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How retailer money-back guarantees influence consumer preferences for retailer versus national brands

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  • Desmet, Pierre

Abstract

Retailers often use money-back guarantees to reduce consumer perceived risk about brand quality and to increase their market share. The effect of such guarantees on perceived product quality and ultimately preference and product choice depends on their perceived value and credibility, related to other extrinsic clues, such as price and brand. An analysis of an experimental design with a national sample of consumers shows that compared with a simple money-back guarantee, a double money-back guarantee does not further increase the relative preference for a retailer brand over a national brand. Furthermore, the size of the effect of a money-back guarantee is small, moderated by the effects of other information on product quality, such as the size of the price differential between retailer and national brands. Finally, the effect of a money-back guarantee differs, depending on the customer–retailer relationship: A retailer with high credibility can influence regular customers less by guarantees.

Suggested Citation

  • Desmet, Pierre, 2014. "How retailer money-back guarantees influence consumer preferences for retailer versus national brands," Journal of Business Research, Elsevier, vol. 67(9), pages 1971-1978.
    • Handle: RePEc:eee:jbrese:v:67:y:2014:i:9:p:1971-1978
    DOI: 10.1016/j.jbusres.2013.11.001
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    Cited by:

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    2. Yang, Hui & Chen, Jing & Chen, Xu & Chen, Bintong, 2017. "The impact of customer returns in a supply chain with a common retailer," European Journal of Operational Research, Elsevier, vol. 256(1), pages 139-150.
    3. Wang, Fa & Chen, Jing & Yang, Hui & Yu, Bo, 2022. "Supplier selection with information disclosure in the presence of uninformed consumers," International Journal of Production Economics, Elsevier, vol. 243(C).
    4. Huang, Zongsheng & Feng, Ting, 2020. "Money-back guarantee and pricing decision with retailer's store brand," Journal of Retailing and Consumer Services, Elsevier, vol. 52(C).
    5. Huang, Zongsheng & Huang, Lingchen & Zhao, Yingxue & Meng, Xiaoge, 2021. "Money-back guarantee in the presence of strategic customer behavior," International Journal of Production Economics, Elsevier, vol. 239(C).
    6. Wenyan Zhou & Oliver Hinz, 2016. "Determining profit-optimizing return policies – a two-step approach on data from taobao.com," Electronic Markets, Springer;IIM University of St. Gallen, vol. 26(2), pages 103-114, May.
    7. Li, Wei & Chen, Jing & Chen, Bintong, 2018. "Supply chain coordination with customer returns and retailer's store brand product," International Journal of Production Economics, Elsevier, vol. 203(C), pages 69-82.

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