Is price a good indicator of quality? That's a question managers and consumers are keen to understand yet research to date has offered mixed views. In some cases consumers have been found to persistently rely on price as a quality cue, but in others the price impact was reduced or even nullified when presented alongside other product features.

A new study suggests both conclusions may be correct: consumers do, and don't, rely on price as a quality indicator, but it depends on the psychological factors at play.

Dengfeng Yan and Jaideep Sengupta show that psychological distance affects consumers' perceptions of price and quality. Psychological distance can mean something relating to another person or the distant future. For example, when judging product quality, people think others will rely more on an abstract view of price as a cue whereas they themselves rely more on concrete product attributes, such as appearance and components.

"We draw on construal level theory whose key premise is that psychologically distant objects are represented as abstract, high-level construals that rely on generalized schemas rather than specific details, and psychologically close objects are presented as concrete, low-level construals that focus more on specific details rather than generalized abstractions," the authors say.

In one experiment, participants were asked to judge the tastiness of a plate of rice based on price or appearance. The majority expected price to have a higher influence on other people's ratings, but their own ratings were more influenced by appearance. Temporal distance was also tested in an experiment in which they were told they would buy a laptop computer tomorrow or in two months, and were presented with specific attributes (high or low configuration) and prices (either $5,000 or $10,000). Results show that price mattered more when people were making the purchase 2 months later than tomorrow. In one case participants were primed with abstract or concrete thinking before they were asked to make a quality judgment and price had a greater impact when high-level, abstract thinking was activated.

In the other study, product attributes were made more abstract by referring to them only as "superior" or "inferior" and not providing detail, and the prices made more concrete ($5,199 and $10,199); participants were then asked to imagine they had bought this computer and judge its quality. The result was that price had a stronger impact on their judgment of the computer people themselves had bought, while they thought the abstract attributes were a more important indicator for other people.

"Our central idea is that the extent to which consumers rely on a particular aspect while forming inferences about product quality is enhanced by its compatibility with the way in which they construe the scenario," they say."Given high-level construals, such as those obtaining with increased psychological distance, a reliance on abstract cues such as price should increase. However, given low-level construals of the sort more likely to obtain with decreased psychological distance, a reliance on more concrete cues such as product-specific attributes should increase."

"We also contribute the notion that the same cue can be part of high- or low-level construals depending on the judgment task. Abstract connotations of price, such as its role in signaling 'goodness', are salient when quality judgments are assessed, but concrete aspects of price, such as feasibility considerations associated with monetary sacrifice, are salient when purchase intentions are assessed."

This explanation of when and why price versus attribute information influences quality judgments will be of importance to both consumer researchers and those who seek to influence quality perceptions.