Notes on (Dhar and Wertenbroch 2000) – Consumer Choice Between Hedonic and Utilitarian Goods

Main Topic or Phenomenon Addressed

This paper examines how consumer choice between hedonic and utilitarian goods is influenced by the nature of the decision task - specifically whether consumers are deciding which item to acquire versus which item to give up (forfeit). The central phenomenon is that the same choice between hedonic and utilitarian alternatives yields different preferences depending on whether it’s framed as an acquisition or forfeiture decision.

Theoretical Construct

Hedonic vs. Utilitarian Goods Framework:

• Hedonic goods: Products whose consumption is primarily characterized by affective and sensory experiences of aesthetic or sensual pleasure, fantasy, and fun (e.g., designer clothes, sports cars, luxury watches)
• Utilitarian goods: Products whose consumption is more cognitively driven, instrumental, and goal-oriented, accomplishing functional or practical tasks (e.g., microwaves, minivans, personal computers)

Acquisition vs. Forfeiture Framing:

• Acquisition choices: Deciding which of several items to acquire/gain
• Forfeiture choices: Deciding which of several items to give up/lose

Differential Elaboration Theory: The paper proposes that forfeiture choices stimulate more spontaneous elaboration than acquisition choices, which enhances the relative salience of hedonic dimensions in overall evaluation.

• What is “Elaboration”?

  • Elaboration is basically how much you think about and imagine using something. It’s like mental daydreaming about the product.
  • High elaboration: You vividly imagine the experience, think about details, picture yourself using it
  • Low elaboration: You think about it briefly and superficially

• Why Elaboration Favors Hedonic Products?

  • Hedonic products are easier and more vivid to elaborate on because they involve:

    • Sensory experiences (taste, touch, sight, sound)
    • Emotions and feelings
    • Vivid mental imagery

  • Utilitarian products are harder to elaborate on because they involve:

    • Abstract benefits
    • Functional outcomes
    • Less sensory/emotional content

Key Findings

1. Main Effect: Consumers show relatively stronger preferences for hedonic goods in forfeiture choices compared to acquisition choices
   • Experiment 1: 84% preferred music certificate in forfeiture vs. 54% in acquisition
   • Experiment 2: 85% preferred M&Ms in forfeiture vs. 50% in acquisition
2. Elaboration Mechanism: The effect is attenuated when differential elaboration is suppressed through thought-listing tasks, supporting the proposed mechanism
3. Reference Point Independence: The effect occurs even without actual ownership - simply manipulating attribute-level reference states creates the same asymmetry
4. Real Market Evidence: Field survey showed owners of hedonic cars demand higher selling prices relative to market value compared to owners of utilitarian cars
5. Loss Aversion Differential: The asymmetry can be expressed as differential loss aversion coefficients (λhf > 1), indicating greater loss aversion for hedonic attributes

Boundary Conditions or Moderators

1. Elaboration Suppression: When participants are required to list reasons for their choices, the acquisition-forfeiture asymmetry is significantly reduced
2. Time/Interaction Effects: Greater elapsed time and interaction with objects in forfeiture conditions enhances the effect
3. Attribute Importance: The effect holds even when utilitarian attributes are rated as equally or more important than hedonic attributes
4. Product Category: The effect generalizes across different product categories (gift certificates, food items, apartments, cars, etc.)

Building on Previous Work

Extends Loss Aversion Literature: While traditional loss aversion research (Kahneman, Knetsch, & Thaler 1990; Tversky & Kahneman 1991) shows items are valued more when forfeited than acquired, this paper goes beyond to examine differential effects for different types of goods.

Builds on Elaboration Research: Incorporates findings from elaboration likelihood research (Tybout & Artz 1994) showing that elaboration enhances favorableness of positive stimuli, particularly for easily imaginable attributes.

Extends Want/Should Distinction: Connects to Bazerman et al. (1998) distinction between affective preferences (“wants”) and cognitive preferences (“shoulds”), proposing that hedonic goods map onto wants and utilitarian goods onto shoulds.

Challenges Pure Rational Choice: Questions the assumption that logically equivalent choice sets yield identical preferences, showing systematic deviations based on task framing.

Major Theoretical Contribution

The paper provides a process-level explanation for differential loss aversion across product types. Rather than treating loss aversion as a universal phenomenon, it demonstrates that the magnitude of loss aversion depends on product characteristics and the underlying psychological processes (elaboration) triggered by different decision tasks. This contributes to understanding when and why loss aversion effects vary in magnitude.

The introduction of choice-based measurement of relative loss aversion (λhf) provides a methodological advancement over traditional WTP/WTA measures, reducing measurement error and bias.

Major Managerial Implication

Pricing and Promotion Strategy:

• Companies can charge premiums for hedonic goods when consumers face discontinuation decisions (e.g., lease buyouts for luxury cars)
• Introductory offers and trial periods may be more effective for hedonic than utilitarian goods
• Free trials that create temporary “ownership” may be particularly powerful for hedonic products

Product Positioning: Understanding that consumers evaluate trade-offs differently in acquisition vs. forfeiture contexts suggests marketers should consider the decision context when positioning products and structuring choice environments.

Theoretical Factors Not Explored

1. Individual Differences: No examination of personality traits (e.g., need for cognition, impulsivity, regulatory focus) that might moderate the elaboration process
2. Cultural Variables: Cross-cultural differences in hedonic vs. utilitarian orientations and elaboration tendencies not explored
3. Temporal Distance: How the time horizon of the decision (immediate vs. future) might affect the elaboration process
4. Social Context: Whether the presence of others or social visibility of the choice influences hedonic vs. utilitarian preferences in acquisition/forfeiture frames
5. Expertise/Familiarity: How domain expertise or product familiarity might alter the ease of elaboration and subsequent preferences
6. Emotional State: Current mood or emotional state as a potential moderator of the elaboration process
7. Choice Set Complexity: Effects when choosing from more than two alternatives or when alternatives vary on multiple hedonic/utilitarian dimensions
8. Resource Availability: How cognitive load or time pressure might affect the differential elaboration mechanism
9. Goal Activation: Whether priming different consumption goals (pleasure vs. utility) before the choice task would moderate the effect
10. Anticipated Regret: How expectations about post-choice regret might influence the acquisition-forfeiture asymmetry differently for hedonic vs. utilitarian goods

Reference

Dhar, Ravi and Klaus Wertenbroch (2000), “Consumer Choice between Hedonic and Utilitarian Goods,” Journal of Marketing Research, 37 (1), 60–71.