Based on the research of Tanuka Ghoshal, Eric Yorkston, Joseph C. Nunes and Peter Boatwright
Marketing managers often have the responsibility of setting the sequence of hedonistic or indulgent experiences for customers, who evaluate them and give feedback, which is used in developing future events and experiences. Thus, making sure the end user enjoys his experiences is important to achieve the managerial goals of fairness, accuracy and influencing choice. Customers encounter a sequence of choices, say in a restaurant or a bar, and this sequence construction is critical to how the options are judged, given the influence of multiple prior reference points. In their research paper, Tanuka Ghoshal, Assistant Professor of Marketing at the Indian School of Business and her co-authors, use experimental as well as real-world data to posit that there is a benefit to setting a very high-quality first experience, while a strategic positioning of high or poor quality choices in a sequence can impact evaluations of other choices.
Another real-world example would be the reality singing show, where the public votes on the participants’ performances. Its significance lies in the fact that marketers rely on customer feedback for future experiences (deciding on elimination, for example). Similarly, the sales of video games depend on programmers enhancing the gaming experience largely on the basis of customer reviews. The experience of playing video games also comprises a sequence of episodes or levels that are evaluated implicitly by the user. Thus, multiple reference points play an important role in impacting sequential experiences and the choices therein as the consumer makes a comparison of these hedonistic experiences in her mind. This is known as sequential history bias.
This paper also addresses the “methods myopia” bias, or the overreliance on a small set of quantitative methods such as laboratory experiments, which limits the scope of inquiries in academic research. To this end, the authors use actual field data from the Blue-Bonnet Brew-off beer contest, an annual event in Dallas-Fort Worth, followed by a stylised experiment that consists of evaluating a sequence of jokes. They posit that the influence of the “first” in a sequence is particularly important, as it anchors the subsequent evaluations and also gets a bit of a boost in terms of higher than average scores. Thus, it sets the tone for the entire sequence.In addition, managers should also keep in mind contrast and assimilation effects. For instance, if a customer has an extreme experience, it may cause a significantly lower or higher evaluation for her subsequent experiences than would normally occur (also called “contrast effect to extremes”). In the context of the Blue-Bonnet Brew-off beer contest, Prof. Ghoshal explains, “Even if the best beer was in the second position, it still plays a role when they judge the ninth beer. This beer is good but is it as good as the second one was?”
There is also a “contrast to predecessor” effect, where one’s immediate earlier choice determines a contrasting (high or low) rating for the next-in-line choice. When a customer is exposed to a series of hedonistic stimuli that is under the purview of marketing managers, he evaluates and judges the different experiences in relation to the best and to the immediate previous experience, which has implications for sequence construction for managers.
Enjoyment of the hedonistic events is critical for customer satisfaction. In order to enhance consumer enjoyment, restaurant managers, for example, could start out with a very good item in a preset menu as there is an assimilation effect to the first item, plus it gets a natural boost in rating and hence boosts overall enjoyment. Interestingly, introducing a negative option in the sequence will enhance other experiences via a contrast effect to extreme negative.
Choice empowers customers, and enticing the customer to experience multiple things weighs on the marketing manager. If the customer samples multiple choices, and, as a manager, you want them to particularly choose one that has higher margins perhaps, then you could introduce a somewhat negative option right before the target option, so that there is a double contrast effect. In other words, when there is a really bad choice, it acts as an extreme stimulus; moreover, if the predecessor is bad, it automatically boosts the next option’s ratings.
Accuracy of evaluation, an important goal in contexts such as talent show judgement, is impacted by these sequential biases. Unfortunately, randomisation is not a panacea as these bias effects persist in any order of the sequence. The recommendation of the authors is that two (or more) independent judges should sample the performances in different orders, if feasible, to enhance accuracy of judgement. If not, fairness being an important consideration, managers can highlight that the sequential target stimuli have been presented in random order.
In summary, multiple preceding evaluations can impact subsequent evaluations, and managers should keep in mind these potentially conflicting and co-occurring comparison effects. Marketers can improve the customer experience of their communications, brands and service encounters by giving careful consideration to sequence construction.
About the Researchers:
Tanuka Ghoshal is Assistant Professor of Marketing, Indian School of Business.
Eric Yorkston is Associate Professor of Marketing, Neeley School of Business, Texas Christian University.
Joseph C. Nunes is Professor of Marketing, Marshall School of Business, University of Southern California.
Peter Boatwright is Carnegie Bosch Professor of Marketing, Tepper School of Business, Carnegie Mellon University.
About the Research:
Tanuka Ghoshal, Eric Yorkston, Joseph C. Nunes, and Peter Boatwright (2014) Multiple Reference Points in Sequential Hedonic Evaluation: An Empirical Analysis. Journal of Marketing Research: October 2014, Vol. 51, No. 5, pp. 563-577.
About the Writer:
Mridula Anand is a writer with the Centre for Learning and Management Practice at the Indian School of Business. She is a graduate in MS from Stanford University and has a law degree.