Selling something
"Paper or Plastic?": How We Pay Influences Post-Transaction Connection
Avni Shah et al.
Journal of Consumer Research, February 2016, Pages 688-708
Abstract:
Does the way that individuals pay for a good or service influence the amount of connection they feel after the purchase has occurred? Employing a multi-method approach across four studies, individuals who pay using a relatively more painful form of payment (e.g., cash or check) increase their post-transaction connection to the product they purchased and/or the organization their purchase supports in comparison to those who pay with less painful forms of payment (e.g., debit or credit card). Specifically, individuals who pay with more painful forms of payment increase their emotional attachment to a product, decrease their commitment to nonchosen alternatives, are more likely to publicly signal their commitment to an organization, and are more likely to make a repeat transaction. Moreover, the form of payment influences post-transaction connection even when the objective monetary cost remains constant and when the psychological cost is indirect (i.e., donating someone else's money). Increasing the psychological pain of payment appears to have beneficial consequences with respect to increasing downstream product and brand connection.
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The Effect of Priming Affect on Customer Service Satisfaction
Jelena Brcic & Gary Latham
Academy of Management Discoveries, forthcoming
Abstract:
A quasi-experiment (Study 1) and an on-line true experiment (Study 2) examined the effect of priming affect on customer service satisfaction. In Study 1, shoppers who received a "happy face" sticker on their retail receipt were more satisfied with the service they received than were those who did not receive a sticker. In order to determine whether customers were unaware of the influence of the prime on their level of satisfaction, a second study was conducted where customers were randomly assigned to conditions. Again, the results revealed that priming positive affect increased satisfaction with the store's service without a customer being aware of the influence of the prime. The results of these two studies suggest that a small change in the environment can influence customer satisfaction with the service received. A third experiment involving an exact replication, and an implicit as well as an explicit measure of affect, suggests the robustness of this finding.
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Charles Kang, Frank Germann & Rajdeep Grewal
Journal of Marketing, forthcoming
Abstract:
We address the questions of whether and how Corporate Social Responsibility (CSR) relates to firm performance, and, in so doing identify four mechanisms pertaining to this relationship: (1) slack resources lead to CSR, i.e., slack resources mechanism (2) CSR improves performance, i.e., good management mechanism, (3) CSR makes amends for past Corporate Social Irresponsibility (CSI), i.e., penance mechanism, and (4) CSR insures against subsequent CSI, i.e., insurance mechanism. We seek to be integrative in our approach and incorporate the four mechanisms in our empirical model specification. Specifically, to model the interplay among CSR, CSI, and firm performance, and to test the four mechanisms simultaneously, we propose a structural panel vector autoregression specification. In support of the good management mechanism, results from our unbalanced panel dataset of over 4,500 firms and up to 19 years suggest that firms that engage in CSR are likely to benefit financially from their CSR investments. Moreover, we do not find support for the slack resources or the insurance mechanism. In contrast, and in support of the penance mechanism, often firms' CSR seems to trail their CSI. However, our results also suggest that the penance mechanism is ineffective at offsetting negative performance effects due to CSI.
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Olga Khessina & Samira Reis
Organization Science, forthcoming
Abstract:
The market fate of a product ultimately determines the success or failure of a firm. A name is a central feature of any product, yet how names affect product market longevity is not well understood. In this paper we develop a theory in which a new product's name affects the product's categorization by audiences and, as a result, impacts its survival chances on the market. We predict that the similarity of the new product's name to names of other products in the industry affects its survival probability, but the direction and magnitude of this effect depends on the popularity and status of products, to names of which the new product's name is similar. We test our predictions on the population of all TV programs that were introduced during prime time plus early evening and late night on networks in the United States from the beginning of the industry in 1944 through 2003. An event history analysis of this population supports our predictions and thus suggests the importance of names in product market viability.
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Why do we overestimate others' willingness to pay?
William Matthews, Ana Gheorghiu & Mitchell Callan
Judgment and Decision Making, January 2016, Pages 21-39
Abstract:
People typically overestimate how much others are prepared to pay for consumer goods and services. We investigated the extent to which latent beliefs about others' affluence contribute to this overestimation. In Studies 1, 2a, and 2b we found that participants, on average, judge the other people taking part in the study to "have more money" and "have more disposable income" than themselves. The extent of these beliefs positively correlated with the overestimation of willingness to pay (WTP). Study 3 shows that the link between income-beliefs and WTP is causal, and Studies 4, 5a, and 5b show that it holds in a between-group design with a real financial transaction and is unaffected by accuracy incentives. Study 6 examines estimates of others' income in more detail and, in conjunction with the earlier studies, indicates that participants' reported beliefs about others' affluence depend upon the framing of the question. Together, the data indicate that individual differences in the overestimation effect are partly due to differing affluence-beliefs, and that an overall affluence-estimation bias may contribute to the net tendency to overestimate other people's willingness to pay.
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Even the Losers Get Lucky Sometimes: New Products and the Evolution of Music Quality since Napster
Luis Aguiar & Joel Waldfogel
Information Economics and Policy, forthcoming
Abstract:
Using comprehensive digital sales data by time and vintage on the US, Canada, and 15 European countries, we infer the evolution of music vintage quality, finding that vintage service flow has increased since 2000. We explain the result with unpredictability of music quality at the time of investment along with growing releases. Evidence shows a) products with modest prospects at release - from artists on independent labels and from new artists - occupy a growing share of the top products; and b) despite growth in the number of products, sales are growing more concentrated.
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Boomerang Effects of Low Price Discounts: How Low Price Discounts Affect Purchase Propensity
Fengyan Cai, Rajesh Bagchi & Dinesh Gauri
Journal of Consumer Research, February 2016, Pages 804-816
Abstract:
We show that providing a low (vs. no) price discount can lower purchase propensity of low-priced products under certain conditions - when purchases are nonessential and purchase volume is small. Based on the theory of purchase value (Grewal, Monroe, and Krishnan 1998; Thaler 1983), we argue that offering a low price discount for nonessential purchases decreases perceived transaction value that in turn lowers consumers' purchase propensity. However, this boomerang effect reverses when purchase volume is larger or when the purchase is essential. We demonstrate this effect with secondary scanner panel data sets (with six different product categories) and in five laboratory experiments (with real purchases). We also document the process and delineate boundary conditions.
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Julio Sevilla & Claudia Townsend
Journal of Marketing Research, forthcoming
Abstract:
We identify and examine the effect of space-to-product-ratio on consumer response; very generally, consumers perceive products as more valuable when more space is devoted to their display. In both lab and field studies we find that this phenomenon influences total sales, purchase likelihood, and even perceived product experience (taste perceptions). More interstitial space increases perceptions of individual products as more aesthetically pleasing and the store as more prestigious. We find these effects across a variety of product categories and rule out a number of competing alternative explanations based on perceptions of product popularity, scarcity, assortment search difficulty, or messiness.
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Sales Displacement and Streaming Music: Evidence from YouTube
Scott Hiller
Information Economics and Policy, forthcoming
Abstract:
In this paper I exploit the removal of Warner Music content from YouTube in January 2009, and its restoration in October 2009, as a plausible natural experiment to investigate the impact of online content availability on album sales. I find that this blackout on YouTube had both statistically and economically significant positive effects on Warner albums, which are quickly moderated as top-selling albums are dropped from the sample. Results also show that albums that have a very successful debut face more displacement from YouTube videos, while the effect on lower debuting albums may be moderated by a promotional effect.
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Closer to the Creator: Temporal Contagion Explains the Preference for Earlier Serial Numbers
Rosanna Smith, George Newman & Ravi Dhar
Journal of Consumer Research, February 2016, Pages 653-668
Abstract:
Consumers demonstrate a robust preference for items with earlier serial numbers (e.g., No. 3/100) over otherwise identical items with later serial numbers (e.g., No. 97/100) in a limited edition set. This preference arises from the perception that items with earlier serial numbers are temporally closer to the origin (e.g., the designer or artist who produced it). In turn, beliefs in contagion (the notion that objects may acquire a special essence from their past) lead consumers to view these items as possessing more of a valued essence. Using an archival data set and five lab experiments, the authors find the preference for items with earlier serial numbers holds across multiple consumer domains including recorded music, art, and apparel. Further, this preference appears to be independent from inferences about the quality of the item, salience of the number, or beliefs about market value. Finally, when serial numbers no longer reflect beliefs about proximity to the origin, the preference for items with earlier serial numbers is attenuated. The authors conclude by demonstrating boundary conditions of this preference in the context of common marketing practices.