Reputation and Advertising of Collective Brand Members in the Wine Industry: The Moderating Role of Market Share

• Main Authors: Mas-Ruiz, F. (Author), Sancho-Esper, F. (Author), Sellers-Rubio, R. (Author)
• Format: Article
• Language: English
• Published: Cambridge University Press 2021
• Subjects: advertising; collective brand; company reputation; wine
• Online Access: View Fulltext in Publisher

 This paper analyzes the nonlinear relationship between the advertising investment and reputation of collective brand members in an experience goods industry, as well as the moderating role of their market share within the collective brand. The central assumption is that the quality reputation of collective brand members has a positive effect on their advertising investment until a reputation threshold is reached, after which the effect on advertising investment becomes negative. This change in the slope is explained by the information sets (firm reputation and collective reputation) used by consumers to reduce uncertainty, which leads to a weaker motivation for the firm to invest in advertising. In addition, scale economies of advertising mean that the market share of collective brand members negatively moderates the curvilinear relationship between quality reputation and advertising investment. The results for a sample of 176 companies in a Spanish experience goods industry (i.e., winemaking) between 2004 and 2014 show an inverted U-shaped relationship between the advertising investment and reputation of collective brand members. The results also show that market share negatively moderates this curvilinear relationship. © 2021 The Author(s). Published by Cambridge University Press on behalf of American Association of Wine Economists.