Jackie Huba

Q&A with Emanuel Rosen, author of the new book Absolute Value

Many of us know Emanuel Rosen as the author of the groundbreaking word of mouth book, The Anatomy of Buzz. It’s been a while since we have heard from Emanuel but I’m excited to say that he’s just released a new book, Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect InformationEmanuel has teamed up with Itamar Simonson, a well-respected Stanford University marketing professor, and together they make the case that how people buy things has changed profoundly—yet the fundamental thinking about consumer decision making and marketing has not. Most marketers still believe that they can shape consumers’ perception and drive their behavior. In the book, the authors show why current mantras about branding and loyalty are losing their relevance when consumers base their decisions on reviews from other users, easily accessed expert opinions, price comparison apps, and other emerging technologies. Here’s a Q&A I did with Emanuel about the new book:

Q. Why did you write this book?

A. This is a project I’ve been working on with Itamar Simonson from Stanford, who’s been recognized as one of the world’s leading authorities on consumer decision making. We both felt that even though a lot has been written about the Internet’s impact on marketing, something bigger was happening. There’s a fundamental shift in the way consumers make decisions as they increasingly rely on reviews from other users or experts. As the full impact of this shift is becoming clear, we need to re-examine some of our long-held beliefs about marketing.

Q. What do you mean by “Absolute Value”?

A. The simplest way to understand what we mean by “absolute” is to think about it as the opposite of “relative.” In the old days consumers evaluated products relative to other things. For example: their past experience with a brand “I used a gadget from Sony and it worked well, which means that the new gadget from Sony may be good too” or “This is the most expensive product in its category so it must be the best.” But we all know that these proxies for quality don’t always work. Today, consumers use reviews from other users and experts to assess the absolute value of things, in other words, to know their likely experience with a specific product or a service. In other words, “Absolute value” refers to the actual experience quality of products, and consumers can predict that quality much more accurately than in the past.

Q. Does this book represent a shift in your past beliefs about marketing?

A. Yes, both Itamar and I used to share the currently accepted beliefs regarding branding, positioning, loyalty, information overload, and consumers’ “irrationality.” But as we started to think about what happens to these concepts in a world where consumers can assess the absolute value of products, we changed our minds about a lot of things. I used to be an avid believer in the power of promotion, branding, and positioning. Even my books on word of mouth were still within the framework of these established marketing concepts. Itamar started his career with a deep conviction that consumers typically tend to act irrationally. He, in fact, made his own contributions to reinforcing these beliefs through his research over the years. In this book we argue that today customers are better able to evaluate products for what they are, and that they will make (on average) better choices and act more rationally.

Q. This sounds like good news for consumers. Can marketers benefit from this shift?

A. It can also be good news for some marketers. Consider ASUS, the Taiwanese PC maker. Jonney Shih, ASUS chairman , told us how when he started, everybody warned him that he wouldn’t get far without brand awareness and heavy advertising. But in 2012, ASUS reached the fifth place in worldwide PC shipments. When consumers don’t use brand as a proxy for quality, newcomers like ASUS who provide a high quality product, enjoy lower barriers to entry. Companies can also diversify more easily regardless of the skills consumers associate with a particular brand. (LG and Samsung take full advantage of this). Of course, the new reality is bad news to companies that don’t offer value.

Q. What is the Influence Mix, and how can it help businesses adapt to the new reality?

A. Marketers need to understand what is changing and what is not. The shift in the way consumers make decision doesn’t apply in the same way to cars and to toothpastes. There are categories, segments and situations where consumers rely on old sources of information, so applying “consumer empowerment” mantras indiscriminately may lead to misguided strategies. The Influence Mix is a framework we offer in the book to help marketers develop better strategies that are based on the specific sources of information their customers depend on. The key question for marketers to ask is: to what extent do my customers depend on new sources of information in making a decision? We show how a company’s strategy should be driven by the answer.

Q.What should a company’s communication strategy be in the new environment?

A.Your communication strategy should derive from your customers’ Influence Mix. If your customers base their decision on user and expert reviews, it’s pointless to use advertising or celebrity endorsement aiming to persuade them that your product is better. Similarly, using banner ads to create top-of-mind brand awareness is also less important because when it’s time to buy, these consumers rely on reviews, which usually overrides any residual effect of exposure to banner ads. Instead, marketers should generate interest in specific products and focus on promoting an ongoing flow of authentic content from users on retail sites.

Q. How should market research change in this new reality?

A. Much of market research still measures consumer preferences in order to predict what they will buy in the future. But if your potential customers use online reviews as their main source of information, it becomes very challenging to predict their choices using traditional market research. The reason is simple: when it’s time to buy, your customers increasingly base their decisions on information from user and expert reviews — not on their prior preferences. So you’re better off tracking these online sources directly. Market research is shifting from trying to predict consumer choices to tracking what is being said in the marketplace.

 ……..

If you want to see Emanuel in person talk about the book (and get a signed copy!), he will be speaking at the Word of Mouth Marketing Association WOMMnext conference April 28-30 in Chicago. (Disclosure: I am a WOMMA member and also working with WOMMA on the conference.)

Leave a Reply