Is Honesty the Best Policy? Examining the Role of Price and Production Transparency in Fashion Marketing

Transparency is one of the most prominent demands of consumers today. Numerous fashion brands are responding to this demand for transparency by sharing information on the cost-breakdown of products and manufacturing processes. Research shows that transparency can become a vital tool for product, process, and business model innovation. Nonetheless, little is known about the role of transparency and how it affects consumers’ perceptions of a brand in a fashion context. By applying the signaling theory, the purpose of this study is to investigate how consumers react to fashion brands that provide price or production transparency. The study further examines whether the extent of information disclosure and perceived fairness of the information also play a role. An experiment of nine scenarios using a fictitious fashion brand was developed, and data were collected from 349 American consumers through Amazon Mechanical Turk (MTurk). The findings suggest that both price transparency and production transparency positively affect the overall brand equity and consumers’ purchase intentions as long as the information is perceived to be fair regardless of the extent. This study extends our current understanding of the role of transparency as an extrinsic signal and also suggests that brand transparency may be another key dimension of brand equity.