Missing information,inferences, and evaluations

Research has shown consumers either form inferences to fill in missing information or adapt processing to accommodate missing values. This article illustrates that processing may influence which attributes are deemed necessary for the choice task and consequently inferred and that attribute-based processing,leads to inference use. The article also tests a framework that incorporates missing information, processing, inference use, and evaluation variables into a single parsimonious model that shows (1) the effects of missing information on processing and inference use and (2) the effects of inference use on evaluations. The model incorporates a link between processing and inference use that may help explain mixed results regarding the degree and direction of impact of missing information on evaluations. Finally, it explores other variables such as missing information overlap, product familiarity and importance, and attribute type that may also influence inference use.     

Consumer Decision Making Regarding a “Green” Everyday Product

One of the techniques marketers use to convert low‐involvement products into high‐involvement ones is adding an important product feature. A case in point is the common practice of adding a “green” or environmentally friendly product feature to an everyday product, something which is often assumed to elevate consumer involvement in the choice of the product. However, there is a lack of research investigating whether adding such a “green” product attribute actually makes any difference to how consumers make choices. Does the way in which consumers make decisions about groceries change when both “green” and conventional alternatives are available? Does it make them deliberate more or do they just develop another, simple choice heuristic? Based on observation and follow‐up interviews of consumers at the milk counter in two supermarkets which stock both organic (a “green” attribute) and conventional milk, it is concluded that, rather than changing the way consumers make decisions when buying this type of product, the availability of a “green” alternative seems to make “green” consumers develop a new, simple choice heuristic that allows them to do their shopping as effortless and time‐efficient as consumers buying conventional products.     

Home and away: Why do consumers shy away from reporting negative experiences in the peer‐to‐peer realms?

This study investigates how customers use their construct of “home” in evaluating their experience in peer‐to‐peer rented accommodation, as opposed to traditional hotels. The literature has paid considerable attention to people's perceptions of destinations, but almost none to their perceptions of “home” and its complexities whilst visiting a destination. We examine the relationships between the concepts of “home” or “here” represented in peer‐to‐peer accommodation and the construct of “away” or “there” represented in traditional hotels. A mixed‐method approach determines the existence of bias in reporting behavior. Our findings indicate that there is a consistent review gap between institutional actors and peer‐to‐peer actors. Also, consumers of peer‐to‐peer accommodation prefer not to engage in negative reporting if a bond with the host is developed. This perception of a home shapes consumers' relationship with the host and leads to reporting bias. This study provides clear theoretical insights to advance our knowledge about the underlying motives behind reporting behavior of negative experiences. Furthermore, it offers practical implications for both institutional and peer‐to‐peer contexts.     

Embrace the debate: Goals,de-marketing overconsumption,and conflicting information

When faced with conflicting information, consumers often wonder what the “right” consumption level is. A highly relevant context that is often associated with such uncertainty is food consumption (e.g., of meat or dairy products), where consumers seek information to determine whether and how much to consume, and often a recommended goal from health experts is to reduce overconsumption. We apply the theory of goal settings as reflecting such information, focusing on specific goals (e.g., “eat meat twice a week”) versus general goals (“eat less meat”). Based on a series of three experiments in both online and field settings with 674 participants overall, we show that in food consumption contexts with conflicting information, general goals set by health experts are less effective than specific goals in battling overconsumption. Perceived value of information was identified as the underlying mechanism as it mediated the effect of conflicting information on reduced overconsumption. Prior work suggests conflicting information is typically disadvantageous for consumers. Our research demonstrates how consumers can benefit from communication emphasizing specific goals when information conflicts. It contributes to policymakers, health experts, and social marketers that search for effective marketing strategies to reduce overconsumption of items that may be associated with conflicting information.     

Special fonts: The competing roles of difficulty and uniqueness in consumer inference

The use of special fonts in marketing communications may have more complex effects than expected. This study examines multiple effects of special fonts and proposes boundary conditions for the effects. Special fonts are perceived as more unique and difficult to read than regular fonts. Five experimental studies show that whereas the perception of uniqueness decreases the awareness of missing information, leading to more favorable initial judgments but a higher likelihood of regret later, the perception of difficulty has the opposite effects. These competing effects are moderated by contextual cues that vary the salience of uniqueness versus difficulty associated with special fonts. Specifically, consumers are more influenced by the uniqueness of special fonts when they rate the degree of uniqueness before the degree of difficulty or when they evaluate a product category (e.g., a handmade item or a décor) that is generally expected to be unique. On the contrary, they are more influenced by difficulty when they rate difficulty first or when they evaluate a product category (e.g., “a tax preparation service”) that is unexpected to be unique. Implications of the results for understanding the effects of fonts on information processing and consumer inference are discussed.     

Tradeoffs Between Price and Quality: How a Value Index Affects

The present research examines how the availability of information about the value of a product, expressed as a ratio of the quality received per dollar, influences preference formation. This index, similar to unit price which provides information about how much quantity is received per dollar, presents consumers with information regarding the quality received per dollar. An experiment that compares consumers' preferences inferred from a choice task with their preferences inferred from a conjoint task was conducted. In the choice task consumers selected the most attractive alternative from a set of options, while in the conjoint task the attractiveness of each option was rated. Consumers, presented with an index of quality received per dollar paid (the value index), are more likely to choose a lower priced, higher value option rather than a higher priced, higher quality option compared to consumers presented with only price and quality information. Clearly, how a consumer chooses to “get the best for his or her money” depends on the ease with which information about the choices can be processed.     

Quality signaling via strikethrough prices

Why do firms often advertise their current price together with their past price? Although consumers expect high quality products to have high prices, such firms may optimally charge lower prices when faced with low production costs. Thus in markets in which quality is difficult to ascertain and costs often fall over time, for example technology products, high quality firms may face a challenge of signaling their quality through current price alone. In this paper we develop a price signaling model in which uninformed consumers draw inference not only from the current price but also the prior period's price (the “strikethrough price”) if the firm chooses to disclose it. We find that a high quality firm benefits from using strikethrough pricing when the prior probability of high quality is relatively low while the probability of costs falling is relatively high.     

When self‐customization backfires: The role of a maximizing mindset

Self‐customization in online shopping contexts readily offers an abundance of options for consumers. However, the sheer amount of information can quickly become overwhelming. One way to give people the freedom to choose without overwhelming them with information is to simplify the decision process by breaking it down into a series of smaller steps. Contrary to a common assumption that simpler decisions increase choice likelihood, however, this study demonstrates that a simple by‐attribute self‐customization process may activate a maximizing mindset, which increases people's desire to find better options and decreases their satisfaction with the ones available. Consequently, simplifying the self‐customization process can sometimes backfire by decreasing choice likelihood. Three studies suggest that although by‐attribute self‐customization formats are easier to choose from, compared with more complex matrix formats, they may sometimes—paradoxically—increase choice deferral. The findings suggest that a maximizing mindset mediates this effect, casting doubt on information‐based alternative explanations. The findings also suggest that whether by‐attribute self‐customization increases or decreases choice likelihood may depend on the presence of objective quality cues, which indicate that an objectively‐best option can be found. This study furthers the understanding of how decision difficulty and maximizing influence self‐customization decisions.     

Designing the content of advertising in a differentiated market

In many markets, consumers use attribute information to assess the value they expect from purchasing a product or service. This includes many low involvement experience goods including take-out food, many packaged good categories and restaurants. In these markets, quality differences exist but many differences are horizontal in nature: the consumer is interested in finding a product that meets her unique tastes. Beyond ensuring that consumers know the brand, the category and the price; it seems advertising should provide consumers with attribute information. However, a significant proportion of advertising does not provide it. In fact, within the same category, competitors respond to messages that emphasize detailed attribute information with messages that are devoid of attribute information. These messages are uninformative about product attributes. We explore how competition in a differentiated market is affected by the ability of a firm has to choose uninformative messages. We construct a model to investigate the factors that affect a firm’s decision to use advertising with detailed attribute information or advertising that does not provide it. The model demonstrates that content decisions about advertising are affected by the differences between products, the range of heterogeneity in consumer tastes and the degree to which costs increase as a function of the quantity of information in advertising. Surprisingly, even when the cost to increase the quantity of information in advertising is low, uninformative campaigns can be more profitable than campaigns with attribute information. The analysis also demonstrates that firms can be more likely to provide attribute information when there are less consumers that are attribute-sensitive. Finally, the model shows that uninformative messages can create “artificial differentiation” in some situations.     

Inferential Evaluations of Sustainability Attributes: Exploring How Consumers Imply Product Information

Consumers are often confronted with incomplete product information. In such instances, they can eliminate the product from further consideration due to higher associated uncertainty or ask for more information. Alternatively, they can apply subjective theories about covariation to infer the value of missing attributes. This paper investigates the latter option in the context of sustainability and provides an in‐depth exploration of consumers’ inference formations. Drawing from rich qualitative data, it offers a conceptualization of the underlying relationships consumers use to infer product sustainability based on other product attributes. The study further assesses whether these findings can be captured in a quantifiable way. To this end, inferred sustainability is conceptualized as a formative second‐order construct, thereby depicting the influence of inference‐triggering product attributes.     

The economics of professional services: lemon markets, credence goods, and C2C information sharing

We discuss how professional service markets are plagued by asymmetric information, by looking jointly at the literature stemming from the seminal work of Akerlof on the “market of lemons”, and at the definition of “credence good” which has been developed especially within the field of health economics. Since consumers cannot evaluate ex post the quality of purchased professional services when these are “credence goods”, they cannot rely with 100 % confidence on other consumers’ and experts’ signals about service providers’ quality. Hence, questions arise on the effectiveness of traditional market features highlighted in literature as market-enhancing when information asymmetry is an issue, namely: advertising, certification, reputation, and liability. Our analysis specifically focuses on consumer-provided knowledge by looking at recent development of Web-based rating and reviewing services. Results point to the fact that consumers in the U.S. heavily rely on such services, and they do so roughly in proportion to their consumption of each professional sector. Therefore, future research on professional services should include a “C2C search technology” when modeling consumer behaviors that allows to define how much each professional service is to be considered as pure or hybrid “credence good.”     

Impact of “High Quality,Low Price” Appeal on Consumer Evaluations

Marketers frequently adopt a “high quality, low price” appeal in advertisements. However, the price–quality inference theory implies that this contextual appeal may not be well-accepted by consumers because it contains two contradictory cues: high quality and low price. This article investigates how consumers evaluate this appeal through two laboratory experiments. Study 1 shows that the appeal leads to favorable price perceptions and purchase intentions when the product price is high; it leads to high quality perceptions when the price is low. Study 2 shows that these effects are salient when consumers have a weak price–quality schema or a low need-for-cognition.     

Simple Decision Aids and Consumer Decision Making

To help consumers deal with increasing amounts of information, many online retailers offer simple decision aids, such as the ability to sort on a particular attribute or eliminate undesired alternatives. The authors propose that consumers use simple decision aids as substitutes for cognitive effort, potentially with adverse consequences for decision making. An experimental study shows that providing unrestricted sorting increases decision quality only when choice conflict is low; beyond a certain point, greater use of the decision aid is associated with declines in decision quality. A second study shows that that allowing consumers to sort alternatives only one time enhances decision quality and, when choice conflict is high, reduces decision effort. A third study shows that providing elimination as well as sorting tools helps mitigate the negative effects of simple decision aids. Although the availability of sorting alone hurts decision quality when choice conflict is high, decision quality under choice conflict is improved when both sorting and elimination tools are provided. Implications for retail practice are discussed.     

Promoting Educated Consumer Choices. Has EU Food Information Legislation Finally Matured?

Contemporary EU food information legislation combines and balances two main consumer interests, i.e., a consumer right to information and the freedom of choice, into one single protective standard: informed choice. Although the recent legislative measures quite openly establish a link between informed choice and the rather abstract societal norm of “what is good for the consumer,” this does not justify the conclusion that food information legislation has become overly meddlesome in relation to EU consumers and their choice of food. Rather, there has been a gradual maturing of the EU legislator’s perception of its task from the mere provision of food information to ensuring educated consumer choices. This development is a logical and necessary consequence of the growing complexity of food choices.     

How consumers use product reviews in the purchase decision process

This paper uses individual level data to examine the influence of product reviews in different stages of the consumer’s purchase decision process. Specifically, a two-stage model consisting of consideration set formation and choice is posited, where the consumer can incorporate information from product reviews in each stage. The model is estimated using an online panel survey about hotel choice. We find that (1) consumers use product reviews more in the consideration set stage and less in the choice stage, (2) Bayesian updating of prior perceived quality better explains how consumers use product reviews compared to two competing updating methods, and (3) the monetary value of a unit increase in the mean of product reviews is computed. Our results suggest that managers should make product review information (their number, average, and variance) available from the beginning of the search process and encourage satisfied customers to write reviews.     

Learning About Computers: An Analysis of Information Search and Technology Choice

We estimate a dynamic model of how consumers learn about and choose between different brands of personal computers (PCs). To estimate the model, we use a panel data set that contains the search and purchase behavior of a set of consumers who were in the market for a PC. The data includes the information sources visited each period, search durations, as well as measures of price expectations and stated attitudes toward the alternatives during the search process. Our model extends recent work on estimation of Bayesian learning models of consumer choice behavior in environments characterized by uncertainty by estimating a model of active learning—i.e., a model in which consumers make optimal sequential decisions about how much information to gather prior to making a purchase. Also, following the suggestion of Manski (2003), we use our data on price expectations to model consumers’ price expectation process, and, following the suggestion of McFadden (1989a), we incorporate the stated brand quality information into our likelihood function, rather than modeling only revealed preference data.Our analysis sheds light on how consumer forward-looking price expectations and the process of learning about quality influence the consumer choice process. A key finding is that estimates of dynamic price elasticities of demand exceed estimates that ignore the expectations effect by roughly 50%. This occurs because our estimated expectations formation process implies that consumers expect mean reversion in price changes. This enhances the impact of a temporary price cut. Finally, while our work focuses specifically on the PC market, the modeling approach we develop here may be useful for studying a wide range of high-tech, high-involvement durable goods markets where active learning is important.JEL Classification: C15, C33, C35, C42, C51, C52, D83, D84     

Price Awareness and Consumers’ Use of Deals in Brand Choice

There is evidence that consumer knowledge of prices is limited, implying that, on occasions, consumers may not be fully informed of prices when making a brand purchase. On such occasions, how do consumers make their brand choice decision? One possibility is that consumers use their expectation of prices. This raises an interesting question. To what extent is brand purchase either a function of preferences and posted prices or, of preferences and expectation of brand prices? Another important issue relates to the role of displays and features in simplifying consumer brand choice. First, do promotions cause consumers to restrict their attention to only promoted brands? Second, do promotions affect the price aware consumers more than the price unaware consumers? Our study uses scanner data on ketchup and peanut butter categories to answer the foregoing questions. We find that between 40 and 50% of the purchases are made by consumers using expectations of prices rather than posted prices. Consumers using price expectations may be thought of as being “unaware” of prices. We also find that promotions cause some consumers to focus exclusively on promoted brands, and this effect is greater on the price aware consumers than on the price unaware consumers. Our findings have an important bearing on the rationality of consumer expectation of prices, especially of the promoted brands. Price aware consumers act as a check against firms promoting without accompanying price cuts.     

I'll Have Fries with That: Increasing Choice Complexity Promotes Indulgent Food Choices

Three studies showed that the way that options are presented in a choice set—as combinations of intersecting attributes or in a more sequential “a la carte” choice format—affects the degree to which consumers adhere to their goals in the consumption setting. Specifically, using the context of food consumption and healthy eating, results showed that consumers were more likely to make double indulgent choices, the choice of both an indulgent entrée and an indulgent side item, when choosing from a menu consisting of predetermined “combination meals” than when selecting among the same entrée and side options in an a la carte fashion. Studies 2 and 3 implicated a goal distraction mechanism in driving the effect; the combination format, with its cross‐cutting of product choices into various combinations, reduces the salience of goal‐related constructs on implicit measures. In showing that different product presentation formats can affect the degree to which consumers make goal‐consistent choices, the current work adds to work on the effects of environmental influences on goal progress and goal achievement. Implications for encouraging goal‐consistent behavior in the context of healthy eating as well as other important consumer goal contexts are discussed.     

Retailer Categorization: How Store-Format Price Image Influences Expected Prices and Consumer Choices

Prior research indicates that consumers may base their retail decisions (e.g., store choice, purchase quantity) on price image, which has been defined as consumer perceptions “of the aggregate price level of a retailer” (Hamilton and Chernev 2013, p. 2). The present research shows that consumers associate different price images not only with specific retailers, but more broadly with various store formats — such as grocery stores, convenience stores, and specialty stores. Six studies provide evidence that store-format price image exerts influence on consumer price expectations and store choice decisions, and that these retailer categorization effects are distinct from the effects of retailer price image.