Profits and halos: The role of firm profitability information in consumer inference

Three experiments investigated the consequences of the presence of information that a manufacturing firm is profitable on consumers' judgments of the firm and the consequences for perceptions of advertising, products, and choice intention. When profitability is present in the advertising context, consumers form more favorable advertiser judgments, which drive perceptions of greater advertisement credibility, which lead to more favorable product inferences, and ultimately stronger purchase intentions. The third experiment additionally shows that profitability information interacts with a warranty to drive judgments and choice. The implication of our findings is that firms should consider highlighting their profitability to enhance advertising effectiveness.