Price-quality relations on consumer markets

Abstract

The urgency of the discussed issue is caused by the unresolved problems of quality measurement and the complexity of the relationship between price and quality of goods. The main aim of the study is to identify the main types of signals about the goods' quality in the consumer market; to determine a list of the main factors affecting the success of quality signaling by a firm; to reveal the mechanisms of these signals; to describe approaches to price-quality signaling on the experimental basis. The methods used in the study: the method of classification, generalization of field and experimental results in psychology, sociology and economics. The results: The author concludes that relation between price and objective quality is rather unstable. A stable relationship exists only between price and subjective quality; the latter is associated with brand. As a result the most profitable investments are not in improvement of objective characteristics but in promotion that means consumer manipulation.

Keywords

• price
• subjective quality
• objective quality
• search goods
• experience goods