The Insights on Perceived Price-Quality

Perceived price-quality or perceived pricequality relationship is price perception on expectation of highest benefit which is manifested in consumers’ interpretation on relationship between price and product quality. There was time when market seemed to be aggresive with the coming of low-priced products. People were rushing to buy for no reason. In this case perceived price-quality is followed by consumers’ quick process of decision making to give positive response. In quick process of decision making, there is a very little search and decision effort. Different products may determine different degree of perceived price-quality. Some can be purchased quickly with very little mental effort, but the others require slow process of buying decision in which a consumer needs moderate amount of time for information gathering and deliberation. Some years back in Indonesia there was a great demand of cheap motorbikes from China. People were so enthusiastic to welcome them. In most south-east Asian countries such as Indonesia, Singapore, Malaysia and the Philippines market penetration of low-priced Chinese products are still significant. Everyday low price policy in budget Vol. 4 | No. 3 ISSN: 2089-6271 The Insights on Perceived Price-Quality


A R T I C L E I N F O
A B S T R A C T P erceived price-quality or perceived pricequality relationship is price perception on expectation of highest benefit which is manifested in consumers' interpretation on relationship between price and product quality.
There was time when market seemed to be aggresive with the coming of low-priced products.
People were rushing to buy for no reason.In this case perceived price-quality is followed by consumers' quick process of decision making to give positive response.In quick process of decision making, there is a very little search and decision effort.
Different products may determine different degree of perceived price-quality.Some can be purchased quickly with very little mental effort, but the others require slow process of buying decision in which a consumer needs moderate amount of time for information gathering and deliberation.
Some years back in Indonesia there was a great demand of cheap motorbikes from China.People were so enthusiastic to welcome them.In most south-east Asian countries such as Indonesia, Singapore, Malaysia and the Philippines market penetration of low-priced Chinese products are still significant.Everyday low price policy in budget airline industry offering domestic or international flight shows another fact that low-priced product is not about giving less benefit but reasonable benefit.This reflects a great demand of low-priced product which might configure a reality that price itself can play consumers' emotion.It is not about product consumption but price consumption.
Price has become object of consumption.
It was noted in the history that since the invention of information technology life has been very busy with gadget.Suddenly, there is a necessary need of connectivity, and market reactively responds with high demand of low-priced digital products.
Nowadays, it is very common to know people in all social class use cellphone in their daily life.
Suddenly, cheap products are found everywhere even the pirated version could easily be found in the market.It is always coming with price that contributes to consumers' dynamics on perceived price-quality.
Price can effectively play emotion of the market.
Within this context price sensitive market is not merely dealing with buying power.People tend to strongly respond change of price in the market which is caused by perception of product quality.Those who crave for luxury consumption or prestige-seeking consumers may prefer to sacrifice their resources --to pay more rather than to choose product with lower or cheaper price because high price refers to high quality.
For consumer, price is an easy means of product Perceived price-quality in this context is that highpriced product may potentially be perceived as low quality as consumers find the high price is unfair and incorrect.They experience wrong buying as the result of emotional or reactive decision which bring their perception to high-priced product but low quality.High-priced products are supposed to bring high benefit but at the end they are considered as wrong price with low benefit (Exhibit-5 Area-2).Consumers in this category would always be suspicious with high-priced products.The reactive and skeptic response toward high-priced products is that their prices are unfair.The prices would direct consumers' inclination to cancel their buying decision.Azar (2009) conducted experiment related with consumer choice.His research reveals consumer's preference between time and money which depends on the good's price.This is considered as inconsistent with the theory of rational choice.
Consumers often behave partial relative thinking that they consider not only absolute price differences but also relative price differences ie.what part of the good's price they can save.This leads consumers to make more effort to save a certain absolute amount when the good's price is lower, because relative to the good's price the savings seem larger.Consumer uses his rationality as he is aware with his decision.He measures price or money with time or effort.Low price will be considered as more saving not only on money but also time.This theory may be used to explain that people are rushing to buy something because of money and time-saved orientation (Exhibit-1 or Exhibit-5 Area-1).It is the value of money as invaluable asset or resource that people start to think of saving.At the extreme point people might look irrational to buy something seemingly for no reason which is actually manifestation of high benefit ie.their money and time-saved orientation (Exhibit-5 Area-1).Anderson (2009) described the philosophical meaning of "free product" which is actually wrong.A person cannot get something for nothing.
If something appears to be free, there is always a cost to the person or to society as a whole, even though that cost may be hidden or distributed.
"There is no such thing as a free lunch."A freelunch counter is a great leveler of classes, and when a man takes a position before one of them he must give up all hope of appearing dignified.
"Free" is just a "free sample" intended both introduce a product and trigger a slight feeling of moral debt that may encourage to buy fullprice item.However, the perceived price-quality in this context happens as consumers are more speculative or "gambling" on low price and high quality.Some just realize that they play with giving up "all hope of appearing dignified", or simply they may be in the condition of lack of price information (Exhibit-2 and Exhibit-5 Area-2).Robin and Dominguez (2008) show the relationship between the experience of fulfillment and the amount of money we spend to acquire more possessions.More possessions mean more fulfillment.From this point it can be drawn that consuming high-priced product means high expenditure of money, and at the end it reflects high need of experience of fulfillment.Spending money for high-priced product is also to defend against unpleasant emotional states like fear, worry, anxiety and loneliness.Following this motive is the -235 --234 -Ignatius Heri Satrya Wangsa / The Insights on Perceived Price-Quality / 229 -251 International Research Journal of Business Studies vol. IV no. 03 (2011) need to have high-priced products which could give highest benefit.This theory corresponds with Bedeian (1971) that high price policy might be suitable for those who are impressed with the importance of quality or products which can give highest benefit.This context acquires price as commodity.Price has become "money" which is always achieved to satisfy needs.It is not product that should satisfy needs, but it is price.(Exhibit-4 and Exhibit-5 Area-2)

Research question
How do we rationalize consumers' responses around the issues of price and benefit to get insight on perceived price-quality ?There are four phases of data analysis.The author uses Consistency Test (CT) for Phase-1 with 42 students as participants.Phase-2 is participated by 37 students, while Phase-3 is participated by two students and conducted using phenomenological approach ie.Narrative Analysis as suggested by Colaizzi (1978) in Goulding (2004)
Interpretation resulted from narratives analysis -251 --250 -Ignatius Heri Satrya Wangsa / The Insights on Perceived Price-Quality / 229 -251 International Research Journal of Business Studies vol. IV no. 03 (2011) Both consistency and inconsistency found in consumers' responses on price and quality offer invaluable insights for marketer.Consistency refers to think coherently which is the ability to value proportional between price and benefit.
Consumers categorized in this area may have in-elastic demand as they can easily identify the relationship between price and benefit namely higher price for more benefit or high quality and lower price for less benefit or low quality.They are more product-oriented.On the contrary, inconsistency refers to think incoherently.
Consumers in this category are price sensitive or price-oriented.They tend to speculate low-priced products with expectation for higher benefit or quality.
Facts of consistency and inconsistency in consumers' responses may have implication that firms should create an environment offering alternativity in prices.In other words, it is necessary that prices should be appropriately applied to specific benefits even in the context of relative price differences.Differences in price should be relevant with differences in product quality.Some segments who are very critical on prices can potentially lead into bad campaign toward the product.Meaning to say there should be a new mechanism to educate market.It is not just about price perception (price without context) but price integrated with benefit (price with context).

CONCLUSION
Rationalization on participants' responses could be first step to find out dynamics of perceived price-quality.It is reasonable enough to mention that price can effectively play emotion of the market.And, it is about perceived price-quality.Some segments show much favor on low-priced product which may be reality the coming era of new consumers.They are more educated, critical to the price unfairness, and highly expected on product benefit and quality.The linearity of high price with high quality may need some revision.
Firms have to work hard to convince market that low price with high quality product is possible without sacrificing product's image.
The author suggest for further in-depth empirical research to achieve more holistic understanding on perceived price-quality.
measurement.It is concrete and consumers trust price much more than their own evaluation of product worth (Shapiro inBedeian 1971).Research in perceived price-quality might be beneficial to know degree of consumer satisfaction, in other words, degree of consumers' well-being.As price perception on quality is related with belief --the expenditure of money as being similar to the expenditure of effort, the more effort means the more a consumer spends on a high-priced product which means also he is going to the highest degree of his well-being.However, this should happen when consumers are aware while making decision specially in price reinforcement environment.There is an area which needs to be considered as consumer limitation.Very often consumers are emotionally authorized indirectly by price and put on their best effort for it.Contribution of ads has been very significant in reshaping image of price ie. the relationship between price and product so that price itself has become dominant or "product" in consumers' mindset.Price has been taken as the most valid representation to value product.Study by McConnell and Stafford and Enis (Bedeian 1971:64) reveals that emotional perception toward price and product quality may happen because consumers are trying to rationalize relationship between price and such things as the physical characteristics of a product, brand name and packaging.The abstract form of price has been brought into being more physical representation.This research is aimed to explore findings related with perceived price-quality.In addition, this research shall reveal some basic theoretical pillars and give general idea for further perceived pricequality research.Findings may also be used to bring out issues on consumer limitation dealing with perceived price-quality.From this perspective firms may gain informative values and invaluable insights to reshape their competitiveness without lacking their sense of social responsibility.Theoretical review To support analyzing perceived price-quality four theories are employed namely Theory-1: Absolute price differences and relative price differences or partial relative thinking (Azar 2009), Theory-2: A "free product" (Anderson 2009), Theory-3: Consumer perception of price unfairness (Bolton et al. 2003), and Theory-4: Consumer perception of price as an indicator of product quality (Bedeian 1971).The above four theories are chosen with the assumption that perceived price-quality most likely happens in price sensitive consumers (Theory-1), trend of free products as promotional gimmick (Theory-2), the risk to experience wrong buying (Theory-3), and trend of unfamiliar brands in a familiar product category where price as common indicator for product quality (Theory-4).Those four theories are integrated and synchronized for interpretation framework.They are presented using the following four Conceptual Models (Exhibit-1 to Exhibit-4).Proposed integration model is also presented to show the conceptual area of perceived price-quality relationship in the context of Customer Perceived Value (Exhibit-5Wangsa / The Insights on Perceived Price-Quality / 229 -251 International Research Journal of Business Studies vol.IV no.03 (2011) Exhibit 4: Conceptual Model -4 Exhibit 5: Proposed Integration Model in Customer Perceived Value context Price is the easiest indicator for product quality.Increasing price is easily predicted as increasing product quality or values.The most easiest way to see product quality or values is through price.From this point of view it may happen price trick which is always high price but low quality product ie.offering high-priced low quality product.Bolton et al (2003) used the term "consumer perception of price unfairness" (see Exhibit-3) as consumers are sensitive to several reference points (outside the price).In her article she exposed consumers skepticism toward high price which is inappropriate and wrong as they appear to have poor apreciation of the cost faced by the firm.Therefore, corrective intervention is needed.
-probability sampling with convenience sampling method is applied.Selection of the participants is based on the author's judgement with regard to efficiency and effectivity of the research.Participants are the Third Year local college students taking Marketing Management subject and living in the Philippines.They are required to fill up questionnaire.Quantitative data from questionnaire are computed using SPSS ver.17.0.Thereafter, output from SPSS are interpreted and analyzed on the aspect of participants' way of thinking coherently specially when they are confronted with some challenging and disturbing statements around the issue of price and benefit.The author proposes this method as Consistency Test (CT).
with two basic assumptions: (1) Participants have stocks of knowledge which produce familiarity, but they are always incomplete and open-ended.This condition of incomplete and open-ended familiarity requires interpretative application; (2) A person's life is a socially constructed totality in which views and experiences interrelate coherently and meaningfully.Those views and experiences of participants can be source of data to describe the fact.Due to limited resource the author labels this approach as "semi-phenomenological" as it covers only on Narrative Analysis.Interpretation on the narratives is made using "fusion of horizons" between the author's frame of reference and the texts being interpreted (Thompson 1997; Goulding 2004).Prior to the interpretation the author applies four steps: (1) acquiring a feeling; (2) extracting main statement; (3) formulating meaning; and (4) clustering meaningful theme.In Phase-4 there are 42 participants.They were given two Situations or Contexts.Situation-1 is dealing with high price and more benefit while Situation-2 is the opposite ie.low price and less benefit.Hence, the participants are required to give response to price and benefit differences in both Situations.It took two months for data gathering from Phase-1 to Phase-4.
350, for me, was the best offer simply because I get a free mobile phone, plus I get free mobile credits namely, (1) free unlimited texts from S to S, (2) unlimited callsS-to-S, and (3)    250 free texts to other networks(Sm and GN).If you exceed the 250 free texts, you will be charged for the excess."(= There are several attractive free packages that drive me to make decision.)"Sowith all these benefits and values, SC I think has just captured the market very well.They have researched and known what today's generation really like.And I believe that it has captured my attention as well.I have been availing of this perks and offers for the past three years and I can say that SC has just done one big job well done.I haven't encountered any network problems so far, so I can really salute them right now.They are serving more than a million Filipinos all over the country and many of my friends personally say that SC is the cheapest when it comes to rates and charges mainly because of their unlimited offers and perks." to pass by a local grocery store in the city and upon checking the hygiene section, what captured my attention is the new product called Close Up White Now.It's a toothpaste that instantly whitens your teeth after you brush.It costs a more or less 65 pesos since I forgot how much it really costs.I was amazed by what it says outside of the box.I said in my mind that I should try this product because of all the benefits and values I can gain after I try this one.I was excited to try this product because it says that Close up White Now is the newest variant of Close Up." (= I believe that the advertisement is necessary and true.)When I reached home, after we had lunch, I want to test the product.I went straight to the sink and brushed my teeth really hard and it took me more or less 2 minutes to brush.I like the minty scent while I was brushing.And the final judgment came, when I went up into the mirror just above the sink, I was surprised and disappointed that there was no effect that happened.(= I need to know the exact result as soon as I reach home.)"Honestly, I was pissed and disappointed of the product.Why do they overpromise a certain product that it gives a lot of benefits and values when in fact all it can even do is just to clean your teeth?Why persuade consumers to the extent that they go crazy about it and in the end they will just be disappointed?Why don't they think that if they overpromise, and the consumers get disappointed, they will just lose value from customers?"Story of Best Offer Product Feeling: happy, proud Main Statement and Meaning: "My mother told me that I should buy a moisturizer to help bring back the moisture of my skin.As we were choosing and buying things, I stopped for a moment because I saw this very beautiful and eye catching moisturizing lotion.It was a "Myra-E Hand and Body Lotion".I suddenly remembered their commercial that said that it helps bring back the moisture of damaged skin.I examined very clearly the moisturizing lotion and told my mother to buy it because it was on sale and it was very cheap but I can no longer remember the price.We bought the product at home." the "Myra-E Hand and Body Lotion" was a best seller because during those times, I was in need of a moisturizing lotion and that was the only lotion in the mall that had everything that I was looking for.The other lotions were good too but they did not contain the ingredients I was looking for.The moisturizing lotion was the best seller because the packaging was very good and very eye friendly.I tried the lotion at home and it actually worked.The lotion had in its cover International Research Journal of Business Studies vol.IV no.03 (2011) that it can help bring back the moisture of your skin in two weeks and it actually worked.My skin was back to its normal moisture with the help of the "Myra-E Hand and Body Lotion".I tried the lotion twice a day and it was very convenient."(= I have no choice and this product is convincing and looks nice.)"My comment to the "Myra-E Hand and Body Lotion" is that, it helped me bring back the moisture of my skin in a less expensive manner.The product is very good and the market strategy being used is very effective.The product did not just satisfy my need but it also helped me save my money."had a bad experience on a disappointing product.I decided to change my shampoo due to the weather because it is very hot in the Philippines I was having a lot of dandruffs.I saw this commercial on the television about the "Vaseline Natural 2 in 1 Anti-Dandruff with Lemon Shampoo and Conditioner".The shampoo was very pleasing because they actually have shown people who have already used their product and they were satisfied.So the day my mother and I went to the mall, I bought the shampoo because my dandruffs were unbearable.As I went home I placed the shampoo inside the bathroom so that I can use it."(= I want to be like them.) "I was very disappointed with the "Vaseline Natural 2 in 1 Anti-Dandruff with Lemon Shampoo and Conditioner" because instead of removing my dandruffs it even increased it.My head was full of dandruffs and there was even a point where I was about to cry because I cannot bear my dandruffs anymore.I immediately threw away the "Vaseline Natural 2 in 1 Anti-Dandruff with Lemon Shampoo and Conditioner" and decided never to use any Vaseline products ever again.Aside from the fact that the shampoo did not work and made things worse, it was also very expensive.I learned my lessons based from the shampoo and promised myself not to purchase anything from the company."In Phase-4 participants were given two Situations in which they are challenged by perceived pricebenefit.Each situations consists two statements which contain the idea of price (Statement-1) and benefit (Statement-2).Situation-1 is dealing with high price and more benefit, while Situation-2 describes a stituation of low price and less benefit (Exhibit-11).At the end they are required to make choice.Choice-A: more convenience and timesaved store with high-priced product.Choice-B: less convenience and less time-saved store with low-priced product.Results show that participants tend to favor Situation-1 and Choice-A.They agree that price should have connection with benefit ie.expensive price for high benefit and cheap price for low benefit.However, results reveal paired differences between Statement-1 and Statement-2 with two-tailed significance less than 0.01 (Exhibit-12).Results from Phase-1 shows some patterns of inconsistent response that is mostly favorable to low price.The statement of "low price and high quality" seems to be favorite and very attractive as it is chosen by most of the participants.This is relevant with Conceptual Model -1 (Exhibit-1) Exhibit 8: Result from Phase-3: Narrative Analysis (1) Exhibit 9: Result from Phase-3: Narrative Analysis (2) of LM and SC (Phase-3) has shown that external reference is still very relevant and effective stimulus to value perceived price-quality.This corresponds to.Perceived price-quality is mainly caused by hidden pressure of certain values such as identity and money.Price may have more than one meaning to a consumer (Exhibit-4).SC's experience on wrong buying has lead her to define it as expensive price or high price with low quality (Phase-3) which corresponds to Theory-3 (Exhibit-3 and Exhibit-5 Area-2).While low price with attribute "free" is still favorite and attractive, on the contrary, high price or expensive is also an image of "wrong product" (see alsoAzar 2009;Anderson 2009).Product's physical appearance is easily used to value quality specially when there is no other rivals.Findings from Phase-1 and Phase-4 show contradiction in participants' reponses on "what I need is high quality with low price" (Phase-1) and "I choose expensive price with more benefit" (Phase-4 Exhibition-11).This viewpoint may show in need of specific situation regarding with perceived price-quality relationship.There should be quite understandable the difference between price without context and price with context (Exhibit-12).Paired differences between Statement-1 and Statement-2 with two-tailed significance less than 0.01 (Phase-4 Exhibit-12)shows that price is sometimes perceived as just a number without context.The other possibility is that participants are just having difficulty to reach proportional understanding between price and benefit.MANAGERIAL IMPLICATIONSPrice and pricing are two things which are highly relevant in mentioning customers' expectation on product benefit.Hence, product quality should be designed to meet with the benefit as expected by customers.It is a matter of firms' creativity to have constant and informative communication with their market through various medium.For instance, advertisements can be effective tool to educate market on product's benefit and its pricing policy.Consequently, advertisements should be validated as the source of truth in perceived pricequality relationship context.