Think Peanuts for Probabilistic Promotions

Shoppers are attracted by uncertainty about what they’ll pay for an item if the risk isn’t a big deal.
     That’s a description of findings from researchers now at University of California at Berkeley and University of Pennsylvania regarding what are called probabilistic price discounts—where shoppers are offered a specified percentage chance of getting a specified price reduction: “Present this coupon when buying the set and there’s a 25% chance you’ll get an additional 25% off on the purchase price.”
     Every smart shopper who can easily locate the coupon will present it. It makes no sense to pass up the offer. But a question more relevant to marketers is whether shoppers are more likely to buy when offered, let’s say, either a sure 20% discount on the one hand or, on the other hand, a 40% chance to get a 50% discount.
     The answer from the studies is that it depends on the amount of money involved. When the sure discount feels quite small to shoppers, they’ll tend to opt for the probabilistic deal. This pattern is related to what researchers call the peanuts effect. “The money amounts I’m considering are just peanuts” In one of the studies, consumers were more likely to select a probabilistic discount on a hotel stay when the price for the hotel stay was $48 than when it was $480.
     Other studies in the set verified how it is a feeling of relatively low size of the sure discount—not only an objectively low size—which matters. Presenting the same sure discount in the context of large discounts made the same sure discount feel smaller. Also, presenting the same sure discount in the form of a percentage rather than a dollar amount was found to make the sure discount seem smaller and to therefore increase the attractiveness of the probabilistic option.
     Prior studies concluded that compared to when the probability of winning the discount is low, when the probability of winning the discount is high, shoppers are more likely to prefer a sure discount. However, this current research indicates that the most important consideration is the shopper’s perceived size of the sure discount, not the size of the chance of receiving the discount or the perceived size of the discount with the probabilistic option. When the sure discount you’d be offering is likely to be perceived as just peanuts, offer a probabilistic discount.

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Relieve the Pain with Probabilistic Discounts 

Gambol with Gambled Price Discounts 

Convert Shoppers with Lucky Discounts

Summon Sisyphus Influence

After reviewing the large body of past research on how people choose which charities to contribute to, researchers at University of Leeds, Singapore Management University, University of British Columbia, and Virginia Tech report a criterion which at first glance is counterintuitive: Everything else being equal, donors prefer recipient charities to be less than fully capable of meeting the charity’s objectives.
     This charity capacity curse seems strange until you recognize how prospective donors perceive charities with abundant financial, human resources, and organizational capacity as needing less help. Most people depend on their perceptions of need in choosing among charities, even though this strategy often ends up compromising the effectiveness of their contributions.
     An implication of the finding is for charities to downplay their existing capabilities when appealing for help. But a danger in doing this is that people consulting online guides to develop their giving strategy will see how ratings of a charity are based largely on the quality of the charity’s capabilities.
     Results from follow-on studies by the researchers argue for using two other strategies to break the charity capacity curse’s effect on prospective donors when the charity is considered as having high capacities: 

• Make the current needs of the charity highly salient. In the studies, this was achieved by describing an unexpected natural disaster to which the charity is responding. 
• Shift the donors’ focus from the need of the charity to the impact of the decision to contribute. In the studies, this was achieved by using phrases like “help the most people,” “make a greater impact on the community,” and “create the most benefits.”

     Other research finds parallels to the charity capacity curse with charity recipients. Generally, the positive reaction to an attractive solicitor increases contributions. But a University of Alberta study found an exception to that rule. Researchers set up a set of fictitious websites on which visitors were asked to financially sponsor a child from a developing country.
     When the children were portrayed as having severe needs, facial attractiveness made no difference in the willingness to help. But when the level of need was not severe, people demonstrated less compassion for attractive than for unattractive children. The researchers attribute this effect to people assuming that attractive children would be better able to recruit help on their own.
     Similarly, showing typical child beneficiaries as a group makes them seem more powerful than showing them as solitary individuals.

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Donate Positive & Negative Right for Charity 

Collapse to Soles When Asking for Money

Stand By Your School of Thought

In these times of geopolitical conflicts, should a marketer take a stand on issues affecting their community and then boldly support the position with the strength of standing by your school? As the Boston Latin Academy defines it, “Stand by her gallantly and fight for her valiantly. In all times and places, her greatness proclaim.”
     Or should you instead stand by your school of thought in the sense of watching from the sidelines, on guard for developments?
     Study results from researchers now at Tel-Aviv University and University of Pennsylvania find that even small solidarity messages, such as a, “We stand with you,” can improve consumer attitudes toward a brand. However, to fully realize the gains, a local brand would need to do more than would a global brand to demonstrate support. An explanation for the difference, supported by the studies, is that actions from a global brand are perceived as riskier for the brand, so in themselves enhance consumer evaluations.
     For the local brand, sustained communication, strategic partnerships, or community initiatives, may be necessary to foster goodwill. The researchers admit that it’s a balancing act, though. Bold support of a controversial opinion can mobilize backlash from consumers who disagree.
     Still, a set of studies at California Polytechnic State University and Georgetown University also makes a case for local brands using a strong megaphone to advocate for stands on geopolitical conflicts affecting their community. Yes, pipsqueak-size enterprises can’t afford to lose bunches of customers. They lack the revenue cushion and market momentum enjoyed by the major players. So stay away from advocating the political equivalent of the torture of puppies.
     Instead, pick your argument area from those where people could recognize legitimate points on both sides. Then, the research indicates, the chief benefit becomes the attention to your business your strong advocacy garners. The net effect proves to be an influx of potential customers which more than compensates for the exit of angry current customers.
     These studies also showed how for selecting an argument where support pays off, your audiences must consider your advocacy to be authentic. Genuinely believe what you’re saying.
     Some of your employees may agree with your stand and others may not. Another important element for success, then, is that you prepare them to handle the flack.
     Lastly, recognize that truly hot controversies can draw attention away from a brand’s selling points. Blazing heat usually distracts people.

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Equip Employees to Field Your Fallout 

Pick an Argument, Pipsqueak 

Salute Sales to Concerned Patriots 

Buoy Your Business Against Boycotts

Debunk Unrealities Using Virtual Reality

Researchers at Yeditepe University, University of Twente, and Ludwig-Maximillian Universität München were inspired to conduct their set of studies by a recognition that promoting accurate scientific information about climate change is crucial for a sustainable future. The study objective was to assess the value of immersive virtual reality simulations of climate scenarios in debunking falsehoods which could impede support for mitigation measures.
     The simulations visually depicted impacts of rising temperatures and sea level on communities and ecosystems. Accompanying the visual stimuli was either narration or text including phrasing like, “People are directly affected by the impacts of climate change. We should correct the misinformation that denies its human-made nature. We witness the rising sea levels encroaching on coastal communities, homes destroyed by stronger hurricanes, more frequent fires, and prolonged droughts devastating farmlands.”
     The VR methodology produced higher climate change belief and less skepticism that climate change is caused by human actions than when the same information was presented on a flat screen, as would be done using non-VR social media.
     Consideration of past research studies and data analyses from their own set of studies led the researchers to explain the superiority of the VR technique as due to the 360-degree environments where distracting physical reality is blocked out and the active engagement fostered by the participant exploring the environments themselves.
     The researchers note that the effectiveness of debunking unrealities via VR will depend on the content of the VR simulations, the VR equipment used, and the receptivity of participants to use of VR. They also admit to lack of purity in their methodology because different participants no doubt explored the VR scenarios in different ways so did not have identical experiences.
     Other research indicates this opportunity for participants to discover for themselves actually adds to the effectiveness. For example, researchers at University of Miami and University of Pennsylvania found that customers are substantially more likely to pass information on to others when they have found at least some of that information on their own. In addition to the thrill of discovery, a major reason for this is that we associate discovered information with our self-image. We’re less likely to criticize the information as unfounded or uninteresting. If the information is in written form, we’re less likely to be put off by spelling and grammatical errors when we believe we came across it through our own initiative.

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Control Conspiratorial Thinking 

Worm Your Way into WOM with Self-Discovery 

Expose Seniors’ Values Through Virtual Reality

Accentuate the Positive Item Characteristics

People purchasing food are more influenced by what will make them healthier than by what would make them unhealthier. This was seen in how study participants expressed greater interest in corn flakes claiming to be high in protein, fiber, and vitamins than in the same cereal claiming to be low in fat, sodium, and carbs.
     The University of Groningen and Vrije Universiteit Amsterdam researchers who conducted the study attribute the difference in preference to shopper assignment of value. Consumers usually associate “higher” and “more” with increased benefits. This is usually less true for “lower” and “less.” Advertising the gain in healthful characteristics adds greater perceived value to a product than does advertising the reduction of unhealthful ingredients.
     The generalizability of this addition-subtraction difference was shown in another of the researchers’ studies: An item featured as “now enriched with alanine”—with alanine described to these participants as beneficial for health—received higher favorability ratings than did an item featured as “now reduced in alanine”—with alanine described to those participants as harmful to health.
     The implication for marketers is to emphasize what’s added over what’s subtracted. Similarly, people rate the same merchandise as better when a description is framed positively than when framed negatively. Researchers at Seattle University and University of San Diego cited past studies showing that consumers are more likely to say they’ll buy a cut of beef described as 75% lean compared to 25% fat, and then, in their own studies, found that people told a chewing gum had more than 95% natural flavors ended up giving higher ratings than those told it had less than 5% artificial flavors.
     Actually, there’s a risk in bringing up the negative at all. When Coca-Cola announced, “Our Bonaqua lightweight mineral water bottles are specially engineered to use 34% less plastic,” we might have expected the purchase likelihood of the product to grow. But studies at City University of Hong Kong, Hong Kong Baptist University, and The Chinese University of Hong Kong showed the opposite can happen. Consumers could respond, “Gee, I wasn’t even thinking about how my mineral water comes entombed in a slug of plastic. I’ll stop buying bottled mineral water.”
     These researchers found that you can minimize the negative response by nudging shoppers to pay more attention to the decrease in the bad than to the presence of the bad. Accomplish this by discussing the upsides of change.

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Wait, Wait, Don’t Tell Me 

Lessen Emphasis on Less Bad Sometimes 

Fancy How to Sell More Features

Cover Cost Per Wear with Fashion Shoppers

High fashion inevitably clashes with high sustainability. Fashion is, by definition, fleeting, not sustainable. From this perspective, the term “fast fashion” seems comfortable. But with consumer behavior researchers using the term to mean inexpensive clothing produced rapidly to fit current trends, the practice of fast fashion is, by that definition, uncomfortable for many people. Compared to sustainable merchandise, fast fashion items are discarded quickly, producing offensive waste both in the inputs and especially the outputs.
     To nudge fashion shopper preferences and purchase intentions toward the less wasteful, highlight the comparison, say a pair of researchers from University of Bath and University of Cambridge. To avoid the clash of high fashion with high sustainability, make the basis of comparison what pays off directly for the individual consumer—cost per wear (CPW), which divides the estimated price of a garment by the estimated number of potential wears the garment provides, thus quantifying its economic value.
     In a set of studies, the researchers demonstrate how communicating CPW shifts preference away from cheaper, low-quality options and toward more expensive, high-quality options if the fast fashion and slow fashion alternatives are presented together, the slow fashion alternative does have a lower CPW, and the shopper is interested in greater economic value for money spent. Citing CPW numbers is more effective than citing non-numeric durability claims. The effect is stronger when the CPW figures are accompanied with certification by a respected organization. Perhaps this is because the prices of the garments and the number of wears are necessarily rough estimates.
     The value of discussing usage frequency extends beyond high fashion clothing. How often a shopper would use a purchased item influences how satisfied they’ll end up being with the item if purchased. Yet researchers at IE University, Universidad Adolfo Ibáñez, and Fundação Getúlio Vargas observed how infrequently retailers discuss probable durable item usage frequency with shoppers. In the studies, shoppers also brought up only rarely the predicted frequency of use as among their reasons for purchasing something.
     To improve well-informed shopping and reduce regrets among customers, discuss the likely frequency of use. With multifunction or multifeatured products, discuss the different ones, to the degree that your time and the shopper’s patience allow.
     But the research produces a caution: When covering usage frequency, talk to the shopper as an individual. Avoid averages and comparisons to others, especially when dealing with shoppers who are likely to compete with others.

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Weigh Disposal Over Depletion for Less Waste 

Serve Up Benefits Per Serving 

Mention Usage Frequency Frequently