Research IssuesThe hypotheses to be tested in this experiment are based on the conceptualization of the price perceived quality relationship as posited by Monroe and Krishnan (1984). In this structure three constructs, perceived quality, perceived value, and willingness to buy are utilized to model the role of price and quality perceptions. Arguing that perceived value and perceived quality are distinct constructs, these authors view perceived quality purely as an evaluative measure, where perceived value is represented as a tradeoff between perceived quality and sacrifice. As shown in Figure 1, price plays a dual role in this tradeoff. Higher prices will lead to greater perceived quality, and consequently, to a greater willingness to purchase based on perceived quality. At the same time, the higher price represents a measure of what must be sacrificed to buy the good and leads to a lesser willingness to buy. Perceived value represents a tradeoff between the two variables, perceived quality and sacrifice. Willingness to buy is positively related to Perceived value.
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