John T. Gourville

Transaction Decoupling: How Price Bundling Affects the Decision to Consume

In todays marketplace, price bundling is widespread: Manufacturers and retailers routinely offer multiple products for a single, bundled price. Although the effects of price bundling on purchase behavior have been well researched, the effects of price bundling on postpurchase consumption behavior have received almost no attention. In this article, the authors build on the sunk cost literature (e.g., Thaler 1980, 1985) and predict that price bundling leads to a disassociation or “decoupling” of transaction costs and benefits, thereby reducing attention to sunk costs and decreasing a consumers likelihood of consuming a paid-for service (e.g., a theater performance). Four studies show this to be the case. In two lab studies, the authors show that having a bundled four-day ski pass as opposed to four one-day ski tickets decreases a persons likelihood of skiing on the final day of a four-day ski vacation. They replicate this result in a field study, showing that multiperformance ticket holders are more likely to forgo a given theatrical performance than are single-performance ticket holders, all else held constant. In a final study, the authors show that the decreased attention to sunk costs brought about by price bundling can be either cognitively driven (i.e., it is difficult to allocate a single payment across multiple benefits) or motivationally driven (i.e., there is an underlying desire to avoid consumption). Their findings have practical implications for managers interested in predicting or influencing actual product consumption.

Consumer Control and Empowerment: A Primer

This paper introduces consumer empowerment as a promising research area. Going beyond lay wisdom that more control is always better, we outline several hypotheses concerning (a) the factors that influence the perception of empowerment, and (b) the consequences of greater control and the subjective experience of empowerment on consumer satisfaction and confidence.

The 2007 ABJS Marshall Urist award: The impact of direct-to-consumer advertising in orthopaedics

Direct-to-consumer advertising (DTCA) has become an influential factor in healthcare delivery in the United States. We evaluated the influence of DTCA on surgeon and patient opinions and behavior in orthopaedics by surveying orthopaedic surgeons who perform hip and knee arthroplasties and patients who were scheduled to have hip or knee arthro-plasty. Respondents were asked for their opinions of and experiences with DTCA, including the influence of DTCA on surgeon and patient decision making. Greater than 98% of surgeon respondents had experience with patients who were exposed to DTCA. The majority of surgeon respondents reported DTCA had an overall negative impact on their practice and their interaction with patients (74%), and their patients often were confused or misinformed about the appropriate treatment for their condition based on an advertisement (77%). Fifty-two percent of patient respondents recalled seeing or hearing advertisements related to hip or knee arthroplasty. These patients were more likely to request a specific type of surgery or brand of implant from their surgeon and to see more than one surgeon before deciding to have surgery. Direct-to-consumer advertising seems to play a substantial role in surgeon and patient decision making in orthopaedics. Future efforts should be aimed at improving the quality and accuracy of information contained in consumer-directed advertisements related to orthopaedic implants and procedures.

The Effects of Monetary Magnitude and Level of Aggregation on the Temporal Framing of Price

Existing research has shown that the “pennies-a-day” strategy of reframing a large aggregate expense as a small daily expense helps to reduce the perceived cost of a transaction (Nagle and Holden, 1995; Price, 1995; Gourville, 1998, 1999). This paper builds on this research and explores the robustness of the phenomenon across two dimensions – (1) the level of temporal aggregation and (2) the dollar magnitude of the transaction. First, we show that the effectiveness of a pennies-a-day strategy is not limited to per-day framing. Rather, we find a more general phenomenon in which a “less aggregate” expense is preferred to a “more aggregate” expense, such that if a per-day framing is preferred to a per-year framing, than a per-month framing also will be preferred to a per-year framing. Second, we show that this effectiveness reverses with the magnitude of the underlying expense, such that while a framing of “

The Consumer Psychology of Mail-in Rebates: A Model of Anchoring and Adjustment

1 per day” is preferred to one of “

The consumer psychology of mail‐in rebates

365 per year,” a framing of “

How Packaging Services Can Hurt Consumption

4200 per year” is preferred to one of “

Branding Next-Generation Products

11.50 per day.”

Overchoice and Assortment Type: When and Why Variety Backfires

Consumers who buy a product intending to use an accompanying mail-in rebate often do not redeem the rebate. To explain this behavior, we argue that consumers use an anchoring and adjustment approach to predicting the likelihood of redeeming a rebate. In keeping with previous research on anchoring and adjustment, for instance, we show that when presented with a desirable product, consumers anchor on scenarios of successful redemption and adjust insufficiently for things that could go wrong in the redemption process. However, we also propose this anchoring and adjustment process is impacted by a consumers motivation to purchase the rebated product. In particular, we propose the anchor employed will be driven by the valence of a consumers underlying motivation. Specifically, a consumer that is motivated to purchase the product will anchor on scenarios of successful redemption while a consumer that is motivated to avoid purchasing will anchor on scenarios of failed redemption. We also propose that the degree of adjustment consumers employ will be driven by their strength of motivation - i.e., the stronger the motivation, the less the adjustment to the motivational anchor. Consequently, mail in rebates either can serve to enhance or to dampen purchase intention depending on a consumers underlying motivation. In other words, rebates offer consumers a means to justify a preferred course of action. Across a series of three studies, we show this to be the case.

Payment Depreciation: The Behavioral Effects of Temporally Separating Payments from Consumption

Purpose – Mail‐in rebates are an oft used, but poorly understood mechanism to promote the purchase of a product. In particular, prior research suggests that a significant percentage of consumers who purchase a product intending to redeem an accompanying rebate, fail to do so – a phenomenon known as “slippage.” To date, however, there has been very little research designed to understand why this takes place. The authors here aim to propose that the presence of a rebate provides a consumer with the means to justify a preferred course of action. Specifically, when considering the purchase of a desired product that carries a rebate, consumers tend to generate scenarios of successful rebate redemption and fail to adequately account for things that can go wrong in the redemption process. As a result, they systematically overestimate their likelihood of rebate redemption.Design/methodology/approach – The authors conduct three laboratory experiments to test the proposed framework.Findings – Study 1 shows that con...