Brand Credibility as a Determinant of Consumer Price Sensitivity in Food Markets

Consumers often rely on credible brands when evaluating product quality and deciding whether a price increase is acceptable. Credibility acts as a signal that indicates that a brand is consistently true to its word, therefore reducing information asymmetry and providing consumers with a measurable value of product quality. This signalling mechanism reduces consumer price sensitivity by decreasing the perceived risk of purchasing a product and subsequently increasing the level of consumer confidence in the product's performance. Given that the food category is typically the highest risk-sensitive category of frequently purchased products, this research aims to examine how brand credibility influences consumer reactions to price changes using Information Economic Theory, Signalling Theory, and current consumer behaviour research. The findings of this research highlight that consumers feel less concerned about changes in price when they are purchasing products from recognised, reputable brands due to the level of trust associated with the brand. Additionally, frequent or unexpected changes in price that are experienced by consumers purchasing food items result in an increased level of perceived risk regarding the value that they place on the products purchased. This study demonstrates that perceived brand trust can significantly influence how much cognitive effort consumers will use to make purchasing decisions, particularly in markets where they are unable to directly assess the quality, safety and freshness of an item prior to consumption. In conclusion, this study has important contributions for theory and practice. From the perspective of theory, this study supports and confirms that signalling mechanisms are significant in markets where uncertainty exists and provides an empirical basis for the moderating effect of brand trust within the food market. In terms of practice, the results from this study illustrate the importance of manufacturers investing in clear communication of price, improved quality assurance processes, and developing brand strategies that build trust over the long-term in order to reduce perceived risk.