Are consumers' perceptions of price–quality relationships well calibrated?

Past research has shown that, to varying degrees, consumers tend to believe price is an indicator of quality, even though there is in fact often very little correlation between objective measures of price and quality (PQ). Moreover, consumers have been observed to be poorly calibrated in their knowledge of precisely which categories exhibit the strongest association between PQ for products. Given the profound changes that have occurred in consumer markets, such as the rise of the Internet and the flood of product quality information now readily available online, the present work seeks to update this line of research. Specifically, it seeks to determine if changes in the marketplace have affected (1) consumers' perceptions of the PQ relationship; and (2) consumers' PQ calibration. Data from two sources were collected and compared: (1) Subjective ratings of the PQ relation for various common products, collected using a questionnaire format in a survey of 313 US consumers; and (2) Objective estimates of the actual PQ association of the same products, gathered from independent third‐party information providers who report both prices and rank‐ordered quality measures for each. Results indicate that consumers today (1) continue to perceive a modest positive relationship between PQ (more so for durables, less for non‐durables); and (2) are modestly calibrated for durable products. But they are much less well calibrated in the realm of non‐durables, where consumers expect a positive link between price and quality in precisely those product categories in which the relationship is actually negative. Relative to past research, the calibration of consumers has apparently ‘flipped’ from non‐durables to durables today. Potential explanations for this result include (1) the rise of the Internet as an information source for quality ratings of durables; (2) a higher level of perceived risk for durable goods purchases; (3) a greater tendency for durables to exhibit a positive correlation between actual quality and price; and (4) the rising quality level of private label brands, which may render prior price–quality perceptions for non‐durables outdated or obsolete.     

Analysing consumers' ‘activism’ in response to rising prices

The purpose of this paper was to compose the profile of active consumers in Greece during a period of rising prices taking into account shifts in their consumption. A survey was conducted from 1 September 2008 to 21 November 2008 to collect the primary data source for the study. Questionnaires were administered to 200 consumers. To our knowledge this was the first attempt to offer insight into the characteristics of the Greek consumer in a period of economic crisis. For this purpose, econometric analysis was employed. Empirical results suggested that high‐income groups spend more for food commodities and are less likely to be active consumers. It was concluded that consumers have reduced spending for some basic and semi‐luxury products like fruits, meat, alcohol, sweets and coffee, and entertainment activities. The main factor which affected the reaction to price increases, as expected, was the monthly private income. Twenty per cent of the consumers are members of a national consumer movement organization, and support their actions against rising prices. Women, who research the market before purchasing a product, are more likely than men to participate in economic boycotts. By examining the profile of non‐active consumers and the reasons for their behaviour, we are able to propose a policy for the activation of the Greek consumer movement, which is necessary for the consumers' resistance to rising prices. Taking into consideration that Greek consumers face increased prices for food commodities and services, a policy framework to activate consumers is among the main prerequisites for maintaining consumers' well being. We suggest that the Greek Consumer Protection Institutes should regain consumers' confidence and focus on the dissemination of information about organized economic boycotts.     

AN ONLINE PORTFOLIO SELECTION ALGORITHM WITH REGRET LOGARITHMIC IN PRICE VARIATION

We present a novel efficient algorithm for portfolio selection which theoretically attains two desirable properties:

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South African consumers' opinions and consumption of soy and soy products

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Connected consumers' responses to negative brand actions: The roles of transgression self-relevance and domain

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