The Constructive Nature of Consumer Response to Differential Product Advantages

Citation:

Ziv Carmon and Stephen M. Nowlis (1995) ,"The Constructive Nature of Consumer Response to Differential Product Advantages", in NA - Advances in Consumer Research Volume 22, eds. Frank R. Kardes and Mita Sujan, Provo, UT : Association for Consumer Research, Pages: 389.

Advances in Consumer Research Volume 22, 1995      Page 389

THE CONSTRUCTIVE NATURE OF CONSUMER RESPONSE TO DIFFERENTIAL PRODUCT ADVANTAGES

Ziv Carmon, Duke University

Stephen M. Nowlis, Washington State University

Most product and service categories include alternatives that differ in terms of the advantages they possess. Some offer higher quality (broadly defined to encompass such issues as reliability, durability, or unique features), and others, more attractive prices. The question of how consumers respond to differential advantages has become particularly relevant as markets are turning increasingly competitive. Not only do rapid technological improvements allow manufacturers to offer a wide variety of features, but there is also increased use of advertising to persuade consumers that one brand's advantages are more desirable than those of other brands.

It is widely believed that consumers' preferences are often constructed, and not merely revealed when assessments are required. As a result, they are sensitive to such things as the characteristics of the choice set (context) and the type of the evaluation (response mode) that is required. The constructive nature of consumer response to differential advantages was the focus of this session. Specifically, two of the papers in this session showed that commonly used methods for evaluating price-quality trade-offs that are normatively equivalent reveal very different preferences, attributing these differences to aspects of the constructive nature of these evaluations.

Carmon and Simonson examine the accuracy of consumers' assessments of the value of quality to them, using value-matching types of questions. In such questions consumers are asked about their willingness-to-pay for a brand given its description, as well as the description and price of a competing brand, which are provided as a reference. Carmon and Simonson find that value-matching responses systematically underestimate the value of quality. In other words, respondents systematically underestimated their willingness to pay for high quality alternatives and overestimated their willingness to pay for low quality ones, compared to the willingness displayed in choice. They explore several alternative psychological explanations for this effect, and show how awareness of this underestimation can be used by marketers to affect the choice among brands that differ in their price and quality.

Nowlis and Simonson propose that attributes differ in the degree to which they are diagnostic and can be meaningfully evaluated out of context based on their absolute values. In particular, evaluations of prices and product features are sensitive to the particular set of considered alternatives whereas perceived brand equity is usually less context sensitive. Building on these distinctions, they show that lower-price, lower-quality brands are more strongly preferred over higher-price, higher-quality brands when consumers make choices between brands rather than judge their likelihood of buying each brand. They also show that lower-quality brands with unique product features will be more strongly preferred over higher-quality brands that do not offer these features when consumers make choices rather than judgments.

The availability of a large number of brands, each claiming that its differential advantage is most important, complicates trading-off price and quality in many product categories. There are those who argue that the quality differences among brands are often largely minor. Advertising is commonly blamed for establishing distorted perceptions of the significance of various product and service features, thereby artificially decreasing consumers' price sensitivity. Mitra and Lynch show that in some decision environments differentiating advertising decreases price sensitivity by increasing the perceived differences among brands. They also show that advertising need not always have detrimental effects on consumer welfare, as in these contexts it allows customers to choose brands that are more in line with their personal tastes than in the absence of advertising.

The discussant, Bob Meyer, reviewed the papers and offered suggestions for future research.

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