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Transaction utility effects when quality is uncertain

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Abstract

The existing literature finds that price discrepancy, which represents the difference between expected and observed price, helps explain brand choice and purchase intention. This effect is often attributed to transaction utility, that is, the incremental utility associated with the surprise of observing a price lower or higher than expected. This research considers the possibility, however, that transaction utility is a less important determinant of choice when quality is uncertain. We propose and find that acquisition utility (perceived value for the money) tends to dominate the explanation of purchase intention, but transaction utility is significant only when consumers are more certain about quality. Our discussion considers the relative role of transaction utility in explaining consumer decision making and how the informative and allocative roles of price might be distinguished.

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Author information

Authors and Affiliations

  1. the University of Notre Dame, USA

    Joel E. Urbany (associate professor of marketing)

  2. the University of South Carolina, USA

    William O. Bearden (Distinguished Professor of Marketing)

  3. Pathfinders, Inc., New Delhi, India

    Ajit Kaicker (senior research director)

  4. the faculty of the Universidad de Los Andes, Bogota, Colombia

    Melinda Smith-de Borrero

Authors
  1. Joel E. Urbany
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  2. William O. Bearden
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  3. Ajit Kaicker
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  4. Melinda Smith-de Borrero
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Additional information

He received his Ph.D. in marketing from Ohio State University and his B.S. from Ohio State University. His research interests include information economics and pricing. Previously, he taught at the University of South Carolina. He has published in theJournal of Consumer Research, Journal of Marketing, andJournal of Retailing, among others.

He received his Ph.D. at the University of South Carolina, his M.B.A. from the University of Georgia, and a B.S. degree from Clemson University. Previously, he taught at the University of Alabama. His research interests include consumer perceptions of value and interpersonal influences. He has published in theJournal of Consumer Research and theJournal of Marketing Research, among others.

He received his Ph.D. in marketing from the University of South Carolina and has a Bachelor’s degree in economics from the University of Delhi. His research interests include price bundling, price effects on perceived quality perceptions, and segmentation of business-to-business markets. He has published in theJournal of Business Research and theAdvances in Consumer Research series, published by the Association of Consumer Research. He previously taught on the faculty of Valdosta State University.

She received a B.S. in statistics, a Ph.D. in marketing from the University of South Carolina, and a M.S. in statistics from Virginia Polytechnic Institute. She previously taught at Lehigh University. Her research interests include market segmentation, discrete data analysis, and pricing. She has published in theJournal of Marketing Research, as well as in theProceedings of the American Marketing Association and theAssociation for Consumer Research.

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Urbany, J.E., Bearden, W.O., Kaicker, A. et al. Transaction utility effects when quality is uncertain. J. of the Acad. Mark. Sci. 25, 45–55 (1997). https://doi.org/10.1007/BF02894508

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