Asking Consumers to Compare May Have Unintended Results
STANFORD GRADUATE SCHOOL OF BUSINESS—You walk into a drugstore and see the familiar sign inviting you to compare the price of the store's brand of aspirin to a national brand. What do you do? According to Itamar Simonson, you may not go for the cheapest. Instead, you may choose the major brand because you perceive it as the less risky choice. Or you may not buy anything at all.
"Telling people to make comparisons, which is a practice that marketers use a lot, can be very uncertain because it can change the behavior of consumers in very fundamental ways," said Simonson, the Sebastian S. Kresge Professor of Marketing at the Stanford Graduate School of Business, who studied the question with Uptal Dholakia, a marketing professor at Rice University. "It can easily backfire. Consumers may decide not to buy at all or to minimize what they perceive as a heightened risk instead of following the advice that the marketer had in mind."
There are several possible reasons. Previous research by Simonson and others showed that in comparisons, consumers tended to put greater weight on the comparative disadvantages rather than advantages of each option. This can make the suggested option (in this case, the store brand) less attractive.
Comparative advertising, which can be either implicit or explicit, has long been used by marketers to frame choices in ways that are favorable to their products. Although there have been many studies about comparative advertising, Simonson and Dholakia's study was unique in that it examined the difference between implicit and explicit comparisons.
Implicit comparisons are made when a consumer takes the initiative to evaluate two or more products. Explicit comparisons are those specifically suggested by the seller or advertiser. The product can be merely placed in close proximity to another product, inviting the consumer to make the judgment autonomously; or the consumer can be explicitly directed to make the comparison. It was the latter situation that the researchers in this particular study sought to explore.
Simonson and Dholakia set up two trials. The first one involved selling CDs on the auction site eBay. Researchers listed a number of top-selling CDs for auction—for example, The Wall by Pink Floyd—with an opening bid of $1.99. They then framed the auctions in two different ways. In some auctions, each CD was flanked by an auction of a CD of the same title with a starting price of 99 cents. In a second set of auctions, the CD was placed between two others of the same title with a starting price of $6.99 each. The opening bid of the middle CD was always $1.99.
The results were instructive: The $1.99 CDs flanked by $6.99 versions ended up fetching much higher prices than the CDs adjacent to the 99-cent offerings.
"We didn't tell people to make a comparison; they did it on their own," said Simonson. "And when people make these kinds of comparisons on their own, they are very influential."
To test the effect of telling consumers to compare, there were two additional sets of auctions, again with starting prices of the adjacent CDs being either 99 cents or $6.99 and the middle CD starting at $1.99. In these groups, however, auction participants were explicitly told to compare the $1.99 price to its neighbors. The result was that prices of the adjacent CDs became statistically irrelevant to what was bid on the middle disc and the buyers in general became much more cautious and risk adverse.
"The mere fact that we had asked them to make a comparison caused them to fear that they were being tricked in some way," said Simonson. So people waited longer to make the first bid—some of them even engaging in "sniping" behavior, which is to wait until the last possible minute before the auction closes to place a bid; they submitted fewer bids; and they were much less likely to participate in multiple auctions simultaneously.
"Being told explicitly to compare items had a dramatic effect on their bidding behavior," said Simonson.
The researchers also wanted to find out how explicit comparisons affected choices between products in a non-bidding situation. In a different study, participants were asked to compare three digital cameras: a low-end camera with basic features and a low price; a mid-range camera with more features and a higher price; and a high-end camera complete with a range of advanced features at a high price. When specifically asked to compare the three cameras (as opposed to letting the participants decide on their own to make the comparison), many more participants chose the "compromise" option of the mid-range camera.
"In this case, also, the very fact of being told to make the comparison made people much more risk averse," said Simonson. "Marketers need to be aware that comparative selling, although it can be very powerful, is not without its risks."
The Effect of Explicit Reference Points on Consumer Choice and Online Bidding Behavior
Utpal M. Dholakia and Itamar Simonson
Marketing Science (Vol. 24, No. 2), 2005
Choice Based on Reasons: The Case of Attraction and Compromise Effects
Journal of Consumer Research, September 1989
The Role of Explanations and Need for Uniqueness in Consumer Decision Making: Unconventional Choices Based on Reasons
Itamar Simonson and Stephen Nowlis
Journal of Consumer Research (Vol. 27, No. 1), 2000
Choice in Context: Tradeoff Contrast and Extremeness Aversion
Itamar Simonson and Amos Tversky
Journal of Marketing Research (Vol. 29), 1992