November 2015
·
27 Reads
·
1 Citation
A price-quality model is presented and tested using the PIMS database. Relative price is shown to be a function of a business’s overall reputation for quality. A business’s reputation for quality is in turn, heavily influenced by three marketing mix variables: product quality, customer service, and marketing communications efforts. Three environmental variables -relative market share, type of market entry and number of customers exert a smaller influence. The need to effectively manage these relationships in order to obtain a price premium is discussed.