The influence of price changes on consumers' purchase decisions

The development of an effective pricing strategy requires the acquaintance of consumers’ price perception as well as the range of elements that influence the price sensitivity. This paper analyses the relationships between product features, individual characteristics and the level of price increase/decrease that induces the consumers to change their purchase decisions. The results of a dedicated survey show, that price sensitivity, individual preferences, type of product and direction of price change and individual characteristics of consumers (gender, age, professional situation) have a significant impact on a threshold at which people are willing to choose the less attractive, but cheaper alternative to their favorite product or give up the variety in consumption. From a consumer behavior perspective, these findings play a fundamental role in pricing.

Determinants of Consumer Purchase Decisions of Health Insurance in Kerala

This research work was to study the level of awareness of consumers about health insurance concept and market, consumer perceptions about health insurance providers, schemes and various factors that influence buying decision of health insurance. There is need to bring entire age group – high risk and low risk under health insurance cover. Widening the cover of health insurance calls for indepth understanding of consumer thinking and extensive marketing efforts based on that. Hence the study of consumer perceptions and the impact of different contributing factors on consumer purchase decision assume significance to the marketer. Understanding the consumer thinking on health insurance will also be of relevance to governmental/non governmental agencies, as affordable health care to all is a policy objective of the government and new schemes are being launched in this area.

A simultaneous examination of the effects of salesperson relationship-building activities and marketing activities on retail buyers' purchase decisions

Firms’ contemporary selling practices often not only demand that salespeople meet sales quotas, but also that they build strong, profitable relationships with customers. Given the belief that relationship-building activities can develop closer customer ties and improve sales performance, scholars have increasingly studied salesperson behaviors aimed at nurturing buyer-salesperson relations. However, while previous sales research has investigated the effects of a number of relational activities on performance outcomes in isolation, knowledge about their effectiveness in comparison to other important performance drivers is virtually absent. The present study provides some first theoretical and empirical insights into this research gap by simultaneously examining the role of specific salesperson relationship-building activities, and product-focused variables, in retail buyers’ new product purchase decisions. Following an extensive literature review, a two-part qualitative field study was conducted to explore salesperson relationship-building activities that are regarded as important by retail buyers. Two key relational behaviors were suggested by the customer-centric and retail industry-specific data; salesperson consultation (communication-based) and salesperson helping behavior (action-based). Drawing on this as well as extant literature, a conceptual framework was developed concerning the influences of these relationship-building activities and other product-focused factors on retail buyers’ new product acceptance. The study’s quantitative component contained a mail and web survey of U.S. retail buyers, resulting in a total dataset of 192 responses. After a comprehensive measure validation process, the theoretical hypotheses were tested using logistic regression analysis. Contrary to existing assertions, the results suggest that salesperson relationship-building activities themselves do not directly and/or indirectly influence purchase decisions, but instead can moderate the effects of product-focused determinants on retail buyers’ new product selections. Data on actual purchase decisions provide a high level of external validity to the findings. The study closes with a concluding discussion, including theoretical and managerial implications of the findings, limitations of the research, and directions for future inquiry.

Mother-child interactions in youth purchase decisions

This study examines the impact of mother-child interactions on youth purchase decisions with a clear focus on dependent young adults living in the parental home. Two studies were carried out using both quantitative and qualitative approaches in order to understand the characteristics of young adults’ purchase decision-making. In the first study, a survey was distributed among young adults, and in the second study, several short essays from pairs of young adults and their mothers were analysed. Findings suggest that mother-child communication has a significant impact on children’s consumer decision-making style. Furthermore, these results draw particular attention to the laissez-faire communication style, which is relevant due to both its prevalence and its influence on youth decision-making. We also conclude that the product or service category is a critical consideration when the independence of young adults is evaluated in relation to their purchases.

Reference groups and product line decisions: An experimental investigation of limited editions and product proliferation

Some luxury goods manufacturers offer limited editions of their products, whereas some others market multiple product lines. Researchers have found that reference groups shape consumer evaluations of these product categories. Yet little empirical research has examined how reference groups affect the product line decisions of firms. Indeed, in a field setting it is quite a challenge to isolate reference group effects from contextual effects and correlated effects. In this paper, we propose a parsimonious model that allows us to study how reference groups influence firm behavior and that lends itself to experimental analysis. With the aid of the model we investigate the behavior of consumers in a laboratory setting where we can focus on the reference group effects after controlling for the contextual and correlated effects. The experimental results show that in the presence of strong reference group effects, limited editions and multiple products can help improve firms' profits. Furthermore, the trends in the purchase decisions of our participants point to the possibility that they are capable of introspecting close to two steps of thinking at the outset of the game and then learning through reinforcement mechanisms. © 2010 INFORMS.

Information needs for a purchase of fairtrade coffee

This research investigates what information German Fairtrade coffee consumers search for during pre-purchase information seeking and to what extent information is retrieved. Furthermore, the sequence of the information search as well as the degree of cognitive involvement is highlighted. The role of labeling, the importance of additional ethical information and its quality in terms of concreteness as well as the importance of product price and organic origin are addressed. A set of information relevant to Fairtrade consumers was tested by means of the Information Display Matrix (IDM) method with 389 Fairtrade consumers. Results show that prior to purchase, information on product packages plays an important role and is retrieved rather extensively, but search strategies that reduce the information processing effort are applied as well. Furthermore, general information is preferred over specific information. Results of two regression analyses indicate that purchase decisions are related to search behavior variables rather than to socio-demographic variables and purchase motives. In order to match product information with consumers’ needs, marketers should offer information that is reduced to the central aspects of Fairtrade.

The Influence of Purchase Confidence on Information Source Selection: Implications for Hospitality Industry

Whether the product of choice is a restaurant, vacation resort or hotel, it is important for hospitality marketers to understand how consumers treat purchase decisions and the influence purchase confidence and situation play on that decision. This study investigated the role purchase confidence plays with knowledge in the selection of sources of information during purchase decisions. The results indicate sources of information are perceived differently by consumers and depending on the purchase situation, subjective knowledge is influenced by purchase confidence affecting the source of information considered when making a purchase decision. The results also indicated that those with high purchase confidence and subjective knowledge will rely on themselves as a source when making a purchase rather than a retail clerk or published material.

The effectiveness of literalism-symbolism in business-to-business advertising

A basic element in advertising strategy is the choice of an appeal. In business-to-business (B2B) marketing communication, a long-standing approach relies on literal and factual, benefit-laden messages. Given the highly complex, costly and involved processes of business purchases, such approaches are certainly understandable. This project challenges the traditional B2B approach and asks if an alternative approach—using symbolic messages that operate at a more intrinsic or emotional level—is effective in the B2B arena. As an alternative to literal (factual) messages, there is an emerging body of literature that asserts stronger, more enduring results can be achieved through symbolic messages (imagery or text) in an advertisement. The present study contributes to this stream of research. From a theoretical standpoint, the study explores differences in literal-symbolic message content in B2B advertisements. There has been much discussion—mainly in the consumer literature—on the ability of symbolic messages to motivate a prospect to process advertising information by necessitating more elaborate processing and comprehension. Business buyers are regarded as less receptive to indirect or implicit appeals because their purchase decisions are based on direct evidence of product superiority. It is argued here, that these same buyers may be equally influenced by advertising that stimulates internally-directed motivation, feelings and cognitions about the brand. Thus far, studies on the effect of literalism and symbolism are fragmented, and few focus on the B2B market. While there have been many studies about the effects of symbolism no adequate scale exists to measure the continuum of literalism-symbolism. Therefore, a first task for this study was to develop such a scale. Following scale development, content analysis of 748 B2B print advertisements was undertaken to investigate whether differences in literalism-symbolism led to higher advertising performance. Variations of time and industry were also measured. From a practical perspective, the results challenge the prevailing B2B practice of relying on literal messages. While definitive support was not established for the use of symbolic message content, literal messages also failed to predict advertising performance. If the ‘fact, benefit laden’ assumption within B2B advertising cannot be supported, then other approaches used in the business-to-consumer (B2C) sector, such as symbolic messages may be also appropriate in business markets. Further research will need to test the potential effects of such messages, thereby building a revised foundation that can help drive advances in B2B advertising. Finally, the study offers a contribution to the growing body of knowledge on symbolism in advertising. While the specific focus of the study relates to B2B advertising, the Literalism-Symbolism scale developed here provides a reliable measure to evaluate literal and symbolic message content in all print advertisements. The value of this scale to advance our understanding about message strategy may be significant in future consumer and business advertising research.

Assessing the awareness and importance of housing sustainability in Queensland

Sustainability has been a major factor and determinant of commercial property design, construction, retro-fitting and landlord and tenant requirements over the last decade, supported by the introduction of rating tools such as NABERS and GreenStar and the recently mandated Building Energy Efficiency Certificate (BEEC). However, the movement to sustainable and energy efficient housing has not been established for the same period, and although mandatory building regulations have been in place for new residential housing construction since 2004, the requirement to improve the sustainability and energy efficiency of housing constructed prior to 2004 has not been mandatory. Residential dwelling energy efficiency and rating schemes introduced in Australia over the past decade have included rating schemes such as BASIX, NatHERS, First rate, ACTHERS, and Building Code of Australia and these have applied to new dwelling construction. At both National and State level the use of energy efficiency schemes for existing residential dwellings has been voluntary and despite significant cash incentives have not always been successful or achieved widespread take-up. In 2010, the Queensland Government regulated that all homes offered for sale, whether a new or existing dwellings require the seller to provide a ―sustainability declaration‖ that provides details of the sustainability measures associated with the dwelling being sold. The purpose of this declaration being to inform buyers and increase community awareness of home sustainability features. This paper uses an extensive review of real estate marketing material, together with a comprehensive survey of real estate agents to analyse the current market compliance, awareness and acceptance of existing green housing regulations and the importance that residential property owners and purchasers place on energy efficient and sustainable housing. The findings indicate that there is still little community awareness or concern of sustainable housing features when making home purchase decisions.

Visceral hedonic rhetoric

Emotional responses can incite and entice consumers to select a particular product from a row of similar items and thus have a considerable impact on purchase decisions. Consequently, more and more companies are challenging designers to address the emotional impact of their work and to design for emotion and consumerproduct relationships. Furthermore, the creation of emotional attachment to one’s possessions is one way of approaching a sustainable consumer-product relationship. The aim of this research is to gain a deeper understanding of the instantaneous emotional attachment that consumers form with products and its subsequent implications for product development. The foci of the study are visceral design, consumer hedonics and product rhetoric. Studied in a conglomerate they become an area of new investigation: visceral hedonic rhetoric. In this context, the term “visceral hedonic rhetoric” is defined as the properties of a product that persuasively elicit the pursuit of pleasure at an instinctual level of cognition. This study explores visceral hedonic rhetoric evident in the design of interactive products and resides within the context of emotional design research. It employs an empirical approach to understand how consumers respond hedonically on a visceral level to rhetoric in products. Specifically, it examines visceral hedonic responses given by thirty participants to the stimuli of six mobile telephones, six Mp3 players and six USB memory flash drives. The study findings demonstrate a hierarchy of visceral hedonic rhetoric evident in interactive products. This hierarchy of visceral hedonic attributes include: colour, size, shape, intrigue, material, perceived usability, portability, perceived function, novelty, analogy, brand, quality, texture and gender. However, it is the interrelationships between these visceral hedonic attributes that are the most significant findings of this research. Certain associations were revealed between product attribute combinations and consumer perception. The most predominant of these were: gender bias associated with colour selection; the creation of intrigue through a vibrant attention-grabbing colour; perceived ease of use and function; product confidence as a result of brand familiarity and perceived usability; analogous association through familiarity with similar objects and shapes; and the association of longevity with quality, novelty or recent technology. A significant outcome of the research is the distillation of visceral hedonic rhetoric design principles, and a tool to assist designers in harnessing the full potential of visceral hedonic rhetoric. This study contributes to the identification of the emerging research field of visceral hedonic rhetoric. Application of this study’s findings has the potential to provide a hedonic consumer-product relationship that is more meaningful, less disposable and more sustainable. This theory of visceral hedonic rhetoric is not only a significant contribution to design knowledge but is also generally transferable to other research domains, as later suggested in future research avenues.

Product reputation model : an opinion mining based approach

Product rating systems are very popular on the web, and users are increasingly depending on the overall product ratings provided by websites to make purchase decisions or to compare various products. Currently most of these systems directly depend on users’ ratings and aggregate the ratings using simple aggregating methods such as mean or median [1]. In fact, many websites also allow users to express their opinions in the form of textual product reviews. In this paper, we propose a new product reputation model that uses opinion mining techniques in order to extract sentiments about product’s features, and then provide a method to generate a more realistic reputation value for every feature of the product and the product itself. We considered the strength of the opinion rather than its orientation only. We do not treat all product features equally when we calculate the overall product reputation, as some features are more important to customers than others, and consequently have more impact on customers buying decisions. Our method provides helpful details about the product features for customers rather than only representing reputation as a number only.

The role of emotions in service customer decision-making

This chapter explains how customers make purchase decisions and how these decisions are influenced not only by the service marketer but also by the customers own emotions. While decision-making is described from the perspective of purchasing services rather than purchasing goods, we challenge the traditional notion that customers make informed, rational and well-thought-out decisions. Rather customers are often driven by subjective feelings such as emotions. We present evidence of how these emotions influence the behavior of customers, their attitudes and evaluation of the service, as well as final decision-making processes.

Essays in revealed preference theory and behavioral economics

Time, risk, and attention are all integral to economic decision making. The aim of this work is to understand those key components of decision making using a variety of approaches: providing axiomatic characterizations to investigate time discounting, generating measures of visual attention to infer consumers' intentions, and examining data from unique field settings.

Chapter 2, co-authored with Federico Echenique and Kota Saito, presents the first revealed-preference characterizations of exponentially-discounted utility model and its generalizations. My characterizations provide non-parametric revealed-preference tests. I apply the tests to data from a recent experiment, and find that the axiomatization delivers new insights on a dataset that had been analyzed by traditional parametric methods.

Chapter 3, co-authored with Min Jeong Kang and Colin Camerer, investigates whether "pre-choice" measures of visual attention improve in prediction of consumers' purchase intentions. We measure participants' visual attention using eyetracking or mousetracking while they make hypothetical as well as real purchase decisions. I find that different patterns of visual attention are associated with hypothetical and real decisions. I then demonstrate that including information on visual attention improves prediction of purchase decisions when attention is measured with mousetracking.

Chapter 4 investigates individuals' attitudes towards risk in a high-stakes environment using data from a TV game show, Jeopardy!. I first quantify players' subjective beliefs about answering questions correctly. Using those beliefs in estimation, I find that the representative player is risk averse. I then find that trailing players tend to wager more than "folk" strategies that are known among the community of contestants and fans, and this tendency is related to their confidence. I also find gender differences: male players take more risk than female players, and even more so when they are competing against two other male players.

Chapter 5, co-authored with Colin Camerer, investigates the dynamics of the favorite-longshot bias (FLB) using data on horse race betting from an online exchange that allows bettors to trade "in-play." I find that probabilistic forecasts implied by market prices before start of the races are well-calibrated, but the degree of FLB increases significantly as the events approach toward the end.

Protocol for a pilot randomised controlled trial of an intervention to increase the use of traffic light food labelling in UK shoppers (the FLICC trial)

Background: Traffic light labelling of foods—a system that incorporates a colour-coded assessment of the level of total fat, saturated fat, sugar and salt on the front of packaged foods—has been recommended by the UK Government and is currently in use or being phased in by many UK manufacturers and retailers. This paper describes a protocol for a pilot randomised controlled trial of an intervention designed to increase the use of traffic light labelling during real-life food purchase decisions.

Methods/design: The objectives of this two-arm randomised controlled pilot trial are to assess recruitment, retention and data completion rates, to generate potential effect size estimates to inform sample size calculations for the main trial and to assess the feasibility of conducting such a trial. Participants will be recruited by email from a loyalty card database of a UK supermarket chain. Eligible participants will be over 18 and regular shoppers who frequently purchase ready meals or pizzas. The intervention is informed by a review of previous interventions encouraging the use of nutrition labelling and the broader behaviour change literature. It is designed to impact on mechanisms affecting belief and behavioural intention formation as well as those associated with planning and goal setting and the adoption and maintenance of the behaviour of interest, namely traffic light label use during purchases of ready meals and pizzas. Data will be collected using electronic sales data via supermarket loyalty cards and web-based questionnaires and will be used to estimate the effect of the intervention on the nutrition profile of purchased ready meals and pizzas and the behavioural mechanisms associated with label use. Data collection will take place over 48 weeks. A process evaluation including semi-structured interviews and web analytics will be conducted to assess feasibility of a full trial.

Discussion: The design of the pilot trial allows for efficient recruitment and data collection. The intervention could be generalised to a wider population if shown to be feasible in the main trial.

Unveiling the Influence of Consumer Wine Appreciation Dimension on Purchasing Behavior

Consumption values and different usage situations have received extensive interest from scholars; however, there is a lack of understanding regarding how these two constructs interact when it comes to the purchase decisions of consumers. This study examines the relationship between consumption values, consumption situations, and consumers’ purchasing decisions in terms of their willingness to pay and the purchase quantity. First of all, my model proposes that all four consumption values and different situations have a positive effect on consumers’ willingness to pay as well as the quantity they purchase. It also proposes that varying usage situations moderate the effect of consumption values on consumers’ purchasing decisions. In my conceptual model, I have also integrated the epistemic and conditional values where there is a gap in the existing literature. Prior literature has isolated the consumption values when studying how they affect consumer behavior and has not examined how consumption situations moderate the relationship between consumption values and purchasing decisions. Also, the existing literature has mostly focused on how consumption values affect purchase intentions, brand loyalty, or satisfaction, whereas my study focuses on purchasing decisions. For my study, the participants were randomly chosen from the general wine consumer population and the age range was between 20 and 75, which included 83 male respondents and 119 female respondents. The data received from my respondents support my hypotheses for the model. In my final chapter, I discuss the theoretical and managerial implications as well as suggestions for future research.