Amitav Chakravarti

The influence of macro-level motives on consideration set composition in novel purchase situations

Consumers often have to create consideration sets when purchasing goals are not well defined. In these situations, the contents of a consideration set depend on a combination of two motives. First, consumers prefer to create a consideration set of easy-to-compare alternatives. It is easier to compare alternatives that have alignable attributes or alternatives that have overlapping features. Second, consumers prefer to create consideration sets that have a high likelihood of containing their optimal alternative. For example, when the set of available alternatives requires the consumer to make trade-offs between benefits (i.e., to be compensatory), the consumer often delays making a decision about which benefits are preferable, and the consideration set tends to contain a more diverse set of alternatives. We document several factors that influence the relative importance of one or the other motive in consideration set formation and discuss implications for brand managers. Copyright 2003 by the University of Chicago.

The Influence of Generic Advertising on Brand Preferences

More than a billion dollars is spent annually on generic advertisements that promote the consumption of commodity goods. Generic advertising is designed to increase primary demand, or the size of the pie, without affecting selective demand, or the share of the pie. We find evidence to the contrary generic advertising increases the consumers sensitivity to changes in price and systematically alters brand preferences. These effects of generic advertising can be attributed to the tendency of generic ads to change the relative importance of the attributes used to evaluate the brands. The results have implications for the public policy issue of how to effectively implement generic advertising without differentially benefiting certain brands and the managerial issue of how to integrate generic and brand advertising in order to achieve product category and brand differentiation goals. Copyright 2004 by the University of Chicago.

Categories Create Mind-Sets: The Effect of Exposure to Broad Versus Narrow Categorizations on Subsequent, Unrelated Decisions

The authors find that exposure to different types of categories or assortments in a task creates a mind-set that changes how consumers process information in subsequent tasks. That is, these mind-sets have a spillover effect that alters consumers decision making in a variety of subsequent and unrelated tasks, from basic cognitive behaviors (e.g., grouping) and consumer decisions (e.g., new product adoptions) to more general decision-making strategies (e.g., susceptibility to heuristics). Consumers previously exposed to broad assortments or categorizations base their decisions on fewer pieces of information, typically those made salient by the environment. In contrast, consumers previously exposed to narrow assortments or categorizations employ multiple pieces of information, both salient and nonsalient, without exerting any extra effort. Consequently, prior exposure to broad versus narrow categorizations leads to greater susceptibility to some common context effects and to heuristic decision making.

The Impact of Standards Competition on Consumers: Effectiveness of Product Information and Advertising Formats

Compared with other markets, those with competing technological standards exhibit certain fundamental characteristics that make a consumers decision to adopt a new product more risky and more complex. This article examines how standards competition affects consumer behavior, an issue that has been relatively neglected by previous research in this area. The results show that consumers depend on different types of information in their adoption decisions and respond differently to advertising. Specifically, the authors find that standards competition motivates consumers to pay more attention to information that is comparative in nature. Thus, information about the relative (absolute) performance of a product has a stronger (weaker) impact on a products share in markets with standards competition (Study 1). Standards competition also moderates the effectiveness of different advertising formats: It strengthens the effect of comparative advertisements but weakens the effect of noncomparative advertisements (Study 2). As a result, two commonly observed drawbacks of comparative advertisements—negative attitude toward the ad and source confusion—disappear in the presence of standards competition (Study 2), and comparative advertisements even induce greater confidence in the advertised brand (Study 3). Finally, in the presence of standards competition, the superiority of comparative advertisements is stronger when the advertised brand has a disadvantage in terms of brand familiarity than when it has an advantage (Study 3). This research takes a step toward a better understanding of these important but underexplored issues and provides managerial insights for firms that launch new products in markets with competing standards.

Knowing Too Much: Expertise-Induced False Recall Effects in Product Comparison

A long history of research has shown that experts’ well-developed knowledge structures provide numerous advantages in memory-based decisions and tasks. More recently, research has shown that in certain situations experts’ more detailed knowledge can hinder memory performance by resulting in the creation of false memories. The current research adds to this growing literature by showing how experts can fall prey to a different type of false memory when making product comparisons. Four studies demonstrate that in a product comparison context, in their attempt to make options more comparable, experts inadvertently “fill in the gap” by aligning nonalignable features in memory. This results in the false recall of aligned features that did not appear in the original descriptions. Experts’ higher sense of accountability for their judgments, coupled with their highly developed schemata, is identified as the mechanism underlying the effect.

Pathos & ethos: emotions and willingness to pay for tobacco products

In this article we use data from a multi-country Randomized Control Trial study on the effect of anti-tobacco pictorial warnings on an individual’s emotions and behavior. By exploiting the exogenous variations of images as an instrument, we are able to identify the effect of emotional responses. We use a range of outcome variables, from cognitive (risk perception and depth of processing) to behavioural (willingness to buy and willingness to pay). Our findings suggest that the odds of buying a tobacco product can be reduced by 80% if the negative affect elicited by the images increases by one standard deviation. More importantly from a public policy perspective, not all emotions behave alike, as eliciting shame, anger, or distress proves more effective in reducing smoking than fear and disgust. JEL Classification C26, C99, D03, I18 PsycINFO classification 2360; 3920

Standards Competition and Effectiveness of Advertising Formats in NewProduct Introduction

Compared to other markets, those with standards battles exhibit certain fundamental characteristics that make the consumer decision to adopt a new product more risky and complex. This paper examines how standards competition affects consumer behavior, an issue that has been relatively neglected by past research in this area. Study 1 sheds light on the fundamental issue of how consumers respond to information on absolute and relative utility of a product. We find that standards competition motivates consumers to heed information on relative performance and ignore information on absolute performance. As a result, information regarding the relative (absolute) performance of a product has a stronger (weaker) impact on a products share in markets with standards competition. Consistent with this finding, Study 2 shows that standards competition moderates the effectiveness of different advertising formats: it strengthens the effect of comparative ads but weakens the effect of non comparative ads. This moderating effect relates to the manner in which the ad format influences confidence in the advertised brand, associative heuristic processing, and attitude towards the ad. Finally, Study 3 shows that in a market with a standards war, the effectiveness of comparative ads is moderated by the relative brand familiarity of the advertised brand. This research takes a step toward a better understanding of these important but under explored issues and provides managerial insights for firms launching new products in markets with competing technological standards.

Focal versus Background Goals in Consumer Financial Decision-Making: Trading Off Financial Returns for Self-Expression?

According to standard (rational) models of (financial) decision-making, consumers should generally have a single strong, normative focal goal when making financial decisions like selecting which stocks to invest in: to maximize risk-adjusted financial returns. Nevertheless, consumers’ financial decisions may also be influenced by other goals that operate in the background, such as the desire to express themselves. The present research examines the interplay between focal and background goals in consumer financial decision-making and identifies several conditions that lead individuals to trade off financial returns for the satisfaction of background goals. Three experiments show that individuals who have (1) been subtly primed with self-expressive background goals, or (2) experienced progress towards the focal goal of financial returns, are willing to accept lower financial returns for the opportunity to invest in stocks that allow for increased self-expression. Further, while subtly primed background goals exert a non-normative influence on investment decisions, (3) explicit cues about an investment’s background goal-instrumentality create a backlash effect, and decrease individuals’ willingness to trade off financial returns.

Investors’ reactions to company advertisements: the persuasive effect of product-featuring ads

Purpose – This article aims to focus on product-featuring advertising targeted to stock investors – that is, ads that provide investors with impressions about the company’s products, over and above financial information. The purpose is to explicate and test the psychological mechanisms by which such ads may exert influence on investors. Design/methodology/approach – An experiment is conducted with a representative sample of real investors, to test the effect and explore the underlying mechanisms. Two additional laboratory experiments reveal moderating factors of this effect. Findings – The results show that highlighting the company’s product features in an investor ad increases investors’ interest in investing in the company’s stock, by enhancing investors’ subjective evaluations of the company’s products. This effect emerges independent of factors related to preexisting brand perceptions (e.g. brand recognizability and likeability) and is mediated by dual causal channels: by increasing expectations about...

Detecting and Reacting to Change: The Effect of Exposure to Narrow Categorizations

The ability to detect a change, to accurately assess the magnitude of the change, and to react to that change in a commensurate fashion are of critical importance in many decision domains. Thus, it is important to understand the factors that systematically affect peoples reactions to change. In this article we document a novel effect: decision makers reactions to a change (e.g., a visual change, a technology change) were systematically affected by the type of categorizations they encountered in an unrelated prior task (e.g., the response categories associated with a survey question). We found that prior exposure to narrow, as opposed to broad, categorizations improved decision makers ability to detect change and led to stronger reactions to a given change. These differential reactions occurred because the prior categorizations, even though unrelated, altered the extent to which the subsequently presented change was perceived as either a relatively large change or a relatively small one.