Behavioral Biases in Marketing

Dowling, Katharina; Guhl, Daniel; Spann, Martin; Stich, Lucas; Yegoryan, Narine

doi:10.2139/ssrn.3091557

Cited by 2 publications

(1 citation statement)

References 95 publications

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“…Under certain conditions however, customers do not form their purchase decisions based on this logic (Hogarth and Reder, 1987;Guhl et al, 2017). Empirical research observed systematic deviations from this economic principle of rationality (Homburg and Koschate, 2005;Hinterhuber, 2015;Bolton, 2018).…”

Section: Price Perception and Purchasing Decisionsmentioning

confidence: 99%

Pricing of Consumer Innovations

Ebbing¹

2022

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Research has documented the importance of consumers as a source of innovation. Consumers primarily innovate out of non-monetary motivations, such as use interest, learning and social rewards. Nonetheless, increasing numbers of consumer innovators are commercializing their work. Rooted in their different motivation to innovate, consumer innovators' pricing decisions may differ systematically from those of commercial firms. The consideration of this background may also affect price evaluations of customers. Investigating these aspects is relevant for (a) consumer innovators, to shape and validate marketing strategies, (b) business administration, to respond to consumer innovators as competitors, and (c) economists, to understand the market impacts of the commercialization of consumer innovations. By fusing extant pricing knowledge with consumer innovation theory, this dissertation investigates (1) how consumer innovators set prices and (2) how customers react to consumer innovation prices. The research questions are answered by two empirical, sequential mixed methods studies.The first study compares firm and consumer innovation prices. A quantitative matchedpair analysis of 4,242 computer games reveals that, compared to firms, consumer innovators systematically set lower prices and align prices more to the provided customer value and less to the incurred development costs. A subsequent interview study with 29 commercializing consumer innovators provides clear support for the explanation that consumer innovators' different motivations to innovate are the reason for the observed differences in price setting.The second study investigates product adoption as a function of price moderated by the presence of a consumer innovation label. An analysis of 2,340 matched pairs of computer games, either commercialized as consumer innovation or not, shows that the source of innovation moderates the inverse U-shaped relationship between price and demand: buyers develop lower reference prices for consumer-developed products. Further, deviations from the reference price have less severe negative consequences on the demand for consumer innovations. Two randomized between-subject experiments with 229 panel participants corroborate the field study's results and validate the theoretical underpinnings.Both studies' findings are scaffolded by numerous robustness checks and auxiliary analyses, including a time-lag analysis and textual content analyses. The results contribute knowledge on the commercialization of consumer innovations by showing that consumer innovators set prices differently than firms and that customers evaluate their offers differently. Theoretical and practical implications of the findings are discussed and further research avenues identified. Table of Contents 1 INTRODUCTION 1.1 Research topic 1.2 Research objectives 1.3 Course of investigation 2 PRICE FUNCTIONS, PRICE SETTING AND PRICE PERCEPTIONS 2.1 Microeconomic market price dynamics 2.2 Price setting strategies and tactics 2.2.1 Cost-based pricing 2.2.2 Value-base...

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Section: Price Perception and Purchasing Decisionsmentioning

confidence: 99%

Pricing of Consumer Innovations

Ebbing¹

2022

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The Economics of Advertising, Fair Marketing, Unusual Behaving, or Consuming

Kuzmanović

2023

Handbook of Research on Socio-Economic Sustainability in the Post-Pandemic Era

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In advertising, social responsibility is a tripartite process involving three relevant actors: the corporation, agency, and audience. Omissions on the social market are most often broadcast by agencies to the detriment of consumers or with the cooperation of the first two actors. The corporation influences the agency through the audience or censorship before it reaches a socially critical effect. While in the short run unfair marketing causes exclusive harm to consumers, in the long run, invasive marketing harms corporations, causing disappointment among customers, active abstinence, or aversion. The marketing paradox speaks of the inefficiency of marketing in delivering value to the consumer of accurate, convenient, and true information. This inefficiency of marketing requires social marketing in order to protect the interests of social groups affected by these actions. Paradoxes are typical zones of adjustment of economic and epistemological (behavioral) interests.

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Behavioral Biases in Marketing

Cited by 2 publications

References 95 publications

Pricing of Consumer Innovations

Pricing of Consumer Innovations

The Economics of Advertising, Fair Marketing, Unusual Behaving, or Consuming

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