Advertising and Product Quality: Are Heavily Advertised Products Better?

Abstract

It is often conceded that heavily advertised products cost more than those that are not advertised extensively. But there is considerable disagreement concerning what this difference means. Advertising's critics often claim it is evidence of monopolistic control over supply and prices, while advertising's defenders generally contend it reflects the higher quality of advertised brands. Surprisingly, there has been almost no research into whether or not heavily advertised goods are of better quality. As a preliminary inquiry into this interesting question, this paper attempts to examine the relationship between advertising expenditures and product quality.

From “Lemons” to Lemonade: Lessening the Impact of Adverse Selection through Buyer Trust

“…Investments in promotion (such as advertising) and brand name are marketing signals that fit this category. A considerable number of empirical studies provide support for the positive impact of these types of signals on product quality perceptions (e.g., Erdem & Swait, ; Kirmani & Wright, ; Phillips, Chang, & Buzzell, ; Rotfeld & Rotzoll, ). Kirmani (, ), however, cautions that high levels of promotional expenditures can undermine the promotion‐perceived quality link by suggesting to the market that the seller is “desperate.” Following this reasoning, it appears that both too little information and too much information from the seller lead to lack of trust on the part of the buyer.…”

Consumer Evaluations of Competing Brands: Perceptual versus Predictive Validity

“…Rotfeld and Rotzoll () examine the relationship between advertising expenditures and actual product quality and find inconclusive results. They conclude that, among nationally advertised brands, product quality is not well correlated with the amount of national advertising.…”

“…Woodside (1974), for example, examines the effects of six levels of actual prices, including no price, on perceived quality ratings of an electric lunch box and found a positive linear relationship between the level of price cue and quality evaluations. Rotfeld and Rotzoll (1976) examine the relationship between advertising expenditures and actual product quality and find inconclusive results. They conclude that, among nationally advertised brands, product quality is not well correlated with the amount of national advertising.…”

“…Similar operational definitions of actual quality ratings have been used to compare advertising (Rotfeld & Rotzoll, 1976) and price (Sproles, 1977) with product quality. However, Consumer Reports ratings are but one method to measure actual qualities.…”

Product Quality Assessment by Consumers — the Role of Product Information

“…The same applies for a well-known brand name vis--vis a less well-known one. So far, research studies have not been able to establish a systematic relationship between price-level and brand name reputation on one hand, and quality of the product on the other [8,9]. The other alternative for the consumer to get informed about the product quality is by making use of external information sources.…”