An Investigation of Perceived Value and Consumable Goods

Citation:

John Hall, Nichola Robertson, and Mike Shaw (2001) ,"An Investigation of Perceived Value and Consumable Goods", in AP - Asia Pacific Advances in Consumer Research Volume 4, eds. Paula M. Tidwell and Thomas E. Muller, Provo, UT : Association for Consumer Research, Pages: 350-354.

Asia Pacific Advances in Consumer Research Volume 4, 2001      Pages 350-354

AN INVESTIGATION OF PERCEIVED VALUE AND CONSUMABLE GOODS

John Hall, Victoria University, Australia

Nichola Robertson, Victoria University, Australia

Mike Shaw, Monash University, Australia

INTRODUCTION

This study aims to investigate perceived value with regard to wine consumption. While product quality and service have attracted much attention, few studies have been undertaken with regard to perceived value.

Sweeney (1996) developed a model of perceived value for electrical appliances. This model proposes that a five dimensional scale influences perceived value of a product. The five dimensions of value include emotional value, social (acceptability) value, functional (price/value for money) value, functional performance/quality) value and functional (versatility) value.

Sweeney’s model (1996) will be examined to determine its appropriateness for non-durable goods such as wine. Appropriate statistical analysis will be undertaken to test the model on the sample and product.

The literature review will provide an understanding of perceived value and wine., while wine and wine consumption has been a heavily docuented topic, little research could be located on consumer perception of value and wine.

LITERATURE REVIEW

The study of perceived value provides valuable insights into the decision making process However, studies undertaken on the topic have been faced with limitations. A limitation found by Zeithaml (1998) is that values are hard to define and consumers have a variety of definitions for the term value. This is reiterated by a number of studies that give varying definitions of value.

Reddy (1991) gives an economic definition of value by including use value and value in use, which relate to functionality and substitutability. Hirschey and Pappas (1993) also saw value in an economic sense, related purely to monetary value, price and cost.

Value was also viewed in a number of other contexts. Rokeach (1973) defined value as "enduring beliefs that particular end states of existence are personally or socially preferable to other states". Value from a marketing perspective looked at a price/quality relationship (Gale and Klavans 1985). Finally, a diversity of definitions are provided by Sheth, Newman and Gross (1991) and supported by Clift (1997), including functional value, social value, emotional value, epistemic value and conditional value.

Sweeney’s model (1996) (Figure 1) of consumers perceived value differs slightly from Sheth, Newman and Gross (1991), with the following amendments to their 5 consumption values; Emotional, Social (Acceptability), Functional (Price/Value for money), Functional (Performance/Quality) and Functional (Versatility).

Value seems comparative or relative, in that it depends on how the consumer compares one object against another or others (Thaler 1985; Quevedo 1991; Reddy 1991). There are a number of other factors that affect the perception and nature of value, such as situation and occasion.

A person purchasing wine for a romantic dinner may seek different characteristics in a wine, from one purchased to drink alone. Engel, Blackwell, Kollat (1968) and Belk (1975) found that individual and situational factors must be considered in order to explain consumer choices. The importance that emotions play on perception of value and the way it affects behaviour must also be considered (French, Blair, Booth 1994 and Sherman, Marthur and Smith 1997).

The terms quality and value have in the past been readily exchanged as one and the same, which has led to some misleading results. The two major differences between quality and value are that value is more individualistic and personal and value involves a trade off, namely the quality received for the price paid (Zeithaml 1998).

Monroe and Krishnan (1985) argue that perception of value is directly related to willingness to purchase. However, Della Bitta, Monroe & McGinnis (1981) differed in opinion, finding that perception of value was not a sufficient condition to buy. According to Kiefer and Kelly (1995), recollection of price and perceived value relates to how satisfied a consumer was with a purchase.

Spawton (1989) postulates that consumers expect a number of things from a wine. One of these expectations is that wine should act as an occasion and /or celebration enhancement, while also complementing meals and enhancing the taste and enjoyment. Consumers may also seek to heighten their self-esteem by being knowledgeable about the product, at the same time creating a favourable impression in a social atmosphere. As wine is often consumed in a social setting, the choice of wine determines the emotional and social value that is derived from its consumption.

Looking at the important attributes used in the buyer decision making process for wine, the research concedes that taste is of utmost importance (Mitchell and Greatorex, 1990). In relation to packaging, the neck and shape of the bottle, the use of foreign language and graphics are used as a cue for quality and price. The hape of the neck and bottle are one way of differentiating one brand from another, yet it is only recently that marketers have begun experimenting with bottle shapes. Screw top closures, plasti shield protectors, larger sized bottles and any non-glass container reduce the impression of the quality of wine (Gluckman 1990).

Price, for wine connoisseurs is not important in reducing risk (Mitchell and Greatorex 1988, 1989). Although price is often used as an extrinsic cue for quality judgement when the consumer has little knowledge or prior experience with the product. (Lockshin and Rhodus 1993)

AIM AND HYPOTHESES

The hypotheses seek to establish a relationship between perceived value and wine consumption. It will involve applying the model developed by Sweeney (1996) to the data collected on wine consumption.

Hla: Emotional value is a dimension of perceived value for wine purchasing/consumption.

Hlb: Social value (acceptability) is a dimension of perceived value for wine purchasing/consumption

Hlc: Functional value (price/value for money) is a dimension of perceived value for wine purchasing/consumption

Hid: Functional value (performance/quality) is a dimension of perceived value for wine purchasing/consumption

Hle: Functional value (versatility) is a dimension of perceived value of perceived value for wine purchasing/consumption

FIGURE 1

METHODOLOGY

The questionnaire was designed to reveal the characteristics and lifestyle of respondents, as well as establishing their feelings, values and beliefs towards wine. The questionnaire was developed following in-depth interviews using means and methodology applied by trained interviewers.

Participants in this study were required to have either purchased or consumed wine in the last three months. Apart from establishing beliefs, values and attitudes to wine, a number of questions also delved into the respondents’ character and lifestyle.

To establish the demographics, wine consumption and purchasing habits of the respondents, a nominal scale was applied, its role was to classify the respondents. The questions regarding beliefs, attitudes and values employed an itemised rating scale requiring participants to rate a semantic differential range of factors with a number between l and 9B1 being not important, while 9 represented very important. The questionnaire was pre tested, and then administered via telephone by trained interviewers.

A random sample of one hundred and ninety one (110 being female, 81 being male) respondents were obtained from the White Pages of Melbourne Telephone Directory. Demographic information collected from these respondents included employment status and type, their income, education, perceived class and household situation.

The appropriateness of the Sweeney Model was investigated through the use of factor analysis.

RESULTS

Through the application of loading and other reduction techniques, a rotated component matrix was developed (Figure 2). It divided the variables into four factors, these were:

1. Emotional/Social ValuesBWhereas Sweeney (1996) divided these two values, this study regards the two as so closely intertwined that they should be considered as one.

2. Functional-QualityBQuality was indicated by the price, age, vintage and brand.

3. Perceived Risk ValuesBOne factor not addressed by Sweeney (1996) is perceived value, this research found that for intangible products, factors reducing risk are highly sought.

4. Functional-Price ValuesBPrice, in terms of value for money, was also considered an important factor in determining perceived value.

The factors accounted for 66.35% of the variance. All factors had eigenvalues greater than one (Lloyd 1984).

DISCUSSION

The Hypotheses aimed to establish if a relationship between perceived value, according to Sweeney (1996) and wine consumption was evident. As there are only four factors, a variance from Sweeney’s model (1996) is immediately evident.

The factor analysis indicated that the social and emotional variables were intrinsically intertwined in wine consumption, with all of the variables loading on one factor. Therefore, although not independent, both values are a dimension of perceived value for wine purchasing/consumption.

Price/value for money is an important factor in establishing perception of value, hence H1c is accepted. Performance and quality are both important dimensions of perceived value, thus H1d is accepted.

Versatility, for wine, is not an important factor of functional value as a dimension of perceived value.

CONCLUSION AND RECOMMENDATIONS

To thoroughly understand perceived value, Sweeney’s model (1996) needs to be applied to a large number of products. This study began this by attempting to manipulate data on wine to apply to Sweeney’s model. Through a factor analysis it was revealed that the PERVAL Model needed to be modified to suit products such as wine. Sweeney et.al. (1996) evaluated electrical appliances, products that are durable and tangible. This study examined the success of the model on a non-durable and intangible product, in this case wine.

One difference is that for a product such as wine, emotional and social (acceptability) values are more closely intertwined than for non-durable goods. The type of product may explain this and what occasions the necessity of wine. Wine is often bought to drink in a social setting, therefore the choice of wine needs to satisfy both your needs and others. Therefore, emotionally you seek an enjoyable experience but you also wish others to enjoy and therefore be impressed by your choice of wine. Another is the level of perceived risk, unlike some durable goods where the main importance is functionality, which is often ensured by a warranty, wine incorporates a great number of risks.

Therefore a modification to Sweeney’s PERVAL Model (1996) is required for products that through their use may link emotional and social value. Along with their intangibility which carries a certain amount of perceived risk to the functional, emotional and social aspects.

FIGURE 2

PERCEIVED VALUE MATRIX

LIMITATIONS AND IMPLICATIONS FOR FURTHER STUDIES

$ The product examined in this study was wine. Although a non-durable product, it may not necessarily be representative of all intangible, non-durable products. Therefore, an opportunity exists to expand studies on all types of product categories. This will allow marketers to have a thorough understanding of the market and consumer perception of value and purchasing behaviour.

$The sample size of 191 may be considered small, although it is large enough for this kind of analysis. Opportunities for further studies exist in repeating the study on a larger national sample, which may be considered as more representative.

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