Implications from Cue Utilization Theory and Signalling Theory for Firm Reputation and the Marketing of New Products
ABSTRACT The main research streams, which focus on signals, signalling theory and cue utilization theory stress the importance of a producers´ credibility or reputation as an important factor that determines a signals´ potential to reduce customers´ risks and to motivate customers to adopt a product. Prior empirical research focused on the isolated effect of cues like price, guarantees, advertising, or reputation on perceptions of quality of new products rather than on the impact of reputation on perceptions of other cues like advertising and bonding instruments, e.g. guarantees. This research focuses on the impact of reputation on the effectiveness of various types of information and bonding instruments which are said to depend on the character of the instrument. The major goal of this paper is to identify adequate strategies for an innovative producer with low reputation to credibly signal high quality.