Howard Marmorstein

The Effects of Frequency Knowledge On Consumer Decision Making

The proposition is advanced that knowledge about the mere number of positive and negative attributes possessed by a brand is an important component of a consumers knowledge structure. A series of experiments is presented that illustrates the unique character of frequency knowledge and its potential role in decision making. In general, it is shown that frequency knowledge can influence judgment and choice, particularly when other types of information have been poorly encoded, poorly remembered, or poorly understood.

The Value of Time Spent in Price-Comparison Shopping: Survey and Experimental Evidence

The value that consumers place on time spent in price-comparison shopping is central to the economics of information theory and models of consumers search behavior. Yet few empirical studies have examined consumers subjective value of time. Building on Gary Beckers work this article presents two tests of a model of the subjective value of time. In an effort to explain consumers subjective value of time while they are price-comparison shopping the model introduces perceived enjoyment of shopping as a new explanatory variable. The findings reveal that respondents incorporate both wage rates and perceived enjoyment of price-comparison shopping into their subjective value of time. Copyright 1992 by the University of Chicago.

Managing the delayed service encounter: the role of employee action and customer prior experience

Despite the increased attention being paid to service delivery, lengthy waits for service are still common. This paper provides a conceptual and empirical examination of the effects of perceived employee action and customer prior experience, on reactions to service delays. The results of a field study of customers experiencing actual delays in a major retail bank are then discussed. The findings indicate that events and actions taking place prior to, during, and after the delay, affect consumer response. First, customers’ prior experience with that service provider is critical. Contrary to much of the literature on expectations, customers who had frequently experienced delays in the past were even more angered by the current service failure. Second, perceived employee effort during the delay had a tremendous impact on customers’ reactions. Irrespective of the length of the delay, when employees are perceived as not making a real effort, customer anger is high. Third, the impact of an apology is more compl...

When More Is Less: The Impact of Base Value Neglect on Consumer Preferences for Bonus Packs over Price Discounts.

The interpretation of a percentage change often hinges on the base value to which it is attached. The authors identify a tendency among consumers to neglect base values when processing percentage change information and investigate the implications of such base value neglect for how consumers evaluate economically equivalent offers presented in percentage terms, such as bonus packs and price discounts. The authors first document a substantial advantage in sales volume for a bonus pack over an economically equivalent price discount in a field experiment conducted in a retail store. Furthermore, in a mall-intercept survey and multiple lab studies, the authors provide additional evidence in support of the effect and identify managerially useful boundary conditions for when the effect is likely to manifest. The article concludes with a discussion of the theoretical and managerial implications of the findings.

Increasing the persuasiveness of a service guarantee: the role of service process evidence

After investing in service quality improvement programs, firms may realize that they still face a daunting challenge: How should they persuade consumers that service has actually improved? One way of attempting to persuade consumers is to offer a service guarantee. But are guarantees credible? Are they really effective? Can they overcome consumers’ prior negative experience? Surprisingly, the topic has received very little attention. This paper provides a conceptual and an empirical examination of the persuasive power of service guarantees. Specifically, the effects of service process evidence, compensation and prior beliefs about the service provider, are examined. The experimental data indicate that the inclusion of service process evidence significantly increases consumers’ willingness to try the provider. The findings also suggest that compensation is more persuasive when service process evidence is specified in the guarantee. The synergy of presenting service process evidence and high compensation, is able to overcome consumers’ prior (negative) exposure. Overall, the study supports the conclusion that consumers are primarily interested in service reliability and only secondarily in compensation for service failures. Managerial implications of the findings are discussed.

Unleashing the Power of Yield Management in the Internet Era: Opportunities and Challenges

The profitability of many firms hinges upon their ability to extract the maximum amount of revenue from a fixed quantity of perishable goods and/or services. Yet most firms in this situation have not invested in yield management systems to address this dilemma. This article explains why minimal use of yield management techniques may have been appropriate in the pre-Internet era. It then explains the major changes to the marketing landscape fostered by the Internet that enable the effective practice of yield management. There are multiple yield management approaches that have potential to increase profitability significantly. The article highlights the most important factors for managers to consider when re-assessing the viability of yield management systems at their firms.

Safety Stock Determination With Serially Correlated Demand in a Periodic-Review Inventory System

We consider a periodic-review inventory replenishment model with an order-up-to-R operating doctrine for the case of deterministic lead times and a covariance-stationary stochastic demand process. A method is derived for setting the inventory safety stock to achieve an exact desired stockout probability when the autocovariance function for Gaussian demand is known. Because the method does not require that parametric time-series models be fit to the data, it is easily implemented in practice. Moreover, the method is shown to be asymptoticaly valid when the autocovariance function of demand is estimated from historical data. The effects on the stockout rate of various levels of autocorrelated demand are demonstrated for situations in which autocorrelation in demand goes undetected or is ignored by the inventory manager. Similarly, the changes to the required level of safety stock are demonstrated for varying levels of autocorrelation.

When More is Less: Base Value Neglect and Consumer Preferences for Changes in Price and Quantity

In a series of studies, we document an advantage in sales volume for a bonus pack relative to an economically equivalent price discount. We provide evidence that consumers’ preferences for quantity changes (including bonus packs and quantity decreases) are due to their tendency toward neglecting the base value of percentages.