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 when it shows decision-making problems. 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. For example, the confusion caused by having too many options. While at the same time keeping the good bits of choice, e.g. finding something just right for you. What does this mean for marketing and measuring marketing in the age of absolute value?
Differing Tastes
Simonson and Rosen mention, but downplay, the problem of differing tastes. The authors note that 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. Indeed the idea that most industries are going in the direction of better, more personalized information seems reasonable to me.
Declining Emotional Attachments
They concede emotional attachment to brands still will happen in the age of (nearly) perfect information. Yet, they argue such 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. Still, 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 happily note some categories are closer to Planet Absolute than others.)
Measuring Marketing In The Age Of Absolute Value
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 values. These lifetimes are just shorter and more uncertain. By their logic a company is only as good as its latest product. Still, they presumably do not 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.
Less Lab Work
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. Still, it would be a useful debate to have. Hopefully, critics in response will lay out the counter-argument as clearly as Simonson and Rosen have their viewpoint.
For more on decision-making see here, here, and here.
Read: Itamar Simonson and Emanuel Rosen, (2014) Absolute Value: What Really Influences Consumers In The Age of (Nearly) Perfect Information, Harper Business