Executive Summary
In comparison with other markets, those with competing technological standards exhibit certain fundamental characteristics that make a consumer’s decision to adopt a new product more risky and more complex. This article examines how standards competition affects consumer behavior, an issue that has been relatively neglected by previous research in this area.
The results show that consumers behave differently in the presence of a standards battle than in its absence: They depend on different types of information in their adoption decisions and respond differently to advertising. Specifically, the authors find that standards competition motivates consumers to pay considerably more attention to information that is comparative in nature. Consequently, information about the relative (absolute) performance of a product has a stronger (weaker) impact on a product’s share in markets with standards competition (Study 1). Consistent with this, standards competition also moderates the effectiveness of different advertising formats. It strengthens the effect of comparative advertisements, but it weakens the effect of noncomparative advertisements (Study 2). Notably, because of this differential attention to comparative information, two commonly observed drawbacks of comparative advertisements—negative attitude toward the advertisement and source confusion—disappear in the presence of standards competition (Study 2), and comparative advertisements even induce greater confidence in the advertised brand (Study 3). Finally, Study 3 shows that in a market with a standards war, comparative ad formats are more effective when the advertised brand has a disadvantage than when it has an advantage in terms of brand familiarity.
From a substantive perspective, these three studies take a step toward a better understanding of these important but underexplored issues and provide managerial insights for firms launching new products in markets with competing standards. From a theoretical perspective, collectively, these studies also make an important point about consumer information processing. At relatively low levels of uncertainty, consumers pay as much (if not more) attention to the affective component as they do to the informational component of an advertisement. However, at relatively high levels of uncertainty, consumers pay more attention to the informational component of the advertisement, often completely ignoring the affective component.
Biography
Amitav Chakravarti is Assistant Professor of Marketing in the Leonard N. Stern School of Business at New York University. He holds a PhD in Marketing from the University of Florida, an MBA from the Indian Institute of Foreign Trade, and a BA (with honors) in Economics from the University of Bombay (India). His current research interests include consideration set composition, the effects of consideration on choice, the role of categorization in decision making, generic versus brand-level advertising, the effect of externally imposed groupings, similarity and cognition, structural alignment theory, and consumer information processing under uncertainty. His research has been published in Journal of Consumer Research and Journal of Marketing Research.
Jinhong Xie is Beall Faculty Fellow and Associate Professor of Marketing in the Warrington College of Business Administration at University of Florida. She previously taught in the William E. Simon Graduate School of Business Administration at the University of Rochester. She holds a PhD in Engineering and Public Policy from Carnegie Mellon University, an MS in Optimal Control from the Second Academy of the Ministry of Astronautics (Beijing), and a BS in Electrical Engineering from Tsinghua University (Beijing). Her current research interests include innovation strategies, network effects, economics of tickets, and independent product information and marketing strategy. Her research has been published in Marketing Science, Management Science, Journal of Marketing Research, Journal of Product Innovation Management, Journal of Marketing, Journal of Service Research, California Management Review, and IEEE Transactions on Engineering Management.
J Marketing Research, Volume 43, Number 2, May 2006
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