Efficiency and quality as economic dimensions of perceived value: Conceptualization, measurement, and effect on satisfaction

Abstract

Perceived value has been analyzed from various perspectives, and a variety of typologies and dimensions have been suggested for the construct. Economic value is one of these types, which is posited in this study as being composed of two dimensions: efficiency and quality. Based on the typology of Holbrook [1999. Introduction to Consumer Value. In: Holbrook, M.B. (Ed.), Consumer Value. A Framework for Analysis and Research. London, pp. 1–28], the present study develops a conceptual framework and a measurement scale for these two components. The relationship between economic value and consumer satisfaction is also examined. The study also describes an empirical study that confirms the validity and usefulness of the proposed model. The results provide an operational tool for measuring economic value that will allow retailers to design suitable strategies for creating and delivering value to consumers. Furthermore, they demonstrate the usefulness of economic value as a concept in the study of consumer satisfaction.

Introduction

The growing body of research into the concept of ‘perceived value’ has established that organizations can achieve a competitive advantage by delivering superior value to consumers. Perceived value has thus become a new strategic imperative for retailers (Gale, 1994; Levenburg, 2005; Sweeney and Soutar, 2001; Sweeney et al., 1997); indeed, some authors have contended that perceived value has, in some respects, superseded more narrowly defined concepts—such as quality (Cronin et al., 2000; Woodruff and Gardial, 1996) and satisfaction (Sweeney et al., 1999; Woodruff, 1997). According to Mathwick et al. (2002), contemporary retailing requires organizations to do business with customers on their terms; moreover, organizations must identify how various retail channels can enhance value in different shopping conditions. In this regard, several authors have noted that research on perceived value in a retail context needs further refinement and development (Carpenter et al., 2005; Cronin et al., 2000; Kleijnen et al., 2007); in particular, there is a need to develop suitable measurement scales for assessing the implementation of strategies that focus on the concept of perceived value (e.g. Babin et al., 1994; Lapierre, 2000; Liu et al., 2005; Sweeney and Soutar, 2001; Ulaga, 2001; Woodruff, 1997).

Cognitive definitions of perceived value, whereby the concept is posited as a trade-off between benefits and sacrifices, have traditionally been prevalent among marketers (e.g. Cronin et al., 2000; Chang and Wildt, 1994; Dodds, 1991; Lapierre et al., 1999; Zeithaml, 1988). Such conceptualizations of value are premised on the economic theory of rational choice. They conceive of ‘value’ as a single overall concept that can be measured by self-reported items that reflect consumers’ cognitive and utilitarian perceptions of value. Other marketing researchers have adopted a broader perspective, whereby the concept of ‘value’ is posited as a complex phenomenon consisting of several (interrelated) attributes or dimensions (Babin et al., 1994; Mathwick et al., 2001, Mathwick et al., 2002; Sinha and DeSarbo, 1998; Sweeney and Soutar, 2001). In particular, Holbrook, 1994, Holbrook, 1999 has developed a useful ‘typology of value’ that captures diverse aspects of the consumption experience—(i) economic value (including quality and price); (ii) social value; (iii) hedonic value; and (iv) altruistic value.

The traditional (cognitive and utilitarian) approach to the concept of ‘value’ has the merit of being simple, parsimonious, and practical; whereas the multidimensional approach provides a richer conception of the complexity of consumers’ perceptions of value. As a consequence of the prevalence of the cognitive approach in the literature, the concepts of ‘quality’ (the main benefit component) and ‘price’ (the main sacrifice component) have been regarded as the important determinants of perceived value (e.g. Dodds and Monroe, 1985; Grewal et al., 1998a; Kleijnen et al., 2007; Lichtenstein et al., 1990; Monroe, 1990; Sirohi et al., 1998; Sweeney et al., 1997; Varki and Colgate, 2001). However, the literature has been largely silent on the question of how evaluations of price and quality actually lead to an overall value judgment (Oh and Jeong, 2004; Rust et al., 2000a). According to Chang and Wildt (1994), an answer to this question requires the development of valid and reliable measures of the relevant constructs.

Against this background, the present study discusses the existing conceptualizations and measures of the economic components of value. In addition, the study examines the role of consumer evaluations of economic value in the creation of consumer satisfaction. The remainder of the paper is organized as follows. The next section provides a review of the literature on: (i) the economic components of value (that is, efficiency and quality); (ii) how the traditional quality–price trade-off can be integrated in a multidimensional structure of value; and (iii) the relationship between economic value and consumer satisfaction. A proposed conceptual model is then presented. An empirical study is then conducted in which the validity and usefulness of the proposed model is demonstrated. Finally, the findings and contributions of the study are discussed, including the implications for scholars and managers, and directions for future research.