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The Joint effects of brands and warranties in signaling new product quality

Author: Price, L. J ; Dawar, NirajINSEAD Area: Marketing Series: Working Paper ; 95/86/MKT Publisher: Fontainebleau : INSEAD, 1995.Language: EnglishDescription: 43 p.Type of document: INSEAD Working Paper Online Access: Click here Abstract: An integrative review of signaling theory literature pertaining to brand reputations and warranties serves as the basis for hypothesizing about joint effects of the two quality signals on consumers' perceptions of product quality, as well as their intentions to purchase. Although prior research largely treats brands and warranties, we identify conditions under which the two signals interact to determine consumer evaluations. In addition, we find evidence that the dimensions along which quality judgments are made by consumers in reponse to warranty signals may depend on the strength of a brand's reputation. The latter effect suggests that consumers do not always interpret the two signals independently. Findings are discussed in terms of their fit with signaling theory assumptions as well as their implications for product management
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An integrative review of signaling theory literature pertaining to brand reputations and warranties serves as the basis for hypothesizing about joint effects of the two quality signals on consumers' perceptions of product quality, as well as their intentions to purchase. Although prior research largely treats brands and warranties, we identify conditions under which the two signals interact to determine consumer evaluations. In addition, we find evidence that the dimensions along which quality judgments are made by consumers in reponse to warranty signals may depend on the strength of a brand's reputation. The latter effect suggests that consumers do not always interpret the two signals independently. Findings are discussed in terms of their fit with signaling theory assumptions as well as their implications for product management

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