1. How displaying real-time sales and stock levels online affects shoppers

    December 8, 2017 by Ashley

    From the Journal of Retailing at New York University press release:

    In “See How Much We’ve Sold Already! Effects of Displaying Sales and Stock Level Information on Consumers’ Online Product Choices,” Marketing Professors Yongfu He and Harmen Oppewal describe online studies designed to test consumers’ purchase decisions when presented with ostensibly real-time sales and stock data. The paper will be published in the December 2017 issue of the Journal of Retailing.

    In one study, 405 participants were asked to decide between two unfamiliar but identically priced statistics textbooks and explain their reasoning on an 11-point scale. The various scenarios showed different combinations of the sales levels (no sales information, equal sales, different sales levels) and stock levels (no stock information, equal stock, different stock levels). In the condition where only sales levels were shown, the book displayed as having sold more was chosen 89 percent of the time, versus 50 percent of the time when no information was provided. When the stock level was displayed, the book showing fewer copies left was chosen 74 percent of the time, versus 50 percent when no stock data was provided. When sales and stock information were both presented, the book with higher sales and also fewer copies remaining was chosen 84 percent of the time. Additional, similar studies were done using unfamiliar chocolate brands versus a well-known brand, which was perceived as more popular and of higher quality because of its familiarity.

    The authors found that across studies, sales level had a significant effect on choice, but that when brand was factored in, the effect of stock level data was often diminished. “In general, though,” they write, “our findings show that when participants become more familiar with a brand, sales and stock level information start to play a lesser role as cues in the decision process.”

    The managerial implications are especially significant for online retailers, as online shoppers face more uncertainty about the quality of products on offer. “Displaying sales and stock level information can be an effective tool to influence consumer choice of a brand,” the authors write. “Retailers should carefully consider when to display either type of information.”


  2. Study suggests major life events shared on social media revive dormant connections

    December 5, 2017 by Ashley

    From the University of Notre Dame press release:

    Online social networking has revolutionized the way people communicate and interact with one another, despite idiosyncrasies we all love to hate — think top-10 lists of the most annoying people and habits on social media.

    However, there are specific advantages to using social media, beyond the simple joys — and occasional annoyances — of reconnecting and gossiping with old friends about babies, birthdays and baptisms.

    New research from the University of Notre Dame’s Mendoza College of Business examines the impact of major life events, such as getting married or graduating from college, on social network evolution, which, the study shows, has important implications for business practices, such as in marketing.

    “Who Cares About Your Big Day? Impact of Life Events on Dynamics of Social Networks,” forthcoming in Decision Sciences by Hong Guo, associate professor of business analytics, and Sarv Devaraj, professor of business, (along with Arati Srinivasan of Providence College), shows that major life events not only get more social media attention overall, but also bring long dormant connections back into social interaction.

    The researchers specifically focus on two key characteristics of individuals’ social networks: indegree of ties and relational embeddedness. Indegree is the number of ties directed to an individual. Those with high indegree centrality are assumed to be the most popular, prestigious and powerful people in a network due to the many connections that they have with others.

    “We find that the indegree of ties increases significantly following a major life event, and that this impact is stronger for more active users in the network,” Guo says. “Interestingly, we find that the broadcast of major life events helps to revive dormant ties as reflected by a decrease in embeddedness following a life event.”

    Relational embeddedness is the extent to which a user communicates with only a subset of partners. Social networking sites allow users to manage a larger network of weak ties and at the same time provide a mechanism for the very rapid dissemination of information pertaining to important life events such as engagements, weddings or births.

    “We show that major events provide an opportunity for users to revive communication with their dormant ties while simultaneously eliciting responses or communication from a user’s passive or weak ties,” Guo says. “Increased communication with weak ties thereby reduces the extent of embeddedness. We also find that one-time life events, such as weddings, have a greater impact than recurring life events like birthdays on the evolution of individuals’ social networks.”

    So why does this matter outside of our social media circles?

    “Knowing this, advertisers may better target their ads to major life events. For example, a travel agent marketing a honeymoon package can target a user who has shared that they just got married,” Guo says. “From the social networking sites’ perspective, various design features may be set up to enable and entice users to better share their life events, like how Facebook helps friends promote birthdays.”


  3. Study suggests food cues entice consumers to overeat

    December 2, 2017 by Ashley

    From the University of Michigan press release:

    The mouth-watering aroma of juicy burgers and crispy fries, and the eye-catching menu signs with delicious food pictures can tempt many hungry patrons to stop at fast-food restaurants.

    But these food cues, which stimulate brain activity, can nudge some customers to overeat due to increased cravings and hunger, a new University of Michigan study suggests.

    “Food-related cues can make people want or crave food more, but don’t have as much of an impact on their liking, or the pleasure they get from eating the food,” said Michelle Joyner, a U-M psychology graduate student and study’s lead author.

    The study involved 112 college participants, who disclosed their weight, race, gender and other demographics. All were randomly assigned to a fast-food laboratory — designed like an actual restaurant with tables/chairs, booths and low background music — or a neutral lab.

    Participants, who ate lunch one hour before the study’s trial, could receive tokens to acquire foods typically available at fast-food restaurants, such as a cheeseburger, French fries, milkshake and soft drink. Tokens could also buy time for an alternate activity, such as playing video games on a tablet. Both the food and game choices appeared on large TV screens.

    The study questions focused on wanting, liking and hunger. Wanting is a strong motivation while liking involves pleasure.

    When exposed to food-related cues, participants felt more hungry in the fast-food lab than the neutral environment. The cues, however, did not make a difference in participants liking the food’s taste in either environment.

    People consumed 220 more calories in fast-food environments that have food-related cues than those who ate in non-cue locations, the study indicated. Joyner said food cues did not impact wanting or liking for games, suggesting the effect is specific to food.

    Joyner and colleagues said it’s important for people to arm themselves with knowledge about how food cues can trick them into thinking they are hungry and increasing their desire for food.

    “It is hard it is to avoid food cues in our current environment, but people can try some strategies to minimize their exposure by not going into restaurants and using technology to skip food advertisements in TV shows,” Joyner said.


  4. Study looks at how value of products we encounter affects what we’ll pay for other items

    November 25, 2017 by Ashley

    From the New York University press release:

    The value of the products we encounter influences how much we’ll subsequently pay for other items, new neuroscience research has found. The results point to a previously undetected factor that affects consumer behavior.

    The study, which appears in the journal Proceedings of the National Academy of Sciences (PNAS), shows that when we come across low-valued items, we’re willing to pay more for products we later face; by contrast, when we see high-valued items, we’ll pay less for products we view in the future.

    “How people value an item is not a simple function of that item alone,” explains Kenway Louie, a research assistant professor at New York University’s Center for Neural Science and one of the authors of the paper. “The valuation process is inherently relative, with people valuing the same exact item more or less depending on the environment they recently inhabited. Our study shows that rewards cannot be evaluated in isolation, but instead must be viewed through the lens of the recent past.”

    It’s been long established that our brains process information by relying on comparisons rather than on absolute judgments. This dynamic is fundamental in sensory processing, where our perception of sensory stimuli in the world depends on the context in which those stimuli appear. For example, a gray square will appear darker to someone coming in from bright sunlight than to someone who’s been in a dark room.

    Less clear is how sensory processing can influence decision-making — or, specifically, evaluations we make.

    In the PNAS work, the researchers, who also included NYU’s Paul Glimcher, a professor of neuroscience, and Mel Khaw, an NYU doctoral student at the time of the study and now a post-doctoral researcher at Columbia University, studied how different environments could affect how people valued food items.

    To do so, a set of experimental subjects viewed 30 different food items on a computer screen and reported how much they would pay for those items. The researchers then calculated these responses to establish a ranking of all the items — from lowest to highest price, based on the subjects’ answers.

    Following this, the study’s subjects underwent a series of trials in which they viewed only the 10 lowest-valued items — a “low-value” condition labeled “the adapt block.”

    The researchers then repeated the first part of the experiment, once again asking the subjects how much they would pay for each of the 30 items. Here, the study sought to determine if viewing the lowest-valued items would cause the subjects to say they’d pay more for these 30 items than they originally indicated. As predicted, after viewing the lower-priced items, the subjects did indeed say they’d pay more for these 30 items than first stated.

    Next, the researchers repeated the adapt block — but, this time, subjects were shown the 10 highest-value items (a high-value, or rich, environment). Conversely, and as hypothesized, after seeing the higher-priced items, the subjects said they’d pay less for all 30 items than previously indicated.

    “Collectively, these findings provide the first evidence that adaptation extends to the economic value we place on products,” explains Louie. “Moreover, they suggest that adaptation is a universal feature of cognitive information processing.”


  5. How emotions influence our internal clock

    November 23, 2017 by Ashley

    From the University of Freiburg press release:

    Just how it works is not known — but human beings have an internal clock which enables us to perceive and estimate periods of time subconsciously. A research team under Dr. Roland Thomaschke of the University of Freiburg’s Department of Psychology showed in experiments that this mental time-processing system is able to adapt quickly and flexibly to predictive time patterns. The study has been published in the specialist journal Emotion.

    The psychologists examined time periods between one and three seconds. Their test subjects were given the task of sorting nouns — which appeared one after another on a computer screen — according to gender (German nouns are grammatically masculine, feminine, or neuter). During the transition to the next word, a small cross was shown. What the test subjects did not know — they were looking at concepts which are seen as positive or negative, such as love and friendship on the one hand, torture and death on the other. With most of the “positive” nouns, the cross appeared before them for half a second; with most of the negative nouns it was for two seconds. “The pattern influenced the test subjects although they were not aware of it,” says Thomaschke. “If the combination was unusual, like a long interval before a positive concept, they had considerable difficulty sorting according to gender.” But this irritation was not manifested when no emotions were involved. With other test subjects, the psychologists used concrete and abstract concepts instead of positive and negative ones — and the effect was not observed in this case.

    This result helps to better understand human perception. In conversation, for instance, it can be observed that positive, agreeing answers are given faster than negative, rejecting ones. This experience leads to participants in online conferences — in which spoken contributions are preceded by a time delay due to the technology used — being regarded by the other participants as being negative; the experience of everyday conversation is subconsciously carried over into the conference situation. The results also suggest how it may be possible to get people’s attention. For example, if a website always shows advertising after the same period of time, users will be able to predict and better ignore it subconsciously. For advertisers it would therefore make sense to fade in advertising at irregular intervals — and to get attention by creating that irritation.


  6. Study suggests people will desire something even more if you increase their focus on it

    November 20, 2017 by Ashley

    From the Case Western Reserve University press release:

    The relationship between desire and attention was long thought to only work in one direction: When a person desires something, they focus their attention on it.

    Now, new research reveals this relationship works the other way, too: increasing a person’s focus on a desirable object makes them want the object even more — a finding with important implications for marketers and clinicians seeking to influence behavior.

    The study, published in the journal Motivation and Emotion, is the first to demonstrate a two-way relationship.

    “People will block out distraction and narrow their attention on something they want,” said Anne Kotynski, author of the study and a PhD student in psychological sciences at Case Western Reserve University. “Now we know this works in the opposite direction, too.”

    In marketing, advertisements with a hyper focus on a product’s desirable aspect — say zooming in on the texture of icing and frosting — might help sell a certain brand of cake.

    Findings suggest the ad could be targeted to people who have shown an interest in a similar product, such as running the cake commercial during a baking show.

    Clinicians could potentially help their patients develop a stronger focus on — and pursuit of — healthy activities that they may desire but otherwise resist, such as exercising or eating a balanced diet, Kotynski said.

    The study’s findings also add a wrinkle to knowledge of focus and emotion.

    According to a spate of previous research, positive emotions — such as happiness and joy — widen a person’s attention span, while negative emotions — such as disgust and fear — do the opposite: narrowing a person’s focus.

    “We conceptualize fear as drastically different from desire,” Kotynski said. “But our findings contribute to growing evidence that these different emotions have something key in common: They both narrow our focus in similar ways.”

    The findings also fit the notion that both of these emotions — fear (negative) and desire (positive) — are associated with evolutionarily pursuits that narrowed our ancestors’ attentions.

    For example, fear of predators motivated attention focused on an escape route, while an urge to mate motivated focus on a sexual partner.

    “If a person has a strong desire, research says this positive emotion would make them have a wide attention span,” Kotynski said. “Our research shows we developed a more beneficial behavior around desire: focusing our mental energy on the important object, much like fear would.”

    The study

    Study participants were shown images of desserts mixed in with mundane items. They were instructed to pull a joystick toward them if the image was tilted one direction and push the stick away if it was tilted the opposite direction. Researchers recorded the reaction time of each.

    Participants who responded fastest to pull the images of desserts were those whose attention had been narrowed. Responses were much slower to the mundane, and for participants whose attention was broad — suggesting narrowed attention increases desire for desserts but not for everyday objects.

    The study used dessert pictures to measure reaction time because such images have been shown to increase desire across individuals, most likely due to a motivation to seek high fat, high calorie foods that is rooted in evolution.


  7. Study suggests celebrity and status may not always help companies

    November 19, 2017 by Ashley

    From the University of Notre Dame press release:

    Businesses that have attracted lots of positive media coverage and are also affiliated with high-status venture capitalists or underwriters may seem like poster children for corporate success. But new research from the University of Notre Dame shows this kind of attention may be too much of a good thing.

    The study “Safe Bets or Hot Hands? How Status and Celebrity Influence Strategic Alliance Formations by Newly Public Firms” defines the media attention aspect as “celebrity” and the venture capitalist and underwriter affiliations as “status.” Together, they serve as lenses that influence how people process other information about a firm, according to researcher Tim Hubbard, assistant professor of management in Notre Dame’s Mendoza College of Business. But possessing both assets–celebrity and status together–is actually more of a disadvantage than possessing one or the other.

    “We show that possessing multiple social approval assets might not always be beneficial,” says Hubbard. “The relative predictability of high-status firms conflicts with the rebel nature of celebrities. It’s like looking through two different–and incompatible–lenses at the same time.”

    This challenges the assumption that accumulating such assets is always beneficial. The study– co-authored by Timothy Pollock, Michael Pfarrer and Violina Rindova and forthcoming in The Academy of Management Journal–shows that managers need to think about these assets in context.

    The researchers studied 347 internet tech startups that went public in the late 1990s and early 2000s, looking at whether they had celebrity and/or high status. They examined how many strategic alliances each firm had one year after going public, based on how potential alliances viewed the firm’s underpricing (change in stock price on the first day of trading).

    While celebrities were plentiful during this period, not all had high status. For example, MapQuest, Peapod, Salon and VerticalNet were all darlings, but were not backed by the highest status actors. Some–such as Pets.com, E-loan and Infoseek–were able to attain both celebrity and high status. All of these firms had varying degrees of success in attracting strategic alliance partners.

    “Celebrity played a big part in alliance formation when the firm had high underpricing, where the stock price experienced a ‘pop’ on the first day of trading,” Hubbard says, pointing to software and consulting services company Ariba as an example. The stock price almost tripled on its first day of trading in January 2002. By the end of its first year, it had 23 strategic alliances, compared to the average number of 2.4 alliances for sample firms in the study.

    “We also discovered that firms with both celebrity and high status had fewer partners one year after their initial public offering,” says Hubbard. High status firms had 1.65 fewer alliances if they had celebrity, compared to if they didn’t.

    “It changes our perspective on how these two intangible resources influence stakeholders,” he says. “Instead of only considering the baseline benefits of status or celebrity, we need to look at how these assets color stakeholders’ perceptions of other information.”

    Hubbard hopes the research can help managers better understand the nuances of intangible assets.

    “Viewing a firm through two different lenses can be difficult,” he says. “Rather than trying to gather every intangible asset, managers should consider which ones complement their organization. Not every firm needs to be a celebrity, and not every celebrity needs to have high status.”


  8. Study proposes more consumer-focused approach to wine

    November 15, 2017 by Ashley

    From the Michigan State University press release:

    The traditional pairing of wine and food too often misses the mark — leaving people confused and intimidated — and should be scrapped in favor of a more consumer-focused approach, a new study indicates.

    The research by Michigan State University hospitality scholars suggests people generally fit into certain wine-drinking categories, or “vinotypes,” and that servers and sommeliers should consider these preferences when suggesting a wine.

    Ordering beef roast for dinner? A traditional wine recommendation would be Cabernet Sauvignon. But why would a server suggest a bold red wine if the customer hates it? Let the patron drink his or her beloved Riesling with the meal, said Carl Borchgrevink, a former chef and restaurant manager and lead author on the study.

    “The palate rules — not someone else’s idea of which wine we should drink with our food,” said Borchgrevink, associate professor and interim director of MSU’s School of Hospitality Business. “They shouldn’t try to intimidate you into buying a certain wine. Instead, they should be asking you what you like.”

    Borchgrevink and culinary expert Allan Sherwin conducted the first scientific study examining the premise of Tim Hanni’s vinotype theory. Hanni, in a play on “phenotype,” proposed that vinotypes are determined by both genetics and environment and that such tastes change over time based on experiences.

    Hanni, a chef and one of the first Americans to earn the designation “Master of Wine,” has proposed four primary vinotypes: “sweet,” “hypersensitive,” “sensitive” and “tolerant.” The categories range from those who like sweet, fruity whites (sweet vinotype) to those who enjoy bold, strong reds (tolerant), and everyone in between.

    Hanni also created a series of criteria to determine vinotypes. If you like sweet beverages such as soda and salt your food liberally, for example, you trend toward the sweet vinotype. But if strong black coffee and intense flavors are your thing, you’re more apt to fall in the tolerant camp.

    For the study, MSU researchers surveyed a group of adults on food and beverage preferences and consumption patterns. They also held a reception with 12 stations where the participants rated the food and wine presented at each station individually, and then together.

    The results were conclusive: Hanni’s premise has merit. The researchers were able to predict wine preferences based on consumption patterns and preferences.

    Next, MSU researchers will test the vintoype theory outright by working with scholars globally. Borchgrevink said separate studies are being planned with partners from around the United States, as well as from Hong Kong, France and other areas.

    The work has implications for both restaurants and wine stores, which should train their staff members on the vinotype approach and find questions to ask consumers that can reveal their wine preferences, the study says.

    But the main focus is the wine-drinker, who should learn to trust their own palate and not necessarily depend on the so-called experts, said Sherwin, the Dr. Lewis J. and Mrs. Ruth E. Minor Chef-Professor of Culinary Management at MSU.

    “At the end of the day it’s going to be the consumer that has the final say,” Sherwin said. “They’re going to be the arbiter.”

    The study is published in the International Journal of Wine Business Research.


  9. Energy firm study suggests branding influences customer switching, not deals

    November 12, 2017 by Ashley

    From the University of East Anglia press release:

    Energy companies in the UK are using specific branding approaches instead of product innovation to keep customers, according to new research from the University of East Anglia (UEA).

    While previous research has tended to focus on pricing, this study looked at the branding strategies and personalities of the Big Six energy firms — British Gas, SSE, EDF Energy, E.ON UK, npower and Scottish Power — and whether this is increasing consumer loyalty and therefore reducing switching behaviour. The Big Six represent more than 90 per cent of all energy supplied in the UK consumer sector.

    Focusing on the electricity market between 2013 — when the number of customers switching providers reached its lowest level — and 2015, the researchers find that brand personality consistency over time is important.

    Consistent brands, such as EDF Energy, performed better as they saw decreases in switching compared to firms, like npower and Scottish Energy, that had significantly changed their brand personality position or communicated inconsistently in this period.

    Providers that had a significantly different brand personality position between marketing communication channels, such as their website and annual report, also had more switching than those that remained consistent. Interestingly, the majority of the brands studied were inconsistent on this measure.

    The findings are published in the journal European Management Review.

    Lead author Dr Richard Rutter, a visiting research fellow at UEA’s Norwich Business School and assistant professor at the Australian College of Kuwait, said: “This research demonstrates the long-term importance of corporate branding in the energy sector and that brand personality does have an impact on customer retention.

    “The Big Six energy providers recognise the power of brand identity when attempting to persuade consumers to switch providers. Rather than doing so simply on the basis of superior financial offers, they are increasingly looking to build a long-term brand personality with which consumers will identify.

    “These organisations wish to be viewed as customer-focused and as offering a fair deal to consumers. There seem to be subtle but important differences in the ways that each company is choosing to communicate with its domestic audience and some are more effective than others.”

    Concentrating on companies’ communication through their websites and annual reports, the researchers examined what brand personality dimensions — defined as sincerity, excitement, competence, sophistication and ruggedness — were communicated most strongly and how consistently each organisation communicated its brand between the website and annual report. They then assessed the organisation’s performance, measured by consumer loyalty or switching behaviour.

    They found that brands communicating excitement more strongly, such as EDF Energy, had the lowest levels of switching. The findings also suggest an ideal brand personality for the UK energy sector: low to medium levels of sincerity and competence and high levels of excitement and ruggedness communicated through the website lead to better performance. The authors say the annual report should maintain this, but also communicate a higher level of competence.

    Co-author Prof Konstantinos Chalvatzis, of Norwich Business School and the Tyndall Centre for Climate Change Research at UEA, said: “Under scrutiny from the public and politicians, the energy sector is changing rapidly. Branding within the energy sector has become increasingly important, as energy firms seek to attract and, importantly, retain customers.

    “We find that certain energy brands, for example EDF Energy have communicated their personality consistently, while others, such as npower and British Gas, seem to have repositioned themselves. A strong brand personality alone is not enough to prevent consumer switching, rather, particular dimensions of personality are more favourable than others and the relevance of specific personality traits can change.”

    The authors, who also include Prof Stuart Roper of the University of Huddersfield and Prof Fiona Lettice of Norwich Business School, recommend that firms should not drastically change their branding each year. Brand managers should also consider how to increase the communication of excitement in relation to their brands without being inauthentic, and ensure that their brand is consistent over time and between different marketing media.

    Relatively quick gains could be made by reviewing external communications for consistency of language and message. The findings also highlight the need for greater emphasis on competence related language, particularly when delivering negative information.


  10. Study suggests calorie counts on menus make a difference

    November 5, 2017 by Ashley

    From the University of Technology Sydney press release:

    One the most comprehensive pieces of research into the impact of displaying calories on menus reveals it not only influences consumers to make lower calorie choices but also encourages retailers to provide lower calorie options.

    The research confirms the move that has been made in Australia towards, and supports a push in the United States, for greater disclosure of calorie or kilojoule information on menus at fast-food outlets and restaurant chains.

    The researchers, Dr Natalina Zlatevska from University of Technology Sydney, Dr Nico Neumann from Melbourne Business School, and Professor Chris Dubelaar from Deakin University, collated 186 studies on the effect on consumers of displaying calories on menus, as well as 41 studies on the effect on retailers.

    The results of the meta-analysis, to be published in the international Journal of Retailing, show that displaying calorie information encouraged a reduction of 27 calories (112 kilojoules) per meal for consumers and 15 calories (62 kilojoules) per menu item by food retailers.

    Lead researcher Natalina Zlatevska, from the Marketing Discipline Group at UTS Business School, says while the calorie reduction isn’t much if you only eat out once a year, for those who eat out regularly it can make a real difference.

    The impact was also greater for women, with a 60 calorie (251 kilojoule) reduction per meal, and for those who are overweight, with a reduction of 83 calories (347 kilojoules) per meal.

    “With more and more food dollars spent on meals purchased outside the home, anything we can do to educate consumers, and make them a bit more aware of their choices is a good start,” Zlatevska says.

    Obesity increases the risk of many chronic and lethal diseases including type 2 diabetes and heart disease, and is a leading cause of premature death in the US, UK and Australia.

    Zlatevska says the finding that retailers adjust the choices they offer when required to display calorie information is significant.

    “In the same way that corporate or financial disclosure changes behaviour, here we see the disclosure effect changing the food environment,” she says.

    “We know that retailers are adjusting so there is the possibility of a combined effect. That is where I think bigger change will probably happen. All these incremental changes add up, it is cumulative.”

    In the US providing calorie information on menus has proved controversial, with constant delays and “push back” from food industry groups fearing the cost of implementing the laws.

    First mandated in the 2010 Affordable Care Act, labelling laws are due to be implemented in the US in May 2018, but already there are suggestions they will again be postponed or watered-down.

    In Australia, displaying kilojoule information on menus is mandatory in NSW, SA, ACT and Queensland for food outlets and restaurant chains with more than 20 stores in a state or 50 nationwide, with Victoria to follow suit next year.