Marcus Cunha

The Influence of Price Discount Framing on the Evaluation of a Product Bundle

Bundle offers consisting of two or more products often include a price discount. The impact of the price discount on the perceived attractiveness of the bundle has been shown to depend on which product is discounted. It has been argued that discounts are more effective when they are assigned to the product that will receive the most weight in the overall evaluation of the bundle. We propose that the perceived value of the discount may also depend on a referent specific to each product. Six studies are used to provide evidence that (1) price discount framing effects can be explained by reference dependence and (2) that reference dependence and product importance independently contribute to price discount framing effects.

When Do Chief Marketing Officers Affect Firm Value? A Customer Power Explanation

Recent discussions in academic literature and the business press often paint an unflattering picture of the contributions of chief marketing officers (CMOs) to the financial value of their firms. Some even suggest that CMOs, despite being the marketing leaders in firms, have little or no effect on firm performance. However, formal empirical research on the impact of CMOs on financial performance is scarce. This article presents conceptual arguments and empirical evidence about this controversial issue. The authors suggest that CMOs are far from irrelevant to the financial performance of firms. However, the impact of CMOs on financial performance is highly contingent on the managerial discretion available to them. Focusing on the role of customer power in limiting the managerial discretion available to CMOs, this study identifies individual and firm-specific conditions in which CMOs contribute more or less to firm value. Analyses of abnormal stock returns associated with the appointment of CMOs provide support for the hypothesized effects of customer power and managerial discretion.

Context-Dependent Effects of Goal Primes

We provide evidence that goal priming effects are context dependent. We show that goal primes encourage prime-consistent behavior when the behavioral context is common and prime-inconsistent behavior when the behavioral context is uncommon. While the prime-consistent behavior is compatible with existing theory, the prime-inconsistent behavior poses a theoretical challenge. We argue that uncommon behavioral contexts encourage the release of a primed goal and, as a consequence, an increase in the relative activation of information inconsistent with the primed goal and prime-inconsistent behavior. (c) 2008 by JOURNAL OF CONSUMER RESEARCH, Inc..

Sunk-cost effects on purely behavioral investments.

Although the sunk-cost effect is a well-documented psychological phenomenon in monetary investments, existing literature investigating behavioral investments (e.g., time, effort) has not replicated this effect except when such investments relate to monetary values. The current explanation for this discrepancy proposes that purely behavioral sunk-cost effects are unlikely to be observed because they are difficult to book, track, and balance in a mental account. Conversely, we argue that, through an effort-justification mechanism, people account for the amount of behavioral resources invested when selecting an alternative, in which case they may fall prey to purely behavioral sunk-cost effects. The results of two experiments support this prediction. Because many decisions involve behavioral investments, behavioral sunk-cost effects should be pervasive psychological phenomena.

Stimulus Context and the Formation of Consumer Ideals

When a choice set consists of a distribution of alternatives with correlated benefits and costs, consumers often exhibit single-peaked preferences—they prefer an alternative having moderate costs and benefits. Theories disagree about how adding additional lower benefit/lower cost or higher benefit/higher cost alternatives to this choice set will affect relative preferences for the initial set of alternatives. Prototype theory predicts that adding alternatives should produce assimilation, whereas multiattribute range-frequency theory predicts that it creates contrast. We reconcile these two theories by assuming that single-peaked preferences reflect a composition of underlying benefit and cost valuations. Moreover, we claim that the correlational structure of the benefit and cost dimensions in the contextual stimuli determines whether these stimuli will exert an assimilation or contrast effect. We show that when benefits and costs are correlated (uncorrelated), adding alternatives that extend the range of offerings produces assimilation (contrast) for preference judgments. We propose a cost-benefit trade-off model that incorporates elements of single-peaked preference theory and range-frequency theory to explain the complex fashion in which contextual stimuli affect consumer ideals.

Assimilation and Contrast in Price Evaluations

How are price judgments influenced by the distribution of observed prices for other items in the same category? Processing goals will moderate price-judgment processes. When the processing goal is discrimination, price perceptions will be influenced by variations in range and ranks of prices in a distribution and contrast effects will be observed. For example, lowering the price of the lowest-priced product in a set will increase perceived expensiveness of higher-priced products. When the processing goal is generalization, however, price perceptions will be influenced by variations in the mean of the price distribution, in which case assimilation is observed. For example, lowering the price of the lowest-priced product in a set will decrease perceived expensiveness of higher-priced products. This latter finding is in sharp contrast to findings in the current literature on the effect of price structure on price judgments.

Riding coattails: : when co-branding helps versus hurts less-known brands

New brands often partner with well-known brands under the assumption that they will benefit from the awareness and positive associations that well-known brands yield. However, this associations-transfer explanation may not predict co-branding results when the expected benefits of the co-branded product are presented simultaneously with the co-branding information. In this case, the results of co-branding instead follow the predictions of adaptive-learning theory which posits that consumers may differentially associate each brand with the outcome as a result of cue interaction effects. Three experiments show that the presence of a well-known brand can weaken or strengthen the association between the less-known brand and the co-branding outcome depending on the timing of the presentation of product benefit information. When this information was presented simultaneously with co-branding information (at a delay after co-branding information), the presence of a well-known brand weakened (strengthened) the association of the less-known brand with the outcome and thereby lowered (improved) evaluation of the less-known brand.

Asymmetries in the Sequential Learning of Brand Associations: Implications for the Early Entrant Advantage

The highlighting effect occurs when the order in which consumers learn about brands determines the strength of association between these brands and their attributes. In four experiments, we find that consumers more strongly associate common attributes with early learned brands and unique attributes with late-learned brands. These findings imply an advantage for late entrants when unique attributes offer a higher value than attributes that are common to late and early entrants. We extend an attention-based model of associative learning to accommodate sequential learning of brand associations and predict when late versus early entrants will be able to sustain an advantage.

Protection of prior learning in complex consumer learning environments

As a product category evolves, consumers have the opportunity to learn a series of feature-benefit associations. Initially, consumers learn that some features predict a critical benefit, whereas other features do not. Subsequently, consumers have the opportunity to assess if previously predictive features, or novel features, predict new product benefits. Surprisingly, later learning is characterized by attenuated learning about previously predictive features relative to novel features. This tendency to ignore previously predictive features is consistent with a desire to protect prior learning. (c) 2007 by JOURNAL OF CONSUMER RESEARCH, Inc..

Consumer Uncertainty and Purchase Decision Reversals: Theory and Evidence

This research examines how prepurchase information that reduces consumer uncertainty about a product or service can affect consumer decisions to reverse an initial product purchase or service enrollment decision. One belief commonly held by retailers is that provision of greater amounts of information before the purchase reduces decision reversals. We provide theory and evidence showing conditions under which uncertainty-reducing information provided before the purchase decision can actually increase the number of decision reversals. Predictions generated from an analytical model of consumer behavior incorporating behavioral theory of reference-dependence are complemented by empirical evidence from both a controlled behavioral experiment and econometric analysis of archival data. Combined, the theory and evidence suggest that managers should be aware that their information provision decisions taken to reduce decision reversals may actually increase them. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mksc.2015.0906 .