1. Study examines how sense of ownership may affect judgment of product

    March 9, 2013 by Ashley

    From the University of Chicago Press Journals press release via EurekAlert!:

    Encouraging consumers to feel ownership of products they haven’t yet purchased can backfire because consumers tend to see themselves in the products they own, according to a new study in the Journal of Consumer Research.

    Companies assume that consumers who are made to feel ownership of a product prior to purchase will prefer it over competing products, but this can actually have the opposite effect and lead consumers to judge the product less favorably,” write authors Liad Weiss and Gita V. Johar (both Columbia University).

    Companies encourage us to feel a sense of ownership of their products even before we buy them. For example, Nike allows consumers to customize sneakers online before buying them, while Apple promotes a feeling of iPad ownership through ads that give consumers a “driver’s seat” perspective of an iPad owner.

    Consumers, however, tend to project their personal traits onto the products they own. For instance, when a consumer who is not very creative owns (or feels she owns) an Apple computer, she may associate her own lack of creativity with the computer.

    The authors identified a flip side to this. In a series of studies, consumers perceived products they did not own as different from themselves because they projected their “anti-self” onto them. This was especially true when consumers were made aware of not owning a product (while shopping for it). When consumers who felt they were uncreative were made aware of not owning an Apple computer, they perceived the computer as more creative.

    “Products we are attracted to prior to ownership may become less appealing once we feel that they are ours. Companies seeking to induce consumers to feel ownership of products prior to purchase should verify that prospective customers have positive self-regard on relevant personality traits before they induce them to feel product ownership. By doing so, they can reduce the likelihood that this will backfire,” the authors conclude.


  2. Study looks at why consumers are more willing to take risks when they can compare products

    March 6, 2013 by Ashley

    From the University of Chicago Press Journals press release via EurekAlert!:

    ShoppingConsumers are more willing to take risks and accept delays in exchange for greater benefits when they are able to compare products, according to a new study in the Journal of Consumer Research.

    “Rationally speaking, consumer preferences should be the same whether their product choices are presented side-by-side and evaluated comparatively or presented one at a time and evaluated in isolation, but it makes a remarkable difference in consumer decision-making,” write authors Christopher K. Hsee (University of Chicago Booth School of Business), Jiao Zhang (University of Miami), Liangyan Wang, and Shirley Zhang (both Shanghai Jiaotong University).

    Consumers regularly face decisions such as whether to buy a current iPhone model today or wait six months for a newer and better model (a time preference dilemma), or whether to invest retirement money in a risk-free savings account or a risky mutual fund with higher expected returns (a risk preference dilemma).

    In one study, consumers had to choose between two internet service plans. One featured a higher speed but wouldn’t be available for three months; the other featured a lower speed but was available immediately. When both options were presented side-by-side, consumers were willing to pay significantly more for faster service with delayed installation. When they were presented with only one of the two options, there was a stark “preference reversal” and consumers were willing to pay significantly more for slower service with immediate installation.

    Consider a financial services company offering both safe (lower expected return) and risky (higher expected return) investments. All investment options should be presented side-by-side to allow comparison if the company wants to encourage investors to choose riskier products with higher expected returns, while options should be featured individually to encourage investors to choose safe products.

    “When consumers can compare products, they tend to prefer delayed or riskier options with greater potential benefits, but tend to value certain and immediate benefits when product comparison is not possible,” the authors conclude.


  3. Study looks at why more independent consumers are better at delaying gratification

    March 4, 2013 by Ashley

    From the University of Chicago Press Journals press release via EurekAlert!:

    shoppingProduct benefits that occur later in time are more likely to appeal to more independent consumers than to those who are more group or family oriented, according to a new study in the Journal of Consumer Research.

    “More independent consumers think of the future in abstract terms and perceive future events as happening in the more distant future, whereas consumers who are less independent think of the future in concrete terms and perceive future events as happening sooner,” write authors Gerri Spassova (Monash University) and Angela Y. Lee (Kellogg School of Management, Northwestern University).

    Perceptions of time are subjective and variable. One day can feel like an eternity, while at other times a day flashes by in an instant. Similarly, a future event can seem really far away, but at other times it’s just around the corner.

    Our perceptions of time are influenced by whether we view ourselves as independent or more group or family oriented. Consumers who view themselves as independent place high value on self-reliance and autonomy, and strive towards being unique, different, and separate from others. In contrast, those who view themselves as less independent see themselves as part of a social group, and strive toward blending and fitting in.

    In one study, consumers were shown advertisements for a Lean Cuisine product. More independent consumers found the ad more persuasive when it was targeted at an individual and its benefits were presented as taking place in the more distant future, while consumers who thought of themselves as less independent found the same ad more persuasive when it was targeted at a family and its benefits were presented as taking place sooner.

    “Advertising targeted at consumers who see themselves as more independent would be more effective when presented in more abstract terms, with product benefits occurring in the more distant future. But ads targeting consumers who see themselves as less independent would be more effective when framed in more concrete terms, with benefits occurring sooner,” the authors conclude.


  4. Study examines interaction between customer loyalty and price reductions

    February 28, 2013 by Ashley

    From the Ruhr-Universität Bochum press release via Physorg:

    shoppingA skilful negotiator can save a lot of money when shopping in his favourite store. This was found out by researchers at the Ruhr-Universität Bochum (RUB) in a large-scale study. An extra five percent discount is, on average, no problem – as long as you know how to use your customer loyalty as a trump.

    The credo turned on its head

    For loyal customers, the price is not so important – at least, that was the credo in marketing and sales up to now. The recently published study by the Bochum scientists Prof. Jan Wieseke, Sascha Alavi and Johannes Habel of the Faculty of Economics at the RUB has turned this perception fundamentally on its head: “Many customers consciously play out their loyalty in price negotiations, and thus gain an extra five percent discount without any problem” says Wieseke. When buying a car worth 30,000 Euros, a buyer thus saves up to 1,500 Euros without any great effort.

    An unbeatable argument

    For their study, the researchers in Bochum evaluated data from more than 6,000 customers and attended over 300 price negotiations in numerous sectors. Because: negotiations have long since not just applied to buying a car, but to almost every store and to almost every price category – whether in a furniture shop, DIY store or clothes shop. Since the long-term retention of their customers is extremely important for companies, loyal customers have an almost unbeatable argument. A regular customer who demands a reasonable price reduction often encounters little resistance from sellers. However, the following statement holds true, says Wieseke: “Many shops know their regular customers and are very quick to spot a lie.”

    Doubtful side effects

    For the companies, the excessive discounts for loyal customers do, incidentally, entail some dubious side effects. Thus, for example, the researchers in Bochum found out that, as a result of the higher discount, the customers become even more loyal to the shop – and are then able to achieve an even greater discount on their next purchase. “This shows that loyalty can, indeed, be bought”, says Wieseke, “but it creates a vicious circle in which customer loyalty and discounts rise ever higher and higher. This puts many shops in a strangle hold.” Anyone wanting to break out of this would have to train their sales staff specifically for negotiations with loyal but demanding customers.

    Taking the old image too much to heart

    From a scientific point of view, the study is highly explosive. Until now, researchers always assumed quite the opposite – that, because of their attachment to their favourite store, loyal customers were even willing to pay higher prices. Also many companies are often not sufficiently aware of the negotiating power of loyal customers: “Many retailers have taken the old image of the faithful, satisfied customer simply too much to heart. A sober look at the figures reveals the harsh reality here”, says Prof. Jan Wieseke.

    The RUB researchers presented the results of their study publicly for the first time last Saturday, 16 February 2013, at the Conference of the American Marketing Association in Las Vegas – one of the world’s most prestigious conferences for marketing researchers.

    The study received an award as best conference paper in the area of sales and customer relationship management. In addition, the study received an honorable mention award as one of the best conference papers overall.


  5. Study examines motivations for consumption of luxury goods

    February 20, 2013 by Ashley

    From the University of Delaware press release via ScienceDaily:

    ShoppingA young woman in Tokyo pays 243,000 Yen for a Louis Vuitton suitcase emblazoned with the company’s iconic monogram. A continent away, another woman purchases the same suitcase at the company’s store on New York’s 5th Avenue for the equivalent price in dollars, $3000. Why? What motivates their purchases? And, do those motivations hinge on their location?

    That is precisely what Professor Jaehee Jung and her collaborators at universities in 9 other countries sought to answer. Their findings published recently in the journal, Psychology & Marketing, compared consumers’ perceptions of luxury.

    Despite the glum worldwide economy, luxury goods are selling well. Jung, an associate professor of fashion and apparel studies, and the others found that consumers in different countries, like the two women described above, purchase luxury goods for different reasons. For luxury goods makers, it is critical to consider these motivations, Jung said.

    In the U.S. it’s about hedonism.

    “American consumers generally buy goods for self fulfillment, rather than to please others,” she said.

    Jung surveyed American college students. Many responded positively to statements such as “pleasure is all that matters.” Factors including the quality of luxury items were not a driving concern for the students. Jung said this preference isn’t surprising; it is cultural.

    In Western cultures where individualism is valued there is generally less pressure to fit in with groups, such as peers and co-workers, than in Eastern cultures where collectivism is valued,” she said.

    Hedonistic tendencies may be creeping into countries with developing economies. Brazilian and Indian students perceived luxury in the same way.

    Surveys of students in France indicated they value luxury items because they are expensive and exclusive. French consumers responded positively to statements including: “true luxury products cannot be mass produced” and “few people own a true luxury product.”

    “Many luxury goods originate in France,” Jung said. “Cultural heritage and pride might have made them feel luxury is not for everyone.”

    Meanwhile Germans focused on function, placing emphasis on quality standards over prestige, as did the Italians, Hungarians and Slovakians.

    Jung and her collaborators intend to keep exploring what drives luxury purchases, saying it has consequence for marketers, as demand increases and their target consumer base widens. A growing number of customers, college students included, now have a taste for luxury goods, but are not necessarily financially stable. Still, they buy.


  6. Study suggests one component of shopping may help alleviate some negative emotions

    February 19, 2013 by Ashley

    From the University of Michigan Ross School of Business press release via HealthCanal:

    choosing, contemplatingRetail therapy is often lamented as wasteful and irresponsible, but new research from the University of Michigan Ross School of Business indicates that it can help alleviate certain negative emotions.

    No prior research has experimentally examined whether retail therapy can bring emotional benefits. Research from marketing professors Scott Rick and Katherine Burson and doctoral candidate Beatriz Pereira suggests that one component of retail therapy—making buying decisions—can help to restore a sense of control and reduce sadness.

    In one study of 45 female undergraduates, 44 percent chose to buy a snack after viewing a movie clip that portrays a bullying incident. Participants rated their emotions at the beginning and end of the experiment. At the end of the study, the sadness scores of buyers were significantly lower than those of nonbuyers.

    “Previous critiques of sadness and shopping pointed to how terrible it was. No one stopped to see if people actually felt better or if buying a candy bar helped to cure negative emotions,” Burson said. Then, in a second study, 100 adults who participated online viewed a movie clip that portrayed the death of a boy’s mentor (previous research has shown that the clip reliably induces sadness).

    Then the participants were randomly assigned to either choosing or browsing conditions. Choosers were told to imagine buying $100 worth of products by placing them in a shopping cart. They were then presented with 12 products, each priced at $25, and asked to select four by dragging them into a shopping cart.

    Browsers were presented with the same 12 products and asked to judge which four would be the most useful when traveling, by clicking on four products and dragging them into a box labeled travel items. Because only some products were appropriate for travel, but all may be desirable when shopping, choosers had more of an opportunity to implement their preferences and experience a sense of control. As a result, at the end of the study, the sadness scores of choosers were significantly lower than those of browsers.

    “We think there are benefits to buying something new and showing it off. But when it comes to alleviating sadness, actively choosing between products is essential, even if those choices are hypothetical,” Rick said. “Shopping is a natural, easy vehicle for choice. There are other situations that afford opportunities to choose and restore personal control, but they may be less tempting and harder to find than the mall.” Burson said that if you’re on a budget and want to realize the benefits of retail therapy, there’s a way.

    “The people who simply imagine that they are buying have less sadness at the end of the experiment, suggesting that imaginary shopping may have some of the restorative benefits we see in real shopping, which might be the ultimate solution,” she said.

    The study also identified boundary conditions to the benefits of retail therapy. The researchers found that making buying choices did not help to reduce anger. Unlike sadness, anger is a high-control emotion, and making choices does not address the main source of anger. Pereira said the studies contribute to research on emotion and decision-making.

    Most work in this area has focused on how specific emotions influence decision-making and consumption. By contrast, the current paper joins a growing stream of research examining how decision-making influences the experience of specific emotions. An important limitation of the current research is the relatively mild nature of both the induced emotions and the shopping contexts utilized.

    “I think it is the tip of the iceberg. We are currently dealing with small transactions and fleeting emotions. I am interested in larger purchases and chronic conditions,” Rick said. “How far can the healing go?”


  7. Study suggests political leanings may affect choice between buying name-brand or generics

    February 18, 2013 by Ashley

    From the Association for Psychological Science press release via HealthCanal:

    groceriesConservatives and liberals don’t just differ when it comes to politics, they may also make different purchases at the grocery store, according to new research published in Psychological Science, a journal of the Association for Psychological Science.

    Psychological research has shown that conservatives and liberals differ on basic personality traits such as conscientiousness, tolerance for uncertainty, and openness to new experience. Researcher Vishal Singh of New York University Stern School of Business and colleagues hypothesized that the conservative tendency to prefer tradition and convention would be reflected in conservatives’ purchasing behavior, leading them to choose established name-brand products over generic brands or new products.

    The researchers analyzed weekly sales data from over 1,800 supermarkets in counties across the United States, spanning the years from 2001 to 2006. Using data on voting history and religiosity — factors that are independently correlated with conservative values — they were able to determine the level of conservatism in each county.

    After accounting for factors such as income and education, the researchers found that the market share for a wide variety of generic products was lower in more conservative counties than in more liberal counties. Similarly, uptake of newly launched products was systematically lower in more conservative counties. These data suggest that conservative ideology may be associated with reliance on established national brands.

    These tendencies are consistent with traits typically associated with conservatism, such as aversion to risk, skepticism about new experiences, and a general preference for tradition, convention, and the status quo,” Singh and colleagues write.

    According to the researchers, this research provides the first evidence for a relationship between political affiliation and buying behavior, suggesting that ideological differences are reflected in daily behavior, even at the unconscious level.

    Along with Singh, authors include Romana Khan of the Graduate School of Business at Ozyegin University and Kanishka Misra of the Stephen M. Ross School of Business at the University of Michigan.


  8. Study suggests lack of cognitive, emotional connection lead to inaccuracy in predicting others’ valuation of objects

    January 29, 2013 by Ashley

    From the University of Chicago Press Journals press release via EurekAlert!:

    Shopper's regretConsumers systematically mispredict both the selling and purchase prices of other consumers due to a lack of cognitive and emotional connection, according to a new study in the Journal of Consumer Research.

    As sellers, consumers fail to appreciate the extent to which endowment and the prospect of giving up an object and not getting to enjoy its benefits influence other owner valuations. On the other hand, as buyers, consumers fail to realize the extent to which lack of ownership and the prospect of giving up money to purchase an object impact other buyer valuations,” write authors Didem Kurt (Boston University) and J. Jeffrey Inman (University of Pittsburgh).

    In one study, a group of consumers was given coffee mugs (owners) and asked to predict how much others would ask for the mug. Another group who were not given mugs (buyers) was asked to estimate how much others would pay for the mug. Both groups failed to predict the prices of others in the same role. Owners underestimated the average selling price demanded by other owners, whereas buyers overestimated the average price offered by other buyers by over 20%.

    These biases can have important economic implications. For instance, when demand for homes is high in an area, buyers may overestimate how much others are willing to pay for a particular home and place a very high bid, resulting in overpaying. Buyers will suffer from reduced satisfaction with a transaction when they discover that others are actually willing to pay less (or have already paid less) for the same or a similar object. Or, when selling used items of sentimental value, underestimating the selling prices of other owners may lead an owner to sell at a lower price, reducing not only the economic benefit of the sale but also decreasing the seller’s overall satisfaction.

    “Consumers rely on both their calculations and feelings when valuing objects for sale. And, since consumers inaccurately assess others’ cognitive and emotional states, they mispredict how much others value objects. However, the accuracy of their predictions can be improved by helping them appreciate similarities between themselves and others who are in the same situation,” the authors conclude.


  9. Study suggests small price differences may make options seem more similar

    by Ashley

    From the Association for Psychological Science press release:

    ShoppingSome retailers, such as Apple’s iTunes, are known for using uniform pricing in an effort to simplify consumers’ choices and perhaps increase their tendency to make impulse purchases. But other stores, like supermarkets, often have small price differences across product flavors and brands.

    As counterintuitive as it might seem, these small price differences may actually make the options seem more similar, according to new research published in Psychological Science, a journal of the Association for Psychological Science. The research shows that adding small differences can actually help to make choosing less difficult and reduce the likelihood that we’ll put off making a choice.

    Traditional models of similarity — along with everyday intuition — would suggest that increasing the differences between objects can’t make them seem more similar. But researchers Nathan Novemsky and Ravi Dhar of the Yale School of Management, along with Jongmin Kim of Singapore Management University, hypothesized that small differences might actually draw attention to the attributes that are identical — attributes we would otherwise ignore.

    So, for example, if we have to choose between two cereals that have the same price, we’re likely to ignore price and focus on the similarity in flavor. But if the prices are slightly different, we’ll focus on similarities in both price and flavor, leading us to see the cereals as more similar overall.

    In the first study, university students chose between two kinds of tea. They saw an image and read information about the ingredients, benefits, and price of each tea.

    Students who were told the teas had the same price judged them to be less similar than the students who thought they had different prices, confirming the researchers’ hypothesis. And this finding wasn’t limited to tea: Novemsky and his colleagues observed the same pattern with other options, including cereals and restaurant entrees.

    Results from a second study suggest that we do pay attention to identical attributes but only when our attention is drawn to them.

    So what consequences might this effect have for actual decision-making?

    Additional studies revealed that students had more difficulty choosing between objects with the same price because they were seen as less substitutable for one another. And students were more likely to actually purchase an object when the prices were different. In the final study, introducing a 3% difference in price nearly doubled the number of purchases.

    Ultimately, these studies suggest that these small differences increase perceived similarity, which helps to make choosing less difficult and decreases the likelihood that we’ll defer making a choice.

    Novemsky and his colleagues note that small differences across choice options probably seem trivial to most people. In a follow-up study, most participants predicted that small price differences wouldn’t affect their choices; they also underestimated their tendency to pay attention to those differences.

    But, together, the findings of these studies suggest just the opposite — small differences can have a substantial impact on how we choose.

     


  10. Study examines influence of family life on response to TV ads

    by Ashley

    From the University of Chicago Press Journals press release via EurekAlert!:

    Family TV timeFamily interaction and everyday activity strongly influence how television advertisements are experienced and interpreted at home, according to a new study in the Journal of Consumer Research.

    “It is common to link advertising viewing at home to increased levels of materialism and domestic tension stemming from ‘pester power’ (children getting parents to buy something by asking for it repeatedly until they get it). While these are serious issues, we have found that creative and skilled viewers of television advertising in the family living room can overturn and personalize commercial advertising meanings for family and household benefit,” write authors Laknath Jayasinghe and Mark Ritson (both University of Melbourne).

    The authors placed video cameras in the living rooms of eight suburban family homes to study viewer behavior during television advertising breaks. They followed up with family group interviews where these consumers were shown excerpts of their recorded advertising response behavior and asked to comment and provide deeper context to their behavior.

    The authors consider advertising response from a viewer-centered perspective, cautioning against conceptions of advertising response, engagement, and interpretation organized solely through broadcast media contexts and from a message processing perspective. The normal and routine situations and contexts that motivate advertising experiences, responses, and engagement at home are uncovered in precise detail and demonstrated to significantly impact the process of advertising response and engagement. They also locate the presence of family interaction during the television program break, which challenges traditional perspectives of audience behavior in studies of advertising response.

    Companies should consider how family interaction, media multitasking, and the place and time of viewing impact the ways consumers watch and engage with television ads. They should also recognize that the same ad may be engaged with and interpreted differently at different times due to varying household interactions and activities that impact how it is viewed,” the authors conclude.