The Right Purchase
How Political Identity Shapes Customer Satisfaction
Daniel Fernandes et al.
Journal of Marketing, forthcoming
This article examines the effect of political identity on customers’ satisfaction with the products and services they consume. Recent work suggests that conservatives are less likely to complain than liberals. Building on that work, the present research examines how political identity shapes customer satisfaction which has broad implications for customers and firms. Nine studies combine different methodologies, primary and secondary data, real and hypothetical behavior, different product categories, and diverse participant populations to show that conservatives (vs. liberals) are more satisfied with the products and services they consume. This happens because conservatives (vs. liberals) are more likely to believe in free will (i.e., that people have agency over their decisions) and therefore to trust their decisions. We document the broad and tangible downstream consequences of this effect for customers’ repurchase and recommendation intentions and firms’ sales. The association of political identity and customer satisfaction is attenuated when belief in free will is externally weakened, choice is limited, or the consumption experience is overwhelmingly positive.
The Impact of Ad-Blockers on Online Consumer Behavior
Marketing Science, forthcoming
Digital advertising is on track to become the dominant form of advertising, but ad-blocking technologies have recently emerged, posing a potential threat to the online advertising ecosystem. A significant and increasing fraction of internet users has indeed already started employing ad-blockers. However, surprisingly little is known yet about the effects of ad-blockers on consumers. This paper investigates the impact of ad-blockers on online search and purchasing behaviors by empirically analyzing a consumer-level panel data set. Interestingly, the analyses reveal that ad-blockers have a significant effect on online purchasing behavior: online consumer spending decreases due to ad-blockers by approximately $14.2 billion per year in total. In examining the underlying mechanism of the ad-blocker effects, I find that ad-blockers significantly decrease spending for brands that consumers have not experienced before, partially shifting spending toward brands that they have experienced in the past. I also find that ad-blockers spur additional unintended consequences, as they reduce consumers’ search activities across information channels. The findings remain robust to different identifying assumptions and robustness checks. The analyses draw timely managerial and policy implications for the digital advertising industry, as well as additional insights into the role of online advertising.
Observing Product Touch: The Vicarious Haptic Effect in Digital Marketing and Virtual Reality
Andrea Webb Luangrath et al.
Journal of Marketing Research, forthcoming
Retail is rapidly evolving to construct virtual environments for consumers. Online product images, videos, and virtual reality (VR) interfaces enliven consumer experiences and are a source of product information. Since consumers are unable to physically touch products in these digital environments, this research considers vicarious touch, or the observation of a hand in physical contact with a product in a digital environment. Across eight studies, the authors use images, GIFs, and VR to show that vicarious touch affects consumers’ psychological ownership and product valuation due to the active nature of product touch which results in a felt sense of body ownership of the virtual hand. This is termed the vicarious haptic effect. Results demonstrate that it is not simply enough to have a hand in an advertisement, the hand must be touching a product. The vicarious haptic effect is strongest for people who become highly stimulated by an immersive VR experience (i.e., measured via the elevation in heart rate). The vicarious haptic effect is attenuated if the viewed interaction does not represent a diagnostic hand movement. The authors discuss theoretical and managerial implications for digital product presentation in order to encourage feelings of product ownership and valuation.
Getting a Handle on Sales: Shopping Carts Affect Purchasing by Activating Arm Muscles
Zachary Estes & Mathias Streicher
Journal of Marketing, forthcoming
This research demonstrates that the physical properties of shopping carts influence purchasing and spending. Prior research on ergonomics indicates that standard shopping carts, which are pushed via a horizontal handlebar, are likely to activate arm extensor muscles. Prior research on arm muscle activation, in turn, suggests that arm extensor activation may elicit less purchasing than arm flexor activation. The authors thus deduce that standard shopping carts may be suboptimal for stimulating purchases. The authors predicted that shopping carts with parallel handles (i.e., like a wheelbarrow or “walker”) would instead activate the flexor muscles and thus increase purchasing. An electromyography (EMG) study revealed that both horizontal and vertical handles more strongly activate the extensor muscles of the upper arm (triceps), whereas parallel handles more strongly activate the flexor muscles (biceps). In a field experiment, parallel-handle shopping carts significantly and substantially increased sales across a broad range of categories, including both vice and virtue products. Finally, in a simulated shopping experiment, parallel handles increased purchasing and spending beyond both horizontal and vertical handles. These results were not attributable to the novelty of the shopping cart itself, participants’ mood, or purely ergonomic factors.
Experimental relativistic zero-knowledge proofs
Pouriya Alikhani et al.
Nature, 4 November 2021, Pages 47–50
Protecting secrets is a key challenge in our contemporary information-based era. In common situations, however, revealing secrets appears unavoidable; for instance, when identifying oneself in a bank to retrieve money. In turn, this may have highly undesirable consequences in the unlikely, yet not unrealistic, case where the bank’s security gets compromised. This naturally raises the question of whether disclosing secrets is fundamentally necessary for identifying oneself, or more generally for proving a statement to be correct. Developments in computer science provide an elegant solution via the concept of zero-knowledge proofs: a prover can convince a verifier of the validity of a certain statement without facilitating the elaboration of a proof at all. In this work, we report the experimental realization of such a zero-knowledge protocol involving two separated verifier–prover pairs. Security is enforced via the physical principle of special relativity, and no computational assumption (such as the existence of one-way functions) is required. Our implementation exclusively relies on off-the-shelf equipment and works at both short (60 m) and long distances (≥400 m) in about one second. This demonstrates the practical potential of multi-prover zero-knowledge protocols, promising for identification tasks and blockchain applications such as cryptocurrencies or smart contracts.
How Market Power Affects Dynamic Pricing: Evidence from Inventory Fluctuations at Car Dealerships
Ayelet Israeli et al.
Management Science, forthcoming
This paper investigates empirically the effect of market power on dynamic pricing in the presence of inventories. Our setting is the auto retail industry; we analyze how automotive dealerships adjust prices to inventory levels under varying degrees of market power. We first establish that inventory fluctuations create scarcity rents for cars that are in short supply. We then show that dealers’ ability to adjust prices in response to inventory depends on their market power, that is, the quantity of substitute inventory in their selling area. Specifically, we show that the slope of the price–inventory relationship (higher inventory lowers prices) is significantly steeper when dealers find themselves in a situation of high rather than low market power. A dealership with high market power moving from a situation of inventory shortage to a median inventory level lowers transaction prices by about 0.57% ceteris paribus, corresponding to 32.5% of dealers’ average per-vehicle profit margin or $145.6 on the average car. Conversely, when competition is more intense, moving from inventory shortage to a median inventory level lowers transaction prices by about 0.35% ceteris paribus, corresponding to 20.2% of dealers’ average per-vehicle profit margin or $90.9. To our knowledge, we are the first to empirically show that market power affects firms’ ability to dynamically price.
I Will Survive: Predicting Business Failures from Customer Ratings
Christof Naumzik, Stefan Feuerriegel & Markus Weinmann
Marketing Science, forthcoming
The success, if not survival, of service businesses depends on their ability to satisfy their customers. Yet, businesses often recognize slumping customer satisfaction too late and ultimately fail. To prevent this, marketers require early warning tools. In this paper, we build upon online ratings as a direct measure of customer satisfaction and, based on this, predict business failures. Specifically, we develop a variable-duration hidden Markov model; it models the rating sequence of a service business in order to predict the likelihood of failure. Using 64,887 ratings from 921 restaurants, we find that our model detects business failures with a balanced accuracy of 78.02%, and this prediction is even possible several months in advance. In comparison, simple metrics from practice have limited ability in predicting business failures; for instance, the mean rating yields a balanced accuracy of only around 50%. Furthermore, our model recovers a latent state (“at risk”) with an elevated failure rate. Avoiding the at-risk state is associated with a reduction in the failure rate of more than 41.41%. Our research thus entails direct managerial implications: we assist marketers in monitoring customer satisfaction and, for this purpose, offer a data-driven tool that provides early warnings of impending business failures.