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Consumer use of the price‐quality cue in financial services

Hooman Estelami (Graduate School of Business, Fordham University, New York, New York, USA)

Journal of Product & Brand Management

ISSN: 1061-0421

Article publication date: 30 May 2008




The purpose of this paper is to examine the extent of use of the price‐quality cue in financial services, and to uncover some of its drivers. The drives studied are: advertising exposure, product complexity, and consumer price knowledge. The use of price as an indicator of quality has been a well‐documented phenomenon in consumer goods markets. However, the existence of this relationship has not been tested in services, and in particular in financial services markets.


A consumer survey of over 200 individuals contacted through intercept interviews was conducted. The use of the price‐quality cue and its drivers were measured using multi‐item scales, for six financial services categories: checking accounts, financial advisory services, automobile insurance, home insurance, life insurance, and tax accounting.


Significant variations in the use of price as an indicator of quality across financial services categories are identified. Furthermore, it is found that both consumer price knowledge and advertising exposure increase the use of the price‐quality cue, while product complexity was found to have no significant impact on price‐quality cue utilization for financial services.

Research limitations/implications

Future research could expand the array of variables which drive consumers' use of the price‐quality cue. In addition, a wider range of financial services categories could be studied.

Practical implications

Knowing the extent by which consumers depend on the price‐quality cue in their decisions is critical to optimal positioning of a financial brand. This paper provides specific managerial recommendations on how to approach the pricing and marketing of each of the six financial services categories studied. In addition public policymakers may find the findings of interest due to quality perception biases that may result from financial services providers' pricing tactics


While previous research studies in price‐quality cue utilization have primarily focused on manufactured goods, this paper is the only study that has examined the dynamics of price‐quality cue utilization by consumers in financial services. This is an important inquiry due to the large volume of consumer expenditures in financial services categories, and the significant impact that these categories have on the financial stability and well‐being of the public.



Estelami, H. (2008), "Consumer use of the price‐quality cue in financial services", Journal of Product & Brand Management, Vol. 17 No. 3, pp. 197-208.



Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited

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