How searching for alternatives influences consumer preferences


Imagine you are writing your thesis, and at the moment you want to save it on your USB stick, it crashes. As it is crucial to create a backup copy of your thesis, you start searching the Internet for a new USB stick. When you enter a particular retailer’s website, the following alternatives are shown:

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As you are provided with 5 different USB sticks, you now have to make a decision on which USB stick you prefer. Most likely, you will start by reading their product descriptions in order to make the best decision. However, after reading the different product descriptions, you are faced with the following dilemma: are you going to purchase the most preferred USB stick that was presented to you? Or are you going to continue your search for another (yet unrevealed and maybe better) USB stick?

Conventionally, it is known that search is costly to consumers, and as companies are aware of this, they are spending substantial amounts of money on product advertisements, which in turn, makes it easier (and less costly) for consumers to find products. In sharp contrast, Ge et al. (2015) argue that companies can benefit from placing an alternative out of sight instead of immediately presenting it to the consumer. Based on four experiments, they demonstrate that if consumers make the decision to search for further alternatives (that were initially not presented), it is more likely that these consumers choose one of the unrevealed alternatives that were discovered during the search. As a result of the search, previously presented (and inspected) alternatives become less attractive. An explanation of this effect is based on the concept of preference construction. Consumers tend to construct specific preferences when they have to make a purchase decision, instead of having prior well-defined preferences (Häubl and Murray, 2003). These preferences are constructed depending on the decision environment and context. In addition, if consumers choose to search for unrevealed alternatives, they may use these observations as input for preference construction. Another interesting finding is that consumers appear to be completely unaware that their search behavior can influence their choices” (Ge et al., 2015). These theoretical findings also have implications for companies, as they are currently aiming to make their products as visible and accessible as possible.

Practical implications

  • Increase product demand by making a product relatively less accessible.
  • Make sure a consumer does not have access to product information immediately, but do not make it too hard for consumers to find the relevant information if they decide to search for it.
  • There is a sweet spot within which companies may benefit from making it more costly for consumers to learn about its products without making it too costly. As a company, you need to find the right balance.
  • Companies can benefit from allowing consumers to actively search for products.

References

Ge, X., Brigden, N., & Häubl, G. (2015). The preference-signaling effect of search. Journal of Consumer Psychology, 25(2), 245-256.

Häubl, G., & Murray, K. B. (2003). Preference construction and persistence in digital marketplaces: The role of electronic recommendation agents. Journal of Consumer Psychology13(1-2), 75-91.

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