Akshay R. Rao

The effect of price, brand name, and store name on buyers' perceptions of product quality : an integrative review

The authors integrate previous research that has investigated experimentally the influence of price, brand name, and/or store name on buyers’ evaluations of product quality. The meta-analysis sugge...

No Pain, No Gain: A Critical Review of the Literature on Signaling Unobservable Product Quality

Recent research in information economics has focused on signals as mechanisms to solve problems that arise under asymmetric information. A firm or individual credibly communicates the level of some unobservable element in a transaction by providing an observable signal. When applied to conveying product quality information, this issue is of particular interest to the discipline of marketing. In this article, the authors focus on the ways a firm may signal the unobservable quality of its products through several marketing-mix variables. The authors develop a typology that classifies signals and discuss the available empirical evidence on the signaling properties of several marketing variables. They consider managerial implications of signaling and outline an agenda for future empirical research.

The Moderating Effect of Prior Knowledge on Cue Utilization in Product Evaluations

This article examines the dissimilar use of product information cues in product evaluations by differentially familiar subjects. Specifically, the use of price cues and intrinsic product cues for the assessment of product quality is hypothesized to depend on prior knowledge. For a product with a positive quality-price association in the marketplace, the study shows that low-familiar and highly familiar subjects tend to perceive a stronger price-quality relationship than do moderately familiar subjects. Moreover, as subjects product familiarity increases, the use of intrinsic cues for product quality assessments tends to become relatively stronger.

Signaling unobservable product quality through a brand ally

In this article, the authors examine the circumstances in which brand names convey information about unobservable quality. They argue that a brand name can convey unobservable quality credibly when...

The Effect of Prior Knowledge on Price Acceptability and the Type of Information Examined

This article assesses whether differences in prior knowledge result in differences in (1) price acceptability and (2) the extent to which different types of information are examined. Using a personal computer-based methodology, subjects who varied in their prior product knowledge provided price responses, and the time they spent examining various kinds of information was measured. Acceptable price-range and points (price limits) were found to be lowest for low-knowledge subjects. Further, the extent to which price and related extrinsic information was examined was found to be lowest for moderatly knowledgeable subjects. Results from a second study provide substantive support for the claim that increasing prior knowledge is accompanied by an increase in both limits of the acceptable price range. Copyright 1992 by the University of Chicago.

Cultural differences in consumer impatience

In this article, the authors examine cross-cultural variations in how people discount the future. Specifically, they predict that people from Western cultures are relatively less patient and therefore discount the future to a greater degree than do people from Eastern cultures, and thus Westerners value immediate consumption relatively more. Furthermore, on the basis of regulatory focus theory, the authors predict that when Easterners are faced with the threat of a delay in receiving a product (i.e., a prevention loss), they are more impatient, whereas when Westerners are faced with the threat of not being able to enjoy a product early (i.e., a promotion loss), their impatience increases. This enhanced impatience manifests in preference for expedited consumption of a product purchased online in two studies. In both studies, the authors used a priming methodology on “bicultural” Singaporean participants; the results support the predictions. In the second study, they also found evidence in support of the process-based explanation for the interaction between culture and message framing.

Causes and Consequences of Price Premiums

Existing literature that argues for the prevalence of price premiums is examined. An evaluation of an extant model identifies several possible boundary conditions that limit the applicability of the model. A set of propositions is developed based on these boundary conditions, linking buyer, seller, and market factors to the magnitude of price premiums that should be available. Alternative means for empirical testing of the propositions are offered, and some implications and applications of this line of thinking for pricing and brand management are described. Copyright 1996 by University of Chicago Press.

Trade-off aversion as an explanation for the attraction effect: A functional magnetic resonance imaging study

This research reports on a cognitive neuroscientific examination of whether trade-off aversion explains the attraction effect. The principal study involves the neuroimaging of participants engaging in choice tasks while their cerebral activity is recorded. The authors examine whether the presence of a third (normatively irrelevant) alternative yields relatively less activation in areas of the brain associated with negative emotion than the activation during choice tasks involving two equally (un)attractive options. The results support the claim that trade-off choice sets are associated with relatively greater negative emotion. The authors discuss the implications of the research for marketing theory and methodology, as well as for managerial practice in the corporate and public policy arenas.

When Two Plus Two Is Not Equal to Four: Errors in Processing Multiple Percentage Changes

When evaluating the net impact of a series of percentage changes, we predict that consumers may employ a “whole number” computational strategy that yields a systematic error in their calculation. We report on three studies conducted to examine this issue. In the first study we identify the computational error and demonstrate its consequences. In a second study, we identify several theoretically driven boundary conditions for the observed phenomenon. Finally we demonstrate in a real-world retail setting that, consistent with our premise, sequential percentage discounts generate more purchasers, sales, revenue, and profit than the economically equivalent single percentage discount.

When More Is Less: The Impact of Base Value Neglect on Consumer Preferences for Bonus Packs over Price Discounts.

The interpretation of a percentage change often hinges on the base value to which it is attached. The authors identify a tendency among consumers to neglect base values when processing percentage change information and investigate the implications of such base value neglect for how consumers evaluate economically equivalent offers presented in percentage terms, such as bonus packs and price discounts. The authors first document a substantial advantage in sales volume for a bonus pack over an economically equivalent price discount in a field experiment conducted in a retail store. Furthermore, in a mall-intercept survey and multiple lab studies, the authors provide additional evidence in support of the effect and identify managerially useful boundary conditions for when the effect is likely to manifest. The article concludes with a discussion of the theoretical and managerial implications of the findings.