Consumers’ Perception of Quality and Value Under Different Price Ranges and Price Positions Within a Product Line: A Study of the Indian Passenger Car Market

Abstract

The purpose of the study is to understand the area of reference price based on previous literature and to assess the current state of knowledge relating to pre-purchase price quality perception and how price features contribute to selection of a particular model in a product line with special emphasis on the automobile sector. Acceptable price range or the reference price is the price that the buyer has in his/her mind, which will be used as a yardstick for making a purchase. A 2 x 4 factorial design with three dependent variables was used in an experimental setup to test the hypotheses formulated based upon behavioral research. The results indicate that while the price characteristics of a product line influence consumer evaluations of a product model within the line, the price characteristics do not operate independently; rather, they interact. Further, the study suggests that several dependent variables that are usually considered separately in price research are actually dimensions of similar constructs. Examining the issue of product-line pricing from a behavioral perspective, this experiment suggests that understanding price perception is the key for developing an effective marketing strategy.