Overcoming the challenge of low familiarity: Can a weakly familiar brand signal quality with exceptionally strong warranty?

Abstract

Weakly familiar brands are likely disadvantaged compared to well-known brands in influencing consumers' pre-purchase quality perceptions. In this research we find that an unfamiliar brand can successfully use an Exceptionally Strong Warranty (ESW) as a quality signal under some conditions. When used in an offer alone, ESW results in more favorable perceptions of quality than a weaker market-standard warranty provided consumers' self-assessed knowledge for the product concerned is high enough, and regardless of their objective product knowledge. However, ESW is not an effective quality signal for consumers with low levels of self-assessed product knowledge unless it is accompanied by a supporting trusted signal like Third-Party Organization Endorsement (TPOE). It appears that consumers with high self-assessed knowledge tend to accept an ESW from an unfamiliar brand heuristically whereas the signal needs assistance from a naturally trusted signal like TPOE to be effective for low knowledge consumers also.