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  • The same circle appears large when surronded by small circles and small mwhen surrounded by larger ones This effect basically implies that the same product could be perceived differently in a different context Previous experience is the ability to recall from memory specific information

The Impact Of Decoys And Background Information On The Impact Of Decoys And Background Information On Presentation Transcript

  • The impact of decoys and background information on consumers preferences and decision making IAREP/SABE CONGRESS Paris, 6 July 2006 Fabio Buoncristiano, University of Bologna Daniele Scarpi, University of Bologna
  • Overview
    • Research goals
    • Theoretical foundation
    • Method
    • Results
    • Conclusions and implications
  • Research goals
    • Empirical analysis of context effects combination:
        • Background contrast effect
        • Attraction effect
        • Phantom options
    • Choice in conflict: past experience vs current choice set
    • Impact of real vs phantom decoys
    • Useful implications for retailers
  • Introduction The process through which consumers form their preferences.... .... resembles more a work of architecture and building , starting from certain base – values.... .... rather than an archaeological work of digging for bringing to light pre – existent values and preferences.
  • Theoretical foundation: background contrast effect
    • Trade-off value between attributes in a first choice influences subsequent choice
    • Individuals compare alternatives currently available with the alternatives encountered in the past
    • Same product perceived differently in a different context
            • Memory of a positive context products seem less attractive
            • Memory of a negative context products seem more attractive
  • Theoretical foundation: attraction effect
    • An inferior alternative (decoy) influences the actrattiveness of the other options
    • The decoy increases the share of the option dominating it
    • Violation of regularity and indipendence from irrilevant alternatives principles (e.g. Luce 1959)
  • Theoretical foundation: phantom options
    • “ Illusory options that look real but are unavailable at the time the decision is made” (Pratkanis & Farquhar, 1992)
        • e.g., out of stock products, show fully booked, etc.
    • Unavailability increases the perceived importance of attributes on which the phantom excells
    • Thus, irrilevant information can influence consumers’ preferences (Potter & Beach, 1994)
  • Phantom options (A)
    • A number of researchs dealing with phantoms have dealt indirectly with consumer response to stockouts (e.g. Farquhar & Pratkanis, 1987; Pratkanis & Farquhar, 1992)
    • We deal directly with stockout
    • Considering out – of – stock – out products as phantoms, we bridges the studies of the effects of phantoms (Carpenter et al., 1994; Janiszewski, 2002) with studies of consumers’ response to stockouts (e.g., Fitzsimons, 2000)
  • Phantom options (B)
    • Information can be objectively irrelevant, but subjectively relevant (principle of relevance or maxim of relation: Grice, 1975; Sperber &Wilson, 1986)
    • Praktanis & Farquhar (1992) distinguish between known and unknown phantoms (i.e. recognized as illusory vs believed to be real until one tries to buy them)
    • known phantoms provide objectively and subjectively irrelevant information;
    • unknown phantoms provide information which is objectively irrelevant, but subjectively relevant.
    • But does the nature of the phantom matter?
  • Hypotheses (1)
    • H1: introducing a decoy in the choice set creates an attraction effect, which leads to a preference for the option closest to the decoy
    • H2: the attraction effect exerts a different strength when the background information is conflicting with the decoy, and when it is not
    • In particular, we are going to verify whether:
    • the attraction effect will be stronger when consumers have background information conflicting (H2a) or not conflicting (H2b) with the decoy.
  • Hypotheses (2)
    • H3: the attraction effect hypothesized in H1 exerts a different strength when consumers evaluate a choice set with a real decoy as opposed to a choice set with a phantom decoy
    • In particular, we are going to verify whether:
    • the attraction effect will be stronger (H3a) or weaker (H3b) when consumers face a real decoy than when they face a phantom decoy.
  • Method
    • Large and representative sample (N=1100; 40% females; mean age=30)
    • Online questionnaire (rating on a 1-7 scale); The distinction between the real and phantom decoy was made by writing “currently unavailable” next to the phantom
    • Product category : Mp3 player varied on 2 attributes:
        • price (euro)
        • memory (gigabyte)
  • Web site design (A)
    • Respondents visiting the website first chose between 2 options (these built-up the background),
    • then they were automatically directed to another web-page and had to choose between other 3 options (these 3 options were the target set).
    • 50% chance each background, randomised by a software.
    • The 3 options forming the target set contained a decoy.
    • 50% chance real or phantom decoy, randomised by a software.
  • Web site design (B)
    • Each respondent received one background only and the web site was designed so to make it impossible:
        • to receive both backgrounds,
        • to compile more than one questionnaire,
        • to compile the same questionnaire more than once.
  • Experimental design
    • To test H1: we compare the control group (no decoy) with 4 other groups (real/phantom decoy emphasizing price/memory).
    • To test H2 we compare a control group (background but no decoy) with 4 other groups (contrasting/non contrasting information and decoy on price /memory).
        • This procedure is run one time for the expensive background, and one time for the inexpensive.
    • To test H3: we compare 2 groups (real/phantom decoy) for the expensive background and 2 groups for the inexpensive background.
  • Results (A)
    • H1: data support H1 for both kind of decoys (real/phantom). The shifts in preferences are in the hypothesised direction and are statistically significant (p<.05). Significance has been assessed using a t-test in proportion.
    • H2: data show that when there is a decisional conflict between background and decoy, the attraction effect reduces the importance of the background (i.e. decoy wins).
      • Hypothesis H2a is therefore accepted, and H2b rejected: the attraction effect is stronger when consumers have background information conflicting with the decoy
  • Results (B)
    • H3: data support H3: the attraction effect exerts a different strength when consumers evaluate a choice set with a real decoy as opposed to a choice set with a phantom decoy.
    • In particular, the attraction effect is stronger when the decoy is phantom: this evidence provides support for H3b.
    • At the same time, such effect is background-dependent, as the superior strength of the phantom decoy is emphasized in the case of an expensive background
  • Conclusions
    • There is a strong interaction between the different considered effects
    • The decoy drives attention to a particular attribute
    • The nature of the decoy (real/phantom) matters
    • Attraction effect stronger for phantoms
    • Attraction effect is stronger when background information conflicts with the decoy
    • Decoy’s role is background dependent
  • Managerial implications
    • Catalogue design
    • Decisions on strategic products positioning
    • Track keeping of consumers’ past purchases (background)
    • Context effects used to improve communication and sales tactics
  • Future researchs
    • This research provide a first answer to the numerous calls for empirical analyses and better samples.
    • We acknowledge its limitations, but we believe it provides a contribution to the advancement of the understanding of context effects.
    • We welcome your suggestions for future research along this path.