| Three essays investigate the unintended effects of key marketing decisions from pricing, product policy, and branding on how consumers respond to a firm's goods and services.; The first essay examines the framing effect that results when prices are presented either as one all-inclusive expense or partitioned into a series of mandatory charges. Existing evidence suggests that preferences are affected by price format. To explain this phenomenon, I propose a simple psychological mechanism whereby the number of prices determines how many product attributes are processed during evaluation. Three studies support the hypothesis that price partitioning acts as an incentive to process multiple product dimensions. This process sometimes leads to the paradoxical overweighing of minor (but easy to evaluate) attributes that would be overlooked under an all-inclusive price. Beyond its predictive implications, this theory contributes to the general notion that pricing may impact perceived value as much as capture it.; The research presented in the second essay provides evidence that add-ons offered to enhance a base product can be more than just simple added benefits. I argue that consumers make inferences based on add-ons, and that these inferences lead to changes in the perceived utility of the core product itself. I further argue that there are two types of add-ons, vertical and horizontal, and that these two types lead to different inferences with opposing effects. A set of experiments supports this framework. From a prescriptive standpoint, these findings highlight the need for marketers to be more attentive in managing add-ons as part of their product strategy.; The final essay analyzes the effect of changing an established brand name convention on consumer perceptions of next-generation products. In the first study, I show that participants infer the level of innovation in a next-generation product by the similarity of its name to those of preceding versions. In study 2, I consider the implications of this result for product adoption, demonstrating that such brand name decisions affect both the perceived benefits and perceived costs of a potential purchase. Overall, these findings suggest that firms should consider this inherent trade-off when determining which naming strategy to follow. |
