Measuring Marketing in the Age of Absolute Value

Itamar Simonson and Emanuel Rosen suggest that with greater access to information consumers can (and do) make much better purchasing decisions. They are, in effect, arguing that much academic work in marketing is too artificial as in the real world consumers can solve problems that confound students in the laboratory. Too much choice can paralyze but this problem often doesn’t need to occur.  Internet tools can filter to get rid of the bad bits of choice, e.g. the confusion, while keeping the good bits of choice, e.g. finding something just right for you.

Simonson and Rosen mention, but downplay, the problem of differing tastes as when looking at online reviews for a cheap hotel room I can filter out the opinions of those who clearly have much higher standards than I do. They suggest most industries are going in the direction of better, more personalized information and that seems reasonable to me.

They concede emotional attachment to brands still happen in the age of (nearly) perfect information but argue attachments are declining. They argue measuring customer satisfaction, e.g. calculating a Net Promoter Score, is “..less meaningful and informative than it used to be” (Simonson and Rosen, 2014, page 81). General measures relating to the company or brand they suggest will be less predictive. I agree but you wouldn’t want to go too far and think the world they describe us going towards, “Planet Absolute”, is already here. (To be fair they never claim that; they happpily note some categories are closer to Planet Absolute than others.)

They also say “Long-term relationships (especially when switching costs are low) become the exception. There is no point making marketing decisions based on lifetime value calculations if that potential is unlikely to be realized” (Simonson and Rosen, 2014, page 81). This seems unnecessarily nihilistic to me. Customers still have lifetime vales, these are just shorter and more uncertain. By their logic a company is only as good as its latest product, so do they think there no point in valuing firms? We still have to value firms to know how much to buy them for. I’d suggest even if you accept their view of a changing marketplace we should only reduce our projections of future cash flows originating from past success not throw out all projections.

In general Simonson and Rosen make  interesting points. They suggest that marketing needs less laboratory work and more work on how consumers decide in a marketplace of (nearly) perfect information. Some academic marketers will disagree but it would be a useful debate to have. Hopefully critics will lay out the counter-argument as clearly as Simonson and Rosen have their viewpoint.

Read: Itamar Simonson and Emanuel Rosen, (2014) Absolute Value: What Really Influences Consumers In The Age of (Nearly) Perfect Information, Harper Business