How Does Objective Quality Affect Perceived Quality? Short-Term Effects, Long-Term Effects, and Asymmetries

Authors:
Debanjan Mitra;Peter N. Golder
Affiliations:
Warrington College of Business, University of Florida, P.O. Box 117155, Gainesville, Florida 32611;Stern School of Business, New York University, 40 West 4th Street, New York, New York 10012
Venue:
Marketing Science
Year:
2006

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Abstract

We examine the relationship between objective and perceived quality for 241 products in 46 product categories over a period of 12 years. On average, we find that the effect of a change in objective quality is not fully reflected in customer perceptions of quality until after about six years. In the first year after a quality change, only about 20% of the total effect over time is realized. These effects are significantly larger and quicker for a decrease in quality relative to an equivalent increase. Interestingly, we also find that brand reputation has a “double” advantage. High-reputation brands are rewarded three years quicker for an increase in quality and punished one year slower for a decrease in quality compared to low-reputation brands. These differences in response time are a meaningful measure of brand equity. Finally, we examine the differences in quality effects across several product- and category-specific variables and discuss the implications of our findings.