Marketing: Consumer Behavior

86 Results

 

How Our Brain Determines if the Product is Worth the Price

Are consumers more likely to buy if they see the price before the product, or vice versa? Uma Karmarkar and colleagues scan the brains of shoppers to find out. Open for comment; 1 Comments posted.

Deconstructing the Price Tag

A new study by Bhavya Mohan, Ryan Buell, and Leslie John has an important conclusion for retailers: Explaining what it costs to produce a product can potentially increase its sales. Open for comment; 7 Comments posted.

Apple Pay’s Technology Adoption Problem

Apple wants to convert your iPhone into a digital wallet with Apple Pay. Professors Benjamin Edelman and Willy Shih assess its chances for success and wonder if consumers have a compelling reason to make the switch. Closed for comment; 12 Comments posted.

Lifting the Veil: The Benefits of Cost Transparency

Most managers think about cost transparency in terms of a supplier-firm relationship: when there is a two-way sharing of cost information between a firm and its suppliers, with the goal of collaborating to reduce costs. What does cost transparency do, however, in customer-firm relationships, when firms voluntarily disclose their variable costs explicitly and directly to consumers? This is the question the authors examine in this paper. Results of several experiments indicate that one-way cost transparency enhances consumers' attraction to the brand, in turn increasing their willingness to buy. Overall, marketers can potentially improve both brand attraction and sales by revealing costs. Read More

Why Do Outlet Stores Exist?

Created in the 1930s, outlet stores allowed retailers to dispose of unpopular items at fire-sale prices. Today, outlets seem outmoded and unnecessary-stores have bargain racks, after all. Donald K. Ngwe explains why outlets still exist. Open for comment; 7 Comments posted.

Has Apple Reinvented the Watch?

Will the Apple Watch reinvent wearables the way the iPhone did smartphones? Ryan Raffaelli shares his insights. Closed for comment; 4 Comments posted.

Why the ALS Ice Bucket Challenge is a Social Media Blockbuster

Most companies should envy the financial and brand awareness brought about by the ALS Ice Bucket Challenge. The campaign's key ingredient, says John Deighton, is that participants enhance their personal capital in performance of a good deed. Open for comment; 6 Comments posted.

The Business of Behavioral Economics

Leslie John and Michael Norton explore how behavioral economics can help people overcome bad habits and change for the better. Open for comment; 4 Comments posted.

Pay Attention To Your ‘Extreme Consumers’

Jill Avery and Michael Norton explain what marketers can learn from consumers whose preferences lie outside of the mainstream. Open for comment; 5 Comments posted.

Does Internet Technology Threaten Brand Loyalty?

Internet technologies may not kill off brands, but they certainly magnify both the bad and good decisions of marketers. Jim Heskett's readers weight in on this month's question. Open for comment; 13 Comments posted.

Are Electronic Cigarettes a Public Good or Health Hazard?

A new case study by John Quelch charts the growing popularity of electronic cigarettes and how tobacco companies and regulators are responding. Open for comment; 11 Comments posted.

How Grocery Bags Manipulate Your Mind

People who bring personal shopping bags to the grocery store to help the environment are more likely to buy organic items—but also to treat themselves to ice cream and cookies, according to new research by Uma R. Karmarkar and Bryan Bollinger. What's the Quinoa-Häagen-Dazs connection? Closed for comment; 13 Comments posted.

The Rising Cost of Consumer Attention: Why You Should Care, and What You Can Do about It

Attention is the allocation of mental resources, visual or cognitive, to visible or conceptual objects. Before consumers can be affected by advertising messages, they first need to be paying attention. As Thales S. Teixeira writes in this paper, the quality of consumer attention has been falling for decades. Consumers have lost interest in the information content of ads because they can access more and better information on‐demand on the Web. In addition, the price of marketers' acquiring high-quality attention has increased by as much as nine‐fold in the past two decades. To compensate for these circumstances marketers have typically responded by advertising more or by pursuing other means, such as price promotions, to acquire customers. However, these tactics risk eroding current profits and future revenues. A better solution, argues Teixeira, is to find cheaper attention or increase its conversion into sales. Novel approaches described in the paper, such as Lean Advertising and Viral Ad Symbiosis, can help to mitigate the rising cost of attention. Ultimately, in order to effectively manage the valuable resource of consumer attention, marketers will need to tailor their advertising strategies to the attention contingently available to them. This paper shows how to achieve this through Teixeira's Attention‐Contingent Advertising Strategy. He also lays out the fundamental principles of the economics of attention, an emerging field. Read More

Separating Homophily and Peer Influence with Latent Space

People are often more willing to try new things when they see others doing so. This phenomenon, which academics call "social influence", has a profound impact on many aspects of customer decision-making and marketing. For example, social influence affects consumers' willingness to take up new technologies, adopt and use social networks, and ask their physicians for particular prescription medicines. Marketers are thus eager to understand how and to what extent social influence affects people's consumption decisions. To date, however, it has been difficult to pinpoint the effects of social influence, as researchers have struggled to separate it from a simple fact that like-minded people tend to enjoy the same things, per the adage "Birds of a feather flock together." The authors use the field of mobile app adoption in Japan to examine this problem. Japan is an ideal testing ground because approximately 80-85 percent of all page views occur through mobile. In addition, mobile apps are often social in nature, especially those that are linked to a social network platform. The authors devise a new method to assess social influence by controlling for other factors that usually complicate the picture. Overall, the findings show that peer usage accounts for more than a quarter of all mobile app adoptions. The paper also highlights a risk that firms could overestimate social influence by 40 percent on average, even up to 100 percent in certain cases. The authors' method helps overcome this risk. Read More

How Government Can Restore the Faith of Citizens

Would we like government more if we could see what it was doing to help citizens? Research by Michael Norton and Ryan Buell. Open for comment; 11 Comments posted.

Should Men’s Products Fear a Woman’s Touch?

Recent research shows that loyal customers often get upset when a brand associated with men expands to include products perceived as feminine. Senior Lecturer Jill J. Avery discusses the problem of "gender contamination." Closed for comment; 17 Comments posted.

A Smarter Way to Reduce Customer Defections

Companies can't afford to lose hard-won customers, but in truth some are more important to keep than others. Recent research by Sunil Gupta and Aurélie Lemmens explains how to find them. Closed for comment; 4 Comments posted.

Managing Churn to Maximize Profits

Customer defection or "churn" is a widespread phenomenon across a variety of industries. As customer acquisition costs continue to rise, managing customer churn has become critically important for the profitability of companies. This paper provides a novel method for determining which customers to target in order to maximize the profit of a retention campaign. The authors developed a binary classification method that uses a gain/loss matrix, which incorporates the gain of targeting and retaining the most valuable churners and the cost of incentives to the targeted customers. Results show that this approach leads to far more profitable retention campaigns than the traditional churn modeling approaches. In addition, the additional profits come at no cost for companies. The implementation of the retention campaign is unchanged, only the composition and size of the target group changes compared to traditional approaches. Read More

To Buy Happiness, Spend Money on Other People

In a new video, Michael Norton shows that spending money on others yields more happiness than spending it on yourself. Closed for comment; 3 Comments posted.

Advertising Symbiosis: The Key to Viral Videos

Creating an online ad that goes viral requires more than mere entertainment. Thales S. Teixeira discusses the key to creating megahit marketing through "advertising symbiosis." Closed for comment; 17 Comments posted.

From McRibs to Maseratis: The Power of Scarcity Marketing

In the new book Happy Money: the Science of Smarter Spending, behavioral economists Elizabeth Dunn and Michael Norton describe how money can buy happiness—but only if we spend it the right way. Closed for comment; 2 Comments posted.

Solving the Search vs. Display Advertising Quandary

Internet advertising was supposed to make it easier for marketers to measure the impact of their ad buys. But a basic question remains: Do search ads or do display ads create more customers on the web? Research by Professor Sunil Gupta. Closed for comment; 8 Comments posted.

Creating the Perfect Super Bowl Ad

Professor Thales S. Teixeira says TV viewers lose purchasing interest when ads get too caught up in entertainment. His advice for the perfect pitch: tie together a good story and a compelling brand. Closed for comment; 3 Comments posted.

Helping Yelp Create More Accurate Reviews

Over time, Yelp's reader rating system of restaurants can make or break an operation, but professor Michael Luca shows the program has flaws. Can a more accurate, fairer system be created? Closed for comment; 2 Comments posted.

Want People to Save More? Send a Text

What's the most effective way to encourage people to save their money? The answer lies in a combination of peer pressure and text messages, according to new research by Assistant Professor Dina D. Pomeranz. Open for comment; 6 Comments posted.

Better by the Bundle?

Video game companies do it, fast-food restaurants, too. Why don't more companies bundle products and services together in one package at a bargain price? Research by Assistant Professor Vineet Kumar. Closed for comment; 3 Comments posted.

The Unexpected Link Between Cadavers and Careers

Illustrating the strange socializing power of our occupational pursuits, a new study by professor Michel Anteby and colleagues finds a strong association between jobs and corpse donations. Open for comment; 2 Comments posted.

Charitable Giving When Altruism and Similarity are Linked

This paper presents a model to help explain several aspects of charitable giving. First, individuals do not appear to reduce their contributions to a charity significantly when they learn that the government or other individuals have increased the funds that they devote to the charity's beneficiaries. Indeed, sometimes people increase their contributions when they hear that others have contributed more. Second, there are often several distinct charities that contribute to the same beneficiaries, and these charities frequently differ by the donor population to whom they target their appeal. Lastly, the extent to which individuals contribute to charity differs greatly, even among countries that appear otherwise quite similar. Rotemberg's model shows that two assumptions grounded in evidence from psychology are helpful in explaining these regularities. Specifically, the combination of (1) letting altruism be larger towards like-minded people and (2) having self-esteem depend on the number of people that agree with oneself is consistent with small reductions in one's own giving in response to larger giving by others. Read More

Do Online Dating Platforms Help Those Who Need Them Most?

The $2 billion online dating industry promises the possibility of a priceless product: romantic love. Associate Professor Mikolaj Piskorski investigates whether these sites are helping the lonely—or just making life easier for young singles who are popular already. Closed for comment; 17 Comments posted.

What Neuroscience Tells Us About Consumer Desire

It's easy for businesses to keep track of what we buy, but harder to figure out why. Enter a nascent field called neuromarketing, which uses the tools of neuroscience to determine why we prefer some products over others. Uma R. Karmarkar explains how raw brain data is helping researchers unlock the mysteries of consumer choice. Closed for comment; 22 Comments posted.

Expectations, Network Effects and Platform Pricing

In markets with network effects, the value that users gain from platforms depends on the number of other users of the same type who join the same platform (direct network effects) or the number of users of a different type that join (cross-group network effects). Examples include social networks like Facebook or Google+, payment systems like PayPal or Visa, videogame systems like PlayStation 3 and Xbox 360, smartphone platforms like Apple's iPhone or Google's Android, etc. Users typically rely on the media, market reports, or word of mouth to form expectations about the total number of other users that join a given platform. However, most of the time these users are unable to calculate the effect of platforms' prices on adoption by other users. In other words, they do not take price into account when forming expectations. To analyze platform profits, Andrei Hagiu and Hanna Hałaburda model different degrees of user sophistication in forming price expectations in markets with network effects. They show that firms have different preferences regarding the average sophistication of their user base depending on market structure. Read More

Creating Online Ads We Want to Watch

The mere fact that an online video advertisement reaches a viewer's computer screen does not guarantee that the ad actually reaches the viewer. New experimental research by Thales S. Teixeira looks at how advertisers can effectively capture and keep viewers' attention by evoking certain emotional responses. Closed for comment; 6 Comments posted.

Reviews, Reputation, and Revenue: The Case of Yelp.com

In just six years, Yelp.com has managed to crowdsource 20 million reviews of restaurants and other services by creating and leveraging an impressive social network of people who enjoy writing reviews. But can a bunch of amateur opinionators working for free really transform the restaurant industry, where heavily marketed chains and highly regarded professional critics have long had a stronghold? To answer this question, HBS professor Michael Luca combined Yelp reviews with revenues for every restaurant that operated in Seattle, WA at any point between 2003 and 2009. Applying a new method to tease out the causal effect of reviews (separate from the effect of underlying quality), the study shows that a one-star increase on Yelp leads to a 5 to 9 percent increase in revenue. Yet Yelp doesn't work for all restaurants. Chain restaurants —which already spend heavily on branding —are unaffected by changes in their Yelp ratings. This suggests that consumer reviews present a new way of learning in the Internet age, and are fast becoming a substitute for traditional forms of reputation. Read More

Salience in Quality Disclosure: Evidence from the U.S. News College Rankings

Why are the U.S. News and World Report College Rankings so influential? According to this paper by Michael Luca and Jonathan Smith, it's at least in part because U.S. News makes the information so simple. While earlier college guides had already provided useful information about schools, U.S. News did the work of aggregating the information into an easy-to-use ranking, making it more salient for prospective students. The authors show that these rankings matter in a big way: a one-rank improvement leads to a 0.9 percent increase in applicants. However, students tend to ignore the underlying details even though these details carry more information than the overall rank. Read More

Search Diversion, Rent Extraction and Competition

Retailers, search engines, shopping malls and other intermediaries often deliberately design their physical layouts or e-commerce sites in order to divert customers' attention away from the products they were initially looking for, with hopes that they'll buy a bunch of other products, too. This paper explores various incentives for so-called "search diversion" in a couple of scenarios—when stores internalize their affiliation decisions with intermediaries, and when competition is introduced among intermediaries. Research was conducted by Andrei Hagiu of Harvard Business School and Bruno Jullien of the Toulouse School of Economics. Read More

What Loyalty? High-End Customers are First to Flee

Companies offering top-drawer customer service might have a nasty surprise awaiting them when a new competitor comes to town. Their best customers might be the first to defect. Research by Harvard Business School's Ryan W. Buell, Dennis Campbell, and Frances X. Frei. Closed for comment; 24 Comments posted.

When Smaller Menus are Better: Variability in Menu-Setting Ability and 401(k) Plans

Economists love menus, which can be used to help understand people's choices. For example, do we prefer more choices (larger menu) or fewer (shorter menu)? But the menu itself has to be pre-selected. Research by David Goldreich (Rotman School of Management, University of Toronto) and Hanna Halaburda (Harvard Business School) focuses on the menu setter's decisions about what to include, and how large a menu to construct in the context of 401(k) plan choices. Read More

The ‘IKEA Effect’: When Labor Leads to Love

Companies increasingly involve customers in the design and assembly of products, from Converse allowing customers to design their own shoes to IKEA asking customers to assemble their own furniture. In this paper researchers Michael I. Norton (Harvard Business School), Daniel Mochon (University of California at San Diego), and Dan Ariely (Duke) use the "IKEA Effect" to explain the increase in valuation we place on products we build ourselves. The researchers discuss the implications of the IKEA Effect for marketing managers and organizations more generally. Read More

Do Not Trash the Incentive! Monetary Incentives and Waste Sorting

Many cities encourage residents to sort their domestic trash into separate bins, for the sake of recycling some of it and thus reducing the amount of garbage that ends up in landfills. The problem is that sorting waste is not a fun activity, and not everyone is willing to do it. Using data from 95 municipalities in Italy, this paper discusses whether and how monetary incentives can encourage people to sort their trash. Research was conducted by Alessandro Bucciol of the University of Verona and the University of Amsterdam, Natalia Montinari of the University of Padua and the Max Planck Institute of Economics, and Marco Piovesan of Harvard Business School. Read More

How Do Incumbents Fare in the Face of Increased Service Competition?

Companies that compete by offering a high level of service are particularly vulnerable to lose customers—even longtime customers—when competitive entrants offer increased service levels, according to new research in the retail banking industry by Ryan W. Buell, Dennis Campbell, and Frances X. Frei, all of Harvard Business School. The good news for providers of high-touch service is that if they can sustain the service advantage over time, they could be rewarded with higher value customers. Read More

Are We Thinking Too Little, or Too Much?

In the course of making a decision, managers often err in one of two directions—either overanalyzing a situation or forgoing all the relevant information and simply going with their gut. HBS marketing professor Michael I. Norton discusses the potential pitfalls of thinking too much or thinking too little. Closed for comment; 44 Comments posted.

A Behavioral Model of Demandable Deposits and Its Implications for Financial Regulation

Depositors are overconfident of their chances of recovering demandable deposits in a bank run. In a recent research paper, professor Julio J. Rotemberg reviews various government regulations available to be imposed on financial institutions—minimum capital levels, asset requirements, deposit insurance, and compulsory clawbacks—to understand how much they can help protect investors. Read More

Clay Christensen’s Milkshake Marketing

About 95 percent of new products fail. The problem often is that their creators are using an ineffective market segmentation mechanism, according to HBS professor Clayton Christensen. It's time for companies to look at products the way customers do: as a way to get a job done. Closed for comment; 114 Comments posted.

Is Groupon Good for Retailers?

For retailers offering deals through the wildly popular online start-up Groupon, does the one-day publicity compensate for the deep hit to profit margins? A new working paper, "To Groupon or Not to Groupon," sets out to help small businesses decide. Harvard Business School professor Benjamin G. Edelman discusses the paper's findings. Closed for comment; 59 Comments posted.

The Influence of Prior Industry Affiliation on Framing in Nascent Industries: The Evolution of Digital Cameras

Firms entering a new product market face tremendous ambiguity and competitive uncertainty, particularly when the new market is sparked by radical technological change. Potential customers have little or no experience with products, and during this period of turbulence, firms experiment with alternative product configurations, functions, and technologies. By studying the emergence of the consumer mass market for digital cameras, Carlson School of Management professor Mary J. Benner and HBS professor Mary Tripsas explore what factors influence a firm's initial introduction of product features during the nascent stage of a product market, and how the process of convergence on a standard set of features unfolds. In particular, they assess how a firm's prior industry affiliation influences its conceptualization of the product. Read More

Platforms and Limits to Network Effects

Why do platforms that restrict choice and charge higher prices seem to prosper alongside platforms offering cheap or free unlimited choice? In the online dating market, for example, eHarmony deliberately limits the number of candidates available to its customers. Headhunters show only a few candidates to the companies, and even fewer companies to the candidates. In the housing market, brokers limit the number of houses they show to potential buyers and sellers. In this paper, HBS professors Hanna Halaburda and Mikolaj Jan Piskorski challenge conventional understanding of platform competition and network effects by describing a two-sided matching environment and studying the indirect network effects in this environment. They show that the interplay between more choice and more competition influences the strength of network effects and attractiveness of a platform. Some agents may opt for a platform with few choices to avoid higher levels of competition. The researchers' model helps explain why platforms that limit their choice set coexist (and thrive) alongside platforms that offer greater choice. Read More

The ‘Luxury Prime’: How Luxury Changes People

What effect does luxury have on human cognition and decision making? According to new research, there seems to be a link between luxury and self interest, an insight that may help curb corporate excesses. Roy Y.J. Chua of Harvard Business School discusses findings from his work conducted with Xi Zou of London Business School. Read More

Tracks of My Tears: Reconstructing Digital Music

Record labels have depended on album sales to boost profits. But in the digital music era, consumers prefer single songs over music "bundles." The result? Harvard Business School professor Anita Elberse says it is time for the industry to rethink its products and prices. Read More

What’s Next for the Big Financial Brands

Some of the great financial brands such as Merrill Lynch built trust with customers over decades—but lost it in a matter of months. Harvard Business School marketing professor John Quelch explains where they went wrong, and what comes next. Read More

Cheers to the American Consumer

The willingness by American consumers to adopt new products, processes, and services more rapidly than those in other countries may be the most important enabler of entrepreneurship and innovation in America, says marketing professor John Quelch. Read More

Marketing After the Recession

This downturn has likely changed people's buying habits in fundamental ways. Professor John Quelch discusses why marketers must start planning today to reach consumers after the recession. Read More

How Much Can You Ask of Your Customers?

Think of IKEA and eBay. Some popular companies make it easy for customers to become "volunteers" in the organization's success, says HBS professor Jim Heskett. Is there a downside? Or will customer-fueled strategies provide competitive advantage in the future? Online forum now closed. Closed for comment; 28 Comments posted.

The Next Marketing Challenge: Selling to ’Simplifiers’

The mass consumption of the 1990s is fast fading in the rearview mirror. Now a growing number of people want to declutter their lives and invest in experiences rather than things. What's a marketer to do, asks professor John Quelch. Read More

How Much Time Should CEOs Devote to Customers?

Every corporate mission statement pays lip service to respecting customer needs, but actual customer expertise is typically a mile wide and an inch deep, says Harvard Business School professor John Quelch. Here's why every CEO should spend at least 10 percent of his or her time thinking about, talking to, and steering the organization to the customer. Read More

Long-Tail Economics? Give Me Blockbusters!

Although the Long Tail theory might argue otherwise, HBS marketing professor John Quelch believes in the power of blockbusters to excite consumers, motivate salespeople, and attract top talent. Read More

Indulgence vs. Regret: Investing in Future Memories

Good news for makers of $20,000 watches and other luxury goods and services. Recent research from Harvard Business School professor Anat Keinan and a colleague suggest that we often regret not indulging ourselves earlier in life. Read More

Modeling Expert Opinions on Food Healthiness: A Nutrition Metric

Despite an increased standard of living in the United States and other developed countries, health problems attributable to poor nutrition persist in part due to consumers' inability to translate the dietary advice of nutrition experts into anything actionable. Citing the improvement of public health as a primary objective, numerous studies have highlighted the need for a nutritional scoring system that is both comprehensive in its coverage of food products and easily understood by consumers. In this paper the researchers advance this objective by proposing a nutrition metric that is based on the current views of leading experts in the field. The metric can be used to score any food or beverage for which several component nutrient quantities are known. Read More

The “Fees → Savings” Link, or Purchasing Fifty Pounds of Pasta

Discount membership clubs have a large and growing presence in retail—one recent survey reported that Costco sells to 1 in every 11 people in the United States and Canada, and warehouse clubs are estimated to be a $120 billion industry today in the United States alone. As a result, many people have had the experience of entering one of these popular clubs and leaving hours later with more goods than can fit in their car. One rational reason for such behavior is that membership clubs do offer lower prices than other retailers. However, Norton and Lee offer a counterintuitive explanation for such buying behavior. They propose that the presence of membership fees alone—independent of the actual savings on any given product—can lead consumers to infer a "fees → savings" link, leading them to spend more than they otherwise would to capitalize on these perceived "great deals." Norton and Lee explore this phenomenon by setting up their own "membership clubs" and comparing profits across stores with varying membership fees. Read More

How to be a Customer

Sure, most marketing efforts aim to influence consumer behavior. But consumers can also market themselves to influence vendors, says Professor John Quelch. Want to get a little extra whipped cream from your neighborhood barista? Here are tips to become a valuable customer. Read More

How to Profit from Scarcity

This past summer's launches of the iPhone and final Harry Potter book were textbook examples of companies profiting in part by creating the illusion of scarcity. Professor John Quelch explains the advantages of this strategy when executed well, and tells how to recover from a real product shortage. Read More

Understanding the ‘Want’ vs. ’Should’ Decision

Pizza or salad? Consumers use different approaches to buying things they want (pizza) versus items they should buy (salad). In their research on online grocery-buying habits and DVD rentals, Harvard Business School's Katy Milkman and Todd Rogers, along with Professor Max Bazerman, provide insights on the want-should conflict and the implications for managers in areas such as demand forecasting, consumer spending habits, and effective store layout. Read More

Extremeness Seeking: When and Why Consumers Prefer the Extremes

When can variety be helpful and when can it be harmful? Conventional wisdom suggests that a product provider enhances the overall attractiveness of a set of options by adding more alternatives to the mix. By contrast, Gourville and Soman's research indicates that in certain, predictable cases, adding more alternatives to an assortment leads consumers to choose either the most basic or the most "fully loaded" product or service, be it a camera, car, cable TV service, laptop, or vacation package in Italy. Read More

How Magazine Luiza Courts the Poor

Brazilian retailer Magazine Luiza has developed an innovative strategy for selling to the poor, combining technology with great service that please both customers and employees. The question of how the company can grow without sacrificing the special qualities that have made it successful is at the heart of a case study developed by Harvard Business School professor Frances X. Frei. Read More

Adding Bricks to Clicks: The Effects of Store Openings on Sales through Direct Channels

Consider a retailer who operates both brick-and-mortar stores and direct channels such as direct mail catalogs and an Internet Web site. What effect does the opening of a new retail store have on direct channel sales in the retail trading area surrounding the store? Does the existence of more opportunities for consumer contact with the brand increase the retailer's direct sales, or does intra-brand, inter-channel competition erode the retailer's direct sales? Does consumer response to the retailer's brand evolve over time, perhaps as consumers go through some process of trial-and-error learning about the relative merits of stores and direct channels, or is the impact of the new store relatively discrete? Does the answer depend on whether consumers in the retail trading area have had the opportunity for previous experience with the brand's stores? This research used a proprietary longitudinal dataset from a multichannel retailer to understand what happens and to probe the implications for channel management strategy. Read More

Neuro Economics: Science or Science Fiction?

The growing use of MRI (magnetic resonance imaging) devices for studying decision making means that in 2007 we may hear a number of striking conclusions based on studies involving a small number of brain scans, says Jim Heskett. What are the more general implications of this trend? Will it have strong explanatory as well as manipulative potential for us as consumers, managers, and citizens? Closed for comment; 61 Comments posted.

Fixing Price Tag Confusion

"Partitioned" price tags that include a main price plus additional charges (Lamp: $70, Bulb, $5, Shipping: $15) may be confusing your customers at best or even causing them to reject the product, warns HBS professor Luc Wathieu. When is an all-inclusive price the best bet? Read More

What Happens When the Economics of Scarcity Meets the Economics of Abundance?

The "Long Tail," a term coined by Chris Anderson—and the title of his new book—describes the item popularity curve. Does the Long Tail represent a paradigm shift for business and consumer behavior? What are its implications for management going forward? Closed for comment; 36 Comments posted.

The Framing Effect of Price Format

How do consumers evaluate different pricing scenarios? This study looks at different pricing models to see which is more likely to result in positive customer perception. Specifically, the authors look at all-inclusive pricing (e.g., the price of a chair is $85.95 including shipping) versus partitioned pricing (e.g., the price of a chair is $81 and shipping is $4.95). When consumers are presented with a partitioned price, they place an exaggerated weight on their evaluation of each individual component. Read More

A Survey-Based Procedure for Measuring Uncertainty or Heterogeneous Preferences in Markets

People who buy retail prescription drugs, invest funds, or participate in auctions rarely have complete information about the product they are buying. Often the only auction information participants have is the number of bidders, observed bids, and product characteristics. If data from an auction, for instance, is a function of bidder behavior, then external survey data may help in testing hypotheses about bidding behavior. Researchers often avoid using surveys because they consume time and effort, but Yin presents a survey design technique and econometric tool to deal with a general population of survey respondents. Her application tested eBay online auctions selling personal computers. Read More

Information Dispersion and Auction Prices

How can auctions be used most effectively? Government and industry traditionally use auctions to price and allocate assets and contracts with high but unknown value. Millions of people use Internet auctions for goods that are often of unknown value (e.g., used goods, unknown brands). This paper asks: Do bidders behave in the way auction theory predicts they should? And, what are the effects of different types of information on prices? To answer these questions, Yin combined theory, econometric modeling, and survey data. Read More

Empirical Tests of Information Aggregation

While neither buyers nor sellers may be certain of the worth of used goods, both may possess private information about the value. Do prices become more informative as the number of bidders grows? Using data from a sample of eBay auctions for computers, Yin looked at how and under what conditions auction prices converge to the common value of a given item. Read More

What Customers Want from Your Products

Marketers should think less about market segments and more about the jobs customers want to do. A Harvard Business Review excerpt by HBS professor Clayton M. Christensen, Intuit’s Scott Cook, and Advertising Research Foundation’s Taddy Hall. Read More

Is Less Becoming More?

Americans these days have a lot more choices in products and services. But do consumers and suppliers suffer from choice overload? If so, what does this abundance mean for companies? Closed for comment; 21 Comments posted.

When Product Variety Backfires

Consumers like choice—but not too much of it. Presented with too many options, buyers may run to a competitor, says professor John Gourville. Here's what new research says about "overchoice." Read More

Where is Consumer Generated Marketing Taking Us?

There is a kind of "always on" communication system shaping up between the most committed of tech-minded users and those who supply them. Is the close monitoring of developing trends always in our best interests as marketers and customers? Closed for comment; 13 Comments posted.

The IPS Property

This paper is about discrete-choice and econometric models. The "invariant proportion of substitution," or IPS, property comes into play when, for example, a consumer faces a choice among three laptop computers with slightly different attributes. How will improvements to one laptop's attributes affect how the consumer chooses to substitute one alternative for another? Steenburgh looked at probabilities based on assumptions about consumers' utility-maximizing behavior. Read More

The Presentation of Self in the Information Age

In the past, we knew a lot about the seller of a product (through ads, marketing, or reputation) but little about the individual buyer. Times have changed. From the Internet to store loyalty cards, technology has made the marketplace into an interactive exchange where the buyer is no longer anonymous. The future market will likely be one in which personal information is shared and leveraged. Consumers who are willing to share their information will be more attractive to sellers and more sought-after than those who have bad reputations or refuse to participate. Read More

Should You Sell Your Digital Privacy?

Regulation won’t stop privacy invasion, says HBS professor John Deighton. What will? What if companies paid us to use our identity? A market approach to privacy problems. Read More

The Subconscious Mind of the Consumer (And How To Reach It)

Harvard Business School professor Gerald Zaltman says that 95 percent of our purchase decision making takes place in the subconscious mind. But how does a marketer reach the subconscious? Zaltman explains in this Q&A. Read More

A Toolkit for Customer Innovation

It seems almost counterintuitive. But this Harvard Business Review excerpt by Harvard Business School professor Stefan Thomke and MIT's Eric von Hippel suggests that you stop listening closely to your customers—and instead give them tools for creating their own products. Read More

In the Virtual Dressing Room Returns Are A Real Problem

That little red number looked smashing onscreen, but the puce caftan the delivery guy brought is just one more casualty of the online shopping battle. HBS professor Jan Hammond researches what the textile and apparel industries can do to curtail returns. Read More

Why E-commerce Didn’t Die With the Fall of Webvan

The Internet grocer Webvan died a nasty death along with many other online delivery services—or did it? HBS professor John A. Deighton describes how the forces that propelled it are here to stay. Read More

Is There Help for the Big Ticket Buyer?

Buying a house, buying a car, investing for retirement. These are among the most important purchasing decisions people make. But who is there to advise them? HBS professor Max H. Bazerman has some ideas. Read More

The Mind of the Market: Extending the Frontiers of Marketing Thought

HBS Professor Gerald Zaltman makes metaphors come alive with his patented Zaltman Metaphor Elicitation Technique or ZMET, a process that draws on psychology, anthropology, neuroscience and other disciplines to delve deep into the mind of the consumer. In this interview, Zaltman talks about the imagery and inspirations behind this unusual market research tool. Read More