Individual effects of product quality signals in the presence versus absence of other signals: differential effects across brick‐and‐mortar and online settings

Purpose – The purpose of this paper is to study the effectiveness of multiple signals. Specifically, the paper investigates how the individual strength of a marketplace signal varies as a function of whether consumers are exposed to that signal alone or in combination with another signal. Design/methodology/approach – The research uses experimental designs to empirically address the research questions. Hypotheses are formulated primarily based on signaling theory and these hypotheses are tested with laboratory experiments using real consumers. Findings – The key finding is that a signal's stand‐alone credibility largely determines whether its individual strength would be diluted or augmented by the coexistence of another signal. Further, when signals with different stand‐alone strengths coexist, the individual strength of the weaker signal is higher than when that signal is present alone. These effects are observed in brick‐and‐mortar and online shopping media. Originality/value – Past research reports mixed findings about whether the individual strength of a signal is diluted (dilution effect) or augmented (augmentation effect) by the presence of another signal. This research attempts to resolve this issue, for the first time, by demonstrating that whether dilution effect or augmentation effect occurs depends on the stand‐alone credibility of the individual signals in a mix.