The impact of inference generation on belief formation

This study investigates the effects of generating inferences (or failure thereof) with incomplete advertising messages on consumer's belief formation. A factorial design is used to systematically investigate the roles of product knowledge, message structure, and inference prompting in this process. The results show that inference generation or failure affects not only the belief per se, but also the confidence in the belief and that strength of learned beliefs about the product tends to be congruent. Specifically, high knowledge consumers' inferred beliefs are stronger, held with higher confidence, and more congruent with their existing beliefs than those of low knowledge consumers. Interaction effects are also observed between product knowledge and message structure for low knowledge consumers. High knowledge consumers are not affected by message structure or inference prompting condition. Implications of these findings for inference-persuasion research, advertising effectiveness, and future research are discussed.     

Have diffusion rates been accelerating over time?

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.Thanks are extended to Vithala Rao and Donald Lehmann (editor) for their comments on an earlier draft, and to Howard Susskind and Eric Olson for their assistance with the data collection and analysis.     

Consumer ethnocentrism,product necessity and quality perceptions of Russian consumers

Retail buyers in Russia have indicated that some customers have expressed a desire to purchase domestically produced products over imports. Consumer ethnocentrism has been proposed as a measure to provide retail buyers with the information necessary to market to these consumers. The purpose of this research is to determine if perceived product quality of products differs based on country of origin, product necessity and consumer ethnocentric tendency. A repeated measures ANOVA test indicates that perceived quality differs by necessity, by product, by country. A consumer ethnocentrism effect on the overall model, however, was not significant. We conclude that Russian consumers do perceive differences in product quality based on country of origin and product necessity, but that consumer ethnocentrism does not have an effect on perceived product quality.     

Why is Assortment Planning so Difficult for Retailers? A Framework and Research Agenda

When retailers conduct product assortment planning (PAP), they determine (1) The variety of merchandise, (2) The depth of merchandise, and (3) Service level or the amount of inventory to allocate to each stock-keeping unit (SKU). Despite longstanding recognition of its importance, no dominant PAP solution exists, and theoretical and decision support models address only some of the factors that complicate assortment planning. This article simultaneously addresses the variety, depth, and service level aspects of PAP to provide a more thorough understanding. A review of current academic literature and best trade practices identifies open questions and directions for further research and applications.     

A COMPARISON OF ACTUAL AND INTENDED CONSUMER BEHAVIOR IN RESPONSE TO RETAIL STOCKOUTS

Studies of consumer response to stockouts typically capture intended behavior. After a stockout experience, consumers are asked what they intend to do. In contrast, this research measured both intended and actual behavior. Consumers were interviewed twice; once immediately following the stockout experience to gauge intended behavior and a second time 30 days later to ask what they had actually done in response to the stockout. Accordingly, the goals of this research are to (1) compare consumer actual and intended behavior in response to stockouts and (2) examine product characteristics, consumer characteristics and situational variables that may explain the consumer's response. Key results suggest that indicated behavior is a good indicator of actual behavior in situations where the consumer intends to quit the search and a rather poor indicator when the consumer intends to delay the search. Finally, of the several product characteristics, consumer characteristics and situational variables examined, store loyalty, pre‐visit agenda and product uniqueness have shown most promise to help managers understand consumer actual and intended response to stockouts.     

Supplier inferences to enhance private label perceptions

In large part due to the expertise of many manufacturer brands that are private label suppliers, the objective quality gap between private labels and leading manufacturer brands is small-to-none in many cases. The current research examines how consumer beliefs about the manufacturer brand origins of private labels may enhance their subjective appeal, by testing the effectiveness of two retailer-controlled tactics that create specification similarity and sourcing inferences regarding private labels, and the degree to which these inferences close perceptual gaps between private labels and targeted manufacture brands. Both the private label copycat packaging and invitation to compare to the manufacturer brand tactics are found to create such inferences and significantly narrow perceptual gaps, while enhancing retailer attitude.     

How product usage influences consumer satisfaction

This paper reports on an empirical investigation of the effect of product usage on consumer satisfaction in the context of consumer durables. It conceptualizes three dimensions of usage-usage frequency, usage function and usage situation-and examines the impact of these usage dimensions on satisfaction. Results of a field survey using five consumer durables suggest that the usage dimensions influence satisfaction through corresponding dimensions of usage disconfirmation, independent of the effect of performance disconfirmation on satisfaction. The specific dimensions of usage disconfirmation which influence satisfaction vary by product.     

The extension of animosity model of foreign product purchase: Does country of origin matter?

Although a growing literature has investigated how animosity and consumer ethnocentrism change customers’ perceptions of foreign products in developed markets, research examining these effects in developing markets is scarce. Additionally, the role of country of origin on such effects has received far less attention. The current paper is developed to bridge these gaps. The primary objectives of this paper are to examine whether the animosity and consumer ethnocentrism models that work in the Western world could be applied into a developing market like Vietnam, and whether these relationships are moderated by country of origin (USA versus China). Data from 485 Vietnamese customers illustrate that most of the main effects are significant except for the relationship between ethnocentrism and product judgement, and the relationship between cosmopolitanism and willingness to buy. Furthermore, out of the three moderation effects, the influence of country of origin on the relationship between ethnocentrism and willingness to buy is significant. The paper concludes with theoretical and managerial implications, limitations, and future research.     

Category management,product assortment,and consumer welfare

In this article, we endogenize product assortment decisions under a category management (CM) framework in a channel setup. We find that (1) product assortment is polarized more under CM than under a non-CM regime; (2) the price of a high-end (low-end) product in an assortment increases (decreases) under CM than under a non-CM regime; and (3) a high-quality manufacturer makes more profit than a low-quality manufacturer. In our model, the manufacturer’s choice of quality and its polarization is driven by the existence and the decisions of the retailer (CM or non-CM). Finally, we have an interesting result on consumer welfare. We find that the total consumer welfare, as measured by consumer surplus, worsens under CM only when there is sufficient heterogeneity in consumers’ tastes.     

On-line/Off-line: Joint Negotiation Teaching in Montreal and Vienna

E-business systems, the most recent generation of information systems, can be effectively used in teaching. One such system was developed and used in a collaborative project that involved teaching of negotiation theory and practice to students from Austria and Canada. The system provides customized course materials and a platform to conduct various e-negotiation activities. The design allows combining e-learning technologies designed to support students in their independent and individual learning with conventional face-to-face training. Our experience indicates that professional negotiation training accompanied by e-learning, and tools to support decision-making and negotiation can foster students' appreciation of the technology as well as demonstrate its limitations. The combination of technology-intensive and conventional resources contributed to students' awareness of social influences on negotiations, importance of communication, and focussed their attention on the problem and its solution. Deeper customization of the course content and delivery may further contribute to effective learning and acquiring of both communication and analytical skills.     

How should a company respond to a product harm crisis? The role of corporate reputation and consumer-based cues

Product harm crises such as Vioxx and Firestone can be devastating events for companies. Although lawsuits by victims tend to draw most of the attention, observers, who typically learn of product harm crises through media outlets, can also cause extensive damage to the companies involved, as they represent current and potential customers of the product.This article provides guidance to practitioners in choosing the appropriate strategy to effectively deal with a product harm crisis. The authors recommend that corporate reputation and consumer-based cues, such as gender and nationality, be incorporated in the decision-making process regarding the choice of a corporate response.     

Valuation and management of money-back guarantee options

In this article, we model money-back guarantees (MBGs) as put options. This use of option theory provides retailers with a framework to optimize the price and the return option independently and under various market conditions. This separation of product price and option value enables retailers to offer an unbundled MBG policy, that is, to allow the customer to choose whether to purchase an MBG option with the product or to buy the product without the MBG but at a lower price. The option value of having an MBG is negatively correlated with the likelihood of product fit and with the opportunity to test the product before purchase, and positively correlated with price and contract duration. Simulation of our model reveals that when customers are highly heterogeneous in their product valuation and probability of need-fit, and if return costs are low, an unbundled MBG policy is optimal. When customers have high likelihood of fit or return costs are excessive, no MBG is the best policy. When customers have small variance in product valuation, but vary greatly in likelihood of product fit, the retailer may prefer to offer a bundled MBG contract, extracting consumer surplus by charging a price close to the valuation level.