Today I read an article in the January – February issue of Harvard Business Review titled, “What Marketers Misunderstand About Online Reviews” by Itamar Simonson and Emanuel Rosen. This was one of those articles that really makes you think! For example, I think it’s fair to say that we are all aware that social media and online reviews are impacting purchase decisions. However, the authors of this article do a nice job of breaking down the “Influence Mix” – what influences a purchase decision and then furthermore, once you understand your brand/service’s “influence mix” how it can be aligned strategically with regard to competition, communication, market research, and product segmentation. I would really recommend reading this quick three page article and determining where your brand/service falls on the “O Continuum” – what the authors have devised as the three main influencers of a purchase decision.
To summarize, Prior preferences (P), Marketers (M), and Others (O) can influence a decision maker’s selection. The authors hypothesize that with a product such as milk, “P” will be more influential than say “M” or “O” (i.e., with habitual purchases, you default to what you do – not necessarily what someone is tweeting about!). The authors also hypothesize that with regard to lower cost items such as paper towels or laundry detergent purchases, decisions will be more influenced by “M” rather than “O” (i.e., again, you don’t necessarily seek out the opinions of others for something that is not a “huge” purchase, but rather rely on eye-catching advertising and cool in-store promotions).
The most compelling portion of the article was an anecdote about the “compromise effect”. In 1992 a study demonstrated a phenomenon dubbed the “compromise effect”. Basically, when consumers were presented with three camera choices, their likelihood to select the middle priced item increased, solely due to compromising. The study was repeated in 2012, with a twist – in addition to the available cameras, participants were shown other cameras along with user reviews. The “compromise effect” disappeared. The authors state “This is hard evidence of the changing nature of decision making, which has become subject to outside information and other factors beyond a marketer’s control”.
I agree – And from a market research perspective, we should heed the author’s advice: to possibly “think differently” – rather than aiming to predict the kind of products consumers will like based on the past, consider that purchase decisions may be more reliant on the opinions of others.