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Research paper

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
Applied Marketing Analytics: The Peer-Reviewed Journal, 10 (2), 176-186 (2024)
https://doi.org/10.69554/VNTN7431

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

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Author's Biography

Robert J. Fisher currently holds the position of Chair in Marketing at the Alberta School of Business at the University of Alberta. Prior to joining the University of Alberta School of Business, Fisher was on the faculty at the Richard Ivey Business School at the University of Western Ontario from 1998–2007 and the University of Southern California from 1991–1998. He earned a bachelor of commerce from the University of Saskatchewan, an MBA from York University and a PhD from the University of Colorado. Fisher's research emphasises the effects of social expectations on managerial and consumer decision making.

Yu Ma is Associate Professor of Marketing at McGill University. He obtained his PhD in management from Olin School of Business, Washington University in St. Louis. Before joining McGill, he was Associate Professor at the University of Alberta. His research interests include food marketing, retailing and big data analytics. Using consumer purchase data and advanced econometric and statistical models, he studies how consumers react to various marketing incentives. He also examines broader marketing issues such as the influence of the macro environment on the retail sector and the impact of food marketing on population health.

Barry Scholnick is a professor of business economics and the Eldon Foote Chair in International Business at the Alberta School of Business, University of Alberta, Canada. His PhD is from the University of Cambridge. The focus of his research is on household finance. He is a visiting scholar at the Federal Reserve Bank of Philadelphia and an external academic consultant at the Bank of Canada.

Citation

Fisher, Robert J., Ma, Yu and Scholnick, Barry (2024, September 1). Crossed signals: The negative effects of manufacturer warranty length on brand share in an independent retail channel. In the Applied Marketing Analytics: The Peer-Reviewed Journal, Volume 10, Issue 2. https://doi.org/10.69554/VNTN7431.

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cover image, Applied Marketing Analytics: The Peer-Reviewed Journal
Applied Marketing Analytics: The Peer-Reviewed Journal
Volume 10 / Issue 2
© Henry Stewart
Publications LLP

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