How Customers Come to Think of a Product as an Extension of Themselves


Businesses are constantly vying to capture the attention of potential customers. It’s not easy to do. People are inundated with different brands as they stroll through the streets, scan through their social media newsfeeds, and binge television. The average American is exposed to more than 4,000 ads every day.

A simple concept can help businesses cut through the noise. It’s called psychological ownership. That’s when consumers feel so invested in a product that it becomes an extension of themselves.

Companies that encourage psychological ownership can entice customers to buy more products, at higher prices, and even to willingly promote those products among their friends. But if businesses disrespect this feeling, sales can suffer.

To build psychological ownership, companies must use at least one of three factors: control, investment of self, and intimate knowledge.

Enhancing customer control

One way is to allow customers a hand in forming the

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Research: Glowing Reviews Aren’t Always the Most Persuasive

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Online reviews can play a big role in influencing people’s purchase decisions, but what makes a review most persuasive one way or the other? Certainly bad reviews can dissuade customers, but it turns out that some good reviews can too. Our research on persuasion and marketing is the first to find that a moderately positive review can be more persuasive than an extremely positive review. In research to be published by the Journal of Consumer Research in October 2018, we found that a moderately positive review is even more persuasive when the default review selection is extremely positive. This is because reviews that deviate from a default review selection are perceived to be more thoughtful—and thus more accurate—than reviews that conform to the default.

We first tested this phenomenon by showing participants a consumer review for a particular brand of granola bar. The review platform

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How Many Versions of a Product Do Consumers Really Want?

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Consumers almost always tell researchers that they prefer to have many versions of a product from which to choose. But, in fact, consumers’ perceptions of how many choices they prefer change depending on whether they intend to use an item for pleasure or to meet a functional need. (Think of a swimsuit desired for beachwear versus swimming laps.) For retailers, that difference has big implications for the problem of assortment — how many variations of a single product to offer.

Consumers motivated by pleasure believe that what pleases them differs greatly from what pleases most other people. They will therefore prefer a large assortment. But when seeking to meet a utilitarian need with the same product, they are less inclined to see their preferences as being greatly different from those of other people. They will then be satisfied by a smaller assortment from which to choose.

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How Liberals and Conservatives Shop Differently

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After the school shooting in Parkland, Florida, in February 2018, Dick’s Sporting Goods announced that it would no longer sell semiautomatic rifles in its hunting and fishing stores (it had already stopped selling them at its main stores after the December 2012 Sandy Hook School shooting). The company has gone on to destroy the guns it pulled from its shelves, rather than selling them back to the manufacturers. CEO Ed Stack told The New York Times, “We’re going to take a stand and step up and tell people our view and, hopefully, bring people along into the conversation.” While some consumers threatened to boycott the retailer, the company’s stock is up, and public perception of the brand is more positive overall.

Dick’s is not alone. The charged political atmosphere is increasingly influencing the marketplace, and retailers are having to figure out where they stand. Consumers are putting

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How Marketers Can Connect Profit and Purpose

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It takes time for a big idea to make its way into business practice. Six years ago, Harvard’s Michael Porter and FSG’s Mark Kramer made the bold statement that shared value — the idea that the purpose of a company is to achieve both shareholder profit and social purpose — would “reinvent capitalism.” They encouraged companies to go beyond CSR (corporate social responsibility) and integrate social impact into companies’ competitive strategy. And in 2011, Nathaniel Foote and Russ Eisenstat proposed a “better way to manage in the 21st century.” They found “higher-ambition” leaders achieved superior performance by doing well and doing good.

For the last six years, we have worked with a group of top marketing executives and business leaders in Silicon Valley and the Bay Area from companies large and small. Each year we assess the issues that are most top-of-mind. From 

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To Compete with Amazon, Big-Name Consumer Brands Have to Become More Like It

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Over the last decade, e-commerce has imposed a painful profit squeeze on big-box retailers, resulting in layoffs, store closings, mall reconfigurations, and even bankruptcies. With no reprieve in sight for retailers, the online world is poised to do the same to brand-name consumer products companies.

One of the core reasons that this is happening is that in addition to providing always-on, on-demand convenience, online retailers know so much more about their customers than their offline counterparts do. In fact, they have mastered the art of creating a direct connection to their customers, which in turn allows them to collect massive amounts of data about them. Then, by applying tools like artificial intelligence, the online retailers are able to create more-personalized customer experiences, fostering levels of satisfaction, connection, and customer loyalty that traditional retailers just can’t compete with.

And when it comes to consumer goods companies, that same artificial

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To Regain Consumers’ Trust, Marketers Need Transparent Data Practices

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It’s a good time to be a consumer. New digital business models have flipped the customer-brand relationship on its head. No longer do consumers need to do their own background research on a product or company to find what they are looking for. Instead, brands come to us. There are more options and more channels to get what you want than ever before.

That said, there is always a downside. This seemingly limitless digital economy has brought with it feelings of overexposure. No one likes to feel as if they’re being watched, yet with technology continuing to mature, we have found ourselves entrenched in a marketing machine that has become far too intimate for anyone’s liking.

The power of digital is so great that brands have started to abuse it. And with this abuse of power has come the erosion of the trust that once existed between businesses

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How Vineyard Vines Uses Analytics to Win Over Customers

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When brothers Shep and Ian Murray cut their ties with Corporate America to start a little company on Martha’s Vineyard in 1998, their motivation was clear: “We’re making neck ties so we don’t have to wear them.”

Little did they know that the business they founded, Vineyard Vines, would become a darling of the fashion industry and a household brand name around the country.

Today, the company best known for its smiling pink whale logo offers much more than their signature neckwear. They manufacturer a full line of “exclusive, yet attainable” clothing and accessories for men, women, and children. That “little” privately-held business has grown tremendously since its launch and currently has more than 90 physical retail locations and a highly successful eCommerce business.

I met the team at Vineyard Vines while doing research about data-driven marketing technologies for my book, Marketing, Interrupted, and

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5 Surprising Findings About How People Actually Buy Clothes and Shoes

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Retail has been constantly reinventing itself, and participants race to keep up with what feels like a series of epic shifts in consumer preferences. Apparel brands are investing especially heavily in online shopping capabilities and introducing interactive features that complement apps and websites. Retailers and manufacturers are rushing out new products to keep pace with the leaders of fast fashion such as Zara, H&M, and Forever 21, which launch new fashions every week or so.

But do consumers actually crave all of these changes? And which approaches can generate growth in this changing environment? Many manufacturers try to answer these questions using point-of-sale data, which often comes filtered by the retailers that gather the information; media coverage, which tends to focus on the new; and previous sales of their products, which reflect the past.

How Marketers Can Get More Value from Their Recommendation Engines

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“Almost everything we do is a recommendation.” That’s the essential design philosophy articulated by then-Netflix engineering director Xavier Amatriain five years ago, where personalizing and customizing choice is the coin of the realm. “I was at eBay last week,” he said at the time, “and they told me that 90% of what people buy there comes from search. We’re the opposite. Recommendation is huge, and our search feature is what people do when we’re not able to show them what to watch.”

Unlike search, recommendation systems seek to predict the “rating” or “preference” a user would give to an item, action, or opportunity. Thoughtfully managed, recommendations can prove far more valuable to marketers than for the customers they ostensibly serve. Recommendation engines not only generate useful data for analyzing customer desires; they can be harnessed to make tactical and strategic recommendations

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Using Analytics to Prevent Customer Problems Before They Arise

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A non-negligible percentage of customers who buy a new smartphone return it within the “free return” window. Many of these returners claim that the phone does not work correctly. However, the data clearly indicates that this is often not the real issue. The reality is that these customers simply don’t know how to use the smartphone well enough, and either do not realize it, or are not willing to admit it. So they return it — which makes a major profit difference for both the smartphone manufacturer and the service provider. For the latter, it could be on the order of thousands of dollars in lifetime value per customer (CLV).

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Being able to foresee a return, and develop an intervention that can preempt it, can prevent these kinds of problems from occuring. This might be an “expert”

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Why Marketing Analytics Hasn’t Lived Up to Its Promise

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We see a paradox in two important analytics trends. The most recent results from The CMO Survey conducted by Duke University’s Fuqua School of Business and sponsored by Deloitte LLP and the American Marketing Association reports that the percentage of marketing budgets companies plan to allocate to analytics over the next three years will increase from 5.8% to 17.3%—a whopping 198% increase. These increases are expected despite the fact that top marketers report that the effect of analytics on company-wide performance remains modest, with an average performance score of 4.1 on a seven-point scale, where 1=not at all effective and 7=highly effective. More importantly, this performance impact has shown little increase over the last five years, when it was rated 3.8 on the same scale.

How can it be that firms have not seen any increase in how analytics contribute to company performance, but

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How Marketers Can Start Integrating AI in Their Work

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According to Constellation Research, businesses across all sectors will spend more than $100 billion per year on Artificial Intelligence (AI) technologies by 2025, up from a mere $2 billion in 2015. The marketing industry will be no exception.

AI holds great promise for making marketing more intelligent, efficient, consumer-friendly, and, ultimately, more effective. Perhaps more pointedly, though, AI will soon move from being a “nice-to-have” capability to a “have-to-have.” AI is simply a requirement for making sense of the vast arrays of data — both structured and unstructured — being generated from an explosion of digital touchpoints to extract actionable insights at speeds no human could ever replicate in order to deliver the personalized service consumers now demand.

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Interestingly, in many cases, the sophistication of AI technologies has already advanced further

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How AI Helped One Retailer Reach New Customers

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When Naomi Simson founded RedBalloon, an online gift retailer that sells personal experiences, she was pioneering the category in Australia. With a $25,000 personal investment and a small office in her home, she began aggregating sales leads and aggressively acquiring customers through very traditional marketing means — like yellow page advertisements. It was 2001, and  online advertising was at its nascent stage. Internet Explorer was the leading Internet browser and Google AdWords had only just recently launched. With a cost of customer acquisition of just 5 cents, Simson’s traditional approach to advertising was generating an impressive return on investment. RedBalloon was setting the pace for gifting experiences like outdoor adventures, wine tastings, concert tickets, and spa treatments.

By 2015, RedBalloon was delivering more than four million customers to businesses across Australia and New Zealand that offered “experiences.”  Simson wasn’t overconfident, but at this point, she felt

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How to Convince Customers to Share Data After GDPR

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In recent years, marketers have lived through the Era of Big Data, and the Era of Personalization, and now we are living through the “Era of Consent.” With the General Data Protection Regulation (GDPR) going into effect on May 25th, businesses will be required to protect the personal data and privacy of EU citizens. For marketers, this means updating your privacy policies, but more importantly, it means finding innovative new ways to connect with customers and gather consent to use their data in order to continue your “marketing relationship” with them.

Marketers across the European Union (EU) have been preparing for this new regulation for months. Yet the regulation impacts all companies globally, including those in the United States, that collect and manage data on citizens in the EU. Many global marketers are still struggling to understand what steps they need to take to

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How Do Consumers Choose in a World of Automated Ordering?

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The term “frictionless commerce” is widely used to describe how digital technologies are blending product purchases seamlessly into consumers’ daily lives. In the ultimate manifestation of frictionless commerce, purchases will be automatically initiated on behalf of consumers (with their advance consent) using real-time, integrated data from known preferences, past behaviors, sensors, and other sources. Envision, for example, a “smart fridge” automatically ordering food items it senses are running low. That is not common yet, but ever since consumers were offered the option to shop online from home, rather than having to go to a store, technology has been rapidly removing friction from commerce.

As frictionless commerce accelerates, so will a momentous shift in the node of commerce. In the era of department stores and supermarkets, consumers selected brands from store aisles and shelves. Over the past several decades, the in-store experience has been increasingly displaced by online shopping,

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Technology Is Changing What a Premium Automotive Brand Looks Like

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Many mature industries are experiencing significant technological disruption. The automotive industry is being disrupted by electric vehicles and self-driving cars, just as home appliances is being disrupted by the Internet of Things and smart appliances, home entertainment by on-demand content providers, and apparel by online personal stylists such as Stitch Fix and Trunk Club.

Leaders in every industry are no doubt keeping a vigilant eye on such developments, yet one very important aspect of this disruption has been largely overlooked: technology fundamentally changes what makes your brand premium.

The traditional drivers of brand premium are being joined (and to varying degrees supplanted) by newer, tech-enabled variables: software, interactive products, digital interactions, immersive experiences, and predictive services, to name a few.



Here’s how technology is changing the game in the automotive industry:

Product: hardware vs. software. While hardware currently accounts for 90% of the perceived value of a car,

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How GDPR Will Transform Digital Marketing

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This month will see the enforcement of a sweeping new set of regulations that could change the face of digital marketing: the European Union’s General Data Protection Regulation, or GDPR. To protect consumers’ privacy and give them greater control over how their data is collected and used, GDPR requires marketers to secure explicit permission for data-use activities within the EU. With new and substantial constraints on what had been largely unregulated data-collection practices, marketers will have to find ways to target digital ads, depending less (or not at all) on hoovering up quantities of behavioral data.

Consumers have already seen a range of developments resulting from the forthcoming enforcement of GDPR. Among these are the dozens of messages from web-based companies from TaskRabbit to Twitter about privacy policy updates, as well as the recent reports about how major internet companies like Facebook and LinkedIn are moving the personal data

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How to Fix MoviePass

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MoviePass, an upstart movie theater subscription service, has been a controversial topic lately. One Wall Street analyst called MoviePass a joke that would be out of business in 18 months. It lost nearly $100 million in its most recent quarter, its parent company’s stock has plummeted, and its auditor recently voiced skepticism over its ability to stay in business.

The company suffers from three fundamental problems. The first is a flawed business model. Its average subscriber sees three movies a month; for every ticket a subscriber uses, MoviePass pays the full retail price to the theater. The problem is that MoviePass collects only $9.95 per month per subscriber, and three movie tickets costs nearly $30, on average, meaning it’s losing nearly $20 per month per subscriber on a variable cost basis. This is a problem that scale (meaning more subscribers) cannot solve.

The second problem: Movie theater operators don’t

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How Companies Can Use the Data They Collect to Further the Public Good

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By the end of 2017, Yelp had amassed more than 140 million reviews of local businesses. While the company’s mission focuses on helping people find local businesses more easily, this wealth of data has the potential to serve other purposes. For instance, Yelp data might help restaurants understand which markets they should consider entering, or whether to add a bar. It can help real estate investors understand where gentrification might occur. And it might help private equity firms with an interest in coffee decide whether to invest in Philz or Blue Bottle.

The potential value of the large data sets being amassed by private companies raises new opportunities and challenges for managers making strategic data decisions. While there are plenty of well-publicized examples of data repurposing gone wrong, we think it would be a shame for companies to decide the only option is to hoard their data. Before you

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