Current Topic: Strategy

Suppose you want to sell a cupboard; how do you determine the price? You will probably compare prices with similar ones and how much the purchase price was. Buyers, in turn, will judge it on external features: how many drawers are there, what material is it made of? Yet often there is a difference in what the seller thinks a product is worth and what the buyer is willing to pay. This is also called the endowment effect (Thaler, 1980).

However, society is becoming increasingly technological, and more (digital) services are offered. Think, for example, of a platform like Amazon, a company specializing in data privacy, or the experience of going to a concert. How are these services evaluated? And more importantly, how big is the seller-buyer gap? Let’s dive in!

Emojis have taken over how the world communicates online. From social media platforms to text messages, emojis have become an integral part of our daily communication. These little expressive icons have taken over our digital conversations. They add a splash of color, humor and personality to our messages making them more engaging and relatable. It’s amazing how a simple string of symbols can convey emotions and ideas, with just a touch of playfulness. 

Marketers love to end their prices with the magical numerical combination of 99. This practice, which is also known as charm pricing, psychological pricing or odd pricing, is seen in virtually every country across the globe. There’s no question about it: it works. But new research shows that the pricing trick will backfire under specific circumstances.

Did you click? Clickbait is a strategy for viral journalism, where the hunt on clicks is accelerating. Powerful and emotional words can make your headline irresistibly clickable, as previous research already showed that clickbait headlines were successful in baiting clicks.

A loyal example of clickbait usage is the website Buzzfeed, where titles are calling on emotions and curiosity by not revealing the conclusion of the article (see figure). This website is known for its rigorous use of analytics and A/B tests, showing that they will be fully aware of the effects that these clickbait headlines have on article clicks.

But does clickbait also contribute to shares and word-of-mouth or do they elicit a certain level of distrust or disappointment?

If there’s one thing that retail psychologists have learned over the years, it’s that choice isn’t always good. Few people will be excited by facing 382 options of laundry detergent. Alternatively, 382 options of craft beer may be exactly what pulls the customer into the aisle (it works for me), sparking the promise of hoppy exploration.

While choice can be alluring and liberating in some purchase contexts, it can be downright paralyzing in others.

This explains why in many studies, both in the real world and the lab, decreasing choice has been found to be beneficial for the bottom-line sales. (don’t worry, I won’t be citing the infamous ‘jam study’, which adorns the opening paragraph of so many articles on product assortment) On the other hand, many other studies still show the adage ‘the more the merrier’ to be true on the store shelf as well.

Clearly, whether choice is good depends on moderating factors such as product category, type of store and the shopper itself. Fortunately, Sethuramana et al. (2022) conducted a large-scale meta-analysis, providing insight into how these factors operate and intertwine to influence shopping outcomes. The researchers analyzed an impressive number of 177 studies obtained from 95 academic papers published during 1970–2021.

In this blog, we’ll sum up their most essential findings and discuss important practical implications for retailers.