header

Understanding the Relationship between Ad Expenditures and Perceived Quality

36 Pages Posted: 6 Apr 2022 Publication Status: Under Review

See all articles by Koushyar Rajavi

Koushyar Rajavi

Scheller College of Business, Georgia Tech

Donald R. Lehmann

Columbia University - Columbia Business School, Marketing

Kevin Lane Keller

Dartmouth College - Tuck School of Business

Alireza Golmohammadi

affiliation not provided to SSRN

Abstract

While some studies have found the effect of ad expenditures on perceived quality to be positive and significant, others have shown that, under certain circumstances, ad expenditures do not impact perceived quality. Several factors have been studied as moderators of this relationship, but past research provides limited insight into why ad expenditures have a stronger impact on perceived quality in certain contexts. We contribute to the advertising to quality perceptions literature by drawing on the accessibility-diagnosticity model from consumer psychology to examine a variety of moderating factors. We examine brand-, category-, and country-level moderators of the expenditures-quality effect. Utilizing a monthly dataset of 898 brands in 48 categories across more than four years, this study provides a comprehensive picture regarding the relationship between ad expenditures and perceived quality. Theoretical and managerial implications of the findings are discussed.

Keywords: advertising, Perceived Quality, Accessibility-Diagnosticity, Panel data, Signaling, Econometric Models

Suggested Citation

Rajavi, Koushyar and Lehmann, Donald R. and Keller, Kevin Lane and Golmohammadi, Alireza, Understanding the Relationship between Ad Expenditures and Perceived Quality. Available at SSRN: https://ssrn.com/abstract=4076899 or http://dx.doi.org/10.2139/ssrn.4076899

Koushyar Rajavi (Contact Author)

Scheller College of Business, Georgia Tech ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

Donald R. Lehmann

Columbia University - Columbia Business School, Marketing ( email )

New York, NY 10027
United States

Kevin Lane Keller

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

Alireza Golmohammadi

affiliation not provided to SSRN ( email )

No Address Available

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
128
Downloads
20
PlumX Metrics