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Walter Herzog, PhD, Johannes D. Hattula, PhD, and Darren W. Dahl, PhD

Marketing is all about understanding customer preferences and providing solutions that match these preferences. However, marketers’ perceptions of their target customers’ preferences can be biased. We show that one of the most important biases in this category is the so-called false consensus effect Stock image of a real estate agent standing at a table looking down at house plans and color selections, while a man and woman stand on either side of her with their arms crossed as if in disagreement with the agent(FCE)—that is, marketers tend to project their personal preferences onto customers.1 Notably, we find that even highly trained marketing professionals are susceptible to the FCE and tend to confuse their personal preferences with the preferences of target customers. Overall, we conducted six studies with 714 marketing executives to investigate the FCE in detail.

The FCE from the Perspective of Marketing Practitioners

We first conducted two pilot studies to explore the role of the FCE from the perspective of marketing practitioners. One hundred marketing executives participated in our first pilot study. We found that 82.0% of the participating executives had an intuitive knowledge of the FCE. Of these participants, 92.7% witnessed that other marketers in their company had been recently affected by the FCE, 86.6% admitted that they themselves had been recently affected by the FCE, and 79.3% indicated that marketers should try to avoid the FCE. In addition, 79.3% stated that they attempt to avoid the FCE when predicting customer preferences. Of these participants, 75.4% indicated that they use a rather straightforward approach to avoid the FCE in practice—that is, they simply try to ignore or “suppress” their personal preferences when making customer predictions.

To provide further evidence for the managerial relevance of the FCE, we conducted a second pilot study with 64 marketers. We asked the participants to rate the importance of ten skills of marketing managers, including the ability to separate personal and customer preferences (i.e., the ability to avoid the FCE). Interestingly, we found that the ability to separate personal from customer preferences was rated as the most important ability on the list (see Table 1 below).

Graph of data titled Perceived Importance of Marketing Managers' Skills from the research document

Can Marketers Avoid the FCE?

Overall, our pilot studies suggest that the FCE is an important bias in marketing practice and that marketers try to avoid it by attempting to ignore their personal preferences. A natural question arising from these observations is whether this simple tactic is indeed an effective remedy for the FCE. We explored this question in four additional studies with 550 marketers.

The studies consistently showed that the effectiveness of this tactic depends on marketers’ own level of preference certainty—that is, the extent to which their personal preferences are clear and held with conviction. The tactic was highly effective and reliably reduced the FCE for high levels of preference certainty. However, for low certainty levels, the tactic backfired and increased the FCE. The latter finding is particularly important from a managerial point of view, because marketers frequently predict consumer reactions to novel stimuli (e.g., new products or technologies)—a situation known to result in lower levels of preference certainty. Hence, our studies suggest that the way marketers attempt to avoid the FCE in practice may frequently backfire and increase the FCE when predicting customer preferences. Figure 1 shows the results of study 1. The remaining studies replicated these results in a variety of decision-making contexts.1

Figure of data titled Results of Study One from the research document

Why do attempts to avoid the FCE backfire for low certainty levels? In this case, marketers’ preferences are fuzzy and not well-defined. Further, it is impossible to make a clear distinction between one’s personal and the target customer’s preferences if one’s personal preferences are not clearly defined. According to psychologist Daniel Wegner, such attempts are, by definition, futile and will only increase decision makers’ focus on their personal preferences, which in turn inflates the FCE.2,3 This is exactly what we observed in our studies.

Overall, our studies indicate that marketers’ general susceptibility to the FCE can be greatly reduced if they are advised to suppress their personal preferences for high, but not for low levels of preference certainty. Marketers following this advice were also able to predict the preferences of their target customers more accurately their prediction errors decreased by more than 50%.

Implications

Our results have several implications for marketers and sales agents in the real estate business. First, they should keep in mind that the FCE may affect their perceptions in many contexts, such as their perceptions of clients’ housing preferences or the market value of property4 (see Hattula et al. 2015 for the impact of the FCE on pricing decisions). Second, real estate professionals should not think of the FCE as a useful heuristic. Our data clearly show that this tendency reduces the accuracy of preference predictions. In other words, it is a “bias” that should be avoided. Third, based on their expert knowledge, real estate agents typically have clear personal housing preferences and thus, our studies suggest that they can easily avoid the FCE (without risking backfire effects). Hence, it is in the power of real estate professionals to steer clear of the FCE and avoid a self-referential perspective on their clients’ preferences.

Finally, our research indicates that the FCE causes marketers to use customer data in an unsystematic way.1 Specifically, we find that marketers are more likely to rely on market research on customer preferences if the results are in line with their personal preferences. In contrast, they tend to ignore customer data that is not consistent with their personal preferences. In other words, marketers use customer data in an ‘egocentric’ way. This, in turn, has two implications: First, the current trend toward big (customer) data does not protect marketers against the FCE. Second, practitioners should keep in mind that the FCE can systematically bias their interpretation and use of customer data.

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Recommended Reading

Herzog, Walter, Johannes D. Hattula, and Darren W. Dahl (2021), “Marketers Project Their Personal Preferences onto Consumers: Overcoming the Threat of Egocentric Decision Making,” Journal of Marketing Research, 58(3), 456–75. https://doi.org/10.1177/0022243721998378

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References

  1. Herzog, Walter, Johannes D. Hattula, and Darren W. Dahl (2021), “Marketers Project Their Personal Preferences onto Consumers: Overcoming the Threat of Egocentric Decision Making,” Journal of Marketing Research, 58 (3), 456–75. https://doi.org/10.1177/0022243721998378
  2. Wegner, Daniel M. (1994), “Ironic Processes of Mental Control,” Psychological Review, 101(1), 34-52.
  3. Wegner, Daniel M. (2009), “How to Think, Say, or Do Precisely the Worst Thing for Any Occasion,” Science, 325 (5936), 48-50.
  4. Hattula, Johannes D., Walter Herzog, Darren W. Dahl, and Sven Reinecke (2015), “Managerial Empathy Facilitates Egocentric Predictions of Consumer Preferences,” Journal of Marketing Research, 52(2), 235-52.

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About the Authors

Walter Herzog, PhD
Professor of Marketing, WHU (Germany)
Dr. Walter Herzog’s (PhD – University of St. Gallen) research interests lie at the intersection of management and consumer psychology. In particular, he is interested in social inference processes (e.g., how do executives predict consumer preferences and interpret market data?) and social influence strategies (e.g., how can executives shape the preferences of consumers and employees?). His research has appeared in various academic journals (e.g., Journal of Marketing Research, Journal of Marketing) and has been featured in the business press (e.g., Harvard Business Review, Financial Times). Moreover, he teaches courses on marketing and behavioral research methods and he has received several awards for his courses at WHU.

Johannes D. Hattula, PhD
Associate Professor of Marketing, Copenhagen Business School (Denmark)
Dr. Johannes Hattula’s (PhD – University of St. Gallen) primary areas of research include managerial decision making, consumer behavior, and growth hacking strategies. His research has appeared in leading academic journals, including the Journal of Marketing Research and the International Journal of Research in Marketing, and has been featured by business publications such as Harvard Business Review, Financial Times, and the MSI Marketing Science Institute. His work has been recognized by several awards and has been supported by various grants (e.g., Swiss National Science Foundation) and companies.

Darren W. Dahl, PhD
Innovate BC Professor, University of British Columbia (Canada)
Dr. Darren Dahl’s (PhD – University of British Columbia) current research interests are in the areas of new product design and development, creativity, consumer product adoption, the role of social influence in consumer behavior, and understanding the role of self-conscious emotions in consumption. His research has been presented at numerous national and international conferences, and published in various texts and such journals as the Journal of Marketing Research, Journal of Marketing, Journal of Consumer Research,and Journal of Consumer Psychology. Professor Dahl teaches courses in Creativity and Business Strategy at the undergraduate, graduate, and executive education levels. He has won awards for both his research (e.g., Killam Research Prize) and his teaching (e.g., 3M Teaching Fellow) efforts.   

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