Services under new management : the myth of a fresh start

Purpose: The purpose of this study is to examine the consumer-side effects of “under new management” (UNM) signs. The authors integrate cue-utilization theory and relevance theory to guide hypotheses about the conditions under which these signs are and are not beneficial. Design/methodology/approach: Two consumer-based experiments were used to examine the quality and reputation effects of restaurants signaling a management change on potential and existing customers. Findings: The results suggest that positive and negative effects are possible. The direction of these effects is contingent upon consumers’ prior experience, type of service (i.e. search/experience) and the relevance of the signal. Research limitations/implications: The study is limited to one industry (i.e. restaurants) and examines the effects of market signals on perceived quality and reputation. In addition, this research brought forth the notion of “signal relevance” and suggested that it may be explicitly tied to attributions. However, this assertion must examine multiple signals (relevant/irrelevant) and their contingent effects on consumer perceptions. Practical implications: The findings advise businesses to use caution when using signals such as an “UNM” sign, as they appear to have different effects depending on the experience of the consumer with the service and the relevance of the signal. Originality/value: This research contributes to the literature on cue utilization theory to understand the effects of marketplace cues on consumer perceptions. It contributes to marketing theory and practice by proposing a model of cue effects based on prior customer experience, type of service and cue relevance.