Business Psychology - Latest Findings

Article No. 84
Customer Psychology Findings, by James Larsen, Ph.D.

Marketplace Injustice

Improved understanding of repeat purchasing offers new ways to protect markets and increase sales.

Have you ever been beaten to death with brand loyalty? That's what happens when you develop a superior product or service and challenge an established brand. People prefer the familiar brand and your improvement is a marketplace failure.

Where's the justice?

This phenomenon is called the status quo bias and it's the reason niche marketing is so popular: there are no established brands to challenge, and you can make the bias work for you by getting into the niche market first.

A.V. Muthukrishnan, a professor at Hong Kong University, recently completed research exploring the status quo bias. He was curious to learn how it works and how to influence it. He learned that overconfidence is the driving force behind it and he demonstrated ways to both strengthen and weaken it.

Muthukrishnan conducted a series of 2-day experiments with young women using hand cream as the product. In all the experiments the women chose a brand they felt was best on the first day and then returned 2 days later and made the selection once again. However, this second time a new brand was added, one superior to all the others.

In Muthukrishnan's first experiment, some women tried their chosen hand cream only once. And when they returned 2 days later and were offered the new brand, 86% of them chose it. The rest of the women in the experiment tried their chosen brand 6 times in a row, wiping off excess hand cream between trials. When they returned 2 days later and faced an identical choice, only 27% of them chose the new, superior brand. Muthukrishnan demonstrated that multiple trials, even when they're contrived and silly, stimulate the status quo bias.

In another experiment he asked some women to rate their beliefs about 8 specific benefits of using their chosen hand cream, everything from "softens skin" to "prevents wrinkles." When these women returned 2 days later, 68% chose the same brand once again, even though it was clearly inferior; while 86% of women who did not complete this exercise selected the new, superior brand. So merely thinking about product benefits also strengthens the bias. When he combined the added trials and the benefit-rating exercise, 82% of the women chose the inferior brand on the second day. These two marketing devices greatly strengthen the status quo bias.

The most popular marketing device used to challenge an established brand is the free trial, so Muthukrishnan tried it and found that it works; 61% of the women trying the superior, challenge brand on the second day selected it. But he did discover a drawback, women who tried the challenge brand yet chose the original brand were even more convinced of its superiority, even though it was clearly inferior.

Muthukrishnan analyzed all his data searching for the psychological processes driving the bias and learned an important rule: Anything that hinders a comparison of product features strengthens the status quo bias, and favors established brands. Conversely, anything that facilitates such comparisons weakens the bias and favors superior, challenge brands. For example, offering samples of a new brand of sausage at the market will more effectively weaken the bias if you include samples of established brands in the trial. Consumers can taste both and be relieved of having to compare the taste of a fresh sausage with a memory of a sausage eaten days or weeks earlier.

A new car dealer may greet a customer with "Have you ever owned this brand of car before?" and follow up an affirmative answer by inquiring about product benefits he/she experienced, like feeling prosperous driving this brand of new car. Customers will overlook the fact that an identical benefit will follow any new car they purchase, and their status quo bias will be strengthened. They'll buy the same brand again. This car dealer would also be wise to side step an offer to compare product specifications with clearly superior brands by pointing out unique product features, ones that can't be compared. Chrysler used this technique when they first introduced air bags.

Reference: Muthukrishnan, A.V. (1995). Decision Ambiguity and Incumbent Brand Advantage. Journal of Consumer Research, 22 (June), 98-109.

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