Signaling Unobservable Product Quality through a Brand Ally

Author(s): Akshay R. Rao, Lu Qu, Robert W. Ruekert

Source: Journal of Marketing Research, Vol. 36, No. 2 (May, 1999), pp. 258-268
Published by: American Marketing Association
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 .... RESEARCHNOTES
NAY

AND COMMUNICAT

," T'

AKSHAYR. RAO, LU QU, and ROBERTW. RUEKERT*

In this article,the authors examine the circumstances in which brand

names convey informationabout unobservablequality.They argue that a
brandname can convey unobservablequalitycrediblywhen 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 unobserv-
able 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.

Signaling UnobservableProduct Quality

Through a Brand Ally

The area of brand management recently has begun to
receive renewed scrutiny in the marketing literature.
Research symposia, special sessions at conferences, and an
entire issue of the Journal of MarketingResearchhave been
devoted to research on the meaning and measurementof
"brandequity" (e.g., Parkand Srinivasan 1994; Simon and
Sullivan 1993), issues related to extending a brand name
*Akshay R. Rao is Associate Professorof Marketing,the CarlsonSchool
of Management, University of Minnesota (e-mail: arao@csom.umn.edu).
Lu Qu is Senior Modeling Analyst, Wells Fargo and Companies (e-mail:
Lu.Qu@Norwest.com).Robert W. Ruekertis Professorof Marketingand
Associate Dean of Programs, the Carlson School of Management,
University of Minnesota (e-mail: rruekert@csom.umn.edu).The first
author gratefully acknowledges the financial support of the Marketing
Science Institute in Cambridge, Mass., and the Center for Research in
Marketing at the Carlson School of Management.The authors are also
grateful to Mark Bergen, Deborah Roedder John, Kent Monroe, Donald
Lehmann, the editor, and two anonymous JMR reviewers for their com-
ments on previous versions of this article. To interactwith colleagues on
specific articles in this issue, see "Feedback"on the JMR Web site at
www.ama.org/pubs/jmr.
into new categories (e.g., Broniarczyk and Alba 1994;
Loken and John 1993), and managerialactions that can be
taken to enhance brand differentiation and profits (e.g.,
Boulding, Lee, and Staelin 1994; Zenor 1994). In addition,
the popularbusiness press suggests that brandsincreasingly
are becoming a key strategic asset of firms. Apparently,
brandnames have significantmonetaryvalue (Aaker 1991).
One important theoretical perspective that informs the
monetaryunderpinningof a brandname is signaling theory
in informationeconomics (Spence 1973). According to this
perspective, because branded products that falsely claim
high quality standto lose (1) investmentsin reputation(e.g.,
brand equity) and (2) future profits, a branded product's
claim about unobservablequality will likely be true (Erdem
and Swait 1998). In other words, consumers rationally
should infer that a brandedseller's claims about unobserv-
able quality are credible because false claims would lead to
monetarily unattractive outcomes (Tirole 1988). Conse-
quently, a brand name can be an effective signal of unob-
servable quality. We adopt this perspective in our research
and proposethat a brand'ssignaling power can emerge from

Journal of MarketingResearch
Vol. XXXVI (May 1999), 258-268 258
Unobservable Product Quality
two sources: (1) dissipative signals, which involve an up-
front expenditurein reputationbuilding that will be forfeit
should quality turn out to be poor, and (2) nondissipative
signals, which do not involve any up-frontexpenditurebut
place only future profits at risk (roughly correspondingto
Bhattacharya1980). In the case of the second type of signal,
regardless of whether it has invested in reputationbuilding
activities in the past, a brandmay be able to signal unob-
servable quality.As we discuss next, we examine this issue
in the context of an emerging marketingpractice-the for-
mation of brandalliances (Rao and Ruekert 1994).
CONTEXT
Much of the currentacademicresearch,as well as writing
in the popularbusiness press, focuses on individualbrands
that have an independentand distinct identity. However, as
Simonin and Ruth (1998) recently discussed, brands often
exist in conjunctionwith otherbrandswithin the same prod-
uct. For example, Diet Coke and NutraSweetare physically
and perceptually intertwined,IBM (and other) computers
use Intel chips, and a recently launched line of ice cream
cordials features Haagen-Dazs in combinationwith various
branded liqueurs. In addition, two or more brandsmay be
featuredin joint promotions,even though they are not phys-
ically integrated (e.g., television commercials featuring
Oscar Mayer and Mail Boxes Etc.). Following Rao and
Ruekert (1994) and Simonin and Ruth (1998), we define
such brand alliances to include all circumstancesin which
two or more brandnames are presentedjointly to the con-
sumer. These alliances range from multiple brandsthat are
physically integratedin a product (as in the case of Apple
and Motorola)to multiple brandsthat simply are featuredin
joint promotions (e.g., Bacardi Rum and Coca-Cola).
Furthermore,a new or unknownbrandcould ally with one
that is well known (e.g., when NutraSweet initially allied
with Coca-Cola), or two or more well-known brandscould
form an alliance (e.g., Eddie Bauer and Ford). This phe-
nomenon, when two or more brand names are featured
simultaneously in a product context, is the focus of our
research.
Although brandalliances are formed for a variety of rea-
sons, ranging from the desire to gain mutual access to pro-
prietarymarkets(e.g., NorthwestAirlines and KLM) to the
attempt to encourage affect transferal (e.g., Lexus and
Coach), there exists little systematic empirical examination
of the issue in the academic literature.Consequently,brand
alliances present several complexities about which existing
theory in marketing is largely mute. Specifically, though
there exist commonsense prescriptions, such as ensuring
that the allies "fit" in some way (Simonin and Ruth 1998),
it is unclear what circumstances favor the formation of a
brandalliance and why, as well as what other specific char-
acteristics may make one brandan appropriateally relative
to another.
Our article attempts to offer one theoretically based per-
spective on the issue. Drawing on the signaling notion that
brand names may communicate unobservable quality, we
develop and test the argumentthatthe conjoining of two (or
more) brands may have the desirable consequence of
enhancing consumers' quality perceptions of the jointly
brandedproductwhen qualityis not readilyobservable.This
occurs when the second brand(i.e., the brandally) credibly
259
communicatesa level of qualitythatthe first brandis unable
to communicateby itself. As we develop in this article, the
credibility of the brandally is driven in partby its vulnera-
bility to consumer sanctions (i.e., economic sanctions such
as boycotts) should the claim of high quality turn out to be
false. These sanctions may result in a brand losing prior
investmentsin reputationor futureprofits (whetheror not it
has a reputation).Thus, for example, when NutraSweetfirst
was introduced,concerns about its potentialharmfulhealth
effects were only allayed after Coca-Cola, Pepsi, and other
such credible brands (i.e., brands that could be hurt by
adverse publicity if NutraSweet turned out to be harmful)
"endorsed" the unobservable quality of NutraSweet by
incorporatingit into their diet formulations(Rao and Ruek-
ert 1994). We proposethata reputationlessbrandwith future
profits at stake also could have allayed fears successfully
about the harmfulhealth effects of NutraSweet.
Our article offers the first systematic empirical examina-
tion of a brandally's ability to communicate unobservable
product quality. (Our focus is not on the more traditional
issue of attributeor affect transferal[i.e., when BrandA has
a proprietarytechnology or image that Brand B desires,
and/or vice versa], not because that issue is uninteresting,
but because there is a large literatureon multiattributemod-
els that can be applied directly to understandingthat phe-
nomenon.) We report on two studies that address our pre-
dictions regarding the circumstances in which an alliance
with a particulartype of brandcan yield enhanced percep-
tions of productquality.
REVIEWOF LITERATURE
Although it is not controversialthat brandnames are an
importantmarketingtool, or that brandnames are generally
a good long-term marketinginvestment(Kotler 1994), it is
less clear precisely why brand names are beneficial. One
school of thought suggests that brandnames enhance con-
sumer perceptions of productquality because brandnames
carrymeanings that consumerscome to value (Gardnerand
Levy 1955; for a meta-analysis of the empirical link
between brandname and perceived productquality,see Rao
and Monroe 1989). Another complementary perspective
suggests that brand names have utility because they are
sources of informationthat identify the manufacturer,and
this information should limit any tendency on the part of
manufacturersof low quality to claim high quality because
such behavior will (when detected) be associated with the
brandin question and will affect futuresales and profitsneg-
atively (Wernerfelt 1988). This second perspective falls
under the rubric of signaling models in information eco-
nomics and is examined next.
ApplyingSignaling Theoryto Brand Names
Often, productquality is not readily observableto buyers
priorto purchasebut is revealed fully afterpurchase(a class
of products termed "experience goods"; Nelson 1974;
Wrightand Lynch 1995). Furthermore,the level of quality is
generally not opaque to the seller, and this differentiallevel
of informationbetween buyers and sellers creates the well-
known problemof "informationasymmetry"(Akerlof 1970;
Kreps 1991). A signal is an action that the seller can take to
convey information credibly about unobservable product
quality to the buyer.For example, one signal is the offer of
260
a good warranty(Boulding and Kirmani 1993; Cooper and
Ross 1985; Grossman 1981). If the sellers' product is of
poor quality, it would be foolish to offer a good warranty,
because presumably, warrantyfulfillment costs would be
higher for poor quality productsbecause they are likely to
have higher failure rates.Conversely,sellers of high quality
products can afford to offer good warrantiesbecause the
likelihood that they will have to honor those warrantiesis
relatively low.1 Similarly,advertisingexpenditurecan serve
as a signal because such expenditureswill be incurredonly
by honest, high quality firms that can recoup their advertis-
ing expenditures from future sales. If a low quality firm
were to advertise heavily, it likely would not recover the
advertisingexpenditurebecause consumers would discover
its low quality after purchaseand use, and repeatpurchase
would not occur. (If purchases in the first period provide
sufficient compensation for the advertising expenditure,
however, such expenditures do not serve as a signal.) In
essence, therefore, a signal is a credible and informative
action because those attemptingto signal dishonestly would
suffer harmful monetary consequences. According to the
informationeconomics literatureon brands,underinforma-
tion asymmetry,brandnames also can serve as a signal of
unobservablequality.
Brands names as signals of unobservablequality. If the
claim associated with a brandis one of high quality and the
brandturnsout to be of poor quality,consumerscan punish
the brand (Montgomery and Wernerfelt 1992; Wernerfelt
1988). Driven principallyby the withholdingof repeatpur-
chase, this punishmentmay range from simply exiting the
marketto engaging in negative word of mouthor calling for
regulatoryaction. On occasion, the negative outcome may
turnout to be disproportionatelysevere; thatis, afterquality
debasement is discovered, the offending brand may fare
worse than low quality brandsbecause this brandmay have
no customer franchise among consumers of low quality
(Rao and Ruekert 1994; Wernerfelt 1988). Because such
punishmentwill be monetarilydetrimentalto the seller, the
provision of a brandname can serve as a quality assurance
device. Branded productsare likely to be of higher quality
than unbrandedproducts, and brand names therefore can
function as effective signals of unobservablequality. Con-
sumers who believe this logic will accept the brandedprod-
uct's quality claim as true.
According to much of the extant literature,the ability of
a brandname to signal unobservablequality is based on the
potential loss of prior brandequity-related investments in
reputation(Erdem and Swait 1998). In other words, con-
sumers can punish firms by withholding future purchases;
consequently, sunk investments in brand equity-building
activities are irrevocably lost. This investment can be
thought of as a "bond"that the brandoffers; the higher the
bond (i.e., the greaterthe dollar amountspent on building a
reputation),the more credible the signal is (Ippolito 1990).
Implicitly, therefore, if a brand has not invested in brand-
[This strategy will work only if the provision of a good warrantyby a
poor quality seller raises his or her costs (and price) to a level higher than
thatof the high quality seller. If the poor qualityseller can offer a good war-
ranty and successfully absorb the higher costs of warranty fulfillment
throughcharging a higher price (which is still lower than that of the high
quality seller), warrantieswill not be a successful signal of quality.
JOURNAL OF MARKETINGRESEARCH, MAY 1999
building activities, its ability to use the brand name signal
should be affected adversely.
However, we arguethat it is still feasible for a reputation-
less brand to signal quality by exposing future sales and
profits to risk. In other words, consistent with Wernerfelt's
(1988) argument that umbrella brands are useful signals
because they expose profits in allied markets to risk, we
argue that a brandcan offer a bond other than prior invest-
ments in reputation.One such bond is future profits that
would be forfeit if the brandclaiming high quality were to
offer low quality. Therefore, though the principle (loss of
money) is the same in the case of reputableand reputation-
less brands,the mechanism is different.A reputablebrand
already has spent money that will be forfeit if it offers low
quality (a dissipative signal), whereasa reputationlessbrand
can, without spending money, claim to be credible because
it will lose money in the futureshould it offer low quality (a
nondissipativesignal) (Bhattacharya1980). This distinction
on how brandnames successfully can signal quality is a key
subtlety that distinguishes our approachfrom that of extant
approaches(e.g., Erdemand Swait 1998) and, as the results
from our empiricalstudies suggest, is potentiallya manage-
rially useful distinction.
The argumentthus far has emphasized the logic that, in
the event the brand offers low quality, the bond is forfeit
because consumerswill take some action that will harmthe
brand.However, consumers'ability to hurta branddepends
on how vulnerable the brand is to consumer sanction. In
other words, the vulnerability of the brand signal to con-
sumer sanction may vary dependingon the degree to which
consumers can identify and punish a brandthat offers low
quality. For example, if a brandcaters to three large auto-
mobile manufacturersthat are geographically close, as
opposed to catering to three aerospace buyers that are
located in three differentcontinents,the likelihood that low
quality in the first case will lead to speedy negative public-
ity and consumer sanction by all three customers is rela-
tively higher.By the same logic, a brandthat is diversified
(e.g., 3M, which caters to multiple markets throughmore
than 60,000 stockkeeping units) offers a less vulnerable
bond than one that is not (e.g., McDonalds, which caters to
essentially one market,with a small assortmentof homoge-
neous products),because it is more costly for consumers to
seek out and destroy every tentacle of a diversified firm.
Even a reputationless brand that stakes future profits (a
nondissipativesignal) is credible only if these futureprofits
can be influencednegatively by consumersrelativelyeasily.
If it is costly to harmthe futureprofitsof such a brand,then
the credibility of the nondissipative signal is lower. (This
argumentis fundamentallysimilarto the argumentin invest-
ment portfolio theory,according to which the riskiness of a
portfolio of investmentsis relatedinversely to the degree to
which it is diversified;Fama and Miller 1972.) In summary,
the degree to which a brand'ssignal is bonded is a function
of not only the amountof money at stake (either in termsof
sunk costs or future profits), but also the degree to which
these monies are vulnerableto futureconsumer sanction in
terms of the cost to the consumer in effecting monetary
damage.
The brand ally as a signal of unobservableproductqual-
ity. We now turnto the second element of our researchques-
tion. As we arguedpreviously,brandnames are credible sig-
Unobservable Product Quality
nals of quality when they post vulnerable bonds based on
either (1) past expenditures on brandequity or reputation-
building activities or (2) future sales and profits at risk.
However, when a brandcannot successfully signal its high
quality by itself (perhaps because, similar to NutraSweet
when it first enteredthe market,it is a new brandand there-
fore has no reputation),it would be appropriatefor it to con-
sider alternativemeans of signaling its high quality to the
marketplace.Credible and enforceable warrantiesare one
such mechanism (Grossman 1981). Alternatively, an
unknownbrandmight signal high quality by selling through
a reputableretailer(Chu and Chu 1994). Another signaling
mechanism, which forms the focus of this research, is to
enter into an alliance with a second brandthat can assist in
credibly signaling high quality to the marketplace.2The
premise here is that the second brand in the alliance suc-
cessfully signals the quality thatthe originalbrandcould not
signal by itself. The source of the second brand'ssignaling
ability could be its vulnerabilityto loss of either (1) invest-
ments in reputation(a dissipative signal) or (2) futureprof-
its independentof its investments in reputation(a nondissi-
pative signal).
Notice that we simply have taken our theoretical argu-
ment regardingthe utility of a brandname as a signal and
applied it to the brandalliance context. As we discuss in a
subsequentsection, managers'beliefs about the prospectof
consumer sanctions likely drive theirattemptsto ensure that
their brandnames are not associated with low quality prod-
ucts. Consequently, consumer beliefs that brand allies are
credible endorsersof unobservablequality indeed might be
rational.
To summarize,a brand's(or brandally's) ability to signal
quality depends on the size and vulnerabilityof its (1) sunk
investments in brand reputation at risk and/or (2) future
profits (independentof its investmentsin reputation)at risk.
The bond in the formercase can be viewed as the amountof
brand-relatedadvertisingperformedin the past, other prod-
uct design and development activity, and the like (elements
of brandequity) that will be forfeit if consumersboycott the
brandshould it be caught offering low quality, whereas the
bond in the lattercase can be viewed as the amountof prof-
its that will be forfeit if consumerscostlessly can identify all
the products associated with a brand that has offered low
quality and withhold future purchases.
HYPOTHESES
The principalpredictionsthatemerge from our theoryare
capturedin two interactionhypotheses that predictdifferent
quality perceptions depending on quality unobservability
and the credibility of the signal (dissipative and nondissipa-
tive) provided by the brandally.
Hi: Overall perceptions of quality for a product featuring a
brand alliance will vary, depending on the observabilityof
the product'squality and the credibilityof the nondissipative
signal provided by the brand ally.
Specifically, focused tests should reveal that
2Although not germane to this research, an obvious question centers
around which of the several available signaling mechanisms (warranties,
channel alliances, brandalliances, and so on) should be chosen.
261
HIa:When the observability of product quality is low, overall
perceptionsof quality will be higher when the nondissipa-
tive signal providedby the brandally is vulnerableto con-
sumer sanction, relative to when this signal is not vulnera-
ble to consumersanction.
This predictionis based on the rationalethat the vulnerabil-
ity of the ally to future sanctions makes the quality claim
credible when quality is unobservable.When the brandally
is not vulnerable to future sanctions, its implicit endorse-
ment is relatively less credible because, if the quality claim
turns out to be false, consumers will find it costly to harm
the ally. Consequently,under low observability of quality,
quality perceptionsshould be higher when the brandally is
easy to punish.
Hlb: When the observabilityof productquality is high, overall
perceptionsof quality will not be significantlydifferent,re-
gardless of the vulnerabilityof the nondissipative signal
providedby the brandally.
In this case, the observabilityof quality makes the ally's sig-
nal irrelevant because the claim can be verified through
inspection.Consequently,if the claim is observedto be true,
quality perceptionswill be high, regardless of the vulnera-
bility of the ally.
Using the same rationale,it is possible to predicteffects
on the basis of the dissipative signal provided by the brand
ally:
H2:Overall perceptions of quality for a product featuring a
brandalliance will vary, depending on the observabilityof
the product's quality and the credibility of the dissipative
signal providedby the brandally.
Specifically, focused tests should reveal that
H2a:When the observability of product quality is low, overall
perceptionsof quality will be higher when the dissipative
signal providedby the brandally is vulnerableto consumer
sanction, relative to when this signal is not vulnerableto
consumersanction.
Again, this predictionis driven by the rationalethat, under
low observability,when the brandally is vulnerableto con-
sumer sanction because it has a valuable asset that will be
lost should it falsely claim high quality, its claims about
unobservablequality are credible.
H2b:When the observabilityof productquality is high, overall
perceptionsof quality will not be significantly different,re-
gardless of the vulnerabilityof the dissipative signal pro-
vided by the brandally.
Here again, because the claim can be verified by inspection,
the signal providedby the ally is irrelevant.
In the interestof brevity, we do not formally propose an
exhaustive set of hypotheses for all possible main and inter-
action effects. However, we report and discuss significant
results of interestsubsequently.
To test our predictions,an experiment was conducted in
which three factors were manipulated:the observabilityof
quality, the nature(or type) of the signal communicatedby
the brandally, and its credibility.In a second study,we repli-
cate a portion of the first study with some methodological
changes and find identical results.
262
METHODOLOGY
Overviewof Methodology
To test the assertions suggested by the theoreticaldevel-
opment, several different approaches were considered.
Because of the paucity of reliable secondary data and the
potential advantagesof experimentationin theory testing, it
was decided that an appropriatemethodological approach
would be a traditional,between-subjects,multifactorexper-
iment. In this design, the impactof the credibilityof the two
types of signals, as well as the observabilityof the product's
performance,could be manipulateddirectly.The key depen-
dent variablewould be the perceptionof productquality for
the jointly brandedproduct.
Pretestingfocused on the developmentof appropriatestim-
uli, manipulations,and dependentvariables,as well as the
identificationof potentialproblemswith the instrument,pro-
cedures, transparencyof hypotheses (yielding demand arti-
facts), and the like. Subsequently,in the formaldatacollection
exercises, mall-interceptsubjectswere assigned randomlyto
one of several experimentalconditions and requested to
respondto typical paper-and-pencil measures.Multipleindi-
cators of dependentvariableswere submittedto traditional
reliability checks and factor analysis. Tests of hypotheses
involved standardanalysisof varianceprocedures.
Study I
The first study employed a 2 (low and high credibilityof
the signal providedby the brandally) x 2 (type of the signal
[dissipative and nondissipative]providedby the brandally)
x 2 (high and low observabilityof productquality)between-
subjects factorial design. As we discuss subsequently,
though the manipulationof the credibilityof the signal (rel-
ative vulnerabilityof future profits to consumer sanctions)
and observabilityof quality were embedded in the stimulus
description, the manipulation of the type of signal was
accomplished by using real and fictitious brandnames (i.e.,
a reputablebrandpotentiallyplacing a dissipative signal at
risk, and a reputationlessbrandpotentially placing only a
nondissipativesignal at risk).
Pretests. On the basis of three pretests (n = 43, 168, and
105), the following decisions were made: Television sets
were selected as the stimulus product for the first study
because product quality was perceived to be an important
consideration in the purchase decision (6.28 on a seven-
point scale), a key requirementof the theory (Tellis and
Wernerfelt1987). "Calypso"(Imagery= 3.84, Concreteness
= 3.69, Meaningfulness= 1.58, ratedon seven-point scales
where I = "Low" and 7 = "High" ) and "Advantage"
(Imagery = 3.88, Concreteness = 2.33, Meaningfulness =
2.63, ratedon seven-point scales where I = "Low"and 7 =
"High"), which are both fictitious names, were selected as
the primary brand name and name of the fictitious brand
ally, respectively. The scores on the imagery,concreteness,
and meaningfulness scales (Paivio, Yuille, and Madigan
1968) reveal that these names do not have high imagery,are
not concrete (i.e., well-entrenched),and are not laden with
secondary meanings and, thus, are relatively neutralterms.
These propertiesare desirable for the experiment, because
they reduce the possibility thatthe imagery,concreteness,or
meaningfulness of the fictitious brand name drove the
observed results. A five-item dependent variable scale for
JOURNAL OF MARKETINGRESEARCH, MAY 1999
quality perceptions (Cronbach'sa = .85) also was gener-
ated. Finally, using subjects' guesses about the true identity
of "Advantage"and "Calypso" as a basis, the most fre-
quentlyoccurringname was selected as the name for the real
brandally. This brandis a well-known internationalcorpo-
rationwith a wide arrayof electronicconsumerproductsand
interests in other aspects of the entertainmentbusiness and
was among the top five global brands in a recent popular
industrysurvey of brandaffect and recognition.Thus, it was
reasonedthat this brandwas likely to yield a high reputation
perception,yet a claim about futureprofits being secure (in
the low credibilitycondition)also would be believable.3The
pretests also were useful in developing product stimuli
based on the informationneeds of the subjects.
Independentvariables. The first factor (credibilityof sig-
nal) involved the manipulationof the degree to which the
brandally stood to sufferif the productfailed to live up to the
promised level of quality. The two levels of manipulation
included(1) a high condition,in which the ally providingthe
endorsementpotentiallystood to suffer considerablemone-
tary damage should customers' quality expectations be
betrayed,and (2) a low condition,in which the ally providing
the endorsementpotentially stood to suffer little monetary
damage should customers'quality expectationsbe betrayed.
Consistent with the procedureemployed by Boulding and
Kirmani(1993), these claims were providedin the stimulus,
attributedto a ConsumerReportsstoryon the product,and (as
we discuss subsequently)perceivedas credible.
The relevantdescriptionfor the high credibilitycondition
was as follows:
While there is not enough informationavailable to ac-
curatelyevaluate the qualityof the Calypso TV, the fact
that it is a collaborationwith Advantage should make
consumers very comfortable with the claims of high
quality. Advantage is a brand name that is associated
with many products,and if the Calypso productfails,
consumers will definitely blame Advantagefor the fail-
ure. As a result, Advantage sales in their other product
categories will suffer greatly.
The relevantdescriptionfor the low credibilitycondition
was as follows:
There is not enough informationavailableto accurately
evaluatethe qualityof the CalypsoTV.The fact thatit is
a collaborationwith Advantage should not necessarily
make consumers comfortable with the claims of high
quality.Advantageis a brandnamethatis associatedwith
many products,and if the Calypso productfails, Advan-
tage is safe from blame because the other productsare
sold in completelydifferentmarkets.As a result,Advan-
tage sales in theirotherproductcategorieswill not suffer.
Notice that in both conditions, the marketcharacteristics
of the brandally are unchanged;in the low condition, the
brandally's presence in multiple marketsis arguedto make
it relatively immune to punishment, whereas in the high
condition, the brandally's presence in multiple markets is
arguedto make it relatively vulnerableto punishment.This
was done to ensure that both stories differed minimally to
avoid potentialconfounding.In addition,similarto the argu-
3Consistentwith priorresearchin the area (Loken and John 1993) and to
protectthis journal from potentiallitigation,the true identityof the brandis
not revealed here.
Unobservable Product Quality 263

Table 1 suring the perceived quality of unobservableattributes is

DEMOGRAPHIC
INFORMATION infeasible. However, because perceptions about attribute
quality (regardless of their observability)should influence
Study I Study2 perceptionsof overall quality (Zeithaml 1988), the principal
(n) (n) dependent variable was constructed using a multidimen-
Gender sional scale of overall quality that was based on priorlitera-
Males 53 31 ture and pretests. This approach is consistent with prior
Females 67 29 empirical research in this area (Boulding and Kirmani
Age 1993). Scale items included measures of global quality, as
20-29 59 19 well as specific attribute-relevantevaluations that were
30-39 35 22 appropriatefor the product under examination (see the
40-49 24* 19
Appendix for scale items). Finally, manipulationchecks and
Annual Income ($) demographicinformationalso were gathered.
<20,000 34 16
35
Sample. One hundred twenty mall shoppers in a major
20,001-30,000 14
30,001-40,000 20 12
Midwestern city participated in the study. The sampling
40,001-50,000 11 6 frame was restrictedto adults age 18 to 49 years. Subjects
50,001-60,000 8 3 received a small ($2.00) token of appreciation for their
>60,000 9* 9 efforts. Data collection was executed by a professionalmar-
Education keting researchfirm. Subjectstook no more than 30 minutes
Some high school - 2 to complete the questionnaire.
Graduatedhigh school 25 19 Instrumentand procedures. Subjects were informed that
Some college 35 24
Graduatedcollege 36 10 they were being asked to participatein a market research
Post college 22* 5 survey that would help manufacturersbetter design and
Total 120 60
develop new products.Then, in the first section of the ques-
tionnaire, in addition to responding to several distracter
*Does not total to 120 because of missing observations. items, subjects provided informationabout their awareness
of the variousbrandnames used in the study,as well as their
ments provided in advertisementsby a firm or a competitor, perceptionof the quality of those brandnames.
the reasoningfor the credibilityof the claim is embedded in In the second section of the instrument,subjectswere pro-
the description (for a similar stimulus that provides strong vided informationabouta new televisionset on the market.As
quality-related arguments, see Simonin and Ruth 1998). mentionedpreviously,a key featureof the television set was
Such an approachis consideredappropriategiven our inter- the ability to reduce the volume duringcommercialbreaks.
action hypotheses, accordingto which this strongmanipula- Following this, subjectsrespondedto dependentmeasures.
tion should not yield an effect when observability is high, Analysis and results.An examinationof responses to the
but should yield an effect when observabilityis low. question about the true purpose of the study indicated that
The second factor (observability of quality) refers to no subjectsguessed the hypotheses.Descriptiveinformation
whether the product's performancecould be assessed prior about the sample is available in the first column of Table 1.
to purchase.Subjects were told that the television set had a Subjects representedboth genders and tended to be rela-
unique attribute;it automaticallywould lower the volume tively young, well-educated, and reasonablyaffluent. Sub-
during commercials. In the high observabilitycondition, in jects owned an averageof 1.96 television sets (rangingfrom
addition to being able to observe performancein the store, a low of 0 to a high of 5). Manipulationcheck results sug-
subjects were told that they had observed the television set gest that all three manipulationswere successful (mean dif-
perform well in a free, 30-day, in-home trial. In the low ferences of .47 [p < .05], 1.2 [p < .0001], and 2.6 [p < .0001]
observability condition, subjects were told that they could on a seven-point scale for observability,whetherbrandally
examine the product's performanceonly in the store; the was perceived to be vulnerableto punishment,and whether
stimulus did not include an in-home trial opportunity.Thus, the brand name was perceived to be real, respectively).
the automatic volume reduction mechanism was differen- Finally, quality was perceived as importantin the purchase
tially observable to the two sets of subjects.4 of television sets (5.87 on a seven-point scale).
Finally, the manipulationof the third factor (type of sig- One hundredeighteen usable responses were analyzed in
nal) involved the use of a fictitious and real brandname as an overall ANOVA for the full model on perceived quality.
the brandally, as noted previously.The implicit rationaleis All cells had a sample size of 15, except the high observ-
that the real brandname carriesa high investmentin reputa- ability/high vulnerabilitycells for both real and fictitious
tion (which potentially could serve as a dissipative signal), brandally conditions (n = 14). The overall model is signifi-
whereas the fictitious brand name has no reputation(and cant (F7,110= 2.55, p < .05) and our key interactionhypoth-
thereforecan serve only as a nondissipativesignal). esis (credibility of signal x observability) is supported
Dependent variables. The theory addresses the effect of (Fl,I 10= 3.30, p < .10, 12 = .029), albeit at a weakerlevel of
credible informationon perceptionsof quality for attributes significance than desired.5 Some other notable significant
thatare not observable.Therefore,it is importantto measure
attributesthat are unobservable.This requirementpresentsa
5Because of the high cost of data collection, our sample is relatively
problem,because in the quality observableconditions, mea- small, and therefore,the significance level attachedto the omnibus F-tests
are relatively weak. However, as we discuss subsequently,our sample is
41nthe second study, these manipulationswere changed and made con- sufficiently powerfulto allow for assessing supportfor focused tests of the
siderably more subtle. specific hypothesesat the traditionalp < .05 level.
264 JOURNAL OF MARKETINGRESEARCH, MAY1999

results were the following: (1) observabilityx type of signal not provide a credible signal (both results significant at p <
interactioneffect (Fl,110= 3.00, p < .10, Tr= .027), (2) the .01, one-tailed tests; d = .96 and .70 for the comparisons
main effect of credibility of signal (Fl,l0 = 5.21, p < .05, involving the reputable brand ally and the reputationless
,12 = .045), and (3) the main effect of the type of the signal brandally, respectively). In other words, underlow observ-
(Fl, 10= 5.58, p < .05, r2 = .048). The lattertwo resultsindi- ability, for both the reputablebrandally and the reputation-
cate that when the brand ally has something to lose, the less brandally, relativelyhigherqualityratingsare observed
product receives significantly higher ratings than when it when the brandally is perceived to be vulnerableto punish-
does not, and the reputablebrandally generatessignificantly ment and not otherwise.6Collectively, these results provide
higher ratings than the reputationlessbrand.(Details about supportfor Hla_b,as well as H2a-b.
the reliabilityand factor structureof the dependentvariable Rival explanations.To make the signal credibilitymanip-
are available in the Appendix.) ulation credible and consistent with prior research(Bould-
To assess support for the principal predictions, the cell ing and Kirmani1993), the source of informationregarding
means for the appropriateconditionswere comparedusing a the potential negative consequences (or lack thereof) of
planned contrastprocedure(Figure 1). Under high observ- productfailurewas ConsumerReports.Although this source
ability, quality perceptionswere not significantly different, of informationwas not varied across conditions and was
regardlessof the credibilityof either kind of signal provided perceived as credible by subjects, there is a potential con-
by the brandally. Underlow observability,however,quality cern that, in conditions of low observability,the reputation
perceptions when the ally provides a credible signal of of ConsumerReportsfor objective and unbiasedevaluations
either type are significantly higher than when the ally does drove subjects' responses, not the differences in credibility
of the signal. In other words, it is unclearwhetherthe effect
would be obtainedif ConsumerReports had not been iden-
Figure 1 tified as the source of the information.In light of this con-
PERCEPTIONSFORTHEJOINTLY
QUALITY BRANDED cern, a second study was conducted.In this study,Consumer
PRODUCTUNDERDIFFERENT LEVELSOF SIGNAL Reports was not identified as the source of information
about the brandally's vulnerability(or lack thereof) and its
ANDTYPE:STUDY1
CREDIBILITY
implication for making qualityjudgments. In addition,sev-
eral othermodificationswere made:(1) a more refinedmul-
Perceived Quality tiple-item scale was used for the observabilitymanipulation
7.0 r
check and (2) a new observability manipulationwas pro-
vided in which, in both high and low conditions, subjects
6.0 -
could take the television set home. This second refinement
5.9 -
protects us from any concerns that subjects in the "free, in-
5.8 - ..-*(5.85, .58)" home trial" believed that the 30-day trial itself provided a
5.7 - signal of quality.The results of the second study are identi-
cal to those of the first. The second study and associated
5.6 -
results are describednext.
5.5
Study 2
5.4
.--
/594 9(5.40,94) Because the results observed in the first study showed
5.3
(5.24,.74 identical effects for real as well as fictitious brands,and in
5.2 .---------- ""-
(5.21, .96) an attemptto minimize the costs of data collection, the sec-
(5.23,1.09)...
5.1 ond study focused on a replicationof the real brandname
(5.12, .94)b 5.,.s
5.0
65 condition in Study 1. Therefore, in this study, a 2 x 2
between-subjects factorial design studied the impact of
4.9
varying the credibilityof the signal provided(high and low)
4.8 by a well-known brand ally in conditions of high and low
4.7 observability. In other words, the well-known (and rep-
utable)brandally has a dissipativesignal that is eitherat risk
4.6
(i.e., the signal is credible) or not at risk (i.e., the signal is
4.5 (4.55, .79)d not credible). The productcontext and dependent variables
were identical, though several additionalitems from a per-
0 i
ceived risk scale (Jacobyand Kaplan 1972) were addedas a
Low High
Creditibility of Signal more refined manipulation check of observability. This
modificationwas consideredappropriatebecause the theory
High observability/high
---- - High obscrvability/ suggests that reductions in observability increase percep-
low dissipativesignal
dissipativesignal
(reputationlessbrand)
tions of risk of nonperformance.
(reputablebrand)
............. Low observability/high minaLow observability/low Independentvariables. Several modifications were made
dissipativesignal dissipativesignal to the stimulus. First, as noted previously, the credibility of
(reputablebrand) (reputationlessbrand)

6We also collected and analyzed data on willingness to (1) pay and
Notes: Figures in parenthesesare means and standarddeviations,respec- (2) buy, as well as on (3) the targetof punitiveaction should the productnot
tively. a is significantly higherthan b (p < .05). c is significantlyhigherthan perform. Because these issues are tangentialto this article, the results are
d (p < .05). not reportedhere but are available in Rao, Qu, and Ruekert(1997).
Unobservable Product Quality 265

signal manipulationwas made more subtle by eliminating
ConsumerReportsas the source of information.Second, the
observability manipulation was changed so that, in both
conditions, subjects were told that they could take the tele-
vision set home and observe it functioning.However, under
low observability,two factors that potentially could affect
performance(vagaries of weatherand location of the set in
the room) were described to have stayed constant, whereas
under high observability, these two factors varied suffi-
ciently to allow for a rigorous test of the electronics of the
television. It was reasoned that subjects who had observed
the television set work well in a variety of settings would
belong in the high observabilitycondition, whereassubjects
who had observed it working in only one setting would
belong in the low observabilitycondition.
The low observabilitycondition stimulus was as follows:
Theautomaticvolumecontrolof commercials is a very
attractivefeature.However,youknowthattherearetwo
important thingsthatcanmakethisfeaturefail.First,if
there is interferencefrom other equipmentlike mi-
crowaveovensor highvoltagepowerlines,thisvolume
controlof commercialsmaybecomepermanently dam-
aged.Second,duringthunderstorms, becauseof electri-
thisvolumecontrolof
cal dischargein the atmosphere,
commercialsmaybecomepermanently damaged.
Youpickup a remotecontrolandturntheCalypsoTV
set on to a programin progress,andin a few minutesa
commercialbreakoccurs.Youcansee thevolumelevel
on the screen,and you noticethatthe volumedrops.
Youtrythison anotherbrandof TV set andnoticethat
the volumeis muchhigherduringa commercial.You
canhearit, andyou canalso see it on the volumemon-
itoron the screen.
the store.Everytime a commercialcameon, the vol-
umewas reduced.
Proceduresand results. Similar to the first study, a mall-
interceptprocedurewas used, and 60 usable responses were
collected (n = 15 per cell) by a professionalmarketresearch
firm. Demographicinformationabout the subjects is avail-
able in the second column of Table 1. The dependent vari-
able was identical to that used in the first study and dis-
played desirable psychometric properties(Cronbach'sa =
.92, factor loadings rangingfrom .91 to .94, with one factor
[k = 4.32] emerging). In addition, the manipulationcheck
for the credibilityof the signal (Cronbach'sa = .85) was sig-
nificant (mean difference of .66, p <.05) though, as we
expected, lower than in the first study; the observability
manipulationcheck (Cronbach'sa = .92, mean difference of
.57, p <.05) was also significant.
The results from this study closely mirror those of the
first study (Figure 2). As predicted, a Duncan's Multiple
Range Test reveals (a = .05) thatqualityperceptionsare sig-
nificantly higher when the brandally is vulnerableto pun-
ishment, relative to when it is not so vulnerable,in the low
observabilitycondition; however, in the high observability
Figure 2
PERCEPTIONSFORTHEJOINTLY
QUALITY BRANDED
PRODUCTUNDERDIFFERENT LEVELSOF SIGNAL
ANDTYPE:STUDY2
CREDIBILITY
Perceived Quality
7.0 r
6.0

5.9
You look at the productbrochureand decideto take
themupon theirfreetrialoffer.So, you havetheset de- 5.8
liveredandinstalledin yourhomefreeof charge.You 5.7
use the set for 7 daysafterwhichthedealershipcomes I

andtakestheTV away.Duringthese7 days,you forget 5.6 -'"(5.64,131)"

to placethe TV in manydifferentplacesof yourhome 5.5
to see if therewereany problemsbecauseof electrical Is
5.4
interference. Youalso experiencedfine weather-there I

were no thunderstorms. Throughout,the TV set per- 53 Is ts

formedfine, andthe automaticvolumecontrolof com- 5.2

mercialsfeatureperformedas it hadperformedin the
store.Everytime a commercialcame on, the volume 5.1

was reduced. 5.0

For the high observabilitycondition, in the last paragraph, 4.9

the degree to which the set was exposed to vagaries of 4.8

weather was enhanced, as follows: 4.7
(4.71, 1.14) / 4.77.89)

You look at the productbrochureand decideto take 4.6 '(4.61,1.45)b

themupon theirfreetrialoffer.So, youhavetheset de- 4.5
liveredandinstalledin yourhomefreeof charge.You
use the set for 7 daysafterwhichthedealershipcomes 0 I
andtakestheTV away.Duringthese7 days,you place Low High
theTV in manydifferentplacesof yourhometo see if Credibility of Signal
therewereany problemsbecauseof electricalinterfer-
ence.Youalso experiencedmanythunderstorms during High obscrvability
the week,someof whichoccurredwhentheTV was in ------ Low observability
one place,and some of whichoccurredwhenthe TV
was in other places in your home. Throughout,the TV
set performed
fine,andtheautomaticvolumecontrolof Notes:Figuresin parentheses
aremeansandstandard
deviations,respec-
commercialsfeatureperformedas it hadperformedin tively. a is significantly higherthan b (p < .05).
 266
condition, there is no significant difference in quality per-
ceptions. In other words, when the brand ally provides a
credible signal and quality informationis unobservable,the
brand ally's vulnerabilityto punishment is used by con-
sumers to infer the quality of the product, which suggests
that the ally's vulnerabilityto loss of futuresales (and thus,
loss of sunk costs in reputation)serves as a credible signal
of unobservablequality.7
GENERALDISCUSSION
Empirical tests of economic theories using primarydata
are relatively rare (for exceptions, see Boulding and
Kirmani 1993; Rao and Bergen 1992; Urbany 1986). In
addition, as Venkateshand Mahajan(1996) note, analytical
or empirical research on products that include multiple
brandnames does not exist. This articleemploys an empiri-
cal test that uses primarydata to assess the utility of an eco-
nomic theory in addressing the issue of multiply branded
products.In particular,we offer the first empiricaltest of the
circumstances when a brand's (1) vulnerabilityto loss of
future profits alone and independentof reputation(i.e., the
provision of a nondissipativesignal) and (2) reputation(i.e.,
the provision of a dissipative signal) are likely to yield
enhanced perceptions of product quality for the jointly
brandedproduct.
The results from the studies suggest that, consistent with
our premise, the credibilityof the "hostage"providedby the
second brandin a brandalliance is a useful piece of infor-
mation regardingproductquality when quality is unobserv-
able. The hostage makes the brand vulnerable because it
stands to suffer economic losses in the future should the
claim turnout to be false, or because it standsto lose invest-
ments made in the past (i.e., investments in reputation)
(Shapiro 1983) because that investment will be forfeit
should the claim turn out to be false. This finding lends
addedcredence to the finding reportedby Boulding and Kir-
mani (1993), albeit in a differentcontext. They were able to
show the effects of bond credibilitythrougha manipulation
of reputation(Consumer Reports ratings of past models),
whereas we are able to show the effect with and without the
manipulationof reputation.As we discuss subsequently,this
is potentially importantfrom a managerialstandpoint.
Contributions
Theoretical.The currentliteraturein marketingand eco-
nomics has emphasized the utility of constructs such as
advertising and reputationin conveying the unobservable
quality of a brandedproduct.In our treatmentof this issue,
we implicitly arguethatthe degree to which a firm will suf-
fer monetarily is the crucial construct of interest. In other
71n a third study, the details of which can be obtained from the first
author,a subtler manipulationof the credibility (vulnerability)signal was
employed in a three-factordesign that replicated Study 1. This subtler
manipulationwas not effective, and consequently,the study did not yield
the hypothesizedresults.An internalpost hoc analysis of those subjects for
whom the manipulationworkedas desired(approximately90% of the data)
provides supportfor the effect of the signal credibility,albeit only for the
reputablebrand.This finding providesan importantboundarycondition for
the theory;seemingly, subjectsdo not infer sophisticatedeconomic theories
about the vulnerabilityof a brandto sanctions and the relationshipof that
vulnerabilityto credible claims about unobservablequality spontaneously,
but (as suggested by the first two studies), if they are alertedto the reason-
ing, they may act in a mannerconsistent with the theory.
JOURNAL OF MARKETINGRESEARCH, MAY1999
words, the firm's vulnerabilityto economic losses is the cen-
tral issue. This is an importantsubtletythatenriches the the-
oretical argument,because vulnerabilityexists at a higher
level of abstraction than reputation and advertising. For
example, though signals such as reputationand advertising
involve a monetary expenditure (i.e., "public burning of
money"), signals such as warrantydo not involve any mon-
etary expenditurebut stake or pledge a futurecost to com-
municate unobservablequality credibly. Similarly, a brand
name with no reputation(i.e., a brandthat has not engaged
in any public burning of money) can communicate unob-
servable quality credibly if it is able to demonstratea vul-
nerabilityto futureeconomic sanctions.
In addition, we show how a brand ally's vulnerability
would make it an attractivepartner.When a brandis unable
to communicate quality credibly by itself (i.e., it can not
"make"vulnerabilityin-house), it may do so by allying with
a credible ally (i.e., it may "buy"anotherbrand'svulnera-
bility). This is an insight that is new to the brandmanage-
ment literaturein marketing.It also suggests that vulnerable
brandsmay tradeon theirnames in a marketfor brandallies.
For example, in 1988, Sunkist received royalties worth
$10.3 million by licensing its name for use on productsas
diverse as soda, candy, and vitamins (Aaker 1991).
Finally, though the degree of fit between the two brands
may be an importantissue, our theoreticalperspectivesug-
gests that alliances between brandsthat do not necessarily
fit well together(but the brandally is vulnerableto punish-
ment) also may be successful. Thus, advertising tie-ins
between US West and 3M, or American Express and Tim-
berland,may be appropriateas one brandtries to leverage
the vulnerabilityor reputationof anotherbrandto endorse
its unobservablequality.
Managerial.Managersshoulduse extremecare in forming
brandalliances.Particularlyin competitivemarketsin which
small percentagesof marketshare translateinto huge dollar
volumes and margins,managers'perceptionsthattheirbrand
franchisewill be damagedif it is associatedwith a poorqual-
ity productlikely motivatesthemto be circumspect,withgood
reason(Rao and Ruekert1994). This circumspectionlikely is
driven by the recognitionthat a brandthat is associatedwith
anotherbrandof poorqualitystandsto suffersignificantmon-
etarylosses shouldconsumersattributeany blame to the first
brand.In otherwords,managersare and should be cognizant
of the vulnerabilityof theirbrandto futureeconomicsanctions
from irateconsumers,should their brandbe associatedwith
anotherbrandthatdeliverslower qualitythanclaimed.
In addition,a brandthat has a large amount of profits at
risk potentially can use that vulnerabilityto argue that its
claims aboutunobservablequalitymust be true;if they were
false, it would have too much to lose. More specifically, a
reputationlessbrandcould make itself vulnerableto loss of
futureprofitsby puttinga large futurerevenue streamat risk
and thus signal its unobservablequality.Then, the economic
rationalefor high unobservablequality could be offered in
advertisingcopy or during sales presentations.
Limitationsand FurtherResearch
Methodology. Experimental approaches to examining
marketplacephenomenaoften are criticizedfor lacking real-
ism (i.e., an external validity concern) and for often gener-
ating results as a consequence of artificially strong manipu-
Unobservable Product Quality
lations (i.e., a demandartifactconcern).8In this research,we
have been sensitive to these concerns in two ways. First, the
use of a between-subjectsdesign limits concerns regarding
demand artifacts; a within-subjects design would have
raised concerns that the differences in the manipulations
would be obvious to subjectsand potentiallycould influence
their response. Second, after establishing theoretically dri-
ven results in the first study, we performeda second study
with weakermanipulationsto determineif the effects would
disappear.Yet, in this second study,we find an identicalpat-
tern of effects.
It should be noted that we consistently find interaction
effects such that the effect of the brandsignal is observed
only under low observability and not under high observ-
ability, regardless of the strength of the manipulation. In
other words, despite what appear to be overwhelming
manipulations at first blush, when product quality is not a
mystery, subjects are not persuaded by those strong
manipulations. In effect, the presence of quality observ-
ability made the issue of the signal moot in subjects'
minds.
Furtherresearch.From a theoreticalstandpoint,a brand's
future profits at stake (a nondissipative signal) is different
thana brand'sinvestmentin reputation(a dissipativesignal).
Given thatthey are differentiallyexpensive from a cash-flow
standpoint,but should be equally costly to be credible, what
factors determinethe choice of one type of signal relativeto
the other?Although theoreticalmodels have addressedboth
types of signals, little theoretical or empirical work exists
that compares and contrasts these different classes of sig-
nals. Researchthat focuses on this issue would be of signif-
icant theoreticalvalue to the field of brandmanagement.
Withregardto brandalliances,an examinationof the short-
and long-runconsequences of alliance formationis perhaps
the next appropriatestep in examiningthis area.Specifically,
what price should the brandally charge for (1) the signaling
power provided,(2) the consequencesif thejoint brandfails,
and (3) the potential loss of its original identity if the joint
brand is hugely successful? Adequate compensation must
accrue in the form of royalty payments,access to profitable
markets, or access to other costly resources. Perhaps the
application of transactionscost analysis or agency theory
would yield interestinginsightsinto this contractingproblem.
Finally, we have focused our attention on the signaling
power of a brand in an alliance. However, the very act of
forming a brand alliance, if it is transparentlyexpensive
(because of royalty payments, promotionalexpenditures,or
administrativecosts) also may serve as a signal of unob-
servable quality. The signaling value of this managerial
action likely would benefit from furtherstudy, so that the
circumstancesin which the formationof an alliance signals
unobservablequality may be identified.
In summary, recent developments in information eco-
nomics provide potentially useful tools for expanding the
extant knowledge base on brand management issues. Per-
haps, as additional research will reveal, economic, psycho-
logical, and other theoreticalperspectivescombined with an
examinationof experimental,survey,and secondary,as well
sFora somewhatphilosophical
discussionof the trade-offsinvolvedin
laboratoryversus field studies, see Greenwood (1982).
267
Appendix
SCALEITEMSFOR PERCEIVEDQUALITY
Item-Total Factor
Item Correlation Loadings*
A. Global Measures of Quality
1. Perceptionof the overall quality .74 .83
2. Perceptionof the durability .83 .90
3. Perceptionof the workmanship .83 .90
B. Product-SpecificMeasureof Quality
4. Perceptionof the sound quality .70 .81
5. Perceptionof the pictureclarity .72 .82
*Only one factoremerged with an eigenvalue greaterthan I (k = 3.64).
Note: Cronbach'sa = .91. Although the items were identical in all stud-
ies, these data pertainonly to Study 1.
as qualitative,data will providea rich descriptionof various
phenomenain the area of brandmanagement.
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