Is it smart if it sounds smart?

Frequent readers of this blog will know that I am not a great fan of research. IMHO it is usally a way for indecisive managers to postpone making a decision, or it is commissioned to become a scapegoat in anticipation of failure.

I realise this is a sweeping statement that you may well disagree with. And it is true that there are some types of research that it is (or may be) very useful. But very few. (And I am specifically fererring to what passes for Research in the Social Sciences.)

For each of the questions & findings below, I can easily find an example of why it is limited or wrong or risky to use. This is not always the fauilt of the researcher because they would have spelled out their assumptions and limitations; it is how the consumers of this research conveniently turn facts into sound bites of understanding that is easily digestible as sexy one-liners in a Board presentaion.

Question: Does a loss leader pricing strategy work with the prevalence of cherry-picking customers?

Answer: Extreme cherry pickers are customers who seek price deals and excessively avail themselves of deep discount offers, which generates negative profits for retailers. Extreme cherry picking segment is small (about 2% of all shoppers), and a loss leader promotional strategy adds to retailers’ bottom lines, despite the pure loss generated by extreme cherry pickers. (Journal of Retailing-2010)

Question: Is there a relationship between CVSA (centrality of visual aesthetic design) and consumers' intentions, such as loyalty, satisfaction, minutes, item, and $ spent inside store?

Answer: There is a positive relationship between CVSA and consumer satisfaction, loyalty, items bought, minutes visiting the store, and $ spent; and that consumers also evaluate, beyond products, visual aesthetic components in retail and that it plays a moderating role on consumer intention. (Journal of Consumer Behaviour, September/October-2010.)

Question Does seeing the word "sale" make you less likely to comparison shop?

Answer: Subjects search less in both treatments with discounts (using the word ‘sale’ or simply offering a discount); therefore we conclude that retailers can use this framing effect in order to reduce the competitiveness in their market, since decreased search intensities dampen competitive pressure. (The University of Adelaide School of Economics, Research Paper, October 2010.)

Question: Does assortment size affect your choice?

Answer: Assortment size has been shown to influence whether consumers make a choice, but could it also influence what they choose? Five studies demonstrate that because choosing from larger assortments is often more difficult, it leads people to select options that are easier to justify. Virtues and utilitarian necessities are generally easier to justify than indulgences; consequently, choosing from larger assortments often shifts choice from vices to virtues and from hedonic to utilitarian options. (Journal of Consumer Research, 2009.)

Question Can the music playing at a flower shop affect how much you spend?

Answer: An experiment in a flower shop, played love songs and romantic music (congruence condition), pop music (music usually played in the flower-shop) and no music (control condition). The mean amount of money spent was significantly higher in the love songs and romantic music condition compared with the other two, whereas the pop music condition did not lead to an increase in the amount of money spent compared with the control, no music, condition. (The International Review of Retail, Distribution and Consumer Research, 2009.)

Question: How can you make someone think they're getting a discount when they aren't?

Answer: Consumers perceive yellow price tags as presenters of discounts. A comparison of the mean values showed that yellow price tags influence the reference price and, moreover, a yellow price tag increased the reference price. As a practical outcome, the results of the study indicated that companies have the opportunity to increase the consumer’s reference price and thereby to raise revenues by changing the colour of the price tag without offering an actual discount. ( University of Tartu, Faculty of Economics and Business Administration.)

Your challenge:

Each of these ‘factoids’ are subject misinterpretation (as is all research) because people ignore or forget the context, limitations and assumptions that informed the project. Think about whether these apply to you. Why? Why not?

And, of course, just because it sounds smart it does not mean it IS smart!

Check out my photo gallery on the menu bar in the RESOUCES section (on the left of the screen) for some NY pics. Just some fun stuff.