Category Archives: Theory/research

Beyond the Purchase

Just as I decide to re-focus this blog a little more closely on the empirical research behind consumption, the relationship between consumption and happiness or fulfillment, what factors play a role in inducing us to buy, what things influence consumer choices, etc., I discover a site that’s already doing that, and indeed has been doing it for a while. And is actually a project by a research lab in San Francisco. And I found them while trying to track down a paper I wanted to blog about and their blog entry on the paper was one of the first search results I got.

The site is called Beyond the Purchase and you can find their blog here. The well-populated archives are comprised of posts that discuss plenty of very interesting research papers and findings. Back on the main website, they have some questionnaire scales that assess various factors that influence your own buying habits, so maybe register and have a go at some of those and see what you find out about yourself that you might not have explicitly known.

Brand attachment and judging ethical behaviour

I’ve written previously about the gap that seems to exist between consumers’ ethical values and consumers’ actual, practical application those ethical values. Even though a lot of us would like to buy in a more ethical and sustainable way, when it comes down to it, we sometimes (or perhaps frequently) don’t. Of course, there are plenty of factors that affect whether we enact our desire to consume more responsibly – the availability of sustainable items, the cost (relative to alternative items and relative to one’s own budget), the quality and range of more responsible options, etc.

Another thing that affects purchasing in general is, of course, brand attachment. Attachment in this context results in brand loyalty and commitment and willingness to pay higher prices to obtain that brand’s products. This is what pretty much every company and brand will be aiming for, so you can be sure that they’re doing what they can to facilitate brand attachment. How attached you are to a brand depends on the affective experiences it offers you (so what emotions it induces in you) and brand characteristics (for example, whether it seems to share values with you, whether it seems to have a brand personality that matches yours, etc.), among other things. But what are the consequences of being attached to a brand? Well, one of them, as investigated by Schmalz and Orth (2012), is how brand attachment influences people’s reactions to unethical behaviour by the company, firm or brand they’re attached to.

Does brand attachment shelter brands from negative publicity? Are brand devotees willing to overlook unethical behaviour, and if they are, to what extent? It’s interesting to think about these questions, given the pretty frequent media reports of relevant occurrences of unethical behaviour. The examples in Schmalz and Orth’s paper include when Nokia moved one of their production facilities from Germany to Romania to take advantage of cheaper labour (and German consumers got rid of their Nokia phones in protest); when Apple was exposed as having used covert video recording of employees in an attempt to reduce theft; and when it was found out that suppliers were plucking live geese to obtain down for a range of Ikea products. Obviously there are plenty of cognitive biases to help us deal with the cognitive dissonance of buying from brands even when we strongly disapprove of their actions, but what role does brand attachment play?

The researchers were interested in the extent to which brand attachment influenced consumer judgement, so they wanted to have two different levels of “unethical” behaviour – moderately unethical and highly unethical – and to see if brand attachment influenced judgement of the unethical behaviour differently between the two levels. What’s the difference between moderately and highly unethical behaviour? In this study, moderately unethical behaviour was when a brand engaged in negative behaviour but then offered some sort of compensation, whereas highly unethical behaviour was when the brand engaged in negative behaviour and didn’t offer compensation. This is one of the hypothetical example scenarios from the paper:

Coca-Cola has announced intentions to build a new plant. Space for the new plant will be allocated from a local nature reserve. While the German Society for Nature Conservation (NABU) has voiced strong concern about likely damage to the breeding grounds of red-listed white stork, Coca-Cola emphasizes that it will bring 2000 new jobs to the economically underdeveloped region.

Moderately unethical scenario:
To assuage project opponents, Coca-Cola states that even more jobs will be created in the near future through a projected increase in the plant’s output over the next years.

Highly unethical scenario:
Opponents of the project argue that the net job creation will be zero as Coca-Cola merely shifts production from one region to another.

Opinions of whether those two scenarios really are moderately and highly unethical, respectively, will vary hugely, but overall what the researchers were interested in was the difference between the moderately unethical scenario and the highly unethical scenario. So even if you personally thought that neither scenario was particularly unethical, or both were highly unethical, it’s still likely that you’d evaluate the second one more negatively than the first one.

And perhaps unsurprisingly, it turns out that brand attachment does shield a brand from negative evaluation from consumers, but only when behaviour is moderately unethical – not when it is highly unethical and without any mitigating circumstances. When you’re strongly attached to a brand and they do something moderately unethical, you don’t judge them as harshly as someone who is only weakly attached to the brand. However, when the brand does something highly unethical, strongly attached people judge them just as harshly as weakly attached people. Developing customer loyalty therefore softens the blow for brands when they do something generally considered to be moderately unethical, but it won’t protect them if they do something objectively awful.

However, there’s another factor at play here that probably makes an immeasurably huge difference – the country of the people in the study and the country where the hypothetical unethical scenarios are set. This study was conducted in Germany and the scenarios were all about hypothetical events that occurred in Germany. It’s not relevant that it’s Germany specifically, but it is relevant that the unethical events are occurring in the same country as the people being asked to judge the unethical events. I think the results might have been different if the country in which the events occurred was different (geographically and/or culturally) from the country in which people were being asked to make the judgements. Limited familiarity with another country and its culture and standards of living make it more difficult to judge (or perhaps easier to dismiss, unfortunately). Consequently, maybe a brand could get away with unethical behaviour on the other side of the world, and the person making a judgement of the unethical behaviour won’t feel so personally impacted and therefore brand attachment might trump even highly unethical behaviour.

People’s attachments, whether to brands or to other people or to whatever, are complex and dynamic, so future research needs to investigate the other factors that influence the relationship between brand attachment and judgement of unethical behaviour.

Navigating the sales: cues to influence consumers

It seems like sales time is upon us again, although some retailers seem to be in a state of perennial discounting. I have been reading up on some of the research into how people react to sales and discounts and how retailers can use sales and discounts to their profit-boosting advantage. Unsurprisingly, that is a massive body of research, and it gives a lot of insight into not only the retail industry but also the cognitive reasoning strategies of the human mind.

One of the research papers I was reading referenced an article in the Harvard Business Review, which Oregon State University has made publicly available as a PDF here. It summarises a small sample of research findings regarding the effects of pricing on consumers, and is an easy read. The article is almost 10 years old now, so it’s interesting to think about both in terms of what is probably still true and what might have changed as the consumer landscape has evolved.

Have a read of the article and see what you think. Here are some of the findings it discusses, as well as my own thoughts about whether such findings would still hold true today:

  • If you ask an average supermarket shopper what the price of an item is after they’ve just taken the item off the shelf, less than half of the shoppers will give an accurate answer.
    I don’t find this particularly surprising for people of a particular economic position who aren’t being incredibly careful with their grocery spending – such a person is probably buying an item that they’ve bought before or is very similar to something they’ve bought before, so they probably know they can afford the price even if they don’t explicitly know what the price is. And I think once you get past perfunctory grocery shopping, people will start to know the prices of items better – if someone has just picked up a pair of jeans they intend to buy, it’s much more likely that they’ll know the price off the top of their heads, compared to if they’ve just picked up some milk or half a dozen eggs.
  • Consumers pay attention to pricing cues such as sales signs, but retailers should be careful not to put too many sales signs out – a sale that’s too extensive seems to cheapen the products under certain conditions, and people are actually less keen to buy if there’s a profusion of sale signs absolutely everywhere.
    I don’t know what contexts this is true for, because I think an established and respected department store, for example, could put a prodigious amount of sale signage out during sale time and people wouldn’t perceive the whole store as being “cheapened”. But if a store were to do that constantly, then I could certainly understand that it might have a cheapening effect in terms of people’s perceptions.
  • We seem to use prices that end in a 9 as a cue to a bargain. In one experiment using a mail order catalogue, demand for a dress was higher when it was priced at $39 than when it was priced at $34. This is possibly because some retailers at some point did use prices ending in 9 for sale items (the article doesn’t say exactly when or where or to what extent, although it does say that J.Crew and Ralph Lauren used 00-cent endings for regularly priced merchandise and 99-cent endings for sale merchandise, which as far as I know is still true of J.Crew).
    I think the price-ending-in-9 being used as a pricing cue to get the attention of consumers is something that has already been capitalised on, really, and therefore possibly isn’t true any more (or isn’t as true as it once was). I think enough retailers use prices that end in 9 for all their stock these days that consumers don’t have any sort of implicit assumption that 9 equals a bargain. I just had a quick look at the online stores for three major mid-range Australian clothes retailers and all three of them have prices that are in the format of either $xx9 or $xx9.95 for basically all full-priced items. I guess to a certain extent that little trick still works, as on a moment’s judgement $89 seems quite different from $90, and it makes it that little bit more difficult to do the mental arithmetic when buying multiple things. But I think a lot of people simply don’t have that mental association between a price ending in 9 and a sale price. Plus I think with the rise in popularity of online shopping and the possibility that people will be shopping in different currencies, fitting the price to particular formats is perhaps increasingly obsolete.
  • Retailers use signpost items, so: even if people aren’t great at knowing or guessing the prices of a lot of things, there are some items that a lot of people might be familiar with when it comes to pricing. Retailers place such items prominently and at a considerable discount, which makes people think “Oh hey, that’s pretty cheap for that item – the rest of the stuff in the store is probably cheaper than average as well, perhaps!”. And that is why supermarkets always have packs of Coke or Pepsi or whatever out the front. They often lose money on those items because they discount them so heavily to attract people into the store.
    I really hadn’t considered why there are almost always cans of drink stacked up outside a supermarket, but know that it’s pointed out, it’s kind of obvious in retrospect.

    It is incredibly interesting to consider these points from the standpoints of both retailers and consumers. As a consumer, being aware of tactics that might be employed to coax you into a purchase is empowering. However, these tactics are unlikely to remain static – as consumers grow wise to current tactics and as their access to information increases (both in terms of understanding how retailers operate and in terms of having alternative options available in an increasingly busy global marketplace), retailers will have to keep changing their game. I would be very interested to know exactly how those tactics have changed in the 10 years since that article was written – the changes have surely been drastic, and the changes in the future will probably have to be even more innovative.

Responsible recommendations and seeking information

Given my previous discussion of the not particularly compelling correlation between brand/price and quality, and people’s not particularly good ability to judge quality of items they might want to purchase, I’ve been wondering about what various factors and elements might coax people into consuming and what information people actually use to make a decision to purchase something, other than brand name and price (especially online, when information about the item you’re considering purchasing might be more limited because you can’t physically inspect and interact with the item).

Recommendations seem to me like they would have a pretty powerful influence over people’s decisions, particularly online. If I see a nice item recommended on a blog that I like, I find myself contemplating whether I need to buy that item myself, even though I might never have wanted it otherwise. More positively, recommendations are a good way of adding data to your decision about whether to purchase something, particularly if the recommendation comes from someone you feel has similar tastes or values to yourself.

Are online recommendations powerful? Do people pay attention to such recommendations and do the recommendations influence people’s purchasing behaviour? Because if you’re a blog writer or a blog reader, or you read or write online reviews, that would certainly be something to consider. Do writers need to be more circumspect about recommendations? Do readers need to be more cautious about evaluating information about a product based on online recommendations?

In the case of some research that looked into this, consumers can be divided into two groups: those who have a high motivation to process information related to a potential purchase, and those who have a low motivation to process that information. If you have high motivation, you do a lot of research, a lot of information gathering, a lot of shopping around, a lot of careful consideration. If you have low motivation, you try to minimise the effort you put into making the decision about what to purchase, you don’t investigate potential alternatives much, and you look for shortcuts that you hope or assume will lead you to the right choice.

Now these two groups – the one with a high motivation to process information (HM) and the one with the low motivation to process information (LM) – react differently to recommendations that they read about particular products online.

When an HM individual reads a recommendation online, it actually motivates them to do even more researching and evaluating. In fact, the stronger the recommendation, the longer an HM individual spends analysing information about all potential options (and the recommended option itself). That’s a pretty good outcome, really: HM individuals are pretty motivated to gather all the information they need to make a well informed decision about a purchase, and recommendations motivate them even further, and in the end they are more likely to make the optimal decision.

The LM individuals, on the other hand, are looking for shortcuts to minimise the time and effort in making a decision about a potential purchase, so they tend to focus on the recommendation too much. When an LM individual encounters a recommendation, that recommendation seems to redirect the individual’s search efforts: their search efforts end up limited to the recommendation and perhaps little else. And, unsurprisingly, LM individuals end up more likely to make clearly sub-optimal choices in their decision about what item to purchase. And on top of that, apparently all it takes for an LM individual to make a sub-optimal choice is a single online recommendation for that particular item.

I imagine that LM individuals might be able to improve their decision-making by devising some rules regarding the amount of information that they should try to obtain before finalising their decision. If you think you might be a bit LM in your decision-making style, try to come up with some points for a checklist to use in guiding your information gathering. If reviews of a product are widely available, have you sought out at least, say, 5 different reviews? If reviews of a product are scarce, what evidence is there that the one review you’ve seen is from a reputable source, or from someone who would have similar standards or needs to yourself? Have you looked for at least one or two alternatives to the product you’re considering, and again sought out multiple reviews of those items? Willfully applying a more strategic and structured approach to your information gathering might feel like a bit of drudgery, but it might yield better results for you in the long run!