The Price-Quality Relationship in an Experimental Setting

Although management assumes a relationship between price and quality when making decisions about pricing and when acting against price cutting within distribution channels, little research on this relationship has been done. Earlier price-quality studies have not involved consumers actually using products over time. This article reports a study in which price was the only variable and, over 24 trials, quality differences for three brands were perceived by subjects when no quality difference existed. The relationship between price and perception of quality was positive but not linear.