Customers’ perceptions of product quality—as opposed to objective quality—drive preferences and consequently satisfaction, loyalty, sales, and profitability, but customers’ perceptions of quality are imperfect and slow to take into account changes in objective quality. What, then, is the relationship between quality and customer perceptions of quality over time? How do improvements or declines in quality affect customers’ perceptions of quality? And how does brand reputation affect these questions? Those are just some of the questions that Debanjan Mitra and Peter Golder set out to answer with their longitudinal study of the relationship between objective and perceived quality for 241 products in 46 product categories over a period of 12 years.
They hypothesize that objective quality does have a positive effect on perceived quality contemporaneously, in the short term, and in the long term. They also hypothesize that a decrease in objective quality has a greater effect on customers’ perceptions than does an increase. Further, they suggest that increases in quality will have larger short-term effects for brands with good reputations than for brands with poor reputations and that decreases in quality will have larger short-term effects for brands with poor reputations than for brands with good reputations.
On average, they find that the effect of a change in objective quality is not fully reflected in customers’ perceptions of quality until after about six years. In the first year after a quality change, only about 20% of the total customer reaction over time is realized. These reactions are significantly larger and occur more quickly for a decrease in quality than for an equivalent increase. Interestingly, they also find that brand reputation has a double advantage. High-reputation brands are rewarded three years earlier than low-reputation brands for an increase in quality and punished one year slower for a decrease in quality. These differences in response time are a meaningful measure of brand equity.
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