How Advertising Expenditures Affect Consumers’ Perceptions of Quality

Abstract

Although some studies have found the effect of advertising expenditures on perceived quality to be positive and significant, others have shown that, under certain circumstances, advertising expenditures do not impact perceived quality. This paper contributes to the literature on advertising-to-quality perceptions by drawing on the accessibility-diagnosticity model from consumer psychology to 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 advertising expenditures and perceived quality.