The formation, evolution and replacement of price–quality relationships
Koen Pauwels () and
Richard D’Aveni ()
Additional contact information
Koen Pauwels: Ozyegin University
Richard D’Aveni: Tuck School of Business at Dartmouth College
Journal of the Academy of Marketing Science, 2016, vol. 44, issue 1, No 4, 46-65
Abstract:
Abstract This paper develops a theoretical framework to address how dynamic competitive interactions and customer preferences change the observed relationship between market price and quality, and it offers an empirical framework to study these phenomena. Our framework proposes that price–quality relationships in a market (the fair value line) evolve according to several processes. We define and discuss these processes, including: (1) line formation, (2) line evolution (comprised of line elevation, erosion, steepening, flattening, blurring, tightening, extension and contraction), and (3) line replacement, which involves redefining price or quality in the marketplace. Instead of assuming that prices are a stable function of observable product attributes only (the static equilibrium view), our framework generalizes to dynamic disequilibrium patterns observed in many industries. These patterns are empirically assessed and explained by customer, competitive, and technology forces analyzed in marketing and strategy literatures. For managers, we discuss how they should react to these processes or, even better, set them in motion. For marketing researchers, we specify several hypotheses on the processes’ antecedents and consequences, testable with readily available datasets.
Keywords: Price–quality positioning; Differentiation; Fair value line; Competitive dynamics; Market evolution; Dynamic competition (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations:
Downloads: (external link)
http://link.springer.com/10.1007/s11747-014-0408-3 Abstract (text/html)
Access to the full text of the articles in this series is restricted.
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:spr:joamsc:v:44:y:2016:i:1:d:10.1007_s11747-014-0408-3
Ordering information: This journal article can be ordered from
https://www.springer ... gement/journal/11747
DOI: 10.1007/s11747-014-0408-3
Access Statistics for this article
Journal of the Academy of Marketing Science is currently edited by John Hulland, Anne Hoekman and Mark Houston
More articles in Journal of the Academy of Marketing Science from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().