Effects on Brand Choice
Do We Learn?
Experience is the best teacher. These are common words of wisdom.
Noting this, marketing managers that enter into new markets often
use exploratory research to learn about the market. Methods with
roots in ethnography, such as contextual inquiry, help management
learn about consumers by experiencing what they think and do in
an information rich environment. These findings are then digested
and the resulting insights help guide future decisions in brand
turns out consumers act in quite a similar manner when making
purchase decisions in a product category that is new to them.
Consumers learn through experiences and their choices evolve as
they become more knowledgeable about a product category. This
is an important concept for managers. Knowing that consumer preferences
evolve is instrumental in helping managers design offers and marketing
programs that co-evolve with the customer. In addition, knowing
when customers needs change helps management better understand
how to value their customer base, by providing supporting information
for equating lifetime customer value assessments.
Types of Offers Carry Experience Effects?
all offers are evaluated the same. It is inherently easier for
consumers to discern the level of quality for some types of offers
than others. Some products can be evaluated prior to purchase,
whereas others cannot. Various goods can be categorized as being
search goods, experience goods, or credence goods.
goods are products for which it we are able to observe the
quality of the product through inspection. Clothing is an example,
as with clothes you are able feel them, examine the colors and
styles, and to try them on before buying them to see if they fit.
goods require experience in use before the product quality
is ascertainable. For example, it is hard to tell if you will
like a song before you hear it. Even if it is described for you
as to which style, how many musicians, and what types of instruments
they play, it is still difficult to predict if you will really
like the song before hearing it. For experience goods people will
often seek "surrogate experience" - the experience of
others - to understand the quality. This is why we have movie
reviews in just about every major newspaper.
credence goods the quality of the offer is difficult to
distinguish even after the purchase and consumption by the customer.
This is because the customer lacks the expertise to judge the
quality of the outcomes. For example, if you see a doctor for
an affliction it is hard to know, without medical expertise, how
good the doctor's diagnosis and treatment actually is. In general
there is a tendency for service goods to be more on the credence
end of the spectrum than tangible goods. Noting this categorization
of various offers, experience effects on brand choice are most
important for experience goods.
Evolution of Choice
Evolution of Brand Preferences and Choice Behaviors of Consumers
New to a Market," a paper I co-authored with Carrie Heilman
(University of Virginia) and Gordon Wright (Purdue University),
we found that consumers that are new to a market category will
follow a three phase evolution of preference.
phases were the Newbie Phase, the Apprentice Phase, and the Expert
consumers are new to a market they have little knowledge to guide
their purchase decision. Thus, when a consumer is in this Newbie
Phase there is a tendency to look for peripheral cues about
quality to reduce risk associated with the purchase. Peripheral
cues are signals of an offer's quality that are not directly related
to the product or service features. A major cue is to quality
is the brand dominance in the category. Lacking expertise in a
new category the consumer will often use this as the primary purchase
criteria as the other facets that impact product quality are yet
unknown. Therefore the consideration set, the brands considered
in the purchase decision, are generally limited to top tier brands.
The consumer perceives the purchase as high risk, as they do not
know how to evaluate the quality prior to purchase, and therefore
sticks with what is familiar. However, once the purchase is made
the consumer gains some confidence in being able to discern quality
and therefore this impacts subsequent purchase decisions.
In the Newbie Phase, a phase with low loyalty, the consumer
is bound to try a variety of offers. The first products tried
are usually confined to dominant brands, however as the consumer
learns from these first experiences the insights gained cause
them to enter the Apprentice Phase.
the Apprentice Phase the consumer is awakening to knowledge
about the category and, as things progress, is better able to
search for optimal solutions. And the search can indeed be extensive
in this phase. Since the evaluative criteria are better known
the perceived risk associated with the purchase declines. Because
of this the consideration set is often significantly enlarged
to include mid and lower tier brands.
the consumers preferences are realized through experience, the
consumer reassesses which product is best for them. Once the consumer
develops enough experience they enter the last phase of choice
evolution, the Expert Phase.
the Expert Phase the consumer is very knowledgeable about
the purchase criteria and the various offers on the market. At
this point the consumer has optimized on her choice based on the
overall price-to-performance tradeoffs. As an expert the consumer
is generally less price sensitive as they have found their sweet
spot with regard to product features and benefits. And the search
for new solutions is minimal as the extensive search is already
accomplished in the Apprentice Phase.
Impact and Management Implications
how consumer brand choice preferences evolve as they become more
experienced is instrumental in developing a well-honed market
segmentation and targeting plan. Marketing programs based on trial,
repeat purchase, and loyalty can be better targeted if the manager
knows when the phase handoffs occur. The price sensitivity of
a consumer evolve along with choice preferences and because of
that the effectiveness of price promotions also vary across the
needs vary across the phases, the core brand value propositions
can be managed to integrate with these various phases. One application
is to be aware of the preferences across the spectrum and offer
various brands to meet the needs at the different stages. For
example, if the Expert Phase consumer is looking for a streamlined
offer then you can have an appropriate brand waiting for them.
Or for packaging, Expert Phase customers may want to purchase
larger quantities, since they know that they have found the best
product that works for them.
it is pertinent to remember that not all customer segments
will follow this same progression. For example, my research
into the baby diaper market shows that there is one market segment
that stays with the leading brands over time. This group tended
to contain more full-time working mothers, and the assumption
is that busy mothers have less time to spend on searching for
optimal solutions and therefore lacking better information stick
with the less risky options.
pairing the choice evolution model with demographic descriptors
you can identify market subsegments with more homogenous preferences
and price elasticities over the preference evolution phases.
Sum of Experience
experience is an important element to consider in market segmentation.
Consumer experience in a new category has an impact on the customer's
price sensitivity. It also has an impact on loyalty.
consumers are more experienced they tend to become more loyal
to their preferred brand, and therefore if they have not tried
your brand they are less inclined to do so in the later phase.
This means trial inducement is an important program for the Newbie
and Apprentice Phases.
the evolution of customer preferences allows the manager to track
different consumer segments over their purchase lifecycle, and
this helps determine when to develop programs that will impact
the behavior of these groups. John Keats, the English poet, notes
"Nothing ever becomes real till it is experienced-even a proverb
is no proverb to you till your life has illustrated it." What
holds true for a proverb also holds true for customers and their
experiences within your product category. Their experiences affect
their choices, and smart managers mirror these transformations
in their marketing initiatives.
Bowman is the Director of Academic Programs at The Institute
of Brand Science at Emory University. He is a principal liaison
for the Institute's network of scholars, and the lead for managing
Institute research in response models.
article was edited by Greg Thomas, the Director of Programs
for The Institute of Brand Science at Emory University. Greg is
passionate about driving innovation in the practice of brand management.
He has worked for Fortune 500 companies, consulted to a wide array
of clients, and holds an MBA from the University of Texas.
article is based on a May 2000 article in the Journal of Market
Research titled "The Evolution of Brand Preferences and Choice
Behaviors of Consumers New to a Market." The article was authored
by Carrie M. Heilman, Douglas Bowman, and Gordon P. Wright.