Influence of competition among products on perceived quality of an experience product: the collective brand perspective

Purpose This study aims to analyse the perceived quality of an experienced product, as a function of competition between products within a collective brand and with all competing products in the market. Design/methodology/approach The analysis was conducted within the Spanish wine industry, characterized by the presence of numerous public collective brands (i.e. Protected Designation of Origin) and diverse branding strategies, where products are marketed both individually and under the umbrella of a collective brand. This study employs multilevel models to examine the perceived quality of wines produced by wineries, incorporating both fixed and random effects in the estimation process. Findings The findings reveal an inverted U-shaped relationship between competition and quality, indicating that perceived product quality is higher when products compete across the entire market rather than solely within their respective collective brands. These results underscore the significance of competition in enhancing product quality in industries where quality designations or collective brands are not the sole indicators of product quality. Originality/value The primary contribution of this study lies in its analysis of how competition among products affects quality within the context of collective brands in an experience goods industry. In this setting, consumers rely on the reputation of the collective brand—an extrinsic quality indicator certified by an external institution. While previous research has explored linear and nonlinear relationships between market structure and quality at the company level, this study specifically examines these dynamics in the context of competition among products produced by members of collective brands.