Discuss the relationship between the price and quality of a product and how price affects a purchase decision.
What will be an ideal response?
Answers will vary. When a purchase decision involves uncertainty, consumers tend to rely on a high price as a predictor of good quality. Reliance on price as an indicator of quality seems to occur for all products, but it reveals itself more strongly for some items than for others. Among the products that benefit from this phenomenon are coffee, aspirin, shampoo, clothing, furniture, whiskey, education, and many services. In the absence of other information, people typically assume that prices are higher because the products contain better materials, because they are made more carefully, or, in the case of professional services, because the provider has more expertise.Researchers have found that price promotions of higher priced, higher quality brands tend to attract more business than do similar promotions of lower priced and lower quality brands. Higher prices increase expectation and set a reference point against which people can evaluate their consumption experiences. A bad experience with a higher priced product tends to increase the level of disappointment. Finally, products that generate strong emotions, such as perfumes and fine watches, tend to get more "bang for the buck" in price promotions.
You might also like to view...
Under an activist rule,
A. the growth rate of money supply is greater than the inflation rate. B. monetary policy is allowed to change over the course of the business cycle. C. the growth rate of money supply is lower than the inflation rate. D. monetary policy is not changed over the course of the business cycle.
A(n)__________is best described as an entire group of individuals who orchestrate the movement of goods, services, and information from the source to the consumer
Fill in the blanks with correct word.
In the case study of the vice president’s coverage of the plans for change at Teachers College, Columbia University, the change was prompted by ______.
A. a grant award B. the increased enrollment C. tearing down buildings to provide space for new ones D. the fact that the buildings and facilities involved were at least a century old
Island Breeze Company designs and makes desk, window, and ceiling fans. In a product liability suit based on negligence, Island Breeze could be liable for vio¬lating its duty of care with respect to all of the following except
a. the design of the fans. b. theproduction process used to make the fans. c. thewarnings on the labels of the fans. d. a consumer'sunforeseeable misuse of a fan.