Week 11: Musings of a (dis)Loyalty Program Card Member™

Two months, since I have come to Bangor, my wallet has become thicker. Unfortunately, it has nothing to do with money, but more due to the lack of it. Last counted, I had 11 plastic cards in my wallet! I can’t even sit comfortably on a chair! I have collected them in the hope of collecting points and saving a few pennies next time I am at the store/supermarket again.

 

Components of a loyalty program

Sharp and Sharp (1997) characterize loyalty programs as campaigns that are initiated by marketers in an effort to reward returning customers with incentives to return again thereby strengthening the relationship with customers and creating a long-term competitive position of the store. There have been a lot of conflicting views and debates in the academic (and business) world about the effectiveness of these programs; but before we delve deeper into that, there are three components of any loyalty program that are crucial –

  1. Magnitude
    This refers to the size of the reward/incentive that is offered to the customers in lieu of the reward points collected.
  2. Reward Distance
    This refers to the number of points required to redeem the reward.
  3. Step size
    The number of points earned per pound/dollar.

Many reward programs are ambiguous when it comes to the step size. A study that is still hot from the oven, suggests that when step size ambiguity is high, consumers will ignore the step sizes and focus more on the reward distance, since this is the only cue available to them (Bagchi and Li, 2011). As humans we are cognitive misers. We do not like to calculate too much. So we take a guess from the information available to us, to figure out if the reward program is actually worth it or if it involves taking too many efforts for very few returns.

Effectiveness of Loyalty Card Programs

A study by Bridson, Evans and Hickman (2008) found evidence to support effectiveness of loyalty card programs. According to them, their study “…empirically verified the relationship between loyalty program, store satisfaction and store loyalty, legitimizing the growth of loyalty programs within the retail sector (pg.371).” This study was conducted in a Health and Beauty retailer’s store in the Australian retail environment. Although the authors believe otherwise, in my opinion, the environmental context in which the study was conducted is not the best fit to generalize the results. A supermarket setting would have been much more apt for this study.

Ineffectiveness of Loyalty Card Programs

A similar study was conducted in the same year using similar attributes but in the French mobile phone market by Pez (2008), found results conflicting with the Australian study. The study relied on quantitative and qualitative (projective) data collection technique. It suggested that, loyalty programs could actually evoke negative emotions about the product or store within the consumer. The negativity is not just restricted to the program, but can also transfer to the store. However there are two aspects about this study I don’t agree with – The context in which it was conducted is too narrow for generalization, and the data collected using the projective test is too subjective in nature.

Issues in measuring loyalty

Does becoming a member of a loyalty program of a store, mean that you are loyal to that store? What about consumers like me who are being ‘loyal’ to whoever gives a free membership card? If from the dataset of all the members of a loyalty card program, if we subtract the set of consumers who are inactive (have not shopped in the last 12 months), can we consider the remaining as loyal customers?

Bowen and Chen (2001) admit that customer loyalty is difficult to define. They outline three approaches to measure loyalty –

Behavioral Measurements: Repetitious purchase behavior indicates loyalty.

Attitudinal Measurements: Measures the emotional and psychological attachment.

Composite Measurements: measure loyalty by customers’ product preferences, propensity of brand switching, frequency of purchase, recency of purchase and total amount of purchase. This approach combines the first two dimensions.

Thus considering only the number of cardholders as a method of measuring loyalty, will not give a true picture or profile of loyal customers.

Case Study – Tesco Clubcard

In 2005, Jennifer Rowley from the School of Business and Regional Development here at Bangor University, published a case study on the Tesco Clubcard scheme. This scheme has been highly successful with over 15 million members worldwide. One of the strengths of this scheme is its multi-dimensional approach allowing members to earn points from diverse activities such as shopping at Tesco stores, to using the Tesco credit card and even through recycling old phones! The company sends out personalized Clubcards to every member that signs up. Rowley observes that there has been a shift in focus from attempting to change customer behavior to trying to change customer attitudes. The new loyalty programs are concerned with developing value offered to the customer through the scheme’s rewards.

Benefits
Customers earn two points for every £1 spent. The points are stored and four times a year; members receive a statement of points with vouchers worth the value of points they have saved. Tesco has also launched a mobile-phone version of its plastic card that may help increase its popularity and functionality.

Check out the Tesco Clubcard commercial below –

 

Food for thought

I think if marketers rebrand the whole concept of a Loyalty Card, by not calling it a loyalty card, and not calling them reward points, it will create a better image in the consumer’s mind. Reward points make consumers feel too much like a Pavlovian Dog. In what ways can a loyalty card be ‘disguised’?

Reference:

Bagchi, R. and Li, X. (2011) Illusionary Progress in Loyalty Programs: Magnitudes, Reward Distances, and Step-Size Ambiguity. Journal Of Consumer Research, 37, 888-901.

Bowen, J. and Chen, S. (2001) The relationship between customer loyalty and customer satisfaction. International Journal of Contemporary Hospitality Management, 13(5), 213 – 217.

Bridson, K., Evans, J. and Hickman, M. (2008) Assessing the relationship between loyalty program attributes, store satisfaction and store loyalty. Journal of Retailing and Consumer Services, 15, 364–374.

Pez, V. (2008) Negative effects of loyalty programs: An empirical investigation on the French Mobile Phone sector. IAREP / SABE World Meeting.

Rowley, J. (2005) Customer relationship management through the Tesco Clubcard loyalty scheme. International Journal of Retail & Distribution Management, 33(3), 194 – 206.

Sharp, B. and Sharp, A. (1997) Loyalty Programs and Their Impact on Repeat-Purchase Loyalty Patterns. International Journal of Research in Marketing, 14 (5), 473-86.

The end of Yellow Bulbs?

This post marks the end of my PCP 4004 Blogging assignment. It has been a good experience so far, and I plan to continue it.
So please do keep checking this space.

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Week 10: Ga-ga-lo-go

In this week’s yellow bulb, I am going to express my opinion about three things –

  1. Impact of brand logos on children
  2. Impact of logos of adult brands on children
  3. Issues in conducting research about logos with children

Impact of Brand Logos on Children

One fine afternoon I was playing with my three-year-old nephew who is currently in his kindergarten, and can barely say the alphabets. Suddenly I heard him exclaim ‘Bominos’ while pointing to the ‘Dominos’ Logo! I was amazed at his logo recognition powers! I tried a few more logos with him and he was able to correctly recognize McDonalds (Mad-Donal), Mercedes Benz (Caaaar), BlackBerry (Back Belly) and Krispy Kreme (Kissy-keem).

Logos are a powerful medium of communicating brand values and imprinting the brand name in the consumer’s mind. It represents the company, its identity and purpose. As seen in the anecdotal evidence mentioned, logos can have a major impact on children as well. Years later, if the company (whose logo you could recognize as a kid) is still in existence, you might often wonder how you ‘grew up’ with the company.

Logorama is a 16-minute French animated film and uses characters made from more than 2500 brand logos and mascots.

Marketers have specifically started targeting the very young consumers to influence their future purchase behavior. Looking at the fast food industry, marketers are have been trying to entice this group of consumers since a long time (remember collecting those Happy Meal toys?).

Arredondo et al (2009) has carried out research in this domain. The objective of the study was to test if young children identified the logos of fast food chains faster than other food brands. The experiment consisted of an activity wherein the participants aged 4-8 years were required to match logos to products. The parents of the children completed a survey that captured their demographic and psychosocial characteristics associated with a healthy lifestyle at home. The results suggest that children who were overweight and older, recognized fast food restaurant logos faster than other food logos. While children who had parents with higher levels of education were more likely to have healthy eating habits and recognize other food logos. One of the limitations of the study is that the researchers did not explore the link between logo recognition and fast food consumption. This limitation was later addressed

Research shows that children are receptive and responsive to advertising campaigns. In a study by Kopelman et al (2007) similar to the one by Arredondo et al (2009) show a conflicting result. The researchers found that there was no correlation between higher brand logo recognition ability and poorer eating habits. Although the participants (aged 9-11) were familiar with the logos of food products presented, brand recognition does not necessarily mean poor eating habits.

Impact of logos of adult brands on children

Research has also been carried out to see whether children are affected by cartoon characters that are used as mascots for adult-only product categories such as cigarettes. Between 1987 and 1997, Camel cigarettes used a cartoon character called Camel Joe as its mascot.

In a study by Fischer et al (1991) it was shown that children aged 3 – 6 years were able to recognize Camel Joe with cigarettes just as easily as they could associate the Disney Channel with Mickey Mouse. This alarming finding suggests that these children would probably grow up and try Camel Cigarettes as their first brand of cigarettes. In response to the findings of the study and other criticisms, R.J. Reynolds started an advertising campaign called Let’s Clear the Air on Smoking. The company maintained that Joe Camel was aimed at adults between the age group of 25 – 49 years.

Gorn and Florsheim (1985) suggest that even if children are not consuming the product advertised on TV currently, they may still be greatly influenced by it and may be possible users of the products in future. The experiment conducted by them show that ten-year old girls who were participants in the study saw themselves using the lipstick being advertised.

Issues in conducting research about logos with children

One of the problems of conducting research on brand logos among children is in the kind of methodology used to collect the data. Since the verbal skills of children in the age group of 3 – 4 is limited, making it difficult for them to articulate concepts even if they understand them. This makes it difficult for researchers to conduct a well-controlled experiment with young children. Often the stimulus used in the experiment is designed like a board game or an interactive computer game to engage the participants and keep them interested in the task.

Data about perceptions of Logos by children can also be collected in an implicit way that I discussed in detail in my last blog – Eye tracking. Children wearing eye-tracking devices can be exposed to logos of different brands. The data collected from the device can be analyzed giving us insights into what aspects of the logo attract the children. However, the ethical implications of such data collection techniques need to be studied.

Food for thought

As a marketer of fast food (or not good for kid’s health) brand company, do you think it is unethical to produce advertisements aimed at children?

Reference:

Arredondo, E., Castaneda, D., Elder, J., Slymen, D. & Dozier, D. (2009) Brand Name Logo Recognition of Fast Food and Healthy Food among Children. Journal of Community Health, 34, 73-78.

Fischer, P.M., Schwartz, P., Richards, J., Goldstein, A. & Rojass, T. (1991) Brand Logo Recognition by Children Aged 3 to 6 Years. Journal of American Medical Association, 266(22), 3145-3148.

Gorn, G.J., Florsheim, R. (1985) The Effects of Commercials for Adult Products on Children. Journal of Consumer Research, 11(4), 962-967.

Kopelman, C., Roberts, L.M., Adab, P. (2007) Advertising of food to children: is brand logo recognition related to their food knowledge, eating behaviours and food preferences? Journal of Public Health, 29(4), 358-367.


Week 9: Eyeing the Consumer

Whenever I have posted a comment on a blog that talks about Internet Advertising and its (in)effectiveness I have often alluded to eye-tracking studies that analyze heat maps and attempt to generalize areas of a website that interest users. So, this week we journey into the (not-so-far) future to see how eye-tracking works and what are its benefits to the world of Consumer Psychology.

One of the primitive eye-tracking studies conducted was by Hunziker et al (1970). Participants were presented with a visual problem, which was displayed on a glass plate. They were then filmed through the other side of the plate. The eye-movements of the participants were analyzed on the basis of the position of the visual problem with reference to the fixation point of the eye. Eye tracking has been applied in the past to study and understand how users interact with objects or products, in order to improve product design – known as Usability Engineering. One of the earliest usability engineering research was conducted to study the movements of pilots’ eyes as they landed the plane using the array of instruments and controls (Fitts et al, 1947). A similar study was conducted by Anders (2001) on flight simulators with pilots wearing a head mounted eye tracker.

The modern eye-tracker device has taken many technological leaps. The emphasis has been to design the tracker to look as innocuous as possible so as to make participants feel comfortable and to elicit behavior at its natural best. A Swedish Company named ‘Tobii’ founded in 2001 has managed to develop an eye-tracking device that lets users wear them unobtrusively and does not restrain head movements.

 

According to Internet Retailing, the cost of each pair of Tobii Glasses is $45,000 (~ £30,000). This includes the tracking device, a data collection device as well as the Tobii Studio software for analyzing the data collected. Interestingly, I remember James Intrilligator talking about Bangor University trying to procure the device to help aid consumer research. Any updates on that?

I remember James spoke about an experiment where eye-trackers were used in a bar setting to understand the process behind how consumers choose a pint of beer.

Here is a video that shows the eye movements of a participant from that study after he enters the bar. Notice how even after the patron places the order; he still gazes at other brands of beer, continuing to evaluate his choice post-purchase.

Client: Carlsberg

Agency: Ipsos, Sweden

Audio Language: Swedish

Data about eye-movements can be useful in many different areas and fields to gain insights that cannot be collected based on explicit measurement tools.

Implications of eye-tracking technology –

Search Engines

Numerous eye-tracking studies have been conducted to test how users analyze search results produced by a search engine. Google has carried out research in their labs to understand how users scan their results.

Take a look at the heat map generated by a user on a typical search result page –

The darker the pattern the more time they spent looking at that spot. The results show that most users found what they were trying to look for in the first two results and seldom read further than the first four links. Users most often ignore looking at the right side of the page, which displays the sponsored advertisements (Aula and Rodden, 2009).

If you use Google regularly, you must have noticed that when you search for a query, it now returns images as well as textual links on the same page. They call this a Universal search. Google ran a series of studies to test whether the image results on the same page were distracting to the user.

Here is a video of how users scan the results in real time. The larger the dot gets, the longer the user pauses and gazes at that spot.

It was found that the thumbnails do not distract the user, or affect the order of scanning the results. It made it easier for participants to find what they were looking for.

Supermarkets

In the chaotic world of supermarket shelves, it is a herculean task to get your brand noticed among a host of other competitor brands placed together. Eye-tracking technology can help understand how a consumer filters the information and selectively attends to stimuli that interest him or her most.

Pieters and Warlop (1999) conducted an eye-tracking study that examined how time pressure affects motivation and consumer choice. The results showed that consumers adapt to the time pressure condition by making shorter eye-fixations and concentrate more on the pictorial information of a product that on the textual information.

So how do consumers buy a product at a supermarket?
Russo and Leclerc (1994) conducted a study to understand how shoppers select a product amongst competing brands through a supermarket shelf simulation in a laboratory setting. They found that the process of selecting a product could be broken down into three stages:

(a) Orientation – This is where a screening of the products takes place without any fixations on a particular product. This stage helps in acquiring information about brand sizes, available brands and the physical layout.

(b) Evaluation – This is where consumers evaluated between two or three products and it forms the longest part of the entire process of purchasing. Direct comparisons take place between the two/three alternatives (gazing back and forth).

(c)  Verification – Similar to the previous stage, however the eye fixations remained shorter at this stage. This suggests that once the decision has been made, consumers still reevaluate their decision by confirming whether the brand selected in superior or best suited to their needs as compared to the alternatives.

This is a eye-movement map generated from a shelf scanning experiment in a supermarket –

Insights from such studies can be used to gain insights into how a consumer evaluates products on the crowded shelf. Note that the participant never looks at the top shelf and the bottom shelf. Perhaps if you are a college student on a shoestring budget, this is where you should look if you want to buy save some money.

 

Advertising

Eye-tracking studies can be conducted on print advertisements to evaluate the effectiveness of advertisements. There are several insights that can be gained from this type of a study –

–       Attention spread of different elements of the ad

–       Flow of the eye movement

–       Average viewing time of the ad

Source: Tobii Case Studies

Print Ad Study for Prada – LG

The results obtained from the study conducted on the Prada – LG Print ad can help reveal a number of things on how consumers perceive the advertisement, such as –

On what parts of the ad did participants gaze?

How long did the participants gaze at a particular element?

In what order (flow) did the participants view the advertisement?

 

Jealous Girlfriends 😛

 

Drawbacks of Eye-Tracking Studies

Although eye-tracking technology may seem promising, it has some drawbacks, apart from the fact that college students cannot buy a pair of trackers for their in-house basement laboratory.

Eye-tracking studies are low on ecological validity. Most supermarket simulations created in the laboratory do not elicit behavior that may be displayed under natural settings. It is difficult to expect participants to behave and act normally the way they would while buying groceries, after making them wear a hefty pair of glasses and a helmet on their head. Study results may also get influenced due to demand awareness. Participants in an eye-tracker study may guess the hypothesis of the experiment and consciously behave in a way so as to support the hypothesis. For example, participants who are made to look at a search page on Google, may guess that the experiment is designed to test effectiveness of internet ads and may deliberately avoid looking at the right hand side of the page.

Eye-tracking devices need to improve their design to make it look as innocuous as possible. Devices that track eye movements but are not contraptions worn by the participant may perhaps help in increasing validity of such experiments.

Food for thought

  • Do you think if you were a participant in an eye-tracking study, the strange contraption on your head would make you behave differently? In what way?
  • Can you think of any other areas of research where eye-tracking technology can help generate useful insights?

Reference:

Anders, G. (2001). Pilot’s Attention Allocation During Approach and Landing–Eye- and Head-Tracking Research in an A330 Full Flight Simulator. International Symposium on Aviation Psychology (ISAP). Columbus, OH.

Aula, A. & Rodden, K. (2009) Eye tracking studies: more than meets the eye. The Official Google Blog.

Hunziker, H. W. (1970). Visuelle Informationsaufnahme und Intelligenz: Eine Untersuchung über die Augenfixationen beim Problemlösen. Schweizerische Zeitschrift für Psychologie und ihre Anwendungen, 29, Nr 1/2. English version: http://www.learning-systems.ch/multimedia/forsch1e.htm

Pieters, R & Warlop, L. (1999). Visual Attention During Brand Choice: The Impact of Time Pressure and Task Motivation. International Journal of Research in Marketing, 16 (1), 1-17.

Russo, J. E. and F. Leclerc (1994). An eye-fixation analysis of choice processes for consumer nondurables. Journal of Consumer Research, 21 (2), 274-290.


Week 8: Heuristics in the Consumer World

When Kahneman and Tversky went to a supermarket!

As a Consumer Psychology student, reading articles and literature on consumer behavior, has helped me gain a better understanding of how the mind of a consumer works when buying a product. Although we all do notice that there are certain stages we go through before making a purchase decision, this course has helped me to scientifically understand the entire process. However, I have realized that I (Consumer) am not the only one who knows how my mind works. The person on the other side of the counter (Seller/Marketer) also has a similar, in-depth knowledge that can be used to manipulate my brain (and my decision) into buying what he wants me to buy!

This week, I will try and jump on both sides of the counter and take a look at how shoppers rely on heuristics while shopping and how sellers can make use of this knowledge to increase sales.

heu·ris·tic [hyoo-ris-tik]. noun

“Computing proceeding to a solution by trial and error or by rules that are only loosely defined.”

Source: Oxford Dictionary

Daniel Kahneman and Amos Tvsersky were the pioneers in the research on heuristics (although the concept was originally introduced by Herbert Simon). In an article by Kahneman, Slovic and Tvsersky (1974), heuristics are described as certain principles or rules that people follow “…which help in reducing the complex tasks of assessing probabilities and predicting values to simpler judgmental operations.” (p.3). Although they help us in arriving at decisions faster, they can sometimes lead to severe and systematic errors in decision making. We will look at some of the heuristics below and how consumers often use them to make purchase decisions.

i. Availability Heuristic

When people try to estimate the frequency or probability of occurrence of an event or by the ease with which they can remember instances of the event occurring, they are using availability heuristic to make a decision. Vivid, weird, unusual or emotionally charged instances of events will be better remembered thus leading to a bias in estimation of probability (Kahneman and Tversky, 1972).

Consumers often ignore the base-rate information (how often the event really occurs) and place more importance to information that is more easily accessible. For example, if you once owned a Sony Walkman that gave you a lot of trouble and needed repair, you are likely to remember your dissatisfaction with the Walkman and will influence your decisions about buying Sony products even years later.

A related concept to availability heuristic is the ‘law of small numbers’, where people generalize information gathered from a small number of people to the population. For example, if your friends say the new café on High Street, which opened recently, is terrible, you may believe that this belief is held by the majority of people, and never try out the new café.

Marketing Implications

Marketers can use the availability heuristic to their advantage or use it to overcome bias. Advertisements that contain vivid imagery, humorous themes, are better recalled. Such advertisements can help in increasing product recall among consumers thereby leading to increased purchase frequency. Marketers can also similarly exploit (?) the ‘law of small numbers’ (Hoyer and Macinnis, 2009). If you look at the product description of an item on Amazon, you can usually see recommendations and reviews from around 3-4 people.  Consumers may use the law of small numbers to generalize and believe that a majority of the population likes the product.

ii. Representativeness Heuristic

This is a fallacy where people estimate the frequency or probability of an event/product by considering how much the event or product resembles the prototype. Kahneman and Tversky (1972) describe a person who uses this heuristic as someone who evaluates the probability of an event, by the degree to which it is similar in essential properties to it’s parent population.

If a new product launched in the market looks similar to a well-established brand, consumers often associate the new product with the attributes of the established one.  If you associate McDonald’s with unhealthy, junk food, you may already base a similar opinion of a newly opened fast food restaurant. Interestingly, McDonalds is trying to shed its ‘unhealthy’ image by offering a healthier variety of Happy Meals.

Marketing Implications

Marketers can take advantage of this heuristic by launching new products with attributes similar to the prototype considered by consumers. Packaging a new product to (some extent) resemble a well-known brand can lead to more consumers willing to try out the new product.

iii. Anchoring or Focalism

People often start with a reference point, which can be implicitly suggested to them. They then try and adjust the anchor to reach an estimate. This may lead to a cognitive bias, as the anchor or the reference point decided by the estimator often affects the final estimate.

In a consumer setting, consumers often unintentionally use this heuristic to judge whether an item is expensive or affordable. Research by Ariely, Loewenstein, and Prelec (2003) shows that participants are willing to pay a higher price for a product when the anchor considered is high, than participants whose anchor was low.

To illustrate with an example, and I swear I am not making this up, imagine you walk in to this restaurant called Norma’s in New York. You flip through the menu and your eyes bulge out when you notice that they make The Zillion Dollar Lobster Frittata with a Supersize serving of Servuga Caviar for $1000 (~ £630). The restaurant uses this absurdly priced item on the menu as an anchor point on their menu. This helps patrons look at the other (slightly less) ridiculously priced items on the menu, seem reasonable in comparison! (Meghan, 2011)

Click here to view their menu card

Marketing Implications

Looking at this from a seller’s point of view, the placement of products in the aisle at a showroom or a supermarket can influence the purchase behavior of consumers. If a £1000 TV set is placed at the beginning of the Electronics aisle, and a similar TV set which costs £800 is placed at the end of the aisle, consumers would often perceive the £800 TV set to be a better deal!

Further Reading

There are many more heuristics that have been developed further to the research by Kahneman and Tversky, which we use in everyday life. Although, we cannot review each one in detail, I have listed a few links below for further reading if you are interested –

–       Consumer Behavior by Hoyer & Macinnis – Link

–       Heuristic Decision Making by Gigerenzer and Gaissmaier (2011): This is a recent paper that looks at some of the heuristics developed by Daniel and Kahneman as well as some new principles developed as an off-shoot from the original ones, in detail. – Link

During my research for this blog, I have been grappling with some questions and I am still looking for their answers. So to conclude, here is some –

Food for thought

  • Given the complexity involved in decision-making, there is no doubt that heuristics can help us arrive at decisions and conclusions, easier and faster. However, using each heuristic can result in a cognitive bias that can color our decision. Do you think consumers should consciously stop relying on heuristics to make purchase decisions?
  • If you were a marketing manager of a brand, will there be some kind of a moral/ethical dilemma in your mind, before you make use of heuristics and capitalize on the phenomena?

Reference:

Ariely, D., Loewenstein, G. & Prelec, D. (2006). Tom Sawyer and the construction of value. Journal of Economic Behavior & Organization, 60, 1–10.

Hoyer, W. & Macinnis, D. (2009) Consumer Behavior. USA: South Western.

Kahneman, D., Slovic, P. & Tversky, A. (1974). Judgment under uncertainty: Heuristics and biases. Science, 185, 1124-1131.

Meghan, V.H. (2011). Anchoring & Adjustment on “Hell’s Kitchen”. Retrieved 17th November 2011 from here


Week 7: Money / Get away ♫

The light bulb in my head lit up when I chanced upon something on High Street and bought it immediately! I found an original vinyl of Pink Floyd’s Dark Side of the Moon at a small records shop in Bangor.

Although it was an impulse buy, I think to some extent it was influenced by the Pink Floyd songs from the same album playing on the speakers in the shop! This made me think deeply about how much of an influence can in-store music have on purchase behavior.

During the second discussion week we discussed an article titled, ‘Representations of the emotions associated with a wine purchasing or consumption experience’ by Mora and Moscarola (2010). The researchers attempted to study the kind of emotions evoked among wine consumers while purchasing a bottle of wine. Similarly, listening to music also evokes emotional responses (along with sensory, imaginal and cognitive responses). Emotional responses to music range from joy to sorrow or even anger (Lacher, 1989). Sloboda (1985) suggested that one of the main reason behind people indulging in musical activity (composing or performing or listening music) is that music is capable of arousing deep and significant emotions.

Applying this information in the consumer world, background music can be used as part of the store atmospherics to influence the perceptions and preferences of consumers (Bruner, 1990). However the kind of background music playing can also make a big difference on the consumers. I remember quite a few times when I came back empty handed from a shopping spree after getting irritated by the din of the shoppers and ‘Judas – Judas’ blaring through the speakers!

Areni and Kim (1993) conducted an interesting study that examined the effect of background music (Top Forty vs Classical Music) on the consumption of wine. In their literature review on wine and music, they suggest that wine tasting/buying, is associated with being sophisticated and also has a certain snob appeal to it. The researchers hypothesized that classical music is better suited to complement activities involving wine tasting, selecting and buying.

The results of the experiment conducted, suggested that classical music (playing in the background) has an impact on the kind of wine selected rather than the quantity of wine bought. Customers bought more expensive kinds of wines when classical music played in the background as opposed to Top Forty.

Here is some classical music for your soul –

Bach – Double Concerto in D Minor

From the results from the study and other research carried out in this area, consumers will behave in a profitable manner (buy more, buy expensive, stay longer in the shop, etc.) if the kind of background music playing is consistent and provides appropriate and congruent external cues. The classical music playing in the wine store may have conveyed a sophisticated, upper class atmosphere hinting that only expensive wines must be considered at the store.

Another study by Mattila and Wirtz (2001) examined the effects of scent and music on consumer purchase behavior. They study found that when the type of scent and music played in the background are congruent with each other, consumers indulge in impulse behavior as well as evaluate the products and the environment significantly positively.

To some extent, I think background music enhances the shopping experience for me. However, very loud music, or louder patrons can ruin the experience just as quickly. Soft music playing in the background can enhance the experience in high-end stores (like A&F) where the ambient noise of other shoppers, sales execs is low in comparison to shops like Primark where you can often hear people whoo-hooing over finding the deal of the century. In my opinion, when I enter a store (especially an apparel store) if the music playing in the background turns out to be a band or genre I do not like at all, chances are I am going to walk out of the store empty handed. Trying to find a genre of music that appeals to maximum number of consumers is a difficult task.

A London based firm called MusicWorks specializes in customizing background music for businesses. To find out attitudes of shoppers about in-store music, the company took to the streets and interviewed shoppers to find out their views. Many of them agreed that music enhances mood that may result in a positive product evaluation. Check out the video below –

Food for thought

Should no frills shops like Kwik Save refrain from using background music? Do store atmospherics contribute to a lesser extent when selling inferior or cheaper products? Does in store music make an impact only when the product is superior or has ‘sophisticated’ connotations?

Reference

Bruner II, Gordon C. (1990), “Music, Mood, and Marketing,” Journal of Marketing, (October), 94-104.

Charles S. Areni, David Kim (1993), “The influence of background music on shopping behavior: Classical versus Top-forty music in a wine store”, in Advances in Consumer Research Volume 20, eds. Leigh McAlister and Michael L. Rothschild, Provo, UT : Association for Consumer Research, Pages: 336-340

Kathleen T. Lacher (1989), “Hedonic consumption: Music as a product”, in Advances in Consumer Research Volume 16, eds. Thomas K. Srull, Provo, UT : Association for Consumer Research, Pages: 367-373.

Mattila, A.S., Wirtz, J., 2001. Congruency of scent and music as a driver of in-store evaluations and behavior. Journal of Retailing 77, 273–289

Mora, P. and Moscarola, J. (2010) Representations of the emotions associated with a wine purchasing or consumption experience. International Journal of Consumer Studies, 34: 674–683.

Sloboda, John A. (1985), The Musical Mind: The cognitive psychology of music, Oxford: Clarendon Press.


Week 5: From William and Sons, to Morri-sons!

A few months back, if I was sitting at home stretched in front of the telly, and craving for some crisps all I had to do was pick up the phone and call the guy at Hanuman Supermarket. ‘The guy’ misleadingly calls his shop a supermarket. Take a look at his ‘supermarket’ below –

Such shops often referred to as ‘mom-and-pop’ shops have been around in developing nations long before supermarkets came into existence. These traditional trade (hereafter: TT) outlets symbiotically dwell in co-existence with the supermarkets. The Nielsen Company carries out a Shopper Trends study every year. It reported that the rise of the supermarkets has resulted in a new segment of consumers, who are modern trade (hereafter: MT) loyalist, but in fact shop at both MT as well as TT formats. These consumers typically allocate more resources to spending at the supermarket than the traditional shops.

Let us first see some of the features of the TT shops –

  • Competing for shelf space

The store usually has limited shelf space and brands often have to compete with their rivals for visibility. Packaging and color scheme are vital in this context, as these are the only differentiators that can help in making the product to stand out.

  • Emphasis on the shop keeper –

As opposed to a self-service and autonomous layout of a supermarket, these stores have the shopkeeper as the first point of contact. Any products required could be accessed through the shopkeeper who often has a detailed inventory of his shop, memorized! Often the shopkeeper acts as a guide and gives advice on brand selection and reassurance about brand quality. In case you fall short of a buck or two, the shopkeepers often readily credit. This makes the shopkeeper a crucial link between the community and the products and services required within the community.

  • Know your customer

Often the shopkeeper knows his customers intimately. This reduces the suspicion of an ulterior motive of the shopkeeper when they try to promote a particular brand to a customer. Convincing the shopkeeper about the benefits of a particular brand can often ensure better sales than a snazzy billboard on a highway!

Although MT outlets have a huge variety of brands in every category, TT outlets win brownie points for convenience of access to the shop. Supermarkets are often located at the outskirts of a bustling city, due to the huge amount of real estate required to set up the market. This often forces customers to plan a visit to the supermarket at the beginning of each month and the TT shops satisfy any contingencies arising during the month. However, in a study by Goswami and Mishra (2009) it was found that TT shops score over MT shops only on the factor of Store Location. The study investigated correlations between Customer Patronage and Grocery Shops.

 

Traditional Stores scored poorly on attributes like cleanliness, offers and quality while doing well on the factor – Location.

To find out more about the differences in MT and TT in Bangor, I attempted to compare a MT and TT outlet in Bangor. Although there are very few traditional stores surviving in Bangor anymore, I have tried to do a comparison between a friendly neighborhood butcher (Williams & Son) on High Street and the Meat Section at Morrisons!

(I could not take pictures of Morrisons as they have a company policy against allowing customers to do so)

Friendliness

You can feel it in the air! As soon as I entered Williams, the staff smiled and welcomed me to the shop. They were not even disappointed when I told them I was there only to take pictures and talk to the staff about the business. They were happy to pose for the pictures in spite of having a lot of customers to attend to. The staff is extremely courteous and knows their customers quite well.

The guy at Morrisons said he was quite busy to talk to me about the business at the moment (although I was the only customer around, and I wasn’t even buying!).

Store Layout

Morrisons has a huge space dedicated to the fresh meat related products. They have a long tabletop with a glass case where they attractively display the products using decorations like grapes and flowers (!). The long tabletop ensures that customers do not have to stand in a long queue and can easily browse through the products.

Williams & Sons have a small window display outside the shop.

However they have made the best use of the space they have and have decorated the window with a Christmas theme in mind. The interior of the shop has an L shaped layout. However, this often results in crowding and a long queuing, with little space to move around the shop.

Cleanliness

This is one area where I believe Morrisons trumps over Williams and Sons. The section looks clean and hygienic. The floor was clean and there was no litter anywhere. The meat cutting and cooking section at Williams & Sons is located behind the counter and is not visible from outside. The store has a cluttered look with boxes stored along the corners of the shop. The floor also needs a good scrubbing 😛

Offers

Williams & Sons has recently introduced a meal deal at £ 2.60. They are also planning on having special offers during Christmas and the festive season. Morrisons has no offers on meats at the moment and the staff is not informed about future offers, which are released by the powers to be at Morrisons.

To sum up, in my opinion, both the formats of trade have their own pros and cons; however, supermarkets are gradually pushing traditional stores out of the race. And very soon, the friendly neighborhood family butcher will be a guy from the folklores!

References:

Biddappa, R. (2011) Both traditional and modern trade show growth momentum, but modern trade registers stronger value growth. (For The Nielsen Company)
Retrieved from: http://in.nielsen.com/news/20110712.shtml

Frade Arnaud (2009) Opportunities in the Traditional Trade of Emerging Markets. (For TNS Global) Retrieved from: http://blogs.tnsglobal.com/retail_shopper/2009/12/opportunities-in-the-traditional-trade-of-emerging-markets.html

Paromita Goswami, Mridula S. Mishra, (2009) “Would Indian consumers move from kirana stores to organized retailers when shopping for groceries?”, Asia Pacific Journal of Marketing and Logistics, Vol. 21 Iss: 1, pp.127 – 143

                                             


Week 4 – To Buy or Not to Buy: That is NOT the question

I was four customers away from the till at the checkout at Morrisons, when I spotted a big pack of M&Ms. I looked around to see the price but it wasn’t displayed. I decided to ask the cashier. So when it was my turn at the checkout –

Did I buy the chocolates? Yes

Did I check the price? No

Did I really need it? No

Did I think before buying it? No!

Morrisons – 1                                 Almost broke international student – 0

This was an example of an impulse buy. An impulse buy is a spur of the moment, unplanned decision to buy. Impulse buying is often activated due to motivation and perception (Weinberg and Gottwald, 2002).  To understand the process of an impulse buy, look at the five-stage decision making model below –

An impulse buy on the other hand does not involve the first three steps of the decision making model. Impulse buyers never evaluate the product and identify the need for it. Impulse buyers do not look for alternatives to the product (on the basis of brand, price, quantity) before making the purchase. Impulsive shoppers do indulge in information processing, however this comes in at a later stage, post-purchase. Impulse buyers may commonly feel a buyer’s remorse post shopping. This may be especially true if the product bought was a ‘big-ticket’ item. In a study by Weinberg and Gottwald, it was found that there was a low-level of cognitive involvement when indulging in an impulse buy. Such buyers are more prone to be emotionally involved in the purchase.

Research by Han, Morgan, Kotsiopulos and Kang-Park (1991) show some interesting findings that should keep you under cognitive control next time you step into Tesco. The study attempted to find possible variables (involving demographics of consumers) that can predict impulse behavior. It was found that non-student consumers indulge in planned shopping, while students and younger consumers are most likely to buy clothes on an impulse.

Self-report techniques are subject to effects of social desirability effect. This makes it difficult to objectively measure amount of cognitive control among impulse buyers who may try to mask the actual cognitive involvement by identifying needs for the product, post purchase and using them to justify the purchase.

Technology has made it even easier to indulge in buying, impulsively. An app developed by Amazon Mobile, allows consumers to scan barcodes. Once the barcode is recognized and matched on Amazon’s servers, consumers are connected to Amazon’s interface where they can purchase the product immediately (Dolcourt, 2010). People who prefer shopping online are more impulsive in nature than offline shoppers (Donthu and Garcia, 1999). Check out this commercial for Iphone 3Gs. In a 30-second commercial the girl holding the phone spent $ 29.95. Yes, I paused and calculated!

5 songs from I-tunes – 0.99$ each = $4.95

1 ticket to She & Him Concert = $25

Research suggests that there are certain factors that encourage impulse buying on the Internet. Anonymity of the shopper, easy access to products, and variety of goods available, easy comparison between multiple brands encourage impulse buying, online (Koski, 2004).

How to avoid buying impulsively

Impulse buying behavior is one of the major causes of consumer debt every year. Read on to find out how to stay away from buying impulsively –

  • Determine if it’s a want or a need
    Try to put the product into a ‘want’ or a ‘need’ category. Budget your needs and wants with more resources allocated for the needs. Limit your spending to ‘need’ related items.
  • Shop with a list or a plan and stick to it
    Its important to be focussed on the list of things you decided to buy and stick to it till you exit the store. Remember impulse buys mostly take place at the checkout counter. So avoid buying cookies and chocolates at the last minute.
  • Shop with cash versus credit cards
    Leave your credit card at home when going shopping for groceries and household items. The willingness-to-pay of consumers increases to a large extent when instructed to pay by card than hard cash (Prelec and Siemester, 2001). A plausible explaination behind this may be that its harder for people to part with their hard-earned cash, than with money which cannot be touched. Some facts compiled by Bankrate.com  (Bannister, 2004) observe that people who use credit cards at fast food restaurents spend upto 50% more than when they pay in cash.
  • Recognize store strategy
    Read and understand the dynamics behind impulse buying. Stores often place items at a level easily noticeable by shoppers. This is especially true at the check out counter, where frivolous products are placed at eye-level. Do not get trapped by such strategies.
  • Don’t go to a store to just hang out.
    Find a hobby or a place to hang out other than the shopping mall. Going out shopping after a bad day at work, or a fight with a friend, is not the best way to resolve emotions. This is the time when you are especially vulnerable to end up with Buyer’s Remorse.
  • Recognize the spending habit by tracking your spending
    Collect reciepts of all your purchases for the month and review them at the end of the month. Classify your purchases and calculate the amount spent on ‘frivolous’ items. Track this amount over a few months and understand your spending behavior.
  • Recognize some impulse buying is not all bad
    Certain deals and discounts may actually save you a fortune over a period. Spend more on deals and offers if its within your budget. But don’t forget that advertisers want every little offer to sound like the deal of the century!

Food for thought
Do you think as a marketer or a brand manager, one of the goals of a marketing strategy should be to increase impulse buying behavior among consumers? Can you think of some ways to increase impulse buying if you were the manager of an apparel brand?

References

Dolcourt, J. (2010, October 12). Amazon’s iphone barcode scanner takes impulse buying to a new level [Web log message]. Retrieved from http://reviews.cnet.com/8301-19512_7-20019420-233.html

Donthu, Naveen and Adriana Garcia (1999), “The Internet Shopper,” Journal of Advertising Research, V 39 (3), 52-58.

Han, Y.K, Morgan, G.A, Kotsiopulos, A, Kang-Park, J (1991) “Impulse buying behavior of apparel purchasers”, Clothing and Textile Research Journal, Vol.9 No.3 pp15-21

Koski, N. (2004). Impulse Buying on the Internet: Encouraging and Discouraging Factors. Frontiers of E-Business Research, eBRF 2004 University of Tampere, September 20-22.

Peter Weinberg, Wolfgang Gottwald, Impulsive consumer buying as a result of emotions, Journal of Business Research, Volume 10, Issue 1, March 1982, Pages 43-57.

Prelec, D. and D. Simester. (2001). “Always Leave Home Without It: A Further Investigation of the Credit Card Effect on Willingness to Pay,” Marketing Letters, 12(February), 5–12.