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GRAHAME
R. DOWLING
is Senior
Lecturer in the Department of
Commerce, The University of
Newcastle, New South Wales,
2308, Australia. Thanks are expressed to John Rossiterand the
reviewers for comments on an
earlier draft.
Dowling
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AdvertisingExplicit Warranties
143
that the consumerwas not receivinga fair deal. The riskof economicloss was
being shifted to consumersin a varietyof ways. For example,productswere
designedto have an artificiallyshort economic life, there was frequentproduct failure,partsand servicewere unavailable,productswere not repairedproperly or quickly,and so forth.These issues were of sufficientconcern to consumers to constitutea politicalissue. They also stimulateda new interestin
a varietyof variousformsof warrantylegislatione.g. the Magnuson-MossWarranty, FederalTradeCommissionImprovementAct, 1975.
While there seems to have been widespreaduse of explicitwarranties[see
for example,Udell and Anderson1968]therehas been relativelylittleresearch
which examines how consumers react to and use them in their purchase
decision-makingprocess. Without this research it is difficult for marketers
and public policy makersto gauge the impact of explicit warrantieson consumer choice.
This researchlimits its scope to an examinationof the effects of advertising
warrantieson potentialconsumers'affectivepredispositiontowardsnew products. Notificationthat a productis sold with a warrantyattemptsto change
consumers'attitudestowardthe product.Specifically,this studytests whether
the advertisingof an explicit warrantyby a vendor (a) serves to reduce the
perceived risk inherent in the purchaseof a new product,and/or (b) affects
potential customers' intentions to buy such a product.'
Warranties as a Device
to Reduce Perceived
Risk
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144
Dowling
with respect to the consumer in seeking to reduce any risk associated with
the purchase and use of the product.
Often advertisingis the first point of contact between a manufacturerand
a potentialconsumer.If a warrantyis a determinantattributeaffectingchoice
among similarproductsthen the use of express productwarrantiesin advertisementsshould have a positive effect on purchaseintentionsand a negative
effect on riskperception.The researchdiscussedbelow was conductedto test
these hypotheses.
Research Design
An experimentwas performedin which a conveniencesampleof 236 Newcastle (Australia)residentswas asked to evaluate three new products shown in
separateprint advertisements-a flat screen television set, a domestic electrostaticair cleaner,and a new form of clothes cleaner.The flat screen television set was a productunavailablein Australiaat the time of the study, the
air cleaner representeda domestic adaptionof an industrialproduct, while
the clothes cleaner was a technologicallyfeasible new product.
All productswere priced at $389 and were not identifiedby brand name.
Brandname identificationwas withheldfromrespondentsbecauseShimpand
Bearden [1979]found that warrantorreputationhad a significanteffect on
consumers'confidence when buying a new product.Also, no mention was
made aboutthe type or size of the retailerwho would sell the product.Wilkes
and Wilcox [1976]have found that consumersexpect warrantysupportfrom
retailersas well as manufacturers.Withholdinginformationabout the identity of the vendor attemptedto ensure that respondentsdid not confound the
manufacturer'swarrantywith any retailersupportedgeneralproductreturns
policies. Debriefinga subset of respondents (n= 25) at the end of the study
indicatedthat duringthe course of the study they were not concernedabout
the role of retailers.
The productswere selected so that their intrinsiccues had low confidence
and low predictivevalues for potentialconsumers-all were technologically
complex [Shimpand Bearden1979].By settinga high price for the products2
and minimizingthe value of intrinsicand selected extrinsiccues (no retailer
identification,no comparisonwith competitiveproducts,no brandnames) a
deliberateattemptwas made to ensure that the productswere perceived as
inherently risky. Two focus group interviews conducted prior to the main
study supportedthis view. Accordingly,the nature of the product and the
presence of a warrantyshould be the main factors used by respondentsto
evaluate the perceived risk of the stimulus objects.
The researchdesignused was a 3 x 3 between-subjectsmultivariateanalysis
of covariance.The dependent variableswere perceived risk and likelihood
of purchase. The independent variables consisted of three products, three
levels of warranty promotion (none, low, high), and the covariates product
interest, specific self-confidence, and importance of warranty.
Perceived risk was measured using the index suggested by Peter and Tarpey
[1975], viz:
where
(1)
OPR, = nE i=1
PLijx ILij
OPRj = overall perceived risk for product j.
PL, = probability of loss i from the purchase of product j.
ILij = the importance of loss i from the purchase of product j.
n = the number of types of loss.
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145
Table 1.
Product
Specific
Self-Confidence
Perceived Risk
Flat ScreenTV
Alpha
MeanInter-item
Correlation
.87
.90
.52
Air Cleaner
Alpha
MeanInter-item
Correlation
.86
.88
.52
ClothesCleaner
Alpha
MeanInter-item
Correlation
.87
.78
.53
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146
Dowling
Table 2.
Explicit Warranties
Warranty Condition
Product
Results
Low
High
FlatScreenTV
12 monthwarranty
againstfaulty
manufacture
1 yearwarrantyon
electrical
components,
plus
3 yearwarrantyon
picturedisplay
Air Cleaner
12 monthwarranty
againstfaulty
manufacture
1 yearwarrantyon
electricalcomponents,
plus
2 yearwarrantyon
powersupply
components
ClothesCleaner
12 monthwarranty
againstfaulty
manufacture
1 yearwarrantyon
faultyworkmanship
and materials,
plus
5 yearwarrantyon
radiationseals
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147
DF
Prob.
Covariates
Alla
Satisfaction
Coverage
OverallGrandMean
Alla
Satisfaction
Coverage
Warranty
Alla
Satisfaction
Coverage
Error
Satisfaction
Coverage
Source
1.02b
6,86
0.42
0.26
0.71
3,44
3,44
0.86
0.55
7.13c
2,43
0.00
10.06
1.09
1,44
1,44
0.00
0.30
7.25c
2,43
0.00
14.48
6.30
1,44
1,44
0.00
0.02
DF
Prob.
2.17b
6,94
0.05
0.57
0.90
3,48
3,48
0.64
0.45
10.99c
2,47
0.00
21.28
7.04
1,48
1,48
0.00
0.01
8.43c
2,47
0.00
1,48
1,48
0.00
0.00
DF
Prob.
1.52b
8.63
10.16
6,102
3,52
3,52
0.18
0.10
0.09
10.07c
14.92
13.93
2,51
1,52
1,52
0.00
0.00
0.00
12.25c
2,51
0.00
1,52
1,52
0.00
0.00
Covariates
Alla
Satisfaction
Coverage
OverallGrandMean
Alla
Satisfaction
Coverage
Warranty
Alla
Satisfaction
Coverage
Error
Satisfaction
Coverage
Source
Covariates
Alla
Satisfaction
Coverage
OverallGrandMean
All
Satisfaction
Coverage
Warranty
Alla
Satisfaction
Coverage
Error
Satisfaction
Coverage
15.53
14.25
mean square= 3.42
mean square = 4.02
Clothes Cleaner
F
20.92
13.64
bF
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148
Dowling
Table 3 presents the results of this analysis. After adjustingfor the three
covariatesthe effects of the warrantyconditionsfor both the multivariateand
univariate analyses were significant. Also, for all products the warranty
manipulationsworked as intended with the high warrantycondition being
perceived as more satisfactory(means:6.2 TV; 6.7 Air Cleaner;6.0 Clothes
CleanerV's 4.0; 4.7; 3.4) and providinga more adequate coverage (5.2 TV;
6.1 Air Cleaner;5.8 ClothesCleanerV's 3.7; 4.0; 3.6). Because the covariates
were not significantand only one treatmentfactor was involved no further
analysis is required to establish that the warranty conditions worked as
expected.
To check thatthe threeproductsused in this study were perceiveddifferently, a separateconvenience sample of ten judges evaluated each product on
six 7-pointLikertscales. Eachscale measuredone of the following attributes:
relativeadvantage,ease of use, complexity,compatibilitywith lifestyle and
otherproducts,abilityto affordthe product,and trialability.These attributes
were derivedfrom Rogers[1962].Table4 providesoperationaldefinitionsof
these attributesand a profileof the averageratingof the judges for each product. Interjudgereliabilities(agreement)are reportedin Table5. Becausejudges
ratedeach productattributeon a scalehavingseven responsecategories,agreement between judges was defined to occurwhenever responseswere within
one scale categoryof each other.Table4 shows that eleven of the twenty-one
interproductcomparisonsare significantlydifferent.For the purpose of this
study each product is considered to have a distinct identity.
Hypothesis Testing The main hypothesis of this study was tested using a MANCOVA.The factors consisted of the three productsand three warrantyconditionsdescribed
previouslyand two covariates,productinterestand specific self-confidence.
Table 6 presents the results of this analysis. Inspection of these results indicatesthatafteradjustingfor the effectsof the covariatesthe warrantyvariable
Table 4.
Attribute
Relative Advantage
Ease of Use
Complexity
Compatibility
Product Profile
Low
High
cc
TVAC
CC
TV AC
TV
AC
CC
Lifestyle
AC TV
CC
Other Products
Affordability
CC TV
AC
Trialability
CC
TV
AC
TV
ACCC
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Table 5.
149
Interjudge Reliabilities
T.V.
Air Cleaner
Clothes Cleaner
Relative Advantage
.73
.80
.82
Ease of Use
Complexity
.87
.47
1.00
1.00
.91
.73
Compatibility
Lifestyle
Other Products
Affordability
Trialability
Average
.49
.73
.82
.87
.74
.67
.89
.62
.84
.83
.87
.87
.93
.98
.87
was ineffective in reducingrisk perceptionor increasingrespondents'intentions to buy the product.These results are contraryto expectations.
Table 6 shows that the covariates and the type of product affected the
dependent variables.3 Respondents who were more interested and
knowledgeableabouta particularnew productstatedthatthey wouldbe more
likely to want to buy one. Also, risk perceptionwas marginallyassociated
with the type of productbeing evaluated.Bothof these findingsseem to have
face validity.
Table 6.
Source
DF
Prob.
Covariates
Alla
Perceived Risk
BehavioralIntention
8.34b
4,448
0.00
0.82
17.25
2,225
2,225
0.44
0.00
84.64c
2,224
0.00
130.32
15.50
1,225
1,225
0.00
0.00
OverallGrandMean
Alla
Perceived Risk
BehavioralIntention
Product
Alla
3.94C
4.448
0.00
Perceived Risk
BehavioralIntention
3.85
2.65
2,225
2,225
0.03
0.07
Alla
0.22b
4,448
0.93
Perceived Risk
BehavioralIntention
0.36
0.07
2,225
2,225
0.70
0.93
0.41b
0.36
0.44
8,448
4,225
4,225
0.91
0.84
0.78
Warranty
ProductX Warranty
Alla
Perceived Risk
BehavioralIntention
Error
Perceived Risk
BehavioralIntention
mean square=4000
mean square= 11.3
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150
Dowling
It is possible that the three products used in this study did not provoke
enoughoverallinterestin respondentsfor the warrantiesto affectriskperception or behavioralintention.This does not appearto be the case. The product
interestvariablehad a mean score of 5.0 (on a 9-pointscale) with a standard
deviation of 2.2 for the three products.
Althoughthe perceived risk measure showed an acceptablelevel of internal reliabilityit is possible that the manner in which each pair of PLi, ILi
variableswas combined may have affected the results. The summation approachin the measurementindex used to operationaliseperceivedrisk (equation 1) has neither been theoreticallyjustified by its users nor criticizedby
nonusers.Aggregationacrossvarioustypesof loss may resultin a compromise
value. In effect summationresults in less utilizationof the separatedimensions of the perceivedriskconstruct.To testwhetherthe summationprocedure
suppressedany relationshipbetween the warrantyeffects and the dependent
variables another MANCOVAwas computed. In this analysis a "disaggregated"measure of perceived risk (eachPli x ILij)and the behavioralintention measurewere used as the dependentvariables.The results, reported
in Table 7, again show no relationshipbetween the warrantyvariable and
respondents'affectivepredispositiontowardsthe products.Consequently,the
aggregationprocess adoptedin the Peter and Tarpey(1975)index of perceived risk is not responsible for the ineffectiveness of the warrantyfactor.
Discussion
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Table 7.
Source
151
DF
Prob.
3.37b
14,438
0.00
30.93c
7,219
0.00
Product
Alla
3.67c
14,438
0.00
Warranty
All"
0.66b
14,438
0.81
1.07b
28,791
0.37
Covariates
Alla
Productx Warranty
All"
Error
Types of Loss
Performance
Physical
Social
Convenience
Financial
Psychological
Behavioral intention
a "All"= both
dependent variables combined in a multivariatetest.
b F value based on Wilk's Likelihood Ratio
c F value based on Hotelling T2
Notes
References
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152
Dowling
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