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Consumer Insights. Market Innovation.


Rajan Sambandam

Instant or Delayed Gratification?

Posted by on in Rajan Sambandam

Let's say you had the choice of giving one of two gift cards. One of them expires soon while the other expires much later. Which would be better to give? The latter, right? Not quite, say some behavioral economists. It appears that the one that expires sooner and therefore avoids procrastination makes people happier. That's right: people procrastinate even when it comes to pleasure. It could be that even with pleasures like using gift cards there are some costs associated (such as arranging for babysitting to go the spa) that loom much bigger in the immediate than in a distant future. So a spa visit in six months seems like a pleasure while one tomorrow looms (somewhat) ominously.


Trouble With Numbers

Posted by on in Rajan Sambandam

A common experience when shopping is to see price discounts expressed in percentage terms. "All items are 25% off". That's easy enough to understand. How about situations where you see signs that say "Take a further 15% off at the register"? This is where complications arise. If an item costs $100 and you see these two signs what do you think is the final discounted price of the item? Multiple percentage changes are often used by stores and for good reason. Recent research shows that consumers are not very good at calculating multiple percentage changes and in fact make predictable mistakes. The researchers show that these mistakes can be rectified in certain ways and that there is a clear economic cost to consumers when such mistakes are made.


Beautiful Charts

Posted by on in Rajan Sambandam

How much do you like it when information is visually conveyed in a very pleasing manner? The New York Times Graphics Department is particualrly adept at this. It is a group of about 30 people with various backgrounds who create the visual representations for the Times publications. The group is mainly composed of cartographers, illustrators and programmers. The graphics editor Amanda Cox is unusual in that she is a statistician. You can see her ability to visualize data in the following examples. The Times graphics group dominated the gold medals at the Malofiej Awards, the most important prize for graphic design. Cox won the gold for Individual Portfolio.

Here are some examples of the group's work. Take your time to look at how simply, yet appealingly these are laid out and the amount of information that is packed in with minimal clutter. The designers have been able to stretch their imaginations in the online edition in ways not possible with the paper copy.


Circles, Squares and Choice

Posted by on in Rajan Sambandam

Can simple shapes like circles, squares and triangles affect consumer choice? In particular, will exposure to simple shape arrays influence how people buy? Simple shape arrays are of the form OOOOΔOO or the form OOOOOOO. The former is called a uniqueness array as there is one shape that is unique and the latter is called a homogeneity (or uniformity) array as all the shapes are the same. Another type of array called a variety array looks like OΔOOΠΔOΠ. So they are quite innocuous. The question is, are they powerful enough to induce behaviors in consumers that correspond to the shapes, such as variety seeking and uniqueness? This idea was tested by two researchers from Stanford University and produced surprising results.


Much as it is with people, there are two ways firms and customers can begin a relationship: one of the two parties can initiate the relationship. With people, who initiates the relationship may have no bearing on the outcome of the relationship (at least none that I know of). With firms and customers it really does make a difference says Paul Dholakia, a researcher at Rice University. It happens at least from the firm's point of view, because of the different behavior exhibited by customers who engage firms on their own, as opposed to being induced to do so.


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