Ravi Dhar Receives William O'Dell Award for Consumer Choice Study

New Haven, Conn., January 25, 2005   Ravi Dhar, professor of marketing at the Yale School of Management and director of the Yale Center for Customer Insights, and Klaus Wertenbroch (INSEAD), are the recipients of the prestigious 2005 William F. O’Dell Award for their study “Consumer Choice Between Hedonic and Utilitarian Goods.”

The O'Dell Award is given annually to honor the Journal of Marketing Research (JMR) article "that has made the most significant long-term contribution to marketing theory, methodology, and/or practice." The award-winning article was published in the February 2000 issue of JMR.

Professor Dhar's research focuses on using psychological principles to understand and predict customer behavior in the marketplace. A common aspect of most difficult customer choices is that they require making trade-offs among the different benefits. In "Consumer Choice Between Hedonic and Utilitarian Goods," Dhar and Wertenbroch examine the fundamental trade-offs that consumers make when choosing between an item that is primarily enjoyable and one that is primarily practical. For example, a consumer choosing among new cars to buy may care about utilitarian features such as gas mileage, as well as hedonic attributes such as style. The authors address how consumers make their choice when they must weigh these characteristics of equally important, yet very different appeal.

According to the research, consumers' preferences among such tradeoffs are influenced by the nature of the decision they must make. When a consumer is endowed with both a hedonic item and a utilitarian item of equal appeal and must decide to give one up (forfeiture choice), the hedonic item is most often preferred over the utilitarian. However, if the consumer must decide which of the same two items to acquire (acquisition choice), the utilitarian is most often preferred. “Thus, choosing between something is not the same as giving something up. They trigger very different evaluations,” said Professor Dhar. The results of this research have a number of real-world implications.

"If competing firms are forced to cut existing product attribute or service levels, consumers may be more reluctant to accept cuts on the more hedonic dimensions," said Professor Dhar. "Our results also suggest that marketers ought to be able to charge premiums for hedonic goods to which consumers have adapted in some manner when the consumers are faced with a decision to discontinue consumption. For example, marketers may be able to add a hedonic premium to the buyout option price at which lessees of luxury or sports cars can buy their vehicles at the end of the lease term.”

The award will be presented at the American Marketing Association's 2005 Winter Marketing Educators' Conference, to be held February 11-14, at the Westin La Cantera Resort in San Antonio, Texas.