The effects of lower prices on perceptions of brand quality: a choice task perspective

Purpose – The purpose of this paper is to investigate whether the negative effect of lower prices on perceived brand quality that has been demonstrated in evaluation tasks arises in a brand choice context. Design/methodology/approach – The effects of lower prices on perceived quality are assessed via two laboratory experiments in which college students participated. Findings – A lower price is associated with lower perceived brand quality in Study 1's evaluation task environment. However, Study 2's results indicate a reversal of the negative effects of lower prices on perceived brand quality in an evaluation task to generally positive effects when the lower price is offered in the form of a discount in a choice task. Practical implications – In addition to providing evidence that fears of the detrimental effects of lower prices may be overblown, the results also provide insight to managers of brands of different levels of quality on how to manage discounts to build, or at least to insulate, perceptions of the brand's quality. Originality/value – The paper's findings may guide both managerial practice and future research on the effects of lower prices, particularly those in the form of a discount.