How to Attract Customers by Giving Them the Short End of the Stick

Several influential streams of research in marketing, psychology, and economics conclude that when an offer a seller makes to a buyer is held fixed, the buyer will be repelled if he or she learns that some other group of buyers is getting a better price for the same benefits or receiving more benefits for the same price. Prior work has attributed this repulsion to perceptions that the offer is inequitable, that it fits others better, or that it suggests that the core product is of low value. In six experiments, the authors show conditions under which exactly the opposite can occur; that is, consumers judge the same offer to be more attractive when a seller offers a better price or more benefits to another group than when the seller treats everyone equally.

[1]  I. Simonson,et al.  The Idiosyncratic Fit Heuristic: Effort Advantage as a Determinant of Consumer Response to Loyalty Programs , 2003 .

[2]  Eric T. Anderson,et al.  Research Note: Price Discrimination as an Adverse Signal: Why an Offer to Spread Payments May Hurt Demand , 2001 .

[3]  Paul M. Brown,et al.  What Makes an Allocation Fair? Some Experimental Evidence , 2002, Games Econ. Behav..

[4]  I. Simonson,et al.  Experimental Evidence on the Negative Effect of Product Features and Sales Promotions on Brand Choice , 1994 .

[5]  Jack M. Feldman,et al.  Self-generated validity and other effects of measurement on belief, attitude, intention, and behavior. , 1988 .

[6]  John Butman,et al.  Trading up : why consumers want new luxury goods--and how companies create them , 2005 .

[7]  F. Kardes,et al.  Spontaneous Inference Processes in Advertising: The Effects of Conclusion Omission and Involvement on Persuasion , 1988 .

[8]  Joel Huber,et al.  The Impact of Inferential Beliefs on Product Evaluations , 1982 .

[9]  Margaret C. Campbell.  Perceptions of Price Unfairness: Antecedents and Consequences , 1999 .

[10]  Joseph W. Alba,et al.  The Role of Consumers' Intuitions in Inference Making , 1994 .

[11]  Fred M. Feinberg,et al.  Do we care what others Get? A Behaviorist Approach to Targeted Promotions , 2002 .

[12]  William T. Ross,et al.  Making Inferences about Missing Information: The Effects of Existing Information , 1992 .

[13]  Gita Venkataramani Johar,et al.  The use of concurrent disclosures to correct invalid inferences. , 2000 .

[14]  Christopher K. Hsee,et al.  The Evaluability Hypothesis: An Explanation for Preference Reversals between Joint and Separate Evaluations of Alternatives , 1996 .

[15]  Scot Burton,et al.  Marketplace attributions and consumer evaluations of discount claims , 1989 .

[16]  Darren W. Dahl,et al.  Fairness and Discounts: The Subjective Value of a Bargain , 2003 .

[17]  John G. Lynch,et al.  Interactive Home Shopping: Consumer, Retailer, and Manufacturer Incentives to Participate in Electronic Marketplaces , 1997 .

[18]  Joseph W. Alba,et al.  Consumer Perceptions of Price (Un)Fairness , 2003 .

[19]  Shelley E. Taylor,et al.  Social cognition, 2nd ed. , 1991 .

[20]  L. Thompson,et al.  Social Utility and Decision Making in Interpersonal Contexts , 1989 .

[21]  J. Lynch.  Theory and external validity , 1999 .

[22]  J. Tirole.  The Theory of Industrial Organization , 1988 .

[23]  Ran Kivetz,et al.  The Effects of Incomplete Information on Consumer Choice , 2000 .

[24]  P. Nelson.  Information and Consumer Behavior , 1970, Journal of Political Economy.

[25]  Joseph W. Alba,et al.  Explorations in price (un)fairness , 2001 .

[26]  K. Lancaster,et al.  Consumer Demand. A New Approach. , 1972 .

[27]  John L. Swasy,et al.  Consumer Skepticism of Advertising Claims: Testing Hypotheses from Economics of Information , 1990 .

[28]  Amna Kirmani,et al.  Money Talks: Perceived Advertising Expense and Expected Product Quality , 1989 .

[29]  Paul T. P. Wong,et al.  When people ask "why" questions, and the heuristics of attributional search. , 1981 .

[30]  Glenn H. Bracht,et al.  The External Validity of Experiments1 , 1968 .

[31]  Priya Raghubir,et al.  The Three Faces of Consumer Promotions , 2004 .

[32]  Alan D. J. Cooke,et al.  When Absence Begets Inference in Conjoint Analysis , 2004 .

[33]  Gabriel J. Biehal,et al.  Memory-Based Inferences during Consumer Choice , 1990 .

[34]  Ernst Fehr,et al.  Testing Theories of Fairness - Intentions Matter , 2000, Games Econ. Behav..

[35]  M. Rabin.  Published by: American , 2022 .

[36]  Donald R. Lehmann,et al.  The Importance of Others' Welfare in Evaluating Bargaining Outcomes , 1993 .

[37]  Gregory S. Carpenter,et al.  The Role of Market Efficiency Intuitions in Consumer Choice: A Case of Compensatory Inferences , 2001 .

[38]  John G. Lynch,et al.  Inference Effects without Inference Making? Effects of Missing Information on Discounting and Use of Presented Information , 1991 .

[39]  M. Schweitzer,et al.  What Makes Negotiators Happy? The Differential Effects of Internal and External Social Comparisons on Negotiator Satisfaction , 2004 .