Product Familiarity, Brand Name, and Price Influences on Product Evaluation

P. S. Raju, Pennsylvania State University
ABSTRACT - Several studies have shown that product evaluation and perception is a function of multiple factors (cues). Recent research efforts have focused on the interactive effects of these factors. One of the interesting developments evolving from psychophysics is the concept of price limits and acceptable range of prices. This paper reports the results of two studies conducted to study the interrelationships between product familiarity, brand name, price limits, and acceptable price range and their effects on product evaluation. The product studied was "stereo receivers."
[ to cite ]:
P. S. Raju (1977) ,"Product Familiarity, Brand Name, and Price Influences on Product Evaluation", in NA - Advances in Consumer Research Volume 04, eds. William D. Perreault, Jr., Atlanta, GA : Association for Consumer Research, Pages: 64-71.

Advances in Consumer Research Volume 4, 1977   Pages 64-71


P. S. Raju, Pennsylvania State University


Several studies have shown that product evaluation and perception is a function of multiple factors (cues). Recent research efforts have focused on the interactive effects of these factors. One of the interesting developments evolving from psychophysics is the concept of price limits and acceptable range of prices. This paper reports the results of two studies conducted to study the interrelationships between product familiarity, brand name, price limits, and acceptable price range and their effects on product evaluation. The product studied was "stereo receivers."


The perception of product quality has been extensively studied by researchers since the fifties. Excellent reviews of the various studies conducted in Marketing and other related disciplines are available (Gardner, 1975; Monroe, 1973; Olson, 1973, 1976). Although earlier studies used price in isolation, later studies have shown that factors such as brand name, store image, and product familiarity or expertise have a definite influence on product evaluation. In spite of conflicting findings, most researchers generally agree that when price is the only information available to the consumer, it has a significant effect on product perception. Recently, therefore, attention has centered on the precise nature of the relationship and the interaction of price with other informational cues when they are present. This paper reports the results of two studies conducted to investigate the influence of product familiarity, brand name, and price on product evaluation. Before discussing the actual studies, some of the relevant literature is reviewed.

Several recent studies (Gabor and Granger, 1964, 1966; Monroe, 1971; Monroe and Venkatesan, 1969; Stoetzel, 1970) indicate that the buyers' subjective perceptions of price may include a range of acceptable prices for a product. In other words, buyers may have lower and upper price limits (absolute thresholds) for a product. If the product is priced below the lower limit, its quality becomes suspect, and if it is priced above the upper limit, it is not considered worth the price. The concept of price thresholds evolves from Weber's law and the principles of psychophysics (Webb, 1961). Gab-or and Granger (1964, 1966) found that the price range and price limits were influenced by income. Sherif (1963) found price limits to be influenced by environmental backgrounds. Monroe and Venkatesan (1969) investigated refined methods of measuring price limits. However, a systematic investigation of factors influencing price limits and acceptable ranges would be very desirable. The present paper sheds some light in this regard. The investigation of price limits is particularly interesting because price variations within the unacceptable low, acceptable, and unacceptable high ranges might have different effects on perception and evaluation of products.

Another factor often suggested as being important is product familiarity or expertise (Jacoby, Olson, and Haddock, 1971; Shapiro, 1968). Valenzi and Eldridge (1973) divided their sample into two groups based on "expertise" with the product. The product considered was beer and "expertise" was judged based on the frequency of purchase and quantity of consumption of the product. Enis and Stafford (1969) used subject groups of students, housewives, and carpet salesmen to evaluate carpet samples. These three groups could be considered as representing different levels of expertise. Although both these studies revealed some significant interactions between product familiarity and price, they failed to reveal any specific relationship between product familiarity and product evaluation. Jones (1974), however, found that price had a greater influence for non-experts than for experts. As Olson (1976) suggests, the cognitive structures of experts may be different from the cognitive structures of non-experts and hence, expertise may significantly influence product evaluation. The exact nature of the relationship is, however, not clear. One interesting question is whether product familiarity influences the range of acceptability of prices. A person with higher product familiarity is likely to be more discriminating and, therefore, expected to have a narrower range of acceptance. Such an effect would also be expected from the point of social judgment theory because higher product familiarity could mean greater involvement with the product which in turn would cause a narrower range of acceptance. Fouilhe (1970) did, in fact, find that known branded products had a narrower acceptable range of prices than unbranded products.

Finally, brand name is generally considered an important informational cue influencing perception. The influence of brand name seems to depend on the way it is operationalized. Andrews and Valenzi (1971) and Smith and Broome (1966) have operationalized brand name in terms of the degree of brand familiarity. These studies have found a significant brand x price interaction. Other researchers such as Gardner (1971) and Jacoby, Olson and Haddock (1971) have operationalized it mainly as a cue that was either present or absent. These studies have not yielded a significant price x brand interaction. The operationalization of brand name in terms of brand familiarity seems more desirable because for most products the consumer is rarely in a situation where the brand name is not available. The present paper, therefore, takes this approach.

Based on some of the concepts discussed above, two studies were conducted to investigate the influence of product familiarity, brand name, and price on product evaluation. The specific objectives of Study 1 were:

(1) To examine the influence of product familiarity on the size of the acceptable price range and the upper and lower price limits.

(2) To examine the influence of product familiarity on the degree of confidence expressed by consumers in judging which brand to buy.

(3) To aid in the selection of brand names and prices to be used in Study 2.

The specific objectives of Study 2 were:

(1) To examine the influence of product familiarity, brand name and price on product evaluation.

(2) To gain some insight into the specific nature of the relationship between price and product evaluation.

Both studies were conducted with respect to one durable, relatively high priced product, namely stereo receivers. This product was found to be especially suitable for the student population from which respondents were obtained.



The subjects were 32 college students who volunteered to participate in the study. The relevant variables were measured by means of a questionnaire. Subjects were told that they would be asked for some of their true opinions relating to stereo receivers. However, they were not told the specific objectives of the study before completing the questionnaire.

Product familiarity was measured by having subjects judge their own familiarity with the product based on past experience, knowledge, and word of mouth communication from friends and other associates. The response was measured on a seven-point scale ranging from "not at all familiar" to "extremely familiar." The upper and lower price limits were measured by a procedure similar to that adopted by Deering and Jacoby (1972) and Stoetzel (1970). Subjects were given four standard specifications (Continuous power output, Total harmonic distortion, FM sensitivity, and Signal to noise ratio) for a new stereo receiver so as to make sure that they were judging the same product. They were also provided a list of eighteen consecutive price categories on the questionnaire ranging from "$100 and under" to "over $500." Except for the lowest and highest categories which were open ended, all the other categories were consistently of $25 magnitude. For example, some of the price ranges in the list were $101-$125, $126-$150, $151-$175 and so on. Subjects were asked to indicate for a new stereo receiver with the given specifications the maximum price they would consider acceptable (beyond which it would not be worth paying more) and the minimum acceptable price (below which they would seriously doubt the quality). The upper and lower limits were measured in two separate questions by having respondents check one of the eighteen price categories for the upper limit and one for the lower limit. Confidence in product purchase was measured on a seven-point scale ranging from "not at all confident" to "extremely confident" in response to the following question:

If you were to buy a brand of stereo receiver by yourself, how confident would you be that you have chosen the right brand?

Finally, in order to select brands of stereo receivers for use in the second study, subjects were asked to indicate their familiarity with fifteen specific brands of stereo receivers available in the market. Responses were again measured on seven-point scales ranging from "not at all familiar" to "extremely familiar."


The following hypotheses were tested in Study 1:

(1) Product familiarity is significantly related to the size of the acceptable range of prices. Higher product familiarity will result in a smaller size for the acceptable range.

(2) Product familiarity is directly related to the degree of confidence in choosing the right brand in a purchase situation.

Analyses and Results

Subjects were divided into two groups based on product familiarity. Categories 1 and 3 on the seven-point scale were considered indicative of "low familiarity" and categories 5 to 7 were considered indicative of "high familiarity." One subject who gave a neutral response of 4 was not included in the analysis. There were fifteen subjects in the "low familiarity" group and sixteen subjects in the "high familiarity" group.

Size of Acceptable Range. The size of the acceptable range for each subject was measured by taking the difference of the upper price limit and the lower price limit. For example, if a particular subject indicated on the eighteen-point scale the upper limit as falling in the category ($301-$325) and the lower limit falling in the category ($226-$250) the acceptable range was calculated as [$313 (i.e., mean of the upper category) -$238 (i.e., mean of the lower category)] which is equal to $75. The calculation was repeated for each subject in the "Low familiarity" and the "high familiarity" groups and the median value for each group calculated. The median for the "low familiarity" group was $83.30 and for the "high familiarity" group it was $46.84. The median for the combined sample was around $62. A median test between the two groups (Siegel, 1956, pp. 111-116) revealed that the groups were not significantly different. However, when means were used instead of medians, the group difference was marginally significant at the 0.10 level. The mean of the acceptable range for the "low familiarity" group was $82.69 and for the "high familiarity" group it was $57.69. The results do not indicate considerable support for Hypothesis 1. However, they seem to be in the right direction.

Upper and Lower Price Limits. The aggregate values of the upper and lower price limits were determined for the two groups to see whether the limits were different for the two groups. In addition, these limits were required for selection of appropriate prices for Study 2.

For each group the aggregate value of the upper and the lower price limit was determined by taking the median value of the responses. This procedure was adopted because the threshold price limit is strictly defined as the point at which 50 percent consider the price acceptable and 50 percent consider it unacceptable (Monroe and Venkatesan, 1969). As an example, the determination of the upper price limit for the "high familiarity" group is illustrated in Table 1. From this table it is clear that the median price lies in the category ($276-$300). To find a single value for the price limit, this category was divided in the proportion 2 to 1 because 2 subjects are needed on the lower side and 1 is needed on the higher side (to get an even division of 8 subjects on each side). Hence, the upper limit is [$275 + 2/3 ($300-$275)] = $291.66.



The other price limits were calculated in a similar manner and the results are shown in Table 2.



Median tests for the upper price limit and the lower price limit revealed that the group differences were not significant. Table 2 also shows the size of the acceptable price range for the two groups as calculated from the median price limits. The values, 96.88 and 75.00, are not very close to the values 83.30 and 46.80 mentioned earlier in part (a). This is not unusual because part (a) used median values of individual acceptable price ranges whereas the values in Table 2 were calculated from the price limits for the whole sample.

Confidence in Purchase. The mean value and variance of the confidence rating for the "low familiarity" and the "high familiarity" groups were calculated. The results are shown in Table 3.



An F test for the homogeneity of variances revealed that the variances for the two groups were not different. The difference in confidence between the two groups was found to be 1.758 and the T value was significant at the 0.01 level. Hypothesis 2 is, thus, supported by the data.



Fifty one volunteer college students participated in this study. Product familiarity was operationalized in the same manner as in Study 1 and subjects were divided into "low familiarity" and "high familiarity" groups. Twenty two subjects fell in each category. Seven subjects who fell in the middle and could not he classified in either group were deleted from the analysis.

Based on respondents' familiarity with fifteen different brands of stereo receivers measured in Study 1, three brands were chosen for inclusion in this study. Pioneer was selected as a well-known brand. Even many of the respondents with low product familiarity were aware of this brand name. Kenwood and Onkyo were chosen as the moderately known and the least known brands respectively. All three brands were available in the market.

Nine different price levels were included in the study. Based on the price limits obtained in Study 1, these nine prices were selected so that three fell in the unacceptable low range, three fell in the acceptable range, and three fell in the unacceptable high range for both the "low familiarity" and the "high familiarity" groups. The actual price levels selected were $100, $130, and $175 in the unacceptable low range; $225, $250, and $275 in the acceptable range; $325, $375, and $400 in the unacceptable high range.

The objective in selecting the nine price levels was that the prices belong in the appropriate ranges and be as realistic as possible. Study 1 showed that the acceptable range was somewhere between $190 and $300. Since most stereo receiver prices (for the brands considered) started around $100, the prices in the unacceptable low range were selected in the range of $100 to $190. Prices above $300 were selected for the unacceptable high range. Actual market prices for various types of stereo receivers were used to select the three prices within each range. The intervals between the prices were not kept equal to avoid the possibility of the subjects adjusting their responses proportionately for the different prices. One major limitation of repeated measures designs is that subject responses to later categories might depend on their responses to earlier categories. The use of equal intervals would, thus, make it easier for subjects to vary their responses proportionately for the various price categories.

Subjects were given the same four specifications for a new stereo receiver as in Study 1. They were then required to judge the overall quality of such a receiver for each of the three brand names and for each of the nine prices within each brand name. The design, there- fore, had one between subjects factor (product familiarity with 2 levels) and two within subjects factors (brand name with three levels and price with nine levels). Such a design is generally referred to as a split plot design (Kirk, 1969). In addition to the overall quality, four other product evaluation measures were obtained. They were durability, performance, expected satisfaction, and expected post-purchase service. All these dependent measures were measured using seven-point scales ranging from "low" to "high." Separate analysis on each of these dependent measures revealed that the results for durability, performance, and satisfaction were very similar to that obtained for overall quality. Only the perception of post-purchase service yielded somewhat different results. Hence, only overall quality and post-purchase service evaluations are discussed in this paper.


Based on past research and some of the studies reviewed earlier, the following hypotheses were generated:

(1) Product familiarity will interact significantly with brand name and price in determining product evaluation. Higher product familiarity is expected to lead to greater discrimination in evaluations of brands. The interactive effect with price is expected because of possible differences in cognitive structures between experts and non-experts. The exact nature of the interactive effect, however, cannot be specified.

(2) Brand name is significantly related to evaluations. Better known brands (such as Pioneer) will receive better evaluations than less well known brands (such as Onkyo). This hypothesis is generally valid except in some cases where a brand may be well known in a negative sense.

(3) Price is significantly related to evaluation. Higher priced items will receive better evaluations than lower priced items.

(4) Brand name and price will interact significantly. Brand name will have a greater influence at higher prices than at lower prices.

Analyses and Results

The data were analyzed using a locally available analysis of variance program known as ANOVR. The results obtained for overall quality evaluation and post-purchase service evaluation are summarized in Tables 4 and 5 respectively.

The tables have been constructed in accordance with standard procedures (Kirk, 1968, pp. 302-303). The total sum of squares is divided into the between subjects sum of squares and the within subjects sum of squares. Different error terms have to be used for testing the significance of various effects. The selection of the appropriate error term is based on the expected mean squares for the various effects. For example, in Tables 4 and 5, four separate error terms have been indicated. Further details of such designs can be found in Kirk (1968) or Winer (1971).

In both cases, the main effect of product familiarity was not significant. In Table 4, the F ratio for product familiarity is only 0.002. Usually the F ratio should be equal to 1.0 or higher. Ratios less than 1.0 have no meaning and usually occur due to chance or due to sampling error. In the case of post-purchase service evaluation, the product familiarity x brand name effect was marginally significant. This interaction effect is illustrated in Figure 1. The figure shows that Pioneer and Kenwood brands were evaluated almost alike by both groups. The "low familiarity" group judged Onkyo closer in post-purchase service to the other two brands than did the "high familiarity" group. This seems to partially support Hypothesis 1 in showing that the "high familiarity group was more discriminating in judging the least known brand Onkyo in relation to the other two brands.

The main effect of brand name is significant both in Tables 4 and 5. This effect is illustrated in Figure 2. Aposteriori tests revealed that in both cases the evaluations of Pioneer and Kenwood were not significantly different. However, Onkyo received significantly lower evaluations on overall quality and post-purchase service. Hypothesis 2 is, therefore, supported to a large extent.

The main effect of price is also significant in both Tables 4 and 5. This result supports Hypothesis 3. Figure 3 shows the effect in graphical form. In the case of overall quality evaluation, aposteriori tests revealed that differences between all consecutive price levels were significant except between level 1 ($100) and level 2 ($130). Figure 3 shows a curvilinear relationship between quality evaluation and price. The rate of change of evaluation seems to be greatest in the acceptable range of prices (the middle 3 prices). The rate of change of evaluation with price was calculated by taking consecutive levels of prices and calculating the ratio [change in evaluation/actual price difference]. For example, the change in overall quality evaluation between levels 4 and 5 is 0.410 and the actual price difference is $25 (250-225). Hence, the rate of change is 0.21/25 which expressed in percentage form (per $100 difference) is 1.64. Figure 4 shows the rate of change between consecutive price levels for overall quality evaluation. The value of 1.64 for example, is indicated between levels 4 and 5. Figure 4 shows clearly that the rate of change is highest between levels 4 and 5 and between levels 5 and 6. All three price levels (4, 5, and 6) are in the acceptable range. The rate of change dramatically decreases in the unacceptable high range.















Figure 3 also shows the main effects of price for post-purchase service evaluation. However, aposteriori tests revealed that there was a significant difference only between Two pairs of consecutive price levels; between levels 2 and 3 and between levels 3 and 4. This clearly shows that price does not play as important a part in post-purchase service evaluation as in overall quality evaluation. This is understandable since store image may be the more critical factor in post-purchase service evaluation than price.

The brand name x price interaction was significant only for overall quality evaluation. Figure 5 shows that this result supports Hypothesis 4. Pioneer and Kenwood manifest almost similar price-quality relationships. Onkyo is judged closer to the other brands at the lower prices but the gap widens in the middle and higher prices. Brand name, therefore, has a greater effect at higher than at lower prices.


The two studies conducted to investigate product familiarity, brand name, and price effects on product evaluation yielded interesting findings. These findings are briefly summarized below:

(1) Product familiarity did not significantly influence the range of acceptable prices. However, results were in the expected direction (narrower range associated with higher product familiarity). The upper and lower price limits were also not significantly influenced by product familiarity. Perhaps a more rigorous study with a larger sample size might be required to understand these relationships better. Future studies should also investigate other factors that might influence the size of the acceptable range and the price limits.

(2) Product familiarity was related positively to the degree of confidence in brand selection in a purchase situation. Combined with (1), this suggests that even if price limits and the size of the acceptable range do not vary with product familiarity, consumers with low product familiarity may spend more time and effort in verifying what they consider to be acceptable.

(3) As found in several earlier studies, price and brand name were positively related to evaluation. Price was found to be more important in overall quality evaluation than in post-purchase service evaluation.

(4) Higher product familiarity was found to create greater discrimination among brands in post-purchase service evaluation.

(5) The effect of price on overall quality evaluation was found to be greatest in the acceptable price range and lesser in the unacceptable low and unacceptable high price ranges.

(6) Brand name was found to have a greater effect on overall quality evaluation at higher prices than at lower prices.

Some of the above findings have been supported in earlier studies. The most interesting results seem to be with respect to the acceptable price range and price limits. Finding (5), for example, suggests that consumers are more sensitive to prices in the acceptable range. A process similar to "chunking" (in the information processing sense) seems to be taking place so that consumers group unacceptable low or unacceptable high prices as categories and don't perceive (or take the trouble of perceiving) evaluative differences between prices within the categories. This may be due to an apparent lack of consumers' interest in the unacceptable prices. In the acceptable range, however, evaluative differences are perceived even though all prices in the range are acceptable. Consumers seem to be more interested in comparing and evaluating alternatives within the acceptable range.

Although some of the results discussed above are significant and interesting it is worthwhile to keep in mind some of the limitations of the two studies. Both studies were preliminary studies to a more rigorous investigation of the relationships. Hence the sample sizes were small. Further, product familiarity was measured by self-rating of subjects. The self-ratings may not be very accurate because of varying perceptions among subjects. Finally, there are some problems whenever price is used as a repeated measures factor. The responses to the various prices may not be independent. Further subjects might guess the true purpose of the experiment and alter their responses. The latter problem was controlled to some extent by using unequal intervals between the prices so that subjects would not give proportionate responses. It should be pointed out that these limitations are not unique to this study. Olson (1974) provides an extensive comparison of various studies in the area and their limitations.

In conclusion, this paper has examined some of the factors influencing product evaluation. The concepts of price limits and price ranges seem to especially offer a very fruitful approach to the study of the perceptual influences of price. A detailed and systematic investigation of these concepts in the future will have considerable theoretical and practical relevance.


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