The Effects of Price Context and Prior Product Knowledge on Consumers’ Product Evaluations

Abstract

This research examines how consumers rely on price and prior product knowledge in product quality evaluations. To understand the interaction effects of price context and prior product knowledge on quality evaluations, a conceptual framework based on cue utilization theory and information processing theory was developed. It is proposed that low knowledgeable consumers are more likely to use price as a quality indicator in a low-priced context; moderate knowledgeable consumers tend to rely on their knowledge to make product evaluations; high knowledgeable consumers are more likely to use their product knowledge in a high-priced context. Experimental studies were conducted using student subjects to test the proposed hypotheses. Results of the experiments showed significant interaction effects between price context and prior knowledge on quality evaluations. A significant quadratic relationship between the use of price and the level of prior product knowledge was observed only in a low-priced context, providing support for the proposed hypotheses in the conceptual model.