What is it about?
On the one hand higher price has been shown to not be a perfect guarantor of superior product quality. On the other hand, there is much talk and some evidence about a 'price-quality relationship', and that high price can be used a signal of high quality. Yet, a firm cannot always just have a high price and automatically be considered high quality. This paper addresses the question of under what conditions will a price signalling strategy succeed?
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Why is it important?
May brands would love to be able to successfully use high price as a signal of high quality. But it's not as simple as having just a high price. This article is also an interesting case study of high prices in the cosmetics industry.
Perspectives
The origin of this article was as an independent study project by a Masters student, Beth Wilson. She had done some fashion modelling, and her view was that many supermarket cosmetics products were chemically similar and functionally as good as the high price department store cosmetics, so why are high price department store cosmetics able to charge such high prices.
Assoc. Prof. Frank Alpert
University of Queensland
Read the Original
This page is a summary of: Price signalling: does it ever work?, Journal of Consumer Marketing, April 1993, Emerald,
DOI: 10.1108/eum0000000002602.
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