Publications and research
Krishna, Aradhna (2013), Customer Sense: How the 5 Senses Influence Buying Behavior, Palgrave Macmillan
For years, marketers have been experimenting with the senses and sensory experiences to create better perceptions of their products. Even with a product as simple as a potato chip, there are many factors that go into the experience of interacting with the chip. How it tastes, how it smells, the sound that eating it makes, and the appearance of its packaging can all influence our perception of the potato chip itself. As scientists and managers begin to recognize the importance of the senses in product design and marketing, more and more products and advertisements have become sensory in nature.
Accepting the importance of the senses brings about a change in how a manager views his or her products. What changes can be made in the packaging, branding, and advertising to captivate the consumer's senses? What changes can be made to the product itself? This book helps managers to understand how customers relate to products on a sensory level, detailing the specific interactions unique to each sense and showing them how small sensory changes can make a huge impact. Customer Sense allows managers to unlock the secret world of sensory appeal and to craft unique products and advertisements for their businesses.
Krishna, Aradhna (ed.) (2009), Sensory Marketing: Research on the Sensuality of Consumers, Routledge
In this edited book, the authors discuss how sensory aspects of products, i.e., the touch, taste, smell, sound and look of the products, affect our emotions, memories, perceptions, preferences, choices and consumption of these products. We see how creating new sensations or merely emphasizing or bringing attention to existing sensations can increase a product's or service's appeal. The book provides an overview of sensory marketing research that has taken place thus far. It should facilitate sensory marketing by practitioners and also can be used for research or in academic classrooms.
Packaging is a critical aspect of the marketing offer, with many implications for the multi-sensory customer experience. It can affect attention, comprehension of value, perception of product functionality, and also consumption, with important consequences for consumer experience and response. Thus, while it was once viewed as being useful only for product preservation and logistics, package design has evolved into a key marketing tool. We introduce the layered-packaging taxonomy that highlights new ways to think about product packaging. This taxonomy has two dimensions: the physicality dimension, which is composed of the outer-–intermediate–inner packaging layers, and the functionality dimension, which is composed of the purchase-–consumption packaging layers. We then build on this taxonomy to present an integrative conceptualization of the sensory aspects of package design as they affect key stages of customer experience.
(We wrote an Op-Ed in The Coversation based on this article. The Op-Ed was carried by The Washington Post, The Guardian, Quartz, The Wire, Salon and other publications and had more than 126,000 reads.)
Prior research has shown that choice versus rejection decisions can cause preference reversals by changing the importance of negative and preference-inconsistent attributes. We demonstrate that people are also more likely to rely on deliberative processing in rejection (vs. choice) tasks. We test our conceptualization across seven experiments. We replicate results from prior research in the choice task; and then show how these results change when a rejection task is used. Study 1A uses the Asian disease problem scenario to demonstrate that rejection makes people less susceptible to framing effects. A hypothetical Study 1B and an incentive-compatible Study 1C replicate the moderating effect of task type on framing effects in the domain of financial decision-making. Studies 2 and 3 examine the effect of task type in the contexts of online reviews (Study 2) and complex product choices (Study 3) – they show that people make more rational and objectively superior decisions in rejection. Studies 4 and 5 tap into the process underlying the effect of task type (choice vs. rejection). We demonstrate that a rejection task produces decisions similar to those observed in a choice task when decision-makers are cognitively depleted (Study 4), or encouraged to rely on their feelings (Study 5).
Firms can save considerable money if consumers conserve resources (e.g., if hotel patrons turn off the lights when leaving the room, restaurants patrons use fewer paper napkins, or airline passengers clean up after themselves). In two studies conducted in real-world hotels, the authors show that consumers’ conservation behavior is affected by the extent to which consumers perceive the firm as being green. Furthermore, consumer perceptions of firms’ greenness and consumer conservation behavior depend on (a) whether the firm requests them to conserve resources, (b) the firm’s own commitment to the environment, and (c) the firm’s price image. Additionally, firm requests to consumers to save resources can create consumer reactance and can backfire when firms themselves do not engage in visible costly environmental efforts. Such reactance is more likely for firms with a high price image. Finally, the authors show that by spending a little money to signal environmental commitment, firms can save even more money through consumers’ conservation of resources, resulting in wins for the firm, the consumer, and the environment.
Five experiments show that less physical involvement in obtaining food leads to less healthy food choices. We find that when participants are given the choice of whether or not to consume snacks that they perceive as relatively unhealthy, they have a greater inclination to consume these snacks when less (versus more) physical involvement is required to help themselves to the food; this is not the case for snacks that they perceive as relatively healthy. Further, when participants are given the opportunity to choose their portion size, they select larger portions of unhealthy foods when less (versus more) physical involvement is required to help themselves to the food; again, this is not the case for healthy foods. We suggest that this behavior occurs because being less physically involved in serving one’s food allows participants to reject responsibility for unhealthy eating and thus to feel better about themselves following indulgent consumption. These findings add to the research on consumers’ self-serving attributions and to the growing literature on factors that nudge consumers towards healthier eating decisions..
People nowadays order food using a variety of computer devices, such as desktops, laptops, and mobile phones. Even in restaurants, patrons can place orders on computer screens. Can the interface a consumer uses affect her choice of food? We focus on the “direct touch” aspect of touch interfaces, whereby users can touch the screen in an interactive manner. In a series of five studies, we show that a touch interface such as that provided by an iPad, compared to a non-touch interface such as that of a desktop computer with a mouse, facilitates the choice of an affect-laden alternative over a cognitively superior one—what we call the “Direct-Touch effect.” Our studies provide some mediational support that the Direct-Touch effect is driven by the enhanced mental simulation of product interaction with the more affective choice alternative on touch interfaces. We also test the moderator of this effect. We obtain consistent results using multiple product pairs as stimuli. Our results have rich theoretical and managerial implications.
There has been a remarkable increase in the use of spotlight analysis to examine any interactive effect between an independent variable and a continuous moderator. Most of the spotlight analyses have been conducted at one standard deviation above and below the mean value of the moderator, even when alternate methods are more appropriate. Additionally, many spotlight analyses are not conducted correctly. More importantly, results for spotlight analyses are reported in a manner that makes it virtually impossible for mistakes to be detected. This article focuses on "understanding", "conducting" and "reporting" spotlight analyses. By posing questions for the reader, it highlights some common mistakes made when doing spotlight analysis, and explains why confusion often arises. Then, it provides an easy to understand way to do spotlight analysis for some popular contexts. Alternatives to spotlight analysis are also briefly discussed. Finally, it suggests how to report results for spotlight analysis and for the alternatives. Pointing out recurrent mistakes should prevent perpetuation of misleading practices. Similarly, reporting essential details of the analyses should prevent mistakes from going undetected.
This article discusses the role of sensory marketing in driving advertisement effectiveness. First focusing on vision, we discuss the effect of mental simulation and mental imagery evoked by ad visuals on ad effectiveness. Second, we review findings on gustation, zooming in on the effect of multi-sensory stimulation on taste perceptions. Third, we elaborate on the role of actual and imagined touch in shaping consumer evaluations and behaviors. Fourth, we discuss olfaction as a driver of ad recall and responses to ads. Finally, we review the role of auditory sense in advertising, focusing on the effect of music on consumers’ memory for and evaluations of ads. Directions for future research in the domain of sensory marketing and product advertising are discussed.
Emotion and rationality are fundamental elements of human life. They are abstract concepts, often difficult to define and grasp. Thus throughout the history of Western society, the head and the heart, concrete and identifiable elements, have been used as symbols of rationality and emotion. Drawing on the conceptual metaphor framework, we propose that people understand the abstract concepts of rationality and emotion using knowledge of a more concrete concept—the vertical difference between the head and heart. In six studies, we show a deep-seated conceptual metaphorical relationship linking rationality with “up” or “higher” and emotion with “down” or “lower.” We show that the association between verticality and rationality/emotion affects how consumers perceive information and thereby has downstream consequences on attitudes and preferences. We find the association to be most influential when consumers are unaware of it and when it applies to an unfamiliar stimulus. Because all visual formats—from the printed page to screens on a television, computer, or smartphone—entail a vertical placement, this association has important managerial implications. Our studies implement multiple methodologies and technologies and use manipulations of logos, websites, food advertisements, and political slogans.
The amount of crime to which individuals are exposed on a daily basis is growing, resulting in increased anxiety about being alone in some public places. Fear of crime usually results in avoidance of places that are perceived to be unsafe, and such avoidance can have negative financial consequences. What can be done to reduce fear in relatively safe public places that are nevertheless perceived as being unsafe? In this paper, we explore the effect of auditory input (type of ambient sound) on perceived social presence and one's feeling-of-safety in public spaces such as car parks and metro stations. In one field study and four laboratory studies, we demonstrate that different ambient sounds convey social presence to a different degree. When perceived social presence is higher and positive, the feeling-of-safety is also higher. Additionally, we show that an increase in perceived safety has a positive effect on consumers' satisfaction with the public area and even raises their willingness to purchase a monthly membership card for the public area. Furthermore, the effect of ambient sound on such consumer responses is serially mediated by perceived social presence and feeling-of-safety.
Embarrassment has been defined as a social emotion that occurs due to the violation of a social norm in public, which is appraised by others (what we call “public embarrassment”). We propose that embarrassment can also be felt when one violates a social norm in private, or when one appraises oneself and violates one’s self-concept (“private embarrassment”). We develop a typology of embarrassment with two underlying dimensions – social context transgression in-public or in-private) and mechanism (appraisal by others or by the self). Of the four resulting categories, one fits with the dominant “social” view of embarrassment, whereas the other three have aspects of privacy. We generate triggers for public and private embarrassment and demonstrate their similarities in study 1. Study 2 (buying an incontinence drug) and study 3 (buying Viagra for impotence versus pleasure) replicate these similarities, and also exhibit differences in the experience of public and private embarrassment through accompanying physiological reactions, action tendencies, and behavioral consequences. Our aim is to expand the scope of embarrassment research to include private contexts and self-appraisal.
We propose that features of static visuals can lead to perceived movement (via dynamic imagery) and prepare the observer for action. We operationalize our research within the context of warning sign icons and show how subtle differences in iconography can affect human behavioral response. Across five studies incorporating multiple methodologies and technologies (click-data heat maps, driving simulations, surveys, reaction time, and eye tracking), we show that warning sign icons that evoke more (vs. less) perceived movement lead to a quicker propensity to act because they suggest greater risk to oneself or others and increase attentional vigilance. Icons used in our studies include children crossing signs near schools, wet floor signs in store settings, and shopping cart crossings near malls. Our findings highlight the importance of incorporating dynamic elements into icon design to promote imagery and thereby elicit desired and responsible consumer behavior.
(Cited in HispanicAd, March 22, 2014, HighBeam research, March 6, 2014, Technology.org, March 6, 2014, Phys.org, March 6, 2014.)
We propose that static visuals can evoke a perception of movement, i.e., dynamic imagery, and thereby impact consumer engagement and attitudes. Focusing on brand logos as the static visual element, we measure the perceived movement evoked by the logo. We demonstrate that the evoked dynamic imagery affects the level of consumer engagement with the brand logo. We measure consumer engagement both through self-report measures, as well as through eye-tracking technology. We find that engagement affects consumer attitudes toward the brand. We also show that the perceived movement – engagement – attitude effect is moderated by the congruence between perceived movement and brand characteristics. Our findings suggest that dynamic imagery is an important aspect of logo design, and if used carefully, can enhance brand attitudes.
(Cited in The Michigan Daily The Michigan Daily, April 9, 2014, Michigan Radio, March 11, 2014, Michigan Radio interview, March 11, 2014, The StarPhoenix, March 4, 2014, Canada.com, March 3, 2014, Samachar, March 1, 2014, Daily India Mail, March 1, 2014, The Hindu, February 21, 2014, Chicago Tribune, February 20, 2014,The New Indian Express, February 20, 2014.)
The concept of olfactory imagery is introduced and the conditions under which imagining what a food smells like (referred to here as “smellizing” it) impacts consumer response are explored. Consumer response is measured by: salivation change (studies 1 and 2), actual food consumption (study 3), and self-reported desire to eat (study 4). The results show that imagined odors can enhance consumer response but only when the consumer creates a vivid visual mental representation of the odor referent (the object emitting the odor). The results demonstrate the interactive effects of olfactory and visual imagery in generating approach behaviors to food cues in advertisements.
There has been a recent swell of interest in marketing as well as psychology pertaining to the role of sensory experiences in judgment and decision making. Within marketing, the field of sensory marketing has developed which explores the role of the senses in consumer behavior. In psychology, the dominant computer metaphor of information processing has been challenged by researchers demonstrating various manners in which mental activity is grounded in sensory experience. These findings are arduous to explain using the amodal model of the human mind. In this introduction, we first delineate key assumptions of the information processing paradigm and then discuss some of the key conceptual challenges posed by the research generally appearing under the titles of embodiment, grounded cognition, or sensory marketing. We then address the use of bodily feelings as a source of information; next, we turn to the role of context sensitive perception, imagery, and simulation in consumer behavior, and finally discuss the role of metaphors. Through this discourse, we note the contributions to the present special issue as applicable.
(Cited in Financial Times, April 16, 2014, Business Standards, April 16, 2014, Extension, March 25, 2014.)
This research examines how oral haptics (due to hardness/softness or roughness/smoothness)related to foods influence mastication (i.e., degree of chewing) and orosensory perception (i.e., orally perceived fattiness), which in turn influence calorie estimation, subsequent food choices, and overall consumption volume. The results of five experimental studies show that, consistent with theories related to mastication and orosensory perception, oral haptics related to soft (vs. hard) and smooth (vs. rough) foods lead to higher calorie estimations. This “oral haptics–calorie estimation” (OHCE) effect is driven by the lower mastication effort and the higher orosensory perception for soft (vs. hard) and smooth (vs. rough) foods. Further, the OHCE effect has downstream behavioral outcomes in terms of influencing subsequent food choices between healthy versus unhealthy options as well as overall consumption volume. Moreover, mindful calorie estimation moderates the effects of oral haptics on consumption volume.
The modal scientific approach in consumer research is to deduce hypotheses from existing theory about relationships between theoretic constructs, test those relationships experimentally, and then show “process” evidence via moderation and mediation. This approach has its advantages, but other styles of research also have much to offer. We distinguish among alternative research styles in terms of their philosophical orientation (theory-driven vs. phenomenon-driven) and their intended contribution (understanding a substantive phenomenon vs. building or expanding theory). Our basic premise is that authors who deviate from the dominant paradigm are hindered by reviewers who apply an unvarying set of evaluative criteria. We discuss the merits of different styles of research and suggest appropriate evaluative criteria for each.
Vanity sizing, the practice of clothing manufacturers, whereby smaller size labels are used on clothes than what the clothes actually are, has become very common. Apparently, it helps sell clothes—women prefer small size clothing labels to large ones. We propose and demonstrate that smaller size labels evoke more positive self-related mental imagery. Thus, consumers imagine themselves more positively (thinner) with a vanity sized size-6 pant versus a size-8 pant. We also show that appearance self-esteem moderates the (mediating) effect of imagery on vanity sizing effectiveness— while vanity sizing evokes more positive mental imagery for both low and high appearance self-esteem individuals, the effect of the positive imagery on clothing preference is significant (only) for people with low appearance self-esteem, supported by the theory of compensatory self-enhancement. Our suggestion of simple marketing communications affecting valence of imagery and consequent product evaluation have implications for many other marketing domains.
Prior research shows that consumers stop purchasing from ﬁrms that treat them badly. In this research we show that consumers also resist ﬁrms that treat other consumers badly while favoring them. In three experiments, we demonstrate such social consciousness in the context of targeted pricing, where ﬁrms offer lower prices to new (versus old) customers. A signiﬁcant proportion of consumers in our experiments give up money to resist the price-discriminating ﬁrm, especially when the discrimination is more salient or is not justiﬁed. Further, perceived unfairness mediates the relationship between the salience and justiﬁcation of the pricing practice and consumer resistance.
I deﬁne “sensory marketing” as “marketing that engages the consumers' senses and affects their perception, judgment and behavior.” From a managerial perspective, sensory marketing can be used to create subconscious triggers that characterize consumer perceptions of abstract notions of the product (e.g., its sophistication or quality). Given the gamut of explicit marketing appeals made to consumers every day, subconscious triggers which appeal to the basic senses may be a more efﬁcient way to engage consumers. Also, these sensory triggers may result in consumers' self generation of (desirable) brand attributes, rather than those verbally provided by the advertiser. The understanding of these sensory triggers implies an understanding of sensation and perception as it applies to consumer behavior—this is the research perspective of sensory marketing. This review article presents an overview of research on sensory perception. The review also points out areas where little research has been done, so that each additional paper has a greater chance of making a bigger difference and sparking further research. It is quite apparent from the review that there still remains tremendous need for research within the domain of sensory marketing—research that can be very impactful.
This research demonstrates that visual product depictions within advertisements, such as the subtle manipulation of orienting a product toward a participant’s dominant hand, facilitate mental simulation that evokes motor responses. We propose that viewing an object can lead to similar behavioral consequences as interacting with the object since our minds mentally simulate the experience. Four studies show that visually depicting a product that facilitates more (vs. less) embodied mental simulation results in heightened purchase intentions. The studies support our proposed embodied mental simulation account. For instance, occupying the perceptual resources required for embodied mental simulation attenuates the impact of visual product depiction on purchase intentions. For negatively valenced products, facilitation of embodied mental simulation decreases purchase intentions.
(Cited in Chronicle of Philanthropy, Media Post, Minneapolis Star Tribune, The Association of Fundraising Professionals Information Exchange).
In two laboratory and one pilot field study, we demonstrate that cause marketing, whereby firms link products with a cause and share proceeds with it, reduces charitable giving by consumers, even when it is costless to the consumer to buy on CM (versus not); further, instead of increasing total contribution to the cause, it can decrease it. Consumers appear to realize that participating in cause marketing is inherently more selfish than direct charitable donation, and are less happy if they substitute cause marketing for charitable giving. Our results suggest that egoistic and empathetic altruism may have different effects on happiness.
Research shows that scent enhances memory for associated information. Current debate centers around scent's immunity to “retroactive interference,” i.e., reduced memory for earlier-learned information after exposure to additional, subsequently-learned information. This paper demonstrates that scent-enhanced memory is indeed prone to retroactive interference, but that some of the information lost is restored using a scent-based retrieval cue. Two process explanations for interference effects are proposed, with the evidence providing more support for an inhibition rather than a response competition explanation. The results enhance our understanding of the encoding and retrieval of olfactory information from long-term memory, and reasons why interference occurs.
Price-matching guarantees are commonly used by sellers as promises to match the lowest price for an item that a customer can ﬁnd elsewhere. In this paper, we use a market experiment approach to examine buyer search as well as sellers’ pricing decisions in the presence versus absence of Price-Matching Guarantees. We use student subjects as well as real consumers in an interactive laboratory setting to trade with each other, acting as buyers and sellers. Our ﬁndings from two experiments indicate that when searchers’ demand is more elastic than non-searchers, PMGs can result in more intense price competition, even when sellers are symmetric. Price-Matching sellers beneﬁt from converting more consumers into searchers who buy a larger quantity at a lower price. The lower (average) market prices also beneﬁt buyers. These implications should be of great interest to researchers, practitioners, and public policymakers.
(Discussed in Time Magazine Healthland, Globe and Mail, Science Daily).
Size labels adopted by food vendors can have a major impact on size judgments and consumption. In forming size judgments, consumers integrate the actual size information from the stimuli with the semantic cue from the size label. Size labels inﬂuence not only size perception and actual consumption, they also affect perceived consumption. Size labels can also result in relative perceived size reversals, so that consumers deem a smaller package to be bigger than a larger one. Further, consumers are more likely to believe a label that professes an item to be smaller (vs. larger) in the size range associated with that item. This asymmetric effect of size labels can result in larger consumption without the consumer even being aware of it (“guiltless gluttony”).
(Honorable Mention, William Davidson award for best paper.)
This paper provides a framework for retailer pricing and ordering decisions in a dynamic category management setting. In this regard, the key contributions of this paper are as follows. First, we develop a multi-brand ordering and pricing model that endogenizes retailer forward buying and maximizes proﬁtability for the category. The model considers (i) manufacturer trade deals to retailers, (ii) ordering costs incurred by the retailer, (iii) retailer forward buying behavior, and (iv) both own- and cross-price effects of all the brands in the category. Second, we use this model to compare differences in ordering and pricing decisions, and in proﬁts, resulting from using a category management versus a brand-by-brand management approach. Our approach allows us to derive implications in a dynamic setting about the impact of interdependence among the brands upon decisions on pass-through of trade deals and retailer order quantity. We show that category management results in noticeably higher proﬁts versus brand-by-brand and cost-plus (markup) approaches. Further, our results suggest an interaction between a brand’s own-price effect and its cross-price effect emerges. If the cross-price effect for a brand is low – that is, the brand takes away relatively few sales from the other brands – the retail pass-through should increase with that brand’s own-price effect. On the other hand, when the cross-price effect is high, the retail pass-through decreases with the brand’s own-price effect.
We draw upon literature examining cross-modal sensory interactions and congruence to explore the impact of smell on touch. In line with our predictions, two experiments show that smell can impact touch in meaningful ways. Specifically, we show that multisensory semantic congruence between smell and touch properties of a stimulus enhances haptic perception and product evaluation. We explore this relationship in the context of two properties of touch, namely texture and temperature, and demonstrate that both smell and touch can have semantic associations, which can affect haptic perception and product evaluation depending on whether they match or not. In study 1, we focus on the semantic association of smell and touch (texture) with gender and in study 2 with temperature. Our results extend prior work on smell and touch within consumer behavior, and further contribute to emerging literature on multisensory interactions.
This research extends the dual coding theory of memory retrieval (Paivio 1969, 2007) beyond its traditional focus on verbal and pictorial information to olfactory information. We manipulate the presence or absence of olfactory and pictorial stimuli at the time of encoding (study 1) or retrieval (study 2) and measure the impact on verbal recall. After a time delay, scent enhances recall of verbal information, and scent-based retrieval cues potentiate the facilitative effect of pictures on recall. These results cannot be attributed merely to increased elaboration at the time of exposure.
(Discussed in New York Times, November 16, 2009, and many other publications.)
Scent research has focused primarily on the effects of ambient scent on consumer evaluations. We focus instead on the effects of product scent on consumer memories. For instance, if a pencil or a facial tissue is imbued with scent (vs. not), recall for the brand’s other attributes increases signiﬁcantly—with the effects lasting as much as 2 weeks after exposure. We also ﬁnd that product scent is more effective than ambient scent at enhancing memory for product information. We suggest that this may be because, with product (ambient) scent, scent-related associations are focused on a single object (are diffused across multiple objects) in the environment. In support, we ﬁnd that the memory effects are driven by the number of product/scent-related associations stored in long-term memory. The results suggest that, although ambient scent has received the bulk of attention from researchers and managers in recent years, greater focus on product scent is warranted.
(Discussed in Telegraph UK, July 22, 2009, ScienceBlog, PsychOrg, and other publications.)
We propose that advertisement (ad) content for food products can affect taste perception by affecting sensory cognitions. Speciﬁcally, we show that multi-sensory ads result in higher taste perceptions than ads focusing on taste alone, with this result being mediated by the excess of positive over negative sensory thoughts. Since the ad effect is thoughts-driven or cognitive, restricting cognitive resources (imposing cognitive load) attenuates the enhancing effect of the multiple-sense ad. Our results are exhibited across three experiments and have many implications for cognition and sensory perception research within consumer behavior, as well as several practical implications.
The authors examine incumbent retailers’ reactions to a Wal-Mart entry and the impact of these reactions on the retailers’ sales. They compile a unique dataset which represents a natural experiment consisting of incumbent supermarket, drug, and mass stores in the vicinity of seven Wal-Mart entries and control stores not exposed to the entries. The dataset includes weekly store movement data for 46 product categories before and after each entry and allows them to measure reactions and sales outcomes using a before-and-after-with-control-group analysis. They find that, overall, incumbents suffer significant sales losses due to Wal-Mart entry, but there is substantial variation across retail formats, stores, and categories both in incumbent reactions and in their sales outcomes. Moreover, they find that a retailer’s sales outcomes are significantly affected by its reactions, and the relationship between reactions and sales outcomes varies across retail formats. These findings provide valuable insights on how retailers in different formats can adjust their marketing mix to mitigate the impact of Wal-Mart entry.
(Discussed in Boston Globe, Atlanta Journal, and other publications.)
The number of firms carrying a cause-related product has significantly increased in recent years. We consider a duopoly model of competition between firms in two products to determine which products a firm will link to a cause. We first test the behavioral underpinnings of our model in two laboratory experiments to demonstrate the existence of both a direct utility benefit to consumers from cause marketing (CM) and a spillover benefit onto other products in the portfolio. Linking one product in a product portfolio to a cause can therefore increase sales both of that product and, via a spillover effect, of other products in the firm's portfolio. We construct a CM game in which each firm chooses which products, if any, to place on CM. In the absence of a spillover benefit, a firm places a product on CM if and only if it can increase its price by enough to compensate for the cost of CM. Thus, in equilibrium, firms either have both products or neither product on CM. However, with the introduction of a spillover benefit to the second product, this result changes. We show that if a single firm in the market links only one product to a cause, it can raise prices on both products and earn a higher profit. We assume each firm has an advantage in one product and show that there is an equilibrium in which each firm links only its disadvantaged product to a cause. If the spillover effect is strong, there is a second equilibrium in which each firm links only its advantaged product to a cause. In each case, firms raise their prices on both products and earn higher profits than when neither firm engages in CM. We also show that a firm will never place its entire portfolio on CM. Overall, our work implies that, by carrying cause-related products, companies can not only improve their image in the public eye but also increase profits.
(Cited in New York Times 14 Sep. 2008, Economic Times (India) 17 Sep. 2008, and other publications.)
Much of experimental research in marketing has focused on individual choices. Yet in many contexts, the outcomes of one’s choices depend on the choices of others. Furthermore, the results obtained in individual decision making context may not be applicable to these strategic choices. In this paper, we discuss three avenues for further advancing our understanding of strategic choices. First, there is a need to develop theories about how people learn to play strategic games. Second, there is an opportunity to enrich standard economic models of strategic behavior by allowing for different types of bounded rationality and by relaxing assumptions about utility formulation. These new models can help us to more accurately predict strategic choices. Finally, future research can improve marketing practice by designing better mechanisms and validating them using experiments.
(Cited in New York Times 14 Sep. 2008, Economic Times (India) 17 Sep. 2008, and other publications.)
We examine the role of language choice in advertising to bilinguals in global markets. Our results reveal the existence of asymmetric language effects for multinational corporations (MNCs) versus local ﬁrms when operating in a foreign domain, such that the choice of advertising language affects advertising effectiveness for MNCs but not local companies. Also, different language formats (e.g., the local language vs. English or a mix of the two languages) are shown to vary in their advertising effectiveness for different types of products (luxuries vs. necessities). Our results indicate that language choice for advertisements is an important decision for MNCs. Also, MNCs cannot mimic local companies in their choice of advertising language.
Much prior literature has focused on the effect of self-construal on social judgment. We highlight the role of self-construal in spatial judgments. We show that individuals with independent (vs. interdependent) self-construals are more prone to spatial judgment biases in tasks in which the context needs to be included in processing; they are less prone to spatial judgment biases in tasks in which the context needs to be excluded in processing. We show such spatial judgment effects when self-construal is operationalized by different cultures (study 1) and as a construct that shifts with situational primes (studies 2 and 3).
(Featured on CBC Radio's As It Happens 19 Mar. 2008, The Times (London) 22 Mar. 2008, LA Times 24 Mar. 2008, US News and World Report 10 Sep. 2008, US News and World Report 26 Oct. 2008, and other media.)
We develop a conceptual framework regarding the perceptual transfer of haptic or touch-related characteristics from product containers to judgments of the products themselves. Thus, the ﬁrmness of a cup in which water is served may affect consumers’ judgments of the water itself. This framework predicts that not all consumers are equally affected by such nondiagnostic haptic cues. Results from four studies show that consumers high in the autotelic need for touch (general liking for haptic input) are less affected by such nondiagnostic haptic cues compared to consumers low in the autotelic need for touch. The research has many implications for product and package design.
(Honorable mention for the Best Paper of the Conference and Best Paper Award of Distribution Channels Track, Winter AMA Educator's Conference, 2006.)
For a shopping mall, sales leakage occurs when consumer purchases facilitated by the mall are finalized outside it. These sales include, for example, catalog orders filled at the leased premises in a physical mall; For an Internet mall, they include the ones consumers make on an on-line store’s website after learning about the store from an Internet mall website. While these sales are difficult to track in the physical mall, Internet malls like Yahoo can track them by placing cookies on consumers when they visit the mall. The challenge for a mall owner then is to design an appropriate pricing model which takes sales leakage into account. In fact, Yahoo currently uses an All-Revenue-Share Fee with Yahoo collecting from on-line stores a share of all sales revenue, regardless of whether the purchase was made through the mall or directly from the store’s own URL. We explore this new All-Revenue-Share Fee model, compare it with the commonly used Fixed Fee model and the two-part tariff model, and identify the model with the highest profits for the mall under different conditions. We suggest that although an All-Revenue-Share Fee is appealing for Internet malls due to its ability to capture sales leakage directly, it may cause the stores to refrain from joining the mall in certain circumstances. Thus, in certain situations charging a fixed monthly fee can actually be more profitable for the mall versus the All-Revenue-Share Fee model. We also examine how mall and product category characteristics as well as market expansion affect the optimal pricing strategy. We show that a mall should price discriminate across product categories, not just by charging different amounts of fees, but by using different pricing models. Our research provides many managerial implications on how to price over time.
Registrars’ ofﬁces at most universities face the daunting task of allocating course seats to students. Because demand exceeds supply for many courses, course allocation needs to be done equitably and efﬁciently. Many schools use bidding systems in which student bids are used both to infer preferences over courses and to determine student priorities for courses. However, this dual role of bids can result in course allocations not being market outcomes, and in unnecessary efﬁciency loss, which can potentially be avoided with the use of an appropriate market mechanism. We report the result of ﬁeld and laboratory studies that compare a typical course-bidding mechanism with the alternate Gale-Shapley Pareto-dominant market mechanism. Results from the ﬁeld study (conducted at the Ross School of Business, University of Michigan) suggest that using the latter could vastly improve efﬁciency of course allocation systems while facilitating market outcomes. Laboratory experiments with greater design control conﬁrm the superior efﬁciency of the Gale-Shapley mechanism. The paper tests theory that has important practical implications because it has the potential to affect the learning experience of very large numbers of students enrolled in educational institutions.
When retailers make product assortment changes by eliminating certain stockkeeping units (SKUs), how does this affect sales of individual brands? This is the main question the authors address in this article. Using data from an online retailer that implemented a permanent systemwide SKU reduction (SR) program, the authors investigate how the program affected various components of purchase behavior for individual brands. They find substantial variations in the SR effects across brands, categories, and consumers.They explore possible drivers for these differences and find that higher-market-share, higher-priced, and more frequently promoted brands tend to gain share and that reduction in the number of sizes, reduction in the number of SKUs, and change in SKU share in the category are important in affecting change in a brand’s purchase share after the SR.They also find that SRs lead to an increase in category purchase incidence and quantity for highly state-dependent consumers and frequent buyers but a decrease in category purchase and quantity for mildly state-dependent consumers and infrequent buyers.In addition, SRs tend to cause more changes in brand choice probabilities among consumers of lower state dependence and higher price and promotion sensitivity.These findings are of importance both to retailers wanting to make product assortment changes and to manufacturers affected by them.
Firms in many industries experience protracted periods of pricing power, the ability to successfully enact price increases. In these situations, firms must decide not only whether to raise prices, but to whom. Specifically, in a competitive context, they must determine whether it is more profitable to increase prices across-the-board or to a specific segment of their customer base. While selective price decreases are ubiquitous in practice (e.g., better deals to potential new customers by phone carriers; better deals to current customers by various magazines), to our knowledge selective price increases are relatively rare. We illustrate the benefits of targeted price increases, and, as such, we expand the repertoire of firms' promotional policies. To that end, we explore a scenario where, two competing firms must decide whether to increase prices to the entire market or only to a specific segment. Targeted price increases (TPI), i.e., being offered an unchanged price (selectively) when others are subject to price increases, can be offered to Loyals (those who bought from the firm in the previous period) or Switchers (those who did not). The effects of TPIs are estimated through a laboratory experiment and an associated stochastic model, each allowing for both rational (Loyalty, Switching) and behaviorist (Betrayal, Jealousy) effects. We find that TPIs can indeed yield beneficial results (greater retention for Loyals or greater attraction of Switchers) and greater profits in certain circumstances. Results for TPI are additionally benchmarked against those for targeted price decreases and are found to differ. The range of effects stemming from the experiment can be used in a competitive analysis to yield equilibrium strategies for the two firms. In this case, we find that-depending on the magnitude of the price increase, market shares of the two firms, and price knowledge across consumer segments-a firm may wish to embrace targeted price increases in some situations, to institute across-the-board price increases in others, and to not enact any price increases in still others. We show that a firm can sacrifice considerable profit if it settles on a suboptimal pricing strategy (e.g., wrongly. instituting an across-the-board increase), favors the wrong segment (e.g., Switchers instead of Loyals), or ignores "behaviorist" effects (Betrayal or Jealousy).
In this paper, we show that there is a relationship between two important matching mechanisms: the Top Trading Cycles mechanism (TTC mechanism proposed by Abdulkadiroglu and Sonmez, 1999) and the Top Trading Cycles and Chains mechanism (TTCC mechanism proposed by Roth, Sonmez, and Unver, 2004). Our main result is that when a speciﬁc chain selection rule proposed by Roth et al. is used, these two mechanisms are equivalent. While the equivalence is relevant for one speciﬁc case of the TTCC mechanism, it is a particularly interesting case since it is the only version identiﬁed by Roth et al. to be both Pareto-efﬁcient and strategy-proof.
This paper focuses on the timeshare industry, where members own timeshare "weeks" and can exchange these weeks among themselves without a medium of exchange (such as money). Timeshare exchanges allow for the weeks to be redistributed among members to better match their preferences and thus increase efficiency. As such, the problem falls within the domain of matching problems, which have recently gained much attention in academia. We demonstrate theoretically that the two major timeshare exchange mechanisms used currently (deposit-first mechanism and request-first mechanism) can cause efficiency loss. We propose an alternate exchange mechanism, the top trading cycles chains and spacebank (TTCCS) mechanism, and show that it can increase the efficiency of the timeshare exchange market because TTCCS is Pareto efficient, individually rational, and strategy-proof. We test the three exchange mechanisms in laboratory experiments where we stimulate exchange markets with networked "timeshare members." The results of the experiments are robust across four different environments that we construct and strongly support our theory. The research focuses on an industry not studied earlier within academia and extends theoretical work on mechanism design to cases where supply of resources is dynamic, but resources can be stored.
We highlight the role of interacting senses on consumer judgment. Specifically, we focus on the role of the visual and haptic (touch) senses on the elongation bias, which predicts that the taller of two equivolume objects will appear bigger. We show that sensory modality will affect the extent (and even direction) of the elongation biaswith visual cues alone and with bimodal visual and haptic cues (seeing and handling the objects), we obtain the elongation bias; however, with haptic cues alone (handling the objects blindfolded) and in bimodal judgments with visual load, we obtain a reversal of the elongation bias.
We show that an extremely high-priced product featured among more moderately priced products within a catalog can increase the reservation price for a moderately priced target product as well as the category as a whole. We investigate how this increase is influenced by the degree of relatedness between the extreme-priced product and the target as well as the situational and temporal proximity (contiguity) in their presentation. Consistent with our conceptualization, we find that the presence of an extreme cue leads to greater changes in target reservation price when the extreme-priced referent and target are more related and are contiguously presented. Furthermore, the impact of an extreme-priced product's relatedness on reservation price appears to be greater when the contiguity between the extreme-priced product and the target product is high versus when it is low.
Brown, Christie and Aradhna Krishna (2005), "The Skeptical Shopper: A Metacognitive Account for the Effects of Default Options on Choice", Journal of Consumer Research, 31 (3), 529-539.
A default option is the choice alternative a consumer receives if he/she does not explicitly specify otherwise. In this article we argue that defaults can invoke a consumer's "marketplace metacognition," his/her social intelligence about marketplace behavior. This metacognitive account of defaults leads to different predictions than accounts based on cognitive limitations or endowment: in particular, it predicts the possibility of negative or "backfire" default effects. In two experiments, we demonstrate that the size and direction of the default effect depend on whether this social intelligence is invoked and how it changes the interpretation of the default.
(Cited in Business Week Online June 12, 2001, Financial Times Online April 17, 2002, Dallas News, aired on Michigan Radio, NPR Marketplace April 1, 2002.)
In this essay we review the evidence from marketing research about price presentation of consumer products and discuss how these lessons have been applied—consciously or unconsciously—in the design of the U.S. tax system. Our perspective is that, in most situations, the designers of the tax system attempt to minimize the perceived burden of any given amount of tax collections. We allow, though, that in certain situations an additional goal is to maximize the perceived burden of others. We also investigate how, when the objective is to encourage a particular activity, price presentation may enhance the achievement of that goal for a given amount of tax subsidy. We conclude by addressing the ethical and normative implications of price presentation in the tax system.
Feinberg, Fred, Aradhna Krishna and John Z. Zhang (2002), "Do We Care What Others Get?: A Behaviorist Approach to Targeted Promotions", Journal of Marketing Research, 39 (3), 277-291.
(Lead article; finalist for the O'Dell award granted by the Journal of Marketing Research for the paper with the most significant long-run contribution to marketing; featured on NPR.)
Increased access to individual customers and their purchase histories has led to a growth in targeted promotions, including the practice of offering different pricing policies to prospective, as opposed to current, customers. Prior research on targeted promotions has adopted a tenet of the standard economic theory of choice, whereby what a consumer chooses depends exclusively on the prices available to that consumer. In this article, the authors propose that consumer preference for firms is affected not just by prices the consumers themselves are offered but also by prices available to others. This departure from the conventional strong rationality approach to targeted promotion results in a decidedly different optimal policy. Through a laboratory experiment, calibration of a stochastic model, and game-theoretic analysis, the authors demonstrate that ignoring behaviorist effects exaggerates the importance of targeting switchers as opposed to loyals. This occurs, though with intriguing differences, even when only part of the market is aware of firms' differing promotional policies. The authors show that both the deal percentage and the proportion of aware consumers affect the optima! strategy of the firm. Furthermore, the authors find that offering lower prices to switchers may not be a sustainable practice in the long run, as information spreads and the proportion of aware consumers grows. The model cautions practitioners against overpromoting and/or promoting to the wrong segment and suggests avenues for improving the effectiveness of targeted promotional policies.
(Awarded the William R. Davidson Award for best paper to appear in the journal in 2002.)
Pricing is one of the most crucial determinants of sales. Besides the actual price, how the price offering is presented to consumers also affects consumer evaluation of the product offering. Many studies focus on “price framing,” i.e., how the offer is communicated to the consumer is the offered price given along with a reference price, is the reference price plausible, is a price deal communicated in dollar or percentage terms. Other studies focus on “situational effects,” e.g., is the evaluation for a national brand or a private brand, is it within a discount store or a specialty store. In this article, a meta-analysis of 20 published articles in marketing examines the effects of price frames and situations on perceived savings. The results reveal many features that signiﬁcantly inﬂuence perceived savings. For instance, while both the percent of deal and the amount of deal positively inﬂuence perceived deal savings, deal percent has more impact. Further, the presence of a regular price as an external reference price enhances the offer value of large plausible deal and implausible deals, but not of small plausible deals. Thus, high value deals should announce the regular price, but not low value deals. Overall, the results have several useful insights for designing promotions.
The effectiveness of any promotional strategy depends, in part, on how accurately channel members predict consumers’ perceptions of their promotional activity. However, empirical research on channel member predictions and their accuracy is virtually nonexistent. In this article we examine manufacturer and retailer beliefs about consumers’ (and each others’) perceptions of sales promotions and assess the accuracy of these predictions. Our ﬁndings indicate that manufacturers and retailers hold similar, but equally inaccurate views of consumers’ industry knowledge. When assessing consumers’ speciﬁc beliefs about different types of promotions, these channel members underestimate consumer knowledge. Their motivational knowledge, however, appears quite accurate whether predicting consumer or other channel member perceptions of motivations. The similarity of supplier and retailer knowledge bodes well for channel efﬁciency, yet limitations in their understanding of consumer knowledge about promotions may lead to weakness in channel marketing strategies.
Many product categories, from pizzas to real estate, present buyers with purchase decisions involving complex area judgments. Does a square look larger or smaller than a circle? How much smaller does a circle of 8-inch diameter look when compared to one with a 10-inch diameter? In this paper, we propose a psychophysical model of how consumers make area comparison judgments. The model involves consumers making effort-accuracy trade-offs that lead to heuristic processing of area judgments and systematic shape- and size-related biases. The model is based on four propositions: P1. Consumers make an initial comparison between two figures based on a single dimension; P2. The dimension of initial comparison—the primary dimension—is the one that is most salient to consumers, where salience is figure and context dependent; P3. Consumers insufficiently adjust an initial comparison using a secondary dimension, which we assume to be orthogonal to the primary dimension used for the initial comparison; and P4. The magnitude by which the initial comparison is adjusted is directly related to the relative salience of the secondary dimension versus the primary dimension. The model predicts that a single linear dimension inappropriately dominates the two-dimensional area comparison task and that contextual factors affect which linear dimension dominates the task. The relative use of the second dimension depends on its relative salience, which can be influenced in a variety of ways. The model extends the area estimation literature in cognitive psychology by exploring new biases in area estimation and is able to resolve controversial effects regarding which shape is perceived to be “bigger,” the square or the circle, by incorporating contextual factors into model specifications. A set of six studies—five laboratory experiments and one field experiment—systematically test model predictions. Study 1 is a process study that shows that when two dimensions are available to make an area comparison judgment, people choose one of those to be the primary dimension, with the other being the secondary dimension. Furthermore, it shows that the choice of the primary dimension is dependent on its relative salience that can be contextually manipulated via manner of visual presentation. Studies 2 and 3 show how the use of a diagonal versus the side of a square (contextually determined) can affect whether a square is perceived to be smaller or larger than a circle of the same area. Study 3 extends the investigation to the domain of the price people are willing to pay for “pizzas” of different shapes, presented differently. Study 4, a field study, demonstrates external validity by showing that purchase quantities are greater when a circular package is expected to contain less than a rectangular package of the same volume in a domain where consumption goal is constant (cream cheese with a bagel). Studies 5 and 6 examine ways in which one can increase the salience of the secondary dimension, in a size estimation task, i.e., judging the rate of increase of area. While Study 5 does so via contextual visual cues (incorporating lines that draw one's attention to the underused dimension), Study 6 does the same using semantic cues that direct attention to a single dimension (e.g., diameter) or the total area and comparing these with a visual presentation of the figure. Overall, results suggest that the manner in which information is presented affects the relative salience of dimensions used to judge areas, and can influence the price consumers are willing to pay. Underlining the external validity of these findings, container shape can significantly affect quantity purchased and overall sales. The paper highlights biases in area comparison judgments as a function of area shape and size. The model is parsimonious, demonstrates good predictive ability, and explains seemingly contradictory results in the cognitive psychology literature. Implications for pricing, product design, packaging, and retailing are suggested.
We examine the key factors that influence a firm's decision whether to use front-loaded or rear-loaded incentives. When using price packs, direct mail coupons, FSI coupons or peel-off coupons, consumers obtain an immediate benefit upon purchase or a fuont-loaded incentive. However, when buying products with in-pack coupons or products affiliated with loyalty programs, promotion incentives are obtained on the next purchase occasion or later, i.e., a rear-loaded incentive. Our analysis shows that the innate choice process of consumers in a market (variety-seeking or inertia) is an important determinant of the relative impact of front-loaded and rear-loaded promotions. While in both variety-seeking and inertial markets, the sales impact and the sales on discount are higher for front-loaded promotions than for rear-loaded promotions, from a profitability perspective, rear-loaded promotions may be better than front-loaded promotions. We show that in markets with high variety-seeking it is more profitable for a firm to rear-load, and in markets with high inertia it is more profitable to front-load. Model implications are verified using two empirical studies: (a) a longitudinal experiment (simulating markets with variety-seeking consumers and inertial consumers) and (b) market data on promotion usage. The data in both studies are consistent with the model's predictions.
Research on optimal bundling strategy has primarily dealt with the case of a monopolist and suggests that mixed bundling be adopted, as it allows for price discrimination. The overwhelming majority of consumer products, however, operate in a competitive arena, so that an adequate description of the bundling phenomenon needs to take account of alternative competitive product offerings. A few researchers have examined the duopolistic case — two suppliers each offering a bundle composed of two complementary products. However, the collective results do not paint a consistent picture. For example, Economides (1993. Mixed bundling in duopoly. Working Paper, Stern School of Business, New York University, EC-93-29) shows that the sub-game perfect Nash equilibrium bundling strategy is to offer a mixed bundle. By contrast, Anderson and Leruth (1993. Why firms may prefer not to price discriminate via mixed bundling. International Journal of Industrial Organization 11: 49 – 61), show that the solution is to offer pure components. The results of Matutes and Regibeau (1992. Compatibility and bundling of complementary goods in a duopoly. Journal of Industrial Economics 40: 37 – 54) suggest that the bundling strategy depends on consumer reservation price: mixed bundling when it is low and pure components when it is high. This paper offers an analytical analysis that reconciles these results by incorporating the moderating role of market expansion on equilibrium bundling strategies. Rendering comparable the conflicting results of such prior research requires selecting a methodology that not only sufficiently allows for their unique formal specifications, but which, in the current estimate, best captures empirical phenomena of broadest interest. The focus on market expansion suggests a model of the nested logit type (see Bucklin and Gupta 1992. Brand choice, purchase incidence, and segmentation: an integrated approach. Journal of Marketing Research 29: 201 – 215). It is shown that the sub-game perfect Nash equilibrium bundling strategy in a duopoly depends on the scope for market expansion, i.e., as the scope for market expansion decreases, the equilibrium bundling strategy shifts from mixed bundling to pure components. It is also shown that pure bundling will not be an equilibrium strategy. Finally, a discussion of the results when the assumption of perfect complementarity is relaxed is provided.
United States firms collectively spend over $6.5 billion annually on coupon promotions and are becoming increasingly concerned with their profitability. FSI (free-standing-insert) data show that coupon duration varies across brands. In this paper, we show how coupon duration can affect coupon profitability. We also provide answers for some empirical observations on coupon duration. We explain, for example, why (i)coupon duration will vary across firms, such that large market share firms will give short-duration coupons and small market share firms will give long-duration coupons; (ii)longer coupon duration for one brand will increase redemption for coupons of that brand and of a competing brand; (iii) coupon duration will affect coupon profitability.
Given the number of volume judgments made by consumers, for example, deciding which package is larger and by how much, it is surprising that little research pertaining to volume perceptions has been done in marketing. In this article, the authors examine the interplay of expectations based on perceptual inputs versus experiences based on sensory input in the context of volume perceptions. Specifically, they examine biases in the perception of volume due to container shape. The height of the container emerges as a vital dimension that consumers appear to use as a simplifying visual heuristic to make a volume judgment. However, perceived consumption, contrary to perceived volume, is related inversely to height. This lowered perceived consumption is hypothesized and shown to increase actual consumption. A series of seven laboratory experiments programmatically test model predictions. Results show that perceived volume, perceived consumption, and actual consumption are related sequentially. Furthermore, the authors show that container shape affects preference, choice, and post-consumption satisfaction. The authors discuss theoretical implications for contrast effects when expectancies are is confirmed, specifically as they relate to biases in visual information processing, and provide managerial implications of the results for package design, communication, and pricing.
Research examining the process of individual decision making over time is brieﬂy reviewed. We focus on two major areas of work in choice dynamics: research that has examined how cur rent choices are inﬂuenced by the history of previous choices, and newer work examining how choices may be made to exploit expectations about options available in the future. A central theme of the survey is that if a general understanding of choice dynamics is to emerge, it will come through the development of boundedly-rational models of dynamic problem solving that lie on the interface between economics and psychology.
Estimates the number of objects in a line are made in many different situations. This paper demonstrates that besides the actual number of dots, aspects of line configuration affect the perceived numerosity of dotted lines. Experiment 1 provides evidence that the highly studied "clutter effect" in distance perception research replicates to the numerosity domain so that lines made up of more segments are perceived to contain more dots. Experiments 2-5 provide nomological validity for the recently proposed "direct distance" effect in distance perceptions by showing that numerosity perceptions are higher the greater the euclidean length between the line end points and by manipulating euclidean length in three orthogonal ways: the relative length of segments (Experiment 2), the angle between segments (Experiment 3), and the general direction of segments (Experiment 4). Experiment 5 conceptually replicates the results of Experiments 2-4 utilizing stimuli-based versus memory-based judgments and a discrimination task. Experiments 6 and 7 extend the research on spatial perception by demonstrating that the use of euclidean length as a source of information is inversely related to line width, with width varied through clutter (Experiment 6) and total line length (Experiment 7). Overall, the results demonstrate that the robustness of the euclidean length effect is contingent on the salience of alternative spatial heuristics-specifically, euclidean width. Theoretical implications are discussed.
Consumers make distance judgments when they decide which store to visit or which route to take. However, these judgments may be prone to various spatial perception biases. While there is a rich literature on spatial perceptions in urban planning and environmental and cognitive psychology, there is little in the field of consumer behavior. In this article we introduce the topic of spatial perceptions as an area of research in marketing. We extend the literature on spatial perceptions by proposing that consumers use the direct distance between the endpoints of a path, or the distance "as the crow flies," as a source of information while making distance judgments-the shorter the direct distance, the shorter the distance estimate. We study two spatial features that affect direct distance-path angularity (i.e., the size of the angle between path segments) and path direction (i.e., whether the path retraces back or not). We further propose and demonstrate that the direct-distance bias is due to the perceptual salience of direct distance and is used by consumers in an automatic manner. Theoretical implications for the manner in which consumers process spatial information and the use of cognitive heuristics while making spatial judgments are discussed.
Some brands in the market opt to offer a single "deal" price (e.g., Pepsi brand soft drink at $1.09 every alternate week), whereas others opt to offer 2 or more deal prices (e.g., Coca-Cola brand soft drink at $0.99 in Week 1 and $1.19 in Week 3). It was hypothesized that offering multiple deal prices is likely to result in underestimation of deal frequency and average deal price, which will bias the price consumers are willing to pay for the brand. Results from 3 laboratory experiments, a longitudinal experiment, and a survey support the hypotheses. In addition, consumers are likely to be willing to pay more for the brand when it is offered at 2 deal prices with a small difference compared with a single deal price. Implications of these findings for consumer welfare and pricing policy are discussed.
Bundling of products is very prevalent in the marketplace. For example, travel packages include airfare, lodging, and a rental car. Considerable economic research has focused on the change in profits and consumer surplus that ensues if bundles are offered. There is relatively little research in marketing that deals with bundling, however. In this article we concentrate on some tactical issues of bundling, such as which types of products should be bundled, what price one can charge for the bundle, and how the price of the bundle should be presented to consumers to improve purchase intent. For example, we hypothesize that bundles composed of complements of equally priced goods will result in higher purchase intention. We also hypothesize that price increases will result in larger purchase intention changes than price decreases. Further, we expect that the presentation format for describing the price of the bundle will influence purchase intention in general, and depending on the price level of the bundle, different presentation formats will result in higher purchase intention. Finally, we hypothesize that purchase intention changes associated with different price levels will be higher for subjects who are familiar with the products than for subjects who are less familiar with the products. We used an interactive computer experiment conducted among 83 Master of Business Administration (MBA) students to test our hypotheses. Our findings suggest that: (1) bundles composed of complements have a higher purchase intent than bundles of similar or unrelated products, (2) consumers are more sensitive to a bundle price increase than to a bundle price decrease of equal amounts, (3) different presentation formats for describing the price of the bundle influence purchase intention, and (4) more familiar subjects respond to different presentations of equivalent bundles in different ways than less familiar subjects. We did not find any support for the hypothesis that bundles composed of similarly priced items have higher purchase intent than bundles composed of unequally priced products.
We explore the effect of dealing patterns on consumer purchase behavior by developing a normative purchase quantity model that can incorporate an),dealing pattern. The model adds to the stream of research on optimal purchasing policy by demonstrating how dealing patterns can be incorporated in a simple manner in dynamic programming models. Implications for purchase behavior are derived by employing the model in a numerical simulation in which time between deals is characterized by a Weibull distribution. The flexibility ofthe Weibull distribution enables us to establish how particular facets of the dealing distribution (e.g., certainty in deal timing, minimum time between deals) affect consumer behavior with respect to optimal purchase quantity, inventory, etc. One of the implications of the model is that the average quantity purchased on deal should be larger when there is greater certainty in deal timing. The model also shows that the average quantity purchased on deal should be larger when deals are spaced further apart, even though the buyer is presented with the same number of deals. We test certain model implications in a laboratory experiment and find actual behavior varying across dealing patterns in a manner consistent with model implications.
Research has shown that there is heterogeneity in consumer knowledge of prices and deals. In addition, it has been found that buyers' purchase behavior can be influenced not only by the current price of a product, but also by what prices they expect in the future. The author builds a purchase quantity model to contrast normative behavior of consumers who have knowledge of future price deals with that of those who do not. Implications from the model are derived concerning consumer deal response for the consumer's preferred and less preferred brands. These implications show that normative purchase behavior is very different between consumers with and without knowledge of future deals. The model implies that consumers with knowledge of future deals could be more likely to purchase on low-value deals and deals on less preferred brands compared with consumers without knowledge of future deals. Another implication of interest is that the relative quantity purchased by consumers who have deal knowledge compared with those who do not depends on the time pattern of deals. The implications are supported in a laboratory experiment. The author finds that actual behavior varies depending on deal knowledge and is quite consistent with model predictions.
Empirical research indicates that some consumers form price expectations which may impact their purchase behavior. While literature in operations research has built purchase policy models incorporating uncertain price expectations, these models have been built for commodities. Consumers face an environment with multiple brands. In this paper, we develop a model that incorporates consumer preferences and price expectations for multiple brands as determinants of normative consumer purchase behavior. The model demonstrates how commodity purchase policy models recognizing price uncertainty can be adapted to the study of multi-brand markets. The model is used to analyze the normative impact of changes in price promotion policies and holding costs on individual purchase behavior. It is also used in a Monte-Carlo market simulation that illustrates some scenarios where a post-promotion dip is more or less evident, and provides an explanation for the nonexistent post-promotion dip.
One of the key decisions a manager must make in designing a coupon promotion is to decide on the face value. In this study we examine the effects of higher face values on coupon redemption timing, category purchase timing, the mix of buyers who redeem the coupon, and purchase quantity. Data from a field experiment on coupon face values are used to test the hypotheses. A new method of measuring the effects of a coupon on category purchase timing is proposed. We find that coupons per se tend to advance category purchase timing, but higher face values do not increase the magnitude of this effect. Surprisingly, higher face values appear to increase redemption rates for both the prior nonbuyers and prior buyers of the brand in a similar way. However, higher face values have little effect on the package size purchased, the number of units purchased, or the total quantity (package size times units) purchased.
Research has shown that brands with higher deal frequency obtain a smaller market share gain on deal and have a lower expected price. However, the level of dealing must be perceived by consumers before it can affect consumer response to promotions. Hence, perception of deal frequency may affect consumer price perceptions and deal response much more strongly than the actual deal frequency. The author determines how consumer perceptions of deal frequency for a brand may be influenced by the dealing pattern of that brand and of other brands. She shows that the price consumers are willing to pay for a brand is correlated more highly with perceived deal frequency than with actual deal frequency. She also shows that the price consumers are willing to pay is correlated with the actual deal frequency of the brand for certain dealing patterns, but not for others.
Several models of consumer response to promotions suggest that a current decision on brand and purchase quantity depends on the expected time until the next price reduction and the expected size of future reductions. In spite of the importance of expected deal frequency and expected deal price to a consumer's decision, relatively little empirical work has been reported on those topics. The authors investigate several aspects of consumer perceptions of deal frequency and deal prices. First, a conceptual model is presented to describe how consumers develop and use those perceptions. Second, results of an extensive survey are used to estimate the degree of consumer knowledge about deal frequency and deal prices. Third, hypotheses about which types of consumers have better knowledge of promotions are tested. Results from the survey indicate that many consumers are reasonably accurate about deal frequency and sale price. In addition, recall on deal frequency and sale price is higher for consumers with larger family sizes and those who read weekly fliers for items on sale, devote a higher percentage of product class purchases to the brand, and purchase the package size more frequently. It is lower for older buyers.
As a consequence of differences in positioning strategies, retail outlets for grocery products often differ in their "marketing environment" - that is, in the configuration of price, product, and promotional stimuli to which consumers are exposed in the store. The in-store marketing environment can be an important marketing tool in terms of its ability to influence consumers' purchase behavior and attract certain types of consumers. This study examines the association between the in-store marketing environment and certain characteristics of consumers' purchase behavior. The results indicate that consumers exposed to different environments exhibit significant differences in their brand loyalty, promotion sensitivity, price sensitivity, and response to new brands. These differences in behavior are found to be related to environmental attributes such as width of product assortment and promotional activity.
Krishna, Aradhna (2016), “How to vote for president when you don’t like the candidates”, Op-Ed in The Conversation, September 29. Appeared also on The Washington Post, The Guardian, Quartz, The Wire, Salon and other publications (no. of reads > 126,000).
Krishna, Aradhna (2016), "Sensory Imagery for Design", The Psychology of Design: Creating Consumer Desire, Rajeev Batra, Diann Brei, and Colleen Seifert (Eds.), Routledge.
Elder, Ryan S. and Aradhna Krishna (2014), “Grasping the Grounded Nature of Mental Simulation”, In-Mind Magazine, 4 (20).
Krishna, Aradhna (2013), Customer Sense: How the 5 Senses Influence Buying Behavior, Palgrave Macmillan, NYC.
Krishna, Aradhna (2012), “Two questions to ask before buying pink”, Op-Ed in Detroit Free Press, October 30.
Krishna, Aradhna (2011), “The Right Way for Companies to Mix Donations and Marketing”, Op-Ed in Detroit Free Press, October 28.
Krishna, Aradhna (2011), "Philanthropy and marketing", Op-Ed in The Toronto Star, October 15, 2011.
Krishna, Aradhna (2011), "As I See it: Sensory marketing ", in Consumer Behavior: Buying, Having and Being (9th edition), Michael Solomon (Ed.), Prentice Hall, London.
Krishna, Aradhna(2011), "Price Deals", in Consumer Insights: Findings from Behavioral Research, Joseph Alba (Ed.), Marketing Science Institute, Boston.
Krishna, Aradhna (2010), "Eulogy to management guru CKP" Op-Ed in Economic Times (India), April 20, 2010
Krishna, Aradhna (Ed.) (2009), Sensory Marketing: Research on the Sensuality of Consumers, Routledge, NYC.
Krishna, Aradhna (2009), "Introduction to Sensory Marketing ", in Sensory Marketing: Research on the Sensuality of Consumers, Aradhna Krishna (Ed.), Routledge, NYC.
Krishna, Aradhna, and Ryan Elder (2009), "The Gist of Gustation: Taste, Food and Consumption", in Sensory Marketing: Research on the Sensuality of Consumers, Aradhna Krishna (Ed.), Routledge, NYC.
Aydinoglu, Nilufer, Aradhna Krishna and Brian Wansink (2009), "Do Size Labels have a Common Meaning across Consumers?", in Sensory Marketing: Research on the Sensuality of Consumers, Aradhna Krishna (Ed.), Routledge, NYC.
Krishna, Aradhna (2009), "Behavioral Responses to Pricing", in Handbook of Pricing Research in Marketing, Vithala Rao (Ed.), Edward Elgar Publishing, Northampton, MA .
Krishna, Aradhna (2008), "Regulate Deals to Prevent More Retail Tragedies", Op-Ed in Detroit News, December 9.
Krishna, Aradhna (2007), "Biases in Spatial Perception: A Review and Integrative Framework", in Visual Marketing: From Attention to Action, Michel Wedel and Rik Pieters (Eds.), Lawrence Erlbaum Associates, Mahwah, New Jersey.
Sensory perceptions and sensory marketing; social marketing, corporate social responsibility and cause marketing; pricing and promotions; experimental economics.
In order to preserve the integrity of the double-blind review process, papers under review and works in progress are not listed.