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In Brands We Trust? A Multicategory, Multicountry Investigation of Sensitivity of Consumers’ Trust in Brands to Marketing-Mix Activities

December 2019
Journal of Consumer Research 46(4):651-670

DOI:10.1093/jcr/ucz026

Authors:

Koushyar Rajavi

Georgia Institute of Technology

Tarun Kushwaha

University of North Carolina at Chapel Hill

Jan-Benedict Steenkamp

University of North Carolina at Chapel Hill

The essence of a brand is that it delivers on its promises. However, consumers’ trust in brands (CTB) has declined around the world in recent decades. As a result, CTB has become a major concern for managers. The authors examine whether CTB is influenced by marketing-mix activities (i.e., advertising, new product introduction, distribution, price, and price promotion) implemented by brands. The authors propose and show that the sensitivity of CTB to marketing-mix activities is moderated by consumer, category, and country characteristics, using a multisource data set consisting of a survey of 15,073 respondents and scanner panel data on 589 brands in 46 CPG categories across 13 countries (including the four largest emerging markets), which collectively account for half of the world’s population. The authors find strong positive effects for advertising and new product introduction intensity, weak positive effects for price and distribution intensity, and a minor negative effect for price promotion intensity on CTB. Furthermore, the authors find that the effect of marketing-mix activities on CTB is moderated by consumers’ personality traits, consumers’ reliance on brands in a category, and countries’ secular-rational and self-expression cultural values.

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MODERATING ROLE OF PERSONALITY TRAITS, BRAND RELEVANCE IN CATEGORY, AND NATIONAL CULTURE

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SUMMARY OF PAST RESEARCH ON CTB

…

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In Brands We Trust? A Multicategory,

Multicountry Investigation of Sensitivity

of Consumers’ Trust in Brands to

Marketing-Mix Activities

KOUSHYAR RAJAVI

TARUN KUSHWAHA

JAN-BENEDICT E. M. STEENKAMP

The essence of a brand is that it delivers on its promises. However, consumers’

trust in brands (CTB) has declined around the world in recent decades. As a re-

sult, CTB has become a major concern for managers. The authors examine

whether CTB is inﬂuenced by marketing-mix activities (i.e., advertising, new prod-

uct introduction, distribution, price, and price promotion) implemented by brands.

The authors propose and show that the sensitivity of CTB to marketing-mix activi-

ties is moderated by consumer, category, and country characteristics, using a mul-

tisource data set consisting of a survey of 15,073 respondents and scanner panel

data on 589 brands in 46 CPG categories across 13 countries (including the four

largest emerging markets), which collectively account for half of the world’s popu-

lation. The authors ﬁnd strong positive effects for advertising and new product in-

troduction intensity, weak positive effects for price and distribution intensity, and a

minor negative effect for price promotion intensity on CTB. Furthermore, the

authors ﬁnd that the effect of marketing-mix activities on CTB is moderated by

consumers’ personality traits, consumers’ reliance on brands in a category, and

countries’ secular-rational and self-expression cultural values.

Keywords: consumer trust, brand trust, marketing mix, branding, information

economics, international marketing

INTRODUCTION

For many firms, brands are among their most valuable

assets. According to brand consultancy Kantar

Millward Brown, the value of the 100 most valuable global

brands alone stood at $4.4 trillion in 2018 (Millward

Brown 2018). What makes brands so valuable? Consider

the definition of brand proposed in the literature. One such

definition, proposed by Kotler (2002, 593), is “a seller’s

promise to deliver a specific set of features, benefits and

services consistent to the buyers.” If consumers trust the

brand to deliver on these promises, this eases their decision

making, reduces costs of information gathering and proc-

essing information, reduces their purchase risk, and

increases expected utility (Erdem and Swait 1998,2004).

Thus, trust is a key factor to consider in brand success.

Koushyar Rajavi (Koushyar.rajavi@scheller.gatech.edu)isanas-

sistant professor of marketing at Scheller College of Business at

Georgia Institute of Technology, 800 West Peachtree NW, Atlanta,

GA 30308. Tarun Kushwaha (tarun_kushwaha@unc.edu) is Sarah

Graham Kenan Scholar and an associate professor of marketing at the

Kenan-Flagler Business School of the University of North Carolina,

300 Kenan Center Dr, Chapel Hill, NC 27599. Jan-Benedict E. M.

Steenkamp (jbs@unc.edu) is C. Knox Massey Distinguished Professor

of Marketing at the Kenan-Flagler Business School of the University

of North Carolina, 300 Kenan Center Dr, Chapel Hill, NC 27599.

Please address correspondence to Tarun Kushwaha. The article is

based on the first essay of the lead author’s dissertation. The authors

thank AiMark for providing data for this study. They also acknowl-

edge the kind help of Bernadette van Ewijk for extracting data for this

study. Supplementary materials are included in the web appendix ac-

companying the online version of this article.

Editor: J. Jeffrey Inman

Associate Editor: Russell S. Winer

Advance Access publication June 21, 2019

CThe Author(s) 2019. Published by Oxford University Press on behalf of Journal of Consumer Research, Inc.

DOI: 10.1093/jcr/ucz026

651

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Kantar Millward Brown (2016) found that business-to-

business (B2B) brands that rated high on brand trust grew

80% in brand value in the last decade, while less trusted

brands grew only 25%. As another example, Nanda (2014)

reported that when it comes to convincing consumers to

pay more, brand trust trumps other brand qualities.

Given the importance of consumer trust in brands, it is

worrying that industry evidence indicates that consumers’

trust in brands is slipping. Young & Rubicam (2017) ana-

lyzed a fairly constant set of well-known brands and

reported that the proportion of brands that customers said

they trusted has fallen from 44% in 2001 to a low of 18% in

2017. The 2017 Edelman Trust Barometer found that in

nearly half of the countries surveyed, the percentage of peo-

ple that mistrust brands’ owners exceeds the percentage of

people that trust them (Edelman 2017). Given these results,

it is not surprising that consumer trust has moved to the top

of management’s priority list. In 2015, when the CEOs of

leading consumer goods firms such as P&G, Nestl

e, and

PepsiCo gathered for the 59

Consumer Goods Forum’s an-

nual summit, “Trust as a Foundation for Growth” was their

main topic of discussion (Consumer Goods Forum 2015).

Consumer researchers have recognized the importance of

consumers’ trust in brands (CTB), defined as the consumer’s

belief that the brand is willing and able to deliver on its

promises (Chaudhuri and Holbrook 2001;Erdem and Swait

2004). The focus of this stream of research has largely been

on the consequences of CTB (see next section).

We build upon and extend previous work in three mean-

ingful ways. First, we shift the lens from the consequences

of CTB to its antecedents. More specifically, we are inter-

ested in the effects of marketing-mix activity on CTB. We

examine how CTB is influenced by five key marketing

instruments: advertising intensity, new product introduc-

tion intensity, price, price promotion, and distribution in-

tensity. Second, we examine the sensitivity of CTB to the

marketing-mix activities on a global basis. Various aca-

demics have urged marketing scholars to investigate con-

sumer behavior issues on an international basis (Erdem

et al. 2006). Are conclusions regarding the effects of mar-

keting activities on CTB globally generalizable? Third, we

examine boundary conditions to the findings within and

across countries. We investigate whether the sensitivity of

CTB to the marketing-mix activities systematically across

context, where we distinguish between three context fac-

tors: consumer, according to their personality traits

(Inman, McAlister, and Hoyer 1990); (product) category,

in terms of consumers’ reliance on brands in a category

(Fischer, Vo¨lckner, and Sattler 2010); and country, accord-

ing to their national culture (Inglehart and Wetzel 2005).

We put together a unique cross-sectional data set from

multiple sources, which contains primary (survey) data as

well as secondary (household panel, country) data from

15,073 respondents on 589 brands in 46 consumer pack-

aged goods (CPG) categories. Our data set covers

13 countries, including the US; European countries such as

France, Germany, and Italy; and the four leading emerging

markets, Brazil, China, India, and Russia. Marketing-mix

instruments are derived from surveys and household panels

operated by Kantar Worldpanel, GfK, and IRI. The study

findings provide managers with strategic direction on how

their marketing-mix activities affect consumer trust in one

of their most valuable assets and how their marketing ac-

tivities have differential impact on CTB across different

consumers, categories, and countries.

PREVIOUS RESEARCH

In order to delineate the position of CTB within the

branding literature and highlight our contribution vis-

a-vis

past research on CTB, we use Keller and Lehmann’s

(2003) brand value chain framework (figure 1). According

to this framework, the brand-value-creation process begins

when the firm invests in a marketing program targeting ac-

tual or potential customers. The marketing activity associ-

ated with the program influences the customer mindset

with respect to the brand—that is, what they know and feel

about the brand. This mindset, across a broad group of cus-

tomers, then results in brand performance in the market-

place, which is the aggregate of individual customer

actions regarding quantity purchased and the price that

they pay. Finally, the investment community considers

brand performance in valuing the company. The brand-

value-chain model further specifies multipliers that

strengthen or weaken the link between two successive

stages, in terms of the value of these multipliers. These

moderating factors determine how value created at one

stage transfers or “multiplies” to the next stage (Keller and

Lehmann 2003, 28).

Past research has focused on the causal link between dif-

ferent stages in the brand value chain, including the effect

of marketing-mix instruments on consumer mindset

(Srinivasan, Vanhuele, and Pauwels 2010), consumer

mindset on marketplace performance (Datta, Ailawadi, and

Van Heerde 2017), and marketplace performance on finan-

cial market performance (Srinivasan et al. 2009). Other re-

search has focused on relations between customer mindset

metrics, which, according to Keller and Lehmann (2003,

29), exhibit an “obvious hierarchy.” This stream of re-

search has distinguished between different customer mind-

set metrics within a broader category. In this stream of

research, brand awareness (Hoyer and Brown 1990) sup-

ports brand associations, which drive brand attitudes and

overall brand evaluations (Wilkie and Pessemier 1973) that

lead to brand attachment (brand attachment, love, attitudi-

nal loyalty, brand-self connection; Batra, Ahuvia, and

Bagozzi 2012;Park et al. 2010), and brand activity (behav-

ioral loyalty, word of mouth [WOM]; Chaudhuri and

Holbrook 2001).

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Where does trust fit into the brand value chain?

Following Chaudhuri and Holbrook (2001), we argue that

CTB is a type of brand attitude that involves “a process

that is well thought out and carefully considered”

(Chaudhuri and Holbrook 2001, 82). Thus, we view CTB

as a cognitive component of brand attitude (see web

appendix A for a comparison between CTB and related

consumer mindset metrics in marketing).

Past research on CTB has extensively examined the

impact of CTB on other consumer mindset metrics,

such as brand consideration (Erdem and Swait 2004),

purchase likelihood (Erdem, Swait, and Valenzuela

2006;Herbst et al. 2011), attitudinal loyalty, and be-

havioral loyalty (Chaudhuri and Holbrook 2001). Other

research has investigated the effect of CTB on brand

performance metrics, such as market share and price

premium (Chaudhuri and Holbrook 2001)andcon-

sumer sensitivity to brand price (Erdem, Swait, and

Louviere 2002). See table 1 for a summary of past re-

search on CTB.

FIGURE 1

EXPANDED BRAND VALUE CHAIN

Adapted from Keller and Lehmann (2003).

NOTE.—In italics are the constructs included in the current study; constructs that were examined in previous research on CTB are indicated with continuous under-

lines; constructs that are added to the value chain are indicated with dotted underlines.

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Using the value chain framework, our research adds to

the literature on brand building by introducing CTB into

the value chain, and more particularly, by examining how

CTB is affected by the marketing program investments.

Further, we extend this framework by introducing context

as a multiplier of marketing program investments on cus-

tomer mindset metrics.

CONCEPTUAL BACKGROUND

Marketing-Mix Instruments as Signals

Inspired by Kirmani and Rao (2000), we use signaling

theory as the theoretical lens to understand why marketing-

mix investments affect CTB. A considerable body of

marketing studies has documented the signaling role of

brand-specific investments. More specifically, past re-

search shows that advertising expenditures (Kirmani

1990), high price (Rao and Monroe 1988,1989), product

warranties (Boulding and Kirmani 1993;Wiener 1985),

brand name (Erdem 1998), price promotions (Yoo,

Donthu, and Lee 2000), and distribution outlets (Chu and

Chu 1994) effectively serve as signals that consumers use

to make inferences regarding the characteristics of prod-

ucts and brands (see Kirmani and Rao 2000 for an over-

view of past research on the signaling role of marketing-

mix instruments). While past research primarily focuses on

consumer attributions regarding overall product superiority

(i.e., product quality), some research has found that

marketing-mix instruments shape consumer beliefs regard-

ing specific product and brand attributes, such as reliability

(Wiener 1985) and credibility (Erdem and Swait 1998).

Marketing-Mix Activities as Signals for Brand

Trust

The essence of CTB is consumers’ belief that a brand

delivers on its promises, time and time again. The nature of

these promises can vary from physical attributes (e.g., or-

ganic ingredients) to functional benefits (taste of coffee) to

self-expressive benefits (e.g., “smart shopper,” brand

CSR). But what should hold a brand back from reneging

on its promises (e.g., selling products with nonorganic

ingredients, using cheaper coffee beans, not being involved

in CSR)? And how can the consumer trust the brand to de-

liver on its promises?

Signaling theory, which is grounded in information eco-

nomics (Klein and Leffler 1981,Milgrom and Roberts

1986), provides an explanation (Kirmani and Rao 2000).

Signaling theory recognizes the asymmetrical information

TABLE 1

SUMMARY OF PAST RESEARCH ON CTB

Study Data

Marketing-mix as

drivers of CTB Findings

Erdem and Swait (1998) Survey from students Brand investments Brand investments have a positive effect on

CTB. CTB is an integral element of brand eq-

uity. CTB leads to higher perceived quality

and lower perceived risk.

Delgado-Ballester and

Munuera-Alem

an (2001)

Survey from consumers — CTB generates consumers’ commitment, espe-

cially in situations of high involvement.

Chaudhuri and

Holbrook (2001)

Surveys from consumers

and managers

— CTB positively inﬂuences purchase loyalty and

attitudinal loyalty. CTB indirectly leads to

increases in market share and price premium.

Erdem et al. (2002) Surveys from students — CTB lowers consumers’ price sensitivity. The

negative effect depends on the level of uncer-

tainty associated with the product category.

Erdem and Swait (2004) Surveys from students — CTB impacts brand choice and consideration

set formation, especially in contexts with high

uncertainty.

Erdem et al. (2006) Survey from students in

seven countries

— The positive effect of CTB on choice is greater

for consumers who rate high on either collec-

tivism or uncertainty avoidance.

Sung and Kim (2010) Surveys from students — Certain brand personality dimensions (e.g., rug-

gedness, sincerity) inﬂuence CTB more than

brand affect.

This study Survey on 15,073 consum-

ers and scanner panel

data in 13 countries

Advertising, innovation,

distribution, price,

price promotion

Advertising, innovation, distribution, and price

positively affect CTB. Price promotions nega-

tively affect CTB. CTB is more sensitive to

marketing mix in categories low on brand rel-

evance, and countries high (low) on secular-

rational values (self-expression values).

1Erdem and Swait (1998) examine the effect of general brand invest-

ments on CTB. Their research, however, does not distinguish between

different marketing-mix instruments.

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structure of the market and proposes that brands can use

market signals to convey information to imperfectly in-

formed consumers. Klein and Leffler (1981) demonstrate

analytically that market prices above the competitive price

(i.e., price premium) are a means of enforcing brand prom-

ises. Klein and Leffler (1981) further discuss that brand-

specific expenditures on advertising that are observable to

consumers are lost if the brand cheats. Large advertising

expenditures inform consumers of the magnitude of sunk

costs and hence the opportunity cost to the brand if it

cheats. This provides another incentive for firms to keep

their promises.

Although Klein and Leffler (1981) focus on advertising

as brand-specific marketing program investment, their ana-

lytical conclusions apply to any kind of observable brand-

name expenditures (Milgrom and Roberts 1986, 799–800),

including new product introductions under a given brand

name (Milgrom and Roberts 1986) and distribution (Rao

and Mahi 2003). New product introductions help a brand

differentiate itself with its competitors. The innovative

brand relies on consumers’ repeat purchases to recoup

R&D, new packaging, and other innovation-related costs.

Thus, innovative brands signal to consumers that they are

motivated to deliver on their promises; otherwise, they

would incur great losses (fixed cost of innovation)

(Milgrom and Roberts 1986). Similarly, a brand with an

extensive distribution network is viewed as a strong and re-

sourceful brand that has been able to attract interest from

multiple retailers. Consumers interpret a brand’s ubiqui-

tous presence as a sign of its consistent performance across

different markets. Extensive distribution costs—associated

with high expenditures on slotting allowances, in-store pro-

motion material, and other expensive retail investments—

would be lost if the brand does not deliver on its promises

(Rao and Mahi 2003).

In sum, signaling theory proposes that consumers use

the extent of investments in various marketing program

elements (high price, advertising activity, new product ac-

tivity, distribution coverage) as signals that the brand will

deliver what it promises (i.e., that it can be trusted). But

what is the role of price promotions? Price promotions lead

to lower price premiums. According to the information

economics perspective, the lower price premiums caused

by frequent price promotions indicate that the brand is

more likely to cheat on its promises. Marketing offers a

complementary explanation on the negative impact of price

promotions on consumer attitude. Blattberg and Neslin

(1989) argue that heavy price promotions raise suspicions

in consumers’ minds regarding the capability of brands.

When exposed to frequent price promotions by a brand, the

consumer “questions why it is necessary to keep promoting

the product and concludes there is something wrong with

the product” (Blattberg and Neslin 1989, 90).

We acknowledge that information economics makes

strong assumptions, which are not always realistic (e.g.,

rationality of firms and consumers). The value of this the-

ory is that it is able to explain many real-world outcomes.

As Boulding and Kirmani (1993, 121–122) argue, “the

power of the signaling framework lies in its ability to make

predictions based on a single behavioral assumption—

rational firms and consumers. [...]However,itsaysnothing

about the underlying processes by which consumers make

such inferences or even whether they actually do so.”

What, then, is the empirical evidence on consumer use of

marketing instruments for CTB? Erdem and Swait (1998)

find that brand investments (measured with two items:

“This brand spends lots of money on ads, commercials,

promotions, event sponsorships, celebrity endorsements,

etc.,” and “This brand has spent a lot on the community

over the years”) have a significant effect on CTB. Other

empirical support for the use of marketing-mix activity on

CTB is largely indirect; the customer mindset metric stud-

ied was perceived quality, not brand trust. Nevertheless, as

quality is essential to the ability of a brand to fulfill its

promises—there are few brands that do not make quality

promises—this work is informative for our purposes. A

large body of marketing studies shows that consumers use

price (Dawar and Parker 1994;Rao and Monroe 1989) and

advertising (Kirmani 1990;Kirmani and Wright 1989)as

signals of product quality. Past research in marketing has

further found that price promotions damage brand attitude

(Yi and Yoo 2011), brand loyalty (Papatla and

Krishnamurthy 1996), and brand equity (Yoo et al. 2000).

Based on the above discussion, we expect that CTB is posi-

tively affected by the brand’s advertising intensity, new

product introduction intensity, distribution intensity, and

price, and negatively affected by the brand’s price promo-

tion intensity.

Consistent with the rational perspective underlying sig-

naling theory, the above discussion abstracts from the con-

text in which the formation of CTB judgments take place.

However, from a behavioral point of view, judgment for-

mation is affected by the psychological makeup of the con-

sumer in question, characteristics of the category involved,

and characteristics of the country in which the consumer

lives. We propose that these three “context” multipliers

strengthen or weaken the effect of marketing-mix activities

on CTB (see figure 2).

Moderating Role of Personality Traits

We start by examining variation in the sensitivity of

CTB to marketing-mix activities in terms of the personality

profile of the consumer (Baumgartner 2002). Personality

traits are “dimensions of individual differences in tenden-

cies to show consistent patterns of thoughts, feelings, and

actions” (McCrae and Costa 1990, 29). These traits are

exhibited by individuals across a wide range of situations,

2 We thank an anonymous reviewer for raising this point.

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such as child rearing, work interactions, and personal con-

sumption. In the last few decades, the Big Five has

emerged as the most influential personality trait model

(McCrae and Costa 2008). The Big Five framework distin-

guishes between five fundamental traits: openness to expe-

rience, conscientiousness, extraversion, agreeableness, and

neuroticism.

These personality traits can be linked to information

processing styles. People have habitual tendencies, com-

monly called thinking styles (Epstein et al. 1996), to ap-

proach various problems in consistently similar ways.

These thinking styles vary between people, are stable over

time (Scott and Bruce 1995), and are related to people’s

personality (Epstein et al. 1996). Epstein and colleagues

(1996) distinguished between two thinking styles:

analytical-rational and intuitive-experiential. An analytical

thinking style is characterized by deliberate, slow, analytic

information processing. An intuitive thinking style is char-

acterized by automatic and quick information processing

and is associated with the use of heuristics. This suggests

that intuitive thinking is associated with greater reliance on

market signals as heuristics in CTB, while analytical think-

ing is associated with less reliance on market signals. The

two thinking styles supplement each other because attitude

formation and behavior are a joint function of both modes

of processing (Epstein et al. 1996, 392).

Subsequent empirical research examined the relationship

between these thinking styles and the Big Five personality

FIGURE 2

RESEARCH FRAMEWORK

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traits (Pacini and Epstein 1999;Riaz, Riaz, and Batool

2012), finding that the tendency to engage in rational, ana-

lytical thinking is related to openness to experience and

conscientiousness, while the intuitive thinking style is as-

sociated with agreeableness and extraversion. Neuroticism

did not exhibit consistent relations with either thinking

style. Thus, we expect marketing-mix activities to have

larger effects on CTB for consumers who are high on ex-

traversion and agreeableness and smaller effects on CTB

for consumers who are high on conscientiousness and

openness to experience.

Moderating Role of Brand Relevance in

Category

We proposed rival explanations regarding the moderat-

ing role of BRiC as Accessibility-Diagnosticity Theory and

the Elaboration Likelihood Model of persuasion posit dia-

metrically opposing effects. We find that advertising inten-

sity (c

160

¼.021, p<.001), new product introduction

intensity (c

260

¼.017, p<.001), distribution intensity

360

¼.062, p¼.014), and price (c

460

¼.015, p<.001)

have a stronger impact on CTB when BRiC is high

compared to when it is low. The effect for price promotion

is not significant. Thus, we find strong support for

Accessibility-Diagnosticity Theory’s predictions. Figure 5

(panel B) again provides observed mean CTBs. It high-

lights that the interaction effects are mostly substantial. For

advertising, Dd¼.69, a medium-large effect, for new

products and price, the effect is close to medium (Dd¼

.45). The effect for distribution is more modest: Dd¼.28.

The Moderating Role of National Culture

We proposed rival predictions regarding how the secular-

rational and self-expression cultural dimensions moderate

the sensitivity of CTB to the marketing-mix activities.

Consistent with the arguments of Accessibility-

Diagnosticity Theory, we find that higher new product

introduction intensity (c

201

¼.076, p<.001), higher price

401

¼.057, p¼.001), and lower price promotion intensity

501

¼–.733, p¼.006) have a stronger impact on CTB in

countries high on secular-rational values compared to coun-

tries low on secular-rational values. The interactions for ad-

vertising and distribution intensity are not significant.

We find significant interactions for self-expression cul-

ture in the direction specified by Accessibility-

Diagnosticity Theory, albeit not for all marketing-mix

instruments. Consistent with Accessibility-Diagnosticity

Theory, advertising intensity (c

102

¼–.061, p<.001), new

product introduction intensity (c

202

¼–.043, p<.001),

and price (c

402

¼–.026, p¼.071) have a weaker impact

on CTB in countries high on self-expression values. The

other two interactions are not significant.

Figure 5 (panel C) depicts mean CTBs associated with

the significant interaction effects. Four interaction effects

exceed the cutoff for a small effect size. The strongest

effects by far are found for the interactions between self-

expression values and advertising intensity (Dd¼.72) and

new product activity (Dd¼.75).

Sociodemographics and Control Variables

We find that women have lower trust in brands (c

070

–.026, p¼.056) and that CTB declines with age (c

080

–.002, p¼.007). We also find that CTB is lower in

European countries (c

004

¼–.441, p<.001). This finding

is in line with the fact that private labels command a larger

market share in Europe than in any other continent.

We included the main effects of our moderators for

proper interpretation of the interactions. Although they are

not the focus of our study, they yield some interesting

results. We find that people high on the trait of agreeable-

ness exhibit higher CTB (c

020

¼.084, p<.001). This is

consistent with past research that identified the trait of trust

as a subscale of agreeableness (McCrae and Costa 2008).

We also find that consumers scoring high on conscientious-

ness (c

030

¼.078, p<.001) and openness to experience

040

¼.038, p<.001) are higher on CTB, while neuroti-

cism has a negative effect on CTB (c

050

¼–.031, p<

.001). This finding is consistent with the notion that an in-

dividual holding a neurotic personality has a pessimistic at-

titude toward individuals and objects, which makes it

difficult for him/her to trust individuals/entities (Tan and

Sutherland 2004).

The main effect of BRiC is positive and significant (c

060

¼.191, p<.001), suggesting that CTB is higher when in a

particular product category, and brands are more important

to a consumer. We find that consumers have lower trust in

brands in countries high on self-expression values (c

002

–.116, p¼.041). This finding is consistent with previous

research, which argued that brands are expected to do

worse in postmaterialistic countries (Holt 2002;Steenkamp

and Geyskens 2014).

Robustness Checks

We conducted a series of checks to assess the robustness

of our findings, including analyses with median split mod-

erators, and models with manufacturer fixed effects and

FIGURE 4

MEAN CTB AT VARYING LEVELS OF MARKETING-MIX ACTIVITIES

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brand fixed effects. We also assessed our model’s out-of-

sample predictive power across three sets of analyses. The

results are reported in web appendixes G–I. The overall

conclusion is that our model findings exhibit a high degree

of robustness.

Other Country-Level Categorizations

While we focus on country differences using Inglehart’s

cultural framework, another, managerially more interest-

ing, classification is between developed and emerging mar-

kets (Burgess and Steenkamp 2006). Our set of countries

includes the four most important emerging markets: Brazil,

China, India, and Russia. We find that the signaling value

of advertising and price is stronger in emerging markets

than in developed markets (see Table 5). Compared to de-

veloped markets, brands have not been around as long in

emerging markets; hence, knowledge about products and

brands is generally less deep (Burgess and Steenkamp

2006). In these contexts, advertising fulfills a more impor-

tant role in creating brand awareness and communicating

the brand message (Pauwels, Erguncu, and Yildirim 2013).

The larger role of price in emerging markets is consistent

with recent research that showed that while consumers in

emerging markets are more price conscious, they also rely

more on price as an indicator to infer product performance

(Zielke and Komor 2015). Distribution has a large effect

on CTB in developed markets but not in emerging markets.

This may be due to the fact that in emerging markets, infor-

mal distribution and small, relatively unsophisticated

mom-and-pop shops play a large role, while in developed

markets, brands are almost exclusively offered in large,

sophisticated, and expensive-looking supermarkets (Child,

Kilroy, and Naylor 2015). Such outlets have more charac-

teristics of expensive brand-specific capital expenditures.

We use the richness of our data set to explore possible

differences in the effects of marketing-mix activities on

CTB across different country-level categorizations (e.g.,

Hofstede’s cultural dimensions, country’s religion, coun-

try’s economic well-being) in an exploratory fashion. We

use median values to categorize countries into low and

high on different factors and run separate analyses on

countries that are above versus below the median on a par-

ticular characteristic, with only the marketing-mix activi-

ties as regressors. We report the results of those analyses in

web appendix J. The results confirm the importance of new

product introduction intensity as the most important driver

of CTB; its effect on CTB is significant across all country-

level categorizations. Advertising is also generally an im-

portant driver of CTB; however, in certain contexts it does

not significantly influence CTB (e.g., countries low on un-

certainty avoidance or low on power distance). Overall, the

results highlight interesting patterns that could be of inter-

est to marketing managers and researchers. Discussing the

possible underlying mechanisms behind these results is

outside the scope of this article, but our findings may offer

inspiration for future research.

DISCUSSION

The brand value chain (Keller and Lehmann 2003) has

emerged as a useful framework to understand the chain of

events through which brands create value. The key first

link in this framework is that marketing activity of the firm

FIGURE 5

MODERATING ROLE OF PERSONALITY TRAITS, BRAND RELEVANCE IN CATEGORY, AND NATIONAL CULTURE

RAJAVI, KUSHWAHA, AND STEENKAMP 665

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influences the consumer mindset with respect to the brand.

If the firm is ineffective in affecting the customer mindset

with its marketing, the subsequent links in the framework

become moot. Our study elaborates and extends the brand

value chain. First, it expands the framework by introducing

brand trust as an important customer mindset element.

CTB has become a top managerial concern and has also

spawned a considerable amount of academic research, doc-

umenting its effect on various brand performance metrics.

Second, we extend the brand value chain by identifying the

context in which the firm operates as a key multiplier, in-

tervening between marketing activity and customer mind-

set. We specify three context domains: consumer,

category, and country. We develop arguments regarding

the main effects of five marketing-mix activities on CTB

as well as the multiplier effects of personality traits (con-

sumer), brand relevance in a category (category), and

secular-rational and self-expression values (country). The

effects were examined using a dedicated data set that com-

bined consumer surveys, household scanner data, and

country data across 589 brands in 46 CPG categories,

across 13 countries, which collectively account for half of

the world’s population. The cross-national data used in this

study provide a strong test of the generalizability of the

findings. Consistent with the expanded brand-value-chain

framework, marketing-mix activity affected CTB, and the

judgment context acted as a systematic multiplier, weaken-

ing or strengthening the effects of marketing program

investments on CTB.

We find that, with the exception of extraversion, the

multiplying role of consumers’ personality traits was small

to negligible, and also not always consistent with their

overall thinking styles. On the other hand, brand relevance

in a category (BRiC) had a much larger multiplier effect.

This suggests that overall thinking styles are less useful to

understand the use of market signals in attitude formation

than category-specific measures. This does not detract

from the theory of thinking styles but suggests that to un-

derstand formation of attitudes toward specific objects (in

our case, trust in specific brands), we need more specific

measures.

In our theorizing, we discussed rival predictions for

BRiC and national culture, based on Accessibility-

Diagnosticity Theory and the Elaboration Likelihood

Model of persuasion. Our findings across categories and

countries consistently supported Accessibility-

Diagnosticity Theory. This is interesting; after all, both are

established theories of attitude formation. Yet they could

be reconciled if, for consumers, firms’ marketing activities

contain real information that requires some thoughtful con-

sideration. If consumers are economic experts, they would

be aware of the information content of the market signals.

They would intuitively understand that if firms renege on

their promises, they would lose repeat business, and hence,

the signals are valid. There are indirect indications that this

might be the case. The two marketing-mix activities for

which the strongest interactions were consistently found

are advertising and new product activity. For advertising,

Kirmani (1990) and Kirmani and Wright (1989) provide

evidence that consumers may indeed link adverting to

quality and sales potential. And for many consumers, new

product activity is important, as it can fill relevant niches

in the marketplace (Schmalensee 1978). According to

Nielsen (2015), almost two-thirds of respondents in a

global survey said they like it when manufacturers intro-

duce new products, and more than half said they purchased

a new product during their last shopping trip.

We find a strong multiplier role for Inglehart’s theory of

national culture. So far, his theory has received little atten-

tion in the literature. Yet his work is rooted in (post)materi-

alism and (post)modernity, which are concepts that are of

great importance to consumer researchers. We believe his

theory deserves more attention in marketing and consumer

behavior.

Managerial Implications

The brand value chain is a structured means for manag-

ers to understand where and how value is created and sug-

gests where to look to improve that process. According to

Keller and Lehmann (2003), brand and category marketing

managers are likely to be particularly interested in the cus-

tomer mindset and the impact of the marketing program on

customers. They create value through smart investments in

their marketing program and by maximizing the multiplier

effects to the extent possible. So, what are smart invest-

ments, from the perspective of maximizing CTB (i.e., allo-

cating more resources to advertising and new product

activity)? These two marketing activities have a large ef-

fect (in Cohen’s sense) on CTB, while the effect of the

other three instruments is small at best. Regarding advertis-

ing, this gives brand managers additional leverage to make

their case that it should not be evaluated only on sales lift.

Advertising builds brand trust, and this message should

resonate with the C-suite, as brand trust is top of mind for

many CEOs (Consumer Goods Forum 2015). Our findings

TABLE 5

THE EFFECT OF MARKETING-MIX ON CTB ACROSS

Emerging

Markets

Developed

Countries

p-value

(difference)

Advertising .133 (<.001) .034 (.039) .018

New products .419 (<.001) .417 (<.001) .966

Distribution –.037 (.651) .270 (<.001) .001

Price .045 (.133) .007 (.523) .234

Price promotion –.271 (.179) –.308 (.009) .872

NOTE.—Numbers in parentheses are two-sided p-value.

666 JOURNAL OF CONSUMER RESEARCH

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also support continued investments in innovation by firms,

which is contrary to industry practice, at least for large

firms (Steenkamp and Sloot 2019).

We further find that the effectiveness of these two major

trust-building marketing activities is substantially (in terms

of effect size) moderated by a person’s degree of extraver-

sion, category BRiC, and country espousal of self-

expression values. Segmenting the market on a personality

trait like extraversion is possible, but the likelihood of suc-

cess is probably not high (Wedel and Kamakura 1998, 16).

National culture is a given, too. In this sense, whether these

multipliers inhibit or facilitate value creation may be

largely out of the hands of the marketer. Yet, as argued by

Keller and Lehmann (2003, 31), recognizing their uncon-

trollable nature is important to help put in perspective the

relative success or failure of trust-building programs.

Marketers cannot be logically held accountable for context

multipliers that they cannot influence. So, if marketers in a

brand strategy session are comparing trust in the firm’s

brand across countries, and they find that CTB is lower in

the US than in China, before concluding that the US man-

ager is not doing their job, they need to correct scores to

account for the fact that the US rates high on self-expres-

sion, while China rates low. Our parameter estimates and

the publicly available country scores on the Inglehart

dimensions can be used to make the necessary correction.

However, creative managers can do something about

brand relevance in a category, either individually or via

trade organizations. The two constituent components of

BRiC are risk reduction and social demonstrance (Fischer

et al. 2010). Advertising can play a major role to highlight

the adverse consequences of not selecting your brand—re-

jection by peers (social demonstrance) or disappointing

product performance.

This will be most effective if the

market leader or multiple brands in the same category do

this. In many product categories, and certainly in the CPG

industry studied in this article, private labels are the main

homogenizing factor reducing BRiC. Individual or collec-

tive actions to differentiate the brand (brands) from private

labels, then, can help increase BRiC. An example of indi-

vidual brand action is to communicate to consumers that

the brand does not manufacture private labels. Tylenol

runs TV ads in which employees make the following prom-

ise: “We don’t make store brand pain relievers. We make

Tylenol.” Pledge announces on its packaging in red, bold,

capital letters that “THIS FORMULA IS NOT SOLD TO

ANY RETAILER AS A STORE BRAND.” An example of

collective action is the long-running advertising campaign

run by the Austrian Association of Brand Manufacturers

(which counts companies like Mars, P&G, and Colgate-

Palmolive as members), which uses slogans like “Die

Marke garantiert den Unterschied” [the brand guarantees

the difference] and “Das Original: Achten Sie auf die

Marke” [The original: Pay attention to the brand]. The mo-

tivation for this campaign was that “many consumers think

that PLs and NBs are actually the same product, only in

different packaging.” The campaign has since been

adopted by other European associations of brand

manufacturers.

Using advertising to increase BRiC kills multiple birds

with one stone. First, it is yet another way in which adver-

tising contributes to the brand value chain. Second, BRiC

itself has a direct effect on CTB. Third, higher BRiC (ei-

ther via increased CTB or directly; this has not been

researched yet) is associated with improved brand perfor-

mance, especially price premiums and brand equity

(Fischer et al. 2010).

Limitations and Further Research

Our empirical setting casts a wide net, leading to empiri-

cal generalizations. Yet our data are not without limita-

tions, which offers three lines of further inquiry. First, our

data are cross-sectional. An interesting question is whether

and how CTB changes over time. Addressing this question

requires longitudinal data with repeated measurements of

CTB on the same people. This allows one to estimate latent

change trajectories (Steenkamp and Maydeu-Olivares

2015) and relate the parameters of change to marketing

program investments. Second, field experiments or lab

experiments can be used for a more detailed causal expla-

nation of the observed regularities in our study. Lab experi-

ments would specifically be helpful in determining the

underlying mechanisms at play. Researchers can test the

accessibility-diagnosticity mechanism against alternative

explanations to detect the underlying mechanism causing

the observed relationships between marketing-mix activi-

ties and CTB. We speculated that perhaps the Elaboration

Likelihood Model and Accessibility-Diagnosticity Theory

might be reconcilable if, for consumers, firms’ marketing

activities contain real information that requires some

thoughtful consideration. Future research should investi-

gate this possibility. Third, in our research, advertising in-

tensity and new product introduction intensity were

operationalized using survey items developed and vali-

dated in past research (Steenkamp, van Heerde, and

Geyskens 2010;Steenkamp and Geyskens 2014). Future

research should examine whether these findings are repli-

cated with secondary data.

The brand-value-chain model includes program quality

multipliers, which were not considered in this study. It

remains to be seen whether program quality multipliers in-

teract with the context multipliers we have introduced in

strengthening or weakening the effect of marketing-mix

activities.

9 We focus on advertising, as Fischer et al. (2010) documented that

heavy advertising is associated with higher BRiC. New product activ-

ity may be another way to increase BRiC.

RAJAVI, KUSHWAHA, AND STEENKAMP 667

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In our study, we find that with the exception of extraver-

sion, the moderating role of personality traits is very small.

This raises several questions. First, what is special about

extraversion that underlies this fairly strong effect?

Second, might direct measures of thinking style (Pacini

and Epstein 1999) yield stronger results? Third, might con-

sumer traits that are conceptually related to the Big Five

(Steenkamp and Maydeu-Olivares 2015) be more pertinent

consumer multipliers than personality traits? Future re-

search should look into these questions.

In information economics theory, it is crucial that con-

sumers observe brand-specific investments. The brands in

our study were the largest brands in their category. It is

likely that their marketing activity is more easily observ-

able than that of minor brands. For example, past research

has showed that advertising intensity has differential

impacts across well-known brands and lesser-known

brands (Campbell and Keller 2003). Future research could

extend our work by examining CTB and the role of

marketing-mix activities therein for lesser-known brands.

Finally, future research could extend empirical testing to

consumer durables. Do marketing-mix activities still play

the same trust-building role in these categories? We specu-

late that this will indeed be the case since the emergence of

e-WOM means that any attempt to renege on promises will

quickly be known to multitudes of consumers who just en-

tered the market. We believe this topic requires further

investigation.

DATA COLLECTION INFORMATION

The individual-level survey data that we used in this

study was collected by the global market research agencies

GfK and Kantar Worldpanel in 2015. The household scan-

ner panel data, which was used for measures on price, dis-

tribution, and price promotion, was collected by GfK,

Kantar Worldpanel, and IRI. The authors acquired survey

data and scanner panel data from AiMark. The first author

conducted all empirical analyses in this study.

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The Effect of Consumer Trust and Ease of Use on Consumer Loyalty Mediated by Brand Image on TIX.ID Application Users (Survey on FEB-UBL Students)

Article

Jan 2025

The purpose of this study is to analyze the influence of consumer trust variables and ease of use variables on consumer loyalty variables mediated by brand image on TIX.ID application users. This type of research is quantitative using primary data, obtained from respondents through questionnaires distributed online. The research participants were several students from the Faculties and Universities mentioned in the title, with a total of 280 respondents taken using random sampling techniques. Data were analyzed using PLS-SEM with the SmartPLS 4 application using validity tests, reliability tests, and hypothesis tests. The results of the study indicate that there is a significant relationship between consumer trust, ease of use, brand image, and consumer loyalty. Looking at the brand image variable that has a major role in mediating the relationship between the two variables X to variable Y. Overall, this study emphasizes that trust, ease of use, and brand image are interrelated and contribute to consumer loyalty.

Strategic Guidelines for City Branding Development through Professional Sports Teams: The Case of Football and Its Influence on Monterrey's Image / Líneas estratégicas para el desarrollo de la marca ciudad a través de equipos profesionales deportivos: Caso futbol y su influencia en la imagen de Monterrey

Thesis

Full-text available

Jun 2024

Manuel Lopezneria Fernández

This research analyzes the role of professional football teams in the construction and strengthening of city branding, using the city of Monterrey, Mexico as a case study. Through a qualitative approach, it examines how local football clubs—primarily Tigres UANL and Rayados de Monterrey—influence the perception and image of the city both nationally and internationally. Strategic guidelines are identified and proposed to harness the media, emotional, and cultural potential of the sport to position Monterrey as a dynamic, modern city with a strong identity. The findings suggest that professional football not only contributes to social cohesion and a sense of belonging among citizens, but also serves as an effective tool for territorial marketing and urban, economic, social, and tourism development when managed properly from a city branding perspective.

Young consumers' brand distrust model: Understanding the antecedents of young consumers' distrust of brands

Article

Feb 2025
J BUS RES

Consumer research has shown that brands benefit from consumers' trust in them. However, although consumers' distrust of brands can accordingly have harmful effects on brands, the antecedents of young consumers' brand distrust are not entirely clear. This study proposes a model for young consumer's brand distrust antecedents based on the integration of our findings and prior research. Manual coding and latent Dirichlet allocation were utilized to analyze online research panel participants' open-ended responses on what makes them distrust brands on social media. Our examination revealed several antecedents of young consumers' brand distrust in the context of social media, such as reputation issues, advertising issues, impression management, and commercial collaboration. This study significantly contributes to consumer research by addressing the understudied topic of what makes young consumers distrust brands within the social media context.

Can Value Congruity Influence Trust and Agreement with Controversial Decisions during Global Disruptions? Can Value Congruity Influence Trust and Agreement with Controversial Decisions during Global Disruptions?

Preprint

Full-text available

Jan 2025

as the cOViD-19 pandemic started to disrupt the global economy, organizations had to make controversial decisions under unprecedented uncertainty. hence, mega sport event organizers had to decide whether their events should proceed. in this context, the present research investigates whether the international Olympic committee was able to leverage its values and commitment to sustainable development by comparing the influence of three measures of value congruity (including two novel sustainability-based instruments) on brand trust and consumers' agreement with controversial cOViD-19-related decisions. a Pls-seM method was used to analyze data from five countries (n = 1241). Results reveal that the novel sustainability-based measures are at least as influential as the traditional measure, and that brand trust mediates the relationship. Moderations of risk perceptions and cultural differences are exhibited. these findings contribute to the literature by comparing sustainability-based and traditional measures in the context of global disruptions. Marketers are encouraged to use novel sustainability-based instruments. GRAPHICAL ABSTRACT Notes: unmediated effects are reported for value congruity on agreement; range of coefficients from global model only (regional effects not represented).

Deceptive signalling: Causes, consequences and remedies

Article

Full-text available

Dec 2024
INT J MANAG REV

Norbert Steigenberger

Deceptive signalling occurs when resource seekers provide communication or observable behaviour that seems to indicate high‐quality attributes yet actually misleads about the resource seekers’ attributes. Deceptive signalling is an everyday phenomenon that hurts investors, consumers and high‐quality ventures alike, leading to resource misallocation and market inefficiencies. It is also a challenge for researchers interested in signalling theory, as deceptive signalling defies signalling theory's predictions, leading to ambiguity regarding if and how deceptive signals should be analysed from a signalling theory perspective. Research on deceptive signalling has accumulated, yet it is scattered across disciplines and discourses, which hampers our ability to understand the phenomenon and obstructs progress in signalling theory. To mitigate this state of affairs, this paper provides a cross‐disciplinary integrative review, systematizing extant research on deceptive signalling, developing suggestions for the integration of deceptive signalling into signalling theory and outlining a research agenda on currently unresolved questions in signalling research pertaining to deceptive signalling. Developing a better understanding of deceptive signalling seems particularly pressing as recent advances in AI technologies, which reduce the detectability of deceptive signals as well as the costs for producing such signals, will presumably lead to an exacerbation of deceptive signalling problems.

The Impact of the E-Marketing Mix on Brand Equity in the Jordanian Banking Sector

Article

Jun 2025

Mahmoud Alghizzawi

This study aimed to identify the impact of the e-marketing mix on brand equity in the Jordanian banking sector. This study used a descriptive analysis approach. The study population consisted of all (13) commercial banks in Jordan listed on the Amman Stock Exchange. A random sample of administrative personnel at commercial banks was selected, including administrators and department heads. It was distributed electronically via Google Forms, and 293 questionnaires (79.1%) from the total study sample were retrieved. The SPSS program version 26 was used to examine the collected data. The results showed that there is a statistically significant effect at the level (α ≥ 0.05) of e-marketing on brand equity in the Jordanian banking sector. It was found that there is a positive correlation between e-marketing and the three dimensions of brand equity (brand loyalty, perceived quality, and brand image). Moreover, a positive brand image should be maintained through the consistent delivery of promises, excellent customer service, and a strong online reputation. Cultivating brand loyalty among customers can be achieved through personalized services, exclusive rewards, and tailored promotions. By integrating these strategies into their e-marketing efforts, banks can effectively engage with customers, differentiate themselves from competitors, and build long-term relationships.

BRAND DIFFERENTIATION STRATEGIES AND SUSTAINABLE COMPETITIVE ADVANTAGE OF MTN NIGERIA IN SOUTH-SOUTH REGION

Article

Full-text available

Jan 2025

Roles of Traditional, Online‐Specific, and Cross‐Channel Marketing Instruments in Multi‐ and Omnichannel Fashion Retail Brand Equity

Article

Jan 2025
J Consum Behav

Multi‐ and omnichannel retailers use various marketing instruments to position themselves as strong brands. However, we know surprisingly little about how strongly retail brand equity (RBE) benefits from the traditional, online‐specific, or cross‐channel instruments that consumers perceive when switching channels. This study fills this gap by leveraging categorization theory. It contributes to the literature by analyzing the roles of important marketing instruments for consumer loyalty decisions through offline and online RBE via a sample of 379 consumers surveyed at three different points in time as well as sequential mediation and cross‐lagged structural equation modeling. The findings highlight the distinct importance of the indirect and total effects of the instruments for loyalty through offline and online RBE. Furthermore, offline and online RBE reciprocally affect loyalty decisions to different extents, providing additional insights into the roles of the instruments. These findings have direct implications for managers seeking to understand the role of marketing instruments and the interactive role of offline and online RBE in customer loyalty.

Branding, Consumerism, and Contemporary Marketing: A Critical Perspective

Chapter

Mar 2025

Ayantunji Gbadamosi

Notably brands and branding distinguish and position businesses’ market offerings in relation to competitors’. They constitute parts of the core elements of the marketing system that contribute to how businesses satisfy their customers. Hence, branding is inextricably linked to the marketing philosophy of creating and delivering value to the customers. In fact, it plays key roles in the notion of value co-creation between businesses and their customers. Although they have characteristics that distinguish them from physical products, service offerings also benefit significantly from the use of banding. Besides, as the marketplace consumption behaviour keep changing, the areas of application of branding have also evolved into many more areas than it used to be such as branding in the not-for-profit activities, branding of political ideologies, personal branding, branding in the religious context, branding in a digital age, and branding in the metaverse among others. This chapter explores these issues critically to open the discourse of the brands, branding, and consumerism in this book.

Owing to interactivity: a meta-analysis on consumer-brand responses in the digital context

Article

Feb 2025

Purpose Interactivity is the key to developing digital branding. However, existing research on brand interactivity outcomes is inconsistent and fragmented, lacking a systematic empirical exploration of its effects on consumer responses in the digital context. Design/methodology/approach Drawing upon the cognition-affection-conation (CAC) framework as our theoretical compass, a meta-analysis was conducted to synthesize and analyze empirical evidence from 144 samples involving 57,952 participants to assess how and when digital brand interactivity influences consumers’ multilevel responses. Findings Our narrative unfolds with digital brand interactivity as the catalyst, fostering positive consumer behaviors – brand loyalty and purchase intention – through a sequential dance of cognitive mindset shifts (brand experience, engagement and attitude) and affective resonance (trust and emotional attachment). A moderation analysis adds depth, revealing stronger effects in B2C settings for lesser-known brands with hedonic interaction content and among individuals with a collectivist orientation. Practical implications Our findings serve as a roadmap for targeted digital marketing strategies, guiding brands, consumers and contextual aspects to optimize the performance of digital branding by harnessing the full potential of digital interactivity. Originality/value This study introduces a framework combining CAC and brand-consumer psychology to understand how interactivity affects consumer responses in digital contexts. It delves into dynamic shifts moderated by brand characteristics, consumer traits and contextual factors, offering a holistic view of digital branding’s impact on interactive marketing.

Comparing Cultures: Dimensions of Culture in a Comparative Perspective

Book

Feb 2004

Brands as Signals: A Cross-Country Validation Study

Article

Jan 2006
J MARKETING

This article tests how well the information economics view of brand equity explains consumer brand choice in countries that represent different cultural dimensions. In this empirical analysis, the authors use survey and experimental data on orange juice and personal computers collected from respondents in Brazil, Germany, India, Japan, Spain, Turkey, and the United States. The results provide strong empirical evidence across countries for the role of brands as signals of product positions. In addition, the positive effect of brand credibility on choice is greater for consumers who rate high on either collectivism or uncertainty avoidance. Credible brands provide more value to collectivist consumers because such consumers perceive these brands as being of higher quality (i.e., reinforcing group identity). Credible brands provide more value to high-uncertainty-avoidance consumers because such brands have lower perceived risk and information costs.

Product Innovations, Advertising, and Stock Returns

Article

Jan 2009
J MARKETING

Under increased scrutiny from top management and shareholders, marketing managers feel the need to measure and communicate the impact of their actions on shareholder returns. In particular, how do customer value creation (through product innovation) and customer value communication (through marketing investments) affect stock returns? This article examines, conceptually and empirically, how product innovations and marketing investments for such product innovations lift stock returns by improving the outlook on future cash flows. The authors address these questions with a large-scale econometric analysis of product innovation and associated marketing mix in the automobile industry. They find that adding such marketing actions to the established finance benchmark model greatly improves the explained variance in stock returns. In particular, investors react favorably to companies that launch pioneering innovations, that have higher perceived quality, that are backed by substantial advertising support, and that are in large and growing categories. Finally, the authors quantify and compare the stock return benefits of several managerial control variables. The results highlight the stock market benefits of pioneering innovations. Compared with minor updates, pioneering innovations have an impact on stock returns that is seven times greater, and their advertising support is nine times more effective as well. Perceived quality of the new car introduction improves the firm's stock returns, but customer liking does not have a statistically significant effect. Promotional incentives have a negative effect on stock returns, indicating that price promotions may be interpreted as a signal of demand weakness. Managers can combine these return estimates with internal data on project costs to help decide the appropriate mix of product innovation and marketing investment.

An Empirical Analysis of Umbrella Branding

Article

Aug 1998

Tülin Erdem

In this article, the author studies the processes by which consumers’ quality perceptions of a brand in a product category are affected by their experience with the same brand in a different category. The model proposed and estimated explicitly incorporates some of the basic consumer behavior premises of signaling theory of umbrella branding (Montgomery and Wernerfelt 1992; Wernerfelt 1988). The author provides a framework to analyze the impact of marketing mix strategies in one product category on quality perceptions, consumer perceived risk, and consumer choice behavior in a different category. The model is estimated on panel data for two oral hygiene products, toothpaste and toothbrushes, in which a subset of brands share the same brand name across the two product categories. The results show strong support for the consumer premises of the signaling theory of umbrella branding.

Issues in Marketing's use of Multi-Attribute Attitude Models

Article

Nov 1973

The simplistic form of linear compensatory attitude modeling includes a number of significant research questions involving concepts, measurement, and analysis. Results and conclusions of marketing research on the model are summarized for each issue and directions for further development are suggested.

Measuring the Dynamic Effects of Promotions on Brand Choice

Article

Feb 1996

Promotions are being used with increasing frequency by manufacturers facing highly competitive markets, which is causing concern among some marketers who feel that frequent promotions can hurt a brand. Nevertheless, there is little empirical evidence to either support or dispel such fears. To fill this gap in the literature, the authors propose a brand choice model that provides an estimate of the dynamic effects of promotions on loyalty to the brand and customers’ sensitivity to the price of the brand, and measures whether promotional purchases reinforce or reduce subsequent response to similar promotions. They estimate a random effects heteroskedastic covariance probit time-varying parameter model on household scanner panel data from the liquid detergent category. Their results indicate that increased purchases using coupons erode brand loyalty and increase price sensitivity. In addition, the authors find that the effect of features and displays on brand choice is reinforced by prior feature and display purchases, respectivly, as well as by feature and display purchases associated with price cuts. Future research directions are also discussed.

The Effect of Price, Brand Name, and Store Name on Buyers’ Perceptions of Product Quality: An Integrative Review

Article

Aug 1989

The authors integrate previous research that has investigated experimentally the influence of price, brand name, and/or store name on buyers’ evaluations of product quality. The meta-analysis suggests that, for consumer products, the relationships between price and perceived quality and between brand name and perceived quality are positive and statistically significant. However, the positive effect of store name on perceived quality is small and not statistically significant. Further, the type of experimental design and the strength of the price manipulation are shown to significantly influence the observed effect of price on perceived quality.

Marketing Universals: Consumers’ Use of Brand Name, Price, Physical Appearance, and Retailer Reputation as Signals of Product Quality

Article

Apr 1994
J MARKETING

Marketing universals are defined as consumer behaviors within a segment and toward a particular product category that are invariant across cultures. Using several definitions of culture and three different criteria for universality, the authors evaluate whether the use of brand, price, retailer reputation, and physical product appearance as signals of quality are marketing universals for consumer electronics products. Using a sample representing 38 nationalities, they find that there are few differences in the use of quality signals across cultures for a high priority segment of consumers. They draw conclusions for the adaptation versus standardization debate and argue that certain behaviors are likely to be universal, whereas others are not. Understanding such differences is essential to designing international marketing strategies.

Does Culture Matter? A Cross-Cultural Study of Executives’ Choice, Decisiveness, and Risk Adjustment in International Marketing

Article

Oct 1988
J MARKETING

The authors investigate whether a manager's home culture significantly influences his or her international marketing decisions. They also examine whether the impact of home culture diminishes in an open economy with intense exposure to international markets, giving way to a process of “globalization.” Decision making in four simulated international marketing situations was studied with executives from the People's Republic of China, Hong Kong, and Canada. The findings confirm that home culture has predictable, significant effects on the decision making of the executives from the People's Republic of China and Canada. Chinese executives from Hong Kong were influenced by a combination of Western and Chinese cultural norms.

An Exploratory Assessment of Situational Effects in Buyer Behavior

Article

May 1974

Russell Belk

Circumstances, contexts, or situations are often cited but rarely examined as explanations for unpredicted behaviors. This article reports an exploration of the amounts and patterns of variance in selected purchase decisions as a function of consumption and purchase contexts. Results for the two product categories studied reveal sizable situational effects.

In Brands We Trust? A Multicategory, Multicountry Investigation of Sensitivity of Consumers’ Trust in Brands to Marketing-Mix Activities

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