Warranty strategy: a solution to hybrid product woes?

Using an experimental design setting, this study investigates how global firms can make use of warranty strategies to influence consumers’ evaluations of hybrid products that are designed in one country and manufactured in another. The results confirm that consumers tend to perceive lower quality and higher purchase risk when evaluating products manufactured in a country perceived to be of lesser capability than its country of design (i.e., negative hybrid effects). However, global firms with products that carry such negative hybrid effects can develop appropriate warranty strategy to overcome such biases. For instance, the results show that consumers improve their assessment of the quality and purchase risk of the negative hybrid products when these products carry warranty with wider coverage and longer duration than the standard package, and when the firm providing the warranty has good warrantor reputation. Implications of these findings for international marketing and research are also discussed.