Effect of Manufacturer Reputation, Retailer Reputation, and Product Warranty on Consumer Judgments of Product Quality: A Cue Diagnosticity Framework

Abstract

In this article, we examine how consumers assess product quality when confronted with multiple cues. Based on cue diagnosticity, a conceptual framework is developed that differentiates between cue types and suggests that the diagnosticity of some cue types depends on the valence of other cue types in the environment. The cue diagnosticity framework is then used to assess the effects of manufacturer reputation, retailer reputation, and product warranty on consumer perceptions of product quality. Consistent with the conceptual framework, we find in 2 studies that warranty is not used in judgments of product quality when a manufacturer with a poor reputation sells directly to consumers or sells through a retailer with a poor reputation. However, when the same manufacturer sells through a reputed retailer, then the warranty is used in making quality evaluations. The results not only support the conceptual framework, but also highlight the important role that the retailer plays in assessments of product quality. The implications ofthe fmdings are discussed along with directions for future research.

Impacts of Reputation for Quality on Perceptions of Company Responsibility and Product-related Dangers in times of Product-recall and Public Complaints Crises: Results from an Empirical Investigation

“…There seems to be a substitutional relationship between reputation and warranties as quality signals (cf. Price and Dawar, 2002 ;Purohit and Srivastava, 2001 ;Innis and Unnava, 1991 ;Gerhard, 1995: 163 ff. ;Ungern-Sternberg, 1984 ;Al-Najjar, 1995: 605 ff.…”

“…According to cue utilization theory (cf. Slovic and Lichtenstein, 1971 ;Lichtenstein et al , 1975 ;Olson, 1978 ;Richardson et al , 1994 ;Stafford, 1996 ;Purohit and Srivastava, 2001 ;Helm and Mark, 2007 ) external information that reliably and credibly refl ects a fi rm ' s conduct and product quality (eg its past reputation or product warranties offered) will be used by consumers as cues or signals that bundle or substitute other (missing) information relating to quality. Consumers use cues as long as they lack the ability to properly evaluate quality via internal information (ie by the product characteristics experienced).…”

An exploratory investigation into the role of extrinsic factors in consumer decision-making for interior soft furnishings

“…when consumers' senses become blurred due to an overwhelming market offering of product ranges and stores), consumers tend to revert to store-or brand image to select the most suitable products rather than to evaluate products' actual physical attributes (Purohit & Srivastava, 2001;Youn-Kyung & Seunghae, 2000). It is claimed that consumers actually patronize the image of a store (Purohit & Srivastava, 2001), which suggests an increased trust in surrogate indicators to facilitate purchase decisions. Buyer behaviour of this kind could be exploited to manipulate consumer decisions.…”

“…Lipscomb (1988) describes materialism, which is even referred to as a socalled consumption ethos, as a basic core value of contemporary culture in the USA (Watson, 2003). Purohit and Srivastava (2001) explain that, for most products, consumers are unable to identify the quality of competing products, especially when goods are concealed by their wrapping or when the properties only become noticeable during the actual use of products (e.g. interior products such as bed linen).…”

Quantifying the Economic Value of Warranties: A Survey

“…Much of the empirical work in this research topic avoids this problem because it relies on experimental data where price and warranty exogeneity come from the experimental design (Purohit & Srivastava, 2001; Chatterjee, Kang and Mishra, 2005). One possible solution is offered by BLP, who use instrumental variables for estimating a model of consumer demand and rm supply.…”