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Article
Publication date: 23 August 2011

Rajesh Chandrashekaran

This paper aims to investigate how consumers adjust their price expectations for brands in response to previously encountered prices. The effects of two distinct…

Abstract

Purpose

This paper aims to investigate how consumers adjust their price expectations for brands in response to previously encountered prices. The effects of two distinct components of price history, focal and contextual, are examined. The focal component represents the role of a brand's own previous price(s) in determining future price expectations. In contrast, the contextual component represents the impact of the prices of previously considered competing brands.

Design/methodology/approach

A total of 60 subjects were enrolled to participate in a longitudinal, quantitative, survey‐based study that required them to provide information on brand perceptions, price expectations, brand consideration and choice.

Findings

Empirical comparison of several model formulations confirms that both components are crucial in explaining how consumers adjust their price expectations in response to the prices of considered brands. Consistent with a wide body of research, a brand's own previous price exerts the greatest influence on price expectations. However, the extent to which contextual prices are assimilated depends on the composition of consumers' consideration sets. Avenues for future research and implications for brand pricing and positioning are discussed.

Originality/value

The results offer several unique perspectives that stand out from (and build further on) previous research. First, although previous research has examined the effects of competing brands' current prices on brand choices, it has not incorporated the prices of competing brands that may have been observed on previous shopping occasions. Second, measures and assesses the perceived variability within the consumers' consideration sets influences the impact of the contextual component on a brand's current reference price.

Details

Journal of Product & Brand Management, vol. 20 no. 5
Type: Research Article
ISSN: 1061-0421

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Book part
Publication date: 31 January 2015

Soora Rasouli and Harry Timmermans

This chapter reviews models of decision-making and choice under conditions of certainty. It allows readers to position the contribution of the other chapters in this book…

Abstract

Purpose

This chapter reviews models of decision-making and choice under conditions of certainty. It allows readers to position the contribution of the other chapters in this book in the historical development of the topic area.

Theory

Bounded rationality is defined in terms of a strategy to simplify the decision-making process. Based on this definition, different models are reviewed. These models have assumed that individuals simplify the decision-making process by considering a subset of attributes, and/or a subset of choice alternatives and/or by disregarding small differences between attribute differences.

Findings

A body of empirical evidence has accumulated showing that under some circumstances the principle of bounded rationality better explains observed choices than the principle of utility maximization. Differences in predictive performance with utility-maximizing models are however small.

Originality and value

The chapter provides a detailed account of the different models, based on the principle of bounded rationality, that have been suggested over the years in travel behaviour analysis. The potential relevance of these models is articulated, model specifications are discussed and a selection of empirical evidence is presented. Aspects of an agenda of future research are identified.

Details

Bounded Rational Choice Behaviour: Applications in Transport
Type: Book
ISBN: 978-1-78441-071-1

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Article
Publication date: 13 November 2017

Moon-Yong Kim and Byung Il Park

The purpose of this paper is to examine the effect of country of origin (COO) information as an important/salient categorical attribute on choice context effects…

Abstract

Purpose

The purpose of this paper is to examine the effect of country of origin (COO) information as an important/salient categorical attribute on choice context effects. Specifically, this research examines whether the introduction of a unique COO in the choice set will have a differential influence on context effects depending on the relative position of the third option (the asymmetrically dominated option vs the extreme option).

Design/methodology/approach

Five experiments were conducted in this research. Study 1 had a 2 (set size: two-option core set vs three-option asymmetric dominance set)×2 (competitor’s COO: common vs unique) between-subjects design. Study 2 had a 2 (set size: two-option core set vs three-option extreme option set)×2 (competitor’s COO: common vs unique) between-subjects design. To address the robustness of the effects, Studies 3-5 replicated the results of Studies 1 and 2. The data were analyzed by χ2 tests and logistic regression analyses.

Findings

The current research demonstrates that the attraction effect is attenuated by the introduction of a unique COO information in the competing option, whereas the tendency to prefer a middle option is not significantly affected.

Originality/value

The present research adds to the current understanding and the practical relevance of COO effects and context effects in marketing by examining the impact of COO as an important/salient categorical attribute on context effects.

Details

International Marketing Review, vol. 34 no. 6
Type: Research Article
ISSN: 0265-1335

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Article
Publication date: 26 April 2019

Christian Laesser, Jieqing Luo and Pietro Beritelli

Most state-of-the-art approaches for the analysis of the process of travel decision-making follow Woodworth’s neo-behaviouristic S–R (stimulus–response) or S–O–R…

Abstract

Purpose

Most state-of-the-art approaches for the analysis of the process of travel decision-making follow Woodworth’s neo-behaviouristic S–R (stimulus–response) or S–O–R (stimulus–organism–response) model. However, within this model, scholars primarily focus on the S–R relationship, investigating specific decisions by describing or explaining an outcome as the result of an input of several stimuli. There is a lack of investigation into the “O” dimension of the S–O–R model. This paper aims to contribute towards closing of this gap by conceptually and holistically expanding existing models with new perspectives and components.

Design/methodology/approach

The authors base the conceptual process on a subjective/interpretative research paradigm, by combining outcomes from different theories and concepts into a new, more holistic approach; and challenging this approach by seeking counterarguments as well as supportive arguments at three conferences and workshops.

Findings

The paper expands the body of literature by positing a generic conceptual operationalization model focusing on the organism (“O”) domain of decision-making. To achieve this, and further to operationalize the S–O–R model, the paper proposes to integrate an M–O–A (motivation–opportunity–ability) approach.

Originality/value

The analysis of the body literature reveals that there is still a lack of analytical and especially workable models/approaches for the analysis of the process of tourist decision-making. The paper contributes to that discussion by offering an alternative and generic operationalization of the tourist decision-making process by inducing a theoretical framework from the deductions gleaned from a number of existing theories.

Details

Tourism Review, vol. 74 no. 3
Type: Research Article
ISSN: 1660-5373

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Article
Publication date: 1 June 2003

Michel Laroche, Chankon Kim and Takayoshi Matsui

This study empirically investigates consumers’ use of five heuristics (conjunctive, disjunctive, lexicographic, linear additive, and geometric compensatory) in the…

Abstract

This study empirically investigates consumers’ use of five heuristics (conjunctive, disjunctive, lexicographic, linear additive, and geometric compensatory) in the consideration set formation, a critical first phase before actual choice behavior. Data were collected on the selection of beer brands and fast food outlets by real consumers. Using a decomposition approach in determining the consumers’ choice heuristics, it was found that the conjunctive heuristic is the most often used decision model in the consideration set formation for the two product classes. Implications for brand managers and future research directions are developed.

Details

Journal of Consumer Marketing, vol. 20 no. 3
Type: Research Article
ISSN: 0736-3761

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Article
Publication date: 11 July 2017

Elisa Montaguti and Alessandra Zammit

This paper aims to examine how pioneering advantage interacts with the compromise effect generated by new product entries. Building on prior work on pioneering advantage…

Abstract

Purpose

This paper aims to examine how pioneering advantage interacts with the compromise effect generated by new product entries. Building on prior work on pioneering advantage and extreme aversion, this research moves toward understanding how the choice share of a pioneer realigns as a consequence of new product entries generating compromise-like scenarios.

Design/methodology/approach

The authors run three experiments to test their propositions. The authors present one study which documents the effect. The second study provides process evidence. The third study suggests how brands can neutralize the adverse effect on their share generated by the followers’ entry/positioning.

Findings

In three studies, the authors showed that when a pioneering product becomes intermediate in a choice set, its share is more adversely affected than when it becomes extreme. The authors show that this depends on consumers’ propensity to use non-compensatory decision rules in the presence of a pioneering alternative. The authors also document that the relative disadvantage of the intermediate pioneer can be overcome when the reasons for selecting an intermediate alternative based on a compensatory decision rule are restored.

Practical implications

The research provides guidelines for managers wanting to enter product categories where a pioneer already exists. The authors show that opting for an extreme position that renders the pioneer intermediate can be rewarding. In contrast, being the second extreme player in a market where the pioneer becomes extreme reduces the expected share of this last entrant.

Originality/value

The authors’ contribution is in showing that this decision strategy can clash with the rule consumers generally use in a compromise setting and that this clash generates two different effects when the pioneer becomes intermediate or extreme.

Details

European Journal of Marketing, vol. 51 no. 7/8
Type: Research Article
ISSN: 0309-0566

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Article
Publication date: 1 February 1999

Rex Eugene Pereira

Develops and tests a general model for understanding the influence of query‐based decision aids (QBDA) on consumer decision making in the electronic commerce environment…

Abstract

Develops and tests a general model for understanding the influence of query‐based decision aids (QBDA) on consumer decision making in the electronic commerce environment. The results show that the use of well‐designed query‐based decision aids leads to increased satisfaction with the decision process and increased confidence in judgements. The number of stages of phased narrowing of the consideration set was higher in the case of subjects who had access to the query‐based decision aids. The mediating variables through which this influence occurs are size of the consideration set, similarity among the alternatives in the consideration set, cognitive decision effort, and perceived cost savings. The size of the consideration set and the similarity among the alternatives in the consideration set were higher in the case of subjects who had access to the query‐based decision aid. Subjects who had access to the query‐based decision aid perceived an increased cost savings and a lower cognitive decision effort associated with the purchase decision. This research is done in the context of consumers searching for information on the World Wide Web prior to the purchase of cars.

Details

Logistics Information Management, vol. 12 no. 1/2
Type: Research Article
ISSN: 0957-6053

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Book part
Publication date: 31 January 2015

Junyi Zhang

The chapter outlines the principles underlying relative utility models, discusses the results of empirical applications and critically assesses the usefulness of this…

Abstract

Purpose

The chapter outlines the principles underlying relative utility models, discusses the results of empirical applications and critically assesses the usefulness of this specification against commonly used random utility models and other context dependence models. It also discusses how relative utility can be viewed as a generalisation of context dependency.

Theory

In contrast to the conventional concept of random utility, relative utility assumes that decision-makers derive utility from their choices relative to some threshold(s) or reference points. Relative utility models thus systematically specify the utility against such thresholds or reference points.

Findings

Examples in the chapter show that relative utility model perform well in comparison to conventional utility-maximising models in some circumstances.

Originality and value

Examples of relative utility models are rare in transportation research. The chapter shows that several recent models can be viewed as special cases of relative utility models.

Details

Bounded Rational Choice Behaviour: Applications in Transport
Type: Book
ISBN: 978-1-78441-071-1

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Article
Publication date: 30 March 2012

Jon Martin Denstadli, Rune Lines and Juan de Dios Ortúzar

This paper investigates how respondents to conjoint experiments process information and choose among product profiles, and how this varies with their knowledge about the…

Abstract

Purpose

This paper investigates how respondents to conjoint experiments process information and choose among product profiles, and how this varies with their knowledge about the product. Models for estimating conjoint attribute weights are almost exclusively based on principles of compensatory decision making. The paper aims to explore to what extent and in what way these basic principles of conjoint modelling are violated.

Design/methodology/approach

Data were obtained from a verbal protocol study where 18 undergraduate students each performed a total of 28 stated choice tasks while “thinking aloud”.

Findings

Results show that cognitive operations consistent with compensatory decision rules constitute a majority of the total number of operations performed across tasks and respondents. However, few respondents exhibited a consistent use of compensatory‐type processes throughout their choice sets. Results suggest that individual preferences interact with characteristics of the choice sets to instigate changes in information processing. It also appears that complete strategies are seldom used. Finally, respondents' knowledge about the product influences the cognitive operations that respondents use in solving conjoint tasks.

Research limitations/implications

Results are based on responses from 18 undergraduate students, which makes generalizations hard.

Practical implications

One implication of this work is that one should apply a more flexible model framework to allow detecting the existence of non‐compensatory strategies.

Originality/value

This paper is one of few which aim to implement findings in behavvioral decision research within the context of conjoint analysis.

Details

European Journal of Marketing, vol. 46 no. 3/4
Type: Research Article
ISSN: 0309-0566

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Article
Publication date: 1 September 2000

K. Sivakumar

The nature of competition between different tiers (e.g. high‐tier vs low‐tier brands) has become an important research domain for academic researchers and marketing…

Abstract

The nature of competition between different tiers (e.g. high‐tier vs low‐tier brands) has become an important research domain for academic researchers and marketing managers. Although research on inter‐tier competition is growing at an increasing rate, there has not been a comprehensive attempt to summarize the research in this stream. The objective of this article is to synthesize the research on inter‐tier competition, extract the key findings, discuss managerial implications, and offer future research directions.

Details

Journal of Product & Brand Management, vol. 9 no. 5
Type: Research Article
ISSN: 1061-0421

Keywords

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