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Signaling Unobservable Product Quality through a Brand Ally

Journal of Marketing ResearchPublished 1 May 1999
Akshay R. Rao, Lu Qu, Robert W. Ruekert
Citations900
SJR quartileQ1
SJR score6.96
SNIP2.42

Abstract

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.

Keywords

Business, Management and Accounting