Quality, value, satisfaction, trust, a

Sivakumar and Raj (1997) showed that asymmetry favors high quality brands in brand choice
aspect as well as in category purchase aspect. They also showed that though high quality brands benefit
more than low quality brands from a price decrease, the former are less vulnerable a price increase.
CONCEPTUAL FRAMEWORK
The objective of this section is to provide an intuitive rationale for the conceptual framework and to use
the idea to derive a number of useful results. The explanation for asymmetric quality tier competition
proposed here is based on product attribute tradeoffs. The basic argument is that while evaluating
products, consumers consider tradeoffs between product attributes. That is, in the context of choosing
brands from different quality tiers, a consumer considers how much extra quality (s)he gets for the
differential price that (s)he pays. Support for the use of price/quality tradeoffs in our conceptual
framework is provided from three different perspectives progressing from the general to the specific: (1)
intuition, (2) support for the broad notion of tradeoff, (3) support for the specific notion of tradeoff.
Any multi-attribute framework in consumer choice can be conceptualized in terms of tradeoffs
among attributes (e.g., Guadagni and Little 1983; Blattberg and Wisniewski 1989). However, to formally
incorporate tradeoffs between quality and price, we need to focus on the notion of differences in attributes
gained per unit difference in price and consider it as a component in the consumer’s utility function. In
the context of purchase decisions, comparing attribute differences between alternatives is intuitively quite
appealing. Some example notions taken from everyday life are “by spending $150 extra, you can get an
IBM computer with the same features rather than an Acer computer”; “spending just $50 more than a
black and white printer, you can get a color printer”; and “by adding $20 to the basic membership fee,
you will be able to add your spouse to the AAA membership.” In all these cases, in addition to the
individual alternatives’ attributes, the decision is based on tradeoffs. Therefore, there is strong intuitive
support for using tradeoff in determining consumer behavior.
The formal notion of tradeoff as “what you get” divided by “what you pay” is a well known one.
Researchers such as Monroe (1990) and Zeithaml (1988) and others have used it, albeit in the context of
determining the attractiveness of individual alternatives first and then comparing the values across
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