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The Signaling impact of low introductory price on perceived quality and trial

Author: Dawar, Niraj ; Savary, MiklosINSEAD Area: MarketingIn: Marketing letters, vol. 8, no. 3, 1997 Language: EnglishDescription: p. 251-259.Type of document: INSEAD ArticleNote: Please ask us for this itemAbstract: Economic signaling theory suggests that consumers interpret price within the context of market conditions. Under specific conditions it predicts that low price may signal high quality. Results from an experiment designed to test the behavioral assumptions underlying this prediction indicate that consumers intentions to purchase conform to the predictions of economic signaling theory, but their judgements of product quality do not. The results suggest that consumers' response to signals may be more complex than previously shown
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INSEAD Article Europe Campus
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Economic signaling theory suggests that consumers interpret price within the context of market conditions. Under specific conditions it predicts that low price may signal high quality. Results from an experiment designed to test the behavioral assumptions underlying this prediction indicate that consumers intentions to purchase conform to the predictions of economic signaling theory, but their judgements of product quality do not. The results suggest that consumers' response to signals may be more complex than previously shown

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