In this study, Qianyun Poppy Zhang, Raluca M. Ursu, and Tulin Erdem developed a model of sequential search, where consumers with heterogeneous, prior information and beliefs about brands chose whether to search for additional information on the available brands and their features. While this method is costly, such information allows consumers to update their beliefs and to make more informed choices.
The researchers estimated their model on a data set of consumers making smartphone search and purchase decisions that have two unique features: (i) it contains information on consumers’ prior ownership of, familiarity, and experience with brands; and (ii) it captures search behavior at the very granular level of eye-movements. The study found that consumers are more likely to search and buy brands they own and are familiar with than ones they aren’t.
Consumers’ prior familiarity with a brand, product or service shapes their reception of new information and may bias their ratings. Models using eye-tracking can help managers adjust for consumers’ prior knowledge and inform advertising and other marketing decisions.
Specifically, prior information impacts consumer search and purchase decisions in three ways: (1) Prior ownership of a brand increases the initial evaluation of the brand; (2) prior familiarity with the brand decreases initial uncertainty and allows consumers to search more options; and (3) prior experience with product attributes allows consumers to extract more precise information from every search action.
Find the working paper here.