GMAT Reading Comprehension
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Source: OG13th
Level: 3
According to economic signaling theory, consumers may perceive the frequency with which an unfamiliar brand is advertised as a cue that the brand is of high quality. The notion that highly advertised brands are associated with high-quality products does have some empirical support. Marquardt and McGann found that heavily advertised products did indeed rank high on certain measures of product quality. Because large advertising expenditures represent a significant investment on the part of a manufacturer, only companies that expect to recoup these costs in the long run, through consumers' repeat purchases of the product, can afford to spend such amounts.
However, two studies by Kirmani have found that although consumers initially perceive expensive advertising as a signal of high brand quality, at some level of spending the manufacturer's advertising effort may be perceived as unreasonably high, implying low manufacturer confidence in product quality. If consumers perceive excessive advertising effort as a sign of a manufacturer's desperation, the result may be less favorable brand perceptions. In addition, a third study by Kirmani, of print advertisements, found that the use of color affected consumer perception of brand quality. Because consumers recognize that color advertisements are more expensive than black and white, the point at which repetition of an advertisement is perceived as excessive comes sooner for a color advertisement than for a black-and-white advertisement.
Kirmani's research, as described in the passage, suggests which of the following regarding consumers' expectations about the quality of advertised products?
- A Those expectations are likely to be highest if a manufacturer runs both black-and-white and color advertisements for the same product.
- B Those expectations can be shaped by the presence of color in an advertisement as well as by the frequency with which an advertisement appears.
- C Those expectations are usually high for frequently advertised new brands but not for frequently advertised familiar brands.
- D Those expectations are likely to be higher for products whose black-and-white advertisements are often repeated than for those whose color advertisements are less often repeated.
- E Those expectations are less definitively shaped by the manufacturer's advertisements than by information that consumers gather from other sources.