Advertising, quality, and willingness-to-pay: Experimental examination of signaling theory

Tsui, Hsiao-Chien

doi:10.1016/j.joep.2012.08.011

Cited by 28 publications

(15 citation statements)

References 28 publications

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“…In this regard, this study integrates the theories of information economics and consumer psychology to offer a more comprehensive and real perception of this phenomenon, a pattern that has been followed by other researchers of signaling processes (e.g. Boulding and Kirmani, ; Erdem and Swait, ; Price and Dawar, ; Tsui, ). The understanding that, in addition to advertising content, advertising expenditure may transmit information and change consumer perception of a specific product enables the extension of information processing theories and, more specifically, social cognition models, such as the ELM (Petty et al ., ).…”

Section: Discussionmentioning

confidence: 94%

“…Extremely high levels of advertising spending produced an inverted effect, even decreasing individuals' quality perception (Kirmani, ). More recently, Tsui () conducted an online survey‐based experiment to show that advertising spending can increase consumers' quality perception and additionally enhance their willingness to pay.…”

Section: Advertising Signalingmentioning

confidence: 99%

“…Several studies were successful in documenting the effect of advertising spending on consumers' perception of product quality (e.g. Kirmani and Wright, 1989;Kirmani, 1990Kirmani, , 1997Moorthy and Zhao, 2000;Barone et al, 2005), as well as on willingnessto-pay (Tsui, 2012), same-store sales growth (Tuli et al, 2012), brand loyalty (Ha et al, 2011), sales performance (Assaf et al, 2015) and firm value (Joshi and Hanssens, 2010). This effect has shown to be significant among different product categories, such as glass cleaner, shampoo, paper towels, auto batteries, coffee makers (Moorthy and Zhao, 2000) compact disk players (Horstmann and MacDonald, 2003), personal computers and sport goods (Joshi and Hanssens, 2010).…”

Section: Advertising Signalingmentioning

confidence: 99%

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Advertising Spending, Mood and Level of Product Information on Quality Perception

2015

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The aim of this article is to investigate the influence of advertising spending and mood on consumers' perceived quality, considering scenarios with slight and severe information asymmetry as regards a product's attributes. An experimental study conducted with 385 subjects demonstrated that mood moderates the impact of advertising spending on consumers' perceived quality, specifically when these expenses are at and above the market average. Moreover, the impact of mood on perceived quality was moderated by the level of product information. These results have several theoretical and managerial implications, and may help companies to invest their advertising resources more efficiently. Copyright

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Section: Discussionmentioning

confidence: 94%

Section: Advertising Signalingmentioning

confidence: 99%

Section: Advertising Signalingmentioning

confidence: 99%

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Advertising Spending, Mood and Level of Product Information on Quality Perception

2015

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“…According to Tsui (), the effect of advertising high‐quality products on the WTP of customers is greater than low‐quality products. Therefore, based on the results of this paper, it could be stated that for high‐quality products, spending more on advertising in order to persuade customers for early purchase is beneficial for the channel members.…”

Section: Discussionmentioning

confidence: 99%

“…Erdem et al. () illustrated that advertising could shift the whole distribution of WTP in the population and Tsui () demonstrated that advertising can influence consumers perception about the quality of products and increase their WTP effectively. Therefore, the retailer could increase WTP of customers in the market (both myopic and strategic customers).…”

Section: Introductionmentioning

confidence: 99%

Cooperative advertising to induce strategic customers for purchase at the full price

Farshbaf‐Geranmayeh

Rabbani

Taleizadeh

2017

Int Trans Operational Res

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In this paper, cooperative advertising in a manufacturer–retailer supply chain in the presence of the strategic customer is studied. It is assumed that a proportion of the customers strategically postpone their purchase in order to achieve a higher surplus. Advertising can enhance the willingness to pay (WTP) of the customers and, as a result, their surplus. In this paper, the effect of cooperative advertising in order to induce customers for early purchase is analyzed. While customer purchasing in the full price leads to higher income for the retailer, it requires spending more on advertising. This trade‐off between the benefits of inducing customers to early purchases and the advertising expenditure is a key to understanding the retailer's optimal advertising decision. On the other hand, it is interesting for the manufacturer to find out when supporting the retailer for its advertising expenditure is beneficial. Nash and Stackelberg (manufacturer as a leader) game‐theoretic models are established to investigate whether, in the channel, it is optimal to induce customers by increasing advertising expenditure or not. Results of the Stackelberg game show that the manufacturer participates in the retailer's advertising expenditure only if it leads to early purchasing of the strategic customers and the participation rate depends on the wholesale price. From the retailer's point of view, when the impact of advertising on the WTP of customers is not significant, the more the proportion of strategic customers, the more inducing customers for early purchase is beneficial. When advertising effectively increases WTP, regardless of the fraction of strategic customers, it is beneficial for the retailer to enhance its advertising in order to dissuade customers from postponing their purchase.

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Channel Coordination with Cooperative Advertising Considering Effect of Advertising on Willingness to Pay

Farshbaf‐Geranmayeh

Rabbani

Taleizadeh

2018

J Optim Theory Appl

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Advertising, quality, and willingness-to-pay: Experimental examination of signaling theory

Cited by 28 publications

References 28 publications

Advertising Spending, Mood and Level of Product Information on Quality Perception

Advertising Spending, Mood and Level of Product Information on Quality Perception

Cooperative advertising to induce strategic customers for purchase at the full price

Channel Coordination with Cooperative Advertising Considering Effect of Advertising on Willingness to Pay

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