Journal of Marketing Research · 1999 · 298 citations · 0 references
BusinessMarketingMarketing ManagementAdvertisingBrand ManagementBrand AssociationsBrand AwarenessBrand CommunicationBrand EquityBrand ExperienceBrand LoyaltyPerceived Product QualityPerceived Quality SignalingPrice-quality SignalingProduct Quality SignalingQuality Signaling Through Price
A brand name can credibly convey unobservable quality when false claims would cause intolerable economic losses, such as reputational damage, sunk investments, or lost future profits. The study examines when brand names signal unobservable quality, focusing on brand alliances as the context. The authors test this by analyzing brand alliances, evaluating how allied brands may communicate unobservable attributes. Multiple studies confirm that consumers’ quality perceptions improve when a brand is allied with a partner perceived to be vulnerable to consumer sanctions, supporting the premise that brand alliances signal unobservable quality.
In this article, the authors examine the circumstances in which brand names convey information about unobservable quality. They argue that a brand name can convey unobservable quality credibly when false claims will result in intolerable economic losses. These losses can occur for two reasons: (1) losses of reputation or sunk investments and (2) losses of future profits that occur whether or not the brand has a reputation. The authors test this assertion in the context of the emerging practice of brand alliances. Results from several studies are supportive of the premise and suggest that, when evaluating a product that has an important unobservable attribute, consumers’ quality perceptions are enhanced when a brand is allied with a second brand that is perceived to be vulnerable to consumer sanctions. The authors discuss the theoretical and substantive implications for the area of brand management.