The impact of standards competition on consumers: effectiveness of product information and advertising formats

Abstract

Compared with other markets, those with competing technological standards exhibit certain fundamental characteristics that make a consumer's decision to adopt a new product more risky and more complex. This article examines how standards competition affects consumer behavior, an issue that has been relatively neglected by previous research in this area. The results show that consumers depend on different types of information in their adoption decisions and respond differently to advertising. Specifically, the authors find that standards competition motivates consumers to pay more attention to information that is comparative in nature. Thus, information about the relative (absolute) performance of a product has a stronger (weaker) impact on a product's share in markets with standards competition (Study 1). Standards competition also moderates the effectiveness of different advertising formats: It strengthens the effect of comparative advertisements but weakens the effect of noncomparative advertisements (Study 2). As a result, two commonly observed drawbacks of comparative advertisements—negative attitude toward the ad and source confusion—disappear in the presence of standards competition (Study 2), and comparative advertisements even induce greater confidence in the advertised brand (Study 3). Finally, in the presence of standards competition, the superiority of comparative advertisements is stronger when the advertised brand has a disadvantage in terms of brand familiarity than when it has an advantage (Study 3). This research takes a step toward a better understanding of these important but underexplored issues and provides managerial insights for firms that launch new products in markets with competing standards