Classification of purchase-related costs and benefits.

Most authors agree that perceived value refers to a tradeoff between all salient costs and benefits (e.g. Monroe 1990; Zeithaml 1988). To understand what constitutes value researchers have tried to classify these perceived benefits and costs. Early research focused on explaining perceived value of products, and defined perceived value as the tradeoff between product quality and price (Monroe 1990), or as a value-for-money assessment (Dodds and Monroe 1985). Sirohi et al. (1998) call this value-for-money assessment, "what you get for what you pay." Some authors addressed that viewing value as a tradeoff between only quality and price is too simplistic (e.g. Bolton and Drew 1991), particularly when products are not the focal point of interest. When consumers, for instance, evaluate the value of services, other criteria are needed to explain the apparent benefits and costs.

The service literature (e.g. Grönroos 1982; Parasuraman et al. 1985; 1988) indicated that apart from what is delivered (i.e. outcome value), the way the service is delivered (i.e. process value) is pivotal to the evaluation of service quality. Even though this distinction helped researchers to better predict the consequences of service quality (cf. Zeithaml, Berry and Parasuraman 1996), this approach is still limited as it ignores the sacrifices made (Cronin et al. 2000). Next, when evaluating retailers, consumers evaluate service quality, as well as merchandise quality (Mazursky and Jacoby 1986). In this context, Dodds (1999) argued that retailers provide most value when the product is of the highest quality, supported by the best service quality, and offered at the lowest price. Additionally, Kerin et al. (1992) argued the importance of the shopping experience in explaining the value perceptions of a retailer. Consumers evaluate more than just the quality of the product and the additional services delivered in relation to price; they optimize the full process of decision making (procedural rationality), not just the outcomes (substantive rationality) (Simon 1976). In doing so, they generally make a tradeoff between the cognitive efforts and decision accuracy (Payne, Bettman and Johnson 1993).

This research uses Zeithaml's (1988) classification and insights from shopping literature to classify the purchase-related costs and benefits. Value judgments are predominantly influenced by evaluations of perceived quality (product and service-related benefits), monetary and nonmonetary costs, and hedonic shopping benefits. Perceived quality refers to the consumer's judgments about a product's or service's overall excellence or superiority. It acts as a global assessment, resulting from product and service-related benefits. Next, consumers endure monetary and nonmonetary costs when buying products.

Monetary costs refer to the price consumers have to pay. Studies investigate perceived price rather than the objective price, as consumers often do not evaluate the exact price, but rather encode it as 'cheap', 'reasonable' or 'expensive' based on their internal reference price (Zeithaml 1988). Zeithaml (1988) views perceived price as costs, but other authors claim that price has a dual effect (Agarwal and Teas 2001; Dodds et al. 1991; Monroe 1990: Teas and Agarwal 2000). Price is a financial sacrifice, but it also positively influences perceptions of value through increased product quality perceptions. However, as the net effect of price on perceptions of value seems to be negative (Dodds et al. 1991), it is often placed among the costs (see Table 3.2).

Apart from monetary costs, consumers make other types of sacrifices to obtain or use the product or service (Becker 1965). These nonmonetary costs particularly refer to the time and effort –both mentally and physically– and the psychological costs (e.g. uncertainty, frustration, anger, fear) made by the consumer. Although time/effort expenditures and psychological costs are conceptually related constructs (e.g. crowding can result in more time usage and psychological discomfort), researchers have treated them as distinct (cf. Baker et al. 2002; Zeithaml 1988). The psychological costs refer to the consumer's mental stress or emotional labor during the shopping experience, whereas time and effort costs refer to the non-emotional investments made by the consumers (Baker et al. 2002). In her classification, Zeithaml (1988) mainly focused on the shopping costs, but shopping literature (e.g. Babin et al. 1994; Babin and Darden 1995; Hirschman and Holbrook 1982) indicated that consumers also derive positive feelings from purchasing; they experience hedonic shopping benefits. This stream of research addresses that consumers evaluate shopping experiences along utilitarian and hedonic dimensions; they experience utilitarian and hedonic value.

The utilitarian dimension reflects whether consumers achieve their shopping goals with minimum investments in time and effort. To improve utilitarian shopping value, consumers must save time and/or reduce effort by engaging in goal-directed behavior that is instrumental, purposive, and task-specific (Hoffman et al. 2002). The hedonic dimension represents the experiential value consumers derive from the shopping process; it refers to emotional and epistemic value (cf. De Ruyter et al. 1997; Sheth et al. 1991). In this respect, consumers are more concerned with entertainment and enjoyment value; they engage in experiential behavior that is likely to be hedonic, ritualized and reflects nonlinear search (Hoffman and Novak 1996). Some authors leave out enjoyment because nonmonetary costs are assumed to have a much stronger impact on consumer behavior (e.g. Baker et al. 2002). This research, however, takes into account the emotional value dimension by suggesting that enjoyment has a distinctive positive effect on purchase intentions. Particularly for hedonic, experiential products, the affective side of shopping experience plays a pivotal part. Yet, this study does not classify the shopping benefits related to social value (value derived from social approval and enhancement of self-image), epistemic value (value derived from curiosity and novelty) and conditional value (value derived from a particular situation). It focuses on the utilitarian and hedonic shopping value derived from the transaction itself. Consequently, it includes the functional and emotional value aspects of shopping. Analogous to the work of Sweeney and Soutar (2001), the influence of conditional value is seen as less important because the survey asks customers to give their general prepurchase evaluations without referring to a special occasion. Next, social value and epistemic value are expected to be partly captured by shopping enjoyment.

Table shows the classification of the purchase-related costs and benefits that constitute shopping value, i.e. value derived from shopping activities.

Table 1 Classification of purchase-related perceived costs and benefits

shopping value
shopping value
Non monetary
Perceived price
Time and effort expenditures
Psychological cost, (risk, anxiety, stress,frustration
Functional/ Utilitarian
Product quality
Service quality
Nonfunctional/ Hedonic
Enjoyment, pleasure, surprise