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.     

The financial advice puzzle: The role of consumer heterogeneity in the advisor choice

We investigate motivational drivers of financial advisor use, accounting for investor heterogeneity, with the goal of helping institutions increase the use of financial advisor services. The results from a latent class choice model reveal two distinct segments that differ in their approach to the financial advice decision. While higher levels of risk tolerance, trust, and self-efficacy increase financial advice use for both segments, albeit at much higher propensities for Segment 1, personality only matters for Segment 1. Moreover, their regulatory focus differs with Segment 1 being promotion and Segment 2 being prevention focused. Using these results, we offer suggestions for marketing strategies.     

Bandwagon vs snob luxuries: Targeting consumers based on uniqueness dominance

Consumers' need for uniqueness (CNFU) has received much attention in identifying intention for luxury consumption. This study investigates how the interplay of CNFU dimensions (i.e. creative choice, unpopular choice and avoidance of similarity), social comparison and psychological entitlement drives consumers’ intention for bandwagon and snob luxury consumption. Useable responses collected from 427 high-income Indian luxury fashion consumers were analysed using SEM and Process-Macro. The creative choice dimension enhances the purchase intention of bandwagon luxury items indirectly via social comparison while psychological entitlement strengthens this indirect effect. The unpopular choice tendency has significant direct effect on snob luxury consumption. The avoidance of similarity dimension enhances purchase intention of snob luxury items directly while it also enhances bandwagon luxury consumption indirectly via social comparison. Psychological entitlement strengthens this indirect effect. This study contributes to the luxury consumption literature by proposing three distinctive types of consumption behaviours relating to snob and bandwagon luxury items based on these interplays.     

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.     

To pursue personality or conformity: A study on the impact of face view on consumers’ need for uniqueness

Chinese people are very focused on “face,” the desire to pursue face, and the fear of losing face. Face has a broad and profound impact on the behavior of Chinese consumers. By adopting Zhang's face dimension method, this study divides consumers’ face view into “the desire to gain face” and “the fear of losing face,” and develops a model to investigate their impacts on consumers’ need for uniqueness. Data from 360 college students and graduate students were used to validate the proposed model through structural equation modeling. Results show that the desire to gain face and the fear of losing face have indirect effects on consumers’ need for uniqueness, with the mediation of independent self‐construal and consumer's susceptibility to normative influence. The study provides both theoretical and managerial contributions, and a new perspective to better understand Chinese consumers’ face view and consumers’ need for uniqueness. Managerially, the study offers suggestions for consumers about how to properly obtain face, for enterprises about how to formulate targeted marketing strategies using consumers’ face view, and for the government on how to guide consumption trends through consumers’ face mentality.     

The role of image in service promotion: focusing on the influence of film on consumer choice within tourism

This paper presents a review and discussion of the role image plays in service promotion and consumer choice in the context of film‐induced tourism. Consumers can be very sensitive to images which are important determinants of what a service customer purchases. In relation to image, the medium of film can have a very influential impact on its audience. Consumers may make purchase choices in a range of areas as a result of what they have seen in the movies. An expanding body of literature suggests that film can influence people's travel decisions and entice them to visit particular destinations they have seen on the cinema screen (reinforced through repeat viewing on video, DVD and television). Tourism is a service industry. Does the image of a destination and how it is represented help overcome some of the challenges of service marketing? Many regions throughout the British Isles have seen their consumer appeal improve because of their links with respective film and television productions. Although they have benefited tourism‐wise from this, in many cases there still has not been enough real support from tourist authorities to this growth phenomenon, and as such, the full potential of film to tap into the consumer psyche has not yet been fully realized. Academic discourse from several disciplines is examined in this communication culminating in a conceptual model of destination enhancement through film‐induced image, featuring the conscious and unconscious communication factors at work on two sets of consumers (film consumers and destination consumers). As a ‘work in progress’, the paper sets the scene for further empirical research in this interesting area of study.     

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.     

The role of ethical obligation and self‐identity in ethical consumer choice

Many variables have been proposed as additions to the theory of planned behaviour structure, and evidence exists to support the value of a measure of ethical obligation and self‐identity. Furthermore, some research has suggested that ethical obligation may serve as an antecedent to attitude as well as intention. This paper presents findings from a large scale survey that highlights the usefulness of ethical obligation and self‐identity in the prediction of intention. Additionally, the role of both these variables in the prediction of attitude is also suggested. This is examined within the ‘ethical’ context of fair trade grocery purchases. Methodological implications for further research are discussed.     

Townhouse residents’ use of interior products in the social zones of their homes as a demonstration of their need for uniqueness

Town houses or cluster homes refer to housing developments where the exterior façade of adjacent units are architecturally identical or very similar. A pertinent disadvantage of this type of tenure is that residents are not allowed to alter the exterior of their homes to reflect personal differences. This study focussed on the probability that residents in these type of townhouses would make intentional effort to demonstrate their uniqueness through counter‐conforming choice of interior objects for the social areas of their homes where guests are received and entertained. The study involved 182 respondents who lived in townhouses in a major urban area in South Africa who were recruited through convenient snowball sampling. Findings indicate that townhouse residents' interior product decisions are predominantly of a creative counter conformity nature which is the safer alternative than avoidance of similarity or unpopular choice counter‐conformity practices that might evoke criticism from peers or reference groups. Interior product choices are therefore predominantly cautious and aimed to evoke the admiration of others rather than critique. A positive outcome of this study in terms of future research is confirmation of the usefulness of the measuring instrument, which was originally developed for clothing research. Findings are insightful for property developers, interior designers, interior decorators and retailers in terms of consumer facilitation and the appropriate marketing of interior products.     

Abandoning distinctiveness: The influence of nostalgia on consumer choice

This study proposes that when feeling nostalgic, consumers are more likely to choose the option that the majority of others prefer. Four studies consistently demonstrate that nostalgia can enhance consumers' social connectedness, which motivates them to maintain the feelings of connection to the group and thereby increases their preference for majority-endorsed options in the subsequent product choices. Moreover, the strength of social ties between consumers and others moderates the mediation effect of social connectedness. In the weak social ties condition, social connectedness mediates the effect of nostalgia on preference for majority-endorsed products. In the strong social ties condition, the mediation effect of social connectedness diminishes. These findings complement previous work on how nostalgia influences consumer behavior.     

If we label it, will they care? The effect of GM-ingredient labelling on consumer responses

More than 60% of foods in North American supermarkets contain GM ingredients. While North American consumers seem less concerned about GM foods than Europeans and Japanese, many consumer activists argue that consumers have a “right to know” if what they eat has GM ingredients. Will informative labelling of GM foods lead to major shifts in buying patterns? An experimental study found minimal effects of GM labelling overall but significant differential reactions to GM-labelled products across consumers with differing levels of consumer activism, perceived benefits of genetic engineering, and interest in novel foods with consumer benefits.     

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.

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.     

The effects of product scarcity and consumers' need for uniqueness on purchase intention

Scarcity strategies are employed by marketers to influence consumer decision making. Many famous brands have been designed and produced for the purpose of as being marketed as limited‐edition products to intensify consumer desire and intention to purchase them. However, very few studies have simultaneously integrated relevant constructs to explain the phenomenon of scarcity purchasing. To fill this void, this study develops a comprehensive research model in order to fully understand how scarcity affects consumer value perception and purchase intention. Simultaneously, two competing models are developed to compare the explanation power of Lynn's Scarcity–Expensiveness–Desirability (S‐E‐D) model and Synde and Fromkin's desire for uniqueness model. The results suggest that the effects of scarcity on purchase intention through perceived uniqueness, perceived sacrifice and perceived value are stronger than the scarcity effects through assumed expensiveness, perceived quality, perceived sacrifice and perceived value.     

The relative impact of corporate reputation on consumer choice: beyond a halo effect

ABSTRACT

Previous work suggests that corporate reputation generates a ‘halo effect’ where products from companies with better reputations are more likely to be chosen. We argue that corporate reputation plays a more expansive role, proposing that consumers will be less price-sensitive to offerings endorsed by companies with good reputations and that it moderates the marginal utility of product features with high clarity. We also propose that an individual’s knowledge of a company increases the likelihood its products will be purchased. Using a choice model incorporating an individual SEM-based reputation measure, we find support for these hypothesised effects in the context of television choices. The results suggest that corporate reputation warrants more attention by marketing managers to increase preferences for their products through these mechanisms.     

When worlds collide: The implications of panel data-based choice models for consumer behavior

Panel data, both diary and scanner, have been analyzed by marketing scientists for over thirty years. One of the important uses of panel data is to better understand consumer behavior by developing and testing hypotheses using the revealed preference data rather than experimental data that uses only self-reported behavior or behavior in a simulated choice environment. The purpose of this paper is to suggest areas of research where panel data can be used to better understand the underlying behavior of the panel members.     

Random regret minimization for consumer choice modeling: Assessment of empirical evidence

This paper introduces to the field of marketing a regret-based discrete choice model for the analysis of multi-attribute consumer choices from multinomial choice sets. This random regret minimization (RRM) model, which has recently been introduced in the field of transport, forms a regret-based counterpart of the canonical random utility maximization (RUM) paradigm. This paper assesses empirical results based on 43 comparisons reported in peer-reviewed journal articles and book chapters, with the aim of finding out to what extent, when, and how RRM can form a viable addition to the consumer choice modeler's toolkit. The paper shows that RRM and hybrid RRM–RUM models outperform RUM counterparts in a majority of cases, in terms of model fit and predictive ability. Although differences in performance are quite small, the two paradigms often result in markedly different managerial implications due to considerable differences in, for example, market share forecasts.     

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.     

The effects of in-store themed events on consumer store choice decisions

Retailers are increasingly using in-store events to provide shoppers with unique experiences that will enhance shopping value and help differentiate their stores from competitors. However, relatively little is known about how consumers respond to experiential retail events in terms of their store choice decisions. The purpose of this research was to find out how in-store retail events affect consumers in terms of their store choice decisions. The paper presents findings from a discrete choice experiment that manipulated the presence of different types of in-store themed events in a do-it-yourself (DIY) category. Participants were 312 randomly recruited residents of Melbourne, Australia, who had recently shopped at a hardware store. The experiment was implemented as a mail-back survey. Using logit models the authors assess the effects of the in-store events along with those of various traditional store attributes, including store appearance, price image and distance, on consumer store choice decisions.     

Thiscompanysucks.com: the use of the Internet in negative consumer‐to‐consumer articulations

The Internet has provided a forum through which consumers who are dissatisfied with various companies can vent their anger towards these corporations. A number of World Wide Web (WWW) sites have cropped up on the Internet, their specific aim being the fomenting of negative communication about companies: these are known as corporate complaint WWW sites. Little research has been conducted on negative on‐line consumer‐to‐consumer articulations and the possible impact that these might have on consumers' perceptions and attitudes. This paper attempts to foster discussion on the use of the Internet in facilitating consumer‐to‐consumer communication, particularly negative communication. First, background information on corporate complaint WWW sites is provided. Then, a survey that was conducted in order to glean information on consumer knowledge of and responses to these kinds of WWW sites is discussed. The results indicate that, among the population used in this study, the awareness of corporate complaint WWW sites was moderate. However, when respondents were aware of them, they were likely to visit them. Social influence plays a role in influencing awareness and prompting visits to corporate complaint WWW sites. In addition, an individual difference factor, attitudes towards complaining, influenced the kinds of activities in which the respondents engaged when they visit corporate complaint WWW sites. Future research directions are proposed.