Retail Politics
Status, Race, and Money: The Impact of Racial Hierarchy on Willingness to Pay
Aarti Ivanic, Jennifer Overbeck & Joseph Nunes
Psychological Science, forthcoming
Abstract:
A deeply entrenched status hierarchy in the United States classifies African Americans as lower status than Caucasians. Concurrently, African Americans face marketplace discrimination; they are treated as inferior and poor. Because having money and spending money signify status, we explored whether African Americans might elevate their willingness to pay for products in order to fulfill status needs. In Studies 1 and 2, explicit activation of the race concept led some African Americans to pay more than they would otherwise pay and also more than Caucasians. Individual differences in perceived status disadvantage and racial identification moderated this result. In Study 3, when race was salient, an overt status threat (inferior treatment in a purchasing context) similarly led African Americans, but not Caucasians, to pay more than they would otherwise pay. This research illustrates how African Americans whose status is threatened use spending as a way to assert status.
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Anger as a Hidden Motivator: Associating Attainable Products With Anger Turns Them Into Rewards
Harm Veling, Kirsten Ruys & Henk Aarts
Social Psychological and Personality Science, forthcoming
Abstract:
The authors examined whether creating associations between products and anger, a negative but also approach-related emotion, motivates people to get or invest in these products when these products are considered attainable. Experiment 1 demonstrated that participants spontaneously spent more physical effort to get anger-related (compared to neutral) products they could attain as gifts. Experiment 2 showed that participants paid more money for anger-related (compared to neutral) products and thus perceived them as more valuable, regardless of whether the anger-product association was established consciously or unconsciously. Importantly, Experiment 2 also revealed that anger-related products were only perceived as more valuable when they were considered in terms of attainability. The authors conclude that anger can be a hidden motivator: Anger-related products that are perceived in terms of attainability act as rewards that motivate people to obtain these products.
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Effects of Messiness on Preferences for Simplicity
Jia (Elke) Liu, Dirk Smeesters & Debra Trampe
Journal of Consumer Research, forthcoming
Abstract:
This research examines the effect of experiencing messiness, induced by a messy environment or by priming the concept of messiness, on consumers. We propose that messiness is an aversive state and consumers are motivated to attenuate this state by seeking simplicity in their cognitions, preferences, and choices. Six experiments support our theorizing. Experiments 1a-1c (conducted in the laboratory) and experiment 2 (conducted in the field) demonstrate that when messiness is salient, consumers form simpler product categorizations, are willing to pay more for a t-shirt with a simple picture, and seek less variety in their choices. Experiment 3 brings additional evidence for the underlying role of the need for simplicity by showing that when the need for simplicity is satiated, the effects of messiness disappear. A final experiment shows a boundary condition of the messiness effect: political conservatives are more susceptible to messiness primes compared to liberals.
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Poverty, Place or Race: Causes of the Retail Gap in Smaller U.S. Cities
William Bellinger & Jue Wang
Review of Black Political Economy, September 2011, Pages 253-270
Abstract:
In this study we explore the possibility that any or all of three dimensions of the U.S. inner city, central location, relatively low income, and a relatively high percentage of minority residents, correlate with a relative lack of neighborhood retail services, the so-called retail gap. Our empirical analysis is based on zip code level data for 39 U.S. cities with populations from 50 to 225 thousand people. After specifying an empirical model based on hypotheses drawn from the urban economics, urban studies, and urban development literature, we test access to retail services using both geographical density and per capita retail measures. While several results from this study are worthy of discussion, our primary empirical finding is that neighborhoods with high percentages of African-Americans are systematically under-served by retail, all else equal, while Latino, low income, or otherwise centrally located neighborhoods are not. We then test a selection of product categories for retail density, finding some differing results by product category but verifying our more general conclusions for most products. Finally, we find that grocery stores have significantly smaller scale in African-American communities, a finding that provides partial support for the urban "food desert" hypothesis. These findings suggest that the inner city retail gap may be more of a racial than geographic issue, and that increased emphasis on racial composition is warranted in the retail development policies applied to smaller U.S. cities.
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Can Prominence Matter even in an Almost Frictionless Market?
Andrew Rhodes
Economic Journal, November 2011, Pages F297-F308
Abstract:
Consumer search on the Internet is rarely random. Sponsored links appear higher up a webpage and consumers often click them. Firms also bid aggressively for these 'prominent' positions at the top of the page. But why should prominence matter, when visiting an additional website is almost costless? I present a model in which consumers know their valuations for the products offered in the market but do not know which retailer sells which product. I show that a prominent retailer earns significantly more profit than other firms, even when the cost of searching websites and comparing products is essentially zero.
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Exploring the Robin Hood effect: Moral profiteering motives for purchasing counterfeit products
Amit Poddar et al.
Journal of Business Research, forthcoming
Abstract:
Counterfeiting is one of the most serious problems facing luxury fashion brands. This study demonstrates that the impact of price differentials on counterfeit purchases varies according to the perceived corporate citizenship (PCC) image of the original brand. When consumers perceive the legitimate brand to be high in corporate citizenship (high PCC), the extent of the price differential does not affect consumers' purchase intentions toward the counterfeit. However, when the legitimate brand has a negative image (low PCC), higher price differentials trigger significantly greater intentions to purchase the counterfeit product. This moral profiteering effect indicates that consumers are more likely to purchase counterfeits when they have both economic and moral justifications for their unethical actions. Marketing efforts directed toward improving the PCC might reduce the purchase of counterfeit goods.
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Failing to commit: Maximizers avoid commitment in a way that contributes to reduced satisfaction
Erin Sparks, Joyce Ehrlinger & Richard Eibach
Personality and Individual Differences, January 2012, Pages 72-77
Abstract:
Past research suggests that individuals who approach decisions with the goal of maximizing, or selecting the best possible option, show less satisfaction with their choices than those with the goal of satisficing, or selecting the first "good enough" option. The present investigation examines whether this difference in choice satisfaction stems from a difference in willingness to commit to one's choices. We argue that maximizers are reticent to commit to their choices and that this reticence robs them of the dissonance reduction processes that leave people satisfied. In Study 1, maximizers reported a stronger preference than satisficers for retaining the possibility to revise choices, both when reporting preferences in their own life and when choosing between options in a hypothetical situation. In Study 2, satisficers showed evidence of classic dissonance reduction after making a choice - they offered higher ratings of a chosen poster and lower ratings of the rejected alternatives, relative to baseline. However, maximizers were less likely to change their impressions of the posters after their choice, leaving them less satisfied with their selected poster. These results provide valuable insight into post-decision processes that decrease maximizers' satisfaction with their decisions.
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Charles Zhang & Norbert Schwarz
Journal of Consumer Research, forthcoming
Abstract:
The same quantity can be expressed at different levels of granularity, for example, "one year", "twelve months" or "365 days". Consumers attend to the granularity chosen by a communicator and draw pragmatic inferences that influence judgment and choice. They consider estimates expressed in finer granularity more precise and have more confidence in their accuracy (studies 1-4). This effect is eliminated when consumers doubt that the communicator complies with Gricean norms of cooperative conversational conduct (studies 2-3). Based on their pragmatic inferences, consumers perceive products as more likely to deliver on their promises when the promise is described in fine grained rather than coarse terms and choose accordingly (study 4). These findings highlight the role of pragmatic inferences in consumer judgment and have important implications for the design of marketing communications.
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DVD sales and the R-rating puzzle
David Lang, David Switzer & Brandon Swartz
Journal of Cultural Economics, November 2011, Pages 267-286
Abstract:
In the last decade, attendance at movie theaters has been relatively stagnant, while sales of digital versatile discs (DVDs) have grown dramatically. In this paper, we look at the factors determining sales of individual DVDs in the United States. Using data on new motion pictures released on DVD between 2006 and 2008, we find the demand for new DVDs is price-inelastic and that DVD sales are counter-cyclical. We find that previous box office success has strong positive effects on DVD sales. Production budget also has a positive effect on DVD sales, albeit indirectly through its effect on box office revenues. Critical acclaim has significant positive effects on both box office revenue and DVD sales, but the effect is smaller in regard to DVDs. There is some evidence to suggest that DVD sales are higher for movies with more sexual content and more violent content and lower for movies with more profanity, but these effects are indirect through the changes in the box office of these movies. We find that sales of R-rated DVDs are not as dependent upon critical acclaim as movies of other ratings, and are thus less risky for movie studios to produce. Our findings provide another explanation for the R-rating puzzle.
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Gabriele Paolacci, Katherine Burson & Scott Rick
Journal of Consumer Psychology, October 2011, Pages 384-392
Abstract:
Prior research has consistently demonstrated that people are reluctant to trade a good they own for an alternative good, particularly when the alternative (or "target") represents a substantial departure from the "endowment". We demonstrate that the endowment effect can be reduced by first making participants consider trading their endowment for an intermediate alternative (which shares some characteristics of the endowment and some characteristics of the target). We find that this "intermediate alternative effect" operates primarily by shifting one's reference point in the direction of the target alternative. Even when the intermediate alternative is not adopted, the extent to which one's endowment is treated as a reference point is weakened, which can also facilitate subsequent trading.
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Lauren Leotti & Mauricio Delgado
Psychological Science, October 2011, Pages 1310-1318
Abstract:
Research suggests that the exercise of control is desirable and adaptive, but the precise mechanisms underlying the affective value of control are not well understood. The study reported here characterized the affective experience of personal control by examining the neural substrates recruited when individuals anticipate the opportunity to make a choice - in other words, when they anticipate the means for exercising control. We used an experimental paradigm that probed the value of having a choice. Participants reported liking cues that predicted a future opportunity to make a choice more than cues that predicted no choice. The anticipation of choice itself was associated with increased activity in corticostriatal regions, particularly the ventral striatum, involved in affective and motivational processes. This study is the first direct examination of the affective value of having the opportunity to choose. These findings have important implications for understanding the role of perception of control, and choice itself, in self-regulatory processes.
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Making Consumers Comfortable: The Early Decades of Air Conditioning in the United States
Jeff Biddle
Journal of Economic History, December 2011, Pages 1078-1094
Abstract:
During the air conditioner industry's first four decades, most installations were "commercial comfort" air conditioning systems, purchased by retailers to increase demand for their products. Air conditioning spread unevenly through the commercial sector and across the country. Using data from a variety of sources, I offer a quantitative account of this diffusion, viewed through an interpretive framework that emphasizes differences across geographic markets and industries in the costs and benefits to retailers of installing air conditioning. Correlates of early adoption of commercial air conditioning include electricity rates and consumer income and education levels.
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Reviews, Reputation, and Revenue: The Case of Yelp.com
Michael Luca
Harvard Working Paper, September 2011
Abstract:
Do online consumer reviews affect restaurant demand? I investigate this question using a novel dataset combining reviews from the website Yelp.com and restaurant data from the Washington State Department of Revenue. Because Yelp prominently displays a restaurant's rounded average rating, I can identify the causal impact of Yelp ratings on demand with a regression discontinuity framework that exploits Yelp's rounding thresholds. I present three findings about the impact of consumer reviews on the restaurant industry: (1) a one-star increase in Yelp rating leads to a 5% to 9% increase in revenue, (2) this effect is driven by independent restaurants; ratings do not affect restaurants with chain affiliation, and (3) chain restaurants have declined in market share as Yelp penetration has increased. This suggests that online consumer reviews substitute for more traditional forms of reputation. I then test whether consumers use these reviews in a way that is consistent with standard learning models. I present two additional findings: (4) consumers do not use all available information and are more responsive to quality changes that are more visible and (5) consumers respond more strongly when a rating contains more information. Consumer response to a restaurant's average rating is affected by the number of reviews and whether the reviewers are certified as "elite" by Yelp, but is unaffected by the size of the reviewers' Yelp friends network.
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The Cost of Doing Femininity: Gendered Disparities in Pricing of Personal Care Products and Services
Megan Duesterhaus et al.
Gender Issues, December 2011, Pages 175-191
Abstract:
Economic discrimination has been a major focus of gender research for the past several decades and such studies reveal a persistent gender wage gap. This study examines another aspect of the interaction between gender and the economy that has been largely ignored by social scientists - gender-based disparities in the cost of goods and services in the personal care industry. We examine prices charged for personal care products and services that are targeted toward women or men and find that women pay more than men for certain items and services. Our research suggests that although the differences are not uniform across types of services or products, women do tend to pay more than men for items such as deodorant, haircuts, and dry-cleaning. We suggest that such practices contribute to gender inequality by increasing women's economic burden and reinforcing essentialist thinking about gender (i.e., that women and men are biologically different).
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Hao Shen & Jaideep Sengupta
Journal of Experimental Social Psychology, forthcoming
Abstract:
This research examines whether and how holding one object influences evaluations of another. Across four studies, we find that occupying the dominant (vs. non-dominant) hand leads to lower evaluations of the target object; further, process data suggests that this effect occurs because dominant hand restriction impairs the ease with which the perceiver simulates holding the target. Boundary conditions that document effect attenuation and reversal are also consistent with this premise. Collectively, the studies offer support for a circular chain of influence between the perception and action systems.