Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect Information

by Itamar Simonson, Emanuel Rosen

Going against conventional marketing wisdom, Absolute Value reveals what really influences customers today and offers a new framework—the Influence Mix, a totally new way of thinking about consumer decision making and marketing, and about developing more effective business strategies. How people buy things has changed profoundly—yet the fundamental thinking about consumer decision-making and marketing has not. Most marketers still believe that they can shape consumers’ perception and drive their behavior. In this provocative book, Stanford professor Itamar Simonson and bestselling author Emanuel Rosen show why current mantras are losing their relevance. When consumers base their decisions on reviews from other users, easily accessed expert opinions, price comparison apps, and other emerging technologies, everything changes. Absolute Value answers the pressing questions of how to influence customers in this new age. Simonson and Rosen point out the old-school marketing concepts that need to change and explain how a company should design its communication strategy, market research program, and segmentation strategy in the new environment. Filled with deep analysis, case studies, and cutting-edge research, this forward-looking book provides a totally new way of thinking about marketing.

Genres: Business, Nonfiction, Psychology, Grad School

256 pages, Hardcover

First published January 28, 2014

Reviews

[Matt Bodien · Rating 3 out of 5]

Naturally, a book that argues that brands are going extinct caught my eye.

Fortunately (for the sake of my career), the authors miss a crucial point about the role of brands that cripples this morbid hypothesis. I'll get to that in a moment. First their thesis:

In a nutshell, the the authors argue that thanks to the likes of Yelp, TripAdvisor, and online reviews on...everything, consumers will be able to easily identify the "Absolute" Value of a product or service, rather than have to make a decision based solely on a "Relative" or perceived value. The argument goes that the primary role of a brand is to communicate this Absolute value, and thanks to more perfect product-quality information brands are becoming less important, and are quite literally on the way out in many categories.

One of his examples that brings the point to life is with the brand ASUS, a Taiwanese Computer manufacturer. This computer brand was able to capture a chunk of the market without any brand development and instead focusing on building a superior specs/price equation. Thanks to favorable reviews, this non-brand* was able to succeed.

Now to my response to this book, which will be short and sweet. The crucial point that this book completely misses is this:

Brands add incremental value to products. They do jobs that products cannot do.

1. Imagine two cans of Red Bull liquid on a shelf. One has no label and just says "Energy Drink." The other looks regular. They're the same price. Which would you purchase?

2. Imagine you're looking at the body wash aisle in Target deciding which bottle to buy. You see a bottle of Dove and a identically shaped Kroger brand next to it. The Kroger bottle says loud and clear: "COMPARE INGREDIENTS TO DOVE." You look and they are identical. Imagine they are priced the same, which bottle do you buy?

3. How did Snickers crush the candy bar category with one word and one question mark, "Hungry?"

Yes, the book is right that more than ever a PRODUCT is under scrutiny. Since BRANDS co-exist and work with the product, a good BRAND will not be able to save a bad PRODUCT. Brands will have to work harder to mean something because more transparent information means consumers can now weigh in on product quality more than ever before. But this does not mean the end of brands, or anything even close.

Whether ASUS wants to admit it or not, ASUS is a brand. Instead of creating it themselves they're letting each consumer do it on his own. In this, ASUS is the inverse-Apple. Instead of standing for one, awesome, powerful, value-adding thing, ASUS will stand for 3 trillion things. Just like our two bottles of Red Bull, the first computer that matches ASUS's specs with a brand that is even just marginally better, will win. My prediction: ASUS will be out within 10 years.

*As I wrote this I just remembered that my Google Nexus 7 tablet is built by ASUS. It has a logo on the back declaring this origin. It's funny, because when I first bought the tablet I remember thinking, "Ugh, I wish it would have just said 'Google' instead."

[Bill Yeadon · Rating 3 out of 5]

This book was written in 2014 and is at a disadvantage when writing about Amazon, Yelp, Google and other review sites, as they change so quickly. But in this case, it may be the opposite. The authors believe that the idea of emotion over logic and even branding and loyalty may be diminished due to the power of internet reviews. This really flies in the face of current thoughts on the power of emotions on decisions.

Simonson and Rosen divide purchase choices into three ideas:
P is for previous beliefs and opinions
O is for others (reviews)
M is for the marketing claims

While I agree that the power of internet reviews is tilting the pie in the favor of reviews (O) the power of emotional draw either through marketing claims or the bias of one's own beliefs is still strong.

The one idea I took away was that the power of a franchise versus an independent company may be weakened. In the past, many people would choose a franchise such as McDonalds versus an independent burger restaurant. A brand always stood for trust and the only way an independent could win is through massive word of mouth. Well, what are review sites but massive word of mouth? This one takeaway made the book worth reading.

[Celeste · Rating 5 out of 5]

This is an amazing book, highly recommended to marketers who have doubts and questions about traditional marketing practices. Wow, this book cleared a lot of doubts in my head, old beliefs that still plague many organisations. Really great insights and factual examples. Amazing writers!

[Xianzi Piao · Rating 4 out of 5]

The author thinks Brand name value is less powerful than other period. Customer doesn't believe the information from the brand, They believe the truth. (They distinguish fake marketing treats from truth value)

[Nate · Rating 3 out of 5]

Well written, easy to read, but mostly common sense ideas about the new importance of product reviews and information over days of the past when branding and pretty advertisements held more weight.

Some gaping holes: This book assumes reviews are a quality gauge for others, but he ignores the demographics of the reviewers themselves. He mentions Yelp several times, but the #1 seafood restaurant in Chicago according to Yelp is at Navy Pier, which is a tourist trap; the #1 steak restaurant is a part of a chain; and the #1 diner is a nondescript greasy spoon in a post (or presently in) college neighborhood.

That happens, presumably, because if you're a tourist on vacation, you absolutely love the fish you had near the lake; and the fillet you had on your anniversary dinner, which perhaps may be one of the few times you splurge on a steak, does taste like 5 stars; and if you're in your early 20s, the morning after diner probably does in fact taste like some of the best food you've ever had.

Unfortunately, for everyone else who does not fall into these minorities, these reviews-and their rankings-are near meaningless.

He also makes a few statements that seem to be off base in regards to the iPads success. He mentions how users care about the importance of features, but this seems to be false as the mantra of Apple with mobile products has always been about usability. The first iPod was bashed by popular tech review sites since it didn't include any of the fancy features of the competitors (e.g. wifi), but these reviewers completely missed the boat in regards to the commercial success of the product; again, this was because the demographics of the reviewers (hard core tech people) were not emblematic of most end users (people who just want simple products that work).

So there are flaws like that in the book, nothing crazy, but kind of odd for them to be there. The original (common sense) hypothesis still holds plenty of water, but if you're seeking a deep discussion on the topic, you'll need other material to supplement.

So would I recommend this book? Well, it depends on whom you are (this is the very topic that the author missed). If you read a lot of business/marketing books, at most a skim or a refresher on a specific area may be useful, but overwhelmingly, I would say pass on this.

However, if this is your first experience with a business book, then you will probably find far more value in it.

[Matias Koskinen · Rating 3 out of 5]

I will use this framework to refine my work.

The book had a bit sluggish start but evolved to a solid discussion. Presented an interesting point of view about marketing as well as provided an useful framework for marketing.

[Nick · Rating 3 out of 5]

The authors argue that marketing has far less influence on customer decision making than it purports to, but that, in fact, consumers have moved away from brand loyalty and towards a state of understanding "absolute value," that is, using various resources, review sites, pricing systems, and research sites to determine the "real value of a product," for me in my context. This leads to changes in marketing and communication strategies, given that branding and loyalty are on the wane, and better, more rational choices, given the improved information context, is on the upswing.

But, if only this were the truth. Published in 2014, the authors likely haven't had an opportunity to consider how spam reviews, fake reviews, and poisonous SEO have corrupted online research, perhaps irrevocably. Indeed, now more than ever trusted brands that run trusted product reviews are more critical than ever, given the likelihood of information manipulation.

The book only briefly covers this fundamental challenge, and brushes it off as a few fake reviews, and not the systemic problem it has become, some 6 years later.

[Sarah · Rating 4 out of 5]

Useful information, a bit repetative

[Melissa · Rating 4 out of 5]

If you’ve ever used a GoodReads.com review to decide whether or not to read a certain book, you’re one of the consumers Itamar Simonson and Emanuel Rosen discuss in their book Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect Information.

In their book, the authors seek to portray how beliefs about marketing and decision-making are changing due to the availability of reviews online. Simply put, we, as consumers, are able to determine the absolute value of a product much more easily now because of all the information available to us. This is changing marketing away from old strategies, which relied on brand recognition and prior information, to encourage us to buy a certain product and shy away from new, untested products.

Absolute Value is written primarily for marketers and students of marketing, as it is not so much designed to enlighten the average consumer as it is to instruct marketers on how to move with the times. The authors seek to explain how marketing is evolving by breaking down their theory into three sections culminating in a comprehensive framework known as the Influence Mix.

Unfortunately, I didn’t understand the Influence Mix perhaps as much as the authors would have wanted. While the authors discuss the Influence Mix at the beginning of the book, they don’t link it throughout. In fact, I would have forgotten to mention the Influence Mix entirely had I not taken notes on this book, and I’m pretty sure the Influence Mix was supposed to be a big part of the authors’ theory.

While this book is written for a marketing professional or student, it is engaging enough to keep the average reader’s attention. Simonson and Rosen have a talent for incorporating just enough ‘marketing speak’ to satisfy their primary demographic, yet still include enough interesting material to engage the average reader. Any time I felt myself being overwhelmed by marketing-speak, the authors illustrated the marketing-speak with an engaging example of what they meant. In this aspect, I found the book incredibly useful. This book enlightened me as to how some of my favorite companies, including Apple and Yelp.com, have been able to successfully embrace the power of organic acceptance of a product and online reviews.

If you have ever been curious as to how Yelp.com, CNET.com, and other review sites are changing the marketing world, this is the book for you. It is not written on such a level as to be boring, and the authors cite so many examples, you’re bound to find at least one relevant to your life.

Note: I won this book in a GoodReads Giveaway contest. My opinions of this book are my own.

[Timothy Chklovski · Rating 3 out of 5]

This is a review from of the book from the perspective of a value investor trying to learn more about power of brands.

Strong consumer brands of inexpensive, high volume items provide some of the most reliable abnormal returns on capital, which can be also rewarding to long-term shareholders, especially those able to further take advantage of the predictability of returns. Think Coca-Cola and its march towards million-fold growth in market-cap over 150 years.
This is among core tenets of students of value investing. So, in the intellectual tradition of Charles Darwin, any disconfirming evidence -- or at least evidence of this waning in the era of online reviews -- warrants review and thought.
And yes, with reviews, one does not need to trust brands -- and indeed in areas like electronics we see successful rise of good products from manufacturers without strong consumer brands.
But the basic willingness of a consumer to pay a premium for a brand that they already subjectively enjoy (Coca-Cola, Marlboro, etc) is not really contested by availability of reviews.
The book also provides interesting hints at the authors more academic work -- on diffusion of information, adoption of new products and compression of adoption stages. Serious readers/students of the topic may do well to go straight to the authors' more rigorous work.

The book also delves into what the role of marketers is, and argues against trying to shape consumer decision making by focusing on specific dimensions (since consumers won't be duped, at least on important purchases) and against trying to achieve awareness alone (since comparisons can reveal even obscure worthy products). Seems like reasonable advice, but creating a superior product rather than marketing an inferior one has always been a good policy -- it's just that now the world has gotten more demanding on quality, and more meritocratic.

I gave the book 3 stars because it is longer than its content warrants; it kept discussing the core and related points, but did not bring novel or conclusive evidence to the topic. I did wind up highlighting quite a few of its points, so it does provide a fair number of push-off points for thought

[Bucket · Rating 4 out of 5]

The authors reveal their new marketing and branding framework based on "the influence mix." This is whether customer segments are most influenced by P (prior knowledge), M (marketers), or the amorphous O (others, which includes reviews, word of mouth, recommendations).

Their premise is that more and more industries are becoming O industries because the availability of real information direct from consumers about a product's quality and product experiences is growing rapidly. This means that consumers are much more likely to know before making a purchase decision exactly how they will feel about a product. They no longer need brand names or marketing messages to tell them how they might feel. The key is to determine how big of a role O plays for your customer segments, to monitor that in an ongoing way, and to build your marketing strategy accordingly.

I found the authors' perspective pretty intuitive and refreshing and like that they weren't over-the-top and sensationalizing in the way they presented. After all, changes in how consumers make purchase decisions do not mean that all marketing and branding theory should be thrown out the window.

I was also intrigued by a smaller element in the book - that even people who access online reviews and information about products and brands are still susceptible to making poor choices or to marketing messages if they get all their information from strictly like-minded sources. It's like a cult, or politics, or incest - nothing can change or evolve without new ideas. This kind of caution about remaining skeptical and open pervades the book.

I also was interested in the authors' evaluation of positioning statements:

"Instead of evaluating the product based on its actual value, the consumer is supposed to evaluate it relative to other options that the marketer chose to highlight."

The problem here being, of course, that positioning matters little in many industries in today's market if the product or service is not of quality.

Themes: marketing, business, branding, communications, internet age

[Hannamari · Rating 3 out of 5]

The book is based on refreshing ideas finally questioning the role of marketing in the era of abundant available information online. The main thesis of the book is that old marketing efforts are becoming less effective as people have access to ever more information and reviews online, and hence can predict the "absolute value" the products they consider buying will give them. The book contains several great insights, and even gives advice to marketers working with these kinds of producs - mainly encouraging them to understand that they are no longer the drivers but the followers, trying to understand customer preferences, encourage interest and participate in creating more absolute value to customers instead of marketing persuation tactics.

To the main claims of the book I would give five stars. However, the ideas would have been better suited for a magazine article and not a full-lenght book. Now the book gets stuck in repeating itself and presenting somewhat obvious examples. Even so, I am happy that I read the book where one of the major researchers in marketing questions the very foundations of the research in his field - including his own.

[Nick · Rating 4 out of 5]

The authors of Absolute Value want you to understand that the Internet world of information about people, products, and services allows for near-perfect information to be known about you and your business. So you’d better start paying attention to what other people are saying about you. Also, you’d better turn out a good product. This idea is of course not new, but I like these authors’ taxonomy of P, O, and M – where P is an individual’s prior beliefs about something, O is what other people are saying, and M is those poor, increasingly irrelevant marketers.

The book reinforces the idea that professional public speakers, like anyone else with a service offering, needs a strong line of good O going in order to create a sustainable business.

[Kenny Oyama · Rating 3 out of 5]

I'm a big fan of Itamar's academic work, but unfortunately the contents of this book were better suited as an HBR-style article rather than a full-length book. The book covers behavioral decision theory research stemming from Kahneman and Tversky in the 1970s until now and shows how consumer decision-making isn't as prone to cognitive biases as previously shown. Available and easily-accessed information allows people to make more-informed decisions while still relying on heuristics.

Although I don't think I'll be reaching for this book to read through again, I do think it's a worthwhile read for someone interested in pop-consumer psychology.

[Theresa · Rating 4 out of 5]

A useful read for anyone going into business, especially marketing. This book explains how marketing tactics need to change due to the accessibility of information about products on-line. Branding and personal recommendations are mostly out while well researched decisions are in. The book is readable and the authors consider related topics such as the impact of fake reviews and the ability to access relevant information.

[Nathan · Rating 5 out of 5]

Consumers today are accessing information and making purchases in fundamentally different ways than they did just a few years ago. They're frequenting online review sites, reading expert opinions and turning to more trusted sources of information. But most marketers are still acting like they have more impact than they really do. Absolute Value shows why they're deluding themselves and how marketing is changing rapidly. This is a must read for anyone in business today.

[Daniel · Rating 5 out of 5]

Anyone who uses Goodread must agree with this book 'Absolute Value'. Widespread use of user-review sites are changing how we decide on reading a book, booking a hotel, buying a car, and visiting a restaurant. Well written and engaging.

[Doddette Tallytalbot · Rating 4 out of 5]

This book is perfect for the anyone who wants to open and business or has a business and wants to understand how customers are influenced!

[Dunrie · Rating 4 out of 5]

Informative, actionable, and a quick read.

[Jean Zuhl · Rating 1 out of 5]

zzzzzzzz