Niches at the edges: price‐value tradeoff, consumer behavior, and marketing strategy

Abstract

PurposeThe purpose of this paper is to examine how the perception of price‐value tradeoff is related to overall satisfaction, purchase intention, word‐of‐mouth advertising, and actual repurchase behavior.Design/methodology/approachData on subscribers and single ticket buyers of a major symphony orchestra in the Midwest are used to test the hypotheses.FindingsThe ANOVA results show significant differences across the three levels of price‐value tradeoff in each of the response variables. Additional analyses of cross‐tabulated data show that some of the bivariate relations conform to, as well as depart from, the rational consumer behavior model.Research limitations/implicationsAlthough the hypotheses are supported, bivariate relations examined in this study can mask or overstate true relations due to the omitted variables bias. Future research can explore reasons for favorable behaviors of consumers whose perception is that the value they receive is overpriced, and also for unfavorable behaviors of consumers whose perception is that the value they received is under‐priced.Practical implicationsThe different niches at the edges provide opportunities for marketers to fine‐tune segmentation and marketing mix strategies. The use of standardized strategies for these niches with different perception and behavior linkages will yield suboptimal results.Originality/valueWhile previous research has mostly focused on price‐quality linkages, this study extends the body of research by examining the perception of price‐value tradeoff and its relation to overall satisfaction, purchase intention, word‐of‐mouth advertising, and actual repurchase behavior. This adds to our understanding of post consumption behavior, showing how consumers respond to the perception of price‐value tradeoff.