Choice Making

Attributes and Choice

How attributes create value for brands?
Attributes
• How attributes impact the evaluation of a product and creates a
unique value/consumer perception?
• Meaningless attributes
• Differentiates it from the competitor
• Novel attributes, fuzzy logic
• High versus low complexity product
• Low complexity more favourable
• How to improve the perception of high complexity, elaborate on the novel feature
• Feature fatigue, what is the optimum number of features
Competitive Advantage Through Differentiation
• Porter defines differentiation as defining an unique position of an
attribute that is widely valued by consumers.

• For creating a differentiation the attribute has to be meaningful,

relevant and valuable???
Competitive Advantage Through
Differentiation
Competitive Advantage Through Differentiation
Competitive Advantage Through
Differentiation
Competitive Advantage Through
Differentiation
Competitive Advantage Through
Differentiation
Irrelevant attributes
• Buyers does not know the true value of the attributes (gold, silk,
PSPO).

• Has no independent information about the value.

• From the viewpoint of a rational information processor, the attribute

cannot be evaluated, carries no information as a result, and therefore
should be ignored.
 Meaningful brands from
meaningless differentiation
Why meaningless differentiation becomes meaningful?
Meaningful Brands From Meaningless Differentiation
• Informativeness principle of communication theory.

• Two aspects of communication: Semantic and Pragmatic.

• Semantic: Message’s literal meaning.

• Pragmatic: The reasons for communication.

• How can the above two components of communication be used to

understand the process?
Close up
The Effect of Novel Attributes on
Product Evaluation
 DELL computer with ASM system feature

Vs.

Whirlpool washing machine with Fuzzy logic

Novel Attributes
• Firms often try to improve and differentiate their products by
introducing additional product features or attributes.

• Past research suggests that the addition of novel attributes is likely to

improve product evaluation since consumers interpret these
attributes as additional benefits provided by the manufacturer
THEORY
Value Inference Learning Cost Inference

Benefit-related inference Cost-related inference

Consumers conclude that these attributes

Negative inferences of attributes
represent additional value or benefit

Research shows that consumers associate

benefits with newly introduced familiar Mainly focusing on learning cost
attributes

This benefits are despite the attributes being

ambiguous or irrelevant Cognitive effort required to accumulate the
knowledge necessary for effective usage

Thus, newly introduced familiar attributes are

perceived as signs of added value High learning cost in high complexity products and
vice versa
 Low- High-
Complexity Complexity
Products Products

Value Inference Learning Cost Value Inference Learning Cost

High Low High High

Increase overall Decrease

product overall product
evaluation evaluation
How adding a unneeded product
promotion impact choice
probability?
How Adding a Unneeded Product Promotion
Impact Choice Probability?
• Option A: Digital camera (Sony) at a price P, choice share: x.

• Option B: Digital camera (Canon) at a price P and a free subscription to a

news magazine, choice share: y.

• Both the cameras have comparable features.

• What is the relationship between x and y? That is which promotion is more

effective? Why?

• Hint: Consumers do not have well-defined preferences

How Adding a Unneeded Product Promotion
Impact Choice Probability?
• The added promotion will have a stronger negative effect when
consumers are more uncertain about their preferences:
• I may be paying for the unintended feature
• Unneeded feature provides a potential reason for choice and is a source of
potential criticism from others
• Tactics are regarded as manipulative in nature and try to punish the
offenders
• What are the factors that may moderate this effect?
Feature Fatigue:
When Product Capabilities
Become Too Much of a Good Thing
Feature Fatigue and Segmentation
• Segmentation based on features!
• Purposeful brands!
Introduction
• A common way to enhance and differentiate a product is by
increasing its number of features which provides greater functionality
for consumers. This strategy has become especially popular as new
developments in electronics and information technology

• Each additional feature provides another reason for the consumer to

purchase a product and may add desired capabilities, but too many
features can make products overwhelming for consumers, leading to
dissatisfaction and “feature fatigue”
Theory
HOW CONSUMERS WEIGH CAPABILITY AND USABILITY IN THEIR
PRODUCT EVALUATIONS ?

ØConsumers consider both the benefits and the costs of adding a

new feature to a product

ØNet effect of increasing the number of product features on

product utility depends on the relative weights that consumers
give to capability and usability in their product evaluations and
that these weights may vary across time and situations
Question
• How will the weight of capability and usability in evaluating a product
vary with time?
Theory
HOW CONSUMERS WEIGH CAPABILITY AND USABILITY IN THEIR
PRODUCT EVALUATIONS ?

ØWhen people evaluate options for the distant future, they favor
highly desirable options that are less feasible over less desirable
options that are highly feasible.

ØThe construal of more distant future events tends to be more

abstract, favoring desirability, whereas the construal of near future
events tends to be more concrete, favouring feasibility
Hypothesis
• As the number of beneficial features included in a product increases,
perceptions of the product’s capability increase.
Hypothesis
• As the number of beneficial features included in a product increases,
perceptions of the product’s usability decrease.
Hypothesis
• Expertise has a positive effect on perceptions of product usability.
Hypothesis
• Consumers give more weight to product capability in their expected
product utilities (before use) than in their experienced product
utilities (after use).
Hypothesis
• Consumers give less weight to product usability in their expected
product utilities (before use) than in their experienced product
utilities (after use).
Discussion
EFFECT OF FEATURES ON FIRM’S PROFITS

• Optimal number of features depend on goals of

company.
• If the firm wants to maximize initial choice (or
equivalently, profits from initial purchases), the
number of features F1 is optimal.
• If the firm wants to maximize probability of
repurchase (or equivalently, profits from
repurchase), F2 is the optimal number of features
(and any less is also incompatible with any profit
objective).
• If the firm wants to maximize the net present value
of the customer’s profit stream, Fopt is best
Feature Fatigue: A Necessary Evil in Portable
Devices
HOW MANY FEATURES DO WE REALLY NEED
• In the 2009 Consumer Technology Research survey conducted by
Rockbridge Associates, consumers were shown a list of 12 common
portable device characteristics (such as text messaging, camera,
etc.). They were then asked, if they could only carry one portable
device, which features would they consider “must haves” (i.e.,
needs), which features would just be “nice to have,” and which are
“not needed.”
 Feature Fatigue: A Necessary Evil in Portable
Devices
• As it turns out, a portable device
with just four primary features would
meet the needs of three quarters of
consumers.

• Anything more and the consumer

may find the device too complicated
causing feature fatigue.
Feature Fatigue: A Necessary Evil in Portable
Devices
• Why would a manufacturer spend the extra money and run the risk of
causing feature fatigue to offer all-inclusive devices if most consumers
only need four features?

• Those four features are not the same for every consumer.

• The greatest number of consumers that have all of their portable

device needs met with four features can be achieved with a device
that includes voice, text, a camera for taking pictures, and email.
Feature Fatigue: A Necessary Evil in Portable
Devices
• Yet, this device only meets the
needs of 40% of consumers.

• So while 75% of consumers

need only four features to be
completely fulfilled, the most
effective combination of four
features completely fulfils the
needs of only 40%.
Feature Fatigue
• To better explain the feature fatigue principle, lets see some examples :

• Search Engine Google vs Yahoo!!!!

Feature Fatigue

Excess Features, Low Usability Less Features, High Usability

Feature Fatigue
• Ecommerce : Wants to maximize the time spent by each consumer
on a particular page and over the years they have found out that too
much clutter isn’t the way to go.
Feature Fatigue
Successful Feature Fatigue Products

Smartphone Victrinox
Successful Feature Fatigue Products

Washing Machine
Samsung Family Hub, Failure! :
Overcoming Feature Fatigue
Keep it Simple

Free Trial

Limited Version

Tutorials

Prototype Market testing

Irresistible attribute

Wider Assortment of Simpler Products

Defeating Feature Fatigue
Wider assortment of simpler products rather than all purpose, feature-
rich products.
Defeating Feature Fatigue
Instead of packing one model with many features to address market
heterogeneity, firms might enhance consumer satisfaction by developing
more tailored products with limited sets of capabilities that appeal to
different segments.