On Consumer Beliefs about Quality and Taste

Marketers and researchers alike typically regard products as differentiated by quality (modeled via vertical differentiation) or taste (modeled via horizontal differentiation). This research examines consumer beliefs about product differentiation. For a wide variety of product pairs, different consumers hold divergent beliefs about whether each pair is a matter of quality (such that one product is objectively better) or taste (such that one product is a better match with their own personal preferences). These beliefs have meaningful consequences. When consumers believe their chosen products are objectively better rather than better matches with their preferences: (1) they are willing to pay more for the chosen product over the alternative; (2) they self-reference less when explaining their choices; and (3) they are more likely to make transitive inferences from choices across other consumers. Observing others' contradictory choices increases the likelihood of believing those products differ by taste rather than quality. Understanding consumer beliefs about product differentiation has implications for understanding consumer decision delegation and decisions that are made in group contexts and for strategic decisions including customer segmentation, product positioning, and pricing policies.