JMDC 6(5) Master

Journal of Marketing Development and Competitiveness

North American Business Press Atlanta – Seattle – South Florida - Toronto

Journal of Marketing Development and Competitiveness

Dr. Michael Berry, Editor Dr. David Smith, Editor-In-Chief

NABP EDITORIAL ADVISORY BOARD

Dr. Andy Bertsch - MINOT STATE UNIVERSITY Dr. Jacob Bikker - UTRECHT UNIVERSITY, NETHERLANDS Dr. Bill Bommer - CALIFORNIA STATE UNIVERSITY, FRESNO Dr. Michael Bond - UNIVERSITY OF ARIZONA Dr. Charles Butler - COLORADO STATE UNIVERSITY Dr. Jon Carrick - STETSON UNIVERSITY Dr. Mondher Cherif - REIMS, FRANCE Dr. Daniel Condon - DOMINICAN UNIVERSITY, CHICAGO Dr. Bahram Dadgostar - LAKEHEAD UNIVERSITY, CANADA Dr. Deborah Erdos-Knapp - KENT STATE UNIVERSITY Dr. Bruce Forster - UNIVERSITY OF NEBRASKA, KEARNEY Dr. Nancy Furlow - MARYMOUNT UNIVERSITY Dr. Mark Gershon - TEMPLE UNIVERSITY Dr. Philippe Gregoire - UNIVERSITY OF LAVAL, CANADA Dr. Donald Grunewald - IONA COLLEGE Dr. Samanthala Hettihewa - UNIVERSITY OF BALLARAT, AUSTRALIA Dr. Russell Kashian - UNIVERSITY OF WISCONSIN, WHITEWATER Dr. Jeffrey Kennedy - PALM BEACH ATLANTIC UNIVERSITY Dr. Jerry Knutson - AG EDWARDS Dr. Dean Koutramanis - UNIVERSITY OF TAMPA Dr. Malek Lashgari - UNIVERSITY OF HARTFORD Dr. Priscilla Liang - CALIFORNIA STATE UNIVERSITY, CHANNEL ISLANDS Dr. Tony Matias - MATIAS AND ASSOCIATES Dr. Patti Meglich - UNIVERSITY OF NEBRASKA, OMAHA Dr. Robert Metts - UNIVERSITY OF NEVADA, RENO Dr. Adil Mouhammed - UNIVERSITY OF ILLINOIS, SPRINGFIELD Dr. Roy Pearson - COLLEGE OF WILLIAM AND MARY Dr. Sergiy Rakhmayil - RYERSON UNIVERSITY, CANADA Dr. Robert Scherer - CLEVELAND STATE UNIVERSITY Dr. Ira Sohn - MONTCLAIR STATE UNIVERSITY Dr. Reginal Sheppard - UNIVERSITY OF NEW BRUNSWICK, CANADA Dr. Carlos Spaht - LOUISIANA STATE UNIVERSITY, SHREVEPORT Dr. Ken Thorpe - EMORY UNIVERSITY Dr. Robert Tian - MEDIALLE COLLEGE Dr. Calin Valsan - BISHOP'S UNIVERSITY, CANADA Dr. Anne Walsh - LA SALLE UNIVERSITY Dr. Thomas Verney - SHIPPENSBURG STATE UNIVERSITY Dr. Christopher Wright - UNIVERSITY OF ADELAIDE, AUSTRALIA

Volume 6(5) ISSN 2155-2843

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©Journal of Marketing Development and Competitiveness 2012

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This Issue

Ethical Corporate Marketing and Societal Expectations ...... 11 Edgar Bellow

This is an age where many members of society are becoming more affluent than ever before. Coupled with the increased competition which results from globalization, consumers are now presented with more power over their purchasing decisions than ever before. Changes in communication and technology have also led to changes which mean that the general public is more aware of societal issues across the world. In particular, consumers may be becoming increasingly aware of how the behaviour of certain organisations either contributes to or alleviates these issues. This paper discusses the ethical decision making process, introduces the various elements of societal expectations, and discusses how these various expectations may influence the corporate marketing of the organisation.

The Effects of Institutionalization on the Internationalization of Markets: A Conceptual Model of Inquiry ...... 27 Constantine G. Polychroniou

Institutionalization of economic actors is a more sustainable strategy for achieving such growth than administrative action. This paper offers a conceptual model that identifies relationships among elements that help institutions evolve, and, attempts to reason out the effects of institutionalization on the internationalization of markets. The framework identifies three influencers that directly affect the evolution of institutions and it discusses how such influencers dominate the process of institutionalization. Intra-institutional cultures, be it monochronic or polychronic, interact under the pressures of endogenous and exogenous to the institution forces causing institutional evolution. Inter-institutional congruence empowers institutionalization which helps the internationalization of markets.

A Closer Review and Strategic Implications of the Comparative Market Analysis in Setting the List Price ...... 48 Chu V. Nguyen, Lucille L. Pointer, Charles Strain

Investigating the belief that real estate properties selling within the time of the listing agent’s contract duration are correctly priced based on comparative market analysis revealed that per square foot listed and sold prices, not their percentage deviation from the average of recent past sold prices, contribute more to the Time on Market (TOM) of listed property. Comparative Market Analysis (CMA) pricing is thus not as critical a factor in the prediction of Time on Market (TOM). Instead, other contributing factors contribute significantly to the TOMs of listed properties. As such, strategic planners may need to rethink their sales strategies.

Diversity Performance as a Factor in Marketing Programs: A Comparative Analysis across Ethnic Group Target Audiences ...... 62 Charles W. Richardson, Jr.

The realization that ethnicity can/should be used as a valid and appropriate segmentation variable has been in place for over fifty years. This research will explore the issue of how a firm’s diversity performance is featured as a component in their marketing plan. The study utilizes content analysis to examine advertising placed in six periodicals. These periodicals consisted of a business magazine, and a magazine targeting a female audience, for each of three market segments. The three segments are general (or, non-ethnic) readers, African-American readers, and Latino-American readers. Findings indicate that firms place ads that showcase their diversity activities in minority publications at a much higher rate than they do in publications targeting a general audience. Implications of these findings for firms directing ad placement, media firms, and consumers are discussed.

A Cross National Study of Topic Sensitivity: Implications for Web-Based Surveys ...... 71 Gerald Albaum, Catherine A. Roster, Scott M. Smith

Topic sensitivity can have a direct bearing on Web survey design choices such as whether to use forced answering and whether to offer non-substantive response options, like “prefer not to answer.” Respondents from six diverse nations/cultures rated sensitivity of a list of 11 topics that might be the focus of a marketing research study. Differences among the cultural sub-samples were found for 9 of 11 topics. Findings indicate that perceived sensitivity of topics is emic- rather than etic-bound, which implies that cross-national researchers should not assume generalizability of topic sensitivity.

How Can You Activate ‘Incongruence’ in ‘Customized Communications’ Through African-American Stereotypes? Measuring ‘Customized Communication Incongruity’ in Advertising ...... 83 Anshu Saxena Arora, Jun Wu

There has been a growing stream of research on advertising incongruity when targeting different cultures and stereotypes. We conceptualize that stereotypical activation through print advertisements generates Customized Communication Incongruity (CCI), leading to both positive and negative impact on ad- evoked feelings and overall brand equity. The research proposes and measures Customized Communication Incongruity (CCI) between the ad-message and commonly known African-American cultural stereotypes through ‘STAR’ framework [Stereotypes (S), Theme (T), Agreement (A) and Relevance (R)], which makes our research ‘first’ in the field of measuring advertising incongruity through stereotypes. We implement Structural Equation Modeling to examine the hypothesis measuring CCI and its effects on ad-evoked feelings and consumer-based brand equity. The research has strong academic and practical implications for researchers, academicians and practitioners as both positive and negative stereotypes were found to significantly impact ad-evoked feelings and brand equity.

iPad and Web 2.0 Pedagogic Innovations In Marketing: Utilization of Entrepreneurial Skills ...... 107 Catherine Giunta

This paper describes the implementation of iPad technology in an undergraduate marketing course. The impact upon entrepreneurial skill development, student effective use of the course’s textbook, and improved course performance support the use of this technological innovation. This pedagogical approach requires students to implement entrepreneurial skills as they experience marketing projects. The university, which houses this endeavor, includes entrepreneurial skills as a component of their liberal arts core education, and has been recognized three times by Entrepreneur magazine as one of the nation’s Top 100 Entrepreneurial Universities. Challenges exist including realization that this technology and research are in preliminary stages.

Marketing a United States Multinational Brand in the United Arab Emirates ...... 115 Ed Langlois, Ann Langlois, Danielle Havens

The purpose of this study is to explore the unique challenges facing advertising agencies doing business in the UAE compared to the US. This study identifies the impact of culture on advertising campaigns and recommends how to successfully adapt US marketing strategies to reach this diverse consumer market. This paper identifies several misconceptions and their affect when planning marketing campaigns for the UAE.

New Perspective of Cross-Cultural Communications: Applications in China Marketing ...... 123 Hong Wang

The success of marketing communication in today’s world is obviously determined by marketer’s cultural intelligence, and this is particularly true for international marketing practice, in which cross-cultural perspectives are definitely important. Cross-cultural communication is becoming even more important for the Chinese marketers in this new century since China planned to more widely open its market to the world and export more of its service and products to the world market. This paper suggests that Chinese marketers are better prepared for cross-cultural communication and put it at their corporate strategic level for marketing China and China marketing. It also suggests that anthropological approaches offer highly effective applications and solutions toward the understanding of cross-cultural issues in international marketing communication.

Effects of Coupons on Consumer Purchase Behavior: A Meta-Analysis ...... 131 Somjit Barat, Lilly Ye

The authors conduct a meta-analysis of studies on coupons and their effects on buyer behavior. Extant research on related topics is vague on measures applied, contextual and outcome constructs. This article, in contrast, offers academics a better grasp on some of the problem areas and provides avenues for future research. Specifically, we focus on effects of 1) Coupon attitudes and coupon knowledge on coupon use; 2) Manufacturers’ coupons on moderating effect between coupon perception and behavior towards coupon; and 3) Studies using objective outcomes on the relation between the perception towards coupons and behavior towards coupons.

GUIDELINES FOR SUBMISSION

Journal of Marketing Development and Competitiveness (JMDC)

Domain Statement

The Journal of Marketing Development and Competitiveness is a double blind peer reviewed journal that publishes thought-provoking, in-depth articles that cover the marketing arena and the interface between marketing and firm competitiveness. Articles in JMDC bridge the gap between theory and application. The journal is widely circulated with a diverse readership that includes practitioners and academics, profit and nonprofit organizations, and government institutions. Although the focus is on traditional marketing mix topics, it also draws on other disciplines including entrepreneurship, management, economics, and finance as well as any marketing issue in an international context. JMDC is committed to publishing a broad spectrum of conceptual and empirical articles that make a new theoretical and/or substantive contribution to the field. The target acceptance bounds of JMDC run between 13% and 19%. All articles go through a double blind review process, and acceptance decisions are made within forty-five days of submission. Authors of unaccepted papers are free to submit their papers to another journal.

Submission Format

Articles should be submitted following the American Psychological Association format. Articles should not be more than 30 double-spaced, typed pages in length including all figures, graphs, references, and appendices. Submit two hard copies of manuscript along with a disk typed in MS-Word.

Make main sections and subsections easily identifiable by inserting appropriate headings and sub-headings. Type all first-level headings flush with the left margin, bold and capitalized. Second-level headings are also typed flush with the left margin but should only be bold. Third- level headings, if any, should also be flush with the left margin and italicized.

Include a title page with manuscript which includes the full names, affiliations, address, phone, fax, and e-mail addresses of all authors and identifies one person as the Primary Contact. Put the submission date on the bottom of the title page. On a separate sheet, include the title and an abstract of 100 words or less. Do not include authors’ names on this sheet. A final page, “About the Authors,” should include a brief biographical sketch of 100 words or less on each author. Include current place of employment and degrees held.

References must be written in APA style. It is the responsibility of the author(s) to ensure that the paper is thoroughly and accurately reviewed for spelling, grammar and referencing.

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Authors will receive an acknowledgement by e-mail including a reference number shortly after receipt of the manuscript. All manuscripts within the general domain of the journal will be sent for at least two reviews, using a double blind format, from members of our Editorial Board or their designated reviewers. In the majority of cases, authors will be notified within 45 days of the result of the review. If reviewers recommend changes, authors will receive a copy of the reviews and a timetable for submitting revisions. Papers and disks will not be returned to authors.

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Ethical Corporate Marketing and Societal Expectations

Edgar Bellow Reims Management School – France

INTRODUCTION

This is an age in which societies across the world are generally becoming more affluent, with greater levels of disposable income than ever before (Burtless 1). Although the growth of consumerism makes this quite evident in many Western countries, the developing economies across many other regions of the world, particularly Asia, indicate that this is a developing global trend. Along with globalization this is opening up the choice which is available to consumers across the entire range of goods and services to which they have access. The implications of this are that consumers are being granted greater discretion over which products and services they wish to purchase (Werther & Chandler 319). This means that in order for a company to sustain a competitive advantage against its global competitors, it must be able to meet the expectations of consumers. This involves not only creating products which meet the expectations of the customer, but also engaging in business practices which meet the expectations of the customer (Clarke et al. 231). For this reason, ethics in business and marketing has become a popular area of study for many researchers. Although there appears to be overwhelming amounts of literature which relate to isolated areas of corporate social responsibility and ethics in corporate marketing there appears to be scant literature which actually draws the concepts together for a holistic perspective. There are several papers which examine the potential expectations of consumers in isolated areas, but many do not discuss the precise implications of how these may be used to market the company. What is more, many of the published articles available do not consider the implications to organisations when various elements of societal expectation of the firm are combined. Although it is true that each individual element may create its own set of consequences for the organisation, the implications may not be fully appreciated until all factors are combined. The interaction of different factors may lead to quite different conclusions when taken as a whole. For example while one approach taken by an organisation may be successful in addressing society’s economic expectations of the company, these actions may in fact be quite detrimental to environmental expectations. This review therefore aims to address the gap in the literature,

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by synthesising current research into the societal expectations of organisations with reference to corporate social responsibility, and discussing the implications of these expectations on ethical corporate marketing. The first section of the review will focus on a discussion which introduces the specific concept of ethical corporate marketing. This section will discuss the definition and theoretical basis of the concept, with some discussion also given to the various elements of which the concept may be comprised. The second section will then go on to discuss the various expectations which society has for any organisation. This will include discussion of economic, legal, ethical, environmental and philanthropic expectations. This section will aim to build a comprehensive set of general expectations across these five key areas which will then be discussed in the subsequent sections. The third section of the paper will discuss how these various expectations relate to ethical corporate marketing, and identify the implications for organisations. The aim of this chapter will be to discuss the various expectations not only in isolation, but also when considering them as a comprehensive framework of expectations. Finally, the paper will conclude with a summary of the discussion and a set of recommendations which may ensure that societal expectations are observed in organisations’ ethical corporate marketing practices.

INTRODUCING ETHICAL CORPORATE MARKETING

Clearly, in order to fully appreciate how societal expectations may impact on ethical corporate marketing, there needs to be a comprehensive understanding of the concept described by this term. The aim of this first chapter is therefore to introduce the concept of ethical corporate marketing. This will include discussion on the definition, and various elements which may be included in the concept. There will also be some discussion as to how companies may currently choose to embrace the concept and the implications of doing so. This chapter should therefore provide an adequate grounding in ethical corporate marketing so that it is quite clear to what the subsequent chapters refer.

Towards a Definition of Ethical Corporate Marketing Corporate Marketing In order to understand the concept of ethical corporate marketing, there must first be some discussion as to what exactly comprises corporate marketing itself. While in the past marketing may have focused on one particular product or an individual area of a company, marketing has undergone somewhat of a paradigm shift in recent years, and corporate marketing marks a logical stage of the evolution of marketing. The new institutional-wide focus which has emerged has been termed ‘corporate marketing’ (Balmer 248). This in itself incorporates a range of marketing-based concepts, such as corporate identity, corporate branding, corporate image, corporate reputation and corporate communications.1 Balmer and Greyser (730) suggest that the question which best summarises the concept of corporate marketing is: “Can we, as an institution, have meaningful, positive and profitable bilateral on-going relationships with customers, and other stakeholder groups and communities?” There are a number of misconceptions which surround corporate marketing which must also be rejected while discussing this concept. The first of these is that, despite the terminology, corporate marketing does not only apply to corporations or large companies, but applies to a diverse array of organisations, including corporations, companies and not-for-profit organisations amongst other. Another misconception is that marketing is always directed at consumers. This is also not the case, as a key feature of corporate marketing is that it is concerned with multiple stakeholders, as a means of promoting the company to all involved in decision-making, and all affected by decisions made. Finally, it must be understood that corporate marketing is concerned with past and future relationships, not only those in the present (Balmer & Greyser 730).

Ethical Corporate Marketing The term ‘ethical corporate marketing’ appears to be a relatively new term when used in its entirety. This is based on the observation that there are very few papers which refer specifically to this term, yet there are calls for papers on the topic at this time by many of the world’s well-known business journals.

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The relative newness of the term means that there has been little discussion as to the meaning. This may however be inferred simply as an organisation taking an ethical approach towards their corporate marketing strategy. Although this would be an appropriate definition for the term, this is not complete, as there is more to the term than this. Given that the practice of using a company’s ‘ethical’ behaviour may also be used as a marketing tool (Becker-Olsen 46), ethical corporate marketing may also refer to the practice of using ethics as a corporate marketing strategy. For example, many companies such as Innocent (Smoothies), Co-operative Bank and Green & Black’s have incorporated a strong ethical stance into their corporate identity (Balmer et al. 4), thereby utilising ethical corporate marketing. In order to further understand how the use of ethical principles may be utilised in corporate marketing, it is important to first understand how ethical behaviour is determined.

WHO DETERMINES BEHAVIOURS ARE ETHICAL?

Ethical Decision Making In order to understand how ethical behaviour is determined, it is important to understand how an individual derives whether a particular behaviour is ethical or not. The Hunt-Vitell Theory of Ethics is a model which was originally proposed in the 1980s which represented the process of ethical decision making. The model is represented in Figure 1. The theory assumes that the presence of a perceived ethical element to a decision which must be made triggers the process which is described by the model. This therefore indicates that if the individual does not perceive there to be any ethical dimension to a problem which is faced then the model will not apply. The process generally involves the decision-maker comparing the available alternative actions which are available to them with a set of predetermined

FIGURE 1 THE HUNT-VITELL MODEL OF ETHICAL DECISION MAKING (HUNT & VITELL 144)

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norms. These norms will be formed on the basis of both local norms and hypernorms, which are the norms which are absolutely fundamental to human existence. This indicates that while there are some norms within the ethical decision-making process which may be universal and unchanged, there are others which are highly dependent on the society which surrounds the organisation. In all, these judgements may also take into consideration the consequences of each outcome, the probability of the occurrence of the outcome within each stakeholder group, the desirability of each outcome, and the importance of each stakeholder group. Even then, it is argued by Hunt and Vitell (146) themselves that the information processing elements of the model may vary depending upon the decision maker’s own moral codes.

Corporate Ethical Values The Hunt-Vittel model predominantly involves the ethical decision making process which occurs within an individual faced by a problem containing an ethical dimension. It is therefore an important process within the ethical behaviour of a company, whose actions are a culmination of the decisions and behaviours of various individuals. Corporate ethical values are defined by Hunt and colleagues as a “composite of the individual ethical values of managers and both the formal and informal policies on ethics of the organisation” (79). This therefore indicates that the ethical decision-making model may be considered key, as wherever there is no formal policy in place as to how decisions should be arrived at, this is the informal process which individuals within the organisation would use.

Judging Ethical Decisions Not only is the Hunt-Vittel model important to understand how a company’s ethical behaviour may be influenced, but also how consumers are likely to perceive these decisions. The same model is likely to be used by a consumer who is evaluating a particular organisational behaviour in terms of its ethical value. It must however be considered that there are two issues which could potentially result in the consumer reaching a different decision as to the most appropriate course of action than the manager within the organisation reached. The first of these is that there are many individual factors which may influence the manner in which ethical decisions are derived. This includes elements such as personal philosophy and value orientation, education, work experience, nationality and age (O’Fallon & Butterfield 376-97). One element which has received a particularly significant amount of attention is religion. Vittel and colleagues (175) showed that religion had a significant impact on the ethical decision making process in those who incorporate religious beliefs intrinsically into every aspect of their lives. This would indicate that given the same set of circumstances, any individual may arrive at an alternative decision. This does also however mean that even if a manager perceives their organisation’s behaviour to be ethical, not all may agree. The second factor which must be considered which will influence this is also that the consumer may not possess all of the facts which are necessary to arrive at a comprehensively reviewed decision. For example according to the model detailed in Figure 1, an analysis of the likely probability of each outcome is necessary in the decision-making process, although these details may not be known to consumers. This may then lead them to different conclusions as to the most ethical course of action in the given situation.

Impacts on the Judgement of Behaviour There are numerous influences which may impact on an individual’s judgement regarding actions which constitute ethical and unethical behaviour. While some of these, as discussed above, are highly individualized, there are others which work on a much larger scale. One such influence is the media. An example of this lies in the coverage which occurred relating to several high-profile cases such as Enron and WorldCom. The large amounts of global media coverage and subsequent discussion which has been afforded to cases such as these has greatly increased public awareness as to how behaviour which may be deemed ‘wrong’ may proliferate in some businesses(Carson 389). Furthermore, the coverage may have also highlighted some practices in which the average citizen would be unaware of the problems associated with that particular behaviour. As a result of the increased awareness however, public opinion is likely to

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have changed, with individuals now realising that such behaviour is unethical, and therefore judging other organisations according to this new-found awareness. In a situation such as this, it could be argued that it is actually the media who have predetermined whether the behaviour of the company was ethical or not. This predetermined judgement is then that which is broadcast, and as a result may gain widespread acceptance, without individuals undergoing the judgement process themselves.

HOW COMPANIES MAY CAPITALIZE ON ETHICS THROUGH CORPORATE MARKETING?

So far, this essay has focused on defining ethical corporate marketing and discussing how judgements of ethics are arrived at. While this is useful, the critical question which arises at this point is how is this so? While it is clear that creating an ‘ethical’ dimension within the company’s image may be a marketing strategy, why is this so, and how may it be achieved? These questions warrant a lengthy discussion all by themselves, and as such, a detailed examination of the literature on the topic is beyond the scope of this review. Here, there will be a brief summary of the main points of the discussion presented. This will be sufficient to demonstrate the importance of including an ethical component within corporate marketing, which will be important when discussing the impact of societal expectations.

The Importance of Ethics in Marketing It has been noted for many years that the consumer must be accepted by organisations as the final judge in their actions, which is reflected in the heavy customer focus which may companies elect to adopt (Balmer & Greyser 730). The reason for this is that, after all the marketing activities have been performed by the company, it is the judgement of the consumer which will determine whether they actually choose to purchase from the organisation. Many researchers have argued that a core element of the consumer’s judgement of a company will be based on the company’s perceived ethical values, and as such these perceived values will therefore influence buyers’ behaviour. This is often quoted as being reflected in the performance of an organisation. Companies which have a core set of well-defined ethical values are generally found to be superior performers (Hunt et al. 81). Companies which ignore public opinion over their ethical values do however risk placing the reputation of their company in jeopardy (Laczniak & Murphy 158). Although this demonstrates that ethically-based decisions and values may be important to the company, this does not necessarily demonstrate how they are important in a corporate marketing context. The ethical values which are held by an organisation are generally acknowledged to influence their products, advertising and marketing content, pricing, treatment of employees, and their relations with customers, other businesses and the wider community (Hunt et al.79).Despite this, it is unlikely that many customers would be aware of the ethical decisions which are made on a daily basis by the companies from which they choose to purchase. Therefore even if a company possesses these well-defined ethical values, they may not be common knowledge to the general public. This is therefore why the inclusion of these ethical principles in corporate marketing is so important. It is only through inclusion within corporate marketing campaigns that the awareness of the public and other company stakeholders may be increased relating to the ethical practices of the company. It is therefore important for companies to not only realise that ethical values may be important in maintaining high public regard, but may be used as a marketing tool in gaining/retaining customers. As already discussed, there are numerous influences which may impact on how consumers view behaviour as ethical or not, although the collectivized public opinion is what may be more important to the company. Although there may be some concern to a company if a substantial number of persons deem their activities to be unethical, this would not usually be of great concern unless the majority of the public share this opinion. The general principle of putting people first in marketing activities should be used as a guide by companies if they wish to prosper in the long-term. It is generally accepted that marketing activities should cater to the customer (Laczniak & Murphy 158) and the ethical perspective of marketing should be no exception to this concept. Therefore one of the most important things to any company which

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wishes to pursue ethical corporate marketing strategies is to establish how they may put the customer first. That is they must establish the general societal expectations of ethical behaviour if they are to meet these criteria and advertise this achievement in their corporate marketing. The next section of the review will therefore discuss societal expectations of different varieties and discuss their implications.

The Expectations of Society for Organisations The role of organisations within the community these days spreads beyond that of supplying consumers with their desired goods and services. For example Sagawa and Segal (105) argue that there is an ever increasing societal expectation for organisations to work in partnership with others to solve humanitarian crises and endemic problems. This may involve working together to fight such issues as environmental damage, disease, poverty and infringements of human rights. If companies are to be able to adequately meet these increased roles it is however necessary for them to understand exactly what the societal expectations for them are. If this is not so then it is unlikely that the business will be able to fully meet these expectations through chance alone. Furthermore, if organisations are able to learn the most pressing expectations, then this may allow those organisations to capitalise on their achieving associated goals, in order to improve their public relations. This would indicate that understanding societal expectations may therefore be used to gain competitive advantage. The aim of this section is therefore to establish what generic societal expectations there may be for all companies, and how expectations may vary by region and industry. The section begins with a discussion of corporate social responsibility (CSR), the generally accepted responsibility that organisations have to meet certain societal expectations. Each different element of expectation will then be discussed in turn. The section also aims to establish how these expectations may be expected to change in the future, and whether it may be possible for organisations to accurately predict these future changes.

CORPORATE SOCIAL RESPONSIBILITY

Definition of Corporate Social Responsibility Corporate social responsibility (CSR) first became born as a concept during the 1960s and 1970s in the specific area of marketing (Maignan & Ferrel 5). CSR has been defined in a number of ways. The first conceptualisation was by Bowen (6) who defined CSR as the pursuit of policies and decisions which “are desirable in terms of the objectives and values of our society.” In its early years of conception the emphasis of work on CSR was in the social duties of marketing rather than the overall social duties of the company. This has since evolved into the field of ethical corporate marketing, concerned with the contribution of marketing activities to socially desirable goals (Maignan & Ferrell 5). Therefore when we discuss societal expectations, we are generally discussing the perceived CSR of the organisation, and the contribution which that organisation is expected to play in society. Although this section will discuss the different areas of expectations, such as environmental or philanthropic expectations, the general collective of these expectations is that which is referred to be CSR. The first logical step in understanding how these individual sets of expectations impact on an organisation is to understand how is determined within an organisation, and the associated impact, as this is the area in which most previous research has been conducted.

Establishing the Extent of Corporate Social Responsibility CSR is generally considered as a social obligation, although there are a number of subcategories which may be distinguished within CSR. These are (a) economic obligations, (b) legal and ethical obligations, and (c) philanthropic obligations, which indicates the responsibility to give back to society in a positive manner (Maignan & Ferrell 4). Environmental obligations may however also be added to this list, to complete the obligations included within CSR. The composition of CSR of these various elements indicates that for a company to adequately meet their CSR they must ensure that they address each of the different elements.

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So, how do companies go about meeting these obligations? The first logical step in the process is to decide who the organisation actually has an obligation to, as there may be conflicting ideas about which is actually the right course of action to meet these obligations. Establishing who the priorities lie with may also help the organisation to balance meeting their CSR with their actual business and profit-making functions. Henriques and Sadorsky (89) argued that CSR is not actually an obligation to every member of society but rather to those who are stakeholders of the company’s actions. That is, the persons who either affect or are affected by the company’s activities. This would include both those who are affected directly and those indirectly affected. These stakeholders may be divided into (a) organizational, (b) community, (c) regulatory, and (d) media stakeholders. This would therefore indicate that these are the individuals whose expectations are the most important to the company, as it is these groups’ judgements on whether CSR has been addressed which will actually impact on business function. Many companies may choose to focus predominantly on the expectations of the customer, as these are the individuals whose judgement will impact directly on sales. As a result, much of the previous work has been conducted primarily on the effects of consumer expectations. The framework which is proposed by Maignan and Ferrell (3) suggests that marketers may improve their success if they expand their focus in CSR beyond consumers to other stakeholders. This is important, as other stakeholders may have an important influence over the customers and the business indirectly. For example, as already discussed, the media may be an important influence over public opinion, and as such should always be considered in this age as a crucial stakeholder in any major organisation. An important consideration when discussing CSR is that it is predominantly motivated by self- interest on behalf of the company, and the choice of CSR practice generally reflects this. CSR may be used as a legitimate manner for organisations to gain consumer confidence and therefore may neglect a positive commitment to society in the long-term (Maignan & Ferrell 4). It has been proposed that there should be a more ethics-driven view of CSR adopted which would judge the rightness or wrongness of an organisation’s actions (Swanson 43). While this may be true, the fact remains that the very nature of business would dictate that stakeholder opinions over the company’s ethical behaviour would remain the most important. The responsibility of the company would therefore most likely remain with its stakeholders irrelevant of how other members of society perceived their actions.

Corporate Responsiveness After determining the main priorities in terms of CSR, the next step for the organisation is to establish how these expectations will actually be achieved. There have been three major processes which have been described as representing corporate responsiveness, the description applied to the physical activities carried out by an organisation under CSR. These are the monitoring and assessment of environmental conditions, attendance to the demands of stakeholders, and the design of plans and policies which are aimed at improving the positive impact of the organisation (Ackerman 4). This is a proposal supported by Wood (691) who also suggested that the management of issues and environmental assessment were key actions associated with CSR. It is clear however that for all three of these actions to be achieved, there must be a clear description available of the precise stakeholder expectations.

WHY CSR IS INADEQUATE AS A FRAMEWORK FOR MARKETING?

This section so far has shown that CSR is the generally perceived responsibility of the organisation to address a number of different societal issues. Although society as a whole may have opinions about the exact extent of an organisation’s CSR, the opinions which matter most to the organisation are those of its stakeholders. This generally means that even if there is a heavily ethics-driven view taken about which of their actions are right or wrong, the fact is that the company will generally aim to meet the expectations of stakeholders above all others. In terms of corporate marketing, the impact on the organisation is then that they should seek to demonstrate at every opportunity how they are meeting, or intend to meet, these various expectations.

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Maignan and Ferrell (4) suggest that the main problem which has prevented adequate comparison and synthesis of previous work on CSR is that there is a lack of agreement across studies as to the conceptual basis of CSR. Previous studies have also examined the concept at different levels, for example some have examined CSR in general business settings, some in terms of an individual firm, and others in terms of an individual decision maker. This conflict over the nature and purpose of CSR has led to different perspectives being adopted within the studies. The three main perspectives which have been adopted are (a) the normative approach, (b) the managerial approach, and (c) the instrumental approach. Each of these perspectives is concerned with establishing different information relating to CSR. The normative approach is concerned with establishing the duties of an organisation to society as a whole. In contrast, the managerial approach is concerned instead with how management of CSR may best be conducted, while the instrumental approach is concerned predominantly with how CSR may best be used to generate benefits for the organisation. On way in which these previous issues may be addressed is to start again from a lower level, and examine societal expectations at a basic level. This removes the necessity of taking any of the perspectives above, as the discussion relates solely to the general expectations of society for any organisation. This then allows for the groundwork to be rebuilt, taking the expectations and discussing them from a normative, managerial or instrumental approach, according to requirements. The next section of the review therefore focuses on these general societal expectations of how organisations should behave.

Current Societal Expectations While it is not possible to establish one isolated generic set of stakeholder expectations, it is possible to describe the basis of the various types of expectation, and where these may be derived from. This section therefore focuses on a discussion of the different types of expectations which stakeholders may have for society.

Economic Expectations Despite the increasing economic growth in the world at the present time there are undeniably large disparities in the distribution of the associated benefits. There are many of the world’s population which are left in areas of high population growth and poor levels of income-earning opportunity (Warhurst 160). This would indicate that while a selected proportion of the world’s population is enjoying improvements to quality of life, there are many left for which this is not improving, and for some may even be deteriorating. It is quite likely that society would perceive businesses to be able to play and important and necessary role in addressing these global economic issues. A set of UN Millennium Development Goals were agreed between United Nations agencies and state governments after the Rio Plus 10 Earth Summit in 2002. These goals each have measurable targets to be achieved by 2015 and are aimed at improving the lives of people across the globe and stimulating economic growth in developing countries. This is expected to not only benefit the countries which are targeted, but also the global economy as a whole (Warhurst 161).

Legal Expectations There is an expectation that before a company pursues issues on a greater societal level they must first address issues within their own organisation to ensure that they are operating in a fully legitimate manner. This may include addressing labour standards to ensure that they are based on frameworks of international law. This would include actions such as the elimination of discrimination, harassment and bullying, promotion of diversity and equal opportunities, and the maintenance of equitable working terms and conditions across worldwide operations. There are many important human rights which society would expect any organisation to operate by, including the rights of freedom of association, the rights of children, and the rights to choose and work freely (Warhurst 154). These are important issues which would be expected of any organisation which is trading in global business. As such it is unlikely that any

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corporate ethical marketing campaign would be taken seriously by any company which was known to be in breach of these basic legal parameters. The framework for human rights comprises of the Universal Declaration of Human Rights (UN 1948), the Labour Standards which are taken from the Fundamental Conventions of the International Labour Organisation (ILO, 1930-1999) and the 1992 Rio Declaration on Environment and Development. These three elements are each binding for states, and it is then the state’s responsibility to transfer the components of these elements to their national laws which govern businesses. These laws, once established, then become the generally recognised norms for ethical practice (Warhurst 154).

Environmental Expectations The expectations which society generally has for organisations in respect to the environment are well documented and is generally one of the main foci of research when discussing ethical behaviour. This is evident in terms of a number of journals which specifically publish research related to ethics and the environment (Lockett et al. 115). Initiatives which focus specifically on the ethical behaviour of companies are often some of the most popular in terms of achieving marketing expectations. Examples of this include organic food and free-range eggs, both of which are considered more ethically correct than their alternatives. The popularity of these initiatives indicates that consumers generally expect organisations to operate in a manner which produces goods which do not impact negatively on the environment. The examples given demonstrate that the awareness of these expectations may be greatest in an industry such as agriculture in which the impacts on the environment may be obvious and direct. The rising awareness of climate change may however indicate that environmental concerns are growing in areas other than those which directly influence the environment. There are an ever-increasing number of sectors in which consumers are believed to be becoming more demanding in terms of environmental ethics of the firm. This may include the travel sector, for example initiatives such as carbon-offsetting may be a successful marketing initiative used by airlines and other travel companies (Revkin). In the building industry, the growing popularity of carbon-neutral developments may also be a further indicator that consumers have high expectations for companies to behave in a manner which conserves the environment.

Philanthropic Expectations The nature of present media and ‘always-on’ technology means that society may now have a greater awareness than ever before of events and conditions across the globe. In effect this means that consumers are able to observe and judge the impact of organisations from their home countries on countries and communities abroad. Although there may be variations in how different countries perceive living standards, it is likely that most consumers would judge local living conditions by their home country standards (Werther & Chandler 320). This would therefore indicate that consumers may have an expectation that companies operate in such as manner as to equalise the conditions within other countries in which they operate. This means that there is generally an expectation that operations which are conducted overseas should be perceived as being conducted in the same manner as those within the home country. The fact that organisations within the home country are often observed to donate to the community, for example by supporting schools and local sports teams, means that there is also an expectation by customers to produce these same benefits for any community in which they operate. It would be expected that any decisions which are made by the company would be made in such as manner as to not be detrimental to the local community and generally society as a whole.

Ethical Expectations Generally, all of the other forms of expectations which have been, or will be, discussed within this section may be considered to be encompassed under the general umbrella of ‘ethical expectations’. The ethical expectations of stakeholders therefore encompass all of the elements discussed already, but may also include additional expectations. For example stakeholders would expect the organisation to behave in

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a manner which is generally trustworthy and responsible, and may also include the organisation to be entirely transparent and truthful in terms of consistency within its marketing and practice (Podnar & Golob 329). While ethical corporate marketing is aimed at presenting the ethical behaviour of a company as a marketing strategy, societal expectations would also include the expectation that this marketing is a true representation of the company’s actions. A study by Tsalikis and Seaton discusses the development of the Business Ethics Index (BEI) which is designed to be used as a tool for industry self-regulation, by measuring consumer reaction to ethical (or unethical) practices. The measurement tool is designed based on a combination of the University of Michigan’s Index of Consumer Sentiment (ICS) and the Conference Board Consumer Confidence Index (CBCCI). Both of these tools have been used successfully since the 1940s to judge general consumer sentiment, and it would therefore seem logical that a similar framework should be used for measuring reaction to ethical behaviours. This index may be useful in determining the general atmosphere with relation to business ethics, but is unlikely to generate any significant changes within specific businesses. This is due to the non-specific nature of the tool, which measures only consumers’ experience with business in the general sense, with no specific details requested. It would however be possible for businesses to adapt this index to their own needs, using it as a template for their own market research.

Future Societal Expectations The ever evolving nature of societal expectations means that the various elements of CSR may overlap and change over time. For example there may be societal expectations which relate to economic factors which may become so important that they are transferred to legal issues. The latest generation of technology, including the spread of the Internet have greatly accelerated the rates at which these shifts may occur (Werther & Chandler 321). Certain numbers of stakeholders inevitably share the same expectations for organisational behaviour. There are also always likely to be different groups of stakeholders which hold almost every conceivable expectation of an organisation’s behaviour. The general societal expectations are generally based on whichever are the largest group of stakeholders in terms of shared belief. This indicates that if there is even a small shift in the opinions of significant members of society then this may result in changes to an area of general societal expectation if a different opinion holds the majority. The individualised nature of ethical judgement which was discussed earlier indicates that there may be many factors which may influence individual decisions, and hence the overall societal opinion. This would therefore also indicate that the formation of general societal expectations may be highly complex and therefore difficult to predict. It is therefore important for organisations to keep abreast of current developments which may impact on opinion, such as political and other world events.

HOW SOCIETAL EXPECTATIONS IMPACT ON ETHICAL CORPORATE MARKETING

This final section, which is the focus of the review, discusses how the societal expectations discussed in the previous section impact on ethical corporate marketing. The section is aimed at establishing whether societal expectations are truly important in influencing consumer behaviour, and if so, how corporate marketing may capitalise on these expectations. The impact will be discussed in relation to the stakeholder model, which therefore forms the introductory discussion in this section.

The Stakeholder Model When considering the implications of societal expectations on ethical corporate marketing it is generally the stakeholder view of CSR which is being considered. The stakeholder theory proposes that the firm is associated with a large number of diverse stakeholders, all of which are motivated to participate in activities associated with the organisation by various interests. The stakeholders in the organisation may be divided into four distinct categories, which are (a) organizational, (b) community, (c) regulatory, and (d) media stakeholders. The organisational stakeholders are generally involved directly in coordination of the company’s activities, and may include those working for the company such as

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managers and employees. Other stakeholders may be involved partially and indirectly with organisation of the company, for example investors in the organisation. A third and final type of stakeholder are those who may affect the control of organisational activities from a distance, for example customers, the media and the local community (Maignan & Ferrell 5). Stakeholder theory also suggests that the behaviour of an organisation may be predicted by a number of factors related to CSR. These are (a) the nature of the organisation’s stakeholders, (b) the expectations of right and wrong which are held by these stakeholders, and (c) the stakeholders’ influence over the company. As the organisation depends upon the support of stakeholders this indicates that their continued support is required, therefore indicating that the company must conform to their norms and expectations. As each of these different groups of stakeholders exerts some degree of influence over the organisation it is also important that each is considered when selecting the ethical norms to adopt (Maignan & Ferrell 6). Individual stakeholders may also be regrouped into communities which are a collection of stakeholders which interact with each other and share a set of common norms with respect to a given issue. It is also possible however that stakeholders may share a set of common norms even when they are not regrouped into these communities (Maignan & Ferrell 7). This is important to ethical corporate marketing given the previous section’s discussion about how societal expectations are formed as a composite of many individuals’ expectations. The implications of this are that ethical corporate marketing needs to be dynamic in its approach to ensure that the groups of stakeholders which share the dominant opinion are addressed. This may need to take account of not only the number of stakeholders which share a particular opinion, but also the importance of the stakeholders involved.

TO WHAT EXTENT ARE CONSUMER BEHAVIOURS GOVERNED BY EXPECTATIONS?

General Ethical Expectations There is a great deal of inconsistency in the findings of current research in terms of how far customer behaviours are actually influenced by their expectations of CSR. Belk and colleagues conducted interviews with participants across eight countries, including China, Australia, USA and Spain. These interviews presented scenarios to participants, each of which involved questionable ethical behaviour on behalf of the product supplier. The interview therefore acted as a test of how the obviously unethical behaviour would influence the purchasing behaviour of the participant. This was a means therefore of establishing the exact extent which unethical behaviour by an organisation would influence the consumer behaviour. Manipulations of the scenarios were also performed in order to change the details of the unethical behaviour, and expel consumer behaviours which may have been related to other factors. The respondents generally showed in this study that they had little concern for unethical behaviour, and that it would hold little influence over their purchasing decisions. Although other studies may have previously shown that consumers are concerned, the results of this study would be considered more reliable given that the video-taped interviews would have made it far more difficult to conceal their true feelings and intentions than an anonymous survey, or even an audio interview. The most interesting element of this study was however that it displayed that when prompted, some consumers were influenced to bring ethical factors into their purchasing decisions. This would therefore suggest that if a company were to specifically target marketing at identifying why consumers should consider ethical factors, they may be successful in influencing some consumers. Other studies have however shown that there may be significant impacts of societal expectations on consumer behaviour towards organisations. For example early work by Creyer and Ross showed that the extent to which an individual would reward or punish a company’s behaviour was a direct result of an interaction between their expectations and the importance with which they associated ethical behaviour (421). This makes sense, as those who believe ethical behaviour to be highly important are most likely to choose to act on that behaviour. Those who regard ethical behaviour with much lower importance are less likely to be influenced and probably also have lower expectations. Other studies have also shown that the use of ethical corporate marketing may be highly influenced by societal expectations, as consumers who

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rate ethical behaviour as important often select to purchase these ethical brands (De Pelsmacker et al. 363).

Environmental Expectations The majority of the research which has been conducted into the reaction of stakeholders to environmental issues has focused on the reactions of consumers to environmental marketing within the tourism industry. This research generally suggests that while consumers may not have reacted as favourably as anticipated to so-called ‘ecolabels’ this may be due to lack of experience and lack of awareness. Despite this, most tourists involved in the studies indicated that they were concerned about the environmental impacts of companies with which they travelled and would consider this in their purchasing decisions (Fairweather et al. 82). Another element of environmental ethics which is pursued by many companies as a marketing concept is that of organic foods. Research in this area has validated the conclusion that specifically focusing consumer marketing on the ethical behaviour of the company does produce positive impacts on the buying behaviours of customers. Research has also shown there to be a need of a trust interaction between the consumer and organisation, given that it is not possible for consumers to verify that the produce was indeed produced organically. The use of organic produce as a marketing tool therefore creates strong trust linkages, which then creates the positive impact on consumers (Pivato et al. 3). The effects which were witnessed in research into the organic food market is likely to carry through into other areas of ethical marketing. Most areas of ethical activity may not be observed directly by consumers and other stakeholders, and therefore trust relations may be an integral part of all ethical corporate marketing.

THE IMPORTANCE OF MEETING SOCIETAL EXPECTATIONS

Although there still appears to be some level of contention as to the exact implications which societal expectations may have for company performance it would certainly appear that there may be implications for ethical corporate marketing. Research indicates that as awareness of the public increases over ethical issues consumers may be electing to become more proactive in their approach to selecting ethically produced goods. If this is becoming a trend within consumers than this would indicate that other stakeholders may also be undergoing similar transitions. For example the media stakeholders are a major influence over consumers, and may also be considered to be general representatives of popular opinion. In addition to this, the community stakeholders may be considered as small groups of general society, and are also therefore likely to be influenced by societal expectations. Finally, organizational and regulatory stakeholders are likely to institute changes in the face of increasing public support for certain ideas, and hence these too are expected to be impacted by societal expectations. The importance which therefore appears to be associated with societal expectations indicates that the integration of CSR into marketing strategies has become a strategic necessity, particularly for brands and large global companies. The failure to include CSR considerations in any marketing strategy may result in exposure of these companies, which has the possibility to destroy the company’s perceived legitimacy. Companies also risk being pursued for punitive damages if they fail to meet specific social expectations. An important element of this is not only being able to meet the current expectations and standards, but to be able to anticipate future expectations (Werther & Chandler 318). As many customers in Western society are becoming more affluent this grants them greater discretion over which products and services they wish to purchase (Werther & Chandler 319). This means that consumers may now be in a position to consider the societal consequences of their personal purchasing decisions in a way which was not previously practicable. This may have led to a change in the types of companies which are now acceptable to consumers, with the cheapest companies no longer automatically those which are embraced. This means that if consumers are to be attracted to the company, organisations must ensure that the image which they portray is one which does not isolate their societal impact from their actions. This indicates that in terms of ethical corporate marketing there is a further consequence in which companies should not only be considering ethical behaviours and meeting societal expectations as

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a proactive marketing strategy. Meeting consumer expectation should not be viewed merely as a benefit of a product, but a necessity if the company is to retain any form of stakeholder relationship and integrity.

Meeting Expectations in Ethical Corporate Marketing It is clear then that societal expectations are an integral part of ethical corporate marketing, and that meeting these expectations is no longer an added value of a company, but instead a necessity. The final stage in the discussion is therefore to consider the processes by which organisations should ensure that these expectations are indeed met. Preble discusses the process which organisations should undergo in order to effectively incorporate societal expectations within their marketing strategies. The review uses the stakeholder concept, as discussed earlier in this section, and therefore the initial step which is suggested is that of stakeholder identification. The next step suggested is then to establish the general nature of the stakeholder claims, which generally means to establish the actual expectations of the stakeholders. The third step in the process is to determine performance gaps, which is the stage at which the company should establish whether they are currently meeting consumer expectations, and where there is still a need to change practice if this is to be achieved. The model then suggests that stakeholders should be prioritised, in a similar manner to the process which occurs in actual ethical decision making. As a result of this, organisational responses should then be formulated, followed by the final stage, which is monitoring and control of these responses. By initiating this process, organisations should be able to ensure that the gaps between societal expectations and their performance are minimised, thereby improving performance. Once this sequence is initiated, regular review would ensure that the organisation was able to keep abreast of evolution of societal expectation, hence maintaining their performance.

SUMMARY AND CONCLUSIONS

It is clear from the review of the literature which has been conducted here that while there may be large volumes of data which have thus far been conducted into business ethics, the literature on societal expectation and its implications is far from complete. The literature reveals that while there is some controversy over how far societal expectations may directly impact on consumer behaviour, there is some potential to influence consumers through meeting stakeholder expectations. It is important that meeting expectation does not only account for the expectations of consumers, as other stakeholders may hold influence over consumer behaviour, either directly or indirectly. It is for this reason that the wider societal expectations should be established and assessed, with prioritisation of the most important stakeholders to satisfy. Recent changes which have occurred, such as the evolution of always-on media mean that consumers may be increasingly aware of major issues which face society not only in their own country but across the world. This also means that the behaviour in which organisations around the world engage is also more public than ever before. It is inevitable that these behaviours will be judged by the all members of society in terms of how ethical they are, and that not all individuals will come to the same conclusions. The changes which have occurred in awareness, along with the greater choice which is now presented to consumers, means that consumers are able to base their purchasing decisions on wider considerations than they may have done so in the past. This means that consumers may proactively choose whether or not to purchase from companies which they perceive to be ethical, or that they perceive to be contributing to society’s problems. This therefore presents an entirely new area of strategy for organisations to pursue, with ethical corporate marketing offering organisations an opportunity to actively portray an ethical image. Companies which use this opportunity to include an element of CSR in their image are likely to increase their competitive advantage and perform better. Not only this, but as changes in societal expectations progress even further, meeting societal expectations is becoming a necessity, which signals that demonstration of this is becoming an integral part of ethical corporate marketing. This therefore indicates

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that the impacts of societal expectations on ethical corporate marketing is immense, and it is in every organisation’s interest to ensure that they are fully versed in the present set of societal expectations.

Limitations of the Review Although the review has established the probable impact of societal expectations on ethical corporate marketing, there remain some limitations. One of the main limitations in determining societal expectations is that it may be difficult to account for the viewpoints of all stakeholders. This may lead to the need to forecast the expectations of some groups of society rather than actually establishing them in person. One example of this is the expectations of environmental activists. Organisations may not be able to establish open channels of communication with groups such as these due to conflicts of interest (Polonsky 29). This estimation of societal expectations may lead organisations to inaccurate conclusions. Therefore, given the importance of societal expectations which has been established, future work should focus on the development of procedures by which organisations can accurately obtain and measure societal expectations on various topics.

ENDNOTE

1. A thorough overview of these concepts is described by Balmer and Greyser in their 2007 paper.

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Carson, T.L. “Self-interest and business ethics: Some lessons of the recent corporate scandals.” Journal of Business Ethics 43.4 (2003): 389-394.

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Lockett, Andy, Jeremy Moon & Wayne Visser. “Corporate social responsibility in management research: Focus, nature, salience and sources of influence.” Journal of Management Studies 43.1 (2006): 115-136.

Maignan, Isabelle & O. C. Ferrell. “Corporate social responsibility and marketing: An integrative framework.” Journal of the Academy of Marketing Science 32.1 (2004): 3-19.

Pivato, Sergio, Nicola Misani & Antonio Tencati. “The impact of corporate social responsibility on consumer trust: The case of organic food.” Business Ethics: A European Review 17.1 (2008): 3-12.

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Sagawa, S. & E. Segal. “Common interest, common good: Creating value through business and social sector partnerships.” California Management Review 42.2 (2000): 105-122.

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The Effects of Institutionalization on the Internationalization of Markets: A Conceptual Model of Inquiry

Constantine G. Polychroniou University of Cincinnati

AIM OF THE ARTICLE

This article purports to explore into the dynamics of the driving forces that define an institutional framework and their relationship to the process of internationalization. The author focuses on market internationalization recognizing that internationalization also includes relations among nations, specific intergovernmental collaboration, migration, and, technological and economic exchange. International- ization of markets is viewed as a process by which domestic or national markets develop or achieve the capability to offer sustainable advantage in a cross-border economic exchange. The internationalization of markets may be expedited by institutionalizing the behavior of actors that influence the economic, social and cultural evolution of the market. It is proposed that increasing economic, social and cultural exchange across markets would require congruency of the regulative, normative and cognitive dimensions of institutions. An institution, viewed as a microcosm of the society in which it exists, irrespective to its incipient identity such as business, political, economic, social, and so on, is in constant evolution as its endemic subcultural forces exchange on their individual interests and cultural beliefs effecting their expectations and behavior. Relevant studies have indicated the existence of multiple subcultures, referred to as logics, and the friction that exists between these sometimes contradictory settings which define the institution’s evolution (Parkera and Parenta, 2009). Existing literature has not habitually addressed the international dimension of the principal issues attempted in this article such as marketing’s effect on sociocultural awareness, the relationship between institutional structure and international marketing, the impact of institutional structure on the institution’s sociocultural identity and the effect of institutional structure on market internationalization. The multidimensionality of institutional theory has been affirmed and richly celebrated and honored by institutional scholars such as Weber, Meyer, DiMaggio, Rowan, Powell, Bourdieu, Scott, Tolbert, Selznick, Thomas and others. However, their approach to institutional theory has been largely sociological focusing on identifying social structures and how social structures

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cope with each other within the confines of organizational environments. In an era of increasing international trade, expedited through the process of multilateralism and regionalism, the emphasis has been on global governance whose role is to accommodate the drive for economic globalization. Under the framework of global governance globalization benefits and costs will be more symmetrical, achieving a more sustainable development of the global economy (Griffin, 2003). The role of supranational institutions and transnational organizations is thought to be central to achieving an optimum or near optimum global governance system (Polychroniou, 2012). In such environment the theory of institutionalization has been challenged to provide leadership in assisting state or private actors become engaged in global governance, in order to effectively produce an optimum design of market and social responsiveness. Non-state, private actors are increasingly assuming an active role in the design and construction of the institutional framework of global governance, warranting the institutionalization of transnational non-state governance (Katsikas, 2011). I argue, seeing the need for undertaking research into such new area, that a theory of supranational institutionalization is likely to be explored into by institutional scholars. In this article, culture is recognized as generic. Therefore, the terms business culture and national culture are used interchangeably given that the former stems from the latter.

INTRODUCTION

The rate of internationalization is positively correlated to the increase of international trade which focuses on the economic value of the exchange and its prospective added value. Internationalization establishes the principles, rules and norms, embedded in the world economy, which define acceptable economic behavior by which to manage cross-border flows of capital, technology and goods and services (Yongjin, 2003). The progress in international trade has contributed to the architecture of internationalization since trade has been catalytic to socializing international exchange and instrumental to accentuating the importance of relative intercultural congruence. This has given rise to global governance which recently has been established to serve as a political-institutional structure for supporting global markets (Görg & Brand, 2006). Institutionalization has provided the framework indispensable for stimulating international trade, by way of specific trade agreements, lower trade barriers and a trade-friendly regulatory environment. However, operationally, international trade has been promoted by marketing whose knowhow and set of skills has helped with market penetration, demand generation, commerce proliferation and economic development. The influence of macro-level international marketing, which is importing and exporting, on economic growth and development is evidenced (Mullen, Beller et al. 2001). Beyond its definitive role on economic development marketing has been instrumental in bringing about awareness of the dynamic impact of culture, be it national or business, on economic growth and the growth of an economy. For instance, the exponential-like growth of regional trade agreements (RTAs) seems to be evidence of the impact of geographic proximity on trade development due not only to symmetries in information dissemination, lower direct and indirect trade costs and similar transaction-inducing advantages but also due to relative cultural homogeneity resulting from spatial nearness as well as entrepreneurial innovation which is empowered by marketing knowhow. Cultural distance1 affects the level of institutional convergence or divergence. That is, the less the cultural distance or dissimilarity between two economies the greater the likelihood of institutional congruence. Conversely, the greater the cultural distance the less congruent the relevant cross-national institutional frameworks are expected to be. The effects of culture on institutional formation and change are manifest through a wide spectrum of economic behaviors and individual actions (Heydemann, 2008). Furthermore, cross-national institutional congruence promotes, and it is promoted by, cultural homogeneity. Empirical research suggests that cultural similarity results from four processes, such as, economic development, cross-national contact, social penetration of religious institutions and imperial legacies (Bonikowski, 2010). Cultural adaptation, an imperative condition for increasing market penetration, would be easier to achieve when cross-national institutional exchange has been cultivated producing greater understanding of relevant cultural dynamics. Adaptation presupposes that the marketing environment is different in terms of cultural idiosyncrasy, which affects both the design and implementation of the entire spectrum of

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marketing functions. Cultural idiosyncrasy may be affected by cross-national institutional exchange which in turn could potentially promote cross-national institutional symbiosis. The success of such symbiosis is positively correlated to the sociopolitical environment of cultures that reside in geographic proximity (McCall, 2009). Cultures evolve either internally, resulting from the breadth and depth of subcultural heterogeneity, or externally through reciprocal exchange producing intercultural adaptability and enhancing cultural adjustability. Adaptability is viewed as a mediator whose dialectical process results in effectuating cross-cultural adjustability. Such adjustability is further enhanced in cross-cultural environments that are characterized by relative identity consistency (Church et al. 2008). The presence of cross-cultural adjustability would seem to affect the formation of institutional identity and produce a greater understanding of broader supranational goals expediting an even greater degree of acculturation. Cultural awareness, resulting from acculturation, affects the process of policy analysis and institutional consistency (Geva-May, 2002). International marketing could not achieve sustainable functionality unless it observed relevant cultural imperatives or exclusives and other idiosyncratic characteristics that are pivotal to optimum decision-making, a process of acculturation. For instance, international goods such as food, clothing, music and so on, are subject to cultural approval which makes acculturation both a critical dynamic for a more targeted decision-making and a criterion for encouraging internationalization. The optimum development and the effective growth of internationalization are contingent on the harmonious and complementary collaboration between marketing and institutional evolution.

MARKETING EVOLUTION AND SOCIOCULTURAL CONVERGENCE

Marketing does not just help economic development by increasing the number of transactions but it also subtly provides a forum for identifying cross-border homogeneous needs and for revealing the potentiality of heterogeneous preferences. Global marketing strategies focus on identifying global market segments to which they can offer a standardized marketing program. Standardization which is driven by the quest for increased efficiencies is relative given that a marketing program cannot be fully and invariably standardized. It has been argued that there may be global brands but there are no global motivations (Svensson, 2002). A global culture per se may not exist, however, we may reasonably conjecture that wants may be similar on a global scale, and, although consumers may differ in the way they pursue fulfilling their wants we can infer that they are motivated to do so. It is evident that marketing has helped reveal the influence of culturalization on both the quantity and quality of economic activity. It has been suggested that strategies for cultural development should be integrated with those of economic development (Nivin and Plettner, 2009). Comparative surveys have shown that national culture determinants such as individualism, perspectives on risk and so on affect investment behavior (Beckmann et al. 2008). Marini (2004) suggests that culture determines economic action such as wealth distribution and growth. For economic growth what is required is achievement motivation and trust. Furthermore, what has been generally proposed is that in order to promote economic development an economy must upgrade its relevant institutional framework to follow the pattern of a more advanced economy. It is also broadly accepted that institutional frameworks are considered necessary for bringing about economic development. Bangwayo et al. (2011) using the 2005 wave of the World Values Survey data for 43 countries found that institutions are important in facilitating adoption of values that are considered important for economic development. In order to contribute to economic development such institutions need to have an effective structure and employ a set of public policies that would be favorable to economic development. In a study conducted by Mathers and Williamson (2011) about capitalism’s performance in certain cultures and the effectiveness or ineffectiveness of institutional constraints they concluded that culture does enhance the effectiveness of capitalism and its impact on economic growth. Institutional structure and policies need to be designed around the quality of cultural capital, that is, the quantity and level of social and economic exchange that exists in the economy, and assume the role of a catalyst. Such design will likely accommodate an orderly but controlled evolution of culture since institutional rules are designed to safeguard and promote cultural adaptation. Shubin (2010) suggests that people with less-valued cultural capital are disadvantaged in that they have limited access to social

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resources and that such cultural capital degrades social bonds and restricts people’s capabilities for economic growth. Cultural capital may be upgraded or increased by an institutional structure that has been permeated by marketing technocracy.

IMPACT OF INSTITUTIONAL STRUCTURE ON INTERNATIONAL MARKETING

The essence of institutional structures is to align discordant or inharmonious forces in an environment, be it sociocultural, political or economic, by which to facilitate not only activity and performance but also to help imbue with and effect evolution of managed change. Yul (2004) studying the industrialization policy of Japan and Korea found that first, policy variations stemmed from preexisting developmental institutions and second, that such variations are also affected by how the evolution of structures affects the options of decision-makers. Institutional actors, due to their legitimate authority, employ relevant structures by which to command governance. For instance, it has been suggested that EU treaty reforms affect structure and decision-making and that shifts in inter-institutional operations affect intra-institutional politics (Naurin and Rasmussen, 2011). Such legitimate authority empowers institutional actors enabling them to act as cultural catalysts for effectuating sustainable cultural evolution2. The goal would be to both moderate cultural complexity and weaken intercultural barriers. In a relevant study Dubois (2004) suggests that institutionalization comprises among others cultural agents and that institutionalization process could change social and political relations. Furthermore, cultural evolution targeted on harmonizing intercultural differences or lessen their impact can have a favorable and sustainable influence on the proliferation of international marketing and its global development. For instance, different cultures perceive the value to organic foods differently, a cultural positioning which directly affects marketing decision-making to employ either a customization or a standardization strategy, making cultural awareness a pivotal decision-making criterion. A recent study revealed that consumers in the United States, Canada and the United Kingdom who showed preference for organic foods had little understanding of their domestic market’s standards, showing weak cultural predisposition. Under the circumstances, the study concluded, harmonization or even the development of a new international standard should be pursued (Sawyer, Kerr et al. 2009). Moreover, it has been suggested that divergent cultures may engender heightened conflict with deleterious effects on channel performance (Mehta, Anderson et al. 2010). Such conflicts may best be managed within the dimensions of an institutional framework which is, by definition, capable of achieving relative harmonization.

THE CONTEXTUAL CHARACTER OF INSTITUTIONALIZATION

Institutional theorists in their effort to analyze and understand the process of institutionalization have proposed a three-component model. Collectively, the three-component framework is defined by three influencers, namely, the cultural-cognitive activities emanating from the sphere of culture (Scott, 2001), (Powell and DiMaggio, 1991), regulative activities resulting from economic expediencies (North, 1990) and normative activities which define sociological structures (Parsons, 1934/1990). Each of these components is thought to be governed by a philosophy and relevant rules which prescribe a particular behavior that interacts with the behaviors of the other components. For instance, the exchange between self-interest and social interest would likely portray an interaction of regulative and cultural-cognitive behaviors that may be critical and which may impact the socioeconomic and political structure of an environment (Polychroniou, 1990). The three influencers exhibit variant rationalities toward achieving their systemic goals, as they are guided by different values. Although delineating the effects of such distinct behaviors on the evolution of those components may be feasible, determining the relevant interactive effects is rather daunting given the incessant and unwavering institutional exchange between the above components and the relevant institutional players. International conditions reflect the degree or level of congruence that underlies cross-border or supranational institutional frameworks. Supranational institutionalization may thus be viewed as having catalytic influence over the development of internationalization. The extent to which internationalization may increase would depend on the strength

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of the symbiotic relationship between and among the above components and the relevant institutional actors. Internationalization activities are a product of imperatives decreed by cultural values and evolutionary forces embedded in the process of internationalization. Such forces prescribe the political, social and economic processes of the environment and they are most efficacious when they are organized under an institutional framework. The extent to which said institutional frameworks exert their influence is depicted in the way in which they are able to affect implementation of marketing programs and the proliferation of marketing. Hassler (2006) studying the Indonesian consumer market found that the regulatory policy framework influences firm-specific behavior and marketing strategies. In a relevant study Önsel et al. (2008) concluded that the firms’ competitive advantage in global markets depends on, amongst other things, the efficiency of public institutions. Theories which largely ignore the role of institutions are not intellectually sound because it is known that markets cannot work without institutions (Needham, Segeren et al. 2011). The argument is considered plausible given that markets reflect cultural variations which if not assessed and carefully considered they are likely to impede economic growth and development.

INSTITUTIONALIZATION OF CULTURE

Cultural values may be expressed randomly and individually or they may be organized under a formal institutional structure which would define interests to be pursued, categorize values as dominant and subordinate, set collective goals, identify actors and empower them with a mandate to implement programs. A formal structure would be instrumental in solidifying the practice of cultural values but more importantly in socializing younger or new members in the given cultural values. The institutionalization of cultural values is a shield that protects both the identity and existence of such values but it also has the capability of becoming an agent of change which can mediate to bringing about transformation or cultural evolution. For instance, the World Bank has used institutional and cultural transformation to promote rational economic activity and legitimize reforms aimed at reshaping the values in order to facilitate entrepreneurship and competitiveness (Taylor, 2010). An institutional survey, designed to promote strategic development at an educational institution, found that key pedagogic issues would need to be addressed in order to promote cultural change (McLinden and Edwards, 2011). Cornia (2010) in analyzing the dynamics of change that affected the Mediterranean journalistic culture found that the journalists’ professional culture was affected through the exchange with EU institutions showing its adaptation to EU institutions’ specificities resulting in a Europeanized journalistic practice. Institutionalization is able to justify expediency for transformation by assessing the impact of cultural idiosyncrasies such as historic background, heritage, traditions, customs, spirituality, and so on and bring about an orderly evolution of such transformation. Furthermore, institutional transformation is a purposeful and profound change that permeates the institution affecting its institutional culture (Eckel and Kezar, 2003). It is affected by exogenous factors such as inter-institutional relationships, government policy and regulation, relevant intergovernmental agreements and other supra-institutional actors as well as endogenous factors that define the purpose of the institution per se such as its mission, structure and process. For instance, humans face constraints which sometimes they challenge triggering changes, at the scale of the social group, which produce rule changes (Smajgl, Izquierdo et al. 2008). McMahon (2005) in studying how the transnational involvement has changed the way Romanian ethno-political institutions approach national problems concluded that transnational involvement has had a positive effect on the transformation of institutional actors. Institutional transformation necessitates a change in rationality which guides decision-making. A change in rationality is plausible and feasible because criteria are different. This means that in order to increase uniformity in rationality and avoid systemic entropy the system would have to employ cultural demythicization.3

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INSTITUTIONAL STRUCTURE’S IMPACT ON SOCIOCULTURAL FRAMEWORKS

Institutional theorists have long attempted to identify, analyze and understand the similarities and differences between institutions. This may readily be viewed as a rather straightforward exercise but in reality it is daunting to sift through the plethora of diverse driven actors, and assess the interactive effects among them. In order to assess institutional similarity we need to identify those structural forces that define institutional identity. Lopez and Scott (2000) define institutional structure as a domain in which normative and cultural exchange establishes agents’ expectations and determines their mutual on-going relations. Institutional structure engages a variety of relational structures that define the institution’s social structure which depicts the interconnectedness to which agents are professionally and culturally committed (ibid). Elder-Vass (2006) has suggested that relational structure can be thought of as the entire entity which is made up by its parts and their interrelationships. Fleetwood (2008) concluded that social structures effect, influence and shape institutions through rules, norms, values and customs. Furthermore, Archer (1995) differentiated between social and cultural structures interacting within an institutional structure. In practical terms, the incipient structure would be defined by the scope and mission of the institution which is a universal developmental entity. For instance, a societal institution such as a nonprofit organization would have a distinctly different scope than a governmental institution such as a central bank. It would, then, seem that incipient structure similarity is defined by institutional scope and that it would be governed by the regulative construct. Institutional activity is performed by the social structure of the institution. It is that social structure that defines the identity of the institution and determines the path to accomplishing institutional goals. Inter-institutional similarity may be promoted using the regulative construct because its activities and relevant goals are universally accepted and pursued. For instance, all institutions wanting to be efficient and effective will seek to employ legislation that would help them achieve that. However, efficiency and effectiveness are perceived differently depending on the cultural-cognitive construct. For instance, the northern countries of the EU view efficiency and effectiveness differently than their southern counterparts. The proposition to using the regulative construct is based on the assumption that it is largely an objective, rational and technocratic setting, elements which can commonly be used by institutions which might be dissimilar culturally. International agents such as marketing should be promoting the institutions’ use of a regulative construct in an effort to bring about integration of cross-border institutional frameworks and relative market homogenization. DiMaggio and Powell, (1983) said that institutions through collaboration may become similar without producing synergies. The possible lack of positive synergies results from a misalignment of regulative, cultural-cognitive and normative activities between or among institutions. For instance, low-context task-oriented business cultures (Northern or Anglo-saxonic) are dominated by regulative activities whereas high-context relationship-oriented ones (Southern or Asian) are dominated by cultural- cognitive activities. The effects of these disparate orientations are manifest in terms of both efficiency and performance, with the business culture showing greater actual or potential competitiveness and capability for deeper penetration of international markets when dominated by the “regulative” construct than when dominated by the “cultural-cognitive” one.

INTERNATIONALIZATION OF MARKETS AND INSTITUTIONAL STRUCTURE

In assessing the evolution of international markets the impact of institutional structure and institutional behavior is viewed as determinants of both sustainability and speed with which international markets may evolve. However, the degree of sustainability and rate of speed with which international markets evolve assume even greater importance and point to the catalytic contribution of institutionalization. Evolution of international markets can be thought of as a process by which national markets are penetrated and gradually permeated by international marketing forces whose paramount goal is to expose to and socialize the national market with internationally accepted standards. The process of internationalization is influenced by the continuous interplay between institutional structure and institutional behavior. Institutional structure is prescribed by the sociocultural infrastructure and defined

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by the formal authority relationships and the principles, rules, standards, actions, and prescriptions which the institution must use in order to achieve set goals. Institutional behavior, on the other, hand, denotes the complex of sociocultural and even subcultural elements which inspire, motivate and prescribe how agents are to act and react within the institution. Such behavior is induced by attitudes that have resulted from sociocultural idiosyncrasies, potentially causing conflict leading to institutional inflexibility impeding adjustment and thwarting institutional effectiveness. For instance, Kloot (2009) using Bourdieu’s theoretical framework of institutional change found that conflict between teaching and research influences foundation programs because such conflict results from two forms of power, namely, academic capital identified with institutional hierarchy and intellectual capital resulting from autonomy of science. Institutional change may also be effected by the distinct values of subcultural settings that may exist within the institution. The institution of religion directly influences not only trade and economic activity but also other formal or informal institutions which also directly influence economic activity (Lewer and Van den Berg, 2007). Enyedi and O’Mahony (2004) found that the Hungarian state has granted maximum autonomy to Church while the Czech state discourages the Church from being a political actor. As a result these two apparently different government policies, with the Hungarian state employing the German model whereas the Czech state employing the French model, have propelled the Church to establishing different institutional goals. The Czech-controlled Church strives to emancipate itself from the state whereas the Hungarian one set as its goal to contend with new religious movements. For instance, a given institutional cultural setting that is made up of a number of religious subcultures with distinct subcultural values is likely to produce conflicting interests or goal disharmony resulting in suboptimum institutional competence. Institutional rigidity affects the rate of internationalization and lessens the potentiality for achieving inter-institutional goal congruence which is considered a core driver of internationalization. Wessels (2005) observes that in Europe there is a high degree of diversity with regard to how national parliaments should perform, a reality which will slow down Europeanization and will expedite national institutional change and adaptation of national parliaments. For instance, the present (at this writing) problems in the Eurozone have sprung up as a result of the absence of fiscal unification which the incipient Eurozone states, when they were authorizing the monetary unification through the Maastricht Treaty of 1992, showed political incapacity to take on integrating their public financial policies. The lack of political will to venture beyond the monetary unification signifies the interworking complexity of national institutionalism and its relevant endemic propensity to defend against exogenous influences. Institutions are multilevel frameworks, that reflect a segment of the society and, which comprise heterogeneous agents who in an effort to coordinate their needs negotiate competing with each other (Brousseau & Raynaud, 2011). The various agents are guided by a complex of cultural and subcultural imperatives4 and influenced by intra-institutional vertical and horizontal relationships as well as other inter-institutional real or perceived circumstances. For instance, members of high-context and low-context cultures view trust or authority differently. As a result, formal and informal relationships have a different impact on agents’ behavior both within and outside their institutional environment. Groenewold and Sam Hak Kan Tang (2007), in studying the effects of Hong Kong’s changeover of sovereignty on democratic accountability, found that the 1997 institutional changeover had a negative effect on democratic accountability resulting in slowing down the growth of GDP. The Asian financial crisis led to reform of policies and institutions in some areas and in some countries of Southeast Asia but not in others because policymakers did not know either what to do or how to do it (Ritchie, 2005). If institutional change is politically instigated the agents will likely show stiffer resistance to it than they are likely to exhibit if change is incited by cultural expediencies. That is, the agents are more prone to defend their standing by assuming a less flexible negotiating position, if the institutional change concerns cultural values. For instance, Gershtenson, Ladewig and Plane (2006) found that people are more likely to approve of institutions when such institutions are controlled by the political party with which they identify, an institutional approach that influences trust. Misalignment of cultural values or the mere perception of such misalignment is the source of communication breakdown or miscommunication. Cultural values, norms and habits constitute the unspoken and invisible force that determines intra- institutional harmony and defines the inflexibility or responsiveness with which exogenous institutional

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influence is managed. The responsiveness with which an institutional cultural framework handles inter- institutional influence would depend on how such influence addresses the needs of the agents. For instance, the shift in the political and administrative culture of East Germany reveals how the rapid shift to a market-driven economy has caused an array of institutional and cultural transformations (Leuenberger, 2007). Intra-institutional transformation is effected by rules that have been set through the institution’s mandate and by culture-induced relationships that guide agents’ behavior. The rate of institutional evolution directly depends on the rigidity of the dominant culture of the institution. For instance, values such as nationalism and traditionalism or the attitudinal predisposition of centrism, present in the sphere of international marketing, define the level of rigidity that may characterize a particular culture. The nature of such rigidity is determined by its propensity to embrace, what evolutionary transition may bring, through adaptation. Delanty and O’Mahony (2009) suggest that adaptation means bringing together the old and the new in a way that underscores legitimization and produces a political outcome, making relatively rigid cultures more pluralistic. That being accepted, I offer the hypothesis that the institutional evolution of culture depends on the structure, adaptability, balance and scope of institutional framework and the culture’s orientation toward economic development. For instance, contrasting task-oriented and relationship-oriented cultures shows that the former displays a greater orientation toward economic goals than the latter whose greater focus is on social ends, affecting institutional evolution differently. Brousseau, Garrouste and Raynaud (2011) suggest that our understanding of what drives institutional evolution depends on assumptions about individual rationality and the role of social efficiency.

A CONCEPTUAL MODEL OF THE INFLUENCE OF INSTITUTIONAL INNOVATION ON INTERNATIONALIZATION

The model I have developed attempts to help institutionalization innovate a new approach by which to cultivate synergies arising from inter-institutional collaboration and which may be used to analyze the propensities that dominant institutional drivers are likely to show in the process of their evolution. I have classified the various institutional drivers for global change into three distinct categories. These are: supranational institutions such as IGOs (intergovernmental organizations) formed through and for intergovernmental cooperation; INGOs (international nongovernmental organizations) largely representing or advocating socioeconomic issues; and, TNCs (transnational organizations) which are effectively weaving up a system of global governance by seeking, on the one hand, to capitalize on the benefits of market homogeneity and, on the other, to mitigate the inefficiencies of market heterogeneity. These are intra-global organizations which seek to achieve relative socioeconomic equilibrium and intercultural symbiosis (Polychroniou, 2012). In defining their goals and developing their strategies these drivers are motivated by distinct principles that represent what they identify as an optimum combination of idealism and pragmatism, or, wants and needs. It is, therefore, given that these drivers qualify criteria and prioritize expediencies differently. For instance, a cultural institution will use different criteria and labor to achieve goals that represent institutional identity and promote institutional values. By contrast, an economic institution will be driven by purely economic goals, as those define the institution’s identity and determine its core values. Ferrari, et al. (2009), in a study exploring the relationship between students’ perception of their institution’s mission identity, found that students highly engage with institutional activity if such activity reflects the mission of the institution. So, institutional goals are best adhered to if they are perceived to be congruent with institutional identity and values. I conjecture that internationalization is a function of the degree of inter-institutional congruence.5 Internationalization is best driven by a synthesis of global institutions that provide an environment in which global-wide frameworks are positioned, by design, to accommodate and promote international exchange. Chorev (2005) speaking of the impact of the World Trade Organization (WTO) on domestic trade policies suggested that the institutionalization of the international organization is one of the transformations that affect the political influence of those actors who participate in the process of globalization and that internationalization is facilitated by transforming existing institutional arrangements. Laffan (1998)

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concluded that the European Union (EU), using institutionalization, has developed a distinctive model of internationalization by focusing on creating both a market space and a community. The effects of internationalization be it economic (market) or sociocultural (community) exchange are a function of the presence or degree of institutionalization of the participant actors. Institutionalization helps harmonization and enhances actors’ propensity to rationalize goal uniformity resulting in increased internationalization. Uniformity of goals is essential to furthering integration and greater exchange achieving deeper institutional cohesion and greater internationalization.

THE MODEL

In diagram “A” I offer a 2-dimensional schematic relationship of the model’s regulative and cognitive-cultural components and an attempt is made to delineate their interaction effects and observe resulting potential accommodations. The normative aspect, referred to above as “normative modeling”, is viewed as the how-to method which the above two components have to use in implementing their goals. The impact of the above two components, namely, regulative and cognitive-cultural on the institution’s transition capability varies depending on which component is dominant and which is subordinate in a given institution. Units of ‘regulation’ are likely to have different weight than units of ‘culture’ depending on the character of the institution, its mission and its actors. Thus, the diagram is a simplified delineation of the transition and does not describe the transitory degree between different levels of each component in the two-dimensional space.

Proposition I: The nature of institution designates the particular values that guide its course.

In arguing the rationality of the model I recognize the importance of achieving relative institutional optimality.6 This normative model delineates the effect of institutional evolution on internationalization by analyzing two distinct institutional drivers, Regulative and Cognitive-Cultural, commonly empowered by the Normative dimensions, and assessing their differential impact on the process of internationalization. Institutional evolution is driven by either the individual impact or the synergistic effect of the above three distinct drivers acting in a non-sequential mode. Regulative comprises a set of elements that are relatively well-defined and structured, such as, administrative values, economic policies, international trade principles, intergovernmental trade agreements, regulatory frameworks and activities and the like. Regulative espouses a monochronic/agenda-oriented culture whose preeminent goal is the efficient achievement of technocratic goals such as economic, political and other macro-goals. Institutional organizations such as central banks, bureaus of economic analysis, office of management and budget, the Institute of International Finance (IIF) and other administrative organizations embrace a regulative culture which emphasizes clear objectives and goals achieving a great degree of intra- institutional homogenization. Institutions that function within a regulative culture exhibit greater cohesiveness, are better positioned to engage in inter-institutional collaboration and promote integration. Cockerham (2010) in his investigation of the regional integration of ASEAN found that although norms and values have affected integration the process of integration has been spearheaded by intergovernmentalism and it concerns functional areas. In coordinating economic policy intergovernmental interaction among the Eurozone states produces common standards for assessing economic situations and guidelines for appropriate policy formulation (Puetter, 2003). During the recent (2009-2012) fiscal crisis of select member-states (PIIGS) of the Eurozone intergovernmental institutionalism would seem to submit to supranationalism as supranational European institutions such as the European Central Bank are poised to assume greater authority pending a fiscal integration. Cognitive- Cultural defines the behavioral aspects, attitudinal expressions, propensities, habits, routines, interactions and similar sociocultural dynamics that intra-institutional players engage in. This driver is by definition unstructured and in flux because it entails a cluster of subcultures which bring in divergent values, allowing permeation of influence among players and subcultural integration. Institutional organizations

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that are dominated by the cognitive-cultural component would include civil and community organizations, social advocacy groups, civil society organizations, and international or non-governmental organizations (INGOs/NGOs). Such organizations are dominated by culture whose ethos reflects the personality traits of the participants and determines their behavior (McCrae, 2009). The institutional structure of such organizations is characterized by a distinct set of constraints that generate a specific administrative process and cultural behavior defined by relevant rules, norms and values (Howlett, 2003). Culture-dominated institutions are usually guided by a plethora of overlapping values which may act as agents of change bringing about much needed institutional flexibility. For instance, music, food and other global products may be used as a common platform with which to acculturate or bridge cultural or subcultural differences resulting in lessening cultural heterogeneity and achieving cultural competence. Cultural competence characterizes an organization’s propensity to adapt and it is considered catalytic to an institution’s continual evolution. Institutions can best achieve cultural competence by encouraging and incentivizing their actors to seek and, in fact, embrace such idiosyncrasy. In a globalizing environment local-global interconnectedness presents an opportunity for social actors to help socialize shared systems of social representations and promote transnational relations (Mato, 2008). The institutional identity of cognitive-cultural driven organizations is characterized by its focus on relationships. The development of such relationships is largely influenced by the degree of harmony of cultural values that dominate the organization. The more conflated or the greater the alignment of diverse cultural values the deeper the organizational harmony and the greater the institutional effectiveness. The Normative component includes the elements of norms, rules, customs, strategies and tactics. Normative elements or standards are used by any organization although for regulative-oriented organizations the use of normative elements is central to achieving their agenda-like goals. For instance, the normative elements to achieving economic goals would be stringently observed and be of coercive nature. Regulating the economic environment requires the use of principles, rules, guides/procedures, conventions, and standards that are formally contracted out to the actors using coercive power or rewards, economic or noneconomic, tangible or intangible. Such normative regime is intertwined with the regulative and cognitive-cultural components and it is defined as normative modeling. Normative modeling is reflective of the configuration of power which is exercised by the actors in their mutual exchange (Braithwaite and Drahos, 2000). The normative regime is used in order to harmonize, regulate and monitor actors’ interactions and exchange with each other as they seek to carry out their commitments and achieve mandated organizational goals (Lopes Cardoso and Oliveira, 2011). A normative regime may best be viewed as the catalyst that expedites and/or confirms the likelihood that organizational goals will be accomplished. By contrast, a nongovernmental organization pursuing a social goal would employ normative elements that would be more yielding or less coercive. The EU represents a paradigm of how the symbiosis of regulative and cognitive-cultural orientations has helped its institutional evolution and Europeanization. The White Paper of the European Commission states that the EU’s legitimacy depends on involvement and participation and not solely on its ability to remove barriers to trade or to complete an internal market. The development of the EU has been the result of member-state relations that hinge on cooperation and partnership rather than competition and conflict (Laffan, 2001).

Proposition II: Orderly institutional evolution may best be achieved by maximizing the interactivity between, and by harmonizing the interaction of, the regulative, cognitive- cultural components and normative modeling.

In assessing institutional evolution it is useful to consider the condition of reflexivity that characterizes the impact of institutions upon actors and vice versa. Institutions are formed through individuals’ initiatives and thus they are subject to their cognitive-cultural influence but reflexively individuals are also influenced by institutional goals (Sparti, 2001). This bidirectional relationship is a core issue that determines the evolution of institutionalization, be it national or supranational, its impact on its identity and its effect on inter-institutional congruence. In a globalizing environment such relationship although it may also produce institutional divergence, depending on the relative influence of

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the institution and its actors, gives legitimacy to the process of institutional homogeneity as values permeate in both directions cultivating institutional congruency. Inter-institutional homogenization, on the one hand, may be empowered by how functional or normative the institutional models are and how congruent are the actors’ cognitive idiosyncrasies. On the other hand, inter-institutional divergence is produced by defensive normative and cognitive elements and by expedient institutional autonomies or by the institutional scope for independence (Beckert, 2010). For instance, in Islamic institutions the rule of law and the functioning of a market economy are subservient to autocracy. By contrast, the scope of institutions that are dominated by values such as the rule of law and a market economy would be different accentuating a potential inter-institutional divergence and incongruence which is likely to impede a cross- border institutional symbiotic collaboration and possible supranational institutionalization. Supranational institutions have resulted from the alignment of functional goals of national or lower level institutions which under the supranational design gradually become congruent. For instance, in the 1950s and 1960s the European Coal and Steel Community (ECSC), the European Economic Community (EEC) and the European Atomic Energy Community (Euratom) merged under a single institutional framework that gave rise to what we now know as the EU. The seventeen national central banks of the Eurozone have to embrace the monetary policy of the European Central Bank (ECB), which is primarily price stability. The above cases are a manifestation of how institutions with functional goals rely on formal authority to implement their agenda. Furthermore, the sociocultural disparity between the northern and southern flank of the Eurozone has been the likely cause of fiscal disharmony within it. So, institutional development is best accomplished by the optimum interaction of functional (regulative) and cultural (cognitive) elements that produce an institutional social environment with greater catalytic power with which to promote change and achieve greater integration. Such institutional development would culminate in supranational institutionalization which can encourage the incremental globalization of cultural assets and effectively promote intercultural harmonization. It would not be orthogonal to suggest that intercultural harmonization would allow a more effective use of institutional regulative power resulting in a greater and more predictable advancement of internationalization. Moreover, ensuring congruency between espoused and enacted values, among the institution’s membership, as well as economic and political influences can help establish internationalization as an institutional priority (Agnew and VanBalkom, 2009). Diagram “A” shows the evolution of the regulative and cognitive-cultural drivers and it depicts their interactive effects upon institutional progression.

Proposition III: Institutional evolution is effected endogenously, from organizational actors, and exogenously from political, economic and social micro or macro- environmental forces.

Quadrant A includes institutions whose regulative and cognitive-cultural impact is of low intensity portraying an institutional framework that is low-key/passive in its propensity to evolve and it would be considered laggard and unresponsive to supra-institutional agendas. Such institutional passivity is generated from within either by intra-institutional actors or by institutional values or qualities. For instance, in Hungary the prevalence of distrust towards the elite has given rise to economic populism making fiscal adjustments more difficult and governance ineffective (Győrffy, 2006). The assumption upon which the proposal for Quadrant A is built is that institutions are naturally entrenched and insulated from outside formal or informal influence. Quadrant B represents institutions whose regulative elements dominate those of cognitive-cultural. Institutions in which regulative elements dominate are considered progressive/responsive providing strong institutional logics and proclivities for inter-institutional cooperation and supranational institutionalization. Such institutional environment would be most supportive of internationalization because their agendas are normally dominated by, or are oriented toward, economic expediencies. For instance, supranational institutions such as the IMF and the WTO whose agenda has been mainly the recovery of economies and/or economic growth have contributed to internationalization. The European Institute of Technology (EIT), launched by the EU, is mandated to redefine the governance of higher institutions in support of a knowledge-based economy for

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EU’s economic and social development (Jones, 2008). The proposal for Quadrant B is built on the assumption that institutions are driven by technocratic agendas which are in tune with their organizational culture. Quadrant C would encompass institutions that score high on both regulative as well as cognitive- cultural elements. Institutions in this category would tend to be by definition accommodative/adaptive. Furthermore, the institution’s propensity to accommodate institutionalization would depend on the degree of alignment and congruence between the institution’s regulative and cognitive-cultural elements with those of other institutions. The greater the likelihood of a symbiotic relationship between institutions the greater their favorable effects on internationalization. The best strategic contribution to strengthening the capacity of institutions is to explore the relationship between individuals’ identity, values and purpose and the institution’s performance, systems and structure, as this can maximize institutional effectiveness and efficiency (Prempeh, 2003). The proposal for Quadrant C assumes that institutions show organizational flexibility and the propensity to foster a collaborative environment by which to promote commonly accepted goals. Quadrant D would define institutions that would score low on regulative and high on cognitive-cultural elements. Institutions in this domain would be dominated by socio-cultural agendas which would be responsive to subcultural values and would encapsulate diverse subcultural goals. Institutions in this quarter would be more constraining due to an esoteric-prone predisposition, causing conflict among subcultural actors, institutional cultural pluralism, and the relevant diffusion of authority. Bursens (2002) analyzing Belgium’s and Denmark’s ability to fulfill EU’s directives found that Belgium’s institutions were more constraining than those of Denmark and that the relatively unfavorable institutional context affected Belgium’s ability to fulfill its implementation duties, concluding that institutions can have a constraining or an empowering impact. The complexity of Belgium’s institutional context, influenced by both the northern and southern cultures, has made coordination of implementation efforts difficult. The assumption upon which the proposal for Quadrant D is based is that the core orientation of institutions originates from the socio-cultural values of the various participants in the organization, producing a fragmented and even a polarizing environment. Internationalization may be expedited through the interference of supranational organizations with either formal or informal authority. Regulative-oriented institutions have clearly a more quantifiable goal than institutions dominated by cognitive-cultural elements, whose scope usually centers on achieving some social goal. Institutions that are dominated by regulative elements may be used as catalysts for socializing institutions, which are guided by cognitive-cultural elements, into understanding, embracing and facilitating the process of internationalization and for mitigating potential inter-institutional dysfunctional exchange. Socialization of sociocultural institutions would not focus on changing the culture but rather it would seek to achieve cultural adaptation and values-harmonization so that optimality of exchange may be enhanced. Relative intercultural convergence enhances alignment of cultural goals producing institutional structures that accommodate economic development. For instance, EU’s economic expediencies have degraded the importance and domination of member states’ political ideology empowering the drive toward political unification. Olsson (2008) observed that changes in institutional structure may result from public intervention that would entail introducing new rules by which to govern actors’ business behavior rendering a new improved institution more adaptable to the changing demands of the market environment. Jonnergard and Larsson (2007) suggested that regulatory processes help introduce regulatory changes which promote internationalization. The role of marketing is considered pivotal to the evolution of institutional structures, leading to internationalization. Domestic firms embark on their journey to becoming international using marketing technocracy which promotes their commercial goals by managing not only the technical aspects of marketing but also by assessing the impact of the given cultural or subcultural environment of the market. Understanding the foreign culture is indispensable to understanding behavior at the market place. Acculturation produces the framework for developing viable relationships through which the mutual interests of foreign marketers may be promoted. Relationship quality is defined by communication, cooperation, trust and commitment Kuhlmeier and Knight (2010), dimensions whose importance varies from culture to culture. Liang and Cherian (2010) conducted a study which showed that imagery generation differs in the Chinese and American cultures because Chinese and Americans have different views of self, ways of thinking, and mental processes. Lack of cultural

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sensibility or the inability to recognize the importance of attitudes and values to the success of a marketing mix, and that such attitudes and values change cross-country, results in marketing failure (Giannakopoulou et al. 2008). In terms of marketing’s influence on institutional evolution, for instance, McNally and Griffin (2005) found that relationship marketing institutionalization is associated with increasing joint action and cultural control, making it a potential social institution. The ability of Marketing to integrate the regulative and cognitive-cultural components of institutional frameworks accommodates and helps expedite the internationalization of markets. Institutional logics, whether regulative or cultural-cognitive, welcome the impact of marketing technocracy on their evolution because it helps them achieve economic goals as it secures the orderly progression of their socio-cultural identity. Marketing offers a set of skills which work to the interests of both the organization and its people by aligning such interests, increasing organizational cohesiveness and enhancing institutional evolution. On the other hand, institutionalization processes help legitimize the impact of marketing and proliferate its use for harmonizing disparate institutional goals. Such processes seek to reach both economic and noneconomic ends, albeit to a different degree for different organizations. Marketing is deemed to have catalytic impact in moving institutions along through the various quadrants and in helping them upgrade to the Progressive/Responsive quadrant B. Each quadrant in the model requires that marketing employs a distinct approach in helping the institutions of the given quadrant evolve. Institutions in quadrant A may be helped by marketing’s capacity to generate demand which gradually fosters the need for exchange with other institutions. For instance, global trade has propelled and expedited the internationalization of well- entrenched national labor unions. In quadrant B institutions apply sophisticated marketing which may further enhance the effectiveness and efficiency with which these institutions operate. For instance, transnational organizations have solidified their presence in the new global economy through the optimum integration of efficiency and customization strategies. In quadrant C marketing’s role is integrative and its impact strategic because of its sui generis capability to use cognitive-cultural elements in order to advance regulative goals and synergize the collaboration between regulative and cognitive cultural elements. For instance, educational institutions use social media and relevant marketing techniques in order to reach regulative goals, as they maintain their institutional profile in the social space. Institutions in quadrant D would tend to use marketing in their quest to maintain their institutional status and promote their sociocultural values. Marketing techniques, such as analysis of psychographic profiles and attitudinal behavior, may be used to identify strategies that would promote intra-institutional harmonization and help accomplish institutional goals. For instance, nonprofit organizations or NGOs such as the World Social Forum may use marketing thinking in order to align their internal actors’ potentially diverse goals and maximize the likelihood of achieving institutional objectives.

DISCUSSION

Analysis presented infers that institutions are subject to endogenous and exogenous forces; they may have an economic or a socio-cultural agenda; they are dynamic and their evolution is continuous; they may be either formal or informal; they exhibit a composite of rational/objective and affective/subjective behavior; they pursue utility, although such utility is perceived differently by institutional actors, depending on institutional scope; and, that institutionalization processes depend on the scope of institutional goals. The internationalization of economies is best described as a dialectical process that depends on the rate and quality of evolution of institutionalization. Institutional evolution is thought to be relatively asymptotic as the cognitive-cultural elements are ingrained in every institution, even within those that are dominated by regulative elements. The core value of institutionalization, in the context of internationalization, is to help identify, cultivate and embrace common goals and bring about an efficient and systematic upgrade of subnational and national institutions progressively helping them to develop into transnational ones. Institutional clustering7 may be used to facilitate inter-institutional congruence and achieve a more effective harmonization of diverse institutional values and a more efficient integration of relevant institutional goals. Institutional clustering may be vertical, horizontal or lateral. Vertical clustering would include institutions that are hierarchical in their structure, have technocratic or universal

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goals to achieve and which goals are exogenously driven, such as international trade institutions. Horizontal clustering would comprise institutions that are relatively unstructured and organizationally flat, their agenda is largely polymorphic and their impetus is subjective, such as social or cultural institutions. Lateral clustering would include institutions that use hierarchy, they employ clear strategies and they usually pursue specific goals of a social nature, such as environmental NGOs. Institutions categorized under vertical clustering are likely to embrace a multi-institutional approach giving rise to supranationalism which is an effective institutional design for cross-border institutional integration. Vertically clustered institutions are by definition regulative, able to exercise leadership in influencing and in helping socialize horizontal and lateral institutions harmonizing relevant institutional goals and achieving inter-institutional congruence. Inter-institutional congruence generates attitudinal homogeneity among institutional actors, empowers institutionalization and promotes the internationalization of institutions which, in turn, creates an environment that favors the sustainable internationalization of markets. Institutionalization can help the internationalization process by acculturating the national and subnational markets into understanding and accepting the goals of internationalization and by helping such markets effectively and efficiently access the benefits of internationalization. On the basis of the model, depicted in diagram “A”, there are three influencers to the evolution of institutionalization. These are: goals, structure, and, actors-players. The preeminent influencer which is thought to dominate the process of institutionalization and its evolution is goals. Goals, once articulated, dictate the appropriate structure that should be employed to optimally facilitate the achievement of those goals. The quality of impact of actors-players will be determined by their socio-cultural identity and how such identity may influence their predisposition to achieving set goals. The entrenched character of socio-cultural imperatives and exclusives define cultural differences and promote a chasm between cultures increasing environmental uncertainty and mistrust. The threat of such discontinuities may be moderated through a set of institutional goals that promote “common” value-propositions, establish a culture of governance, encourage inter-cultural confidence and trust producing inter-institutional convergence that contributes to the proliferation of internationalization. The core value of this study has been to shed light onto how institutionalization catalytically promotes internationalization of national markets and economic liberalization. The argument presented makes evident that stability and efficiency of international institutional frameworks are a composite effect of regulative and cognitive-cultural elements and that optimum institutional effectiveness results from a concerted effort of institutional actors to achieve functioning congruity. Diagram A would support the argument that institutions in quadrant B would evolve most efficiently and that institutions that reside in the other quadrants should be helped to move toward that cell. Further research might among others focus on how socio-cultural differences, among social actors, may best be alleviated or mitigated; how to moderate or lessen potential conflict arising from antagonistic behavior among groups in the sphere of socio-cultural elements; how to measure the impact of socio-cultural dissension on regulative institutions; how to assess the evolution and the process of socialization of institutions; how supra-institutionalization might more effectively expedite internationalization; how to assess the weight of regulative units and that of cultural-cognitive ones so that the composition of the 2-dimensional space becomes more relevant and meaningful; and, how to evaluate the impact of socio-cultural institutions on the rate and quality of internationalization.

40 Journal of Marketing Development and Competitiveness vol. 6(5) 2012

DIAGRAM “A” INSTITUTIONAL EFFECT ON INTERNATIONALIZATION

HIGH PROGRESSIVE/ ACCOMODATIVE/

RESPONSIVE ADAPTIVE

B C

REGULATIVE

INERT/ RESISTANT/ PASSIVE OBSTRUCTIVE

A D LOW

COGNITIVE – CULTURAL LOW HIGH

ENDNOTES

1. Cultural distance determines the level of homogeneity between two cultures. That is, the greater the distance between two cultures the more heterogeneous the cultures are. 2. Cultural evolution underscores the dynamism and continuity of societal change which both stimulates and is stimulated becoming increasingly complex. 3. Cultural demythicization describes a system’s approach which accepts cultural differences without allowing them to impede sociopolitical integration. 4. Cultural imperatives are defined as those customs or requirements that must be observed by those operating in that culture. 5. Inter-institutional congruence is achieved by harmonizing institutional values and aligning institutional goals producing an inter-institutional symbiotic relationship. 6. Relative Institutional optimality is defined as the evolutionary integrated growth and symbiosis of the regulative and cognitive-cultural modes of institutional development. 7. Institutional clustering defines a group of institutions whose values and goals are more homogeneous, and which employ similar strategies for accomplishing their goals.

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ACKNOWLEDGEMENTS

The author wishes to thank the anonymous reviewers for their favorable review and for concluding that the paper offers unique insights for the field’s advancement. Moreover, the author is further indebted to the reviewers for their comments and advice on what to include in a future paper.

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A Closer Review and Strategic Implications of the Comparative Market Analysis in Setting the List Price

Chu V. Nguyen University of Houston-Downtown

Lucille L. Pointer University of Houston-Downtown

Charles Strain University of Houston-Downtown

INTRODUCTION

Historically, the US has pursued a standing policy promoting home ownership through regulations and institutional arrangements. The introduction of Regulation Q and the creation of the Federal Home Loan Bank System, Ginnie Mae and Freddie Mac are examples of how the U.S. government has encouraged and facilitated the channeling of funds from economic units with surplus funds to the home mortgage markets. The net effect was that it made mortgage funds available to consumers at affordable rates. Consequently, almost sixty seven (67) percent of American families owned their own homes before the subprime mortgage crisis, and residential real estate is by far the largest investment for the average American as well as the largest component of individual wealth. In 2007, realtors sold over 6 million new and used homes. This created a large, politically strong group of real estate agents and brokers in the U.S. The literature is replete with studies investigating the diverse strategies used to sell real estate (Turnbull & Zahirovic-Herbert, 2012; Benefield & Sirmans, 2009; Johnson, Benefield & Wiley, 2009; Anglin, Rutherford & Springer, 2003). Real estate agents influence many decisions in the marketing of property including setting the listing price for property. The list price is the price that a particular property when it is put up for sale. Normally a realtor does a comparative market analysis (CMA) to help the client set the list price. A common belief is that the listing price and the attendant psychological reactions of the potential buyers to the listed price significantly influence both the final sales price and the total number of days that the property remains on the market (TOM). Although price is an important factor, evidence

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indicates other factors may influence the TOM. Other variables such school district, the number of bedrooms and baths, mortgage rate and its recent changes, number of listings in the particular area, and so on, certainly can play a role in the TOM of the properties. Given the previous discussion, a logical question to ask is to what extent list price influences a property’s TOM and to what extent other variables influence Time on Market (TOM). Secondly, how useful is the CMA as an instrument for setting list prices. Because of the subjective judgment in performing a CMA, the monetary benefit, and reputation of the listing agents in the industry for the quick sale of listed properties suggest the possibility that properties are underpriced. In light of the aforementioned, this study utilizes Cox’s (1972) proportional hazard and Tobit models to discern the above issues and evaluate the robustness of the empirical results obtained from them. Although researchers used the Cox, proportional hazard Model in numerous studies, the Tobit has been used less in studies of this nature. These models belong to the general class of the logistic regression model, used to handle discrete and truncated dependent variables.

Review of Literature Given the economic impact of the housing market sales in the American financial system, researchers have conducted studies to understand the factors predicting the length of time property remains on the market (TOM) for close to forty years. Within this time, industry research found a myriad of factors might be predictors of TOM. The vast quantity of research focused on three distinct streams beginning with the physical characteristics of the property, liquidity issues and lastly characteristics of the sellers or a combination of these. Even though the list price has been included in many models, there is less focus on how list prices are determined in the housing market (Haurin, et al., (2010). The property list price is of critical concern for both sellers and prospective buyers. Buyers view the list price as a primary factor in the length of time property remains on the market because it captures the effects of the many hypothesized drivers of sales (Knight 2002). According to several researchers, the listing price provides an upper boundary for expected sales offers and signals market information to potential buyers (Haurin, et al., (2010); Anglin 1997 and Horowitz 1992). Examining the effects of selling price, TOM, and financing premiums, Ferreira & Sirmans (1989) found that the initial list price positively affect TOM and the greater the difference between the list price and sales price the longer the days on the market. Yavas & Yang (1995) research support the commonly prevailing notion that list price affects how long it takes for a real estate sell but they also show a reciprocal effect because TOM influences the final selling price. Most studies consistently find a positive relationship between higher than average list price and longer TOM (Jud, Seaks, & Winkler, 1996; Asabere, Huffman, & Mehdian, 1993; Miller & Sklarz, 1987, Kang, & Gardner, 1989; Trippi, 1977; Anglin, Rutherford & Springer, 2003; Haurin, et al., 2010), shows that sellers increasing sensitivity to the arrival rate of potential buyers in a market, results in sellers reducing list prices to maintain a steady flow of potential buyers. Knight (2002) and Huang & Palmquist (2001) examined the interrelationship between list price and time on the market finding that it is crucial to list homes at the right price initially. Accordingly, the level of the initial list price will influences the rate at which a seller learns about the buyers and the distribution of offers. Higher listing prices, reduces the number of potential buyers and as a result fewer offers. Research shows that when we revise the original listing prices, the effect not only increases TOM but also results in lower selling prices due to the existence of a hypothesized stigma effect, which Taylor (1999) originally proposed. Benjamin & Chinloy (2000) show that property moves faster when priced at or below market value oppose to overpricing property. This effect must be qualified depending on geographic or spatial factors. In a study of the residential housing major in a major U.K. city where most residential homes sell at a premium above the listed price, McGreal, et al., (2009), found that although the list price influences TOM, it is a more complex relationship. Properties selling higher than list price experienced a shorter TOM and those selling for less than the list price had a longer TOM. However, this relationship only exists for properties on the market for less than 6 months.

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TOM and Selling Prices In the US residential real estate market, the actual selling price more often than not differs from the list price (Horowitz, 1992; (Haurin, et al., (2010). Many studies document an inverse relationship between selling price and TOM compared to the positive relationship between list price and TOM (Belkin, Hempel & McLeavey, 1976). Examining the relationship between selling price and marketing time, Benefield, Rutherford, and Allen (2011), found that across all homes including both normal, foreclosed and homes classified as estate sales, TOM had an inverse relationship to selling prices. However, estate homes, which were typically older and smaller with a significant lower list price and selling, price and spent slightly less TOM than the non-estate homes. While investigating the effects of list price, Haurin, et al., (2010) confirmed that homes atypically raises the ratio of list price to sales price at a decreasing rate and dwellings with greater atypically have a longer time on the market. The study confirms that sellers of atypical properties tend to set prices relatively high, and offer higher discounts from list prices, which supports Knights (2002) findings. Research shows that seller heterogeneity or constraints impacts list price, selling price and TOM. As sellers holding costs increases, reservation prices decreases and TOM decreases (Cheng, Lin, & Liu, 2010; Sirmans, Turnbull, & Dombrow, 1995; Glower, Haurin & Hendershott, 1998; and Arnold, 1992). Kang and Gardner (1989) note that the relationships between selling price, list price, housing characteristics are complex ones that are often dependent on market conditions.

List Price, Comparative Market Analysis and Agents The prevailing belief in the real estate industry is that correctly priced properties sell within the time of the listing agent’s contract duration. Overpriced properties tend not to sell quickly, thus remaining on the market too long and eventually leading to the expiration of the listing agents’ contracts. This conviction is the basis for realtors to perform a comparative market analysis. A CMA is supposed to help both the agents and consumers decide upon the correct price for the listing property. To perform a CMA, real estate agents search the Multiple Listing Services (MLS) archive to find at least three “comparable” properties, preferably in the same geographic area, that were sold in the past six months. If agents cannot find comparable properties in the same geographic area or within the last six months, the agent must rely on properties in another geographic area, which should be in relatively close proximity. These issues force the agent to make many adjustments to find the “comparable” properties for a CMA. There are no hard rules for these adjustments. Instead, their determination requires a subjective evaluation. Additionally, during the period when the real estate property prices move rapidly and monotonically such as in the recent residential real estate market, six months is a long time. Therefore, to provide a good CMA, the agent must be very knowledgeable of the current economic and financial conditions of the economy as well as the conditions of the current market in the prevailing phase of the business cycle. The real estate industry consists of agents with varying levels of skills and knowledge due to several factors. To become an agent, an individual must meet the state educational requirements and provide proof of competency by passing the state examination. Subsequently, active agents must satisfy an annual state educational requirement known as the mandatory continued education requirement (MCE.). The current MCE requirements consist of a minimum number of quantitative calculations in the areas of economics and finance. These minimum requirements result in a high variability in the skills and abilities of the licensed agents. Reputable real estate companies provide excellent training to their agents. These companies in return keep a large portion of the sales commissions from their associates. Due to this bias against the commission sharing structure, newer real estate firms developed known as one hundred percent companies. In these new firms, the principal brokers are available to answer questions from their sale associates, but provide little training. In this arrangement, the real estate sale associates pay a minimum annual fee and about one hundred dollars per transaction. Thus, agents in these establishments learn by doing, which in turn exacerbates the problems associated with the quality of agents and their ability to develop good CMAs. The principle agent problems are a factor affecting the agents’ inputs on clients’ decisions on setting the list price and acceptance of offers. Levitt & Syverson (2008) show that realtors sell their own homes at a higher price than they sell their clients and leave them on the market

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longer, which led them to conclude that realtors often work to their own optimal advantage rather than to their clients best interest. Turnbull & Dombrow (2007) demonstrate that agent specialization influences property selling price and time on the market. Agents specializing in listing properties obtain higher prices for their sellers while those who specialize in selling obtain lower prices for their buyer. This highlights the importance of agents being experienced and knowledgeable in the market. A knowledgeable agent should help set the “right” price through their CMA. The purpose of this study is to investigate the relationship between list price, CMA and TOM. Do properties listed close to CMA sell within the time of the listing agent’s contract period?

Potential Contributing Factors to TOM of Listed Residential Real Estate For the most part, real estate property owners tend to have an upward bias when pricing their properties. However, given the above discussion on the industry, the CMA is a useful instrument for listing agents to recommend the listing prices for properties. Listing prices based on CMA may not account for all the variables influencing their TOM. Based on prior research, it is logical to postulate that the listed price of a property is an important factor in its TOM; it is not the only factor contributing to its TOM. Other factors specific to that property may influence the TOM of a real estate property. National economic and monetary policies, which manifest in the personal income, interest rate, unemployment, and inflation affect the willingness and the ability of the population to purchase residential properties, are also contributing factors to the TOMs of listed residential properties. To investigate the predictors of TOM, this study uses commonly investigated home characteristics with the exception of loan to value which were identified from prior studies (see for example Haurin 1988; Kang & Gardner 1989; Glower, Haurin & Hendershott, 1998; Turnbull & Dombrow, 2007; Culp & Retzlaff, 2008; Bourassa, et al., (2009); McGreal, et al., (2009); Benefield, Rutherford & Allen, (2011): • per square foot listed prices • sold prices under or over the CMA (which is the average of sale prices in the school district where the listed property is located) • loan to value ratio • change in state unemployment rates from five to four months ago • change in the conventional mortgage rates from four to three months ago • independent school district where the property is located • period when the property is listed measured by dummy variable assuming different values for different periods when data is collected—Aprils and Augusts of 2006, 2007, and 2008 • number of full bathrooms • number of bedrooms • the cross between the number of bedrooms and full bathrooms to measure the functional obsolescence of the property • number of car garages • square footage • number of stories of the buildings • square footage of the lots • whether the property has a private swimming pool • per square foot of listed and sold prices • amount the seller helps with closing costs • amount of money the seller spent on repairs • dollar listed price of the property • year property built • bonus offered by the seller to buyer’s agent

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Methodology The methodological challenge in studying TOMs of listed real estate properties is whether the measures days in the market itself is discrete and truncated from below, i.e., TOM is an integer and cannot be negative. This truncating phenomenon renders the conventional econometric procedure impropriate to identify the characteristics contributing to the TOMs of listed real estate properties. To use any regression model with truncated data, the probability density of the dependent variable must relocate from plus and minus infinity to the range between zero and positive infinity. To overcome this statistical challenge and to check for the robustness of the empirical results, this study follows several other studies (Haurin, 1988; Glower, Haurin & Hendershott, 1998) using the semi-parametric Cox proportional hazard model that discerns the aforementioned issues and to check the robustness of the results by comparing them to the results obtained from estimating a parametric Tobit model.

COX PROPORTIONAL HAZARD MODEL

Let the TOM be a random variable T with a probability distribution function f (t), (where t is a realization of T) represent the TOM. As such, the following equation provides the cumulative probability:

t = )()( Pr ≤= tTobdssftF ).( (1) ∫0

The probability that the TOM is of a length of at least—in the terminology of this topic matter, the property is said to “survive” for the length of t—can be described by equation (2)

≥=−= )(1)( Pr tTobtFtS )..( (2)

Given the listed property has lasted until time t, the probability that it sells in the next short interval of time, denoted by ∆t , expresses as: (equation (3)

),( Pr ( ≥∆+≤≤=∆ tTttTtobttl ).| (3)

A useful function for characterizing this aspect of the distribution is the hazard rate which is given by equation (4), Greene (2008, p. 933.)

Pr ( ≥∆+≤≤ tTttTtob )| −∆+ tFttF )()( tf )( λ t)( = lim →∆ = lim →∆ = (4) t 0 ∆t t 0 ∆tS t)( tS )(

As pointed out by Greene (2008, p. 934), the hazard rate is roughly the rate at which the listed residential real estate properties are sold after the duration of t days, given that they are on the market for t days. As such, the hazard function discerns the following intuitive question that the longer a listed property is on the market, the more likely that it sells within the next week. The speculative position of the real estate agents is that the longer a property has been on the market, the more difficult it will be to sell this property because of the potential buyers’ psychological thinking; thus, it is less likely that it sells in the next short time interval. Greene, (2008) and Elandt-Johnson & Johnson, (1980) further articulated that the hazard function, the probability density function, the cumulative density function, and the survival function are all related. Equation 5 provides the hazard function and equation 6 describes the probability density function.

− ln tSd )( λ(t) = (5) dt

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= λ ttStf ).()()( (6)

Another important function for this model is the integrated hazard function provided by the following expression (7).

t =Λ λ )()( dsst (7) ∫0

Equation (8) describes the survival function.

Λ− t)( tS = e .)( (8)

Therefore, equation (9) provides an alternative expression of the integrated hazard function. In this setting, the integrated hazard function is a generalized residual.

)( −=Λ ln tSt ).( (9)

As pointed out by Greene (2008, p. 937), one limitation of the above class of model is that external factors are not incorporated as potential contributors to the survival distribution and adding a set of “covariates” or explanatory variables to the models is fairly straightforward. To this end, let

= 321 zzzzx n )...,...... ,,( be an n by 1 vector of covariates, then the following equation (10) specifies Cox’s (1972) proportional semi-parametric hazard method of analyzing the effects of covariates on the hazard rate:

' λ( ) = exp λβ 0 txt )().( (10)

Thus, an alternative to equation (10) is:

 λ t)(  ' Ln  = x β (11)  λ0 t)( 

In this equation, β is the vector of unknown regression coefficients we plan to estimate and λ0 t)( is the unknown hazard function for a listed real estate property with covariate vector x = 321 n )0...,...... 0,0,0( . Also, as pointed out by Hopkins (1981, p. 576), this specification models the log-linear effect of the covariates upon the hazard function. Additionally, when agents list residential real estate properties, some of them will be under contract quickly and contracts on some of the remaining properties will follow. Properties that do not sale during this period tend to remain on the market much longer and eventually lead to the expiration of the listing agents’ contracts. In addition, TOM can never be negative. The behavior of the TOM violates the normality assumption in conventional OLS procedure. As pointed out by Greene (2008, p. 906), when modeling this type of event, although an underlying regression model is in fact at work, it is not the conditional mean function that is of interest. The objects of estimation are certain probabilities of events. Researchers often use the exponential model for phenomena such as these. Econometrically, Greene (2008, p. 941) articulates that the proportional hazard model (semi- parametric model) is a common choice for modeling these events because it is a reasonable compromise between the non-parametric Kaplan-Meier estimators (Kaplan & Meier ,1958), and possibly excessively

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structured parametric models. Cleves, Gould, Gutierrez, & Marchenko, (2008) and Meyer (1988), have devised another, “semi-parametric”, specification for hazard models. Hopkins, (1981) provides a method by which we may estimate the regression parameters. Let

321 tttt k )...,...... ,,( represent k distinct times for a property to sell among the m observed times when the listed properties sell. The conditional probability that a listed property with covariate vector xi is sold, given that only one property is sold at time ti and that the set of Ri (indices of properties on the market prior to time ti ) is the ratio of the hazards:

exp x ' β ).( (12) ' ∑exp x j β ).( ∈Rj i

If there is no multiple sales (ties) among the listed residential real estate properties at the times, 'i st , then as Cox (1975) points out, multiplying these probabilities together for each of the sales time, ti , yields the partial likelihood function (13):

k exp x ' β ).( (13) β = i xL )|( ∏ ' i=1 ∑exp x j β ).( ∈Rj i

When there are ties or multiple sales among the listed residential real estate properties at the times, 'i st , then Breslow (1974) proposes the following likelihood function (14).

k exp s ' β ).( (14) β xL )|( = i ∏ mi i=1    ' β   ∑exp x j ).(   ∈Rj i 

The equation provides that mi is the number of sales of the listed real estate residential properties at time ti , si is the sum of the covariates of the mi of the sold properties. Maximization of the appropriate partial likelihood function yields estimators of β 's with the properties similar to those of the usual maximum likelihood estimators such as an asymptotic normality, Hopkins (1981, p. 578.) As articulated by Kiefer,

(1988), the λ0 t)( , the baseline hazard with unknown parameters, will normally require estimation. In the above specification, we obtain the effects of the covariates by multiplying the hazard λ0 t)( by a factor exp x'β ).( , which does not depend on the duration of t. Additionally, this specification is convenient because non-negativity of exp x ' β ).( does not impose restrictions on β and the estimations and inferences are straightforward. More importantly, estimation of β in the above model does not require the specification and estimation of the baseline hazard, λ0 t)( , Greene (2008, p. 940) and Kiefer, (1988).

TOBIT MODEL

To check for the robustness of the empirical results, we estimate the Tobit model (a parametric member of the class of the logistic regression model developed by economist James Tobit 1958) using the same data set. Again, the objective of the analysis is to construct a probability model that links the changes in a set of independent variables or covariates to the probability of an outcome. Following

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Greene (2008), this study specifies equation (15) as the basis condition to construct the Tobit model, where y* is unobservable a dependent variable relating to a set of covariates x’ as follows:

xy '* += εβ = * ≤ y 0 if y 0 (15) = yy * if 0 < y*

Econometrically, equation (15) specifies how a vector of factors, x influences the TOMs of listed real estate properties. Green (2008, p. 928), shows the development of the log-likelihood of this model from two sets of terms as follows:

0 − x ' β  1  − xy ' β  L lnln Φ=  i  ln Φ+  ii  (16) ∑ σ ∑ σ σ yi ≤0   0< y  

This model can be used to estimate the coefficient vector β of the covariates or independent variables x.

DATA AND EMPIRICAL RESULTS

This section empirically examines whether or not other variables besides the listed price (based on the CMA) provided by listing real estate agents affect the TOM of listed residential real estate property. To this end, this study collected data for the aforementioned variables on 5,544 residential real estate properties sold in three independent school districts, recorded in the archive of the MLS of Houston Association of Realtors in Aprils and Augusts of 2006, 2007, 2008. Out of these sample properties, 2,927 were listed at the per square foot price above that of the average of the recent past sold prices in the independent school district, which is used as a proxy measure for a CMA. To appreciate the beauty of the Cox proportional hazard model, it is important to realize that equations (1) and (2) combined or equation (9) indicates that if any given covariate positively affects the hazard rate of the properties, i.e. the reported hazard ratio being greater than one, that covariate in fact shortens this property’s TOM. For example, if the estimated coefficient of an independent variable or a covariate is 0.18, then an increase in the measurement of that variable by one unit will cause the hazard rate by 20% since exp. (0.18) is 1.20. Alternatively, if an estimated coefficient of a covariate is -0.2231, then an increase in that independent variable by one unit will result in a decrease of the hazard rate by 20% because exp.(-0.2231) = 0.8. Clearly, a positive estimated coefficient of Tobit indicates an increase in the TOM of the property; while a positive estimated coefficient of Cox’s model indicates an increase in the “hazard” that the property in question to be censored or to be sold., i.e., shortening the TOM of the property in question. Since some properties were listed under and some were listed over CMA, this study separated the sample in two subsamples—one subsample includes properties listed under and the other consists of those listed above the CMA—and each of the two selected model is estimated with the full sample and these two subsamples as reported in Table 1. Additionally, some sellers offer bonuses to buying agents with the dollar value of the bonus to the buying agent expressed as the percentage of the sold price for the empirical analysis. Overall, the empirical results reveal the goodness of fit as evidenced by the log likelihoods and the Chi-square statistics i.e. fits the models for all the samples -- full sample and two subsamples well. In determining factors influencing TOMs for the full data sample, the Tobit model reveals that the listing price is marginal significant, while the Cox’s model indicates that it is not significant at any conventional level. As to the bonus to agents representing buyers, the Tobit’s model suggests that it is not significant, while Cox’s model indicates that it is significant at the one percent level. Overall, the comparison

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between the two models of the logistic regression model class suggests that Cox proportional hazard model is more powerful in detecting factors that influence the TOMs of listed real estate properties. The consistency of the comparison results lends credence to the empirical findings of this investigation. Statistically, we determine the significance of individual estimated coefficients of Cox’s model by the z-statistics, while the t-statistics determine the significance of the estimated coefficients of the Tobit model. From the full sample results - except for the aforementioned minor difference between results obtained from the two models - an analysis of the estimation results indicate that many variables are significant at the 1 percent level. These include: • the independent school district where the property is located • size of the garage as measured by the number of cars • number of stories of the unit, per square foot listed price and sold price • seller’s help in closing cost, year built of the unit • bonus the seller offers to the buyer’s agent) are significant at the 1 percent level

The empirical results further indicate that whether the property has a private swimming pool is significant at the 5 percent level. Whereas a change in the conventional mortgage rates from four to three months prior to the contract to purchase by the buyers, seller’s paid repairs, dollar listed price are marginally significant and all other included factors are statistically insignificant at conventional levels. Interestingly, the empirical findings reveal that while the levels of the per square foot listing price and sold price but not their deviations from CMAs—listed under or over the average of the recent past sold prices in the independent school district—significantly influence the TOMs of the listed real estate property. Although using the recent past sold prices in the independent school district as a proxy measure for CMA in this analysis may mitigate the believability of the empirical findings, the empirical results cast doubt on the prevailing belief in the real estate industry that “properties that sell within the time of the listing agent’s contract duration are priced right. Properties that do not sale fast and remain on the market too long and eventually lead to the expiration of the listing agents’ contracts are not due to them not being ‘priced right’. The results seem to lend some support to the public perception reported in the Real Estate Industry survey 2005 and the aforementioned deficiencies of CMAs prepared by listing real estate agents in the industry.

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TABLE 1 Properties Listed Over Properties Listed Under CMA Full Property Sample CMA

Variables β’s - Cox β‘s -Tobit β’s - Cox β‘s -Tobit β’s - Cox β‘s -Tobit

0.00383 -0.36798 -0.00002 0.00060 -0.00003 0.00124 List Price vs. CMA 0.97 -1.27 -0.13 0.07 -0.20 0.14

-0.00198 0.17066 -0.00119 0.07388 0.00094 -0.09081 Sell Price vs. CMA -0.52 0.62 -0.79 0.70 1.09 -1.46

0.00682 -0.36878 -0.00637 0.61825 -0.00107 0.15270 Loan Value Ratio 0.79 -0.53 -0.60 0.95 -0.16 0.32

Δ Unemployment rate from 5 to 4 0.00153 -0.26385 0.01044 -0.67956 0.00741 -0.52537 mos. prior to contract 0.19 -0.45 1.38 -1.28 1.37 -1.33

Δ mortgage rate. from 4 to 3 0.00760 -0.88131 0.01227 -0.96923 0.01233 -0.94964 months. prior to contract 0.72 -1.11 1.22 -1.36 1.70*** -1.79***

-6.94591 0.06435 -4.66901 0.105212 -7.47747 School District—Location 0.10292 2.94* -2.70* 1.78*** -1.88*** 4.30* -4.27*

0.01134 -0.52814 -0.00133 -0.18900 0.00478 -0.27845 Period Property Sold 0.95 -0.59 -0.12 -0.23 0.58 -0.46

-0.38445 21.94409 0.03759 0.278270 -0.11451 7.81326 # Full Bath Rooms -2.11** 1.65*** 0.23 0.03 -1.00 0.97

-0.14047 5.86655 0.19081 -11.29692 0.05073 -4.00335 # of Bedrooms -1.29 0.74 1.91*** -1.67*** 0.72 -0.81

Bath/Bedroom Functional 0.07432 -3.19452 -0.03756 1.69076 0.00582 -0.07598 Obsolescence 1.46 -0.86 -0.74 0.49 0.17 -0.03

0.12913 -9.92914 0.09965 -6.33306 0.10966 -8.24734 Size of Garage/ # of spaces 3.95* -4.04* 3.53* -3.15* 5.26* -5.33*

-0.00028 0.02297 0.00028 -0.01822 -0.00006 0.00584 Building Sq. Feet -3.19* 3.59* 2.80* -2.69* -1.21 1.51

-0.02866 2.02170 --0.26619 20.76292 -0.15088 11..15824 # of Stories -0.60 0.56 -5.41* 6.13* -4.60* 4.63*

0.00001 -0.00021 -0.00001 0.00013 -0.00005 0.00005 Lot Size 0.71 -0.66 -0.67 0.86 -0.29 0.33

0.06149 -5.92108 0.15491 -11.14090 0.12929 -9.25521 Private Pool 0.83 -1.06 2.08** -2.14** 2.40** -2.43**

-0.05414 4.01576 -0.01745 1.07413 -0.02633 1.77037 Listing Price per Sq. Foot -6.66* 6.80* -4.70* 4.37* -8.40* 8.19*

0.04954 -3.54884 0.02371 -1.43101 0.02729 -1.76273 Sold Price per Sq. Foot 7,04* -6.95* 6.50* -5.92* 8.94* -8.34*

-.00002 0.00109 -.00002 0.00113 -0.00003 0.00109 Seller Paid Buyer’s Closing Cost -2.91* 2.97* -1.97** 1.91*** -4.32* 3.55*

-0.00003 -0.00013 -0.00002 0.00058 0.00001 -0.00011 Seller Paid Repairs -4.08* -0.88 -0.71 0.44 1.67*** -0.76 -0.00337 0.22705 -0.0040 0.29400 -0.00340 0.24383 Year Built -2.53** 2.22** -3.82* 3.84* -4.24* 4.04* 0.00001 -0.00027 -0.0001 0.00013 0,00001 -0.0000 Listing Price in $000’s 2.79* -3.31* -2.62* 2.27** 1.17 -1.74***

0.00315 -0.12017 0.08347 -4.89841 0.00303 -0.11840 Bonus paid to Buyer's Agent 2.85* -1.45 1.39 -1.17 2.80* -1.48

Chiqurare(22) 131.40* 124.83* 173.15* 167.56* 253.77* 236.55*

Log likelihood -17,934.97 -15,002.26 -20,374.19 -16,66.73 -42,165.20 -31,644.57

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Future research may refine the CMA by including the comparable properties very near to the listed property and adjust for their different characteristics to rectify the CMA rudiment. Arguably, the rudiments of the CMA used in this investigation may mitigate the believability of the empirical findings. The important contributions of this study are that it confirms the use of the Cox’s model as better model than the Tobit model for business applications. It also confirms that there are several other important factors other than price influencing the TOMs of listed real estate properties. A comparison of empirical results obtained from estimating the two models reveals that some aforementioned factors becomes more/less or significant/not significant determinant of TOMs of some listed real estate properties in one sample versus another. More specifically, a change in the conventional mortgage rate from four to three months prior to buyers’ contracts to buy contributes significantly to TOMs for the full sample, but becomes insignificant when the models were estimated using two subsamples. In addition, number of bedrooms marginally contributes to TOMs of properties with per square foot listing price below the CMA level, but does not affect TOMs of other properties. Additionally, number of stories of the unit is highly important in determining TOMs of properties when the ‘per square foot’ listing price is above the CMA and is irrelevant regarding the TOMs of properties when the ‘per square foot’ listed price is below CMA level. We conjecture that these differences are attributable to the synergic effects of the characteristics of the properties in these samples and the buyers of these properties. For example, a buyer of an upper quality property, hence higher per square foot listing price would have taste for different amenity of the property than the taste of a buyer of a property with lower than the CMA price per square foot.

CONCLUSION

To investigate the belief that properties that sell within the time of the listing agent’s contract duration have the correct price and other factors, which affect a property’s Time on Market (TOM), this study used both the Cox’s (1972) proportional semi-parametric hazard model and Tobit model. Interestingly, the empirical findings reveal that the levels of the per square foot listed price and sold price, but not their deviations from the proxy measure of the CMA, significantly influence the TOM of listed real estate properties. Therefore, CMA pricing is not as critical a factor in the prediction of TOM. The model comparisons reveal that both models fit the data well, however, Cox’s model is more powerful in determining factors contributing to days on the market of listed real estate properties. For example, the estimated coefficient of the bonus paid to buyers’ agents was highly significant in Cox’s model, but was not significant at any conventional level in Tobit model. The estimation results indicate that the following are significant at the one-percent level: • the independent school district where the property is located • size of the garage as measured by the number of cars • number of stories of the unit, per square foot listing price and sold price • seller’s help with closing costs • year built of the unit • bonus the seller offers to the buyer’s agent

The empirical results further indicates that whether the property has a private swimming pool is significant at 5 percent level, while change in conventional mortgage rates from four to three months prior to the contract to purchase by the buyers, seller’s paid repairs, dollars listing price are marginally significant, all other included factors are statistically insignificant at conventional levels. Thus, real estate strategic planners may need to rethink the variables they use in developing their sales strategies.

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Ferreira, E. J. & Sirmans, G. S. (1989). Selling Price, Financing Premiums, and Days on the Market, Journal of Real Estate Finance and Economics, 2: 209-222.

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Diversity Performance as a Factor in Marketing Programs: A Comparative Analysis across Ethnic Group Target Audiences

Charles W. Richardson, Jr. Clark Atlanta University

INTRODUCTION

For some time, advertisers have looked to customize the look and feel of their message in accordance with the makeup of the targeted audience. There has been a fair amount of research describing the portrayal of racial minorities in advertising. The customized approach seems to have been well received. Blacks have been shown to display more positive attitudes toward the advertisement and the product itself when Black models are portrayed. In addition, general (non-ethnic) audiences have shown to react positively to the increased incidence of Blacks in advertisements. Besides responding to audience demographics, corporations have found it useful to target potential customers based on other dimensions. There has been sufficient research attesting to the influence of corporate social performance (CSP) and corporate social responsibility (CSR) on consumers’ purchase behavior. The studies provide support for the existence of both company-specific factors, such as the components of CSR that a firm chooses to emphasize and product quality issues, as well as consumer- specific factors, such as their personal support for the specific components of CSR, and their general feelings about the appropriateness of CSR for profit-seeking enterprises. This research explores the issue of how one recognized element of CSR (a firm’s diversity performance) is featured as a component in the firm’s marketing plan, and specifically to examine whether firms seek to equally utilize their diversity performance as a competitive advantage across both ethnic and non-ethnic audiences.

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LITERATURE REVIEW

Evolution of the Ethnic Consumer Market Recognition of Ethic Consumers The thought that ethnicity can/should be used as a valid and appropriate segmentation variable, was first validated by Coca-Cola in the 1950’s, when they presented their commercial content in Spanish, in order to attract the patronage of the Hispanic consumer. Today’s emerging ethnic consumers represent the largest, most overlooked market in America. According to the 2000 U. S. Census, by 2050, people of color will represent 55 percent of the population. Ethnic Americans – African-, Hispanic-, and Asian-Americans – are increasing in populations seven times as fast as the non-ethnic majority. Ethnic Americans have economic clout. Their spending power has grown tremendously doubled in the past decade and is now almost $3 trillion. They are rapidly opening businesses, buying homes, going to college, and living the American Dream at rates that far outpace mainstream white Americans.

Advertising Support There is strong evidence that shows the benefits of using ethnic media to reach African American, Hispanic and Asian American consumers. Brand-loyal customers of color buy an extensive variety of products and services in greater numbers than their white counterparts. Extensive research shows minorities' willingness to use much of their almost $3 trillion in annual spending power, and other data has ethnic media delivering significantly higher returns on investment for advertisers than general-market advertising. Yet minority-focused media continues to be overlooked by the ad community, as only a small fraction of advertising budgets is put into approximately 1,700 ethnic media outlets. It isn't standard practice for agencies to propose ethnic buys as routine parts of media plans, a questionable strategy driven by a fundamental lack of understanding of how cultural cues and trust in minority-formatted media can impact an advertiser's bottom line. Ethnic markets are consuming products at rates that far outpace their representation in the population. Yet, the advertising dollars spent to reach these segments badly lags both population representation, as well as consumption. Every dollar per listener earned by a general-market station garnered just 78 cents per listener in minority stations. Most multicultural media executives said they were optimistic about their future advertising revenues, expecting increases to grow through the next several years. But the prevailing opinion was that they weren't receiving their fair share of ad revenue. And most believe minority-focused media is considered a fringe buy.

Portrayal of African-Americans in Ads Since the mid-1960s, advertisers have been grappling with the sensitive dilemma of including African-American models/characters in their commercial presentations. As the existence of the ethnic market segments demanded increasing recognition from firms, attempts were made to address these segments with messages that were culturally sensitive. Research has shown that Blacks react more favorably to advertisements containing Black characters. By the same token, studies have shown that White audiences’ reaction to Black characters range from neutral to negative, depending on elements of their demographic profiles. For example, white college students in a Midwestern university had positive reactions to Black characters (Whittler, 1989), but white adults, from a southeastern city, had less favorable reactions to the products using Black actors (Schingler and Plummer, 1972). Hence, firms face a dilemma as they attempt to balance the positive and negative reactions of different demographic segments, while avoiding the trouble and cost of customizing their advertising message accordingly. While there has been an increasingly clear presence of African-American models in both print and television advertisements, it is misleading to judge progress by considering raw numbers alone. Willkes and Valencia (1989) reported on a 1984 study that contained African-American images in 26% of television advertisements. Zinkhan, Quails and Biswas (1990) reported results of a 1986 study finding

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16% of television advertisements contained African-American images. In 1995, Bristor and Lee reported 45% of the television advertisements they reviewed contained African-American images. Ainsworth (2006) found that African-American males were more like to appear in hip-hop magazines than in more generally targeted magazines. However, both types of periodicals were consistent in their portrayal of African-American males, containing few images in business and work-related settings. Briggs and Torres (2005) examined the impact of ethnic presence in service advertisements, finding that strong ethnic identifiers were useful in low-involvement purchases, but not in high-involvement circumstances where additional attributes outweighed ethnic considerations. Print advertisements have utilized an even smaller percentage of African-American images, and even though the incidence of Black images has increased with time, the percentage of Black portrayals trails population percentages. Use of Black characters is generally higher in periodicals targeting the African- American community. While there are other variables to consider, the growth of African-American images in advertisements can be viewed as a positive development. However, as Bristor and Lee point out, after a certain point, the emphasis should not be on whether an African-American is in the advertisement, but the concern should be what the African-American does, (or does not do), in the ad. These authors present five additional themes of racist techniques, much more subtle than simple exclusion: • Role Portrayal – preponderance of athletes and lack of business professionals • Family – lack of visibility of African-Americans in traditional (two parents, one or more children) family roles • Screen Presence - Tokenism -minor roles versus main/focus characters Objectification – vague visuals, an entity but not a person Marginalization – presence is minimized by lighting, camera angles, etc. • Status and Power Balance - Characters with lower socioeconomic power, e.g. subordinate vs. manager, athlete vs. coach Blue collar image vs. white collar • Cultural Values – use of white cultural values while utilizing African-American characters, e.g. use of light skinned women with Caucasian features to a far greater extent than darker skinned models.

This article is significant in that it points out the danger of relying on statistics alone to judge progress in this arena. In addition, the more dangerous stereotypical portrayals are not limited to those showing African-Americans as distorted caricatures of Vaudevillian days, but those that are, in many circles, considered signs of progress.

Corporate Social Performance and Corporate Social Responsibility Besides responding to audience demographics, corporations have found it useful to target potential customers based on other dimensions. There has been an extensive amount of research investigating the issue of corporate social performance (CSP) and corporate social responsibility. Corporate social responsibility, also referred to as prosocial corporate endeavors (Murray and Vogel 1997) or corporate social performance (Turban and Greening 1997) has traditionally been conceptualized rather broadly as the managerial obligation to take action to protect and improve both the welfare of society as a whole and the interest of organizations (Davis and Blomstrom 1975). It manifests itself in activities such as corporate philanthropy, cause-related marketing, minority support programs, and socially responsible employment and manufacturing practices. For more than forty years, researchers have been attempting to develop a link between various components of CSP and a firm’s marketplace success, usually measured by financial performance. One of the challenges of CSP/CSR research is that there are many difference sets of social and stakeholder issues. As a result, it has been very difficult to identify and isolate a relationship between social contributions and marketplace performance.

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Rowley and Berman (2000) developed a framework that makes the connection between CSP/CSR and financial performance under two scenarios: 1) Socially positive behavior that betters employee relationships will lead to better financial performance – through creating a more satisfied, therefore, more productive workforce. 2) Instances where social good and financial performance are joint outcome of specific activities, e. g. stakeholder’s actions, such as boycotts, and the firm’s response to that activity (compliance, public relations campaigns, etc.)

In a separate study, Greening and Turban (2000) examine the issue of whether a firm’s social performance will be a source of competitive advantage in attracting a talented, quality workforce. They conclude that it is, and that prospective job applicants are more likely to pursue jobs from socially responsible firms, than from firms with poor social performance reputations. Sankar and Bhattacharya (2001) investigate the impact that a firm’s CSP/CSR activity will have on consumer’s perception and evaluation of: 1) The company and its general product offerings 2) Specific product performance

Their findings conclude that the relationship is a function of company specific factors, such as which CSP/CSR issues a company chooses to focus on, or product quality issues, and consumer specific factors, such as their individual and personal support for the specific components of CSP/CSR and their general feelings about the appropriateness of CSP/CSR for profit-seeking enterprises. We can conclude from this discussion that firms recognize the value of a positive social performance reputation, and that it can be used as a competitive advantage, attracting employees, stockholders and customers. The mitigating factor is that CSP/CSR activities will influence behavior by those consumers whose value set places a high emphasis on CSR, and on the components of CSR that are meaningful to them personally. In our investigation of the diversity component of CSR, we will expect to find that a firm’s diversity activities will provide the most leverage in market segments that assign a higher level of importance to those activities. Most often that importance will not be dictated by pure social concerns, but will be motivated by a (perceived) contribution to the betterment of personal circumstances, i.e. simple self-interest. The challenge to the firm will be the ability to identify these appropriate segments by useful demographic and/or psychographic measures. The studies provide support for the existence of both company-specific factors, such as the components of CSR that a firm chooses to emphasize and product quality issues, as well as consumer- specific factors, such as their personal support for the specific components of CSR, and their general feelings about the appropriateness of CSR for profit-seeking enterprises.

METHODOLOGY

Background Ethnic audiences have seen their options evolve and expand over the last fifty years. While magazines such as Ebony (originated in 1945) attempted to address all needs of a specific demographic audience, the publishing of Black Enterprise (BE) and Essence in 1970 signaled the beginning of more targeted periodicals. BE continues to be the only viable instrument addressing business issues in and for the Black community. Essence has periodically been challenged by other entrants, but is the only magazine that has been able to sustain itself as a periodical aimed at general issues affecting the African-American woman. For quite awhile, the Hispanic audience was served by Spanish language versions of mainstream magazines. This continues to be a major component of the targeted content for this set of consumers. In addition, the pattern of specialization has emerged in a fashion similar to that seen in the African- American market, and magazines were introduced that take into account facets of the Hispanic experience other than language. This development made it possible to select magazines that are similarly positioned to the two African-American magazines chosen, and described above.

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Description of Periodicals The magazines selected for the research described here were chosen so as to represent two dimensions of the target audience:

• Ethnic Grouping . African-American . Hispanic-American . White

• Interest or Subject Focus . Business . Women’s Lifestyle

Black Enterprise published its first issue in 1970, and is currently published on a monthly basis. It is targeted towards black businessmen and women, professionals and administrators dealing with all aspects of black economic development. Features include money management, industry highlights, careers and high technology. The magazine also offers a career marketplace and classified, and publishes an annual list of the top 500 African-American owned businesses. Essence also produced its first issue in 1970. It currently publishes on a monthly basis. This magazine is positioned as the preeminent lifestyle magazine for today's African-American woman, one looking for a rich source of useful, provocative information covering such topics as health, career, contemporary living, and family concerns as well as fashion, beauty, and fitness. Hispanic Business first published in 1979, and currently is published monthly, with the exception of combined issues in January/February and July/August. The magazine is targeted towards upwardly mobile Hispanic executives and employees. Each issue reports on the latest corporate news, global developments, and specific trends relevant to Hispanic people. It also publishes an annual list of the top Hispanic-American businesses. Latina published its first issue in 1996, is currently published monthly, and is positioned as the magazine for today's Hispanic woman; it's edited with a special understanding of her lifestyle and values. The monthly magazine features the latest information on fashion, beauty, health, fitness, and career opportunities, as well as profiles of today's newsmakers and celebrities. Money is published monthly and its goal is to help its readers reach their financial goals. Each issue of Money offers smart, no-nonsense tips and strategies to make the most of your money. Its mission is to cover all aspects of the world of investing and spending to help readers gain the lifestyle they wish. Harper's Bazaar magazine features comprehensive, insightful coverage of fashion and beauty. Since 1867, Harper's Bazaar has been edited for the modern woman who seeks the best for her home, in her travels and her entertaining. The magazine keeps her informed on all the news in fashion, beauty, entertainment, the arts, health, fitness and finance. Every effort was made to find periodicals that were similarly positioned, by focus area, across ethnic lines. Amongst the general audience, there exists a much more diverse offering of magazines, one with a greater degree of specialization, and one which offers more choices within any given interest category. The female magazine (Harper’s Bazaar) was chosen because it had the broadest mission, and was not as focused on fashion and beauty issues as other magazines like Glamour or Vogue. It still provides a less diverse range of topics than does Essence and Latina. See summary of periodicals in Table 1.

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TABLE 1 PERIODICALS REVIEWED

AFRICAN-AMERICAN HISPANIC-AMERICAN NON-ETHNIC MAGAZINES MAGAZINES MAGAZINES BLACK ENTERPRISE HISPANIC BUSINESS MONEY ESSENCE LATINA HARPER’S BAZAAR

Research Focus The purpose of this research is to explore the issue of how one recognized element of CSR (a firm’s diversity performance) is featured as a component in their marketing plan, and specifically to examine whether firms seek to equally utilize their diversity performance as a competitive advantage across both ethnic and non-ethnic audiences. The specific questions to be examined are: • What is the level of commitment to advertising in the different periodicals? • What is the mix of advertising contained in the various magazines, that is, which products and services are targeting the market segments addressed here? • What is the frequency of ads depicting various aspects of diversity performance, and how does this vary across magazines and marketing segments?

Hypothesis Given the results of previous research and our position that self-interest (through belief or benefit) generates support for CSP/CSR initiatives, we will expect a higher incidence of diversity messages in periodicals that target diverse market segments.

Data Reliability Multiple coders were utilized, and so, a pilot sample was utilized to ensure coder consistency. Three months of each magazine were reviewed for their ad content. Results of each coder were compared, and Scott’s pi and Cohen’s kappa were calculated, yielding values of .86 for each, both surpassing the acceptance threshold value of .80.

Data Collection The study utilizes content analysis to examine advertising placed in six periodicals, representing a business magazine, and a magazine targeting a female readership, for each of three market segments. Twelve issues of each magazine were reviewed. Advertisements of one-quarter page or larger were counted and categorized as product focused or related to a diversity initiative. Smaller ads were not included in the study. Multiple page ads (placed on consecutive pages), for a single advertiser were counted as a single ad. Ads were categorized as being product (or service) specific, or as being diversity focused. Total ads per issue were tallied, as well as total pages for the magazine.

Coding Categories Dimensions of Diversity

• Employee Diversity - includes franchisees • Supplier Diversity • Charitable Contributions - contains scholarships, foundations • Event Sponsorship

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Product/Service Analysis For those ads identified as being product or service focused, frequencies were tallied in the following product/service categories: • Travel /Leisure – Airlines, Hotels, Tourism • Autos – Cars, Vans, SUV’s • Services – Banking, Insurance • Investment Advice – Mutual Funds, Stocks, Financial Advisors and Planners • Consumables – Liquors, Juices, Desserts • Pharmaceuticals – Cosmetics, Drugs/Medications, Personal Hygiene • Housewares – Home Décor, Appliances, Entertainment • Apparel – Clothing, Hats, Shoes, Accessories • Luxury – Jewelry, Watches, Furs • Entertainment – Movies, Television, Magazines/Newspapers

Findings Product/Service Distribution Product emphasis varied across both dimensions of periodical classification. As mentioned previously, the ethnic periodicals, with a more general focus, carried advertisements that spanned a greater variety of products and services. Predictably, the female oriented periodicals all carried more advertisements for fashion and cosmetics than their business counterpart in each ethnic segment. The ads in the ethnic business periodicals were more consumption oriented, and had fewer advertisements for saving and investing. These categorical results are summarized in Table 2.

TABLE 2 ADS BY PRODUCT TYPE (% OF TOTAL ADS)

BLACK HISPANIC HARPER’S MONEY ESSENCE LATINA ENTERPRISE BUSINESS BAZAAR DIVERSITY 20% 25% 2% 10% 7% 1% SERVICES 22% 25% 17% 5% 6% 7% AUTOS 12% 15% 17% 6% 8% 5% TRAVEL 12% 9% 2% 1% 2% 2% INVESTMENTS 12% 4% 43% APPAREL 2% 1% 9% 9% 22% COSMETICS 3% 45% 41% 38% TECHNOLOGY 10% 15% 6% 1% 2% PUBLICATIONS 5% 6% 3% 4% 6% CONSUMABLES 5% 2% 3% 10% 14% 3% LUXURY 15% 15% HOUSEWARES 5% 7% 5%

Diversity Ads As expected, and as seen in Table 2, firms have determined that advertising messages must be targeted to specific customer segments. They placed diversity-oriented advertisements in ethnic periodicals at much higher rates than in general readership periodicals. Implied in this strategy is the philosophy that diversity issues are not a priority for majority or general readership audiences. The companies that advertised in several of the magazines varied their content depending on the periodical. For example, American Airlines placed product benefit advertisements, (typically espousing the benefits

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of greater legroom in coach), in Money but placed supplier and employee diversity advertisements in Black Enterprise and Hispanic Business. Incidence of diversity advertisements was greater in the business magazines than in the female periodicals, and the type of diversity advertisements varied significantly by magazine positioning. Black Enterprise had a high representation of employee and supplier diversity advertisements, while the diversity ads in Essence and Latina were more focused on charitable giving and event sponsorship. Money and Harper’s Bazaar had virtually no diversity ad presence, only containing ads for community service. There was one ad in Money (in twelve months) focused on supplier diversity. There was a difference in the event sponsorship advertisements n the business and female segments. Black Enterprise and Hispanic Business had advertisements that focused on career, business and entrepreneurship. Essence and Latina had advertisements that focused on music festivals and model/talent searches. Both Black Enterprise, and Essence have made forward strides into the event business and naturally both magazines had significant instances of advertisements that featured their own events (e. g. Black Enterprise Entrepreneurship Conference, and the Essence Music Festival). Diversity ads are summarized in Table 3.

TABLE 3 DIVERSITY AD (AVERAGE PER ISSUE) DISTRIBUTION

BLACK HISPANIC HARPER’S MONEY ESSENCE LATINA ENTERPRISE BUSINESS BAZAAR EMPLOYEE 13/55% 10/50% 0 1.75/23% 2.08/47% 0 DIVERSITY SUPPLIER 7/29% 6/30% 0.08/10% 0.33/4% 0 0 DIVERSITY CHARITABLE 2/10% 3/12% .50/60% 2.08/27% 0.75/17% .50/50% CAUSES EVENT 1/6% 2/8% .25/30% 3.50/46% 1.58/36% .50/50% SPONSORSHIP

Analysis of variance was performed on the different levels of diversity ad presence in the periodicals representing the three different ethnic categories. Results supporting the hypothesis are shown in Table 4.

TABLE 4 ANOVA OF DIVERSITY AD PRESENCE BY MAGAZINE GROUP

Mean Square F Significance

Magazines 230.675 88.407 .002

IMPLICATIONS

The results indicate that advertisers recognize that magazine publishers have been successful in targeting specific customer segments by developing vehicles enabling them to direct specific and specialized content to these audiences. In the case of the ethnic publications, their audiences have indicated that they are receptive to, and even demanding of, a focused, targeted message. While there is no doubt that Blacks reading Money magazine have the proper demographics for consuming high end products, an advertisement, with Black characters and a positive message, in Black Enterprise goes a long

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way towards telling those consumers that the advertiser is interested in their specific business. Firms looking to achieve their financial goals must develop messages intended for targeted audiences, and ensure that they be placed in periodicals that specifically target those consumer segments. On the other hand, firms using only minority media forms run the risk of alienating minority individuals that read periodicals that are not specifically aimed at their minority demographic. Not seeing images reflecting a minority perspective, may alienate, and drive away, these readers.

REFERENCES

Ainsworth, A. B. (2006). A Year in the Life of the African-American Male in advertising: A Content Analysis. Journal of Advertising, 35, (1), 83 – 104.

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Greening, D. W. & Turban, D. B. (2000). Corporate Social Performance as a Competitive Advantage in Attracting a Quality Workforce. Business & Society, 39, (3), 254-281.

Murray, K. B. & Vogel, C. M. (1997). Using a Hierarchy of Effects Approach to Gauge the Effectiveness of CSR to Generate Goodwill Towards the Firm: Financial Versus Nonfinancial Impacts, Journal of Business Research, 38, (2), 141-59.

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Whittler, T. E. (1989). Viewers' Processing of Actor's Race and Message Claims in Advertising Stimuli, Psychology and Marketing, 6 (Winter), 287-309.

Wilkes, R. E.& Valencia, H. (1989). Hispanics and Blacks in Television Commercials, Journal of Advertising, 18, (1), 19-25.

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A Cross National Study of Topic Sensitivity: Implications for Web-Based Surveys

Gerald Albaum University of New Mexico

Catherine A. Roster University of New Mexico

Scott M. Smith Brigham Young University

INTRODUCTION

The use of Web surveys by academic and practitioner researchers in marketing is increasing rapidly. This is largely due to the advantages that Web surveys have in terms of speed, cost, and efficiency of data collection over other modes of data collection. In addition, Web-based survey programs offer researchers a wide variety of design options that can reduce sources of respondent error that are typically high in other self-administered methods, such as acquiescence, extreme responding, and social desirability (Miller, 2006). One such Web survey design option that has not received much attention is the use of “forced answering,” which requires respondents to enter an “appropriate” response before they are allowed to proceed to the next survey question. When used for all questions, one positive effect of forcing is that it virtually eliminates item omissions, or item non-response error. However, some survey researchers warn that forced answering could increase unit, or sample, non-response error (Dillman, 2007; Dillman, Tortola, & Bowker, 1998). Respondents could “break-off” and stop responding when confronted with forced answering questions (Peytchev, 2009), which lowers completion rates. Dillman and his associates (Dillman, 2007; Dillman et al., 1998) suggest one way around this is to provide a “prefer not to answer” (PNA) option, which, if used, would allow respondents to continue without providing a substantive response to each question. This, however, brings back item omission, because PNA is deliberate item omission. A study of U.S. Internet survey panelists conducted by Albaum, Roster, Wiley, Rossiter, and Smith (2010) found no evidence to support that forced answering lowers completion rates, whether or not

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PNA is used. However, the topics in Albaum et al.’s (2010) study would not be perceived to be sensitive or threatening to most respondents. Results might differ if respondents were to be asked to respond to questions regarding sensitive topics. Furthermore, perceived sensitivity of topics could vary across cultures. With the increased reporting of cross-national/cultural research in marketing, topic sensitivity takes on greater importance. Topic sensitivity can have a direct bearing on research design choices such as whether to use forced answering and whether to offer non-substantive response options, like “prefer not to answer.” The primary objective of the present study is to examine topic sensitivity in different cultures/nations. We hypothesize that topic sensitivity will vary across nations with diverse cultures, thus indicating that sensitivity is a cultural emic (i.e., culture bound) rather than a cultural etic (culture free). Although the emic-etic distinction is a central concept in current thinking about cross-cultural research (Berry, 1980; Brislin, 1980), it has received little attention in cross-cultural research in marketing. As a related matter, we examine if personal interest in survey topics that might be deemed “sensitive” varies across different cultures/nations.

BACKGROUND AND HYPOTHESES

Topic Sensitivity The issue of topic sensitivity has raised a number of methodological issues for survey researchers, such as choice of survey design mode (Kreuter, Presser, & Tourangeau, 2008; Presser & Stinson, 1998; Sakshaug, Yan & Tourangeau, 2010; Tourangeau & Smith, 1996), question and response construction (Bradburn et al., 1979; Jann, Jerke, & Krumpal, 2012; Peter & Valkenburg, 2011; Schaeffer, 2000), measurement and validity concerns (Locander, Sudman, & Bradburn, 1976; Tourangeau & Yan, 2007), and ethical treatment of survey participants (McCosker, Barnard, & Gerber; Seiber & Stanley, 1988). Overall, research in this area demonstrates that surveys about sensitive topics can increase item or unit non-response error and are prone to measurement errors associated with socially desirable response styles. In a recent study, Kreuter et al. (2008) examined the effects of different modes of data collection, including CATI, IVR, and Web, with regards to responses to potentially sensitive information. Findings from this study lend support to a growing body of evidence that survey administration by the Web increases the level of reporting of sensitive information and reporting accuracy relative to the other modes of data collection. This is primarily because Web-based surveys allow respondents to participate under a presumed cloak of anonymity, unlike person-administered surveys. Despite methodological interest in this issue, there does not appear to be uniform precise agreement on the definition of a “sensitive topic.” Lee and Renzetti (1990) observe that “one difficulty with the notion of a ‘sensitive topic’ is that the term is often used in the literature as if it were self-explanatory” (1990, p. 510). Definitions vary based on perspective and parties involved. In a general sense, Sieber and Stanley (1988, p. 49) define “socially sensitive research” as:

“studies in which there are potential consequences or implications, either directly for the participants in the research or for the class of individuals represented by the research.”

Lee and Renzetti (1990, p. 512) further define “sensitive topics” as those that involve the threat of personal consequences for either the researcher or study participants:

“…a sensitive topic is one that potentially poses for those involved a substantial threat, the emergence of which renders problematic for the researcher and/or the researched the collection, holding, and/or dissemination of research data.”

Yet another view is that questions can be considered sensitive if respondents personally perceive them as intrusive, if the questions raise fears about the potential repercussion of disclosing information, or if they trigger social desirability concerns (Tourangeau & Yan, 2007).

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For the present study, sensitivity of topic is defined as:

“a topic that possesses a substantial threat to those involved as it may be perceived as intrusive and could raise fears about potential repercussions or consequences of disclosing the information requested. There may be potential costs (or threats) to the respondent.”

This definition is consistent with the view that topic sensitivity is a matter of individual perception arising from the fear of personal consequences associated with information disclosure. Individual perceptions may be based on potential costs or threats arising from internal or external consequences of divulging personal information about sensitive topics. Although there has been a substantial amount of research about topic sensitivity in general, very little research has addressed exactly what survey topics respondents perceive to be intrusive or personally threatening. Exemplars include research by Bradburn and his associates, who conducted a series of studies in which respondents engaged in personal interviews about a topic traditionally considered to be threatening, and were then presented with different topics and asked to rate how “uneasy” they felt each topic would make “most people” feel if asked questions about such topics (Bradburn et al., 1979; Bradburn, Sudman, Blair, & Stocking, 1978). In a similar fashion, Peterson and Ridgway (1986) asked mail survey respondents to rate how threatening they thought each of 22 topics would be to “people in general” as well as to “them personally.” These authors report differences in ratings based on the perspective. Overall, respondents rated topics more threatening for people in general than for them personally. Topic sensitivity varied depending on respondents’ gender and level of education. In addition, respondents in this study more frequently chose the response “will not answer this question” to questions about topics they rated as personally threatening than did respondents who rated the same topic as less threatening. Although topic sensitivity is defined here and elsewhere as an individual matter, there may be consequences within a defined population on the extent of sensitivity of any topic. The aforementioned studies explored differences in topic sensitivity perceptions among U.S. respondents. The level of perceived sensitivity of a topic to respondents may vary across cultures/nations. Johnson, O’Rourke, Burris, and Owens assert that surveys are an “inherently social activity” and that “survey respondents are not merely autonomous information processors, rather, they all exist within complex social matrices that influence their thoughts, feelings, and behaviors” (2002, p. 55). Schaeffer (2000), following her detailed investigation of topics frequently regarded by researchers as “personally sensitive,” concludes that respondents asked to provide self-reported information about a class of events or behaviors that might be deemed “sensitive” respond to these questions within the context of socially patterned ways of behaving. These social patterns of behavior arise from social norms, social reinforcement and sanctions that exist with culturally-defined societies, which can impact how easy (or uneasy) it is for members of a particular society to report accurately about behaviors that reflect cultural or social norms within groups. Therefore, we hypothesize that topic sensitivity will vary across nations with diverse cultures, thus indicating that sensitivity is a cultural emic (i.e., culture bound) rather than a cultural etic (culture free):

H1: Topic sensitivity will vary across nations with diverse cultures.

Topic Interest Topic interest has been regarded as an intrinsic motivation for participating in survey research (e.g., Brüggen, Wetzels, de Ruyter, & Schillewaert, 2011; Cialdini, 1988; Groves, Singer, & Corning, 2000). Topic interest can increase responses rates (Groves, Presser, & Dipko, 2004; Groves, Cialdini, & Couper, 1992) and can lead respondents to provide more accurate responses to survey questions (Tourangeau, Groves, & Redline, 2010). The issue of topic interest has not generally been associated with topic sensitivity. However, the two issues are related in the sense that both impact respondents’ motivation to participate and provide accurate responses to questions associated with survey topics. Topic sensitivity

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has been identified as a de-motivating factor that leads to higher survey non-response (Beatty & Herrmann, 2002); however, topic interest could motivate a respondent to answer questions about a sensitive topic more truthfully and accurately. What survey topics are interesting or relevant to a particular culture/nation may be largely dependent on that culture’s value systems. It is also likely to assume that interest in topics will vary in accordance with a nation/culture’s educational, religious, industrial, technological, political, and economic well- being, as these major influences shape the life and attitudes of individuals living within that nation/culture. We reason that if cultural/nation differences in topic sensitivity are present, that differences might be related to topic interest, for many of the same reasons. Therefore, we offer the following hypothesis regarding the relationship between topic interest and sensitivity:

H2: Topic interest regarding sensitive topics will vary across nations with diverse cultures.

METHODOLOGY

Sample To test our hypotheses, data on topic sensitivity and topic interest were collected in six countries having diverse cultures. Countries sampled included Australia, China PRC, Hong Kong SAR, New Zealand, The Netherlands, and the United States. The countries included in the sample represent a range of cultural diversity, as illustrated by the range of index values for the cultural dimensions from Hofstede’s schema (Hofstede 2001, pp. 500, 502). Individualism/collectivism varies from a high of 91 in the United States and 90 in Australia to a low of 20 in China PRC; uncertainly avoidance varies from 53 in The Netherlands to 29 in Hong Kong SAR; power distance varies from 80 in China PRC to 22 in New Zealand; masculinity varies from 66 in China to 8 in New Zealand: and long-term orientation ranges from 118 in China to 29 in the United States. Data were obtained from students and faculty in one university in each country. A Web-based survey was used as the mode of data collection in all countries except Australia, from which data were obtained via a traditional paper-and-pencil self-administrated survey. Since English was the language of instruction in all universities, there was no need to translate the questionnaire in China, Hong Kong, and The Netherlands. In addition to the topic questions, respondents were asked their gender and age. Our goal was to seek variation in age and gender among samples, as these factors could impact individuals’ perceptions regarding the sensitivity of topics and therefore prove to be significant covariates in our analyses. Considering the demographic characteristics of respondents, the gender distribution varied widely among the six countries, with females being in the majority in all countries but New Zealand. The range for females was 87.5% in China PRC to 40.9% in New Zealand. The average age of respondents also varied widely, ranging from 47.8 years in New Zealand to 26.7 years in China PRC.

Questionnaire and Measures The questionnaire included 11 topics that might be the focus of a marketing research study. When selecting topics, we purposively selected topics with cross-national applicability that could be viewed as high, moderate, or low sensitivity. Respondents were first asked to indicate how “sensitive” each of the 11 topics would be to “them personally” if the topic of a survey, using a numerical rating scale of 1 to 5, where 1 = “not sensitive at all” to 5 = “extremely sensitive”. This measure was designed to test our H1 hypothesis regarding cross-cultural attitudes toward topic sensitivity. “Sensitivity” was defined for the respondents using our definition, as described above. For the five countries in which an Internet survey was used for data collection, the order of presentation of the topics was rotated randomly for each respondent. In Australia, the order of presentation of the list of topics was randomly determined. Thus, the chance of carry-over effects was eliminated. A related issue regarding the impact of topic sensitivity is that of respondent interest in answering questions about a topic, which is expressed in our H2 hypothesis. The present study examined the

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relationship between sensitive topics and topic interest indirectly in a subsequent question that asked respondents to rate “how personally interesting” they would find the same set of 11 topics using a numerical rating scale of 1 to 5, where 1= “not at all interesting” to 5 = “extremely interesting.” Once again, the order of presentation of the topics was rotated randomly for respondents who received an Internet survey and randomly determined for Australian respondents who received a traditional paper- and-pencil survey.

FINDINGS

The complete list of topics and ANOVA results for H1, topic sensitivity differences across countries, and for H2, topic interest differences across countries, are illustrated in Table 1 and Table 2, respectively.

TABLE 1 VALUES OF SENSITIVITY OF A SAMPLE OF TOPICS, ANOVA RESULTS1

Hong Kong All Topic Australia China PRC SAR F p Countries ______Ethnicity/cultural values 2.84(1.31) 3.50(0.75) 2.33(0.89) 4.76 .001 2.23(1.24) Family income/personal finances 3.72(1.17) 3.62(0.91) 4.08(0.99) 3.49 .005 3.39(1.34) Shoplifting/consumer theft 2.80(1.55) 3.50(0.75) 3.00(1.34) 2.45 .026 2.45(1.51) Attitudes green marketing 2.24(1.26) 3.00(1.41) 2.42(0.99) 5.09 .001 1.82(1.19) Ethical attitudes e.g. cheating or falsifying documents 3.12(1.42) 4.13(1.36) 3.08(1.00) 5.75 .001 2.64(1.49) Assessments of employer/ supervisor 2.96(1.51) 3.25(1.28) 3.83(0.83) 3.63 .004 2.89(1.36) Attitudes charitable giving 2.36(1.22) 2.88(1.46) 2.33(1.23) 1.35 .247 2.09(1.24) Brand image of soft drinks 1.52(0.77) 3.50(0.76) 2.33(1.37) 17.61 .001 1.48(0.95) Purchasing goods & services over the Internet 1.68(1.03) 3.38(1.30) 2.83(1.34) 5.52 .001 1.89(1.21) Computer security behaviors 3.48(1.29) 3.88(0.99) 3.50(1.17) 5.72 .001 2.80(1.47) Alcoholic beverage consumption and driving 2.52(1.36) 3.13(0.99) 2.75(1.29) 1.90 .099 2.27(1.36)

Sample Size 25 8 12 1Scaled 1 to 5, where 1=”not sensitive at all” and 5=”extremely sensitive”. (= Standard deviation)

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TABLE 1 (CONT’D) VALUES OF SENSITIVITY OF A SAMPLE OF TOPICS, ANOVA RESULTS1

The New United All Topic Netherlands Zealand States F p Countries ______Ethnicity/cultural values 1.86(1.20) 2.04(0.84) 1.90(1.29) 4.76 .001 2.23(1.24) Family income/personal finances 3.58(1.27) 3.45(1.29) 2.67(1.50) 3.49 .005 3.39(1.34) Shoplifting/consumer theft 2.53(1.40) 2.13(1.52) 1.90(1.50) 2.45 .026 2.45(1.51) Attitudes green marketing 1.47(0.88) 1.31(0.57) 1.63(1.36) 5.09 .001 1.82(1.19) Ethical attitudes e.g. cheating or falsifying documents 2.86(1.38) 2.27(1.32) 1.82(1.47) 5.75 .001 2.64(1.49) Assessments of employer/ supervisor 3.08(1.32) 2.95(1.33) 2.18(1.24) 3.63 .004 2.89(1.36) Attitudes charitable giving 1.92(1.08) 1.95(1.13) 1.90(1.39) 1.35 .247 2.09(1.24) Brand image of soft drinks 1.14(0.35) 1.32(0.72) 1.16(0.78) 17.61 .001 1.48(0.95) Purchasing goods & services over the Internet 1.56(0.84) 1.91(1.11) 1.71(1.30) 5.52 .001 1.89(1.21) Computer security behaviors 2.17(1.32) 3.13(1.49) 2.29(1.48) 5.72 .001 2.80(1.47) Alcoholic beverage consumption and driving 2.22(1.20) 2.18(1.37) 1.84(1.51) 1.90 .099 2.27(1.36)

Sample Size 36 22 25

1Scaled 1 to 5, where 1=”not sensitive at all” and 5=”extremely sensitive”. (= Standard Deviation)

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TABLE 2 VALUES OF INTEREST OF A SAMPLE OF TOPICS, ANOVA RESULTS1

Hong Kong All Topic Australia China PRC SAR F p Countries ______Ethnicity/cultural values 3.48(1.16) 3.75(1.04) 3.08 (0.67) 1.24 .295 3.15(1.27) Family income/personal finances 2.64(1.70) 3.50(0.93) 3.25(1.49) 1.88 .102 2.53(1.47) Shoplifting/consumer theft 2.71(1.49) 2.63(1.19) 2.83(1.03) 1.38 .238 2.35(1.27) Attitudes green marketing 3.17(1.37) 3.25(1.17) 2.58(0.90) .662 .653 3.16(1.35) Ethical attitudes e.g. cheating or falsifying documents 3.33(1.32) 4.00(0.93) 3.00(1.21) 1.35 .250 3.07(1.29) Assessments of employer/ supervisor 3.48(1.12) 3.00(1.31) 3.83(1.03) 1.47 .203 3.27(1.20) 3.63 .004 2.89(1.36) Attitudes charitable giving 2.48(1.12) 3.50(1.07) 2.67(0.89) 1.10 .363 2.94(1.29) Brand image of soft drinks 2.52(1.19) 3.25(0.71) 3.25(0.97) 3.07 .012 2.45(1.30) Purchasing goods & services over the Internet 2.71(1.31) 3.25(1.17) 3.42(1.08) 1.19 .318 2.81(1.28) Computer security behaviors 2.80(1.40) 3.75(1.04) 2.83(1.19) 2.11 .069 2.57(1.32) Alcoholic beverage consumption and driving 2.90(1.37) 2.25(0.71) 2.33(0.65) 0.59 .710 2.63(1.25)

Sample Size 25 8 12 1Scaled 1 to 5, where 1=”not sensitive at all” and 5=”extremely sensitive”. (= Standard deviation)

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TABLE 2 (CONT’D) VALUES OF INTEREST OF A SAMPLE OF TOPICS, ANOVA RESULTS1

The New United All Topic Netherlands Zealand States F p Countries ______Ethnicity/cultural values 3.06(1.26) 2.73(1.12) 3.14(1.62) 1.24 .295 3.15(1.27) Family income/personal finances 2.19(1.22) 2.27(1.42) 2.48(1.57) 1.88 .102 2.53(1.47) Shoplifting/consumer theft 2.03(1.06) 2.14(1.25) 2.38(1.42) 1.38 .238 2.35(1.27) Attitudes green marketing 3.39(1.46) 3.09(1.07) 3.12(1.57) .662 .653 3.16(1.35) Ethical attitudes e.g. cheating or falsifying documents 2.81(1.22) 3.00(1.20) 3.05(1.49) 1.35 .250 3.07(1.29) Assessments of employer/ supervisor 3.36(0.96) 3.23(1.27) 2.88(1.42) 1.47 .203 3.27(1.20) Attitudes charitable giving 3.06(1.45) 2.91(1.07) 3.10(1.49) 1.10 .363 2.94(1.29) Brand image of soft drinks 2.58(1.38) 1.86(1.17) 2.14(1.38) 3.07 .012 2.45(1.30) Purchasing goods & services over the Internet 2.92(1.32) 2.64(1.18) 2.52(1.36) 1.19 .318 2.81(1.28) Computer security behaviors 2.25(1.23) 2.36(1.18) 2.52(1.47) 2.11 .069 2.57(1.32) Alcoholic beverage consumption and driving 2.75(1.25) 2.50(1.34) 2.62(1.42) 0.59 .710 2.63(1.25)

Sample Size 36 22 25

1Scaled 1 to 5, where 1=”not sensitive at all” and 5=”extremely sensitive”. (= Standard Deviation)

H1: Differences in Topic Sensitivity by Nations/Cultures Results from an ANOVA test regarding differences in topic sensitivity across counties, which was our general hypothesis described in H1, are provided in Table 1. We find that there are significant differences (p < .05) between the six countries for 9 of the 11 topics, excluding “behaviors like alcoholic consumption and driving,” and “attitudes toward charitable giving,” both of which were rated moderately sensitive by all cultural sub-groups (overall means = 2.3 and 2.1, respectively). Our finding that 9 of 11 topics differed in sensitivity among these six cultural sub-samples supports our H1 hypothesis that perceived sensitivity of topics is emic- rather than etic-bound. As far as the potential covariates, gender does not appear to have a significant influence on topic sensitivity but age can, depending on the topic. Across cultures, the only topic with significant differences (p < .05) between genders was “family income/personal finances,” which was perceived as slightly more sensitive by females (mean = 3.6) than males (mean = 3.1) using independent samples t-tests (t = 2.07, p < .05). Examining each country’s situation, gender had no effect on results in Australia, China PRC, Hong Kong SAR, and New Zealand. In The Netherlands females (mean = 2.9) rated “shoplifting or other forms of consumer theft” as more sensitive than did males (mean = 1.8). This finding is significant at p < .02 (t = 2.50). In the United States males (mean = 2.3) rated “purchasing goods and services over the Internet” as more sensitive than did females (mean = 1.31), which is significant at p < .07 (t = 1.99). Analysis of variance among age groups revealed four of the selected topics varied in perceived sensitivity depending on age. Across cultures, respondents age 35 or under rated the topics “ethnicity and cultures” and “ethical attitudes toward behaviors like cheating” higher in sensitivity than those aged 35 or older. Older respondents (age 46 or over) rated “shoplifting or other forms of consumer theft” higher in sensitivity than younger respondents. Finally, both younger (35 or under) and older (56 or over)

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respondents rated behaviors like “alcoholic beverage consumption” higher in sensitivity than middle-age respondents.

H2: Differences in Topic Interest by Nations/Cultures In order to test H2, differences in topic interest toward sensitive topics among nations/cultures, we first conducted a correlation analyses between the 11 items based on respondents’ measures regarding sensitivity and interest. Overall, only 5 correlations were significant at p <. 05 out of 66 possible (11 topics and 6 countries) and 9 of 66 were significant at p < .10. Clearly, this indicates that such a relationship is not strong. Overall, the ANOVA findings revealed significant differences in interest among cultures/nations only for the topic “brand image of soft drinks” (F = 3.07, p < .05). Based on these findings, we conclude that H2 is not supported. There were also few differences in covariates across cultures in terms of topic interest. One topic, “assessment of your employer/supervisor” was rated as significantly more interesting to males (mean = 3.5) than females (mean = 3.1) (t = 2.04, p < .05). As far as age, younger respondents (age 19 to 25) rated the topic “brand image of soft drinks” significantly more interesting than did older respondents, significantly so in The Netherlands (F = 3.26, p < .05). Male respondents in Hong Kong rated purchasing goods over the Internet significantly more interesting than did females (mean males = 4.2 vs. mean females = 2.9, t = 2.6, p < .05). No other relationships between gender or age and topic interest were found to be significant within or across cultures.

DISCUSSION AND IMPLICATIONS

A flurry of methodological research has focused on design aspects of Web surveys. Yet, one design option, that of forced answering, has received little attention. By employing forced answering, researchers are assured zero item omissions. When should options like PNA be used? This appears to be a Web design issue that involves tradeoffs between data quantity and data quality. As previously mentioned, one study using a U.S. sample found no evidence to support that forced answering lowers completion rates, whether or not PNA is used (Albaum et al., 2010). But, the topics in this study would not be perceived to be sensitive or threatening to most respondents. However, this same study exposed an interaction effect that revealed a tradeoff between quality and quantity of data. Most researchers (and University Institutional Human Subject Review Boards) agree that respondents should not be forced to answer sensitive questions that could make them uncomfortable or pose a substantial threat. What is not well understood are what questions or topics are regarded as “sensitive” by respondents or how respondents’ perceptions of question sensitivity can be impacted by culture or respondent characteristics. From a cultural analysis perspective, results from this study support the notion that research topic sensitivity is a cultural emic, rather than an etic. This implies that cross-national researchers should not assume generalizability of topic sensitivity when they make Web survey design choices regarding use of forced answering and “opt-out” response options such as “prefer not to answer.” Furthermore, topic sensitivity can be influenced by respondent characteristics, particularly age. As a related matter, this study explored the relationship between topic sensitivity and personal interest in answering questions about a topic. Topic sensitivity has been viewed as a demotivating factor that potentially decreases unit and item omissions, while topic interest has been viewed as a motivating factor that can counteract these same concerns. To date, the relationship between these two opposing motivational forces has not been empirically investigated. We reasoned that topic interest could vary across cultures for many of the same reasons topic sensitivity was expected to vary across cultures. However, that does not appear to be the case.

LIMITATIONS, CONCLUSIONS, AND FUTURE RESEARCH

The results from this study cannot be generalized to the broader populations of the six countries. One limitation is the small samples that resulted. Another limitation is that only 11 topics were examined.

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However, we attempted to select broad topics that are routinely studied within the marketing and social science literature. Different results could be obtained with different topics. Clearly, the topic of sensitivity warrants further investigation to determine guidelines for researchers who wish to understand the implications of employing forced answering, especially in cross-national studies. Results from the present study support the notion that research topic sensitivity is a cultural emic, rather than an etic. We did not, however, find support for a relationship between topic sensitivity and topic interest. Interest in answering questions about a topic is a dimension of survey research that deserves its own methodological research. Interest may be related to question wording and response format, however. Future research could explore how these aspects of interest influence respondents’ willingness to provide complete and truthful responses to questions about sensitive topics.

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How Can You Activate ‘Incongruence’ in ‘Customized Communications’ Through African-American Stereotypes? Measuring ‘Customized Communication Incongruity’ in Advertising

Anshu Saxena Arora Savannah State University

Jun Wu Savannah State University

INTRODUCTION

In the advertising and marketing communications field, there has been a lengthy stream of research regarding the depictions of African Americans in advertising and other forms of marketing communications (Bailey 2006; Cox 1970; Dominick and Greenberg 1970; Kassarjian 1969; Shuey, King, and Griffith 1953; Taylor and Lee 1995). Despite the pressure from black interest groups to both increase the frequency with which black models are used and to improve African-American role portrayals in ads, as late as the 1990s, research on general magazine advertising indicated that a small percentage of magazine advertisements used black models, and that the percentage of blacks in ads trailed general population percentages (Stevenson and Swayne 2011). Advertisers have a strong influence on shaping consumer perceptions as advertisements have the ability to either help eradicate the negative perceptions of African-Americans, or they can facilitate pervasive stereotypes, which may increase racism. In the context of African-American advertising, Kern-Foxworth (1994) wrote: “Some of the earlier advertising featuring blacks was highly offensive and greatly exaggerated physical features. The mouth was opened unusually wide and filled with very large and/or carnivorous white teeth by exceptionally large, thick, ruby-red protruding lips. The eyes in these advertisements were most often seen uncontrollably with ecstatic fright.”

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From the African-Americans perspective, the risky depiction of stereotypes may lead to advertising incongruity of finding themselves in the ads, which they don’t approve. Schema-based research suggests that ads that do not match advertising expectations and that are incongruent with advertising expectations are more likely to draw consumers’ attention and be processed more extensively than ads that match advertising expectations, thus providing a way for brands to stand out amidst the ad clutter (Loef 2002). In line with schema theory (Fiske and Taylor 1984, Fiske and Pavelchak 1986, Mandler 1982) and schema-based approaches in marketing (e.g., Sujan 1985, Meyers-Levy and Tybout 1989), we define these advertising and behavioral mismatches between the depiction of advertising stereotypes, and consumer responses and expectations as “customized communication incongruity (CCI)”. Advertising incongruity is enforced and activated through the presence of stereotypes applied as customized form of communications to the target consumer groups, leading to our conceptualization of CCI. We strongly argue that advertising stereotypes are purposefully used, depicted and activated by the advertisers to gain consumers’ attention (whether positive and/or negative) leading to ad-evoked feelings, purchase intentions and impacting overall brand equity through CCI. The purpose of our research is two-fold. First, it conceptualizes the advertising incongruity (mismatches) between stereotypical activation and the corresponding effects on the target consumer- groups as “Customized Communication Incongruity (CCI)”. Second, the research explores the use of advertising stereotypes targeting African-Americans and investigates their responses, behaviors, attitudes and expectations towards the ads and brands through CCI. In subsequent sections, we define and measure CCI through STAR framework using African-American stereotypes. The research has strong academic and practical implications for future researchers and advertisers on the usage and activation of customized communication incongruity (CCI) in advertising through African-American stereotypes and studying the potential effects of CCI on African-American population for positive or negative impact on ad-evoked feelings, behaviors and overall brand equity.

LITERATURE REVIEW

Stereotypes can be defined as socially shared sets of beliefs about attributes that are characteristic of members of a social category (Greenwald and Banaji 1995, p. 14). La Ferle and Lee (2005) explained that media employ stereotypes as a categorization tool to avoid ambiguity and favor easier cultural understanding. However, when the result is the application of predominately negative attributes to a racial group along with reinforcement through media, issues of discrimination and stigmatization come to the forefront (Cohen and Garcia 2005). “In order to successfully navigate our complex social environment, we make use of stereotyping, group categorization, and other simplifying techniques (Valentino 1999).” There has been a lot of confusion and misrepresentation when dealing with African-American stereotypes in advertising. African Americans can have adverse effect to their self-esteem, self-efficacy, and even their level of achievement as a consequence of media stereotyping (Cohen and Garcia 2005). Black representation in the media has improved over the years in terms of roles. However, there are still many examples where negative associations are often connected with Black Americans. Representations of African-Americans in the advertising media “mold public opinion then hold it in place and set the agenda for public discourse on race (Campbell 1995).” The negative media images of blacks are not benign and often, these negative images of African Americans fuel public confusion through misinformation. When those images perpetuate myths and exaggerations, it is hardly surprising that the public maintains misinformed opinions (Melone 2003). People who report heavy television viewing are more likely to describe African Americans as “lazy and unskilled (Entman 1994).” Despite successful African American politicians and celebrities, the structural position of blacks in America has changed little (Spear 1999), and public policy continues to regard African Americans as “a ‘problem people’…rather than as fellow American citizens with problems (West 2001).” This gives rise and strength to our conceptualization of “Customized Communication Incongruity (CCI)” through the use of negative and often misrepresented African- American stereotypes in advertising.

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Customized Communication Incongruity (CCI) We define ‘Customized Communication Incongruity (CCI)’ as the advertising and behavioral mismatches between the depiction and activation of advertising stereotypes, and consumer responses, attitudes and expectations. Advertisers use the concept of CCI intentionally in media advertising in order to attract attention, recall and incongruity-related thoughts from both the target and general audience. The ads in Figures 1 and 2 illustrate a risky and misinterpreted stereotypical CCI depiction of African- Americans for well-known brands targeting the general population and not just the African-Americans. In two ads of Figure 1 by popular brands, the first ad shows an African-American female in an abnormally louder depiction and the second ad focuses more on the other ethnicities than the African-American male present in the ad. The second ad of Figure 1 illustrates "tokenism," a term used by academic researchers, which consists in minimizing a screen presence, by relegating the minority in a crowd scene for example (Bristor et al. 1995). On the other hand, Figure 2 shows three ads depicting African-American females in a completely unusual and uncharacteristic manner, leading to incongruent advertising and CCI.

FIGURE 1 CCI ADS DEPICTING AFRICAN AMERICAN STEREOTYPES

Advertising Researchers feel that it is plausible to hypothesize that adaptation to important cultural values enhances the persuasiveness of advertising (Hornikx and O’Keefe 2009). Corpus analyses of advertising appeals in magazines (e.g., Han and Shavitt 1994), on television (e.g., Lin 2001), or on websites (e.g., Singh and Matsuo 2004) have reported that advertisements in a given culture are often likely to reflect that culture’s values (cf. Cutler, Erdem, and Javalgi 1997). Many studies have compared the persuasiveness of an ad appealing to individualist values and an ad appealing to collectivist values for both American and Chinese audiences (e.g., Aaker and Schmitt 2001; Zhang 2004). The expectation has been that Americans will be more persuaded by (and will like better) an ad with an individualist appeal compared to one with a collectivist appeal, with the reverse expected for the Chinese. Yet, some researches yielded reverse results showing the positive impact of advertising incongruity to the target

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group. The effect of targeted messaging on the unintended groups has also been researched in order to provide insight into resulting attitude formation (Aaker, Brumbraugh, and Grier 2000).

FIGURE 2 CCI ADS FEATURING AFRICAN-AMERICAN FEMALES WITH INCONGRUENT ADVERTISING

Advertisers use ethnic models and loud (often, misrepresented) stereotypes since the general audience do not reject these ads. Ads targeting the African American market leads to higher recall by the African- Americans, featuring Black models (Whittler 1991), even if there are negative stereotypes and portrayals in the ads. Skin color bias research (Watson, Thornton and Engelland 2010) indicates that the advertising industry, music entertainment companies and magazine publishers ‘historically capitalize on the hierarchy of skin color that often exists among African Americans (Bristor, Lee, and Hunt 1995, 55) by frequently portraying light-skinned African-American female models as the standard of ethnic beauty (Baker 2005; Keenan 1996) and allegedly using digital lightening techniques on darker-skinned African-American female models in print ads (Asim 2005; Reaves et al. 2004). Many advertising researchers (Meyers-Levy and Tybout 1989, Stayman et al. 1992, Sujan and Bettman 1989, Meyers-Levy and Tybout 1989, Sujan 1985) have hypothesized that if ads are incongruent with the brand schema, consumers will have (a) more thoughts in total and (b) more incongruity-related thoughts than if ads are congruent with the brand schema. Thus CCI usage leads to more thoughts, attitudes, reactions (responses) and feelings of arousal generated towards advertising. Another stream of research illustrates that blacks (and minorities in general) were often associated with predefined products (e.g., food, clothes, and shoes among others) and are absent in ads that promote high-value products, personal computers, computers supplies, electronics among others (Taylor et al, 1995; Kern-Foxworth 1994; LaFerle and Lee 2005). Taylor et al. (1995) wrote: “If African Americans or Hispanics Americans are stereotypically portrayed as uneducated, they are not likely to be depicted frequently in publications with highly educated readers, such as Scientific American or Business Week. In reference to products, a group perceived as uneducated is unlikely to be frequently portrayed as users or purchasers of technologically sophisticated products, such as electronic diaries or computer systems.” These are some of the negative effects of employing CCI in African-American stereotypical advertising along with other negative behavioral aspects of self-esteem, self-efficacy, and level of achievement.

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THEORETICAL FRAMEWORK AND RESEARCH HYPOTHESES

In the earlier sections, we have focused on our proposed concept of “Customized Communication Incongruity (CCI)” emerging from the over- and mis-representation of African-American stereotypes in advertising. Research literature is abundant on some of the earliest CCI depictions of blacks in advertising as entertainers and athletes. Quite often so, research has explained that white audiences view sports, or music, as acceptable occupations for blacks (Bowen and Schmid, 1997). While there may be positive portrayals of blacks conveying a positive message, it may also send the wrong message that this is the only field where they can succeed. Bristor et al. (1995) argue that this kind of portrayal may be dangerous in the sense that it may influence young blacks into thinking that sports and entertainment are the only viable options for them. Bowen and Schmid (1997) researched about the African-American stereotypes and wrote that "white models are portrayed in a variety of occupations and situations and the differences are used to amplify the product's versatility. Minorities deserve comparable consideration." A very common African-American stereotype is depicted in the Figure 3. Even though it may arouse humor, yet it signifies the state of African-American society today. Bristor et al. (1995) observed the rarity of traditional, intact black families. Bang and Reece (2003) illustrated that blacks were almost never portrayed in traditional family settings. Coltrane and Messineo (2000) found that whites were most likely to be portrayed as spouses, and in a home setting. McLaughin and Goulet (1999) argued that the portrayal of single parent black women was meant to gain "the empathy, and subsequent patronage of this particular group." FIGURE 3 CUSTOMIZED COMMUNICATION INCONGRUITY FEATURING AFRICAN-AMERICAN STEREOTYPES

Figures 4 (Dr. Ben Carson: world’s best pediatric neurosurgeon and Obama 2010 presidential campaign) highlight positive portrayals of African-Americans in advertising through achievement and higher education. Such portrayals are less common, yet they are existent. Social Learning theory can be applied to our research on African-American stereotypical activation and depiction leading to customized communication incongruity (CCI). Social Learning theory is developed by Albert Bandura and states that people learn from observational learning. Knobloch-

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Westerwick and Coates (2006) wrote: “Models for behavior can be observed in the immediate social environment, but in modern societies, a vast amount of information about values and behaviors is obtained from the symbolic mass media environment. Advertising messages form a large part of media content, portray actions in repetitive manner, and show rewards for these actions. These aspects should, according to social-cognitive theory, encourage onlookers to adopt behaviors seen in advertisements.” The other relevant theory to our research is cultivation theory by Gerbner (1970) that describes the impact of advertising effects on the conceptions of social reality. George Gerbner envisioned ‘cultivation’ as mass media’s ability to acculturate an audience through repeated exposure—the development of a mediated view. Audience members’ perceptions of reality are formed by the repeated portrayals of individuals and groups in the mass media, resulting in beliefs and attitudes that are shaped by mass media (including advertising) that may not represent reality (Gerbner et al. 1980).

FIGURE 4 POSITIVE PORTRAYALS OF AFRICAN-AMERICANS IN ADVERTISING

Our CCI conceptualization is strengthened by Gerbner et al. (1980), who later refined initial Gerbner’s cultivation theory by identifying two different processes in cultivation theory: mainstreaming, “a homogenization of outlooks among otherwise divergent groups of viewers” (heavy use of mass media leads to the formation of similar views by dissimilar groups), and resonance, “cases of special salience and vulnerability to television messages” (through repeated mass media exposure, a specific group’s attitude formed from the many exposures becomes even stronger as it “resonates” or makes more sense to that specific group). Customized Communication Incongruity (CCI) happens when two cultivation theory aspects of ‘homogenization’ and ‘resonance’ leads to ‘incongruence’ in African-American advertising and communications through stereotypes’ activation, and becomes an accepted societal norm representing African-Americans. Figure 5 provides our ‘Customized Communication Incongruity Advertising and Consumer-Based Brand Equity’ conceptual framework, illustrating the presence of CCI-based African-American advertising stereotypes leading to ad-evoked feelings and consumer-based brand equity, characterized by brand loyalty, brand awareness, brand associations and perceived quality (as indicators of brand equity). In our research, customized communication incongruity through African-American stereotypes’ activation is illustrated through the STAR framework where STAR is an acronym for Stereotype (S), Theme (T), Agreement (A) and Relevance (R). ‘Stereotype (S)’ illustrates stereotypical activation and

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depiction of African-Americans in advertising. As discussed earlier, these stereotypes and portrayals can be negative (as shown in Figures 1, 2 and 3) or positive (as shown in Figures 4 and 5) portrayals; leading to corresponding negative or positive ad-evoked feelings. This results in the following hypothesis.

H1: Negative stereotypical activation is associated with negative ad-evoked feelings while Positive stereotypical activation is associated with positive ad-evoked feelings

Every ad has a ‘Theme (T)’ which can be represented by emotions in advertising like warmth, humor, eroticism, fear, anger, etc. The theme of an ad can also be simply informational without any emotions expressed in the ad. The ad may focus on product attributes, features and information, called hard-sell advertising appeals or may focus on behaviors, emotions and feelings generated in a real-life environment, called soft-sell advertising appeals. Soft-sell appeals lead to positive attitudes toward the ad (Okazaki, Mueller and Taylor 2010). Soft-sell appeals focus on the more general goal of creating a positive feeling (Mueller 1987) and lead to positive ad and brand cognitions (Geuens and De Pelsmacker 1998). This leads to the following hypothesis.

H2: Themes with soft-sell (rather than the hard-sell) advertising appeals are more associated with positive ad-evoked feelings

FIGURE 5 ‘CUSTOMIZED COMMUNICATION INCONGRUITY ADVERTISING AND CONSUMER- BASED BRAND EQUITY’ FRAMEWORK

Stereotype - S H 1

Theme H2 - T H5 Consumer-Based Brand Ad Evoked Feelings H3 Equity Agreement - A H4 Relevance - R

CUSTOMIZED COMMUNICATION FEELINGS TOWARDS CONSUMER-BASED BRAND EQUITY INCONGRUITY (CCI) ADVERTISING ADVERTISING

‘Agreement (A)’ and ‘Relevance (R)’ highlight agreement, relevance and support for CCI-based incongruent advertising targeting African-Americans. Kern-Foxworth (1994) noted that "using blacks in advertising has always been a strategy employed by advertisers." LaFerle and Lee (2005) explained that advertisers employ stereotypes as a categorization tool to avoid ambiguity and favor easier cultural understanding but they also stress the negative aspect of such method for ethnic members. Both academic and industry research points to a tendency among black consumers toward materialism and conspicuous

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consumption, with high interest in product information and above average proportions of market mavens (Fortenberry and McGoldrick 2011). The concept of Customized Communication Incongruity (CCI) explains the incongruent ads depicting loud and risky (mis)representations of African-Americans through the stereotypical activation, which is atypical. Mandler (1982) states that incongruity leads to arousal and therefore consumers will attempt to resolve incongruity through schema-based processing. Moderate incongruity can be resolved through assimilation, and consequently arousal results in favorable evaluations; while strong incongruity cannot be resolved without restructuring schema knowledge, which is accompanied by negative affect leading to unfavorable evaluations (Mandler 1982). Evidence for Mandler’s (1982) hypothesis has been found by several studies (Meyers-Levy and Tybout 1989, Stayman et al. 1992). Since arousal potential of incongruity with the ad schema is limited (cf. Steenkamp, Baumgartner and Van der Wulp 1996), favorable consumer evaluations are likely to result.

H3: CCI-based incongruent ads showing agreement to target consumers’ ad schema lead to more arousal, and consequently positive ad-evoked feelings. H4: CCI-based incongruent ads relevant to target consumers’ ad schema lead to more arousal, and consequently favorable and positive ad-evoked feelings.

Certain brands (e.g., Coca-Cola, McDonald’s) are considered to possess “high brand equity,” resulting in higher market shares and prices than competing products (Badenhausen 1996) and as a result, they enjoy high customer loyalty, name awareness, perceived quality, strong brand associations, and other assets (Aaker, 1991). Yoo and Donthu (2001) have coined the term ‘consumer-based brand equity to refer to the set of four brand equity dimensions or indicators of brand awareness, brand associations, perceived quality and brand loyalty. Consumer-based brand equity is defined as “the value consumers associate with a brand, as reflected in the dimensions of brand awareness, brand associations, perceived quality and brand loyalty” (Pappu et al., 2006, p. 698) and in the present research, brand equity refers to consumer- based brand equity. Although McCracken (1986, 1989) conceptualized the implications of meaning transfer for branding, the mechanisms he postulated have not been verified experimentally. There has been a considerable amount of researches available showing an impact of ad-evoked feelings on advertising responses (e.g., Aaker, Stayman and Hagerty 1986, Batra and Ray 1986, Burke and Edell 1989, Edell and Burke 1987, Holbrook and Batra 1987) but these researches did not study the consequent effects of ad-evoked feelings on branding. We propose that CCI-based advertising incongruity play an important role in creating consumer-based brand equity. In the context of the above, the following hypothesis is developed.

H5: Ad-evoked feelings mediate the relationships between advertising incongruity (CCI) and brand equity.

All the hypotheses developed in this section and illustrated in our ‘Customized Communication Incongruity Advertising and Consumer-Based Brand Equity’ Conceptual Framework in Figure 6, are tested in the subsequent sections.

RESEARCH DESIGN AND METHODOLOGY

Study 1 (Pre-Test with 137 Student Respondents) Our primary goal in Study One is to develop an instrument called STAR framework to assess Customized Communication Incongruity (CCI). The sample consisted of 137 undergraduate respondents from a historically black university, all between 18 to 28 years old, and 83 of them were women (see Table 1). Approximately 88 percent of the participants were African Americans, and 60.6 percent were females. With respect to class rank, the majority of the participants were juniors and seniors. Table 1 presents the demographic characteristics of our sample used in Study 1.

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TABLE 1 DEMOGRAPHICAL CHARACTERISTICS (N=137) FOR STUDY ONE

Sample Characteristics % of the sample Gender • Male 39.4 • Female 60.6 Ethnicity • African American 87.6 • others 12.4 College Rank • Freshman 0.7 • Sophomore 6.6 • Junior 30.7 • Senior 50.4 • Graduate Student 9.5 • Other 2.2

The study was confined to seven print ads depicting African-American stereotypes – three positive portrayals, three negative portrayals and one humorous stereotype depiction across the product categories of automobiles, technology and fashion brands. These product categories were relevant to the subjects because of their interest in these product categories. The research was executed in two stages as follows.

Stage I – Qualitative Stage Initially 60 ads in relevant product categories depicting African-Americans were selected from ten health and fashion magazines (Seventeen, Shape, Men’s Health, Women’s Health, Oprah, Allure, Elle, Details, Lucky, and Cosmopolitan) for different issues in years 2010 - 2011. Fifteen academic experts in marketing and advertising were recruited as a jury and were asked to assess 60 ads on positive and negative stereotypical depictions of African-Americans. The experts had the required knowledge about stereotypes, advertising appeals and the intent of stereotypical use in advertising. We used Geuens and Pelsmacker (1998) research design of measuring subject-based perception of the ads and selected only the ads that were judged as positive and negative stereotypical depictions. A final set of seven (7) ads emerged from this stage after conducting the frequency counts. Out of 7 final ads, three ads were found to be positive stereotypical portrayal; three ads were negative stereotypical portrayal; while one ad had humorous stereotypical depiction. When the real ads are assigned to the different experimental treatments, they are high on external validity but low on experimental control, and hence, it is important to attribute the ads to the correct experimental category to avoid confounds (Geuens and Pelsmacker 1998).

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TABLE 2 CCI, ADVERTISING AND BRANDING MEASURES’ DESCRIPTORS

Ad-Evoked Feelings or CCI measurement on 1-5 agreement scale Primary Affective Consumer-Based Brand Equity Reactions (PARs)

STEREOTYPES (S) Brand Awareness • There is a clear positive stereotype in this advertisement. • Worried-carefree • I can recognize this brand among other competing • I agree with this stereotypical depiction in the • Nervous-calm brands. advertisement. • Contemplative-impulsive • I am aware of this brand. • I am one of the more popular persons in my daily • Critical-accepting • Some characteristics of this brand come to my mind surroundings. • Cautious-adventurous quickly. • I can see my friends in this advertisement. • Dubious-confident Brand Associations • • This advertisement changes my initial impressions of the • Pessimistic-hopeful It is likely that this brand offer good value for topic portrayed. • Callous-affectionate money • • There is a clear negative stereotype in this advertisement. • Bad-good It is likely that this brand would be technically ** • Sad-happy advanced. • • I grew up around situations/messages like this. ** • Insulted-honored I like this brand. THEME (T) • Indifferent-interested • I trust this brand as a manufacturer of (product • I find this advertisement “corny” or “lame” • Irritated-pleased category). • • How funny is this advertisement? • Unemotional-sentimental I would feel proud to own this brand. • I have to think about the advertisement before I laugh. • Depressed-cheerful Perceived Quality • I would use this as a joke. • Regretful-rejoicing • It is likely that this brand is of high quality. • I like the advertisement but would not show it publicly. ** • It is likely that this brand is of very consistent • I can crack jokes at people this advertisement portrays or quality. affects. ** • It is likely that this brand offer excellent features. AGREEMENT (A) • It is likely that this brand is very reliable. • This advertisement gives me motivation. Brand Loyalty • This advertisement supports my background. • I consider myself to be loyal to this brand. • I have similar experiences with the ad’s intent or message. • This brand would be my first choice. • I can relate how much to this advertisement. • I will not buy other brands if this brand is • This advertisement agrees with my life goals. available at the store. • I would want this for my family. • I agree with this advertisement. ** RELEVANCE (R) • The ad is completely out of the context for me. • I don’t agree with the advertisement at all. • I cannot relate with this advertisement at all. • This advertisement could be so much better. • This advertisement is old and has no “flavor”. • The ad is completely irrelevant to me. ** • This advertisement doesn't motivate me. ** • This advertisement is current with today’s interests. ** • I would have understood this advertisement 3 years ago. ** • I agree with the thought process behind this advertisement. ** **Deleted Items

Stage II – Quantitative Stage We developed a 30-item CCI scale as provided in Table 2. Table 2 provides measures for CCI, ad- evoked feelings and consumer-based brand equity. The seven print ads were presented to a group of 137 students at a comprehensive historically black university in the southeastern part of the United States in random order of positive and negative stereotypical portrayals in order to avoid any potential order effects bias. If the ads were representing tangible goods, then it was easier for the respondents to answer

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questions about buying the product or brand but for intangible goods’ (technology infrastructure and socially conscious) ads, the respondents were given the cue that if they support the ad/brand then it is similar to raising funds and donations for the brand. The data in this pre-test was collected and analysed. We conducted an exploratory factor analysis on the CCI scale comprising of 30 items and four factors of STAR framework emerged from the analysis. The four-factor model explained 81.96 percent of the variance. The Kaiser-Meyer-Olkin (KMO) Measure of Sampling Adequacy was 0.963 and Bartlett’s Test of Sphericity Chi-Square value of 2135.306. Cronbach alphas for STAR framework were 0.94, 0.95, 0.84 and 0.85 respectively, proving reliability for the model. From the results of pre-test, we excluded 10 statements/ items for the STAR framework because their factor loadings were too low (<0.4). Finally we obtained 20 statements/ items questionnaire which measure CCI, consisting of 5 items for ‘Stereotype’, 4 items for ‘Theme’, 6 items for ‘Agreement’ and 5 items for ‘Relevance’.

Study 2 (Post-Test with 155 Non-Student Respondents) A nonstudent sample of respondents took part in the Study Two. In total, 155 participants (91 women and 64 men) were approached on city streets, on public transportation, and in cafés. Table 3 presents the demographics for this sample. Trained interviewers were employed for the study who explained to the respondents that the investigation dealt with consumer responses to advertising. Participants examined the same seven ads as the student sample.

TABLE 3 STUDY 2 – NON-STUDENT SAMPLE DEMOGRAPHICAL CHARACTERISTICS, (N=155)

Sample Characteristics % of Sample Gender Male 41.3 Female 58.7 Age 17 - 20 14.2 21 - 25 16.1 26 - 30 18.1 31 - 35 14.2 36 - 40 10.3 41 - 45 16.8 46 - 50 6.5 61 and above Ethnicity African American 67.1 White (Caucasian) 25.4 Hispanic/Latino/ Spanish origin 1.3 Asian 3.1 American Indian / Alaska native 0.6 Native Hawaiian or other Pacific Islander 0.6 Other 1.9

Common Method Variance Tests Because all constructs were measured using self-report measures, we examined whether common method variance was a serious issue. As recommended by Podsakoff and Organ (1986), Harman’s one- factor test was performed. In this test, all survey items were entered together into an unrotated factor

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analysis and the results were examined. If substantial common method variance is present, then either a single factor would emerge or one general factor would account for most of the total variance explained in the items (Podsakoff and Organ 1986). After entering all items into the factor analysis model, seven factors emerged from the analysis, and the first factor only accounted for 32 percent of the total variance. In addition, no general factor emerged from the factor analysis, thus providing support for the absence of such general bias in the finding (Matilla and Enz 2002). Thus, common method variance was not deemed a serious issue in this study.

Measures Table 2 (provided earlier) presents the descriptors for the measures of the constructs shown in Figure 6. Unless stated otherwise, we used a Likert-type response format for the survey items. We developed CCI measurement scale represented by STAR framework consisting of 20-items, pretested on 137 student respondents (study 1) and then on 155 non-student respondents (study 2). The primary affective reactions or ad-evoked feelings were measured on a 16-item semantic differential scale, assessing respondents’ feelings as a reaction to seeing the stimulus (Brooker and Wheatley 1994). Brand awareness (3-items), perceived quality (4-items), and brand loyalty (3 items) were measured using Yoo and Donthu (2001) scales while brand associations (5-items) was measured using Aaker’s (1991) instrument.

Data Analysis We tested the proposed ‘Customized Communication Incongruity Advertising and Consumer-Based Brand Equity’ conceptual framework presented in Figure 6 using structural equation modeling to evaluate the research hypotheses by using SPSS AMOS 20 (Arbuckle 2008, IBM 2011). The covariance matrix was used as the input for the structural model. The following fit indices were used to assess the fit of the nomological network developed in Figure 1. The absolute fit measures, maximum likelihood ratio, chi-square statistic, and p-value provide a measure of the extent to which the covariance matrix estimated by the hypothesized model reproduces the observed covariance matrix (James and Brett 1984). The root mean square error of approximation (RMSEA) was considered as it provides an estimate of the measurement error. The normed fit index (NFI) provides information about how much better the model fits than a baseline model, rather than as a sole function of the difference between the reproduced and observed covariance matrices (Bentler and Bonett, 1980). The comparative fit index (CFI) has similar attributes to the NFI and compares the predicted covariance matrix to the observed covariance matrix and is least affected by sample size. The two-step approach to structural equation modeling was employed (Anderson and Gerbing, 1988). First, the measurement model was inspected for satisfactory fit indices. After establishing satisfactory model fit, the structural coefficients were interpreted.

TABLE 4 DESCRIPTIVE STATISTICS AND CORRELATION MATRIX

Variables Mean S.D. Stereotype Theme Agreement Relevance ADEF Stereotype 12.62 3.11 1.000 Theme 7.37 2.69 -.018 1.000 Agreement 11.08 3.89 .568*** .196** 1.000 Relevance 25.14 3.87 .241*** -.193** .375*** 1.000 Ad Evoked Feelings 66.19 8.65 .572*** .157** .467*** .065 1.000 Brand Equity 48.91 10.88 .662*** .035 .515*** .173** .616*** ***P<0.001, *P<0.1, ** P<0.05

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RESULTS

The means, standard deviations, reliability estimates, and Pearson zero-order correlations are provided in Table 4. Correlations were in the intended direction with positive and negative stereotypes demonstrating a significant relationship with most of the constructs in our model. For example stereotypes, agreement and relevance were significantly related to brand equity while stereotypes, theme and agreement were significantly related to ad-evoked feelings. The two-step approach to structural equation modeling was employed (Anderson and Gerbing 1988). First, the measurement model was inspected for satisfactory fit indices. After establishing satisfactory model fit, the structural coefficients were interpreted.

Testing of Measurement Model We performed confirmatory factor analysis on the six variables: Stereotypes, Theme, Agreement, Relevance, Ad-evoked feelings and Brand equity. We tried to asses overall fit of the model. First we find that the overall fit was not very good. Then we exclude 5 items (S5, T1, A5, A6, R5) which had the modification index is too high (>0.5) and standard solution is too low (< 0.4), then we find a better overall fit. The measurement model shown in Table 5 provided an acceptable fit to the data when considering fit statistics. (Chi-square=383.847, df=258, P-value=0.000, Chi-square/df=1.488, RMSEA=0.060, CFI=0.917, TLI=0.904 and NFI-0.789).

TABLE 5 MODEL FIT

Model Measurement Estimate Positive Stereotype Model Chi-Square (df) 383.847(258) p-value .000 Chi-Square/df 1.488 RMSEA .060 TLI .904 NFI .789 CFI .917 Negative Stereotype Model Chi-Square (df) 516.818(258) p-value 0.000 Chi-Square/df 2.003 RMSEA .086 TLI .821 NFI .760 CFI 0.858

Reliability Analysis Cronbach’s alpha coefficient is used to measure the internal consistency of each identified construct. The reliability of the construct is acceptable if Cronbach’s α exceeds 0.70 (Hair, Anderson, Tatham and Black, 1998). Cronbach α coefficients are listed in Table 6 which shows that this research has achieved the high reliability (Cronbach α are all above 0. 76). The value of skewness is less than 2 and kurtosis is less than 7, which means that the data is normal, meeting the normality assumption (Curran et al 1996). As shown in Table 7, all of the estimated parameters of STAR indicators were statistically significant (p < 0.001), indicating excellent validity. It means that the measurement model in our study has convergent validity.

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Table 8 shows the discriminant validity. To assess discriminate validity, we made a series of Chi- square (χ 2) difference tests on the factor correlations among all the STAR constructs (Anderson and Gerbing 1998). This was done for one pair of variables at a time by constraining the estimated correlation parameter between them to 1.0 and then performing a Chi- square (χ 2) difference test on the values obtained for the constrained and unconstrained models (Anderson and Gerbing, 1998). The resulting significant difference in χ 2 indicates that two constructs are not perfectly correlated and the discriminate validity is achieved (Bagozzi and Phillips 1982). As shown in Table 8, the unconstrained model is our measurement model. In our CCI measurement scale through STAR framework, we have 4 constructs. We constrained the correlation between any 2 constructs at a time and performed 6 tests. The Chi-square difference was calculated by comparing each of the new model with the unconstrained model (measurement model). Based on Table 8, all of the χ 2 differences in this study are greater than 3.84, which is a good evidence for discriminant validity.

TABLE 6 RELIABILITY

Variable/Items Cronbach Alpha Mean S.D. Skewness Kurtosis Stereotype 0.764 A5 3.06 0.92 -.398 .361 P4 3.16 1.10 -.220 -.458 P1 3.28 .1.00 -.443 .172 A1 3.12 1.05 -.095 -.179 Theme 0.760 H2 2.32 1.12 .263 -.828 H4 2.73 1.11 -.093 -.633 H5 2.32 1.04 .189 -.696 Agreement 0.875 S2 2.75 1.18 .086 -.840 S3 2.73 1.10 -.081 -.815 S4 2.80 1.17 -.056 -.926 R1 2.80 1.11 .088 -.325 Relevance 0.761 S5 4.93 1.18 .047 -.699 S8 4.91 1.21 -.007 -.805 A6 5.23 .91 .267 .342 R6 5.19 1.10 -.179 -.338 P5 4.85 0.99 .158 .148

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TABLE 7 CONVERGENT VALIDITY

Path Unstandardized Estimate S.E. C.R. Standardized Estimate

A1 <--- STEREOTYPE 1.000 .778

A5 <--- STEREOTYPE .721*** .070 10.292 .734 P1 <--- STEREOTYPE .640*** .081 7.926 .614 P4 <--- STEREOTYPE .977*** .078 12.486 .823 H2 <--- THEME 1.000 .599

H4 <--- THEME 1.197*** .192 6.228 .713 H5 <--- THEME 1.344*** .223 6.021 .865 S5 <--- RELEVANCE 1.000 .497

S8 <--- RELEVANCE 1.189*** .192 6.191 .576 A6 <--- RELEVANCE 1.264*** .242 5.223 .806 R6 <--- RELEVANCE 1.384*** .272 5.098 .735 P5 <--- RELEVANCE .689*** .186 3.715 .412 S2 <--- AGREEMENT 1.000 .868

S3 <--- AGREEMENT .953*** .069 13.838 .885 S4 <--- AGREEMENT 1.023*** .073 14.073 .894 R1 <--- AGREEMENT .656**** .081 8.118 .622 ***P<0.001

TABLE 8 DISCRIMINANT VALIDITY

Model Chi-Square DF ∆Chi-Square ∆DF Unconstrained Model 383.8 258 Stereotype – Theme 482.0 259 98.2 1 Stereotype – Agreement 395.7 259 11.9 1 Stereotype – Relevance 398.9 259 15.1 1 Theme – Agreement 422.0 259 38.2 1 Theme – Relevance 498.1 259 114.3 1 Agreement – Relevance 405.6 259 21.8 1

The Structural Model After testing the measurement model, we proceeded to examine the proposed structured model and hypotheses. The main purpose of this study is to analyze the causal relationship of STAR framework and brand equity and the mediating effect of ad evoked feeling on this relationship. From the structural model we obtained results as illustrated in Table 9.

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TABLE 9 RELATIONSHIPS AMONG STAR, AD EVOKED FEELINGS AND BRAND EQUITY

Parameter Standard Critical Standard Path Hypothesis Result Estimate Error Value Estimate Positive Stereotype Ads Stereotype->Ad 4.682 .650 7.206*** .763 Positive Supported Evoked Feelings Theme->Ad Not .085 .562 .151 .009 Positive Evoked Feelings Supported Agreement->Ad Not .396 .535 .740 .069 Positive Evoked Feelings Supported Relevance->Ad 1.607 .826 -1.945** -.155 Positive Supported Evoked Feelings Ad Evoked Feelings->Brand .443 .049 8.974*** 1.098 Positive Supported Equity Negative Stereotype Ads Stereotype->Ad -5.009 .794 6.306*** -.760 Negative Supported Evoked Feelings Theme->Ad Not .287 .492 .583 .033 Positive Evoked Feelings Supported Agreement->Ad Not .869 .599 1.450 .152 Positive Evoked Feelings Supported Relevance->Ad -1.623 .937 -1.733** -.137 Negative Supported Evoked Feelings Ad Evoked Feelings->Brand .290 .032 9.004*** .945 Positive Supported Equity ***P<0.001, **P<0.05

Positive Stereotypes Model Table 9 shows the path coefficient from stereotype to ad evoked feelings is positive and significant (4.682 with p<0.000), which supports the Hypothesis 1 that positive stereotype has a positive direct effect to ad evoked feelings. The path coefficient from theme to ad evoked feelings is positive but not significant (0.085, P>0.05), which does not support Hypothesis 2. The path coefficient from agreement to ad evoked feelings is positive but not significant (0.396, p>0.05), which does not support Hypothesis 3. The path coefficient from relevance to ad evoked feelings is both positive and significant (1.607, p<0.05), thus supporting Hypothesis 4. The path coefficient from ad evoked feelings to brand equity is positive and significant (0.443 with p<0.000), thus supporting Hypothesis 5 that ad evoked feelings has a positive direct effect to brand equity.

Negative Stereotypes Model Table 9 shows the path coefficient from stereotype to ad evoked feelings is negative and significant (- 5.009 with p<0.000), which supports the Hypothesis 1 that negative stereotype has a negative direct effect to ad evoked feelings. Hypotheses 2 and 3 are not supported similar to positive stereotype model indicating that theme and agreement do not affect ad-evoked feelings. The path coefficient from relevance to ad evoked feelings is both negative and significant (-1.623, p<0.05), thus supporting Hypothesis 4 that negative stereotypes (relevance) leads to negative ad-evoked feelings. The path coefficient from ad evoked feelings to brand equity is positive and significant (0.290 with p<0.000), thus supporting

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Hypothesis 5 that ad evoked feelings has a positive direct effect to brand equity parameters of brand awareness, recall and brand associations. Brand loyalty and perceived quality dimensions of consumer- based brand equity are not significantly impacted by negative ad-evoked feelings.

Nomological Validity Hypotheses 1 and 4 were supported because the paths from positive (negative) stereotypes were found to be significant leading to positive (negative) ad-evoked feelings for ‘stereotypes’ and ‘relevance’ components of CCI. Furthermore, Hypothesis 5 was fully supported and we found that ad-evoked feelings mediate the relationship between CCI and consumer-based brand equity. These hypotheses further established the nomological validity by examining the impact of our CCI constructs (STAR framework) on various dependent measures of ad-evoked feelings and brand equity. Nomological validity refers to the degree to which the construct, as measured by a set of indicators, predicts other constructs that past theoretical and empirical work suggests it should predict (Netemeyer, Bearden, and Sharma 2003).

TABLE 10 UNSTANDARDIZED VALUES BY GENDER FOR THE STEREOTYPE MODEL

Positive (Male) Positive (Female) Path Standard Path Standard Path Coefficient Error Coefficient Error Stereotype->Ad Evoked 2.886*** .725 6.063*** 1.151 Feelings Theme->Ad Evoked Feelings .246 .833 1.069 .906 Agreement->Ad Evoked .831 .598 -.708 1.096 Feelings Relevance->Ad Evoked -30.709 73.040 -.059 .886 Feelings Ad Evoked Feelings->Brand .482*** .104 .367*** .046 Equity Negative (Male) Negative (Female) Stereotype->Ad Evoked -2.584** 1.032 -5.634*** 1.177 Feelings Theme->Ad Evoked Feelings .397 1.005 -.009 .255 Agreement->Ad Evoked 2.001*** .640 .861 .831 Feelings Relevance->Ad Evoked -2.511*** .853 -1.945 1.920 Feelings Ad Evoked Feelings->Brand .403*** .065 .259*** .039 Equity ***P<0.001, *P<0.1, ** P<0.05

Gender Differences We investigated the ad-message context and its meaning applicability to cultures and sub-cultures as a manipulation check and the way males and females interpreted CCI differently with respect to cultures (or sub-cultures) and repeated viewings of the same message. Table 10 displays the gender differences observed across the hypothesized structural equation model. The results show that males prefer

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stereotypical depictions over females. Also, on repeated viewings of the ads showing African-American stereotypes, women encountered more negative feelings over men. For the Positive Stereotype model, both males and females prefer positive stereotypes and the stereotypes significantly influenced ad evoked feelings. In turn, ad evoked feelings significantly influenced brand equity for both males and females. The paths from theme, agreement and relevance to ad-evoked feelings were not statistically significant for both males and females. In the Negative Stereotype model, both males and females exhibited negative ad-evoked feelings to negative stereotypes ads, which in turn significantly influenced brand awareness and brand associations dimensions of consumer-based brand equity. Consistent to our previous findings in Table 9, brand loyalty and perceived quality dimensions of consumer-based brand equity are not significantly impacted by negative ad-evoked feelings. The paths from agreement and relevance to ad-evoked feelings were statistically significant for males. Males found the negative stereotypes ads more agreeable to their context than females. However, males found negative relevance to these negative stereotypes ads, thus leading to negative ad-evoked feelings. In the Female Negative Stereotypes model, only stereotypes was significant predictor of ad-evoked feelings; agreement, theme and relevance were not significant predictors of ad evoked feelings. An interesting finding of the male and female (positive and negative stereotypes) models was that negative stereotypes was found to be more agreeable with males over females but both gender showed a preference for negative stereotypical CCI ads leading to stronger brand awareness, recall and brand associations dimensions of consumer-based brand equity.

DISCUSSIONS

There have been two research streams prevalent in advertising literature – one, which focuses on adaptation, persuasion and congruity of ad messages for targeted and customized communications (see, e.g., Hornikx and O’Keefe 2009, Agrawal 1995, Taylor 2005, Taylor and Johnson 2002); and the other, which focuses on developing ads that are incongruent with consumers’ expectations for extensive processing and positive (better) ad evaluations on consumers. Incongruent ads are created by advertisers and marketers to attract instant consumer attention and better brand recall. Goodstein (1993) and Olney et al. (1991) show that consumers watch ads with a unique execution longer than standard ads, and Heckler and Childers (1992) show that some types of incongruent ads are better recalled than congruent ads. Several studies have shown that incongruent ads are perceived to be humorous, and produce positive affective responses (Lee and Mason 1999, Alden, Mukherjee and Hoyer 2000). CCI has provided a new qualifying dimension in our research study. The study was designed to provide a better understanding of advertising incongruity through CCI. This is our major contribution to the research literature, which relies on interdisciplinary insight and advertising incongruity framework for understanding advertising meanings, ad-interpretations and branding. We are also the ‘first’ in introducing and illustrating the impact of CCI (using STAR framework) through African-American stereotypes on brand equity parameters of brand awareness, brand associations, perceived quality and brand loyalty. In our study, we segregated ‘stereotypes’ into positive and negative stereotypes as mentioned in the earlier sections and found positive relationships between positive stereotypes and ad- evoked feelings; and ad-evoked feelings and brand equity. On the other hand, negative stereotypes lead to negative ad-evoked feelings in both men and women. Males found the negative stereotypes ads more agreeable but less relevant to their context than females. Contrary to our expectations, both positive and negative stereotypes significantly impacted brand equity. An interesting finding of the male and female (positive and negative stereotypes) models was that both gender showed a preference for negative stereotypical CCI ads for brand awareness, recall and brand associations dimensions of consumer-based brand equity. This was particularly intriguing and captivating as the advertising research literature suggests otherwise where negative (and even positive) stereotypical depictions are risky and lead to negative ad and brand attitudes and behaviors (Fazio et al. 1995; Bargh, Chen and Burrows 1996; Chen and Bargh 1997). Our research shows a significant preference for the stereotypical depictions for better ad-evoked feelings and stronger consumer-based brand equity. Females

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were found to dislike negative stereotypes over males but both gender preferred stereotypes for better brand awareness, recall and brand associations.

CONCLUSION AND SUGGESTIONS FOR FUTURE RESEARCH

In this research study, we proposed the concept of ‘Customized Communication Incongruity (CCI)’ using the STAR framework and further developed the measures of CCI using African-American stereotypes. The conceptualized CCI Advertising and Consumer-Based Brand Equity framework is further tested using structural equation modeling. Our study suggests that advertising incongruity can be better understood through the activation and depiction of African-American stereotypes, which impacts ad-evoked feelings and brand equity significantly. The study targets African-Americans both as stereotypical ad-subjects and as target population under study. As is true of most empirical research, the current research has some limitations. First, the cross- sectional design of the study does not allow for causal inferences. Another limitation of the study was that all data were collected via self-report measures, which may lead to the problem of common method bias and inflated predictive relationships. However, as recommended by Podsakoff and Organ (1986) and detailed in the results section, we conducted Harmon’s One Factor test, which did not indicate that common method variance was problematic in our structural equation model. Lastly, we had a modest sample size. A future area of inquiry would be to disaggregate CCI using STAR framework for different ethnicities and examine its influence in the hypothesized model. Another interesting research avenue would be to compare the responses of racio-ethnic and cross-cultural groups to the current sample, since behaviors, attitudes and branding are distinct outcomes. We also believe that longitudinal designs are needed in this area to examine the behavior of these constructs over time.

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iPad and Web 2.0 Pedagogic Innovations In Marketing: Utilization of Entrepreneurial Skills

Catherine Giunta Seton Hill University

INTRODUCTION

The iPad’s Impact on Marketing Curriculum Preferring an interactive approach to teaching in which all students are actively involved (Ueltschy 2001), there was a concern that students were not fully engaged in the undergraduate Marketing Management course’s text book. (1) Specifically, the question was, “Are students reading the text so as to synthesize that material with the additional content presented in class lecture and discussion?” Did students apply the text material in an active way for their learning or were they simply passively reading the material to re-state it in a case study or another assignment? (2) Furthermore, certain course objectives were targeted for more successful attainment. It appears that the iPad technology facilitated resolution of the pedagogical concerns noted above. The targeted learning outcomes of the course were more successfully fulfilled. Students were very engaged with their textbooks in and out of the classroom. The textbook became a real-time resource that linked to other relevant marketing statistics and research findings. Benefits included students being able to acquire and interact with content in a technology-rich learning environment, and greater student control leading to improved meta-cognitive skills (Hunt, Eagle, Kitchen 2004). The entrepreneurial skill of “learning as a life-long professional” was enhanced. Marketing students, using entrepreneurial skills, became more competent, thereby “giving them a framework that they can use to assess current and future technologies in terms of their potential impact on marketing practice…and appeal to consumer or business customers (Neilson, 2009, p. 43). As part of the technology initiative at the university in which this course is taught, an assessment group on the Griffin Technology Advantage program (referred to as the GTA in this paper) was instituted. The results of those research efforts indicate the effectiveness of the iPad as a learning tool that facilitates successful attainment of course objectives (Gawelek, Spataro, Komarny, 2011). Students did attest to the

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ability to transfer knowledge into behavior. In an entrepreneurial manner, they maximized the resources provided to them in the classroom. “Students are engaged,” Spataro says, “and faculty are getting really creative... 66% of our faculty have reported using mobile technology at least once a week, if not once a day, in the classroom. The walls are coming down. The role of the academy, and the way in which we prepare students, is changing” (Spataro, M., cited in Discover, Create, Communicate: Learning Transformed).

MARKETING TEACHING INNOVATION

Tools and Resources Part1: Beginning in the Fall of 2010, Seton Hill University (SHU), as part of a new program called the Griffin Technology Advantage, started a major technology initiative involving the iPad; “the very notion of education, knowledge and research is being redefined” (Havas 2009, p. 428). The university “seized the opportunity to experiment and ….[to] improve the learning experience” (Gawelek, Spataro, Komarny 2011, p. 30). All full-time students, full-time faculty, and other university members received an iPad. This university was the first to move to such an iPad commitment in the United States. When faculty and students arrived on campus, the IT staff provided an organized pickup system for the reception of the iPads. The distribution of the iPads was completed for the majority of faculty and staff within the first week of the new semester. Additionally, every recipient received at least one hour of training on the iPad. The university upgraded its computer support infrastructure to support the heavy utilization of the university’s resources. The IT staff was responsive to new demands. For example, the capacity in the classroom that is the focus of this manuscript was enhanced to adapt to many students “pulling” on the wireless system at one time. “Since its 2010 release, Apple’s iPad has been making inroads in education….so students can work with the latest technology” (Woyke, 2011, para. 1). Information technology resources were structured to handle the technological challenge (iPads Move onto Campuses; Uses to Follow). This paper will discuss the use of the iPad in the entry-level marketing course and how it resolved many of the professor’s concerns regarding student engagement in the course content. Additionally, students’ use of Entrepreneurial Skills will be noted. The innovation occurred in two main ways: (1) use of the iPads in class as a learning tool, and (2) use of an iPad-based marketing textbook. This work corresponds with the rapid increased use of technology by employees and consumers (Vaughan-Nichols, 2011). Marketing students engaged in experiential learning are increasingly called upon to integrate cutting- edge technology (Granitz, Koernig, 2011). Marketing students are called upon to gain technological competences relevant to business as marketers use more information technology (Neilson, 2009; Bell, et.al., 1997), just as marketing educators are called upon to integrate innovative tools into the curriculum ( Kaplan, Piskin, Bol, 2010). From the first day of class, students were encouraged to share their reactions and impressions of the new technology as a pedagogical tool. Faculty and staff were invited to periodic professional development meetings in which the use of the iPad as a teaching tool was discussed and informally evaluated. The marketing syllabus encouraged students to use the Wall Street Journal application (“app”) for the iPad in order “to bridge the gap between knowledge acquisition, skill development, and real world application” (Fitzgerald 1995, cited in Ueltschy 2001, p. 63). In class, students referenced website links on the course’s electronic website and correlated the researched information to class discussion and text book materials. Students became more accountable for their individualized learning. Students were required to use their iPads for presentations and in-class exercises by first researching relevant statistics and corporate best practices, and then projecting some of their findings from the iPad to their classmates. As the use of the technology evolved, students researched available resources and used the iPad technology for small-group research and activities during their presentations. Additionally, the syllabus added negative evaluation for misuse of the iPad in the classroom.

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Responseware (clicker) for the iPad was required. The software allows the instructor to immediately display the class’ results of real-time surveys. This afforded students the opportunity to individualize their reactions to information they were learning. The professor also attempted to use this tool for short quizzes, but the software did not make this the optimal tool for that approach. This pedagogical approach calls on the students to implement entrepreneurial skills as they experience business (Marketing) projects. Stevenson and Grousbeck, 1989 defined entrepreneurship as the "'process of creating value by bringing together a package of resources to exploit an opportunity'" (cited in Morris and Hills, 1992, p. 1). The university where this process occurred houses a national entrepreneurial center and includes entrepreneurial skills as one of the components of all students for their liberal arts core education. The culture encourages the Business students while working on corporate- related projects to institute "opportunity recognition, agility, and constant response to the market, quality products, and innovative practices" (Cone, 2007, p.86). Additionally, the university has been recognized three times by Entrepreneur magazine as one of the nation’s Top 100 Entrepreneurial Universities. Therefore, this setting was an environment where these entrepreneurial skills were understood and could be implemented. Furthermore, this is relevant, because entrepreneurship in marketing is "an exploration of the ways in which entrepreneurial attitudes and behaviors can be applied to the development of marketing programs" (Warren, 1992, p. 22). Part 2: In August, 2010, the university Provost approached some faculty and asked if they would be part of a small, national Beta test for a new iPad-based text book developed by the Inkling company. The professor used the textbook originally intended for the marketing course but on the Inkling platform (Young, 2011). Features of this type of eBook includes that there is interaction in real-time to students’ text-related questions through a memo option. Unlike other iPad texts (Wieder, 2011), students can “follow” the notes, comments, and supplementary material that the professor adds to the actual text. The professor typed notes and Socratic questions for the entire class that appeared throughout the chapters on all students' text books. The information literally overlays onto the text content. The professor used the textbook interactively with other technology on the podium: shifting to PowerPoints, Internet, etc. She connected the marketing plan and simulation projects with text content on the Inkling pages. Students were assigned to synthesize course material with Wall Street Journal examples and to post their results through the memo option of the text. She assessed the students’ marginalia (Kaya, 2010) to determine comprehension and analysis. Their individual results were displayed on the professor’s text and periodically projected during lecture as reinforcement and recognition of student product. Additionally, the quizzes in the text are programmed instruction giving students the why’s/rationale/knowledge for answers. As the semester progressed, the professor refined the use of the Inkling book for more formative assessment.

Student Information and Engagement The students were introduced to the iPad as part of the university’s Griffin Technology Advantage Program. On the first day of class, the professor was very transparent with the class about the use of the iPad and the Inkling text book as a pilot program in interactive learning. The successful integration of the iPad into Marketing education requires (1) institutional academic and technological support, (2) faculty receptivity to learning a new technology and integrating the tool into the marketing curriculum, and (3) students’ openness to accepting the change and potentially un-foreseen challenges of adapting to a new learning tool and the subsequent learning environment. The students’ openness to opportunities in a new venture built their entrepreneurial skill of “adapting to change/flexibility”.

DATA ANALYSIS

“The effectiveness of integrating technology into the curriculum can be assessed by gathering quantitative and qualitative data from students and faculty” (Benbunan-Fich, et al., 2001, p. 12). As part of the university’s early evaluation of the concept of intense integration of the iPad into the classroom, the author conducted research of iPad Inkling users. In the author’s preliminary research, of 87 student

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respondents, their use of iPads in courses to support instruction included the following: (a) Internet: 87%; (b) Applications: 59%; (c) E-mail: 57%; (d) E-texts: 22%. Correspondingly, the following indicates the items that the faculty required as students’ use of the iPad in their courses: (a) Internet: 78%; (b) Applications: 46%; (c) E-Mail: 43%; (d) E-texts:18%. Students also ranked factors that were perceived as beneficial outcomes of the use of iPads. The students thought the capability to complete assignment-related research in real-time, to access to an eBook, to plan team meetings, and to access the Internet for learning were the most beneficial aspects of the iPad technology as a pedagogical tool. The table below shows the statistical outcomes of this aspect of the survey results.

TABLE 1

HIGHEST RANKED BENEFITS OF iPAD AS LEARNING TOOL

Benefit M SD

Access to the Internet for learning 3.33* 2.46

Access to eBook 3.5 * 2.39

Assignment-related research 3.86 2.17

Planning team meetings (for courses) 3.5 2.06

Significance: *p≤0.05

Variance was statistically significant (to the 0.05 level) for the highest ranked benefit responses. In analyzing the question asking which benefits were gained by using the iPad, the mean and the median of “access to the Internet for learning” and “access to eBook” responses were very significant. Therefore, the learners believed those benefits made a notable difference and impact on their learning. This result demonstrates that the respondents seriously considered the value of the iPad as a learning tool when completing the survey. The iPad provided access to the Inkling textbook. The mode response for the factor “Access to Inking Book” received an average score of 2 (on a scale of 1 to 5, with 1 being the highest advantage), thereby demonstrating the students’ perception of the usefulness of that textbook platform. In addition to the aforementioned research, the students involved in the latest offering of the marketing course completed a reflection paper regarding the use of technology in the classroom. Of 39 student reflection papers, 38 were positive-to-very positive about the use of technology in the course. Comments included that “times are changing”; the technology we used made class a lot more interesting as well as enjoyable…we could implement what we learned. Understanding the competitive nature of the workplace, students also remarked about the transferability of the experience to the workplace. For example, one student stated that the use of a high-level of technology gave a feel for modern business and provided better in-depth knowledge [of marketing]. Furthermore, a respondent remarked that the use of technology provided an idea of how technology is becoming an integral part of every business. Using an

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interactive technology, the students were engaged. A student recognized the necessity of this innovation, stating that the use of an online simulation would not be possible without classroom technology. Benefiting from the hands-on learning, one student recommended requiring the use of technology in all assignments. Students appreciated the real-time accessibility to the Internet and article sources. Furthermore, access through the iPads, and to a lesser degree laptops, afforded students the capability for immediate analysis of online analytics related to a marketing simulation. The students recognized the advantage of conducting research meetings in real-time. As one student noted, the iPad allowed him to outline and find information for assignments easier and quicker. It was beneficial that the textbook, lecture notes, course site and simulation are “all in one place”. A respondent stated that they could use the lessons they learned in class and grow. Most faculty who conducted the Beta test on this campus reported that a benefit of the iPad was the access to the Internet for learning. Another survey of a small group of Business Program faculty found that 75% of the respondents stated that students demonstrated that the iPad enhances their learning through more academic research being completed in the classroom.

DISCUSSION

As noted above, the university’s Liberal Arts Core Curriculum includes an element for Entrepreneurial Skills. These are subdivided into Goal-setting, Risk-taking, Adapting to Change/Flexibility, Team work, Transferring knowledge into behavior, Learning how to learn as a life- long professional, and Sound decision-making informed by values. These elements build the entrepreneurial paradigm and "process of exploration, innovation, experimentation, and resource mobilization. [This is crucial to the success of the business projects and exercises] because finding what works depends on having the right knowledge, being able to envision new combinations, and having the freedom to test ideas through action" (Dees, 2007, p. 26). The following delineates how each of the university's entrepreneurial skill set was enhanced through the exposure to new technology. Goal-setting. The students implement this element early in the semester by determining how to establish goals for the attainment of the Inkling textbook and achieving a comfort zone utilizing the “memo” feature. Risk-taking. This skill was realized when students accepted the challenge of using a textbook in a piloted format. Realizing that grading would be associated with the memo and imbedded-video features of the textbook, the students had to further call upon their implementation of a risk-taking culture in the classroom. Adapting to Change/Flexibility. This type of iPad-based learning was a new endeavor for all of the students. Therefore, as learners they move from a status quo state to a transforming stage before the ultimate norming state is attained. These future business managers realized that one has to become accustomed to change. Team work. The app-based projects discussed in this paper were sometimes team projects. Students acted very collaboratively by sharing ways to troubleshoot issues with the textbook and other iPad apps. This collegiality developed into a positively intertwined classroom of engaged learners. Additionally, in the year-end teacher evaluation, the students rated the question “formed teams or discussion groups to facilitate learning” a 4.5 average (out of a possible 5). The interactive, engaging nature of the iPad facilitated the accomplishment of this outcome. Transferring knowledge into behavior. This entire experience required each student to demonstrate their marketing knowledge through the completion of various assignments using the iPad. This involves displaying professional behavior as well. Furthermore, in the year-end teacher evaluations, the students rated the question “the teacher involved students in hands-on projects such as research, case studies, or real-life activities” as a 4.5 (out of a possible 5). Learning how to learn as a life-long professional. As the students progress through this experience, they realize that each exercise is the first of many similar experiences they will have throughout their business careers. Students saw this learning experience as a competitive advantage.

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Sound decision-making informed by values. Small and large decisions were made by students. This required a professional, respectful, accurate process that led to credible assignments. Student refined researching skills, developed hands-on appreciation for the interface of business marketing concepts, and a new confidence that the required business competencies can be extrapolated in the future work setting. Students in the marketing course realized that creativity was feasible even though a pre-established teaching approach was the guide. This necessitated a flexibility to change within time constraints and time parameters. The in-class student surveys provided additional data about their perception of the value of the technology innovations. The Inkling project made the marketing learning more interactive. With Wi-Fi connectivity, students could watch a case study video from each chapter directly on their iPad. This multi-media interactivity appeared to increase students’ engagement in the text material and the development of their cognitive and reasoning skills. They were able to implement the entrepreneurial skills of “transferring knowledge into behavior” by demonstrating their knowledge and analysis of marketing concepts by submitting assignments through the Inkling iPad and by sharing their enhanced research skills in successful marketing plans. This latter adaptation developed the entrepreneurial skill of “learning how to learn as a life-long professional”. Visual and auditory reinforcement was offered. As the professor desired, this format made learning very accessible and involved the students more actively in the textbook content. The iPad facilitated a marketing simulation coming into the classroom walls during the next marketing course offering. The students could access and discuss decisions at any location. Some adaptations and revisions occurred in the spring of 2011 in other upper-level business courses. The Dropbox cloud technology, including the Dropbox iPad app, was used for project draft organization. Groups were formed through the electronic file site. Through the direct access of Dropbox, students collaborated on reports and analyzed their simulation and/or project results. Students’ feedback indicated that this tool improved their time management skills and their organization abilities, and enhanced positive, interactive team work. Student accountability for results is much more visible and the students stated that it led to more equal workload distribution. “Learners are able to learn anytime, anywhere, and in a collaborative learning environment” (Wee Keng, Chen Swee, 2001, para. 1). The Dropbox cloud technology facilitated development of the Entrepreneurial Skills of goal-setting, teamwork, and transferring knowledge into behavior.

CONCLUSIONS

The research conducted on this innovation is in a very preliminary stage. Moving forward, more collection of data for analyzing student learning outcomes needs to be gathered. Although this paper demonstrates several measurable outcomes of iPads as pedagogical tools, there is a need for more performance metrics. Ways to evaluate and track the intangible skill development of students need to be formalized. Data from the aforementioned Teaching and Learning Forum for faculty and staff (Gawelek, et.al., 2011) was coded by the author of this paper. The major concern of faculty surrounded the distractions that are easier due to the iPads’ presence. The author of this paper found one way to counteract that concern is through frequent movement throughout the classroom and the use of a remote pointer and clicker (that advances slides). Through effective use of the iPad, despite social media temptations, students demonstrated the effective implementation of the entrepreneurial skills of “goal-setting” and “sound decision making informed by values”.

Future Adaptations and Conclusion This innovation is applicable in other marketing education and entrepreneurial skills settings. Other professors can select learning gaps in the classroom and use the iPad's benefits to help resolve the issues. “Once the educator chooses an area, the activity can be adapted for a learning outcome” (Granitz, Koernig, 2011 p. 60). The evolutionary nature of this technology offers increased opportunities for effective marketing education.

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Given the preliminary results in the marketing course, the iPad innovation will continue. In the future, based upon student feedback, Google docs will be encouraged for student pre-planning, real-time drafting, and chats before homework is submitted through Dropbox. The possible applications of these iPad-based innovations can enhance marketing education’s effectiveness while students implement entrepreneurial skills.

REFERENCES

Bell, J., Demick, D., Ibbotson, P., Karajan, S. & Wood, V. (1997). Marketing Education without Borders: Exploiting the New Information Technologies. Journal of Marketing Management, 13, 615-624.

Benbunan-Fich, R., Lozada, H.R., Pirog, S., Wisenblit, J. & Priluck, R. (2001). Integrating Information Technology in the Marketing Curriculum: A Pragmatic Paradigm. Journal of Marketing Education, 23 (5), 5-15.

Cone, J. (2007). Entrepreneurship on Campus: Why the Real Mission is Culture Change. Kansas City, Missouri: Kauffman thoughtbook 2007.

Dees, J. G. (2007, March). Taking Social Entrepreneurship Seriously. Society, 44 (3), 24-31.

“Discover, Create, Communicate: Learning Transformed” [Report]. (2012). Greensburg, PA: Seton Hill University.

Gawelek, M. A., Spataro, M. & Komarny, P. (2011). Ipads: Why Mobile?. Educause Review, 46 (2), 28- 32.

Gawelek, M. A., Cook, E., DePasquale, T., Spataro, M. & Sullivan-Cosetti, M. (2011). Assessment group on the Griffin Technology Advantage program, conducted at Seton Hill University.

Granitz, N., & Koernig, S.K. (2011). Web 2.0 and Marketing Education: Explanations and Experiential Applications. Journal of Marketing Education, 31(1), 52-72.

Havas, A. (2009). Universities and the Emerging New players: Building Futures for Higher Education. Technology Analysis & Strategic Management, 21 (3), 425-443.

Hunt, L., Eagle, L. & Kitchen, P.J. (2004). Balancing Marketing Education and Information Technology: Matching Needs or Needing a Better Match?. Journal of Marketing Education, 26(1), 75-88. iPads Move onto Campuses; Uses to Follow. (2010). Educational Marketer, 41 (8), 1-2.

Kaplan, M. D., Piskin, B. & Bol, B. (2010). “Educational Blogging: Integrating Technology into Marketing Experience,” Journal of Marketing Education, 32(1), 50-63.

Kaya, T. (2010). Classroom iPad Programs Get a Mixed Response. Chronicle of Higher Education, 57(6), A8.

Morris, M.M., Hills, G. (1992). The role of entrepreneurship in Marketing Education. Marketing Education Review, Vol. 2, Summer 1992, 1-10.

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O’Hanlon, C. (2010). Trickle-Down Technology. T H E Journal, 37(10), 28-33.

Ueltschy, L. C. (2001). An exploratory study of integrating interactive technology into the marketing curriculum. Journal of Marketing Education, 23(1), 63-72.

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Wee Keng, N., Chen Swee, E. (2001). Getting it Right: Enhancing On-Line Learning for Higher Education using the Learner-Driven Approach. Singapore Management Review, 23 (2), 61.

Woyke, E. (2011). Apple Lets Some Students Exchange iPad 2s. Forbes.com, March 8.

Wieder, B. (2011). iPads Could Hinder Teaching, Professors, Say. Chronicle of Higher Education, 57(28), A22-A23.

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Marketing a United States Multinational Brand in the United Arab Emirates

Ed Langlois Palm Beach Atlantic University

Ann Langlois Palm Beach Atlantic University

Danielle Havens Palm Beach Atlantic University

INTRODUCTION

This study explores why marketing strategies in the UAE are different from US strategies. This scenario envisions marketing the same product in both countries. Included is an analysis of cultural aspects and a comparison of UAE advertising strategies to US advertising strategies. The economy of the United Arab Emirates (UAE) is the model for most emerging Middle East economies. It is the most attractive and admired economy of the region, with a Gross Domestic Product purchasing power parity of $42,000 per capita (CIA World Factbook, 2010). The UAE population is growing. It attracts young, educated consumers with a demand for Western goods and services. This UAE market presents unique opportunities for rmultinational companies selling US consumer goods. How US businesses can capitalize on this opportunity is the question that needs answers.

LITERATURE REVIEW

This paper discusses the unique challenges advertisers face when building marketing plans to attract the Middle East consumer and the different marketing strategies used to reach this diverse market. Rehman (2008) believes marketing strategies for the UAE require local customization to be successful. Customizing products and services to meet local consumers’ needs and wants is a viable option. It can be very expensive. The cost to prepare and place advertisements in various mediums coupled with the cost for in-store and out-of-store promotions results in only large multinational companies having the resources to enter new markets with new products.

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Rehman (2008) believes there are vast economic opportunities in Dubai and with the other members of the Gulf Cooperation Council (GCC). Multinationals should modify their marketing messages on products and branding to capitalize on the GCC market potential by providing specific examples of successful multinational businesses. He identifies the many misconceptions associated with this region and the common pitfalls of labeling in these diverse markets. Marinov (2007) compared and contrasted the emerging Islamic countries in the Middle East, North Africa and Asia. He described the influence Islam has on businesses, specifically Shariah law. Marinov describes how the diversity of consumers in these Islamic nations impact the marketing efforts of US multinational companies. Despite this diversity, there are enough similarities for regional marketing strategies to be successful. A unique survey was developed by Kalliny & Ghanem (2009) to measure the impact of culture and religion on advertising messages and the different approaches advertising agencies use in the US and the UAE. The study is unique. Previous research on the topic examined content. There study surveyed advertising agencies to determine the degree to which cultural values were incorporated into marketing messages. The survey was distributed to 189 advertising agencies located throughout the Arab world and via email to advertising agencies located in the US and Middle East. The majority of agencies responses were from the United Arab Emirates (62) Egypt (26) and Lebanon (22). The survey included 29 items. Respondents checked a Lickert Scale indicating the response that reflects their agency’s approach when designing advertisements for the US or Middle East. Categories included adverting and cultural appeals. The study addresses two voids in the marketing/advertising literature. It examined advertising in the Middle East and it takes a different methodological approach when examining advertising and culture. The study supports the idea that cultural values play a role in preparing advertising messages. Responses from Middle East agencies indicate they do incorporate cultural characteristics such as obedience and some collective traits such as references to customs and conventions. The study examined the ongoing debate of standardization versus adaptations from a different perspective. The authors encourage other researchers to do the same by examining not only the differences, but the reasons for the cultural differences. Marketers sometime assume advertising agencies understand the consumer and develop advertising campaigns reflecting their thinking. If the assumption is inaccurate, researchers need to investigate these values to understand if the cultures are converging or diverging.

UAE Consumers Before developing a marketing plan, marketers need to access the demographics and psychographics of the target audience .This chore was very difficult in the GCC countries. Data compiled from accurate research sources is necessary to understand the dynamics in the marketplace. False assumptions about a region’s population and culture can result in miscalculating a market’s resources and the business opportunities available. (Rehman, 2008). The UAE has 80% of all expatriates compared to the other Gulf Cooperation Council UAE (CIA World Factbook, 2010). The UAE market is predominately Arab orientated. It is the market for companies looking to sell products and services by US multinational companies. The population is diverse. Turnover is high. Many expatriates are on temporary work Visa’s. Another common misconception that Rehman (2008) reveals is that UAE consumers that hates everything Western and American. This is not the case because Western brands are extremely successful in the UAE and in the GCC countries. The Deira City Centre Mall in Dubai is home to 347 stores. Eighty percent of the merchandise sold comes from American brands including DKNY, Calvin Klein and Radio Shack (Rehman, 2008). Dubai has an impressive retail shopping that includes the world’s largest shopping mall and 30 shopping malls in total. Tourism is a growing industry in this emirate. Businesses have created a “retail experience” for locals and tourists (Rehman, 2008). One such experience includes an indoor ski slope attached to the Mall of the Emirates.

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In comparison to other Islamic countries, the UAE is considered to have a well-educated knowledge of consumer goods, including entertainment, cars, and household goods such as cleaning products, appliances and electronics (Marinov, 2007). Marinov (2007) agrees that consumers in the UAE want Western products and brands. The educated and younger consumers in the UAE exhibit purchasing patterns of those consumers in advanced countries’ markets, with expectations more similar to those found in North America and Western Europe and less like those found in other Arab countries (Marinov, 2007). Laurie Farris, counselor for commercial affairs at the U.S. Embassy in Abu Dhabi, supports Marinov’s claim. Farris stated that the UAE imports a lot of goods from the U.S. In fact, the U.S. exports more goods to the UAE than to Israel. The UAE is still developing country. (L. Farris, personal communication, May 19, 2010). There are a growing number of young, educated consumers with a high disposable income who are ready to form brand loyalties (Rehman, 2008). This type of consumer accounts for 50 percent of the total population and almost all are expatriates (R. Raad, personal communication, May 17, 2010). According to the CIA World Factbook, the median age in the UAE is 30. Males outnumber females 3:1.Rehman believes there is a large and growing population of university educated women with high disposable incomes with high standards. Not everyone in the UAE is wealthy and demand high end products. In reality, the social class ranges from wealthy Emerati nationals to unskilled foreign workers who have low standards of living to skilled expatriates with high levels of disposable incomes (Rehman, 2008).

Markets of the UAE The markets of the GCC are the most attractive of all the economies in the Middle East (Rehman, 2008). They boast significant wealth from oil and maintain relatively stable monarchies. Rehman argues that the UAE is the most attractive because of the combination of prosperity, demographics and deregulation. It is difficult to refute the statement. Marinov (2007) describes the ways markets in the Gulf countries are segmented based on ethnicity, religion and income. The UAE can be segmented according to native and non-native residents, Muslim and non-Muslim, affluent, and non-affluent, with a segment that includes tourists. Contrary to popular belief, women do not play a passive role when it comes to major purchases. Women in the CGC countries have a great deal of purchasing power. They are educated. Universities in Saudi Arabia produce more female than male graduates each year. These women then enter the workforce and their disposable income makes them a key audience for purchasing goods and services. UAE consumers do not reject American brands. There are situations when despite correct marketing strategies, political and religious issues affect sales. A recent example was the boycott of Danish goods in Saudi Arabia as a response to a Danish publication of a cartoon depicting the Prophet Muhammad negatively. The cartoon was very offensive to a majority of Muslims. Denmark’s entire export market declined more than 15 percent during a five-month boycott. Rehman (2008) suggests that business leaders must build rapport with the local community, show they are invested in the area, and operate independently from these politically motivated crisis Businesses must create marketing messages and branding that respect the local culture. What is the best marketing strategy? There is no simple answer or a one-size-fits-all approach. Marketers have to understand the target audience, determine their needs, wants and how best to satisfy them (Rehman, 2008). However, Ramz Raad, chairman and CEO of TBWA/RAAD advertising agency headquartered in Dubai, cautioned that demographics are hard to get from the government making it difficult to develop a targeted marketing campaign (R. Radd, personal communication, May 17, 2010). Many global firms choose to outsource their marketing needs to a local advertising agency that has been operating in the region for a longer period of time and understands the market. Rehman and Marinov agree that a marketing strategy that is region specific is the most effective way to reach consumers in the UAE.

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Region-Specific Marketing Approaches Kalliny & Ghanem (2009) state that international marketing professionals have debated the topic of standardization and adaptation of advertising messages for the last 50 years. Homogeneous messages are key to brand building, but you cannot deny the power of adaptation. Rehman (2008) describes four models of customization for marketing plans. The first model is non- customization, which is when a multinational applies the same branding approaches used everywhere else to the UAE. This is the simplest and most cost effective since you have all your logos and taglines in place. If the brand is elite and global, like a luxury European car, this strategy will work because the marketing is part of the allure. If the company is American or European based, English is the universal language in the UAE. Since nearly all expatriates are fluent in English, these multinationals can reach their target audience because those that do not speak English probably do not have high disposable incomes. The major disadvantage to non-customization is that it can make the brand seem too foreign and lesser the brand’s market penetration to local consumers. Marinov (2007) notes a customization strategy similar to non-customization because it does not customize the product, only the delivery. Consumer demands, quality and prices differ in the UAE due to the diverse population. To compensate for these differences, retailers employ a variety of nationalities that “facilitates a customized service with cultural sensitivity.” Bilingual approaches are most effective, which leads to the next degree of customization, adapting the message. This is the most common customization strategy. By packaging products in both English and Arabic, a company can reach the entire audience in the UAE.HSBC. McDonald’s translate their global taglines. Coca-Cola and Pepsi use regional celebrity endorsements. Doritos maintains its theme of fun, upbeat youth while incorporating Arabic language and music and, of course, their signature “crunch.” Another example of adapting the message is disclosing certain information that is important to the audience. For example, McDonald’s franchises in the Middle East have added the assurance of “halal,” which is permissible by Islamic law, to the health message in their advertising (Rehman, 2008). Coca Cola has been practicing these two forms of adaptation since the 1950s (O’Barr, 2000). In an interview conducted by William O’Barr and Marcio Moreira of McCann-Erickson, who served as Coca- Cola’s advertising agency, explained Coke’s venture into international advertising. He explained that Coke didn’t run the same ads internationally to save money on production costs, but did it because “it is more important to communicate a common viewpoint than to use a common execution’. McCann would check the ads, TV commercials and radio tracks used in the U.S. and determine which ones were appropriate and transferable to other markets. It was not until the 1970s that Coke decided to develop advertising aimed at different markets, due to the competitive nature domestically between Coke and Pepsi. These domestic issues reflected in U.S. advertising were not effective internationally. They began reshooting scenes with international actors, thereby adapting the message. Each commercial was the same, but with local flare and in most cases translated in the native language. Coke had to be especially sensitive to Islamic countries and the portrayal of women in advertisements. A TV commercial shot on the beach for the Middle East is going to be different than the same commercial shot for Brazil. If the Middle East version ran in the Brazilian market, Brazilians would not be able to identify with the women in the commercial because Brazilians do not dress as conservatively. The audience would say “that is not us.” On the other hand, the Brazilian commercial would not even be allowed to air in the Middle East because women scantily dressed is offensive (O’Barr, 2000). Oracle, the database software giant, is a global company that chose to localize their product. According to Hish Esaadi, director of alliance and channels for Oracle, they were the first database company to “Arab-ize” database software. Oracle outsourced a company in Egypt to translate the software into Arabic. The process was relatively inexpensive and only took two weeks (H. Esaadi, personal communication, May 19, 2010). Caution is needed when simply translating the English language into Arabi. Some Arabs might be more comfortable communicating in English because of the many Arabic dialects throughout the region.

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Yahoo’s purchased the Arab Internet portal Maktoob. It is one of the most visited online new portals in the Arab world, reaching 16.5 million people (MacMillan, 2009). Yahoo translated its home page, e-mail and instant messaging components into Arabic but chose to keep Maktoob’s local flavor mostly intact. The acquisition increased advertising opportunities and resulted in significant new ad revenues for Yahoo. The third degree of customization is adapting the portfolio. This strategy entails reviewing your product line, selecting those products that seem most applicable to your target audience and stocking more of those items in those locations. The most challenging part is for regional managers to be able to divert their merchandising strategy from what is mandated from their global headquarters. This strategy is used most frequently in the apparel industry. In the GCC region, the market demands a constant flow of new products that are made of lightweight fabrics and have both long and short options. Rehman (2008) said the steady flow of new and different fashions is most important in this market since the audience is predominately teenage girls. Rehman’s highest degree of adaptation is customizing the actual product to entice consumers with regional-specific tastes. The multinational who has mastered this customization strategy is McDonald’s, who serves rice burgers in Taiwan and Japan, McCurry Pan in India, shrimp burgers in Korea, and the McArabia, a combination of the chicken sandwich and gyro. This “best practice” for McDonald’s is not easy for all companies since it requires money for research, development and cost benefit analysis. Product customization gives a sense of cultural awareness and sensitivity to the multinational’s global brand, which is priceless (Rehman, 2008).

Advertising in U.S. vs. UAE Rehman references an article from the International Journal of Advertising published in 2007 that examines advertising in the UAE. The study found that 52 percent of the ads reviewed marketed jewelry and cosmetics. In addition, a whopping 81 percent of ads featured women in long clothing. This proves that savvy marketers are realizing the buying power of women in the UAE. In the U.S., comparative marketing depicting two or more brands was more popular than in the UAE, 26% compared to only 6% in the UAE. U.S advertisements are more informative in nature than those found in the UAE – 32 percent compared to only 8 percent in the UAE (Rehman, 2008). Other distinctions in advertising in the U.S. and the UAE are based on the different religious beliefs and cultural values represented in advertising. Although the United States was founded on Christianity, it does not influence U.S. advertising content nearly to the degree Islam affects UAE marketing. Key cultural differences between these two markets are respect for elders and individualism vs collectivism (Kalliny & Ghanem, 2009). They cite Hofstede’s statistic that the U.S. is the most individualistic country, with a score of 91. The Arab countries received a 38 on this same scale. The researchers hypothesized and proved that advertising agencies in the UAE intentionally emphasize obedience to elders and authority in addition to collectivistic traits such as group loyalty and customs. Surprisingly, Middle East advertising agencies depict women more modestly than U.S. agencies. The trait is not surprising.

Advertising in the UAE vs. Other Islamic Countries Contrary to Rehman’s observation of advertising trends in the UAE, Marinov (2007) lists marketing strategies that should be applied when marketing to Islamic countries. • Messages should target men specifically and should be subtle when targeting women. • Messages should be mostly informative. • Promotions should avoid negative publicity, while emphasizing modesty and cost savings. • Discount and money-back offers are discouraged since consumers will question the fairness of the retail price and the motives of the seller.

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There are two reasons why this information contradicts Rehman (2008). His recommendations are from a study conducted in 2002. The Middle East, especially the UAE, has evolved significantly. The demographics and psychographics of the region has changed and continue to evolve. Rehman’s information refers only to the UAE. Marinov is making wide generalizations across the diverse population in Islamic countries. They tend to be more conservative than those found in the UAE. Not only does the Middle East region differ in ethnicity, but in the degree in which Islam is embedded into the culture. Marinov’s (20007) strategy recommendations are more conservative than those practiced in the UAE. They are closely aligned with Islam and Sharia Law. Islam law governs all economic activities, including marketing and advertising. According to Islamic marketing ethics, the production and sales of goods must be ethical from start to finish. Marinov (2007) goes on to say that the product must both satisfy the needs of the consumer and benefit society as a whole. Messages must be honest and retailers are encouraged to disclose all positive and negative features of a product. Western retailers generally use psychology as there pricing strategy and artificially inflate prices to offer discounts. Consumers believe they are getting a good deal. This practice is not allowed according to Islam law. Prices should only change to reflect the quality of the product (Marinov, 2007). The most important factor to consider when marketing specifically to the Middle East region is to keep in mind the fundamental core values of Islam when planning strategies. The degree of adaptation should be based on the specific region’s adherence to Islamic practices as well as the brand’s country of origin. Though Saudi Arabia and the UAE share a border, the degree of adaptation for products and services differ. In November 2007, the American cable television network MTV launched MTV Arabia (Capell, 2007). Licensing is popular in markets within the Arab world and abroad because of local culture differences and regulations. MTV made the strategic choice to license MTV Arabia to Arab Media Group. Despite the fact that this media group had no experience in television, MTV chose them because “they demonstrated a deep understanding of the diverse consumers across the Middle East markets. This was a very smart move on MTV’s part. They are targeting Arab youth, a growing population that is educated and tech-savvy. MTV Arabia, like there other brands, operate on integrated platforms. They are not just a TV station and not positioning themselves as a music channel but rather a “youth lifestyle platform.” Young Arabs can interact on the website, post blog comments, express themselves, and vote for their favorite music and programs. MTV has indentified the target market and honed in on its needs. MTV’s managing director for emerging markets, Bhavneet Sing said during an interview for BusinessWeek, “Purely on the music front, we'll feature underground Arabic music genres like hip-hop, which is incredibly popular, but hasn't been embraced by local media. We're going to play more international music because our audiences have told us they're missing that connection to the global music scene that only MTV can offer.” MTV had no trouble entering the Arab market. They were welcomed into the country because they adapted their brand to “reflect and respect Arabic cultural values.” MTV followed the appropriate strategies this researcher found to be most successful when entering an Arab market.

CONCLUSIONS

Improved education, population growth coupled with globalization has helped consumers in the UAE become more savvy and sophisticated. They expect the same technology, fashion and global brands to be available in the local markets. The region’s growth and diverse population make it attractive to a variety of industries. Region-specific marketing strategies can be tailored to reflect the local consumer’s tastes and lifestyles. Global marketers are cautioned to research target audience demographics and not be influenced by misconceptions found in the Middle East and beyond. Multinational companies that can access the demographics of a region can begin to create surveys to gain information on consumer’s wants and needs. This can be a difficult task.

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Companies need to create a random sample that is representative of their target audience. Adding to the difficulty is that many residents do not list their home telephone number. Emirat cultural norms prohibit companies from conducting phone surveys. Advertisements, to be successful, must reflect consumers needs and wants, not mimic traditional roles or make inaccurate assumptions. The UAE has a goal to be bigger and better than its competitors by setting standards for other destinations to aspire too. The goal can only be reached if the destination has an established brand to deliver its promises. Consumer confidence in the UAE, the second largest Arab economy, is the highest since 2009 according to Master Card Worldwide Index of Consumer Conference released August 18, 2011. Sales in Dubai are up by approximately 10 percent according to the Rivoli Group. Three of five UAE consumers have shopped at Calvin Klein and Christian Dior and one of three have shopped at Gucci. The rapid economic growth has resulted in consumer having an insatiable desire for luxury designer clothes. Luxury brands is a integral part of UAE consumers lifestyle According to a Nielsen survey released on Monday, January 30, 2012, the majority of people residing in Middle East countries practice the Muslim faith. Their religion is an integral part of there every day lifestyle. Believers follow the teachings of the Quran, the holy book of Islam. Alcohol and drugs are forbidden. The cultural effects of a media campaign against drugs and alcohol had a minimal effect on people residing in the Middle East. Many times US public service and commercial advertisements are delivered to the wrong audience. It is necessary to identify the target audience. This is important particularly when crossing cultural boundaries. The numbers of UAE women in the workforce continues to increase. A brand new demographic titled Working Women has been developed and implemented when conducting new surveys. The increasing role US and UAE women in the workplace has resulted in a whole new marketing base (Al-Jenabi, 2008). Advertisers need to respond to cultural shifts to keep pace with the constant changes in Americans and UAE women wants and needs. United States of America multinational companies should market their products and services to the UAE and the other GCC countries. The birth rate is high for Muslims. Two of 3 Muslims earn $50,000 or more annually (Salman, 2007). The majority of Muslims like American products. There is a huge market of expatriates for goods and service. Islamic law prohibits price control on goods and believe there should be no interference with the market. They favor healthy competition. There are harsh punishments for companies using forbidden tactics. Their rules for marketing and advertising products are very different from Western countries. Dubai’s efforts in developing their brand image is necessary for survival in the highly competitive global marketplace. The key to success is to brand Dubai as the destination for demographic and psychographic groups with purchasing power and resources to react positively to advertisements from US companies.

REFERENCES

Al-Jenaibi B., (2008).The Effects of Media Campaigns on Different Cultures. Proceedings of World Academy of Science, Engineering and Tecnology. Volume 36.

CIA World Factbook (2010).Retrieved June 20, 2010 from https://www.cia.gov/library/publications/the- world-factbook/geos/ae.html

Kalliny, M., & Ghanem, S. (2009). The Role of the Advertising Agency in the Cultural Message Content of Advertisements: A Comparison of the Middle East and the United States. Journal of Global Marketing, 22(4), 313-328. Marinov, M. (Eds.). (2007). Marketing in the emerging markets of Islamic countries. New York, NY: Palgrave MacMillan.

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MacMillan, D (2009). Yahoo's Bold Advance into the Middle East. BusinessWeek. Retrieved from http://www.businessweek.com/technology/content/aug2009/tc20090826_150597.htm

Marinov, H. (2010). Marketing in the Emerging Markets of Islamic Countries, Journal of Islamic Marketing, pg 81-83.

O’Barr, W. (2000) The Airbrushing of Culture: An Insider Looks At Global Advertising. The Advertising Educational Foundation, Inc. Retrieved from http://muse.jhu.edu/journals/advertising_and_society_review/v001/1.1obarr.html

Place Branding and Public Policy, Palgrave 2009, 1751-8040 Vol. 5,3, 234-236.

Rehman, A. (2008). Dubai & Co.: Global strategies for doing business in the Gulf States. New York, NY: McGraw-Hill.

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New Perspective of Cross-Cultural Communications: Applications in China Marketing

Hong Wang Shantou University

INTRODUCTION

International marketing communication is communication that crosses national boundaries for business purposes. Communication among people from the same culture is often difficult enough. Therefore, communication between people from different cultures from the point of view of language, values, customers, and ways of thinking, will be far more difficult, with a degree of miscommunication being almost inevitable (Ferraro, 2006). Problems in marketing communication conducted cross- culturally often arise when participants from one culture are unable to understand culturally determined differences in communication practices, traditions, and thought-processing in another cultural context. Marketing communication literature focused on advertising supports the hypothesis that advertising content differs between countries. International advertising research has confirmed differences in advertising content between countries. The premise upon which these studies are predicated indicates that advertisements, in part, reflect individual countries’ social systems (Emery and Tian, 2003; McLeod and Kunita, 1994; Mueller, 1992; Ramaprasad and Hasegawa, 1992; Zandpour, Chang, and Catalano, 1992). The importance of cross-cultural communication is evident for China marketing and marketing China, since there are many factors that influence the relationship between Chinese and non-Chinese businessmen. According to Harrison and Hedley (2008), there is an important question of how to sell and market to Chinese companies effectively, both for new market entrants and for those companies with existing operations in China. They point out several factors, such as patience, flexibility, plenty of negotiation, and remembering the basics of marketing, that underlie the preparation of adapting to the local environment. The core of anthropology as a social science concerns culture and its relationship to human behavior. Although there are many different definitions of culture employed by scholars from various fields, such as

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political science, history, psychology, anthropology, sociology, and so on, the common points made by cross-disciplinary scholars are clear. The essential core of culture consists of traditional ideas that are historically derived, selected, and generated to support attached values. Culture systems may be considered as products of action or as conditioning elements of further action. They consist of patterns, explicit and implicit, of and for behavior acquired and transmitted by symbols, constituting the distinctive achievements of human groups, including their embodiments in artifacts (Feldhusen, 2008; Lillis and Tian, 2010).

THE IMPACT OF CULTURE ON MARKETING COMMUNICATION

Lee, Yang, and Graham (2006) conducted research about tension and trust in international business negotiations with 176 American and Chinese executives who participated in simulated international business (buyer–seller) negotiations. The data collected reflect a series of cultural differences between the two groups. The Chinese and American executives mutually felt tension during the negotiation; however, for the Chinese, greater levels of tension led to an increased likelihood of agreement, but also led to lower levels of interpersonal attraction and in turn lower trust of their American counterparts. For the Americans, the felt tension marginally decreased the likelihood of an agreement and, did not affect interpersonal attraction, but did have a direct negative effect on trust. Zhang and Zhou (2010) inquire: “Are those Chinese companies simply lucky survivors in chaotic price wars, or do they know something about how to wage price wars that their Western counterparts do not?” In their study, they found that luck had nothing to do with being a victor in a price war, but good planning and execution did. It is fair to say that Chinese companies are much keener about price wars than the executives in the West. Cross-cultural marketing communication is marketing communication among consumers or customers whose culture differs from that of the marketer’s own culture in at least one fundamental aspect of cultural such as language, religion, social norms and values, education, and life style. Cross-cultural marketing communication demands that firms be aware of and sensitive to cultural differences. To respect the right to culture by the consumers in various cultures and marketplaces, marketers should understand that their customers have a right to maintain, practice, and identify with their own culture. If the marketers want to succeed in cross-cultural marketing, they must work in a way that respects the consumer’s values and their right to cultural ties. For example, for Western marketers to communicate in a business setting, it is important for them to respect the Chinese government’s claim for guoqin, which means that they must “consider the special situation or character of China” (Yan, 1994). In another research on refrigerators, Baoku, Lijuan, and Bingru (2011) state that peasants evaluate product attributes differently in various regions and markets. In the case of the refrigerator market, segmentation is very important. This is evidenced by the fact not only related refrigerators, but also high-tech products China has a total of 53 state-level high-tech development zones (Tu, 2011). In sum, marketing communication is not an independent behavior, but is related to all other business or market behaviors. From the anthropological perspective, then, all market behaviors are culture-bound. Buying and selling take place within the culture itself (Hamilton, 1987). In order to match marketing with consumer preferences, purchasing behavior, and product-use patterns, marketers benefit from understanding the market’s cultural environment. Business firms should not focus on cultural differences merely to adjust marketing communication programs to make them acceptable to consumers. This is to suggest that firms should also identify cultural similarities, in order to identify opportunities and modify standard marketing strategies based on marketing communication theory informed with cultural information. Working skillfully with these cultural similarities and differences in the worldwide marketplace is an important marketing task for businesses.

ANTHROPOLOGICAL PERSPECTIVES OF CROSS-CULTURAL COMMUNICATION

In the 1950s, anthropologist Edward T. Hall was beginning a career that would be highly influential in business in terms of cross-cultural communication. From 1950 to 1955, Hall served as director of the

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U.S. State Department’s “Point Four” training program, a training program designed to teach technicians who would be working outside North America. Hall clearly understood the significance of cultural influence on communication effectiveness. Hall built a career in the cross-cultural communication field and eventually wrote several seminal works in business, anthropology, communication, and many other fields (Jordan, 2003). Hall’s practice and influence in the fields of cross-cultural communication and intercultural training have been monumental. He clearly understood that errors in cross-cultural communication could destroy a business deal or a peace agreement. In his first book, The Silent Language, he explained culture as communication, and communication as involving much more than just language. Communication included nonverbal characteristics and had to be understood in its cultural context (Hall, 1981). In later books, he explored the culturally different ways of conceiving space and time, as well as the implications in business practice. Hall’s practice in and theoretical contributions to marketing communication generated great impact and international value in terms of cross-cultural factors. Many other anthropologists, such as Gay Ferraro (2006) among others, have continued Hall’s work on communication in international settings. Anthropologists’ interest in cultural studies grew out of academic purposes but has been extended to business applications as well. The results of anthropological study on culture have been widely applied in various fields of the business world. In the business world, a profound understanding of cultural values in general and specific individual cultural characteristics in particular can lead to greater success in the global market and economy. On the other hand, cultural misunderstandings can be counterproductive for individual development, organizational effectiveness, and profits, because cultural factors influence people’s motives, brand comprehension, attitude, and intention to purchase. Therefore, it is important that we clearly understand the fact that in the global marketplace the effectiveness of communication depends on many factors, however, the primary one among them is the capacity to understand our cultural preferences and how they influence and are influenced by those from other parts of the world (Emery and Tian, 2003; Lillis and Tian, 2009). We argue that the anthropological approach is a very effective way to assess the impact of culture on international marketing communications. We agree with Mariampolski (2006) that culture is important as a heuristic principle for describing and classifying human behaviors, and it is also an analytic concept to be used for explaining how individual choices result from the interpersonal influences and the symbolic universe that delineates everyday life. According to Mariampolski, culture operates on both the material and nonmaterial levels of human experience, serving as the foundation for the behaviors, meanings, and tools of all human collectives. To Mariampolski, cultural tools refer to all of the physical components of a group’s life experiences, which include technology and materials, as well as the fundamental rules, codes, and techniques for accomplishing daily affairs. Cultural meanings refer to the sense-making process how people intellectually or emotionally understand the purposes, implications, and associations that underline all of human behaviors and the tools individuals use in everyday life. Business negotiation, another kind of important format for marketing communication, also necessitates awareness of cultural difference. A recent study by Chang (2003) has concluded that in Chinese society, people emphasize the “zero-sum game” in most of their business competition activities. It is suggested that a successful negotiation should create a “win-win” situation. As Thompson (2001) noted, a true win-win negotiation is one where any agreement reached by negotiators covers most interests of both sides. However, it is very difficult, if not impossible, to improve one party’s outcome, while simultaneously not hurting the other party’s result. As such, honesty could be the first step toward a better agreement with the Chinese business community. To be honest about one’s intentions, goals, and interests can help to build trust and create a positive bargaining zone. Respecting culture difference and being patient in waiting for a response will be the second step toward a successful negotiation. Lastly, but not finally, extra services or practical favors cement friendship and sincerity in business transactions. These two recent studies suggest that in the real business world, firms can profit by studying the Hofstede culture model, which entails accepting cultural differences and practicing those skills in marketing communication practices, enabling them to gain the expected or better outcomes. There are

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innumerable factors that affect the international business environment but a fundamental precondition of any successful international business enterprise is effective communication, which more or less involves the businessperson’s awareness of other cultures. As such, cross-cultural problems definitely provide greater challenges and opportunities for business firms in the 21st century, even though these challenges might not be new to the marketing communication field itself. The effectiveness of international marketing communication can be strengthened when businesspeople become aware of cultural differences and their impact on communications.

CONCLUSION AND SUGGESTIONS TO CHINA MARKETERS

The importance of the success of marketing communication is obvious in progressively more competitive international markets. Marketing communication strategies and skills determine the profitability of business organizations. Culture is one of the key factors that lies deeply rooted in the life of each individual and exerts tremendous influence on a variety of human behaviors. Cultural difference can have a profound impact on outcomes that are vitally important to the success of a business deal. From a practical standpoint, building an awareness of both visible and invisible manifestations of culture is a critically important first step in determining how to effectively conduct marketing communications internationally and cross-culturally. Cross-cultural communication is becoming even more important for the Chinese marketers in this new century since China planned to more widely open its market to the world and export more of its service and products to the world market. It is suggested that Chinese business leaders are better prepared for cross-cultural communication and put it at their corporate strategic level for marketing China and China marketing. It is true that in today’s business world, whoever masters cross-cultural communication strategies and skills will win the competition. While international business is often conducted through various means from culture to culture, marketing communications can be enhanced when managers are cross-culturally trained to be aware of areas likely to create communication roadblocks and conflict. International business in general is enhanced when people from different cultures find new approaches to solve problems by creating solutions that combine cultural perspectives and examine the problem at hand from each other’s differing perspectives. Moreover, it is key for cross-cultural business leaders to understand one’s business partners well enough to make cultural adjustments to solve the conflicts (Hooker, 2008). Anthropologists are professionally trained to be highly sensitive to cultural differences; the result of anthropological study on culture has been widely applied in various fields in the real business world. It is suggested that anthropological approaches offer highly effective applications and solutions toward the understanding of cross-cultural issues in international marketing communication.

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Effects of Coupons on Consumer Purchase Behavior: A Meta-Analysis

Somjit Barat Pennsylvania State University Mont Alto

Lilly Ye Frostburg State University

INTRODUCTION

Coupon has been widely used by marketers as an important promotional tool in many consumer product categories. In the past few years, consumers increased their use of coupon as a cost-saving measure in a turbulent economic environment (Spiekermann et. al, 2011). In 2009, the coupon use in the U.S. set a new record, as consumers redeemed $ 3.3 billion worth of coupons, a 27% leap from 2008 (Webley, 2011). We can hardly overemphasize the importance of coupons as a medium of advertising/marketing and the role it plays in our everyday lives. Retailers and manufacturers issue coupons with the main intention of boosting sales either through higher purchase by existing customers or enticing non-customers into trial purchase or both. In recent years, coupon has also been used as an important tool in marketing campaigns, and promotional campaigns featuring retailer-customized coupons (for the best customers only and customized to fit their preferences) has been increasingly used to build customer loyalty. Venkatesan & Farris (2012) suggested that the customized coupons increase the effectiveness of marketing promotion and lead to positive financial performance. The topic of ‘coupons’ has been investigated extensively by marketing scholars over the years, and from very divergent perspectives (Chatterjee et. al, 2000; Cheema et. al, 2002; Heilman, 2002; Chiou-Wei & Inman, 2008). While some studies have investigated topics such as attitude towards coupon, coupon enjoyment, embarrassment from using coupons etc. as antecedent variables, others studies have considered outcome variables such as coupons redemption, redemption frequency, brand loyalty, brand competitiveness, purchase intention, perceived purchase risk, total amount spent etc.. Moreover, coupons differ from one another in type (cents off, buy-one-get-one free or a percentage off the ticket-price), method of distribution (by mail, newspaper insert, Internet, handheld device or with another product) and

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their dispensing source (point-of-sale receipt/coupon printer at the check-out counter or coupon dispensers at the aisle). Finally, the effect of coupon on the various behavioral aspects mentioned above are, to some extent, moderated by the method of coupon distribution, type of coupon issued and the value of the coupon redeemed. Such divergent perspectives present us with a rich repository of data and complex relationships among several antecedent and dependent variables in studies spanning across several decades. The relationship among the variables is made even more complicated by the diversity and range of moderating factors that the researchers have investigated. However, the widespread use of coupons in marketing practice notwithstanding, there has been no systematic attempt to review, analyze and take stock of extant literature to comprehend the nature of relationship among the plethora of antecedents and outcomes of coupon usage. To address this gap, we conduct a meta-analysis to evaluate the findings from previous published research and seek for trends and patterns in the data that might be invisible from a cursory look at the literature. We are especially interested in investigating how coupon characteristics and research methodology might influence the relationship between coupon perceptions and coupon usage. In the following section, we discuss the relevance of meta-analysis in the present context. Then we review the coupons literature to define our analytical domain, and follow it up with a discussion of the methodology. After we present our findings, we conclude the article with discussions of our results and managerial implications emanating from the research.

WHY META ANALYSIS

Conventional knowledge suggests that coupons have a positive impact on sales prospects of the promoted product. We investigate whether there is broad consensus among different researchers as to the impact of coupons on purchase behavior. We also speculate that the effect of coupons (if present) on purchase behavior may be moderated by different factors such as the method of distribution of coupons, the country in which data is gathered, type of product on which a coupon is issued, type of study conducted, type of data collected and the type of coupon that is redeemed. In the backdrop of the above research streams, meta-analysis is an accepted and popular analytical tool that aims to bring studies, sometimes with notably divergent—if not contradictory—results, under a common conceptual framework in a heavily-researched field (such as coupons, for example). Our basic goals are twofold: comparing and combining (Hall et. al, 1995). We hope to contribute to extant literature in the following ways: 1) consolidate findings from past research and better understand in what direction such research is headed for, 2) provide meaningful interpretation of the divergent customer responses and categorize them for easy analysis, 3) analyze, assimilate and consolidate the array of antecedent, dependent and moderator variables in the body of research, 4) offer some framework for the entire gamut of past research on coupons

DATA COLLECTION

For the current study, we focus only on the post-1980 years. We collected data using the following procedure: 1) first, we conducted an electronic search with key words (coupon, promotion etc.) on major databases (ABI Inform, Business Source Premier, Science Direct etc.) spanning across disciplines such as marketing, consumer behavior, sales and promotion, advertising, and etc.; 2) We further conducted search in major journals (Journal of Marketing; Journal of Marketing Research; Journal of the Academy of Marketing Science; Journal of Advertising; Journal of Advertising Research; Journal of Consumer Research; Journal of Current Issues and Research in Advertising; Journal of Personal Selling and Sales Management, and etc.); 3) We also sent requests for working papers through newsgroups (e.g. ELMAR, alt.consumers); 4) All these efforts were followed by a manual search of the above journals mentioned above in order to doubly make sure that we did not miss any relevant study. 5) Finally, we wrote to eight renowned authors (e.g. Bawa, Lichtenstein) in the field to make sure that no similar meta-analysis exists

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or was under review. 6) We also obtained correlations from authors who had not provided such information in their studies by asking possible working papers related to coupon. We received responses from four of the eight authors we contacted, and incorporated pertinent information in our study. We eliminated studies that either did not conform to our broad framework and/or did not provide the relevant statistics required in conducting the meta-analysis. As a result, our effective sample size was narrowed down to 32 studies with 67 effect sizes. Overall, we believe that we performed an exhaustive search of the literature for the purpose of conducting this meta-analysis.

CONCEPTUAL FRAMEWORK

Not only are coupons one of the most popular and effective ways of promoting products, but also their types, methods of distribution and sources has evolved over the last several years. Consequently, what initially started off as a simple inducement for repeat purchases or as an encouragement for new product trials has been transformed to a vast and powerful industry worth several billions of dollars each year. The literature review brings up several antecedents, consequences as well as moderators of coupon usage. For example, while some authors (Mittal, 1994; Reibstein, 1982; Aggarwal, 2003) used longitudinal data, others (Chapman et. al, 1997; Heilman et. al, 2002; Amin et. al, 1993) used cross- sectional data. Authors such as Raghubir (1998) based their research on both cross-sectional and longitudinal data. Generally speaking, an individual reacts to the same coupons differently with the passage of time and with more exposure to coupons. On the other hand, the same individual might react differently to different types of coupons at the same point of time. Extant literature has looked at various effects of coupons on customer purchase behavior (Nevo et. al, 2002; Raghubir, 1998; Taylor, 2001; Cronovich et. al, 1997; Bawa et. al, 1997; Gould, 1997; Leone et. al, 1996; Srinivasan et. al, 1995). These studies indicate that ‘unexpected’ coupons are generally associated with an increase in purchase and the number of unplanned purchases on the trip (Heilman et. al, 2002). Another study predicts that unexpected price changes affect the consumer’s ‘real’ income in a positive way (i.e. an increase in real income leads to a hike in his/her discretionary spending on budgeted items. Cheema et. al, 2002). Chatterjee et. al (2000) investigated consumer switching patterns between national- level and store brands in response to ‘cross-coupons’. In another study titled “Coupon Value: A Signal for Price” (Raghubir, 1998), the author argues that a customer generally associates a higher discount with a higher price of the product and that, this effect is contingent upon availability of secondary sources of information. Research also shows that unanticipated price increases suppress consumers’ tendencies to purchase discretionary goods, while unanticipated price decreases enhance it (Janakiraman et. al, 2002). Based on the above discussion, we characterize the consumer’s behavior towards the coupon as the main dependent variable. We also argue that behavior towards coupons can be operationalized using three main constructs: coupon usage, product perception and product purchase (by redeeming the coupon). Earlier authors have conceptualized coupon usage, for example, by using proxy variables such as coupon redemption; product perception has been conceptualized by measuring proxy variables such as brand perception and product attitude. Purchase behavior has been measured using proxy variables like purchase intention. On the other hand, based on the review of extant literature, we define our independent variable as perception towards coupon—which can be operationalized using three constructs: coupon attitude, coupon perception and coupon knowledge. According to the literature, coupon attitude is measured using proxy variables such as coupon proneness, and coupon perception is measured using coupon value perception and coupon value consciousness. Finally, coupon knowledge is measured by items such as price knowledge. Therefore our meta-analysis is based on the following conceptual model.

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FIGURE 1 CONCEPTUAL MODEL

Perception towards coupons influences behavior towards coupons moderates

Contextual and/or measurement constructs

Potential Contextual Moderators In-Store v/s Media Distribution Distribution method has been considered one of the most influential factors for coupon use, and received much attention in prior research (Lembeck, 1977; Reibstein et. al, 1982). Media coupon includes free-standing inserts, newspaper, direct mail, in/on pack, magazines, newspaper etc. Compared to media- distributed coupon, in-store coupon is relatively new viz. electronic coupon, peel-off coupon on product packaging, coupons at shopping aisles and/or check-out counters. Since an in-store coupon is unexpected, consumers spend less than originally planned. The surprise saving elevates the consumers’ mood, and encourages them to redeem their coupons (Heilman et. al, 2002). Based on the above discussion, we suggest the following hypothesis:

H1: There exists a strong relationship between coupon perception and behavior towards the coupon when in-store coupons are used.

Grocery v/s Consumer Durable Items Over the last two decades, coupon research has expanded to include consumers’ purchase of non- durable grocery goods (Putrevu et. al, 2001) as well. No empirical research states the differential impact of these two types of coupon; however, since grocery coupon are more readily available than consumer durables coupons (Barat, 2004), consumers are more likely to use grocery coupons; this leads us to the second hypothesis:

H2: The relationship between coupon perception and behavior towards the coupon is stronger when grocery (as opposed to non-grocery) coupons are used as the basis of study.

Manufacturer v/s Retailer coupons Coupons can also be broadly classified into manufacturers’ coupon and retailers’ coupon. One key difference between the two is the validity period. Retailers’ coupons are normally valid for one week, while manufactures’ coupons are valid much longer (Spears, 2001). We, therefore, argue that manufacturer coupons will be preferred over retailers’ coupons for redemption purposes, which provides motivation for our third hypothesis:

H3: Manufacturers’ (as opposed to retailers’) coupon will have stronger moderating effect between coupon perception and behavior towards coupon.

U.S. v/s non-U.S. study Despite the popularity of coupons as a promotional tool in the US, they are not as common in several other countries because of legal, economic, and cultural differences (Kashani et. al, 1990). Although some

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studies examined the differences among different ethnic groups in North America in response to coupon promotion, little attention was given to non-U.S. countries (Huff et. al, 1998). This motivates our fourth hypothesis:

H4: There exists a stronger relationship between coupon perception and behavior towards coupons in the U.S. market as opposed to non-US markets.

Cents off versus % off Coupon Shoemaker and Tibrewala (1985) suggested that coupon face value has a positive impact on consumer purchase, especially new customers (Garretson et. al, 1999). The major types of coupon are cents-off and percent-off coupon. Compared with percent- off coupon, cents-off coupon offers more certainty about the possible saving, because consumers do not necessarily need to know the original price to calculate the possible saving. This may lead to higher possibility of redeeming the coupon; therefore, we frame our fifth hypothesis as:

H5: A stronger relation between coupon perception and behavior towards coupon exists when cents- (as opposed to percent-) off coupons are used.

Potential Measurement Moderators Longitudinal versus Cross Sectional Study Longitudinal studies measure coupon effects over a period of time, while cross-sectional studies pertain to coupons across industries. In a cross-sectional study, measurements may be influenced by seasonal and other situational factors, whereas in a longitudinal study, measurements are carried out over a long time span and chance events would tend to average out the effects (Ailawadi et. al, 2001). Since most studies are cross-sectional in nature (Putrevu et. al, 2001), we are motivated to formulate our sixth hypothesis as follows:

H6: Relation between perception towards coupons and behavior towards coupons will be stronger when the study involves cross-sectional data (as opposed to longitudinal date, or a mix of both).

Subjective v/s Objective Study We have classified moderators into subjective and objective depending on the nature of the outcome variable in each study. For example, outcomes such as coupon redemption rate or frequency of store visit (which are comprehensively measurable), then we categorize them as objective measures. On the other hand, if the outcome is not precisely measurable (i.e. embarrassment from using coupons or family attitude towards using coupons), then we categorized those moderators as subjective. Since objective moderators can be measured more precisely than their subjective counterparts, we expect that objective outcomes will have a stronger effect on the relation between the independent and dependent variables, providing motivation for our next and last hypothesis:

H7: Objective (as opposed to subjective) outcomes will have a stronger effect on the relation between the perception towards coupons and behavior towards coupons.

We summarized the constructs used in the study in Table 3 and Table 4. Table 3 demonstrates all the moderator constructs and their respective items, and Table 4 shows categorization of the independent and dependent constructs, are exhibited in the Appendix.

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METHODOLOGY

First, we coded the studies and checked those for homogeneity by conducting the Fisher’s z–test. The ‘Q’ value turned out to be significant (Q= 3760.96 and χ2 = 34.17 for d.f. 20). This implied that we had evidence to conduct a meta-analysis. We adjusted the raw effect sizes for reliability. Then we ran a simple linear regression with all independent, dependent and moderating variables on adjusted effect size in order to find out if any of the factors had significant effect on the direction and magnitude of consumer decision. Finally, we ran bivariate correlation analyses for each pair of ‘raw’ correlation coefficient and the moderating variables (results in Table 2) in order to test the hypotheses we laid out earlier. Results of t-test (Table 1) indicate that both the independent variables coupon attitude (p=0.04) and coupon knowledge (p=0.01) are significantly correlated to the adjusted effect size, whereas the dependent variable coupon use (p=0.00) is also significantly correlated to the adjusted effect size. Given that half of our main constructs are significantly correlated to the adjusted effect size (the dependent variable) and the fact that the model as a whole is significant, we feel reasonably comfortable as to the conceptual robustness of our model. Table 2 shows the correlation matrix of the variables.

RESULTS

We do not find support for H1, H2, H4, H5 and H6, while there is no evidence to reject H3 and H7. Coupons distributed through the store are not significantly correlated to the adjusted effect size. Nor do we find support for effect of coupons on grocery items in affecting the relation between perception towards coupons and behavior towards coupons. In agreement with our third hypothesis, manufacturer (as opposed to retailer) coupons appear to have a significant impact on the relation between perception towards coupons and behavior towards coupon. Our fourth hypothesis states that US-based studies exhibit a stronger relationship between the above-mentioned independent and dependent variables as compared to non-US based studies, but the results fail to support the hypothesis. Our fifth hypothesis pertaining to cents off (as opposed to percent-off) coupon, as expected bear a strong impact on the relation between the two independent variables but fails to find support due to non-significance of the respective beta coefficient, as is the case with our sixth hypothesis (longitudinal v/s cross-sectional). Finally, results in table 1 indicate that objective outcomes (p=0.02) have a significant effect on the relationship between perception towards coupon and behavior towards coupon, providing support.

DISCUSSION AND MANAGERIAL IMPLICATIONS

The construct of coupon perception, as mentioned in Table 4, comprises of items such as coupon value perception and coupon value consciousness. Even though all these items measure perception of the coupon, yet all of them are very subjective in nature. In other words, there might have been a gap between what the researcher intended to measure and what the respondents actually revealed. This might have led to its effect being obscured. On the other hand, as far as knowledge about coupons is concerned, respondents might consider themselves experienced but in reality, their level of ‘familiarity’ or ‘knowledge’ may not be as strong as to have a significant impact on the effect size. As far as the moderator constructs are concerned, ideally we would have liked to consider studies based on each method of distribution separately (mail, Internet etc.), but we were unable to do so because of lack of an acceptable number of studies in each category. We surmise that, when we grouped different methods of distribution together to form a single construct, their moderating power got weakened. This can be accounted for by the following: while coupons distributed through the media may be more readily available than in-store coupons, some customers may still prefer in-store coupons, which do not need to be preserved in advance before its redemption date. In other words, the positive impact of the coupon distributed through media is somewhat weakened by redemption incentive for in-store coupons.

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With regard to country of study, however, only three of the thirty-two studies included in our analysis deal with non-US data. Naturally, the impact of country of study was expected to be significant. On the other hand, a study can be longitudinal, cross-sectional or a mix of both (Raghubir, 1998). Longitudinal data are very likely to get ‘contaminated’ by elements of cross-sectional data simply because the number of family members, buying pattern etc. change over time. Therefore, it is difficult for us to isolate the effects of time from the cross-sectional aspect in measuring behavior in response to coupons. This helps us explain why the moderating effects of the variables in the study failed to produce a significant impact on the effect size. As far as types of coupons are concerned, cents off coupon has the advantage that it is easier for the customer to calculate the amount of savings; on the other hand, percent off coupon offers the customer higher discounts for higher prices, but the customer does not necessarily calculate the amount of savings from percent-off coupons. This might explain why different researchers got different/inconsistent results in terms of the moderating effects of type of coupon discount on effect size. In terms of outcome constructs, ‘coupon utilization’, as we have seen, is operationalized by redemption frequency, number of redemptions etc. (Table 4). Although the scales of these items are not necessarily the same, yet they all basically measure how coupon is used by the individuals. This may be one of the reasons why the overall effect of coupon utilization on effect size is significant. The ‘purchase behavior’ is composed of several items out of which, only ‘product trial’ and ‘number of items bought’ are direct indications (measures) of the customer making a purchase. The other items (perceived purchase risk, stockpiling etc.) are no more than remote surrogate measures. For example, just because a person has a purchase intention does not necessarily imply that he/she will actually buy the product by redeeming the coupon. From this standpoint, therefore, there appears to be a possibility that such items might be inaccurate measures of the outcome construct ‘purchase’, leading to non-significant relation with the effect size. This study has several managerial implications. First, our research may help practitioners understand whether the general trend (if any) of purchase in response to such promotions has undergone any significant change over the last couple of decades. For example, coupons on convenience products (grocery, for example as in Banwari, 1994) might influence purchase behavior in a way different from that of consumer durables (Aggarwal, 2003). Furthermore, a broad perspective on how the consumer perceives coupons and how their behavior may or may not be moderated by certain issues will make the retailer/manufacturer of coupons more knowledgeable and enable retailing managers to design a more effective marketing strategy. This, in turn, will lead to better use of marketing dollars. For example, if research reveals that primary data is not as reliable as secondary data or that, neither can have a significant impact on the effect size, then coupon- issuers can think of alternative ways as to how they can capture data on customer response. In addition, the study is an indication for both marketing researchers and practitioners in that they should pay more attention to standardizing scales for measuring the impact of coupons on purchase behavior, and they should focus on objective scales to measure the effectiveness of coupon use.

LIMITATIONS AND FUTURE RESEARCH

Our obvious limitation was the relatively smaller number of studies that we found relevant for our analysis, despite our best efforts. Nevertheless, there have been past instances of meta-analyses performed with even fewer studies (Sultan et. al 1990 with 15 articles; Szymanski et. al 1995 with 16 studies; Dant et. al 1996 with 17 studies etc. in comparison to ours, with 22 studies). Thus, future research might circumvent this issue by broadening the horizon of research to include other promotional tools (such as paper advertisements, televisions commercials and so on). Such a step might not only add to the number of published studies but also bring in more dimensions as far as contextual and/or moderating factors are concerned. This has the potential of making the analysis more robust and richer, if not resulting in a higher number of findings that are significant. Attempts can also be made to include more studies from

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non-US countries. Another contribution to this study might be to include services and test if the results show any substantial change in terms of effect on purchase behavior.

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APPENDIX

TABLE 1 LINEAR REGRESSION RESULTS

Standardize Colinearity d Statistics Unstandardize Coefficient Model Variables d Coefficients s t Sig. Std. B Error Beta Tolerance VIF 1 (Constant) .33 .32 1.02 .31 0.11 8.53 IV coupon attitude .38 .18 .59 2.13 .03 0.15 6.38 IV coupon perception .26 .18 .35 1.45 .15 0.17 5.65 IV coupon knowledge .42 .17 .55 2.45 .01 0.16 6.03 DV coupon use .49 .15 .75 3.27 .00 0.21 4.75 DV product perception .01 .17 .01 .06 .94 0.19 5.18 DV purchase -.02 .15 -.03 -.18 .85 0.34 2.89 country of study .09 .12 .11 .79 .43 0.27 3.68 grocery items .15 .11 .24 1.36 .17 0.19 5.16 consumer durable .27 .18 .32 1.51 .13 0.18 5.31 manufacturer coupon -.59 .15 -.83 -3.78 .00 0.17 5.75 longitudinal coupon -.23 .16 -.30 -1.48 .14 0.34 2.88 discount type % off -.02 .1 -.03 -.13 .89 0.15 6.57 coupon cents off coupon .13 .12 .19 1.08 .28 0.28 3.46 distr method media -.27 .16 -.36 -1.64 .10 0.15 6.63 distributed thru store -.03 .12 -.05 -.28 .77 0.24 4.09 outcome subjective -.53 .22 -.66 -2.43 .01 0.12 8.19 Significant values (P<0.05) are indicated in bold

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TABLE 2 CORRELATION MATRIX FOR INDEPENDENT, DEPENDENT AND MODERATING VARIABLES

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 IV coupon attitude 1 IV coupon perception -.55 1 IV coupon knowledge -.53 -.31 1 DV coupon use -.12 -.18 .21 1 DV product perception .28 -.10 -.18 -.47 1 DV purchase .05 -.01 .01 -.55 -.29 1 country of study -.36 .28 .09 .08 -.14 -.06 1 grocery items .15 .09 -.17 -.19 .19 .13 .27 1 consumer durable -.14 .19 -.07 -.13 -.04 .08 .23 -.41 1 manufacturer coupon -.22 -.13 .29 .41 -.23 -.22 .32 .00 -.13 1 longitudinal coupon .09 .14 -.28 .03 -.07 .03 .26 .01 .52 -.08 1 primary data source .25 .10 -.28 -.30 .15 .12 -.25 .19 .14 -.70 -.12 1 discount type % off -.48 .19 .29 .07 -.15 .01 .32 -.21 .05 .34 -.17 -.61 1.00 coupon distribution method -.36 -.09 .43 .42 -.21 -.27 .29 -.16 -.10 .62 -.31 -.41 0.39 1 media distributed thru store .12 .14 -.20 -.30 .01 .25 -.08 .09 -.04 -.08 .13 -.01 0.12 -.46 1.00 outcome subjective .25 .10 -.28 -.30 .15 .12 -.25 .19 .14 -.70 -.12 1 -.61 -.41 -.01 1

FIGURE 1 DISTRIBUTION OF CORRELATIONS

10 Frequency

Mean = 0.2972 Std. Dev. = 0.2576 N = 67 0 -0.25 0.00 0.25 0.50 0.75 1.00 effect size

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TABLE 3 MODERATOR CONSTRUCTS

Construct Classification Coupon Media: magazine distribution, Sunday supplement, FSI, direct mail, Distribution electronic Method In- Store: checkout counter, aisle dispenser, ads at store (in-store) Country of US sample study non-US sample

Type of Grocery product Consumer durables Issuer Manufacturer Retailer Type of study Longitudinal undertaken Cross-sectional

Type of data Primary: face-to-face interview, shopping lists, mall intercept, mail survey Secondary: scanner panel data, firm reports etc.) Type of Cents off discount Percent off

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TABLE 4 FRAMEWORK IN CLASSIFICATION OF INDEPENDENT AND DEPENDENT CONSTRUCT

Category Sub Category Items Operationalization Independent 1.1 Attitude Toward Coupon Attitude How consumer’s behavior 1. Coupon Attitude Coupon Family Coupon Attitude guided by attitude towards Embarrassment from using coupon in general Coupon 1.2 Coupon Proneness Coupon proneness Coupon Enjoyment 2. Coupon Perception 2.1 Coupon Value Coupon Face Value Perception How coupon valued and Perception Coupon Discount Perception consumer’s perception of value Coupon Discount Rate influences behavior Perception 2.2 Coupon Value Coupon Value Conscious Consciousness View Coupon Favorably 3. Coupon Knowledge 3.1. Price Knowledge Price sensitivity What consumer knows about Price perception coupon and coupon related 3.2 Coupon Knowledge Coupon distribution preference features. Prefer Coupon Type 3.3 Product Knowledge Product Familiarity Dependent 1.1 Coupon Usage Level of Use Coupon Measure how consumer decides 1. Coupon Use Frequency of Coupon Use to actually use coupon. Coupon Intensity 1.2 Coupon Redemption Redemption Value No. of Redemptions Frequency of Redemption 2. Product Perception 2.1 Brand Perception Brand Loyalty Effect of Coupon on brand Brand Competitiveness perception Brand Switching 2.2 Product Attitude Product Preference Likelihood to try the product 3. Purchase Behavior 3.1 Purchase Intention Likelihood to buy Effect on purchases behavior of Perceived purchase risk consumer due to coupon. 3.2. Actual Purchase Total amount spend Product Trail No. of Item bought Repeat Purchase Purchase acceleration Stockpiling

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