Monthly Archives: October 2010

Understanding Consumer Attitudes

17 Sunday Oct 2010

Posted by in Marketing Strategy

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Consumer attitudes are both an obstacle and an advantage to a marketer. Choosing to discount or ignore consumers’ attitudes of a particular product or service—while developing a marketing strategy—guarantees limited success of a campaign. In contrast, perceptive marketers leverage their understanding of attitudes to predict the behavior of consumers. These savvy marketers know exactly how to distinguish the differences between beliefs, attitudes, and behaviors while leveraging all three in the development of marketing strategies.

An attitude in marketing terms is defined as a general evaluation of a product or service formed over time (Solomon, 2008). An attitude satisfies a personal motive—and at the same time, affects the shopping and buying habits of consumers. Dr. Lars Perner (2010) defines consumer attitude simply as a composite of a consumer’s beliefs, feelings, and behavioral intentions toward some object within the context of marketing. A consumer can hold negative or positive beliefs or feelings toward a product or service. A behavioral intention is defined by the consumer’s belief or feeling with respect to the product or service.

A marketer is challenged to understand the reason a particular attitude might exist.

Perhaps the attitude formed as the result of a positive or negative personal experience. Maybe outside influences of other individuals persuaded the consumer’s opinion of a product or service. Attitudes are relatively enduring (Oskamp & Schultz, 2005, p. 8). Attitudes are a learned predisposition to proceed in favor of or opposed to a given object. In the context of marketing, an attitude is the filter to which every product and service is scrutinized.

The functional theory of attitudes—developed by Daniel Katz—offers an explanation as to the functional motives of attitudes to consumers (Solomon, 2008). Katz theorizes four possible functions of attitudes. Each function attempts to explain the source and purpose a particular attitude might have to the consumer. Understanding the purpose of a consumer’s attitude is an imperative step toward changing an attitude. Unlike Katz’s explanation of attitude—as it relates to social psychology, specifically the ideological or subjective side of man—consumer attitudes exist to satisfy a function (Katz, 1937).

The utilitarian function is one of the most recognized of Katz’s four defined functions. The utilitarian function is based on the ethical theory of utilitarianism, whereas an individual will make decisions based entirely on the producing the greatest amount of happiness as a whole (Sidgwick, 1907). A consumer’s attitude is clearly based on a utility function when the decision revolves around the amount of pain or pleasure in brings.

The value-expressive function is employed when a consumer is basing their attitude regarding a product or service on self-concept or central values. The association or reflection that a product or service has on the consumer is the main concern of an individual embracing the value expressive function (Solomon, 2008). This particular function is used when a consumer accepts a product or service with the intention of affecting their social identity.

The ego-defensive function is apparent when a consumer feels that the use of a product or service might compromise their self-image. Moreover, the ego-defensive attitude is difficult to change. The ego-defensive attitude—in general psychology—is a way for individuals deny their own disconcerting aspects (Narayan, 2010). A marketer must tread lightly when considering a message strategy to a consumer with an attitude based on the ego-defensive function.

The knowledge function is prevalent in individuals who are careful about organizing and providing structure regarding their attitude or opinion of a product or service (Solomon, 2008). A marketer can change a consumer’s knowledge function based attitude by using fact-based comparisons and real-world statistics in the message strategy. Vague and non-relevant marketing campaigns are ineffective against a knowledge attitude audience.

Advertising campaigns that appeal to consumer behaviors based on the value-expressive or utilitarian functions are the most common (Sirgy, 1991). Utilitarian advertisements deliver a message regarding the benefits of using a product or service. Advertising targeted to consumers with value-expressive attitudes will typically include product symbolism and an image strategy. In either case, it is important to understand why a consumer holds a particular attitude toward the product or service.

The ABC Model of Attitudes—consisting of the three components: affect, behavior, and cognition—accentuates the relationship between knowing, feeling, and doing (Solomon, 2008). Affect is the feeling an individual has regarding an object. In the current context, affect represents the emotion or opinion about a product or service. Behavior is the responses of a consumer resulting from affect and cognition. Behavior only implies intention. Cognition is an individual’s belief or knowledge about an attitude object.

The hierarchy of effects is the result of all three components working together. The hierarchy of effects is a concept used to distinguish between the involvement levels or motivation an individual might have toward the attitude object. The standard-learning hierarchy, low-involvement hierarchy, and experiential hierarchy are the three hierarchies of effects. Dr. Jill Novack, from Texas A&M University, includes a fourth member of the hierarchy of effects. Novack states that behavioral influence should be included, and represented by the component order—behavior, belief, and affect (Novack, 2010).

The standard-learning hierarchy, also known as the high-involvement hierarchy assumes that the consumer will conduct extensive research and establish beliefs about the attitude object. The consumer will then establish feelings regarding the attitude object. The feelings—or affect—are followed by the individual’s behavior. The cognition-affect-behavior approach is prevalent in purchase decisions where a high level of involvement is necessary.

The low-involvement hierarchy consists of a cognition-behavior-affect order of events. A consumer with an attitude formed via the low-involvement hierarchy of effects bases the purchase decision on what they know as opposed to what they feel. The consumer establishes feeling about a product or service after the purchase. This limited knowledge approach is not suitable for life-changing purchases such as a car or new home.

The experiential hierarchy of effects is defined by an affect-behavior-cognition processing order. In this scenario, the consumer is influenced to purchase based entirely on their feeling regarding a particular product or service. Cognition comes after the purchase and enforces the initial affect. Emotional contagion is common in attitudes formed by the experiential hierarchy of effects (Solomon, 2008). Emotional contagion, in this situation, suggests that the consumer is influenced by the emotion contained in the advertisement.

The elaboration likelihood model (ELM) offers a theory concerning attitude change. Similar to the ABC model of hierarchy, the ELM model is based on the level of involvement in the purchase (Petty & Cacioppo, 1981). Depending on the level of involvement and motivation, the consumer will follow one of two possible routes. The central route is when the consumer is highly involved in every aspect of the purchase. A consumer following the central route extends extra effort in researching and understanding the products or services. The peripheral route—as the name implies—is followed by a consumer with low involvement in the purchase process.

Social judgment theory offers another explanation for attitude changes, whereas a consumer compares current information to previous notions (Novack, 2010). Incoming messages are filtered down two possible paths—latitudes of acceptance and latitudes of rejection. If the new information is similar to existing information, the consumer follows the latitude of acceptance. In contrast, if the information is disparate, the consumer follows the latitude of rejection (Solomon, 2008).

Multiattribute models are used to understand and measure attitudes. The basic multiattribute model has three elements—attributes, beliefs, and weights. Attributes are the characteristics of the attitude object. Beliefs are a measurement of a particular attribute. Weights are the indications of importance or priority of a particular attribute. A multiattribute model can be used to measure a consumer’s overall attitude.

The most influential multiattribute model—the Fishbein model—also uses three components of attitude.  The first, salient beliefs, is a reference to the beliefs a person might gain during the evaluation of a product or service. Second, object-attribute linkages, is an indicator of the probability of importance for a particular attribute associated with an attitude object. Evaluation, the third component, is a measurement of importance for the attribute. The goal of the Fishbein model is to reduce overall attitudes into a score. Past and predicted consumer behavior can be used to enhance the Fishbein model (Smith, Terry, Manstead, & Louis, 2008).

A more advanced and automated modeling technique, semantic clustering, is used to analyze and predict consumer attitudes. While proven effective for measuring the flow and direction of information, recently semantic clustering is being used to elicit attitudes toward brands (Shaughnessy, 2010). Blogs and forums are a prime target for an analyst using the semantic clustering technique.

Results from a multiattribute will reveal several pieces of information that can be used in various marketing applications. If the competitor scores higher on a particular attribute, a marketer should downplay the attribute and emphasize the importance of a high-scoring attribute of his or her own. Likewise, if the score reveals a broken connection between a product and attribute, the marketer can develop a message strategy to establish the link. Differentiation is an important advantage to marketers. Using the results of a multiattribute model, a marketer can develop and market new attributes to existing products.

Changing a consumer’s attitude towards a product, service or brand is a marketer’s Holy Grail. Three attitude change strategies include: changing affect, changing behavior, and changing beliefs (Perner, 2010).  Classical conditioning is a technique used to change affect. In this situation, a marketer will sometimes pair or associate their product with a liked stimulus. The positive association creates an opportunity to change affect without necessarily altering the consumer’s beliefs. Altering the price or positioning of a product typically accomplishes changing behavior. One example is the use of coupons or incentives to promote sales.

Changing beliefs is the most difficult of the three. A marketer can leverage several approaches to changing a consumer’s beliefs about a product. Four common approaches include: change current held beliefs, change the importance of beliefs, add beliefs, and change ideal. Changing beliefs is sometimes a necessary, for example, when a mature product is to be reintroduced into the market (Arora, 2007).

Marketing spans many disciplines including mathematics, and psychology. Math plays an important role is predicting consumer behavior. Understanding the reasons behind consumer behavior requires knowledge of several theories of psychology. These two disciplines combine to aid in the complete rationalization of consumer behavior. Attitudes are easily formed, but difficult to change. Marketing is an ongoing attempt to instill a positive attitude toward a specific product or service.

Attitudes can be influenced by many factors outside the product attributes. Social and cultural environment as well as demographic, psychographic, and geographic conditions can sometimes shape consumer behavior. Consumer attitude, if positive, is an advantage to a marketer. A savvy marketer can build a model for prospecting new consumers from the attributes of a satisfied customer. Direct marketing companies create higher response rates by using look-alike modeling based on existing customers—individuals with a positive attitude.

Consumer behavior is the study of how a consumer thinks, feels, and selects between competing products. Moreover, the study of attitudes is critical to understanding the motivation and decision strategies employed by consumers. The combination of beliefs, attitudes, and behaviors influence how a consumer reacts to a product or service. Marketers develop relative, compelling marketing messages using the same combination of information, and ultimately influence consumer behavior.

References

Arora, R. (2007). Message framing strategies for new and mature products. The Journal of Product and Brand Management, 16(6), 377.  Retrieved October 4, 2010, from ABI/INFORM Global. (Document ID: 1373518421).

Katz, D. (1937). Attitude measurement as a method in social psychology. [Electronic version]. Social Forces, 15(4), 479-482. Retrieved October 3, 2010, from JSTOR:             http://www.jstor.org/stable/2571413

Narayan, S. (2010). The perils of faking it. Retrieved October 3, 2010, from http://64.74.118.102/2010/02/04214927/The-perils-of-faking-it.html

Novack, J. (2010). Internal influences – lifestyle and attitude. Retrieved, October 3, 2010, from http://www.marketingteacher.com/lesson-store/lesson-internal-influences-lifestyle-attitude.html

Oskamp, S. & Schultz, W. (2005). Attitudes and opinions. Lawrence Erlbaum Associates, NJ.

Perner, L. (2010). Consumer behavior: the psychology of marketing. Retrieved October 2, 2010, from http://www.consumerpsychologist.com/

Petty, R. & Cacioppo, J. (1981). Attitudes and persuasion: classic and contemporary approaches. Dubuque, IA: William C. Brown.

Shaughnessy, H. (2010). How semantic clustering helps analyze consumer attitudes. Retrieved, October 4, 2010, from http://blogs.hbr.org/research/2010/07/every-day-in-the-english.html

Sidgwick, H. (1907). Methods of ethics (7th ed.).  Macmillan and Company, London.

Sirgy, J. (1991). Value-expressive versus utilitarian advertising appeals: when and why to use each appeal. Retrieved October 2, 2010, from http://www.allbusiness.com/professional-scientific/advertising-related-services/270171-1.html

Smith, J., Terry, D., Manstead, A., Louis, W., Kotterman, D., & Wolfs, J. (2008). The Attitude-Behavior Relationship in Consumer Conduct: The Role of Norms, Past Behavior, and Self-Identity. The Journal of Social Psychology, 148(3), 311-33.  Retrieved October 4, 2010, from ABI/INFORM Global. (Document ID: 1501929231).

Solomon, M. (2008). Consumer behavior buying, having, and being (8th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.

Ethical imperatives of a marketing company

03 Sunday Oct 2010

Posted by in Marketing Psychology

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A marketing company is faced with a plethora of moral challenges. Considering that it is the responsibility of a marketing company to provide services on behalf of other companies, it stands to reason that any unethical decision or approach reflects on the company being represented by the marketing firm. Moreover, antitrust concerns are always prevalent due to the fact that the marketing company has access to internal knowledge of many companies—some of which are competitors in the same market.

Unlike other types of businesses, a marketing company must be trusted with a client’s most valuable asset—their customer data. In many cases, customer records for several companies are comingled and hosted on a common platform. The marketing company is responsible for protecting the integrity of the information, but at the same time ensure that the proprietary information is not shared with competitors.  All the while, the marketing company is expected to create revenue-producing campaigns.

A marketing company’s success is based entirely on the performance and effectiveness of their strategies and campaigns. If a marketing company represents several clients in the same industry, there is an inescapable moral dilemma. The marketing strategy for one company could benefit from knowing the marketing strategy and corporate direction of another. The marketing industry is crowded and fierce. Pressure to retain a customer could lead to unethical decisions by campaign managers and salespersons within a marketing company.

The temptation for a salesperson to leverage information from one account for the purpose of producing revenue-generating campaigns for another is not uncommon. Pressure from upper management, coupled with personal financial responsibilities, can influence the salesperson to make immoral decisions. If caught, the individuals responsible can face serious legal problems.  Velasquez (2006) defines one of the five characteristics of moral standards as one “not established by law or legislature” (p. 9). Marketing ethics are based on—among other things—advertising truthfulness and honesty, and privacy in database marketing.

Antitrust laws were designed to allow businesses to compete fairly. Having access to a competitor’s playbook—in this case, their marketing strategy—exposes an unfair advantage. The Federal Trade Commission created the Bureau of Competition to promote competition and protect consumers (Feinstein, 2010). The Compliance Division of the Bureau of Competition would be responsible for investigating complaints and enforcing the laws. Any legislation, passed or pending, should be in the foreground of all decisions made by an agency in the marketing industry.

A proven record of capabilities and performance is imperative, but not at the risk of a bad reputation. A marketing company that cannot be trusted to represent the best interest of their client’s will not sustain business. Moreover, the same effort and expertise should be used on every marketing campaign—regardless of the client. Ethical guidelines are critical to establishing a trustworthy reputation in the marketing industry. Enforcing the guidelines is critical for maintaining the reputation and business.

Before ethical guidelines can be established, research regarding ethics in the marketing industry must be conducted. Whether the research is empirical or conceptual, the results will be enough to formulate a series of ethical guidelines for the marketing industry. Research should continue until there is enough information regarding all current ethical dilemmas in order to establish an internal corporate ethical policy. The most prevalent ethical issues facing the marketing industry are product safety and reliability, advertising truthfulness and honesty, fairness in pricing, and forthrightness in selling (Murphy, 2002).

The American Marketing Association has established a code of ethics that provides a strong framework for which an internal, company-specific, code of ethics can be developed. The company’s ethical guidelines should include details regarding product development, promotion, distribution, pricing, and market research. Each area has its own unique ethical challenges. For example, ethic issues regarding promotion would encompass false and misleading advertising. Coercion is associated with the distribution or supply-chain process. The code of ethics needs to take into consideration every aspect of the business.

Marketing research has always been under the microscope of morally sensitive consumers. No one is comfortable giving personal information to a complete stranger. A corporate policy on ethics would offer support to the researchers in the field, and help alleviate any concerns by the survey audience. A published policy on the storage, usage, and privacy of information collected in the field will put at rest any concerns by the general audience. Additionally, an acceptable usage policy could serve as an addendum to the corporate code of ethics.

Corporate ethical guidelines concerning antitrust issues are becoming more important today than ever before. While the current code of ethics developed by The American Marketing Association concentrates on issues affecting consumers, there is little written regarding antitrust or business-to-business relationships. Legislation on the subject of antitrust has been in effect for over one hundred years.  The aim of antitrust legislation is to create a level playing field for competitors (Fontenot, 2010). At the same time, however, antitrust laws and corporate adopted ethic guidelines are designed to protect the organization.

A corporate guideline of ethics needs to go beyond the issues covered by legislation. The Sherman Antitrust Act of 1890, the Clayton Act of 1914, the Robinson-Patman Act of 1936, and the Federal Trade Commission Act of 1914 together ensure inter-firm competition without interfering with the spirit and creativity of the marketing industry. Standard Oil, Alcoa, American Tobacco, IBM, and Microsoft—to name a few—have faced charges for antitrust violations. These situations may have been avoided if an internal corporate code of ethics was developed and enforced.

The company’s code of ethics should be a culmination of two moral philosophies—moral idealism and utilitarianism. The moral idealism approach assumes many expectations drawn from industry standards to establish a universal acceptance approach (Sobel, 2010). The utilitarian approach will take into consideration social costs and benefits of the policies defined in the corporate code of ethics (Velasquez, 2006, p. 60).

The company’s code of ethics will ultimately define the ethical culture of the organization.

At one time or another, every company is faced with moral challenges. The need for scruples spans every department at every level. The need for written policies regarding the company’s position on certain ethical issues is crucial. A company-wide adopted code of ethics demonstrates the company’s moral responsibility. This is not only important to the employees, but many clients and prospects insist on such a policy. It is not unreasonable for a potential client to ask for documentation concerning service levels, continuity plans, and ethical standards.

Certain types of business conducted within a marketing company are bound by pre-existing regulations. For example, if a marketing company were to produce a campaign that leveraged information—such as personal health data—the HIPA regulations would need to be followed. Similarly, under certain conditions, the Sarbanes-Oxley Act of 2002 would be enforced to ensure the proper reporting of financial information resulting from campaigns.

A formal code of ethics should include sections covering the acceptable use of the company’s inter- or intra-net. A policy explaining the proper etiquette and protocol of communicating electronically is very important. A large percent of daily communication between employees and clients happens via email. The casualness of an email message sometimes lends itself to the inadvertent mention of sensitive company or client information.

Electronic communication has become the standard. This method of communication, however, exposes several vulnerabilities and concerns. Security of everyday, casual email messages is non-existent. The corporate code of ethics should address problems related to the flippant attitude sometimes portrayed in electronic communication. Casual comments can very easily be taken out of context and leveraged against a company for proving a lack of ethical standards.

Email etiquette and voice mail policies—at the corporate level—need to be well documented, distributed, and enforced as part of a corporate code of ethics. Email messages are no longer used only to send quick messages to the next cubicle (Woloch, 1999). Important corporate communications, such as policies and contract negotiations, are distributed across email channels. The simplistic nature of email communication lends itself to vulnerabilities as it is used more often to communicate sensitive information.

One of the most important considerations for adopting a code of ethics is current technology. New technologies are realized every day. Companies are beginning to leverage technologies that did not exist a decade ago. Social networking, instant messaging, and text messaging are becoming mainstream communication tools for businesses in every industry. The code of ethics adopted by any company should include current issues that are easy to understand and enforce. The code of ethics for a marketing company will need to expand beyond the typical policies for interoffice communication. Social media has become a viable communication channel for corporate marketing and advertising.

A company code of ethics should never be a company secret, but rather the roadmap for morality.

Every employee, at every level, within the corporate structure should be trained to understand, abide by, and enforce the company’s code of ethics. The employees are the face and voice of the company. Every action is subject to scrutiny. The company will succeed by standing strong, unified, and embracing the adopted code of ethics. However, when an employee recognizes a situation that is contrary to his or her own moral virtues, there needs to be a mechanism for grievance.

The company’s code of ethics must include the procedure for reporting unethical behavior. A formal grievance procedure will encourage employees to become actively engaged in enforcing the corporate code of ethics. Moreover, the company is making a global statement regarding the widespread acceptance of the code of ethics policies. The grievance procedure will need to include sections explaining the differences, and reporting steps, between an illegal action and an unethical action. An illegal action, for example, should be reported to authorities responsible for upholding the laws.

Once adopted, the code of ethics will be circulated throughout the organization. Every employee will be required to attend training sessions that will enforce the importance of a company code of ethics on ethics while explaining the details of each internal policy. Most large organizations have an extensive human resources department. The HR department is already well versed in the methods and techniques for training employees on company policies and procedures. The challenge, of course, is managing competing schedules and the demands of clients while isolating the necessary time to train every employee.

While it is true that companies conduct ethics training to comply with legal mandates, positive fallout includes increased employee morale and retention (Tyler, 2005). With a well-defined code of ethics and a company-wide adoption of the policies, ethical issues can be addressed before they become a concern. As policies within the code of ethics change to address the company’s social costs, new training will be necessary to implement and enforce these policies. The corporate code of ethics is always evolving.

A marketing company must not only adhere to their internal policies, but also inherit the policies of their clients. Every marketing company eventually becomes an extension of other businesses. Any wrongdoing by the marketing company is reflected upon its clients. In some cases, as with Nestle in the 1960s, the burden of responsibility is entirely with the company—not the marketing firm or outside vendors. After many years of unethical behavior resulting in public boycotts, Nestle pledged to adopt the WHO/UNICEF International Code of Marketing of Breast-milk Substitutes (Sikkink, 1986). The development of a formal code of ethics by Nestle Corporation might have thwarted the unethical actions by their marketing and advertising team.

Businesses of every size leverage marketing companies for promoting their products and services. Any marketing company, bound by its own code of ethics, will accept projects that will not jeopardize their moral standards. Ethical dilemmas occur when a marketing firm is forced to choose between their moral compass and their bottom line. The policies outlined in the corporate code of ethics are only a guideline for moral standards. The decisions faced by a marketing company may not be as black and white as a code of ethics. In these situations, the company must look beyond these policies.

Companies find themselves, many times, faced with an ethical dilemma. In many cases, the problem is not internal to the company, but the result of a decision made by a client. A marketing company can be asked to develop a marketing strategy for a controversial product. There will always be a desire to be profitable, but to what end? A formal statement of ethical principles will add the necessary structure for an organization to become strong moral stewards. At the same time, a code of ethics can cause personal conflict. A marketing company armed with a code of ethics becomes the moral compass for their clients and a beacon of societal principles for the consumer.

References

Feinstein, R. (2010). Bureau of competition: 2010 user’s guide. Retrieved August 28, 2010, from http://www.ftc.gov/bc/BCUsersGuide.pdf

Fontenot, R. (2010). Antitrust issues in marketing. Retrieved August 29, 2010, from http://hercules.gcsu.edu/~rfonteno/Strategic/Anti-trust%20Issues%20in%20Marketing.pdf

Murphy, P. (2002). Marketing ethics at the millennium: Review, reflections, and recommendations. Retrieved August 28, 2010, from http://www.ethicalbusiness.nd.edu/pdf/Marketing_Ethics_Millennium.pdf

Sikkink, K. (1986). Codes of conduct for transnational corporations: The case of the WHO/UNICEF code. [Electronic version] International Organization, 40(4), 815-840. Retrieved August 27, 2010, from JSTOR: http://www.jstor.org/stable/2706830

Sobel, J. (2010). Kant’s moral idealism. [Electronic version] Philosophical Studies, 52(2), 277-287. Retrieved August 27, 2010, from http://www.springerlink.com/content/h386362587434775/fulltext.pdf

Tyler, K. (2005). Do the right thing: ethics training programs help employees deal with ethical dilemmas Retrieved August 29, 2010, from http://findarticles.com/p/articles/mi_m3495/is_2_50/ai_n11841923/

Velasquez, M. (2006). Business ethics – concepts and cases. Pearson Prentice Hall. New Jersey

Woloch, L. (1999). Email etiquette. Retrieved August 27, 2010, from http://www.theproductivitypro.com/newsletters/Number%202%20March%201999.htm