cues


6/31



impact to reach the markets they are targeting. But, consumers perceptions of

product attributes keep on evolving. This mandates dynamism in strategy

formulation and implementation by the firm. A competitive firm must

understand consumers perceptual and decision making process, respond by

strategizing influence casted by cues on consumers perceptions for value and

keep on adapting itself to the evolving consumer perceptions. Perceptions for a

product are not static but are highly dynamic. They are highly dependent on

consumers behavioral characteristics which are by nature evolving with time

and situation.

Impact of Cues On Perceived Value

The conceptual model presented in Figure A examines the linkages between consumers

perceptions of value and their utilisation of cues- brand name and price levels. The

relationship is mediated by the variables discussed- perceived quality, sacrifice and risk.

Different marketing cues can impact the mediating variables positively or negatively.

The impact of brand name and price levels on consumer perceptions of value as

discussed so far in literature is concisely reviewed here.

PerceivedRisk

Consumers perceptions of risk are considered to be central to their evaluations, choices,

and behaviours (Dowling, 1999). Consumer researchers define perceived risk in terms

of uncertainty and consequences; perceived risk increases with higher levels of

uncertainty and/or the chance of greater associated negative consequences (Oglethorpe

& Monroe, 1987). Study by Agarwal and Teas (2001) purport that perceived risk is

multi dimensional in nature and includes performance risk and financial risk.

Performance risk is posited as the uncertainty about whether the product will perform

its intended function and financial risk as the uncertainty about how much loss may

have to be incurred for repair/maintenance of the product(Agarwal & Teas, 2001).


7/31



Perceived risk is the feeling of discrepancy between product value and consumers

expectations for the type of product. Role of perceived risk as a mediator between cues

and perceived value has been posited by Sweeney, Soutar and Johnson (1999).

According to Sweeney et al. (1999; p. 81), "When making a purchase decision,

consumers are always faced with some concern over the performance of the product

since perfect information regarding future performance is never known." Hence,

whenever exposed to extrinsic product cues consumers make judgements of not only

product quality, sacrifice but also about uncertainties that may pose potential long-term

losses. Risk may be thus postulated as an indicator for future costs. Accordingly, the

model conceptualises risk as the feeling of discrepancy between product value and

consumers expectations for the type of product. Building on the works of Baur (1960),

study by Bearden and Shimp (1982) suggests that consumers use extrinsic cues (such as

price, manufacturer reputation, and warranty) to form perceptions of value through

formation of perceptions for risk. Teas and Agarwal (2000) included country of origin

as an additional extrinsic cue and further validated the mediating role of perceived risk

in influencing perceptions for value. Moreover, empirical work by Wood and Scheer

(1996) has suggested and hypothesized perceived risk to be related negatively to

product evaluations. Perceptions of value for product evaluations are often

conceptualized as involving a trade-off between quality and sacrifice (Zeithaml, 1988;Dodds & Grewal, 1991; Teas & Agarwal, 2000), which results in quality having a

positive association with value and sacrifice having a negative association with value.

Sweeney, Soutar, and Johnson, 1999 offer arguments justifying the role of risk as a

mediator between extrinsic cues and value. They suggest a negative linkage between

quality and risk and since a positive linkage is established between quality and value,

the following hypothesis is constructed. Empirical evidences suggest a strong support

for less favourable product evaluations when risk perceptions are high.


8/31



H1 : Perceived risk is negatively associated to Perceived value

H 1a: Perceptions for financial risk is positively associated to price levels

H 1b: Perceptions for performance risk is negatively associated to perceived quality.

Perceived Quality

Perceived Quality is construed as the belief in the overall "goodness" of what all is

received i.e. product or service.It represents the get component in consumer shopping

models. It is the judgement about a products excellence or superiority. Perceptions of

product quality play a pivotal role in determining consumer shopping and choice

decision (Zeithaml, 1988). Perceived quality is:

(1) different from objective or actual quality,

(2) a higher level abstraction rather than a specific attribute of a product,

(3) a global assessment that in some cases resembles attitude, and

(4) a judgment usually made within a consumer's evoked set. (Zeithaml, 1988)

Academic research initially measured quality by using uni-dimensional rating scales.

The fact that quality is multi-dimensional was considered by Dodds and Grewal (1991)

and they formally operationalised quality by forwarding a conceptual definition. Quality

scales were then developed and validated to be used for different categories of products

(e.g., packaged goods, industrial products, durable goods) to capture quality in those

categories. Dodds has specifically laid down a multi attribute scale for assessing qualityinvolving constructs as such reliability, workmanship, dependability. This may be

formalized as total quality in the proposed model.

Perceived quality has shown to involve a positive relationship with perceptions for

value. In certain categories of product, surrogates (Olshavsky, 1985) such as style in

cars and clothes, vacuum packaging for fruit juices signals quality serving as reliable

agents for formation of perceptions for value. Greater the presence of surrogates higher

is value perceived. Perceptions of value are constructed around the perceptions for

quality.

H2: Perceived quality is positively associated with perceived value

PerceivedSacrifice

Perceived Sacrifice refers to the feeling towards giving up something important, i.e.

money, time, energy, efforts. It represents the give component in buying models


9/31



focussing consumers. In economics objective price is regarded as the only sacrifice

consumers make to obtain product. In multi-attribute models consumer perceive price as

sacrifice. Perceptions of price are different from objective price. Objective price is the

actual price of the product and perceived price is price as encoded by consumers.

Consumers do not consider the numerical price while deciding, however they consider

price as cheap or expensive depending upon their financial situation. Other variables

such as time, energy and efforts are included either explicitly or implicitly in

consumers judgments of sacrifice. If consumers do not find the product in store and

expend time and efforts in searching the product for acquisition then it increases the

perceptions of give component in perceived value component for consumers.

However, in the present study perception sfor sacrifice are measured on financial lines

only. Higher sacrifice perceptions have been shown by researches to impact value

perceptions negatively (Dodds & Grewal, 1991). The following is hypothesized,

H3: Perceived sacrifice is negatively related to perceived value

PerceivedValue and Willingness to Buy

Perceived value

Perceived value refers to an evaluation of the "fairness" of the transaction, i.e. the belief

that the product/service quality is equivalent to the sacrifice and risk, formalized as total

cost for consumers. Empirically, product is evaluated on perceived value basis and a

consumer depicts willingness to buy the product when,

Perceived value = Total Quality Perceived > 1

Total Cost Perceived

Existing studies have delimited perceived value concept to perceived quality and

sacrifice, ignoring perceived risk as a contributing variable to consumers total value

perception. This study expands the potential mediators, expanding consumers

perceived value concept. Value perceived by consumers has been shown over several

years of exploratory research to affect willingness to buy for consumers ultimately

influencing purchase intentions.

The Impact of Brand on Consumers' Perceptions of Quality

Research indicates that brand names (Dodds & Monroe, 1985; Stokes 1985) and store

names (Wheatley & Chiu, 1977) are extrinsic quality cues. Researchers have viewed

brand name as a "summary" construct (Johansson, 1989; Han, 1989); or a "shorthand"


10/31



cue (Zeithaml, 1988) for quality. Wright (1975) suggests that consumers do not examine

brand attributes every time they make brand choice decision, and base their judgments

on brand attitudes (summary information) rather than on product attribute information.

Rao and Monroe (1989) has tested impact of brand name on consumers perceptions for

quality and have found a positive association between the two. The degree of

association was even higher for consumers with higher levels of product familiarity.

Accordingly the following hypothesis is proposed,

H4: Product evaluation differs for differences in perceptions for brand name which serve as a

generalized Quality indicator.

Impact of Price on Consumers Perceptions of Quality and Sacrifice

Marketing scholars and practitioners increasingly have recognized in recent decades that

price provides an important marketplace extrinsic cue (Bearden & Shimp, 1982; Dodds

& Monroe, 1985; Dodds & Grewal, 1991; Zeithaml, 1988) by indicating the amount of

money consumers must sacrifice to satisfy their consumption needs. In this respect,

price represents a financial burden, and posited as an indicator of sacrifice. Erickson and

Johansson (1985) have highlighted a negative role of price in sense that higher price

negatively affects purchase probabilities.

H5 : Product evaluation differs for differences in perceptions for price levels which serve as a

generalized Sacrifice indicator.

However in a study Zeithaml (1988) posited that consumers perceive price in a broadersense. Apart from consideration of price as a cue affecting sacrifice perceptions price is

also used as a quality cue. Several exploratory studies have studied the relationship

reflecting effect of price, as a marketing cue, on consumers perceptions for quality

(Miyazaki 2005). Rao and Monroe (1989) have substantiated a positive price- quality

linkage. High quality products require superior inputs which may be purchased at higher

cost only. This cost is embedded by the marketer in final price of the product.

Considering this logic consumers believe that highly priced products offer superior

quality in a competitive environment. Intense competition limits marketers ability to

offer low quality products at high prices lest he should endanger his survival in the

marketplace (Erickson & Johansson, 1985; Liechtenstein, Ridgway & Netemeyer,

1993). So consumers tend to take price as a cue for quality.

H6: Product evaluation differs for differences in perceptions for price levels which serve as a

generalized quality indicator.

Research Design and Sample


11/31



The participants for this research were people with the age between 18 and 35 years. The reason

for the choosing this particular age-group is that people in this group are aware of the selected

product categories of mobile phones and athletic shoes. The selection of the product categories is

guided by the principle that it must be of use to both male and female population. Both malesand females must be prospective buyers of the products under study. Also, it renders replication

of previous price-brand value studies where athletic shoes have been used a product category

under study.

For testing the effect of brand name and price on consumers search and product evaluations in

Indian context an explanatory experimental study is undertaken with a structured questionnaire

survey. The questionnaire contained measures for different constructs under study. Perceived

quality, perceived value was assessed via scales developed by (Dodds & Grewal, Effects of

Price, Brand, and Store Information on Buyers' Product Evaluation, 1991). Scale for perceived

sacrifice was taken from the published researches (Teas & Agarwal, 2000). Sacrifice wasassessed via a two-item summated scale developed by Teas and Agarwal (2000). Scale for

perceived risk is taken from published researches Dowling (1999). Risk is considered a multi-

dimensional concept, involving five types of risks - performance, psychological, social, financial,

convenience, and physical (Kaplan, Szybillo, and Jacoby 1974). However, the two most

commonly studied risks are performance risk and financial risk (Bearden & Shimp, 1982;

Sweeney et al. 1999; Wood and Scheer 1996). Performance risk (a two-item summated scale)

and financial risk (a three-item summated scale) were measured by scales proposed by Grewal et

al. (1994). The scales are listed in Appendix.

The participants were obtained by making use of own network of people. They were specificallyasked about their demographic information and then their levels of familiarity and

knowledgeability for each of the product categories. They were asked to provide a brand name

each for the respective product categories for which they feel they are comfortable forming

opinions regarding quality, sacrifice, risk and value. Each respondent was exposed to questions

pertaining to both the product categories. This was done to check the generalisability of the

outcomes to the research. The questionnaire is appended in the paper.

Results and Analysis

Reliability and Correlation

Reliability tests are administered to check the internal consistency of a summated scale where

several items or sub-constructs are used to assess the major construct. Each item measures


12/31



certain aspect of the construct and the items must be consistent in what they indicate about the

major construct. Coefficient alpha or cronbachs alpha is computed for a construct comprising of

more than two items measured on similar Likert scale.

Perceived quality is a mutli-dimensional construct measured through the questionnaire using four

items positioned on Likert scale. Internal consistency of perceived quality is assessed via

Cronbachs alpha computation. Coefficients cronbachs alpha for perceived quality is greater

than 0.7 and is hence acceptable.

RELIBILITY STATISTICS and ITEM STATISTICS

Cronbach's Alpha

.723

Cronbach's Alpha Based on Standardized

Items

.718

N of Items

4

Items(Perceived Quality) Mean Standard Deviation

Reliability 4.38 .612

workmanship 3.66 .690

dependability 3.76 .691

Durability 4.31 .595

Since the other multi-dimensional constructs were positioned as two-item with likert scale,

reliability test is not conducted. Rather, conducting simple correlation tests between each pair of


13/31



variables (sub-constructs) in this multi-variate data analysis study would help signify the

internal consistency. The results of the simple correlation tests indicate that there is

significant correlation between each item taken to measure a construct. The specific

results are shown in the table following.

Constructs

Sub-constructs(items)Pearson correlation Sig. (1-tailed)

Perceived Sacrifice

Inability to spend Reduction in spendingCorrelation significant at 0.01 level

.528 .000

Perceived Value

Brand is a good buy Brand is a bargainCorrelation significant at 0.05 level

.234 .013

Perceived Financial Risk

Financial risk quotient Overall financial risk

.132 .108

Perceived Performance Risk

Confidence in performance Perceived workingCorrelation is significant at 0.01 level

.561 .000

Perceived Quality, Sacrifice, Risk and Value effects

H1 : Perceived risk is negatively associated to Perceived value

H 1a: Perceptions for financial risk is positively associated to price levels


14/31



H 1b: Perceptions for performance risk is negatively associated to perceived quality.

For testing the relationship between perceived financial risk and price level perceptions

of respondents simple correlation test is employed and it is envisaged that financial risk

and price levels perceived for a product category are not unrelated. Coefficient of

correlation between the two constructs is found to be .205 which signifies a positive

association. ANNOVA shows the variance observed in the dependent variable (perceived

financial risk) through the sum of squares corrected for the mean (SS). SSbetween is 4.899

showing the portion of the sum of squares in perceived financial risk related to the

independent variable or factor ,that is, price levels. SSwithin signifies variation in perceived

financial risk related to the variation within each category of price levels. SS perecieved

financial risk=SSbetween+ SS within ,i.e SS perceived financial risk is 4.899+ 31.803= 36.702.

So the strength of effects of price levels on perceived financial risk is measured as:

=4.899/36.702= .13348,

stating that 13.34% of the variation in perceived financial risk is accounted for by price levels

Calculated value of F-statistic is larger than the critical value for 3 and 85 df, hence null hypothesis

stating no association between perceived financial risk and perceived price levels is rejected. With low

price consumers depict lower perceived financial risk and with medium, high and too high levels of

price perceptions consumers depict comparatively higher financial risky perceptions for the product

categories under evaluation.

Table: 3.1 DESCRIPTIVES

Perceived Financial Risk

N Mean Std.

Deviation

Std. Error 95% Confidence Interval

for Mean

Lower Bound Upper

Bound

Low 4 1.3750 .25000 .12500 .9772 1.7728

Medium 38 2.3289 .49697 .08062 2.1656 2.4923


15/31



High 44 2.4773 .72300 .10900 2.2575 2.6971

too high 3 2.0000 .00000 .00000 2.0000 2.0000

Total 89 2.3483 .64581 .06846 2.2123 2.4844

Table 3.2 :Correlations

Price(ind) AvgFinRisk1

3

Price(ind)

Pearson

Correlation1 .205

Sig. (2-tailed) .054

N 91 89

Perceived

financia risk

Pearson

Correlation.205 1


N 89 90

Table 3.3: ANOVA

Perceived financial risk

Sum of

Squares

df Mean Square F Sig.

Between Groups 4.899 3 1.633 4.365 .007

Within Groups 31.803 85 .374

Total 36.702 88

H2: Perceptions for performance risk is negatively related to perceived quality.


16/31



For testing the relationship between perceived performance risk and quality level

perceptions of respondents , simple correlation test is employed and it is seen that

performance risk and quality levels perceived for a product category are not unrelated.

Coefficient of correlation between the two constructs is found to be .385 significant at

.001 level of significance.

It is showing a positive association. ANOVA shows the variance observed in the dependent variab

(perceived perfromance risk) through the sum of squares corrected for the mean (SS). SSbetween

showing the portion of the sum of squares in perceived perfromance risk related to the independe

variable or factor ,that is, perceived quality levels. SSwithin signifies variation in perceived perfroman

risk related to the variation within each category of perceived quality levels. SS perecieved performance r

=SSbetween+ SS within ,i.e SS perceived performance risk is 4.586+25.774= 30.36. So the strength

effects of perceived quality levels on perceived performance risk is measur

as: =4.586/30.36= 0.15105,

stating that 15.15% of the variation in perceived performance risk is accounted for by perceiv

quality levels. Calculated value of F-statistic is larger than the critical value for 2 and 86 df, hen

null hypothesis, signifying no association between perceived performance risk and perceived quali

levels is rejected. With satisfactory quality levels perceived consumers depict somewhat confide

outlook that the brand would perform satisfactory , however with good and very good levels of quali

perceptions consumers depict very high confidence in performance of the brand under evaluation. Th

is evident in table showing descriptive.

Table 3.5: ANOVA

Perceived performance Risk13

Sum of

Squares

df Mean Square F Sig.

Between Groups 4.586 2 2.293 7.650 .001

Within Groups 25.774 86 .300


17/31



Total 30.360 88

Table 3.6: Correlations

sumPerRisk

Quality

sumPerRis

k

Pearson

Correlation1 .385

**

Sig. (2-

tailed).000

Quality

Pearson

Correlation.385

** 1

Sig. (2-

tailed).000

**. Correlation is significant at the 0.01 level (2-tailed).


18/31



H3: Perceived Risk is negatively related to perceived value

For assessing the association between perceived risk and perceived value, correlation coefficient

calculated is found to be -0.135. This indicates a negative association between perceived risk and

perceived value.

Table 3.7: Correlationsa

Per Risk Per

Value

Perceived

Risk

Pearson Correlation 1 -.135


Percei

ved

Value

Pearson Correlation -.135 1


Descriptives : Performance risk perceived

Perceived

Quality levels

N Mean Std.

Deviation

Std. Error 95% Confidence Interval for Mean Minimum

Lower Bound Upper Bound

Satisfactory 6 3.7500 .61237 .25000 3.1074 4.3926 3.00

Good 32 3.9844 .54602 .09652 3.7875 4.1812 2.50

very good 51 4.3922 .54142 .07581 4.2399 4.5444 3.50

Total 89 4.2022 .58736 .06226 4.0785 4.3260 2.50


19/31



Summated Perceived risk values are categorized into 3 levels where 1 indicates low risk(

combining values 1 and 2 where 1 was very low risk and 2 was low risk), 2 indicates

medium risk and 3 indicates high risk(combination of itemized 3 and 4 denoting high

and very high risk previously). One-way ANOVA is used to analyze the effect of

perceived risk on perceived value levels. Summated perceived value construct,

Individual perceived value asked by respondents and perceived value in relation to the

money expected to be expended is each tested using ANOVA and results are

summarized in table 3.8 and 3.9 The p-value (i.e. sig.) for each item under perceived

value construct is greater than the significance level =0.05 and hence the hypothesis is

not rejected. Although the association between perceived risk and perceived value is

negative as depicted by correlation coefficient, the population means for low, medium

and high risk levels are not significantly different. This is evident from the descriptive

table where perceived risk levels are tested for each item under perceived value construct

and no significant difference is observed. .

Table 3.8: Descriptives

Perceived Risks

levels

N Mean Std.

Deviatio

n

Std.

Error

Perceived value

1.00 31 3.77 .669 .120

2.00 51 3.90 .700 .098

3.00 4 4.25 .500 .250

Tot

al86 3.87 .682 .074

Summated

perceived value

1.00 31

3.580

6 .68431 .12291

2.00 513.519

6.46862 .06562


20/31



Table 3.9 :ANOVA

Sum of

Squares

df Mean

Square

F Sig.

Perceived value

Between

Groups

.914 2 .457 .981 .379

Within

Groups38.679 83 .466

Total 39.593 85

Summated

perceived value

Between

Groups.737 2 .369 1.213 .302

Within

Groups

25.216 83 .304

Total 25.953 85

Brand Value

with respect to

Between

Groups1.470 2 .735 1.102 .337

3.00 43.125

0.25000 .12500

Tot

al86

3.523

3.55257 .05959

Brand Value with

respect to price

1.00 31 3.29 .938 .168

2.00 51 3.02 .761 .107

3.00 4 3.00 .000 .000

Tot

al86 3.12 .818 .088


21/31



price Within

Groups55.367 83 .667

Total 56.837 85

H4: Perceived quality is positively associated with perceived value

Correlation analysis is done for determination of association between perceived quality

and perceived value. Summated perceived value and specific item indicating

respondents perception of value are analyzed. .134 and .066 indicates positive

correlation between the two constructs. Also, both the constructs, summated perceived

value and specific value asked for, is showing a positive association of 0.436 and is

further validating the construct.

Table 3.10: Correlations

Perceived

Quality

Summated

perceived value

Percceived

value(specific)

Perceived Quality1 .134 .066

.215 .542Summated perceived

value

.134 1 .436

.215 .000

Percceived

value(Specific)

.066 .436 1

.542 .000

b. Listwise N=87

ANOVA indicates a p-value


22/31



(perceived value less than or equal to 3 is considered as below satisfaction and ranging

between 3 to 4 is considered as good value). So the table depicts significant differences in

the means of perceived quality levels with perceived value as a dependent variable.

Table 3.11: Descriptives

Per qlty levels N Mean Std.

Deviation

Std.

Error

95% Confidence

Interval for Mean

Min. Max.

Lower

Bound

Upper

Bound

Percceived

value

1.00 3 3.00 .000 .000 3.00 3.00 3 3

2.00 29 4.00 .598 .111 3.77 4.23 3 5

3.00 54 3.85 .711 .097 3.66 4.05 3 5

Total 86 3.87 .682 .074 3.73 4.02 3 5

Summated

perceived

value

1.00 32.833

3.28868 .16667 2.1162 3.5504 2.50 3.00

2.00 293.655

2.42476 .07888 3.4936 3.8167 3.00 5.00

3.00 543.481

5.60628 .08250 3.3160 3.6470 2.00 5.00

Total 863.517

4.56071 .06046 3.3972 3.6377 2.00 5.00

Table 3.12 ANOVA

Sum of

Squares

df Mean

Square

F Sig.


23/31



Percceived valueBetween

Groups2.778 2 1.389 3.132 .049

Within

Groups

36.815 83 .444

Total 39.593 85

Summated value

Between

Groups2.024 2 1.012 3.401 .038

Within

Groups24.700 83 .298

Total 26.724 85

H5: Perceived sacrifice is negatively related to perceived value

The association between perceived sacrifice and perceived value is analyzed through

correlation coefficients computation. A negative coefficient of .096 indicates that there is

a negative association between perceived sacrifice and perceived value. Since,

respondents have been asked specifically about their perceptions of value for a brand

with respect to the price, correlation is tested for with the specific sub-construct and it is

not undertaken for other items in the construct perceived value.


24/31



Table 3.13:Correlationsa

Perceived

Sacrifice

Brand Value

with respect

to price

Perceived Sacrifice

Pearson

Correlation1 -.096


Brand Value with

respect to price

Pearson

Correlation-.096 1


a. Listwise N=89

However, ANNOVA descripitives and analysis reveal that there is no significant

difference between the population means for different levels of perceived sacrifice. The

difference in means for different levels of perceived sacrificetested with perceived value

as dependent variable is not significant. p-value > of .05 and hence the null hypothesis

of no difference in population means is not rejected.

Table 3.14 : Descriptives

er acr ce eve s ean t . ev at on t . rror on ence nterva or

Mean

n mum ax mum

ower oun pper oun

Percceived

alue(single)

. . . . . .

. . . . . .

. . . . . .

ota . . . . .

Brand Value with

respect to price

. . . . . .

. . . . . .

. . . . . .


25/31



ota . . . . .

Summated value

. . . . . . . .

. . . . . . . .

. . . . . . . .

ota . . . . . . .

Table 3.15: ANOVA

Sum of

Squares

df Mean

Square

F Sig.

Percceived

value(single)

Between

Groups1.088 2 .544 1.217 .301

Within

Groups37.991 85 .447

Total 39.080 87

Brand Value

with respect toprice

Between

Groups.097 2 .048 .070 .933

WithinGroups

58.767 85 .691

Total 58.864 87

Summated

value

Between

Groups1.079 2 .540 1.754 .179

Within

Groups26.145 85 .308

Total 27.224 87

4. Brand name and price effect on product evaluations


26/31



H6a: Product evaluation differs for differences in perceptions for brand name which serve

as a generalized Quality indicator.

H6b: Product evaluation differs for differences in perceptions for brand name which

serve as a generalized Quality indicator.

H7a : Product evaluation differs for differences in perceptions for price levels which

serve as a generalized Sacrifice indicator.

H7b : Product evaluation differs for differences in perceptions for price levels which

serve as a generalized Quality indicator.

The hypotheses were tested using one-way ANOVA with brand names and price levels

perceived treated as factors and perceived quality, sacrifice, risk and value were one by

one treated as dependent variables. The results of the ANOVA are presented in Table 4.

Table 4 indicates that perceptions for Brand name have significant effect on perceived

quality with f=0.000 indicating significance even at 0.001 levels. However, no

significant effects were observed for brand name on sacrifice and risk. Perceived value is

also significantly affected by perceptions for the brand name with f reported as

0.000


27/31



Treatmnt Df Quality Sacrifice Risk Value Effect size

F-value P

value

F-

value

P

value

F-

value

P value F value P

value

SSx/SSy

Brand 9,8

0

5.008* .000*

1.024 .428 .748 .664 9.337* .000* Brand name is having signi

effect on perceived qu

which is=0 .3609

And on perceived value=0.2

Price 3,

84

.968 .412 2.244*

*

.089** 1.247 .298 9.337 .000* Price perceptions is h

significant effect on perc

sacrifice=0.0725 And

perceived value=0.2478

Brand XPrice

*significant at .001 levels

** significant at .05 levels

*** significant at .10 levels

Discussion and Implications

The study deciphers significant managerial implications for formulation

and modification of segmentation, positioning, pricing, and

communicating strategies. Marketers might segment their markets on

basis of variables such as individual differences. Results have shown that

consumers can be segmented on the basis of their levels of familiarity

and knowledegeability, influencing consumers search time. Levels of

familiarity and knowledgeability are highly co-related with levels of

qualification. So consumers can be segmented on basis of their

qualification levels. Moreover, analysis indicated that males and females

evaluate products differently, so marketers must manipulate cues

accordingly. Gender differences give rise to differences in cue reliance.


28/31



By managing and manipulating marketing cues marketers may position

their products favourably in a competitive scenario. Brand name is

shown to influence search time taken and the search characteristics

consumers look for. Perceptions for brand name are seen to influence

perceived quality. Perceptions for quality get positively integrated into

perceived value framework. Marketers can position their products so that

they occupy meaningful and distinct competitive positions in the mind of

the consumer. This can be accomplished, in part, by differentiating the

product on attributes deemed important by the consumer. For instance,

marketers can segment consumers on the basis of their price perceptions.

Consumers with high price perceptions tend to resort to advertising and

in-store promotion during search. However, if lower price involvement is

perceived for a product category then consumers would rely more on

word-of mouth during search. Accordingly marketer can decide upon the

promotion strategies. Price can be manipulated for a product and

projected as a major positioning tool. Perceptions for price serve as

indicators of sacrifice for consumers. Consumers perceptions for

sacrifice then get embedded in their perceptions for value which

ultimately affects their evaluations of a product. Also, the impact ofbrand name on perceptions for risk consumers oversee was hypothesized,

but no significant association between brand name and level of risk

perceived is observed. However, the study contributes by validating the

negative role of perceived risk to perceived value. It is found that price

levels perceptions impact the financial risk perceived and hence, by

implication marketers must manage perceptions for price of a product if

the aim of projecting a product as low -risky needs to be achieved. By

improving the perceptions for quality, one way for which is to enhance

brand name projections, markets can achieve degradation in consumers

perceptions of performance risk associated with a product. Consumers

perceptions can be better managed and hence allowed to enter product


29/31



evaluations favorably. Product evaluations directly influence willingness

to buy. Cues might be posited as communication tools communicating

quality, sacrifice and risk associated with product. The study suggests

real life implications for managers enabling them to manage cues

communication ultimately resulting in a positive product image. This

might translate into a purchase action on consumers part.

Works Cited

Agarwal, S., & Teas, R. K. (2001). Perceived Value: Mediating Role of Perceived Risk.

Journal of Marketing Theory and Practice, 9(4), 1-14.

Bartlett, C. J. (1969). Clinical Prediction: Does One Sometimes Know Too Much?

Journal of Counseling Psychology, 13, 267-270.

Baur, R. A. (1960). Consumer Behavior as Risk Taking. In R. S. Hancock (Ed.),

Dynamic Marketing for a Changing World(pp. 389-398). Chicago: American Marketing

Association.

Bearden, W. O., & Shimp, T. A. (1982). The Use of Extrinsic Cues to Facilitate Product

Adoption.Journal of Marketing Research, 19(May), 229-239.

Bettman, J., Johnson, E. J., & Payne, J. W. (1991). Consumer Decision Making. In T. S.

Robertson, & H. H. Kassarjian (Eds.),Handbook of Consumer Behavior(pp. 50-84). NJ:

Prentice Hall: Englewood Cliffs.

Bilkey, W. J., & Edk, N. (1982). Country-of-Origin Effects on Product Evaluations.

Journal of International Business Studies, 13(Spring-Summer), 89-99.

Chao, P. (1993). Partitioning Country of Origin Effects: Consumer Evaluations of a

Hybrid Product.Journal of international Business Studies, 24, 291-306.

Darling, J. R., & Arnold., D. R. (1988). Foreign Consumers' Perspective of the Products

and Marketing Practices of the United States Versus Select European Countries. Journal

of Business Research, 17(November), 237-248.

Dodds, W. B., & Grewal, D. (1991). Effects of Price, Brand, and Store Information on

Buyers' Product Evaluation.Journal of Marketing Research, 28(August), 307-319,.

Dodds, W. B., & Monroe, K. B. (1985). The Effect of Brand and Price Information on

Subjective Product Evaluation.Advances in Consumer Research, 12, 85-90.


30/31



Dowling. (1999). Perceived Risk. In P. E. Earl, & S. Kemp (Eds.), The Elgar Companion

to Consumer Research and Economic Psychology (pp. 419424). Cheltenham: UK:

Edward Elgar.

Erickson, G. M., & Johansson, J. K. (1985). The role of price in multi-attribute product

evaluations.Journal of Consumer Research, 72(2), 195-199.

Han, C. M. (1989). Country Image: Halo or Summary Construct. Journal of Marketing

Research, 26(May), 222-229.

Hann, C. M., & Terpstra, V. (1988). Country-of-Origin Effects for Uni-National and Bi-

National Product.Journal oflnternational Business Studies, 19(Summer), 235-255.

Hawkins, D. I. (2001). Consumer Behavior: Building Marketing Strategy. New York:

Irwin/McGraw-Hill.

Johansson, J. K. (1989). Determinants and Effects of the Use of 'Made in' Labels.International Marketing Review, 6(1), 47-58.

Johnson, R. L., & Kellaris, J. J. (1988). An exploratory study of price/perceived-quality

relationships among consumer services.Advances in Consumer Research, 75, 316-322.

Kelly, E. L., & Fiske, D. W. (1951). The Predictions of Performance in Clinical

Psychology.Ann Arbor: University of Michigan Press.

Liechtenstein, D. R., Ridgway, N. M., & Netemeyer, R. G. (1993). Price perceptions and

consumer shopping behavior: A field study. Journal of Marketing Research, 30, 234-

245.

Maynes, E. (1985). Quality as a Normative Concept: A Consumer Economist's Views. In

J. J. Olson (Ed.),Perceived Quality.Lexington: MA: D.C. Heath.

Meyvis, T., & Janiszewski, C. (2002). Consumers' Beliefs About Product Benefits:The

effect of obviously irrelevant product information. Journal of consumer research, 28

(4(March)), 618-635.

Monroe, K. B., & Chapman, J. D. (1987). Framing Effects on Buyers' Subjective Product

Evaluations.Advances in Consumer Research, 14, 193-197.

Newell, A. a. (1972).Human Problem Solving.NJ: Prentice Hall: Englewood Cliffs.

Oglethorpe, J. E., & Monroe, K. B. (1987). Risk Perception and Risk Acceptability in

Consumer Behavior: Conceptual Issues and an Agenda for Future Research. In R. W. al.

(Ed.), Winter Marketers Educators Conference.AMA.


31/31


I i l R h J l f M S i & T h l

Olshavsky, R. W. (1985). Perceived Quality in Consumer Decision Making: An

Integrated Theoretical Perspective. In J. Jacoby, & J. Olson (Eds.), Perceived Quality

(pp. 3-29). Lexington: MA: Lexington Books.

Olson, J. C., & Jacoby, J. (1972). Cue utilisation in the quality perception process. In M.

Venkatesan (Ed.), Advances in Consumer Research (pp. 167-179). Iowa City, Iowa:Association for Consumer Research.

Payne, J. W. (1993). The Adaptive Decision Maker.Cambridge: Cambridge University

Press.

Rao, A. R., & Monroe, K. B. (1989). The Effect of Price, Brand Name, and Store Name

on Buyers' Perceptions of Product Quality: An Integrative Review, 26 (August):. Journal

of Marketing Research, 26(August), 351-357.

Sweeney, J., Soutar, G. N., & Johnson, L. W. (1999). The Role of Perceived Risk in the

Quality - Value Relationship: A Study in a Retail Environment. Journal of Retailing, 75

(1), 77- 105.

Teas, R. K., & Agarwal, S. (2000). The Effects of Extrinsic Product Cues on Consumers'

Perceptions of Quality, Sacrifice, and Value. Journal of the Academy of Marketing

Science, 28(2), 280-292.

Wheatley, J. J., & Chiu, J. S. (1977). The Effects of Price, Store Image, and Product and

Respondent Characteristics on Perceptions of Quality.Journal of Marketing research, 14

(May), 181-186.

Zeithaml, V. A. (1988). Consumers perceptions of Price Quality and Value: A Means-

End Model and Synthesis of Evidence.Journal of Marketing, 52(July), 2-22.

EFFECT OF BRAND NAME AND PRICE ON CONSUMER PRODUCT EVALUATIONS

Documents

Transcript of EFFECT OF BRAND NAME AND PRICE ON CONSUMER PRODUCT EVALUATIONS