The Relationship Between Retail Advertising and Published Quality Ratings in a State’S Lodging Sector

Abstract

For some time economic and marketing research has examined the relationships between the level of advertising expenditures and product quality. The primary result of all this research has been conflicting theoretical perspectives and empirical findings. For some products and circumstances it does appear that the higher the advertising expenditure level, the higher is the relative quality level of the product being advertised (Nelson 1970, 1974, Klein and Leffler 1981). In other cases, there appears to be a more “perverse” (Schmalensee 1978, Comaner and Wilson 1979) relationship where the highest expenditure levels belong to those manufacturers producing the lowest quality goods.