The preference for scarcity: A developmental and comparative perspective

Human adults often show a preference for scarce over abundant goods. In this paper, we investigate whether this preference was shared by 4‐ and 6‐year‐old children as well as chimpanzees, humans’ nearest primate relative. Neither chimpanzees nor 4‐year‐olds displayed a scarcity preference, but 6‐year‐olds did, especially in the presence of competitors. We conclude that scarcity preference is a human‐unique preference that develops as humans increase their cognitive skills and social experiences with peers and competitors. We explore different potential psychological explanations for scarcity preference and conclude scarcity preference is based on children's fear of missing out an opportunity, especially when dealing with uncertainty or goods of unknown value in the presence of competitors. Furthermore, the results are in line with studies showing that supply‐based scarcity increases the desirability of hedonic goods, suggesting that even as early as 6 years of age humans may use scarce goods to feel unique or special.     

Effects of the number of advertised brands in a choice set: A metacognitive process

When product shelves feature more advertised brands, such that the choice set likely contains some familiar options, this subjective experience of familiarity could influence consumers' evaluations of chosen products and shopping experiences, through a metacognitive process. The findings of this study suggest that (a) a product shelf displaying some advertised brands, as opposed to no advertised brands, generates greater subjective familiarity, more favorable attitudes toward the purchased items, more shopping satisfaction, and greater intentions to revisit the store; and similarly, (b) a product shelf displaying more, as opposed to fewer, advertised brands generates greater subjective familiarity, more favorable attitudes toward the purchased items, more shopping satisfaction, and greater intentions to revisit the store. These outcomes result from a three‐step metacognitive process, whereby the subjective familiarity triggered by the presence of advertised brands influences judgments, through the effect of shopping pleasure. These results are robust for high‐ and low‐involvement products, as well as in contexts in which the prices of the advertised brands are higher than, lower than, or the same as those of the nonadvertised brands.     

A simple method for estimating preference parameters for individuals

This paper demonstrates a method for estimating logit choice models for small sample data, including single individuals, that is computationally simpler and relies on weaker prior distributional assumptions compared to hierarchical Bayes estimation. Using Monte Carlo simulations and online discrete choice experiments, we show how this method is particularly well suited to estimating values of choice model parameters from small sample choice data, thus opening this area to the application of choice modeling. For larger sample sizes of approximately 100–200 respondents, preference distribution recovery is similar to hierarchical Bayes estimation of mixed logit models for the examples we demonstrate. We discuss three approaches for specifying the conjugate priors required for the method: specifying priors based on existing or projected market shares of products, specifying a flat prior on the choice alternatives in a discrete choice experiment, or adopting an empirical Bayes approach where the prior choice probabilities are taken to be the average choice probabilities observed in a discrete choice experiment. We show that for small sample data, the relative weighting of the prior during estimation is an important consideration, and we present an automated method for selecting the weight based on a predictive scoring rule.     

Assimilation of advertised reference prices: the moderating role of involvement

This study examines the hypothesis that the level of involvement influences the assimilation of advertised reference prices (ARPs) into consumers’ existing internal reference prices (IRPs). In addition, it investigates the nature of the relationship between the change in IRP and the perceived discrepancy between the ARP and IRP. Results from two different product categories are consistent with assimilation-contrast theory and reveal a nonlinear relationship between the change in IRP and the perceived ARP–IRP discrepancy. In addition, the results are consistent with involvement theory and with prior research on how involvement influences the extent to which consumers elaborate on and are persuaded by advertised information. Specifically, highly involved consumers assimilate a smaller portion of the ARP into their existing IRPs. Implications for research and practice are highlighted.     

Dissatisfaction and complaining behavior as a result of unavailable advertised food specials

Reactions by consumers to unavailable advertised food specials as well as management responses to specific consumer reactions are explored in this paper. Special attention is given to differential shopper reactions and management behavior with respect to race. Information gathered from 219 food shoppers about their latest unavailability experience comprised the data base for the study. The findings suggest that black and white shoppers are similar with respect to purchasing and response behavior. However, the differential management behavior toward black and white shoppers offers further evidence of the continuing discriminatory marketing practices by some supermarkets. Implications from a public policy perspective are presented.     

Estimating joint preference: A sub-sampling approach

Individual and joint preference inform about different aspects of a product's marketing strategy. While individual preference is easily measured, joint preference is expensive to obtain. The author proposes a sub-sampling approach that uses MCMC and data imputation techniques to estimate individual and joint preference. It requires individual data from the entire sample and joint data from a fraction of the sample. Empirical evidence suggests that the sub-sampling approach works well when joint data are collected from 25% of the sample. Predictive and correlation tests demonstrate the superiority of the proposed approach. Greater than 50% reduction in data collection cost is shown.     

The developmental self-valuing theory: A practical approach for business ethics

Ethics in business has been an increasingly controversial and important topic of discussion over the last decade. Debate continues about whether ethics should be a part of business, but also includes how business can implement ethical theory in day-to-day operations. Most discussions focus on either traditional moral philosophy, which offers little of practical value for the business community, or psychological theories of moral reasoning, which have been shown to be flawed and incomplete. The theory presented here is called the Developmental Self-Valuing Theory, and adapts the general psychological theory of Albert Bandura for ethics in business. In this theory, individuals first learn moral values from associations with others who are significant in their lives. Secondly, self-regulation is learned through a process of self-observation, self-judgment and self-reaction. Thirdly, the individual must believe that he can act ethically. Situational constraints and inducements, as well as positive and negative consequences for specific behaviors, will also affect the level of ethical performance. Each of these elements is examined and combined to achieve a practical method for increasing the level of ethics in corporate activity through selection, training and situational enhancement. Larry Jensen is Professor of Psychology at Brigham Young University. He has published in the areas of moral reasoning, education, and behavior. Steve Wygant is a doctoral candidate in the area of Social Psychology with primary interests in the philosophy of science and personality research.     

Gender schematicity and preference for gender-typed products

Two experiments demonstrated that subjects preferred products described in terms congruent with their self-perceived schema for masculinity or femininity. In Experiment 1, male subjects were classified as highly masculine or not so masculine on the basis of their self-ratings. Those who were highly masculine preferred a product described in very masculine terms and those who were not so masculine preferred a product described in feminine terms. In Experiment 2, female subjects were classified as highly feminine or not so feminine on the basis of self-ratings. Highly feminine subjects liked a product best when it was described in highly feminine terms, next most when it was described as having both masculine and feminine attributes, and least when it was depicted as totally masculine. Subjects who saw themselves as less feminine showed the opposite pattern of preference. These effects did not appear to be mediated by differential processing of schema-consistent information.     

Brand death: A developmental model of senescence

Drawing on literature underpinning brand management in marketing, product life cycles in economics, fads in sociology and aging in biology, this paper argues that brand demise is inevitable and not necessarily caused by managerial incompetence. Rather, this demise is a natural part of a brand's developmental process, instigated by consumers seeking to satisfy not only their material needs (constitutive utility), but also their self-image (symbolic utility). This paper presents a model of brand senescence to explain this phenomenon and concludes with a discussion of the implications for managerial practice and marketing theory.     

A stochastic programming model to analyze ordinal preference data

Many marketing situations require analysis of ordinal preference data. Existing analysis methods include OLS, variations of the logit model and methods such as LINMAP. An alternative method is proposed that has the following features: 1) Tie rankings are allowed; 2) all rank order information is incorporated into the estimation — not just first preferences; 3) the procedure is formulated as a L.P. model, which is easily implemented with existing software; 4) statistical inference is supported by the underlying stochastic model; and 5) it supports estimation of individual and group preferences.     

Anchoring effects of advertised reference price and sale price: The moderating role of saving presentation format

This study investigates how consumers utilize an advertised reference price and the posted sale price (SP) as anchors to adjust their internal reference prices (IRP). As expected, the effect of SP on IRP depends on the magnitude and direction of deviation from the IRP. When the posted SP exceeds IRP, it exerts an upward pressure on IRP, whereas when it falls below IRP, it has a negative impact. Consistent with prior research, consumers rely at least partially on the advertised reference price to adjust their IRP. The saving presentation format also moderates the effects of gains and losses on IRP but does not influence offer evaluation directly. Results suggest that retailers can enhance evaluations directly by pricing their products appropriately relative to consumers' IRP and indirectly through the choice of saving presentation format.     

A structural equation model of latent segmentation and product choice for cross-sectional revealed preference choice data

We consider the problem of simultaneously performing market segmentation and predicting product choice for a given population of consumers. This behaviour-based segmentation model uses several types of information characterizing individual consumers and their market context: sociodemographic, psychographic and product choice data. These data are combined in a normative conceptual framework that posits the formation of latent segments, each of which displays differing degrees of sensitivity to relevant product attributes. This permits results obtained by the proposed model structure to differ significantly from those of traditional segmentation techniques, which usually produce a set of groups characterized by smaller within-group than between-group variation in sociodemographic and/or psychographic variables. By making the segments behaviour-based, it is argued that the segments produced by the model will be more actionable and more directly relevant to management decision-making. The proposed model is applied to a data set involving choice of a beauty product offered by five national brands. The results show that the explanatory power of the latent segmentation and choice model is far greater than that of the MNL model, which is nested within our more general specification. The types of results available from the model are illustrated through the application.     

Building brand knowledge structures: Elaboration and interference effects on the processing of sequentially advertised brand benefit claims

Two experiments are reported that examine the effects of an ad campaign designed to link two different benefit claims to a brand. The findings indicated that recall for a subsequently advertised claim depended on the strength of existing brand–benefit links in memory. If prior advertising strongly established a benefit claim in memory, then proactive interference effects inhibited the recall of subsequently advertised benefit claims unrelated in meaning. Additional analyses suggested that these interference effects appeared to be a result of difficulties with encoding the newly advertised claims. If the original benefit claim was not as strongly established in memory, however, then unaided recall of the subsequently advertised benefit claims was actually higher than if there had been no prior advertising at all. In fact, less accessible and memorable claims, whether they preceded or followed more accessible and memorable claims, enhanced recall of the stronger claims. Additional analyses suggest that these elaboration effects occurred because prior or subsequent advertising improved brand awareness and thus later brand claim recall as a result.     

The effect of physical possession on preference for product warranty

Peck and Shu (2009) found that touching a product causes greater endowment effect. We seek to replicate and extend this finding to the case that whether touching a product consumers have just bought may increase the willingness to pay (WTP) for warranty. Loss aversion, the tendency to prefer avoiding losses over obtaining equivalent monetary gains, often explains product warranty purchases. This tendency will be stronger when the buyers consider the product as part of their endowment. Touching the product promotes stronger ownership perception and thus shifts consumer's reference point. The new reference point causes consumers to anticipate greater pain from the loss of the product and thus leads to higher WTP for product warranty protection. We find support for this hypothesis in two field studies with a total of 104 participants.     

Incorporating user costs in preference models for service alternatives

Services are often distinguished from goods by the involvement of the consumer in the production and delivery process. Since the net benefits derived by consumers depend upon their effectiveness and efficiency in fulfilling their required roles, preferences for and choice of alternative services should reflect their effort. We propose a model of preference which incorporatesuser costs, which reflect consumers' efforts, or a corresponding universal set ofuser service dimensions, which reflect attributes of the service that impinge on these user costs. We apply this model to a small-scale study of services for the transfer of written material. The findings demonstrate the ability to treat rigorously essential aspects of services, with implications for the management of services, and for further research.The authors acknowledge the considerable efforts of Rosemary Lyster, MBA student at New York University, and Lorraine Scudieri, Manager of Business Research at Bell Atlantic, in planning and executing a complex survey which provided the data used in this analysis. The authors were stimulated by discussions with Roger Betancourt, who deserves much of the credit and none of the blame for what follows. The authors are also grateful to Avijit Ghosh, Robert Shoemaker, and John Czepiel for their comments on an early version of this paper. Our application was motivated by a research project with Institut National des Telecommunications (France Telecom University) and, in particular with Pierre Vialle.     

Analysis of brand preference segments

Market segments are defined in this article on the basis of a vector of preference levels for alternative brands. The proposed analytical procedure does not require the usual assumption of homogenous perceptions. The resulting segments are shown to differ in perceptions of the brands, correlations of attribute-specific perceptions with preference, and product-oriented AIO measures. A common joint space developed from a common discriminanr configuration of brand perceptions is compared with separate joint spaces for two of the segments. The results reveal unique brand configurations and attribute orientations for these segments, and the fit of preference vectors in these unique spaces is superior to that in the common joint space. These findings lead to the conclusion that the commonly made assumption of homogenous preceptions is unwarranted and can lead to erroneous managerial implications.     

Naïve theories of price: A developmental model

A model of the development of naïve theories of price is presented and tested. The criterion used to account for price variations within a product category is product features at age five, product features and quality at age ten, product quality and buyer utility at age thirteen, and a combination of supply considerations and buyer utility/demand in adulthood. Five-year-olds do not justify their use of product features as a price criterion; however, older respondents all justify their price criterion by referring to a source of value. At age ten, variation in the amount of manufacturing inputs is the source of value which justifies the use of product features as a price criterion; at age thirteen, variations in the quality of manufacturing inputs justify the use of product quality as a price criterion; and in adulthood, relative scarcity and buyer preferences justify the use of cost and demand as price criteria.