Special Session Summary Consumer Response to Constrained Choice

Citation:

Kyeong Sam Min and Adwait Khare (2002) ,"Special Session Summary Consumer Response to Constrained Choice", in NA - Advances in Consumer Research Volume 29, eds. Susan M. Broniarczyk and Kent Nakamoto, Valdosta, GA : Association for Consumer Research, Pages: 501-503.

Advances in Consumer Research Volume 29, 2002     Pages 501-503

SPECIAL SESSION SUMMARY

CONSUMER RESPONSE TO CONSTRAINED CHOICE

Kyeong Sam Min, The Ohio State University

Adwait Khare, University of Pittsburgh

Beginning with the seminal work of Huber, Payne, and Puto (1982), researchers have sought to understand how, and why, consumers respond to "decoy" products. The term "decoy" is adopted due to the increase in attractiveness and choice share of the product alternative most similar to the decoy, often referred to as the target. The increase occurs at the expense of a dissimilar competitor product. A product decoy can be classified along two dimensions: dominance (dominated, dominating, and non-dominated) and availability (available and unavailable). A particular attention is paid to the two forms of decoys in this session, including an asymmetrically dominated alternative (Lure) and a dominating but unavailable alternative (Phantom).

Past research has focused on consumer response to expansion of a choice set through the addition of a Lure, or the presence of a known Phantom (a dominating alternative whose unavailability is known at the time of choice). This work has important managerial implications for retailers facing decisions regarding how, and where to extend their product offerings. However, an equally important product assortment question retailers commonly face is: How will consumers respond when restrictions are imposed on product offerings (e.g., Broniarczyk, Hoyer, and McAlister 1998; Fitzsimons 2000)?

This session presented three papers that explore how consumers respond when their decisions are constrained by removal or unavailability of the product. The first paper, by Khare, Mittal, and Morrin, illustrated how the asymmetrically dominated decoys influence choice when they are added to or deleted from the choice set. Khare et al. found that deleting a low (high) price brand reduces the share of the remaining low (high) price brand more (less). Importantly, changes in share after brand deletion are not obverse of those found upon addition. Their results should be of particular importance to category managers who are often faced with the task of deleting brand offerings and wish to understand the impact of their decisions.

The second paper, by Pettibone, examined whether consumers substitute the most similar item to the phantom rather than rely on a judgment-based process favoring the non-dominated alternative when forced to make a choice. To test this similarity-substitutionhypothesis, he conducted two experiments by manipulating similarity using brand information. Yet, he found no evidence for the similarity-substitution hypothesis. In his second experiment, Pettibone tested whether justifying decisions would reduce the phantom decoy effect by drawing attention to the dominated nature of the favored alternative.

The third paper, by Min and West, investigated how consumers respond to the phantom alternative by altering the timing of when a consumer is made aware of the choice constraint from before to after an initial choice is made. They found in two studies that the presence of an unknown phantom tends to reduce the probability of selecting the most similar available product. In addition, Min and West found that this tendency was qualified by decision importance and switching costs.

Doug Wedell presented an integration of how these papers fit into the existing literature and lead the audience in a discussion on the topic.

 

"THE EFFECT OF ADDING AND DELETING ASYMMETRICALLY DOMINATED DECOYS ON CHOICE"

Adwait Khare, University of Pittsburgh

Vikas Mittal, University of Pittsburgh

Maureen Morrin, University of Pittsburgh

The attraction effect, which refers to the significant increase in the share of a dominating brand (target) at the expense of a non-dominating brand (competitor) when an asymmetrically dominated brand (decoy) is added to a consideration set, is a robust phenomenon (Heath and Chatterjee 1995; Huber et al. 1982). As per the attraction effect, when a decoy is added to a core set consisting of a target and competitor brand, the target brand gains share. Till date, most of the research has examined the effect of adding decoy brands. The impact of deleting decoy brands however remains understudied.

This paper compares the impact of adding versus deleting asymmetrically dominated decoys on consumers’ preference for a high price versus low price target brand. We conducted an experiment where subjects (n=350) were assigned to a 2 (brand condition: addition, deletion) x 2 (decoy type: high price, low price) design. Each subject made two choices separated by a week’s time. In the addition conditions, subjects saw a core set (target and competitor only) in session 1 and an enhanced set (core set plus decoy) in session 2. Conversely, in the deletion condition subjects chose from the enhanced set in session 1 and from the core set in session 2. The category used was orange juice, and each brand was described on two attributes: price and quality.

Results from the study show some interesting findings. First, we find that choice shares after addition and deletion of a decoy from a choice set do not yield obverse results for the target brand. When a decoy was added to the choice set, the shares of a high price and low price targets increased similarly (by 19% and 22% respectively). However, after a decoy was deleted, while the low price target lost 26% share the high price target lost only 15% of its share. Point allocation data (subjects allocated 100 points among the brands they evaluated) show a similar asymmetry in deletion effects and also replicate earlier demonstrations of asymmetry in addition effects. When a decoy was added to the choice set, the high price and low price targets gained 13.5 and 7.2 points respectively.

However, after a decoy was deleted, while the low price target lost 10.5 points the high price target lost only 7 points. These results, obtained from choice and point allocation data, were found to persist even after controlling for subjects’ memory (in session 2) regarding their choices made in session 1. Thus the presence or absence of a decoy impacts a target differently depending upon the nature (high or low price) of the decoy and the target. Currently, we are exploring theoretical explanations for the phenomenon observed here: "stickiness" for high price/high quality brands after the choice set is altered by deleting decoys.

One promising approach that can be pursued focuses on differential residual desire for price versus quality. As people generally prefer to move up in quality than price, residual desire for foregone quality can be expected to be larger than residual desire for foregone price. After a low (high) quality decoy is deleted, a chooser of the low (high) quality target might realize that her chosen brand is now the weakest on quality (price) and therefore long for the foregone quality (price) advantage realized in the decoy’s presence. Stronger longing for quality (than for price) can help explain why more (less) subjects switch away from the low (high) quality target to the high (low) quality competitor after a low (high) quality decoy is deleted. The broader principle in this approach suggests that attributes which differ in their evoked cognitions and/or feelings (be it residual desire or vividness or imaginability) can lead to asymmetric decoy effects.

 

"PHANTOM DECOYS IN JUDGMENT AND CHOICE"

Jonathan C. Pettibone, University of Alabama in Huntsville

When making choices, certain alternatives may lure the unsuspecting decision maker into choosing one alternative over another. These alternatives, such as those described by the attraction and compromise effects (Huber and Puto 1983), are rarely chosen and yet strongly influence the choice process. They may be described as decoys, for despite their differences, their presence serves to increase preference for another alternative in the choice set (Wedell and Pettibone 1996). In contrast to other decoys, the phantom decoy is an unavailable alternative that dominates one other item in a choice set (Pratkanis and Farquhar 1992). When asked to choose an alternative from the set, participants are told that the decoy is unavailable. Thus, this decoy is a 'phantom’ alternative, because it is present in the choice set but is unable to be selected. Studying the effect of the phantom decoy provides insights toward how unavailable alternatives can alter choice and judgment.

Previous research using a choice response mode has demonstrated that participants typically select the item that is dominated by the highly attractive but unavailable phantom decoy (Highouse 1996; Pratkanis and Farquhar 1992). This effect violates rational choice principles that suggest unavailable alternatives should not be considered when making a decision. It is also in stark contrast to the attractiveness effect (Huber and Puto 1983), where an asymmetrically dominated decoy increases preference for the alternative that dominates it. Pettibone and Wedell (2000) replicated the phantom decoy effect in choice, but attractiveness judgments of the items indicated no effect of the phantom decoy. Further, they found that when participants were asked to make separate attractiveness ratings for the stimulus values on each descriptive dimension, the combined dimensional value ratings suggested that the non-dominated alternative should be preferred. This is consistent with predictions made by range-frequency theory (Parducci 1995), but does not explain the effect of the phantom decoy found in choice. Based on their results, Pettibone and Wedell proposed a similarity-substitution hypothesis, suggesting that the phantom decoy effect is a choice based phenomenon. When forced to make a choice, participants may simply substitute the most similar item to the phantom decoy rather than rely on a judgment-based process.

In the current research, the similarity-substitution hypothesis of Pettibone and Wedell (2000) was tested by manipulating similarity to the decoy through the brand affiliation of the items in the choice set. Participants were presented with sets of three alternatives drawn from different types of consumer products. Two hypothetical brands were used for each set. The brand of the products was manipulated within-subjects, so that for any given set only the decoy and the dominated alternative were from the same brand or the decoy and the non-dominated alternative were from the same brand. Participants were asked to choose the alternative they preferred after being told that one of the items was unavailable. If the similarity-substitution hypothesis is true, then the phantom decoy effect should be largest when both the phantom and the dominated alternative belong to the same brand, thus enhancing their similarity. Results indicated no effect of brand information on preference, failing to support the similarity-substitution hypothesis.

One possible interpretation of these results is that the phantom decoy effect is not driven by similarity, but by the extension of the range along a single dimension caused by the decoy. This would result in increased weight being given to the extended dimension. As the dominated alternative has a better value along the extended dimension when compared to its competitor, it would be preferred. Future research will focus on isolating the effect of similarity and range extension by testing new phantom decoys that either extend the range while reducing similarity to the dominated alternative, or remain similar without extending the range.

 

"CONSUMER RESPONSE TO KNOWN VERSUS UNKNOWN PHANTOM ALTERNATIVES"

Kyeong Sam Min, Ohio State University

Patricia M. West, Ohio State University

The incidence of unavailable, or "phantom" alternatives on consumer decision making has been documented to impact consumer judgment and choice (e.g., Farquhar and Pratkanis 1993; Fitzsimons 2000; Highhouse 1996; Pettibone and Wedell 2000). Contrary to rational choice theory, the presence of a dominating but unavailable alternative has been shown to increase the probability of selecting the most similar available alternative. For example, when choosing between salmon, halibut, and steak as restaurant entrTes, halibut is the likely choice if the salmon is sold out or unavailable for the evening.

The existing literature has commonly assumed that the consumer is aware that the phantom is unavailable before making a choice (i.e., a known phantom). However, we test how and why consumer decision making differs when the consumer is unaware of the existence of a phantom prior to choice (i.e., an unknown phantom). Following up with the entrTe selection example, an unknown phantom would entail notifying the patron that salmon is not available that evening after the person has ordered the entrTe, thus requiring the person to select another entrTe.

Past research might lead one to conclude that the unavailability of a "promoted item" will lead a consumer to buy a similar, but more expensive alternative (i.e., the "bait and switch" practice) without experiencing any regret or dissatisfaction with the decision. However, numerous factors may affect how consumers respond to product unavailability.

We argue that reactance is likely to be triggered when a consumer is informed of product unavailability after making a selection. Reactance to choice constraint in this situation may drive the consumer to seek an alternative dissimilar to the phantom in response to the threat imposed on freedom of choice. Both decision importance and switching costs are expected to moderate consumer reactance. As decision importance (or switching cost) increases, consumer choice may be less influenced by the presence of a known versus unknown phantom. Furthermore, consumers are expected to experience reduced satisfaction when faced with choice constraints.

In study 1, subjects were taken on a computer-based shopping trip and asked to make a series of choices across product categories using a 2 (decision context: known versus unknown phantom) x 2 (switching costs: high versus low) x 4 (decision importance) mixed design. Each choice set consisted of a core set of two dissimilar, but equally attractive products plus a phantom product that is similar to but dominates one of the core products. Decision context was manipulated by informing subjects of the availability of the phantom before (known) or after (unknown) a choice was made. Switching costs were determined based on whether a phantom dominates a top dog (i.e., high switching cost) versusan underdog alternative (i.e., low switching cost). Finally, decision importance was varied by product price: a television set ($200), CD changer ($150), calculator ($12), and batteries ($3).

TABLE 1

CHOICE SHARE OF A TARGET: DECISION CONTEXT BY DECISION IMPORTANCE

Consistent with our prediction, decision makers were more likely to select the target when a known phantom (61.5%) versus an unknown phantom (54.6%) was present. In addition, a larger difference in the target choice share between known and unknown phantom condition was observed only when decision importance was low (see Table 1) or when the switching cost was low (low switching cost condition: known phantom [51.8%] versus unknown phantom [43.8%]; high switching cost condition: known phantom [70.9%] versus unknown phantom [67.1%]). As predicted, those who switched to a competitor in the presence of an unknown phantom (M=4.73) experienced significantly lower decision satisfaction than those who picked a competitor in the presence of a known phantom (M=5.48).

Study 2 was conducted to extend our understanding to an individual brand switching behavior by incorporating initial preference to determine switching costs, while replicating key findings in study 1. Subjects were taken on a virtual "date" and asked to choose a bouquet of flowers, a restaurant entrTe, a movie, and candy using a 2 (decision context: known versus unknown phantom) x 2 (switching cost: high versus low) mixed design. Once again, the choice set consisted of a core set of two alternatives plus a phantom. Consistent with our predictions, the target choice share was higher when a known phantom (70.9%) versus an unknown phantom (54.4%) was present. Furthermore, a difference in the target choice share between known and unknown phantom cases was found only when the switching cost was low (low switching cost condition: known phantom [15.8%] versus unknown phantom [0.0%]; high switching cost condition: known phantom [90.7%] versus unknown phantom [90.7%]).

In sum, the results of these two studies show that the timing of information regarding product unavailability affects consumer choice. When informed after making a choice, consumers are more likely to select and be dissatisfied with the product dissimilar to the "phantom." Moreover, as decision importance or switching cost increases, the difference in the target choice share between known and unknown phantom conditions decreases. These findings suggest that reactance is triggered when a consumer is informed of product unavailability after making a choice.

REFERENCES

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