Understanding Money-Back Guarantees: Cognitive, Affective, and Behavioral Outcomes

[Display omitted] ► Money-back guarantees (MBGs) have cognitive, affective, and behavioral outcomes. ► Emotions are an important mediator of the MBG effects on consumer behavior. ► MBGs positively affect the evaluation of experience and search goods. ► MBG return conditions are most critical when designing MBGs. Although money-back guarantees (MBGs) have a long tradition in marketing and retailing practice, a deeper understanding of how consumers value this instrument is still lacking. The results of two experimental studies show that in addition to cognitive effects, MBGs evoke a positive emotional response, thereby increasing consumers’ purchase intentions and willingness to pay a price premium. Moreover, MBGs positively affect consumers’ responses for search and experience goods, although for experience goods, MBGs should be designed with stricter return conditions as compared to MBGs for search goods. The results should help retail managers understand the consumer impact of MBGs, as well as assist them in pricing guaranteed items and designing effective MBGs according to the type of product.