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Do Negative Headlines Really Undermine the Credibility of a Quality Label? A Quasi-Natural Experiment

Author

Listed:
  • Andreas Hildenbrand

    (University of Giessen)

  • Rainer Kühl

    (University of Giessen)

  • Anne Piper

    (University of Giessen)

Abstract
In 2013, Stiftung Warentest tested hazelnut chocolate for their leading magazine, called Test. Stiftung Warentest is one of the most important consumer organizations in Germany. Ritter Sport is a high-quality producer of chocolate in Germany. Their hazelnut chocolate did not pass the test. It was given the grade of unsatisfactory. Stiftung Warentest accused Ritter Sport of labelling an artificial flavouring as a natural flavouring. Ritter Sport rejected the accusation. They went to court and won the trial. Stiftung Warentest had to withdraw the issue in question of Test magazine. This affair was all over the media in January of 2014. Using the Ritter Sport versus Stiftung Warentest case, we analyse whether negative headlines really undermine the credibility of a quality label by examining Stiftung Warentest and their quality label, also called Test. In addition, we examine what can be done to restore or, more generally, increase the credibility of a quality label. Based on a quasi-natural experiment, we find that the negative headlines on Stiftung Warentest have undermined the credibility of the Test label. We also find that the credibility of the Test label can be increased by providing reference values to the tests, strengthening the independence of Stiftung Warentest, and using laboratory methods in the tests. For the most part, the same holds true for any quality label.

Suggested Citation

  • Andreas Hildenbrand & Rainer Kühl & Anne Piper, 2015. "Do Negative Headlines Really Undermine the Credibility of a Quality Label? A Quasi-Natural Experiment," MAGKS Papers on Economics 201514, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    • Handle: RePEc:mar:magkse:201514
    as

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    File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/paper_2015/14-2015_hildenbrand.pdf
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    References listed on IDEAS

    as
    1. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-483, December.
    2. Nelson, Phillip, 1970. "Information and Consumer Behavior," Journal of Political Economy, University of Chicago Press, vol. 78(2), pages 311-329, March-Apr.
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    4. Nelson, Philip, 1974. "Advertising as Information," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 729-754, July/Aug..
    5. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    6. Andreas Hildenbrand & Rainer Kühl, 2014. "Ritter Sport und Stiftung Warentest: Informationsdefizite überwinden," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 94(3), pages 217-220, March.
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    Cited by:

    1. Dana Nayer & Mosi Rosenboim & Miki Malul, 2022. "The damages of negative information: illustration from two markets," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 49(3), pages 283-295, September.

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    More about this item

    Keywords

    Information; product quality; quality label; source credibility;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • M3 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising

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