Prominent Attributes under Limited Attention

Forthcoming in Marketing Science

48 Pages Posted: 24 Jul 2015 Last revised: 22 Feb 2017

Yi Zhu

University of Minnesota - Carlson School of Management

Anthony J. Dukes

University of Southern California - Marshall School of Business

Date Written: December 23, 2016

Abstract

Evidence shows that marketers can direct consumers’ limited attention to specific product attributes by making them “prominent”. This research asks: How should firms decide which attribute to make prominent in competitive environments? A key feature of this setting is that consumers’ preferences are context-dependent and that a firm’s choice of an attribute affects the evaluation of all products in the category. We develop a model in which firms selectively promote one of two attributes (e.g. image or performance) before competing in price. We find when consumers evaluate both attributes, perceived differentiation within an attribute can become diluted, an effect we call the dilution effect. This implies that making the same attribute prominent can arise in equilibrium. Only if there is a sufficient quality advantage in an attribute do we find equilibria with firms making different attributes prominent. We also show how the dilution effect can be a disincentive for investments in quality improvements.

Keywords: Prominent Attributes, Limited Consumer Attention, Dilution Effect, Context-dependent Preferences, Competitive Strategies, Game Theory

JEL Classification: D83, L13, M31, M37

Suggested Citation

Zhu, Yi and Dukes, Anthony J., Prominent Attributes under Limited Attention (December 23, 2016). Forthcoming in Marketing Science. Available at SSRN: https://ssrn.com/abstract=2633851 or http://dx.doi.org/10.2139/ssrn.2633851

Yi Zhu

University of Minnesota - Carlson School of Management ( email )

321 - 19th Ave. South, Suite 3-150
Minneapolis, MN 55455
United States

Anthony J. Dukes (Contact Author)

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States
213-740-3846 (Phone)

HOME PAGE: http://www-bcf.usc.edu/~dukes/

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