Compromising the compromise effect: Brands matter

Abstract

Consumer behavior research has a long history indicating that preferences are influenced by the relative positions of members of a choice set. The realism of this work, however, is somewhat limited because alternatives are typically labeled with letters rather than with real brand names. We investigate the boundaries of prior research by testing whether preferences for alternatives in compromise and superior positions generalize to a more realistic market scenario that includes choices between real brands. In particular, we conduct two studies that examine if preferences for brands in a choice set are moderated by the inclusion of more or less familiar brand names. We find that consumers prefer extreme brands when compromise brands are relatively less familiar and compromise brands when they are relatively more familiar. In this scenario brand familiarity and not the position of the alternatives determine choice. In situations where a choice alternative is superior, we find no moderation due to brand familiarity.