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    MOUNTAIN BLUEBIRD MANUSCRIPT REVIEW HISTORY MANUSCRIPT (ROUND 3)

    Abstract Consumers often make inferences when they do not have complete information regarding products. Our research shows that consumers often have contradictory nave theories about the implications of common market phenomena, and that they draw different conclusions as a function of which theory is primed, even when the available information is held constant. Eight experiments demonstrate this basic process. The results show that some of consumers commonly held beliefs about various elements of the marketing mix can be contradictory, and drive product evaluations in opposite directions as a function of which nave theory is active at the time of judgment making. Finally, we discuss the role of consumer knowledge as a moderator of these observations.

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    Consumers rarely have complete information regarding products about which they form judgments. To compensate for this uncertainty, consumers use a variety of inferential strategies to fill the gaps in their product knowledge prior to making judgments and choices (Gunasti and Ross 2009; Kardes, Posavac, and Cronley 2004). For example, consumers will often infer a products overall quality (Kardes et al. 2004a), the level of a missing attribute (Dick, Chakravarti, and Biehal 1990), or the social signaling potential of a product (Berger and Heath 2007), and use these inferences when making a decision with incomplete information. Our research focuses on the natural origin of those inferences (i.e., nave theories) and the implications of the active nave theory when conflicting alternatives exist.

    Nave theories are informal, common-sense, explanations people use in their everyday lives to make sense of their environment, and often diverge from formal scientific explanations of what actually happens (Furnham, 1988). The nave theories we focus on in this study can be defined as consumers assumptions about marketing tactics. Consumers hold many nave theories pertaining to a variety of domains, including causality (Faro, McGill, and Hastie 2010), metacognitive experiences (Schwarz 2004), and judgment processes (Tsai and McGill 2011). They actually hold so many theories that more than one might be applicable to a given situation, and different theories may compete, and, in some cases, even contradict one another. Our goal is to identify consumers nave theories related to marketing communications, and to investigate variables that lead one theory to dominate.

    Recent research has explored how a variety of nave theories are used as the basis for consumer inference (e.g., Labroo and Mukhopadhyay 2009; Raghunathan, Naylor, and Hoyer 2006; Yorkston, Nunes, and Matta 2010). Posavac, Herzenstein, Kardes, and Sundaram (2010), for example, report that consumers use a firms profitability as an inferential basis to generate an attitude about the firm according to the assumption that a profitable firm will possess a constellation of favorable traits. Consumers use of this nave theory often leads to a host of judgmental consequences about a product advertised by a profitable firm, including more favorable evaluations of the firm, perceptions of greater advertisement credibility, more positive brand attitudes, and increased purchase intention. We suggest, though, that consumers use of nave theories is often much more complex. For many marketplace phenomena, consumers may hold multiple potentially contradictory nave theories that may have opposing evaluative implications, and thus drive different inferences as a function of which theory is active at the time of judgment.

    The purpose of our research is twofold. First, we seek to demonstrate that priming different nave theories regarding a marketplace phenomenon may lead to very different judgments depending on the theory that is salient. Moreover, we seek to delineate several important competing nave theories about common options within the marketing mix. Thus, our research aims to contribute both on a theoretical front by advancing our knowledge regarding nave theories and the role they play in inference formation, as well as practically by documenting several sets of competing nave theories that could be leveraged in practice by increasing the salience of a nave theory favorable to a firms offerings. When Nave Theories are Contradictory

    We suggest that consumers often hold nave theories about everyday market experiences that have contradictory implications. For example, consumers frequently assume that communications are generally informative and truthful because they have a nave theory suggesting that communicators are typically helpful (Grice 1975). At the same time, consumers assume that marketing communications are often biased and untrustworthy, because they have a nave theory suggesting that marketers are motivated to maximize sales via deception or manipulation (Campbell and Kirmani 2008). Hung and Wyer (2008) showed

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    that both of these theories (communications are truthful vs. untrustworthy) can play a role in the interpretation of an ad, and that their relative impact depends on both characteristics of the ad and the level of motivation to think about implications.

    Nave theories associated with the effort required to generate a piece of art can influence the perceived artistic merit of the work (Cho and Schwarz 2008). Specifically, individuals may assume that great artists can produce masterpieces quickly and with relatively little effort, or they may assume that creating great art requires considerable time and effort (Kruger et al. 2004). Cho and Schwarz (2008) showed that those who were primed to make the latter inference rule accessible (i.e., good-art takes-effort), positive inferences about quality were drawn from the reported effort that the artist put into his work. Conversely, for those who were primed to make the former inference rule accessible (i.e., good-art-takes-talent), inferences about quality decreased with perceived artistic effort. In other research, inferences about the time elapsed between two causally related events can be manipulated by priming different nave theories about causality (Faro, McGill, and Hastie 2010). Together these results illustrate within the context of evaluative judgments that inferences are malleable through priming because of the preexistence of competing nave theories.

    The susceptibility of evaluative judgments to the priming of nave theories may have important implications for understanding consumers reactions to product communications. Because of the nature of advertising, marketing communications are only able to provide partial information. Then, the consumer must fill in the missing information in order to make a purchase decision. Thus, to fill in these informational gaps, consumers often form inferences about what they do not know based on the information that is available (Kardes et al. 2004b). Nave theories are very useful for consumers because they can be activated with minimal cognitive effort, and can be readily applied to guide inferences regarding marketing communications, products, services, and so on. In our in our current project, we illustrate how commonly held nave theories may conflict, and how, depending on the availability of one inference rule or another, product evaluations will differ.

    It should be noted that not all consumers will be equally susceptible to the priming of opposing nave theories. Consumers who are experts in a domain have far fewer informational gaps. Thus, we would expect that the judgments of consumers with expertise in a given domain would be less likely to be affected by nave theory priming. This expectation is consistent with prior work that demonstrates that contextual manipulations of focus are less likely to drive the product judgments of experts versus non-experts (Posavac et al. 2005). Ubiquitous Consumption-Related Nave Theories

    A major focus of marketing research deals with marketing mix variables. Among these variables price has received considerable attention (Ofir and Winer 2002). Not only does price directly impact firms revenues, it is also a communication tool and it may carry very different product implications (Monroe 2003). For example, high prices can be interpreted as a cue for high quality (Bagwell and Riordan 1991; Cronley et al. 2005; Rao and Monroe 1989). On the other hand consumers often perceive price as a sacrifice (Zeithaml 1988) and therefore high prices can be judged as too expensive (Heyman and Mellers 2008). Thus, high prices may be interpreted as either a sign of high quality or low value depending on the inference rule accessible when price information is processed.

    Another interesting facet of pricing strategies is the use of promotions to increase sales. Although consumers typically perceive that marketing and advertising are synonymous, marketers spend three times as much on sales promotions as they do on advertising (Belch and Belch 2009). This tendency is in large part due to the attractiveness of promoted products, and the powerful and readily measurable influence sales promotions have on consumers

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    buying. Some critics, though, have noted that sales promotion can have potentially damaging effects on brand equity (Jones 1990). The pressing question, then, is when will a consumer promotion be perceived as a good deal (Raghubir, Inman, and Grande 2004) versus a signal of poor quality (i.e., the manufacturer is offering a deal on an inferior product; Lichtenstein, Burton, and O'Hara 1989). Thus, the conclusion that a consumer draws regarding a product that is being offered on deal may depend on which nave theory is active during judgment.

    Marketers often rely on social influence techniques to increase the effectiveness of their persuasive attempts (Cialdini