Marketing Letters

This research tests the proposition that brands suffer prejudice and discrimination due to animosity toward a country with which they have a strong stereotypic association. In the first study, attitudinal data collected across a range of brands that vary in terms of the strength of the brand-country association indicate that brands with strong stereotypic association with a country suffer direct prejudice, in the form of more negative attitudes, related to animosity. When the brand-country association is less strong, the relationship between animosity and brand attitudes is moderated by the strength of the stereotypic association. In the second study, the level of brand-country association is manipulated experimentally to provide additional evidence of its moderating role on the relationship between country animosity and both prejudice toward (more negative brand attitudes) and discrimination against (less choice) a new brand.

An examination of the timing of consumers' purchases for coffee reveals that consumers vary a great deal in terms of the regularity of their purchasing behavior. Some consumers make purchases at seemingly random time intervals, while others purchase at highly regular intervals. The measurement of regularity in purchase timing, as well as the identification of its covariates, is important in many contexts such as modeling purchase incidence and sales forecasting. We measure the degree of regularity among a sample of coffee purchasers and identify several consumer characteristics that vary with the degree of regularity in purchase timing. Results show that regularity in purchase timing is related to brand loyalty, store loyalty and deal proneness, as well as to certain pattern of routinization by the households, and that regularity may be used, along with other aspects of purchase behavior, to provide a basis for market segmentation.

The authors discuss the long-run future of decision support systems in marketing. They argue that a growing proportion of marketing decisions can not only be supported but may also be automated. From a standpoint of both efficiency (e.g., management productivity) and effectiveness (e.g., resource allocation decisions), such automation is highly desirable. The authors describe how model-based automated decision-making is likely to penetrate various marketing decision-making environments and how such models can incorporate competitive dynamics. For example, the authors foresee that close to full automation can ultimately take place for many decisions about existing products in stable markets. Partial automation could characterize decision making for new products in stable markets and existing products in unstable markets.

This paper uses the technique of computer-aided text analysis to evaluate the meanings of 240 advertising slogans. Content analysis performed by a computer is more reliable and less tedious than that performed by human coders. We analyze the content of the slogans and assume this reflects what the advertiser thinks that he or she said. One large group of equivocal slogans and four other more distinct groups are found.

Consumers often undervalue price promotions because they discount the discounts. In this research, we examine the effect of using a novel type of discount presentation (e.g., “Pay 60% of the regular price”) on deal evaluations, and compare it to that of an equivalent discount presentation commonly used in the U.S. (e.g., “Get 40% off the regular price”). In three experiments we show that the former discount presentation results in higher perceived savings and higher purchase likelihood than the latter. Using process measures, we demonstrate that this effect is due to increased systematic processing induced by the novelty of the discount presentation, which improves calculation accuracy and hence decreases the underestimation of discounts. We also report a boundary condition of the effect of discount presentations on deal evaluations by showing that it is eliminated when consumers do not need to expend effort to accurately process price information.

Consumer research has indicated that the use of the 99 ending in a retail price creates the impression of a price that is relatively low. A comparative price survey of a wide assortment of general merchandise products indicates that this impression does not match marketplace reality. On the contrary, the price survey showed that retail prices with 99 endings were less likely than prices with other endings to be among the lower prices for an item. The finding of this discrepancy has implications for consumers, public policy-makers, and our understanding of how consumers make inferences from price information.

The academic literature on the growth acceleration of new products presents a paradox. On the one hand, the diffusion literature concludes that more recently introduced products show faster diffusion than older ones. On the other hand, technology generation literature argues that growth rate, at least as measured by diffusion parameters, remains constant across generations. We resolve this apparent paradox by testing whether growth acceleration occurs across technology generations while controlling for the passing of time. We check acceleration across 39 distinct technology generations in 12 product markets. The results show that intergeneration acceleration occurs in time to takeoff but not with respect to diffusion parameters (i.e., p and q). We show that takeoff acceleration is mostly driven by technology vintage (i.e., the passage of time) rather than generational shifts. Thus, time is a factor that accelerates early growth, but generational shifts do not. This result also holds when controlling for the effects of market vintage when the market is either business-to-business or business-to-consumer as well as when the technology is process- or product-based. KeywordsDiffusion-Acceleration-Technology generations-Takeoff

It is widely believed that products are diffusing within the marketplace at an increasing pace. To empirically investigate this belief, diffusion model parameters are estimated for a large set of consumer durables in the home appliance industry, Multiple measures of diffusion rates are then computed and compared across products by year of introduction. Contrary to conventional wisdom, no statistical relationship is found. These results suggest that diffusion rates havenot been systematically accelerating over time.

The Accessibility-Relevance framework provides a useful perspective to consider the retrieval and use of memory information during product decision making (Alba, Lynch, and Hutchinson, 1990; Lynch, Marmorstein, and Weigold, 1989). However, it considers accessibility on an individual brand basis, while actual product choice often includes information across multiple alternatives. Thus, memory set accessibility (MSA), the relative accessibility across memory brands, is introduced as a potentially important but unexplored issue within the Accessibility-Relevance research stream. This study 1) provides an explanation for how MSA may produce results which significantly expand the current Accessibility-Relevance conceptualization and 2) considers the effects of MSA and relevance on both brand processing and choice.

A meta-analysis of two factor analysis outcome measures, the percentage of variance accounted for and the average (absolute) factor loading, in 803 substantive factor analyses was undertaken. The average percentage of variance accounted for was 56.6%, and the average (absolute) factor loading was 0.32. Number of variables factor analyzed, nature of the sample from which data were collected, sample size, number of factors extracted, and (minimal) number of scale categories employed influenced the percentage of variance accounted for in a factor analysis. Number of factors extracted, analytical approach, and number of variables analyzed influenced the average factor loading obtained in a factor analysis. Factor analysis of synthetic (random) data possessing the general structure as the observed data in the meta-analysis accounted for 50.2% of the variance in the data and produced an average factor loading of 0.21. The latter figures imply that many factor analyses have produced outcome measures of questionable meaningfulness.

This paper examines the role of trade-ins in consumers' purchases of new durable goods. We argue that even if the net price paid by consumers who trade in an old product remains the same, varying the offer on the trade-in substantially affects consumers' satisfaction with the transaction. In particular, because the product is a part of their endowment, consumers' valuation of their used product can be more than the market's valuation. While the endowment effect is a well-documented phenomenon, its implications for trade-ins have yet to be studied. We use the notion of mental accounting and endowment effects to develop a model of trade-ins. We show that even if two deals are financially equivalent, the preferred option for consumers is often the one in which the consumer is overpaid on the trade-in. In addition, we find that consumers who are overpaid (relative to a market price) on their trade-in are willing to pay a higher net price than are consumers who are underpaid on their trade-in.

Research extending over twenty years in behavioral decision theory has led to the development of two important research streams—mental accounting and reason-based choice. This paper explores recent research on the role of mental accounting and reason-based choice in the construction of consumer preferences. Evidence suggests that the principles of mental accounting often regulate the purchase and consumption of luxuries and that reasons may play an important part in this process. In particular, buying and consuming luxury goods tends to call for reasons and justification and can evoke intra-personal conflict that might be resolved with the aid of mental accounting. Moreover, reasons can serve as important building blocks in the formation and grouping of mental accounts. The current paper also discusses the construction of preferences as a process where, in certain cases, consumers choose reasons rather than options. Among other things, focusing on reasons can lead to discrepancies between decisions and consumption experiences, preference intransitivity, and unconventional choices. Directions for future research are discussed.

Using a large-scale AT&T database, we decompose usage levels into frequency and duration, and then investigate how they affect survey response accuracy. Results show that more accurate surveys are obtained from those in the high frequency group (possibly because of the increased use of the more accurate rate-based method of recall and higher degrees of regularity), and from those in the longer duration group (possibly because of increased involvement). We therefore suggest that the survey method is less suited for light users because of higher error, and that alternative methods such as diaries might be more appropriate. We also found similarly consistent results with respect to self-perception of usage rate and the accuracy of survey recall.

Through observations of AT&T data and the results of two of our own studies, we discovered interesting asymmetrical effects of the level of aggregation of the question on the response accuracy in surveys of behavioral frequency. We find that disaggregating a question to a lower, less comfortable level of aggregation creates greater uncertainty, leading to larger absolute errors in survey responses. However, if a question is asked at a higher less comfortable level, the majority of respondents escape by splitting questions down to the natural level, thereby avoiding greater uncertainty and thus responding more accurately. We argue that for greater accuracy in surveys, one should identify the natural level of aggregation at which a question should be posed. But when in doubt, it is better to ask a question at a higher level of aggregation because of possible escapability downward.

There is much theoretical and empirical evidence that consumers' predictions of their future behavior are positively correlated with their actual subsequent behavior. However, consumers are not perfectly calibrated in predicting what they will do in the future. This article examines several factors that moderate the link between consumers' stated purchase intentions and their subsequent purchase behavior. Specifically, we examine how the relationship between purchase intentions and purchase behavior is moderated by (1) factors that affect how accurately respondents can represent their current intentions and (2) factors that affect how accurately respondents can predict whether and how their intentions will change over time. The article summarizes the extant literature and develops propositions for future research.

Research in mental accounting shows that prior spending influences a consumer's decision to make a new spending decision (Heath and Soll 1996, Soman 2001). In particular, greater spending in a particular category reduces the likelihood of further spending in that category. In the present research, we decompose spending into two distinct episodes—the acquisition liability episode during which a purchase is made accompanied by a commitment to pay (e.g., using a credit card) and the payment episode during which the consumer's wealth actually gets depleted (e.g., paying the credit card bill). Using a controlled laboratory experiment and real world data from a group of consumers, we replicate earlier findings that prior spending influences a pending spending decision, but also show that the location of both the acquisition liability episode and the payment episode play a role. Our results contribute to an understanding of the dynamic mental accounting of acquisition liability and actual outflows.

Past studies on the differences between the processing of numerical and verbal information have typically considered numerical information in the form of ratings on a scale (scale-value numerical information). They have not focussed on numerical information in their natural unit of measurement (natural-value numerical information), which is more commonly found in marketing communications. This study tests previous findings using natural-value numerical information instead of scale-value numerical information under learning and choice tasks. Results suggest important differences between the processing of natural-value and scale-value numerical information.

We examine the effects of probability and mode of acquisition on choices between hedonic and utilitarian alternatives. The results suggest that the lower the probability of receiving the selected item, the more likely individuals will be to choose the more hedonic alternative in a choice set. Mode of acquisition (i.e., whether subjects are choosing in a windfall or a standard purchase situation) is also found to affect preferences, even when probability of acquisition is held constant. Hedonic options appear to be more popular as prizes than as purchases, whereas utilitarian options appear to be more popular as purchases than as prizes.

This paper develops a model for situations in marketing and elsewhere in which an individual decision maker acquires multiattributed items that belong to several classes over time. The model captures the dynamic acquisition of heterogeneous items. Measurement and parameter estimation methods are described and illustrated with a small set of experiment data involving the acquisition of durable goods by households. Future research steps are also outlined.

Market segmentation research is currently focused too narrowly on the task of segment identification as opposed to its strategic relevance within a firm. In this paper we distinguish an ex ante approach to market segmentation research, which begins with studying the motivating conditions that lead people to the tasks and interests in their lives, from an ex post approach which begins with an individual's reaction to marketplace offerings. We argue that the marketing task of guiding managements to make what people will want to buy will be more successful in light of a deep understanding of behavior in the context of everyday life and work, rather than a detailed understanding of preferences in the marketplace. Directions for future research are discussed.

Industry informants suggest that the equity of well-known, established brands can be leveraged to create value for unfamiliar or less-established brands. To the extent that cues in the retail environment imply some commonality between the high-equity brand and the less-established brand, benefits to the less-established brand may be expected. We refer to this implied commonality as strategic equivalence. Sharing the retail brand portfolio with high-equity brands is one way of establishing strategic equivalence. Display structure—whether the brands are displayed separately or intermixed—can also affect perceptions of strategic equivalence. In two studies, we demonstrate the ability of high-equity brands to increase the value of lower-equity brands in the same retail department and the ability of display structure to moderate this effect.

In two experiments we examine how consumers are affected by a sequence composed of an initial product-failure experience followed by a success experience. Our interest is to assess how consumers' evaluation of the product and of their own performance change after the second experience. A preliminary experiment used hypothetical scenarios describing consumers' experiences with different products. In the main experiment, participants received actual hands-on experience with a Smith-Corona Personal Typewriter/Word Processor. A major result was that product evaluations could be as high following a failure-success sequence of experiences as following success alone. This was especially true with hands-on experiences. However, the main experiment showed that negative affect (frustration) expressed following an actual product failure experience remained even after a subsequent success. Marketing implications of these dual results are discussed.

We review recent literature on competitive reactions and strategic thinking and offer several observations. Evidence is mounting that strategic thinking is an unnatural act, made difficult by natural individual biases and organizational roadblocks. In addition, it is possible that uncertainty about competitive behavior is caused by and contributes to informal and incomplete competitive intelligence. We propose a simple model which suggests a potential path dependency in a firm''s intelligence gathering, driven by the inertia of its past decision-making. Such a path dependency can be broken, however, as evidenced by several examples of firms who have overcome barriers to strategic thinking in creative ways. Paradoxically, though, there are circumstances in which competition is overemphasized in decision-making. Research priorities are discussed.

The research examines the two paths of influence of activation technique in advertising, defined as engaging in motor activity required to reveal the advertising message. Under the first path, activation technique enhances the perceived creativity of the advertisement, via its structural and design aspects; whereas under the second path it influences processing fluency via its compatibility with the message. In the latter, activation technique may detract from overall evaluations of the advertisement, especially when the motor activity is incompatible with the message. Two experimental designs demonstrate this dual effect and its underlying mechanism.

Retailers did not immediately extend their business to the Internet environment, fearing that on-line activities could adversely impact their off-line sales. To facilitate assessment of the impact of on-line activities on off-line sales, we develop a method that allows retailers to use readily available market data for making informed decisions. The proposed method determines (1) the extent to which on-line sales cannibalize off-line sales, and (2) whether on-line activities build on-line equity for the firm. We illustrate the method using data from Tower Records' Internet sales division. We find that on-line sales do not significantly cannibalize retail sales and that the firm's web activities build long-term on-line equity. While the proposed method can be used by any clicks-and-mortar firm, our firm-specific results indicate that Towers' fears regarding cannibalization due to its own Internet activities were unfounded.