Why a niche category signals high quality?

Abstract

The purpose of this paper is to study whether positioning the same product in a niche versus mass-market category would signal quality differently. Drawing from the specialization concept, it is proposed that a product positioned in a niche category will be perceived as one of higher quality compared with the same product positioned in a mass-market category. Additionally, the product’s main feature should be perceived as possessing higher quality than an additional feature. In order to test the research questions, three experiments were conducted. The first experiment used price perception as a surrogate for product quality perception. The second experiment measured product quality perception directly. The third experiment measured feature quality perception. The findings reveal that the same product positioned in a niche (versus mass-market) category is perceived as possessing higher quality, along with its main (versus additional) feature.

Price perception is not a surrogate for quality perception. Managers would benefit from this research by applying the knowledge gained in launching a product. That is, those who launch a product with combined features should consider the impact of the category in which it positions that product. The main contribution of this research is to offer a new perspective in positioning, specifically, to use category entry as a quality signal.