On consumer choice patterns and the net impact of feature promotions

Even in the digital age, feature promotions continue to receive significant investments from CPG manufacturers and retailers. Whether this is money well spent depends on consumers' (heterogeneous) tendency to switch brands or stores in response to features. This study proposes a ‘Mixed-pattern Random-effects Nested Logit’ (MRNL) model to analyse the effect of feature promotions in a multi-retailer multi-brand setting. Across 16 different CPG categories, our results reveal that in all cases a mixture of choice patterns prevails: about half of households exhibit a brand focus (i.e. rather substitute between stores offering that brand), the remaining half show evidence of a store focus (i.e. rather substitute brand offers within a visited store). We find that the size of the promotion lift and its underlying sources differ substantially between patterns. Brand-focused consumers are generally more responsive to feature ads than store-focused consumers – especially in low-concentration categories; while they imply much stronger cannibalization for the manufacturer, and much weaker cannibalization for the retailer. It follows that retailers reap much higher benefits in the brand-focused segment, while manufacturers may not prefer that segment in terms of net gains and must be wary of subsidizing those consumers. We identify household and category characteristics that underlie the choice patterns and offer opportunities for targeting.     

Interaction effects of mood induction and nominal representation of price on consumer choice

The transition to the euro in several European countries causes consumers to make mistakes in economic transactions. One mistake referred to as the “euro illusion” is the tendency to evaluate prices on the basis of their nominal representation, thus overestimating or underestimating how expensive products are. Investigating effects of the euro illusion on consumer choice as well as moderating effects of mood, three laboratory experiments were conducted employing convenience samples of students. In Experiment 1 a bias toward the nominal representation was demonstrated when participants chose an unfamiliar (fictitious) large-unit currency (small numbers) for paying the price of a consumer product but chose an unfamiliar small-unit currency (large numbers) for obtaining a salary. The bias was larger for participants who were induced to feel positive and deactivated (calm and relaxed) than for participants who were induced to feel negative and activated (anxious and jittery). The difference in frequencies of choice of currency were replicated in Experiment 2. No effects were, however, found of natural mood assessed by self-report ratings. In Experiment 3 choices of more expensive consumer products with additional features were more frequent when the prices were expressed in the large-unit currency than when expressed in the small-unit currency. Neither in this case did self-reported natural mood affect the choices.     

Book essay on Flemming Hansen and Sverre Riis Christensen (2007), Emotions, advertising and consumer choice

Hansen and Christensen discuss a wide range of current issues regarding the role of emotions in consumer behavior as well as measures of advertising effectiveness. The central theme of the book is the elaboration and application of a new tool to measure the emotional constructions that consumers develop for branded fast moving consumer goods. The authors call this measure NERS, which stands for Net Emotional Response Strength. The book appeals to both intermediate and advanced academic readers due to the comprehensiveness of its literature review and the depth of its theoretical developments. The present essay critically comments the contents of the book and then, based on the context provided by the book, discusses in further detail some salient aspects of the role of emotions in consumer choice that deserve special attention. In particular, it is pointed out how some findings from behavioral decision research could improve the conceptualizations offered by Hansen and Christensen.     

The effects of emotion and need for cognition on consumer choice involving risk

Building upon previous research, this article proposes that the effect of mood on risk-taking is moderated by the individual’s need for cognition. The hypothesized effect of mood and the need for cognition are tested with different types of consumer choices in three studies. Consistent with the hypotheses, the results indicate that the subjects in happy mood tend to be risk-aversive while the subjects in sad mood incline to take risks. Furthermore, the mood affects risk-taking behavior more for the low-NFC subjects than for the high-NFC ones. Finally, implications of the findings and suggestions for future research are discussed.     

Effects of the perceived diagnosticity of presented attribute and brand name information on sensitivity to missing information

Four experiments demonstrated that as the perceived diagnosticity of the presented information increases, sensitivity to missing diagnostic information decreases. However, experts were sensitive to missing information regardless of the diagnosticity of the presented attribute information. When a well-known brand name was paired with the attribute information, novices were insensitive to missing information regardless of the diagnosticity of the presented attribute information. Implications of the results for understanding information utilization and omission neglect are discussed.     

Category management and consumer choice

This paper shows the results of an exploratory analysis of the structure of a complex product category: Wine. In complex categories, a usual strategy of consumers is the partitioning of alternatives into homogeneous subsets and the sequential eliminations of subsets until a product/brand is chosen from among few homogeneous alternatives in the last subset. To identify if there is such a kind of strategy and the product attributes involved is of great interest for the retailer. After a discussion of the different modelling alternatives of the choice process, the authors provide an application of the additive trees (ADDTREE) model to explore the hierarchical structure. The ADDTREE results provide a first overview of the competitive market structure of the wine category: competition becomes more intense as the wine category is partitioned by, first, the type of wine criteria and, second, the designation of origin (DO) criteria.     

The structure of consumer confidence and real value added growth in retailing in the Netherlands

Consumer confidence is a determinant of the willingness to buy and thus of sales in retailing. The main purpose of this study is to investigate whether the structure of consumer confidence in the period 1987-2000 differs from the 1972-87 period. The main finding is that, in the 1972-87 period saving had a precaution motive and in the 1987-2000 period saving had a transaction motive. In the 1972-87 period, the utility and ability of saving were determined by the development of household wealth; and in the 1987-2000 period, the utility and ability of saving are determined by the level of household wealth. The perceived inflation is related more strongly to the perceived development of the general economic situation in the 1972-87 than in the 1987-2000 period. Empirical evidence is found that consumer confidence also influences real sales of retailers.     

The impact of advertising on consumer price sensitivity in experience goods markets

In this paper we use Nielsen scanner panel data on four categories of consumer goods to examine how TV advertising and other marketing activities affect the demand curve facing a brand. Advertising can affect consumer demand in many different ways. Becker and Murphy (Quarterly Journal of Economics 108:941–964, 1993) have argued that the “presumptive case” should be that advertising works by raising marginal consumers’ willingness to pay for a brand. This has the effect of flattening the demand curve, thus increasing the equilibrium price elasticity of demand and the lowering the equilibrium price. Thus, “advertising is profitable not because it lowers the elasticity of demand for the advertised good, but because it raises the level of demand.” Our empirical results support this conjecture on how advertising shifts the demand curve for 17 of the 18 brands we examine. There have been many prior studies of how advertising affects two equilibrium quantities: the price elasticity of demand and/or the price level. Our work is differentiated from previous work primarily by our focus on how advertising shifts demand curves as a whole. As Becker and Murphy pointed out, a focus on equilibrium prices or elasticities alone can be quite misleading. Indeed, in many instances, the observation that advertising causes prices to fall and/or demand elasticities to increase, has misled authors into concluding that consumer “price sensitivity” must have increased, meaning the number of consumers’ willing to pay any particular price for a brand was reduced—perhaps because advertising makes consumers more aware of substitutes. But, in fact, a decrease in the equilibrium price is perfectly consistent with a scenario where advertising actually raises each individual consumer’s willingness to pay for a brand. Thus, we argue that to understand how advertising affects consumer price sensitivity one needs to estimate how it shifts the whole distribution of willingness to pay in the population. This means estimating how it shifts the shape of the demand curve as a whole, which in turn means estimating a complete demand system for all brands in a category—as we do here. We estimate demand systems for toothpaste, toothbrushes, detergent and ketchup. Across these categories, we find one important exception to conjecture that advertising should primarily increase the willingness to pay of marginal consumers. The exception is the case of Heinz ketchup. Heinz advertising has a greater positive effect on the WTP of infra-marginal consumers. This is not surprising, because Heinz advertising focuses on differentiating the brand on the “thickness” dimension. This is a horizontal dimension that may be highly valued by some consumers and not others. The consumers who most value this dimension have the highest WTP for Heinz, and, by focusing on this dimension; Heinz advertising raises the WTP of these infra-marginal consumers further. In such a case, advertising is profitable because it reduces the market share loss that the brand would suffer from any given price increase. In contrast, in the other categories we examine, advertising tends to focus more on vertical attributes.

Consumer Support Networks: assessment of need for consumer information and advice service

Research evidence suggests that UK consumers are facing significant problems with goods and services and are in need of information and advice to avoid or redress such situations. Consumers are not always aware of their rights nor where they can access consumer advice services. In 2000, the Department of Trade and Industry launched the Consumer Support Network (CSN) programme in Great Britain to improve consumer access to expert, accurate and timely advice. One challenge faced by these Networks and many other agencies is to assess the needs of consumers for consumer information and advice services. A needs assessment is required as a key element in the effective planning and development of services in each Network at a local level. The focus of the needs assessment at the local level is to encourage Networks to consider suitable solutions to meet the needs of people in their communities. This paper provides a review of the development of Consumer Support Networks in Great Britain and discusses the importance of needs assessment to service providers such as CSNs and other agencies. It reveals the complexity associated with conducting effective needs assessments including the various aspects of needs, consumer segmentation and characteristics of consumer information and advice. Further research is being carried out at Queen Margaret University College, UK, with a view to the development of a scientific model for the assessment of need for consumer information and advice services.     

An empirical test of the Theory of Sales: Do household storage constraints affect consumer and store behavior?

We revisit and test Salop and Stiglitz (1982) Theory of Sales. Equilibrium comparative static predictions are that greater consumer storage constraints lead to: (1) higher average prices, (2) fewer promotions, and (3) shallower promotions. In equilibrium, price dispersion is nonlinear in storage constraints, first increasing then decreasing. Empirical estimates of storage constraints are developed for approximately 1,000 households using the American Housing Survey (1989), United States Census (1990), and Stanford Market Basket Database (1991–1993). We find consumers with greater storage constraints shop more often and purchase smaller quantities per visit; moreover, the comparative static predictions are supported and evidence consistent with the equilibrium dispersion prediction is observed. Estimated quantitative effects are economically important. JEL Classification D12 · D40 · M3     

Information technology and consumer behavior in travel and tourism: Insights from travel planning using the internet

Sustaining business success hinges upon a firm׳s ability to understand and capitalize on consumer behavior trends. Synthesizing information from a variety of sources, this paper discusses the nature of use of the Internet by American travelers. In general, the adoption of the Internet has reached a level of saturation and some traditional channels such as online travel agencies (OTAs) continue to dominate travel planning. While traditional means of Internet use for travel planning appears to be widespread across all customer segments, higher-order Internet uses (i.e., social media) are now prevalent among some segments, particularly among travelers of Generation Y. Also, there seems to be an important bifurcation in the traveler population in that the traditional online consumers remain unchanged with their pattern of use of online tools while sizable groups are adopting emergent information sources and transaction channels. This article details the particulars of these trends and offers managerial implications and future research directions.     

Segmentation of Malaysian shoppers by store choice behaviour in their purchase of fresh meat and fresh produce

Differences in retail store choice behaviour are examined for the purchase of fresh meat and fresh fruit and vegetables in Malaysia. In purchasing fresh meat, cluster analysis identified two groups of respondents who purchased the majority of the fresh meat they consumed from either modern retail stores or the traditional market. However, with regard to the purchase of fresh fruit and vegetables, cluster analysis identified three groups of respondents (modern retail shoppers, transient shoppers and traditional market shoppers). Although the clusters were labelled using similar terms, several similarities and differences were identified in the respective clusters for each food item. The findings indicate that store choice preference was based on the food product that the consumer intended to purchase.     

Convergence and divergence in consumer behavior: implications for international retailing

Converging technology and disappearing income differences across countries will not lead to homogenization of consumer behavior. Rather, consumer behavior will become more heterogeneous because of cultural differences. As consumer incomes converge across countries, the manifestation of value differences will become stronger. This phenomenon makes it increasingly important to understand values of national cultures and their impact on consumer behavior. Retailing strategies for one country cannot be extended to other countries without adaptation. Hofstede’s model of national culture is applied to understand differences in consumer behavior across countries. Examples are provided of consumption differences, their relationships with culture discussed, and selected implications for international retailing management detailed.     

Convergence in global markets and consumer behaviour

Consumer behavioural scientists such as economists and marketing researchers are interested in the degree to which global convergence is occurring with respect to various consumer behaviour dimensions, particularly the extent that consumption patterns in products appear to evolve and become more similar across different parts of the world. With increasing internationalization and cultural cross‐fertilization, the traditional societies of the world are converging in many ways. The strategic marketing of flavoured alcoholic beverages is a particularly interesting example of this evolutionary process to convergence. Consumers in countries of different cultural originations are developing preferences for the same products and show increasing sign of converging around global product identity. This article presents the results of a study analysing the evolutionary process.     

Volunteering personal information on the internet: Effects of reputation, privacy notices, and rewards on online consumer behavior

Accurate personal information provision is one of the most important determinants of the commercial development of the Web. However, consumers are usually reluctant to provide personal information or tend to provide false information online because of their concern about privacy violation risks. We employ a 2× 2× 2 experimental design to examine the effects of reputation, privacy notices, and rewards on online consumer behavior in volunteering two types of personal information on the Internet: demographic information and personally identifiable information. We discuss the theoretical and practical implications of the findings.     

The role of information asymmetry in the choice of entrepreneurial exit routes

Our quantitative study investigates the determinants of internal versus external exit routes in family firms. Building on information asymmetry theory, we examine how an owner's inferior knowledge about the abilities of potential external entrants (in contrast to family internal successors) renders a family internal transfer more likely. This information asymmetry, however, can be mitigated by activities such as owners' screening and transfer candidates' signaling efforts to reveal the candidates' abilities. Our data exhibits a positive effect of signaling and an inverted U-shaped effect of screening on the probability of external exit routes. Firm age, as a driver of emotional attachment, weakens these effects.     

推销影响力缺乏的原因及对策分析

推销是一项非常具有挑战性的工作,推销员在推销过程中经常面对各种推销困境。从心理学的角度来探讨,推销困境产生的根本原因是推销员对潜在消费群体缺乏影响力。推销中缺乏影响力的主要原因有难以激发客户产生回报的责任感,缺乏运用客户一致性心理的技巧,不能获得客户的喜好等,因此应从唤起客户产生回报的责任感,激发客户做出发自内心的承诺,掌握多方面信息以迎合客户的喜好等方面,塑造推销影响力。     

Development and validation of a measure of consumer behaviors toward nutritional labeling in restaurants

This study identifies multiple steps for the development and validation of a measurement of consumer attitudes and behaviors regarding nutritional information in restaurants. These steps include an extensive literature review, in-depth interviews, experts’ reviews, a pilot test, and a customer survey. The final questionnaire that collected data from 617 restaurant customers was verified through statistical analysis of reliability test, construct validity, and confirmatory factor analysis. The measurement offers a method to evaluate customers’ use of nutrition information in restaurants and, thus, a tool to prevent obesity for the public.     

Predicting consumer behavior with two emotion appraisal dimensions: Emotion valence and agency in gift giving

Decades of emotion research have demonstrated the unique influences of many specific emotions on consumer behaviors. These countless numbers of emotion effects can make it difficult to understand the role of emotions in consumer behavior. The current research introduces a parsimonious framework that can predict the effects of emotions on the consumer behavior of gift giving with just two appraisal dimensions: valence and agency. A series of studies examining gift giving reveals that positive emotions exert positive effects on gift giving, independent of their agency. In contrast, agency does predict the effects of negative emotions on gift giving. Negative self-caused emotions increase gift giving, whereas negative other-caused emotions decrease gift giving. These findings seem to hold for inactive and active emotions, and for uncertain and certain emotions. Together, these findings make a unique theoretical and empirical contribution to the understanding of emotions in gift giving. Moreover, it provides a pragmatic framework for both academics and practitioners.     

A comparison of parents' and children's knowledge of brands and advertising slogans in the United States: implications for consumer socialization

Research in the area of consumer socialization suggests that parents act in an agent–learner relationship with their preadolescent children and have the greatest influence on their young children's purchase behaviour. The present study examines this assumption in light of changes in family roles and composition, media exposure and marketing efforts aimed at children. A cognitive recognition test of advertising slogans drawn from recent television commercials is used to determine knowledge levels of a sample of preadolescent children and their parents. Results suggest that children, beginning at age nine, have as much knowledge of advertising slogans as do their parents, even in product categories targeted at adults.