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How do consumers use signals to assess quality?

  • Gergaud, Olivier
  • Livat, Florine

This article analyzes the way some 6,000 European wine consumers, both connoisseurs and non-connoisseurs, use a set of available signals (price, umbrella branding, goodwill, past consumption) to assess the quality of Bordeaux wines where price is the main source of information on quality. Connoisseurs use this signal less intensively than on connoisseurs. Price represents a substitute for umbrella branding where consumers are not aware of who is beneath this umbrella, and where this signal is thus of no help to them. This could explain why such wines tend nowadays to lose market share in favor of branded wines that are easier to evaluate.

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File URL: http://purl.umn.edu/37296
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Paper provided by American Association of Wine Economists in its series Working Papers with number 37296.

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Date of creation: Apr 2007
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Handle: RePEc:ags:aawewp:37296
Contact details of provider: Web page: http://www.wine-economics.org

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  14. Olivier Gergaud & Florine Livat, 2004. "Team versus individual reputations : a model of interaction and some empirical evidence," Cahiers de la Maison des Sciences Economiques bla04015, Université Panthéon-Sorbonne (Paris 1).
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  18. Thomas, Louis & Shane, Scott & Weigelt, Keith, 1998. "An empirical examination of advertising as a signal of product quality," Journal of Economic Behavior & Organization, Elsevier, vol. 37(4), pages 415-430, December.
  19. Bettman, James R & Park, C Whan, 1980. " Effects of Prior Knowledge and Experience and Phase of the Choice Process on Consumer Decision Processes: A Protocol Analysis," Journal of Consumer Research, University of Chicago Press, vol. 7(3), pages 234-48, December.
  20. Erevelles, Sunil & Roy, Abhik & Yip, Leslie S. C., 2001. "The universality of the signal theory for products and services," Journal of Business Research, Elsevier, vol. 52(2), pages 175-187, May.
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