MIT Sloan Professors Find Product Comparisons Key to Building Trust

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U.S. automakers need to provide product comparisons and test drives to win consumers back

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Trust is one of the biggest factors for consumers when buying a new car. If consumers don’t trust a particular brand, it’s unlikely they’ll invest the time and energy to evaluate that brand’s vehicles. However, automobile companies can overcome this challenge to rebuild trust and ultimately increase sales, according to MIT Sloan School of Management Professors John Hauser and Glen Urban. The strategies that work best, they found, involve product comparisons in the form of test drives and online brochures.

In a paper titled, “When Providing Competitive Information to Your Own Customers Encourages Trust, Consideration and Sales,” Hauser, Urban, and Guilherme Liberali of the University of Rotterdam analyzed the efforts of a U.S. automobile manufacturer (USAM) to increase sales. Prior to the recession, the company had launched vehicles it believed were more reliable and met consumer needs better than competitors. Nonetheless, it failed to gain market share because over half of consumers in the U.S. – and two-thirds of consumers in California -- didn’t trust the company enough to consider its vehicles.

“It was unfortunate because at that point the company had some really good automobiles available. That created an interesting situation where, if no one will consider your cars, it doesn’t even matter how good you are because you can’t survive competing for only one-third of the market,” said Hauser. “The company thought that if it could get people to seriously evaluate its cars, it would increase trust and sales would follow.”

Setting up a real-life field experiment, the company implemented strategies to provide unbiased comparisons intended to increase trust in the company. These included offering competitive test drives and competitive brochures that compared their own vehicles with those from other manufacturers as well as encouraging consumers to use online advisors and to read community forums on its products.

The field study showed that the most effective strategy in increasing trust was the competitive test drive. Among test drive participants, consideration was increased by 20% and sales were increased by 11%. “We saw a big change in consideration and trust after the test drive when consumers experienced the vehicles and saw for themselves how they had improved,” said Hauser.

“Enhancing trust by providing competitive information might be applicable in many markets,” wrote the authors. “If consumers reject a brand before considering it, they are unlikely to learn whether the brand meets their needs better than the brands they now consider. Because consumers often consider but a small fraction of the brands in a category, marketing actions, which encourage consumers to consider brands that they would not otherwise consider, can be key to profitable marketing.”

The other successful strategy involved customized and competitive brochures. Hauser explained, “Competitive product information was effective because, like competitive test drives, eBrochures provided consumers with an unbiased comparison in which USAM did well.”
On the other hand, the online advisors and community forums did not work to increase trust. “At the time of the experiments, USAM had recently introduced improved vehicles, but consumers’ negative experiences with prior, lesser-quality vehicles were also salient,” wrote the authors. “Competitive information helps only if it is actually good news.”

The lesson for other companies, said Hauser, is that providing information about competitors’ products can be beneficial. “Most brand managers would be very hesitant to tell customers about competitors’ products, but if your products are not being considered and are better than consumers think – which happens with a lot of different products -- then this strategy will work.”

For Prof. Hauser’s bio: http://mitsloan.mit.edu/faculty/detail.php?in_spseqno=SP000053&co_list=F

For Prof. Urban bio: http://mitsloan.mit.edu/faculty/detail.php?in_spseqno=SP000138&co_list=F

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