Implications from cue utilisation theory and signalling theory for firm reputation and the marketing of new products

Abstract

The main research streams, which focus on signals, signalling theory and Cue utilisation theory, stress the importance of a producer's credibility or reputation as an important factor that determines a signal's potential to reduce customer risk and to motivate customers to adopt a product. Earlier empirical research has focused on the isolated effect of cues like price, guarantees, advertising or reputation on perceptions of quality of new products rather than on the impact of reputation on perceptions of other cues, such as advertising and bonding instruments, e.g. guarantees. This research focuses on the impact of reputation on the effectiveness of various types of information and bonding instruments, which are said to depend on the character of the instrument. The major goal of this paper is to identify adequate strategies for an innovative producer with low reputation to signal high quality credibility.