The price – quality relationship and the tricks of the mind
A few days ago one of my contacts in a professional network, in a marketing function for many years, posted: The cheaper always turns out to be more expensive for the consumer. Several days later I noticed someone has liked the photo above.
It strikes me how much we rely on conventional wisdom. There is not shortage of it when it comes to price. Even though conventional wisdom is very culture specific, in many cultures you find reference to the positive relation of price and quality.
We rely on the shortcuts of the mind to simplify our life and take fast decisions. We don’t have the time to linger in front of every product and deliberate on every purchase. The heuristics that slip in our minds today can be tracked way back in the past. Many have most likely expressed the norm of perception at the time but even more likely, they have expressed a general expectation, as they do today. For example the expectation that if you pay more you will get more.
But do consumers relate quality to price only in one direction?
Actually no. In the consumer mind today high price does not necessarily mean high quality. Consumers are in fact aware that they may pay more and get less.
Price is not the strongest cue for product quality. There are several sets of other factors that signal quality more clearly. Such are the internal product cues, e.g. the ingredients or taste of a food product, the material or style of furniture, the durability of a car etc. For some product categories specific information is developed to indicate quality, take for example the hotel stars rankings. Customers may not always know what the exact difference between 4 or 5 stars, but use them as guidance in their perception of quality. The brand and advertising often have a stronger influence than price as a sign of high quality. The store or distribution channels are also factors that speak of the product quality.
It can be said with certainty that price serves as the reference for product quality in the absence of other information. Total lack of information is rare, but what’s available to it may be inconclusive for the consumer. The brand may be unfamiliar, the package – lacking the relevant information or the product category – unknown. Some situations are especially conductive to rely on price – e.g. when there is a significant variance in price in the category, the mind would readily assume a similar variance in the product. There are also products that are complicated or difficult to evaluate, so it is more natural to take a shortcut in determining their quality.
When you speak with consumers you also find that some make immediate connection from price to quality, while others use more information and reasoning, and also that their attitudes vary across categories. Someone who loves new technology with nearly insider’s knowledge on smartphones and operating systems, maybe clueless when it comes to washing powder or washing machines, for example.
So, some consumers may agree that buying on the cheap will be more expensive in the end, but at the moment of purchase it is not just price they are looking at.
The role of price is even less determining on its own when we turn to value. Firstly, the value of a product has more layers and meanings than quality. What we get when we acquire a product involves experience, emotions, social interaction, may be connection to other things we value. Also, the meaning is personal, what has high value for me may not be something you would value at all. It runs deep within the foundations of one’s life.
Consider for example the package holidays. The complexity of the product – travel, destination attractions, hotel and service, provided entertainment, socialising, the weather, the fantasies beforehand, the pre-purchase process etc. , provides a wide scope to determine the value of the product and makes the relation with price multidirectional. Low price and high value may go hand in hand.
The world of products, designed for consumption, as we make it, does not run on one adage.