Crossed signals: The negative effects of manufacturer warranty length on brand share in an independent retail channel

Robert J. Fisher, Yu Ma and Barry Scholnick
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Robert J. Fisher: Alberta School of Business Research Chair in Marketing, University of Alberta, Canada
Yu Ma: Associate Professor of Marketing and Bensadoun Faculty Scholar, McGill University, Canada
Barry Scholnick: Professor, Alberta School of Business, University of Alberta, Canada

Applied Marketing Analytics: The Peer-Reviewed Journal, 2024, vol. 10, issue 2, 176-186

Abstract: Manufacturers' attempts to signal quality via longer warranties can have unintended effects on independent retailers' behaviour in categories where extended service contracts (ESCs) are offered. The results of this research indicate that independent retailers are likely to promote brands with shorter rather than longer manufacturer warranties to maximise the likelihood of selling an ESC as an option. This research provides an explanation as to why manufacturers find it difficult to use warranty length as a signal of product quality. This research is based on a field study of brand shares of household appliances and consumer electronics by a major retailer over a ten-year period. The results have important implications for manufacturer and retailer marketing strategies.

Keywords: warranty length; quality signalling; retailer incentives; extended service contracts; extended warranties (search for similar items in EconPapers)
JEL-codes: M3 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:aza:ama000:y:2024:v:10:i:2:p:176-186

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