Category Archives: Cases

People need vocabulary to develop taste

Barry Schwartz argues in his book, the Paradox of Choice, that increasing choices does not make us happy. Instead, reducing choices boosts sales and giving more options lowers choices.

Autonomy and Freedom of choice are critical to our well being, and choice is critical to freedom and autonomy. Nonetheless, though modern Americans have more choice than any group of people ever has before, and thus, presumably, more freedom and autonomy, we don’t seem to be benefiting from it psychologically. —quoted from Ch.5, The Paradox of Choice, 2004

Then, does giving more choices enhance the enjoyment choosers experience? It may not be, either. I had a similar experience at the cheese section of the Annam Gourmet at Ho Chi Minh city, Vietnam. It provided a wide variety of cheeses. Therefore, spent a significant amount of time in carefully comparing multiple cheeses and eventually choosing one. When I tasted the selected cheese, unfortunately, I was confused which one to choose because I spent too much time on thinking about several cheeses.

Then, what could marketers do to help people enjoy their experience? One suggestion is that when customers experience the option, they are reminded which one was chosen. For instance, if the option name is shown, customers will be able to keep focused on it.

Nekkid Wings is a chicken wing restaurant in Seoul, Korea. Customers select one out of twelve flavors for a bucket of five wings. Some flavors are safe (e.g., classic buffalo) and others are risky (e.g., parmesan garlic). Most customers order multiple buckets and try safe and risky flavors together. The flavor names printed on the paper help customers focus on which flavor they are testing.

West, P. M., Brown, C. L., & Hoch, S. J. (1996). Consumption Vocabulary and Preference Formation. Journal of Consumer Research, 23(2), 120–135.

Consumers’ understanding of their own preferences can be aided by a “consumption vocabulary”—a taxonomy or framework that facilitates identifying the relation between a product’s features and one’s evaluation of the product. In the absence of such a vocabulary, consumers’ understanding of their own preferences will require more extensive experience and may never fully develop. The effect of such a vocabulary is tested in two experiments in which subjects provided with a vocabulary (1) exhibit better-defined and more consistent preferences than control subjects, (2) show improved cue discovery, and (3) show learning (i.e., increases in consistency over time). All results hold regardless of the functional form of the model used to assess subjects’ preference formation.

Donate in cash or by credit card

We often pay in cash or by credit card. Differently from cash, credit card often leads us to over-consumption. This is because credit card does not require us to write down the amount paid (rehearsal) and our wealth is not depleted immediately rather than with a delay (immediacy) (Soman 2001).

We could also donate in cash or by credit card. For example, visitors at the Tate Liverpool in UK could donate 4 pounds by inserting bills into a silver box or tapping their credit cards on a white device. Which donation mechanism benefits the museum better?

Soman, D. (2001). Effects of payment mechanism on spending behavior: The role of rehearsal and immediacy of payments. Journal of Consumer Research27(4), 460-474.

Past expenses have been shown to influence future spending behavior by depleting available budgets. However, a prerequisite for this relationship is the accurate recall of past payments and the experiencing of the full aversive impact associated with them. This article shows that the use of different payment mechanisms influences both these factors and hence moderates the effects of past payments on future spending. Specifically, past payments strongly reduce purchase intention when the payment mechanism requires the consumer to write down the amount paid (rehearsal) and when the consumer’s wealth is depleted immediately rather than with a delay (immediacy). Two experiments show support for the proposed theoretical framework.

A visual nudge for social distancing inside an elevator

As Coronavirus spreads widely, people are asked to keep distance from others. The Straits Times posted a photo showing that visitors at an Indonesian shopping mall stand on boxes inside an elevator.

Another simple visual nudge was found in Seoul, Korea. The elevator floor was divided into nine squares. A single pair of foot prints was painted inside each square, suggesting only nine people in total were asked to ride an elevator.

It was not long before that I had thought floor signage could not change our behavior because we learned rules naturally. At that time, a yellow-painted footstep in Singapore and an orange-colored line in Shenzhen failed to correct our learned rules. However, Corona virus is now changing my thought: floor signage changes our behavior.

Benartzi, S., Beshears, J., Milkman, K. L., Sunstein, C. R., Thaler, R. H., Shankar, M., … Galing, S. (2017). Should Governments Invest More in Nudging? Psychological Science, 28(8), 1–15.

Governments are increasingly adopting behavioral science techniques for changing individual behavior in pursuit of policy objectives. The types of “nudge” interventions that governments are now adopting alter people’s decisions without coercion or significant changes to economic incentives. We calculated ratios of impact to cost for nudge interventions and for traditional policy tools, such as tax incentives and other financial inducements, and we found that nudge interventions often compare favorably with traditional interventions. We conclude that nudging is a valuable approach that should be used more often in conjunction with traditional policies, but more calculations are needed to determine the relative effectiveness of nudging.

How to breathe better with a mask

Wearing a mask becomes common as the spread of Covid-19 (Coronavirus disease) dominates our lives. However, people find it difficult to breathe with a mask. I recently found an interesting new product for masks at Granhand where I visited to buy droppers or incenses for my office.

Though you can not seize nor hold the smell, it has a decisive effect on the matter of our memory and emotion and believes on its vitally of influences on our decision among our lives. GRANHAND gives faith towards the value of the fragrance and consistently pursues to make the scent part of our regular living. Although it may be slow nor has perfection, the variety of contents that our brand is offering will build the unique value of the experience that no other brand will possess. GRANHAND will not be a product where it vanishes with ease nor be neglected. It will continuously illuminate with a distinct presence and yield to warm people’s mind.

This store sells a natural oil named as “On Your Mask.” When we spray it inside the mask, we could breathe in a fresh way. This oil impressed me a lot because when I think about a mask in the past, I paid attention exclusively to its practical functionality. In other words, I simply ignored how much comfortable I should feel when wearing it.

Customer experience is not dried up for new product development.

Kornish, L. J., & Ulrich, K. T. (2011). Opportunity Spaces in Innovation: Empirical Analysis of Large Samples of Ideas. Management Science, 57(1), 107–128.

A common approach to innovation, parallel search, is to identify a large number of opportunities and then to select a subset for further development, with just a few coming to fruition. One potential weakness with parallel search is that it permits repetition. The same, or a similar, idea might be generated multiple times, because parallel exploration processes typically operate without information about the ideas that have already been identified. In this paper we analyze repetition in five data sets comprising 1,368 opportunities and use that analysis to address three questions: (1) When a large number of efforts to generate ideas are conducted in parallel, how likely are the resulting ideas to be redundant? (2) How large are the opportunity spaces? (3) Are the unique ideas more valuable than those similar to many others? The answer to the first question is that although there is clearly some redundancy in the ideas generated by aggregating parallel efforts, this redundancy is quite small in absolute terms in our data, even for a narrowly defined domain. For the second question, we propose a method to extrapolate how many unique ideas would result from an unbounded effort by an unlimited number of comparable idea generators. Applying that method, and for the settings we study, the estimated total number of unique ideas is about one thousand for the most narrowly defined domain and greater than two thousand for the more broadly defined domains. On the third question, we find a positive relationship between the number of similar ideas and idea value: the ideas that are least similar to others are not generally the most valuable ones.

Empty space sparks creativity

Space matters when we need creativity. According to research, when a ceiling is high, people become creative because a high (vs. low) ceiling primes the concept of freedom (vs. confinement). Similarly, Jump Associates has various types of cubicles for designers; “garage” cubicles are widely open for those who want to be creative, whereas “Zen rooms” are tiny small cubicles. Interestingly, Dev Patnaik, the founder of the Jump Associates, mentioned that US people prefer garage offices whereas Japanese clients like Zen rooms.

When I visited the design department at the University of Sao Paulo, one of the best universities in Brazil, I was shocked by its building. It has a huge empty space in the middle and has tons of bright, natural lights. I learned that empty space not only increases the perceived value of a product inside. It boosts the creativity of the people inside.

Inside the building, the walls allow people to write and erase easily, which also may enhance creativity.

Meyers-Levy, J., & Zhu, R. (Juliet). (2007). The Influence of Ceiling Height: The Effect of Priming on the Type of Processing That People Use. Journal of Consumer Research, 34(2), 174–186.

This article demonstrates that variations in ceiling height can prime concepts that, in turn, affect how consumers process information. We theorized that when reasonably salient, a high versus low ceiling can prime the concepts of freedom versus confinement, respectively. These concepts, in turn, can prompt consumers’ use of predominately relational versus item-specific processing. Three studies found support for this theorizing. On a variety of measures, ceiling height–induced relational or item-specific processing was indicated by people’s reliance on integrated and abstract versus discrete and concrete ideation. Hence, this research sheds light on when and how ceiling height can affect consumers’ responses.

Color marries between buttons and bulbs

We often write down something on the surface. For instance, a window says “this is a window” or a pedestrian crossing says “Look Right.” However, written, verbal information is easy to be ignored. Compared to verbal information, visual information attracts attention better.

When I visited the design department at the University of Sao Paulo, one of the best universities in Brazil, I found a clever and clear, visual information in a classroom. The wide classroom has four lines of bulbs on the ceiling from the front row to the back end. Although there are four bulb buttons on the wall, the way buttons are placed does not align with the way bulbs are on the ceiling. Instead of writing down “the first row, … the last row,” they match buttons and bulbs through color.

Lurie, N. H., & Mason, C. H. (2007). Visual Representation: Implications for Decision Making. Journal of Marketing, 71(1), 160–177.

A large number of visualization tools have been created to help decision makers understand increasingly rich databases of product, customer, sales force, and other types of marketing information. This article presents a framework for thinking about how visual representations are likely to affect the decision processes or tasks that marketing managers and consumers commonly face, particularly those that involve the analysis or synthesis of substantial amounts of data. From this framework, the authors derive a set of testable propositions that serve as an agenda for further research. Although visual representations are likely to improve marketing manager efficiency, offer new insights, and increase customer satisfaction and loyalty, they may also bias decisions by focusing attention on a limited set of alternatives, increasing the salience and evaluability of less diagnostic information, and encouraging inaccurate comparisons. Given this, marketing managers are advised to subject insights from visual representations to more formal analysis.

Could electronic agents improve customer experience in a cafe?

Script is a stereotyped sequence of activities. A good example of the script is for restaurant dining. We are greeted by a server who guides to a table, we receive a menu from a server, and the server takes our orders. Drinks arrive first and then meals arrive later. When we finish meals, we pay the bill at the cashier and leave the restaurant.

Marketers and designers use scripts to improve customer experience. We often assume the fewer activities customers perform in the restaurant, the more they are satisfied. Therefore, we hire more part-time servers. Alternatively, we try to design an unmanned store by installing vending machines or robots to automatize in-store activities.

Different from our assumptions, however, restaurant customers could be happy about doing everything by themselves. I found this when I met a friend at one of the Rainmaking cafe in Copenhagen, Denmark. Rainmaking is a corporate innovation and venture development firm.

When I entered the cafe, a refrigerator greeted me. No one was inside. I soon realized I should do everything by myself in this cafe. I picked up a beverage, paid it using my mobile phone, grabbed a table with my friend, and then cleaned up the table when leaving.

The whole experience did not bother me much but was quite pleasant. Everyone else seemed to follow this rule. This self-service cafe could be an alternative to automatization. Although many owners want vending machines or robots to make their stores unmanned or intact, not few customers are willing to perform in-store activities themselves.

Patricia M. West, Dan Ariely, Steve Bellman, Eric Bradlow, Joel Huber, Eric Johnson, … David Schkade. (1999). Agents to the Rescue? Marketing Letters, 10(3), 285–300.

The advent of electronic environments is bound to have profound effects on consumer decision making. While the exact nature of these influences is only partially known it is clear that consumers could benefit from properly designed electronic agents that know individual users preferences and can act on their behalf. An examination of the variousroles agents perform is presented as a framework for thinking about the design of electronic agents. In addition, a set of goals is established that include both outcome-based measures, such as improving decision quality, as well as process measures like increasing satisfaction and developing trust.

Feedback leads to virtual progress

People seek for feedback about progress. When travelers arrive at the Chek Lap Kok International Airport, they catch a train to Kowloon and Hong Kong. In the train, there is a blue-light indicator which shows where the train is right now. This feedback gives correct information to travelers.

However, feedback is not always objectively given but can be subjectively manipulated. Virtual and illusory progress can be made by manipulating feedback. One of my favorite examples is the “purchase acceleration” suggested by marketing researchers. They reported that customers who received a 12-stamp coffee card with 2 preexisting “bonus” stamps (B) complete the 10 required purchases faster than customers who received a “regular” 10-stamp card (A). If the preexisting bonus stamps are presented in a more visually appealing way (like this), virtual progress could be further enhanced.

Kivetz, R., Urminsky, O., & Zheng, Y. (2006). The goal-gradient hypothesis resurrected: Purchase acceleration, illusionary goal progress, and customer retention. Journal of Marketing Research43(1), 39-58.

The goal-gradient hypothesis denotes the classic finding from behaviorism that animals expend more effort as they approach a reward. Building on this hypothesis, the authors generate new propositions for the human psychology of rewards. They test these propositions using field experiments, secondary customer data, paper-and-pencil problems, and Tobit and logit models. The key findings indicate that (1) participants in a real café reward program purchase coffee more frequently the closer they are to earning a free coffee; (2) Internet users who rate songs in return for reward certificates visit the rating Web site more often, rate more songs per visit, and persist longer in the rating effort as they approach the reward goal; (3) the illusion of progress toward the goal induces purchase acceleration (e.g., customers who receive a 12-stamp coffee card with 2 preexisting “bonus” stamps complete the 10 required purchases faster than customers who receive a “regular” 10-stamp card); and (4) a stronger tendency to accelerate toward the goal predicts greater retention and faster reengagement in the program. The conceptualization and empirical findings are captured by a parsimonious goal-distance model, in which effort investment is a function of the proportion of original distance remaining to the goal. In addition, using statistical and experimental controls, the authors rule out alternative explanations for the observed goal gradients. They discuss the theoretical significance of their findings and the managerial implications for incentive systems, promotions, and customer retention.

Are fresh fish better than canned fish?

I love canned sardines. Whenever I visit different cities, I buy a dozen of canned fish on the way back home. I was excited to find Annam Gourmet at Ho Chi Minh city, Vietnam because it has a wide variety of canned fish, along with fresh fish.

Canned fish are fish which have been processed, sealed in an airtight container such as a sealed tin can, and subjected to heat. Canning is a method of preserving food, and provides a typical shelf life ranging from one to five years.

Some say I am obsessed with canned fish. Others suggest me to avoid them. I have long wondered whether canned fish are bad for my health and whether over-consuming canned fish harm my health. Recently, I met an article released from Consumer Reports that canned fish are as healthy for us as fresh fish, particularly for sardines and salmon. For canned tuna, however, we should be cautious about mercury.

Thankfully, my love for canned sardines survives. However, it is difficult to correct a belief that canned fish are dangerous. Updating our belief system is truly challenging.

Amir, O., & Ariely, D. (2007). Decisions by Rules: The Case of Unwillingness to Pay for Beneficial Delays. Journal of Marketing Research, 44(1), 142–152.

Since the emergence of neoclassical economics, individual decision making has been viewed largely from an outcome-maximizing perspective. Building on previous work, the authors suggest that when people make payment decisions, they consider not only their preferences for different alternatives but also guiding principles and behavioral rules. The authors describe and test two characteristics pertaining to one specific rule that dictates that consumers should not pay for delays, even if they are beneficial: rule invocation and rule override. The results show that money can function as the invoking cue for this rule, that the reliance on this rule can undermine utility maximization, and that this rule may be used as a first response to the decision problem but can be overridden. The article concludes with a discussion of more general applications of such rules, which may explain some of the seemingly systematic inconsistencies in the ways consumers behave.

If people avoid meeting with others, do marketers sell products online only?

Nowadays people avoid meeting others. We could buy products through mobile phones and order food at screens inside restaurants. A recent virus outbreak even encourages us to stop shaking hands with strangers.

Ironically, the more we avoid meeting others, I believe, the easier others sell their products to us. When I visited Prezzemolo & Vitale, a local grocery store in Notting Hill in London, an employee brought a lump of meat on a board, cut it into thin slices, and passed them over to passers by. Interestingly, most of those who tried samples bought several pieces of different types of meat. I was not exception.

When he looked at me with a slice of meat, I inferred, he made an effort to approach me. This inference is rarely made when I stand in front of machines such as mobile phones or kiosks. I conclude that when we meet people and machines, we may have different inference: people make effort to come close to us whereas machines do not. This inferred effort may play a critical role in determining our next behavior such as buying a product.

Morales, A. C. (2005). Giving Firms an “E” for Effort: Consumer Responses to High‐Effort Firms. Journal of Consumer Research, 31(4), 806–812.

This research shows that consumers reward firms for extra effort. More specifically, a series of three laboratory experiments shows that when firms exert extra effort in making or displaying their products, consumers reward them by increasing their willingness to pay, store choice, and overall evaluations, even if the actual quality of the products is not improved. This rewarding process is defined broadly as general reciprocity. Consistent with attribution theory, the rewarding of generally directed effort is mediated by feelings of gratitude. When consumers infer that effort is motivated by persuasion, however, they no longer feel gratitude and do not reward high-effort firms.

Effort not only dictates our behavior. It helps us enjoy what we do.

Norton, M. I., Mochon, D., & Ariely, D. (2012). The “IKEA Effect”: When Labor Leads to Love. Journal of Consumer Psychology, 22(3), 453–460.

In four studies in which consumers assembled IKEA boxes, folded origami, and built sets of Legos, we demonstrate and investigate boundary conditions for the IKEA effect-the increase in valuation of self-made products. Participants saw their amateurish creations as similar in value to experts’ creations, and expected others to share their opinions. We show that labor leads to love only when labor results in successful completion of tasks; when participants built and then destroyed their creations, or failed to complete them, the IKEA effect dissipated. Finally, we show that labor increases valuation for both “do-it-yourselfers” and novices.