MSI Trustees Academics explain the Why behind the Buy

“To get people to do something, force them to say no” Punam Keller

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Think academics have nothing to offer business? Think again with the practical academics presenting to thoughtful practitioners at MSI Trustees meeting last week on the Why behind the Buy.


First, Carey Morewedge showed that people value physical goods more than digital goods not because of uniqueness, production cost, market value, permanence or pleasure of consuming. Instead, perceived control over physical products is higher due to psychological ownership. Implications are multiple for touch interfaces of wearables and taking digital design cues from the physical world (skeuomorphism, baby!).


Punam Keller showed how anticipatory regret overcomes short-term costs to help people take action and enjoy long-term benefits. Effective are both declining financial incentives (time-limited discounts) and enhanced active choice (making people choose between ‘Yes, and I will get these benefits’ versus ‘No, and I won’t get these benefits). Great applications include the Mango Health App at CVS (pictured) and enrolling in retirement plans (if you want people to do that, force them to explicitly say no while stating what they are giving up).

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Avi Goldfarb made us think about the economics of prediction machines: as price of prediction falls, what will be used less (substitutes) and what more (complements)? In decision making, judgment is a key complement: you need to know your organization’s priorities and how it will use prediction to reach its objectives. For instance, for security and insurance, what your payoffs associated with the costs of a data breach versus the costs of preventing a breach? Better and cheaper prediction will allow e.g. Amazon to deliver stuff to your door before you even think about buying it, and you can ‘shop at your door’, i.e. return the things you do not want. You can watch his talk on HBR live:


On Friday, Olivier Toubia went beyond the exact wording of the search query, which only reflects what consumers think will be different. For instance, a consumer searching for ‘affordable sedan made in America’ probably also cares about comfort and safety and comfortable, but assumes all US sedans have it. Uncovering the underlying preferences, he shows that an online travel portal can get better results serving ads aligned with revealed preferences. Moreover, preferences change over time e.g. before, during and after the Superbowl, and targeted ads get the best results.


Cait Lamberton shows us that some principles in Cialdini’s (1984) ‘bible of persuasion’ no longer work. For instance, 50% of FAFSA college aid applications do not get completed, mostly as the target (of high performance but low socio-economic status) students don’t fully understand benefits and costs of going to college. In a country-wide experiment, typical persuasion tactics (such as interacting with an expensive counselor) failed to work, but visualizing the benefits ( ‘students care about working less’) and  enhanced active choice got 20,000 more students to attend college, for only $ 0.50 of cost per student. As to the second principle of time based scarcity, 26 experiments failed to show it enhanced sales – mostly because willingness-to-pay is lower for up to 40 minutes before the clock runs out. This shows the importance of testing ‘rules of marketing’ for your own brand now. Apparently, scarcity only works as a persuasion tactic when it is based on true quantity scarcity or red hot Krispy Kreme Donuts!

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Finally, I encouraged managers to approach social media with a more playful mindset. Some of your fans interact with the ecosystem of your rival brand, attacking it and supporting your brand in ways you could never do. My research with Ece Ilhan and Raoul Kubler shows that such Rival Brand Engagement ultimately benefits both brands and extends the engagements effects of marketing actions such as new products and ad campaigns. However, it is also important to study offline conversations, as my research with Engagement Labs finds that volume, but not sentiment correlates with that of online conversations. Understanding how your actions affect both online and offline conversations, and how they in turn drive sales performance is crucial to avoid false alarms and wasteful action.

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This meeting also marked the unveiling of the new MSI Research Priorities 2018-2020, with most discussions favoring Organizing for Marketing Agility as the key them for the next Trustees meeting. See you this November in San Francisco!


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