Exploring the formation of consumer expectations

Abstract

Consumer expectations are important because they influence decisions before purchase and help determine satisfaction after purchase. Yet, how consumer expectations are formed has received little attention in marketing literature. We track the behaviour of American and Indian consumers, using an online simulation, to understand how consumers use information available to them to form expectations. The motivating influence of regulatory focus is also investigated. We find that consumers use detailed reviews most often to form their expectations, even though such information is more difficult to process than other simpler forms of information like social media-based indicators. Further, we find that across countries and regulatory foci, consumers prefer to separate (vs. aggregate) available information into smaller pieces that are easier to process, that is, they form expectations within a 'narrow frame'. Lastly, we find that promotion-focussed consumers use less information and take less time to form expectations, but still form higher expectations than prevention-focussed consumers. Theoretical and managerial implications of these findings are discussed.