De-targeting to signal quality


It is important for firms to signal the high quality of their products to consumers in experience goods markets. Conventional wisdom suggests that a high price can be a signal of high quality. However, we argue that the role of price in signaling quality could be weakened when firms resort to the intensive use of targeting in advertising, which could attenuate the informational content of a high price. As a consequence, a high quality firm needs to distort its price more to signal its quality. However, when different levels of targeting are available, a high quality firm may find it optimal to signal its quality with a lower level of targeting.

Divisions: College of Business and Social Sciences > Aston Business School > Economics, Finance & Entrepreneurship
Additional Information: © 2020, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International
Publication ISSN: 0167-8116
Last Modified: 29 Nov 2023 12:41
Date Deposited: 16 Jan 2020 12:00
Full Text Link: 10.1016/j.ijresmar.2019.10.003
Related URLs: https://www.sci ... 167811619300692 (Publisher URL)
http://www.scop ... tnerID=8YFLogxK (Scopus URL)
PURE Output Type: Article
Published Date: 2020-06
Published Online Date: 2020-01-16
Accepted Date: 2019-10-23
Authors: Liu, Xingyi

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