Brand names can improve product quality because firms will want to avoid the financial loss that would follow a fall in reputation.Firms will thus work harder to maintain high quality.

Question

Quizplus · Accepted Answer

Brand names are associated with high quality and a positive reputation. Firms understand that a drop in quality could lead to a loss in brand value, revenue, and customer loyalty. To avoid this, firms work harder to maintain the quality of their products to protect their reputation and brand value. Therefore, brand names can improve product quality.

Brand Names Can Improve Product Quality Because Firms Will Want