New Evidence on Price and Product Quality

A variety of investigations have indicated that consumers subjectively perceive a positive relation between price and product quality. However it is also necessary to consider the objective analysis of actual price‐quality relations which exist among competing products available for consumer choice. This investigation reviews findings from some subjective and objective evaluations of the price‐quality relationship, followed by an objective analysis of price versus quality among 135 recently marketed groups of products in five product categories. Findings indicate that for 51 percent of the products a positive price‐produce quality relation may be inferred, and dramatic differences in this relation are evident from one product category to another. Implications of these findings for the efficiency of consumer decision‐making, the performance of consumer markets and future research on objective price‐quality relations are discussed.