Skip to main content
Disciplines
Automotive Business IT + Informatics Construction + Real Estate Electrical Engineering + Electronics Energy + Sustainability Insurance + Risk Finance + Banking Management + Leadership Marketing + Sales Mechanical Engineering + Materials
Events
DE
EN
Books
Journals
Topic Page
Marketing
Start single access now
Access for companies
EXTENDED SEARCH
Log in
Top
Marketing Letters
Published in: Marketing Letters 4/2015

01-12-2015

The double benefits of consumer certainty: combining risk and range effects

Authors: Erik Maier, Robert Wilken, Florian Dost

Published in: Marketing Letters | Issue 4/2015

Log in

Activate our intelligent search to find suitable subject content or patents.

search-config
loading …

Abstract

We investigate consumer certainty as an important dimension of attitude strength and explore its influence on willingness to pay (WTP) ranges. WTP ranges are defined by two thresholds (floor/minimum and ceiling/maximum reservation price); their difference indicates the degree of (un)certainty. Across five studies (online, laboratory, and field experiments plus a field survey) with more than 25,000 participants, we find that increased consumer certainty generates an asymmetric shift in the WTP thresholds, such that the floor price increases more strongly than the ceiling price, which also implies a reduction in the WTP range. Consequently, this research specifies predictions offered by choice models that use Bayesian learning. The asymmetric effects appear, irrespective of the source of uncertainty, so our study advances understanding of whether consumers differ in their behavior as a consequence of preference or product performance uncertainty.
previous article Are look-alikes confusing? The application of the DRM paradigm to test consumer confusion in counterfeit cases
next article Consumer satisfaction versus churn in the case of upgrades of 3G to 4G cell networks

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

  • über 102.000 Bücher
  • über 537 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Maschinenbau + Werkstoffe
  • Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 340 Zeitschriften

aus folgenden Fachgebieten:

  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Versicherung + Risiko




Jetzt Wissensvorsprung sichern!

inform now
Footnotes
1
In turn, previous empirical findings regarding the endowment effect actually might have reflected the average of a relatively stronger increase in the floor, relative to the ceiling, price.
 
2
Previous research offers initial indications of this range-reducing effect of certainty, though without analyzing the impact on WTP thresholds separately. For example, Dost and Wilken (2012) approach the certainty–range link indirectly, showing that the WTP range for a high certainty-level commodity product is smaller than that for a low certainty-level service. Wang et al. (2007) demonstrate that performance and preference uncertainty can increase WTP ranges. Both contributions call for further empirical research on the effect of certainty on WTP ranges.
 
3
All items formulated for this pretest, as well as statistical details, are available from the authors upon request.
 
4
Items are available from the authors upon request.
 
5
The items pertaining to the two latter constructs are available from the authors upon request.
 
6
Items are available from the authors upon request.
 
7
Parameter estimates derived from both reduced samples can be obtained from the authors upon request.
 
Literature
Bagwell, K. (2007). The economic analysis of advertising. In M. Armstrong & R. R. Porter (Eds.), Handbook of industrial organization (pp. 1701–1844). Amsterdam: North Holland.
Berger, I. E., & Mitchell, A. A. (1989). The effect of advertising on attitude accessibility, attitude confidence, and the attitude-behavior relationship. Journal of Consumer Research, 16, 269–279.CrossRef
Berger, J., & Schwartz, E. M. (2011). What drives immediate and ongoing word of mouth? Journal of Marketing Research, 48(5), 869–880.CrossRef
Birnbaum, M. H., & Stegner, S. E. (1979). Source credibility in social judgment: bias, expertise, and the judge’s point of view. Journal of Personality and Social Psychology, 37(1), 48–74.CrossRef
Burton, S., Lichtenstein, D. R., Netemeyer, R. G., & Garretson, J. A. (1998). A scale for measuring attitude toward private label products and an examination of its psychological and behavioral correlates. Journal of the Academy of Marketing Science, 26(4), 293–306.CrossRef
Byzalov, D., & Shachar, R. (2004). The risk reduction role of advertising. Quantitative Marketing & Economics, 2(4), 283–320.CrossRef
Cacioppo, J. T., Petty, R. E., & Kao, C. F. (1984). The efficient assessment of need for cognition. Journal of Personality Assessment, 48(3), 306–307.CrossRefPubMed
Cialdini, R. B., Trost, M. R., & Newsom, J. (1995). Preference for consistency: the development of a valid measure and the discovery of surprising behavioral implications. Journal of Personality and Social Psychology, 69(2), 318–328.CrossRef
Dost, F., & Wilken, R. (2012). Measuring willingness to pay as a range, revisited: when should we care? International Journal of Research in Marketing, 29(2), 148–166.CrossRef
Erdem, T., & Keane, M. P. (1996). Decision-making under uncertainty: capturing dynamic brand choice processes in turbulent consumer goods markets. Marketing Science, 15(1), 1–20.CrossRef
Erdem, T., Keane, M. P., Öncü, T. S., & Strebel, J. (2005). Learning about computers: an analysis of information search and technology choice. Quantitative Marketing and Economics, 3(3), 207–246.CrossRef
Erdem, T., Keane, M. P., & Sun, B. (2008). A dynamic model of brand choice when price and advertising signal product quality. Marketing Science, 27(6), 1111–1125.CrossRef
Fay, S., & Xie, J. (2010). The economics of buyer uncertainty: advance selling vs. probabilistic selling. Marketing Science, 29(6), 1040–1057.CrossRef
Fazio, R. H., & Zanna, M. P. (1978). Attitudinal qualities relating to the strength of the attitude-behavior relationship. Journal of Experimental Social Psychology, 14(4), 398–408.CrossRef
Fischer, G. W., Luce, M. F., & Jia, J. (2000). Attribute conflict and preference uncertainty: effects on judgment time and error. Management Science, 46(1), 88–130.CrossRef
Gelman, A., & Hill, J. (2007). Data analysis using regression and multilevel/hierarchical models. Cambridge: Cambridge University Press.
Godes, D., & Mayzlin, D. (2009). Firm-created word-of-mouth communication: evidence from a field test. Marketing Science, 28(4), 721–739.CrossRef
Grant, S. J., & Tybout, A. M. (2008). The effect of temporal frame on information considered in new product evaluation: the role of uncertainty. Journal of Consumer Research, 34(6), 897–913.CrossRef
Gross, S. R., Holtz, R., & Miller, N. (1995). Attitude certainty. In R. E. Petty & J. A. Krosnick (Eds.), Attitude strength: antecedents and consequences (pp. 215–246). New York: Psychology.
Isik, M. (2004). Does uncertainty affect the divergence between WTP and WTA measures? In Economics Bulletin, 4(1), 1–7.
Isik, M. (2006). An experimental analysis of impacts of uncertainty and irreversibility on willingness-to-pay. Applied Economics Letters, 13(2), 67–72.CrossRef
Jang, S., Prasad, A., & Ratchford, B. (2012). How consumers use product reviews in the purchase decision process. Marketing Letters, 23(3), 825–838.CrossRef
Krosnick, J. A., & Petty, R. E. (1995). Attitude strength: An overview. In R. E. Petty & J. A. Krosnick (Eds.), Attitude strength: antecedents and consequences (pp. 1–24). New York: Psychology.
Laran, J., & Tsiros, M. (2013). An investigation of the effectiveness of uncertainty in marketing promotions involving free gifts. Journal of Marketing, 77(2), 112–123.CrossRef
Lee, Y. H., & Qiu, C. (2009). When uncertainty brings pleasure: the role of prospect imageability and mental imagery. Journal of Consumer Research, 36(4), 624–633.CrossRef
Lee, J. A., Garbarino, E., & Lerman, D. (2007). How cultural differences in uncertainty avoidance affect product perceptions. International Marketing Review, 24(3), 330–349.CrossRef
Nayakankuppam, D., & Mishra, H. (2005). The endowment effect: rose-tinted and dark-tinted glasses. Journal of Consumer Research, 32(3), 390–395.CrossRef
Okada, E. M. (2010). Uncertainty, risk aversion, and WTA vs. WTP. Marketing Science, 29(1), 75–84.CrossRef
Petrocelli, J. V., Tormala, Z. L., & Rucker, D. D. (2007). Unpacking attitude certainty: attitude clarity and attitude correctness. Journal of Personality & Social Psychology, 92(1), 30–41.CrossRef
Rucker, D. D., & Petty, R. E. (2004). When resistance is futile: consequences of failed counterarguing for attitude certainty. Journal of Personality and Social Psychology, 86(2), 219–235.CrossRefPubMed
Rucker, D. D., Tormala, Z. L., Petty, R. E., & Briñol, P. (2014). Consumer conviction and commitment: an appraisal-based framework for attitude certainty. Journal of Consumer Psychology, 24(1), 119–136.
Rust, R. T., Inman, J. J., Jia, J., & Zahorik, A. (1999). What you don’t know about customer-perceived quality: the role of customer expectation distribution. Marketing Science, 18(1), 77–92.CrossRef
Salisbury, L. C., & Feinberg, F. M. (2008). Future preference uncertainty and diversification: the role of temporal stochastic inflation. Journal of Consumer Research, 35(2), 349–359.CrossRef
Schlereth, C., Eckert, C., & Skiera, B. (2012). Using discrete choice experiments to estimate willingness-to-pay intervals. Marketing Letters, 23(3), 761–776.CrossRef
Shen, Y., Li, S., & DeMoss, M. (2012). The effect of quantitative electronic word of mouth on consumer perceived product quality. International Journal of Management & Marketing Research, 5(2), 19–29.
Smith, J. B., & Bristor, J. M. (1994). Uncertainty orientation: explaining differences in purchase involvement and external search. Psychology & Marketing, 11(6), 587–607.CrossRef
Smith, R. E., & Swinyard, W. R. (1983). Attitude-behavior consistency: the impact of product trial versus advertising. Journal of Marketing Research, 20(3), 257–267.CrossRef
Thaler, R. (1985). Mental accounting and consumer choice. Marketing Science, 4(3), 199–214.CrossRef
Tormala, Z. L., & Rucker, D. D. (2007). Attitude certainty: a review of past findings and emerging perspectives. Social and Personality Psychology Compass, 1(1), 469–492.CrossRef
Tormala, Z. L., Rucker, D. D., & Seger, C. R. (2008). When increased confidence yields increased thought: a confidence-matching hypothesis. Journal of Experimental Social Psychology, 44(1), 141–147.CrossRef
Urbany, J. E., Dickson, P. R., & Wilkie, W. L. (1989). Buyer uncertainty and information search. Journal of Consumer Research, 16(2), 208–215.CrossRef
van Dijk, E., & van Knippenberg, D. (1996). Buying and selling exchange goods: loss aversion and the endowment effect. Journal of Economic Psychology, 17(4), 517–524.CrossRef
Wallace, D. S., Paulson, R. M., Lord, C. G., & Bond, C. F., Jr. (2005). Which behaviors do attitudes predict? Meta-analyzing the effects of social pressure and perceived difficulty. Review of General Psychology, 9(3), 214–227.CrossRef
Wang, T., Venkatesh, R., & Chatterjee, R. (2007). Reservation price as a range: an incentive-compatible measurement approach. Journal of Marketing Research, 44(2), 200–213.CrossRef
Weathers, D., Sharma, S., & Wood, S. L. (2007). Effects of online communication practices on consumer perceptions of performance uncertainty for search and experience goods. Journal of Retailing, 83(4), 393–401.CrossRef
Webster, D. M., & Kruglanski, A. W. (1994). Individual differences in need for cognitive closure. Journal of Personality and Social Psychology, 67(6), 1049–1062.CrossRefPubMed
Wu, C., & Shaffer, D. R. (1987). Susceptibility to persuasive appeals as a function of source credibility and prior experience with the attitude object. Journal of Personality and Social Psychology, 52(4), 677–688.CrossRef
Zaichkowsky, J. L. (1994). Measuring the involvement construct. Journal of Consumer Research, 12(3), 341–352.CrossRef
Zhu, F., & Zhang, X. (2010). Impact of online consumer reviews on sales: the moderating role of product and consumer characteristics. Journal of Marketing, 74(2), 133–148.CrossRef
Metadata
Title
The double benefits of consumer certainty: combining risk and range effects
Authors
Erik Maier
Robert Wilken
Florian Dost
Publication date
01-12-2015
Publisher
Springer US
Published in
Marketing Letters / Issue 4/2015
Print ISSN: 0923-0645
Electronic ISSN: 1573-059X
DOI
https://doi.org/10.1007/s11002-014-9282-5

Other articles of this Issue 4/2015

Marketing Letters 4/2015 Go to the issue

OriginalPaper

The role of visual art in enhancing perceived prestige of luxury brands

OriginalPaper

The multiple roles of fit between brand alliance partners in alliance attitude formation

Erratum

Erratum to: Impact of satisfaction with e-retailers’ touch points on purchase behavior: the moderating effect of search and experience product type

OriginalPaper

Network externalities in online video games: an empirical analysis utilizing online product ratings

OriginalPaper

I will risk a stranger’s money, but not my own or my friend’s money: Effect of proximity of the money source to the self on financial risk-taking

OriginalPaper

Are look-alikes confusing? The application of the DRM paradigm to test consumer confusion in counterfeit cases