Marketing Letters

, Volume 8, Issue 3, pp 251–259

The Signaling Impact of Low Introductory Price on Perceived Quality and Trial

  • Niraj Dawar
  • Miklos Sarvary

DOI: 10.1023/A:1007963128115

Cite this article as:
Dawar, N. & Sarvary, M. Marketing Letters (1997) 8: 251. doi:10.1023/A:1007963128115


Economic signaling theory suggests that consumers interpret price withinthe context of market conditions. Under specific conditions it predicts thatlow price may signal high quality. Results from an experiment designed totest the behavioral assumptions underlying this prediction indicate thatconsumers intentions to purchase conform to the predictions of economicsignaling theory, but their judgments of product quality do not. The resultssuggest that consumers' response to signals may be more complex thanpreviously shown.

PriceEconomic SignalingPerceived QualityExperiments

Copyright information

© Kluwer Academic Publishers 1997

Authors and Affiliations

  • Niraj Dawar
    • 1
    • 2
  • Miklos Sarvary
    • 3
  1. 1.Richard Ivey School of BusinessUniversity of Western OntarioLondonCanada
  2. 2.INSEADCanada
  3. 3.Graduate School of BusinessStanford UniversityStanford