2005 AMA Winter Educators' Conference

2005 AMA Winter Educators’ Conference Marketing Theory and Applications

Editors Kathleen Seiders, Boston College Glenn B. Voss, North Carolina State University

Track Chairs Jeff Inman, University of Pittsburgh Cheryl Nakata, University of Illinois at Chicago K. Sivakumar, Lehigh University Paul Bloom, University of North Carolina, Chapel Hill Steve Hoeffler, University of North Carolina, Chapel Hill Ronald C. Goodstein, Georgetown University Brian Wansink, University of Illinois David Henard, North Carolina State University Mitzi Montoya-Weiss, North Carolina State University Sandy Jap, Emory University Rick Andrews, Louisiana State University Danny Weathers, Louisiana State University Peter Golder, New York University Mike Ahearne, University of Connecticut Eli Jones, University of Houston Jagdip Singh, Case Western Reserve University Deepak Sirdeshmukh, North Carolina State University Linda Ferrell, University of Wyoming O.C. Ferrell, Colorado State University Rebecca Slotegraaf, Indiana University Rosann Spiro, Indiana University

Volume 16

Printed in the United States of America

Publications Director: Francesca Van Gorp Cooley Project Coordinator: Charles Chandler Cover Design: Jeanne Nemcek Typesetter: Marie Steinhoff ISSN: 1054-0806 ISBN: 0-87757-314-X

All rights reserved. No part of the material protected by this copyright notice may be reproduced or utilized in any form or by any means, including photocopying and recording, or by any information storage or retrieval system without the written permission of the American Marketing Association. Preface and Acknowledgements

The theme for the 2005 Winter Marketing Educators’ Conference is “Understanding Diverse and Emerging Markets, Technologies, and Strategies.” The multicultural marketplace is the new mainstream and sophisticated marketing technologies provide a better understanding of buyer behavior and the ability to reach diverse segments more efficiently. This year’s conference includes a variety of innovative special sessions presenting key thought leaders and paper sessions addressing research themes that are critical to marketing scholars and educators. Many dedicated individuals contributed to this conference. In particular, we acknowledge the outstanding work of the Conference Track Chairs, whose stellar performances produced a truly distinguished program. Reinforcing the role of the Winter Educator’s Conference as a premier research conference, the Track Chairs worked to shape high-level special sessions and maintained a lofty bar for competitive paper sessions. The Conference Track Chairs are as follows:

Consumer Behavior Jeff Inman, University of Pittsburgh Global Marketing: Cheryl Nakata, University of Illinois – Chicago K. Sivakumar, Lehigh University Marketing and Society Paul Bloom, University of North Carolina – Chapel Hill Steve Hoeffler. University of North Carolina – Chapel Hill Brand Marketing and Communications Ronald C. Goodstein, Georgetown University Brian Wansink, University of Illinois – Urbana-Champaign Marketing, Technology, and Innovations David Henard, North Carolina State University Mitzi Montoya-Weiss, North Carolina State University Inter-Organizational Issues Sandy Jap, Emory University Marketing Research Rick Andrews, Louisiana State University Danny Weathers, Louisiana State University Marketing Strategy Peter Golder, New York University Selling and Sales Management Mike Ahearne, University of Houston Eli Jones, University of Houston Services & Relationship Marketing Jagdip Singh, Case Western Reserve University Deepak Sirdeshmukh, North Carolina State University Instructional Innovations Linda Ferrell, University of Wyoming O.C. Ferrell, Colorado State University Special Interest Group Rebecca Slotegraaf, Indiana University Rosann Spiro, Indiana University

The program reflects the important contributions of the conference reviewers (listed on pp. iv-vii). All those who submitted papers and special session proposals are to be thanked, as are members of the Academic Council and AMA journal editors whose leadership in creating the featured Conference Special Sessions was instrumental. We are exceedingly grateful to Denise Smart, AMA Academic Council President, for her advice and support throughout the conference planning process. Also, we acknowledge the significant implementation efforts of the AMA staff: Nicole Morris, our Program Manager; Charles Chandler; Francesca Van Gorp Cooley; and Pat Goodrich. Thanks also to Marie Steinhoff for typesetting the proceedings. With deep appreciation, we thank all contributors for making this a conference that is worthy of our field.

Kathleen Seiders Glenn B. Voss Boston College North Carolina State University

iii 2005 AMA Winter Educators’ Conference List of Reviewers

Mary J. Bitner, Arizona State Bruce Clark, Northeastern A University University Manoj Agarwal, Binghamton Carolyn Bonifield, University of Lucette B. Comer, Purdue University Vermont University Sanjeev Agarwal, Iowa State Greg Bonner, Villanova University Robert Cosenza, University of University Doug Bowman, Emory University Mississippi Shanita Akintonde, Columbia Kevin Bradford, University of Nicole E. Coviello, University of College Notre Dame Auckland Joe Alba, University of Florida Michael Brady, Florida State Bill Cron, Texas Christian Terri Albert, University of Hartford University University Dana Alden, University of Hawaii Steve Brown, University of Lawrence Cunningham, University Alan Andreasen, Georgetown Houston of Colorado – Denver University Tom Brown, Oklahoma State Kerry P. Curtis, Golden Gate Kersi Antia, University of Western University University Ontario Eileen L. Bridges, Kent State John Antil, University of Delaware University D Syed Anwar, Western Texas A&M Nancy Buchan, University of University Wisconsin – Madison Peter Dacin, Queens University Neeraj Arora, University of Margo Buchanan-Oliver, Kofi Dadzie, Georgia State Wisconsin University of Auckland University Zeynep Arsel, University of Cheryl Buff, Siena College Robert Dahlstrom, University of Wisconsin Al Burns, Louisiana State Kentucky Kwaku Atuahene-Gima, City University Rajiv Dant, Clarkson University University (Hong Kong) Jim Burroughs, University of Prakash Das, Queen’s University Craig Atwater, Temple University Virginia Kirk Davidson, Mount St. Mary’s Anne-Francoise Audrain, Rouen Ronald Bush, University of West College School of Management Florida Marion Debruyne, Emory Jon Austin, Cedarville University University Catherine Axinn, Ohio University David Dekker, University of C Nijmegen Susan Cadwallader, Texas A&M Benedict Dellaert, Universiteit B University Maastricht Julie A. Baker, University of Richard Caldarola, American Carol Demoranville, Northern Texas – Arlington Intercontinental University Illinois University Sridhar Balasubramanian, Meg Campbell, University of Kalpesh Desai, University of University of North Carolina Colorado Buffalo Soumava Bandyopadhyay, Lamar Les Carlson, Clemson University Sameer Deshpande, University of University Forrest Carter, Michigan State Lethbridge Yeqing Bao, University of University Andrea Dixon, University of Alabama Goutam Challagalla, Georgia Cincinatti Fleura Bardhi, University of Institute of Technology Susan Douglas, New York Nebraska – Lincoln Fiona Chan, University of Hong University Michael Basil, University of Kong Kent Drummond, University of Lethbridge Rajesh Chandy, University of Wyoming Boris Becker, Oregon State Minnesota Sean Dwyer, Louisiana Tech University Joseph Chang, University of Joseph Bellizzi, Arizona State Regina E University West Amar Cheema, Washington Ike Ekeledo, Northeastern Illinois Neeraj Bharadwaj, University of University Texas University John Cherry, Southeast Missouri Anita Elberse, Harvard University Sundar Bharadwaj, Emory State University University Reham Eltantawy, Florida State Lawrence B. Chonko, Baylor University University

iv Sunil Erevelles, University of Xin He, University of Pittsburgh Harold Kassarjian, University of North Carolina – Charlotte Tim Heath, Miami University California – Los Angeles Sevgin Eroglu, Georgia State Geraldine R. Henderson, Carol Kaufman-Scarborough, University University of Texas – Austin Rutgers University Neil Herndon, University of Patrick Kaufmann, Boston F Missouri – Columbia University Louise Heslop, Carleton University Erdener Kaynak, Penn State Lawrence Feick, University of Janet Hoek, Massey University University Pittsburgh Susan Hogan, Emory University Jeremy Kees, University of Reto Felix, University of Hartmut Holzmueller, University of Arkansas Monterrey Dortmund Stephen Keysuk Kim, Oregon State Karen Fernandez, University of Lee Kam Hon, Chinese University University Auckland of Hong Kong Adwait Khare, University of Rosie Ferraro, Duke University Heather Honea, San Diego State Houston Linda Ferrell, University of Mark Houston, University of Jaehwan Kim, University of Wyoming Missouri Colorado Leslie Fine, Ohio State University Carol Howard, Oklahoma City Noreen Klein, Virginia Tech Bob Fisher, Western Ontario University University Carlos Flavian, Universidad de Frederick Hoyt, Illinois Wesleyan Thomas Klein, University of Zaragoza University Toledo Thomas Foscht, University of Graz Yili Huang, University of Illinois – Yu Jun Koernig, University of Ellen Foxman, Bentley College Chicago Illinois – Chicago Dan Freeman, University of John Hulland, University of Praveen Kopalle, Dartmouth Delaware Pittsburgh College Frank Fu, University of Houston Mike Hutt, Arizona State Scott Koslow, University of University Waikato G Bruce Hutton, University of Robert V. Kozinets, Northwestern Larry Garber, Appalachian State Denver University University Michael Hyman, New Mexico Ram Krishnan, California Nitika Garg, University of State University Polytechnic State University Mississippi Hyojkin Kwak, Drexel University Mrinal Ghosh, University of I Michigan Subin Im, San Francisco State L Joan Giese, Washington State University Dan Ladik, Suffolk University University Scott Inks, Ball State University Michel Laroche, Concordia Mary Gilly, University of Koert van Ittersum, Georgia University California – Irvine Institute of Technology Debra Laverie, Texas Tech Charlotte Greig, Golden Gate Vish Iyer, University of Northern University University Colorado Ruby Lee, University of Nevada Andy Grein, City University of James H. Leigh, Texas A&M New York University Raj Grewal, Penn State University J Tom Leigh, University of Georgia Stephen J. Grove, Clemson Cheryl Jarvis, Arizona State Katherine Lemon, Boston College University University Patrick Lentz, University of Julie Guidry, Texas A&M Rama Jayanti, Cleveland State Dortmund University University Steven V. LeShay, Wilmington Devon Johnson, Northeastern College H University Lewis Lim, Indiana University Chris Joiner, George Mason Charles Lindsey, Indiana University John Hadjimarcou, University of University Marilyn Jones, Bond University Texas – El Paso Susan Lloyd, American University Som Hanvanich, Xavier University Terry Loe, Kennesaw State Angela Hausman, University of K University Texas – Pan American Brian Lofman, Ramapo College of Rajiv Kashyap, William Peterson New Jersey University

v Ritu Lohtia, Georgia State Venkatapparao Mummalaneni, University Virginia State University Q Peggy Sue Loroz, Gonzaga Patrick Murphy, University of William Qualls, University of University Notre Dame Illinois Xueming Luo, University of Jim L. Murrow, Drury University Texas – Arlington R N Priya Raghubir, University of M Kent Nakamoto, Virginia Tech California – Berkeley Doug MacLachlan, University of Om Narasimhan, University of Priyali Rajagopal, Ohio State Washington Minnesota University Humaira Mahi, Michigan State Ed Nijssen, University of Nijmegen Deva Rangarajan, Vlerick-Leuven University Rakesh K. Niraj, University of Gent, Belgium Alan Malter, University of Arizona South California Peter Rea, Baldwin-Wallace Elliot Maltz, Willamette University Thomas G. Noordewier, University College Detelina Marinova, Case Western of Vermont Kristy Reynolds, Louisiana State Reserve University Patricia Norberg, Quinnipiac University James Maskulka, Lehigh University Su Bom Rhee, Santa Clara University University Charlotte H. Mason, University of Greg Rich, Bowling Green State North Carolina O University Charla K. Mathwick, Portland State Gillian Oakenfull, Miami Keith Richards, University of University University Houston Shashi Matta, University of Matthew P. O’Brien, University of Nora J. Rifon, Michigan State Southern California Arizona University Debbie McAlister, Texas State Elie Ofek, Harvard University Ed Rigdon, Georgia State University – San Marcos Shintaro Okazaki, Universidad University Michael S. McCarthy, Miami Autónoma de Madrid Aric Rindfleisch, University of University Ulrich Orth, Oregon State Wisconsin David Mick, University of Virginia University Deborah E. Rosen, University of Sam Min, University of South David Ortinau, University of South Rhode Island Dakota Florida Bill Ross, Penn State University Vikas Mittal, University of Abhijit Roy, Loyola College Pittsburgh P Don Roy, Middle Tennessee State University Risto Moisio, University of Photis M. Panayides, Cyprus Nebraska – Lincoln Subroto Roy, University of New International Institute of Haven Michael Mokwa, Arizona State Management University Salvador Ruiz, Universidad de Veronika Papyrina, University of Murcia Sangkil Moon, North Carolina Western Ontario State University Leonard Parsons, Georgia Institute Bill Moore, University of Utah of Technology S David Moore, University of Vanessa Patrick, University of Michigan Joel Saegert, University of Texas Southern California at San Antonio Elizabeth Moore, University of Joann Peck, University of Notre Dame Jeff Sager, University of North Wisconsin Texas Neil Morgan, University of North Antony Peloso, Arizona State Carolina Kare Sandvik, Buskerud University University Nicola Sauer, University of Rob Morgan, University of Robert Peterson, University of Alabama Mannheim Texas – Austin Paul Sauer, Canisius College David Mothersbaugh, University of Jeffrey Podoshen, Prado Alabama Saeed Samiee, University of Tulsa Jaideep Prabhu, Imperial College Sanjit Sengupta, San Francisco Susan Mudambi, Temple Devashish Pujari, McMaster University State University University Reshma Shah, Emory University Paulo H. Muller, University Ellen Pullins, University of Toledo Federal do Paraná Tim Silk, University of Florida

vi Jim Simpson, University of Janet Tinoco, University of Central Rebecca M. Wells, University of Alabama – Huntsville Florida Dayton Alina Sorescu, Texas A&M Julie Toner (Schrader), Bellarmine Patricia West, Ohio State University University University Jelena Spanjol, Texas A&M Chris White, Michigan State University University Richard Spreng, Michigan State U Tiffany Barnett White, University University David Urban, Virginia of Illinois at Urbana Srinivas Sridharan, University of Commonwealth University Champaign Western Ontario John Wong, Iowa State University Raji Srinivasan, University of V Arch Woodside, Boston College Texas – Austin Srini Srinivasan, Drexel University Rajiv Vaidyanathan, University of James A. Stephens, Emporia State Minnesota Y University Raj Venkatesan, University of Attila Yaprak, Wayne State Rodney L. Stump, Morgan State Connecticut University University Alladi Venkatesh, University of Jun Ye, Case Western Reserve Ursula Y. Sullivan, University of California – Irvine University Illinois Peter Verhoef, Erasmus University Virginia Yonkers, Siena College Tracy Suter, Oklahoma State Rotterdam Boonghee Yoo, Hofstra University University Zannie Voss, Duke University Gergana Yordanova, University of Scott D. Swain, Boston University Pittsburgh W Cliff Young, University of Colorado T Frank Wadsworth, Indiana Debu Talukdar, University of University Southeast Buffalo Kirk Wakefield, Baylor University Z John F. Tanner, Jr, Baylor Wakiuru Wamwara-Mbugua, Gail Zank, Texas State University Wright State University University – San Marcos Kimberly A. Taylor, Florida Florian Wangenheim, University of Allen Zhang, University of Texas – International University Dortmund San Antonio Stephen S. Tax, University of Charles Weinberg, University of Zhu Zhen, Babson College Victoria British Columbia George Zinkhan, University of Georgia

vii TABLE OF CONTENTS

PREFACE AND ACKNOWLEDGMENTS iii

LIST OF REVIEWERS iv

TABLE OF CONTENTS viii

COMPANY-CONSUMER AND CONSUMER-CONSUMER SOCIAL EFFECTS

The Impact of the Type, Frequency, and Quality of Customer Contact on Customer Satisfaction Marshall Rice 1

Mirror, Mirror, on the Wall, Am I What I Consume After All: A Framework for Ethnicity Based Consumption, a Social Identity Perspective Tracy R. Harmon 7

Cultural Influence on Word-of-Mouth Communication Desmond Lam, Dick Mizerski, Alvin Lee 9

ORGANIZATIONAL IMPACT ON SERVICE DELIVERY

The Effects of Authenticity Rift on Firm Performance Zannie Giraud Voss, Glenn B. Voss, Daniel M. Cable 11

Positioning in Service Firms: Model Development and Some Basic Normative Guidelines Charles Blankson, Stavros P. Kalafatis 13

Antecedents and Consequences of Role Clarity in Explaining Employee-Perceived Service Quality in Call Centers Avinandan Mukherjee, Neeru Malhotra 15

INSTRUCTIONAL INNOVATION IN MARKETING EDUCATION

The Status of Cross-Functional Education in Undergraduate Marketing Curricula Within Management Education Victoria L. Crittenden, Elizabeth J. Wilson, Cameron Duffy 18

On Different Teaching Pedagogies: What Happens to Your Course Evaluations? Alma Mintu-Wimsatt, Kendra Ingram, Mary Anne Milward, Courtney Russ 20

An Assessment of a Consumer Behavior Multiple-Choice Question Taxonomy John R. Dickinson 22

PRODUCT PLACEMENTS EFFECTS

A Comparison of Consumers’ Responses to Traditional Advertising and Product Placement Strategies: Implications for Advertisers Terry Daugherty, Harsha Gangadharbatla 24

New Brand Worlds: A Comparison of College Student Attitudes Toward Brand Placements in Four Media Yongjun Sung, Federico de Gregorio 26

viii Brands in Action: The Role of Brand Placements in Building Consumer-Brand Identification Andrew T. Stephen, Leonard V. Coote 28

PROCESS AND BEHAVIOR

The Marketing Cocompetition Process and Strategic Alliance Instability: A System Dynamics Model Anna Shaojie Cui, Roger J. Calantone 30

Focal Supplier Opportunism in Retailer Category Management Neil A. Morgan, Anna Kaleka, Richard A. Gooner 32

AFFECT-RELATED CONSUMER RESEARCH

“No Greater Satisfaction Than to Vindicate Expectation” How Affective Expectations Shape Consumption Experience Andrew K.C. Wong 34

Customer Delight: An Attempt to Comprehend the Dimensions That Compose the Construct and its Behavioral Consequences Stefânia Ordovás de Almeida, Walter Meucci Nique 36

Towards a Conceptual Framework of E-Confusion Vincent-Wayne Mitchell, Gianfranco Walsh 44

UNDERSTANDING CUSTOMER-FIRM EXCHANGE PROCESSES

Differential Impacts of CRM on Consumer Responses: Toward an Integrative Framework Frederick Hong-Kit Yim 46

Exploring the Phenomenon of Buyer-Seller Mismatches in Business-to-Business Relationships Christopher P. Blocker 47

Consumer Trust Norms in Multi-Channel Firms: The Role of Trust in Technology and Firm Commitment to Privacy Protection in Technology-Based Service Delivery Devon Johnson 58

EXPLORATIONS OF CULTURE AND ETHNOCENTRISM DIMENSIONS

Validation and Application of a Bi-Dimensional Long-Term Orientation Scale William O. Bearden, R. Bruce Money, Jennifer L. Nevins 59

Consumer Socialization of Third Culture Kids in a Cosmopolitan City Alfred Y. Sit, Haksin Chan 61

Consumer Ethnocentrism in the German Market Heiner Evanschitzky, Florian V. Wangenheim 63

NEW PRODUCT CONSUMER DECISION PROCESSES

Identifying Information Search Patterns in a Web-Based Environment: Development of a Search Pattern Index Morris K. George, Girish N. Punj 65

ix Perceived Risk and Consumer Innovativeness Hierarchy: An Empirical Study of Resistance to High Technology Product Adoption Tanawat Hirunyawipada, Mohammadali Zolfagharian 73

Perceived Entitativity as a Moderator of Family Brand Evaluations Joseph W. Chang, Yung-Chien Lou 75

MARKET-BASED DRIVERS OF FIRM PERFORMANCE

The Performance Implications of Synergistic Knowledge Resource Effects in Differing Environmental Conditions David A. Griffith, Stephanie M. Noble, Qimei Chen 77

The Impact of Market Characteristics on Order-of-Brand Entry Strategy: An Empirical Study Danielle A. Chmielewski, Bryan A. Lukas, Robert E. Widing II 79

Organizational Culture Antecedents of Market-Driven Positional Advantage and Organizational Performance Consequences Artur Baldauf, David W. Cravens, Christian Bischof 87

DEFENSIVE AND PROACTIVE RESPONSES TO SERVICE FAILURE AND COMPLAINTS

See No Evil, Hear No Evil, Speak No Evil: A Study of Defensive Organizational Behavior Towards Customer Complaints Christian Homburg, Andreas Fürst 89

The Rest of the Iceberg: An Examination of Noncomplaining Service Customers Clay M. Voorhees, Michael K. Brady, David M. Horowitz 91

From Empathy to Forgiveness: A Prosocial Perspective in Service Failure and Recovery Research Felix T. Tang 92

STRATEGIC CONCERNS IN GLOBAL MILIEUS

International Marketing Alliance Dynamics: Empirical Findings from the Pharmaceutical Industry Sengun Yeniyurt, Janell D. Townsend, Erin Cavusgil 94

A Cross-National Study of Consumer-Firm Exchange Relationships Within the Context of Market Milieus Patrick Lentz, Deepak Sirdeshmukh, Ed Nijssen, Hartmut H. Holzmüller, Jagdip Singh 96

CONVERGENT COMMUNICATIONS: MOVING BEYOND ADVERTISING

An Examination of IMC at the Tactical Level: Differences Across Time and Product Type Stephen J. Grove, Les Carlson, Michael J. Dorsch, Christopher D. Hopkins 98

Assessing the Effects of In-School Point of Purchase and Sampling on the Choice of a Healthy Food Option Dafina Rexha, Katherine Mizerski, Richard Mizerski 99

x Testing Why Adults Purchase Fast Food Cartoon Character Toy Premiums Claire Lambert, Richard Mizerski 101

COMPETITIVE INTERACTION AND STRATEGIC DECISIONS

Multimarket Contact and the Moderating Role of Dominant Local Players: A Conceptual Overview Sweta Chaturvedi Thota 103

The Nature of Co-Opetition: Literature Review and Propositions Pilsik Choi 105

Technology Versus People: Two Schools of Thought on Pricing Capability Development Lewis K.S. Lim, Rebecca J. Slotegraaf, Rockney G. Walters 107

GOVERNANCE

Dimensions and Outcomes of Relational Exchange in a Business-to-Business Context: A Meta-Analysis Mohammadali Zolfagharian, Rajasree K. Rajamma 109

Entry Mode and Level of Equity: A Simultaneous Examination of Foreign Direct Investment Governance Sudha Mani, Kersi D. Antia, Aric Rindfleisch 111

Towards an Understanding of the Governance of Complex Networks of Relationships: Uncertainty, Governance System Choices, and Performance Outcomes Andrew T. Stephen, Leonard V. Coote 112

INNOVATIVENESS AND LEARNING

Market Driving Relationship Marketing for Radical Innovations Helder J. Sebastiao 114

An Investigation of Perceptual Factors Influencing Consumer’s Intention to Adopt Radical Versus Incremental New Products Audhesh K. Paswan, Lisa C. Troy 117

It’s All about Learning: What Firms Can Learn from Consumer Pioneers Yun Ye 118

SPECIAL SESSION: CULTURE, COMPETITION, AND CONSUMERS’ REACTIONS TO BRANDS

Will Consumers Prefer Global or Local Brands? The Role of Identity Accessibility in Consumer Preference for Global Versus Local Brands Yinlong Zhang, Lawrence Feick, Vikas Mittal 125

CONSUMER JUDGMENTS AND MOTIVATIONS IN SERVICES

Why Do Conference Goers Return? A Model of Intentions to Attend and Recommend Annie H. Liu, Mark P. Leach, Robert D. Winsor 126

Influence of Other Customers: A Scale Development E. Deanne Brocato, Susan B. Kleiser 128

xi ENCOURAGING YOUNG PEOPLE TO BEHAVE BETTER

Beyond Just Being There: An Examination of the Impact of Attitudes, Materialism, and Self-Esteem on the Quality of Helping Behavior in Youth Volunteers Elten Briggs, Tim Landry, Charles Wood, Todd Arnold 130

A Cross-Cultural Examination of the Relationship Between Materialism and Individual Values William Kilbourne, Marko Grünhagen, Janice Foley 132

M.E.A.L. Time: How Nutritional Disclosure Affects Gender Evaluations of Fast Food Menu Items Kenneth W. Bates, Kyle A. Huggins 134

LEARNING FROM CUSTOMERS AND EDUCATING CUSTOMERS IN THE NEW DOMINANT LOGIC OF MARKETING

Unlocking Value Through Customer Education Thorsten Hennig-Thurau, Peter C. Honebein, Benoit Aubert 136

Organizational Learning and Dynamic Marketing Capabilities: Implications for Organizational Performance Linda M. Foley, Douglas W. Vorhies, Victoria D. Bush 138

INNOVATION ADOPTION

Adopting RFID Technology: Does the Manager’s Attitude Matter? Gilbert N. Nyaga, Roger J. Calantone, Thomas J. Page 140

A Synergistic Model for New Product Success Russell Adams 147

Income Elasticity of Household’s Demand for Communication and its Products: Global Measurement and its Marketing Implications Min Lu, Yanbin Tu 148

CONTEMPORARY PRICE-RELATED CONSUMER RESEARCH

Computational Estimation of Partioned Prices: Another Heuristic Moves into the Marketing Neighborhood William J. Jones, Devon S. DelVecchio, Terry L. Childers 154

The Effects of Magnitude Representation Encoding Interference and Order of Price Exposure in Comparative Price Advertising Keith S. Coulter, Robin A. Coulter 155

Influences on What Consumers Know and What They Think They Know Regarding the Persuasive Aspects of Pricing-Related Selling Tactics Jay P. Carlson, William O. Bearden, David M. Hardesty 157

MEASURE ADVERTISING SUCCESS

Creativity in Advertising: Purchase Intent and Brand Attitude Effects Brian D. Till, Daniel W. Baack 159

xii Where’s the Affect? An Investigation of the Effect of Three Advertising Scales on Attitude to the Ad Arjun Chaudhuri 161

Marketing Communication and Company Brand Attitude Marc Weinberger, Dale Taoping Tzeng, Paul Bottomley, Harlan Spotts 168

RELATIONSHIP STRATEGIES: INTRA-FIRM, INTER-FIRM, AND SOCIETAL

Organizational Antecedents to and Outcomes of Marketing Strategy Development Styles: A Contingency Model J. Chris White, Jeffrey S. Conant, Raj Echambadi 177

Coordinating Marketing and Sales: Exploration of a Neglected Interface Christian Homburg, Ove Jensen 179

THE ROLES OF CROSS FUNCTIONAL TEAMS AND PRODUCT QUALITY IN INNOVATION

The Effect of Interactional Justice on the Performance of Cross-Functional Product Development Teams Tianjiao Qiu, Deborah Rupp, William Qualls 181

Cross-Functional Integration and New Product Performance: A Meta-Analysis Tanawat Hirunyawipada, Archna Vahie 183

The Contingent Effect of Product Quality on New Product Performance: A Conceptual Model Kwaku Atuahene-Gima, Gloria Barczak 185

CONSUMPTION OF SERVICES

Consumer Experience of Social Power During Service Consumption: An Exploratory Study Kalyani Menon, Harvir Bansal 187

What Drives Customer Success? Consumer Perceptions of Enabling and Restraining Forces Associated with Performing Consumption Tasks Pete C. Honebein 194

The Effect of Event Valence on Wait Management Strategies Elizabeth G. Miller, Barbara E. Kahn, Mary Frances Luce 196

MARKETING RESEARCH: NEW PERSPECTIVES ON DATA ANALYSIS

Seemingly Unrelated Regression: An Alternative to Traditional Bridging in Conjoint Analysis Niels J. Blunch 198

Within-Informant Bias in Marketing Research James R. Brown, Anjala S. Krishen, Pushkin Kachroo, Chekitan S. Dev 200

Building Formative Construct Measures: The Example of Corporate Reputation Sabrina Helm 202

xiii STRATEGIC ISSUES IN ELECTRONIC MARKETING

Effects of Online Store Attributes on Customer Satisfaction and Loyalty Miao Zhao, Ruby Roy Dholakia 204

Organizational Factors Related to Effective Customer Information Systems Practices Debra Zahay 206

PUBLIC POLICY MEETS CONSUMER RESEARCH

Marketing Considerations in Weight Control: Preliminary Findings Angela Hausman 207

Product Involvement and Place Attachment: Insights from the Environmental Psychology Literature Merlyn A. Griffiths 209

Emergency Contraception: Expectations of Product Need and Use Andrew M. Parker, Melanie A. Gold 216

CUSTOMER SATISFACTION AND LOYALTY DYNAMICS

Investigating Drivers of Customer Defection: A Relative Weight Approach Thomas Hollmann, Cheryl Burke Jarvis 218

Investigating the Moderators of the Customer Satisfaction-Loyalty Link: Evidence from Retailing Heiner Evanschitzky, Gianfranco Walsh 220

The Interplay of Cognition and Affect in the Formation of Customer Satisfaction: A Dynamic Perspective Christian Homburg, Nicole Koschate, Wayne D. Hoyer 222

BUYER AND ORGANIZATIONAL DYNAMICS IN THE GLOBAL SETTING

Marketing Six Sigma: Zero Defects in Intercultural Service Quality Martin C. Reimann, Ulrich F. Luenemann 223

The Impact of Experiential Knowledge and Creativity on Performance of International Project Taewon Suh, Hongxin Zhao, Seung H. Kim, Mark J. Arnold, Mueun Bae 234

COPING WITH A CHANGING TECHNOLOGICAL AND ETHICAL CLIMATE

Change and the Marketing Organization Kelly D. Martin, Jean L. Johnson 236

Privacy Concerns and Customers’ Willingness to Provide Information: A Review with Implications for Future Research Mona Srivastava, Robert Harmon 238

Shifts in Workplace Ethics: Opportunities for Conflict? Paul L. Sauer, Paul Chao 240

xiv IMPROVING SALESPERSON PERFORMANCE THROUGH NEW SKILLS AND TECHNOLOGY

Interaction Between the Salesperson and Customer: A Framework for Improving the Sales Outcome Elizabeth Hemphill, Chris Dubelaar, Steven Goodman, Gus Geursen 242

EXTRINSIC REWARDS AND CONSUMER CHOICE

Coupons: The Inside Scoop Somjit Barat 253

What Next? Explaining Repurchase Decisions After Joining a Loyalty Program Shirley Y. Cheng, Jessica Y. Kwong 254

Not All Deals Are Created Equal: Two Different Roles of Sales Promotion Dongwoo Shin, James H. Leigh 256

ONLINE AUCTIONS, ADVERTISING, AND RESEARCH

The Effects of Reserve Prices on Bidding Behavior in Online Auctions Marla Royne Stafford, Ashley Kilburn, Barbara B. Stern 258

Advertising Goes Mobile: Explaining Attitude Toward M-Advertising Parissa Haghirian 260

FOSTERING SERVICE RELATIONSHIPS

Regulatory Focus and Relationship Marketing Success Maria Sääksjärvi, Johanna Gummerus 262

Predicting Usage Level and Upgrading Behavior of Service Customers: A Model for Lifetime Value Estimation at Early Relationship Stages Florian V. Wangenheim 268

INTERNATIONAL ADVERTISING AND BRAND POSITIONING ISSUES

The Impact of Perceived Language Status on Product and Service Quality Expectations Melissa Maier Bishop 270

Effects of Positioning a Foreign Brand as a Domestic Brand in Countries with Developed (U.S.) Versus Transitioning (Romania) Market Economies Lada V. Kurpis, Simona Stan, Carmen Barb 272

ISSUES IN MANAGING THE BRAND

Can Self-Affirmation Reduce Prejudice Expression Toward Stereotyped Brands? Huimin Xu 279

Self and Brand Image Congruence: Driving Consumer Value Adam Marquardt 286

The Spillover Effects of Product-Harm Crises in a Brand Portfolio Jing Lei, Niraj Dawar, Jos Lemmink 288

xv CREATING SUCCESS WITH SOFT ASSETS

Market Driven Intangibles and Sustainable Performance Advantages Matti Tuominen, Sheelagh Matear, Sami Kajalo, Saara Hyvönen, Arto Rajala, Kristian Möller, Gordon E. Greenley, Graham J. Hooley 290

Understanding Creative Campaign Implementation: An Investigation of its Antecedents Atlanta L. Stoyle, Leonard V. Coote 292

RELATIONSHIP STRUCTURE

Value-Based Differentiation in Business Relationships: Gaining and Maintaining Key Supplier Status Wolfgang Ulaga, Andreas Eggert 294

Affect and Conation in Business-to-Business Relationships: An Empirical Analysis of Loyalty Lifecycle Sequence Chad Ruel Allred 296

The Effect of Total and Asymmetric Specific Asset Investment on Supplier-Buyer Relationship: A Structural Model Taewon Suh, Henry Yu Xie, Ik-Whan G. Kwon 298

AUTHOR INDEX 300

xvi THE IMPACT OF THE TYPE, FREQUENCY, AND QUALITY OF CUSTOMER CONTACT ON CUSTOMER SATISFACTION

Marshall Rice, York University, Toronto

ABSTRACT satisfaction. For example, a customer’s level of satisfaction with a company (and it’s products and services) is This paper presents an investigation of the impact of likely impacted by such factors as interaction with the 81 distinct types of customer contact on customer satisfac- corporate Web site, exposure to marketing communication. Data from 8,836 respondents support the finding that tions, participation in corporate events and training, inter- customer satisfaction is improved by increasing contact action with sales representatives and many other contacts. points. In addition, certain types of contact and quality of contact are shown to be important. This paper presents an exploratory investigation of the impact of a larger number of customer contacts than is INTRODUCTION found in the academic literature. Specifically, this paper examines the impact of the type, frequency and quality of Over the past 20 years, customer satisfaction has 81 distinct contact points on customer satisfaction. By become a key concept in marketing (Harvey 1998). Aca- examining 81 different contact points, we hope to provide demic research has focused on important customer satis- some preliminary insights into the following types of faction issues that include such topics as the conceptual- managerial and research questions: ization and measurement of satisfaction constructs, (Fou- rier and Mick 1999; Smith 1999), the impact of satisfac- 1. Can a company improve overall satisfaction by in- tion on customer retention (Rust and Zahorik 1993), creasing its frequency of contact with customers? customer satisfaction and profitability (Gurau and Ranch- hod 2002), loyalty and customer satisfaction (Gronholdt, 2. Are certain types of customer contact more valuable Martensen, and Kristensen 2000), the role of value in than others in improving overall satisfaction with a customer satisfaction (Day 2002) to name a few. Al- company? though the subject of customer satisfaction has been extensively studied, research shows mixed findings and 3. Does frequency of contact or quality of contact have complex relationships between the antecedents and out- a stronger relationship with overall satisfaction with comes of business having more versus less-satisfied cus- a company? tomers (Szymanski and Henard 2001). RESEARCH DESIGN AND In addition, the impact of customer contact has been DATA COLLECTION extensively examined in the CRM literature (Winer 2001). Research has shown that regular contact with customers For this study, the researchers analyzed data provided can improve profits (Reinartz and Kumar 2000), decrease by a large company in the technology sector (the name of defection/increase retention (Verhoef 2003; Weinstein the company is not revealed to protect proprietary data). 2002) and increase the perceived relationship investment A total of 8,836 people were intercepted at the corporate (De Wulf, Odekerken-Schroder, and Lacobucci 2001). Web site and participated in the research which was Further, considerable research shows that increased cus- administered via an online survey. Respondents were tomer contact by activities such as loyalty programs typical of those who come to the Web site (i.e., a mix of improve acquisition, retention and customer development IT Professionals and Developers and General Users). As (Stone, Bearman, Butscher, and Gilbert 2004), while an incentive to participate, respondents were able to enter brand building contact improves loyalty (McAlexander, a contest to win a $100 gift certificate from Amazon.com. Schouten, and Koening 2002). Data was collected via an Internet population for several reasons. First, experience and usage of many of the Research on customer satisfaction has generally fo- variables that we examined (i.e., subscription to Internet cused on understanding the impact of a limited number of services, participation in online events etc.) are not com- product or firm attributes. In particular, the research has mon phenomenon and it would be difficult to obtain these tended to focus on the impact of service and product respondents via a simple random telephone sample. Sec- quality on overall customer satisfaction. It is reasonable to ond, the instrument was quite lengthy which would have assume, however, that many other contacts that an orga- made it prohibitive to attempt to administer the survey via nization has with its customers can have an impact on traditional data collection methods.

American Marketing Association / Winter 2005 1 The 81 contact points that were examined in this Respondents also indicated their level of satisfaction paper were arrived at through extensive discussions with with each type of contact using nine point scales (where 1 decision makers at the company that provided the data. In indicated that they were “not at all satisfied” and 9 the discussion, the principal researcher and corporate indicated that they were “very satisfied”). Respondents decision makers began with an informal listing of possible were also asked to rate their overall satisfaction with the contact variables that can have an impact on satisfaction company, its products, service and support organization and that could be measured. This list was then judgmentally using the same nine point scale. This overall satisfaction reduced to produce the final 81 contact points. question served as the basis (dependent variable) for much of the analysis that is presented in this paper. To Respondents answered a series of closed-ended ques- answer the research questions, analysis was performed tions that asked them to identify which of 81 unique types using a combination of cross-tabulation (X2 analysis), of contact they have had with the company. These 81 analysis of variance (ANOVA) and regression. contact points were then categorized for analysis into nine distinct types of customer contact as listed in Table 1. Research Hypothesis Cronbach’s Alpha was used to test the reliability of the scales that make up the nine individual types of contact. The following research hypothesis are investigated in this All nine items displayed an Alpha of > .85 which is paper: considered good (Nunnaly 1978) and indicates that the individual contact points were measuring a unidimen- H1: Increases in the amount of customer contact points sional construct within each group. will correlate positively with overall company satisfaction.

TABLE 1 Classification of Types of Contact

Category of Type of Contact Number of Contacts Within This Group

1. Corporate Web sites visited 16 contact points

2. Received Information about the company/ 14 contact points: such as reading online reviews the company Products about products, company Products seeing print ads, meeting a sales representative, receiving direct mail, etc.

3. Initiated Contact with the company 13 contact points: such as contacting the company by telephone, e-mail communication, contacting support, etc.

4. Subscribed to Newsletter(s) 11 contact points: a total of 11 newsletters were offered and monitored

5. Participated in Training 7 contact points: such as taking an online course, using training materials, etc.

6. Participated in Events/Community Activities 7 contact points: such as participating in an online chat, attending a conference, etc.

7. Planned and Deployed corporate solutions 6 contact points: such as using company products, upgrading a product/service, etc.

8. Subscribed to Services 5 contact points: a total of five services offered by the company were available

9. Product/Service Purchase or Download 2 contact points: purchasing product/service or down- loading product/service

American Marketing Association / Winter 2005 2 H2: Certain types of customer contacts are more valuable was significantly different across the three categories of (i.e., have more impact) than others in improving frequency of contact. Those respondents who had the overall satisfaction. highest levels of contact with the company had a significantly higher mean score on satisfaction with the com- H3: Quality of contact will have a stronger relationship pany as compared to those respondents who had lower with overall satisfaction than frequency of contact. levels of contact. Similarly, those respondents who had medium levels of contact had significantly higher satis- RESULTS AND DISCUSSION faction with the company as compared to those respondents in the light contact category. The mean values of H1: Increases in the amount of customer contact will overall satisfaction with the company (on a nine point correlate positively with overall company satisfac- scale with nine indicating “very satisfied”) for each of tion. these groups are shown in Table 3. A Duncan’s Multiple Range test confirmed significant differences among the Respondents were categorized into three levels of mean values shown in Table 3. frequency of contact, based on the number of contact points (out of a possible 81 total number of contacts) they This positive relationship between frequency of con- had with the company. Table 2 details the definition of the tact and increased overall satisfaction with the company three categories of frequency of contact: Light Contact, can also be seen in the percentage of respondents who Medium Contact, and Heavy Contact. were classified as highly satisfied (HSAT is defined as those respondents who indicated that their satisfaction The frequency of contact into light (10 or fewer was either 8 or 9 on a 9 point scale) and those who are contacts), medium (11 to 20 contacts) and heavy contact classified as “not satisfied” (NSAT is defined as those (21+ contacts) groups was determined judgmentally by respondents who indicated that their satisfaction was 1, 2, key decision makers at the company that provided the 3, or 4) on overall satisfaction with the company across the data. Specifically, decision makers were asked how many three categories of frequency of contact. As seen in Table contacts they believe constituted “light,” “medium,” and 4, as the level of contact with the company increases, the “heavy” contact with their customers. percentage of respondents who fall into the HSAT category goes up significantly, and the percentage of those in Using analysis of variance (ANOVA), it was possible the NSAT category goes down accordingly (Chi-square = to determine that overall satisfaction with the company 119.4, p. < .0001).

TABLE 2 Categories of Frequency of Contact

Frequency of Contact Definition % of Sample

Light Contact 10 or fewer contacts 37%

Medium Contact 11 to 20 contacts 34%

Heavy Contact 21+ contacts 29%

TABLE 3 Impact on Satisfaction based on Frequency of Contact

Frequency of Contact Satisfaction With the Company (Mean)

Light Contact 6.4

Medium Contact 6.7

Heavy Contact 7.1

(F = 78.61, Significance: < .0001)

American Marketing Association / Winter 2005 3 H2: Certain types of customer contact will be more valu- who had that contact and those who didn’t, were com- able (i.e., have more impact) than others in improving pared to determine if a significant difference existed. overall satisfaction. Table 5 summarizes the change in the mean score of overall satisfaction with the company as a result of each Analysis of variance (ANOVA) was used to deter- type of customer contact. mine which types of contact were associated with the greatest change in overall satisfaction with the company. As Table 5 shows, the most valuable types of contact For each type of contact, the mean scores on overall for the sample overall, based on change in the mean scores satisfaction with the company between those respondents of overall satisfaction with the company are:

TABLE 4 HSAT and NSAT by Frequency of Contact

Frequency of Contact % HSAT % DSAT

Light Contact 36% 17%

Medium Contact 41% 14%

Heavy Contact 49% 10%

X2 shows significant differences between all groups: (X2 = 119.4 p. < .001)

TABLE 5 Change in Overall Satisfaction With the Company By Type of Contact

Satisfaction of Satisfaction of Change in Those Those Not Satisfaction as Contacted Contacted a Result of ANOVA Type of Contact (Mean) (Mean) Contact Results

Received Info. About The Company 6.78 5.98 +0.80 F = 132.66 p < .0001

Visited Web sites 6.75 6.23 +0.52 F = 57.43 p < .0001

Product/Service Purchase/Download 6.78 6.28 +0.50 F = 80.19 p < .0001

Subscribed to Newsletter(s) 7.01 6.53 +0.48 F = 108.53 p < .001

Participated in Events/Communities 6.99 6.61 +0.38 F = 47.41 p < .0001

Subscribed to Services 6.97 6.64 +0.33 F = 27.67 p < .0001

Planned/ Deployed corporate solutions 6.76 6.56 +0.20 F = 18.40 p < .0001

Participated in Training 6.89 6.60 +0.29 F = 36.76 P < .0001

Initiated Contact with the company 6.72 6.50 +0.22 F = 10.95 P < .001

American Marketing Association / Winter 2005 4 a. Received information about the company or the com- should it direct resources to trying to improve satisfaction pany products with some key types of customer contact? In order to study this question, the survey asked respondents to rate their b. Visited Web sites satisfaction with contacts they had experienced on a nine- point scale (1= not at all satisfied, 9 = very satisfied). A c. Product or service purchase or download regression analysis was then preformed with overall satisfaction with the company as the dependent variable and It is important to note, however, that satisfaction was aggregate satisfaction measures for the categories of con- higher in all categories if the respondent had been contact that had the largest number of contacts (received tacted. information about the company, visited Web sites, product or service download, planned or deployed solutions, H3: Quality of contact will have a stronger relationship initiated contact with the company). with overall satisfaction than frequency of contact. The results of this regression clearly show that satis- From a managerial viewpoint it would be useful to faction with key customer contact points (i.e., quality of know whether frequency of contact or quality of contact contact) is more strongly related than frequency of contact has a greater impact on customer satisfaction. That is, to overall satisfaction (R2 = .52, all variables significant given limited resources should organizations direct those at the .0001 level). Complete regression results are shown resources to trying to increase the number of contacts or in Table 6. Given these results, it suggests that organiza-

TABLE 6 Regression Results

Type of Contact Parameter Estimate Significance

Initiated Contact with the company .193 p < .0001

Received Info. about The company .282 p < .0001

Product/Service Purchase/Download .209 p < .0001

Planned/ Deployed Corporate solutions .172 p < .0001

Visited Web sites .110 p < .0001

Frequency of contact .132 p < .0001

tions should consider putting more resources into improv- overall company satisfaction. However, while the number ing the quality of contact rather than increasing the total of contacts is clearly important more impact is seen by number of contacts. increasing the quality of each contact.

CONCLUSION As this is a exploratory study with only one company, it is suggested that future research focus on different This paper is an exploratory study that attempted to companies and sectors in an attempt to see whether these show the relationship between the amount and quality of patterns exist in other industries. In addition, future re- customer contact and it’s impact on satisfaction. As indi- search should investigate whether different taxonomy/ cated in the paper, the research hypothesis were largely consumer groups for the same company respond in simi- confirmed. Specifically, the data show that increases in lar ways to both frequency and type of consumer contacts. the amount of contact points is correlated positively with

American Marketing Association / Winter 2005 5 REFERENCES 28 (1), 9–16. Reinartz, Werner J. and V. Kumar (2000), “On the Prof- Day, Ellen (2002), “The Role of Value in Consumer itability of Long-Life Customers in a Noncontractual Satisfaction,” Journal of Consumer Satisfaction, Dis- Setting: An Empirical Investigation and Implications satisfaction, and Complaining Behavior, 15, 22–33. for Marketing,” Journal of Marketing, 64 (4), 176– De Wulf, Kristof, Gaby Odekerken-Schroder, and Dawn 33. Lacobucci (2001), “Investments in Consumer Rela- Rust, R.T. and A.J. Zahorik (1993), “Customer Satisfac- tionships: A Cross-Country and Cross-Industry Ex- tion, Customer Retention, and Market Share,” Jour- ploration,” Journal of Marketing, 65 (October), (4), nal of Retailing, 69 (2), 193–215. 33–51 Smith, A. (1999), “Some Problems When Adopting Fournier, Susan and David Mick (1999), “Rediscovering Churchill’s Paradigm for the Development of Ser- Satisfaction,” Journal of Marketing, 63, (October), vice Quality Measurement Scales,” Journal of Busi- (4), 5–24. ness Research, 46, 109–20. Gronholdt, Lars, Anne Martensen, and Kai Kristensen Stone, Merlin, David Bearman, Stephan A. Butscher, and (2000), “The Relationship Between Customer Satis- David Gilbert (2004), “The Effect of Retail Customer faction and Loyalty: Cross-Industry Differences,” Loyalty Schemes – Detailed Measurement or Trans- Total Quality Management, 11, (July), (4–6), S509– forming Marketing,” Journal of Targeting, Mea- S515. surement and Analysis for Marketing, 12 (3), 305–19 Gurau, Calin and Ashok Ranchhod (2002), “How to Szymanski, David M. and David H. Henard (2001), Calculate the Value of a Customer–Measuring Cus- “Customer Satisfaction: A Meta-Analysis of the Em- tomer Satisfaction: A Platform for Calculating, Pre- pirical Evidence,” Journal of the Academy of Market- dicting and Increasing Customer Profitability,” Jour- ing Science, 29 (1), 16–36. nal of Targeting, Measurement, and Analysis for Verhoef, Peter C. (2003), “Understanding the Effect of Marketing, 10 (March), (3), 203–20. Customer Relationship Management Efforts on Cus- Harvey, J. (1998), “Service Quality: A Tutorial,” Journal tomer Retention and Customer Share Development,” of Operations Management, 16, 583– 97. Journal of Marketing, 67, (4), 30 McAlexander, James H., John W. Schouten, and Harold Weinstein, Art (2002), “Customer Specific Strategies – F. Koening (2002), “Building Brand Community,” Customer Retention: A Usage Segmentation and Journal of Marketing, 66, (January), 38–55. Customer Value Approach,” Journal of Targeting, Nunnaly, J. (1978), Psychometric Theory. New York: Measurement and Analysis for Marketing, 10 (3), McGraw-Hill 259–69. Parasuraman, A. and D. Grewal (2000), “Serving Cus- Winer, Russell S. (2001), “A Framework for Customer tomers and Consumers Effectively in the Twenty- Relationship Management,” California Management First Century: A Conceptual Framework and Over- Review, (Summer), 89–105. view,” Journal of the Academy of Marketing Science,

For further information contact Marshall Rice Marketing Area Schulich School of Business York University 4700 Keele Street Toronto, Ontario Canada M3J-1P3 Phone: 416.736.2100, Ext. 58241 E-Mail: [email protected]

American Marketing Association / Winter 2005 6 MIRROR, MIRROR, ON THE WALL, AM I WHAT I CONSUME AFTER ALL: A FRAMEWORK FOR ETHNICITY BASED CONSUMPTION, A SOCIAL IDENTITY PERSPECTIVE

Tracy R. Harmon, University of South Florida, Tampa

SUMMARY identity are: (1) human cognitive capacities are limited, (2) individuals think about others in order to interact, and The study of ethnicity as it relates to consumption is (3) individual struggle for understanding in order to fairly recent in the study of consumer behavior and predict and control their outcomes. As a result individuals marketing (Ogden et al. 2004). Within the marketing tend to categorize information about themselves, others, literature, many studies have shown how culture signifi- objects, and situations before engaging in memory or cantly impacts consumer’s perceptions and behavior in inferential processes, relevant to social interactions and the global marketplace (McCracken 1986). Deshpande consumption. et al. (1986) suggests that the concept of strength of ethnic identification leads us to believe the existence of funda- Gilly and Penaloza (1999) state that marketers inves- mental differences between members of a particular eth- tigate culture indirectly, resulting in references to dispar- nic group. Herche and Balasubramanian (1994) discov- ate cultural groups and marketing practices, with less ered that consumers who belonged to a specific ethnic attention to generalized adaptation processes. Their point group were likely to display analogous shopping behav- highlights what is missing form the ethnic identity con- iors. Thus, the focus of this research does not address sumption research, the underpinning foundation of ethnic aggregate national cultures; rather the intent is to under- identity, which precedes consumption, which is addressed stand the impact of strength of ethnic identity within a with the proposed framework. Therefore ethnicity-based national boundary. This paper therefore seeks to explain consumption is more meaningful than the use of a sign, or the impact of intra-national cultural differences in ethnic symbol that is consumed, it is a self-concept of image, that identity within the specific context of the United States on cannot be expunged by the presence of a global market- consumption behavior. place.

This framework does not seek to underscore the role Based upon the current research trends in consumer of consumption in the construction of a socially based acculturation and the lack of fit of acculturation to micro- ethnic identity, but examines the role of a socially based cultures within a nation, as well as within an ethnic group, ethnic identity as an antecedent to the act of consumption. a framework is presented that expands the study of con- Attempts to assimilate the ethnic self into a one-dimen- sumer buyer behavior. This lack of fit leads to an impor- sional “melting-pot” ideology fail to address the complex- tant question relevant to marketing: Does the degree of ities of personal and social identities among diverse pop- ethnic identity affect consumption practices? The frame- ulations. Thus, the primary assumptions are (1) ethnic work suggests consumption practices are moderated by identity precedes consumer consumption, (2) as the the degree of ethnic identity formation. The framework strength of ethnic identity changes, so does consumption includes taking into the consideration the core self, iden- practices, and (3) ethnicity based consumption does not tifying the strength of a consumer’s ethnic identity using aid in the construction of a socially-based ethnic identity. Phinney’s (1989) key dimensions which are influenced This research proposes that the strength of ethnic identi- by socialization processes, and determining whether pur- fication displayed by consumers is the focal construct of chase decisions vary by degree of ethnic identification interest during the investigation of ethnicity based con- during the consumption process. The proposed frame- sumption practices. The proposed study will relate the work considers the collective nature of ethnic identifica- four components of ethnicity (1) ethnic awareness, (2) tion, which considers the elements of the self, motive, ethnic self-identification, (3) ethnic attitudes, and (4) ethnicity, and factors of socialization. These four compo- ethnic behaviors (Phinney 1990) to consumption practic- nents capture the core of the individual while accommo- es. We expect the differences to be moderated by the dating the situational and contextual factors of intersect- degree of formation of an ethnically based social identity. ing identities. The proposed framework is divided into two distinct halves, which capture the core ethnic self, and Social cognition is one of the prevailing perspectives the apparent ethnic self. in social psychology which provides the theoretical foundations of conventional conceptions of identity. The as- After consideration of the core ethnic self and the sumptions which underlie social cognitive theories of apparent ethnic self, which is influenced by social interac-

American Marketing Association / Winter 2005 7 tions, the formation of ethnic identity emerges. The frame- frequently. Individuals who are in the foreclosed and work indicates four defined levels of ethnic identity moratorium stages of development may development a development, which are termed diffuse, foreclosed, mora- multicultural attitude of consumption, and may partici- torium, and achieved ethnic identities. A diffused ethnic pate in more frequent culture swapping. Naturally the identity has little or no exploration of ethnicity, and lacks levels of ethnic identification will vary within ethnic a clear understanding of the issues. A foreclosed ethnic groups and among subcultures within these groups. How- identity has little exploration but a clearer understanding ever these levels of identification will allow marketers to of their ethnicity. Whereas, an ethnic identity in morato- better understand the consumption practices within a rium denotes evidence of exploration of ethnicity, but particular ethnic group. some confusion about the meaning of ethnic groups. Lastly, an achieved ethnic identity is one that has been This framework helps to mitigate the premise of explored, understood and accepted. contradictory consumption practices among those who possess a subjectively, strong ethnic self-identity, by It would be expected that during the diffuse stage, an providing a better understanding of the factors that help individual would be the least likely to reference his or her shape a consumer’s ethnic identity. This will enhance the ethnic identity during consumption. Whereas, an indi- ability to develop marketing communications appropriate vidual who has achieved development of their ethnic for the multicultural market. identity, would readily access their ethnic identity more

For further information contact: Tracy R. Harmon Marketing Department University of South Florida 4202 East Fowler Avenue – BSN 3222 Tampa, FL 33620 Phone: 813.74.6184 E-Mail: [email protected]

American Marketing Association / Winter 2005 8 CULTURAL INFLUENCE ON WORD-OF-MOUTH COMMUNICATION

Desmond Lam, University of Western Australia, Australia Dick Mizerski, University of Western Australia, Australia Alvin Lee, University of Western Australia, Australia

SUMMARY individuals. Culture, in particular, can have a strong influence on one’s word-of-mouth behavior. The power of word-of-mouth has considerable docu- mentation since the 1960s. Word-of-mouth has been It is well documented that culture can have a strong widely reported to be many times more influential than influence on consumers’ thoughts and actions. Hence, information from prints, radio, and personal selling. De- culture can potentially have a significant influence on spite the importance and influence of word-of-mouth, it consumers’ word-of-mouth behavior through its influ- has remained one of the most neglected marketing areas. ence on individual values and group norms. In one of the In fact, many companies are still struggling to develop most widely cited work, Hofstede (1980) found many effective marketing programs that encourage consumer differences between the perceptions and the working word-of-mouth communication. The authors of this cur- styles of individuals in 53 countries. Hofstede identified rent study believe that a sound understanding of factors four basic dimensions of differences between national influencing word-of-mouth such as those relating to cul- cultures, namely, individualism, masculinity, uncertainty ture may help to create more proactive and targeted avoidance, and power distance. In this current study, promotional programs toward stimulating consumer word- Hofstede’s dimensions were employed to examine indi- of-mouth. vidual-level or within-culture differences.

Consumers may engage in word-of-mouth for a num- A survey was conducted on a convenience sample of ber of intrinsic reasons. Word-of-mouth among consum- 228 total respondents from two universities in Australia. ers is also affected by other external factors. The influence Each respondent was given a questionnaire comprising a of culture appears to be the most important external number of items on issues relating to their cultural values factors, particularly in the context of international market- and word-of-mouth behavior. These items were measured ing. While there are many studies on the impact of culture on a 5-point Likert scale from 1 (strongly disagree) to 5 on marketing, very few examined the effect of culture on (strongly agree). The data was subjected to confirmatory consumers’ word-of-mouth communication. This study factor analysis (CFA) and fitted to a structural equation attempts to examine whether and how culture can influ- model with AMOS 6.0. The results gave strong support to ence consumers’ word-of-mouth behavior. In particular, the influence of masculinity and power distance cultural special attention will be given to distinguish word-of- dimensions on individuals’ word-of-mouth behavior. The mouth communication with people of strong ties (defined influence of masculinity on out-group word-of-mouth as in-group) from communication with people of weaker was significant and positive. Individuals high in mascu- ties (defined as out-group). Consequently, this article linity are expected to be more assertive and aggressive in provides both theoretical and empirical contribution to the their approach to communication. As such, they are more word-of-mouth literature. Ultimately, it is the intention of likely to exchange product information with weaker ties the authors to help companies to identify markets or such as out-groups. The results of this study have sup- societies that may be more receptive to word-of-mouth ported this hypothesis. In addition, power distance has marketing. significant positive influence on in-group word-of-mouth and negative influence on out-group word-of-mouth. In- The reasons why one engages in word-of-mouth have dividuals with high power distance are more likely to been extensively researched for about 40 years. Word-of- engage in word-of-mouth within their in-groups than with mouth activity has been shown to influence a variety of their out-groups. Those with low power distance are more consumer conditions, from awareness, expectations, per- likely to feel less inhibited and, as such, will more likely ceptions, attitudes, behavioral intentions to actual behav- engage in out-group word-of-mouth. These phenomena iors. Past research found that consumers engaged in word- were observed in this current study. However, the study of-mouth mainly for altruistic, product involvement, and did not find any evidence of influence of individualism on self-enhancement reasons. The frequency and intensity of either in-group or out-group word-of-mouth. At the same word-of-mouth may also depend on situations, service time, contrary to expectations, uncertainty avoidance ap- quality, types of products and markets, social networks, peared to have little impact on both in-group and out- social class, individual personality, and culture of the group word-of-mouth.

American Marketing Association / Winter 2005 9 It is important to note that any extrapolation of the receptive to the use of word-of-mouth compared to others. results must be made cautiously given that this research This study examined and differentiated those cultural was conducted on a single country and was only repre- values/dimensions that may be more likely to encourage sented by a sample of higher-education student popula- word-of-mouth from those that are less likely to do so. tion. Future research will attempt to broaden the sample Both word-of-mouth and mass media influence the adop- frame across several countries to improve generalization. tion of new products. The results from this research can Also, the support of the influence of culture does not rule provide businesses with greater insight into using word- out the explanations of other factors that are not covered of-mouth as a tool for marketing, especially in the interna- in this study. Consumers’ word-of-mouth behavior may tional context, by examining critical factors that can affect also change depending upon consumption contexts and word-of-mouth. For example, if companies understand on the types of products they consume. Research into the factors that affect business referral behaviors, they can these areas will likely yield a more comprehensive insight then try to create an environment to induce more customer into the word-of-mouth construct. referrals. The results will also enable companies to estimate the potential impact of product or company-related Word-of-mouth is indeed a major force in the market- negative and positive word-of-mouth across different place that should not be taken for granted. Individuals national cultures. with certain cultural values/dimensions may be more

For further information contact: Desmond Lam Faculty of Economics and Commerce University of Western Australia Social Sciences Building South 35 Stirling Highway WA 6009, Australia Phone: +61.8.6488.2890 FAX: +61.8.6488.1055 E-Mail: [email protected]

American Marketing Association / Winter 2005 10 THE EFFECTS OF AUTHENTICITY RIFT ON FIRM PERFORMANCE

Zannie Giraud Voss, Duke University, Durham Glenn B. Voss, North Carolina State University, Raleigh Daniel M. Cable, University of North Carolina at Chapel Hill, Chapel Hill

SUMMARY nonprofit professional theatre industry as the context. We operationalized organizational identity using five organi- This research examines whether internal disagree- zational value dimensions relevant to the nonprofit pro- ments relating to organizational identity – authenticity fessional theatre industry (Voss, Cable, and Voss 2000), rift – influence firm performance. An authentic organiza- and we collected measures from two respondents (i.e., the tional identity represents a true, unique and singular managing director and marketing director) at each theatre. statement of core organizational values and beliefs held We tested the hypotheses by conducting polynomial re- by all organizational insiders and communicated to all gression analyses that modeled firm performance as a stakeholders. Rift in the authenticity of organizational function of the main and quadratic effect of each value identity represents clefts or differences in the core organi- dimension reported by each respondent and the interac- zational values and beliefs held by organizational insid- tion between the managing director and marketing direc- ers. These internal differences signal confusion regarding tor value dimension report. We used two distinct mea- the organization’s core values and lead to divergent goals sures of firm performance: customer support, measured and strategies. as the theatre’s total earned revenue and overall financial performance, measured as net income. The notion of multiple organizational identities has existed since early explorations by Albert and Whetten Rift had a negative impact on firm performance for (1985), who proposed that dual identity organizations four of the five values. These findings offer evidence that possess both normative and utilitarian orientations, and multiple definitions of identity may hinder rather than that organizations may begin with a single identity but help the firm. Surprisingly, rift had a positive effect on acquire multiple identities over the course of time. Thus, firm performance for the market value dimension, defined firms may have a constellation of values with some values as the organization’s commitment to customer satisfac- dominating (Gioia, Schultz, and Corley 2000; Voss, Cable, tion. Firm performance was lower when both marketing and Voss 2000). As long as the identity of the organiza- and managing directors reported that market values were tion – however complex the set of core values and be- either extremely important or not at all important. This liefs – is commonly held and understood, it is still singular suggests that “extreme” market theatres either ignore and congruent. customers in pursuit of artistic experimentation or are too focused on current customer preferences at the expense of When authenticity rift exists, an organization pos- creating exciting new art. Balance appears to be achieved sesses diverse and competing responses to the questions when the marketing director reported that market values “Who are we?” and “What are our core values and were extremely important while the managing director beliefs?” Rift occurs when multiple identities create con- reported that market values were not important. This fusion throughout the organization as to the firm’s iden- result questions the wisdom of diffusing market values tity or when different factions within the organization throughout an arts organization. actively espouse different organizational priorities and values (Albert and Whetten 1985; Golden-Biddle and While much research exists on organizational iden- Rao 1997; Pratt and Foreman 2000). Conceptual argu- tity, this study is unique in its empirical examination of the ments support alternative hypotheses for the relationship effect of internal discrepancies on firm performance. In between authenticity rift and firm performance, including short, skillful management of a singular, clear, authentic (1) no relationship, (2) a negative relationship, or (3) a organizational identity may be more advantageous than positive relationship. multiple, distinctive identities presented to different stakeholders. References available upon request. To test these alternative hypotheses, we conducted a longitudinal, two-wave empirical study using the U.S.

American Marketing Association / Winter 2005 11 For further information contact: Zannie Giraud Voss Duke University Box 90680, 206 Bivins Building Durham, NC 27708–0680 Phone: 919.660.3347 FAX: 919.684.8906 E-Mail: [email protected]

American Marketing Association / Winter 2005 12 POSITIONING IN SERVICE FIRMS: MODEL DEVELOPMENT AND SOME BASIC NORMATIVE GUIDELINES

Charles Blankson, Long Island University, New York Stavros P. Kalafatis, Kingston University, United Kingdom

SUMMARY objectives (functional and symbolic). Furthermore, this study finds that services are managed within two broad Despite the growing activities and interest attached to life cycle stages (fortification and membership) out of the concept of positioning and the fact that the subject is seven (i.e., primal, consolidation, latent, deposition, for- considered to be one of the key elements of modern tification, membership, fallow). Moreover, they employ marketing management (Porter 1996; Kotler 1997), there “the name” (i.e., the brand name) as the dominant posi- appears to be a paucity of documented strategic position- tioning strategy. ing models capable of being applied by managers and advertising executives. This article deals with the actual In conclusion, the general patterns of the components process of managing the concept of positioning. It at- of the model, i.e., decisions and activities, are described tempts to put forward normative guidelines through the and underline the comprehensiveness and robustness of formulation, development and operationalization of a the new model. Concerning the definition of the decisions comprehensive composite strategic positioning frame- and activities incorporated in the framework, on the basis work. Using a triangulation research methodology, a of inductive reasoning, the following three phases and the conceptual positioning framework that is the composite of related managerial decisions and activities have been two extant positioning frameworks (Brand Concept Im- identified: age Management (BCM) by Park et al. (1986) and the Generic Positioning Framework (GPF) proposed by Phase 1 Definition, by management, of the over- Hooley et al. (1998)) is formulated, and given the diffi- all positioning aim(s). culty in the positioning of services (Assael 1985; Zeithaml and Bitner 1996), and the wide spectrum of services Phase 2 Identification of positioning objective(s), available, it was decided to carry out the research in the which are deemed as, appropriate in order United Kingdom plastic card service firms (e.g., credit to achieve the desired positioning aim(s). cards, charge cards, store cards, debit cards industry). The proposed framework thus represents the composite of the Phase 3 – (i) Decisions related to the selection of spe- BCM and GPF positioning framework. The rationale for cific positioning strategies which reflect combining these two models (see Jacoby 1978; Wright both the life cycle stage of the offering and Kearns 1998) stems from the need for the develop- and the objectives identified in phase 2. ment of a comprehensive framework that incorporates the management of positioning over time and at the same Phase 3 – (ii) Management (i.e., implementation and time, ensures marketing synergy, i.e., congruence of re- monitoring) of the positioning related lated activities. activities.

From the findings, the paper puts forward some basic Secondly, based on literature-derived descriptions normative guidelines and in the process, reveals that and in-depth face-to-face interview, the managerial deci- services pursue two key positioning aims (profit and sions and activities were operationalized leading to the market share; profit and status) and two main positioning following normative guidelines.

Positioning Aim(s) Positioning Objective(s) Life Cycle Stages (LCS)

Profit & Market Share Functional Primal Profit & Status Symbolic Consolidation Latent Position Deposition Fortification Membership Fallow

American Marketing Association / Winter 2005 13 Thirdly, the resultant guidelines were applied in the positioning aim(s), objective(s), life cycle stages, and U.K. plastic card services domain and in this process, data strategies. The latter has been distilled into a simple were collected using a combination of face-to-face inter- summary and is presented in Table 1. Our study calls for views (executives/experts), survey (target group), and new ways of thinking about and conceptualizing the content analysis (company communications). These have application of positioning in service organizations. been used in the descriptions of the four card brands’

TABLE 1 Summary of Application of the Comprehensive Strategic Positioning Model

Overall Positioning Strategies Employed, i.e., Overlapping in Executives/Experts, Card Brand Positioning Positioning LCS Communications, Aim(s) Objective(s) and Target Group

Credit Card: Profit and Market Functional Fortification Reliability and Visa Share and Membership The Brand Name

Charge Card: Profit and Status Symbolic Membership Top of the Range Amex and The Brand Name

Store Card: Profit and Status Functional Fortification Service, Value for Money, M & S and The Brand Name

Debit Card: Profit and Market Functional Fortification The Brand Name Switch Share

For further information contact: Charles Blankson Department of Marketing College of Management Long Island University – C. W. Post Campus Brookville, NY 11548–1300 Phone: 516.299.3094 FAX: 516.299.3917 E-Mail: [email protected]

American Marketing Association / Winter 2005 14 ANTECEDENTS AND CONSEQUENCES OF ROLE CLARITY IN EXPLAINING EMPLOYEE-PERCEIVED SERVICE QUALITY IN CALL CENTERS

Avinandan Mukherjee, Montclair State University, New Jersey Neeru Malhotra, Aston University, United Kingdom

SUMMARY to influence decisions about their job (Teas 1983). Super- visory consideration refers to leader behaviors concerned Role clarity as perceived by frontline service employ- with promoting the comfort and well-being of the subor- ees is the extent to which they receive and understand dinates (Boshoff and Mels 1995). Finally, team support – information required to do the job in the manner that is support from co-workers – not only provides an outlet to expected by the management (Kelly and Hise 1980; Teas service burnouts arising from difficult service encounters, et al. 1979). Role clarity is critical to delivering service but also acts as a channel for disseminating practical quality in service organizations. This is particularly true in knowledge and information relating to the jobs of the call centers, where customer contact employees are fre- frontline employees (Sergeant and Frenkel 2000). Key quently subjected to conflicting demands of cost effi- consequences of role clarity are organizational commit- ciency and customer service, thus leading to lower per- ment, job satisfaction, and service quality. Job satisfac- ceptions of role clarity. In the absence of adequate role tion and organizational commitment also affect service clarity, call center representatives (CCR) could end up quality. Organizational (affective) commitment refers to misguiding customers, providing wrong information to the employee’s emotional attachment to, identification them, transferring calls unnecessarily, putting calls on with and involvement in the organization (Meyer and hold or asking the customer to call later, all of which Allen 1991). Job satisfaction refers to the extent to which would lead to poor service quality. Lack of role clarity can the employees feel satisfied with the kind of work they do also have negative effects on job satisfaction and organi- and with the nature of their job. Service quality is the result zational commitment (Ruyter et al. 2001). Hence, the key of human interaction between the service provider and the purpose of this study is to investigate how frontline staff’s customer. Service quality as perceived by frontline em- role clarity in telephonic voice-to-voice service encoun- ployees is chosen as the performance consequence of their ters affects their perception of the service quality deliv- role clarity, as “customer contact employees are well ered by them. placed to effectively judge the quality of services that they deliver” (Sergeant and Frenkel 2000, p. 19). We adapted We also examine in this research the influence of the SERVQUAL instrument (Parasuraman et al. 1988) to selected antecedents and consequences of role clarity in include only those dimensions that relate to the employ- explaining service quality. The conceptual model is pro- ees’ service quality. As far as possible, measurement vided in Figure 1. According to Singh (1993), the study of items for the variables were drawn from standardized relationships between organizational factors and role clarity scales well established in literature having acceptable is rooted in the path-goal theory of leadership (House reliabilities. However, some items were adapted and the 1971) and the job characteristics model (Hackman and shortened versions of some scales were used based on a 2- Oldham 1976). Key antecedents of role clarity are five stage pre-test. All items were linked to five point Likert variables mostly relating to organizational job design type scale ranging from “strongly agree” to “strongly characteristics – two job-related variables (feedback and disagree.” autonomy), two supervisory variables (participation and supervisory consideration), and one social variable (team- We based our study on an “in-house” call center of a support). Feedback refers to the degree to which carrying major retail bank, where customer satisfaction is one of out the work activities required by the job results in the the main objectives. Self-administered anonymous ques- individual obtaining direct and clear information about tionnaires were mailed to their “Head of Customer Ser- the effectiveness of his/her performance (Hackman and vices” responsible for call centers who further forwarded Oldham 1976). Autonomy is the degree to which the job them to the respective CCRs. Questionnaires were distrib- provides substantial freedom, independence, and discre- uted to 710 call center employees. Three hundred eighty tion to the individual in scheduling the work and in questionnaires were returned to the researchers, provid- determining the procedures to be used in carrying it out ing a response rate of 53.5 percent. These in turn yielded (Hackman and Oldham 1976). Participation in decision- 342 useable questionnaires. making refers to the degree to which employees are able

American Marketing Association / Winter 2005 15 A structural equation model is developed and tested Our study helps to understand the nature and signifi- on this sample of 342 call center representatives. A two- cance of role clarity in customer service. Role clarity stage approach was followed (Anderson and Gerbing affects service quality positively, and directly as well as 1990). First, the measurement model was estimated and indirectly through organizational commitment and job standardized regression coefficients obtained, and sec- satisfaction. Although job satisfaction does not affect ond, the structural model was estimated. The final model service quality directly, it does so indirectly through satisfied all three criteria (absolute fit, incremental fit and organizational commitment which has a positive effect on parsimonious fit) to determine goodness-of-fit for the service quality. Further, managers need to act upon the model. Of the 11 hypotheses, all except H2, H4, and H11 key antecedents of role clarity in call centers. Detailed were accepted (see Figure 1). scripting and setting clear expectations in call centers would improve role clarity. Effective feedback based on Our research reveals that role clarity plays a critical random call recording becomes vital in a highly mecha- role in explaining service quality. Further, feedback, nized call-center environment. Participation in decision- participation and team support positively influence role making by the customer contact employees on issues clarity, which in turn increases job satisfaction, organiza- concerning their jobs and going beyond scripts contribute tional commitment and service quality. However, au- to role clarity. Team support, in terms of helpful and tonomy and supervisory consideration have no signifi- supportive team workers, further assists in role clarity by cant effect on role clarity. Our research suggests that disseminating useful information concerning various is- boundary personnel in service firms should strive for sues in their jobs that are not explicitly known or in- higher perceived role clarity to be able to deliver higher structed, and through sharing each other’s experiences service quality. Hence, this study establishes linkages and learning from them. Overall, our research suggests between internal marketing and external marketing in that boundary personnel in service firms should strive for service firms, demonstrating that customer contact em- higher perceived role clarity to be able to deliver higher ployees, who are clear of their job roles, feel satisfied and service quality. committed and deliver better service quality to customers.

FIGURE 1 The Research Framework with Hypothesized Relationships and Structural Model Coefficients

Feedback

H1 (0.414*)

Autonomy H2 H7 (0.12*) Organizational Commitment

Participation H3 (0.19*) RoleRole Service clarityClarity H9 (0.226*) Quality H4 H8 (0.652*) SupervisorH4y Consideration H6 (0.295*) Job H11 Satisfaction H5 (0.12*) Team Support

*Significant at p < .01, std parameter estimate within parenthesis.

American Marketing Association / Winter 2005 16 REFERENCES Human Resource Management Review, 11 (1), 61– 89. Anderson, J.C. and D.W. Gerbing (1990), “Structural Parasuraman, A., V.A. Zeithaml, and L.L. Berry (1988), Equation Modeling in Practice: A Review and Rec- “SERVQUAL: A Multiple Item Scale for Measuring ommended Two-Step Approach,” Psychological Consumer Perceptions of Service Quality,” Journal Bulletin, 103 (3), 411–23. of Retailing, 64 (1), 12–40. Boshoff, C. and G. Mels (1995), “A Causal Model to Ruyter, K. De, M. Wetzels, and R. Feinberg (2001), “Role Evaluate the Relationships Among Supervision, Role Stress in Call Centres: Its Effects on Employee Per- Stress, Organizational Commitment, and Internal Ser- formance and Satisfaction,” Journal of Interactive vice Quality,” European Journal of Marketing, 29 Marketing, 15 (2), 23–35. (2), 23–42. Sergeant A. and S. Frenkel (2000), “When Do Customer Hackman, J.R. and G.R. Oldham (1976), “Motivation Contact Employees Satisfy Customers?” Journal of Through the Design of Work: Test of a Theory,” Service Research, 3 (1), 18–34. Organizational Behaviour and Human Performance, Singh, J. (1993), “Boundary Role Ambiguity: Facets, 16, 250–79. Determinants, and Impacts,” Journal of Marketing, House, R.J. (1971), “A Path-Goal Theory of Leadership 57 (April), 11–31. Effectiveness,” Administrative Science Quarterly, Teas, R.K., J.G. Wacker, and R.E. Hughes (1979), “A 321–39. Path Analysis of Causes and Consequences of Kelly, J.P. and R.T. Hise (1980), “Role Conflict, Role Salesmen’s Perceptions of Role Clarity,” Journal of Clarity, Job Tension, and Job Satisfaction in the Marketing Research, 16 (August), 335–69. Brand Manager Position,” Journal of the Academy of ______(1983), “Supervisory Behaviour, Role Marketing Science, 8 (2), 120–37. Stress, and the Job Satisfaction of Industrial Sales- Meyer, J.P. and N.J. Allen (1991), “A Three-Component people,” Journal of Marketing Research, 20 (Febru- Conceptualization of Organizational Commitment,” ary), 84–91.

For further information please contact: Avinandan Mukherjee Marketing Department Montclair State University Montclair, NJ 07043 Phone: 973.655.5126 FAX: 973.655.7673 E-Mail: [email protected]

American Marketing Association / Winter 2005 17 THE STATUS OF CROSS-FUNCTIONAL EDUCATION IN UNDERGRADUATE MARKETING CURRICULA WITHIN MANAGEMENT EDUCATION

Victoria L. Crittenden, Boston College, Chestnut Hill Elizabeth J. Wilson, Suffolk University, Boston Cameron Duffy, Boston College, Chestnut Hill

SUMMARY tions and teamwork that is facilitated and enhanced by advances in technology. It has been 20 years since Behrman and Levin suggested that real-world business problems “do not yield to 2. Graduates with integrative academic experiences that a single-discipline solution” (1984, p. 142). During this build on strong functional expertise have a competi- 20-year period, there have been numerous calls for inte- tive advantage in the job market and a greater chance gration across college and university curriculums (cf., of long-term success. Association of American Colleges 1985; Boyer 1987) and within colleges of business in particular (Porter and Regarding the integration of marketing and other McKibbin 1988). Schelfhaudt and Crittenden (2005) re- functional areas, Crittenden (2003) and Barber et al. port, however, that while most MBA curricula have been (2001) suggest that the marketing function is in a bound- revised to accommodate the trend toward cross-func- ary-spanning role in facilitating increased functional inte- tional integration, the curricula of undergraduate business gration. It is not surprising, then, that many cross-func- programs frequently fail to adapt to the changing needs of tional, academic examples include interactions with mar- modern organizations. To meet these needs, employees keting. As suggested by Alden et al. (1991), these ex- must be skilled in organizational flexibility, teamwork, amples cover a wide range of integration models, both and cross-functional communication and collaboration within and outside the business school. Additionally, the (Smart and Barnum 2000; Sheth 2002). There is concern functions included in the academic examples are consis- as to whether undergraduate students will matriculate tent with the results of a 2002 study which found that with the people and technical skills needed in today’s participation in new product development included mar- workplace (cf., Newman 1999; Parker 2003). keting, quality, manufacturing, engineering, and purchasing (Goldense and Schwartz 2002). Marketing has been suggested as the broadest area in business management and, as such, the boundary-span- Research Questions and Methodology ning function with a company (Crittenden 2003). Aca- demically, Barber et al. (2001, p. 240) suggested that the The current research addresses three major questions marketing department in a college of business “is in a with respect to the business school’s marketing depart- powerful position to serve an important role in guiding ment and its integration with other functional areas for and binding together other areas” in the facilitation of undergraduate management education: cross-functional teaching and learning. Following this practitioner and academic line of logic, the study reported 1. Does integration occur between marketing and other here assesses the state of cross-functional management functional areas? education from the perspective of the chairs of marketing departments in universities across the United States. 2. How is the integration accomplished?

Cross-Functional Education 3. What are the impediments to integration?

Several researchers have examined the need for cross- In the spring of 2004, a “Status of Cross-Functional functional integration in the business school curriculum Business Education in the United States” survey was sent (e.g., Alden et al. 1991; DeMoranville, Aurand, and to marketing department chairs at colleges and universi- Gordon 2000; Schelfhaudt and Crittenden 2005). Based ties across the United States. The purpose of the survey on these research findings, there are two major reasons for was to benchmark the state of cross-functional under- integration within the business school program: graduate marketing education by addressing the three major research questions identified above. The survey 1. Cross-functional integration is the norm in business, resulted in a 15 percent response rate, slightly below the resulting in increased interdepartmental communica- 18 to 57 percent response rates found in previous studies

American Marketing Association / Winter 2005 18 utilizing academic directories as the sampling frame lable by individual faculty members and less time-inten- (Andrus, Laughlin, and Norvell 1995). sive than more comprehensive programs. In terms of integration in the marketing classroom, respondents re- Results ported some difficulty at finding materials, agreed that teaching experience is an important resource for effective It appears that marketing educators are participating delivery of cross-functional content, and suggested that in some level of cross-functional education. Interestingly, industry experience is a plus in cross-functional teaching. cross-functional education is more of a priority at private More importantly, educators may not be doing a good job schools than public schools. The majority of integration conveying the importance of cross-functional learning. takes place in Geiger and Dangerfield’s (1996) “integrat- References available upon request ing project curriculum” model. This level is more control-

For further information contact: Vicky Crittenden Boston College 450 Fulton Hall Chestnut Hill, MA 02467 Phone: 617.552.0430 FAX: 617.552.6677 E-Mail: [email protected]

American Marketing Association / Winter 2005 19 ON DIFFERENT TEACHING PEDAGOGIES: WHAT HAPPENS TO YOUR COURSE EVALUATIONS?

Alma Mintu-Wimsatt, Texas A&M University – Commerce, Commerce Kendra Ingram, Texas A&M University – Commerce, Commerce Mary Anne Milward, Texas A&M University – Commerce, Commerce Courtney Russ, Texas A&M University – Commerce, Commerce

SUMMARY The results suggest that the traditional students consistently ranked the professor the highest in all five A recent conversation with several colleagues evaluative criteria. Looking at each of the evaluative prompted quite an animated discussion regarding various criteria, only the variable “grading policies” produced modes of delivering business education and the role of slightly different results. That is, for “teaching skills,” instructional technology. Some vehemently claimed that “rapport with students,” “knowledge of material,” and the traditional face-to-face pedagogy is by far the most “presentation skills” – the traditional class was signifi- effective means of teaching students. Others purported cantly different (at p < .01) from ITV and Internet-based that technology mediated distance learning modes are just methods. No statistical differences were found between as effective. Interestingly enough, regardless of how each ITV and Internet-based groups on the said four variables. colleague felt about various teaching pedagogies – ultimately, a consensus was reached. That is, the group Regarding the variable “grading policies,” ITV stu- agreed that their teaching evaluations had “gone haywire” dents ranked the professor the lowest. ITV result was with distance education classes despite the advances in statistically different from traditional and Internet-based instructional technology. This consensus opinion prompted at p < .01. Meanwhile, no statistical difference was found us to investigate how teaching pedagogies affect students’ in the “grading policies” between the traditional and course evaluations. That is, does delivery method affect Internet-based classes. how students evaluate their instructors? This findings in this study compared how one sea- The primary purpose of this study was to compare soned professor’s evaluative rating [who has been recog- MBA students’ evaluative perceptions of their professor nized with several university teaching awards] was sig- in three different classroom contexts: traditional, ITV and nificantly affected by the mode of delivery. It appears that Internet-Based Marketing Management course. This study instructors are rated better in the traditional face-to-face investigated how students’ evaluation of the instructor context. However, it is noteworthy to mention that while was affected when different teaching pedagogies are students rated both ITV and Internet-based modes lower, used. MBA students evaluated their instructor based on the rating itself was still relatively favorable (i.e., means five evaluation criteria: (1) teaching skills, (2) rapport of less than 2 in a scale of 1–5). with students, (3) grading policies, (4) knowledge of materials, and (5) presentation skills Given today’s student needs and university budget- ary constraints, it is a foregone conclusion that instruc- MBA students enrolled in the Marketing Manage- tional technology is here to stay. Unfortunately, while ment course during their first year of the graduate program technology can significantly improve teaching effective- served as the sample groups for this study. Most of the ness [through the use of e-mails, power point presenta- students are in the 25–30 age range and have worked for tions, web pages, etc.] it can also provide many chal- at least two years. The students were requested to com- lenges. Perhaps, there is none more intimidating to educa- plete a standardized University evaluation form. For the tors than the seemingly adverse impact it has on student Internet-based students, a second evaluation form was course evaluations. After all, most tenure and promotion utilized to assess online technology-related issues. Course decisions hinge on students’ evaluative ratings of their evaluation forms were distributed during the last week of professors. classes.

American Marketing Association / Winter 2005 20 For further information contact: Alma Mintu-Wimsatt Department of Marketing & Management Texas A&M University – Commerce Commerce, TX 75429 Phone: 903.886.5698 FAX: 903.886.5702 E-Mail: [email protected]

American Marketing Association / Winter 2005 21 AN ASSESSMENT OF A CONSUMER BEHAVIOR MULTIPLE-CHOICE QUESTION TAXONOMY

John R. Dickinson, University of Windsor, Ontario

SUMMARY H2: The mean percent of correct answers to questions classified as recall is greater than the mean percent of This study conducts an assessment of the taxonomy correct answers to questions classified as applied. into which multiple-choice questions are classified in a question bank accompanying a widely adopted consumer H3: There is a significant interaction between classified behavior text (Solomon, Zaichkowsky, and Polegato [SZP] question difficulty and classified question cognitive 2002). The study provides not only an assessment of that skill on percent of correct answers. particular question bank, but also a pro forma for similar assessments of other question banks. Multiple-choice H4: The mean point-biserial correlation of questions clas- questions are classified by SZP on two dimensions: ques- sified as moderate is greater than the mean point- tion difficulty (easy, moderate, difficult) and “. . . the main biserial correlation of questions classified as either cognitive skill it is designed to test. . .” (Forrest 2002, easy or difficult. “Preface”) (applied, recall). H5: The mean point-biserial correlation of questions clas- “The analysis of multiple-choice items typically be- sified as recall is not significantly different from the gins with the computation of a difficulty and a discrimina- mean point-biserial correlation of questions classi- tion index for every item.” (Aiken 1991, p. 78) In this fied as applied. study question difficulty was operationalized as the percent of correct responses for a given question. The mean H6: There is no significant interaction between classified percent was 55.7 percent, ranging from 2.4 percent to question difficulty and classified question cognitive 100.0 percent. Discrimination was operationalized as the skill on discriminating ability. point-biserial correlation between a student’s total exam score (excluding the focal question) and the dichotomy of Data were drawn from two midterm examinations whether the student answered the question correctly or (40 and 42 students, respectively) covering chapters one incorrectly. The mean point-biserial correlation was 0.218, through eight and two noncumulative final examinations ranging from -0.364 to 0.669. (41 and 42 students, respectively) covering chapters nine through seventeen. For each examination, six questions H1: The mean percent of correct answers is inversely were selected at random from each chapter on a systematic related to classified question difficulty. basis, for a total of 204 questions.

TABLE 1 Factorial Analysis of Variance Significance Levels

Criterion

Factor Measured Discrimination Difficultya Indexb

Classified Difficulty 0.031 0.876

Cognitive Skill 0.103 0.011

Difficulty x Cognitive Skill 0.983 0.948

a Arc sine transformed b Fisher’s r to z transformed

American Marketing Association / Winter 2005 22 H1 through H3 and H4 through H6 were analyzed for the respective criteria of percent answered correctly using a 3 (difficulty levels) x 2 (cognitive skills) factorial and point-biserial correlation are presented in Table 2. analysis of variance. Significance levels, i.e., p-values, for References available upon request. all statistical tests are presented in Table 1. Mean values

TABLE 2 Mean Criterion Values

Percent Correct Point-Biserial Correlations

Factor Level Recall Applied Row Recall Applied Row

Easy 65.25 59.65 63.38 .251 .172 .225

Moderate 56.24 50.30 54.02 .251 .170 .221

Difficult 54.03 48.77 52.28 .231 .169 .210

Column 57.68 51.98 .243 .170

H1 and H2 were supported, H3 was not supported. H4 and H5 were not supported, H6 was supported.

John R. Dickinson Odette School of Business University of Windsor Windsor, Ontario Canada N9B 3P4 Phone: 519.243.4232, Ext. 3104 E-Mail: [email protected]

American Marketing Association / Winter 2005 23 A COMPARISON OF CONSUMERS’ RESPONSES TO TRADITIONAL ADVERTISING AND PRODUCT PLACEMENT STRATEGIES: IMPLICATIONS FOR ADVERTISERS

Terry Daugherty, University of Texas, Austin Harsha Gangadharbatla, University of Texas, Austin

SUMMARY (Petty and Cacioppo 1983). Thus, information is processed actively when deemed relevant and relegated to a Product placement is a form of advertising and pro- secondary status when relevance is perceived as low. For motion in which brands are placed in television shows, the most part, product placement is more likely processed movies, or other entertainment content to generate visibil- through the peripheral route since the message is second- ity and achieve audience exposure. Proponents of product ary to that of the media content. For instance, while placement cite several potential advantages for embrac- watching movies or television shows the likelihood that a ing this method, such as a long shelf life, prominent viewer is more focused on the placed product than on the exposure, and enhanced realism. For example, even years programming content is low. While elaboration of mes- after a movie is released or a television show airs, adver- sages can vary depending consumer motivation, the im- tisers are still able to receive some level of benefit from plications for processing product placement is important DVD/video releases and television re-runs (Morton 2002). when measuring the effectiveness of this tactic given the Furthermore, product placement allows advertisers to inherent differences between various types of media and escape “commercial zapping” because consumers cannot advertising. Gupta and Lord (1998) compared product skip over products placed within media content. In fact, placement with traditional advertising and found that television networks believe that by 2007, there will be prominent placements outperformed traditional advertis- 24.7 million DVR owners (Digital Video Recorders) ing. However, this work does not lend itself toward resulting in a loss of about $6.6 billion in advertising understanding product placement occurring in other me- revenue. However, there are common disadvantages as- dia modalities, such as television, computer games and sociated with product placement, such as the lack of music videos (Nelson 2002). control over how products are portrayed or incorporated into a scene or storyline. Further, advertisers have no To explore these issues, five hundred adults were influence over how successful media programming will randomly selected from an online panel and asked to be, making it difficult to predict where to place brands for complete a thirty-item survey. Subsequently, a total of maximum exposure. Nevertheless, advertisers continue 227 completed questionnaires were collected resulting in to spend as much as $20 million to have their products a response rate of 45.4 percent (227 out of 500). The appear in media content (Grover 2004). variables measured centralized around four categories: opinions about advertising, opinions about multiple forms While a considerable amount of research has ex- of product placement, perceived advertising effective- plored the effects of product placement, key issues remain ness, and perceived effectiveness of multiple forms of for understanding this strategic tactic. For instance, much product placement. of the research investigating product placement to date has advocated or used memory-based tests (either recall or The findings suggest that in general product place- recognition) to assess effectiveness (Brennan and Dubas ment is less effective in generating brand awareness than 1999; Eddington 1991; Pracejus 1995; Russell 1998; traditional advertising, but more effective in stimulating Weaver and Oliver 2000) with very little work done interest and generating immediate or short-term product comparing the effectiveness of product placement versus purchase intentions. Further, while attitudes toward prod- traditional advertising. Therefore, the purpose of this uct placement in movies and television were elevated over study is to explore consumer attitudes toward the various those in video games and music lyrics, more work is forms of product placement (i.e., movies, television, video needed in this area before any conclusions can be made games, music lyrics, etc.) and investigate how these differ discounting these nontraditional alternatives. from traditional advertising. Academic theorists are poised to expand our knowl- According to the Elaboration Likelihood Model, edge in this area as research exploring these issues has consumers process information through a central route both important industry and theoretical implications for when they are highly involved or interested in content and explaining the nature of product placement in media. a peripheral route when involvement or interest is low Empirical research is needed though to fully conceptual-

American Marketing Association / Winter 2005 24 ize this tactic and identify exactly how product placement and lead to future research in this area. While advertisers impacts affective (attitude) responses rather than simply are continuing to search for alternative tactics to reach cognitive (memory). The objective of this study was not their target audiences, media professionals need to be to suggest definitive attitudinal or behavioral preferences cautious in how they approach these methods, as more over product placement or traditional advertising. Rather, work is needed to extend our understanding of product the goal was simply to expand this growing body of work placement. References available upon request.

For further information contact: Terry Daugherty Department of Advertising University of Texas at Austin 1 University Station A1200 Austin, TX 78712 Phone: 512.471.8917 FAX: 512.471.7018 E-Mail: [email protected]

American Marketing Association / Winter 2005 25 NEW BRAND WORLDS: A COMPARISON OF COLLEGE STUDENT ATTITUDES TOWARD BRAND PLACEMENTS IN FOUR MEDIA

Yongjun Sung, The University of Georgia, Athens Federico de Gregorio, The University of Georgia, Athens

SUMMARY (attitude toward advertising in general and brand involvement). Discussions of brand placement in the popular press and academic literature tend to predominantly revolve Employing a convenience sample of college students around film. However, recent content analytic work (e.g., (n = 437), the results of this study reveal that opinions de Gregorio and Sung 2004; Ferraro and Avery 2000; regarding movie and TV show placements tend to be Friedman 1991) demonstrate that brand appearances within rather similar and more positive (perhaps due to perceived other media are prevalent and continue to increase in similarities of their characteristics) than those dealing incidence as time progresses. Brand placement in other with music and video games. Respondents tend to per- media is not a recent phenomenon. Advertisers produced ceive music and video game placements as: more inappro- and sponsored television shows in the 1950s such as priate, less effective enhancers of content realism, inferior Texaco Star Theater (McCarthy 2001), the Sega video sources of brand information, less influential in purchase game company placed Marlboro ads in its early racing behavior, and more unethical and misleading. games (Emery 2002), and a song from 1903 entitled “Under the Anheuser-Busch” asked listeners to “Come, As no previous study has looked at content genre come, drink some Budwise [sic] with me” (Agenda, Inc. within the context of brand placement, our incorporation 2003). throws further light on and expands the knowledge of consumer perceptions of placement strategy. Finding of Although not voluminous, there has been a steady the study indicates that film and television have more stream of academic research since the late 1980s on the genres considered appropriate for brand integrations than strategy of brand placement. Although scholarly brand music or video games. It is interesting to note that ani- placement research has been ongoing since the late 1980s mated fare for both movies and television is considered (Steortz 1987), it has largely focused on the context of particularly inappropriate for brand placements by more films, with a dearth of investigations of the practice in than 50 percent of respondents. It is also notable that genre other media. Some commonly investigated factors have appropriateness for music tends to be split based on included: extent and type of placement (e,g., Devanathan “mainstream-ness” – country, rock, and hip hop being et al. 2002; Sapolsky and Kinney 1994), audience recall considered appropriate (genres generally well represented and recognition of placed brands (e.g., Gupta and Lord on the weekly mainstream music charts) and blues, jazz, 1998; Ong and Meri 1994), and qualitative explorations Christian, and classical/opera inappropriate (genres rarely of consumers assimilation and interpretation of the mean- on the mainstream music charts). For video games, sports ing of brands placed (DeLorme and Reid 1999). is clearly the genre of choice among respondents (it is possible that racing was considered a type of sport, thereby In addition, a distinct sub-stream of the literature has explaining the closeness of percentages) and is also viewed been devoted to the gauging of audience opinions about as especially appropriate for brand placement as a televi- and attitudes toward brand placements in films. While sion genre. This would seem to point to an association of numerous attitudinal studies of brand placement in films sports with branding, which is of intuitive sense as sports exist, to the authors knowledge only a single, qualitative events tend to be brimming with sponsorships and adver- study has yet examined attitudes toward brand placement tisements. in multiple media (DeLorme 1998). This exploratory study builds on and contributes to previous work by In addition, the present study provides evidence that serving as the first quantitative investigation of attitudinal those who are more positively disposed towards advertis- responses to brand placement in films, television shows, ing in general are also likely to be more accepting of its popular songs, and video games. Its overall objectives are specific forms (in this case placed within media content). to examine and compare the attitudes of college student Further, there exists a positive relationship between in- consumers with regards to brand placement across differ- volvement with brands and positive perceptions of place- ent media. In addition, this study also investigates two ment strategy. Thus, our results provide preliminary evi- potential antecedents of attitudes toward brand placement dence that two ways advertisers can potentially segment

American Marketing Association / Winter 2005 26 their brand placement audience is according to acceptance more detailed and precise points of segmentation for the of advertising in general and level of involvement with two criteria than our separation of high/low and more/less. brands. Greater research is needed, however, to develop

For further information contact: Yongjun Sung Department of Advertising and Public Relations Grady College of Journalism and Mass Communication The University of Georgia Athens, GA 30602 Phone: 706.549.0988 FAX: 706.542.2183 E-Mail: [email protected]

American Marketing Association / Winter 2005 27 BRANDS IN ACTION: THE ROLE OF BRAND PLACEMENTS IN BUILDING CONSUMER-BRAND IDENTIFICATION

Andrew T. Stephen, University of Queensland, Australia Leonard V. Coote, University of Queensland, Australia

SUMMARY target consumers, but the placement also shows brands being used or consumed in natural settings. This may be Brand placement in mainstream media such as films, more believable, since media characters with which con- television programs, computer and video games, and sumers might relate to and identify with use the placed music videos has become a common practice, and a brands. Social identity theory is thus relevant in this component of many integrated marketing communication context. A conceivable outcome of brand placements strategies. There are now countless examples of brand putting brands in “action” in the eyes of consumers may placements in media, particularly in films and television be the development of consumer-brand identification. programs. Some recent placements in television programs Identification literature has considered image-, knowl- include General Motors’ products in CBS’s Survivor and edge-, and social-related antecedents of identification Bravo’s Queer Eye for the Straight Guy, Mitsubishi, (e.g., Bhattacharya and Sen 2003). Brand placements American Express, and Coors in NBC’s The Restaurant, showing brands in apparently realistic (yet contrived) Coca-Cola in Fox’s American Idol, MSNBC in NBC’s contexts may signal richer image, knowledge, and social The West Wing, Dell Computer in Fox’s 24, and the information about brands to potential consumers than Trump corporate brand as the focus of NBC’s The Ap- other forms of marketing communications due to the more prentice. Most commercial studio films feature brand realistic medium. Examining brand placements and con- placements, such as Fox News in 20th Century Fox’s Day sumer-brand identification then helps not only to advance After Tomorrow, and the suite of brands placed through- knowledge of the effectiveness of this communication out the recent James Bond films (including Omega, BMW, device, but also to improve our understanding of how to Aston Martin, Heineken, and Visa). actualize deep-level bonds of identification between consumers and brands. Past research on brand placement has focussed on measuring the effectiveness of placements with respect to A conceptual framework advanced in this paper consumer memory and recall and attitudes towards brands, proposes a process through which image-, knowledge-, practitioners’ views on brand placement, and consumers’ and social benefit-related characteristics of brand place- attitudes towards the practice of brand placement with ments contribute to the development of identification- respect to mostly ethical and moral considerations. Little based bonds between consumers and brands. Loyalty or extant research has considered more enduring and funda- relational outcomes of identification are also considered mental processes or outcomes of brand placements. This (i.e., brand loyalty, brand advocacy, and brand defence). paper links brand placement with brand loyalty outcomes This process is thought to be moderated by characteristics through a process of consumer-brand identification. The of a marketing communication strategy of which a given integration of consumer-brand identification with a non- placement is part, and characteristics of the focal brand. traditional marketing communications strategy such as Consumer characteristics with respect to (1) attitudes brand placement is novel. Despite their prevalence in towards brand placement (e.g., acceptance of the device), marketing, the processes for leveraging brands to create and (2) personal relevance of the focal brand are also strategically valuable communication mechanisms and posited as moderators of this process. highly loyal consumers is not yet fully understood. The existing literature has built a detailed and thorough foun- Implications for theory and practice are considered. dation for understanding brand placement and its poten- The main contribution of this paper is the integration of tial benefits to advertisers and marketers, however it is yet social identity theory and consumer identification with to consider the contributions brand placement makes to the brand placement literature. These theories provide developing strong social and emotional bonds between compelling justifications for brand placement as a mar- consumers and their brands. keting communication strategy because they explicate the deeper connections that can form between consumers and Brand placements are a unique form of marketing their brands, and the attitudinal and behavioral loyalty- communication in that they allow consumers to view related outcomes of these connections that are possible. In brands “in action.” When brands are placed in popular terms of practical implications, this paper provides mar- mass media, this not only provides exposure to potential keters and brand managers with a viable approach to

American Marketing Association / Winter 2005 28 fostering consumer-brand identification. Bonds of identi- with brands and the outcomes of this process. The ability fication between consumers and their brands are difficult of a brand placement to show a brand in “action” and to to break; a loyal customer base with a high level of personify a brand by associating it with media characters consumer-brand identification is strategically valuable in a realistic and believable manner makes it a unique and a potential source of competitive advantage. communication device, and one that is conducive to fostering consumer identification with a brand. While Although brand placement has been used in mass advertisers and marketers rightly perceive brand place- media for many decades, its current growth and economic ment to be an effective communications and brand-build- value across a variety of media warrants a deeper exami- ing strategy, this paper considers the possibility that the nation of its effectiveness as an emerging “hybrid” com- benefits advertisers can potentially enjoy from investing munications strategy (cf., Balasubramanian 1994). This in such a strategy may be more wide-reaching and valu- paper considers placement from a different perspective by able than previously thought. References available upon examining its role in the process of consumers identifying request.

For further information contact: Andrew T. Stephen UQ Business School University of Queensland Brisbane, Qld 4072 Australia Phone: +61.7.3365.9721 FAX: +61.7.3365.6988 E-Mail: [email protected]

American Marketing Association / Winter 2005 29 THE MARKETING COCOMPETITION PROCESS AND STRATEGIC ALLIANCE INSTABILITY: A SYSTEM DYNAMICS MODEL

Anna Shaojie Cui, Michigan State University, East Lansing Roger J. Calantone, Michigan State University, East Lansing

SUMMARY willingness to continue the partnership is based on the firm dependence on the partner, satisfaction for past To gain speed to market and to enable firms to address cooperation, and the learning potential in the partnership. markets otherwise inaccessible in the short run, marketing alliances often form. The coexistance of cooperation and Embedded in the model are positive loops capturing competition between partners makes alliances a process the force of cooperation and negative loops capturing the of cocompetition. The force of cooperation based on force of competition. Through the positive loops the common benefits holds an alliance together, while the willingness to continue the partnership builds up itself. force of competition based on private benefits tears an For example, increasing with the willing to continue, alliance apart. The two countervailing forces interact with investment further enhances the firm’s dependence and each other during the partnering process and influence the willingness to continue. Similarly, willingness to con- stability of an alliance. Previous research has recognized tinue increases the cooperation effort and correspond- competition as a source of alliance instability, however, ingly the benefits generated from the partnership, which largely due to the limitation of methodologies employed in turn increases the willingness to continue. Through the in extant literature, few research has taken a dynamic view negative loops the willingness to continue the partnership and studied the cocompetition process overtime. reduces itself. In respect to benefit sharing, disadvantage in sharing benefits, increased by high dependence and System dynamics modeling is a simulation method reduced bargaining power, decreases the firm’s satisfac- that has been widely applied to model all kinds of complex tion for the relative outcome and reduces its willingness to systems. This methodology provides a way to study continue. Related to partner availability, learning im- complex interactions and feedbacks overtime. Having not proves a firm competency and increases the availability of been widely used in marketing, more specifically in alternative partners, which in turn decreases the firm’s interfirm partnerships, this methodology has the potential dependence and willingness to continue. Also, because of to improve our understanding of the interaction between opportunism, a firm dependence on the partner firm cooperation and competition and its influence on the decreases the partner firm cooperation effort, which re- instability of an alliance. duces the focal firm learning and willingness to continue.

In this study we build a system dynamics model in the The model is run under a symmetric setting where all context of horizontal learning alliances (Figure 1). The parameters are set the same for the two firms and an dyadic model captures the two partner firms’ learning, asymmetric setting where some parameters are set differ- increase in competitive advantage, dependence and will- ent for the two firms. The simulation results confirm that ingness to continue the partnership, with “willingness to when the force of competition overweighs the force of continue the partnership” directly related to the stability of cooperation, the propensity of instability is increased. an alliance. The model is symmetric between firm A and Further, when two firms are perfectly symmetric in learn- B. For both firms, private learning increases individual ing capability, partner knowledge and intent of appropria- firm’s competitive advantage, while collective learning tion, the partnership is highly stable, while asymmetry in increases the joint competitive advantage, which is shared these characteristics increases the propensity of instabil- by the two firms; dependence increases with investment in ity. the partnership and unavailability of alternative partners;

American Marketing Association / Winter 2005 30 FIGURE 1 A System Dynamics Model of Cocompetition in Learning Alliances

For further information contact: Anna Shaojie Cui Department of Marketing and Supply Chain Management The Eli Broad College of Business Michigan State University N370 Business College Complex East Lansing, MI 48824 Phone: 517.432.5535 E-Mail: [email protected]

American Marketing Association / Winter 2005 31 FOCAL SUPPLIER OPPORTUNISM IN RETAILER CATEGORY MANAGEMENT

Neil A. Morgan, University of North Carolina at Chapel Hill Anna Kaleka, Cardiff University, United Kingdom Richard A. Gooner, Scott, Madden & Associates, Raleigh

SUMMARY complex issue required by retailers. For example, most theory and empirical evidence regarding buyer-seller Leveraging suppliers resources and capabilities via relationships adopts a dyadic perspective, either focusing category management has become the focus of wide- on a single buyer-supplier relationship (e.g., Dyer and spread attention in the supermarket industry, as retailers Singh 1998; Jap 1999), or treating each supplier relation- seek competitive advantage in the face of industry con- ship with a common buyer separately (e.g., Subramani solidation, globalization, and the rapid expansion of mass- and Venkatraman 2003). Yet, since retailers have more merchandisers into the grocery market (ACNielsen 1998; than one supplier to almost all categories, and prescrip- Gruen and Shah 2000; Hopkins 2003). Category manage- tions advocate giving a key supplier significant influence ment concerns treating sets of complementary and/or over retailer category management, the retailer-focal sup- competing brands in retail settings as strategic business plier relationship may affect relationships with other units and allocating resources within these categories to suppliers to the category in ways that impact the retailer maximize planned outcomes (e.g., Blattberg and Fox performance. Since these conditions have not been ad- 1995; Dhar, Hoch, and Kumar 2001; Zenor 1994). Cat- dressed in previous theory development and empirical egory management therefore involves the analysis of research, the literature has little guidance to offer manag- category-level data, setting goals for category perfor- ers facing such situations. mance, and the formulation and execution of category plans, all of which might be undertaken with varying This research contributes to theories of interfirm degrees of involvement from suppliers (Basuroy, Mantrala, relations and competitive advantage and offers guidance and Walters 2001; Dussart 1998). However, analysts for retailer and supplier managers by developing and suggest that retailers can enjoy significant performance testing a model of opportunism among focal suppliers at benefits if retailers allow a focal supplier to assume the the category-level, its antecedents, and associated perfor- role of “category captain” where the supplier undertakes mance outcomes. Our research contributes to knowledge or has significant input into the retailer’s category man- in three areas. First, synthesizing insights gained from agement (e.g., Blattberg and Fox 1995; Cannondale 1999; qualitative fieldwork with those available in the literature, Freedman, Reyner, and Tochtermann 1997). Despite this, we develop a conceptual model of important antecedents fear and/or experience of supplier opportunism means and consequences of category-level focal supplier oppor- that many retailers are either unconvinced or report hav- tunism. Second, we test our model using data from 73 ing failed to make such category management relation- category managers representing six grocery retailers across ships with focal suppliers work (e.g., Brandweek 1999; a representative set of 35 different product-categories to Supermarket Business 1999). provide new empirical insights into focal supplier opportunism and its impact on category-level performance. Our The literature offers surprisingly little guidance to data suggest that focal supplier opportunism decreases retailer and supplier managers regarding this important retailer category performance. Consistent with retailer issue. There has been little empirical study of category fears, we find that focal suppliers with significant influ- management generally, and no research focused on the ence in retailers category management efforts are more key issue of focal supplier opportunism at the category- likely to engage in opportunistic behavior. However, our level (Dhar et al. 2001; Gruen and Shah 2000). The data also reveal that retailer fears that being dependent on literature reveals a number of different theories relevant to a focal supplier will lead to greater supplier opportunism understanding buyer-supplier relationships (e.g., transac- are largely unfounded, while supplier dependence on the tion cost analysis, relational exchange, resource depen- retailer is also unrelated to focal supplier opportunism. dence, etc.) and their impact on firm performance (re- Finally, we find that retailers’ ability to monitor – but not source-based view, industrial organization, etc.). How- to punish – its focal suppliers is negatively related to ever, many of these theories offer different viewpoints on opportunistic behavior among focal suppliers. Third, our various aspects of supplier-retailer relationships in cat- findings illuminate the important but largely ignored case egory management, and none provide a comprehensive in which a buyer relationship with a focal supplier puts framework that permits the broad understanding of this that supplier in a position to directly influence the buyer

American Marketing Association / Winter 2005 32 relationships with other competing suppliers, who also the category but that these militant behaviors do not continue to supply products to the buyer. From this significantly negatively impact retailer category-level perspective, we find that focal supplier opportunism in- performance. creases militant behaviors among non-focal suppliers to

For further information contact: Neil A. Morgan Kenan-Flagler Business School CB# 3490, McColl Building University of North Carolina at Chapel Hill Chapel Hill, NC 27599–3490 Phone: 919.962.9835 FAX: 919.962.7186 E-Mail: [email protected]

American Marketing Association / Winter 2005 33 “NO GREATER SATISFACTION THAN TO VINDICATE EXPECTATION” HOW AFFECTIVE EXPECTATIONS SHAPE CONSUMPTION EXPERIENCE

Andrew K.C. Wong, The Chinese University of Hong Kong, Hong Kong

SUMMARY result, disconfirmed experience tends to be assimilated to the affective expectations, leading to satisfaction. Consumption experience is subjective, dynamic and subject to external influences. Consumers may uncon- P1: Ad-induced affective expectations will lead to an sciously color their judgments through the tinted glass of assimilation bias such that negatively disconfirmed a priori expectations. Imagine, when we take the first sip experience will be evaluated in the direction toward of an award-winning Pauillac wine, or when the long the prior affective expectations, provided that the awaited sequel of an international blockbuster finally discrepancy is not noticed. opens, are we immune to the influence of expectations and let the moment of truth tells the truth? Ambiguity Moderates the Effects of Affective Expec- tations According to the Disconfirmation Paradigm (Olson and Dover 1979), satisfaction is determined by the dis- The assimilation bias of affective expectations is crepancy between expectation and experience. Treating contingent on the noticeability of the discrepancy (Wilson and measuring expectation and experience as two inde- et al. 1989). When facing an ambiguous experience, pendent entities, one can compute the discrepancy by which is open to multiple interpretations (Herr et al. 1983; simple mathematics and determine the dis/satisfaction. Hoch 2002), a consumer may have difficulty in recogniz- Accordingly the prediction is intuitively appealing: the ing the discrepancy, if any. Past research suggested that higher the expectation, the bigger the disappointment. But ambiguous stimuli tended to be assimilated to contextual what if the experiential perception is vulnerable to the stimuli (Herr et al. 1983; Hoch and Ha 1986; Martin et al. magnetic force of expectations? The focus of this paper is 1990; Schwarz and Bless 1992), providing tentative sup- to examine how prior expectations shape subsequence port to the notion. In the discussion of product attributes, consumption experience. Hoch and Deighton (1989) related ambiguity to the search, experience and credence qualities. Information in an ad Affective Expectation Theory highlighting the experience or credence qualities of the focal product is by default more ambiguous and likely to Olson and Dover (1979) defined expectations as induce greater assimilation to affective expectations. pretrial beliefs about the product, and belief as a subjective probability of association between a product and an P2: With the presence of affective expectations, an ad attribute. Subsequent studies mostly focused on attribute- highlighting experience or credence attributes of a based evaluation (e.g., Deighton 1984; Smith 1993). product or service will lead to greater assimilation While emphasis has long been given to the cognitive side, bias than does an ad highlighting search attributes. the affective side of expectation is under explored. Ambiguity can be reduced by the presence of a Not until recently was the affective nature of expec- comparison standard. It is not uncommon that past expe- tations formally conceptualized and empirically tested. rience is recalled as a standard to resolve ambiguity. The Wilson and Klaaren (1992) defined affective expecta- retrieval of past experience strongly suggests self-refer- tions as “people’s predictions about how they will feel in encing, which occurs “when information is processed by a particular situation or toward a specific stimulus” (p. 3). relating it to aspects of oneself, e.g., one’s own experi- In the context of consumption, advertising can induce not ence” (Burnkrant and Unnava 1995, p. 17). Phillips and only attribute-related expectations, but also the affective Baumgartner (2002) proposed that affective expectations expectations of how a consumer feels during and after could be formed based either on the remembrances of consumption. In accordance with the affective expecta- retrospective consumption-related emotions, or anticipa- tion theory, it is possible that even the actual consumption tory visions of future emotions. These two types of self- experience objectively fails to meet a priori expectation, referencing attempt are in accordance with the retrospec- consumers would still unconsciously surrender to their tive and anticipatory self-referencing proposed by own affective expectations such that the discrepancy Krishnamurthy and Sujan (1999). They defined retro- between expectation and experience is not noticed. As a spective self-referencing as anchoring the stimulus to

American Marketing Association / Winter 2005 34 autobiographical experiences, and anticipatory self-refer- the actual experience should be more “open” and more encing as referencing the stimulus to imagined future likely to be assimilated to the affective expectations. In experience. summary, the temporal orientation of self-referencing may either resolve (under retrospective self-referencing) Under retrospective self-referencing, the retrieved or enhance (under anticipatory self-referencing) the am- details of a past consumption activated by an ad may serve biguity of the experience, and thus moderates how affec- as a background against which the actual consumption is tive expectations influence judgment. evaluated. Discrepancies, particularly those negative ones that fall short of the expectations, should be more notice- P3: The assimilation bias of affective expectations is able and subsequently reduce the assimilation bias or even reduced under retrospective self-referencing, but en- lead to a contrast effect (Schwarz and Bless 1992). In the hanced under anticipatory self-referencing. case of anticipatory self-referencing, the interpretation of

For further information contact: Andrew K.C. Wong Department of Marketing The Chinese University of Hong Kong Shatin, N.T. Hong Kong Phone: 852.2609.7808 FAX: 852.2603.5473 E-Mail: [email protected]

American Marketing Association / Winter 2005 35 CUSTOMER DELIGHT: AN ATTEMPT TO COMPREHEND THE DIMENSIONS THAT COMPOSE THE CONSTRUCT AND ITS BEHAVIORAL CONSEQUENCES

Stefânia Ordovás de Almeida, Pontifícia Universidade Católica do Rio Grande do Sul, Brazil Walter Meucci Nique, Universidade Federal do Rio Grande do Sul, Brazil

ABSTRACT UNDERSTANDING CUSTOMER DELIGHT

The goal of this research is to propose and test a scale Customer delight can be defined as “an emotion, that is suitable to measure the dimensions that compose characterized by high levels of joy and surprise, felt by a the customer delight construct, as well as its behavioral customer towards a company or its offering (product/ consequences. Aiming that, three studies were used to service)” (Kumar 1996, p. 9). Thus, customer delight is prove the existence of content and construct validity for defined as a rather positive emotional state towards the the proposed dimensions. purchase/consumption experience, generally derived from the surprisingly positive disconfirmation level of per- INTRODUCTION ceived performance (Oliver et al. 1997; Rust and Oliver 2000). Delight would be characterized as an emotion Regardless of the great number of academic re- made up of cognitive and affective aspects, including here searches giving prominence to customer satisfaction, the surprise (Kumar 1996). In this sense, Izard (1997) clari- understanding of what happens to the customer when he/ fies that even the cognitive concepts inherent in satisfac- she experiences something beyond satisfaction during the tion and, consequently, in customer delight – such as need post-consumption experience is still incipient. Going be- and desire –, and its comparative standards are considered yond satisfaction engenders a deeply positive emotional affective by nature or, at least, as having an affective state regarding the experience of buying or consuming, component. which is known as customer delight. Considering this scenario, this paper attempts to contribute to the Con- Notwithstanding the fact that a delighted customer sumer Behavior literature by proposing a scale that is an should be at first satisfied, delight cannot be mistaken for attempt to comprehend and measure the dimensions that mere satisfaction. The differentiation basically occurs at compose the customer delight construct, as well as its an arousal level of the positive emotional response: at a behavioral consequences, and which is also suited to low level there lies satisfaction; at a high level, delight evaluate different cases of buying or consuming experi- (Oliver and Westbrook 1993). In this sense, previous ences. studies also determined that pleasure and arousal are part of intrinsic characteristics of either the goods or the With this in mind an exploratory/qualitative research services experiences. Therefore, both dimensions are was carried out, trying to understand the construct and viewed as complementary in the delight formation, con- generate items for the construction of a measurement sidering that pleasure by itself is regarded as a positive scale. Subsequently, a quantitative/descriptive research affect of moderate arousal (Mano and Oliver 1993). was conducted through three studies: the first two aimed at the fine-tuning of the measures by successively apply- Other evidence on the differentiation between satis- ing the scale to distinctive samples; the third also aimed at faction and delight can be found in the studies of Oliver the validation of the scale through the criteria of model and Westbrook (1993). These studies showed that cus- adjustment, unidimensionality, reliability, convergent, and tomers who experience high levels of joy and surprise discriminant validity properly attributed to the instru- presented greater indexes of repurchase intention and a ment. The content validity was a permanent concern high degree of expectations disconfirmation. Therefore, during the study. the authors empirically confirmed the existence of a delight state separated from satisfaction. Kumar (1996) Furthermore, this study consists of a theoretical re- also attributed discriminant validity to the constructs and view of the aspects that involve customer delight and the concluded that the effects of delight on the repurchase description of the methodological procedures used in intentions of individuals are higher and go beyond those field research. The explanation regarding the analyses of satisfaction. In this sense, it can be observed that the performed and results found has the purpose of describing differentiation between satisfaction and delight is not the research findings as a whole, giving a basis for the present just at the level of surprisingly positive discussion that encloses the study. disconfirmation experienced, but also at the level of the

American Marketing Association / Winter 2005 36 positive affect felt by the consumer, including here arousal, different samples of the same population were used. and in the post-consumption behavior generated. Undergraduates from business schools of three different universities in Brazil formed the population. The first and THE DELIGHT SCALE DEVELOPMENT – second samples, which were used only for scale fine- EXPLORATORY PHASE tuning, had 146 and 124 respondents respectively; the third, which should also be submitted to validation, had The exploratory/qualitative phase of the scale devel- 240 respondents. Regarding the samplings, it was verified opment process was responsible for the construct domain that a rate of 81 percent of the respondents in the first delimitation and creation of items. First a bibliographic study, 92 percent and 71 percent in the second and third investigation was carried out through the analyses of studies respectively, analyzed experiences with goods, several studies in the marketing and psychology areas. while the others did so with services. After this investigation, 30 consumers were questioned concerning their highly satisfactory consumption experi- The procedures used for testing and fine-tuning the ences. Subsequently, 20 consumers whose illustrations fit scale were based on the propositions made by DeVellis into the theoretical formulation of the theme were selected (1991), in which the exploratory factorial analysis (EFA), to participate in the in-depth interviews. the communalities of the items – accepted at 0.5 (Evrard 2002); the measure of the reliability through Cronbach’s The highly positive disconfirmation of expectations Alpha – accepted at 0.6 (Evrad 2002); the item-item was observed in all respondents’ descriptions as a funda- correlation – minimum of 0.5 (Evrard 2002) and the item- mental point in delight formation. In this sense, surprising total correlation – maximum of 0.80 (Kline 1998) were consumption was experienced by all respondents inter- taken into account, apart from the basic descriptive mea- viewed and was always related to the positive affect. The surements. The software used here was SPSS 10.0. In possibility of personalization of services as a way of addition, following the recommendations of Hair et al. surprising consumers, as well as the product tailored to (1998), unvaried outliers were examined through the Z one’s needs and desires, was a reason for the descriptions coefficient test and only in the third data collection the of delightful experiences through personalization. Con- necessity of withdrawing eight outliers from the sample cerning the price perception, six respondents mentioned arose. this item directly and, often, the positive perception of price was associated to the positive performance of the Data Collection and Measurement Scale product or service. The intention to buy again and the tendency towards positive word of mouth were observed Data collection was carried out throughout March among all respondents. and May/2003 by the researcher in the classrooms, and respondents filled out the questionnaires by themselves. The measuring items for the scale construction come The recommendation given to the participants when an- from different sources. The ones responsible for the swering the questionnaire was to take into account a positive surprise measurement were taken from the Dif- highly satisfactory consumption experience that they had ferential Emotions Scale – DESII by Izard (1977). The gone through, considering the study focus. As a measure- items used to measure the other dimensions were mainly ment scale, a 7-point Liket scale was used, where point adapted from the studies of Kumar (1996), Oliver et al. one represented the “totally disagree” assertive, and point (1997) and Rust and Oliver (2000), with the grounding of 7 a “totally agree” assertive. Items indicating high agree- the in-depth interviews. These items were submitted to a ment represented a higher tendency to delight. Portuguese version process. Once the version was fin- ished, two marketing academics evaluated its comprehen- THE VALIDATION OF THE DELIGHT sion. Therefore, three marketing experts analyzed the MEASUREMENT SCALE items defined for the scale and suggested improvements. Thus, 40 items formed the first version of the built scale Aiming at the proposed scale validation, two proce- through five broad dimensions: cognitive aspects, affec- dures were carried out: the content validity and construct tive aspects, positive surprise, price perception and post- validity, both suggested by DeVellis (1991). The content purchase evaluation. validity was achieved by logical analysis. The construct validation was done using the AMOS 4.0. software. THE DELIGHT SCALE DEVELOPMENT – Besides the validation process, the inexistence of multi- DESCRIPTIVE PHASE variate outliers (measured by the Mahalanobis D² distance) was confirmed. Small problems of normality were The descriptive phase of the delight scale develop- also verified and eliminated, according to the principles ment began with a pre-test of the instrument done with 10 suggested by Kline (1998). The results of the scale devel- people from the same study population. With the objec- opment process and its later validation are presented tive of testing, purifying and validating the scale, three below.

American Marketing Association / Winter 2005 37 RESULTS OF THE DELIGHT SCALE The items related to the price perception measure- DEVELOPMENT PROCESS – FIRST STUDY ment were not widely supported in the literature and they were inserted in the analysis for their constant appearance The first scale version, applied to the first sample and throughout the in-depth interviews. The observation of its submitted to EFA, indicated nine factors responsible for low adherence to the scale and, consequently, to the representing 67.32 percent of total variance explained. studied construct, led us to the belief that price perception The results of the EFA, after some gatherings were done was not correlated to the presence of delight. Conse- to regroup variables that were isolated or misallocated quently, the necessity of rewriting the statements on price based on their conceptual coherence and their factorial was brought up from the moment of the first data collec- loadings (Evrard 2002), are presented in Table 1 through tion – along with the bad indexes that also indicated the the factorial loadings of the items and their communali- minor correlation of price factors with the construct. ties. Therefore, despite the fact that the final price factor (variables V37 and V39) had presented in the latter study With the reliability and correlation analyses done, a Cronbach’s Alpha of 0.6996 and an item-total correla- considering the EFA results, it was decided that some tion of 0.5381, the elimination of the factor was applied variables needed to be removed. The variables and the for the theoretical motives explained above. factor they belong to are: Factor 1: V4, V5, V10. Factor 2: V18, V26. Factor 5: V6, V9, V36. Factor 6: V27. Since the With the removal of the price perception factor, a new standardization measured through item V18 was not be- EFA was run and the final factorial structure presented ing well comprehended in its relation to delight, a new five factors. Items V20 and V18 were presented alone item called “I received personalized service/good” was under one factor that was called personalization dimen- inserted with the same variable code for the second study. sion. According to Kumar’s (1996) study personalization The Cronbach’s Alpha for the factors after the modifica- is a feeling that can be associated both to satisfaction and tions were: Factor 1: 0,9303; Factor 2: 0.8542; Factor 3: delight. Furthermore, he points out that this appraisal is 0.8125; Factor 4: 0.8343; Factors 5: no items left; Factor diagnostic and a significant predictor of delight. Person- 6: only one item left; Factor 7: 0.5164. After all these alization is, most of the time, related to unexpected extras procedures, a new EFA was done and no items presented provided by the employees to tailor the offer to customer values lower than 0.5. needs. In this sense, higher levels of personalization make the customer feel that the company cares about him, THE DELIGHT SCALE DEVELOPMENT leading to delight (Kumar 1996). The final factorial struc- PROCESS – SECOND STUDY ture of the scale to be validated, covering a total variance explained of 68.71 percent, followed by its communali- The adjusted factorial composition of the second ties, means and standard deviations is presented in Ta- study showed five dimensions and a total variance ex- ble 2. plained of 67.19 percent was presented, with a KMO value of 0.861. Only one factor, represented by items V37, When analyzing the descriptive measures here pre- V38, and V39, presented improper solutions in the analy- sented, the existence of high standard deviations was sis performed, with a Cronbach’s Alpha of 0.3848, and detected. The comprehension for those values came though improper correlations. In this way, variable V37 was the employment of an ANOVA among consumers of rewritten as “the price of this service/good spurred me to services and goods that corroborated the existence of buy,” and variable V38 was excluded for being prone to statistically significant differences in the groups’ means dubious interpretations. Apart from that, no other changes for 16 of the 23 analyzed variables. In these cases, the were made in the scale related to the previous study. consumers of services always had the highest means.

THE DELIGHT SCALE DEVELOPMENT Thus, the scale observed in Table 2 is the one pre- PROCESS – THIRD STUDY sented for validation, being composed of 23 items, divided into five factors. The dimensions that compose The third sampling pointed to a factorial structure customer delight and its behavioral consequences are composed of six dimensions, responsible for a total vari- described below, along with their respective Cronbach’s ance explained of 64.52 percent and a KMO measure Alpha values: Factor1 – Affective Aspects Dimension value of 0.874. For the results analysis, the EFA was (0.9179); Factor 2 – Cognitive Aspects Dimension initially conducted and its results were compared to those (0.8497); Factor 3 – Post-consumption Evaluation Di- from the internal consistency and item-item/item-total mension (0.7735); Factor 4 – Positive Surprise Dimen- correlation analysis, running all the procedures again each sion (0.7725) and Factor 5 – Personalization Dimension time a variable was removed. Thus, at the end of all (0.7830). As a result, the validation process of the pro- analyses employed, the rejection of the following items posed scale is demonstrated below. was performed: V40, V35, V17, V34, V13, and V16.

American Marketing Association / Winter 2005 38 TABLE 1 First Study Initial Factorial Structure

Factor 1 – Items Loa. Com. V11 This experience brought me happiness .803 .740 V3 This service/good transmitted positive feelings to me .698 .736 V7 This was a stimulating experience .679 .698 V15 This experience brought personal satisfaction to me .670 .662 V16 This was an irresistible experience to me .673 .736 V2 This experience brought me pleasure .666 .743 V1 This experience brought me joy .654 .758 V8 This experience was fascinating .652 .710 V14 I felt fulfilled with this consumption experience .647 .790 V17 This experience was attractive to me .608 .707 V10 This service/good made a dream come true .600 .602 V13 This experience made me feel special .597 .754 V5 I personally I identify myself with this service/good .592 .676 V12 This experience made me feel important .564 .723 V4 This consumption experience was one of the most important I have ever had .356 .600 Factor 2 – Items Loa. Com. V23 This service/good had an exceptional performance .794 .744 V24 This consumption experience completely satisfied my desires .755 .728 V19 This experience surpassed all my expectations .680 .670 V20 I received personalized assistance .678 .719 V22 The quality of the service/goods is superior to that of others .677 .643 V21 In this experience all the attributes that could be satisfactory were more than satisfactory .655 .691 V25 This service/good had great value to me .632 .562 V18 I received standard service/goods .481 .691 V26 I received more than is expected in this consumption experience .424 .608 Factor 3 – Items Loa. Com. V30 I was positively amazed with this experience of consumption .749 .651 V29 I was positively astounded with this consumption experience .692 .799 V28 I was positively surprised with this consumption experience .537 .711 Factor 4 – Items Loa. Com. V32 I intend to repurchase this service/good in the future .795 .723 V33 I would recommend this service/good to a friend .735 .803 V34 After this consumption experience I felt like complimenting the company/ employee .672 .726 V31 I am likely to make positive remarks about this service/good to other people .605 .609 V35 I am the most loyal customer after this experience .511 .662 Factor 5 – Items Loa. Com. V6 If I had not bought this service/good, I would have felt frustrated .694 .679 V36 I consider having a connection with the company whose service/goods I bought .653 .585 V9 This service/good was made to order for me .535 .570 Factor 6 – Items Loa. Com. V37 The price was a decisive variable within the choice of this service/good .834 .758 V27 There was flexibility so as to assist my necessities in this consumption experience .543 .530 Factor 7 – Items Loa. Com. V38 Regarding my purchase potential, the price of this service/good is too high .741 .727 V39 The price of this service/good influenced my level of satisfaction towards the consumption experience .698 .577 V40 I believe I have paid a fair price for this service/good. .597 .573

Extraction Method: Principal Component Analysis with VARIMAX Rotation Source: Data Collection Kaiser-Meyer-Olkin Measure (KMO): 0.862 Bartlett’s Test of Sphericity 1911.087 – sig. = 0.000

American Marketing Association / Winter 2005 39 TABLE 2 Third Study Final Factorial Structure

Factor 1 – Affective Aspects Loa. Com. Means/Std.Dv. V1 This experience brought me joy .824 .763 5.6/1.3 V7 This was a stimulating experience .809 .740 5.3/1.4 V3 This service/good transmitted positive feelings to me .806 .740 5.8/1.2 V2 This experience brought me pleasure .796 .677 5.6/1.3 V11 This experience brought me happiness .793 .653 5.3/1.3 V14 I felt fulfilled with this consumption experience .669 .629 5.2/1.4 V15 This experience brought me personal satisfaction .667 .622 5.5/1.4 V25 This service/good had great value to me .653 .596 4.4/1.7 V8 This experience was fascinating .638 .602 4.9/1.5 V12 This experience made me feel important .612 .572 4.6/1.7 Factor 2 – Cognitive Aspects Loa. Com. Means/Std.Dv. V23 This service/good had an exceptional performance .812 .772 5.4/1.3 V22 The quality of the service/goods is superior to that of others .742 .595 5.2/1.5 V24 This consumption experience completely satisfied my desires .738 .689 6.0/1.2 V21 In this experience all the attributes that could be satisfactory were more than satisfactory .644 .681 5.0/1.4 V19 This experience surpassed all my expectations .605 .597 5.3/1.3 Factor 3 – Post-Consumption Evaluation Loa. Com. Means/Std.Dv. V33 I would recommend this service/good to a friend .832 .792 6.2/1.1 V32 I intend to repurchase this service/good in the future .820 .719 5.6/1.7 V31 I am likely to make positive remarks about this service/good to other people .603 .605 5.8/1.4 Factor 4 – Positive Surprise Loa. Com. Means/Std.Dv. V30 I was positively amazed with this experience of consumption .770 .672 4.1/1.6 V29 I was positively astounded with this consumption experience .702 .746 5.3/1.5 V28 I was positively surprised with this consumption experience .546 .711 5.6/1.2 Factor 5 – Personalization Loa. Com. Means/Std.Dv. V20 I received personalized assistance .875 .818 4.9/2.0 V18 I received personalized service/good .868 .812 4.5/2.0

Extraction Method: Principal Component Analysis with VARIMAX Rotation Source: Data Collection Kaiser-Meyer-Olkin Measure (KMO): 0.887 Bartlett’s Test of Sphericity: 3105.668 – sig.= 0.000

Note: Although the load of V28 is rather low, it was decided that this variable should be maintained, since otherwise we would have a factor with only two variables, which is not recommended in the validation process. Furthermore, this three-item factor had already been proposed and validated by Izard (1977), as well as used in many studies before this one, proving its reliability.

RESULTS OF THE DELIGHT SCALE 1991; Garver and Mentzer 1999; Jöreskog and Sörbom VALIDITION PROCESS 1982; Steenkamp and Trijp 1991). In these circumstances, these authors recommend the necessary procedures to Since the content validity was already achieved achieve construct validity as unidimensionality, reliabil- through the methodological accuracy employed in the ity, convergent and discriminant validity, besides the development phases and in the scale fine-tuning, clearly measurement models adjustment criterion. Table 3 shows specified in the study method, with the aim of verifying the CFA results for the five-scale dimensions. the construct validity, the five-scale dimensions were submitted as five different measurement models to the Analyzing the fit-indexes, one can detect that most of confirmatory factor analysis (CFA). This method is widely the measures are satisfactory. The χ2/df for the personal- applied in marketing studies, as well as correlated fields, ization dimension is higher than expected, but the prob- in the search for the construct validity (Bagozzi et al. ability of the qui-square being influenced by the sample

American Marketing Association / Winter 2005 40 TABLE 3 Results of CFA for the Five-Scale Dimensions

Fit-Indexes Affect Cognition Post-Purchase Surprise Personalization

Chi-square (χ2) 59.145 8.534 4.745 6.285 6.980 Degrees of freedom (GL) 33 4 1 2 1 Chi-square/degrees of freedom (χ2/GL) 1.792 2.134 4.745 3.124 6.980 Goodness-of-fit Index (GFI) 0.952 0.985 0.986 0.983 0.971 Adjusted Goodness-of-fit Index (AGFI) 0.919 0.944 0.917 0.950 0.913 Tucker-Lewis Index (TLI) 0.976 0.975 0.964 0.976 0.945 Comparative Fit Index (CFI) 0.983 0.990 0.988 0.984 0.945 Root Mean Square Error of Approximation (RMSEA) 0.059 0.070 0.127 0.096 0.161

Estimation Method: Maximum Likelihood Source: Data Collection

size is well known and discussed in the literature (Hair an average variance extracted (AVE) over 0.5. By analyz- et al. 1998; Kline 1998). Therefore, Raykov and ing the reliability of the five dimensions, we could affirm Marcoulides (2000) recommend that other fit-indexes that all the measurement models are reliable. Thus, the should be analyzed, so that a real idea on the model affective dimension presented CR = 0.9749 and AVE = adjustment can be reached. 0.6880, the cognitive dimension presented CR = 0.9609 and AVE = 0.6296, the post-consumption evaluation When analyzing the measures of the indexes GFI, dimension presented CR = 0.9672 and AVE = 0.6887, the AGFI, TLI, and CFI, it can be noted that their values were positive surprise dimension presented CR = 0.9695 and always higher than 0.90, which is in agreement with the AVE = 0.7121, and the personalization dimension pre- recommendations of Hair et al. (1998) and Kline (1998). sented CR = 0.9648 and AVE = 0.6406. The adjustment measure RSMEA possesses acceptable values ranging between 0.05 and 0.08 (Hair et al. 1998). For Garver and Mentzer (1999) and Bagozzi et al. Analyzing the data mentioned in Table 3, one can observe (1991), the convergent validity of a scale is given by the that the dimensions of post-purchase evaluation, positive quality of its fit-indexes. Besides all the scale dimensions surprise and personalization presented values that ex- having been validated through the examination of their ceeded the acceptability for the referred index. According fit-indexes, the factor regression coefficients were also to Raykov and Marcoudiles (2000), this index shares the verified to certify the convergent validity. All the factor same theoretical nature of the CFI. Thus, due to the high regression coefficients were statistically significant, which, values of the CFI obtained in the analysed dimensions, according to Bagozzi et al. (1991), means that t-values are these measures were considered validated as well. higher than |2,00| for p < 0.05 (7.86 was the lowest t-value found in the study). As a strong condition for convergent After presenting the criteria that led to the conclusion validity, Steenkamp and Trijp (1991) suggest that all the that all the dimensions of the proposed scale are fit and factor regression coefficients should exceed 0.5. This validated, unidimensionality was pursued and achieved condition was also achieved, since 0.591 was the lowest through the examination of standardized residues pro- value found. posed by Garver and Mentzer (1999), Jöreskog and Sörbom (1988), and Steenkamp and Trijp (1991). According to the As a final procedure, so as to infer construct validity, authors, in order to present unidimensionality, a dimen- the discriminant validity was verified through the method sion should have all its standardized residuals lower than proposed by Fornell and Larcker (1981). This method 2.58. The highest standardized residual score found in the proposes that the average variance extracted for each study was 2.049 in the personalization dimension, there- dimension should be higher than the squared correlation fore, all dimensions may be considered unidimensional. between this dimension and any other dimension, which characterizes the shared variance. For the studied con- According to Garver and Mentzer (1999) a reliable struct – customer delight and its behavioral consequences – measurement model – in this case a reliable dimension – discriminant validity was detected among the dimensions. should present a composite reliability (CR) over 0.7 and This can be observed by the values of the average variance

American Marketing Association / Winter 2005 41 extracted for these dimensions: 0.6880 for the affective found. However, the ANOVA realized in the third study aspects, 0.6296 for the cognitive aspects, 0.6880 for the denotes the existence of statistically significant differ- post-purchase evaluation, 0.7122 for the positive surprise ences between the means of consumers of goods and and 0.6406 for the personalization dimension. These services: the latter group’s means are always statistically values were by far higher than the highest value found for higher. In these circumstances, the importance of the the shared variances among dimensions (0.3600). The insertion of a variety of services in goods that are gener- following discussion comments all these results. ally standardized must be emphasized, considering the necessity of variety when one is seeking to deliver an DISCUSSION unexpected pleasant performance (Oliver et al. 1997). What could be observed from the consumption of goods The scale construction and test practiced in this study is that most of them were symbolic ones, so the need of meet the demand of developing a greater theoretical personalization was replaced, in these cases, by the con- comprehension on customer delight. Within this context, gruency of the good with consumer self-concept. Besides the first evidence on the study can be described as a that, these differences are not relevant to the process of measure purification relevance, through a successive scale scale development; neither do they show the need for reapplication; for only the empirical evidence can prove separated scales to evaluate the consumption of goods and that some items, or even entire dimensions, such as price services. The difference between these consumers lies in perception, did not belong to the construct. Hence, an the kind of consumption experience and not in the dimen- implication for the marketing academy is demonstrated in sions analyzed, which pertain to both of them. the confirmation of the dimensions that compose the customer delight construct and its behavioral conse- Another question to be regarded is the conclusion that quences. This evidence was achieved through the favor- the price perception variables are not a customer delight able fit-indexes of the models and the confirmation of dimension. Thus, the perception of a low or fair price is unidimensionality, reliability and validity for the pro- only part of customer delight when accompanied by other posed scale in all analyzed dimensions, which confirms its attributes that also have the capacity of delighting (e.g., construct validity. “these pants fit me perfectly and they were also cheap” – respondents answered in one in-depth interview). The fact The content validity was also achieved, by logical of being only cheap is not enough to give the pants the analysis, because of the quality of the scale measurement power of delight, it solely satisfies the bargain or equity items, accessed by the exploratory/qualitative research, item. The presence of delight presumes that the experi- which was done before the scale construction, and also by ence possesses other components that might effectively the successive fine-tunings. Yet, a scale application with generate a positive affect and surprise. Therefore, still new contexts and another population is encouraged, sup- maintaining the consideration of the need for new studies plying the deficiencies that might have come up in this so as to confirm the real accessory role of price in delight study, such as the employment of the students’ sample, formation, care must be taken when intending to use it as concerning the limitations of external validity that result a way of delighting customers. This observation is impor- with this type of sampling. tant for organizations to perceive that delight should occur through their differentiated attributes rather than strate- It’s important to note that although discriminant gies that can be easily copied by their competitors, such as validity was established between the dimensions of the price promotion (Rust and Oliver 2000). scale proposed, this was not done between delight and its close relatives, such as joy, as proposed by Oliver et al. All things considered, the inclusion of delight, through (1997), which suggested a more psychometric specifica- the proposed scale, in theoretical models on the post- tion and differentiation between the called “positive af- consumption evaluation process will allow a deeper un- fects.” Therefore, this can be a suggestion for future derstanding of the distinct impacts between satisfaction studies. The discriminant validity between satisfaction and customer delight in following behavioral results. The and delight was not the goal of this study either, as already complete theoretical model test is another step to be taken established by Kumar (1996). The peditive and nomologi- towards the comprehension of the existent relations among cal validity were not established either, since, to infer this, the construct dimensions and the verification of which it would be necessary to test the whole structural model. dimensions have a higher impact on subsequent behav- Thus, it remains as a suggestion for the future. iors. Furthermore, other relations that search for a greater comprehension of the role of customer delight in the post- When evaluating the research object used by the consumption evaluation should be empirically verified, respondents in the three studies, it is observed that the pursuing a wider vision of customer delight as a highly citation of goods shows supremacy when compared to the positive emotional result to the experience of consump- ones of services. Causes for this phenomenon were not yet tion.

American Marketing Association / Winter 2005 42 REFERENCES Kline, Rex B. (1998), Principles and Practice of Struc- tural Equation Modeling. New York: The Guilford Bagozzi, Richard P., Youja Yi, and Lynn W. Philips Press. (1991), “Assessing Construct Validity in Organiza- Kumar, Anand (1996), Customer Delight: Creating and tional Research,” Administrative Science Quarterly, Maintaining Competitive Advantage. Doctoral dis- 36, 421–58. sertation, Graduate Faculty, Indiana University. Devellis, R.F. (1991), Scale Development: Theory and Mano, Haim and Richard L. Oliver (1993), “Assessing the Aplications. Newbury Park: Sage. Dimensionality and Structure of Consumption Expe- Evrard, Yves (2002), “Instrumentos de Pesquisa, Coleta rience: Evaluation, Feeling and Satisfaction,” Jour- e Análise de Dados,” class material, Business School, nal of Consumer Research, 20 (December), 451–66. Federal University of Rio Grande do Sul/Brazil. Oliver, Richard L. and Robert A. Westbrook (1993), Fornell, Claes and David F. Larcker (1981), “Evaluating “Profiles of Consumer Emotions and Satisfaction in Structural Equation Models with Unobservable Vari- Ownership and Usage,” Journal of Consumer Satis- ables and Measurement Error,” Journal of Marketing faction, Dissatisfaction, and Complaining Behavior, Research, 18 (February), 39–50. 6, 12–27. Garver, Michael S. and John T. Mentzer (1999), “Logis- ______, Roland T. Rust, and Sajeev Varki (1997), tics Research Methods: Employing Structural Equa- “Customer Delight: Foundations, Findings, and Mana- tion Modeling to Test for Construct Validity,” Jour- gerial Insight,” Journal of Retailing, 73 (3), 311–36. nal of Business Logistics, 20 (1), 33–57. Raykov, Tenko and George A. Marcoulides (2000), A Hair, J.F.J., R.E. Anderson, R.L. Tatham, and W.C. Black First Course in Structural Equation Modeling. New (1988), Multivariate Data Analysis. New Jersey, Jersey: Lawrence Erlbaum Associates. EUA: Prentice Hall. Rust, Roland T. and Richard L. Oliver (2000), “Should Izard, Carroll E. (1977), Human Emotions. New York: We Delight the Customer?” Journal of the Academy Plenum. of Marketing Science, 28 (1), 86–94. Jöreskog, Karl G. and Dag Sörbom (1982), “Recent Steenkamp, Jan-Benedict E.M. and Hans C.M. Trijp Developments in Structural Equation Modeling,” (1991), “The Use of LISREL in Validating Market- Journal of Marketing Research, 19 (November), ing Constructs,” International Journal of Research 404–16. in Marketing, 8, 283–99.

For further information contact: Stefânia Ordovás de Almeida Faculdade dos Imigrantes/Pontifícia Universidade Católica do Rio Grande do Sul Afonso Taunay 180/605 Porto Alegre/RS Brazil 90520–540 Phone: 00.55.54.2271433 FAX: 00.55.54.2271433 E-Mail: [email protected]

American Marketing Association / Winter 2005 43 TOWARDS A CONCEPTUAL FRAMEWORK OF E-CONFUSION

Vincent-Wayne Mitchell, City University of London, United Kingdom Gianfranco Walsh, University of Strathclyde in Glasgow, United Kingdom

SUMMARY ability to better organize visual stimuli makes field independent consumers less likely to experience e-confusion In 2004, the worldwide Internet population amounted from overload and unclarity antecedents. Situational vari- to 945 million and projections for 2005 put this at 1.1 ables, such as using the Internet under time constraints, billion (Clickz.com 2004a). However, this growing num- can lead to rushed decision-making, shortened informa- ber of consumers is presented with overwhelming amounts tion-processing and inference-making time which is ex- of online information and websites and the pace of tech- pected to increase e-confusion because of decreased pro- nological development is faster than some consumers can cessing time. adapt to. Recent authors have suggested that hyper-choice confuses people, increases regret, is initially attractive but When e-confused, consumers attempt to understand ultimately unsatisfying and is psychologically draining who they will attribute responsibility for the confusion (Mick, Broniarczyk, and Haidt 2004). Such confusion can and can either blame themselves or others for the confu- affect attitudes toward online-shopping and make con- sion. We suggest that attribution serves as a moderator of sumers; dissatisfied, less brand loyal, less trusting, post- the confusion-outcome link. We propose that the immedi- pone purchases, and shop offline (Walsh et al. 2002). It is ate effect of all e-confusion is indecisiveness and hesita- surprising then that so little research has addressed the tion resulting in the consumer either doing nothing or specific issue of consumer confusion on the Internet and postponing their web activity. We conceptualize e-confu- its effects on consumers. The aim of this research then is sion as a temporary state of disorientation which has to develop a conceptual model of e-confusion and to feelings associated with it. These affective consequences explore some of its antecedents and consequences using a represent an individual’s feelings and emotions in relation cognitive, affective and behavioral framework. to their evaluation of the website such as frustration, irritation, anxiety, or even anger. Cognitive consequences Our framework extends that of Walsh et al. (2004) refer to consumers’ knowledge and beliefs about a website. who suggest confusion can be caused by too similar, too Consumers may form erroneous beliefs about the website many or unclear stimuli. Websites that look and feel which can affect trust, satisfaction and loyalty. Behavioral similar and give visual cues and/or brand appearance of a consequences represent consumers’ behavioral intentions “look-a-like” or “fake” website can cause consumers to or tendencies, or actual overt actions toward the website. believe mistakenly, for example, that website A is the We divide behavioral consequences into two types; (1) same as website B. The website, www.pirated-sites.com, Generic, i.e., those which are generic to e-confusion and offers many cases of Web design piracy. Consumers can (2) Specific, i.e., those which are specific to the anteced- feel unclarity e-confusion when they encounter ambigu- ents causing e-confusion. E-companies need to learn how ous, incongruous, misleading or inadequate Internet in- to identify and eliminate sources of confusion on their formation. For example, Mobile phone sites (e.g., websites and could reduce confusion sources by doing a www.dialaphone.com) can make prices difficult to under- confusion audit of their websites. From a regulation stand and workout. Overload e-confusion antecedents can perspective, more governmental and private monitoring occur when consumers are confronted with more product- of the web might help to reduce the numbers of copycat related e-information than can be processed in the short- website and cyber squatting which will reduce sources of term memory. A good example of e-information overload similarity-induced e-confusion. Better e-mail filtering is the often uncategorized results of search engines. Indi- systems will obviously help, but it may be time for the vidual characteristics exert an influence on e-confusion establishment of a government sponsored e-mail prefer- because they are often linked to the consumer’s ability to ence service (EPS), to which all organizations should rationalize and process stimuli. For example, age may subscribe. Our main contribution to theory lies in devel- reduce e-confusion through an Internet experience frame- oping a model of consumer e-confusion. Future research work or may increase e-confusion as processing compe- should include the development of a measurement instru- tence decreases with the ageing process. Field indepen- ment and subsequent testing of the conceptual model and dent individuals impose organization upon visual stimuli, hypothesized relationships. References are available upon and are able to locate a sought-after component. The request.

American Marketing Association / Winter 2005 44 For further information contact: Vincent-Wayne Mitchell Cass Business School City University of London 106 Bunhill Row London EC1Y 8TZ Phone: +44.207.040.5108 FAX: +44.207.040.8328 E-Mail: [email protected]

American Marketing Association / Winter 2005 45 DIFFERENTIAL IMPACTS OF CRM ON CONSUMER RESPONSES: TOWARD AN INTEGRATIVE FRAMEWORK

Frederick Hong-Kit Yim, Drexel University, Philadelphia

SUMMARY ers” is more strongly related to value perceived by consumers. As a new paradigm in marketing, CRM is in need of theoretical assistance (Gummesson 2002). Much, if not Moreover, drawing from the diverse research on most, of the research on CRM has tended to focus on its relational exchanges (e.g., Garbarino and Johnson 1999; favorable performance metrics such as sales growth. Nijssen et al. 2003; Sirdeshmukh, Singh, and Sabol 2002), There is scant research effort directed at examining the a comprehensive theoretical framework for understand- differential impacts of CRM dimensions on delivering ing how consumer loyalty can be achieved through value, consumer value. In particular, there is no attempt to look satisfaction, and trust in the CRM context is developed. into the mechanism of how customer loyalty can be Specifically, we postulate that value perceived by con- nurtured via value, satisfaction, and trust in CRM projects. sumers is positively related to satisfaction with the service firm, which, in turn, is positively related to trust in the Notwithstanding some disappointing CRM results, service firm. We further posit that trust in the service firm we believe that the early failures of CRM are not perennial is positively related to loyalty to the service firm. and CRM movements are not expected to terminate (Sheth 2002). A sharper theoretical understanding of CRM can In conclusion, in response to the call for more theo- effectively advance future CRM endeavors and success- retical assistance for CRM (Gummesson 2002), our re- fully breed outstanding firm performance. To avoid the search contributes to the marketing discipline both theo- premature death of the CRM discipline (Fournier, Dobscha, retically and managerially. Theoretically, it advances the and Mick 1998), this study seeks to advance the CRM CRM literature by explicating how a number of ex- literature by examining how the CRM dimensions differ- change-relevant constructs are related, and sheds light on entially impact consumer value. In particular, CRM is how organizational CRM efforts differentially impact conceptualized to have four distinct behavioral dimen- value perceived by consumers in a service setting. As far sions, namely, (1) focusing on key customers, (2) organiz- as managerial implications are concerned, managers are ing around CRM, (3) managing knowledge, and (4) lever- afforded the broad picture of how loyalty can be grown via aging information technology (Yim 2002). We posit that a number of consumer response constructs, and therefore when compared with other CRM dimensions of “organiz- inculcated the effective way to direct their CRM efforts in ing around CRM,” “managing knowledge,” and “leverag- terms of delivering value to their key consumers. ing information technology,” “focusing on key custom-

For further information contact: Frederick Hong-Kit Yim Bennett S. LeBow College of Business Drexel University 32nd and Chestnut Streets Philadelphia, PA 19104 Phone: 215.990.9129 or 215.895.2145 FAX: 215.895.6975 E-Mail: [email protected]

American Marketing Association / Winter 2005 46 EXPLORING THE PHENOMENON OF BUYER-SELLER MISMATCHES IN BUSINESS-TO-BUSINESS RELATIONSHIPS

Christopher P. Blocker, University of Tennessee, Knoxville1

ABSTRACT es relative to the situation (Coviello et al. 2002). However, research is still seeking to build theory that can prescribe Evidence shows relational strategies can prove suc- targeted relationship strategies to firms as they interact cessful in some cases but are costly and ineffective in with diverse sets of customers in various situations others. Yet, understanding favorable conditions for a (Siguaw, Baker, and Simpson 2003). Existing efforts to relational over an arm’s length approach is still emerging. address this issue take several approaches, including: One area that holds promise for shedding light on this identifying relationship-relevant dimensions on a contin- issue is buyer-seller mismatches, as they occur when firms uum (Anderson and Narus 1991; Webster 1992), map- strive for dissimilar goals and relate in incompatible ways. ping product market types to relational strategies (Coviel- This paper draws focus to this concept by integrating the lo et al. 2002), analyzing relationships with ROI (Gum- literature and exploring the complexity of buyer-seller messon 2004), and identifying profitable customers (Re- incompatibility. inartz and Kumar 2003). For the most part, these approaches take a seller’s one-sided viewpoint. Unfortu- INTRODUCTION nately, key questions of whether the other party desires a relationship – or perhaps more important – whether a Building strategic buyer-seller relationships that are “close relationship” means the same thing to both parties marked by long-term, close dealings has captured the are largely left unaddressed. attention of firms and researchers alike (Day 2000). Given the substantial resources firms invest to make relation- Additionally, some have used the concept of buyer- ships work, it is unsettling to find a significant number of seller mismatches – specified as a mismatch in relation- relationships end in failure (Das and Teng 2000; Wathne, ship goals – to provide greater explanation into why Biong, and Heide 2001). One leading scholar posits that relationships might succeed or fail (Gronroos 1997; Pels, “some firms lose half or more of their customers every Coviello, and Brodie 2000). This approach has at least two three years, and the worst is still to come” (Day 2000, key advantages. First, assessing mismatches requires a p. 25). These are difficult realities considering the abun- dyadic perspective. Knowing only one party’s intentions dance of research performed in relationship marketing and goals is not enough. Second, mismatch consider- over the past two decades. ations give priority not only to stable characteristics of each party but also to situations that might significantly In view of these realities, research in business-to- influence relationship outcomes. If firms can understand business relationships shows a noticeable movement from possible mismatches up front, before investing significant enthusiasm that included declarations of a new paradigm resources, there is potential to drive down the rate of (Gronroos 1994) and a fundamental re-shaping of the relationship failure, and thus, risks associated with sunk field (Webster 1992), to a dampened realization that costs and missed opportunities elsewhere. relationship strategies are not universally applicable or painless to implement (Day 2000). For example, many Use of buyer-seller mismatches as a specified confirms make significant investments in technologies (e.g., struct in relationship research is infrequent. However, the CRM) promising greater customer retention and loyalty, concept is inherent in much of the literature that, for but the large majority fail to realize the anticipated return example, discusses mismatches in relationship values, (Newell 2003). Additionally, researchers historically have social mismatches leading to relationship failure, and argued for suppliers to shift customer interaction from a relationship dysfunctions, to name a few. In general, transactional mode to a relationship building mode (Kot- research questioning the appropriateness of relationships ler 1991; Webster 1992). Regrettably, this approach has in light of potential incompatibilities supports the idea of influenced some firms to attempt partnering initiatives mismatches (Colgate and Danaher 2000). However, mis- without respect to the other party’s fit or desire (Day 2000; match research thus far oversimplifies the phenomenon. Garbarino and Johnson 1999). Existing research points solely to a single match or mismatch from a global view of the relationship. At this Recently, researchers have urged firms to pull back aggregate level, there is little appreciation for the com- the reins on relationship strategies, in favor of plural plexity of business exchanges, wherein a variety of mis- strategies blending relational and transactional approach- matched goals might occur at different levels of the

American Marketing Association / Winter 2005 47 relationship. This leads to several questions such as: What 1987), satisfaction (Berry and Parasuraman 1991), and types of mismatches are common across various ongoing profitability (Kalwani and Narayandas 1995). The main exchanges? Which ones significantly impact the relation- thrust of research to date generally assumes that firms ship as a whole? When should a mismatch be overlooked should be in the process of shifting from arm’s length versus deemed insurmountable? Given these questions dealings to building close relationships (Colgate and and current difficulties that business relationships face, a Danaher 2000). Finally, research generally takes a seller’s deeper look is warranted. “push” perspective in attempting to retain customers, erect switching barriers, and build profitability. A more granular understanding of the buyer-seller mismatch phenomenon could provide additional insight Despite substantial attention directed towards devel- into understanding why relationships succeed or fail. oping buyer-seller relationships, current signs point to Thus, a primary question needing further development is instability in relationships, continued customer attrition, this: how might a deeper look into the nature of mis- and termination of partnerships (Wathne, Biong, and matches expand upon previous conceptions of relation- Heide 2001). Blatant drawbacks to the relationship ap- ship incompatibility and provide a clearer window into proach have drawn criticism including potential for: hid- the true complexity of buyer-seller relationships? den costs, negative return on investment (Gummesson 1997), and other negative outcomes. Further, despite the BUYER-SELLER RELATIONSHIP popularity of relationship strategies, many firms continue PERSPECTIVE to rely on competitive, transactional dealings (Cannon and Perreault 1999). One key learning from this discus- Developing buyer-seller relationships has been rec- sion is the realization that, prior to embarking upon ognized by firms as an integral component to overall relationship strategies, greater consideration should be strategy for many years (Cannon and Perreault 1999). given to the resources needed and potential risks. Doing Specifically, firms now see customer retention and man- so might prevent wasted resources, and ultimately, messy agement of relationships as a key to fending off rivals, relationship failures. So, while the potential benefits of who constantly seek to attract customers away (Day relationships are clear, the net recommendation is for 2000). From a financial perspective, managers covet the firms to pursue plural strategies that employ both transac- performance gains that research suggests can be achieved tional and relational approaches relative to varying situa- through retention (Noordewier, John, and Nevin 1990). tions, customers, and environments (Frazier 1999; Furthermore, market drivers such as elimination of middle- Garbarino and Johnson 1999). men, global competition, technological innovation, and supply-chain coordination provide both the motive and However, this shift is not easily accomplished. Many means for fostering close relations (Sheth and Parvatiyar agree that existing theory is not sensitive to situational 2000). factors (Wilson 2000). Beyond this, it rarely allows for a much needed dyadic perspective. Though a supplier might Alongside the flurry of relationship activity in the see a particular customer as ripe for relationship building, business community, a rich tradition of research has the customer may not be responsive. Even more complex, supported the surge of interest in buyer-seller relation- both parties might agree in principle but simply view ships. Early works observed business relationships di- relationships in different ways. A supplier may believe a verging from transactional models towards long-term strong relationship is one that is exclusive. Yet, the re- associations (Arndt 1979). Research streams have since spective customer might feel it is simply good business examined traits like trust and commitment (Gundlach, practice to keep suppliers “on their toes” by engaging Achrol, and Mentzer 1995), dependence (Heide and John competitors. The next evolution, then, of buyer-seller 1990), and potential performance outcomes (Kalwani and theory should adequately address these variations and Narayandas 1995). Generally, one could argue that the develop theory around the issue of with whom firms most significant progress thus far has been exploring a should build relationships in given situations. wide selection of relationship-relevant constructs. These constructs serve as key variables in the process of devel- BUYER-SELLER MISMATCHES oping and maintaining relationships. The term mismatch in business relationships was first Upon examining the development of buyer-seller used by Pels, Coviello, and Brodie (2000), who sought to relationships, at least three themes emerge. First, an over- integrate transactional and relational strategies into a whelming bulk of research has sought to explain how plural approach. They posit that buyers and sellers often good relationships are built. Second, researchers have operate under mismatched exchange orientations. Ex- given a great deal of attention to linking relationships to change orientations, they theorize, are overarching ways positive outcomes such as lower costs (Noordewier, John, of dealing with another party and arise from specific and Nevin 1990), greater control (Dwyer, Schurr, and Oh relationship needs. In other words, relationship needs

American Marketing Association / Winter 2005 48 give rise to a party’s pursuit of either transactional or specific discrepancies that occur across a variety of ongo- relational dealings. Thus, a mismatch of exchange orien- ing exchanges. tation occurs when one party elects a transactional mode and the other operates under a relational mode. In addition to these examples, the concept of buyer- seller mismatches can be traced from a variety of sources Similarly, Gronroos (1997) asserted that customers such as mismatches in relationship values, mismatches of operate in one of three modes: a transactional mode, a relationship desire, behavioral and social mismatches passive relational mode, or an active relational mode. leading to relationship failures, and relationship dysfunc- Mapping these customer modes to a seller’s relational or tions, to name a few (Table 1). In reviewing this literature, transactional approach, he argues that dollars spent by several concepts emerge. For one, the discussion on sellers in relationships where modes do not match are mismatches and related topics has occurred as an after- wasted efforts. These two perspectives provide a baseline thought to the excitement around building relationships. understanding of buyer-seller mismatches and are illus- This might be attributed to a realization in the last decade tratively condensed into Figure 1. This figure serves as an that many relationships fail because of relationship mis- overarching picture of the phenomenon, yet does not matches. Additionally, up to this point, research address- distinguish the reality that many mismatches can occur at ing mismatches has limited itself to high-level descrip- different levels in a relationship. One other comparable tions of the phenomenon and has not explored integrative example to note is the work of Gassenheimer, Houston, connections to the extant literature on relationships. and Davis (1998), who introduce the notion of relative relational distance. They theorize that social and eco- MISMATCHES DEFINED nomic value discrepancies between parties create relational distance. The result of this distance is that parties Although the concept of mismatches has been dis- evaluate social and economic value discrepancies by a cussed both explicitly and implicitly in relationship litera- comparison of alternatives and subsequently decide to ture, no formal definition has been offered. This work tolerate the differences or exit the relationship. While this seeks to expand upon previous perspectives (Gronroos perspective is dyadic, relational distance is modeled as a 1997; Pels, Coviello, and Brodie 2000) of buyer-seller “summary disposition” (p. 335) and does not attend to the mismatches and integrate ideas from literature that speaks

FIGURE 1 Buyer-Seller Mismatches

Buyer Exchange Paradigm Relational Transactional Relational Seller Exchange Paradigm Transactional

American Marketing Association / Winter 2005 49

on and on

Cannon and Narayandas and Cannon

and Brodie 2000 Brodie and

man 1991 man

995; Colgate and Danaher 2000; Danaher and Colgate 995;

Day 1994;Garbarino and Johnson 1999; Johnson and 1994;Garbarino Day

Rogers 1995; Sheth and Parvatiyar 1995 Parvatiyar and Sheth 1995; Rogers

Payne and Ballantyne 1991; Pine, Peppers, and Peppers, Pine, 1991; Ballantyne and Payne

Gordon McKeage, and Fox 1998; Gronroos 1995; Gronroos 1998; Fox and McKeage, Gordon

Ritter, and Gurmenden 2001 Gurmenden and Ritter,

Senhota 1995; Colgate and Danaher 2000; Walter, 2000; Danaher and Colgate 1995; Senhota

Jackson 1985 Jackson

2000; Dwyer, Schurr, and Oh 1987; Gummeon 1997; Gummeon 1987; Oh and Schurr, Dwyer, 2000;

Sinah, and Sabol 2002 Sabol and Sinah,

Dickinson 1998; Kumar, Scheer, and Steenkamp 1995 Steenkamp and Scheer, Kumar, 1998; Dickinson

Sollner 1999 Sollner

TABLE 1 TABLE

The Concept of Mismatches in Relationship Literature Relationship in Mismatches of Concept The

–Sharing Information of Level Buyer’s vs. Sharing Information Levelof Seller’s –1998 Dickinson and Hollander, Keep,

–Trust of Level Buyer’s vs. Trust of Level Seller’s –Sirdeshmulch, 1996; Steenkamp and Scheer, Kumar,

–Dependence of Level Buyer’s vs. Dependence of Level Seller’s –and Hollander, Keep, 1994; Cadotte and Gundlach

–Orientation Collaborative Buyer’s vs. Orientation Collaborative Seller’s –1999 Johnson and Garbarino

–Need Buyer's and Offer Seller’s

Relationship Failure Relationship

Leading to Relationship Failure Relationship to Leading –Orientation Time Buyer's vs. Orientation Time Seller’s –1999 Johnson and Garbarino

8.Strategy Relational for Prerequisites –Strategy Relationship for Readiness Actual vs. Expectations Seller –1 Bitner 1995; Berry

7.Disfunctions Relationship –relationships of Drawbacks Inherent vs. Expectations Seller Buyer –Hakanss 1998; Young and Wilkinson

6.to Leading Costs Unexpected –Goals Financial Meet to Ability Relationships vs. Expectations Seller’s – 2001; Homburg and Cannon

5.Tools Marketing of Mismatch –Orientation Exchange Buyer’s vs. Tools Marketing Seller’s –1985 Jackson

4.Mismatch Social or Behavioral –Investment Relationship Buyer’s vs. Investment Relationship Seller’s –Spek and Salmond, Krapfel,

3.Values Relationship of Mismatch –Values Buyer’s vs. Values Seller’s –1998 DAvis and Houston, Gassenheimer,

2.Relationship for Desire of Mismatch –Relationship for Motivation Buyer's vs. Relationship for Motivation Seller’s –1997; Barnes

1.Orientation Exchange of Mismatch –Orientation Exchange Buyer's vs. Orientation Exchange Seller’s –Coviello, Pels, 1997; Gronoos Topic As It Relates to Mismatch to Relates It As Topic Mismatched? Specifically Is What Author(s) Illustrative

American Marketing Association / Winter 2005 50 to mismatches (Table 1). As such, the following serves as (Sheth and Parvatiyar 2000). These goals play an active an initial definition for buyer-seller mismatches: role in shaping relationship needs. When buyers and sellers have incompatible relationship goals, they result in Buyer-Seller mismatches are composed of active or mismatches. latent differences in parties’ perceived needs and wants from a business relationship, as shaped by situational Reflected in Incompatible Interfirm Relations factors and dissimilar goals, that are ultimately reflected in incompatible interfirm relations. Borrowing from the Nordic school of relationship theory, mismatches are reflected in ongoing interaction Variety of Mismatches: Inherent in this conceptual- between buyers and sellers (Gronroos 1997). Mismatches ization is the idea that a variety of mismatches can occur become manifest in actions that buyers and sellers take or in relationships. Business relationships can be complex fail to take towards each other, resulting in an unsatisfied because a range of exchanges may take place. This com- need or want across a particular relationship dimension. plexity allows for multiple layers of interaction across These differences can be assessed at a high level (like in product/service exchanges, partnership investments (Rok- previous research) as one firm’s general desire for rela- kan, Heide, and Wathne 2003), information exchange tional dealings versus the other party’s general desire for (Anderson and Weitz 1992), social norms (Cannon, Ach- transactional dealings (see Figure 1). It is suggested here, rol, and Gundlach 2000), operational linkages, and many however, that desired needs and wants from the relation- others. So, while an overall mismatch of transactional ship drive the exchange orientation. Thus, mismatched versus relational exchange orientations might exist, a exchange orientations serve as a proxy for a variety of variety of mismatches can occur that may or may not underlying mismatched needs and wants. Ultimately, significantly impact the relationship as a whole. This mismatches become salient, take shape, and result in represents a departure from previous notions of a solitary incompatible dealings. overarching match or mismatch. To illustrate, buyers can be confronted with a seller Perceived Needs and Wants who constantly attempts to raise the bar on the commitment of the relationship, when in fact, the buyer senses no Consistent with theory applied to relationships (e.g. return on this investment. While this seller might see resource dependence, TCA, social exchange), parties potential growth in getting “deeper” into the customer enter relationships with the expectation that doing so will relationship, they are met with buyer apathy. Alterna- be rewarding (Berry and Parasuraman 1991). Buyers and tively, buyers can be frustrated in relationships where they sellers pursue a range of needs and wants from the other continually vie for attention from a seller who is “busy party. Within the context of mismatches, buyers and with other opportunities.” These differences in perceived sellers can strive for needs that the other party is ultimately needs and wants are played out and result in mismatches. unable or unwilling to provide. Mismatched needs can To further explore the connection between mismatched occur across (1) homogenous relationship dimensions needs and wants within exchange orientations, the follow- (i.e., common to both parties) or (2) heterogeneous rela- ing discusses buyer-seller tradeoffs associated with trans- tionship dimensions, such as supplier dependability in actional and relational dealings. exchange for an exclusive relationship. Finally, research suggests that desired needs and wants can be latent or BUYER-SELLER EXCHANGE TRADEOFFS active as the situations change (Gronroos 1997). Organizations, for the most part, make intentional Shaped by Situations and Goals decisions to establish relationships and have particular goals in mind (Oliver 1990). Furthermore, they do so in Several authors acknowledge that relationship theory ways that maximize rewards from these relationships has been generally insensitive to situational factors that (Frazier 1983). Many have explored various goals and shape relationships (Coviello et al. 2002). Mismatches tradeoffs for suppliers and customers arising from a provide a framework for including them. For example, a transactional or relational exchange. For example, many multitude of situational conditions in the macro and task posit that relationship strategies can lead to competitive environment and firm characteristics can shape buyer- advantage (Day 2000), yet others suggest maintaining seller mismatches such as: environmental factors (Keep, close relationships can also prove very costly (Sharma Hollander, and Dickinson 1998), product-market charac- and Tzokas 1999). An integrated review of these benefits teristics (Crosby and Evans 1990), firm strategy (Wilson and sacrifices as they map to both a transactional and 2000), and risk orientation. Relationship goals also shape relational orientation is presented in Table 2. It is sug- buyer-seller needs and wants. Firms enter relationships gested that understanding these factors presents insight for the purpose of fulfilling strategic goals like entering into why buyers and sellers might pursue incompatible new markets and serving customer needs to name a few needs and wants from relationships.

American Marketing Association / Winter 2005 51 ith Relational Orientation ith Relational Orientation Greater Customization of Products/Services e,d,ad,ag Higher Control of Direction the Relationship ag Greater, Specialized Service Levels h,w,ad Leads to Economies of Scale s Leads to Opportunities for Competitive Advantage ad Outsourcing Benefits, Ability to Focus Energies Elsewhere d Reducation of Choices / Efficient Decision Making d,ad Risk Reduction in Crisis Situations s Shortened New Product Development Time g,p Leads to Economies of Scale s Greater Price Stability p,ac Risk Reduction / Higher Leverage with Buyers ae Sales / Profitability Outcomes j,ac,af * Higher Relationship Satisfaction c,k,n,x,ab,ab,ac,ah * Leads to Opportunities for Competitive Advantage j,u,ad,ai TABLE 2 Buyer-Seller Exchange Tradeoffs Seller – Transactional Orientation Seller – Relational Orientation Buyer – Transactional Orientation Buyer – Relational Orientation High Avilability of Alternatives a,g,p‘Less Hassle / Low Commitment j,aaAvoidance of Overdependence, Relationship Burdens p,r,aeGreater Ability to Focus on Acquiring New Customers j,iLess Hassle / Low Commitment j,o,aa Access to Value-Added Services h,d * Cost Reduction through Synergies b,g,p,r,z,ag,ak p,ag Learning Customer * Customer Retention, Satisfaction, Loyalty c,k,n,x,y,ac,ah Optimized Focus of Resources, Retention j,i.ag * Avoidance of Switching Costs, Sunk Costs e,f,m,p* High Leverage (Low Vulnerability) with Suppliers, l,p,ac,ah,ak* Low Price through Adversarial Bidding a,g,p,aj Conflict Resolution More Manageable p Benefits Gained / Sacrifices Avoided Associated with Transactional Orientation Access to Technology g,p,ag * Avoidance of High Service Costs, Investments, Adaptation n,o,t,v,aa,ac Efficiency / Effectiveness for Value Chain p,ak Benefits Gained / Sacrifices Avoided Associated w * Items have received greated attention in Relationship Literature Cost Reduction through Synergies p,r,u,ac,ag a1976 amihud b Anderson 1995c Berry and Parasuraman 1991d Bitner, Gwinner, and Gremler 1998e Brennan and Turnbull 1999f Burnham, Frels, and Mahajan 2003g Cannon and Homburg 2001 nh Golicic, Foggin, and Mentzner 2003 Cannon and Narayandas 2000i m Billiland and BEllo 2002 Child and Dennis 1995 pj Han and Wilson 1993 Day 2000 o Gronroos 1997 x and Kohli 1995 Leuthesser k l q r Garbarino and Johnson 1999 Helper and Levine 1992 Kalwani and Narayandas 1995 Gasseheimer, Houston, and Davis 1998 v w s LaBahn and Krapfel 2000 Keep, Hollander, Dickinson 1998 Lambert, Emmelhainz, and Gardner 2000 z ab u Sharma and Grewal 1995 Noordeweier, John, and Nevin 1990 Krapfel, Salmond, and Spekman 1991 ag ah Sriram, Krapfel, and Spekman 1992 aa Webster 1992 Pels, Coviello, and Brodie 2000 ac t Sharma and Tzokas 1999 y Krapfel 1991 Morgan and Hunt 1994 ne aj Sollner 1999 1985 Williamson af1988 Spekman ai Weitz and Jap 2000 ad Sheth and Sharma 1997 Benefits Gained / Sacrifices Avoided Associated with Transactional Orientation Benefits Gained / Sacrifices Avoided Associated w

American Marketing Association / Winter 2005 52 A MODEL OF BUYER-SELLER MISMATCHES An economic mismatch could include conflict over preferred discounts or length of contract. A social Given the newness of the concepts presented in this mismatch might arise from asymmetrical levels of paper, the model (Figure 2) is a framework to guide theory trust. Form also explains whether the mismatch oc- development and testing of buyer-seller mismatches. curs across a homogenous relationship dimension (e.g., frequency of interaction) or a heterogeneous Situational Conditions one (e.g., buyer’s need for reliability vs. seller’s push for exclusivity). The model assumes a context shaped by situational conditions that emanate from the macro and task environ- 2. Salience: This refers to whether the mismatch is ment, as well as both party’s characteristics. This eleva- latent or active for either party. tion of situational conditions lends greater understanding to the types of relationships that can feasibly form in a 3. Priority: Mismatches relative to goals, needs, and given context. Conditions act to motivate, as well con- wants can be assigned a certain priority, which could strain relationship development due to incentives and be perceived differently by the parties. A high prior- deterrents arising from the context. In the model, situa- ity mismatch could be a shift in strategic direction that tions shape buyer-seller goals, needs and wants from significantly alters the relationship structure. A low relationships; mismatches that take place; comparison priority mismatch might be a personality conflict level of alternatives; and resulting outcomes. between two boundary personnel.

Buyer and Seller Relationship Goals, Needs, and Wants 4. Extensiveness: The extensiveness of a mismatch describes the degree to which incompatibilities exist These components shape what is sought in a relation- at an individual level or organization. A seller may ship and are where mismatches of needs and wants occur. determine that a blocked need for closer interaction A disproportionate focus in the literature has discussed within a customer’s firm is localized around a par- buyer needs and wants from a relationship, however, it is ticular gatekeeper. Buyers might see the overall seller’s asserted that inclusion of seller’s needs and wants pro- offer (organization) falling short of its needs. vides a more holistic picture. 5. Magnitude: Mismatches take on relative magnitudes Buyer and Seller Exchange Orientations based on the perceived gap size.

The assumption here is that exchange orientations 6. Temporal Nature: Parties to a relationship may learn arise out of need structures (Pels, Coviello, and Brodie to cope with certain mismatches over a long period of 2000). Changes in need structure might drive changes in time, while others require immediate action. exchange orientation. If a seller sees a need to retain a customer whose past interaction has remained arm’s length, Perceived Mismatches and Comparison Level of Al- that seller might begin utilizing relationship tactics, thus ternatives (CL alt) altering the exchange orientation. A buyer who desires “less hassle” in a relationship might enact a transactional The model proposes two basic outcomes of mis- orientation to ward off unnecessary use of time. Thus, it is matches. First, it suggests that, parties perceive mis- suggested firms do not adopt some degree of transactional matches relative to their situation, goals, needs, and wants. or relational orientation for its own sake. Rather, orienta- Second, they judge these mismatches against a compari- tions arise as a perceived means for achieving desired son level of alternatives, hereafter CL alt (Thibaut and needs and wants from the relationship. Kelly 1959). A significant stream of research has used the concept of CL alt to study relationships (Wilson 2000), Buyer-Seller Mismatches i.e., parties continually evaluate outcomes against desired needs and wants. CL alt is the lowest level of outcomes When considering the host of mismatches that can that a party will accept in light of other available alterna- occur within a relationship, understanding their traits adds tives. This standard serves as the deciding factor for insight towards classification of the phenomenon. The whether the party will cope with the outcomes or seek following traits within the model are considered an initial alternatives (Thibaut and Kelley 1959). set of aspects to define a mismatch. It is not assumed that this list is exhaustive, as further inquiry will likely refine CONCLUSIONS and/or add to this set. Given the instability of many relationships, research 1. Form: Mismatches can take different forms. A simple recommends buyers and sellers move toward plural ap- typology might include economic and social needs. proaches that blend relational and transactional strategies.

American Marketing Association / Winter 2005 53 Seller

Coping/Maintain Seek Alternatives

from Relationship from Goals, Needs, and Wants and Needs, Goals, Seller Exchange Orientation Yes No (CL alt)? Below Comparison Level of Alternatives

Form

Priority

Salience FIGURE 2

Magnitude

Mismatches

Extensiveness

Temporal Nature

Set of Buyer-Seller Perceived Mismatches (CL alt)? Buyer-Seller Mismatch and Outcomes Below Comparison Level of Alternatives No Yes

Situational Conditions (Macro and Task Environment, Firm Characteristics)

Buyer from Relationship from Coping/Maintain

Seek Alternatives Goals, Needs, and Wants and Needs, Goals, Buyer Exchange Orientation

American Marketing Association / Winter 2005 54 Yet, making this move is not easy. Firms struggle with targeting particular customers for Key Account Manage- determining strategies for particular situations and an- ment (KAM) programs and general stratification for sales swering the question of with whom close or arm’s length support, and other services. Sellers might also use an relationships make sense. On one side, firms might miss awareness of mismatches to pick up on customers’ chang- the benefits of a close relationship. Conversely, some ing needs and wants (Flint, Woodruff, and Gardial 2002). firms dive into relational strategies and waste significant Buyers might utilize mismatch information as input into resources when relationships do not pan out. Further, balanced score cards for rating suppliers, or attempt to many agree that existing research does not adequately build expertise within their processes to address mis- account for diverse situations and customers (Cannon and matches. For relationships on the brink of dissolution, a Perreault 1999; Coviello et al. 2002; Wilson 2000). granular understanding of the mismatches involved could aid parties in understanding whether the relationship can Understanding relationship incompatibility from the be reconciled or is beyond repair. Finally, by understand- perspective of mismatches, casts a wider net that allows ing mismatches in the wake of a failed relationship, firms for a more comprehensive view of both parties’ desires can identify issues to be addressed in order to prevent and a deeper look at situations that influence success or future occurrences. failure. Key contributions offered from this discussion are threefold. First, a brief review of relationship literature Knowledge about how firms react to mismatches is identifies the need for theory to offer a dyadic perspective an area where little is known. How might a firm persuade and greater sensitivity to situational factors. Current re- the other party to close the gap on a clear mismatch? When search is largely limited to a single firm perspective and might firms adjust their own goals to accommodate mis- oversimplifies the concept of incompatibility. This paper matched needs? How might mismatches relate to con- puts forth the first known attempt to integrate the mis- cepts of relational equity and return on relationship mea- match concept to directly address these issues. Second, a surements? Research addressing costs and benefits for detailed definition, with discussion of relevant variables relationships with high versus low levels of mismatch and refinement of existing discussion on mismatches is might provide interesting insights for relational strategy offered. This work builds on previous studies to theorize decisions. This paper began by asking if a deeper look into that incompatible needs and wants lie at the core of the nature of mismatches could expand upon ideas of mismatches. Finally, a model of buyer-seller mismatches relationship incompatibility and offer a clearer window is proposed, including antecedents, aspects of the phe- into the true complexity of buyer-seller relationships. The nomenon, and potential consequences around mismatch integrated literature on relationships and mismatches sug- outcomes. gests that it does, but further work is needed to answer this question more comprehensively. Prior to addressing con- Managers are urged to appreciate the concept of struct measurement, initial efforts should focus on further mismatches as they occur in relationships. The concept of development of the mismatch construct, ensuring concep- mismatches forces managers to look deeper at both sides tual thoroughness and refinement of the variables dis- of the equation. This might help firms both avoid wasted cussed herein. Qualitative inquiry seems the logical next resources and optimize relationship investments. Within step for development. existing relationships, mismatches could guide sellers in

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American Marketing Association / Winter 2005 56 (2001), “Choice of Supplier in Embedded Markets: 17. Relationship and Marketing Program Effects,” Jour- Wilson, David T. (2000), “An Integrated Model of Buyer- nal of Marketing, 65 (2), 54–66. Seller Relationships,” in Handbook of Relationship Webster, F.E. (1992), “The Changing-Role of Marketing Marketing, Jagdish N. Sheth and Atul Parvatiyar, in the Corporation,” Journal of Marketing, 56 (4), 1– eds. Thousand Oaks, CA: Sage, Inc.

For further information contact: Christopher P. Blocker University of Tennessee 304 Stokely Management Center Knoxville, TN 37996–0530 E-Mail: [email protected]

American Marketing Association / Winter 2005 57 CONSUMER TRUST NORMS IN MULTI-CHANNEL FIRMS: THE ROLE OF TRUST IN TECHNOLOGY AND FIRM COMMITMENT TO PRIVACY PROTECTION IN TECHNOLOGY-BASED SERVICE DELIVERY

Devon Johnson, Northeastern University, Boston

SUMMARY protection. Trust in the firm, frequency of transactions, and customer-company identity are examined as conse- Although web-based self-service technology deliv- quences of the two trust norms. The model is evaluated ers convenience benefits to customers and transaction using combined survey and transaction data from 834 cost savings to firms, it also heightens consumers’ con- personal computer (PC) banking customers of credit cerns about the privacy of personal identity and contact union. information. These concerns are perhaps salient due to the absence of tangible and verifiable cues regarding a seller’s The results reveal that trust in technology and per- intentions and capabilities (Balasubramanian, Konana, ceived commitment to privacy protection play an essen- and Menon 2003). Information security and technology tial mediating role between the aforementioned anteced- concerns have been recognized as essential to consumer ent and consequence variables. Interestingly, overall trust evaluations of a Web a site’s trustworthiness. Trust in a in the firm does not mediate the impact of these trust web site is therefore regarded as critical to web site norms on the consequence variables, i.e., commitment to success and a key focus of competitive differentiation privacy and trust in technology directly impact customer- (Urban, Sultan, and Qualls 2000). company identity and frequency of transaction, respectively. The findings indicate that managers and research- This article addresses a gap in the literature by pro- ers need to consider cross-channel effects of consumer posing two new facets of consumer trust in a technology- evaluation of other firm channels in evaluating the trust- based service firm: trust in technology and perceived worthiness of a web site. Managers also need to explore commitment of the firm to privacy protection. The study ways of demonstrating and reinforcing firm identity ide- proposes a model that demonstrates the importance and als in technology-based service delivery. Finally, the role of these two constructs in the wider nomological study suggests that rather than regard service delivery network of consumer-multi-channel service firm rela- technology as a generic invisible black box, managers tionship. Affective commitment, operational benevolence, should communicate the capabilities and integrity of its and problem solving orientation are modeled as anteced- service delivery technology to customers. ents of trust in technology and commitment to privacy

For further information contact: Devon Johnson Northeastern University Boston, MA 02115–5000 Phone: 617.373.3549 FAX: 617.373.8366 E-Mail: [email protected]

American Marketing Association / Winter 2005 58 VALIDATION AND APPLICATION OF A BI-DIMENSIONAL LONG-TERM ORIENTATION SCALE

William O. Bearden, University of South Carolina, Columbia R. Bruce Money, Brigham Young University, Provo Jennifer L. Nevins, University of South Carolina, Columbia

SUMMARY to address the shortcomings of extant measures, Bearden et al. (2003) developed a measure of long-term orientation Time orientation exists as a ubiquitous influence that composed of eight items in two subscales of four items permeates many aspects of life for every individual, each designed to address tradition and planning aspects of whether in a personal or business-related context. As LTO. In the current research we evaluate this two-factor such, marketing researchers have long been interested in LTO scale with data collected from two samples of U.S. how time is valued by consumers and decision makers in (n = 339) and Japanese (n = 253) adults (study 1). business settings. Measures of long- versus short-term time orientations have been the subject of recent inquiry Validation and Equivalence regarding their conceptualization, measurement and levels of analysis. The research reported here involves an From the U.S. and Japanese data, a uni-dimensional assessment and validation of a multi-factor set of items model in which all eight items loaded on one factor, a two- designed to measure long-term orientation at the indi- factor uncorrelated model, and a two-factor correlated vidual level using data from a study involving 592 Ameri- model, in which the two sets of four items loaded on their can and Japanese adult respondents. In addition, two respective tradition and planning factors, were estimated. application studies investigate the predictive validity of Comparisons of these models (cf., Anderson and Gerbing the long-term orientation measures in consumer and mana- 1988) across both country analyses revealed that the two- gerial decision contexts. factor correlated model provided the best representation of the data. Overall, these results provide evidence of Time Orientation Use and Measurement discriminant validity for the separate factor LTO subscales (tradition and planning) and are consistent with the previ- Hofstede’s (1980) work on national cultural values ous results reported by Bearden et al. (2003). Addition- has generated numerous citations and discussion, as well ally, we examined the measurement equivalence of the as criticism (Oyserman et al. 2002; Spector et al. 2001, data following the procedures outlined by Singh (1995) 2002). Specifically, Long-Term Orientation (LTO), or and Steenkamp and Baumgartner (1998), who recom- Confucian Dynamism, as Hofstede’s fifth dimension was mend tests of configural equivalence and metric equiva- originally called, has been the subject of recent inquiry lence, both of which exhibited satisfactory levels of fit. regarding the conceptualization, measurement, and levels These results support the cross-cultural applicability of of analysis this dimension was designed to capture (Fang the LTO scale. 2003). The lack of clarity regarding the underlying values, as well as confusion surrounding the dimensionality and Additional Evidence polarity of the LTO construct has contributed to increasing scrutiny of this cultural dimension. Responses from the U.S. and Japan were also collected for the eight-item consumer frugality scale of Hofstede’s fifth dimension has come to be used as a Lastovicka et al. (1999), a four-item measure of personal measure of time orientation. Indeed, attitudes toward time ethics (Vitell, Rallapalli, and Singhapakdi 1993), and a have been shown to vary systematically among consum- twelve-item consumer compulsive buying scale (Valence, ers (Prelec and Loewenstein 1998), business/marketing d’Astous, and Fortier 1988). It was hypothesized that managers (Kim and Oh 2002) and national cultures (Gra- individuals scoring high in the tradition and planning ham 1981). The concept of LTO has been used in a facets of long-term orientation would score higher in number of international marketing studies (Nakata and terms of consumer frugality, and ethics, and lower in Sivakumar 1996), with many indicating the need for compulsive buying tendencies. In addition to these other improved measurement. Some of these studies either constructs, single item convergent validity items for both empirically or conceptually correlated Hofstede index of the proposed LTO scales were also assessed using the scores for the countries involved, but could have benefit- procedures recommended by Bagozzi (1993). A series of ted from better individual-level measurement. In an effort consistently significant (p < .01) and generally strong

American Marketing Association / Winter 2005 59 estimates between the two tradition and planning subscales term outcomes related to firm profits and market share. and these additional measures provided supportive evi- Following completion of the choice task, respondents dence of validity for the proposed LTO measures. then replied to an item designed to elicit their confidence in their decision, as well as the tradition and planning LTO Application Studies measures. While the correlations between the tradition and planning measures and the dichotomous choice vari- In addition to study 1 assessments of equivalence and able were modest, the estimates are positive and signifi- validity, two additional studies were conducted to inves- cant as expected and provide additional support for the tigate the extent to which the proposed LTO measures are proposed scales in terms of predictive validity. correlated as expected with important consumer outcomes (study 2) as well as managerial decision making Conclusions and Implications (study 3). In study 2, data were collected from 54 undergraduate business students under the ruse of a study of The results reported in this article are generally consumer credit use among college students. Two mea- supportive of the bi-dimensional measure of long-term sures of credit involvement were obtained: total average orientation proposed by Bearden et al. (2003). A replica- monthly credit card balance and the total number of credit tion and application of the proposed LTO measure yielded cards owned. Although the correlations between the credit evidence of convergent, discriminant, and predictive va- measures and planning and tradition were mixed, both the lidity, dimensionality, and nomological validity. The im- simple correlations, as well partial correlation estimates, plications of our research are important to business aca- for the total eight-item LTO scale and both of the credit demics for several reasons. Our study adds to the body of measures were significant (p < .10). We also found knowledge regarding culture, and LTO in particular, and evidence of the ability of our measures to moderate the supports a valuable tool for studying an important aspect negative relationship between Lastovicka et al.’s (1999) of culture. Rather than merely assign index scores as consumer frugality scale and the two credit outcome reflective of whole groups, researchers using new scales variables described above. such as the LTO scale described in the current research, will be able to investigate outcome phenomena dependent In study 3, seventy-three MBA students first reacted directly on the individual values of subjects in various to a choice scenario involving selection of a pricing countries. Citation information available upon request. strategy that varied in terms of long-term versus short-

For further information contact: William O. Bearden The Moore School of Business University of South Carolina Columbia, SC 29208 FAX: 803.777.6876 E-Mail: [email protected]

American Marketing Association / Winter 2005 60 CONSUMER SOCIALIZATION OF THIRD CULTURE KIDS IN A COSMOPOLITAN CITY

Alfred Y. Sit, Chinese University of Hong Kong, Hong Kong Haksin Chan, Chinese University of Hong Kong, Hong Kong

SUMMARY have largely maintained their socializing influence on our ATCK participants. Often deprived of an extensive network of social support as they frequently relocate, many Third culture kids (TCKs, children raised outside ATCKs have developed an unusually strong bond with their passport countries) are a growing segment of global the immediate family. significance. We conducted an in-depth, qualitative study on consumer socialization of adolescent TCKs (ATCKs), The consensus in the literature is that peer influence and the data suggest that the unique cross-cultural expe- is negatively correlated with parental influence. Given riences of ATCKs are conducive to self-socialization, a ATCKs’ strong family ties, one would expect their peers phenomenon that has largely been neglected in the mar- to assume a smaller role. Indeed, the strength of peer keting literature. Our findings highlight ATCKs’ flexible group influence does appear weaker for ATCKs. How- use of socialization agents, as well as the influence of ever, the diminished peer group influence may also be ATCKs’ own motives and values. attributable to the mobility of ATCKs. Their nomadic lifestyle apparently attenuates peer group influence. Contrary to much of previous research, the adolescent consumer is not a passive recipient but rather an School is the place where adolescents spend most of active agent in the consumer socialization process. Strad- their time awake. Interestingly, extant consumer social- dling the home (i.e., first) and host (i.e., second) cultures, ization research has produced little evidence of school ATCKs are naturally exposed to a wide range of market influence. Note that school life extends far beyond the information, but they are at the same time quite purposive classroom, and extracurricular activities are an important as they “pick and choose” from a variety of potential part of school life for many ATCKs. One interesting consumer socialization agents. Notably, ATCKs’ motives finding is that extracurricular activities afford special and values play a significant role in the consumer social- shopping and consumption opportunities that otherwise ization process, as they negotiate the multi-cultural terrain would not be available to the adolescent consumer. of global markets. From a self-development perspective, ATCKs strategically engage in selective exposure to Previous research has suggested that TV is a potent socialization agents and actively construct their own shop- force shaping consumer values. This is, however, not the ping and consumption scripts. case for the ATCKs in our study. Our participants opt for the Internet and teen magazines to enrich their market- Methodology place knowledge of the first culture, even though the first- culture marketplace is thousands of miles away. Broadly To conduct a discovery-oriented study addressing speaking, these media are selected because they enable complex and dynamic issues of consumer socialization, the ATCKs to stay connected to their cultural roots. we adopted phenomenological interviewing as the method for data collection. Textual data were generated by means Contrary to past research which suggests that adoles- of in-depth interviews with 13 English-speaking female cents from higher-income families are more materialistic, ATCKs (ages 15 to 17) in a cosmopolitan city. The data the well-off ATCKs in our study generally do not consider were analyzed using a modified meaning condensation themselves to be brand-conscious. Situated in a heteroge- technique. After establishing an internal structure through neous brand environment in the diverse expatriate com- an iterative process, we generated meaning categories via munity, ATCKs appear to be less vulnerable to the hege- collective coding. Finally, inter-relationships among the mony of leading global brands. categories were established in keeping with the overarching theme of consumer socialization. Implications

Findings Unlike much of the empirical research on consumer socialization, our ATCK study has brought the cultural The ATCKs in our study have very strong ties to the context to the forefront. In light of the encouraging immediate family. In contrast to previous findings of findings of this study, the door is wide open for follow-up waning parental influence during adolescence, parents studies on consumer socialization of ATCKs, and for

American Marketing Association / Winter 2005 61 investigations into the impacts of global marketing on the unyielding local differentiation, given that young con- socialization of consumers in different cultures. A consumers are active participants in the socialization process. certed effort in cross-cultural research on consumer socialization would contribute to our understanding of inter- Many ATCKs in our study long for a connection to national consumer behavior and the broader impacts of their cultural roots while adapting to the second culture. globalization. Notably, previous research has found that expatriate executives, ATCKs’ adult counterparts, also share this sen- Some have envisaged a homogeneous youth market. timent. This has important implications for global market- The socializing influence of global marketing, however, ers targeting the growing expatriate communities around is mediated by socialization agents. There are hints of the world. Arguably, the marketing and public policy implications apply to immigrant communities as well.

For further information contact: Haksin Chan Department of Marketing The Chinese University of Hong Kong Shatin, Hong Kong Phone: 852.2609.7637 FAX: 852.2603.5473 E-Mail: [email protected]

American Marketing Association / Winter 2005 62 CONSUMER ETHNOCENTRISM IN THE GERMAN MARKET

Heiner Evanschitzky, University of Muenster (MCM), Germany Florian V. Wangenheim, Universität Dortmund, Germany

SUMMARY termed consumer cosmocentrism (CC), which we introduce due to the specific circumstances surrounding etno- International marketing researchers have for long censtrism in Germany is able to explain DCB better than been concerned with determining whether consumers are the CE construct. predisposed towards a preference for domestic as opposed to foreign products. Empirical studies have consis- Results tently confirmed the existence of such as “domestic- country bias” (DCB), which is manifested in stronger In a German context, we examine the relationship product preferences and buying intentions for home- between CE and CC on consumer preferences and inves- made products (for an overview, see Verlegh and tigate whether competitiveness and cultural similarity can Steenkamp 1999). DCB has typically been explained by help explain the varying strength of CE effects. The an individually varying, trait like property named “con- inclusion of a new construct, CC, adds little explanatory sumer ethnocentrism” (CE; Shimp and Sharma 1987). In power to our models. It seems important to verify that CE brief, the more ethnocentric consumers are, the stronger does in fact explain consumer preferences better than its the DCB, and consequently, their predisposition to prefer counterpart, even in a culture which is likely to be biased domestic over foreign products. towards the formulation of the CE scale.

In a recent study, Balabanis and Diamantopoulos In general, it seems that preference rankings can be (2004) identify a number of weaknesses of prior research better explained by the combination of demographic linking CE to DCB. First, earlier research had typically variables and CE for Germany than for Britain. The been restricted to one product category, thereby not allow- highest R2-value in the study by Balabanis and ing researchers to investigate potential variation of DCB Diamantopoulos (2004) is .14 (Cars/Britain), while the across product categories. Second, previous studies had highest explained variation in the present study is .18 focused on a very limited number of countries of origin (Shoes/Germany). Taken together, the fact that the high- (COO) of the researched product categories, which in turn est R2-value in both studies is obtained for the home prevented findings regarding varying degrees of DCB for country suggests that CE is better suited for explaining different COOs included in the study. Since there are domestic rather than foreign-country bias. Still, the level some indications that the effect of CE on DCB depends on of explained variance is far from satisfactory. Since the the specific configuration of COO and product category, CC construct has not yielded satisfactory results, one it is important to consider both aspects jointly. In sum, implication from this study is that further research is there are reasons to believe that the effect of consumer needed to understand more clearly how preference judg- ethnocentrism on domestic country bias is likely to differ ments for domestic versus foreign products are formed. both across countries and product categories, but prior research has not been designed to test this assumption. The effect of CE on domestic product preference is a consistent finding in both Balabanis and Diamantopoulos Based on those weaknesses, Balabanis and (2004) and the present study. Domestic firms in Germany Diamantopoulos (2004) investigate the effect of CE on can well rely on a “safeguarding” effect when marketing DCB for one domestic (Britain) and five foreign countries their products to consumers high in CE. At the same time, of origin in eight product categories, and find initial managers from foreign countries cannot rely on CE as a support for the assumption that this effect varies across reliable indicator of the inclination of consumers to down- product categories and COOs. grade their products.

Replicating and extending Balabanis and Diamanto- The findings of the study confirm that CE effects are poulos (2004), we contribute to the literature by (1) product- and country-specific, which confirms Balabanis conducting a similar study using a larger sample of Ger- and Diamantopoulos’ (2004) findings. However, the re- man consumers, (2) investigating a total number of 14 sults of the study contradict Balabanis and Diamantopoulos product categories (including the eight categories re- (2004) somewhat, in that at least economic competitive- searched by Balabanis and Diamantopoulos 2004) and (3) ness of the country-of-origin plays a role in determining testing whether the addition of an alternative construct, respondents’ judgments. One explanation for this finding

American Marketing Association / Winter 2005 63 may be that Germans are higher in uncertainty avoidance atory insights that could help shape further research than Britons. Therefore, Germans tend to choose products questions. First, it seems that CE affects preference rat- that they believe to be superior rather than to “experi- ings for the home country negatively in product categories ment” with home country products when competitively (a) that are perceived as being strong drivers of the better offers are available. This finding is also important economy (in Germany: cars, TV sets, electronics) and/or from a managerial perspective, as Balabanis and buying from foreign firms may endanger employment in Diamantopoulos (2004) concluded that in Britain, man- the home economy (fashion wear, toys). Consequently, agers from economically strong countries cannot count on CE exhibits the expected effects in product-country con- a country-of-origin effect in their favor, due to economic figurations that are likely to be perceived as threats for the competitiveness. For the German market, however, that home economy (e.g., French food products, Italian fash- seems to be the case: American and British firms are not ion wear and shoes, Japanese electronic products and TV negatively affected by CE effects, and in a few cases it sets). From that perspective, it may be concluded that even seems that CE is positively related to preference for German ethnocentrist view British and American prod- them. ucts as good and competitive, but not as harmful for the German economy, and therefore do not discount them in When further examining the structure of effects of their preference ratings. References and tables with re- CE on preferences, we are able to generate some explor- sults available upon request.

For further information contact: Heiner Evanschitzky Marketing Center Muenster Am Stadtgraben 13–15 D-48143 Muenster Germany Phone: +49.251.83.22036 FAX: +49.251.83.22032 E-Mail: [email protected]

American Marketing Association / Winter 2005 64 IDENTIFYING INFORMATION SEARCH PATTERNS IN A WEB-BASED ENVIRONMENT: DEVELOPMENT OF A SEARCH PATTERN INDEX

Morris K. George, University of Connecticut, Storrs Girish N. Punj, University of Connecticut, Storrs

ABSTRACT However, based on previous research on information source usage in traditional settings (Bruner 1986; We propose an index (labeled as Search Pattern Westbrook and Fornell 1979) it is possible to hypothesize Index) that can be used to capture distinctive patterns of likely influences on search in a web environment. These consumers in an online store setting. A sensitivity analysis may be broadly classified as Consumer Characteristics reveals that the proposed index can capture a variety of and Product and Situational Factors and are briefly de- search sequences, thereby enabling a better understand- scribed next. ing of underlying online behavior. Consumer Characteristics INTRODUCTION Domain expertise is defined as the ability of consum- The internet has become a dominant source of infor- ers to navigate through a website to access relevant mation about products and services. The information information. Consumers construct navigational maps, search sequences used during consideration set formation consisting of places or “landmarks” (Hodkinson et al. stage may vary across consumers depending on several 2000). Landmarks are “features of the online environment consumer, product and situational influences. The ob- which are relatively stable and conspicuous” (Dillion served search sequences are an external (and measurable) et al. 1993, p. 173), such as known websites. Domain manifestation of what the consumer is perhaps thinking expertise can be expected to be an important influence on while evaluating a particular brand for inclusion in a search patterns. consideration set. Buried in the search sequences are insights into the behavior of consumers in an online store System Expertise: Is the ability of an individual to environment. use the web and it includes skills such as being able to navigate through menus, plan and execute an online The purpose of this study is to propose a methodol- search, and the ability to manipulate and interact with a ogy by which distinct search sequences can be measured search engine or decision aid. System expertise can also and classified. Specifically we seek to develop a Search be expected to be an influence on search patterns Pattern Index (SPI) that can be used to capture the distinc- (Hodkinson et al. 2000). tiveness of common search sequences used by consumers in accessing web-based product information. Demographic Characteristics: Such as education, occupation and income can also be expected to influence Consumers are likely to use the web as an information consumer search patterns. Education is assumed to in- source during the early phases of the consumer decision crease the buyer’s need for information relating to the making process. Later, this information is likely to be purchase decision. Occupation and income are also im- supplemented by (and integrated with) information gath- portant influences because of their effect on search costs ered through a mix of traditional sources such as personal (Westbrook and Fornell 1979). (friends, family, etc.), neutral (books, magazine articles, etc), and marketer-dominated (advertisement, etc.) Search Attitude Towards the Web: Can be expected to sequences in these environments, while also important, influence search patterns because of consumers varying are much more difficult to capture. But, by then the beliefs of the credibility and reliability of information purchase decision has already been framed by the infor- posted on the web. Consumers may be skeptical of mar- mation initially gathered on the web. Hence, it is impor- keter-dominated information and may perform unneeded tant to understand the search sequences used by consum- search solely to establish the credibility of such informa- ers during this important initial phase. tion.

FACTORS INFLUENCING INFORMATION Brand Preference: Consumers with a strong brand SEARCH PATTERNS preference normally limit their search to information about their preferred brand. A consumer who has decided There is relatively little research on the factors that to buy a particular brand will primarily be interested in may determine search patterns in an online store setting. comparing prices for the selected model and choosing the

American Marketing Association / Winter 2005 65 best store/outlet. Hence, search patterns are likely to focus Knowledge Building Visit: The search patterns are few attributes. likely to be similar to those in a hedonic browsing visit but with more structure to them. They are less likely to be Price and Non-Sensory Attributes: The search at- affected by “flow.” Fewer websites are likely to be visited tributes can be categorized into (1) brand name, (2) price, with more pages being accessed at a visited site. (3) searchable sensory attributes, and (4) non-sensory attributes (Degeratu et al. 2000). Non-sensory attributes Web-Design Features: The amount of information form an important evaluative criterion in a web-based stored on a website and the navigational tools or decisions store environment. The importance given to price and aids that facilitate search between and within web pages other non-sensory attributes as an evaluative criterion by that are linked to that site have an important influence on a consumer depends on the price sensitivity and utilitarian search patterns. These design features determine to a great needs of the consumer. extent the total number of pages visited, the frequency with which pages are visited more than once and the Product and Situational Factors sequence of page visits. There are at least two different approaches that can be used to understand how consumers Nature of the Product: The complexity and value of navigate across the webpages linked to a website. the product and the consumer’s prior experience are likely to influence search patterns. For a complex, high value According to the economics of information perspec- product, consumers are likely to access more information tive, there is a likely negative relationship between search about product attributes and product reviews or ratings. cost and extent of search (Stigler 1961). Search cost in a For low value products, information search is likely to be web-based environment is closely related to the time or limited to brand and/or price comparisons. effort required to execute the search (Johnson et al. 1999). Web-design can play an important role to reduce the time Shopping Strategies: Are likely to be an important or effort required for search by providing readily identifi- influence on consumer search patterns because of their able links to related attribute information on other pages. relationship to two important goals, namely, the urgency of the purchase and the motivation for the website visit According to the information foraging framework, (Moe and Fader 2001). A taxonomy based on these two information resides in “patches” and consumers allocate dimensions suggests four shopping strategies: directed time to searching between-patches versus within-patch purchase visits, search/deliberation visits, hedonic brows- search, such that they optimize the rate of information ing visits, and knowledge building visits. gain per unit cost (Pirolli and Card 1999). In an online store setting, consumers will allocate time to within-page Directed Purchase Visits: Since an immediate pur- versus between-page search in order to maximize infor- chase is planned, consumer search will be product specific mation gain. The easier it is to access information across and of the “drill-down” type (Lynch and Ariely 2000). In web pages, the more within-page search there will be. other words, consumers will visit few sites, but examine more pages at a visited website. Another phenomenon To summarize, information search patterns in a web- consumers are likely to display is referred to as “harking based environment are likely to be influenced by the back” (Green and Jackson 1976), which refers to fre- Consumer Characteristics and Product and Situational quently going back to pages visited earlier. Factors as discussed above. The manner in which these factors interact to influence search patterns is depicted in Search/Deliberation Visits: The search patterns will Figures 1 and 2. be similar to those in a directed purchase visit, except that there will be less “harking back” due to the diminished Figure 1 shows the factors influencing the search urgency for the purchase. Also, consumers are likely to activity of a consumer. Regardless of the product, con- visit more websites, and examine fewer pages at a visited sumers have certain inherent consumer characteristics site. such as demographic, domain and system expertise and attitude toward web, brand preference, etc. that they bring Hedonic Browsing Visit: The search patterns are to the search task. Once web-based search is initiated, likely to be more random, since an immediate purchase is purchase related product and situational factors, such as not planned and neither is there a sense of purpose. shopping strategy (e.g., directed search vs. hedonic brows- Consequently, consumers are more likely to be suscep- ing), web-design features, especially amount of informa- tible to the effects of “flow” (Hoffman and Novak 1996). tion and the organization of information in different They are likely to visit many websites, but only access a webpages, will either facilitate or distract the consumers few pages at a visited site. in their search for information. Taken together, the above- mentioned factors determine the information search patterns of consumers in an online store setting.

American Marketing Association / Winter 2005 66 FIGURE 1 Factors Influencing the Information Search Pattern in a Web-Based Environment

Consumer Characteristics

• Domain expertise • System expertise • Demographic characteristics • Attitude towards web • Brand preference • Price & non-sensory attributes Direct Purchase visit Consumer Web Search Purchase Planned

Search/ Deliberation visit Product & Situational Factors

• Nature of the product Web-design features • Shopping strategy • Amount of information Hedonic- Knowledge- Browsing visit • Navigational tools’ Building visit decision aids

Figure 2 shows the different paths consumers may DEVELOPMENT OF A SEARCH take in a web-based information search depending on the PATTERN INDEX influence of the above factors at different stages of the search process. Each of these paths reflects different Search patterns are important for designing websites patterns of information search. For example, a consumer for different kinds of products. A manager is interested in in a directed search visit (immediate planned purchase) understanding specific search patterns consumers display who has decided the brand to buy will directly access any for their product. The formation of a consideration set is known website to search for evaluative information. On often an outcome of a web-based search. It is therefore the other hand, a consumer without a pre-search decision important for the manager to understand the search pat- about brand and with less product knowledge will first try terns used in the formation of a consideration set. Many to access product information through a search engine or websites of electronic stores or retail chains are designed decision aid (depending upon domain and system exper- in such a way that a consumer can search for alternatives tise). At this stage too, the amount of information accessed in a product category using certain attributes or attribute varies from consumer to consumer depending on the values as search criteria. Depending upon customers’ motivation to acquire information. In both the above preferences, these alternatives can also be sorted based on cases, the number of sites visited (inter-site search) and price, consumer ratings, or best-selling brands. number of pages visited per site (intra-site search), links taken from a site and the type of sites visited depend to a In developing a Search Pattern Index, it is important great extent on the design of the web-sites. to understand the underlying search behavior of consum-

American Marketing Association / Winter 2005 67 FIGURE 2 Flow Chart of Web-Based Information Search for a Directed Purchase Visit

Brand loyalty Domain and Prior search system expertise

Brand site

Yes Yes Directed Brand price Specific site Purchase visit decision address known?

No No Shop bots Search engine- Search engine- keyword search keyword search

Experience/ Prior Search Shop bots Sufficient No Low knowledge about Involvement of product category? Consumer

Visit e- Yes High stores

Product & Company/ Reviews/ Siturational Factors Shop bots Product Brand site Consumer reports sites

ers. Consumers start their search with the “ultimate, all Search Index = Alternative transitions – Attribute transitions singing, all dancing version of the product rather than with Alternative transitions + Attribute transitions a straightforward replacement” (Smith 2000). In other words consumers search for a product which scores high where alternative (attribute) transitions represent the num- on all their important evaluative criteria (attributes). This ber of instances in which the ith +1 piece of information gives them an opportunity to know what is available in the accessed was of the same alternative (attribute) as the ith. market and at what price. But very often this ideal product This will give an indication whether it is an alternative- will be a high priced premium product and not what the based search or attribute-based search depending on consumer wants. Consumers then “trade down” (Smith whether search index is positive or negative. This index 2000) to evaluate more realistic brands for the purpose of captures the consumers’ search pattern in cases where the forming a consideration set. Since information search is information accessed can be segregated as attribute based associated with search cost in terms of time (and cognitive or alternative based. effort), customers attempt to arrive at the consideration set with minimum number of searches. They select criteria However, in most searches, a combination of at- which, according to them, will reduce the number of tributes and attribute values are used as search criteria and searches required for the formation of consideration set. this makes it difficult to use this index. The general search In order to achieve this goal, consumers may engage in pattern indicates that instead of accessing information attribute (alternative) based search. Some of the earlier about an attribute, consumers use attribute-values as search studies have focused on developing a search index, which criteria to arrive at a set of alternatives. This brings up the reflects this kind of search pattern in a web based decision- need for a new search index, which captures the search making environment. Payne (1976) proposed Search In- pattern described above. dex as:

American Marketing Association / Winter 2005 68 It is evident from the general pattern of search that (1) attributes selected remains the same, (b) the attribute consumers use attribute-values as search criteria (2) the value remains the same, but the number of attributes number of attributes used in a search and attribute-values change, and (c) both the attribute value and the number of differ across searches (3) consumers try to minimize the attributes change. number of searches in arriving at a desired set of alternatives. They use attributes and attribute-values in such a Here, we are ignoring the scenario where both at- way that it helps to reduce the number of searches. An tribute values and numbers of attributes remain unchanged ideal situation would be one in which the consideration set because, in such cases, the alternatives selected will be the is arrived at in one search using the correct number of same and it would not be an effective search. In most attributes and the right attribute-values. But in reality, cases, the attribute value, which has the maximum impact consumers tend to over calibrate or under calibrate, or, in on selection, is price range. Hence, we are considering other words, they start with more stringent or less strin- only price range as the attribute value. gent criteria for selection. In subsequent searches, this over/under calibration is corrected by relaxing/tightening In the three cases mentioned earlier, identifying tran- the criteria. For an index to reflect the search pattern, it sition is easy in the first two cases. In the first case, when should capture this over/under calibration and transitions the number of attributes remains unchanged, narrower/ in consecutive searches, i.e., from under calibration to wider price range will indicate more/less stringent criteria over calibration or vice versa. for selection, and hence becomes a case of transition to over/under calibration. In the second case, when attribute Measuring Over/Under Calibration values remain unchanged, more/less number of attributes in the second search indicates more/less stringent criteria As discussed above, attributes and attribute-values and thus is transition to over/under calibration. However, are used as criteria in searches. Therefore, the number of in the third case, it is very difficult to identify transitions. attributes and attribute-values used in a search gives us an To identify transition, one can follow a general rule of indication of how stringent the criterion is. Since this thumb like the one mentioned below: varies with consumers and searches, the index of search pattern should include the following variables to repre- 1. When the number of attributes is less and the price sent over/under calibration: range is more, in the second search, it is a case of under calibration.

1. Number of attributes used in the first search, A1 2. When the number of attributes is less and the price

2. Number of attributes used in the last search, AL range smaller, it is over calibration.

3. Total number of attributes, NA 3. When the price range is larger and the number of attributes more, it is under calibration. 4. The attribute value: in most cases, the price range, in

the first search, R1 4. When the price range is smaller and the number of attributes less, it is considered over calibration.

5. Price range in the last search, RL In (3) and (4) it is assumed that when the price range

6. Maximum price range, RMAX. is smaller, the selection criteria becomes stricter even though the number of attributes is less and is treated as In addition to the above variables, we need to mea- transition to over calibration. Similarly, larger price range

sure the transitions- under calibration transitions, NU, and indicates less strict selection criteria and the transition is over calibration transitions, NO. In two consecutive treated as under calibration transition. searches, if the search criteria are more stringent in the second search than in the first, it is a case of transition to Using the above parameters, an index of search over calibration and NO is taken as 1. Similarly in the pattern can be expressed as: second search, if the search criteria are less stringent

compared to the first, it is considered as transition to under SPI = 100 {(A1 – AL)/2NA + (RL – R1)/2RMAX} NU/NT

calibration and NU is taken as 1.

where A1 = number of attributes in the first search

Identifying Over/Under Calibration Transitions AL = number of attributes in the last search

NA = total number of attributes in the search

In consecutive searches, the following scenarios are R1 = price range in the first search

probable: (a) the attribute value changes, while number of RL = price range in the last search

American Marketing Association / Winter 2005 69 RMAX = maximum price range The term, NU/NT is a measure of consumers’ willing-

NU = number of transitions to under calibra- ness to correct his/her initial over calibration in the subse- tion quent searches. Together with the first term, this indicates

NT = total number of transitions the magnitude of over/under calibration.

The term, {(A1 – AL)/2NA + (RL – R1) / 2RMAX} is a The index, we proposed allows for range specifica- measure of over all under/over calibration. Theoretically, tion only in price. However, in reality, the websites allow the most extreme values for this term are -1 and +1. Here, for range specification in more number of attributes. In we are interested in the sign of the expression. The order to capture the search patterns in such cases, one can following scenarios are possible with respect to the sign of modify SPI by adding terms, similar to (A1 – AL)/2NA, SPI. representing the over/under calibration with respect to the range specification of different attributes. However, by Positive Sign: This can happen in the following doing so the interpretation of SPI becomes more complex. conditions. Since we thought price is a surrogate measure in many cases for product features and performance, only price • Customer specifies relatively stringent criteria on the range is included in our search pattern index.

attributes as well as the price range (i.e both (A1– AL)

and (RL – R1) are positive) in the initial search. This is AN ILLUSTRATION OF THE INDEX a simple case of over calibration. The customer searches for the ideal or dream product in the first The Search Pattern Index is tested using data from an search itself. experiment involving apartment search in a web-based

environment. A total of 19 attributes (NA = 19) of the • Other conditions, in which SPI is positive, are not so apartment like location of the apartment, availability of straightforward. Customer may over calibrate in one heat/hot water, facilities such as swimming pool, fitness criterion but under calibrate in the other. In this case, room in the complex are used as search criteria. Along SPI will be positive only when the under calibration with these attributes, participants specified maximum and in attributes/price range is canceled out by the over minimum monthly rent for the apartment as other search calibration in price range/attributes. For example, if criteria. The maximum monthly rent that can be entered a customer specified 4 attributes initially and 8 at- for search was $1300 and minimum was $400. Hence the

tributes in the final search, and if NA=10, then under maximum price range, Rmax is 900 (i.e., 1300 – 400). calibration by the customer in attributes is -0.2 (i.e., Participants used a combination of these search criteria in

(A1 – AL)/2NA). However, if the same customer had a number of searches to arrive at a list of apartments, specified a price range of 100 initially, 700 in the last which they consider for renting. The participants’ choice

search, and if RMAX is 1000, then the over calibration of attributes and the price range specified in each of the

in price range, (RL – R1) / 2RMAX) is 0.3. Hence, the searches was captured in log files. The experiment was overall over calibration in this case is 0.1. conducted in severe to slight pressure and few alternatives vs. many alternatives (2 x 2 experiments). SPI will be negative in the following conditions: The search histories of eight participants who display • Customer specifies relatively less stringent criteria different search patterns are studied. The search param-

on the attributes as well as the price range (i.e both eters A1, AL, R1, RL, NO, and NU, are calculated from the log

(A1 – AL) and (RL – R1) are negative) in the initial files and used to arrive at the Search Pattern Index. The search. This is a simple case of under calibration. The SPI, calculated for different combination of search pa- customer searches for what is available in the market rameters are given in Table 1. and then goes toward the product which best suits his/ her needs. Another explanation may be that a cus- The search histories selected show great amount of tomer who under calibrates may not have sufficient variability. The number of attributes used in the first knowledge about the product. search varies from 13 to 4 and that in the last search ranges from 1 to 8. Similarly the price range selected varies from • Other necessary condition for a negative sign for SPI 200 to 900. In all these cases, the Search Pattern Index is the overall under calibration by the customer, (SPI) captures the underlying aspect of search pattern. similar to the second condition explained in the case The sign of SPI indicates whether it is overall over/under of positive sign. Here, for SPI to be negative, the over calibration and magnitude represents the extent of over/ calibration in attributes/price range has to be can- under calibration. The index is positive with higher mag- celled out by under calibration in price range/at- nitudes when stricter criteria (over calibration) are used in tributes.

American Marketing Association / Winter 2005 70 TABLE 1 Search Pattern Index in a Web-Based Information Search

Maximum price range, RMAX = 900

Total No. of Attributes, NA = 19

Search Pattern Sl. No Search Parameters Index

A1 AL R1 RL NU NT

1 12 5 300 700 14 18 31.61 2 7 4 250 900 5 8 27.50 3 7 8 900 600 3 8 -7.24 4 11 4 600 200 10 12 -3.17 5 6 1 700 200 1 2 -7.31 6 8 4 900 450 4 7 -8.27 7 13 3 600 300 3 6 4.82 8 4 1 400 900 4 4 35.67

the first search compared to the last search, in terms of more efficiently. One way of customization, which many both the number of attributes and price range (cases 1, 2, companies do, is to make the search more interactive and and 8 in Table 1). When less stringent criteria are used in prompt customers to visit more appropriate sites. This is the first search, in terms of both the number of attributes done by tracking the sites and pages visited by the con- and price range, the index is always negative (case 3). sumers in their search. Identification of search pattern and However in cases where participants used more attributes more importantly making inferences about the consumers but wider price range, the sign and magnitude of the index from the search pattern will help to customize the search depends on the extent of overall over/under calibration for individual consumer. In this paper we identified cer- specified by both price range and number of attributes tain factors that influence search patterns. These factors used in the search. In cases 4, 5, and 6, the under calibra- have varying influence on consumers’ search activity at tion in terms of price range was large enough in order to different stages of their search. Also, in order to reflect the nullify the over calibration specified in terms of A1 and AL individual search pattern, especially in the search for and therefore the overall index is negative. But in case 7, formation of consideration set, a Search Pattern Index is the over calibration specified in terms of A1 and AL is developed. This can be used as a dependent measure in sufficient to nullify the under calibration expressed in future researches to understand and predict consumers’ terms of price range and hence the search index is positive. search pattern in a web-based environment. The index can This illustrates the SPI’s ability to capture the search be easily modified to suit websites of different e-stores pattern in terms of overall over/under calibration in differ- because the basic nature of search remains the same- i.e., ent searches. searching for alternatives using attributes and attribute values as criteria. CONCLUSIONS AND FUTURE RESEARCH We developed a uni-dimensional index to represent Emergence of web as an important source of informa- search pattern, which is a multi-dimensional activity. tion has necessitated the identification of search patterns. Future research can focus on developing a multi-dimen- More and more e-businesses are trying to customize their sional index without sacrificing the ease of interpretabil- web sites to help the consumers search for information ity.

American Marketing Association / Winter 2005 71 REFERENCES Web,” International Journal of Human-Computer Studies, 52, 805–30. Bruner, C. Gordon (1986), “Problem Recognition Styles Johnson, J. Eric, Gerald L. Lohse, and Naomi Mandel and Search Patterns: An Empirical Investigation,” (1999), “Designing Marketplaces of the Artificial: Journal of Retailing, 62 (3), (Fall) 281–97. Four Approaches to Understanding Consumer Be- Degeratu, Alexandru M., Arvind Rangaswamy, and Jianan havior in Electronic Environments,” INFORMS Con- Wu (2000), “Consumer Choice Behavior In Online ference “Marketing and the Internet.” and Traditional Supermarkets: The Effects of Brand Moe, W. Wendy and Peter S. Fader (2001), “Uncovering Name, Price, and Other Search Attributes,” Interna- Patterns in Cybershopping,” California Management tional Journal of Research in Marketing, 17, 55–78. Review, 43 (4), (Summer), 106–17. Smith, Gerald E. (2000), “Search at Different Price Lev- Payne, J. Stephen, Andrew Howes, and William R. Read- els: The Impact of Knowledge and Search Cost,” The er (2001), “Adaptively Distributing Cognition: A Journal of Product and Brand Management, 9 (3), Decision-Making Perspective on Human – Comput- 164–78. er Interaction,” Behaviour & Information Technolo- Green, T.R. and P.R. Jackson (1976), “Hark-Back: A gy, 20 (5), 339–46. Simple Measure of Search Patterns,” British Journal Pirolli, Peter and Stuart Card (1999), “Information Forag- of Mathematical and Statistical Psychology, 29 (1), ing,” Psychological Review, 106 (4), 643–75. (May), 103–13. Westbrook, Robert A. and Claes Fornell (1979), “Patterns Hodkinson, Chris, Geoffrey Kiel, and Janet R. McColl- of Information Source Usage among Durable Goods Kennedy (2000), “Consumer Web Search Behav- Buyers,” Journal of Marketing Research, 16 (Au- iour: Diagrammatic Illustration of Wayfinding on the gust), 303–12.

For further information contact: Morris K. George Department of Marketing University of Connecticut 2100 Hillside Road Storrs, CT 06269 Phone: 860.486.1102 FAX: 860.486.5246 E-Mail: [email protected]

American Marketing Association / Winter 2005 72 PERCEIVED RISK AND CONSUMER INNOVATIVENESS HIERARCHY: AN EMPIRICAL STUDY OF RESISTANCE TO HIGH TECHNOLOGY PRODUCT ADOPTION

Tanawat Hirunyawipada, University of North Texas, Denton Mohammadali Zolfagharian, University of North Texas, Denton

SUMMARY construct containing common dimensions across product categories as well as category-specific dimensions. Since Consumer innovativeness is a central element in the this study focuses on high-tech products, network exter- studies of diffusion of innovation (Midgley and Dowling nalities is introduced as a category-specific risk while 1978), and it identifies early adopters from general con- financial, performance, physical, time, social, and psy- sumers (Roehrich 2002). Finding early adopters can ac- chological risks are included as perceived risk dimensions celerate the diffusion of innovation and minimize the generally found across categories. The seven dimensions chances of new product failure (Robertson 1971, pp. 112– of perceived risk are collectively tested to explore the 113). Consumer innovativeness studies generally seem to effect of innovation-resistance on the consumer innova- focus on arousal and novelty seeking as the underlying tiveness hierarchy. reasons for consumers to seek novel products (Hirschman 1980). However, new products also inherently encom- Data collected from 746 graduate and undergraduate pass an element of risks associated with resistance to students at a major public university in Southwestern U.S. adoption (Ram and Sheth 1989). This study examines: (1) show strong supports for all 12 hypotheses. The positive consumer innovativeness is the trait that engenders the relation between CGI and ADI suggests that CGI is a adoption of innovation; (2) new products encompass propensity to enjoy cognitive process that needs practical resistance to adoption. We hypothesize that perceived and pragmatic activities and that can be obtained through risk, which is a highly salient, influential attribute of using products. This trait can drive consumers toward the innovation resistance (Bettman 1973; Dholakia 2000), actual innovation adoption. The positive relation between moderates the relationship between consumer innova- SNI and VCI shows that SNI trait relates to consumers’ tiveness and new product adoption. tendency to seek fantasy and arousal for optimizing their level of stimulation. This arousal is achieved by the mere Reviewing consumer innovativeness literature (e.g., adoption of stimulus information. SNI is therefore a trait Midgley and Dowling 1978, 1993; Hirschman 1980; in consumers with positive propensity toward VCI. The Roger 1983; Venkatraman and Price 1990), we delineate positive relation between DSI and AI (both ADI and VCI the consumer innovativeness hierarchy, which includes dimensions) may suggest that consumer innovativeness the three different aspects: global innovativeness (GI), becomes stronger within specific product categories. DSI domain-specific innovativeness (DSI), and actualized encompasses consumers’ interests in specific categories innovativeness (AI). GI is defined as the degree to which and constitutes higher propensity to adopt innovations. an individual is receptive to new ideas and independently adopts the ideas through various forms of new products. The results confirm the moderating effect of per- GI is also disaggregated into cognitive innovativeness ceived risk, that is, consumers with high overall perceived (CGI) and sensory innovativeness (SNI). DSI is consid- risk typically score high on VCI (the higher perceived ered an individual’s innovativeness predisposition to- risk, the higher VCI). This is a key answer to the ongoing ward generic product class. AI is defined as the degree to dispute concerning the proneness of globally innovative which consumers are relatively earlier in adopting new consumers (GI) toward new product adoption. The resis- products than other members of their societies. We sug- tance to innovation adoption, represented by perceived gest that AI be disintegrated into the adoption of actual risk associated with new products, clearly counteracts the products (Adoptive innovativeness, ADI) and the acqui- influence of the CGI trait. It is only the SNI trait that sition of novel information about products (Vicarious significantly influences the adoption behavior of innova- innovativeness, VCI). tive consumers with high concern about risk. This effect causes innovative consumers to reject new products but This study also proposes that perceived risk, i.e., still acquire and enjoy products’ novel information. Per- instigating resistance to the adoption of innovation, mod- ceived risk changes the innovators from “doers” to “dream- erates the relation between consumer innovativeness and ers.” However, perceived risk has insignificant impact on innovation adoption. Perceived risk is a multidimensional the relation between DSI and AI (both ADI and VCI). DSI

American Marketing Association / Winter 2005 73 consumers’ interests and knowledge in certain product warranty programs are among considerable activities to categories may mitigate perceived risk from his/her adop- mitigate consumers’ perceived risk. tion. Future study should consider more diversified prod- The result implies that marketing managers should uct categories. By doing so, the other dimensions of first target DSI consumers as early adopters for high-tech perceived risk might be identified, and the external valid- products. GI consumers make up the second best potential ity of the model might be increased. Additionally, the adopters. To achieve this objective, managers should hierarchy of consumer innovativeness needs further theo- manipulate the market mix so that both groups of consum- rization, especially on other moderating variables that can ers are targeted. Promotional messages, while stressing significantly influence AI. The dimensions of perceived CGI and SNI, should ensure consumers that they can risk, which may be salient in different aspects of consumer overcome the risk associated with innovation adoption. innovativeness, are another interesting avenue for future Product demonstration, product trials, and appropriate research.

For further information contact: Tanawat Hirunyawipada University of North Texas P.O. Box 311396 Denton, TX 76203 Phone: 940.565.3120 FAX: 940.565.3837 E-Mail: [email protected]

American Marketing Association / Winter 2005 74 PERCEIVED ENTITATIVITY AS A MODERATOR OF FAMILY BRAND EVALUATIONS

Joseph W. Chang, University of Regina, Regina Yung-Chien Lou, National Cheng-Chi University, Taiwan

SUMMARY Jews, women, may be perceived as low or moderate entitative groups with insignificant coherent interactions. Research in family brand evaluations uncovers that Social groups with coherent interaction among group the reciprocal effects of brand extensions on family brands members, such as task or intimacy groups, are normally are moderated by the categorical similarity of brand perceived as high entitative and strongly valued (Lickel extensions (e.g., Chang 2001; Loken and John 1993; et al. 2000). Social groups with different perceived John, Loken, and Joiner 1998) and the accessibility and entitativity activate different psychological processes and diagnosticity of brand extension information (e.g., lead to different subsequent impression formation (or Ahluwalia and Gurhan-Canli 2000; Chang 2002). When judgments) of groups. Moreover, Crawford et al. (2002) the accessibility of extension information is high, con- find that the abstracted traits of the individual behaviours sumers engage in piecemeal or systematic processing on of high entitative groups are more likely to be applied to brand evaluations, where detailed brand extension infor- revise group stereotypes than those of low entitative mation is processed for the impression formation of fam- groups, which suggests that new individual members of ily brands. Under the circumstances, the valence of highly high entitative groups are more influential than those of accessible extension information is more diagnostic than low entitative groups on group impression formation. The the contextual factor of categorical similarity on family findings suggest that, except for similarity and informa- brand evaluations. The images of family brands are weak- tion accessibility-diagnosticity, group impression forma- ened by negative extension information and are enhanced tion is moderated by the perceived entitativity of groups. by positive extension information, regardless of the cat- For brand evaluation research, the results may also imply egorical similarity of brand extensions. that the new extension information of high entitative family brands is more influential than that of low entitative Most recently, a considerable amount of attentions in family brands on family brand evaluations. the research of social cognition has been given to the influences of new group members on the impression Based on group impression formation and accessibil- formation of social groups with high and low perceived ity-diagnosticity theories, experimental hypotheses are entitativity (e.g., Crawford, Sherman, and Hamilton 2002; developed to examine the intermediating roles of per- Lickel, Hamilton, Wieczorkowska, Lewis, Sherman, and ceived entitativity, information valence, and categorical Uhles 2000; McConnell, Sherman, and Hamilton 1997). similarity on family brand evaluations with laboratory A social aggregate is perceived as having “the nature of an experiments under high accessibility situations. Both high entity, of having real existence” (Campbell 1958, p. 17; and low entitative family brands are enhanced and diluted McConnell et al. 1997, p. 750), whereas perceived by positive and negative extension information respec- entitativity is defined as the degree to which a collection tively, regardless of the categorical similarity of brand of persons is perceived as being bonded together in a extensions and the perceived entitativity of family brands. coherent unit (Campbell 1958; Lickel et al. 2000, p. 224). The polarization effect of perceived entitativity on the The concept of perceived entitativity emphasizes the quality judgements of family brands is also observed. interactive coherence among group members (Gaertner High entitative family brands are more favorably evalu- and Schopler 1998). Expected variability discusses the ated than low entitative family brands. The polarization similarity among existing group members in a more static effect then serves as a mediator on reciprocal extension fashion, such as race, gender, and quality, whereas per- effects and leads to the results that high entitative family ceived entitativity emphasizes the relationship among brands are more significantly diluted by negative exten- group members on the dynamic perspective of interactive sion information and low entitative family brands are coherence (Gaertner and Schopler 1998; Hamilton, more significantly enhanced by positive extension infor- Sherman, and Rodgers 2003; Lickel et al. 2000). Low mation. References available upon request. variable groups with same ethnicity or gender, such as

American Marketing Association / Winter 2005 75 For further information contact: Joseph W. Chang University of Regina 1320C Grace Street Regina, SK S4T 5M8 Canada Phone: 306.949.9523 FAX: 310.356.4934 E-Mail: [email protected]

American Marketing Association / Winter 2005 76 THE PERFORMANCE IMPLICATIONS OF SYNERGISTIC KNOWLEDGE RESOURCE EFFECTS IN DIFFERING ENVIRONMENTAL CONDITIONS

David A. Griffith, Michigan State University, East Lansing Stephanie M. Noble, The University of Mississippi, University Qimei Chen, University of Hawaii, Honolulu

SUMMARY all standardized factor loadings were well above .40, a minimum threshold of acceptability (Hair et al. 1998). Introduction The measurement model produced a chi-square value of 399 with 216 degrees of freedom, a chi-squared/df ratio of Despite the growing interest among scholars and 1.85, GFI of .90, IFI of .943, and CFI of .942, indicating practitioners, there is a lack of research on and a need to that the model provides a good overall fit. improve our understanding of the process of implementing a knowledge management strategy. This article ad- Results and Discussion dresses this area and contributes to our understanding by providing insights into both synergistic knowledge re- This study makes several important contributions to source effects and the environmental influences on knowl- the literature. First, researchers have yet to fully explore edge management strategy implementation effectiveness. the synergistic effects of knowledge resources in their Specifically, we investigate the synergistic effect of com- conversion into capabilities. Day (1994) identifies capa- bining knowledge of customers, industry, and firm prac- bilities and skills related to “market-sensing” and “cus- tices to develop the capability of ability to meet customer tomer-linking,” as critical to a firm’s competitive advan- needs and the influence of the capability of ability to meet tage. Our results build on this and indicate that when the customer needs on performance. Further, as our focus is firm’s knowledge resources (i.e., knowledge of a firm’s resource conversion into the capability of ability to meet customers, its industry and the firm’s practice) are devel- customer needs, we examine the moderation effect of two oped and implemented in conjunction with one another environmental conditions i.e., competitive intensity and the firm is able to establish more well developed capabili- market dynamism, on the conversion effectiveness. ties in relation to meeting customer needs.

Method and Analysis The findings of this study also demonstrate the influence of environmental conditions on resource conversion. We tested the hypotheses using data collected in the The results indicate that competitive intensity does not retail industry. Trained market researchers were then sent diminish the conversion of knowledge resources into the into the field to conduct 320 pre-arranged in-office inter- capability of ability to meet customer needs. In fact, the views with retailers systematically selected from a direc- conversion of knowledge resources had a positive influ- tory. A total of 293 usable responses were received, ence on the ability to meet customer needs even in highly yielding a 60 percent response rate (when taking the competitive markets. These finding are encouraging as replacement sample into account). Retail sectors in the they indicate that even in markets stronger in competitive sample consisted of airlines, major household appliance, intensity, synergistically combining knowledge resources automobile dealers, banks, beauty salons and services, can result in the development of the capability of ability to clothing retail, computer dealers, convenience stores, meet customer needs. copy and duplication service, cosmetics retail, department stores, electronic appliances, florists retail, furniture Further, the results pertaining to the influence of retail, gift shops, golf, grocer, hotels, insurance, jewelers, market dynamism on resource conversion indicated that pet shops, pharmacies, photo finishing, pizza, real estate market dynamism did in fact influence a firm’s knowl- agent, restaurants, sporting goods, toys, and travel agen- edge resource conversion. Specifically, the results indi- cies. cated that firms who were able to synergistically combine knowledge resources operating in highly dynamic mar- The fit of the measurement model was assessed by kets were less effective at developing the capability of examining factor loadings from latent variables to indica- ability to meet customer needs when compared to firms tor variables, the chi-squared test, and fit indices. All operating in less dynamic markets. As theorized, dynamic factor loadings were significant at the p < .001 level and markets are characterized by ever changing consumer

American Marketing Association / Winter 2005 77 demands and as such even firms who are able to synergis- knowledge resources to a firm is often viewed in terms of tically combine resources are faced with unique market its performance outcomes, without careful consideration challenges. This is not to indicate that firms that were able of its intervening firm capabilities, such as the ability to to synergistically combine resources were not able to meet customer needs. As such, the findings of this study develop the capability of ability to meet customer needs, underscores, and provides empirical support for, the theo- for the results clearly indicate that there was a strong retical precepts put forth in the capabilities literature, i.e., relationship between these two elements in markets char- that resources are necessary yet insufficient for the estab- acterized by high and low market dynamism, but rather lishment of enhanced performance. Here, the findings that the market environment itself hampered the firm from demonstrate that it is through the conversion of knowl- fully capitalizing on its ability to synergistically combine edge resources into capabilities that a firm is able to knowledge resources. develop a unique market position allowing for enhanced performance. As such, this study extends the literature on In addition, most studies of knowledge resources knowledge resources and the RBV of the firm by explor- have focused almost exclusively on direct performance ing the employment of knowledge resources under a implications, thus neglecting the importance of resource capabilities perspective. References available upon re- conversion into viable capabilities. The importance of quest

For further information contact: David A. Griffith Department of Marketing and Supply Chain Management The Eli Broad College of Business Michigan State University East Lansing, MI 48824–1122 Phone: 517.432.5535, Ext. 260 FAX: 517.432.1112 E-Mail: [email protected]

American Marketing Association / Winter 2005 78 THE IMPACT OF MARKET CHARACTERISTICS ON ORDER-OF- BRAND ENTRY STRATEGY: AN EMPIRICAL STUDY

Danielle A. Chmielewski, The University of Melbourne, Australia Bryan A. Lukas, The University of Melbourne, Australia Robert E. Widing II, The University of Melbourne, Australia

ABSTRACT highly competitive nature of the consumer goods industries, it is important for firms to better understand the This study empirically investigates the impact of impact of market factors on its order-of-entry strategy. competitive intensity, market turbulence and market This will help ensure that a firm’s order-of-entry decision growth potential on a firm’s order-of-brand entry deci- for a brand reflects the conditions it faces in the market it sion. The results indicate that the greater the competitive is choosing to enter. intensity and market growth potential, the earlier the brand entry. Directions for future research are discussed. Against this background, the purpose of this study is to empirically examine the impact of key characteristics INTRODUCTION of the market, namely competitive intensity, market turbulence and market growth potential, on a firm’s order-of- Order-of-brand entry refers to the sequence of entry brand entry strategy in a range of consumer goods indus- of brands into a market (Schoenecker and Cooper 1998). tries. These three characteristics affect the attractiveness The issue of when to introduce a new brand into a market of the market into which a firm wishes to enter. This is a is a complex one, because as Schnaars (1986) asserts, very important and managerially relevant issue, because different entry strategies are optimal for different firms as it suggests that different market characteristics require well as for different market conditions. Whilst earlier different order of entry decisions. It has been argued that entry into a market can lead to the development of a first- the order-of-entry of a product into a market is a key mover advantage (see Lambkin 1988; Robinson 1988; determinant of the success or failure of the product Robinson and Fornell 1985), there are also risks and costs (Fuentelsaz, Gomez, and Polo 2002). Understanding the associated with introducing a brand earlier into the mar- interplay between the market and order of entry strategy ket. Development and particularly promotion costs of the will allow firms to make a more informed decision about brand are high, and the risk of failure is considerable, as the most appropriate entry strategy to employ, given the demand uncertainty exists (Lambkin 1988; Urban et al. market conditions. 1986). In a new market, it can also be difficult to accurately forecast the size of the market and the optimal The paper is structured as follows. First, we present positioning of the new brand (Sullivan 1991). Entering a the conceptual model and put forth our hypotheses by brand later into the market can allow a firm to benefit from providing a brief review of the relevant literature. Then, a late-mover advantage (see Sullivan 1991; Shankar, we identify the methodology employed in this empirical Carpenter, and Krishnamurthi 1998), although later entry study, before presenting our results. In the final section, also has its risks, because the brand is entering a more we provide a discussion of the results and some future competitive marketplace. Therefore, by understanding research avenues. the factors affecting the order-of-entry decision for a brand, a firm is better placed to enter a brand into a market CONCEPTUAL BACKGROUND AND in such a way as to balance the risks of entering too early HYPOTHESES with the problems of missing opportunities by entering too late (Lilien and Yoon 1990). Figure 1 is a conceptual framework for the discussion that follows. We now discuss each of the proposed rela- The strategic marketing and management literature tionships and develop hypotheses based on existing litera- has long argued that a firm’s environment affects a firm’s ture. strategy (e.g., Miller 1987; Tan and Litschert 1994). A firm’s external environment can be a source of informa- An attractive market is defined as one “where the tion uncertainty (Rajagopalan and Spreitzer 1996). Con- average competitor consistently earns a return above its ducting an analysis of the competitive environment en- cost of capital, i.e., it is creating value for shareholders” ables a firm to better understand and measure “the attrac- (Doyle 2000, p. 157). Market attractiveness is a function tiveness of industries for long-term profitability and the of the structure of the market in which a firm competes, factors that determine it” (Porter 1985, p. 1). Given the and the extent to which the market is turbulent influences

American Marketing Association / Winter 2005 79 FIGURE 1 Order-of-Brand Entry Strategy: A Conceptual Model

Market Attractiveness (a) Competitive Intensity Order-of-Brand Entry (b) Market Turbulence (c) Market Growth Potential

the attractiveness of that market (Glazer 1991). A turbu- entrants with a “head start,” because they increase the lent, dynamic market requires a firm to be responsive and lead-time between early-movers and late-movers. adapt to changes in its environment (Rajagopalan and Spreitzer 1996). A number of factors influence the attrac- Barney (1991) argues that early entrants can develop tiveness of the market, including customer turbulence, an advantage over late entrants, because they have the competitive intensity, technological intensity, buyer power, opportunity to develop solid relationships with suppliers, and supplier power (Doyle 2000; Jaworski and Kohli establish strong brand awareness, and obtain a large share 1993; Miller 1987; Porter 1980). This study will focus on of the market. Consequently, they are able to lock in three key factors; competitive intensity, market turbu- suppliers and customers and create barriers to entry, thus lence, and market growth potential (Doyle 2001). We now making entry more difficult for subsequent entrants. If turn to a brief discussion of each of these factors. firms know that their industry will be characterised by intense competition, they have an incentive to make a pre- Competitive Intensity emptive move by entering earlier and erecting barriers to entry, rather than entering later and facing barriers to Competitive intensity refers to the extent to which the entry. On this basis, we put forth the following hypothesis: composition of the market and competitive actions change over time (Gatignon and Xuereb 1997; Kohli and Jaworski Hypothesis 1: The greater the competitive intensity in 1990; Slater and Narver 1994). According to Fuentelsaz, a market, the earlier the brand entry. Gomez, and Polo (2002, p. 250), “competition stems from firms interacting and striving in the same environments Market Turbulence and for the same resources.” Competitive intensity addresses the breadth and aggressiveness of a competitor’s Market turbulence is defined as the extent to which actions (Slater and Narver 1994). Day (1994) asserts that the composition of customers and their preferences change the intensity of competition within a market determines over time (Han, Kim, and Srivastava 1998; Kohli and the profit potential of that market. Jaworski 1990). Market turbulence is similar to “environmental heterogeneity,” which refers to “the change in According to Porter (1980, p. 17), competitive inten- diversity of production methods and marketing tactics sity in a market occurs “because one or more competitors required to cater to customers’ needs” (Miller 1987, either feels the pressure or sees the opportunity to improve p. 62). position.” Rivalry can take the form of price competition, aggressive advertising and marketing tactics, product Customers are an important component of an indus- introductions, and increased levels of customer service or try. They can influence the nature of competition within warranties. an industry (and hence industry profitability) by forcing prices down, demanding higher quality or more services, A firm achieves superior performance by choosing to and playing competitors against each other (Porter 1980). enter an attractive market, where it can defend its position against competitors. An increased level of competitive A market that is characterised by high levels of intensity decreases the attractiveness of the market, in that turbulence implies that a firm must constantly modify its it can result in the erection of barriers to entry such as portfolio of brands or develop new brands in order to economies of scale and strong brand name recognition continuously meet customers’ changing preferences or (Urban and Hauser 1993). Entry barriers provide early latent needs (Jaworski and Kohli 1993). This makes a

American Marketing Association / Winter 2005 80 market quite unattractive, because brand preferences are wear, food, household products, motor vehicles, personal frequently changing. In addition, in turbulent markets, care products, and computers. Respondents were asked to increased customer pressure puts profit margins under complete the survey with respect to a new brand that their threat (Doyle 2000). Thus market turbulence makes it SBU had introduced into the market at least one year ago. difficult for firms to accurately forecast the demand potential for their brand, as well as to develop an appropriate Data Collection positioning strategy for their brand (Sullivan 1991). Where market turbulence is present, later brand entry may be the The sampling frame for this research comprised 2894 best option for a firm. The reason for this is as follows. consumer goods manufacturers in Australia and New Entering earlier into a market requires high set up costs, Zealand. The mailing list was obtained from a public such as R&D, advertising, and market development costs. mailing list company. T-tests found that there were no A market that is turbulent is not particularly attractive, significant differences between the Australian and New therefore in order to maximise its return, a firm should Zealand responses. The study employed direct mail data engage in a strategy that is cost-effective and less risky. collection in the form of an on-line survey. An on-line Later entry allows a firm to free-ride on the investments survey was chosen because past research has found that an made by earlier entrants, hence reducing the costs associ- on-line survey generally “produces an acceptable re- ated with entry and increasing the profitability of the sponse rate at a lower cost per returned questionnaire than brand entry (Sullivan 1991). Lowest-cost entrants are mail” (Tse 1998, p. 353). most likely to generate profitability for their new brand (Doyle 2000). In light of this, we hypothesize the follow- E-mail invitations containing a hyperlink leading to ing: a web-site with the on-line survey were sent to marketing executives, brand managers, or general managers of stra- Hypothesis 2: The greater the market turbulence, the tegic business units in our sample firms. The initial e-mail later the brand entry. was followed by two subsequent follow-up e-mails. The response rate, after taking into account a number of Market Growth Potential ineligible and/or unreachable respondents, was six percent, with 149 useable surveys completed. Whilst the Market growth potential refers to the level of poten- response rate is low, it is not unusual. Alreck and Settle tial and demand growth of the market at the time of entry (1995) note that it is not uncommon for direct mail data of the brand strategy (Fuentelsaz, Gomez, and Polo 2002). collection response rates to fall within the range of five to According to Lilien and Yoon (1990), a firm’s order of ten percent. Indeed, our response rate (6%) was consistent entry decision depends on the market potential and de- with the response rate obtained by Tse (1998) (7%) in his mand growth of a market. A higher growth and demand study comparing response rates when using e-mail versus potential increase the attractiveness of the market, be- mail data collection methods. Low e-mail response rates cause it is easier for a brand to be successful if the market may be attributed to the sharp increase in junk e-mails in into which a firm is entering is growing (Doyle 2000). recent years, and increasingly effective anti-spam soft- According to Doyle (2000), “growth markets are non- ware blocking unsolicited e-mails (Tse 1998). zero-sum: all the competitors can grow, which acts to reduce destructive price competition and margin erosion” For the purposes of this study, a high internal validity (p. 158). However, in order to capitalise on the growth was more important than external validity, which is con- potential of the market and capture early-mover advan- sistent with the view put forth by Wittink (2004) in his tages, high market growth potential is most likely to lead recent Editorial Statement of the Journal of Marketing to early brand entry. Therefore: Research. We nonetheless controlled for a possible non- response bias in three ways. First, in the spirit of Armstrong Hypothesis 3: The greater the market growth poten- and Overton (1977), we tested for differences between tial, the earlier the brand entry. early and late respondents by dividing the data into thirds using the three response waves as the grouping variable. METHODOLOGY The t-tests between mean responses of first-wave and second-wave, first-wave and third-wave, and second- Industry Selection wave and third-wave responses indicated no statistically significant differences (p < .05) across market turbulence, To be consistent with previous research (e.g., Golder competitive intensity, market growth potential, order of and Tellis 1993; Kalyanaram and Urban 1992; Schoenecker entry, and business unit size. Second, we conducted a one- and Cooper 1998; Sullivan 1991; Urban et al. 1986), our way between-groups analysis of variance to explore the unit of analysis is the strategic business unit (SBU) of impact of response wave on market turbulence, competi- firms operating in a range of consumers goods industries. tive intensity, market growth potential, order-of-brand These industries include beverages, clothing and foot- entry, and size of business unit. Respondents were divided

American Marketing Association / Winter 2005 81 into three groups according to the response wave. There using exploratory factor analysis (EFA) run with SPSS were no statistically significant differences (p < .05) in the 11.5 and confirmatory factor analysis (CFA) run with mean scores of first-wave, second-wave, and third-wave LISREL 8.5. EFA identifies the structure of the factors to responses. Third, we used the Mann-Whitney U Test to be tested (Gerbing and Anderson 1988). Market turbu- compare the median responses between first-wave and lence, competitive intensity and market growth potential second-wave, first-wave and third-wave, and second- were subjected to EFA using principal components ex- wave and third-wave responses across market turbulence, traction method with oblique rotation in order to allow the competitive intensity, market growth potential, order-of- factors to correlate with each other (Tabachnick and brand entry, and size of business unit. No statistically Fidell 2001). Factors with eigenvalues greater than 1.0 significant differences (p < .05) were found. These find- were retained, and items with low loadings (less than ings indicate that non-response bias was not a problem in 0.40) were deleted (Hair, Anderson, Tatham, and Black this study. 1998). The results supported both discriminant and convergent validity for all three constructs. The Measures After conducting EFA, we subjected market turbu- This study used a combination of existing scales and lence, competitive intensity and market growth potential new scales. to CFA to test the underlying structure identified in the EFA (Gerbing and Anderson 1988). The chi-square of the Order of Brand Entry: The scale was adopted from measurement model was statistically significant (χ2 = Green, Barclay, and Ryans (1995) and Schoenecker and 96.84, p = 0.04, df = 74). The goodness-of-fit index (GFI), Cooper (1998), and comprised a single item, “how many adjusted goodness-of-fit index (AGFI), root mean square brands were in the market prior to entry of your brand?” error of approximation (RMSEA), parsimonious normed The item was scored using a 7-point Likert-type scale, fit index (PNFI), comparative fit index (CFI) and normed were 1 = 7, 2 = 6, 3 = 5, 4 = 4, 5 = 3, 6 = 2, and 7 = 1 brands. incremental fit index (NFI) indicate an acceptable fit with the hypothesised measurement model (GFI = 0.86, AGFI = Competitive Intensity: We adopted the 7-point scale 0.81, RMSEA = 0.06, PNFI = 0.59, CFI = 0.88, and NFI = used by Jaworski and Kohli (1993) to assess competitive 0.72), and meet the benchmarks suggested by the litera- intensity. The scale consisted of six items, where 1 = ture (Baumgartner and Homburg 1996). strongly disagree, and 7 = strongly agree. Reliability of the three constructs was measured by Market Turbulence. We adopted the 7-point scale looking at the composite reliability and cronbach alpha. used by Jaworski and Kohli (1993) measure market turbu- Convergent validity was assessed by examining the pa- lence. The scale consisted of six items, where 1 = strongly rameter estimates, t-values and average variance extracted disagree, and 7 = strongly agree. (AVE). Discriminant validity was assessed by comparing the squared correlations for all pairs of constructs in the Market Growth Potential: A new scale was devel- measurement model with the AVE for each construct oped for this construct in this study. The scale for market (Fornell and Larcker 1981). growth potential comprised 4 items: (i) the market for our brand did not grow as fast as expected, (ii) the untapped The three constructs exhibited acceptable reliability dollar value of our market was not as large as expected, levels, with the cronbach alphas ranging from 0.70 to 0.82 (iii) our market did not provide the expected sales poten- (exceeding the recommended level of 0.70) (Churchill tial for the brand, and (iv) our market was not as profitable 1979), and the composite reliability ranging from 0.69 to as expected. These were assessed using a 7-point scale, 0.83 (exceeding the recommended threshold of 0.60) where 1 = strongly agree, and 7 = strongly disagree. (Churchill 1979; Fornell and Larcker 1981). All of the parameter estimates were significant, with the t-values Control Variables: Consistent with prior research ranging from 3.70 to 7.79. All the t-values were signifi- studies on new brands and order of entry (see Fuentelsaz, cant (p < 0.01) (Hair et al. 1998). Moreover, nearly all Gomez, and Polo 2002; Lilien and Yoon 1990; Robinson parameter estimates met or exceeded the threshold of 0.60 and Fornell 1985; Smith and Park 1992), this study recommended by Bagozzi (1981), providing evidence of employed brand development time, quality of the brand, convergence validity. The AVE ranged from 0.33 (for degree of similarity of new brand with existing brands, customer turbulence), 0.50 (for competitor intensity), and and business unit size as control variables. 0.40 (for market growth potential). Whilst two of the constructs had AVE values that did not meet the recom- Assessment of Measures mended threshold of 0.50 (Fornell and Larcker 1981), they exhibited acceptable levels of reliability and face A pretest was first conducted to determine face valid- validity. There was also evidence of discriminant validity ity. We then assessed measure reliability and validity between the constructs. Looking at the correlations in

American Marketing Association / Winter 2005 82 Table 1, it can be seen that the squared correlation be- Hypothesis 2 predicted that the greater the market tween any pair of the three constructs does not exceed turbulence, the later the brand entry. Order of brand entry either of the construct’s AVE. is negatively and marginally significantly related to market turbulence (ß = -0.206, p < 0.10). While Hypothesis RESULTS 2 could not be supported, it was marginally significant and thus warrants future research. This will be discussed later. Regression analysis was conducted to test the hypothesized relationships. Table 2 provides a summary of Hypothesis 3 predicted that the greater the market the results. growth potential, the earlier the brand entry. Order of brand entry is significantly and positively related to mar- Hypothesis 1 predicted that the greater the competi- ket growth potential (ß = 0.691, p < 0.01). Hypothesis 3 tive intensity, the earlier the brand entry. Order of brand was supported. entry is significantly and positively related to competitive intensity (ß = 0.715, p < 0.01). Hypothesis 1 was sup- Two of the four control variables were significant. ported. The results show a significant and negative relationship

TABLE 1 Pearson Correlations and Descriptive Statistics

Mean S.D 1 2 3 4

1. Order of Brand Entry 3.57 2.26 1.0 2. Competitive Intensity 4.83 1.25 .01 1.0 3. Market Turbulence 4.54 .93 -.06 .24* 1.0 4. Market Growth Potential 4.52 1.07 .30 -.02 -.02 1.0

* p ≤ .01 (two-tailed test)

TABLE 2 Regression Analysis: Standardized Regression Coefficients Dependent Variable Independent Variables Order of Brand Entry

ßt Control Variables Brand development time -.421 -2.338** Quality of brand -.435 -2.711** Degree of similarity of brand .196 1.290 Business unit size -.170 -.845

Direct Effects Competitive Intensity .715 4.195* Market Turbulence -.206 -1.570*** Market Growth Potential .691 3.950*

R2 .922 Adjusted R2 .832 F 10.188

* p ≤ .01; ** p ≤ .05; *** p ≤ .10 (one-tailed test)

American Marketing Association / Winter 2005 83 between brand development time and order of brand entry decision. A strong market growth potential denotes a (ß = -0.421, p < 0.05), and a significant and negative more favourable, attractive market, because it reduces the relationship between quality of the brand and order of risks of entry and increases the likelihood of a firm brand entry (ß = -0.435, p < 0.05). These two significant capturing an early-mover advantage (Doyle 2000). results will be discussed briefly later. In sum, our results, taken together, suggest that mar- DISCUSSION AND FUTURE RESEARCH ket characteristics are indeed important drivers of order- of-brand entry. Therefore, a thorough knowledge of the The purpose of the study was to empirically test market is necessary to make an informed entry decision. several hypotheses grounded in the literature regarding Importantly, these market characteristics will enable deci- some possible antecedents of order-of-brand entry strat- sion-makers to have a more complete understanding of egy. The findings support our hypothesis that the attrac- competitor reaction by enhancing the likelihood of cor- tiveness of the market influences a firm’s order-of-brand rectly predicting their competitors’ entry decisions (Por- entry strategy. ter 1980). This knowledge may subsequently influence a firm’s decision to enter earlier or later. The study suggests several factors as important determinants of a firm’s order-of-brand entry strategy. First, Two control variables, brand development time and competitive intensity in a market appears to be an impor- brand quality, were significantly and negatively related to tant determinant of early brand entry. In competitively order-of-brand entry, thus indicating that both these vari- intense markets, a firm must be strategically aware that ables are also important determinants of later brand entry. their competitors are likely to enter earlier rather than Future research needs to be conducted in order to further later, so this should be factored into a firm’s entry deci- our understanding of the impact of these two variables on sion. A firm should recognize that entering such a market order-of-brand entry. earlier helps a firm generate switching costs and establish barriers to entry through the development of strong brand There are some other possible avenues for future awareness and strong relationships with buyers and sup- research that would help to develop a more comprehen- pliers (Barney 1991). In addition, as Mueller (1997) sive understanding of the market attractiveness – order- states, early-movers face lower costs than late entrants, of-brand entry relationship. Market turbulence was nega- because they can disregard these sunk costs when making tively and marginally significantly related to order-of- strategic decisions, whereas later entrants must incur both brand entry. Further investigation of this relationship is the sunk costs and any other costs in order to compete on necessary to more fully understand the impact (if at all) the same level as the early-movers. that market turbulence has on a firm’s order-of-entry decision for a brand. Second, as market turbulence had only a marginally significant impact on later brand entry, this warrants In addition, it seems desirable to include performance further investigation. To the degree that future research indicators (such as return on investment, return on sales, supports market turbulence as being an important deter- and market growth) in the model in order to empirically minant of order-of-brand entry, this suggests that a firm determine the performance of the order-of-brand entry should factor market turbulence into its entry decision. strategies given a market’s competitive intensity, market Market turbulence reduces the attractiveness of a market turbulence and market growth potential. and increases the risks of entry for a new brand, in that it becomes more difficult to accurately forecast the demand Also, by looking only at market attractiveness in this potential for a brand (Sullivan 1991). Entering later in the study, this research has focused on the opportunities and market allows a firm to free-ride on the investments made threats (i.e., external environment) that influence a firm’s by established competitors in the market, hence reducing order-of-brand entry strategy. Including a firm’s resources the financial risks of entry into such an unstable market and capabilities in the conceptual model would help to (Doyle 2000). Again, in this study, the marginally signifi- empirically determine how a firm’s strengths and weak- cant result should be interpreted with caution. nesses (i.e., its internal environment) affects the order-of- entry decision for a brand. Finally, the results indicate that the growth potential of the market is also an important determinant of early Finally, it would also be interesting to replicate this brand entry. In markets with strong growth potential, a study in the industrial goods industries to see whether the firm must be aware of the likelihood of its competitors attractiveness of a market plays an important role in entering earlier rather than later, thus indicating that a firm determining a firm’s order-of-entry decision for a brand in must factor the market growth potential into its entry these industries.

American Marketing Association / Winter 2005 84 REFERENCES Ryans (1995), “Entry Strategy and Long-Term Per- formance: Conceptualization and Empirical Exami- Alreck, Pamela L. and Robert B. Settle (1995), The Survey nation,” Journal of Marketing, 59 (October), 1–16. Research Handbook. New York: Irwin. Hair, Jr., Joseph F., Rolph E. Anderson, Ronald L. Tatham, Armstrong, J. Scott and Terry S. Overton (1977), “Esti- and William C. Black (1998), Multivariate Data mating Nonresponse Bias in Mail Surveys,” Journal Analysis, 5th ed. New Jersey: Prentice-Hall Inc. of Marketing Research, 14 (August), 396–402. Han, Jin K., Namwoon Kim, and Rajendra K. Srivastava Bagozzi, Richard P. (1981), “Evaluating Structural Equa- (1998), “Market Orientation and Organizational Per- tion Models with Unobservable Variables and Mea- formance: Is Innovation a Missing Link?” Journal of surement Error: A Comment,” Journal of Marketing Marketing, 62 (October), 30–45. Research, 18 (August), 375–81. Jaworski, Bernard J. and Ajay K. Kohli (1993), “Market Barney, Jay (1991), “Firm Resources and Sustained Com- Orientation: Antecedents and Consequences,” Jour- petitive Advantage,” Journal of Management, 17 nal of Marketing, 57 (July), 53–70. (March), 99–119. Kalyanaram, Gurumurthy and Glen L. Urban (1992), Baumgartner, Hans and Christian Homburg (1996), “Ap- “Dynamic Effects of the Order of Entry on Market plications of Structural Equation Modelling in Mar- Share, Trial Penetration, and Repeat Purchases for keting and Consumer Research: A Review,” Interna- Frequently Purchased Consumer Goods,” Marketing tional Journal of Research in Marketing, 13 (April), Science, 11 (Summer), 235–50. 139–61. Kohli, Ajay K. and Bernard J. Jaworski (1990), “Market Churchill, Jr., Gilbert A. (1979), “A Paradigm for Devel- Orientation: The Construct, Research Propositions, oping Better Measures of Marketing Constructs,” and Managerial Implications,” Journal of Marketing, Journal of Marketing Research, 16 (February), 64– 54 (April), 1–18. 73. Lambkin, Mary (1988), “Order of Entry and Performance Day, George S. (1994), “The Capabilities of Market- in New Markets,” Strategic Management Journal, 9 Driven Organizations,” Journal of Marketing, 58 (Summer), 127–40. (October), 37–52. Lilien, Gary L. and Eunsang Yoon (1990), “The Timing Doyle, Peter (2000), Value-Based Marketing: Marketing of Competitive Market Entry: An Exploratory Study Strategies for Corporate Growth and Shareholder of New Industrial Products,” Management Science, Value. England: John Wiley & Sons, Ltd. 36 (May), 568–85. ______(2001), “Building Value-Based Branding Miller, Danny (1987), “The Structural and Environmental Strategies,” Journal of Strategic Marketing, 9, 255– Correlates of Business Strategy,” Strategic Manage- 68. ment Journal, 8 (January/February), 55–76. Fornell, Claes and David F. Larcker (1981), “Evaluating Mueller, Dennis C. (1997), “First-Mover Advantages and Structural Equation Models with Unobservable Vari- Path Dependence,” International Journal of Indus- ables and Measurement Error,” Journal of Marketing trial Organization, 15 (October), 827–50. Research, 18 (February), 39–50. Porter, Michael E. (1980), Competitive Strategy. New Fuentelsaz, Lucio, Jaime Gomez, and Yolanda Polo (2002), York: The Free Press. “Followers’ Entry Timing: Evidence from the Span- ______(1985), Competitive Advantage. New ish Banking Sector After Deregulation,” Strategic York: The Free Press. Management Journal, 23 (March), 245–64. Rajagopalan, Nandini and Gretchen M. Spreitzer (1996), Gatignon, Hubert and Jean-Marc Xuereb (1997), “Strate- “Toward a Theory of Strategic Change: A Multi- gic Orientation of the Firm and New Product Perfor- Lens Perspective and Integrative Framework,” Acad- mance,” Journal of Marketing Research, 34 (Febru- emy of Management Review, 22 (January), 48–79. ary), 77–90. Robinson, William T. and Claes Fornell (1985), “Sources Gerbing, David W. and James C. Anderson (1988), “An of Market Pioneer Advantages in Consumer Goods Updated Paradigm for Scale Development Incorpo- Industries,” Journal of Marketing Research, 22 (Au- rating Unidimensionality and its Assessment,” Jour- gust), 305–17. nal of Marketing Research, 25 (May), 186–92. ______(1988), “Sources of Market Pioneer Ad- Glazer, Rashi (1991), “Marketing in an Information- vantages: The Case of Industrial Goods Industries,” Intensive Environment: Strategic Implications of Journal of Marketing Research, 25 (February), 87– Knowledge as an Asset,” Journal of Marketing, 55 94. (October), 1–19. Schnaars, Steven (1986), “When Entering Growth Mar- Golder, Peter N. and Gerard J. Tellis (1993), “Pioneer kets, Are Pioneers Better than Poachers?” Business Advantage: Marketing Logic or Marketing Legend?” Horizons, 29 (March/April), 27–36. Journal of Marketing Research, 30 (May), 158–70. Schoenecker, Timothy S. and Arnold C. Cooper (1998), Green, Donna H., Donald W. Barclay, and Adrian B. “The Role of Firm Resources and Organizational

American Marketing Association / Winter 2005 85 Attributes in Determining Entry Timing: A Cross- Sullivan, Mary (1991), “Brand Extension and Order of Industry Study,” Strategic Management Journal, 19 Entry,” Marketing Science Institute Working Paper (December), 1127–43. No. 91–105, Cambridge, MA: Marketing Science Shankar, Venkatesh, Gregory S. Carpenter, and Lakshman Institute. Krishnamurthi (1998), “Late Mover Advantage: How Tabachnick, Barbara G. and Linda S. Fidell (2001), Using Innovative Late Entrants Outsell Pioneers,” Journal Multivariate Statistics, 4th ed. New York: Harper & of Marketing Research, 35 (February), 54–70. Row, Publishers, Inc. Slater, Stanley F. and John C. Narver (1994), “Does Tan, J. Justin and John R. Hauser (1993), Design and Competitive Environment Moderate the Market Ori- Marketing of New Products, 2d ed. New Jersey: entation-Performance Relationship?” Journal of Prentice Hall, Inc. Marketing, 58 (January), 46–55. ______and Robert J. Litschert (1994), “Environ- Smith, Daniel C. and C. Whan Park (1992), “The Effects ment-Strategy Relationship and its Performance Im- of Brand Extensions on Market Share and Advertis- plications: An Empirical Study of the Chinese Elec- ing Efficiency,” Journal of Marketing Research, 29 tronics Industry,” Strategic Management Journal, 15 (August), 296–313. (January), 1–20.

Danielle A. Chmielewski Department of Management (Marketing Program) Alan Gilbert Building The University of Melbourne Parkville Vic 3010 Australia Phone: +61.3.8344.1886 FAX: + 61.3.9348.1921 E-Mail: [email protected]

American Marketing Association / Winter 2005 86 ORGANIZATIONAL CULTURE ANTECEDENTS OF MARKET-DRIVEN POSITIONAL ADVANTAGE AND ORGANIZATIONAL PERFORMANCE CONSEQUENCES

Artur Baldauf, University of Bern, Switzerland David W. Cravens, Texas Christian University, Fort Worth Christian Bischof, University of Bern, Switzerland

SUMMARY Hypothesis 1: There is a positive relationship between (a) market focus, (b) participative decision Research attention has been given in several studies making, (c) support and collaboration, (d) power to organizational culture, market orientation, innovation, sharing and market intelligence. and organizational performance. Dimensions of culture are potential antecedents to market-driven positional ad- Hypothesis 2: There is a positive relationship be- vantage which is expected to impact organizational per- tween (a) market focus, (b) participative decision formance consequences. Nonetheless, only limited re- making, (c) support and collaboration, (d) power search has considered the simultaneous antecedent and sharing and innovativeness. consequence relationships. In the focal construct we view positional advantage as a multi-dimensional construct Hypothesis 3: There is a positive relationship be- consisting of market intelligence, innovativeness, and tween (a) market focus, (b) participative decision learning and development. The proposed organizational making, (c) support and collaboration, (d) power culture antecedent dimensions are market focus, partici- sharing and learning and development. pative decision making, support and collaboration, and power sharing. We also relate the focal construct to Market intelligence, innovativeness, and develop- desired consequences and argue that a market-driven ment and learning positional advantages are expected to positional advantage positively impacts market perfor- have a positive impact on the market and financial performance, profitability, and sales growth. mance of the business unit. We offer the following hypothesis: The organizational culture, positional advantages, and performance conceptualization adds to prior cultural, Hypothesis 4: There is a positive relationship be- market orientation, and performance research in the fol- tween (a) market intelligence, (b) innovativeness, lowing ways: (1) cultural and process perspectives of and (c) learning and development and market and market orientation are considered in an antecedent conse- financial performance of the business unit. quence context; (2) positional advantage which could be termed as a receptivity to innovate is conceptualized as a The data for examining the hypotheses were col- three dimensional construct consisting of market intelli- lected from senior managers employed by companies in a gence, innovativeness, and learning and development; German-speaking business environment. The sampling and (3) a multi-dimensional view of organizational per- objective was to include a wide range of larger firms in a formance is examined in terms of culture and innovation wide range of different businesses. A judgment sampling antecedents. procedure was applied to identify candidate companies. We utilized a standardized questionnaire which was pre- We view organizational culture in terms of widely tested for wording and understanding before final mail shared and strongly held values and belief systems and distribution. After several follow-up activities we re- consider the higher level construct as a source of competi- ceived 204 usable questionnaires were returned reflecting tive advantage. Our market-driven positional advantage a response rate of 21 percent. Established multiple item dimensions are proposed to capture relevant dimensions measures were used for the ten construct measures which of the capacity to innovate, and represent a more compre- we purified applying state-of-the art methodologies. Ac- hensive reflection of innovative behavior than is consid- ceptable reliability and validity of the scales was indi- ered in prior research. Based on our conceptual logic we cated. Besides investigating the above stated direct rela- specifically interested in examining the following cultural tionships we also controlled in our path models for poten- and positional advantage hypotheses: tial effects of customer type and company size on the

American Marketing Association / Winter 2005 87 organizational culture and positional advantage relation- laboration has no significant impact on the positional ships. In addition, market turbulence, competitive inten- advantage dimension. sity, and technological turbulence were included as moderators for the positional advantage and performance Higher market intelligence activities result in higher relationships. Regression analysis was used to test the market, profitability, and growth performance. Innova- hypotheses. tiveness positively impacts profitability but not market and growth performance. Learning and development pos- The results for H1, H2, and H3 are encouraging but itively impacts all three performance consequences. Hence mixed. Market focus and participative decision making we find partial support for H4a and H4c and mixed are strong predictors of market intelligence, innovativeness, support for H4b. The moderating effects of the environ- and learning and development. Power sharing is only a ment constructs are not supported. predictor of learning and development; support and col-

For further information contact: Artur Baldauf Management Department University of Bern Engehaldenstrasse 4, 3012 Bern Switzerland Phone: +41.31.631.5331 FAX: +41.31.631.5332 E-Mail: [email protected]

American Marketing Association / Winter 2005 88 SEE NO EVIL, HEAR NO EVIL, SPEAK NO EVIL: A STUDY OF DEFENSIVE ORGANIZATIONAL BEHAVIOR TOWARDS CUSTOMER COMPLAINTS

Christian Homburg, University of Mannheim, Germany Andreas Fürst, University of Mannheim, Germany

SUMMARY complaint intention), representing the consequences of DOB. Despite substantial benefits of an effective complaint management, there is ample evidence that many organiza- Results tions do not handle customer complaints appropriately. Instead, organizational members often exhibit an appar- With respect to the (direct and indirect) antecedents ently irrational and dysfunctional defensive behavior to- of the prevalence of DOB, the results of our study support wards complaints. This paper aims at providing a theoreti- the prediction that the prevalence of negative attitudes cal explanation for this phenomenon. Furthermore, based towards complaints is negatively affected by customer on a dyadic data set, it analyzes antecedents and conse- orientation of HRM and customer orientation of corporate quences of the prevalence of defensive organizational culture, respectively (p < .01). Moreover, as suggested, behavior towards complaints (DOB). the prevalence of negative attitudes towards complaints, in turn, has a positive effect on the prevalence of DOB (p < Conceptualization of DOB .01). In addition, our results provide evidence for the prediction that the prevalence of DOB is also (directly) Based on individual psychology and organizational negatively affected by customer orientation of HRM (p < theory as well as in line with literature on organizational .01). However, we fail to find statistical support for our behavior and complaint management, we argue that indi- assumption that the prevalence of DOB is too (directly) viduals in organizations perceive customer complaints as negatively influenced by customer orientation of corpo- a source of actual or potential threat to self-esteem, rate culture (p > .10). reputation, autonomy, resources, or job security. Thus, in order to protect themselves against this threat, they exhibit Furthermore, all hypotheses related to the conse- different types of DOB. quences of the prevalence of DOB are confirmed by the data. More specifically, the prevalence of DOB is found Overall, we identify seven types of DOB that can be to have a negative effect on complaint satisfaction as well assigned to one of the three following categories: com- as on perceived complaint-based improvements (p < .01). plaint acquisition (i.e., isolation from complaints, hostile Moreover, we observe that complaint satisfaction posi- behavior towards complainants), complaint transmission tively influences overall customer satisfaction and future (i.e., no/biased transmission of complaints to complaint complaint intention, respectively (p < .01). In addition, managers, no/biased transmission of complaints to senior our findings confirm a positive impact of perceived com- managers), and complaint utilization (i.e., no/inadequate plaint-based improvements on overall customer satisfac- handling of complaints, no/inadequate analysis of com- tion as well as on future complaint intention (p < .01). plaints, and no/inadequate use of complaint information in decision making). Research Issues

Methodology First, drawing upon individual psychology and organizational theory, we provide a theoretical explanation for Our data analysis is based on 110 dyads. Each dyad the phenomenon of DOB. consists of a managerial assessment of the antecedents (i.e., customer orientation of human resource manage- Second, our study provides evidence for the high ment (HRM), customer orientation of corporate culture, relevance of this phenomenon. More specifically, we prevalence of negative attitudes towards complaints) and show that the presence of DOB has a significant negative types of DOB in the focal company and five customer impact on customers’ complaint satisfaction and on the assessments related to their post-complaint responses ability of the firm to learn from complaints (i.e., the (i.e., complaint satisfaction, overall customer satisfac- implementation of complaint-based improvements). tion, perceived complaint-based improvements, future

American Marketing Association / Winter 2005 89 Third, our research provides an understanding of the First, managers can work directly on this phenom- forces within an organization that can influence DOB. A enon. Our conceptualization of DOB (i.e., the identifica- particularly strong influence on the prevalence of DOB tion of seven different types) provides managers with a comes from the customer orientation of HRM. checklist type of structure. Based on this structure, they can analyze the prevalence of DOB in their company and, Managerial Implications in turn, initiate activities to reduce this behavior.

Our research also provides guidance for managers on Second, managers may also work on the antecedents how to improve a firm’s complaint management. More of the prevalence of DOB. In this context, the customer specifically, the findings of our study suggest that manag- orientation of a firm’s HRM is particularly important. ers should strive to reduce the prevalence of DOB in their company. This can be done in two ways:

For further information contact: Christian Homburg Marketing Department I University of Mannheim L 5-1 68131 Mannheim Germany Phone: +49.621.181.1555 FAX: +49.621.181.1556 E-Mail: [email protected]

American Marketing Association / Winter 2005 90 THE REST OF THE ICEBERG: AN EXAMINATION OF NONCOMPLAINING SERVICE CUSTOMERS

Clay M. Voorhees, Florida State University, Tallahassee Michael K. Brady, Florida State University, Tallahassee David M. Horowitz., Florida State University, Tallahassee

SUMMARY provider. Moreover, consumers that simply exit a failed encounter may demonstrate more favorable intentions While most service recovery strategies have focused toward the firm than those that opt to complain and on customers that actively complain to the firm, it has been experience poor recovery efforts. suggested that these customers represent only the “tip of the iceberg” (Diener and Greyser 1978, p. 22). This means The analysis reveals significant differences between that the majority customers that experience poor service the different consumer groups with respect to their repeat simply exit the encounter and managers receive no oppor- purchase intentions and several negative outcomes vari- tunity to recover. Davidow (2003) suggests that in order ables. Specifically, the results confirm the hypotheses and to fully understand customer behavior in failed encoun- demonstrate that consumers that receive a satisfactory ters a study must be forwarded that investigates the recovery effort have the most favorable intentions toward responses of the consumers that do not register com- a firm. Following this, noncomplainers demonstrate the plaints. next most favorable intentions. Finally, consumers that complain but receive a dissatisfactory recovery effort are In an effort to address this critical gap in the literature, least likely to return to do business with a service provider. the current study conducts a comprehensive comparison of groups of customers that opted not to complain and Ultimately, the findings offer significant implica- those that registered a complaint to the firm. The compari- tions for both service researchers and managers. In parsons are made across repeat purchase intentions and a ticular, the results provide further justification for re- number of negative outcome variables. It is hypothesized search on service recovery strategies as it appears that that consumers that end a failed encounter with a satisfac- poor recovery efforts can be costly to a firm. References tory recovery are most likely to return to the service are available upon request.

For further information contact: Clay M. Voorhees Department of Marketing Florida State University Tallahassee, FL 32306–1110 Phone: 850.645.1519 FAX: 850.644.4098 E-Mail: [email protected]

American Marketing Association / Winter 2005 91 FROM EMPATHY TO FORGIVENESS: A PROSOCIAL PERSPECTIVE IN SERVICE FAILURE AND RECOVERY RESEARCH

Felix T. Tang, The Chinese University of Hong Kong, Hong Kong

SUMMARY reflects a concern for others and incorporates the concepts of sympathy, compassion, and tenderness (Batson 1990). Consider a dinning scenario in which your server has When people feel empathy towards the transgressor, they completely forgotten your order. How do you feel? This are more likely to forgive him/her (McCullough et al. is an outcome failure and the extant literature predicts that 1997, 1998). Such evidences have been found across you will become dissatisfied, and you may also engage in demographics variables, across cultures, and across con- negative word-of-mouth and exit behaviors. What if your texts (Eisenberg and Miller 1987). Thus, consumers are server collapses into tears in front of you after finding out capable of displaying prosocial behavior, even if such that he/she has completely forgotten your order? Would behaviors may not be directly beneficial. The concept of you feel sympathetic towards the server despite of the empathy has also been discussed by Parasuraman et al. service failure? Would you abandon your resentment (1988), Tax et al. (1998), but the conceptualization is towards the service provider? In such situation, consum- quite different in this paper. While Parasuraman et al. ers might feel empathetic and behave in a merciful way (1988) and Tax et al. (1998) saw consumers as recipients towards the server even if there has not been a word of of empathy, this paper advocates the possibility for con- apology or compensation. sumers to be givers of empathy.

Although this scenario may be pushing the limits, it Observational set and perceived similarity are the exemplifies a boundary condition where the concepts of two most relevant antecedents in the service recovery justice, equity, fairness, disconfirmation, and attribution context. Observational set is the focal of one’s attention are not adequate to explain all consumer behaviors. The and it can be instructed or cued. When people focus on the traditional view downplayed consumers’ ability to self- needy other’s emotional state or perspective, they are restore satisfaction, ignored consumers’ consideration for more likely to feel empathetic towards those who are in other’s welfare, and overlooked the effect of positive need than when people focus on the facts (Eisenberg and emotions on post-recovery evaluation. Miller 1987). Perceived similarity concerns one’s perception of the resemblance between oneself and a comparison Prosocial Behavior and Forgiveness object. In their meta-analysis of sixteen studies, Miller et al. (2001) concluded that perceived similarity with Prosocial behavior research in psychology suggests another was associated with or led to feelings of empathy consumers may look beyond their own well being (Batson or sympathy. et al. 1995). Prosocial behavior is broadly defined as “social behaviors oriented to benefit another, regardless Forgiveness as Consumer Behavior of potential outcomes for oneself” (Miller, Kozu, and Davis 2001). Such behavior includes but not limited to What marketers are doing during service recovery donating, forgiving, helping, sharing and volunteering. are essentially wooing for consumer forgiveness with Philosophers, such as Hume (1949), considered prosocial compensation and apology, asking consumer to replace behavior as moral actions of human instinct. Of the resentment (e.g., dissatisfaction) with beneficence (e.g., various prosocial behaviors, forgiveness is one of the satisfaction). The two consequents of forgiveness, lower most relevant concepts in the service marketing context. avoidance and lower revenge, are also strikingly similar to Modern philosophers, such as North (1987), agreed that the marketing consequents of successful service recovery the central theme in forgiveness involves replacing re- (e.g., increase repatronage and lower negative word-of- sentment with beneficence. Using McCullough, Parga- mouth activity). Thus, forgiveness is a valid, alternative ment, and Thoresen’s (2000) definition, forgiveness is an perspective of service recovery. intraindividual and prosocial change toward a perceived transgressor. Hypotheses

Empathy Based on insights from prosocial behavior research, six hypotheses are postulated and are summarized in The most proximal determinant of forgiving of for- Figure 1. Due to space constraint, the hypotheses and their giveness is empathy (McCullough et al. 1998). Empathy development are not discussed here. The Figure should be

American Marketing Association / Winter 2005 92 FIGURE 1 An Empathy-Forgiveness Model in the Context of Service Failure

Satisfaction Observational + Set + Empathy+ Forgiveness + Repatronage Perceived Intention Similarity + Negative WOM Intention

self-explanatory (the positive and negative signs indicate our ability to explaining consumer behavior; (3) postulate the predicted directions of relationship) and the logics a new perspective by seeing service recovery efforts as flow from the discussion above. attempts to seek consumers forgiveness.

Discussion No doubt, the concept of justice, equity, fairness, disconfirmation, and attribution remain the cornerstones This paper aims to (1) call for attention to the limita- of our understanding on consumer behavior in the recov- tions of the current views and theories on service recovery process. However, let us not blindly rely only on these ery; (2) introduce the concepts of prosocial behavior, concepts for they do not give us a complete picture of empathy, and forgiveness into service recovery to broaden consumer behavior. References available upon request.

For further information contact: Felix Tang Department of Marketing The Chinese University of Hong Kong Hong Kong Phone: 852.9678.5958 FAX: 852.2603.5473 E-Mail: [email protected]

American Marketing Association / Winter 2005 93 INTERNATIONAL MARKETING ALLIANCE DYNAMICS: EMPIRICAL FINDINGS FROM THE PHARMACEUTICAL INDUSTRY

Sengun Yeniyurt, Michigan State University, East Lansing Janell D. Townsend, Michigan State University, East Lansing Erin Cavusgil, Michigan State University, East Lansing

SUMMARY uncovering the effects of competition for collaboration, experiential learning and culture distance on the propen- Collaborative ventures are an indispensable tool for sity to engage in a specific mode of entry: international executives in the quest for achieving a sustained competi- marketing alliances. tive advantage in the marketplace. The significance of this instrument is evidenced by a marked increase in the use of A co-evolutionary dynamic framework is introduced cooperative arrangements as a business form, and the as a means to understand the complex phenomena in- variety of studies related to this phenomenon. The bound- volved in forming international marketing alliances. The aries of what define the marketplace, however, have advantages derived from international marketing alli- evolved in ways previously unimaginable. The world has ances are first explored based on the concepts of resource become more integrated in terms of infrastructure and complementarities and extension. In order to reveal the dependence; the drivers of these global trends leave few consequences of the intensity of collaboration and com- industries untouched by the increased velocity and inten- pany experience on international collaborative venture sity of competition for resources and customers (Wolf formation in the global marketplace, we draw on the 2000). In this domain, collaboration has become an indis- organizational ecology perspective. Further, we employ pensable means through which firms are able to respond the concepts of organizational learning and the assump- to environmental turbulence (Achrol 1991), effectively tions of the internationalization process to delineate the extending the reach and resources they would not have effects of experience and culture on international collabo- otherwise. The use of alliances in marketing and interna- rative ventures. tional contexts is inextricably linked. The hypotheses are tested through the analysis of the This complex phenomenon encompasses dynamic global marketing alliance activity announced by U.S. aspects of the competitive environment and various per- pharmaceutical firms from 1984 to 2003; this includes spectives of firm behavior. As firms collaborate to com- 792 international marketing alliance formations engaged pete (Ohmae 1989a), the relative population of potential by 317 firms. An event history was constructed for each partner firms remains somewhat static over time, eventu- U.S. pharmaceutical company starting with the date of its ally leading to competition for collaboration in an indus- first international marketing alliance. The data were ar- try. What remains to be discerned is the nature of the ranged into yearly spells updated when an event occurred competition for alliance partners, particularly in light of and at the end of each year to account for the changes in the increased environmental turbulence and diversity variables. A continuous time event history analysis with established by the globalization of industries (Achrol time varying covariates was employed in order to estimate 1991). Additionally, experiential learning is posited to be the effects of the independent variables on the probability fundamental to a firm’s ability to accumulate knowledge of a company engaging in a new international alliance. (Huber 1991; Sinkula 1994) and conduct international operations (Cavusgil 1980; Johanson and Vahlne 1977); The findings of a Cox hazard rate model support the yet, empirical findings supporting this position remains hypothesized effects of legitimation and competition, sparse. While the literature generally proposes cultural sustaining the assumptions of organizational ecology, distance as a significant factor in the internationalization extending the theory to the global context of inter-firm process (Johanson and Vahlne 1977; Johanson and relationships. Particularly important to the literature is Weidersheim-Paul 1975; Kogut and Singh 1988), recent that companies are eager to follow their competitors in the findings do not support this proposition with respect to early stages of industry level internationalization utilizing international market entry timing (Mitra and Golder 2002). marketing alliances as a mode of entry; yet once a critical The question remains as to whether the diversity of mass of international marketing alliances is attained in the cumulative culture distance experiences affects an industry, the propensity to engage in alliances declines. organization’s inclination toward future international col- Our results provide strong support for the proposition that laborative ventures. This study contributes to the litera- companies learn from their international alliance forma- ture through the reconciliation of these perspectives by tions. Cultural distance is a significant factor in interna-

American Marketing Association / Winter 2005 94 tional marketing alliance engagement, as the cumulative cumulative cultural distance experiences on an organiza- cultural distance of previous alliances increases the like- tion’s inclination toward future actions. Finally, organiza- lihood that a company will engage in a future international tional size has a positive effect on the propensity to engage marketing alliance. Previous studies have only consid- in a new international marketing alliance. References are ered the effect of culture distance experience in specific available upon request. markets, as opposed to the impact of the diversity of

For further information contact: Sengun Yeniyurt Department of Marketing and Supply Chain Management The Eli Broad Graduate School of Management Michigan State University N370 Business College Complex East Lansing, MI 48824 Phone: 517.353.6381 FAX: 517.432.4322 E-Mail: [email protected]

American Marketing Association / Winter 2005 95 A CROSS-NATIONAL STUDY OF CONSUMER-FIRM EXCHANGE RELATIONSHIPS WITHIN THE CONTEXT OF MARKET MILIEUS

Patrick Lentz, University of Dortmund, Germany Deepak Sirdeshmukh, North Carolina State University, Raleigh Ed Nijssen, Radboud University, The Netherlands Hartmut H. Holzmüller, University of Dortmund, Germany Jagdip Singh, Case Western Reserve University, Cleveland

SUMMARY other control mechanisms) and relationship-based (characterized by reciprocity, fairness, and personal exchange Broadly, two fundamental mechanisms are relevant processes) market milieus. We propose hypotheses re- for understanding the dynamics that promote or impede garding the effects of market milieus on micro relation- consumer-firm market exchanges in a global society of ships, mainly drawing from Granovetter (1985), Kollock networked economies. One fundamental mechanism fo- (1994), and Zucker (1986): cuses on the ongoing exchanges between individual consumers and sellers, and involves understanding the moti- H1: Consumers’ perceptions of exchange value and satis- vations for each party to enter into, consummate and faction will be significantly higher in rule based continue market exchanges, from here on referred to as market milieus, relative to relationship based market micro mechanism (e.g., Nicholson, Compeau, and Sethi milieus. 2001). A second fundamental mechanism focuses on the embeddedness of market exchanges and involves under- H2: Consumers’ judgments of trust will be significantly standing the social and market context that provides an higher in relationship based market milieus, relative arena for individual consumer-firm exchanges to occur, to rule based market milieus. referred to as macro mechanism (e.g., Shapiro 1987;

Zucker 1986). Few if any studies have focused on the H3: Consumers’ loyalty intention judgments will not macro mechanisms of individual consumer-firm ex- vary significantly for different configurations of changes, which is particularly troubling since different market milieus. markets around the globe are likely to vary both in terms of their micro and macro mechanisms. H4: Relative to relationship based market milieus, the influence of consumers’ satisfaction and value judg- Conceptual Background and Research Hypotheses ments on loyalty will be significantly higher in rule based market milieus. We draw from extant literature to develop a micro model of Satisfaction-Trustworthiness-Trust-Value-Loy- H5: Relative to rule based market milieus, the influence alty (ST2VL) relationships (e.g., Liu, Furrer, and of consumers’ trust judgments on loyalty will be Sudharshan 2001; Sirdeshmukh, Singh, and Sabol 2002). significantly higher in relationship based market mi- Regarding the larger context in which exchanges occur, lieus. we draw from sociology (Shapiro 1987; Zucker 1986) and economics (Hirschman 1970; Nooteboom, Berger, and Research Design Noorderhaven 1997) to define market milieus. These involve consumers’ and sellers’ expectations regarding Two different samples were used to test the hypoth- the norms governing customer-firm interactions in a given eses. First, we collected a consumer sample regarding the market. Market milieus thus refer to the dominant and individual-level dynamics between satisfaction, trustwor- shared normative structure that forms the context for thiness, trust, value, and loyalty with their insurance consummating exchanges between providers and their company (n = 365, 504, and 316 for the U.S., Germany, customers. As Kramer (1999) notes, in the absence of and the Netherlands, respectively). Second, a separate specific knowledge about each other, consumers and consumer sample was used to evaluate the macro environ- firms can revert to formal rules at one end of a continuum ment, i.e., the market milieus at the industry level in the to mutual relationships at the other end, to solve their same three countries (n = 18, 30, and 31 for the U.S., problem or uncertainty. We thus define two dominant Germany, and the Netherlands, respectively), which helped configurations of market milieus, that is, rule-based (char- circumvent method bias. To test our hypotheses, the two acterized by contracts, detailed legal environments, and types of data were joint in an hierarchical type of analysis

American Marketing Association / Winter 2005 96 using both mean analyses and multiple-group SEM, with and partial support for H1, since only value shows higher the three countries as separate groups. Items for analyzing levels in rule based relative to relationship based market the micro environment have been adapted from existing milieus; however, H2 cannot be supported. Third, turning literature, whereas items capturing the level of rules and to the moderating effects of market milieus, we find relationships have been developed for the purpose of this partial support for H4 and H5. While both satisfaction and study, and pretested using “think aloud” exercises with trust in frontline employees differ in their influence on small convenience samples. The measurement model loyalty according to our hypotheses, trust in management evidenced good levels of reliability and validity. policies and practices as well as value do not.

Results Discussion

Our analysis revealed substantial and statistically Our study results demonstrate that examining con- significant differences across the three market milieus at sumer-firm relationships in situ is a promising approach the macro level. We found that the U.S. insurance market for better understanding exchange relationships, particu- milieu is more relationship based, the German insurance larly when considering markets in different countries. market is rule based, and the milieu of the Dutch insurance This extends contemporary understanding of the exchange market is located between the two extreme positions. dynamics and thus provides both theoretical and manage- Although additional differences were found in the micro rial relevance. The results clearly reveal that an isolated model relationships between countries, the more interest- investigation of micro mechanisms is inappropriate, espe- ing result is related to the influence of market milieus. cially in cross-cultural settings. We believe that our work First, the macro level variables add significantly to model enhances the knowledge of macro effects on micro mecha- fit. Second, regarding direct effects of market milieus on nisms by conceptualizing and empirically demonstrating exchange-specific constructs, we find full support for H3 the different effects. References available upon request.

For further information contact: Patrick Lentz Department of Marketing University of Dortmund Otto-Hahn-Str. 6 D-44227 Dortmund Germany Phone: +49.231.755.3277 FAX: +49.231.755.3271 E-Mail: [email protected]

American Marketing Association / Winter 2005 97 AN EXAMINATION OF IMC AT THE TACTICAL LEVEL: DIFFERENCES ACROSS TIME AND PRODUCT TYPE

Stephen J. Grove, Clemson University, Clemson Les Carlson, Clemson University, Clemson Michael J. Dorsch, Clemson University, Clemson Christopher D. Hopkins, Clemson University, Clemson

SUMMARY A research design was employed to compare services print advertisements and goods print advertisements on Since its inception, Integrated Marketing Communi- their degree of integration and the trend towards integra- cation (IMC) has been viewed as a valuable concept by tion over time. First, a sample of services and goods print marketing practitioners (McArther and Griffith 1997). advertisements was generated to obtain a wide range of IMC has been characterized as the coordination of com- advertising messages over three different time periods. munication tools (e.g., advertising, publicity, sales pro- Next, a data collection process was established for ex- motion, etc.), for a brand. A review of this phenomenon in tracting data from each print advertisement. The data practice uncovers three broad categories including IMC extraction process consisted of two steps. During the first as “integrated communication,” IMC as “one voice” com- step, content analysis of each print advertisement was munication and IMC as a “coordinated marketing com- conducted in order to profile it in terms of the communi- munication campaign.” This study focuses on the inte- cation tools that it employed. During the second step, the grated communication approach because it appears to be profiled print ads were re-examined to determine the the one most often used in practice. Relative to services, extent to which they were integrated. This two-step pro- it is argued that advertising in this area should be charac- cess produced a data set consisting of count data. Once the terized by a greater presence of IMC than the advertising data set was created, the data were examined using both of physical goods. This is largely do the fact that IMC may inferential and descriptive analyses. provide a mechanism that addresses some of the problems associated with marketing a product the customer has Results indicate that while IMC is a reality among difficulty comprehending clearly and thus, may alleviated both services and physical goods advertisements, IMC a degree of perceived risk. was found to exist in services advertising to a greater extent relative to goods advertising. Moreover, the inci- This study empirically investigates the utilization of dence of IMC at the advertisement level, regardless of the IMC across product type and over time. It is expected that product type that is being advertised, has not increased there is greater usage of IMC among sellers of services significantly over recent years. As a result, there appears than among sellers of goods. It is also expected that the to be much room for further and more enlightened adop- usage of IMC has grown over the years, reflecting its tion of IMC principles. References available upon re- increased emphasis in the marketing discipline. To mea- quest. sure the nature and incidence of IMC, the study focuses on its manifestation at the tactical level.

For further information contact: Christopher D. Hopkins Department of Marketing College of Business and Behavioral Science Clemson University 233 Sirrine Hall, Box 341325 Clemson SC, 29634–1325 Phone: 864.656.3952 FAX: 864.656.0138 E-Mail: [email protected]

American Marketing Association / Winter 2005 98 ASSESSING THE EFFECTS OF IN-SCHOOL POINT OF PURCHASE AND SAMPLING ON THE CHOICE OF A HEALTHY FOOD OPTION

Dafina Rexha, The University of Western Australia, Australia Katherine Mizerski, Edith Cowan University, Australia Richard Mizerski, The University of Western Australia, Australia

SUMMARY influence and socialisation can have a significant impact on children’s first purchasing decisions. Childhood obesity has tripled in the U.S., U.K., and Australia in the past decade with one in four children now School canteens are one of the first places where being classified as overweight or obese (Azhar 2004; de children are faced with the decision of what food to Brito and Segal 2002). These children are more likely to purchase by themselves. Usually parents give their chil- develop health problems such as diabetes, asthma, cardio- dren money to purchase from the school canteen. The vascular disease, joint problems, back pain, and psycho- parents, however, are not present at the time the purchase logical problems (Anthony, Patterson, and Kemp 2002; decision is made. Cameron et al. 2003). Many suggest that an immediate change in the school There are a number of factors thought to contribute to food and nutrition environment needs to occur (Stitzel the “obesity epidemic” (Time 2004) with increased con- 2003; Wallis 2004) so that schools are healthy environ- sumption of energy-dense foods and decreased levels of ments where the food related policy of the canteen allows physical activity, receiving most of the blame (Waters and children the opportunity to make healthy choices (Baxter Baur 2003). Advertisers of these energy-dense foods and 1998; Conento et al. 1995). O’Dea (2003), in her research fast foods have come under scrutiny and are accused of into children’s eating practices, identified convenience, targeting their products directly to children. This targeting taste and social factors as barriers to healthy eating. The has led for a call to ban food advertising during children’s children in the study noted, however, that they would eat programmes in a number of countries (Canning 2004) and what was available and “allowed.” This would suggest has forced manufacturers to re-evaluate their offerings. that if healthy food were available for children to purchase and eat at school, they would do so. There is a lack of Recently, a new culprit has been identified as a research, however, on how to create this change and how contributor to childhood obesity. It has been suggested to encourage children to eat healthier. The current study that schools, that routinely educate children about good attempts to fill this gap and provides the results of a nutrition in the classroom, have failed to send the right multiple observation period experiment undertaken at a messages from their school canteens. A study by Which? primary school canteen in Australia. The experiment was Magazine (2003) found that school canteen offerings read designed to determine the effects of sampling, subtle more like fast food menus and contributed less than one promotion, and availability of healthy food in children’s portion of fruit and vegetables to a child’s daily intake. preferences and purchases of canteen food. This has led to criticism being levelled at schools for failing to fulfil their duty of care towards students by The sample consisted of 166 children in grades one to providing “unhealthy” food choices (Stanton 2002; Wallis four. Each child who purchased food from the canteen 2004). during recess was observed and their food choices re- corded. After obtaining a baseline of existing product With one third of all children’s meals coming from sales, Smoothies, a healthy food choice consisting of outside the home and more than half (52%) of these being strawberries, skim milk, and orange juice, were made consumed at school, many food preferences and food available as a new option. This new option was supported acceptance patterns are developed in schools (Birch 1999; with point of purchase promotion in the form of a large Story 2002). Schools are also a critical component of the poster at each window. In addition, two of the classes were child’s social environment and play a significant role in provided with samples prior to recess. shaping children’s food preferences and eating behaviours (Baxter 1998). Not only are children reinforced through The results support previous research into the effect their own choices at school, they are also affected by the of advertising on children’s preferences but go beyond choices of their peers (Kubik et al. 2003). This peer this to look at the effect of alternative promotional tools on

American Marketing Association / Winter 2005 99 actual purchase. While the point-of-purchase ad did have mation in class on nutrition, these promotional tools could the effect of increasing sales, sampling, an often used tool serve as reinforcement for the educational message. in adult food purchases (e.g., Fazio 1986; Smith and Swinyard 1980), was not as effective. Although more Although the findings of the current study are based children who had sampled ultimately purchased, the dif- on children’s choice behaviour in a school canteen set- ferences were not significant. ting, the findings may be generalizable to a broader venue. As canteens are one of the first places where children can Evidence from the study suggests that the availability make independent food choices, the results of this study and promotion of a healthy food product can reduce the can be used by other outlets where children make choices purchase and consumption of other “less healthy” op- (i.e., fast food outlets). The results can provide valuable tions. This effect, however, was short-lived. The rebound information for managers of food outlets that target chil- of these less healthy options in the absence of promotional dren and for producers of food targeted at children. By tools may provide a strategy for long-term behavioural providing information on healthier options, food advertis- change. If schools are serious about encouraging good ers may be able to circumvent restrictions on advertising eating habits, and joining the fight to reduce childhood during children’s programs. References available upon obesity, perhaps they need to consider the use of “promo- request. tional” materials. Given that most schools provide infor-

For further information contact: Katherine Mizerski MTL/BPM Edith Cowan University Pearson St. Churchlands 6018 Western Australia E-Mail: [email protected]

American Marketing Association / Winter 2005 100 TESTING WHY ADULTS PURCHASE FAST FOOD CARTOON CHARACTER TOY PREMIUMS

Claire Lambert, University of Western Australia, Australia Richard Mizerski, University of Western Australia, Australia

SUMMARY among children. However, few of the three to seven year old consumers that are targeted actually purchase the The Fast Food Industry has come under extensive premiums. Because independent visits to Fast Food res- criticism for its “junk food” content and its aggressive taurants appear rare before the age of eight, the vast marketing to children (Sieders and Petty 2003). The use of majority of toy premiums are bought by adults. It is extensive advertising to children and toys as premiums are assumed that adults purchase Fast Food premiums after alleged to cause young consumers to develop poor eating being “pestered” by the child to obtain the items habits, become overweight or obese, and labor under (McKimmie 2004). long-term health problems due to a diet of too much Fast Food (Dore, Harris, and Whittaker 2002; WHO 2003; The most effective time for a child to request a Fast McKimmie 2004). Food toy premium would appear to be at the Fast Food restaurant, where the decision is made and the retail New restrictions, including warning labels on fast environment showcases the product. One would expect food meal packaging, the banning of advertising to chil- that meal buyers accompanied by a child to a Fast Food dren, and eliminating promotions that involve toys as facility, would have a greater probability of purchasing a premiums, are being studied by some Australian States cartoon toy premium aimed at that child than a buyer and their Federal Government in order to tackle rising without a child with them (AFA 2001). Fast Food and obesity in young Australian children (Cumming 2002). brand past purchase frequency and perceived value of the Similar sentiments have been expressed in the United premium were also tested for an effect in the premium’s States and the United Kingdom, where there are initiatives purchase. to restrict or ban fast food advertising and promotion aimed at young consumers (Banzhaf 2003; Barboza 2003; The research was conducted using a field experiment House of Commons 2004). There are present bans on at a major Fast Food brand’s retail facility located in the “junk food” advertising during children’s television pro- Perth, Australia metropolitan area. The promotion was a grams and restrictions concerning the type of premiums four-week long continuity premium promotion that of- used in five other countries (Lambert and Mizerski 2003). fered 16 versions of a Snoopy plush toy. The campaign included local media advertising that almost exclusively The success of premium based promotions appears aired on children’s television, as well as point-of-pur- rare for many product categories, with consumer partici- chase material meant to generate awareness and inten- pation rates often reported as one percent or less of a tions to visit the fast food retail operations. brand’s buyers (Schultz, Robinson, and Peterson 1993). However, the experience of fast food retailers is quite The study used a cross-section sample of meal buyers different (Taylor 2001). McDonalds, Burger King, and that were personally interviewed over three time periods Wendy’s lead all other companies in the use of premiums to investigate the effect of the Snoopy premium on con- in their promotions. Most of their premiums appear to be sumer decision-making and purchase in this category. A aimed at children, with some Fast Food retailers begin- total of 50 surveys were completed per day (n = 100 per ning their targeting to three years olds (AFA 2001). weekend) over three periods, and sampled meal buyers that visited the Fast Food facility in-store, during the Critics of the Fast Food Industry (Schlosser 2001; weekend lunch period. WHO 2003; McKimmie 2004) charge that the special allure of toy type premiums, and the sheer volume of their It was found that the accompaniment of children with use, may train young and naïve children into repeatedly the meal buyer was not a significant effect in the purchase requesting or purchasing Fast Food meal items. The of a Snoopy cartoon toy premium, nor for the number of promotion of these meals frequently feature cartoon char- Snoopy premiums reported purchased in the past. Buyers acter premiums tied into television programs or movies in of the premium provided a significantly higher mean their advertising and sales promotion (Spethmann 2002). value of the Snoopy premium than non-buyers of the The repeated use of heavily promoted premiums is as- premium, but these values were significantly lower if the sumed to build Fast-Food brand and category loyalties buyer was accompanied by a child or children. However,

American Marketing Association / Winter 2005 101 there were no differences in the groups’ perceived value rant should be re-evaluated as it appears they may tend to of the Snoopy premium if pre-campaign respondents’ primarily lure adults. These results suggest that potential mean estimation of the premium’s value was included in Public Policy interventions need to be aimed at the parents comparisons. and caretakers that largely make the purchase decisions for what children eat. The need for bans on the use of The effect of previous purchase of the Snoopy pre- cartoon–based premiums targeted to the children’s mar- mium, not purchase of the brand of Fast Food, was a ket (cf., Sieders and Petty 2003; McKimmie 2004), needs significant effect in buying the Snoopy premium on the more evidence before causality can be assumed. Of course, visit that was surveyed. In addition, the reported purchase it may be that simple possession of a premium is enough of the premium reflected a distribution not significantly as reported by Pierce et al. (1998), but rejected by Lee different from the Negative Binomial Distribution often et al. (2004), in regard to finding of an effect of Tobacco observed with fast moving consumer package goods and premiums in smoking initiation. gambling products (Mizerski et al. 2004). This suggests that purchase of the continuity premium may have be- Researchers that have looked into the stochastic come habitual. This apparently habitual component was a pattern for fast moving consumer package goods have significant effect in repurchase of that premium, and argued (cf., Ehrenberg 1969) for there generally being potentially more influential than the respondent’s per- little or no effect of information processing or attitudinal ceived value of the premium. precursors in frequent choice behavior. Information-based programs and remedies may be expected to be less effec- The study’s results provide an insight into the effective than if the buyer of the premium was more cognitively tiveness of children’s requests for Fast Food toy premi- involved in the decision. Clearly, more research needs to ums targeted at them. The claims that cartoon-based be conducted to see if these early findings can be repli- premiums necessarily lure children to a Fast Food restau- cated and explained. References available upon request.

For further information contact: Richard (Dick) Mizerski School of Economics and Commerce M261 The University of Western Australia 35 Stirling Highway, WA 6009 Australia Phone: +618.6488.7210 FAX: +619.6488.1055 E-Mail: [email protected]

American Marketing Association / Winter 2005 102 MULTIMARKET CONTACT AND THE MODERATING ROLE OF DOMINANT LOCAL PLAYERS: A CONCEPTUAL OVERVIEW

Sweta Chaturvedi Thota, James Madison University, Harrisonburg

SUMMARY the relationship between multimarket contact and mutual forbearance have not received adequate attention in ex- This paper identifies the factors that moderate the tant literature. In this paper, the factors that moderate the relationship between multimarket contact and mutual relationship between multimarket contact and mutual forbearance observed by firms that operate in multimarkets. forbearance are identified. The paper draws from game- A framework is developed that identifies the market theoretic propositions and hypercompetition literatures factors that moderate the relationship between multimarket and develops a framework that identifies the market contact and mutual forbearance. Specifically, the paper factors that moderate the relationship between multimarket discusses the moderating effects of factors, which arise contact and mutual forbearance. It is proposed that the mainly due to the presence of dominant local players, on various moderating variables would reduce the level of the levels of mutual forbearance observed by firms. It is mutual forbearance observed by firms when firms operate proposed in this paper that the suggested moderating in multimarkets. In this paper, primary market factors that factors would reduce the level of mutual forbearance moderate the relationship between multimarket contact observed by firms when firms operate in multimarkets. and mutual forbearance are identified, which would help in understanding and determining the relationship be- Multimarket competition is defined as a situation tween multimarket contact and the mutual forbearance where firms compete with each other simultaneously in observed by firms. several markets (Karnani and Wernerfeldt 1985). This situation is present in multiproduct industries or industries The paper discusses the moderating effects of factors with different geographic markets (Fernandez and Marin that arise mainly due to the presence of single-market 1998). A better understanding of multimarket competi- firms or dominant local players on the levels of mutual tion is of great importance to marketing strategy research forbearance observed between firms. The factors identi- and practice because of the central nature of the issue of fied are the presence of single-market firms or dominant interfirm rivalry to marketing strategy issues. Thus, it is of local players, the level of competition triggered by dom- extreme importance to firms that compete in multiple inant local players, and resource similarity between the markets to develop an understanding of the behavior of single-market firms and the firms operating in multimar- other firms that operate in these markets. Further, in kets. formulating a strategy for multimarket competition, it is important to consider the impact of various factors that The discussion in this paper, that describes the pro- affect the level of competition between firms. Despite cess through which multimarket competition influences attempts by past research to explore issues revolving the intensity of competition and leads to reduced mutual around multimarket competition, there is a dearth of forbearance, has been represented in a framework. The research that explores the roles of the various moderating framework, demonstrates the role of moderating variables variables on the relationship between firms that engage in that reduce mutual forbearance and heighten the intensity multimarket competition. of competition when firms operate in multimarkets.

Strategy researchers and industrial economists have The framework and propositions in this paper have examined whether firms that engage in multimarket com- several research implications for managers and research- petition would compete aggressively against each other or ers. The impact of the several moderating variables on the observe mutual forbearance (i.e., tacitly collude). Mutual level mutual forbearance and, consequently, on the level forbearance is a form of tacit collusion in which firms of competition between firms that operate in multimarkets avoid competitive attacks against the rivals they meet in has been examined in this paper. The reduced levels of multiple markets (Jayachandran, Gimeno, and Vardarajan mutual forbearance and the increased intensity of compe- 1999). Interestingly, past research has argued both for and tition may have serious implications on the success of against whether mutual forbearance is a deterministic multimarket firms and on the level of competition that outcome of multimarket contact. multimarket firms may face from a single-market firm or a dominant local player operating in that market. This It is stressed here that although the relationship be- study will help shed light on how managers of multimarket tween multimarket contact and mutual forbearance has firms should mentally map their market and determine been examined in prior research, the factors that moderate their rivals.

American Marketing Association / Winter 2005 103 For further information contact: Sweta Chaturvedi Thota Department of Marketing College of Business MSC 0205 James Madison University Harrisonburg, VA 22807 Phone: 540.568.6817 FAX: 540.568.3587 E-Mail: [email protected]

American Marketing Association / Winter 2005 104 THE NATURE OF CO-OPETITION: LITERATURE REVIEW AND PROPOSITIONS

Pilsik Choi, University of Illinois, Champaign

SUMMARY ances mainly because it focuses on both cooperation and competition with competitors simultaneously while the Interfirm interactions have been extensively studied other three focus only on cooperation with suppliers, in economics, marketing, strategic management, and or- customers, competitors, and/or noncompeting firms. Com- ganization theory. Over the last two decades, research on petitors in this paper are defined as direct competitors who interfirm interactions has evolved into two research are competing in the same market(s). streams: one based on firms’ competitive behavior and the other on firms’ cooperative behavior. Before the mid Co-opetition is categorized into channel co-opetition, 1980’s, interfirm interactions were analyzed with great marketing co-opetition, and R&D co-opetition. Channel emphasis on firms’ competitive behavior. This stream of co-opetition denotes a situation where one competitor research was influenced by economic theory, which gen- becomes the other competitor’s buyer or supplier or a erally embraces intense competition. In the mid and late situation where one competitor uses the other’s distribu- 1980’s, while other researchers dwell on the tradition of tion channels or production facilities while they compete firms’ competitive behavior, a number of researchers with each other in a final goods market. Marketing co- turned their attention to the cooperative aspects of inter- opetition is a situation where direct competitors cooperate firm interactions. Since then, they have identified various for joint marketing efforts (e.g., brand alliances, joint types of interfirm cooperation, e.g., symbiotic marketing, promotion, bundling, etc.) while they compete with each co-marketing, strategic alliances, etc. All of these con- other in the same market. R&D co-opetition occurs when cepts emphasize cooperation between firms. direct competitors join forces in research and development or other similar activities (e.g., joint new technology In the early 1990’s, sharing the similar background to development, joint industry standard development, etc.) that of the concepts emphasizing cooperation, a new while they compete in other activities. concept, “co-opetition,” was created. Unlike the other concepts, co-opetition (blend of cooperation and compe- Drawing upon the literature on co-opetition, strategic tition) focuses on both cooperation and competition at the alliances, co-marketing, and symbiotic marketing, I iden- same time. The book, Co-opetition, by Brandenburger tify complementarity, compatibility, managerial ability, and Nalebuff (1996) ignited the popularity of the concept. and competition level as antecedents of co-opetition. The book has generated tremendous interest among prac- Complementarity occurs when the pooled skills and re- titioners and researchers. In light of the amount of inter- sources can create excess value relative to their value ests in co-opetition, however, it is surprising that aca- before the pooling. Since the cooperation part of co- demic publication on co-opetition is very limited thus far. opetition requires mutual benefits, one partner should have certain skills or resources that the other partner needs Addressing this issue in the literature, this paper in order for such cooperation to be formed. Thus, a high attempts to investigate the nature of co-opetition. The level of complementarity between competitors will likely purpose of this paper is to review the literature related to lead them to enter into co-opetition. In this process, co-opetition and examine its antecedents and conse- technological change moderates the influence of quences. Specifically, this study attempts to address the complementarity on co-opetition. Compatibility, which is following questions: (1) What is co-opetition? (2) How characterized as similarities in management style and can it be classified? (3) Which firm characteristics cause company culture, is another important factor for the co-opetition? (antecedents), and (4) What benefits does cooperation part of co-opetition. Although competitors co-opetition generate for firms that adopt the concept? are complementary with each other, if they are not com- (consequences). patible in the areas where they cooperate, it is difficult for them to cooperate with each other in those areas. Hence, Co-opetition is defined as the situation where a group a high degree of compatibility between competitors will of competitors cooperate in activities associated with likely lead them to engage in co-opetition. Management creating mutual benefits while at the same time they ability is also an important factor for co-opetition forma- compete with each other in activities associated with tion. Management that has the ability to recognize skills dividing up the benefits. Co-opetition is different from and resources it needs and seek those skills and resources symbiotic marketing, co-marketing, and strategic alli- from other companies will more likely identify co-opetition

American Marketing Association / Winter 2005 105 opportunities with other competitors that can provide available to the firms in the co-opetitive relationship, their such skills and resources. Therefore, competitors with products and services are not likely to match those from such management ability will likely forge a co-opetitive the firms in the co-opetitive relationship. Thus, the firms relationship. Finally, competition level can influence co- in the co-opetitive relationship gain a competitive edge opetition formation as well. When two companies com- over competitors outside the relationship, which increase pete fiercely in a market, they likely perceive each other competitiveness. In addition to increased competitive- as an enemy to defeat and have less willingness to collabo- ness, co-opetition also provide the participating firms rate, even if they have complementary skills and re- with efficiency because they do not need to develop skills sources. Thus, it is proposed that a high level of competi- and resources they need internally. tion between competitors will decrease the possibility of formation of a co-opetitive relationship. The most important contribution of this paper is that, to my knowledge, this study is the first study that formally In terms of consequences, co-opetition brings better defines co-opetition and examines both its antecedents competitiveness and efficiency to participating competi- and consequences. Given the fact that research on co- tors. Since competitors outside the co-opetitive relation- opetition is at its early stage, this study provides ground- ship do not possess all the skills and resources that are work on which future research on co-opetition can build.

For further information contact: Pilsik Choi Department of Business Administration 339 Wohlers Hall University of Illinois at Urbana–Champaign 1206 South Sixth Street Champaign, IL 61820 Phone: 217.333.4240 FAX: 217.244.7969 E-Mail: [email protected]

American Marketing Association / Winter 2005 106 TECHNOLOGY VERSUS PEOPLE: TWO SCHOOLS OF THOUGHT ON PRICING CAPABILITY DEVELOPMENT

Lewis K.S. Lim, Indiana University, Bloomington Rebecca J. Slotegraaf, Indiana University, Bloomington Rockney G. Walters, Indiana University, Bloomington

SUMMARY investment priorities for firms. Specifically, the technological school would place a greater priority on the exter- A growing number of studies in marketing and stra- nal acquisition of material, tangible resources such as tegic management are concerned with the notion of pric- software and consultancy services, whereas the people ing capabilities. Within this emerging literature, two school would prescribe the internal development of ab- schools of thought dominate the intellectual discourse. stract, intangible resources such as tacit market knowl- The “technological” school, reflected mainly in industry- edge, and interfunctional conflict resolution mechanisms. oriented and business practice writings, emphasizes com- Each school inherently emphasizes resource acquisition putational precision, and objectivity as prerequisites to from a different kind of factor market and may be suited effective pricing. Accordingly, it views pricing capabili- for adoption in a different type of organizational environ- ties as driven by the installation of information systems ment. These issues call for linking the study of pricing and the procurement of pricing engineering expertise. In capabilities to the broader theories of management, such contrast, the “people” school, espoused largely by schol- as the resource-based view, transaction cost theory, and ars subscribing to an organizational capabilities or orga- contingency theory. nizational learning perspective, sees market sensing and concerted organizational action as the fundamental me- In exploring these two schools of thought, this paper diators of effective pricing. Focusing on such higher- contributes to marketing knowledge in a number of ways. order people-dependent processes, this school advocates First, the current state of understanding concerning pric- the development of coordination mechanisms, tacit knowl- ing capabilities is put into proper perspective, with the edge, and routines over time to improve pricing effective- delineation of two possible alternative positions scholars, ness. consultants, and practitioners alike might hold toward the topic. Certain implicit theories or otherwise unstated Noting the divergent viewpoints, we construct two premises on either side are thereby illuminated. Second, “implied” models of pricing capability development in within each school of thought, the notion of a pricing order to bring to light the mediating processes and driving capability itself is further clarified with the identification mechanisms assumed by proponents of the respective of the key enabling skills and resources. Third, the alter- schools of thought. In the technological model of pricing native processes of improving pricing effectiveness are capability development, we depict the availability of explicated, thus allowing us to understand how different accurate and timely information on cost and revenue compositions of resources influence the effectiveness of flows, the acquisition of pricing engineering knowledge, price decision making. and the customization of data display in information systems as antecedents, and pricing precision and objec- As an agenda for future research, we outline two tivity as mediators, of pricing astuteness. In the people primary directions in which the framework proposed in model on the other hand, we suggested collective task this paper could be extended. For a start, investigations experience in developing the pricing process, a shared/ could be carried out into the managerial-perceptual and dominant logic about the marketplace, and interfunctional organization-specific factors that lead a firm to adopt goal alignment within the organization as antecedents, either the technological or the people model of pricing and market sensing and concerted organizational action capability development. Thereafter, research could focus as mediators, of pricing astuteness. on determining the contingent deployment of different pricing capabilities to suit the organizational decision By juxtaposing the two alternative models, we are environment. More definite conclusions could then be able to draw differential implications of each school. drawn about the role of pricing capabilities in influencing Evidently, each school suggests a different set of resource firm performance.

American Marketing Association / Winter 2005 107 For further information contact: Lewis K.S. Lim Kelley School of Business Indiana University 1309 East Tenth Street Bloomington, IN 47405 Phone: 812.855.1116 FAX: 812.855.6440 E-Mail: [email protected]

American Marketing Association / Winter 2005 108 DIMENSIONS AND OUTCOMES OF RELATIONAL EXCHANGE IN A BUSINESS-TO-BUSINESS CONTEXT: A META-ANALYSIS

Mohammadali Zolfagharian, University of North Texas, Denton Rajasree K. Rajamma, University of North Texas, Denton

SUMMARY methodological moderators below were identified and used in our analysis. Research in the last two decades identifies relational exchange as the key underlying factor driving business 1. Contextual Moderators: performance. However, the theoretical foundation of re- 1.1 The country from which data was collected (U.S. lational exchange is far from clear. Relational exchange vs. other countries). has been operationalized using over 37 different dimen- 1.2 Whether the data was collected from a single sions, many of which overlapping and interrelated industry; and two. (Gundlach et al. 1995). This might be due to the contextual and methodological differences of the studies. The contri- 2. Methodological moderators: bution of our meta-analysis is twofold: (1) to establish 2.1 Whether upstream or downstream firm in the whether an overall positive association exists between relationship responded to the survey. relational exchange and its purported outcome variables 2.2. Respondent’s status in the firm (whether the and (2) to identify the contextual, methodological and respondent was a top executive or not). measurement peculiarities that instigate variation in findings reported by different researchers. Hence, our first We hypothesized that relational exchange dimen- proposition is that there is an overall positive relationship sions have a stronger impact on its outcome variables (a) between relational exchange and its outcomes. when the sample is drawn from within the U.S. (b) when it is drawn from a single industry (c) when the upstream The database for meta-analysis was constituted of 34 partner is the respondent in the study and (d) when the studies, altogether contributing 37 dimensions of rela- respondent has a high rank in the firm. tional exchange and 13 outcome variables. After collapsing dimensions with similar definitions and eliminating Analysis was done using the multiple regression those that have less than 10 correlations, our database technique with dummy coded variables (0/1). The z- consisted of 19 studies (55%) providing 89 usable corre- transformed correlations formed the criterion variable lations. These correlations were associated with five rela- and the five dimensions of relational exchange, the three tional exchange dimensions: solidarity, durability, flex- outcome variables and the four moderator variables formed ibility, information exchange and mutuality, and three the predictor variables in the regression equation. All the outcome variables: satisfaction, performance, and com- data, except the effect size, were dummy-coded. mitment. These dimensions and outcomes were categorized into (1) instrumental/concrete including flexibility, The findings offer insights to researchers as well as information exchange (two dimensions) and performance practitioners. We could not find any significant overall (one outcome) and (2) abstract including solidarity, dura- relationship between relational exchange and its outcome bility, mutuality (three dimensions), satisfaction and com- variables. The results also partially support our argument mitment (two outcomes). We hypothesized that the instru- that instrumental dimensions (flexibility) as well as in- mental dimensions and outcomes of relational exchange strumental outcomes (performance) of relational exchange would have significant, positive relationship with the are more salient than abstract dimensions. Further, sig- effect size. nificant moderators of the relationship were found to be sampled industry (studies that collected data from a single Differences across correlations in meta-analyses are industry had stronger positive effect sizes) and the often attributed to four broad categories of characteristics: respondent’s rank in the firm. Responding firm’s position measurement method, research context, estimation proce- in the relationship was found to marginally moderate the dure, and model estimation (Sultan et al. 1990). As our relationship. By far, it was seen that, sampled industry is analysis focused on correlations, model estimation proce- the strongest moderating factor of the relationship. dure and model specification (i.e., omitted variable bias) were not considerable issues for this study (Henard and In sum, the findings indicate that the association Szymanski 2001). Therefore, two contextual and two between relational exchange and outcome variables is

American Marketing Association / Winter 2005 109 highly dependent on three factors: (1) how relational and its outcomes. This calls for more studies in the area. exchange is operationally defined, (2) who evaluates the Moreover, we found that other meaningful dimensions of relationship (upstream firm versus downstream firm and relational exchange such as trust, harmonization of con- high-status employee versus low-status employee within flict have received barely any attention from the research- the organizational hierarchy), and (3) the data source ers. Hence, this is an avenue for further research on the (single- vs. multiple-industry). subject. Future research should also include the views of all the parties involved in the relationship in order to get One major limitation of our findings stems from the a more comprehensive view of what is happening within small number of empirical studies that are available and a given relationship. that explore the relationship between relational exchange

For further information contact Rajasree K. Rajamma College of Business University of North Texas P.O. Box 311396 Denton, TX 76203–7231 Phone: 940.565.4787 FAX: 940.381.2374 E-Mail: [email protected]

American Marketing Association / Winter 2005 110 ENTRY MODE AND LEVEL OF EQUITY: A SIMULTANEOUS EXAMINATION OF FOREIGN DIRECT INVESTMENT GOVERNANCE

Sudha Mani, University of Western Ontario, London Kersi D. Antia, University of Western Ontario, London Aric Rindfleisch, University of Wisconsin – Madison

SUMMARY inclusion of these dual viewpoints allows us to assess their relative theoretical merit upon both aspects of FDI deci- Entering a foreign market is an expensive, risky, and sions. daunting task comprised of multiple decisions. Among the most important of these decisions is the governance Using a rich dataset of 4,459 subsidiaries of 858 arrangement of a new subsidiary. Firms entering foreign Japanese firms across 38 countries over a nine-year pe- markets must first select a mode of entry (e.g., a wholly- riod, we specify a cross-classified, multilevel, bivariate owned subsidiary versus a joint venture with a local model of FDI governance. This model enables simulta- partner). For joint ventures, the entering firm must also neous estimation of entry mode and level of equity deci- decide upon its level of equity investment. Although these sions and integrates theoretical viewpoints from both the two governance decisions are strategically inter-related, TCA and experience perspective. the extant FDI literature has examined them in isolation. The bivariate model in this paper addresses the problem The results from the bivariate multilevel analysis associated with the correlated nature of these two deci- suggest a need to integrate the TCA and experience sions. perspective. Our findings reveal that TCA factors have a greater significant impact on choice of entry mode than it The key theoretical perspectives explaining entry does on the level of equity participation. In contrast, mode and level equity have been the transactional cost and experience considerations significantly determine both experience perspective. Prior studies have typically as- aspects of governance. The much larger effect sizes ob- sumed common antecedents of transaction cost analysis tained for entry mode and host country experience, rela- (TCA) and experience for both aspects of governance, tive to that of advertising intensity lend support to the and little is known about their specific effects on each assertion that models of FDI activity that focus solely on aspect of governance. TCA emphasizes capability pro- TCA-related concerns are underspecified (Blodgett 1991; tection, while the experience perspective considers gov- Brouthers 2002). Further, our analysis reveals that al- ernance with a view to capability enhancement. Despite though experience exerts a powerful influence on FDI recent research examining these dual objectives (Delios governance, the direction of its effects is dependent upon and Henisz 2000; Lu 2002; Madhok 1997), the relative the type of experience in question. predictive ability of these two theoretical perspectives across both aspects of FDI governance is unknown, as This research was supported by a grant from the there has been no simultaneous estimation of their influ- Social Sciences and Humanities Research Council of ence. Our paper addresses this lacuna by simultaneously Canada (#411-98-0393) at the University of Western estimating both mode and level of FDI governance via the Ontario. References available upon request. lens of both the TCA and experience perspectives. Our

For further information contact: Kersi D. Antia Richard Ivey School of Business University of Western Ontario 1151 N. Richmond Street London, Ontario N6A 3K7 Canada Phone: 519.661.4231 FAX: 519.661.3959 E-Mail: [email protected]

American Marketing Association / Winter 2005 111 TOWARDS AN UNDERSTANDING OF THE GOVERNANCE OF COMPLEX NETWORKS OF RELATIONSHIPS: UNCERTAINTY, GOVERNANCE SYSTEM CHOICES, AND PERFORMANCE OUTCOMES

Andrew T. Stephen, University of Queensland, Australia Leonard V. Coote, University of Queensland, Australia

SUMMARY works (cf., Bradach and Eccles 1989; Heide 1994, 2003). Plural governance is intended to afford firms in networks The governance of interfirm relationships in market- with greater flexibility to adapt to changing conditions in ing channels is complex. Much extant literature has con- their environments or channels. This notion is applied to sidered relationship governance from the perspective of more general considerations of how uncertainty can be discrete, isolated dyadic relationships (e.g., a single buyer dealt with in relationship networks through governance and a single supplier). In reality, relationships in market- mechanisms. The discussion then turns to introducing the ing channels, supply chains, and distribution networks notion of governance system compatibility; that is, opti- combine to form relationship networks that are inherently mal configurations or combinations of governance modes complex and can have high levels of uncertainty. The under plural governance must be compatible across levels governance of relationships in these networks is likely to or branches of relationship networks. The most efficient vary significantly from the governance of the single governance systems or plural forms of governance are dyadic relationships that have been the focus of many those that provide sufficient flexibility and greater cer- previous studies. An emerging stream of literature consid- tainty, and that are compatible across levels. The concep- ers the governance of multiple, linked relationships in tual framework builds on these foundations and advances network-type structures (e.g., Heide 2003; Mishra, Heide, propositions that predict (1) how downstream channel and Cort 1998; Wathne and Heide 2004). While it is conditions can influence upstream channel governance understood that complex systems of interfirm relation- choices, and (2) when plural governance is required based ships exist and are relatively commonplace in practice on prevailing conditions elsewhere in a network. (cf., Anderson et al. 1994), research into the governance of these networks of relationships is needed. The concepts and propositions discussed in this paper have a number of implications for theory and practice. Continuing in the tradition of this emerging stream of Studying relationship networks and how they might be literature, and seeking to extend previous, more descrip- efficiently governed in order to increase flexibility and tive conceptualizations of relationship networks in mar- certainty for firms in these networks is of importance to keting, this paper advances a more general conceptualiza- academic and practitioner audiences. At a theoretical tion of governance in relationship networks. The paper level, the framework proposed in this paper is novel in the focuses specifically on how governance system choices sense that it considers contingent effects across levels of are made and what factors influence these decisions, and networks (e.g., upstream vs. downstream) in determining the performance-related outcomes of systems of gover- the most appropriate systems of governance that are nance. An important element of the conceptual discussion compatible with each other. This builds on recent work by in this paper is the notion that governance choices for one Mishra et al. (1998) and Wathne and Heide (2004). level in a network are strongly influenced by a firm’s Including plural governance in these conceptualizations assessments and evaluations of conditions of uncertainty adds to the depth and richness of the framework. For and relationship characteristics at other levels in the same practitioners, this paper offers suggestions for how to network. The authors present an extended conceptual make optimal and efficient governance system choices discussion and formal propositions in an attempt to ad- under conditions of uncertainty and complexity in a vance thought towards a more general framework of relationship network context. The conceptualizations pro- network governance. vide guidelines for what practitioners should consider and evaluate as part of the process of designing the most A central issue considered in the conceptual frame- appropriate governance systems for their needs. Refer- work relates to the use of plural forms, or plural gover- ences available upon request. nance, in managing multiple, linked relationships in net-

American Marketing Association / Winter 2005 112 For further information contact: Andrew T. Stephen or Leonard V. Coote UQ Business School University of Queensland Brisbane, Qld 4072 Australia Phone: +61.7.3365.9721 FAX: +61.7.3365.6988 E-Mail: [email protected]

American Marketing Association / Winter 2005 113 MARKET DRIVING RELATIONSHIP MARKETING FOR RADICAL INNOVATIONS

Helder J. Sebastiao, University of Oregon, Eugene

SUMMARY merce, and Dell driving the standard for modular computer manufacturing processes (Kumar, Scheer, and Kotler Firms that launch radical product and process inno- 2000). vations are market driving: creating, shaping, and accel- erating markets for their radical innovations and redefin- The market driving entrepreneur typically creates ing customer expectations, value propositions, and busi- and enters new markets through alliances and similar ness processes. Successful market driving is dependent on cooperative strategies rather than competitive positioning developing, growing, and strategically leveraging net- (Sarasvathy 2001). Success is dependent on leveraging works of alliances and key customers, and relationship and building upon who they know: industry contacts, marketing plays a critical role in fostering collaboration. funding sources, supporters, suppliers, and customers This suggests a fundamental shift in marketing focus from (Sarasvathy 2001). This emphasis on alliances and col- targeting and communicating with prospective customers laboration is the most significant influence on the selec- towards the cultivation, management, and leveraging of tion of relationship marketing objectives and strategies. multiple collaborative relationship ties. Thus initial rela- Alliances facilitate widespread industry adoption and tionship marketing efforts should be concentrated on provide access to markets and customers that otherwise establishing strong alliance network ties and conducting may not be available to the entrepreneurial firm. Initial frequent and intensive mutual learning-oriented commu- customers provide feedback and the input that drives nications with initial customers. successive product iterations and service enhancements (Gatignon and Xuereb 1997; Hill 1997). Contrasting Being Market Driven with Market Driv- ing Market driving firms both drive the formation of expectations and use an iterative approach to refining new Market Driven Firms Are Responsive: Market driven products and services to meet customer and alliance relationship marketing strategies emphasize responsive- partner expectations that evolve through successive inter- ness to both channel member and existing customer needs. action with their networks. Due to limited resources When a firm is market driven its primary objectives are to entrepreneurs must achieve this incremental learning within gain full channel member support of a product launch and a relatively short timeframe. Interaction with the firm’s to leverage existing customers in adopting an incremental networks must also reinforce strategically important rela- innovation, often through the use of product/service mi- tionships. gration strategies. The result of a successful market driven strategy should be expanded market share or share of Market Driving Creates an Innovation Network wallet/budget, reinforced brand loyalty, and enhanced existing customer satisfaction. While firms can maintain A collaboration-oriented relationship marketing strat- competitive advantage by being market driven in existing egy should result in lower product launch costs, reduced markets, they become vulnerable to firms pursuing a time for market acceptance, and reduced market uncer- market driving strategy. tainty. Embedded relationships provide an additional barrier against competitive threats and help reduce overall Market Driving Firms Are Opportunistic and Col- marketing costs. The strategic leveraging of these rela- laborative: Market driving firms are generally new en- tionships leads to ongoing product, service, and market trants who revolutionize an industry by delivering a opportunities as the network expands and becomes in- substantial leap in customer value through either a break- creasingly interconnected to other alliance and customer through technology or marketing system made possible networks. The desired end state is status as an industry by a unique business process (Kumar, Scheer, and Kotler standard and possession of a highly embedded network of 2000). The most successful radical innovations produce relationships contributing to future innovations based on what Arthur (1990) refers to as a market in lock-out, joint value creation. This is a natural evolution for the where a technology or technology-based business process initial customer relationships in which the seeds of col- becomes an industry standard that is extremely difficult to laboration were planted. This environment of shared risk dislodge. Examples include Amazon.com and EBay be- and reward fosters greater learning between the firm and ing perceived as the standards for conducting e-com- the customer, which in turn can lead to improved efficien-

American Marketing Association / Winter 2005 114 cies, higher quality, and faster turnaround times (Prahalad Table 1 summarizes the differences between market and Ramaswamy 2000). driving and being market driven.

TABLE 1 Market Driving Versus Market Driven Relationship Marketing

Market Driving Market Driven

Type of Innovation Radical product and/or process innovation Incremental product / service innovation

Firm Situation Typically entrepreneurial; new product to new markets New product/service to existing markets

Basic marketing Essentially proactive, iterative, and committed to Essentially reactive/responsive to philosophy creating technology standards and markets market demand

Basic strategic Strategy evolves from an iterative process, testing as Select an optimal strategy among approach many alternatives as possible by leveraging alternatives based upon expected ♦ Firm technical, functional, market expertise returns, using ♦ Emerging networks of prospective customers/alliances ♦ Pre-specified criteria ♦ Collaboration ♦ Pre-determined goals ♦ Research and projections ♦ Knowledge of existing channels and customers

Involvement of Initial target customer input is integral to the iterative Possible contact via context of NPD target customer process of product/service and segment refinement; research in the innovation Dialog is continuous, and network of potential Leverage existing relationships for process customer/collaborators continually expands potential migration

Key Relationship Identifying, recruiting and forming networks of Customer adoption/migration to new Mktg Strategies alliances and customers product Building commitment to the technology as a standard Full channel cooperation Customer as input to future product ideas Joint value creation via embedded network relationships Customer as referral source

Key Relationship (1) Well defined market (1) Expand market share Mktg Goals (2) Standards as an effective barrier to entry (2) Expand share of wallet/budget (3) Access to additional markets and opportunities (3) Reinforce brand loyalty

Key Mktg-Based (1) Industry standard technology or process (1) Expanded cash flow from Assets from (2) Embedded product innovation network incremental sales RM Activities acceptance time (2) Enhanced cash flow from reduced market

Conclusion cesses. Successful market driving is dependent on developing, growing, and strategically leveraging networks of Traditional relationship marketing models for estab- alliances and key customers. Relationship marketing plays lished, market driven firms do not adequately account for a critical role in market driving and ultimate radical the characteristics and challenges of entrepreneurial mar- innovation launch success, particularly in fostering col- ket driving firms. These firms redefine markets with laboration with alliances and customers. References are radical innovations that trigger dramatic changes in cus- available upon request. tomer expectations, value propositions, and business pro-

American Marketing Association / Winter 2005 115 For further information contact: Helder J. Sebastiao University of Oregon Lillis Business Complex 1208 University of Oregon Eugene, OR 97403–1208 Phone: 541.346.4179 FAX: 541.346.3341 E-Mail: [email protected]

American Marketing Association / Winter 2005 116 AN INVESTIGATION OF PERCEPTUAL FACTORS INFLUENCING CONSUMER’S INTENTION TO ADOPT RADICAL VERSUS INCREMENTAL NEW PRODUCTS

Audhesh K. Paswan, University of North Texas, Denton Lisa C. Troy, University of North Texas, Denton

SUMMARY and inter-item correlations. The results indicate acceptable levels of reliability and validity. We next tested the The objective of this paper is to enhance our under- hypotheses using pair wise t-tests and multiple regres- standing of key perceptual dimensions influencing con- sions to test the hypotheses of interest. Separate models sumers’ intentions to adopt radical and incremental new were run using purchase intention towards the RNP and products. We do so by investigating five key perceptual the INP, and for both models the multi-collinearity esti- factors as antecedents to intention to adopt (or purchase) mates were well within acceptable limits. a radical new product (RNP) or an incremental new product (INP): perceived knowledge about the RNP and Findings from the study indeed indicate that the very INP, perceived complexity of the RNP and INP, perceived same consumer can have similar adoption intentions for financial risk and perceived performance assurance (op- different types of products (i.e., radical versus incremen- posite of risk) associated with the RNP and INP, and tal), possibly desiring to adopt both a radical and an perceived comfort associated with purchase of the INP or incremental new product within the same broad category RNP. Our investigation of whether these perceptual fac- of consumer electronics. Additional findings suggest that tors vary across radical versus incremental new products, consumers seem to differ in the way they perceive the two and whether they influence the adoption of radical versus types of innovative products (radical versus incremental) incremental new products similarly differs from existing along perceptual dimensions such as complexity, finan- literature which typically focuses on consumer innova- cial risk and performance assurance dimensions but do tiveness as a trait or a behavior and which often lumps not differ (in our sample) across product types in their consumers together into radical versus incremental groups perceptions of perceived knowledge or perceived comfort despite the fact that consumers may actually adopt incre- with the purchase process. Finally, we find that the influ- mental products some of the time and radical products in ence of key perceptual factors on adoption intentions may other situations. be similar for radical versus incremental new products.

The respondents for the study were composed partly Our findings are important for marketers who have of senior and graduate students at a major university in a historically sought to lump consumers into innovative suburban campus and partly of non-students contacted categories with the assumption that these would hold personally through student interviewers from two market across products. Furthermore, consumers seem to differ in research classes. The scale items for measuring the five the way they perceive the two types of innovative prod- perceptual factors were adapted from existing studies. ucts along perceptual dimensions such as complexity, The same scale items were repeated in two separate financial risk, and performance assurance dimensions but sections of the survey – one for Incrementally New do not differ (in our sample) across product types in their Products (INPs) and another for Radical New Products perceptions of perceived knowledge or perceived comfort (RNPs) in the context of consumer electronics. A total of with the purchase process. These findings are also impor- 609 surveys were first analyzed for reliability and validity tant to marketers as they seek to design marketing plans to (convergent and discriminant) using Cronbach’s Alpha address consumer’s perceptions.

For further information contact: Audhesh K. Paswan Department of Marketing and Logistics College of Business Administration University of North Texas P.O. Box 311396 Denton, TX 76203–1396 Phone: 940.565.3121 FAX: 940.565.3837 E-Mail: [email protected]

American Marketing Association / Winter 2005 117 IT’S ALL ABOUT LEARNING: WHAT FIRMS CAN LEARN FROM CONSUMER PIONEERS

Yun Ye, The University of Arizona, Tucson

ABSTRACT literature and developing a mediation model. The model indicates that the resource of consumer pioneers can This paper identifies an implicit potential resource generate sustained competitive advantage through the that can generate sustained competitive advantage for mediator of higher-level organizational learning, espe- firms that produce innovative products: consumer pio- cially under high-level environmental uncertainty for neers. Examining the mechanism of consumer learning firms that produce high-level innovative products. and organizational learning, this paper emphasizes the mediating role of higher-level organizational learning and In the next section, I will discuss the concept of the dynamics how consumer pioneers generate sustained consumer pioneers from a consumer learning perspective, competitive advantage. followed by a discussion of why the resource of consumer pioneers could be a potential sustained competitive ad- INTRODUCTION vantage by addressing its four attributes. Then I will discuss the mediating role of higher-level organizational Identifying resources that can generate sustained learning. Finally, a conceptual framework and some addi- competitive advantage has been an important area of tional propositions are presented to build a comprehen- study in strategic management. In the existing literature, sive mediation model incorporating consumer pioneers, some unique resources, such as strategic planning, infor- organizational learning and sustained competitive advan- mation processing systems and positive reputations, are tage. considered to be able to generate sustained competitive advantage for firms (Barney 1991), but resources which CONSUMER LEARNING AND can generate sustained competitive advantage have be- CONSUMER PIONEERS come more implicit and limited today. As environmental uncertainty is growing faster in this technology era, it has Consumer Learning become more crucial to exploit new resources to serve as sustained competitive advantages for firms, especially for Consumers learn, but their learning varies. The basic those firms whose products are highly innovative and definition of learning, which refers to the relatively endur- need to be upgraded constantly, such as digital product ing changes in the response to stimuli (Rogers 1962), industry (e.g., computer, digital camera, PDA, etc.) already points out the key issue: change. But how do changes happen? How are they different from consumer Thus, the purpose of this study is to address another to consumer? And what does the difference mean to implicit and important potential resource that can gener- researchers and marketers? These are the major issues I ate sustained competitive advantage for firms that pro- will address here. Consumer learning occurs not only duce innovative products: consumer pioneers. Defined as through exposure to external information sources such as lead consumers with high learning capability and low advertising and word-of-mouth, but also through a pro- learning costs, consumer pioneers as a resource have four cess of internal knowledge transfer from familiar to novel empirical indicators of the potential to generate sustained domains (Gregan-Paxton and John 1997). Employing the competitive advantage: value, rareness, imperfect imita- internal knowledge transfer view, this study focuses on bility, and non-substitutability (Barney 1991). The under- the endogenous mechanism of consumer learning. Two lying idea is learning transfer. That is, firms can generate popular views that apply to the endogenous mechanism of consumer pioneers to sustained competitive advantage by consumer learning are the hierarchical connections be- learning from what consumer pioneers have learned. Prior tween stored pieces of information (Miller 1956) and the studies have considered working with lead customers to model of Consumer Learning by Analogy (Gregan-Paxton recognize strong needs before the rest of the market and to and John 1997). According to the hierarchical connection find solutions to those needs as a salient strategy for firms theory, the information previously stored in consumers’ to gain competitive advantage (Slater and Narver 1995). memory will associate their learning when they encounter But what is the underlying mechanism that such a re- similar information. Similarly, the model of Consumer source generates sustained competitive advantage? Un- Learning by Analogy predicts that previously acquired der what conditions does this resource become crucial to knowledge is transferred by analogy in the process of firms, and to what kind of firms? This article provides consumer learning. These two views reveal that learning answers to the above questions by examining the relevant is a relatively harder task to consumers when they encoun-

American Marketing Association / Winter 2005 118 ter an innovative or a new product and use the product for located on different positions of the diffusion curve. the first time, as they may not be able to refer to similar Among them there exists such a group that enjoys learn- previous experience. Thus, firms that have innovative ing, trying and sometimes adopting new products, espe- products face harder tasks of consumer learning than cially high technological products such as digital cam- those firms that don’t. eras, MP3 players, new models of computer, and hybrid electric vehicles. These consumer pioneers are active and Innovation Adoption and Diffusion effective learners compared to average consumers. Their learning usually does not stop at adoption, or even at As Rogers (1962) stated, the process by which inno- rejection of a product. Unlike average consumers, these vations are adopted by consumers is a special example of pioneers will extend their learning beyond adoption or consumer learning. There are five stages in the adoption rejection with high interest and enthusiasm. For example, process: awareness, interest, evaluation, trial and adop- after adoption, when they find what they like or dislike tion. Depending on the degree of innovativeness, differ- about the product, they will express their satisfaction, ent consumers belong to different categories of the diffu- dissatisfaction, or further demands to the marketers. On sion curve: innovators, early adopters, early majority, late the other hand, if they reject the product, they clearly majority, and laggards. Consumer innovation adoption know why they rejected the product and what needs to be and diffusion are especially important to firms entering improved in the future. In both cases, they are willing to the market with innovative products because consumers’ deliver their perceptions (e.g., satisfaction, expectations, learning costs are usually high for such products. Just as and demands) to others (other consumers or the firm). In Mistri (2002) indicated, “the consumer’s learning behav- the beginning, when they are interested in the product, ior presupposes that he is in a situation of bounded they can be very passionate and highly motivated. Later, rationality and must proceed with a progressively more when they evaluate the product, they can be very rational and more refined classification of a product or group of and professional. products, and that he is seeking a strategy that enable him to classify the goods with a minimum research effort” In this article I use the term “consumer pioneers” (p. 310). Thus, the main barrier for consumers to adopt an rather than “consumer experts” or “innovators/early adopt- innovative product is the relatively high learning cost. ers” because these three groups are from different consumer behavior perspectives. Precisely, consumer ex- Learning Costs perts emphasize expertise and knowledge (consumer behavior status) and early adopters emphasize adoption Since most of the time consumers do not have com- (consumer behavior consequence), while consumer pio- plete information of the product, they are more likely to neers emphasize learning (consumer behavior process). learn inaccurately and misperceive product quality. Per- Consumer experts are “people whose prior knowledge is fect learning only occurs when consumers can accurately well developed, in part because they have had a lot of evaluate product quality (Goering 1985). Not all consum- experience, knowledge, and familiarity with an object or ers can perform perfect learning for all products. a task” (Hoyer and MacInnis 1997, p. 101). Thus, these Gabszewicz, Pepall, and Thisse (1992) explained “as with consumers may have high expertise in necessary choice most new products, consumers need to learn how to use and purchase, but may not be willing to learn and try new the new good, and consumers differ in their ability to products. Some firms use consumer experts in test mar- learn, or in their willingness to adapt to something new” keting because of their expertise. However, since they are (p. 399). Thus, the combination of consumers’ willing- not necessarily interested in new products in the first ness and ability to learn can be seen as their learning place, their opinions may not be that reliable to represent capability. As Gabszewicz, Pepall, and Thisse (1992) average consumers in the real market, and may cause stated, a consumer with low learning capability has a high firms to overestimate the market. In contrast, consumer learning cost, and is predicted to dislike trying new pioneers may not have as much expertise as experts, but products. Meanwhile, a consumer with high learning they have more enthusiasm to learn and try new products capability has a low learning cost and will enjoy trying as well as communicate with marketers and other consum- innovative products. Thus, I refer to consumers with high ers. Additionally, since their actions are more spontane- learning capability and low learning costs as consumer ous, firms could lower consumers’ learning costs by pioneers, and I refer to those with low learning capability studying consumer pioneers’ learning processes. This and high learning costs as average consumers. may not only help the firm to explore flaws of their products, but also to accelerate the diffusion process. Consumer Pioneers Also, a consumer pioneer can be a member of either the first two categories of adopters: innovators and early As we can see, for an innovative product, there are adopters. The reason it is not necessary to distinguish always various groups of consumers who have different consumer pioneers from innovators or early adopters is learning capabilities and adoption actions, and they are that this article focuses on the process of consumers’

American Marketing Association / Winter 2005 119 choice (learning) rather than the consequence of choice consumers and market really expect from the product and (adoption). It’s not important whether a consumer pioneer exploit new opportunities. Second, as mentioned earlier, eventually adopts the product, but he/she engages in the since high learning cost is a main barrier for average learning process with high learning capability during the consumers to adopt new products, firms may exploit the choice. strategy that can lower consumers’ learning costs through consumer pioneers’ experience. For example, firms could Nowadays, it is common to see numerous online find how to improve consumers’ willingness to try a new communities in which people communicate with each product by stimulating their interest, which can be discov- other about their experiences with certain products and ered from consumer pioneers’ experience. Learning from brands. Consumer pioneers often are active members, consumer pioneers’ experience, firms can also improve though not necessarily opinion leaders (Rogers 1962). consumers’ learning ability by designing education pro- One salient characteristic of them is their high willingness grams and upgrading products. Thus, the above argument to communicate with other consumers and also with indicates that consumer pioneers can be considered a marketers. Unlike consumer experts, who are usually valuable source that can help firms to exploit new oppor- located by firms to ask for opinions, consumer pioneers tunities in the market, and finally generate sustained voluntarily locate firms to provide suggestions. Such competitive advantage. activities include writing online reviews, providing feedback cards, e-mailing to technology support departments, Rareness and so on. The underlying motivation could be their needs for self-esteem and self-fulfillment, which needs further Just as not all firms can have sustained competitive research. But at least one thing is clear: such communica- advantage, not all consumers can be consumer pioneers. tion between the marketers and consumers as well as that Only those active and effective learners with high learn- among consumers is crucial to innovation adoption and ing willingness and ability can be consumer pioneers. A diffusion processes (Schiffman and Kanuk 2000). few factors put constraints on consumers’ learning willingness and ability, such as interest, financial support, CONSUMER PIONEERS AS A POTENTIAL education level, time, and so on. For example, a consumer RESOURCE OF SUSTAINED COMPETITIVE with a tight schedule may not have time to try new ADVANTAGE products even though he may be interested in them. A consumer with limited financial support also will not try The definition of sustained competitive advantage new products because he will not risk his money at all that Barney (1991) provided is “a firm is said to have a (Rogers 1962). A consumer with limited education may sustained competitive advantage when it is implementing have difficulty understanding a high technology product a value creating strategy not simultaneously being imple- and may be unable to provide insightful comments even mented by any current or potential competitors, and when after he has adopted it. Thus, for certain product catego- these other firms are unable to duplicate the benefits of ries, there is a limited amount of consumer pioneers, and this strategy” (p. 102). Also according to Barney (1991), they compose a rare resource for firms to perform compe- to have the potential of sustained competitive advantage, tition. the resource must have four attributes: value, rareness, imperfect imitability, and non-substitutability. To argue Imperfect Imitability that consumer pioneers are a potential source of sustained competitive advantage, I first examine whether it has To be a potential source of sustained competitive these attributes. advantage, the source must be imperfectly imitable. That is, firms that do not possess it cannot obtain it. Barney Value (1991) proposed how firm resources can be imperfect imitable. One possibility is that the resource is socially A firm’s resource is considered valuable if it exploits complex. Are consumer pioneers such a socially complex opportunities in a firm’s environment. Consumer pio- resource? The answer is positive if a firm can create long- neers are such a valuable resource in two ways. First, as term and stable relationships with them. However, it is not mentioned above, consumer pioneers are willing to pro- an easy task. It requires unique pursuing strategies for the vide valuable evaluations and suggestions for products, firm to hold a pool of its own loyal consumer pioneers, and especially new products, to firms. These evaluations and this complex relationship is hard to be mimicked by other suggestions help firms accurately estimate their product firms. Moreover, if a firm can create the reputation among and market and plan future strategy. Since the comments consumer pioneers that it is a superior relationship holder, from consumer pioneers are representative of average this imperfect imitability will be durable. consumers to a certain degree, firms may identify what

American Marketing Association / Winter 2005 120 Non-Substitutability Lower-level learning, also called adaptive learning (Senge 1990) or single-loop learning (Argyris 1977), occurs A potential resource of sustained competitive advan- within a given organizational structure when organiza- tage cannot be strategically substituted. The substitutes tional contexts are well understood and reflect the for this resource may be valuable but are neither rare nor organization’s assumptions about its environment and imperfectly imitable. As to consumer pioneers, as long as itself. In contrast, higher-level learning, also called gen- the firm can maintain a stable relationship with them, they erative learning (Senge 1990) or double-loop learning are non-substitutable. One reason is that consumer pio- (Argyris 1977), tries to adjust overall rules and norms neers are mobile and time-effective. For a particular brand rather than specific activities or behaviors. This type of the consumer pioneer pool is unique and willing to serve learning is a more cognitive process and the associations the firm who locate them first. Moreover, even competi- resulting from it have long-term effects and impacts on the tors can locate them later, often the optimal timing (e.g., organization as a whole. Obviously, learning from con- introductory period) has passed, and the consumer pio- sumer pioneers is such a higher-level learning. In the neer pool is no longer effective for the product. Of course, three-stage process of learning that includes information this argument is based on some assumptions. That is, acquisition, information dissemination, and shared inter- consumer pioneers usually have limited effort and are pretation (Slater and Narver 1995), learning from con- easier to obtain brand loyalty for the firm that cares them sumer pioneers is crucial in the stage of information most. For example, a consumer pioneer who serves acquisition for innovative firms. When organizations per- Microsoft may be hard to serve Macintosh simultaneously, form this kind of learning from consumer pioneers, they not only due to his preference for Microsoft but also due should not only focus on the openness to such external to his limited time or expertise. “learning partners” (Slater and Narver 1995), but also create an effective interface and long-term relationship In summary, possessing these four attributes – value, with them, thus establishing a superior organizational rareness, imperfect imitability, and non-substitutability – culture and reputation among customers. This type of consumer pioneers can be considered a potential resource higher-level learning can be considered market-based of sustained competitive advantage. Thus, the first hy- organizational learning. pothesis is, Market-Based Organizational Learning and Market- H1: Consumer pioneers are a potential resource of sus- Based Absorptive Capacity tained competitive advantage for firms. As Sinkula (1994) stated, market-based organiza- But this poses another question: how can this re- tional learning is different from other types of learning in source generate sustained competitive advantage? Does five ways. First, it focuses on external information (e.g., every firm have the ability to generate this resource to customers and suppliers) and it is not as explicit as most sustained competitive advantage? The answer lies on internally focused organizational learning. Second, it organizational learning. As Cravens (2000) addressed, results in the fundamental bases of competitive advan- firms can benefit from organizational learning which tage. Third, it pays more attention to the observation of helps them quickly respond to opportunities and threats, competitors. Fourth, the information it acquires and stores reduce time to develop new products, improve existing in organizational memory is difficult to access. Finally, products and services, and accelerate new product adop- market-information is equivocal. From these five at- tion. In the next section, I will examine the mediating role tributes, we can see that learning from consumer pioneers of organizational learning in the relationship between is such a market-based organizational learning. Con- consumer pioneers and sustained competitive advantage. sumer pioneers provide “access to a greater number of information sources, force the development of mecha- CONSUMER PIONEERS AND nisms that facilitate the sharing of information, and offer ORGANIZATIONAL LEARNING alternative perspectives to the meaning of critical information that could lead to generative learning” (Slater and Organizational Learning Narver 1995, p. 70). Furthermore, this kind of “information-driven” (Goldstein and Zack 1989) and “market- Foil and Lyles (1985) defined organizational learn- driven” (Jaworski, Kohli, and Sahay 2000) learning is ing as “the development of insights, knowledge, and especially important to innovative firms because they face associations between past actions, the effectiveness of barriers of high learning costs for average consumers in those actions, and future actions” and adaptation as “the their innovation adoption. Two dimensions underlying ability to make incremental adjustments as a result of innovation – technology and market – suggest that devel- environmental changes, goal structure changes, or other oping new products needs not only technology that is changes” (p. 811). They also classified organizational different from prior technology, but also fulfilling key learning into two levels: lower- and higher-level learning. customer needs better than existing products (Chandy and

American Marketing Association / Winter 2005 121 Tellis 1998). Thus, even though the primary goal of the experience difficulties in innovation learning (Engelland innovative firms is to drive the market to a new direction, and Alford 2000), the information provided by consumer identifying which direction is most likely to be successful pioneers will help the firm match average consumers’ based on consumers’ needs is at least as, if not more, expectations to increase their willingness to learn, make critical as new technology development. How does one product quality or features less ambiguous, and finally identify the right direction? In this article, the answer lies lower their learning costs and diminish the entry barriers. in market-based absorptive capacity from consumer pio- Thus, I argue that higher-level organizational learning, neers. i.e., market-based organizational learning and absorptive capacity, serves as a mediator in the relationship between Absorptive capacity, also called innovative capabil- consumer pioneers and sustained competitive advantage. ity, is defined as the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to H2: The resource of consumer pioneers can generate commercial ends (Cohen and Levinthal 1990). As Cohen sustained competitive advantage by the firm’s higher- and Levinthal (1990) addressed, “absorptive capacity level organizational learning (i.e., market-based or- refers not only to the acquisition or assimilation of infor- ganizational learning and market-based absorptive mation by an organization but also to the organization’s capacity). ability to exploit it” (p. 131). Thus, the ability to exploit market-based knowledge and information can be seen as CONCEPTUAL FRAMEWORK AND market-based absorptive capacity, which is a special form OVERVIEW OF THE METHOD of higher-level organizational learning. This exploration ability, which will eventually determine the firm’s inno- Employing the knowledge transfer theory, the con- vative capability, is crucial to the firm’s success. An ceptual model illustrates the knowledge transfer mecha- organization’s market-based absorptive capacity depends nism which emphasizes that firms learn from what con- mostly on its direct interface with the external environ- sumer pioneers learn and generate the tacit knowledge to ment (e.g., customers, suppliers, competitors). Since in- sustained competitive advantage (Figure 1). novative firms face more barriers of high learning costs from consumers than non-innovative firms, they espe- There are two moderators in the model. One is envi- cially benefit from working with consumer pioneers to ronmental uncertainty, including market and technology discover effective ways to lower learning costs for aver- uncertainty. Prior research shows that under high environ- age consumers when develop new products (e.g., radical mental uncertainty, customer orientation has a positive product innovation) or upgrade existing products (e.g., influence on firms’ innovation because the development incremental innovation). As average consumers usually of a new product in a highly uncertain environment

FIGURE 1 Conceptual Framework of Relationship Among Consumer Pioneers, Higher-Level Organizational Learning, and Sustained Competitive Advantage

Product Environ- Innovative mental Level Uncertainty Higher-Level Organizational Learning

Consumer Sustained Pioneers Competitive Advantage

American Marketing Association / Winter 2005 122 creates the need for more market scanning and network- H4: The higher the innovative level of the product, the ing with users to identify customer needs (Gatignon and more the likelihood that the resource of consumer Xuereb 1997). Thus the third hypothesis is: pioneers can generate sustained competitive advantage for the firm via higher-level organizational learn- H3: The higher the environmental uncertainty, the more ing. the likelihood that the resource of consumer pioneers can generate sustained competitive advantage for the Method firm via higher-level organizational learning. The possible method will be a survey among key Another moderator is the innovative level of the informants in innovative product industries. These infor- product. As I stated before, consumers’ learning costs are mants include firms’ gatekeepers or knowledge manag- higher for radical products than for incremental products ers, who monitor the environment and translate external (Chandy and Tellis 1998). Therefore, it is especially information into understandable internal knowledge to important for firms that produce radical products to re- the research group (Cohen and Levinthal 1990). Another main close with their customers, lower their learning costs survey will be conducted using relevant industry data- and increase their adoption rates via consumer pioneers. bases to examine the performance of these firms’ R&D. So the final hypothesis is:

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American Marketing Association / Winter 2005 123 For further information contact: Yun (Serah) Ye The University of Arizona 320 McClelland Hall 1130 E. Helen P.O. Box 210108 Tucson, AZ 85721 Phone: 520.621.9179 FAX: 520.621.7483 E-Mail: [email protected]

American Marketing Association / Winter 2005 124 WILL CONSUMERS PREFER GLOBAL OR LOCAL BRANDS? THE ROLE OF IDENTITY ACCESSIBILITY IN CONSUMER PREFERENCE FOR GLOBAL VERSUS LOCAL BRANDS

Yinlong Zhang, The University of Texas at San Antonio, San Antonio Lawrence Feick, University of Pittsburgh, Pittsburgh Vikas Mittal, University of Pittsburgh, Pittsburgh

SUMMARY words, being global can induce better responses from consumers sometimes, but being local can induce better Globalization is becoming the buzzword of this cen- responses in other situations. tury. Business executives and marketing academics are discussing this term to explore the profound changes that Three experiments were proposed to investigate the will happen in marketing practice. Many marketers now- effect of accessibility of global versus local identity con- adays face decisions on whether to market their products struct in consumer preference between global and local globally or locally. One aspect of this global versus local brands. Study one manipulates the relative accessibility of decision is whether to emphasize their market brands as global versus local identity, inducing effects in consumer global or local ones. For example, a recent trade article preference for global or local brands. Study two measures (Marketing News 2004) reported that many new soft the relative accessibility of the consumer’s global and drink companies are making decisions on whether to local identity, and obtains the same pattern of results as stress their brands as global, like Pepsi or Coke, or as local Study one on consumer preference. The first two studies based on what can be proven to better their chances for offer convergent evidence supporting our hypothesis: success in markets that are both increasingly globalized When a global identity is activated, consumers tend to and localized. value the global brands more highly than the local brands; when the local identity is activated, consumers tend to From a theoretical perspective, this decision asks value the local brands better than the global brands. Study whether emphasizing a brand as global or local will three manipulates the differential versus integration modes induce positive responses from consumers. Marketing to replicate the results similar to the one manipulating the literature offers contradictory empirical answers for this accessibility of local versus global identity. This will, in question. For example, Steenkamp, Batra, and Alden turn offer the initial evidence that the effect of global (2003) found that labeling a brand global instead of local versus local identity on consumer preferences runs through can increase its appeal to customers even if the objective the differential versus integration ways of thinking. Impli- product quality is the same. While Zambuni (1993) found cations from these three studies on globalization and the opposite: consumers like it more when a brand is accessibility-diagnosticity are discussed. Through these emphasized as a local one than when it is emphasized as studies we make a key theoretical contribution to the a global one. Along the same line, De Mooij (1998) literature of globalization, since we offer a powerful argued that localization strategy seems to be more attrac- theoretical explanation for the inconsistent findings in tive than the globalization strategy for consumer prod- past studies. Our results are consistent with the recent ucts. These inconsistent findings on global versus local development in the literature of cross-cultural psycholo- suggest that some boundary conditions moderate the main gy. Our studies are also consistent with the recent devel- effect of global or local on consumer preference. In other opment in the accessibility diagnosticity framework.

For further information contact: Yinlong “Allen” Zhang The University of Texas at San Antonio 6900 North Loop 1604 West San Antonio, TX 78249 Phone: 210.458.6331 FAX: 210.458.6335 E-Mail: [email protected]

American Marketing Association / Winter 2005 125 WHY DO CONFERENCE GOERS RETURN? A MODEL OF INTENTIONS TO ATTEND AND RECOMMEND

Annie H. Liu, Loyola Marymount University, Los Angeles Mark P. Leach, Loyola Marymount University, Los Angeles Robert D. Winsor, Loyola Marymount University, Los Angeles

SUMMARY a cost-benefit analysis [perceived value assessment], or an analysis of how well expectations were met [perceived Abstract satisfaction assessment]). Underlying these hypotheses is our premise that the high degree of elaboration associated In the face of competition for limited vacation and with these assessments makes attitudes more easily acces- leisure time, meeting planners and membership associa- sible and highly diagnostic. tions have traditionally been interested in how to attract new members and enhance attendance at organizational We were further interested in members’ intentions to conferences. This study empirically investigates mem- recommend a conference to others. By evaluating the bers’ intentions to attend organizational conferences us- relationship between attitudes regarding a conference and ing an accessibility-diagnosticity framework. Findings referral intentions for past attendees, and the relationship suggest that post-attendance attitudes are the most impor- between word-of-mouth information and attendance in- tant factors predicting intentions to (1) attend a future tentions for non-attendees, this study will provide an conference and (2) recommend the conference to others. empirical test of whether or not a reinforcing feedback Furthermore, what one has heard about the conference cycle exists for conference attendance. (i.e., the buzz) and one’s perceived congruence with the values of the organization are also found to be important Model, Methodology, and Results when predicting attendance intentions. Our base model incorporates three antecedent vari- Purpose of the Research and Hypotheses ables predicting attendance: perceived organizational congruence, word-of-mouth information, and attitude to- The purpose of this research is to investigate mem- ward the conference. In addition, this model includes bers of professional organizations regarding their inten- relationships between perceived organizational congru- tions to attend conferences. Toward this goal, we examine ence and attitude, and word-of-mouth information and three types of information that might be relevant to the attitude. An expanded model includes intentions to rec- formation of conference intentions. These are: (1) the ommend, and adds three direct relationships between member’s attitude toward the conference, (2) information perceived organizational congruence and referral inten- acquired through word-of-mouth (i.e., the conference tions, word-of-mouth information and referral intentions, buzz), and (3) the member’s perceived congruence with and attitude toward the conference and referral intentions. the values of the organization. We further utilize the accessibility-diagnosticity framework to provide a theo- A sample of 800 members of an organization for retical rationale for why the relative importance of these retired employees of a government agency was randomly three information types might differ between attendees drawn from the population of approximately 8,000 orga- (i.e., those members who have previously experienced nizational members, and mailed a questionnaire. The total one or more of the organization’s conferences) and non- number of useful and complete responses obtained was attendees. Specifically, it is hypothesized that for attend- 448, representing a 58 percent response rate. ees, attitudes toward the conference will be more diagnostic with regard to intentions to attend future conferences. Structural equation methodology was used to test the For non-attendees, conversely, their attitudes will be less hypothesized relationships. Results indicated that for the diagnostic, and therefore other information sources will sub-sample that had attended a recent conference, inten- be accessed and utilized. tion to attend a future conference was directly related only to one’s attitude toward the conference. In addition, In addition, it is hypothesized that for non-attendees, attendees’ attitudes toward the conference were found to attitudes will be formed primarily based on what they have be related to perceived organizational congruence and to heard about the conference, and from their general feel- information they received from word-of-mouth. The di- ings about the organization. For attendees, attitudes will rect relationship between one’s perceived organizational instead be formed upon more elaborative judgments (e.g., congruence and intention to attend was not found to be

American Marketing Association / Winter 2005 126 statistically different from zero. Neither was the relation- tion, and their attitude toward the conference. In addition, ship between word-of-mouth information and intention to one’s perceived organizational congruence and the infor- attend. Thus, for those who have attended, the effects of mation acquired through word-of-mouth were found to be perceived congruence and word-of-mouth information related to one’s attitude toward the conference. Again, the appear to be fully mediated by one’s attitude. direct relationship between the word-of-mouth information and intention to attend was not found to be significant, For the sub-sample without a recent conference expe- suggesting that this relationship is fully mediated by one’s rience, intention to attend a conference was directly re- attitude toward the conference. lated to one’s perceived congruence with the organiza-

For further information contact: Annie H. Liu College of Business Administration Loyola Marymount University One LMU Drive Los Angeles, CA 90045 Phone: 310.338.3039 FAX: 310.338.3000 E-Mail: [email protected]

American Marketing Association / Winter 2005 127 INFLUENCE OF OTHER CUSTOMERS: A SCALE DEVELOPMENT

E. Deanne Brocato, The University of Texas at Arlington, Arlington Susan B. Kleiser, The University of Texas at Arlington, Arlington

SUMMARY to create service environments where the customers that enter the environment are compatible. It makes intuitive Services literature has recognized the role customers sense that customers will “gravitate toward those service play as an integral part of the service environment (Baker environments with which they are most compatible” (Mar- 1987; Bitner 1992; Grove and Fisk 1997). Other custom- tin and Pranter 1989, p. 7). In line with compatibility, the ers in many instances can be viewed as part of the service visual characteristics (appearance, dress, gender, ethnicity) environment (Martin and Pranter 1989), since they are of other customers can have an influence on the service often required to share the same facility (Baker 1987). environment. Age, income, and social class have been Drawing on inference theory (Huber and McCann 1982), suggested as characteristics that should influence percep- other customers within a service environment provide tions of the environment (Baker 1987). Other patrons’ cues, which in turn are used by consumers to make behaviors can have profound effects on customers. Grove assessments of quality (Baker, Parasuraman, Grewal, and and Fisk (1997) found in an exploratory study at a theme Voss 2002). “The appearance, behavior, and number of park, behaviors of other customers affected consumer other customers and contact personnel can clearly affect both positively and negatively. For example, other cus- the way consumers perceive the service firm” (Baker tomers cutting in line and shoving during waiting for 1987, p. 79). The importance of service personnel has service created dissatisfying service encounters and wait- been documented in several studies (Parasuraman, ing in line with polite patrons led to satisfying encounters. Zeithaml, Berry 1988; Bitner 1992; Baker 2002), but In another exploratory study by Martin (1996), general there appears to be a gap in the extant literature concerning factors of behaviors were found to influence patrons’ the influence of other customers on the perceptions of evaluations of service satisfaction. service facility quality and ultimately on service evaluations, such as satisfaction. The lack of attention devoted to Scale Development the influence of other customers is surprising since many times “the number and duration of such c-c [customer to Scale items for the dimensions of compatibility, customer] encounters exceed that of employee-customer visual cues and behavior were generated drawing from encounters by an order of magnitude” (Martin and Clark services literature that has explored customer-to-customer 1996, p. 347). Furthermore, the presence of other custom- interactions (Martin and Pranter 1989; McGrath and Otnes ers in a service environment may influence, albeit directly 1995; Grove and Fisk 1997). Forty-one (41) items were or indirectly, one’s satisfaction (Martin and Pranter 1989). developed in order to capture the full conceptual domain In addition, frequent interactions among customers can of the construct. After item purification 11 items remained lead to either a more favorable or less favorable service in the model representing the three dimensions. Evidence experience depending on the type of interaction (e.g., was found for convergent and discriminant validities. friendly patrons, crying children, cursing, etc.). This pa- Also, all Cronbach’s alpha reliability coefficients exper sets forth to create the Other Customer Influence ceeded the .7 lower limit (Hair et al. 1998) with the (OCI) scale to measure the influence that other customers dimension reliability estimates ranging from .74 to .83. have on one’s evaluation of facility quality and ultimately on satisfaction with the service experience. Nomological validity was assessed by investigating the hypothesized paths between the three dimensions of Dimensions of Other Customer Influence OCI and the facility quality construct. The model fit was assessed and found to be sufficient: (GFI .90; AGFI .86; Drawing on services literature (Martin and Pranter CFI = .98; RMSEA = .065). The chi-square value was 1989; Grove and Fisk 1997; Martin and Clark 1996; significant (χ2 = 278.40, 128 df, p < .00), however this was McGrath and Otnes 1995; Baker 1987; Baker et al. 2002) expected due to the sample size (Marsh, Balla, and three dimensions of the Other Customer Influence (OCI) McDonald 1988). Positive links between compatibility construct are posited. These dimensions are compatibil- and behavior to facility were found to be significant (p < ity, visual cues and behavior. We define compatibility as: .05) as indicated by the positive gamma (γ) parameters. capable of existing or performing in harmonious, agree- The parameter linking visual cues and facility quality was able, or congenial combination with another or others. not found to be significant. Finally, the path from facility Martin and Pranter (1989) address the need for managers quality to satisfaction was significant.

American Marketing Association / Winter 2005 128 Discussion, Limitations, and Future Research of the service environment provides the justification for this new measure. This measure is a starting point for One study cannot provide sufficient evidence of a future investigations into the construct of OCI. Each valid measure. However, this study lays the foundation dimension should be investigated and expanded as more for the continuing process of construct validation. The empirical evidence is gathered. Continual refinement is evidence provided indicates the OCI scale is a valid needed for all measures and this measure is no different. measure. This measure provides marketers with the abil- The complexity of the construct necessitates the need for ity to determine how other patrons’ social factors influ- future research and investigation. References available ence evaluations of facility quality and service satisfac- upon request. tion. The recognition of other customers as an integral part

For further information contact: E. Deanne Brocato The University of Texas at Arlington Box 19469 Arlington, TX 76019–0469 Phone: 817.272.6765 FAX: 817.272.2854 E-Mail: [email protected]

American Marketing Association / Winter 2005 129 BEYOND JUST BEING THERE: AN EXAMINATION OF THE IMPACT OF ATTITUDES, MATERIALISM, AND SELF-ESTEEM ON THE QUALITY OF HELPING BEHAVIOR IN YOUTH VOLUNTEERS

Elten Briggs, University of Oklahoma, Norman Tim Landry, University of Oklahoma, Norman Charles Wood, University of Tulsa, Tulsa Todd Arnold, Oklahoma State University, Stillwater

SUMMARY H2a: The negative relationship between materialism and the decision to volunteer is mediated by atti- Young people represent a strong and growing source tude towards the task. of volunteers for not-for-profit organizations (NPO), and represent an important focus for NPO marketing efforts. H2b: The negative relationship between materialism Therefore, it is in the long-term interests of NPOs that they and goal setting is the mediated by attitude towards develop a better understanding of teenage volunteerism. the task. Despite the importance of the topic, research concerning the volunteer sector in the marketing literature has been H3a: The relationship between self-esteem and the deci- scant historically (Bendapudi, Singh, and Bendapudi 1996; sion to volunteer is mediated by attitude towards Fisher and Acherman 1998; Wymer and Starnes 2001), the task. and no marketing studies have focused on the challenges faced by charitable organizations in their efforts to attract H3b: The relationship between self-esteem and goal and solicit quality help from youth volunteers. setting is the mediated by attitude towards the task.

The present study attempts to bridge this gap by Questionnaires were administered by mail to a na- examining the determinants of helping behavior in a tional sample of youth who had received marketing mate- sample of youth volunteers involved in a task requiring rials asking them to participate in a fundraising effort for significant self sacrifice. We hypothesize that attitudes an international relief organization that involved fasting – toward this task will mediate the effect of other individual i.e., not eating solid food for 30 hours. The respondents’ variables on the quality of the helping behavior received attitudes towards the organization and towards the by the NPO. Based on the conceptualization of helping fundraising task were measured by instructing the respon- behavior forwarded by Bendapudi, Singh, and Bendapudi dent to “Please mark an “X” on the space that best (1996), we consider two distinct dimensions of helping describes your honest attitudes or feelings about each of behavior – help vs. no help and token help vs. serious help. the following.” The fasting task and the name of the The first of these dimensions is captured by the variable organization were each followed by a five-point scale participation, which indicates whether or not the respon- anchored by “negative” and “positive.” Materialism dent chose to take part in the fast; and the second of these (MAT) and Self-Esteem (SES) were both measured using dimensions is captured by the variable goal-setting, which established scales. In order to test our hypotheses we indicates whether or not the individual set a fundraising followed the procedure outlined by Barron and Kenney goal. We examine three primary independent variables of (1986) for testing mediation. This test entails three steps: interest that have been theorized to play key roles in (1) regress the independent variable on the mediator, (2) determining volunteer behavior and that should be espe- regress the independent variable on the dependent vari- cially relevant for better understanding teens’ charitable able, and (3) regress both the independent and mediator on participation: (1) their attitudes towards the organization, the dependent variable. Four of the six anticipated rela- (2) their level of self-esteem, and (3) their level of mate- tionships were supported: H1a, H1b, H2a, and H3b. A rialism. Our hypotheses are as follows: task was consistently a significant predictor of both helping behavior dependent variables. H1a: The relationship between attitude towards the organization and the decision to volunteer is medi- Our findings indicate that for NPOs marketing to ated by attitude towards the task. youth for involvement in volunteer projects, even if teens think highly of an organization, the choice of the task is H1b: The relationship between attitude towards the or- crucial to their participation and their commitment to ganization and goal setting is the mediated by fundraising. For NPOs recruiting teens that are likely to be attitude towards the task. higher in materialism, the nature of the task or activity

American Marketing Association / Winter 2005 130 needs to be interesting and compelling enough to get them relationship between helping behavior quality and self- to join in. However, once they have joined the activity, esteem becomes more pronounced upon the decision to attitudes toward the fundraising task do not appear to be participate in a volunteer task, but in our context, self- enough for them to follow-through with actual fundraising esteem was not predictive of the initial decision to volun- activities. Finally, our results seem to imply that the teer.

For further information contact: Elten Briggs University of Oklahoma 307 West Brooks, Room 10A Norman, OK 73019 Phone: 405.325.4675 FAX: 405.325.7688 E-Mail: [email protected]

American Marketing Association / Winter 2005 131 A CROSS-CULTURAL EXAMINATION OF THE RELATIONSHIP BETWEEN MATERIALISM AND INDIVIDUAL VALUES

William Kilbourne, Clemson University, Clemson Marko Grünhagen, Southern Illinois University at Edwardsville, Edwardsville Janice Foley, University of Regina, Regina

SUMMARY incentives were given. The final sample was 46 percent female and 54 percent male. Interest in materialism and its implications is apparent as far back as the early Greek philosophers. Pythago- Following Roberts, Manolis, and Tanner (2003), ras, for example, required that students relinquish their materialism is represented as a second order factor model personal possessions before entering his school. Rudmin with success, centrality, and happiness as first order latent and Kilbourne (1996) provide an historical view of differ- constructs. Second, the model suggests that self-transcen- ent attitudes toward materialism from the ancient world to dence values will be inversely related to materialism, and the modern. Marketing scholars recently returned to an self-enhancement values will be positively related to assessment of materialism in contemporary societies. materialism. The model will be tested across three cul- While some studies have remained critical of consump- tures, Germany, Canada, and the U.S., using the proce- tion practices, referring to materialism as a “dark side” dures suggested by Steenkamp and Baumgartner (1998). variable (Mick 1996), others have suggested that materialism might have positive aspects as well (Holt 1997). Both the measurement model and the structural mod- Despite the many examinations of materialism, it remains el were tested for invariance across the samples. In these unclear how it relates to other aspects of life. tests, five statistics were used with standard cutoff criteria as suggested by Hair et al. (1998). In addition, successive- Burroughs and Rindfleisch (2002) argue that the ly constrained models were subjected to sequential Chi nature of materialism needs to be clarified, and that more square difference tests to determine if the constrained researchers are beginning to examine it in the context of model fit the data as well as the baseline model. other life goals and values. While there have been many definitions of materialism, what they have in common is The analysis required that the structural model pro- that they reflect the use of consumption to acquire more posed be tested. This was done as suggested by Byrne than instrumental or use value in the things purchased. (1999), maintaining the invariances established in the Collectively, the definitions suggest that the individual measurement models in the initial structural model. Be- seeks a relationship with objects through which she or he cause the measurement model for materialism was invari- is enhanced in some way. ant, it was included as a fully constrained measurement model across the three countries. The values measurement Moschis and Chruchill (1978) and Richins (1987) model was fully invariant except for the covariances that have measured materialism as an attitude structure focus- were partially invariant with the German sample left free ing on the meaning of possessions to the individual. The to vary. The final structural model was tested first for model developed here depicts materialism as an attitude overall fit across countries and satisfied all criteria used. structure that is influenced by the individual values of In addition, the sequential Chi Square Difference Test self-enhancement and self-transcendence as used by yielded a p-value of 0.74 indicating that the constrained Schwartz (1994). model predicted as well as the original model. We concluded that the structural model was invariant across Methods countries as predicted.

The sample for the study consisted of university The path coefficients for the structural model were students from Canada, Germany and the U.S. There were consistent with the hypotheses established. The coeffi- 168, 139, and 97 respondents respectively from the three cient from self-transcendence to materialism was -0.21 countries. Canadian students completed and returned the (p < 0.01) indicating the negative relationship hypothe- questionnaire in class, and U.S. and German students sized. The result was consistent across the three countries. completed the questionnaire outside of class and returned The coefficient from self-enhancement to materialism it the next week. All participation was voluntary and no was 0.70 (p < 0.01) demonstrating the positive relationship hypothesized. This result also held across the three samples.

American Marketing Association / Winter 2005 132 Conclusions that the materialism scale is a measure of attitudes toward consumption rather than a true value labeled as material- There are two main conclusions to be drawn from the ism. The hypothesized causal sequence was individual study. The results of the analysis indicate that the reduced values having an effect on attitudes toward materialism. form of the materialism scale produces a valid second The results indicated that the proposed causal model had order factor model of materialism. The latent constructs an acceptable fit on all criteria. In addition to this, the are happiness, centrality, and success and the model was causal model was demonstrated to be invariant across all shown to be invariant across countries. three countries. The relationship between self-transcen- dent values and materialism was negative, and the rela- The second objective or the study was to determine tionship between self-enhancement values and material- the causal sequence for values and materialism assuming ism was positive as hypothesized.

For further information contact: William Kilbourne Department of Marketing Clemson University Clemson, SC 29634 Phone: 864.656.5296 FAX: 864.656.0138 E-Mail: [email protected]

American Marketing Association / Winter 2005 133 M.E.A.L. TIME: HOW NUTRITIONAL DISCLOSURE AFFECTS GENDER EVALUATIONS OF FAST FOOD MENU ITEMS

Kenneth W. Bates, University of Arkansas, Fayetteville Kyle A. Huggins, University of Arkansas, Fayetteville

SUMMARY show that consumers may be able to distinguish differences between relatively healthy and non-healthy items, Obesity has become a major health concern for many but they are generally unaware of the large degree to citizens in the United States, and it is an issue, that which many items are unhealthy. This, in conjunction according to the CDC, has reached epidemic proportion with the decline in purchase intention for unhealthy items (Manson and Bassuk 2003). It has been projected by the when nutrition information is provided, suggests benefits United States Department of Health and Human Services from nutritional disclosure in dinner house restaurants. that obesity will soon overtake tobacco as the leading cause of preventable death in the United States and will While these are important findings for dinner house offset many of the medical advancements made in dis- restaurants, we believe the fast food industry is an equally eases such as cancer, diabetes, and heart disease (U.S. important arena for exploration. The National Restaurant DHHS 2001; Manson and Bassuk 2003). Due to these Association projects that $123.9 billion will be spent on recent developments many policy makers, public-interest quick service dining in 2004 (National Restaurant Asso- groups, and concerned citizens have turned their focus ciation 2004). While Burton and his colleagues (2004) upon the restaurant industry. In the last thirty years, the assessed the effect of nutrition disclosure on purchase amount of money spent on food purchases outside-the- intention and choice, we propose that significant gender home has risen 20 percent and accounts for almost half of differences will be found within fast food item evalua- American’s total yearly expenditures on food (Lin, Frazão, tions and choice. and Guthrie 1999). The correlation between increases in restaurant patronage and obesity has created concern There has been a substantial amount of research about the healthiness of restaurant menu items, and propo- stressing the importance of physical appearance and at- sitions have been made that Congress should extend the tractiveness, especially the importance that it holds for Nutrition Labeling and Education Act (NLEA) to include females (e.g., Cash, Winstead, and Janada 1986; Bar-Tal restaurant menu items. The Menu Education and Labeling and Saxe 1976; Richins 1991). According to Hirschman Act (MEAL) of 2003 in Congress requires restaurant (1987), women’s personal value is much more likely to be chains with twenty or more outlets to list key nutrition determined by physical attractiveness while males will be information (DeLauro 2003), and the FDA has initiated evaluated on a wider range of attributes. In 1992, Myers preliminary discussions about possible national standards and Biocca found that watching only 30 minutes of for the provision of nutrition information for restaurant television programming and advertising can alter a young foods (Mathews and Leung 2003). Any ruling that man- woman’s perception of her body. Empirical studies have dates the provision of nutrition information at restaurants also found that women are more concerned about their will have profound financial, tactical, and strategic impli- physical appearance than men (Burton, Netemeyer, and cations for retailers in the restaurant industry. Lichtenstein 1995); young women frequently compare themselves with idealized advertisement models, and the Given the importance of this issue to public policy amount of comparison is negatively correlated with satis- makers and restaurant industry managers, our research faction of one’s physical appearance (Richins 1991). extends recent findings related to nutrition disclosure in Therefore, in light of this stream of literature, it seems table service restaurants to the fast food industry. Burton appropriate to investigate gender effects within the pa- et al. (2004) found that consumers significantly underes- tronage of quick service restaurants. timate the nutritional content of items that are higher in calories, fat, and sodium while estimations of relatively Overall, fast food results model that of dinner house healthier items were far closer to actual nutrient levels. restaurants as respondents’ estimations of calorie, fat, and When item nutrition levels were actually provided, re- sodium levels in fast food items are generally inconsistent spondents significantly decreased in their purchase inten- with actual levels. As items become higher in unhealthy tion for items inconsistent with nutrient estimates (rela- attributes, consumers significantly underestimate objectively unhealthier items) and either showed no effect or tive nutrient levels. Of concern to the MEAL proposition, increased purchase intention for items consistent with consumers are also unable to predict, with any increased nutrition estimates (relatively healthier items). Results accuracy, the levels of fat or sodium in an item when

American Marketing Association / Winter 2005 134 caloric content alone is provided. While consumers may condition (provided information on calories, fat, and know that higher calories are positively related to higher sodium), males and females both significantly decrease saturated fat and sodium levels, they do not appear to their frequency of choosing these items. Although males make accurate predictions of these levels from calories still choose the unhealthy items 47 percent of the time alone. compared to women at only 5 percent, this provides empirical support for requiring nutrition disclosure. Due Findings also indicate that males generally visit fast to the preference exhibited by males for unhealthier items food establishments more often than females, have more and the significant effect of nutrition condition on item positive attitude towards unhealthy items, and choose content favorability and purchase intentions, the level of them more frequently. As expected, when no nutrition nutritional disclosure could potentially have a large im- information is provided, males select unhealthy items pact upon the male gender. References available upon nearly 70 percent of the time as opposed to women at only request. a quarter of the time. However, under the full nutrition

For further information contact: Kenneth W. Bates Marketing and Logistics Department Sam M. Walton College of Business, 302 BADM University of Arkansas Fayetteville, AR 72701 Phone: 479.575.4055 FAX: 479.575.8407 E-Mail: [email protected]

American Marketing Association / Winter 2005 135 UNLOCKING VALUE THROUGH CUSTOMER EDUCATION

Thorsten Hennig-Thurau, Bauhaus-University of Weimar, Germany Peter C. Honebein, University of Nevada, Reno Benoit Aubert, Grenoble Ecole de Management, France

SUMMARY the product’s consumption and, ultimately, its disposal. The overall customer value of a product is the totality of Vargo and Lusch (2004) argue that it is the customer values realized across these different stages. who eventually determines the value of a product by using it, not the producer by manufacturing and distributing it. Second, the customer value delivered by a product Specifically, the customer “must learn to use, maintain, over the different phases is the result of a joint effort of the repair, and adapt the appliance to his or her unique needs, producer and the consumer. Both parties’ actions and usage situation, and behaviors” (Vargo and Lusch 2004, competence are indispensable for generating customer p. 11). The question we address in this research is derived value in each phase. In the joint value creation framework, directly from this shifting of the focus of value production manifest products carry the potential for a certain level of from the producer to the customer: How can the producer customer value, with this potential being innovated and ensure that there is not only value potential embedded in implemented by the producer in its laboratories and facto- its goods, but also that this value potential will be un- ries, respectively. The level of value production can be locked appropriately by the customer during product increased by an active role of the customer in these phases. usage? Customer Education Model In this research, by drawing upon the literature of customer-as-coproducer from service research, we present As illustrated in the joint value creation framework, the idea of a joint value creation process between produc- customers hold the key to unlocking post-purchase value ers and consumers for the context of consumer goods. We through the preparation, use, and disposition of products. then illustrate how the use of customer education, referred To aid the customer, companies offer supporting activi- to as a company’s measures and actions that are targeted ties, such as customer education, which ensure customers at the development of post-purchase related customer have the necessary skills to perform key value-driven knowledge and skills, can impact key company outcomes, tasks. We offer a conceptual model that predicts the such as customer satisfaction, trust, and loyalty. effects of unlocking value through customer education on product satisfaction, company satisfaction, customer trust Joint Value Creation in the firm, and customer loyalty (see Figure).

Organizations should endeavor to increase the com- From a conceptual standpoint, our research suggests petence of customers that is needed by the customer to that customer education can be a catalyst for increasing stimulate full use of a product during consumption. We customer loyalty. Through the acquisition of skills, we suggest a joint value creation framework should serve as expect customers to use products more intensely, which the theoretical basis for the customer education concept leads to greater product performance and increased prod- since it demonstrates how customer value is created. uct satisfaction. Additionally, we believe customer education also influences the customer’s satisfaction and trust The framework is founded on two basic axioms. with the company. The combination of customer satisfac- First, it is presumed that the generation of customer value tion, company satisfaction, and company trust is what represents a multi-stage process, which starts with the ultimately leads to customer loyalty. Future research generation of the product idea, continues with the devel- should examine the link between customer education and opment and production of the product, and finalizes with customer loyalty.

American Marketing Association / Winter 2005 136 FIGURE

For further information contact: Thorsten Hennig-Thurau Department of Marketing and Media Research Bauhaus-University of Weimar Bauhausstr. 11 99423 Weimar Germany Phone: +49.3643.58.3822 FAX: +49.3643.58.3791 E-Mail: [email protected]

American Marketing Association / Winter 2005 137 ORGANIZATIONAL LEARNING AND DYNAMIC MARKETING CAPABILITIES: IMPLICATIONS FOR ORGANIZATIONAL PERFORMANCE

Linda M. Foley, University of Mississippi, University Douglas W. Vorhies, University of Mississippi, University Victoria D. Bush, University of Mississippi, University

SUMMARY to both academics and practitioners. For example, why are some firms better at adapting to change than others? What Increasingly, the dynamic capabilities view is being business processes and routines must be in place to allow utilized as a favored approach to understanding a firm’s firms to adequately adjust to modifications in consumer competitive advantage. The dynamic capabilities view preferences, economic, or other environmental condi- builds on the previous resource based view of the firm by tions? How do firms generate continual and successful supplementing its strengths while simultaneously recog- innovative thinking? How does this internal reconfigura- nizing its weaknesses (Priem and Butler 2001; Eisenhardt tion to adapt to external changes affect overall business and Martin 2000; Teece, Pisano, and Schuen 1997). This performance, from both a perspective of financial out- emerging capabilities literature realizes that the posses- comes and positions of advantage? And, finally, how do sion of rare, imperfectly imitable, and valuable resources specific marketing functions such as customer relation- is an important step to build competitive advantage. ship and brand management play into outcomes like However, dynamic capabilities also address the develop- customer satisfaction and brand equity from a dynamic ment and deployment of these resources and how resourc- capabilities perspective? es are integrated together within a firm (Barney, Wright, and Ketchen 2001; Day 1994). The dynamic capabilities This paper attempts to answer the above questions by “view recognizes that the deployment of resources through integrating dynamic capabilities into a single unified these organizational processes may better explain firm framework. In order to do so, we classify and subdivide performance variations than absolute resource levels in the various levels of organizational routines and process- driving firm performance” (Ray, Barney, and Muhanna es into lower and higher order capabilities constructs. 2004). Since the addition of the word “dynamic” to the term “dynamic capabilities” implies learning through recon- Due to its inherent advantage, researchers have stud- figuration, development, and integration, it was necessary ied this important concept (e.g., Teece, Pisano, and Schuen to integrate the organizational learning literature into the 1997; Day 1994). However, despite all the recent atten- framework presented here. tion, little research has been conducted with specific regard to dynamic capabilities and marketing. Since mar- This paper contributes to academia by tying market- keting processes are constantly undergoing adaptations ing capabilities to the financial performance of the firm, that parallel the changes in consumer preferences and the which is a topic which has had numerous calls for research environment as a whole, it is extremely important to (e.g., Srivastiva, Shervani, and Fahey 1998) including a understand marketing processes in a dynamic context. recent edition of the Journal of Marketing devoted to understanding this relationship. Additionally, the frame- A better understanding of marketing capabilities may work was also developed based on qualitative interviews lead to the ability to answer some fundamental questions with key informants in marketing organizations.

REFERENCES gerial Representations of Competitive Advantage,” Journal of Marketing, 58 (April), 31–44. Barney, Jay, Mike Wright, and David J. Ketchen, Jr. Eisenhardt, Kathleen M. and Jeffrey A. Martin (2000), (2001), “The Resource-Based View of the Firm: Ten “Dynamic Capabilities: What Are They?” Strategic Years After 1991,” Journal of Management, 27, Management Journal, 21, 1105–21. 625–41. Priem, Richard L. and John E. Butler (2000), “Is the Day, George S. and Prakash Nedungadi (1994), “Mana- Resource-Based ‘View’ a Useful Perspective for

American Marketing Association / Winter 2005 138 Strategic Management Research?” Academy of Man- Srivastava, Rajendra K., Tasadduq A. Shervani, and Liam agement Review, 26 (1), 22–40. Fahey (1998), “Market-Based Assets and Sharehold- Ray, Gautam, Jay B. Barney, and Waleed A. Muhanna er Value: A Framework for Analysis,” Journal of (2004), “Capabilities, Business Processes, and Com- Marketing, 62 (1), 2–18. petitive Advantage: Choosing the Dependent Vari- Teece, David J., Gary Pisano, and Amy Shuen (1997), able in Empirical Tests of the Resource-Based View,” “Dynamic Capabilities and Strategic Management,” Strategic Management Journal, 25 (1), 23–38. Strategic Management Journal, 18 (7), 509–33.

For further information contact: Linda M. Foley Department of Marketing School of Business Administration University of Mississippi University, MS 38677 Phone: 412.401.2662 FAX: 412.481.3160 E-Mail: [email protected]

American Marketing Association / Winter 2005 139 ADOPTING RFID TECHNOLOGY: DOES THE MANAGER’S ATTITUDE MATTER?

Gilbert N. Nyaga, Michigan State University, East Lansing Roger J. Calantone, Michigan State University, East Lansing Thomas J. Page, Michigan State University, East Lansing

ABSTRACT to address this gap by underscoring the importance of managers’ attitude toward RFID adoption. This paper explores the mediating role of manager’s attitude, subjective norms, and perceived behavioral con- LITERATURE REVIEW trol in the adoption of RFID technology. Moderating variables are also examined. Strategic and theoretical Radio-Frequency Identification (RFID) Technology implications are discussed. The examined antecedents are posited to have significant influence on RFID adoption. RFID consists of a passive radio-frequency tag with a printed antenna and a radio-frequency (RF) emitter/ INTRODUCTION reader. The tag emits a signal using energy derived from the RF emitter/reader. The tag stores detailed product Advances in technology have made the need for information and is attached to a product or pallet, with companies to implement new systems that improve busi- each tag specifying a unique product identification code ness process performance a continuous imperative. How- (Rutner et al. 2004). Currently the RFID signal range is a ever, decision makers in organizations are not always few meters, but with continued advances in technology, willing to implement or adopt new technologies or to do the range is likely to increase tremendously. Use of RFID so early. This unwillingness maybe due to shortage of enables more accurate inventory management, fewer stock- funds, lack of appreciation of the technology’s potential, outs, and less product loss throughout the supply chain. or even outright negative attitude toward new technology. As a result, most retailers including Wal-Mart, Target, This study seeks to understand how managers’ attitude and Albertsons as well as the Department of Defense have toward a new technology, radio-frequency identification imposed deadlines for their suppliers to begin shipping (RFID), influences their decisions to implement, delay, or RFID-tagged pallets and cases (Bednarz 2004). reject its adoption. RFID is the latest technology byword in supply chain management. Manufacturers, wholesal- RFID can be deployed in anything that can be tagged, ers, retailers, and third party firms are seeking to leverage which means that RFID can be used in very diverse the advantages brought about by the RFID technology. industries and data management systems. For instance, in Yet, there are marked differences in the deployment of the the tire industry, RFID chips that are smaller than the size technology among firms, especially with respect to the of a rice grain can be embedded into new tires, which attitude of managers mandated to evaluate and implement enables association of the tire with a specific vehicle, store RFID adoption. a 12-character coding for a number required by the U.S. Department of Transportation, and indicate when and There exists a significant body of research on the where the tire was manufactured (Faber 2002). Both big reasons why people accept or reject new technological and small firms are implementing RFID technology. For systems (Davis et al. 1989). Most studies are premised on example, a fairly small company, Beaver Street Fisheries theories and models borrowed from social psychology is using RFID to track cases and pallets of fish and more (Davis 1986; Swanson 1987). In this study, the theory of exotic fare-including alligator and turtle meat at the com- reasoned action (TRA) and its two variants, the theory of pany’s seafood-processing and packing plant (Sullivan planned behavior (TPB) and the technology adoption 2004). model (TAM) are used. Extant literature shows that stip- ulations of these theories have been applied, directly or In spite of the demonstrable benefits, some managers indirectly, in examining the impact of an individual’s are less than enthusiastic about implementing RFID tech- attitude on behavioral intention, and subsequently ob- nology. One of the reasons is that it is a costly investment. served behavior (Eagly and Chaiken 1993). Most studies Generally, the cost of implementing RFID ranges from on technology adoption tend to focus on end users (Davis $100,000 to several millions (Sullivan 2004). A market et al. 1989) while ignoring the role of manager’s involved study by The Aberdeen Group shows that most of the in implementation of those technologies. This study seeks polled company officials believe that deploying RFID

American Marketing Association / Winter 2005 140 will add costs and significantly erode their profit margins individual’s belief about the extent of difficulty or ease of (Cooke 2002). Other concerns include lack of RFID performing the behavior (i.e., implementing RFID). It is standardization and security/privacy issues. Managers are a measure of a person’s perception of his or her control concerned that some RFID deployments may not be over factors necessary to carry out the behavior (Hill et al. compatible with those of supply chain partners. Indeed, 1996), and is expected to reflect past experiences as well big firms such as Kimberly-Clark, Target, and Wal-Mart as anticipated impediments and obstacles (Doll and Ajzen have been pressing for adoption of standards on what is 1992). Examining managers’ perceived behavioral con- included in RFID chip and how readers and tags commu- trol as an antecedent of intention to adopt new technology nicate (Bacheldor and Sullivan 2004). can help better understand RFID adoption.

Theories TAM is an adaptation of TRA, which aims at providing a basis for tracing the impact of external factors on The theory of reasoned action (TRA) (Ajzen and internal beliefs, attitudes, and intentions (Davis et al. Fishbein 1980) is a very general model that has been 1989) and is specifically tailored for modeling user accep- subjected to several adaptations. These include Davis’ tance of information systems (Phillips et al. 1994). Ac- (1986) technology adoption model (TAM) and the theory cording to TAM, the key determinants of acceptance of planned behavior (TPB) (Ajzen 1980). These theories behavior are perceived usefulness and perceived ease of have been shown to provide a robust analysis of the use. Perceived usefulness refers to the prospective user’s attitude-behavior intention relationship. In this study, subjective probability that using a specific application antecedents of attitude toward technology adoption pos- system will increase his/her job performance in an orga- tulated in TAM, and antecedents of behavioral intention nizational context. Perceived ease of use (EOU) reflects posited in TRA and TPB are integrated to develop a model the potential difficulties in transferring and utilizing the of RFID adoption. new technology both by the adopting firm and individuals expected to use it (Phillips et al. 1994). TAM stipulates TRA stipulates that an individual’s performance of a that people form intentions to perform behaviors that they behavior is determined by his or her behavioral intention have positive affect. For instance, people form intentions (BI) to perform the behavior, and that BI is jointly deter- toward using computer systems based largely on their mined by the person’s attitude and subjective norms cognitive appraisal of how the computer system will concerning the behavior in question (Ajzen and Fishbein improve their performance. TAM offers a base for exam- 1980; Davis et al. 1989). BI is a measure of strength of ining antecedents of managers’ attitude toward deploying ones intentions to perform a specified behavior while RFID. attitude refers to the degree to which a person has favorable or unfavorable evaluation of the behavior in ques- CONCEPTUAL MODEL AND HYPOTHESES tion. Subjective norm (SN) is a person’s perception that people who are important to him/her think that he/she The preceding literature review highlights several should or should not perform the behavior (Ajzen and variables that have a bearing on a manager’s attitude and Fishbein 1980; Hill et al. 1996). Extant literature on behavioral intention with respect to implementing RFID adoption identifies several salient referents including top in their organizations. Each of the three models, TRA, management, supervisors, the organization’s MIS depart- TPB, and TAM, provides some bases for understanding ment, technology experts, and peers. Attitude toward a technology adoption. Thus, this study integrates stipula- behavior is determined by an individual’s salient beliefs tions of the three models to develop the model shown in about consequences of performing the behavior (i.e., Figure 1. adopting RFID technology) multiplied by the subjective values or evaluations of those consequences (i.e., impact As argued in TAM, perceived usefulness and per- of RFID technology). Beliefs refer to an individual’s ceived ease of use are stipulated to influence managers’ subjective probability that performing the target behav- attitude toward RFID technology adoption (Davis et al. ior, in this case deploying the RFID technology, will result 1989; Adams et al. 1992; Phillips et al. 1994). In the case in a given consequence. TRA has been applied widely and of RFID adoption, perceived usefulness refers to per- provides a useful framework for this study. ceived RFID utilities for the organization. It is conceptualized in terms of costs and benefits of RFID technology TPB is an extension of TRA, which seeks to address compared to current technology (i.e., technology in use limitations in TRA with respect to behaviors over which that is to be replaced). For instance, if a firm has bar coding people have incomplete volitional control (Ajzen 1985; technology in place and wishes to adopt RFID, the man- Doll and Ajzen 1992). TPB stipulates that besides attitude ager will compare the costs of implementing RFID (actu- and subjective norms (as stipulated in TRA), another al, purchase cost, installation costs, employee training factor, perceived behavior control is predictive of behav- costs, etc.) and expected benefits (i.e., asset management, ioral intentions. Perceived behavioral control refers to an error reduction, supply chain collaboration, etc.) against

American Marketing Association / Winter 2005 141 FIGURE 1 Conceptual Model

Perceived usefulness H1 of RFID Manager’s attitude toward adopting RFID H4

Perceived ease of use Behavioral intention H2 Manager’s subjective and implementation H5 about adopting of RFID norms toward adopting RFID RFID H6 Normative beliefs and H3 motivation to comply Manager’s perceived with referent behavioral control on adopting RFID H7a,b,c

Moderators ♦ Manager’s experience ♦ Firm size

the costs and benefits of bar coding. If the gap between Managers’ normative beliefs and motivation to com- these is significantly large (i.e., RFID is more effective ply with referents are stipulated to influence subjective than bar coding), then the manager can justifiably seek norms and subsequently behavior intention (Ajzen and RFID implementation. Whether a firm adopts RFID tech- Fishbein 1980; Davis et al. 1989). Referents expected to nology or not is likely to be influenced by the manager’s exert influence on managers adopting RFID include sup- cognitive evaluation of the gains from the implementa- ply chain partners, senior managers, consultants, etc. For tion. Thus, it is hypothesize that: instance, recommendations by highly reputed consultants as well as advice by experienced executives held in high

H1: Perceived usefulness has a direct and positive effect esteem by a manager may motivate the manager to under- on the manager’s attitude toward RFID adoption. take a specific business function, in this case, deploying RFID technology. Furthermore, if supply chain partners Perceived ease of use is conceptualized in terms of and competitors are deploying RFID, then managers will extent of difficulty, time, and learning costs associated most likely follow suit. Thus, it is hypothesized that: with changing from the current system to RFID technology. If RFID deployment is perceived to be cumbersome H3: Manager’s normative beliefs and motivation to com- and difficult, or inconveniencing to supply chain partners, ply with a referent have direct effects on his/her then it is expected that managers might be hesitant to subjective norms toward RFID adoption. implement it. However, if the deployment is perceived to be less involving, then managers might be inclined to The manager’s attitude toward implementation of readily implement it. Moreover, the cost of training em- RFID is posited to be a major determinant of whether or ployees on how to use RFID can be high and time not he/she executes RFID deployment. Attitudes develop consuming. Learning costs can also include the negative from beliefs that people hold about the object of the performance implications of technology changeover and attitude (Doll and Ajzen 1992). It is expected that if potential losses in the process of replacing the current managers strongly believe that implementing RFID in system with RFID. These costs could influence manag- their organization will culminate in improved process ers’ attitude toward RFID adoption. Thus, it is hypothe- performance and better coordination with supply chain sized that: partners, they are likely to develop favorable attitudes toward RFID. However, if their RFID evaluation is neg-

H2: Perceived ease of use has a direct and positive effect ative, then we expect that their attitude toward RFID on the manager’s attitude toward adopting RFID. implementation will be negative. This is expected to

American Marketing Association / Winter 2005 142 impact on their behavioral intentions and subsequently experience with a practice differentially affects their atti- decisions to either implement or not implement the RFID. tudinal and normative beliefs, which in turn influences Thus, it is hypothesized that: their intention to continue or introduce a practice. Doll and Ajzen (1992) concluded that experience with behavior

H4: Manager’s attitude toward RFID technology has a increased the overall predictiveness of attitude, subjective direct and positive effect on intentions to adopt RFID. norm, and perceived behavioral control on behavior intention. Subjective norms have been shown to influence behavioral intention (Ajzen and Fishbein 1980; Hill et al. Firm size has also been stipulated as a moderator. In 1996; Karahanna et al. 1999). In the case of RFID adop- their international study of attitudes toward adoption, tion, it is expected that manager’s subjective norms as Bunker and McGregor (2002) suggest that contextual determined by normative beliefs and motivation to com- variables such as firm size and business type are the most ply with referents will have a strong influence on technol- influential factors. Indeed, they report that skill-based ogy deployment. These norms may arise from available (experience) factors have lesser influence on adoption information (i.e., trade journals, business magazines, con- than contextual factors (i.e., firm size, business type). sultant reports, etc.) or desire to conform to expectations Sillence et al. (1998) also reported size of business as an of senior managers, experts, and/or supply chain partners. influential factor in adopting e-commerce. In small firms Thus, it is hypothesized that: faced with resource constraints, RFID implementation may not be the highest priority project. However, in large

H5: Manager’s subjective norm toward RFID has a direct firms with greater resource endowment, RFID implemen- and positive effect on intention to adopt RFID. tation may be easily accomplished. Moreover, the influence of trading partners may be more intense (i.e., Wal- Perceived behavior control, according to Ajzen Mart’s requirement that its top 100 suppliers adopt RFID). (1991), can influence whether people choose to pursue an outcome, their degree of preparation, the effort they From these studies, it can be argued that managers’ expend, their perseverance, as well as the thoughts and past experience in implementing new technology and firm emotions experienced during the task. Thus, the extent to size will increase the predictive power of antecedents of which manager’s view themselves as capable of imple- behavioral intention (attitude, subjective norm, and per- menting RFID, both in terms of mandate to oversee RFID ceived behavior control). In other words, the three ante- implementation and possession of requisite skills, will cedents will more strongly predict intention to implement influence their behavioral intention. Moreover, as Doll RFID among managers with experience in implementing and Ajzen (1992) state, beliefs dealing with presence or new technologies than those with no prior experience, and absence of required resources and opportunities to per- in bigger firms than in small firms. Thus, it is hypothesized form a specific behavior are perceived to dictate per- that: ceived behavioral control. It is expected that the more resources and opportunities a manager has, the greater H7: The influence of (i) attitude, (ii) subjective norms, should be their perceived behavioral control over RFID and (iii) perceived behavioral control on intention to adoption. Consequently, greater perceived behavioral adopt RFID technology increases with: control is expected to lead to greater intention to adopt RFID. Thus, it is hypothesized that: a. Increases in manager’s experience in new technology adoption

H6: Manager’s perceived behavioral control on RFID deployment has a direct effect on intention to adopt b. Increases in firm size RFID. METHOD Moderators of Attitude-Behavior Relationship To test the proposed model, data can be collected Past studies employing TPB have shown that situa- using a survey questionnaire directed to senior logistics tional and personal factors moderate the relationship officials involved in the new technology implementation between attitude, subjective norm, perceived behavioral process. The study sample can be selected from member control, and behavior intention (Doll and Ajzen 1992; Hill list of appropriate industry associations such as the Coun- et al. 1996; Ajzen 2001). For instance, in a study of cil of Logistics Management. Mail surveys can be effec- competitive benchmarking intentions among managers, tive in collecting required data. To measure the constructs Hill et al. (1996) found out that attitude has stronger effect stipulated in the study, tested and validated measures in for more experienced managers than less experienced extant literature could be adapted. For perceived useful- managers. They posit that managers’ experience or lack of ness and perceived ease of use of RFID, Davis’ (1989)

American Marketing Association / Winter 2005 143 technology acceptance scale could be adapted with mod- RFID’s implementation is expected to attract inputs from ifications to make them relevant to RFID deployment. diverse quarters including industry pundits, supply chain Measures of attitude and subjective norms could be adapt- partners, managers’ peers, and top echelons of firm’s ed from TRA scale (Ajzen and Fishbein 1980) while management hierarchy. However, extant literature has perceived behavioral control construct measures could be not given much attention to this fact. This study therefore adapted from Ajzen’s (1985) TPB scale. Behavioral in- raises an issue of practical and theoretical import, which tention construct measures have been developed in all calls for further investigation. three theories (Ajzen and Fishbein 1980; Ajzen 1985; Davis 1989). The scales entail asking the respondents to Third, the study implicitly extends the theory of indicate the extent to which they agree or disagree with reasoned action to supply chain research. In examining an statements concerning the subject of interest on a seven- issue that has widespread impact on the supply chain, the point Likert scale anchored with 1 = “Strongly Disagree” study serves to open new frontiers for TRA, TAM, and and 7 = “Strongly Agree” (Ajzen and Fishbein 1980; TPB applications and research. Future research is likely to Ajzen 1985; Davis 1989). Measures of moderator vari- add great value by investigating organizational and sup- ables include information about the respondent such as ply chain issues within the framework of expectancy number of years as a manager (experience) and company models. Moreover, the study takes into account all three information such as annual revenue, number of employ- theories, thereby developing a more comprehensive as- ees, etc (firm size). Firms could also be grouped as small, sessment of attitude-intention linkage within the context medium, or large in size. of new technology adoption. Such an integrative view of expectancy models is likely to give better insights to To analyze the data, structural equation modeling future research. (SEM) approach could be used. SEM is a comprehensive statistical approach to testing hypotheses about relations Fourth, the study raises the issue of factors moderat- among observed and latent variables, and combines as- ing the impact of manager’s attitudes toward new technol- pects of multiple regression and factor analysis to estimate ogy adoption on behavioral intentions. Firm size and a series of interrelated dependence relationships simulta- manager’s experience are only a start. There could be neously (Hair et al. 1998). SEM provides a robust way of other moderating variables that future research can ex- addressing the relations between constructs and subse- plore. For instance, how does centralization versus decen- quently enables a better understanding of issues in ques- tralization mediate the attitude-intention relationship? By tion. understanding the moderating effects of different variables, researchers and practitioners alike will be able to STRATEGIC AND THEORETICAL identify conditions in which specific actions are most IMPLICATIONS appropriate. This in turn will have both managerial and theoretical implications. There are several strategic and theoretical implications from the preceding arguments. First, the study raises CONCLUSION the issue of manager’s attitude toward RFID application, and by extension technology adoption for firms engaged Scholars and practitioners alike concur that new in supply chain relationships. Past studies have tended to technology adoption is a process characterized by many ignore the role of manager’s attitude, yet, in the final challenges for both the users and implementers. The study analysis, the manager in charge of new technology de- shows that the role of managers involved in technology ployment must be convinced that RFID implementation is adoption ought to be given greater consideration when appropriate, feasible within a given timeframe, and ur- examining technology adoption. In addition, the study gent. This is an issue of great importance especially with shows that an integrative assessment of propositions from the expanding deployment of RFID in supply chain oper- various expectancy models greatly help in the under- ations. By examining the role of managers’ attitude, standing of technology adoption process. Moreover, as greater insights are likely to emerge that could enable a Davis et al. (1989) suggest, conditions under which atti- better understanding of not only RFID adoption, but also tudes mediate the belief-intention link ought to be inves- other new technology adoption situations. This could tigated further. This study is a positive step in responding result in better planning of marketing efforts. to Davis et al.’s challenge.

Secondly, the study reinforces the role of normative The issues raised in this study have important impli- beliefs in technology adoption. RFID deployment has cations for academics and researchers. For academicians, strategic and operational implications on firm’s partners the study raises important questions about the mediating in the supply chain. Furthermore, being a recent develop- role of manager’s attitude in technology adoption. Indeed, ment in supply chain collaboration and management, the study’s focus on technology adoption from the point

American Marketing Association / Winter 2005 144 of view of the manager’s attitude will be of interest to marketing programs. The study has implications on how consumer behavior researchers. For practitioners, the to design new technology adoption programs and mea- issues raised offer an opportunity for a better assessment sures to increase usage (i.e., number of companies adopt- and planning of new technology implementation and ing RFID).

REFERENCES nal, 36 (6), 60–63. Fishbein, Martin and Icek Ajzen (1975), Belief Attitude Adams, D.A., R.R. Nelson, and P.A. Todd (1992), “Per- Intention and Behavior: An Introduction to Theory ceived Usefulness, Ease of Use, and Usage of Infor- and Research. Reading, MA: Addison-Wesley. mation Technology: A Replication,” MIS Quarterly, Hair, Joseph F., Rolph E. Anderson, Ronald L. Tatham, 16 (2), 227–47. and William C. Black (1998), Multivariate Data Ajzen, Icek and Martin Fishbein (1980), Understanding Analysis, 5th ed. Upper Saddle River, NJ: Prentice Attitudes and Predicting Social Behavior. Engle- Hall. wood Cliffs, NJ: Prentice-Hall. Hill, Matt, Leon Mann, and Alexander J. Wearing (1996), ______(1985), “From Intentions to Actions: A “The Effects of Attitude, Subjective Norm, and Self- Theory of Planned Behavior,” in Action-Control: Efficacy on Intention to Benchmark: A Comparison From Cognition to Behavior, J. Kuhl and J. Beck- Between Managers with Experience and No Experi- mann, eds. New York: Springer. ence in Benchmarking,” Journal of Organizational ______(1991), “The Theory of Planned Behav- Behavior, 17, 313–27. ior,” Organization Behavior and Human Decision Karahanna, Elena, Detmar W. Straub, and Norman L. Process, 50, 179–211 Chervany (1999), “Information Technology Adop- Bacheldor, Beth and Laurie Sullivan (2004), “RFID Kick- tion Across Time: A Cross-Sectional Comparison of Start,” InformationWeek, (May 24), 20–22. Pre-Adoption and Post-Adoption Beliefs,” MIS Quar- Bednarz, Ann (2004), “Manufacturers Ready RFID Roll- terly, 23 (2), 183–213. outs,” Network World, 21 (16), 40–. Phillips, Lisa A., Roger Calantone, and Ming-Tung Lee Bunker, D. and R. MacGregor (2002), “The Context of (1994), “Intentional Technology Adoption: Behav- Information Technology and Electronic Commerce ior Structure, Demand Uncertainty, and Culture,” Adoption in Small/Medium Enterprises: A Global Journal of Business & Industrial Marketing, 19 (2), Perspective,” Eighth Americas Conference on Infor- 16–28. mation Systems, 1675–84. Plouffe, Christopher R., Mark Vandenbosch, and John Cookie, James A. (2002), “Companies Focusing on Min- Hulland (2001), “Intermediating Technologies and imal RFID Compliance,” Logistics Management, 43 Multi-Group Adoption: A Comparison of Consumer (5), 24. and Merchant Adoption Intentions Toward a New Davis, Fred D. (1986), “A Technology Acceptance Model Electronic Payment System,” Journal of Product for Empirically Testing New End-User Information Innovation Management, 18, 65–81. Systems: Theory and Results,” Sloan School of Man- Rutner, Stephen, Mathew A. Waller, and John T. Mentzer agement, Doctoral dissertation, Massachusetts Insti- (2004), “A Practical Look at RFID,” Supply Chain tute of Technology. Management Review, 8 (1), 36–41. ______(1989), “Perceived Usefulness, Perceived Sheppard, Blair H., Jon Hartwick, and Paul R. Warshaw Ease of Use, and User Acceptance of Information (1988), “The Theory of Reasoned Action: A Meta- Technology,” MIS Quarterly, 13 (3), 319–40. Analysis of Past Research with Recommendations Doll, J. and Icek Ajzen (1992), “Accessibility and Stabil- for Modifications and Future Research,” Journal of ity of Predictions in the Theory of Planned Behav- Consumer Research, 15, 325–43. ior,” Journal of Personality and Social Psychology, Sullivan, Laurie (2004), “Reaching Down the Supply 63, 754–65. Chain,” InformationWeek, Issue 981, (March 22), Eagly, Alice H. and Shelly Chaiken (1993), The Psychol- 49–51. ogy of Attitudes. Fort Worth, TX: Harcourt Brace. Swanson, E. Burton (1987), “Information Channel Dis- Faber, Michael J. (2002), “RFID: The Next Tool for position and Use,” Decision Science, 18, 131–45. Managing Records?” Information Management Jour-

American Marketing Association / Winter 2005 145 For further information contact: Gilbert N. Nyaga Michigan State University N370 Business College Complex East Lansing, MI 48824 Phone: 517.353.6381 FAX: 517.432.1112 E-Mail: [email protected]

American Marketing Association / Winter 2005 146 A SYNERGISTIC MODEL FOR NEW PRODUCT SUCCESS

Russell Adams, University of Texas – Pan American, Edinburg

SUMMARY the different aspects of product success into one model it will be easier to recognize the critical factors of success For decades researchers have ascribed to Rogers’ and and facilitate the focus of future research on these aspects. Porter’s contention that new products are one of the The paper also explains the appropriateness of using strategic keys for a company’s survival (Porter 1980; percolation (Weisbuch and Solomon 2000) as an alternate Rogers 1962), much research has been conducted in this view of diffusion theory that reflects what occurs in field which is well summarized by Mahajan, Muller, and consumer markets. Bass (1990). Companies are continually developing new products to remain competitive in their markets. Given the The model views product success, measured by dif- substantial investment involved and the relatively low fusion, as the intersection of two important paths; produc- success rates of new product introduction, fifty percent of tion, and marketing. From the production side, network new product introductions fail within the first year (Zirger effects are created by both installed user base and licens- and Mandique 1990), and given that new products can ing relationships, this then expands the content value of count for a third of a firms profits (Booz et al. 1982) the hardware leading to greater diffusion. The marketing research that discovers ways to increase this success rate side involves the human or consumer element. With is critically important. Several aspects of successful New appropriate marketing and the positive attitude (which Product Development (NPD) and adoption have been can also be derived from the installed user base), positive studied independently, such as diffusion, strategic part- WOM will synergistically combine with the network to nerships, Word-of-Mouth (WOM), and installed user result in product diffusion (percolation). The comprehen- base as well as the effects of marketing, but these factors sive model is then applied to the current platform wars for have not been modeled in conjunction. computer gaming. Currently Sony, Microsoft, and Nin- tendo are vying for dominance in the console game market The goal of this paper is not to create a definitive with Sony’s Playstation 2 the current leader. The value of model for guaranteeing the success of new product launch- the model becomes apparent as the factors of success for es, but to shift the theoretical lens to allow researchers to Sony reflect the synergies that are developed in the model. pursue avenues that have yet to be studied. By combining References available upon request.

For further information contact: Russell Adams University of Texas – Brownsville 80 Fort Brown Brownsville, TX 78520 FAX: 956.983.7558 E-Mail: [email protected]

American Marketing Association / Winter 2005 147 INCOME ELASTICITY OF HOUSEHOLD’S DEMAND FOR COMMUNICATION AND IT PRODUCTS: GLOBAL MEASUREMENT AND ITS MARKETING IMPLICATIONS

Min Lu, University of British Columbia, Vancouver Yanbin Tu, University of Connecticut, Storrs

ABSTRACT goods or necessary goods by households, who exhibit different demand patterns from other categories of con- This paper investigates the income elasticity of house- sumers such as private firms and government agencies. hold’s demand for communication and IT (CIT) products We investigate the income elasticity of household’s de- in twenty-three OECD countries during 1989 to 2001. We mand for communication and IT products in the OECD find that CIT products are luxury goods to the households countries ranging from 1989 to 2002, and find that com- in these countries. We discuss the marketing implications munication and IT products are luxury goods to house- of our findings, and provide some marketing recommen- holds in OECD countries. We also discuss the marketing dation. implications of our findings in the paper.

INTRODUCTION The rest of the paper is organized as follows: Brief Literature Review; Hypothesis and Testing Results; A Business firms engaged in the manufacturing and Discussion of our Findings; and Concludes the paper with sales of communication and IT products are facing a Limitations of this work. dynamic and challenging marketplace. In such an environment, the capacity to attract and retain consumers, and BRIEF LITERATURE REVIEW maintain reasonable profit margins, is critical to the business success. The idea and practice of differentiating and For a given product, income elasticity and price segmenting customers are quite common in the technolo- elasticity of demand are expected to change over time as gy sector. Some communication and IT products vendors the product moves through its life cycle. Early marketing such as Dell divide their customers into categories of researchers about product life cycle theory including home, small business, and large business. Other vendors Clifford (1965), Levitt (1965), Cox (1967), Polli and such as Amazon target the markets in different countries. Cook (1969), and Scheuing (1969) describe in detail the However, these differentiations and segmentations are four major stages in a product’s life cycle: introduction, typically based on differences in the type of product or growth, maturity, and decline. New products diffusion service each segment desires. Theoretically or empirical- models that incorporate price changes have been devel- ly, we need to offer additional information that can be oped by Robinson and Lakhani (1975), Bass (1980), used to support and refine their differentiating and seg- Jeuland (1981), and Kalish (1985). From this literature, menting strategy. One perspective is to measure whether price elasticity is expected to increase as a product moves one commodity is necessary or luxury to different groups through its life cycle. Two reasons are for this result. First, of customers. This represents an important research topic, consumers will collect more information about the prod- because understanding the nature of income demand uct, especially regarding availability, deals, prices. and elasticity is very useful to developing effective pricing promotions, in the later stages of the life cycle (Tellis and versioning strategies for communication and IT prod- 1988; Tellis et al. 1988). Second, the “early adopters” ucts vendors. According to economic theory, the income during the introduction stage tend to have higher incomes elasticity of demand is used to describe how many per- and are more likely to exhibit lower price elasticities, centage points the demand for an item will change when accordingly lower income elasticities, than late adopters income adjusts by one percent. An income elasticity of (Onkvisit et al. 1989; Nagle 1987; Simon 1979). So, we demand greater than one suggests that the good is luxury can say that price elasticity of demand is likely to be more to the consumer. An income elasticity of demand between negative in the later stages of the product life cycle. zero and one implies a necessary good to him, while a value less than zero suggests that the good is an inferior A better understanding of income elasticity and/or good to him. price elasticity of demand in combination with the product life-cycle theory can enable more effective marketing The objective of this research is to determine whether strategies. For instance, if a product is necessary to some communication and IT products are considered luxury consumers, they are more likely to be early adopters and

American Marketing Association / Winter 2005 148 more likely to purchase the product during the introduc- income elasticity of demand is higher. We set up the tion and growth stages of the product life cycle. In addi- following hypothesis. tion, these consumers are less price-sensitive so a price premium can be charged. Luxurious users, on the con- Hypothesis (H): Communication and IT products are trary, do not tend to have an “urgent” need for the product, luxury goods to households. and are more likely to buy the product during the growth or maturation stages. Luxurious users are also more sen- In order to measure the income elasticity of demand, sitive to prices, that is, lower prices likely to spur demand empirically we perform the following regression: In Q = and higher prices likely to discourage demand. α + β In M + ε where Q is the quantity of good, M is income or expenditure and ε is the error term. Taking the deriva- Economics and marketing scholars have conducted tive with respect to M, we obtain β = (cQ / cM) some empirical research on the income elasticities of a (M / Q)which is the estimated value of the income elastic- number of goods and services, such as energy (Bohi ity of demand for Q. 1981), agricultural products (Klonaris and Hallam 2003; Mdafri and Brorsen 1993) healthcare (Matteo and Matteo We collect the data of annual household final con- 1998; Getzen 2000; Freeman 2003) and information goods sumption expenditure, annual expenditure on communi- (Bakos and Brynjolfsson 1999, 2000). Lu et al. (2004) cation products and annual expenditure on audio-visual measure whether computers and packaged software are photographic and information processing equipment necessary or luxury to private firms, households and (called IT products) which are all at 1995 prices, from government agencies in USA. They find that such IT 1989 to 2001 in OECD countries (OECD 2002). We products are necessary goods to private firms, luxury conduct regressions for communication products and IT goods to households and inferior goods to government products respectively. Table 1 shows the regression re- agencies. This paper is related to Lu et al.’s research. sults for communication products in twenty-three OECD However, the difference of this study form theirs is as countries. From the table, we clearly see that the estimated follows: (1) we investigate communication and IT prod- coefficient for each country is greater than one (from the ucts, a broader range of commodities, which include highest 8.686 for Japan to the lowest 1.577 for Iceland), computers and packaged software; (2) we conduct a which suggest communication products are luxury goods global measurement of income elasticity of communica- to the households in these countries. The t-values for these tion and IT products across twenty-three countries, which estimated coefficients indicate that they are significant at provide more robust testing results; (3) this study only one percent level. Most important, the R-squares for most focuses on the households. of countries (17 out of 23) are over 0.90 (the average R- square is 0.927), which means that, generally, the regres- RESEARCH HYPOTHESIS AND sions have a high level of goodness-of-fit. TESTING RESULT Table 2 presents the regression results for IT products The demand for a commodity is said to be normal if in seventeen OECD countries. Except for Germany, all demand does not fall when income rises, and inferior if the estimated coefficients for other countries are greater demand falls when income rises. We define the income than 1 (from the highest 6.221 for Demark to the lowest elasticity of demand for x as η = (cx / cM) where M is the 1.576 for Korean), which also indicate that IT products are income of consumer. η is interpreted as the percentage by luxury goods to the households in these countries. All the which the demand for good x changes when income estimated coefficients, except for Germany and Greece, changes by one percent. A commodity, say x, is a luxury are significant at one percent level. The R-squares for 13 good if η < 1, a necessary good if 0 < η < 1, or an inferior out of 17 countries are over 0.90, and the average R- good if η < 0. square is 0.906, which mean that the regressions for IT products have a high level of goodness-of-fit as well. While some parts of communication and IT products German, the outlier in the sample, has the income elastic- will be necessary goods to private firms (see Brynjolfsson ity of 0.8141, which suggests IT products are necessary and Yang 1996; Dewan and Min 1996; Lu et al. 2004), we goods to German households. But, the testing for it is not expect that overall communication and IT products will be significant below three percent level. considered luxury goods by households, since the main function of such products are entertainment, and commu- The testing results for both communication and IT nication, and rarely critical computing to households. products support the hypothesis (H) in the study, that is, Following this reasoning process that private firms will that overall communication and IT products are luxury tend to be early adopters of communication and IT prod- goods to the households in OECD countries. Since most ucts, as their income elasticity of demand is quite low, we of OECD countries are developed countries, we can expect that households, on the other hand, will tend to be generalize our conclusion to that communication and IT later adopters of communication and IT products, as their products are luxury goods to the households globally. The

American Marketing Association / Winter 2005 149 TABLE 1 Regression Results for Communication Products

Income # of Country Elasticity t-Value p-Value Observation R-Square

Australia 3.115 21.914 8.77x10-10 12 0.980 Austria 4.095 15.702 2.25 x10-8 12 0.961 Belgium 5.048 11.340 0.000345 6 0.985 Canada 2.075 20.254 4.67x10-10 13 0.974 Czech 5.175 5.09392 0.002235 8 0.812 Demark 2.535 6.360 5.37x10-5 13 0.786 Finland 4.710 4.523 0.001103 12 0.672 France 5.821 36.213 6.13x10-12 12 0.992 Germany 6.063 15.337 3.24x10-7 10 0.967 Greece 4.683 14.423 5.09x10-8 12 0.954 Iceland 1.557 9.731 2.04x10-6 12 0.905 Ireland 2.445 47.216 4.29x10-12 11 0.996 Italy 6.186 17.563 2.14x10-6 13 0.966 Japan 8.686 7.795 2.72x10-5 11 0.871 Korean 4.752 11.785 1.4x10-7 13 0.927 Mexico 3.752 6.767 4.9x10-5 12 0.821 Netherlands 4.723 13.012 0.00098 5 0.983 Norway 3.510 12.548 4.71x10-6 9 0.957 Poland 4.860 8.363 0.003585 5 0.959 Spain 3.128 23.737 1.8x10-5 6 0.993 Sweden 3.301 4.823 0.016986 5 0.886 UK 3.021 26.507 1.35x10-10 12 0.986 USA 2.195 44.806 7.38x10-6 12 0.995

TABLE 2 Regression Results for IT Products

Income # of Country Elasticity t-Value p-Value Observation R-Square

Austria 3.051 11.049 6.33x10-7 12 0.924 Belgium 2.755 17.151 6.78x10-5 6 0.987 Canada 3.434 34.224 1.59x10-12 13 0.990 Demark 6.221 20.673 3.75x10-10 13 0.975 Finland 3.564 14.974 3.56x10-8 12 0.957 France 5.061 35.897 6.69x10-12 12 0.992 Germany 0.8141 2.598 0.032 10 0.458 Greece 5.354 4.404 0.012 6 0.829 Iceland 2.798 14.058 6.51x10-8 12 0.952 Ireland 2.096 6.422 0.000122 11 0.821 Italy 3.454 10.699 3.75x10-7 13 0.912 Korean 1.576 17.314 2.5x10-9 13 0.965 Mexico 1.602 4.893 0.00063 12 0.705 Norway 2.832 14.297 1.95x10-6 9 0.967 Spain 2.220 41.896 2.99x10-5 5 0.998 UK 4.246 21.250 1.19x10-9 12 0.976 USA 4.655 82.128 1.75x10-15 12 0.999

American Marketing Association / Winter 2005 150 underlying reason is that if such products are considered household processes a computer. Intuitively, these two as luxury goods by the households in developed countries, figures further demonstrate that computers are luxury they must be perceived as luxury goods by the households goods to households in OECD countries. in developing countries as well since the developing countries have a low GDP per capital and an associated This study provides some interesting insights into living standard. communication and IT products markets. We find evidence in the global setting to suggest that communication DISCUSSION AND IMPLICATIONS and IT products are luxury goods to households. Vendors OF FINDINGS of communication and IT products can take advantage of these findings by strategically setting prices for the house- Why are communication and IT products luxury hold. Vendors should set low prices of communication goods to the households? Unlike private firms, who use and IT products for households for two reasons. First, as communication and IT products for the purposes of com- these products are considered to be luxury goods, a high puting function and competitive advantage, households price will result in a sharp drop in demand. usually use such products for entertainment, communication and convenience. It is common to state that game Second, as growth in the household sector is a precur- software, digital camera, audio or video systems are sor to growth in the overall market, a drop in current luxury goods to households. For other IT products such as demand will also entail a reduction in future sales (see Lu computers, households need them to function these “lux- et al. 2004). As Lu et al. (2004) point out that during the ury” goods. Therefore, computers and associated applica- introductory stage of the product life cycle for computers tion software are the extension of such luxury goods to the and packaged software the consumer base will tend to be households. Figure 1 shows the percentage of households comprised predominantly of private firms, and once the with access to a home computer in OECD countries in growth stage begins, marketing and advertising efforts 2000. The percentage varies from 11.1 for Mexico to 65 should shift to cultivate demand within the household for Demark. For U.S., 51 percent households use comput- sector. Our findings in the global setting further confirm er at home in 2000. Figure 2 shows that more and more that vendors of communication and IT products should people buy and use personal computers in USA during make more marketing efforts towards the household mar- 1997 to 2001, which tells us that even in USA, not every kets when their products evolve into the growth stage. As

FIGURE 1 Households With Access to a Home Computer in 2000

70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 Italy Japan Spain Korea United France United Ireland Austria Canada Mexico Sweden Portugal Australia Denmark Germany Turkey (4) Finland (1) Switzerland Belgium (3)

Notes: 1Beginning of 2002; 2March 2001–April 2002 (financial year) instead of 2001; 31999 instead of 2000; 4Households in urban areas only; 5For 1999, households in urban areas with more than 15,000 inhabitants only.

American Marketing Association / Winter 2005 151 FIGURE 2 Personal Computers in USA (Per 1000 People)

700 600 500 400 300 200 100 0.0 1997 1998 1999 2000 2001

the life cycle of communication and IT products become some marketing recommendation of using price discrim- shorter and shorter, this recommendation is significant to ination to households and switching their market target to the communication and IT industry. households as their products evolve to the growth stage of product life cycle. CONCLUSIONS, LIMITATIONS, AND FUTURE RESEARCH The work presented here is not without limitations. We use aggregate data in our analytical framework. The This paper investigates the income elasticity of house- conclusions reached in this paper may not be valid across hold’s demand for communication and IT products in 23 all types of communication and IT products. Some parts OECD countries during 1989 to 2001. We find that of communication and IT products, taken cell phone as an communication and IT products are luxury goods to example, might be necessary goods to the households in households in these countries, which suggests that such some countries. Therefore, using micro-data to investi- products are luxury goods to the households globally. We gate these types of nuances is a worthwhile area for future also discuss the marketing implications of our findings research. and provide communication and IT products vendors with

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American Marketing Association / Winter 2005 152 35, 495–502. 155–63. Getzen, T. (2000), “Health Care is an Individual Necessi- Nagle, P. (1987), The Strategy and Tactics of Pricing. ty and a National Luxury: Applying Multilevel Deci- Englewood Cliffs: Prentice-Hall, Inc. sion Models to the Analysis of Health Care Expendi- OECD (2002), National Accounts of OECD Countries. tures,” Journal of Health Economics, 19, 259–70. Volume II. 1989–2000. Jeuland, A.P. (1981), “Parsimonious Models of Diffusion Onkvisit, Sak and John J. Shaw (1989), Product Life of Innovation, Part B: Incorporating the Variable of Cycles and Product Management. Connecticut: Quo- Price,” Working Paper, University of Chicago. rum Books, Greenwood Press, Inc. Kalish, S. (1983), “Monopolistic Pricing with Dynamic Polli, R. and V. Cook (1969), “Validity of the Product Life Demand and Production Cost,” Marketing Science, 2 Cycle,” Journal of Business, 42 (10), 385–400. (Spring), 135–60. Robinson, B. and C. Lakhani (1975), “Dynamic Price Klonaris, S. and D. Hallam. (2003), “Conditional and Models for New-Product Planning,” Management Unconditional Food Demand Elasticities in a Dy- Science, 21, 1113–22. namic Multistage Demand System,” Applied Eco- Scheuing, E.E. (1969), “The Product Life Cycle as an Aid nomics, 35, 503–14. in Strategy Decision,” Management International Levitt, T. (1965), “Exploit the Product Life Cycle,” Har- Review, 9 (4/5), 111–24. vard Business Review, 43 (11), 81–94. Simon, H. (1979), “Dynamics of Price Elasticity and Lu, M., Y. Tu, and S. Thompson (2004), “Computers and Brand Life Cycles: An Empirical Study,” Journal of Packaged Software: Necessary or Luxury Goods?” Marketing Research, 16, 439–52. Working Paper, OPIM, Business School, University Tellis, G.J. (1988), “The Price Elasticity of Selective of Connecticut, Storrs. Demand: A Meta-Analysis of Econometric Models Matteo, L.D. and R.D. Matteo (1998), “Evidence on the of Sales,” Journal of Marketing Research, 25 (No- Determinants of Canadian Provincial Government vember), 331–41. Health Expenditures: 1965–1991,” Journal of Health Tellis, G. and C. Fornell (1988), “The Relationship Be- Economics, 17, 21–228. tween Advertising and Quality Over the Product Life Mdafri, A. and B.W. Brorsen (1993), “Demand for Red Cycle: A Contingency Theory,” Journal of Market- Meat, Poultry, and Fish in Morocco: An Almost Ideal ing Research, 15, 64–71. Demand System,” Agricultural Economics, 9 (2),

For further information contact: Yanbin Tu Department of Operations and Information Management Business School University of Connecticut Storrs, CT 06269 Phone: 860.486.6485 FAX: 860.486.4839 E-Mail: [email protected]

American Marketing Association / Winter 2005 153 COMPUTATIONAL ESTIMATION OF PARTIONED PRICES: ANOTHER HEURISTIC MOVES INTO THE MARKETING NEIGHBORHOOD

William J. Jones, University of Kentucky, Lexington Devon S. DelVecchio, University of Kentucky, Lexington Terry L. Childers, University of Kentucky, Lexington

SUMMARY This research addresses three key questions examined via three studies. First, what varieties of computa- Economic choice models originally conceived con- tional estimation strategies are consumers likely to em- sumers as rational agents making optimal choices. Later, ploy when revising a discounted price? Second, given consumer researchers would present evidence of a con- computational estimation strategies how do interactions sumer who is rational within the bounds set by the desire between the numerical value of the price and discount to maximize outcomes given an acceptable level of mental influence consumer choice? Specifically, we examine effort (e.g., Payne, Bettman, and Johnson 1993; Simon situations in which price and discount combinations sug- 1978). In such a “satisficing” mode, consumers rely on gest a particular computational estimation strategy and heuristics to reduce processing demands. One of the most how the effort expended in using this strategy affects widely cited heuristics is anchoring and adjustment. An- choice share. Third, does the affect generated from em- choring and adjustment has often been used to explain the ploying more or less effortful computational estimation integration of price information (e.g., Morwitz, Greenleaf, procedures increase or decrease choice share for the and Johnson 1998; Yadav and Seiders 1998). This may be brand. In or initial study, we examine strategies that a popular heuristic among consumers since it requires consumers use when estimating the value of a discount for little mental effort. However, anchoring and adjustment 144 price-discount combinations. Study 2 examines choice typically fails to provide highly accurate estimates (e.g., behavior for a discounted brand and how price-discount Jacowitz and Kahneman 1995). combination s favoring particular computational estimation strategies increase or decrease share for the brand In this study we introduce computational estimation relative to other brands. Study 3 largely replicates Study 2, as an alternative explanation to consumers’ use of parti- but measures affect and confidence generated through the tioned prices. Dowker et al. (1996) define computational estimation process. estimation as a procedure in which elements of simple computation and approximation skills are combined to Because of its higher accuracy, lower effort niche, we devise strategies for manipulating numbers. The strate- expect that consumers employ computational estimation gies in computational estimation include, but are not strategies in a variety of situations. Thus, our point-of- limited to, rounding, using known numbers (e.g., trans- view is consistent with a bounded rationality view of forming $106 X .23 to $100 X .25), distributing one consumer decision-making, but one that supposes greater number into two or more (e.g., 15% is broken into 10% + mental effort and accuracy than the predominant heuris- 5%), and use of fractions (e.g., 80 X 25 = 80 X ¼ X 100). tic. This view is supported by results that differ from those Thus, computational estimation procedures enable con- that would be predicted by anchoring and adjustment. sumers to evaluate price information in a more sophisti- However, additional studies that directly contrast anchor- cated manner than other heuristics, but without investing ing and adjustment and computational estimation in terms the large amount of mental energy needed to perform of consumers’ price estimates and choice are warranted. exact calculations.

For further information contact: William J. Jones Gatton School of Business and Economics University of Kentucky Lexington, KY 40507 Phone: 859.275.2962 FAX: 859.257.3577 E-Mail: [email protected]

American Marketing Association / Winter 2005 154 THE EFFECTS OF MAGNITUDE REPRESENTATION ENCODING INTERFERENCE AND ORDER OF PRICE EXPOSURE IN COMPARATIVE PRICE ADVERTISING

Keith S. Coulter, Clark University, Worcester Robin A. Coulter, University of Connecticut, Storrs

SUMMARY affects their perceptions (Monroe 2003). Because consumers typically examine the items in a list from top to Research has demonstrated that consumers often rely bottom, prices at the top of the list become externally- on the non-conscious, automatic processing of price in- supplied reference prices that influence the perceptions of formation when choosing among brands. The numerical prices that occur lower on the list. Buyers who initially see cognition literature suggests that one way in which nu- high prices perceive subsequent lower prices as less merical stimuli (and hence prices) may be non-consciously expensive (and hence of greater value) than they would if represented and encoded in memory is in terms of magni- they initially see low prices (Slonim and Garbarino 1999). tude representations. Magnitude representations are judgments of relative “size” arrayed in analog format along a Thus, in the case of the aforementioned price lists left-to-right oriented mental number line, and may reflect consisting of standard/sale prices in different size fonts, either the exact value (e.g., 8), or an approximation of the we also consider that these prices may occur in either exact value (e.g., “large”) of a number (Dehaene 1992). descending (e.g., $20–18, 16–14,12–10) or ascending Research further suggests that the magnitude representa- (e.g., $4–2, 8–6,12–10) series. Thus, relative to a particu- tion that sustains the processing of numeric value may be lar target item that appears at the bottom of the lists and highly related to the underlying magnitude code that hence is typically examined last (i.e., the item priced at sustains the processing of physical stimuli (Dehaene and $12–10 in the example above), initial reference prices Akhavein 1995). Thus, interference may ensue if the would be higher in the descending series, and lower in the magnitude representation associated with the numeric ascending series. value of a number (e.g., large) is inconsistent with the magnitude representation associated with the physical In the case of the descending order series, both size or appearance of that number (e.g., small). standard and sale initial reference prices would be greater than a target sale price appearing at the bottom of the list. Consider, then, a set of price lists containing com- Thus we hypothesize that a (small) congruent physical paratively high (standard) and low (sale) prices for several size magnitude representation associated with that target items within a particular product category. The lower sale price should reinforce the perception that the target prices are all displayed in either smaller font, such that the price is actually lower or smaller (and hence a better buy) numerical value and physical size dimensions are congru- than the higher reference price(s). Both size/value con- ent (e.g., $12–10), or larger font such that the numerical gruence and price-order effects are expected to occur. value and physical size dimensions are incongruent (e.g., Conversely, a (large) incongruent physical size magnitude representation associated with the target sale price is $12–10). In the case of the incongruent lists, we hypoth- expected to interfere with the perception that the target esize that the non-corresponding magnitude representa- price is lower or smaller than the higher reference price(s). tions should interfere with consumers’ ability to encode Therefore in this latter instance, price-order effects should the sale prices as lower or smaller than the standard high be diminished. prices. As a result, the differences between the standard high prices and the low sale prices should be perceived as Method less, and the more favorable price and/or value assessments typically associated with the comparatively low Hypotheses were tested in a 2 (congruent/incongru- sale prices should be weakened or reduced. The reduced ent) x 2 (ascending/descending order) experiment (N = value assessments should lead to a decrease in demand for 120). Subjects were shown a list of (6) brands in table each of the low-priced items. The opposite effects are format containing high (standard) and low (sale) prices expected in the case of the congruent physical-size/nu- and brief product descriptions. In the congruent (incon- meric value lists. gruent) conditions the higher standard prices appeared in larger (smaller) font than the lower sale prices. Brands Research has also shown that the order in which were listed in either ascending or descending order of buyers are exposed to multiple prices (i.e., in list format) price, with a fictitious target brand always appearing at the

American Marketing Association / Winter 2005 155 bottom of the list. After viewing the stimulus price list, value congruency interacts with price-presentation order subjects were exposed to a brief “filler” infomercial. They such that price-order effects are eliminated under incon- then completed a paper and pencil questionnaire. gruent magnitude representation conditions. Processing check results supported our contention that subjects’ Results processing of price information was implicit, automatic, and non-conscious, rather than explicit, conscious, and/or Findings indicated that congruent magnitude repre- inferential. Results also indicated that differing degrees of sentations result in more favorable value perceptions, attention caused by the size of the larger/smaller fonts lower price judgments, and increased purchase likeli- could not have accounted for dependent variable results. hood. Findings also demonstrated that numerical size/ References available upon request.

For further information contact: Keith S. Coulter Clark University GSOM 950 Main Street Worcester, MA 01610–1477 Phone: 508.793.7749 FAX: 508.793.8822 E-Mail: [email protected]

American Marketing Association / Winter 2005 156 INFLUENCES ON WHAT CONSUMERS KNOW AND WHAT THEY THINK THEY KNOW REGARDING THE PERSUASIVE ASPECTS OF PRICING-RELATED SELLING TACTICS

Jay P. Carlson, The Graduate College of Union University, Schenectady William O. Bearden, University of South Carolina, Columbia David M. Hardesty, University of Miami, Coral Gables

SUMMARY knowledge or self-assessed perceptions regarding what consumers think they know. To this point, no research has An array of pricing-related selling tactics (i.e., tactics attempted to investigate directly influences on objective used by sellers to generate favorable price perceptions and subjective knowledge or any moderators of the rela- regarding their brands, stores, and/or offerings) exists in tionship between objective and subjective knowledge the marketplace. Prior research examining pricing-related regarding consumer persuasion knowledge of marketer selling tactics has focused on assessing consumer re- pricing-related selling tactics. To address this objective, sponse to individual tactics (e.g., partitioned pricing – the present paper describes the results of a study that Morwitz, Greenleaf, and Johnson 1998; pennies-a-day – investigated issues related to both objective and subjec- Gourville 1998; price bundling – Yadav and Monroe tive knowledge of the persuasive aspects of pricing- 1993). Research that has studied consumer price knowl- related selling tactics. edge has done so in the context of individual prices (e.g., Dickson and Sawyer 1990; Mazumdar and Monroe 1992; Hypothesized Relationships Monroe and Lee 1999; Vanhuele and Dreze 2002). Also, consumer persuasion knowledge, as advanced by Friestad Preference for numerical information (Viswanathan and Wright (1994), has been investigated in the domains 1993), need for cognition (Cacioppo and Petty 1982), and of advertising (Boush, Friestad, and Rose 1994) and experience with pricing-related selling tactics were all personal selling (Campbell and Kirmani 2000). However, predicted to be positively related with objective knowl- consumer persuasion knowledge in the domain of pricing, edge. The personal relevance of pricing-related selling more specifically, for marketer pricing-related selling tactics, frame of reference (i.e., the beliefs about the tactics, has not been examined. knowledge possessed by significant others in an individual’s life – Radecki and Jaccard 1995), experience with Alba and Hutchinson’s (2000) review of knowledge pricing-related selling tactics, and objective knowledge calibration supports the contentions of prior researchers were all hypothesized to be positively related with subjec- (e.g., Brucks 1985; Park, Mothersbaugh, and Feick 1994) tive knowledge. Lastly, experience was predicted to mod- that objective and subjective knowledge are two impor- erate the relationship between objective knowledge and tant but distinct knowledge constructs that differentially subjective knowledge such that this relationship would be impact information search and consumer evaluations. weaker when experience was high relative to when expe- Moreover, prior research examining the relationship be- rience was low. tween objective and subjective knowledge has not always found consistent results, and researchers argue that a Study Overview better understanding of the relationship is needed (Cow- ley and Mitchell 2003). The current research examined The eight hypotheses were tested from data collected both objective knowledge and self-perceived knowledge in a survey research study involving a sample of 191 regarding the persuasive aspects of marketer pricing- undergraduate students. The data were collected in two related selling tactics in order to better understand the time periods, separated by one week. Measures of objec- relationship between the two knowledge constructs. tive knowledge, subjective knowledge, and experience were collected in phase one, with preference for numeri- The objective then of the current research was to cal information, need for cognition, personal relevance, identify and test a set of hypothesized factors that influ- and frame of reference collected in phase two. ence two knowledge constructs as they relate to knowledge regarding the persuasive aspects of marketer pric- Results and Discussion ing-related selling tactics (cf., Park et al. 1994; Radecki and Jaccard 1995). The first of these constructs was Briefly, the results provided support for several hy- objective knowledge or accurate information stored in pothesized antecedents of both objective and subjective long-term memory. The second construct was subjective knowledge and suggest that experience is a key moderator

American Marketing Association / Winter 2005 157 of the objective knowledge – subjective knowledge rela- knowledge, while the relationship between frame of ref- tionship in the domain of pricing-related selling tactics. erence and subjective knowledge received mixed support. Specifically, need for cognition and experience with pric- Lastly, the relationship between objective knowledge and ing-related selling tactics were positively and significant- subjective knowledge was found to be positive and signif- ly related with objective knowledge, while the relation- icant when experience was low, but was non-significant ship between preference for numerical information and when experience was high. This result suggests that objective knowledge received mixed support. In addition, consumers might be susceptible to overconfidence when personal relevance, experience, and objective knowledge experience is high but objective knowledge is low. Refer- were positively and significantly related with subjective ences available upon request.

For further information contact: Jay Carlson The Graduate College of Union University Schenectady, NY 12308 Phone: (518) 388.6738 FAX: (518) 388.6754 E-Mail: [email protected]

American Marketing Association / Winter 2005 158 CREATIVITY IN ADVERTISING: PURCHASE INTENT AND BRAND ATTITUDE EFFECTS

Brian D. Till, Saint Louis University, St. Louis Daniel W. Baack, Saint Louis University, St. Louis

SUMMARY H1: Creative advertising will lead to higher levels of purchase intent for the advertised brands. Creativity is a very important component of advertising. With the industry focus on creative advertising, there H2: Creative advertising will lead to more positive atti- is surprisingly little research looking directly at the effec- tudes for the advertised brands. tiveness of award-winning advertising. There are only a handful of studies that focus specifically on this topic. Methodology First, the research by Kover et al. (1995) investigated the link creative advertising and consumers’ responses to that For the creative commercials, we used Communica- advertising. They found that student defined “creative” tion Arts award winners. Communication Arts bases its advertisements were linked to higher purchase intent. The awards primarily on ad creativity as assessed by a panel of second study, Ang and Low (2000), investigated the distinguished advertising professionals. Forty advertise- relationship between advertising creativity and subjects’ ments were randomly selected from a pool of winners affective responses. The authors found that creative ads from three recent years to form the sample. To create the were consistently perceived as more favorable, and, to a pool of control advertisements, advertisements were sam- lesser degree, resulted in a more favorable view of the pled during prime time television during four randomly brand and increased purchase intent. The third study, selected days of the week. From this pool, forty were Stone et al. (2000), attempted to link creative commercials randomly selected. We inserted the commercials selected to likeability. The study found that liked commercials into two television programs (Dream Living and Ground were more often judged as creative. Two recent studies, Forces). We used two programs embedded with a differ- Till and Baack (2004a) and Till and Baack (2004b) ent set of 20 commercials (½ creative, ½ control) for intra- explore the effectiveness of creative advertisements by study replicability. Therefore, our study used four two and linking exposure to creative advertising (measured as a half minute pods with five thirty second commercials winning an advertising award) to increased unaided recall each. This resulted in a total of ten minutes of advertising of both the brand advertised and the features of the (twenty commercials) per program. Subjects were 69 commercial. Till and Baack (2004a) finds that creative undergraduate students enrolled in business courses at a advertisements led to greater unaided brand and feature Midwestern university. Three weeks before watching the recall. Till and Baack (2004b) replicated their first study, television program, subjects complete a questionnaire but used a one-week delay measure of recall. They found measuring the attitude and purchase intentions regarding that brand names and commercial features are better the brands advertised. After watching the television pro- recalled for creative commercials, but only in the unaided gram, the subjects filled out the same questionnaire previ- recall task. ously completed. To measure purchase intent and brand attitude, subjects were asked to rate on a seven-point, All of the above studies, while significant, leave bipolar adjective scale purchase intent and brand attitude. some issues for further investigation. First, for most of the Both of these measures were based on previous studies studies, the grouping of advertisements into creative and (e.g., Chapman and Aylesworth 1999; Till and Busler non-creative groups was based on student ratings. Stu- 2000). dents may not be the most appropriate judges of the creativity of an advertisement (White and Smith 2001; Results and Discussion Kover et al. 1995). This potential problem with student raters cast particular doubt on studies of the affective The unit of measure for the analysis is the change in effectiveness of creativity advertising. To further investi- purchase intent and brand attitude between pre and post gate this issue, this study explores the link between advertisement exposure (statistics available upon request). creative advertising and brand attitude and purchase in- For both programs, a paired t-test analysis revealed no tent, but uses professionals, not students, to rate creativity. significant differences between control and creative ad- Specifically, the following hypotheses are investigated: vertisements for brand attitude and purchase intent.

American Marketing Association / Winter 2005 159 This research focused on the effect of creativity on ingrained and less influenced by a single ad exposure. It both purchase intent and attitude toward the brand. The also possible that differences in findings between this and results find suggest that creative advertisements, at least previous research is due differences in the types of judges with limited viewing, do not appear to affect purchase used to evaluate advertising as creative. While past stud- intent or attitude toward the brand. These results cast ies have found creative advertisements to be effective doubt on past studies finding that creative advertising led using similar measures (e.g., Ang and Low 2000; Kover to increased affective effectiveness (Ang and Low 2000; et al. 1995; Stone et al. 2000), they used students to assess Kover et al. 1995; Stone et al. 2000). It is possible that creativity. We feel that the use of professionals to judge these results reflect the difficulty in affecting consumer the advertising is a far more valid measure of “creativity” brand attitude and intent to purchase with one commercial and may account for the different results of the present exposure. Unlike measures of recall, as used in Till and research versus earlier studies. References available upon Baack (2004a) and Till and Baack (2004b), brand attitude request and purchase intent of known brands is likely more solidly

For further information contact: Daniel Baack Saint Louis University 3674 Lindell Boulevard St. Louis, MO 63108–3397 Phone: 314.977.3810 FAX: 314.977.3897 E-Mail: [email protected]

American Marketing Association / Winter 2005 160 WHERE’S THE AFFECT? AN INVESTIGATION OF THE EFFECT OF THREE ADVERTISING SCALES ON ATTITUDE TO THE AD

Arjun Chaudhuri, Fairfield University, Fairfield

ABSTRACT ad. For instance, Chaudhuri and Buck (1995a; see also Chaudhuri 2004) showed that reptilian affects are not A natural viewing situation is used to examine the related to liking for the ad while prosocial affects are efficacies of three scales that purport to account for positively, strongly and significantly related. Burke and emotional and rational responses to advertising. With Edell (1989) showed that upbeat, warm and negative attitude to the ad as the dependent variable, the three scales feelings differ in their effects as well. are tested using a large number of subjects, a random and large number of ads and a sufficiently large number of One problem with the operationalization of this last independent observations (each subject was exposed to a approach has been that researchers who use the Edell and single ad only). The results indicate differences in the Burke (1987) feelings scale tend to shorten the scale (53 prediction of attitude to the ad among the three scales. items) and adapt it to their purposes (as an example, see Surprisingly, the most parsimonious of the three scales MacInnis, Rao, and Weiss 2002). In general though, achieves the greatest predictive ability. measurement scales are developed with the understanding that they should be used in their entirety and not INTRODUCTION abridged according to the purposes of a particular piece of research. Thus, there would seem to be a need for a shorter The purpose of this study is straightforward. Can a scale which still captures all the multidimensional aspects short scale for assessing the emotional and rational reac- of qualitatively different affects. The CASC scale offers tions to advertisements predict the attitude to these ads as such an alternative with only 16 items which purport to well or better than two scales that are well known but are measure four different affective and cognitive dimen- considerably longer in length? If so, the implications of sions. One of the goals of this study was to test if the CASC the study for practical purposes of data collection are also scale had the same predictive power of the feelings and obvious. Respondent fatigue will be lowered and better judgment scales. If so, then it presents a viable and quality of responses may be expected with a substantially perhaps more practical alternative to the other two scales. smaller scale that also addresses the multidimensional properties of responses to advertising. Although there has been considerable work, as cited above (see also Batra and Ray 1986; Holbrook and West- Accordingly, this study compared the “feelings” scale wood 1989 and others), that suggests that a range of (53 items) developed by Edell and Burke (1987) and the emotional effects are evoked by advertising, no single “judgments” scale [25 items taken from the Reaction accepted theoretical paradigm has emerged that guides Profile for TV commercials (Wells, Leavitt, and McCon- research in this area. Individual studies have used a variety ville 1971)] also used by these authors (Burke and Edell of theoretical frameworks, such as Plutchik’s (1980) 1989; Edell and Burke 1987; Burke and Edell 1986) with typological approach (Holbrook and Westwood 1989) the relatively short (16 items) CASC (Communication and Mehrabian and Russell’s (1974) dimensional ap- Analytic and Syncretic Cognition) scale developed by proach (Olney, Holbrook, and Batra 1991). None of these Chaudhuri and Buck (1995a, 1995b, 1998). The three approaches, however, are clearly anchored in the struc- scales were examined in terms of their ability to predict ture of the brain. The theory of the “triune brain,” as attitude to the ad. adapted in the CASC scale, described below, bases itself on knowledge of the human brain. Affect has been operationalized in different ways in consumer research and advertising studies. One way has THE CASC SCALE been to view affect as an overall, global reaction such as “liking” for an ad (Haley and Baldinger 1991; Herr and This scale was developed in the area of communica- Page 2004; Mitchell and Olson 1981). Another way has tion sciences (Chaudhuri and Buck 1995a) and subse- been to assess affect as an amalgam of a set of qualitatively quently refined and published in the social psychology different types of affects that may be evoked by an ad. This and consumer research literature (Chaudhuri and Buck has been prompted by evidence (Chaudhuri and Buck 1995b, 1998). It claims, on the basis of confirmatory 1995a; Edell and Burke 1987) that different dimensions of factor analysis and repeated testing, to measure both affect can have strikingly different effects on liking for the emotional and rational (syncretic and analytic cognitions)

American Marketing Association / Winter 2005 161 responses to advertising with a short list of 16 items which The general form of the scale is “Did the ad make you feel/ load on four different factors. It has been tested at both the think. . . .” In all there are sixteen items, four in each individual level of subjects and at the aggregate level dimension. The prosocial dimension comprises of the using ads as the units of analysis. It has been tested for both questions “did the ad make you feel happy/proud/hopeful/ print and television media. Its results have been replicated a sense of affiliation.” The individualistic dimension across different subjects and different ads. The CASC contains the items “did the ad make you feel angry/afraid/ scale also has the virtue of being grounded in a widely disgusted/irritated.” The reptilian dimension consists of accepted theory based upon scientific evidence on the the items “did the ad make you feel sexy/aggressive/ workings of the human brain as described next. envious/a sense of power.” The analytic dimension is based on brand differentiation and asks questions on The scale uses the theory of the triune brain (McLean whether the ad made the respondent think of the “facts 1973, 1990) as its conceptual basis. According to McLean, about the brand/pros and cons of the brand/arguments for the human brain has developed in a series of stages and using or not using the brand/differences between the today there are essentially three brain structures that are brand and its competitors” (Chaudhuri and Buck 1995b, interconnected and represent a “triune brain.” The first of 1998). Thus, the CASC scale measures both emotional these structures is the reptilian brain (reticular formation, and rational dimensions of responses to ads. The emotion- basal ganglia, and midbrain) that governs such basic al items measure a spectrum of qualitatively different behavior as reproduction, aggression, territoriality, etc. affective responses that are relevant to advertising while The second brain structure is the paleomammalian forma- the rational items refer to the processing of the elements tion (limbic system) found in mammals which guides in an ad which differentiate between brands. Brand differ- prosocial behavior associated with the preservation of the entiation strategies have repeatedly been found to be the species and also agnostic behavior associated with the single most important executional factor that influences preservation of the individual. The third, and most recent, ad effectiveness (Stewart and Furse 1986; Stewart and structure is the neomammalian formation (neocortex and Koslow 1989) and Holbrook (1987) specifically men- thalamic structures) and its primary functions are in the tions such strategies among the more desirable effects of realm of higher order cognitive processing, including advertising. verbal communication, language, ideas, problem solving, complex learning, and memory (Chaudhuri and Buck THE FEELINGS SCALE 1995b, 1998). The feelings scale was developed by Edell and Burke The reptilian counterpart of the human brain is still (1987) in trying to understand the role of feeling respons- considered to influence us in certain basic behavior such es to an ad (as distinct from thoughts about an ad) in as the struggle for power, adherence to routine, imitation, promoting advertising effects. They took their cue from, obeisance to precedent and deception. These are some of among others, Zajonc (1980) in trying to establish that the same behaviors that are espoused in advertising – affective responses are valid, reliable, and unique evalu- “never let them see you sweat” (deception), “did you DQ ations of objects that are independent of cognitive evalu- today?” (adherence to routine), “caviar for the power ations. Moreover, they asserted and established that ads hungry” (power), etc. While the reptilian brain programmes were capable of simultaneously evoking both positive and stereotypical behaviors, the old mammalian portion of the negative feelings among viewers (unlike positive and brain, or the limbic system, functions in the subjective negative cognitive evaluations) and that such feelings experience of feelings and desires. In general, circuits were as important in understanding and explaining adver- involving the septal area are involved in prosocial feelings tising effects. associated with behaviors conducive to the preservation of the species, nursing, maternal care, parenting, and play. Edell and Burke (1987) used 69 items which were In contrast, circuits involving the amygdala are concerned drawn from a larger pool of items in a pretest prior to their with individualistic feelings such as fear, anger and dis- study. They reported that three factors with high internal gust, which are associated with self preservation and self consistency between the factors were extracted from a protection (Chaudhuri and Buck 1995b, 1998). factor analysis of the items. They described these factors as upbeat (“active/confident/good/lively, etc.”), negative The CASC scale was developed within the frame- (“angry/bad/dull/sad, etc.”) and warm (“affectionate/calm/ work of the triune brain and contains multidimensional kind/sentimental, etc.”). These three factors, the three elements which conform to the mammalian brain (proso- factors from the judgments scale (Burke and Edell 1986) cial and individualistic dimensions), the reptilian brain and prior attitude to the brand were used to predict attitude (reptilian dimension) and the neomammalian brain (ana- to the ad. It was found that the upbeat and warm feelings lytic dimension). CASC is a seven point paper and pencil scales did not add uniquely to the explanation of variance scale anchored at two endpoints by “not at all” and “a lot.” in attitude to the ad but that they were jointly significant.

American Marketing Association / Winter 2005 162 The authors concluded that, overall, the feelings dimen- subjective responses by individuals to ads and it is not a sions contributed importantly and differently from the scale which assesses the objectively existing elements in judgments scale. Edell and Burke (1987) also reported an ad such as the use of scenery, actors, music, etc. Such that in a follow up study they reduced the list of items to reliably verifiable elements in an ad are often used in 56 items based on the redundancy noted between the content analysis of ads as in the method described by items. Stewart and Furse (1986). The items in the judgments scale constitute evaluations of ads and, thus, may be better Examination of the items in the feelings scale shows viewed as responses that are a result of the cognitive that the three factors in this scale have some important processing of ads and which are considered opinions of differences with the factors in the CASC scale. First, the the overall effectiveness of ads while the feelings scale four items in the reptilian dimension of the CASC scale measures affective responses to ads which are more spon- are not represented at all in the feelings scale. Second, the taneous and less considered. Note, however, that the negative dimension of the feelings scale has three of the judgments scale is different from the analytic dimension four items in the individualistic dimension of the CASC of the CASC scale which measures the cognitive process- scale with the notable exception of the “fear” item. Third, ing of brand differentiation (“did the ad make you think of the feelings scale possesses three of the four items in the the differences between the brand and its competitors,” prosocial dimension of the CASC scale with the exception etc.) in an ad while the judgments scale asks for a cogni- of the “sense of affiliation” item in the CASC scale. tive evaluation of the ad in terms of overall adjective based Further, in the feelings scale, these three items are not all judgments about the ad. Thus, the analytic dimension of on the same factor as in the CASC scale. Fourth, in spite the CASC scale should have a different and unique effect of having four dimensions, the CASC scale is far shorter on attitude to the ad over and above the effect of the (sixteen items) than the feelings scale (53 items). Finally, judgments scale. the analytic dimension (four items) of the CASC scale is not represented in either the feelings scale or in the In any case, controlling for both affective and cogni- judgments scale as discussed below. tive responses to ads provides for better model specification in the present study. Thus, the judgments scale was THE JUDGEMENTS SCALE also included in the study.

The “judgments” scale was used by Burke and Edell STUDY GOALS (1986) as an adjective based attitude to the ad scale in order to capture ad reactions over time in a naturally The following research goals formed the motivation occurring situation. These authors used the scale to test for the study. Attitude to the ad was chosen as the depen- television commercial wearout – i.e., to see if subjects’ dent variable on which to test the predictive ability of the evaluation of ads declined as levels of exposure increased. three scales since these scales all purport to measure They used thirty of the items from the Reaction Profile for responses to advertising and not necessarily to brands or TV commercials developed by Wells, Leavitt, and McCo- companies. Further, attitude to the ad has been found to be nville (1971) and four additional items from other re- an important concept in determining the persuasiveness of search on attitude to the ad in order to compile the scale. advertising messages (MacKenzie and Lutz 1989; Mue- The scale was found to be reliable (internal consistency) hling and McCann 1993). and to have a stable three factor structure consisting of the 34 items. Notably, it was found in this study that ratings 1. Which scale is better overall at predicting attitude to for the scale did not change over time while the ratings of the ad? an overall attitude to the ad scale did. Thus, this scale is different from an overall attitude to the ad scale. 2. Which dimensions of the three scales predict attitude to the ad? In a later study, Edell and Burke (1987) reported reducing the scale to 25 items based on the redundancy 3. Are the dimensions of these scales stable under the among some of the items. These authors referred to the following conditions? three factors of the scale as the “judgments” scale and they found that this scale was qualitatively different from the • When there is a natural viewing situation. While feelings scales also used in their study. These authors also the feelings and judgments scales were devel- emphasized that the scale measures judgments about the oped in a naturally occurring setting, the CASC characteristics of an ad such as Humorous, Informative, scale was not. Gentle, Valuable, etc. while the feelings scale measures responses that are properties of the individual (happy, sad, • With a random sample of ads. None of the scales etc.) and not a characteristic of the ad itself. This view may were developed under this condition. be contested since the judgments scale also measures

American Marketing Association / Winter 2005 163 • With a large sample of ads. Only the CASC scale RESULTS used over a hundred ads. In order to investigate the structure of the three scales • With a large sample of subjects. None of the the data in this study were analyzed using Principal scales used a large sample of individual subjects Components Analysis. This is appropriate since all three (not exposures). scales report the use of exploratory factor analysis in the development of the scales. • When each observation is independent of the others. All of the scales were developed using The CASC scale in this study was found to comprise subjects who responded to multiple ads. This of three factors with an eigenvalue greater than one. A causes autocorrelation, since the units of obser- fourth factor with an eigenvalue of .93 was also extracted vation are not independent of each other, result- but not considered further since the cutoff for all the scales ing in biased estimates. was taken to be the customary eigenvalue of one. Howev- er, the presence of this fourth factor should be noted since METHODS the CASC scale is supposed to have four dimensions. Varimax rotation of the remaining three factor structure Data Collection extracted 54 percent of the variance in the items. All sixteen items loaded higher than .50 on one of the three The data were collected in a natural viewing situa- factors and not higher than .40 on any other factor. With tion. Four hundred and forty eight undergraduate subjects the exception of the fourth factor which narrowly missed at a private university in the northeast were interviewed in the cutoff, the factor structure of the CASC scale seems to their dorm rooms while watching television. Respondents be somewhat stable with three of the four expected factors were asked to tune into one of the major television performing as expected for the set of randomly selected networks that they normally watched and to watch some ads. All the four items for the prosocial dimension of the program content. During the first commercial break one scale loaded on the first factor along with all the four items of the commercials in the pod was randomly chosen and in the reptilian dimension. Similarly, all the four items for at the end of the commercial the respondent was asked to the analytic and individualistic items loaded on the second switch off the television and to fill in a questionnaire about and third factors respectively. The items were summed the commercial just viewed. according to the factors they loaded on.

As a result of asking one subject to react to one ad The feelings scale, which was expected to comprise only, a data set of 448 independent observations was of three factors, resulted in eleven factors for the 53 items obtained for the measures discussed next. used in this study and explained 64.8 percent of the variance in the items. Moreover, the varimax rotated Measures factor solution failed to converge. Examination of the initial factor matrix showed that only the first three factors The questionnaire contained items from all the three had loadings greater than .50 and, accordingly, only these scales and also on an attitude to the ad scale. The CASC three factors were used in further analysis. Burke and scale had 16 items all of which were taken from Chaudhuri Edell (1989) also state that these items should result in and Buck (1998). The feelings scale consisted of the 53 three factors. Thus, only these 39 items were used in items described by Burke and Edell (1989) which loaded further analysis and they were summed according to the greater than .5 on a factor in that study. The judgments factors they loaded on. Thirty one of the items loaded scale had the 25 items refined and used by Burke and Edell greater than .5 on the first factor; 6 items on the second (1989) and Edell and Burke (1987). The instructions to the factor and 2 items on the third factor. subjects reproduced the instructions provided by Chaudhu- ri and Buck (1998) and Edell and Burke (1987) for the The 25 items in the judgements scale loaded on five three scales.1 factors which together explained 60.8 percent of the variance in the items. Burke and Edell (1989) reported that The attitude to the ad scale was measured as the sum these 25 items loaded on only three factors in their study of the responses to a seven point semantic differential but this was not the case with regard to the data in the scale with the following five items: pleasant/unpleasant, present study. However, the original formulation of this unfavorable/favorable, unlikeable/likeable, good/bad, and scale (Wells, Leavitt, and McConville 1977; Wells 1964) negative/positive. These items have been widely used to reported six dimensions and, thus, the five factors were measure attitude to the ad in previous research (Muehling accepted as valid dimensions to investigate further. Ac- and McCann 1993). cordingly, the items which loaded greater than .5 on each

American Marketing Association / Winter 2005 164 of the factors were summed on their respective factors. All attitude to the ad and all three of the dimensions in the 25 items loaded greater than .5 on one of the five factors CASC scale featured in this set of explanatory variables. and did not cross load higher than .50. There were a minimum of four items on each factor. DISCUSSION

The three scales were next analyzed with regard to Of the three scales in the analysis described above, their effects on attitude to the ad. Multiple regression was the CASC scale emerges as the most successful in predict- used for this analysis. First, the feelings scale was used to ing consumer attitudes to advertising. First, it is the only predict attitude to the ad. All three dimensions of the scale in which all the dimensions made unique and signif- feelings scale together accounted for 36.8 percent of the icant contributions to attitude to the ad. In fact, the variance in attitude to the ad and only two of the three individualistic dimension of the CASC scale made the factors were significantly (p. < .05) related to attitude to highest contribution of all the dimensions in the three the ad. Second, the judgments scale was used to predict scales. The prosocial dimension made the third highest attitude to the ad. The five dimensions of the scale ac- contribution and the analytic dimension made a smaller counted for 45 percent of the variance in attitude to the ad but unique and significant contribution. Second, even and only four of the five factors in the scale were signif- with only 16 items it accounted for more of the variance icantly (p. < .05) related to the dependent variable. Last, (44.2%) in attitude to the ad than the 39 items used from the CASC scale was used to predict attitude to the ad. The the feelings scale (36.8%)and almost as much of the three dimensions of the CASC scale accounted for 44.2 variance (45%) as the 25 items in the judgments scale. percent of the variance in attitude to the ad and all three Last, it accounted for 9.4 percent incremental explanation dimensions were significantly related. of variance in attitude to the ad over and above the contributions of the other two scales. Moreover, its factor structure seems to be fairly stable, in spite of the fact that To test the incremental variance in attitude to the ad, the fourth dimension of the scale narrowly missed the if any, accounted for by the CASC scale over and above arbitrarily set eigenvalue cutoff point of one. Three of the the variance accounted for by the feelings and judgments four dimensions had eigenvalues higher than one and scales, a two step procedure was used. In the first step, all these explained more than half of the variance in the 16 the eight dimensions of the feelings and judgments scales items. were used as independent variables with attitude to the ad as the dependent variable. This resulted in an R square of The feelings scale was the least successful of the three .484. Next, the three dimensions of the CASC scale were scales with only one factor making a unique and signifi- also introduced into the equation. This resulted in an R cant contribution to attitude to the ad over and above the square of .578. Thus, the increase in R square, or the unique contributions of the CASC and judgments scales. additional variance explained in attitude to the ad by the Further, at least in this study, the factor structure of the CASC scale was .094 or 9.4 percent. In this final step, only scale was not as expected. Instead of the three factors one of the three dimensions in the feelings scale and two which were expected, eleven factors with an eigenvalue of the dimensions in the judgments scale were significant greater than one emerged. The judgments scale fared (p. < .05) predictors of attitude to the ad. However, all the better with all 25 items loading on five factors, more or three dimensions of the CASC scale were significantly less according to the specifications of the original formu- (p. < .05) related to attitude to the ad. Thus, all the lation of the reaction profile for television commercials dimensions of the CASC scale uniquely contributed to the (Wells, Leavitt, and McConville 1971). The judgments prediction of attitude to the ad and the scale as a whole also scale also made a sizeable contribution to the explanation uniquely and substantially contributed to the explanation of variance in attitude to the ad and two of the dimensions of variance in attitude to the ad over and above the of the scale made unique and significant contributions. variance accounted for by the feelings and judgments scale. Overall, it would seem from this study that the 16 items of the CASC scale deserve the attention of those The significant (p. < .05) standardized coefficients attempting to test the effectiveness of television commer- (beta) in the last step were .209 (prosocial), .097 (analytic) cials in terms of consumer attitudes. The CASC scale and -.332 (individualistic) for the three factors in the offers the ability to measure both emotional and rational CASC scale. The only dimension of the feelings scale responses to advertising in a practical and fairly stable which was significant (p. < .05) had a beta of -.122. The format. Moreover, it appears to contain unique elements only two significant dimensions of the judgments scale that are not in the other two scales. Further, even with a had beta weights of .242 and -.164. Thus, only six of the shorter number of items, it predicts attitude to the ad as eleven independent variables in the equation made unique well if not better than the other two scales. The CASC and significant (p. < .05) contributions to the prediction of scale does not claim to measure the entire range of human

American Marketing Association / Winter 2005 165 emotional experience. However, the simplicity of the sample of subjects and ads. Albeit, the study used only CASC scale makes it useful for conducting large scale student subjects and that may have been a shortcoming. testing of emotional and rational responses and advertis- However, since the subjects were viewing the programs ing effectiveness. The scale can be used to aggregate that they wanted to watch, they were probably the target responses and assign scores to ads or it can be used to audiences for these commercials and, thus, users or poten- assess individual level processing of ads. Further, it can be tial users of the products and services in the commercials. used for ads in both print and electronic media and for a variety of consumer products. And, finally, the scale can Further testing of the CASC scale versus the other be used to test ads with vastly different advertising strat- two scales in this study is warranted. First, all three scales egies since it has previously been validated in a sample of should be tested among “real world” respondents as 240 ads which contained sex, humor, animation, patrio- pointed out above in a limitation of the present study. tism, status, fear appeals, family situations, celebrities, Future studies should also test the efficacies of all three animals, typical spokespersons, product demonstrations, scales against important outcome variables other than comparisons, price appeals, health appeals, etc. (Chaudhuri attitude to the ad. For instance, it may be expected that the and Buck 1995b). CASC scale will perform better than the other scales with regard to the formation of attitude to the brand since the Finally, the CASC scale performed well in the natural analytic dimension of the CASC scale specifically mea- and “real world” setting of the present study with a large sures responses to brand differentiation within an ad.

ENDNOTE ______and ______(1998), “CASC – A Scale for Measuring Emotional and Rational Re- 1 The three scales in the study are not reproduced here due sponses to Advertising,” Zietschrift Fur Sozial Psy- to space constraints but may be obtained from the chologie, 29 (2), 194–206. sources cited in this paper. Edell, Julie A. and Marian C. Burke (1987), “The Power of Feelings in Understanding Advertising Effects,” REFERENCES Journal of Consumer Research, 14 (December), 421– 33. Batra, Rajeev and Michael L. Ray (1986), “Affective Haley, Russell I. and Allan L. Baldinger (1991), “The Responses Mediating Acceptance of Advertising,” ARF Copy Research Validity Project,” Journal of Journal of Consumer Research, 13 (September), Advertising Research, 31 (2), 11–32. 234–49. Herr, Paul M. and Christine M. Page (2004), “Asymmet- Burke, Marian C. and Julie A. Edell (1986), “Ad Reac- ric Association of Liking and Disliking Judgments: tions Over Time: Capturing Changes in the Real So, What’s Not to Like?” Journal of Consumer World,” Journal of Consumer Research, 13 (June), Research, 30 (March), 588–601. 56–65. Holbrook, Morris B. (1987), “Mirror, Mirror on the Wall, ______and ______(1989), “The Impact What’s Unfair in the Reflections on Advertising?” of Feelings on Ad-Based Affect and Cognition,” Journal of Marketing, 51, 95–103. Journal of Marketing Research, 26 (February), 69– ______and R.A. Westwood (1989), “The Role of 83. Emotion in Advertising Revisited: Testing a Typolo- Chaudhuri, Arjun (2004), “Testing the Independence of gy of Emotional Responses,” in Cognitive and Affec- Affect Using Prosocial and Reptilian Feelings,” in tive Responses to Advertising, P. Cafferata and Alice Marketing Theory and Applications, William L. Cron M. Tybout, eds. Lexington, MA: Lexington Books. and George S. Low, eds. Chicago, IL: American MacInnis, Deborah J., Ambar G. Rao, and Allen M. Weiss Marketing Association, 15, 286–92. (2002), “Assessing When Increased Media Weight ______and Ross Buck (1995a), “Affect, Reason, of Real-World Advertisements Helps Sales,” Jour- and Persuasion: Advertising Strategies That Predict nal of Marketing Research, 39 (November), 391– Affective and Analytic-Cognitive Responses,” Hu- 407. man Communication Research, 21 (3), 422–41. MacKenzie, Scott and Richard J. Lutz (1989), “An Empir- ______and ______(1995b), “An Explo- ical Examination of the Structural Antecedents of ration of Triune Brain Effects in Advertising,” in Attitude Toward the Ad in an Advertising Pretesting Advances in Consumer Research, Frank R. Kardes Context,” Journal of Marketing, 53 (April), 48–65 and Mita Sujan, eds. Ann Arbor, MI: Association for MacLean, Paul D. (1973), A Triune Concept of the Brain Consumer Research, 22, 133–38. and Behavior. Toronto: University of Toronto Press.

American Marketing Association / Winter 2005 166 ______(1990), The Triune Brain in Evolution: Plutchik, R. (1980), Emotion: A Psychoevolutionary Syn- Role in Paleocerebral Functions. New York: Plenum thesis. New York: Harper and Row. Press. Stewart, David W. and D.H. Furse (1986), Effective Mehrabian, A. and J.A. Russell (1974), An Approach to Television Advertising: A Study of 1000 Commer- Environmental Psychology. Cambridge, MA: MIT cials. Lexington, MA: Lexington Books. Press. ______and S. Koslow, (1989), “Executional Fac- Mitchell Andrew A. and Jerry C. Olsen (1981), “Are tors and Advertising Effectiveness: A Replication,” Product Attribute Beliefs the Only Mediator of Ad- Journal of Advertising, 18, 21–32. vertising Effects on Brand Attitude?” Journal of Zajonc, Robert B. (1980), “Feeling and Thinking: Prefer- Marketing Research, 18 (August), 318–32. ences Need No Inferences,” American Psychologist, Muehling, Darrel D. and Michelle McCann (1993), “At- 35, 151–75. titude Toward the Ad: A Review,” Journal of Current Wells, William D. (1964), “EQ, Son of EQ, and the Issues and Research in Advertising, 15 (2), 25–58. Reaction Profile,” Journal of Marketing, 28 (Octo- Olney, Thomas J., Morris B. Holbrook, and Rajeev Batra ber), 45–52. (1991), “Consumer Responses to Advertising: The ______, Leavitt Clark, and Maureen McConville Effects of Ad Content, Emotions, and Attitude To- (1971), “A Reaction Profile for TV Commercials,” ward the Ad on Viewing Time,” Journal of Consum- Journal of Advertising Research, 11 (6), 11–17. er Research, 17, 440–53.

For further information contact: Arjun Chaudhuri Charles F. Dolan School of Business Fairfield University Fairfield, CT 06824 Phone: 203.2544000, Ext. 2823 FAX: 203.254.4105 E-Mail: [email protected]

American Marketing Association / Winter 2005 167 MARKETING COMMUNICATION AND COMPANY BRAND ATTITUDE

Marc Weinberger, University of Massachusetts, Amherst Dale Taoping Tzeng, University of Massachusetts, Amherst Paul Bottomley, Cardiff Business School, United Kingdom Harlan Spotts, Western New England College, Springfield

ABSTRACT corporate reputation, as well as foundation work in branding, negativity, and branding and media effects. The value of strong stakeholder brand attitudes toward companies has become increasingly apparent to Branding practitioners and academic researchers. Less apparent is the role of the media in the formation of corporate brand The concept of corporate branding has resonance attitudes. This research draws on key literature from with several disciplines that deal with business and orga- branding and legitimacy theory to examine the interplay nization theories, but its popularization can be traced to between the volume and valence of publicity and volume product branding research in the early 1980’s. There is of advertising as well as the moderating effect of brand considerable agreement that the corporate brand has im- strength in the formation of company brand attitudes. We portant value that must be nurtured and protected. employ a unique dataset from three proprietary sources providing company advertising, publicity and company The parallel but related trend to corporate branding brand attitudes for a set of 18 technology firms over a 42 has been the emergence of integrated marketing commu- month time period. The outcome reinforces recent asser- nication with its recognition that product, service, or tions about the importance of publicity compared to company reputations are formed by many controllable advertising and also the growing recognition of company and uncontrollable forces. These forces may include adver- brand strength in tempering media effects. tising, but publicity and public relations may have an equal or greater impact on brand perceptions. INTRODUCTION Public relations activity related to branding has often The importance of branding and brand equity for been treated by marketers as the step-child of advertising, products, companies and organizations has become al- but that thinking has been changing in recent years. Rance most axiomatic over the past decade. Rather than debate Crain (2002), Editor in Chief of Advertising Age, argues the importance of strong brands, research has focused on that “the landscape of marketing is changing more quickly the creation, maintenance, preservation and worth of and dramatically than I ever could have imagined, and its brands. This research focuses on the association between new realities will require public relations to shoulder more marketing communications (advertising and publicity) of the load. Kitchen (1996) argues that the role of adver- and company brand attitudes. tising in corporate branding may be diminishing with marketing public relations (MPR) and corporate public BACKGROUND relations (CPR) on the rise.” In their book The Fall of Advertising and Rise of PR, Al and Laura Ries (2002) Research by Aaker and Jacobson (1994, 2001) and assert that public relations has become the most powerful Jacobson and Aaker (1987) examined various aspects of marketing-services discipline. company valuation and branding. Based on firms in computer-related industries, they concluded that “. . . Legitimacy Theory company brand attitude, a component and indicator of brand equity, has value relevance. Not only are changes in The conceptual basis for the importance on company brand attitude associated with stock return, but this asso- branding is “Legitimacy Theory,” a field that began with ciation is also incremental to information contained in foundation work by Parson (1960) and Weber (1978). It accounting measures” (p. 492). Brand attitude is a major has been extended into the organization and strategy component of brand equity, thus a follow-up question to literature in management (for a review see Suchman Aaker and Jacobson’s analysis is “what drives brand 1995). “Legitimacy is a generalized perception or as- attitude?” Our research examines marketing communica- sumption that the actions of an entity are desirable, proper, tions related antecedents of brand attitude; specifically, or appropriate within some socially constructed system of volume and valence of publicity, and, the volume of norms, values, beliefs, and definitions” (Suchman 1995, advertising for firms in the technology industry. The study p. 574). Accordingly, one type of legitimacy is pragmatic draws on conceptual work from legitimacy theory and legitimacy whose task is to Conform to Demands (respond

American Marketing Association / Winter 2005 168 to needs, co-opt constituents, build reputations), Select summarize three key findings from social cognition that Markets (locate friendly audiences), Recruit Friendly Co- involve the impact of volume. The first is a familiarity Optees, and Advertise (advertise product, advertise image). effect that increased exposure is associated with greater familiarity and stronger liking (Harrison 1977; Zajonc Intermediaries that distribute publicity in the media 1968). Research by Lee and Labroo (2004) provides and advertising by the firm are all potential sources that evidence that when processing fluency of the target is legitimate the organization. Pollock and Rindova (2003) enhanced by prior exposures, a more favorable attitude is use the term infomediary to describe the media as a funnel observed (Anand and Sternthal 1991; Bornstein 1989). that channels and shapes stakeholder knowledge and Second, research by Hawkins and Hoch (1992) suggests opinion. that simple repetition increases acceptance of a statement. Finally, the amount of available information about an The media may play a pivotal role in the branding activity reduces perception of riskiness (Heath and Tver- process, a view supported conceptually (Gray and Balmer sky 1991). Pollock and Rindova (2003) state, “all else 1997) and empirically (Fombrun and Rindova 1998). To being equal, the combined effects of increased familiarity, wit, Fombrun and Shanley (1990, 240) observed: “The acceptance, and reduced perceptions of risk can generate media themselves act not only as vehicles for advertising legitimacy benefits for a firm that receives a higher and mirrors of reality reflecting firms’ actions, but also as volume of media coverage” (p. 633). Of course, all else is active agents shaping information through editorials and usually not equal and so the evidence for a volume of feature articles.” Speaking from the “Legitimacy” per- coverage effect is not universal. spective, Deephouse (2000) argues that media reputation is a strategic resource for firms. “A firm’s reputation is In an advertising context, Lodish and his co-authors produced by the interactions of the firm with its stakehold- concluded that ad weight is not enough to explain overall ers, and, by information about the firm and its actions sales effects (Lodish et al. 1995). Smaller or newer brands, circulated among stakeholders, including specialized in- however, do benefit from greater advertising weight. formation intermediaries (Fombrun 1996; Logsdon and MacInnis, Rao, and Weiss (2002) examined a sample of Wartick 1995).” He further argues, that “a positive repu- mature brands that did benefit from greater volume of tation assists the legitimation process is important for advertising and a set that did not. The difference in effects, competitive advantage because it signals stakeholders however, were driven by message type not the volume of about the attractiveness of the firm who are then more spending. willing to contract with it” (Fombrun and Shanley 1990; Weigelt and Camerer 1988). There are two general effects related to volume of exposure and valence that may result from the framing of Pollock and Rindova (2003) examine the connection a message as positive or negative (sometimes referred to between the media and its influence on market analysts of as tone). Reddy, Swaminathan, and Motley (1998) dem- IPO’s. In their social constructionist framework, social onstrated that the valence of a critic’s (infomediary’s) structures like the media enhance the flow of credible reviews are important for Broadway shows. Shows that information that helps reduces uncertainty in market ex- received extremely low reviews did not last beyond one or changes. These social structures include specific infome- two weeks before closing. In a study of movie reviews, diaries or critics such as financial analyst reports, restau- Basuroy, Chatterjee, and Ravid (2003) concluded that rants reviews, books, movies, and plays (Cameron 1995; both positive and negative reviews are correlated with Caves 2000; Deephouse 2000; Rindova and Fombrun revenues; just the negative reviews diminish in their 1999). Pollock and Rindova (2003) point out that such impact over time. infomediaries legitimate firms or products by influencing buyer or stakeholder desirability perceptions of an orga- Valence has also been shown to matter for negative nization’s activities. They directly test this connection information from critical sources such as Consumers between media and legitimacy. “The legitimate organiza- Union when directed at services versus tangible goods tion [is perceived] not only as more worthy, but also as (Weinberger and Brown 1978). In a political context the more meaningful, more predictable, and more trustwor- valence of “Ad Watch” coverage of candidate advertising thy” (Suchman 1995, p. 571). had a significant impact on voter preferences (Min 2002).

Communication Volume and Valence In a publicity context, message valence is an aspect of media coverage that influences audiences by virtue of the There are important findings from social cognition choice of topics covered and the interpretation or spin about the impact of information on impression formation placed on the coverage. “In particular, framing events and (Fiske and Taylor 1991) and judgment (Heath and Tver- issues in positive or negative terms provides audiences with sky 1991) that have a bearing on the media effects of visible public expressions of approval or disapproval of volume and valence of coverage. Pollock and Rindova firms and their actions” (Pollock and Rindova 2003, p. 634).

American Marketing Association / Winter 2005 169 Negativity and Impression Formation holders temper the media message based on prior experience formed through direct and/or indirect communica- Denigrating information about people, products, com- tion with an organization. The effect of new information panies, or other products abound in the media. The impact is either enhanced or diminished based on this prior of negative and positive reports on impression formation perception. For the overall sample of companies in of political candidates (Golan and Wanta 2001), products Wartick’s study, the valence, or tone of coverage, influ- (Weinberger, Allen, and Dillon 1981; Weinberger and enced change in corporate reputation. For good reputation Romeo 1989), and job candidates (Bolster and Springbett firms, volume of media exposure was most highly corre- 1961) are well known. The mere mention of an issue on lated with level of reputation. In contrast, valence was the news makes a story important, possibly memorable, most important for influencing reputation for firms with and perhaps worthy to be passed along to others (Altheide poor reputations. It is possible that the mere exposure for 1977). Information in the media takes on a form of social companies with neutral or positive reputation are rein- proof (Rao et al. 2001) leading to information cascades forced by more exposure. Negative coverage, however, (Bikhchandani, Hirschleifer, and Welch 1992) and avail- may be discounted similar to consumers committed to a ability cascades (Kuran and Sunstein 1999). The role as brand seem to discount disconfirming brand information. “infomediary” may result in opinion leadership because of its inherent social proof. Firms with poor reputation may not have this shield of protection and may be vulnerable to negative media Under conditions of uncertainty audiences may coverage. This is the protection that legitimacy theory consciously or unknowingly imitate media statements suggests positive reputation may provide. Perhaps it eases rather than form independent judgments (Bikhchandani the uncertainty that stakeholders have while a poor repu- et al. 1992). Perhaps this helps explain why advertising tation may leave it vulnerable to negatively valenced weight is more important for new products or small brands messages from the media. than for mature brands. If simple volume or mere exposure effects prevailed, any kind of exposure in the media RESEARCH QUESTIONS would be expected to have a positive impact on liking of the organization or message target. However, Lee and The current study examines the relationship expressed Labroo (2004) suggest that conceptual fluency is trig- in Figure A looking at the relative impact of publicity gered when negatively valenced information is presented, (volume and valence) and advertising weight (volume) on resulting in a less favorable attitude when the valence of brand attitude. other constructs brought to mind are negative. Like prior experience with a company or brand, the conceptual The research examines the important issue of relative fluency effect presumes a more elaborate message effect impact of advertising weight and publicity on company and less automatic positive frequency of exposure effect. brand attitudes (CBA). Further, the effect of the volume of stories in comparison to the positive or negative framing Existing Company Perceptions of the issues is investigated. The first research question addresses this general issue. Pollock and Rindova (2003) found that volume and valence of media reports influenced the market for new RQ1 – What is the relative impact of publicity and IPO’s (high uncertainty product). Volume affected inter- advertising volume and publicity valence on compa- est and attention while the valence seemed to affect ny brand attitude? investor preferences. Here the newness of the offering could explain the inordinate reliance on media reports. A In keeping with current views about the dominance of study of consumer response to negative publicity (Ahlu- publicity, the expectation is that publicity will be more walia, Burnkrant, and Unnava 2000) found that consum- closely related to company brand attitudes than advertisers committed to a brand were not affected as severely by ing. Given that stakeholders are business people in tech- negative publicity. IPO’s by their general nature may have nology firms, it might be expected that publicity domi- fewer investors committed to the company, thus being nance should be particularly apparent. Based on the mixed more influenced by media stories. results of past research, it is unclear whether volume or valence will dominate in the overall sample. Company perception expressed as strength of corporate reputation was examined by Wartick (1992), specif- The second research question (RQ2) addresses the ically looking at both the volume and valence of media matter of prior brand strength. coverage. His model suggests that a defined stakeholder (audience) is exposed to media (amount, tone, and recen- RQ2 – Are the effects of RQ1 tempered by higher and cy) through a filter defined by source credibility, selective lower levels of prior company brand attitude? perception, and topic relevance. After exposure, stake-

American Marketing Association / Winter 2005 170 FIGURE A Publicity (Volume &Valence) Media Communication and Company Brand Attitude

Publicity (Volume & Valance) Level of Company Brand Company Brand Attitude Attitude Advertising Volume

The expectation is that for strong reputation firms, national advertising expenditure information on over volume will matter more than valence; for weaker firms, 100,000 different brands. Monthly data were aggregated valence should be more important than volume. In keep- into quarters over the time period of investigation for each ing with research showing information effects dependent of the companies included in the study. on stakeholder perceptions (Wartick 1992; Ahluwalia, Burnkrant, and Unnava 2000), the analysis accounts for Company Brand Attitude Data stronger and weaker prior company brand attitudes. Techtel Corporation provided the company brand DATA AND DATA ANALYSIS attitude data, which was collected via quarterly surveys of the personal computing and network computing markets. This study utilizes data on publicity, advertising, and Their panel surveyed approximately 1500 people influen- company brand attitude for each of 18 firms, requiring tial in purchasing computer software and hardware (esti- three separate sources. All data cover the period Janu- mated 50% response rate). The Techtel measure of com- ary 1, 2000 to July 1, 2003 encompassing 42 months or 14 pany brand attitude asked respondents whether they have quarters. positive, negative, or no opinion of a company. Like Aaker and Jacobson (2001), we made use of this informa- Publicity Data tion to develop a company brand attitude measure defined as Net Positive Opinion (NPO = percent of respondents CARMA International provided the publicity data, with positive opinion about the firm –percent of respon- which are based on a Media Analysis Rating System first dents with a negative opinion about the company). A developed in 1991. The system rates each article in the simple 3 point scale (positive (1)/neutral (0)/negative (-1) context in which it appears. Using a pre-determined set of has been used in political science (Robinson, Shaver, and seven criteria, each article is coded and receives a score Wrightsman 1999) and has been shown (e.g., Haley and between zero (the least favorable) to 100 (the most favor- Case 1979) to provide information similar to measures able). All codings begin at 50 (the neutral point), with a with more scale points. For this study we focus on Tech- possible 50 points added or subtracted from this value. tel’s Enterprise Panel consisting of firms also studied by CARMA conducts daily tracking of the volume of posi- CARMA, including: AT&T, Cisco, Compaq, Computer tive and negative press coverage as well as the valence Associates, Dell, EMC, Gateway, Hewlett Packard, IBM, rating for each article appearing in eighteen major maga- Intel, Microsoft, Oracle, Peoplesoft, SAP, Siebel, Sun, zines and newspapers in the U.S. For this study daily data Sybase, Unisys. were compiled into quarterly periods to match the company brand attitude data. Analysis of Data

Advertising Data The company brand attitude variable (NPO) is collected from the first quarter of 2000 to the second quarter Data on media spending were collected from of 2003. Since the advertising data and the publicity data Ad$pender (2004), a multi-media database providing on some of the firms in the Techtel enterprise data set were

American Marketing Association / Winter 2005 171 not collected during the exact same period, observations Positive Opinion. It appears that publicity valence and for companies with any missing values were eliminated advertising spending do not significantly influence atti- from further analysis. This process reduced the initial tudes toward the company. dataset from 266 to 166 usable and unique observations. Research Question 2: Are the effects of Research Analysis first regressed the total number of favorable Question 1 tempered by higher and lower levels of prior (volfav) and unfavorable (volunf) articles, the overall company brand attitude? publicity rating (valence) and the total advertising spending (advol) on net positive opinion (NPO). Since we have Prior research has established that the effects of both time series and cross-sectional data, the independent publicity vary depending on prior company attitudes. variables were checked for multicollinearity, heteroske- Thus, a median split of the sample was used to divide firms dasticity (Breusch-Pagan) and autocorrelation (Durbin- into groups, Stronger versus Weaker Net Positive Opin- Watson). No multicollinearity or heterskedasticity were ion. The descriptive statistics for each group are presented observed among the variables; however, autocorrelation in Table 1. As expected, there is a statistically significant was a problem, which was corrected with a first order difference between the two groups on Net Positive Opin- autoregressive process. ion with higher mean opinions for Stronger than Weaker Companies. While the two groups did not differ on the RESULTS level of favorable publicity volume, there was a significant difference in the average volume of unfavorable Research Question 1: What is the relative impact of publicity. Firms with Weaker opinion had almost twice publicity and advertising volume and publicity valence on the volume of unfavorable publicity as firms with Stron- company brand attitude? ger opinion. Similarly, the valence of publicity was more positive for Stronger than Weaker firms. Descriptive statistics for the overall sample of firms are presented in Table 1. The average Net Positive Opin- A Chow test (Greene 1993) was used to test for ion for firms in the sample was 50.38. Volume of publicity differences in regression models between the two groups. varied on average with 66 favorable articles to 43 unfavor- The results of this test (F = 32.27, p < .0001) indicated that able articles per quarter. The average valence of publicity significant differences exist between the two groups of was slightly positive with a CARMA publicity rating of firms in terms of the relationship between marketing 51.76. Finally, average ad spending was $3,302,000 per communications and Net Positive Opinion. The models quarter. differ on volume of favorable publicity (t = 2.25, p < .03) and publicity valence (t = 3.63, p < .001). The other Results of the regression model were statistically variables in the model were not significant. significant (see Table 2), explaining approximately 22 percent of the variation in Net Positive Opinion. After A regression model including the four independent appropriate corrections for serial correlation, Favorable variables was fit for each group of Stronger and Weaker Publicity Volume was the only variable influencing Net opinion companies. For Stronger companies the volume

TABLE 1 Descriptive Statistics of Variables Used in the Analysis for Overall Sample of Firms, and Stronger and Weaker Net Positive Opinion Groups of Firms (per quarter)

OVERALL Stronger Weaker Significance

Net Positive Opinion 50.382 62.485 43.582 < .0001

Favorable Publicity Volume 65.666 63.559 68.417 .6718 Unfavorable Publicity Volume 42.937 31.894 57.354 < .003 Publicity Valence 51.763 53.132 49.977 < .0001 Advertising Spending (‘000’s) $3302.47 $3376.83 $3205.39 .8320

Number of Observations 166 94 72

* t-test results based on df = 164.

American Marketing Association / Winter 2005 172 TABLE 2 Regression of Ad Spending, Volume of Publicity, and Valence on Company Brand Attitudes

Variable Coefficient t-value Significance

Intercept 32.2088 2.59 0.01 Favorable Publicity Volums 0.084 3.17 0.002 Unfavorable Publicity Volume -0.003 -0.11 0.913 Publicity Valence 0.268 1.20 0.230 Advertising Spending -0.0002 -1.50 0.1364

Regression Significance F = 11.22 Df = 4, 161 P < .0001 R-sq = .2180

of favorable publicity was the only significant influence where opinions are unformed or neutral. Such a result was on Net Positive Opinion (see Table 3A). This model not found; no positive advertising effects were detected accounts for over 50 percent of the variance in the depen- here. This may support MacInnis et al. (2002) who con- dent variable. tend that for mature brands, it is the type of message and not the volume of ad spending that matters. Results for the Weaker opinion companies were markedly different (see Table 3B). The overall regression A second notable result was that publicity did matter, model accounted for only 22 percent of the variance in Net with the influence of valence and volume nuanced. In the Positive Opinion. An examination of the individual coef- overall model the volume of positive publicity accounted ficients revealed Publicity Valence as the only factor for the variation in company brand attitude. We can see, having significant influence on Net Positive Opinion. It however, that this effect obscures a significant difference appears that Volume of publicity and advertising spend- in how publicity works. Wartick (1992) found that coming had no significant influence on company brand atti- panies with stronger versus weaker reputations are differ- tude for those with Weaker reputations. entially affected by the volume and valence of publicity. In his analysis as in ours, volume of positive publicity DISCUSSION correlated with higher ratings for firms with better reputations. These firms were not influenced by publicity The task of this research was to examine marketing valence per se. In the context of the social cognition communications related antecedents of company brand research discussed earlier, it is possible that companies attitude, namely the volume and valence of publicity and with prior positive reputations are reinforced by more the volume of advertising on a set of firms in the technol- exposure, a mere exposure effect. Perhaps these stronger ogy industry. In several articles noted earlier, Aaker and perceptions are related to the stronger commitment found Jacobson argued that company brand attitude is a compo- to insulate audiences from negative information (Ahlu- nent of brand equity. These attitudes are related to stock walia et al. 2000). returns and provided information beyond normal accounting measures. Our current research adds to insights Firms with weaker prior attitudes are affected by the about company brand attitude by examining the role valence of publicity in the media, but not the volume of advertising and publicity play in the support or weakening positive or negative articles. Again this result is consistent of brand equity. with both Wartick’s and Ahluwalia’s findings that companies with weaker reputations are affected more by First, the volume of advertising is not related to brand unfavorable information than the amount of information. attitude for the full sample of 18 firms; nor for the separate It appears that that firms with stronger prior reputations examination of firms with stronger or weaker net positive are given a limited shield of protection not afforded to opinion. This result is consistent with conclusions by firms with weaker reputations. Lodish et al. (1995) that advertising weight is not sufficient to explain sales effects. In particular they suggested Third, firms with stronger and weaker reputations do that newer and smaller brands gain the most from adver- have some important differences in publicity coverage. tising. Though our study did not examine newer or smaller As the descriptive statistics reveal, firms with stronger brands, firms with weaker company brand attitudes may brand attitudes have far fewer negative stories and a more be expected to gain from advertising like a newer brand positive publicity rating on average. The levels of positive

American Marketing Association / Winter 2005 173 TABLE 3A Regression of Ad Spending, Volume of Publicity, and Valence on Company Brand Attitudes for Firms with Stronger Prior Company Brand Attitudes

Variable Coefficient t-value Significance

Intercept 19.487 0.93 0.353 Favorable Publicity Volume 0.243 5.92 0.0001 Unfavorable Publicity Volume 0.064 1.13 0.260 Publicity Valence 0.508 1.37 0.176 Advertising Spending -0.0002 -1.18 0.243

Regression Significance F = 4.60 Df = 4, 67 P < .0024 R-sq = .2153

TABLE 3B Regression of Ad Spending, Volume of Publicity, and Valence on Company Brand Attitudes for Firms with Weaker Prior Company Brand Attitudes

Variable Coefficient t-value Significance

Intercept 0.789 0.06 0.950 Favorable Publicity Volume -0.007 -0.30 0.766 Unfavorable Publicity Volume 0.034 1.54 0.128 Publicity Valence 0.651 2.78 0.007 Advertising Spending -0.0002 -1.05 0.296

Regression Significance F = 4.60 Df = 4, 67 P < .0024 R-sq = .2153

publicity and advertising between stronger and weaker Finally, the results give credence to the belief that firms are not different. The important result is that the public relations activity is gaining ascendance relative to individual regression models run on the firms with stron- advertising in corporate branding. Here we see the unique ger and weaker brand attitudes still finds a volume effect role of volume and valence of publicity shaping stake- for the stronger firms and a valence effect for the weaker holder opinions. It supports the view that the media may firms. Even though firms with stronger company attitudes play a pivotal role in the branding process. Though have about the same number of positive articles as do beyond the scope of the current research, prior research firms with weaker company attitudes, the volume of suggests that this media influence effect is magnified positive publicity continues to perpetuate the strong rep- under conditions of audience uncertainty where informa- utation. Firms with stronger prior reputations should tion may reduce riskiness perceptions. strive to enhance the volume of positive publicity they receive.. No study is without limitations. The effects observed in this investigation are clearly related to a small set of At the same time, firms with weaker reputations have firms within the technology industry for a set period of an average publicity rating lower than the stronger firms; time. An examination of a larger set of firms across a however, they scored right at the CARMA neutral public- variety of industries may reveal different relationships. ity rating of 50. It appears that the variation in valence is However, the results reported here are consistent with influencing firm reputation. This implies that firms with those of other studies focused on different industries and weaker reputations are not impacted by more articles, using different measures of company brand attitude, pro- rather it is the ratings or valence of the articles that is most viding a level of convergent validity. The strong effects of closely related to the level of company brand attitude. publicity found in this study should not be used to elimi- Fluctuations in the rating valence of stories about these nate advertising. All that is clear from this study is that the firms is closely related to brand attitudes for these weaker amount of advertising is not related to company brand reputation firms. attitudes. As MacInnis and her colleagues suggested, it

American Marketing Association / Winter 2005 174 may simply be that “what” firms say in their ads is more tation should be viewed as “legitimacy theory” suggests, important than how “loud” they say it. as a strategic resource. This research lays the groundwork to examine the broader relationship of the direct and CONCLUSION indirect effects between marketing communications, company brand attitude, and company value. In doing so we The conclusion from this analysis is that publicity is will gain greater insight to the dollar value of marketing a driver of corporate brand attitude and that media repu- communications on company valuation.

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For further information contact: Marc Weinberger Isenberg School of Management University of Massachusetts Amherst, MA 01003 Phone: 413.545.5674 FAX: 413.545.3858 E-Mail: [email protected]

American Marketing Association / Winter 2005 176 ORGANIZATIONAL ANTECEDENTS TO AND OUTCOMES OF MARKETING STRATEGY DEVELOPMENT STYLES: A CONTINGENCY MODEL

J. Chris White, Michigan State University, East Lansing Jeffrey S. Conant, Texas A&M University, College Station Raj Echambadi, University of Central Florida, Orlando

SUMMARY with control and coordination. Therefore, we propose that the relationship between the number of MSD styles used Despite growing interest evidenced by recent publi- and implementation capability is curvilinear (an inverse cations in the marketing strategy literature and by the U-shaped relationship); that is, the number of MSD styles Fortune 500 business members of Marketing Science used is positively associated with implementation capa- Institute (MSI), there is a dearth of research on and a need bility and the number of MSD styles used squared is to improve our understanding of the process of develop- negatively associated with implementation capability. ing and implementing marketing strategy. Several impor- We propose that the relationship between MSD styles and tant gaps in the literature have limited our understanding. implementation capability is contingent on firm size, First, most existing models of strategy-making fail to fully environmental turbulence, and the organization’s com- capture the complexity and variety of the phenomena, and petitive strategy emphasis. Finally, we argue that a firm’s overlook the roles top managers and organizational mem- implementation capability will positively impact its per- bers play in developing strategy. Second, prior research formance and that the relationship between number of has focused primarily on either antecedents or conse- MSD styles used and performance will be mediated by quences of strategy-making, but not both (see Menon et al. implementation capability. 1999 for a notable exception). And third, despite evidence suggesting the performance outcomes of strategy-making The conceptual model we develop has the potential to may depend on complex contextual interactions, studies make several important contributions to the marketing of the implications of strategy-making have focused al- strategy literature. First, empirical support would provide most exclusively on direct financial payoffs, with incon- evidence that multi-dimensional measures are necessary sistent results. to capture and better understand the complexity and variety of the strategy development process. Second, In this paper, we address these gaps by developing a empirical testing of the proposed model can improve the model that incorporates organizational antecedents and reliability of the strategy-making scales created by Hart performance outcomes of marketing strategy develop- and Banbury (1994) and adapted to the marketing context ment (MSD) styles in a contingency framework. The by White et al. (2003), thus incorporating an organization- organizational antecedents of MSD styles tap the domain wide approach to the study of marketing strategy develop- of organizational structure, organizational culture, and ment. Third, the propositions put forth in this paper top management team characteristics. We propose that the provide guidelines for testing a complex framework in number of MSD styles is positively influenced by organi- which the relationship between the number of MSD styles zational formalization, an innovative organizational cul- used and implementation capability is contingent on the ture, and heterogeneity of the top management team, and interaction of strategy development with organizational, negatively influenced by organizational centralization. environmental, and competitive strategy factors. And We draw on resource-based theory, the theory of compet- fourth, we believe empirical testing of the proposed model itive rationality, and the paradox perspective on organiza- would support the notion that organizations with superior tional effectiveness to discuss the relationship between implementation capability realize significantly greater the number of MSD styles used by the firm and the ability performance. In summary, this research has the potential to implement strategy. Specifically, we argue that even to provide managers and researchers alike with a better though the use of multiple MSD styles results in benefits understanding of the process of developing and imple- (e.g., causal ambiguity, barriers to imitation, etc.), it may menting marketing strategy. also result in additional costs, such as those associated

American Marketing Association / Winter 2005 177 REFERENCES Model and a Test,” Journal of Marketing, 63 (April), 18–40. Hart, Stuart and Catherine Banbury (1994), “How Strat- White, J. Chris, Jeffrey S. Conant, and Raj Echambadi egy-Making Processes Can Make a Difference,” Stra- (2003), “Marketing Strategy Development Styles, tegic Management Journal, 15 (May), 251–68. Implementation Capability, and Firm Performance: Menon, Anil, Sundar G. Bharadwaj, Phani Tej Adidam, Investigating the Curvilinear Impact of Multiple Strat- and Steven W. Edison (1999), “Antecedents and egy-Making Styles,” Marketing Letters, 14 (July), Consequences of Marketing Strategy-Making: A 111–24.

For further information contact: Chris White The Eli Broad College of Business Michigan State University N370 North Business Complex East Lansing, MI 48824–1122 Phone: 517.353.6381 FAX: 527.432.1112 E-Mail: [email protected]

American Marketing Association / Winter 2005 178 COORDINATING MARKETING AND SALES: EXPLORATION OF A NEGLECTED INTERFACE

Christian Homburg, University of Mannheim, Germany Ove Jensen, University of Mannheim, Germany

SUMMARY unit level, and at the local (country) level. However, conflicts between M&S are not further explored. Dews- Academic research has studied marketing’s inter- nap and Jobber (2000) conceptually explore the M&S functional interfaces in detail (Maltz and Kohli 2000; interface in consumer packaged-goods companies. Ruekert and Walker 1987a). However, it has almost completely neglected one interface that is very important We identified two studies that provide empirical in managerial practice: the interface between marketing information on the M&S interface. Strahle, Spiro, and units (such as product management, communication, Acito (1996) observe that sales managers do not generally market research) and sales units (such as the field reps). set sales objectives which are consistent with the strategy As a result of an MSI workshop on marketing’s interfaces, specified by a marketing executive for a particular prod- Montgomery and Webster (1997, p. 16) noted that “in- uct. Some of the reasons behind this gap are miscommu- trafunctional conflict within marketing was a more impor- nications and volume-goal differences. Their results un- tant topic for discussion than we had expected. The most derline the need for more research on communication as frequently discussed issue was the conflict between sales well as coordination between M&S. Homburg, Work- and marketing.” man, and Krohmer (1999) compare the influence of five functional groups over marketing and non-marketing Given growing recognition that this interface is high- issues: marketing, R&D, operations, and finance. Howev- ly conflict-laden in practice, our paper prepares the ground er, their study does neither analyze the extent of conflict for future empirical research. We develop a conceptual between M&S nor mechanisms to cope with it. framework of the interface and of coordination mechanisms for coping with it. Our framework defines the key Conceptual Framework constructs and develops hypotheses. Our conceptual framework comprises three general Literature Review components: (1) coordination mechanisms, (2) performance domains, and (3) moderators and mediators of the One of the most important findings of our literature coordination-performance relationship. review is what we did not find: dedicated empirical research of the M&S interface. The vast majority of 1. We conceptualize two domains of coordination mech- studies dealing with organizational issues in marketing anisms for M&S units: boundary-reducing mecha- have not distinguished between marketing and sales sub- nisms and boundary-bridging mechanisms. These functions or functions. two domains reflect two facets of integration that have been distinguished in the literature. For exam- Among those studies that have dealt with the internal ple, Kahn and Mentzer (1998) differentiate between structure of the marketing function, one group uses design an “interaction” facet, that focuses on information dimensions such as centralization, formalization, and exchange, and a “collaboration” facet focusing on the specialization (Dastmalchian and Boag 1990; Ruekert, willingness to work together. Recent work on coordi- Walker, and Roering 1985). However, this work does not nation mechanisms increasingly acknowledges their further differentiate the marketing function into market- differential effects on an interfunctional boundary ing subunits and sales subunits. and complements the classical coordination mechanisms (Galbraith 1973; Van den Ven, Delbequec, and Very few articles explicitly deal with the distinction Koenig 1976) by mechanisms targeted at interdepart- between M&S. The pioneering work of Cespedes (1993, mental beliefs and values (Martinez and Jarillo 1989; 1994) highlights the key challenges at the M&S interface Roth, Schweiger, and Morrison 1991; St. John, Young, as well as instruments for managing the interface. Work- and Miller 1999). We define boundary-reducing man, Homburg, and Gruner (1998) develop a typology of mechanisms as the “pull” facets of coordination which the structural location of M&S and identify environmen- foster the willingness to cooperate, thereby diminish- tal antecedents influencing the configuration chosen. M&S ing the interdepartmental barriers. Among these are subunits are found at the corporate level, at the business integrative recruiting and HR development as well as

American Marketing Association / Winter 2005 179 integrative reward systems. On the other hand, we 3. Our moderators and mediators are centered around define boundary-bridging mechanisms as the “push” the boundary between M&S. By boundary criticali- facets of coordination which drive two departments ty, we understand the amount of coordination needed to cross the boundary, but do not decrease the inter- at that interface. The greater the criticality, the more departmental barrier. These include formalization, traffic occurs at the boundary. Boundary criticality is integration teams, joint planning, and information constituted by such constructs as task interdepen- systems. dence and market dynamism. Boundary-creating differences refer to the extent of barriers hampering 2. Our framework contains two domains of success. coordination. Among these are differences in goal The first domain encompasses success at the busi- orientation, time orientation, and skills. The third ness level. We distinguish between market-level domain, integrativeness of the corporate environ- measures and financial measures. The second do- ment, pertains to the extent to which M&S are embed- main represents the integration success at the depart- ded in an intraorganizational context that fosters mental level. Here, we subsume such constructs as coordination between two units. Most importantly, coordination efficiency, coordination effectiveness, this includes top management support. References communication intensity, information quality, and available upon request. information usage.

For further information contact: Christian Homburg Marketing Department Director of the Institute for Market-Oriented Management University of Mannheim 68131 Mannheim Germany Phone: 49.621.181.1555 FAX: 49.621.181.1556 E-Mail: [email protected]

American Marketing Association / Winter 2005 180 THE EFFECT OF INTERACTIONAL JUSTICE ON THE PERFORMANCE OF CROSS-FUNCTIONAL PRODUCT DEVELOPMENT TEAMS

Tianjiao Qiu, University of Illinois at Urbana–Champaign, Champaign Deborah Rupp, University of Illinois at Urbana–Champaign, Champaign William Qualls, University of Illinois at Urbana–Champaign, Champaign

SUMMARY managers impact their task performance and interpersonal citizenship behaviors. In recent decades, cross-functional product development teams (CFPDTs) have become a popular mechanism Interactional justice refers to the extent to which team for achieving greater interfunctional integration in the members feel they are treated with dignity and respect by new product development process. Research has demon- their project managers. Interactional justice is particularly strated that CFPDTs composed of members from various relevant in the study of CFPDT members’ performance areas such as marketing, product design, process design, because it reflects the interpersonal dimension of the new engineering, and finance work as an efficient mechanism product development process. The quality of interperson- for generating innovative new product ideas (e.g., Sethi al treatment received during the product development 2000; Wind and Mahajan 1997). A key characteristic of process from the project manager greatly influences team CFPDTs is the diversity of functional areas represented in members’ fairness judgment and predicts supervisor- the team. On one hand, cross-functional diversity pro- related outcomes. Three aspects of supervisor-related vides for crucial functional inputs during the new product outcomes are examined: team members’ multi-foci com- development process. Successful cross-functional rela- mitments, their task performance, and their interpersonal tionships ensure a high level of information sharing and citizenship behaviors. integration, which in turn leads to innovative new products. On the other hand, cross-functional diversity poses In the paper, we develop and test an integrative model great challenges to efficient working relationships, re- relating interactional justice perceptions to CFPDT per- flected in three potential barriers – turf barriers, interpre- formance (see Figure 1). We hypothesize that higher tive barriers, and communication barriers (Hunt 1995). levels of supervisor-focused interactional justice climate enhance the interpersonal relationships between team To benefit from cross-functional diversity, a high members and project managers. Such enhanced relation- level of interaction and collaboration among CFPDT ships are reflected in team members’ multi-foci commit- members is necessary. Since each team member in CFP- ments to the team and to the product development project. DTs is equipped with unique experience with the existing Furthermore, team members’ multi-foci commitments product technology or manufacturing process, it is essen- serve as a mediator between the perceived interactional tial that he/she communicates effectively in order to create justice and their task performance as well as their interper- the synergy that CFPDTs provide. Without such informa- sonal citizenship behavior. tion sharing and integration, team members cannot develop a common understanding of or a shared goal regarding Members from 50 students’ product development the product development process. teams participated in the study. Student teams were composed of majors from the College of Engineering and the One factor that can potentially influence the level of Business school, which emulate the structure of cross- cooperativeness among CFPDT members is their fairness functional product development teams. The model is perceptions. Fairness perceptions have a significant im- tested using structural equation modeling. The overall pact on a wide variety of job-related attitudes and behav- model is strongly supported by the data, with satisfactory χ 2 iors (e.g., Cohen-Charash and Spector 2001; Colquitt goodness-of-fit statistics as follows: (58)=83.42 (p = 2001; Colquitt et al. 2001). The literature shows that .02); RMSEA = 0.047; GFI = 0.937; CFI = 0.985; NFI = employees make at least three types of fairness judg- 0.951; AGFI = 0.902; and RMR = 0.036. All estimated ments: distributive, procedural, and interactional. Using beta parameters for the model are significant at 0.05 the reward structures as the key variables, Shikhar and levels. Vijay (2001) have examined the performance of CFPDT through distributive and procedural justice perspectives The findings indicate that the relationship between without mentioning the role of interactional justice. To team members and the project manager is enhanced by bridge the research gap, we examine how CFPDT mem- higher levels of perceived interactional justice. Such bers’ interactional justice perceptions about their project enhanced relationship is reflected in team members’ multi-

American Marketing Association / Winter 2005 181 FIGURE 1 The Conceptual Model of Interactional Justice on CFPDT Members’ Task Performance and Interpersonal Citizenship Behavior

Task Performance Interactional Justice

Person-Focused Interpersonal Citizenship Behavior Multi-Foci Commitment

Task-Focused Interpersonal Citizenship Behavior

foci commitments towards the team and the on-going contributes to the better understanding of the role of project. It is further demonstrated that multi-foci commit- interactional justice perception in enhancing interfunc- ment serves as the partial mediator between the perceived tional communication and cooperation in the new product interactional justice and both team members’ task perfor- development process. mance and interpersonal citizenship behavior. The paper

For further information contact: Tianjiao Qiu Department of Business Administration 339 Wohlers Hall University of Illinois at Urbana–Champaign 1206 S Sixth Street Champaign, IL 61820 Phone: 217.333.4240 FAX: 217.244.7969 E-Mail: [email protected]

American Marketing Association / Winter 2005 182 CROSS-FUNCTIONAL INTEGRATION AND NEW PRODUCT PERFORMANCE: A META-ANALYSIS

Tanawat Hirunyawipada, University of North Texas, Denton Archna Vahie, University of North Texas, Denton

SUMMARY Second, the decisions to include or exclude any specific characteristics into the samples always impact the Literature has emphasized the importance of the relation reliability of measures. The results show that the larger the between cross-functional integration (CFI) and the suc- number of functions integrated, the more difficult it will cess of new products (e.g., Anderson 1982; Nystrom be for CFI to become effective. The results confirm the 1985; Ruekert and Walker 1987a, 1987b). Many empiri- importance of the inclusion of the R&D function in the cal and theoretical studies confirm a positive relation CFI team for the success of NPD. The inclusion of the between CFI and new product performance (e.g., Gupta, marketing function in CFI shows neutral impact on the Raj, and Wilemon 1986; Griffin and Hauser 1992, 1996; CFI-new product performance relation. This may imply Song and Parry 1997a, 1997b). Yet other studies show that the importance of the marketing function be made either non significant or negative effect of CFI on the clear before it is included in the CFI. Future research may success of new product development (e.g., Zirger and investigate which other function should be integrated for Hartley 1996; Henard and Szymanski 2001; Gray, Matear, the success of new product. The meta-analysis also shows and Matheson 2002). These disparate findings in the that the respondents from NPD teams have positive im- literature make the indispensability of CFI in new product pacts toward effect size. This suggests that the NPD team development (NPD) a questionable concept. We use meta- members, which are the primary source of data, represent analysis to provide a clearer answer to the importance of the actual information of the CFI-new product success CFI for the success of new products. relation better than do the respondents from senior man- agements. However, this result serves as a warning that Employing the model-level effect sizes, we found people who are involved in CFI may provide biased 108 correlations between CFI and new product perfor- information about the CFI-new product success relation. mance. Findings from the meta-analysis show that the Researchers may consider using data from different infor- relation between CFI and new product success is positive- mants for independent and dependent variables to prevent ly correlated, but that some key factors moderate this common method bias. Interestingly, the authors find that relation. This meta-analysis provides three main findings. studies published in the year 2000 and thereafter show First, attention must be paid to the operationalization of considerably positive relation with effect size. This result the constructs because the way the dimensions of the sheds some light on why Henard and Szymanski (2001) construct are defined can impact the findings. We find that found no significant relation between CFI and new prod- CFI is likely to be comprised of at least two distinct uct success as most of the extant studies they looked at dimensions: internal integration and inter-functional cli- were published prior to year 2000. This finding supports mate. Internal integration captures the concept of CFI in our expectation that the increasing needs for diverse terms of its physical interactivities between functions expertise and experiences can lead to more integration of whereas inter-functional climate is more likely to capture different functions, and therefore to greater outcomes. the norm within group or organization that encourages the trust and relationship among different functions. Inter- The generalization of the results is limited because of functional climate can increase the capability to resolve the moderating effects of contextual variables. Studies conflicts among integrated teams. The result from the with respondents from companies across multiple coun- meta-analysis indicates that CFI has stronger relation with tries do not support the salient relation between CFI and new product success when the CFI is defined as the new product success. CFI may not be able to impact supportive climate for collaboration. This issue casts a consistently across countries with different norms and doubt on whether researchers have crafted enough dimen- cultures. Thus, researchers conducting CFI studies should sions to reflect the underlying concept of CFI. The results take the context, organizational environment, and culture also show that the CFI-new product success relation is into consideration. Accordingly, different cultures and stronger when the new product performance is operation- societies can be studied to create a typology of norms that alized as product effectiveness than when it is operation- are best suited for CFI. Future research may focus on how alized as NPD productivity. This suggests that respon- multicultural the individual NPD teams are and what dents view a potential outcome of CFI as product effec- impacts this characteristic has on the success of new tiveness rather than productivity. products. The result also shows that samples from high-

American Marketing Association / Winter 2005 183 tech products appear to play a moderating role on the effect size, and that CFI performs different roles across effect size. NPD’s time constraint and technology conver- stages of NPD. A future implication is to research not only gence are among the reasons why NPD team in high-tech the impact of CFI in various stages of NPD, but also the industry is more likely to seek integration with other factors and conditions that impact the CFI strategy in each functional areas. The samples from western countries also NPD stage. Not surprisingly, goods vs. services as well as show stronger negative impact on effect size than do industrial products vs. non-industrial products do not samples from other countries. This result can be explicat- explain the variance of the effect size. Given that the ed by the individualistic norm of people in western coun- overall combined mean is significant, we conclude that tries. Workforce in these countries is less likely to commit CFI is important for NPD irrespective of the nature of the to rigid group norm or CFI team. The result also implies types of products. that CFI in development stage has negative impact on the

For further information contact: Tanawat Hirunyawipada University of North Texas P.O. Box 311396 Denton, TX 76203 Phone: 940.565.3120 FAX: 940.565.3837 E-Mail: [email protected]

American Marketing Association / Winter 2005 184 THE CONTINGENT EFFECT OF PRODUCT QUALITY ON NEW PRODUCT PERFORMANCE: A CONCEPTUAL MODEL

Kwaku Atuahene-Gima, City University of Hong Kong, Hong Kong Gloria Barczak, Northeastern University, Boston

SUMMARY pleski et al. 1993; O’Neal and LaFief 1992). Thus, acceptance of marketing’s key role in establishing product Many firms have instituted quality programs in an quality implies a contingency view of product quality effort to upgrade and continually improve the quality of (Varadarajan and Jayachandran 1999). However, there their products for the ultimate purpose of creating com- has been little, if any, research on if and how environmen- petitive advantage (Clark and Fujimoto 1991; Menon tal factors moderate the relationship between product et al. 1997). This emphasis on product quality is well- quality and performance. deserved as there is strong evidence that product quality is an important determinant of firm performance (Buzzell Since product quality is a deliberate firm strategy to 2004; Hildebrandt and Buzzell 1991; Jacobson and Aaker differentiate one’s offerings from its competitors’ (Jacob- 1987; Phillips, Chang, and Buzzell 1983; Sethi 2000). son and Aaker 1987; Phillips, Chang, and Buzzell 1983; The positive impact of product quality on performance Porter 1980; Varadarajan and Jayachandran 1999), we (Buzzell 2004; Hackman and Wageman 1995; Hilde- propose that the effectiveness of such a strategy will be brandt and Buzzell 1991; Jacobson and Aaker 1987; influenced by the nature and dynamics of its environment Phillips, Chang, and Buzzell 1983; Sethi 2000) is of (internal and external). This proposition resonates with particular interest because it suggests a direct effect rela- Varadarajan and Jayachandran’s (1999) argument that tionship. Research has investigated the direct effect of the “market performance outcome of a business’s deci- product quality on various performance dimensions such sion to offer products of a high quality is contingent on . . . as market share and profitability (Buzzell 2004; Hilde- consumers’ characteristics and competitors’ reactions” brandt and Buzzell 1991; Phillips, Chang, and Buzzell (p. 130). 1983), price (Jacobson and Aaker 1987; Phillips, Chang, and Buzzell 1983) and costs (Jacobson and Aaker 1987; We define product quality from a customer, rather Phillips, Chang, and Buzzell 1983). Though the evidence than a supplier, perspective (Bounds et al. 1994; Kordu- is substantial, uncritical acceptance of this result suggests pleski et al. 1993; Morgan and Piercy 1998). A customer- that product quality defies the logic of contingency theo- focused approach views quality as the customer’s percep- ry. Such a view is subject to theoretical skepticism given tion of how well a given product meets their needs and that a variety of marketing strategies (e.g., market orien- expectations (Kordupleski et al. 1993; Morgan and Piercy tation, innovation, strategic alliances) have been found to 1998; Parasuraman, Zeithaml, and Berry 1985). Put an- follow contingency theory. other way, quality is “simply conformance to [the] requirements” (O’Neal and LaFief 1992) of the customer. Practically, uncritical acceptance of the direct effect Although product quality may influence new product of quality on performance down plays the role of market- performance directly, it is possible that external market ing in ensuring market performance. The importance of factors may help or harm that relationship (Varadarajan the marketing function in building product quality is well- and Jayachandran 1999). Our theoretical arguments sug- established (Cravens et al. 1988; Kordupleski et al. 1993; gest that when technological uncertainty is high, firms O’Neal and LaFief 1992). In fact, it has been argued that may need to commit to certain aspects of the technology marketing, as the most customer-focused function (Kor- before they know and understand the ramifications of dupleski et al. 1993), should play the lead role in establish- their actions. The level of quality based on those actions ing product quality (Kordupleski et al. 1993; O’Neal and is likely to be rendered inferior by new technological LaFief 1992) as its job is to understand customer needs developments which may have a negative effect on prod- and translate those needs into products with high custom- uct quality. Similarly, in situations of high market uncer- er value (Cravens et al. 1988; Kordupleski et al. 1993; tainty, project teams need to monitor market shifts and O’Neal and LaFief 1992). Creation of value through high adjust product specifications accordingly (Menon et al. product quality depends on marketing skills in analyzing 1997). Since it takes time for firms to adjust the level of and determining customer needs, competitor analysis, quality to meet both rapidly changing customer needs and identifying appropriate target segments, product position- competitive actions, the positive effect of product quality ing, communication, pricing, distribution, and speedy on new product performance is likely to diminish. Greater implementation of launch (Cravens et al. 1988; Kordu- customer demandingness may indicate that customers are

American Marketing Association / Winter 2005 185 not satisfied with existing products (Li and Calantone customers and perceptions of value will be determined 1998), suggesting a lower level of competition for a (Buzzell 2004; Hildebrandt and Buzzell 1991; Jacobson specific product of high quality. Hence, product quality and Aaker 1987; Phillips, Chang, and Buzzell 1983). will be more positively related to new product performance under high level of customer demandingness. Our model makes practical and theoretical contribu- Finally, as the hostility of a new product introduction tions. From a practical perspective, we focus on under- increases, so does the strength of competitors’ reactions standing the effect, if any, of specific internal environ- (Heil and Walters 1993; Heil and Robertson 1991; Moore mental variables with product quality. Because these 1992). Effective competitor responses suggest an erosion internal variables can be influenced and/or controlled by of the competitive advantages of the focal firm’s new managers, the findings of this study should provide useful product. recommendations for enhancing product quality and ultimately, new product performance. It is possible that some Regarding internal moderators we argue that a prod- of these variables may have an adverse reaction with uct concept which is familiar to the organization will be product quality. Thus, our findings can provide insight as easier, less time consuming and less expensive to design, to which variables enhance or weaken product quality and develop, and market. Hence, a project team is more thus, product performance. In terms of theory, an impor- capable of maintaining the level of quality than a product tant contribution of this study is its extension of the concept high new to the firm. Further, in a new market, previous research on product quality to include potential where customers know little about how to evaluate a moderators of the relationship between product quality product’s attributes and benefits, product quality may and performance. Unlike existing research, this study have greater positive effect on performance because the draws on contingency theory and argues that the impact of nature of the product “may be able to influence how product quality on product performance depends on par- attributes are valued [and] define the ideal attribute com- ticular internal product and strategy characteristics as well bination” (Kerin, Varadarajan, and Peterson 1992, p. 35). as external market characteristics. Another major contri- In other words, a quality new product in a new market may bution of this study is its focus on specific product define the product category and the nature and level of outcomes as opposed to most prior research that examines quality expectations (Kerin, Varadarajan, and Peterson firm-level aggregate outcomes such as the quality of a 1992). Finally, a quick implementation implies that prod- firm’s products relative to competitors (Clark and Fujim- uct, price, distribution and promotion tactics and activities oto 1991; Menon, Jaworski, and Kohli 1997; Morgan and are operational simultaneously, at full strength, over a Piercy 1998). By focusing on product quality at the relative short period of time. The faster the implementa- individual product level, this study can provide insights tion of a specific product’s marketing strategy, the more about factors that interact with quality and the differential likely that the product will be known and accessible to effects they have on product performance.

For further information, contact: Kwaku Atuahene-Gima Department of Management City University of Hong Kong Hong Kong E-Mail: [email protected]

American Marketing Association / Winter 2005 186 CONSUMER EXPERIENCE OF SOCIAL POWER DURING SERVICE CONSUMPTION: AN EXPLORATORY STUDY

Kalyani Menon, Wilfrid Laurier University, Waterloo Harvir Bansal, Wilfrid Laurier University, Waterloo

ABSTRACT it arises during service consumption. The objective is to initiate an in-depth understanding of the nature and com- A survey derived scripts of consumer experiences of ponents of consumer experiences of powerfulness and powerfulness and powerlessness during service consump- powerlessness during service consumption. It is hoped tion. Most experiences occurred in high contact services, that such an understanding will enable service managers underlining the social nature of consumer power. Power- to develop tools and strategies to enhance service experi- fulness and powerlessness were linked with distinct ante- ences. The following section draws on the social psychol- cedents and consequences that differ from non-consump- ogy literature to describe the concept of power, what is tion situations, and powerfulness appears to be a more known of the experiential aspects of power and its impli- complex experience than powerlessness. cations for consumer behaviour. We then present our empirical study of the subject. A survey of consumers of INTRODUCTION a range of services was conducted and qualitative and quantitative data collected on their experience of power As repeatedly documented by consumer researchers, and the lack of it. The data were coded and analyzed to the social interaction between consumers and service develop scripts of consumer powerfulness and powerless- providers is among the most significant determinants of ness. Such scripts map the mental representation of rele- consumer experience in the service (Bitner, Booms, and vant experiences (Fitness and Fletcher 1993; Shaver et al. Tetrault 1990; Keaveney 1995; Menon and Dubé 2000). 1987) and may be crucial to understanding the dynamics Service satisfaction and dissatisfaction depends greatly of consumer – provider interaction. on how the provider relates to consumers, and how they in turn perceive the provider. SOCIAL POWER AND CONSUMER – SERVICE PROVIDER INTERACTIONS Research on service provider – consumer dynamics has looked at it primarily from a relationship marketing Social power has been defined as the control pos- perspective, to understand benefits to consumers and sessed by an individual over another and refers to attempts firms due to long term relationships with service providers to enhance and protect differentiation of the individual (e.g., Gwinner, Gremler, Bitner 1998). These studies have (Depret and Fiske 1993; Moskowitz et al. 1994). As an focused on various examples of interpersonal behaviour extension, we argue it may be thought of as the ability to such as empathy (e.g., Butcher, Sparks, and O’Callaghan control another’s outcome. High power and low power 2003), friendship (Price and Arnould 1999) and affective have been conceived as polar opposites with high power commitment (Shemwell, Cronin, and Bullard 1994). So- being manifest in frequent behaviours of dominance and cial psychologists stress that these behaviours are exem- assertiveness and low power expressed by submissive plars of two key meta-constructs of power and commun- acts. Power dynamics are thought to permeate most social ion that underlie most social interactions and map the relationships, whether explicitly or implicitly. This con- various modes of relating to the world. (Moskowitz et al. cept of power and control may occur explicitly in services 1994). Understanding consumer-service provider inter- such as the control a doctor has over a patient, or a banker action and the impact on the consumption experience has over a mortgage application. While the power equa- requires we go beyond examples of behaviour to examine tion in such transactions is clearly weighted in favour of how the two meta-constructs of power and communion the service provider, there may be several other service occur in services where providers and consumers are situations where the power equation may not be so obvi- required to interact during service delivery and consump- ous. For instance, a restaurant patron has power in so far tion. To our knowledge, no research has thus far adopted as their patronage adds to the business of the restaurant such a theoretically anchored approach to the study of the and of the individual waiter. But the restaurant and the parameters of consumer-service provider interaction. waiter in turn can affect the outcome of the diner’s eating experience, and thus may have some power as well. There This paper presents an initial investigation of the may also be a range of services where the power equation meta-construct of power from a consumer perspective as is mostly absent such as services at the post-office, routine

American Marketing Association / Winter 2005 187 banking, and other such services where the consumer’s perceptions of their power in a service situation? Finally, and/or the provider’s ability to control the outcome may with the objective of examining the impact of power on be relatively irrelevant. consumer service experience, we also examine how perceptions of two marketing outcome variables – service While initial research examined individual level fac- quality and consumer satisfaction – vary due to the power tors such as gender as sources of social power (Ridgeway experience. The following section presents a survey used 1992), more recent research stresses the interaction be- to capture the components of consumer experiences of tween individual and situation level variables. Gender by power – antecedents, cognition, expectations, emotions, itself may not impact social power quite as much as the and expression – as well as consumer evaluations of gender composition of the social group with greater service quality and satisfaction when they are powerful or stereotypical gender-power relationship in same gender powerless in a service context. interactions than in opposite gender interactions (Macoby 1990; Moskowitz et al. 1994). Continuing with the idea METHOD that power is a function of the interaction between a person and the situation, social and professional roles Following the method used by previous research on have been shown to impact power, For example, individ- developing scripts of interpersonal dynamics (Fitness and uals express more power in the role of a supervisor but less Fletcher 1993; Shaver et al. 1987), we used a self-admin- in the role of a supervisee (Moskowitz et al. 1994). The istered survey with a mix of qualitative and quantitative first question of interest to this paper is what elicits service measures. Research has shown that repeated experiences consumer experiences of powerfulness and powerless- render people highly knowledgeable about various com- ness? Are they mirror images of each other e.g., does the ponents of their experiences and that it is possible to elicit absence of what elicits powerfulness elicit powerlessness memory representations or scripts of these experiences and vice versa? (Fitness and Fletcher 1993; Shaver et al. 1987). Typically, researchers provide individuals with a series of prompts This paper also examines the experiential conse- designed to elicit retrospective reports of the experience, quences of power and lack of power on consumer cogni- and scripts are developed using the most frequently mention and expectations, emotions, and emotion expression. tioned features of the experience. The cognition and expectations of individuals experiencing power or the lack of it tend to have specific biases since Sample and Procedure powerful individuals are motivated to defend their power and the powerless to compensate for their lack of it A convenience sample of adult consumers of services (Richeson and Ambady 2002). Thus, in order to preserve (n = 138; 54% male, 46% female) were approached on a their power, powerful consumers may have an exaggerat- university campus and randomly assigned to one of two ed conception of their role and ability in the service, or versions of the survey questionnaire – either the version may have low expectations of others in the setting. Pow- asking them to recall an experience of powerfulness (n = erless individuals may focus their attention and cognitive 60) or one of powerlessness (n = 78) during consumption resources on monitoring others in the social setting since of any type of service. The respondent pool was mainly they perceive themselves as being dependent on others. composed of the members of the university community such as administrative staff, employees of local business- In addition to its impact on cognition, powerfulness es, and some faculty. We did not approach any undergrad- and powerlessness may impact emotion experiences and uate students. Majority of the respondents were between expression. According to the interpersonal view of emo- the ages of 26 and 50 (approx. 67%), 42 percent had tions, emotions emerge and are defined during interaction completed an undergraduate degree, 25 percent were between individuals (Parkinson 1995). There are well- graduates, and 14 percent held post-graduate degrees. established norms about the appropriateness of emotions relative to one’s power and emotions such as anger and In each version of the questionnaire, respondents joy are typically experienced when one is in a powerful were instructed to recall and report the actual experience situation while emotions such as anxiety and sadness are of powerfulness/powerlessness in as much detail as pos- experienced in powerless situations. Further, the extent to sible. Powerfulness and powerlessness was defined for which individuals express emotions may also be impacted the respondents as control/certainty and lack of control/ by their experience of power with powerful people being certainty respectively in a service context. The question- more willing to express their emotions than the powerless naire began with demographic questions and was fol- (Conway et al. 1999). Thus the second research question lowed by a series of prompts to aid recall of a relevant of interest to this paper is: How does consumer percep- experience of powerfulness or powerlessness (e.g., what tions of power or the lack of power in a service context happened, when, who was present, etc.). This was fol- manifest itself? What kind of cognition, expectations, lowed by measures for the dependent variables. emotions, and expressions occur as a result of consumer

American Marketing Association / Winter 2005 188 Dependent Variables RESULTS

Open-ended questions asked respondents to provide Antecedents details of the antecedents of powerfulness/powerlessness (what happened to make them feel powerful/powerless), It is noteworthy that the majority of the experiences specifically the type of service setting in which the event recounted occurred in high contact services (retail, pro- occurred, gender of the individuals present at the time of fessional) rather than in low contact services (miscella- the event, and details of the eliciting event. neous services such as online, cable) supporting the contention that power is intrinsically social in nature and Open-ended questions then captured the experiential arises in the context of interpersonal interaction. Results consequences of consumer thoughts and expectations. indicate that while the majority of the powerless experi- Respondents were asked to describe their thoughts, and ences (54%) occurred in the context of professional ser- their expectations of the service provider as they experi- vices, the majority of powerful experiences occurred in enced powerfulness/powerlessness during the event de- the context of either retail services such as computer scribed. Multi-item 5 point scales (not at all – strongly) stores, restaurants (48%) or professional services such as drawn from past research (Richins 1997) measured expe- financial services, legal services, and government servic- riential consequences of some major consumer emotions. es (45%). In keeping with past research, while consumers Anger was measured by 5 items (anger, frustration, irrita- were almost equally likely to feel powerful in mixed tion, outrage, hostility; α = 0.94), anxiety was measured gender and same gender groups, powerlessness was expe- by 3 items (nervousness, worry, anxiousness; α = 0.79), rienced primarily in mixed gender groups. The mixed shame was measured by 3 items (shame, embarrassment, gender groups involved either a service provider or other guilt, α = 0.71) and happiness was measured by 3 items consumers of the opposite gender in close proximity (joy, excitement, happiness; α = 0.85). The experiential during the event. consequences of emotion expression was measured by a single item 7 point scale (not at all – very much so) asking Interesting differences arose in terms of the nature of respondents to indicate the extent to which they expressed the eliciting events for powerful and powerlessness. Pow- their emotions using hand and body gestures, facial or erfulness occurred primarily when consumers perceived vocal expressions. they had high levels of knowledge in the service setting (67%). This knowledge could relate to knowledge of the The marketing outcome variables were all measured nature of the service (e.g., knowledge of financial instru- by multi item scales. Service quality was measured by a 4 ments a consumer wishes to purchase, knowledge of item (employee professionalism, quality of information computer hardware in a retail store) or to knowledge of the provided, care of customers, overall service quality; α = script of the service encounter (e.g., consumers knew the 0.95) 5-point scales (poor – excellent). Consumer satis- process to file a complaint, knowledge of the various faction was measured by a 2-item 7-point scale (very phases of consumption in a high-end restaurant). On the dissatisfied – very satisfied; very disappointed – very other hand, while 32 percent of powerless experiences delighted, α = 0.94) adapted from Oliver (1997). occurred despite consumer perceptions of knowledge, the majority of powerlessness occurred due to service failures Data Analysis such as service delays, pushy service provider, and being taken advantage of (68%). Powerless consumers did not The qualitative responses dealing with the anteced- report lack of knowledge as a cause for their experience, ents, cognition, and expectations were scrutinized and thus indicating that powerlessness, rather than being the coded by three coders working independently to reflect mirror image of powerfulness as documented by past underlying dimensions and/or categories. After careful, research, may be a distinct experience. repeated readings, the data was sorted in to groups reflecting underlying similarities. For instance, when coding Experiential Consequences responses to the question of the eliciting event, data about delayed service and condescending service provider were Turning now to the experiential consequences of assigned to the category of service failure. We ensured powerfulness and powerlessness, powerfulness was linked that the data assigned to each category was more similar almost equally with provider oriented (49%) and action to each other than to data assigned to other categories. oriented thoughts (43%). For example, an action oriented Conflicts were resolved by majority vote. The full list of thought may concern a consumer thinking of, “how to get categories is presented in Table 1. Aggregate scores were it [laptop under repair] back ASAP,” or being “better created for the quantitative measures. Chi square tests and aware,” so as to “to make a better decision.” Provider difference of means were conducted to develop scripts of oriented thoughts took the form of a consumer thinking of powerfulness and powerlessness. “being ripped off as a consumer [by the service provider]

American Marketing Association / Winter 2005 189 TABLE 1 Frequencies and Mean Values for Episodes of Powerfulness and Powerlessness.

Powerful Powerless N = 60 N = 78 Antecedents

Service setting (% frequencies) χ2 = 14.33 (p < 0.05) Retail 0.48 0.21 Professional 0.45 0.54 Miscellaneous 0.07 0.25 Gender composition (% frequencies) χ2 = 4.83 (p < 0.05) Mixed 0.43 0.62 Same 0.57 0.38 Eliciting event (% frequencies) χ2 = 18.49 (p < 0.05) Consumer knowledge 0.67 0.32 Service failure 0.33 0.68

Experiential Consequences

Cognition (% frequencies) χ2 = 21.49 (p < 0.05) Action oriented 0.43 0.15 Provider oriented 0.49 0.55 Rumination 0.06 0.16 Avoidance 0.02 0.14 Expectations (% frequencies) χ2 = 9.07 (p < 0.05) Core service related 0.46 0.25 Interpersonal service related 0.36 0.59 No expectations 0.18 0.16 Emotions (mean values) Anger t = -8.11 (p < 0.05) 1.97 3.55 Happiness t = 8.44 (p < 0.05) 2.30 1.48 Worry t = -5.42 (p < 0.05) 1.78 2.69 Shame t = -3.21 (p < 0.05) 1.30 1.69 Emotion expression (mean values) t = 1.65 (p < 0.10) 4.33 3.90 Service quality perceptions (mean values) t = 8.47 (p < 0.05) 3.69 2.15 Consumer satisfaction (mean values) t = 9.11 (p < 0.05) 4.87 2.49

having already paid for this expensive chalet,” or focus- action-oriented thoughts. These results reflect past re- sing on how the provider was delivering the service. search indicating the “other-focus” of powerless consum- Powerless consumers tended to have provider-oriented ers while powerful consumers focus on how they can thoughts (55%) and reported a very low frequency of any accentuate and protect their powerful position in the

American Marketing Association / Winter 2005 190 situation. Interestingly, two categories of thoughts – rumi- powerfulness, respondents reporting powerless experi- native (e.g., what can I do, how did I get in to this situation) ences did not cite lack of knowledge as a cause of their and avoidance (I’ll never come back here again, get out powerlessness. Rather service failure (which can occur immediately) occurred to some extent in powerlessness despite consumer knowledge) led to powerlessness. Pow- but not in powerfulness. erfulness appears to be a more complex experience than powerlessness as evidenced by the fact that for the ante- Consumer expectations of the service provider dur- cedents such as service setting, and experiential conse- ing their experience of powerfulness and powerlessness quences of cognition and expectations, there was no one showed a pattern similar to that of consumer cognition. clearly dominant category for powerfulness. Powerful- Powerfulness was accompanied by expectations that the ness was equally likely in retail and professional services, provider would attend to both the core service (46%) as led to both action oriented and provider oriented thoughts well as the interpersonal service (36%). Powerlessness, and to expectations regarding both the core service and the however, was dominated by expectations that the provid- interpersonal service. Powerlessness, on the other hand, er will attend to the interpersonal aspects of the service had more clearly dominant categories. It tended to occur (59%). For instance, the core service expectations could most in professional services, was dominated by provider take the form of, “yes, when I pay for a hotel room or a oriented thoughts and expectations regarding the inter- chalet, I expect it to be ready when they tell me” or “. . . I personal aspects of the service. In this context it should be expected answers to all questions regarding food and the mentioned that informal feedback from respondents after restaurant.” On the other hand, examples of interpersonal having completed the surveys indicated that those recall- service expectations were, “they [the service provider] ing experiences of powerfulness had greater difficulty in would be helpful and knowledgeable,” “expected the articulating the experiential aspects of this as compared to usual prompt attention,” “politeness,” “be friendly, pleas- those recalling experiences of powerlessness. This may ant,” or “consumer should be utmost.” indicate that the concept of power becomes more salient for consumers when they perceive the lack of it, and Regarding the emotions experienced, in keeping with therefore it is more clearly represented in their minds. the fact that powerlessness occurred primarily due to Since powerlessness was linked with a negative event service failure, powerless respondents reported higher such as service failure, it is also possible that, since intensity of all negative emotions (anger = 3.55, worry = individuals place more emphasis on the negative, these 2.69, shame = 1.69) than did powerful respondents (an- experiences were more sharply sketched in their minds. ger = 1.98, worry = 1.84, shame = 1.21; all p < 0.05), while the latter reported greater happiness than did the former Managing consumer perceptions of power appears to (2.30 and 1.48 respectively; p < 0.05). Further, while past be an important managerial issue since powerful consum- findings indicate that powerless individuals are highly ers had higher perceptions of service quality and satisfac- conscious of their self-presentation and thus may be less tion. For instance, consumers tended to feel more power- expressive about their emotions, results here indicate that ful in same gender groups than in mixed gender groups, although powerless consumers were indeed less likely to and this could have implications for segmenting consum- be expressive than powerful consumers, the difference ers and assigning service provider responsibilities accord- was only marginally statistically significant (means 4.33 ing to the gender of the consumer. Further, while service and 3.90 respectively, p < 0.10). failure is clearly to be avoided, merely preventing failure may not enhance consumer power. Rather, providing Marketing Outcomes consumers with knowledge of the structure and process of the service may go a long way in doing so. Results indicate that powerful consumers have higher perceptions of service quality (mean = 3.69) and satis- Surprisingly, powerless respondents reported high faction (mean = 4.87) than powerless consumers (2.15 intensity anger, an emotion generally thought to occur and 2.49 respectively; p < 0.05). when an individual feels in control of a situation or wishes to gain control over a situation (Conway et al. 1999). DISCUSSION Further, contradicting past findings indicating that powerless individuals are highly conscious of their self-pre- This paper studied consumer experiences of power, sentation and thus may be less expressive, results indicate an important construct in our understanding of consum- that both powerful and powerless consumers are likely to er – service provider interactions during service con- equally express their emotions. While the nature of our sumption. The research provides details of consumers’ data does not allow an examination of the reasons for this, mental representations of their experiences of powerful- we speculate that this may be a deliberate strategy by the ness and powerlessness. Evidence indicates that power- powerless consumers to convey their experience to the fulness and powerlessness may not be simple mirror service provider and perhaps recruit the provider’s help in images of each other. While consumer knowledge elicited navigating the remainder of the service. Such a reasoning

American Marketing Association / Winter 2005 191 is in keeping with past research indicating that consumers gy and it will be interesting for future research to examine are highly aware of the communicative role of their consumer power in the context of consumer interactions emotions and use it accordingly (Parkinson 1995). It is with technology as substitutes for service providers (Moon also possible that since most people are aware of the 2000). Further, the concept of social power may not be power standing connoted by discrete emotions (e.g., Con- restricted to service situations and consumer – service way et al. 1999), experiencing and expressing high power provider interactions. Consumer perceptions of their power emotions may be a strategy to try and gain more power in may exist when they interact with other consumers such as the setting. during communal consumption activities generated by brand communities, and in fact any consumption situation While as noted previously, experiences of powerful- embedded in a social context. ness and powerlessness occurred primarily in high contact services thus underlining the social nature of power, While important insights into consumer experiences it will be interesting to study the occurrence of social of power were gained through this exploratory study, power in services that are migrating from high contact to future research is required to address the shortcoming of self service. Research indicates that consumers attribute this study (e.g., the use of a relatively small convenience human characteristics to their interactions with technolo- sample) as well as the queries that arise from its findings.

REFERENCES ing, 76 (3), 285–307. Moon, Youngme (2000), “Intimate Exchanges: Using Bitner, M.J., B. Booms, and M. Tetrault (1990), “The Computers to Elicit Self-Disclosures from Consum- Service Encounter: Diagnosing Favorable and Unfa- ers,” Journal of Consumer Research, 26 (4), 323–40. vorable Incidents,” Journal of Marketing, 54, 71–84. Moskowitz, D., E. Suh, and J. Desaulniers (1994), “Situ- Butcher, K., B. Sparks, and F. O’Callaghan (2003). “Be- ational Influences on Gender Differences in Agency yond Core Service,” Psychology and Marketing, 20 and Communion,” Journal of Personality and Social (3), 187–208. Psychology, 66 (4), 753–61. Conway, M., R. Difazio, and S. Mayman (1999), “Judg- Oliver, R. (1997), Satisfaction: A Behavioral Perspective ing Others’ Emotions as a Function of the Others’ on the Consumer. McGraw-Hill. Status,” Social Psychology Quarterly, 62, 291–305. Parkinson, B. (1995), Ideas and Realities of Emotions. Depret, E. and S. Fiske (1993), “Social Cognition and New York: Routledge. Power: Some Cognitive Consequences of Social Price, L. and E. Arnould (1999), “Commercial Friend- Structure as a Source of Control Deprivation,” in ships: Service Provider – Client Relationships in Control Motivation and Social Cognition, G. Weary, Context,” Journal of Marketing, 63, 38–56. F. Gleicher, and K. Marsh, eds. New York: Springer- Richins, M. (1997), “Measuring Emotions in the Con- Verlag, 176–202 sumption Experience,” Journal of Consumer Re- Fitness, J. and G. Fletcher (1993), “Love, Hate, Anger, search, 24, 127–46. and Jealousy in Close Relationships: A Prototype and Richeson, J. and N. Ambady (2002), “Effects of Situa- Cognitive Attribution Analysis,” Journal of Person- tional Power on Automatic Racial Prejudice,” Journal ality and Social Psychology, 65, 942–58. of Experimental Social Psychology, 39, 177–83. Gwinner, K., D. Gremler, and M.J. Bitner (1998), “Rela- Ridgeway, C.J. (1992), “Gender, Interaction, and Ine- tional Benefits in Services Industries: The Custom- quality,” Personality and Social Psychology, 76 (5), er’s Perspective,” Journal of the Academy of Market- 805–19, New York: Springer. ing Science, 26, 101–14. Shaver, P., J. Schwartz, D. Kirson, and C. O’ Connor Keaveney, S. (1995), “Customer Switching Behavior in (1987), “Emotion Knowledge: Further Exploration Service Industries: An Exploratory Study,” Journal of a Prototype Approach,” Journal of Personality of Marketing, 59, 71–82. and Social Psychology, 52, 1061–86. Macoby, E. (1990), “Gender and Relationships: A Devel- Shemwell, D., J. Cronin, and W. Bullard (1994), “Rela- opmental Account,” American Psychologist, 45, 513– tional Exchange in Services: An Empirical Investiga- 20. tion of Ongoing Customer Service-Provider Rela- Menon, Kalyani and Laurette Dubé (2000), “Ensuring tionships,” International Journal of Service Industry Greater Satisfaction by Engineering Salesperson Management, 5 (3), 57–68. Response to Customer Emotions,” Journal of Retail-

American Marketing Association / Winter 2005 192 For further information contact: School of Business and Economics Wilfrid Laurier University Waterloo, ON, N2L 3C5 Canada Phone: 519.884.0710, Ext. 2704 FAX: 519.884.0201 E-Mail: [email protected]

American Marketing Association / Winter 2005 193 WHAT DRIVES CUSTOMER SUCCESS? CONSUMER PERCEPTIONS OF ENABLING AND RESTRAINING FORCES ASSOCIATED WITH PERFORMING CONSUMPTION TASKS

Pete C. Honebein, University of Nevada, Reno

SUMMARY elements of the consumption environment that must be in place to enable consumer performance. This not only The consumer’s role in unlocking the value that includes such things as policies, but also procedures, exists in products and services continues to attract the tools, interfaces, and technologies. Incentive defines the interest of the marketing field. Spearheaded by Vargo and intrinsic and extrinsic motivators that stimulate consum- Lusch (2004), the new dominant logic for marketing ers to perform in a certain way. Often, these motivators defines the consumer’s role of coproducer, where the take the form of rewards, punishments, or both. Expertise consumer is continually involved in the production of reflects the knowledge and skills possessed by the con- value as he consumes products and services. The consum- sumer, developed through training programs and direct er’s success as a coproducer is dependent upon the con- experience. sumer’s physical and mental skills, or if the consumer lacks those qualities, the embedding of those attributes in Method and Procedure the product or service itself. Vargo and Lusch (2004) suggest that organizations that recognize this balance can Given the exploratory nature of our research the more effectively develop offerings that enable consumers design of the study is based on critical incident technique to realize greater value. (Bitner, Booms, and Tetreault 1990; Meuter et al. 2000). This methodology involves collecting actual stories that The development of a consumer’s physical and men- describe, in as much detail as possible, situations in which tal skills through such strategies as consumer and custom- an organization enables or restrains customer perfor- er education is well recognized, as is the embedding of mance. These stories are then classified to uncover pat- such qualities in products and services through self- terns or themes, in this case using the coproduction service technologies (Meuter, Ostrom, Roundtree, and experience model as the primary classification structure. Bitner 2000). Yet, a consumer’s ability to perform activ- A convenience sample of 144 students in an introductory ities that realize benefits associated with products and marketing class was invited to participate in the study. services is dependent not only upon the acquisition of Participation involved posting up to two stories on a web- skills or the transfer of skills to another entity, but upon the based bulletin board during a two week period in ex- expectations, feedback, and motivation the consumer change for extra credit. Participants were asked to write possesses and receives from external sources (Bateson stories of at least 200 words that reflected their personal 2002; Gilbert 1996). The combination of these factors, experience with performance success or failure in one of which this paper defines as vision, access, incentive, and the following roles: (1) a consumer; (2) an employee expertise, forms a coproduction experience model that working with consumers; or (3) an observation of another offers organizations a framework of the causal factors that consumer. Two example stories prepared by the principal make self-service possible in the context of coproduction investigator provided participants a model of the form, and value creation. The aim of this research is to investi- structure, and length expected for the stories. One exam- gate which consumer performance factor has the strongest ple story described a tax preparer’s checklist, and the influence on consumers’ success and satisfaction with other described a retail clerk teaching a customer about products and services. using a camera.

Coproduction Experience Model Results

A performance orientation for consumers focuses on Seventy percent of the stories reflected situations four key constructs: vision, access, incentive, and exper- where consumer performance was enabled, while 30 tise. We define vision in terms of two key components, the percent of the stories reflected situations where consumer consumer’s awareness of key performance goals or out- performance was restrained. In terms of the consumer comes, and the feedback the consumer receives related to performance model, a vast majority of the stories (72%) the achievement of the goals or outcomes. Access defines described situations where access had the strongest influ-

American Marketing Association / Winter 2005 194 ence on consumer performance, followed by expertise er performance (54%), followed by human policies/pro- (13%), incentive (9%), and vision (6%). Within access, cedures (29%), and then other non-human solutions (17%). SSTs were the most often identified influence on custom-

For further information contact: Peter C. Honebein Managerial Sciences Department University of Nevada at Reno 5450 Wintergreen Lane Reno, NV 89511 Phone: 775.849.0371 E-Mail: [email protected]

American Marketing Association / Winter 2005 195 THE EFFECT OF EVENT VALENCE ON WAIT MANAGEMENT STRATEGIES

Elizabeth G. Miller, Boston College, Boston Barbara E. Kahn, University of Pennsylvania, Philadelphia Mary Frances Luce, Duke University, Durham

SUMMARY In addition, various methods of coping suggest that delay can be preferred. In particular, emotion-focused Most service experiences involve waiting and thus coping attempts often take the form of denial or avoidance the total experience can be described as being comprised (e.g., Lazarus 1991). To the degree that people practice of multiple parts, e.g., arrival, wait, main event, departure, “wishful thinking” or feel that the event is psychological- that extend over time. Each of the components of the ly further away during a wait, delays may be preferable. experience may be associated with different emotions, Similarly, to the degree people use delay to cope, for and consequently, may require different coping resources example, by taking deep-breaths and telling themselves and strategies which may interact. We examine such that things will be okay (more of a problem-focused interactions by investigating how the expected valence of strategy), delay may also be beneficial. an event affects two different wait management strategies – providing duration information and reducing wait Wait Duration and Duration Information times – for managing the stress experienced during the wait. Four experiments demonstrate that event valence Thus, several literatures suggest that under certain can moderate, and even reverse, the effects of wait man- circumstances delay can be beneficial and desired. In agement strategies. particular, such considerations are likely to become relevant when people are waiting for events which they find Waiting and Event Valence stressful, negative, or otherwise aversive. We suggest that in such negative situations, there are two sources of stress: While the literatures on services and operations man- that associated with having to wait and that associated agement have examined many facets of waiting, such with the event itself. Further, considering our arguments research has not considered the effect of the waited-for about avoidance, coping, and procrastination, we believe event on the waiting experience (other than to suggest that that interventions designed to attenuate wait stress may people are willing to wait longer for more important have unintended negative consequences on the stress due events; Houston et al. 1998; Maister 1985). In addition, to the event. In particular, we believe that since duration such research has typically been conducted in non-stress- information – one popular intervention for reducing wait ful environments, such as banks or restaurants. In these stress – is thought to operate by reducing uncertainty (Hui environments, waiting is assumed to be negative because and Tse 1996; Osuna 1985), it may be particularly harm- the event being waited for is either positive or neutral, and ful. That is, we predict that when the waited-for event is waiting is assumed to be the focal source of consumer aversive, duration information can actually increase stress, stress. In contrast, we argue that waits are not always even though this information attenuates stress in more negative and the valence of the event matters. In particu- neutral situations. Further, given that increased wait time lar, we propose that delay may have positive effects when can be used for coping, we predict that longer waits may the event being waited for is negative or unwanted. actually result in reduced stress (and thus, a better waiting experience) for aversive events, while the reverse finding The literatures on procrastination, approach-avoid- is typically found in more neutral situations. ance, and coping provide support for this contention. Specifically, the procrastination literature suggests pro- We examine these two hypotheses across four studies crastination is more likely when people want to avoid a in several different waiting environments. In the first task (Greenleaf and Lehmann 1995), while Miller’s (1959) study, in which participants were asked to wait prior to approach-avoidance conflict theory suggests desires for participating in a discussion group where they would avoidance increase and are stronger than desires for either taste soft drinks or be required to give an impromptu approach as one nears a feared stimulus. These tendencies speech, we find evidence that duration information can suggest that desire for delay may predominate over the exacerbate stress when people are waiting for an aversive desire to have the experience completed. Consequently, event and that these adverse effects occur because dura- people may view delay less negatively (and perhaps even tion information interferes with the coping process. These positively) in such situations. results are replicated and further supported in study 2,

American Marketing Association / Winter 2005 196 where we find that people who choose to cope with particular, managers seeking to apply wait management avoidance-oriented strategies respond more negatively to strategies that have been used successfully in one context duration information when waiting for an aversive event should be careful when trying to apply those strategies in (watching an aversive film) than those who do not. Stud- other contexts, especially when those contexts differ in ies 3 and 4 extend these findings to a second wait manage- their valences. For example, hospitals should be wary of ment strategy – reducing wait times – while also lending mimicking strategies currently employed by banks (and credence to the notion that delay can have beneficial other industries) to reduce the negativity of waits. In effects. addition, this research suggests that for situations involving negative or stressful aspects for consumers, managers Implications should consider wait management strategies other than duration information to manage these waits. Strategies Based on these findings, we argue that marketers that assist consumers in managing their stress (from all should consider the characteristics of their service or sources) will likely yield the most positive experiences. good, as well as the emotional state of their customers, References available upon request. when determining the best way to manage delays. In

For further information contact: Elizabeth Miller Boston College 140 Commonwealth Ave. Chestnut Hill, MA 02467 Phone: 617.552.2988 FAX: 617.552.6677 E-Mail: [email protected]

American Marketing Association / Winter 2005 197 SEEMINGLY UNRELATED REGRESSION: AN ALTERNATIVE TO TRADITIONAL BRIDGING IN CONJOINT ANALYSIS

Niels J. Blunch, Aarhus School of Business, Denmark

SUMMARY The name “seemingly unrelated” is due to the fact that the one and only connection between the two equa- Splitting a conjoint job involving many attributes tions is the (possible) correlation of the error terms. into several jobs each containing a sub-population of the original attributes is a well-known method to overcome In the present application, the equations model the respondent overload. first and second bundle of conjoint judgements by a single respondent, and the possible correlation between the In traditional bridging the conjoint job is split into error-terms is due to the fact that the two equations refer two or more jobs each with a subsection of the attributes to the same respondent – a fact that is ignored by tradition- (taking care not to split correlating attributes into different al bridging. Also, we place the restrictions on the estima- jobs) and then combining the partial utility functions into tion of the parameters that the coefficients referring to the one using the technique of bridging. The name indicating bridging attributes are equal across the equations, and the that a few of the attributes are included in both (all) same goes for the two constants. conjoint jobs, and are – so to speak – used as bridges to bring the evaluations on a common scale. Comparing the Two Techniques

This is done by estimating the “best” (in an OLS- In an experiment seventy-nine business students at sense) scale factor, by which to multiply the utilities for master level were asked to express on a scale from 0 to 10 the bridging attributes in the second design to match the their willingness to by 2 x 27 different cars, each described utilities in the first. The hope being that the coefficients of in an 18-attribute profile. A week later they were asked to all factors in the second equation should also be made evaluate five car profiles (with all 18 attributes). This comparable with those of the first equation by multiplica- second round was a holdout round, i.e., the data from this tion with the same constant. Only rarely will the “regulat- round was not used to calculate the preference functions. ed” utilities of the bridging attributes from the second Rather they were used to evaluate the functions by com- design be the same as those estimated from the first paring the results of the holdout round with predictions design, and consequently we end up with two estimates of based on the preference functions calculated on data from the utilities of the bridging attributes, as well as two the first round. The main results were as follows: estimates of the constant. This problem is solved by averaging these utilities. 1. Compared to traditional bridging SUR reduced the MAD (Mean Absolute Deviation) by about 30 per- Although bridging has been used in several conjoint cent and the correlation between actual and predicted studies as an intuitively reasonable – although somewhat preferences was increased by no less than about 70 rough – method for solving the problem of respondent percent. These figures are averages taken over the overload, the method is not quite satisfactory, as it is best five holdout profiles. described as a sequence of ad hoc’eries. Consequently the statistical (distributional) properties of the model are 2. The variation of MAD and correlations across the five rather obscure, making traditional testing meaningless – profiles was considerable smaller for SUR than for or at least complicated. traditional bridging – i.e., SUR is more stable.

In order to overcome the weaknesses of traditional 3. Traditional bridging results in larger uncertainty on bridging, I would suggest Zellner’s seemingly unrelated parameters estimated in the second evaluation as regression model (SUR). In its basic form, the model is: compared to the first.

α α ε To sum up: The advantages of SUR as compared to y1 = 0 + Σ iXi + 1 i traditional bridging are: y = β + β Z + ε 2 0 Σ j j 2 1. Estimation and “bridging” is done in one go instead j of in tandem. ε ε / where (possibly) cov( 1, 2) = 0

American Marketing Association / Winter 2005 198 2. The estimation is based on all variables, which makes on data from the same respondent – are taken into the result less erratic than traditional bridging, where consideration, whereas it is ignored in traditional the result depends solely on the bridged attributes. bridging.

3. The uncertainty is more evenly divided among the 5. Unlike bridging, SUR is a formal model with well- parameters in the model, whereas traditional bridg- known statistical properties; which means that statis- ing favours the first conjoint evaluation. tical evaluation and testing etc. can be performed on the total model, and not only on the separate (un- 4. The possible correlation of the error terms – caused bridged) models. References available upon request. by the fact that the two parts of the model are based

For further information contact: Niels J. Blunch Department of Marketing, Informatics, and Statistics Aarhus School of Business Haslegaardsvej 10 DK–8210 Aarhus V Denmark Phone: +45.8948.6688 FAX: +45.8615.3988 E-Mail: [email protected]

American Marketing Association / Winter 2005 199 WITHIN-INFORMANT BIAS IN MARKETING RESEARCH

James R. Brown, West Virginia University, Morgantown Anjala S. Krishen, Virginia Polytechnic Institute and State University, Blacksburg Pushkin Kachroo, Virginia Polytechnic Institute and State University, Blacksburg Chekitan S. Dev, Cornell University, Ithaca

SUMMARY We illustrate our two approaches for reducing within-informant bias using data from two concurrent and Empirical researchers who investigate managerial related surveys of hotel-brand headquarters relationships issues in marketing (e.g., sales force performance, marin the U.S. and Canada. In the first survey, we gathered keting channel relationships) often rely upon the key data from the general managers of a number of hotels informant methodology to report on organizational struc- representing two well-known U.S. lodging chains. The ture and behavior, both within the firm and among orga- second survey asked brand headquarters field representa- nizations. For example, Brown and Peterson (1994) as tives of these two chains to report on the relationships well as Weeks, Chonko, and Kahle (1989) have asked between the brand headquarters and the hotels that the sales managers to provide their subjective assessments of reps supervised. The two surveys yielded 245 matched the individual salespeople whom they supervise. pairs – general managers and brand headquarters reps – with complete enough data, representing a 14.2 percent The problem with such an approach is that, for a response rate, to illustrate our approach. Further, virtually variety of reasons, supervisors’ subjective ratings of their all of the headquarters reps reported on their relationships subordinates are not independent. This lack of indepen- with multiple hotels. Hence, the potential for within- dence violates a key assumption of multivariate analysis informant bias in our data set appears strong. (e.g., ordinary least squares regression, structural equation modeling) that the error terms are independently Reliable and valid measures based on these data were distributed. Violating this critical assumption can result in used to estimate an identified system of two simultaneous biased standard errors (Johnston 1984; Kennedy 1998) equations, with hotel opportunism and brand headquar- and unstable parameter estimates (Johnston 1984; Kennedy ters opportunism as the two dependent variables. 1998). Thus, the objective of this paper is to present and illustrate two methods for reducing the biases that occur Our results show that, as compared to the parameter when key informants report on multiple organizational estimates derived from the unadjusted data, the mean- units (e.g., customer service reps, salespeople, retail man- centered bias adjustment method strengthens parameter agers, channel member firms). estimates in some cases and weakens parameter estimates in others, while in still other instances, this method has no Perceptual reports of informants lack independence strong effect on the parameter estimates. The matrix because of several factors, including halo effects, lenien- inversion-based bias elimination method operates simi- cy or harshness, and central tendency (Cocanougher and larly. Ivancevich 1978). Retrospective accounts of performance may also lack independence because of a desire to appear In comparing the two correction methods, the infer- consistent and rational as a result of the consistency motif ences drawn from the 2SLS analysis are not different, (Podsakoff, MacKenzie, Lee, and Podsakoff 2003; Pod- although certain parameters do vary somewhat. Thus, for sakoff and Organ 1986). our sample, the particular method used to adjust for within-informant bias appears to matter less than the The problem of within-informant bias can be ad- simple act of correcting for that bias. dressed in at least two ways. One is to use data based upon completely independent observations (e.g., John and Reve When key informants (e.g., sales managers) report on 1982). Another is to correct for the within-informant bias more than one organizational entity (e.g., salespeople), mathematically. We take this latter approach here. those reports cannot be considered independent. When used in multivariate analyses, these dependent reports One method that we propose to adjust for within- violate the important assumption that the multivariate informant bias is the mean-centering bias adjustment error terms are independently distributed. As a result, the method. Another is the matrix invest-based bias elimina- parameters estimated from these multivariate analyses tion method, a refinement of the first method. can lead researchers to make inferential errors. Such

American Marketing Association / Winter 2005 200 errors can be avoided, however, by correcting for within- informant subjective assessments). References available informant bias (i.e., the lack of independence among key upon request.

For further information contact: James R. Brown College of Business and Economics West Virginia University P.O. Box 6025 Morgantown, WV 26506–6025 Phone: 304.293.3053 FAX: 304.293.5652 E-Mail: [email protected]

American Marketing Association / Winter 2005 201 BUILDING FORMATIVE CONSTRUCT MEASURES: THE EXAMPLE OF CORPORATE REPUTATION

Sabrina Helm, University of Duesseldorf, Germany

SUMMARY crease in one indicator is accompanied by increases of the other indicators. If reputation were modeled as a reflective The epistemic relationship between variable and in- construct, the indicators – understood as a stakeholder’s dicators in latent variable structural equation modeling perceptions of (e.g., product quality, treatment of employ- (SEM) is often not considered by researchers, leading to ees, management quality, care for the environment, etc.) – measurement model misspecification (Burke et al. 2003). are interpreted as “effects of a construct“ (Bollen and Latent variables may be associated with reflective or Lennox 1991, p. 305). Reputation leads to these effects formative indicators. From a conceptual and methodolog- meaning that reputation determines the quality of prod- ical standpoint, it is very important which kind of indica- ucts, the quality of management, the treatment of employ- tor specification is used. Taking the example of the ees, and so forth, as outcomes of reputation. construct of corporate reputation, the paper therefore raises two research questions: Formative indicators “cause” the latent variable, they represent different dimensions of it. The construct is 1. How can the correct mode of indicator specification a summation of the formative observed variables associ- be determined for a complex construct? ated with it meaning that changes in the indicators change the construct. The indicators need not be correlated or 2. How can a formative approach to measuring reputa- represent the same underlying dimension (Bollen and tion be developed and tested? Lennox 1991). Conceptualizing corporate reputation as a formative construct means that the indicators lead to the Due to a resurgence of interest in corporate reputa- construct as inputs which seems to be the more suitable tion, an abundance of different definitions of the construct relationship between indicators and construct. Reputation can be found in the literature. Wartick (1992, p. 34) for is an aggregation of all its indicators such as product example defines corporate reputation as “the aggregation quality or treatment of employees. This implies that be- of a single stakeholder’s perceptions of how well organi- cause it delivers high quality products, a firm has a good zational responses are meeting the demands and expecta- reputation; because it treats employees right, it has a good tions of many organizational stakeholders.” In accor- reputation, and so forth. The process of conceptualizing a dance to this and similar definitions, corporate reputation formative measurement model for reputation is different can be understood as a construct based on a firm’s contri- to the process used for reflective modeling. In the paper, butions to its stakeholders. This understanding is also the process is discussed in detail following a set of relevant concerning the most discussed reputation mea- conceptual criteria to clarify the construct’s epistemic sures such as Fortune’s “Most Admired Companies” or nature. An empirical study in the consumer goods sector the “Reputation Quotient” developed by the Reputation serves to illustrate the tasks associated with formative Institute. In empirical terms, this definition of reputation modeling. Diamantopoulos and Winklhofer (2001) sug- results in the formative conceptualization of the measure- gest a four step approach for index construction, which is ment model for reputation as rankings are used to measure used for guidance in our study of reputation. It includes reputation and to compare companies based on their content specification, indicator specification, test for reputation. Rankings and indices are classical examples multicollinearity, and external construct validity. of formative construct conceptualization. But as the literature on the two measures implies, they are created using The results of the study support a formative measure- reflective indicators. ment model containing 10 indicators. As some of the indicators have low weights (which are the equivalent for In the paper, the meaning of a formative and reflec- loadings in reflective measurement models), the discus- tive structure of a measure is pointed out in detail. Using sions part of the paper is devoted to the implications of reflective indicators, the researcher assumes that the ob- formative modeling and the handling of low weights. servable indicators represent the construct, the direction Generally, ex-post removal of indicators is not considered of causality runs from the construct to the items. These are an option if the formative construct is changed by that interchangeable which means that the construct is uni- deletion procedure (Diamantopoulos and Winklhofer dimensional and the items correlated; they are required to 2001). The findings imply that the individual differences share the same antecedents and consequences. An in- in the importance that stakeholder groups attach to the

American Marketing Association / Winter 2005 202 proposed reputation dimensions need to be investigated that different stakeholder groups “give different weight” more closely. If the importance – meaning the weights of to the reputation dimensions. Eliminating low-weighted the formative indicators – would prove to be low in one indicators would result in a shortened, stakeholder-spe- stakeholder setting, but high in another, measurement cific list of indicators. Of course, this would reduce the models for reputation could be adapted to the stakeholder capacity of the measure to compare different stakeholder groups if this were acceptable for formative models. This groups’ perceptions of a certain company – thereby lim- finding would corroborate some authors’ understanding iting a study’s generalizability.

SELECTED REFERENCES sumer Research, 30, 199–218. Diamantopoulos, A. and H.M. Winklhofer (2001), “Index Bollen, K. and R. Lennox (1991), “Conventional Wisdom Construction with Formative Indicators: An Alterna- on Measurement: A Structural Equation Perspec- tive to Scale Development,” Journal of Marketing tive,” Psychological Bulletin, 110, 305–14. Research, 38, 269–77. Burke, Jarvis C., S.B. Mackenzie, and P.M. Podsakoff Wartick, S.L. (1992), “The Relationship Between Intense (2003), “A Critical Review of Construct Indicators Media Exposure and Change in Corporate Reputa- and Measurement Model Misspecification in Mar- tion,” Business & Society, 31, 33–49 keting and Consumer Research,” Journal of Con-

For further information contact: Sabrina Helm Department of Marketing University of Duesseldorf Geb. 23.31, Universitaetsstrasse 1 40225 Duesseldorf Germany Phone: ++49.211.811.13 49 FAX: ++49.211.811.52 26 E-Mail: [email protected]

American Marketing Association / Winter 2005 203 EFFECTS OF ONLINE STORE ATTRIBUTES ON CUSTOMER SATISFACTION AND LOYALTY

Miao Zhao, Roger Williams University, Bristol Ruby Roy Dholakia, The University of Rhode Island, Kingston

SUMMARY Online Store Attributes and Customer Satisfaction

With the emergence of computer-mediated commu- In this paper, the main focus is on the relationships nication (CMC), online stores are experimenting with between online store attributes and customer satisfaction. attributes that are unique to the new media. There is a While Baker (1986) and Bitner (1992) proposed catego- choice of many attributes (such as search engine, ordering ries of attributes that impact consumer responses to retail- system, order status tracking, customer survey, personal- er cues, Eroglu, Machleit, and Davis (2003) argue that ization, and virtual reality display, etc.), each performing these typologies do not easily translate into the online a specific function and distinct from other attributes world. Existing empirical research is limited. within the website. In addition to deciding which attributes to include and how to specifically operationalize We report on an empirical study designed to test the selected attributes, online store managers are also whether retail store attributes affect users’ satisfaction concerned about the impact of an attribute or a set of with and loyalty to the website. Secondary data, collected attributes on customer satisfaction and loyalty. at the online store level, were compiled directly from www.bizrate.com in August 2003. Customer ratings on While there is an established body of literature and 1079 individual online stores were collected. decades of experience regarding the design of physical stores, the new world of online stores and website at- First, factor analysis of 12 attributes (excluding “over- tributes are now beginning to receive attention. In addi- all look and design of site”) was performed and the results tion to describing multiple attributes, several authors have indicate that the time at which the measures are taken attempted to categorize them into “must have” and “should contribute to the factor loadings; hence the two factors are have” attributes (e.g., Burke 2002). Given the large num- labeled “at check out” and “after delivery.” The two ber of possible attributes as well as the changing nature of factors explain 68 percent of the variance. Second, several technology that makes new attributes increasingly possi- multiple regression analyses are performed to examine ble, it is not surprising that there is a lack of consensus the relationship between the attributes and the attributes regarding “must have” and “optional” attributes. and customer satisfaction and loyalty (intention to revisit). Website Attributes From the analysis of the customer ratings, we draw Using Ghose and Dou’s (1998) classification of web- some conclusions regarding the influence of online store site attributes, we first attempt to identify potential at- attributes on site design, satisfaction and repeat purchase tributes across four different types of websites – commu- intentions. First of all, “ease of finding what you are nication, entertainment, information, and transaction (on- looking for” and “clarity of product information” are the line store). With so many website attributes to choose two most important attributes for generating positive from, our analysis suggests that transaction (or online ratings of overall look and design of the site. The analysis store) sites are more likely to include certain types of also suggests how specific attributes are operationalized attributes. It also suggests that online stores are “attribute are as important as whether or not a specific attribute is rich” – potentially containing the maximum number (16) included. of the 25 specific attributes. It is also very likely that online stores will differ not only on the number of specific We also find that the time gap between interacting attributes incorporated within specific websites, but also with a site and evaluating the experience or indicating how a specific attribute such as “customer support” is revisit intentions affects the impact of attributes; some operationalized. These variations create important chal- attributes persist in their impact. Others appear to lose lenges for research on the effects of individual attributes some of their impact. on customer satisfaction and loyalty.

American Marketing Association / Winter 2005 204 Since the analysis relied on secondary data from met expectations” became the dominant attributes influ- Bizrate, interpretation of results and conclusions must encing online store ratings once the customer received consider several methodological limitations. While the actual delivery of the product. These fulfillment variables customer ratings were acquired twice, the temporal asso- are biggest challenges to all non-store retailing, including ciation of the second set of attribute ratings with the internet retailing. This suggests that the most creative, dependent variables seems to be the primary reason for the interactive, vivid online site won’t compensate for weak observed relationship. Also, it is not surprising that “ful- fulfillment and customer support capabilities. References fillment” variables such as “on time delivery,” “product available upon request.

For further information contact: Miao Zhao Roger Williams University One Old Ferry Road Bristol, RI 02809 Phone: 401.253.5351 E-Mail: [email protected]

American Marketing Association / Winter 2005 205 ORGANIZATIONAL FACTORS RELATED TO EFFECTIVE CUSTOMER INFORMATION SYSTEMS PRACTICES

Debra Zahay, Northern Illinois University, DeKalb

SUMMARY five firms identified specific organizational factors perti- nent to the management of customer information in a Organizations are continually reassessing and re- strategic context. One exemplary company was compared aligning their capabilities and seeking to enhance their to four others to uncover organizational issues and pro- business performance. There are many factors that con- cesses leading to effective management of customer in- tribute to organizational success. In recent years, many formation. firms have turned to a new area, the management of Customer Information Systems (CIS) (Zahay and Griffin During the interviews a pattern emerged which indi- 2004) or the use of customer information in systems such cated how customer information is integrated throughout as Customer Relationship Management (CRM) systems the organization in a manner similar to the process by (Reinartz, Krafft, and Hoyer 2003), to contribute to firm which new products are successfully managed within the profitability. In addition, failure rates of applications organization. Co-location, teamwork, and functional inte- associated with customer information, like Sales Force gration were recurring themes. Although one exemplary Automation (SFA) and Customer Relationship Manage- company seemed to do an outstanding job of collecting ment (CRM), remain high, averaging 50–60 percent (Rig- and disseminating information, all firms struggled with by et al. 2002) and empirical support for their contribution issues of inter-functional conflict, including the role of the to management success is ongoing. sales force in contributing data to these systems. Howev- er, there also appear to be organizational factors some- Therefore, factors not included in these prior studies what unique to the management of customer information. must explain the variance between firms in terms of the For example, customer-centric strategies are developed use of customer information and its translation of the use interactively as a dialogue between middle and upper of those difficult-to-imitate resources into ultimate firm management, using customer data and competitive trends. performance. One possible explanation for these differ- The similarities and differences of the CIS process to the ences is organizational implementation factors. For ex- NPD process is the organizing structure of the results ample, in New Product Development, organizational fac- section of the paper, which is available upon request from tors are found to be important in developing successful the author. new products In-depth interviews with 17 managers in

REFERENCES Rigby, D.K., Frederick F. Reichheld, and Phil Schefter (2002), “Avoid the Four Perils of CRM,” Harvard Reinartz, Werner, Manfred Krafft, and Wayne D. Hoyer Business Review, 80 (2), 101–109. (2003), “Measuring the Customer Relationship Man- Zahay, Debra and Abbie Griffin (2004), “Customer Learn- agement Construct and Linking it to Performance ing Processes, Strategy Selection, and Performance Outcomes,” Teradata Center for CRM at Duke Uni- in Business-to-Business Service Firms,” Decision versity Working Paper Series (www.teradataduke. Sciences, 35 (2), 169–203. org).

For further information contact: Debra Zahay Northern Illinois University DeKalb, IL 60115 Phone: 815.753.6215 FAX: 815.753.6014 E-Mail: [email protected]

American Marketing Association / Winter 2005 206 MARKETING CONSIDERATIONS IN WEIGHT CONTROL: PRELIMINARY FINDINGS

Angela Hausman, University of Texas – Pan American, Edinburg

SUMMARY This study attempts to create a more comprehensive understanding of the factors affecting weight control Americans are fat, and getting fatter (Martin, Robin- efforts by employing non-student samples and building son, and Moore 2000). Despite this over-consumption, on Perugini and Bagozzi’s (2001) Model of Goal Directed people are not eating healthier (Kim, Nayga, and Capps Behavior (GDB). The resulting model, while developed 2001). Consumers are not happy about this trend – that is in the context of weight control, might be equally valuable why they spend billions of dollars trying to correct the in understanding similar purposive behaviors, including defects caused by overeating (Thompson and Hirschman other health behaviors such as smoking cessation and 1995) and 120,000 each year will die prematurely due to exercise, dark-side consumption behaviors, such as gam- nutrition related ailments (Frazao 2000). Governments bling and eating disorders (Hirschman 1992), and other are not happy about it either – that is why they spend process behaviors (Bagozzi and Edwards 2000). Hypoth- billions of dollars promoting healthier food consumption. eses tested were: Taxpayers and insurance carriers are not happy – since medical costs associated with obesity account for five H1: (a) Negative attitudes toward diet foods and (b) percent of direct and ten percent of indirect costs (Martin, negative attitudes toward giving up non-diet foods Robinson, and Moore, Robinson, and Moore 2000). The negatively affect the relationship between desires to food industry is not happy as customers line up to file control weight and performance of weight control lawsuits blaming restaurants for their excess weight (CBS behaviors. Evening News 2003).

H2: The perceived usefulness of food information posi- Nothing seems to help. Consumers take off weight tively affects the relationship between desires and through expensive diet programs, pills, surgery, and exer- performance of weight control behaviors. cise only to put it back on again. Promotional advertising and educational programs run by the government and H3: The perceived ease of implementing food restrictions insurance companies fall on deaf ears (Wansink 2002). positively affects the relationship between desires Nutritional labeling, once thought to be the panacea for and performance of weight control behaviors. enabling consumers’ desires to eat healthier, does not appear to be having the desired effect (Hill et al. 2002). H4: Mood states affect the performance of weight control behaviors. Marketing studies have developed models attempting to explain why consumers engage in behaviors that H5: Satisfying social needs negatively affects perfor- thwart weight control goals. For instance, Bagozzi and mance of weight control behaviors. various colleagues have developed the theory of trying, and more recently, the theory of goal directed behavior, A preliminary questionnaire was developed and dis- which explain more of the variance in observed behaviors tributed to members of the community using a quota by incorporating past efforts, control, and desires as sampling technique. Using a system similar to the one antecedents of food consumption (cf., Bagozzi and War- employed by Keaveney (1995), data quality was assessed shaw 1990; Bagozzi and Edwards 2000). Recently, Wan- by contacting randomly selected respondents from each sink (2002) contributed to this understanding by review- sample. These procedures produced a usable sample size ing research related to World War II efforts to modify of 199. Existing scales were used to measure constructs. food consumption. His study underscored the importance Reliability assessment demonstrated acceptable Cron- of food availability and familiarity in evaluations of food bach’s alpha for all scales. acceptability. Unfortunately, most of these studies suffer from narrow sampling frames – mainly employing stu- Analysis showed 95 respondents were not trying to dents – and low explanatory ability. Developing reliable lose weight, while 101 were, using a median split on and valid measures of modeled constructs has also con- intentions to lose weight next week as the criterion. As tributed to the lack of theoretical progress in understand- expected from prior research, more women than men were ing these behaviors (Bhaskaran 2002). trying to lose weight. Dieters also tended to be under 40,

American Marketing Association / Winter 2005 207 single, and better educated. The effect of income and then on subsets of those who are attempting to lose weight dieting appeared bimodal, with lower and higher income and those who are not. Variables were added in sequential earners being more likely to be dieters than those in blocks starting with exogenous variables and ending with between. Demographic factors affected these variables, the proposed moderators on performance. Resulting re- showing that women are likely to diet more frequently gressions were all significant (at .05 level) and the ex- than men, as are those who are married and working full plained variance was 41.6 percent for the entire dataset, time. 51.1 percent for dieters, and 47.4 percent for non-dieters, providing superior explanatory ability over those ob- To understand factors effecting weight control, a tained using the GDB alone (r2 = .25), although the series of hierarchical regressions were conducted using variables are best at explaining the behavior of dieters as performance of weight control behaviors as the dependent would be expected. References available upon request. variable. The regression was run first on the entire dataset,

For further information contact: Angela Hausman Management, Marketing, and International Business University of Texas – Pan American 1201 W. University Drive Edinburg, TX 78504 Phone: 956.381.2826 FAX: 956.384.5065 E-Mail: [email protected]

American Marketing Association / Winter 2005 208 PRODUCT INVOLVEMENT AND PLACE ATTACHMENT: INSIGHTS FROM THE ENVIRONMENTAL PSYCHOLOGY LITERATURE

Merlyn A. Griffiths, University of California, Irvine

ABSTRACT function for attaining security, comfort, connectedness, and survival (Ainsworth and Bell 1970). An apparent Discussions of person-product bonding relationships congruity exists between the bonding relationships con- in the consumer behavior literature have focused on sumers develop with products and that which they devel- consumer involvement with one category of products; op with places. Although consumer product involvement namely physical goods. Yet, evidence exists that people is extensively studied (e.g., Andrews et al. 1990; Beatty have similar relationships with other types of products et al. 1988; Bloch 1982, 1984; Higie and Feick 1989; like place. Environmental Psychology recognizes person- Laaksonen 1994; Lastovicka 1979; Lastovicka and Gard- place bonding relationships as “place attachment.” Draw- ner 1978; Laurent and Kapferer 1985; Richins and Bloch ing on the literatures of product involvement in consumer 1986; Zaichkowsky 1985, 1986, 1994), relatively little is behavior and place attachment from environmental psy- known about consumer involvement with places. Unlike chology, this paper provides a conceptual framework the products studied in the consumer behavior literature through which to understand consumer bonding relation- regarding involvement (e.g., cosmetics, automobiles, cloth- ships with places. ing, etc.), places offer a wide variety of uses, activities, settings, cultures, and landscapes that marketers can use to INTRODUCTION build an ongoing relationship with consumers, emphasizing various enticing and attraction factors. These at- Although products have been defined in the typical tributes of places, maintain stability as the geographic marketing textbook to include person, physical good, location and spatial nature of the place never changes organization, service, events, properties, places, experi- (e.g., Brazil never ceases to be Brazil), however, the ence, information, and ideas; anything that can be offered adventures, excitement, and experiences one can engage to a market to satisfy consumers want or need (for exam- in is limited only by the individual’s imagination. ple, Kotler 2003, p. 407), a preponderance of the consumer behavior literature on product involvement emphasizes Person-place bonding relationships have been recog- consumers’ involvement with physical goods. However, nized in environmental psychology as “place attach- evidence exists that people have similar relationships with ment.” This literature offers potentially significant theo- other types of products like places. Bonding with places, retical contributions to the product involvement literature similar to involvement with products, objects, personal by expanding the range and type of products studied to possessions, and other people, is recognized as a universal include “place” as a product. First, it broadens our under- human phenomenon. standing of person-place relationships that contribute to the individual’s identity. The strength of individuals’ Person-place bonding relationships although not clas- attachment to place is determined by the degree to which sified as such, exist minimally in the consumer behavior they perceive the place as being an innate part of their literature as part of consumer consumption of places. For existence, self image, and self concept (Sirgy 1982), example, Penaloza (2000, 2001) demonstrates consum- similar to the strength of one’s attachment to personal ers’ place attachment to the American West through the possessions. As Belk (1988) describes, possessions be- recreation and commoditization of the Wild West era in come a part of the extended self. The extended self, he American history, through Rodeo and Stock Shows. This summarizes, include “body, internal processes, ideas and reenactment of America’s rich historical legacy has inter- experiences, and those persons, places, and things to national appeal, and is relived in the United States, Europe which one feels attached” (p. 141). Thus, one’s identity is (e.g., Old Texas Town in Berlin), and the United King- tied to the categories of things equated to be a part of the dom. It is the cultural meanings ascribed to the West, the self, including places. Consequently, if place can be a part values of freedom, family, and naturalism which facilitate of the extended self like material possessions, then place the formation of person-place bonds with this historic must be ultimately tied to one’s identity. Place as it relates place of an era long ago. to one’s identity is identified in the environmental psychology literature as place identity which is one of the From a psychological standpoint, person-place bond- determinants of place attachment representing the emo- ing, similar to person-person attachment (like the bond tive and affective aspects including preferences, feelings, between infant and caregiver), is a biological human and values (Proshansky 1978).

American Marketing Association / Winter 2005 209 Second, place attachment adds to our understanding of-mouth. These institutions strive to endear alums to the of the mobility of meanings (McCracken 1986) ascribed school independent of social ties to other alums. For many to place by individuals. McCracken’s (1986) theoretical alumni the physical place is endowed with relevance and account of meaning movement emphasizes the transfer of meanings often ascribed to churches, synagogues, or meaning from the culturally constituted world to the religious institutions. For example, some universities like consumer good, to the individual consumer. The place University of Richmond and University of Virginia are attachment literature presents a theoretical framework offering columbariums or burial sites on campus, the through which to explore the breadth of meaning move- ultimate extreme in person-place bonding with the phys- ment by extending our understanding of how and why ical place even after death. person-place attachments are formed, the symbolic meanings ascribed to place and the relevance and importance Place as an Entity that characterizes these meanings for the individual. Place refers to space that has been given meaning Third, understanding how different types of attach- through personal, group, or cultural processes (Low and ments are classified will help researchers clarify bound- Altman 1992). As a spatial entity to which people develop aries of not only place attachment, but also attachments to attachments, place can vary in scope, size, and scale. It can brands, products, and material possessions. Kleine and be tangible versus symbolic, known and experienced Baker (2004) recognized the lack of overlap between the versus unknown or not experienced (Low and Altman place attachment literature and possession attachment in 1992). The tangible, known and experienced places are consumer behavior, and make a pressing call for research- for example, homes, neighborhoods, communities, and ers to integrate both literatures to broaden the scope of cities. Bonding with these everyday familiar places occurs attachment research, further clarifying boundaries, mean- as a result of long term residential exposure. Similarly, ing, and value of person-object and person-place bonding recreational places visited (e.g., Appalachian Trail, Ha- relationships. waii, Jamaica, Disneyland) are also tangible, known and experienced places however, the experience is short term Understanding consumers’ involvement and attach- and non-residential in nature. Yet, special feelings of ment to places has practical implications for both relation- connectedness develop toward these places that are expe- ship and place marketers (i.e., tourism and destination rienced for a short period of time. Symbolic, unknown and marketers) as well. As many segments of the tourism unexperienced places (e.g., heaven, Italy, if one has never industry reach the maturation stage, these providers of visited) are places that have not been physically experi- experiential consumption scramble to enhance custom- enced by the individual. The activities, rituals, or land- er’s psychological attachment to place by seeking to build scape are elaborated on only through the individual’s long term programs that communicate investments of imagination, influenced by stories, readings, or pictures love, status, and reciprocal loyalty (Morais et al. 2004). (i.e., TV, magazines, and internet). Yet for many individ- Leisure and recreation providers have sought to not only uals and groups, although there is no actual exposure in understand the formation of and processes involved in the physical sense with these places, an existential bond person-place bonding relationships, but also the impact develops. on consumer commitment, satisfaction and loyalty to place (Iwasaki and Havitz 2004). For relationship market- An example of an individual’s involvement and sub- ers whose primary focus is building strategies of person- sequent attachment to a place is the 1995 film “While You alization (i.e., one-on-one interaction) individualization Were Sleeping,” where the main character (played by (i.e., specific needs and preferences) and continuity (i.e., Sandra Bullock) has a fantasy world of romance that repeat patronage) (Gordon et al. 1998) comprehension of includes an attachment to Florence, Italy, a place she has the process and degree to which consumers’ attachment to strong desires and affinity for, but has never visited. She places evolves, presents invaluable information in influ- carries a passport daily in hopes of one day going there. encing consumer preference, expectation, satisfaction, Her endearment to Florence is further evident in the way and loyalty (Lau and McKercher 2004). Although the she speaks of the place as a significant part of her life. The social aspects of place are often emphasized by these level of her involvement and attachment to this place is marketers, some promote the importance of bonding with based on the feelings and romantic meanings she ascribed the physical place. Summer camps, for example want to Florence, implying a revered place that if she were to individuals to be attached to the place independent of the physically experience it, would represent a phenomenal people that may be a part of the place. In this respect, the accomplishment. Thus, a place with strong self relevance physical space, rather than merely social ties, drives in its meanings to the individual will be salient in thoughts, campers to return each year, even if their friends do not. have a high degree of emotional significance and expec- Institutions like colleges and universities yearn to in- tation of future experiences imagined or anticipated to be crease place bonding relationships with their alumni to possible in that place. gain benefits like increased donations and positive word-

American Marketing Association / Winter 2005 210 Much of the environmental psychology literature knowledge, and belief) and practice (action and behavior) emphasizes longevity in residence as a requirement for (Low and Altman 1992). Within the intellectual milieu, place attachment to develop. However, Stueve, Gerson, place attachment research builds on the premise that and Fischer (1975) found that the effect of length of people develop long-standing and meaningful relation- residence on feelings about a locale is largely explained ships with places. Place attachment can develop through by the mediation of local ties. This finding weakens four distinct ways; namely; biological, the evolutionary studies that argued that attachment develops as a direct and physiological adaptations and ecological fit of people result of length of residence. The narrow geographic view to places (Riley 1992); environmental, the interactional and the bounded condition relegated by the length of experiences of cultural ecology (Hufford 1992); psycho- residence have limited our understanding of place attach- logical, the experiences across life stages from childhood ment, a complex and multi-faceted phenomenon (Manzo to adult life (Chawla 1992; Cooper-Marcus 1992; Rubin- 2003). This limitation was addressed when Low and stein and Parmelee 1992); and sociocultural, the social Altman (1992) extended the spatial range of previous norm and ideologies, ritual performance, and culturally studies, and asserted that people can be attached to places shared meanings (Ahrentzen 1992; Low 1992). of varying scale, specificity, and tangibility, from the very small, like objects, to the nation, planet Earth, or the Like product involvement, place attachment has wide Universe. In a recent study, Hidalgo and Hernandez variability in its definition and operationalization across (2002) found that attachment can also develop after brief studies. According to Low and Altman (1992) place contact with place. The subjects in the study demonstrated attachment is the bonding of people to places. Hummon attachment type behaviors after only short term exposure (1992) identifies it as an “emotional involvement with to place, in particular where the opportunity for social places” (p. 256). Low (1992) considers it as “an individ- interaction was absent. This finding demonstrates that ual’s cognitive or emotional connection to a particular people can develop attachment to places after short term setting or milieu” (p. 165), and Shumaker and Taylor exposure, and in the absence of social relationships that (1983) views it as a “multilevel person-place bond that are typically formed through long term exposure. evolves from specifiable conditions of place and characteristics of people, and that has implications for the Based on the arguments above, it is my position that attitudes and behaviors of individuals toward their socio- place attachment can also be formed through short term physical environments” (p. 223). Consensus however, non-residential exposure (i.e., recreational or tourist plac- leads to the definition adopted in this paper: place attach- es) or even non-exposure (i.e., wanting to visit Italy) to a ment is “a positive affective bond between an individual place. This paper introduces place attachment to the and a specific place, the main characteristic of which is the consumer behavior literature in an effort to extend our tendency of the individual to maintain closeness to such a understanding of person-place bonding relationships. place” (Hidalgo and Hernandez 2001). In this respect, Drawing on well-established theories and empirical stud- maintaining closeness includes nearness in physical proxies of place attachment from environmental psychology, imity, cognitive closeness through the imagination, and/ this paper aims to provide a conceptual framework through or emotional closeness through the feelings evoked when which to understand the characteristics of people-place the place is considered by an individual. bonding relationships. The goal is to examine the properties of product involvement in its applicability to place as Studies of place attachment in environmental psy- a product. In the sections to follow, an abbreviated review chology first establish a geographic or conceptual terrain of the place attachment and product involvement litera- of interest as the boundary place to which attachment tures is presented, followed by a summary of the key develops. With few exceptions studies have emphasized concepts of person-place bonding relationships and po- limited spatial range of place to routinely familiar places: tential implications for the product involvement litera- homes (Ahrentzen 1992; Brown et al. 2003; Harris et al. ture. 1996; Hidalgo and Hernandez 2001), near-home territo- ries (Fuhrer et al. 1993), home town (McAndrew 1998); LITERATURE REVIEW (Abbreviated) neighborhood (Bonaiuto et al. 1999; Low 1992) community (Hummon 1992; Pretty et al. 2003; Riger and Lavra- Place Attachment kas 1981) and city (Brown and Perkins 1992). These limited spatial ranges represent the tangible, known and Place attachment is a complex phenomenon that experienced aspects of place, which carries a necessary integrates many aspects of person-place bonding. In the requirement of longevity in residence as a determinant of environmental psychology literature, theories of place place attachment. Each type of place offers different attachment involve the affective aspects of bonds people experiences and exposure that facilitates the forming of form with places (Low and Altman 1992). The emotional bonds. qualities are often accompanied by cognition (thought,

American Marketing Association / Winter 2005 211 Spatial Ranges of Place City: The city, larger in spatial range than home, neighborhood and community, represents collective or Home: Home as a place we inhabit has many mean- group ownership of public space and place. As a posses- ings. It is the stage of much of our everyday performances, sion to which individuals and groups become attached, and cultural artifacts eliciting important meanings to Belk (1992) identified city as “a collection of monuments, people (Ahrentzen 1992). As a primary territory, home including buildings, cemeteries, and museums that extend affords residents a sense of control that is rarely experi- our personalities” (p. 43). The city encompasses the enced in other locations. Home is a safe haven, a place of community, neighborhood, and homes. In this respect, the connection with family, a setting for enjoyed activities, city allows for further exploration by the residents (insid- and a medium for identity displayed (Harris et al. 1996). ers), and non-residents (outsiders) alike. As the city is Thoughts of home can elicit powerful memories and public domain, it is likely that transient non-resident affective responses, as among other meanings, home can individuals more than residents would utilize the collec- mean the house one grew up in, the setting where love was tive sites (museums, monuments) and other public estab- first felt, the dwelling where one raised children (Cooper- lishments. Marcus 1992). In his focus on attachment to possessions, Belk (1992) posits that we spend much of our lives in our Determinants of Place Attachment homes; our desire for what he calls “homeyness” results in feelings of attachment to home. Several concepts have emerged in the environmental psychology literature focusing on person-place bonding, Neighborhood: Neighborhood has been considered that have been used inconsistently and in some cases the range most important in the formation of attachment interchangeably in the literature. In particular, place iden- bonds, thus the most often studied (Hidalgo and Hernan- tity (Proshansky et al. 1983); place dependence (Shumak- dez 2001). A neighborhood has as its main composition er and Taylor 1983), and sense of place (Hay 1998) are people and the interrelated social ties among them. Ac- most commonly used. The concepts are behaviorally cording to Rubinstein and Parmelee (1992) “life stage and related in that they are concerned with the bonds between patterns of interdependence are consistent influences on people and places. However, in some studies, the concepts the nature and objective manifestations of emotional have been operationalized as consequences of place at- bonds with neighborhoods” (p. 150). Neighborhood so- tachment, while in others one term has been used to cial ties are held together through group collective behav- encapsulate the others. Twigger-Ross and Uzzell (1996) iors that also serve to maintain order and cohesiveness for example, purport that place attachment functions to among the residents. The physical boundaries of neigh- support and develop aspects of place identity. Jorgensen borhoods vary in size and configuration, and are a result and Stedman (2001) posits that place attachment, place of the residents’ collective demarcation and sentiments identity, and place dependence are three dimensions of (Lawrence 1992). Neighborhoods are an extension of sense of place. Kyle et al. (2004) claims place identity and individuals collectively coexisting. Brown et al. (2003, place dependence are dimensions of place attachment, 2004) examined attachment to neighborhood by focusing and Pretty et al. (2003) emphasizes place attachment and on the neighborhood blocks as the level analysis. The place dependence are two of three indicators of place complexity in a neighborhood has at its source the wide identity. The significant overlap in terminology and def- heterogeneity of residents, demographically, socioeco- initions of these place related constructs and the lack of nomically, and ethnically, making it a more dynamic uniqueness in operationalization should signal research- concept for place attachment studies. ers to consider whether these concepts are the same or whether they are theoretically different ways of looking at Community: Communities are a composition of mul- the same phenomenon: person-place bonding. In this tiple neighborhoods, allowing for a wider range of inter- regard, it is logically necessary to examine these con- action among residents of the neighborhoods that make up structs to ascertain each of their relation to place attach- the community. According to Riger and Lavrakas (1981) ment and applicability in understanding individual and “attachment to communities refer to the neighborhood as group bonding relationships with place. a “network of necessities, that go beyond the minimal level of functional necessity and become conscious com- Place Identity: Place identity has been defined as munities, in which attachment persists because of adher- “those dimensions of the self that define the individual’s ence to a clear set of values, despite the absence of personal identity in relation to the physical environment traditional functions which formerly bound people to by means of a complex pattern of conscious and uncon- neighborhoods” (p. 57). A key indicator of community scious ideas, beliefs, preferences, feelings, values, goals attachment is greater freedom of behavior, exploration, and behavioral tendencies, and skills relevant to this confidence, and affective responses within the local com- environment” (Proshansky 1978, p. 155). Place identity munity (Fried 2000). relates to “the variety and complexity of physical settings

American Marketing Association / Winter 2005 212 that define the day-to-day existence of every human sense of place is not imbued in the physical setting, but being” (Proshansky et al. 1983, p. 59). Thus, place iden- resides in human interpretations of the setting (Jorgensen tity is one of many facets of an individual’s self-identity and Stedman 2001). As viewed by Hay (1998), sense of that helps in structuring experiences with physical places place can be broader in context than place attachment, as (Shumaker and Taylor 1983). Place identity is most con- a result of the “subjective qualities, and the sensing of cerned with how places form identity (Moore 2000), and place to create personal meaning” (p. 7). Shamai (1991) how a place shapes or builds aspects of an individual’s self describes sense of place as having levels of intensity of identity. For example, a person who identifies with the feeling and behavior from belonging (affiliation) and neighborhood of the South End of Boston might identify attachment (special affinity) to commitment (ready to do himself or herself as a “Southie,” expressing the dimen- something for the place). He further notes that “place is sion of self that is defined by and related to the physical never merely an object, but a part of a larger whole that is environment. The strength of the individual’s emotional being felt through the ‘actual’ experience of meaningful attachment to place is based on self definitions of who and events . . . the experience is felt through all the senses what he or she is relative to place (Proshansky et al. 1983). (sight, hearing, smell, taste, and touch)” (p. 348). From Thus, for an individual to become attached to a place they this perspective, it can be surmised that sense of place is must first identify with the place. It is the meanings they a necessary requirement for place attachment, as it is the ascribe to the place that enforces the feeling of similarity, meanings individuals and groups ascribed to the place that belonging, and relatedness. Place attachment is integral to feeds attachment. self-definitions (Brown and Perkins 1992), making place identity the reinforced symbolic representation of the self Measurement Approaches of Place Attachment that identifies with the particular place. In this respect, place identity is representative of the emotive and affec- Across studies, the most common measure used to tive aspects of place attachment. It is the intimate self- identify the existence of place attachment has been “length interpretation of what an individual may take to be a sign of residence” (Bonaiuto et al. 1999; Brown et al. 2003; or locus of one’s identity. Riger and Lavrakas 1981). As an indicator of place attachment, length of residence hinges on residents’ dem- Place Dependence: Place dependence refers to “an onstration of attachment through physical manifestations occupant’s perceived strength of association between him like upkeep of the appearance of their homes and property or herself and specific places” (Stokols and Shumaker (Jorgensen and Stedman 2001), protecting the home and 1981, p. 457). The strength of the association between neighborhood from crime and other incivilities (Brown person and place is based on the individual’s comparative et al. 2003; Brown et al. 2004), and interacting with other judgment of the current place as a mechanism to satisfy residents (i.e., knowing names of neighbors and neigh- needs and goals, and expectations of having goals and borhood children) (Mesch and Manor 1998). Length of needs met by alternative comparable places (Shumaker residence, by the nature of its mandatory requirement of and Taylor 1983). The outcome from each option may be long term participation, neglects attachment bonds that negative; meaning that the current or alternative place can be formed with temporary residences, places to which may not be ideal in satisfying the individual’s goals. exposure is short term or limited, places that are not yet However, in comparison, the judgment is made to choose physically experienced, symbolic and other intangible the better of the two less than ideal options. Place depen- places. Harris et al. (1996) demonstrated that attachment dence is therefore setting specific, as its main concern is to temporary residence is possible, with their study of the adequacy of fit between the individual’s goals and the attachment to a student housing facility. Kyle et al.’s particular place, and the achievement of those goals. It is (2004) study of attachment to the natural setting Appala- the functionality of the place that drives the level of chian Trail demonstrated that attachment does form through dependence an individual develops to the place. Place non-residential and short term exposure to place. The dependence differs from place attachment in two ways. length of residence measure is acknowledged as a power- First, place dependence can be negative depending on the ful correlate of attachment; however, it is theoretically limitations of the place in achieving the individual’s problematic as it excludes attachment to non-residential desired goals; and second, the strength of the connection places. A brief review of product involvement is present- between the person and place is based on specific behav- ed here to explore the factors characteristic of product ioral goals rather than general affect (Jorgensen and involvement that may be applicable to person-place bond- Stedman 2001). The functional aspect of place depen- ing. dence suggests it is representative of the “commitment to place” aspect of place attachment. PRODUCT INVOLVEMENT

Sense of Place: Sense of place is the meaning at- Consumer behavior researchers have examined the tached to a spatial setting by a person or group. Further, person-product bonding relationships by focusing on

American Marketing Association / Winter 2005 213 consumer involvement with different product categories. Brand Commitment: Brand commitment and prod- A significant number of empirical studies of product uct involvement have been identified as related but dis- involvement begin by first setting specific parameters tinct constructs (Traylor 1981). These constructs differ in identifying a product or object of interest, like automo- that the object of involvement is a product, while the biles (Bloch and Richins 1983) cosmetics (Coulter et al. object of commitment is a brand. In fact, according to 2003) and fashion clothing (O’Cass 2001). As a construct, Fournier (1998), “brand has no objective existence at all: product involvement has been operationalized in numer- it is simply a collection of perceptions held in the mind of ous ways, resulting in a great deal of variability in the the consumer. The brand cannot act or think or feel – interpretation of empirical evidence across studies. Coulter except through the activities of the manager that adminis- et al. (2003) defines product involvement as the personal ters it” (p. 345). Brand commitment has been defined as an relevance or importance of a product category; O’Cass emotional or psychological attachment to a brand or (2001) sees it as a person specific characteristic that exists product class (Beatty et al. 1988; Robertson 1976; Traylor among consumers in varying degrees; Bloch (1986) 1981; Warrington and Shim 2000). Strong brand commit- recognizes it as an unobservable state reflecting the amount ment has been associated with high levels of involvement of interest, arousal or emotional attachment a consumer (Warrington and Shim 2000), implying the greater the has with a product; and Zaichkowsky (1985), Celsi and brand commitment, the more firmly fixed is the brand as Olson (1988) and Warrington and Shim (2000) believe the only choice for the consumer (Traylor 1981). The product involvement is a person’s perceived relevance of strength of the consumer commitment to a brand lies in the the object or product class based on inherent needs, distinguishable attributes of the brand and the salience of values, and interests. these attributes relative to the consumer’s belief system in regard to the product (Robertson 1976). However, in- It is well documented that levels of product involve- volvement is not a necessary requirement for commitment exists on a continuum from high to low (Antil 1984; ment, as a consumer can become involved with a product Lastovicka and Gardner 1978; Leavitt et al. 1981). Deter- and not be committed to it. Involvement occurs when mination of high versus low is in large part a function of values important to the individual’s self-image are made the level of interest in the product and the level of salient. Commitment results when these values, self- cognitive processing and behavioral activities that the image or important attitudes are cognitively connected to consumer engages in (Antil 1984). Consumers with high a specific situation. In this respect, product involvement product involvement exhibit strong interest in a product leads to brand commitment (Beatty et al. 1988; Coulter that conceivably occupies their thoughts (Richins and et al. 2003; Fournier 1998). Bloch 1986) and demonstrates strong commitment (War- rington and Shim 2000) and enthusiasm (Bloch 1986). Brand Loyalty: Brand loyalty has also been linked to Consumers with low involvement product rely on short both brand commitment and product involvement. As term memory and routine behaviors or minimal cognitive closely related concepts, distinction in operationalization processing (Leavitt et al. 1981) as they are not closely tied is often blurred. For example, Quester and Lim’s (2003) to the product or brand outside of their focal attention study examining the relationship between brand loyalty (Robertson 1975). and product involvement, states that “brand loyalty develops when the brand fits the personality or self-image of the As an individually defined phenomenon, involve- consumer or when the brand offers gratifying and unique ment with products requires ongoing commitment with benefits that the consumer seeks . . . in both instances, regard to thoughts, feelings, and behavioral response personal attachment develops toward the brand” (p. 26). (Quester and Lim 2003), emotional connection (Bloch However, in an earlier study Beatty et al. (1988) claimed 1986) as a function of the meanings ascribed to the that not brand loyalty, but “commitment results when product, and strong personal relevance (Bloch 1986; these values, self-images or important attitudes become Bloch and Richins 1983; Higie and Feick 1989). Empir- cognitively linked to a particular stand or choice alterna- ically studied, product involvement has been said to have tive” (p. 152). Consumer loyalty, as described by Oliver robust influencing effects on consumer cognitive and (1999) is “a deeply held commitment to rebuy or repa- behavioral responses, including memory, attention, pro- tronize a preferred product/service consistently in the cessing, early adoption, search, brand commitment, satis- future, thereby causing repetitive same-brand or same faction, and opinion leadership (see Laaksonen 1994). brand-set purchasing” (p. 34). Thus, loyalty has two distinctive concepts; namely, behavioral which relates to Determinants of Product Involvement the purchase and repeat aspect, and attitudinal which emphasizes the commitment depth relating to the pre- Several concepts have emerged in the consumer ferred product or service. This distinction is the basis for behavior literature relating to consumer involvement with the difference between product involvement, brand loyal- products. Most often found intermingled with product ty, and brand commitment. involvement are brand commitment and brand loyalty.

American Marketing Association / Winter 2005 214 KEY CONCEPTS: PLACE ATTACHMENT AND ence their interest to the extent to which they become a PRODUCT INVOLVEMENT wine enthusiast. Product involved enthusiasts have been characterized by Bloch (1986) as having high levels of From the literature review on place attachment and information seeking, opinion leadership, innovativeness, product involvement, it can be determined that both are product nurturance, or care and represent a significant psychological constructs that involve the interplay of marketplace force. individually determined self relevant meanings ascribed to the product or place of interest. However, similarities CONCLUSION and differences exist between these constructs. Place, like product can become irreplaceable. When an individual The position taken in this paper is that bonding with identifies with place and endows it with meanings the place is a cognitive, affective, and behavioral commit- extent to which place becomes an interpretation of the self ment. Further, short term exposure as well as non-expo- which draws on place as a locus of identity (Hummon sure can also result in the forming of bonds with place. 1992), place becomes unsubstitutable. Like products, Experience through fantasy, desire, and imagination sup- these places are those that for the individual there are no ply equally strong interest and involvement to which alternatives or substitutes that have the same meaning as attachment develops. Developing a bond with place does the original. not require physical experience. Similarly, developing a bond with products does not require ownership of the The factors that drive the development of place product. It is generally accepted that a product can be a attachment (i.e., biological, psychological, environmen- place. Place, like tangible products, can become an inte- tal, and socio-cultural) contributes to our understanding gral part of one’s self image and identity. However, the of product involvement. The aspects of an individual’s properties of place that influence an individual in the upbringing, the environmental and sociocultural facets forming of bonds are not fully explored. In this respect, indigenous to where one grew up and the cultural norms researchers are encouraged to explore the dynamic nature and rituals experienced may predispose one to become of place to deepen our understanding of person-place involved with specific products. For example, an individ- bonds, and extend the product involvement literature ual growing up in a region where wine consumption is a using the insights of place attachment from the environ- ritualistic part of meals, (e.g., Italy or France) may influ- mental psychology literature.

SELECTED REFERENCES ment: A Conceptual Inquiry,” in Place Attachment, Irwin Altman and Setha M. Low, eds. Vol. 12, New Ainsworth, Mary D. Salter and Silvia M. Bell (1970), York: Plenum Pres. “Attachment, Exploration, and Separation: Illustrat- Penaloza, Lisa (2000), “The Commodification of the ed by the Behavior of One-Year-Olds in a Strange American West: Marketers’ Production of Cultural Situation,” Child Development, 41, 49–67. Meanings at the Trade Show,” Journal of Marketing, Bloch, Peter H. and Marsha L. Richins (1983), “A Theo- 64 (October), 82–109. retical Model for the Study of Product Importance Proshansky, Harold M., Abbe K. Fabian, and Robert Perceptions,” Journal of Marketing, 47 (3), 69–81. Kaminoff (1983), “Place-Identity: Physical World Hidalgo, M. Carmen and Bernardo Hernandez (2001), Socialization of the Self,” Journal of Environmental “Place Attachment: Conceptual and Empirical Ques- Psychology, 3, 57–83. tions,” Journal of Environmental Psychology, 21, Richins, Marsha L. and Peter H. Bloch (1986), “After the 273–81. New Wears Off: The Temporal Context of Product Laaksonen, Pirjo (1994), Consumer Involvement: Con- Involvement,” Journal of Consumer Research, 13, cepts and Research. New York: Routledge. 280–85. Low, Setha M. and Irwin Altman (1992), “Place Attach- Complete set of references will be provided upon request

For further information contact: Merlyn A. Griffiths Graduate School of Management University of California, Irvine Irvine, CA 92697 Phone: 714.366.6998 E-Mail: [email protected]

American Marketing Association / Winter 2005 215 EMERGENCY CONTRACEPTION: EXPECTATIONS OF PRODUCT NEED AND USE

Andrew M. Parker, Virginia Polytechnic Institute and State University, Blacksburg Melanie A. Gold, University of Pittsburgh, Pittsburgh

SUMMARY primary contraceptive, it is possible that experience with EC could lead individuals to think of it as such. On the Emergency contraception (EC) is a form of contra- other hand, EC use can cause a number of temporary but ception that reduces the risk of pregnancy after unprotect- uncomfortable side effects, which if seen as significant ed sex or contraceptive failure. Though available in some may actually decrease future willingness to engage in form since the late 1960’s, only recently has it been the unprotected sex. Lastly, it is expected that the perceived focus of behavioral research. Recent FDA deliberations risk of getting pregnant from an episode of unprotected on switching one EC product (Plan B) from prescription- sex will moderate the positive relationship between actual only to over-the-counter status have brought EC even unprotected sex and actual EC use, with this relationship more public attention. Focused on a specialized market being stronger for those with higher risk perception. (particularly young women) and being potentially stigma- and affect-laden (because it is a medication used solely In a longitudinal study, 301 sexually active female after unprotected intercourse to prevent pregnancy), EC adolescents participants completed an initial, one-on-one represents a rather unusual product class. From a market- interview conducted in a research office, followed by six ing perspective, in trying to deliver the product to the monthly 10-minute telephone interviews (see Gold et al. consumer in a way that is most useful, it is important to 2004). At each interview, the perceived likelihood of their understand how consumers think about, use, and are next sexual intercourse being unprotected and of using EC affected by EC, particularly adolescents and young wom- in the next month were gathered, as well as whether they en. From a public-health perspective, this same informa- had engaged in unprotected sex and/or used EC in the tion could be invaluable in protecting individuals’ safety preceding month. Participants also indicated the per- and well-being. ceived risk of pregnancy from one episode of unprotected sex. Because use and misuse of EC reside at the center of this important public health debate, understanding what Across the six months, only 5 percent to 9 percent motivates individuals to seek out and use EC (i.e., market predicted that their next sexual intercourse would be demand) is crucial. The focus here will be on one piece of unprotected, while 24 percent to 33 percent predicted EC the EC product-consumer relationship that has not been use during the next month. The overall pattern, across considered – expectations of the future. Expectations, in visits, is that expectations of having unprotected sex this case of having unprotected sex and possibly needing correlated positively with reports of subsequent unpro- EC, are central to most theories of choice. To the extent tected sex (omnibus p < .0001; Strube 1985), while that the perceived likelihood of needing EC is high (i.e., expectations of EC use correlated positively with subse- unprotected sex seems likely), and to the extent that quent reports of actual EC use (p = .03). Significant having EC on hand will diminish the chances of an correlations were not found between expectation of un- unwanted outcome (i.e., pregnancy), seeking out EC will protected sex and EC use or between expectation of use be a more attractive option. and unprotected sex. Finally, reports of actual unprotected sex correlated positively with EC use, although this It is hypothesized that expectations of having unpro- relationship was not moderated by risk perception. A very tected sex will correlate positively with future reports of similar pattern arose when looking at the relationships actual unprotected sex. Similarly, expectations of EC use between past behavior and expectations of the future. will correlate with future reports of actual EC use. How- ever, each expectation is hypothesized to correlate poorly In summary, expectations do correlate with behavior, with the other behavior. A crucial concern is whether the both past and future. However, a key distinction is be- expectation of using EC will in fact lead to more irrespon- tween the expectation of having sex (and potentially sible behavior (i.e., unprotected sex). To the extent that needing EC) and the expectation of actually using EC. EC expectations are not related to subsequent unprotected Much of the public policy debate regarding EC has sex, however, such a concern holds less weight. A similar centered on how EC could encourage irresponsible sexual issue involves the expectation of unprotected sex and and contraceptive behavior, particularly among adoles- actual past EC use. While EC is not recommended as a cents. Two of the results here argue against that concern.

American Marketing Association / Winter 2005 216 First, expectation of EC use did not predict future reports For healthcare providers and marketers, these results of unprotected sexual behavior. Second, past EC experi- suggest the validity of interventions that recognize the ence did not predict expectation of future unprotected sex. usefulness of expectations. If a young woman expects that From the perspective of advance provision and EC’s over- she will use EC in the future, then this expectation should the-counter status, while unprotected sex definitely influ- be identified during a health care visit and counseling ences EC use (EC wouldn’t be necessary without it), we should include a discussion about how to facilitate timely have no evidence that EC use is influencing unprotected use of EC and when the medicine is most effective. sex.

REFERENCES haviors,” Journal of Pediatric and Adolescent Gyne- cology, 17, 87–96. Gold, Melanie A., Jennifer E. Wolford, Kym A. Smith, Strube, Michael J. (1985), “Combining and Comparing and Andrew M. Parker (2004), “The Effects of Ad- Significance Levels from Nonindependent Hypothe- vance Provision of Emergency Contraception on sis Tests,” Psychological Bulletin, 97, 334–41. Adolescent Women’s Sexual and Contraceptive Be-

For further information contact: Andrew M. Parker Department of Marketing (0236) Virginia Tech Blacksburg, VA 24061 Phone: 540.231.3096 FAX: 540.231.3076 E-Mail: [email protected]

American Marketing Association / Winter 2005 217 INVESTIGATING DRIVERS OF CUSTOMER DEFECTION: A RELATIVE WEIGHT APPROACH

Thomas Hollmann, Arizona State University, Tempe Cheryl Burke Jarvis, Arizona State University, Tempe

SUMMARY Second, much of the extant research in satisfaction and loyalty uses behavioral intention probabilities (e.g., Customer satisfaction, loyalty and retention are cen- “likelihood to renew the contract” on a 7-point Likert tral tenets in the practice of customer relationship man- scale) rather than actual defection data (e.g., Anderson agement (CRM) for both goods and services, and these and Sullivan 1993; Parasuraman, Zeithaml, and Berry concepts have been the focus of heavy study. Yet custom- 1988), despite the fact that Garland (2002) has shown that er defection rates remain quite high in many service-based self-reported switching probabilities overestimate actual industries, as shown by Griffin and Lowenstein (2001). defection rates. Thus, both measuring satisfaction as a Therefore it may be surprising that defection itself has predictor of defection and measuring self-reports of be- received far less attention in both research and practice havioral intentions fall short in providing researchers a than its counterparts of loyalty and retention. Only recent- valid tool for identifying and analyzing drivers of custom- ly, a variety of studies have started to look at specific er defection. Different methodological approaches are drivers of customer defection (e.g., Ahmad 2002; Capra- needed to more effectively measure and evaluate the ro, Borniaczyk, and Srivastava 2003; Keaveney 1995) or system of factors that influence customer switching be- more generally at influences on repurchase decisions haviors. (e.g., Bolton and Lemon 1999; Jones, Mothersbaugh, and Beatty 2003). Therefore, the goal of this paper is to extend the methodological arsenal of customer loyalty research by Interestingly, Keaveney’s (1995) qualitative research proposing and illustrating the use of a defection weight found that the majority of defected customers identified a method (DWM) of data collection and analysis to assess complex combination of multiple reasons for a decision to the relative influence of key drivers of customer defec- switch service providers, rather than a single driver of tion. This method allow researchers to investigate the defection. This finding highlights the need for both aca- relative influence of a constellation of factors that contrib- demics and practitioners to understand drivers of defec- ute to switching decisions, rather than evaluating influ- tion in the context of a comprehensive model, rather than ences in isolation from each other. DWM employs graded through individual investigations of single factors in paired comparisons to understand the preference structure isolation as is typical of the literature to date. of defection drivers.

In addition, measurement has complicated the study The paper reports results from a survey of recently of defection drivers in two ways. First, researchers often defected consumers on a variety of services using the five have relied on measures of customer satisfaction to iden- elements of the Servqual scale, price, and the physical tify problem areas in service delivery that might influence product as defection driver categories. The study shows future defection. Satisfaction has been found to have a that a vast majority of defection decisions are multi- significant impact on repurchase intentions, but that im- dimensional. Less than 10 percent of the respondents have pact is typically small (Bolton 1998), and it has been a uni-dimensional defection weight profile in which one shown that in some cases as much as 65 percent to 85 reason dominates, i.e., represents 75 percent or more of percent of defected customers report being “satisfied” or the decision to defect. This finding supports Keaveney’s “highly satisfied” (Reichheld 1996). Even dissatisfaction (1995) qualitative findings of the complexity of the defec- is not necessarily a predictor of defection (Hennig-Thurau tion decision. and Klee 1997). For a loyal customer, it may take repeated incidences of dissatisfaction with various elements of a The paper also compares the relative influence of the product purchase or service encounter before the custom- tested defection drivers using the DWM technique to the er chooses to switch. Or, it may require that a customer relative influence of the same drivers as reported by reach a threshold level of dissatisfaction on a particular traditional customer satisfaction measures using regres- factor or combination of factors to choose to leave. Even sion analysis. Significant differences in the relative weights if a customer is not particularly loyal, defection may not of the tested factors are demonstrated between the two occur despite unsatisfactory experiences, because of con- methods, supporting past evidence that traditional mea- venience or competitive issues. sures of satisfaction are not valid proxies for drivers of defection.

American Marketing Association / Winter 2005 218 Finally, we use the DWM results to perform a cluster enced to defect by the elements of service quality as analysis of customers based on defection drivers, illustrat- expressed by the Servqual, while about 30 percent of ing a method that practitioners and academics alike could respondents were more strongly influenced by the non- use to segment customers and differentiate services. Close Servqual elements. References are available upon request. to 70 percent of respondents were more heavily influ-

For further information contact: Thomas Hollmann W.P. Carey School of Business Arizona State University P.O. Box 874106 Tempe, AZ 85287–4106 Phone: 480.965.3621 FAX: 480.965.8000 E-Mail: [email protected]

American Marketing Association / Winter 2005 219 INVESTIGATING THE MODERATORS OF THE CUSTOMER SATISFACTION-LOYALTY LINK: EVIDENCE FROM RETAILING

Heiner Evanschitzky, University of Muenster (MCM), Germany Gianfranco Walsh, University of Strathclyde, Scotland

SUMMARY restricted model. With four degrees of freedom more, the restricted model exhibits a significant Chi-square differ- Research on the relationship between customer satis- ence (at p < .05) for three effects: “critical incident,” faction and customer loyalty has advanced to a stage in “expertise,” and “income.” The Chi-square difference for which moderator variables need to be examined more the “loyalty-card membership” is slightly less than 9.49, thoroughly. The relevance of customer satisfaction for indicating a difference significant at a level slightly below maintaining successful relationships with customers has .05. Because this effect just fails the threshold, we decided been discussed widely (e.g., Oliva, Oliver, and MacMill- to test for moderation here as well. Only “age” and an 1992; Reichheld 1993; Hennig-Thurau and Klee 1997) “gender” showed no general moderating effect (Chi- and early work on that relationship demonstrates a posi- square difference with four degrees of freedom were tive and direct relationship. However, more recent studies 1.913 for age and 1.282 for gender). Therefore, we did not argue that satisfaction can have a direct and indirect test for specific moderator effects. In summary, it appears impact on loyalty (e.g., Hennig-Thurau 1997). that “loyalty-card membership,” “expertise,” “critical incident,” and “income” are relevant general moderators of Consistent with the notion of a non-linear relation- the link between satisfaction and loyalty. ship (e.g., Mittal, Ross, and Baldasare 1998; Audrian 2002), some research suggests that the satisfaction-loyal- Next, we analyzed specific moderator effects of the ty relationship is influenced by certain moderator vari- two satisfaction dimensions on the two loyalty dimen- ables (Jones and Sasser 1995). The objective of this study sions for the moderators. Loyalty-card membership im- is to provide additional insight into the relationship be- pacts only one out of the four effects. It moderates the link tween customer satisfaction and customer loyalty by between “satisfaction with employees” and “positive word- empirically examining the effects of selected moderators of-mouth.” Those customers who do not hold a loyalty (loyalty-card membership, critical incidents, expertise, card seem more likely to relate to their positive experienc- gender, age, income) on this relationship. es with the retailer’s employees to others. Apparently, the loyalty card holders seem to expect employees to be The sample consisted of 776 customers of a large friendly and competent and by doing that, expectancy DIY chain. Testing for moderation, we first looked at a level of that factor is high. This result questions the non-restricted model and then restricted the four paths appropriateness of investing in loyalty-card programs. from satisfaction to loyalty to be equal across subgroups. Our finding is in line with findings from Reinartz and Chi-square differences (with four degrees of freedom) Kumar (2002) who found little support for the general were assessed. Next, we compared two models that only positive link between loyalty and profitability. differed in one effect of one satisfaction dimension on one loyalty dimension. One model restricts the parameter to be Three effects are moderated by “critical incidence.” equal across groups while the second model allows vari- It is worth mentioning that we only looked at those critical ation in one of that parameter across groups. The restricted incidents that were resolved to the satisfaction of the model has one degree of freedom more than the general customer, meaning we are looking at “recovered custom- model. A moderating effect would be present when the ers.” With that in mind, it can be noted that recovered improvement in Chi-square moving from the restricted to customers – if satisfied with the employees – are far more the non-restricted model is significant, meaning the Chi- loyal than customers who did not experience a critical square difference between the two models (and one de- incident. In addition, the link between “satisfaction with gree of freedom) is larger than 3.84 (p = .05). the assortment/tangibles” and “positive word-of-mouth” is also moderated by a positively resolved critical inci- After confirming the influence of the four postulated dent. Interestingly, “expertise” moderated only the link main effects, we tested for moderator effects. A Chi- between “satisfaction with assortment/tangibles” and re- square difference test was conducted for all six possible purchase intention. It is economically highly relevant that moderator effects, comparing a restricted and a non- lucrative professional customers (e.g., craftsmen such as

American Marketing Association / Winter 2005 220 carpenters or plumbers) buying their products at the DIY mensions are equally important to men and women and all retailer are far more likely to repurchase if satisfied with age-groups in their effect on customer loyalty. A reason the assortment. for that could be that DIY stores usually offer low- involvement goods that are normally purchased less im- The analysis of income as a moderator shows mixed pulsively. Particularly for certain high-involvement prod- results. The link between satisfaction with the assortment ucts, we would expect a moderating role of gender and age and positive word-of-mouth is stronger for wealthier on the satisfaction-loyalty link. Despite the fact that we customers. Moreover, the link between satisfaction with found no support for the moderating effect of gender and employees and both loyalty dimensions is stronger for age, there is sufficient evidence for a non-linear relation- customers with lower income. It seems that high-income ship between the two constructs “satisfaction” and “loy- consumers are more concerned with the availability of a alty.” Our research suggests that the two satisfaction wide variety of products and less concerned with the dimensions, “satisfaction with assortment/tangibles” and friendliness and competence of the employees. “satisfaction with employees,” positively influence the two loyalty outcomes “repurchase intention” and “posi- The link between satisfaction and loyalty is less tive word-of-mouth.” In particular, we found that “loyal- straightforward and more complex than previous studies ty-card membership,” “expertise,” “critical incident,” and have suggested. Gender and age do not moderate the link “income” are relevant general moderators of the link from satisfaction to loyalty. Contrary to previous findings between satisfaction and loyalty. References and tables (e.g., Homburg and Giering 1999), the satisfaction di- with results available upon request.

For further information contact: Heiner Evanschitzky Marketing Center Muenster University of Muenster Am Stadtgraben 13–15 D-48143 Muenster Germany Phone: +49.251.83.22036 FAX: +49.251.83.22032 E-Mail: [email protected]

American Marketing Association / Winter 2005 221 THE INTERPLAY OF COGNITION AND AFFECT IN THE FORMATION OF CUSTOMER SATISFACTION: A DYNAMIC PERSPECTIVE

Christian Homburg, University of Mannheim, Germany Nicole Koschate, University of Mannheim, Germany Wayne D. Hoyer, The University of Texas at Austin, Austin

SUMMARY and that the ability of both cognition and affect to predict customer satisfaction should increases. Previous research has recognized that both cognition and affect significantly predict satisfaction judgments. The results of an experimental study based on a real However, only a few studies have investigated cognitive consumption experience indicate that the impact of cog- and affective antecedents of customer satisfaction simul- nition on the satisfaction evaluation increases over time taneously. Moreover, these studies have been static (i.e., and that the influence of affect decreases. Moreover, these cross-sectional) in nature. This represents a significant effects are more pronounced in the case of consistent shortcoming since it is well established that customer performance experiences. Finally, the study shows that satisfaction is a dynamic phenomenon. Despite the strong the variance in customer satisfaction jointly explained by recognition that customer satisfaction should be viewed cognition and affect increases as experience accumulates. from a dynamic perspective, the role of cognitive and The findings have several important implications for affective influences has not been systematically studied in marketing managers. For example, the study helps man- this manner. The few studies which have investigated the agers to understand customer satisfaction in a more thor- antecedents of customers satisfaction from a dynamic ough way. It sheds light on the formation process of perspective have focused on the cognitive component of customer satisfaction and shows that customers satisfac- customer satisfaction. tion has a more stochastic character in early stages. Thus, it is more easily for managers to influence the satisfaction Against this background, this study provides a dy- judgment in the early stages where the satisfaction evalu- namic analysis of the simultaneous influence of cognition ation has not yet been crystallized. Further, it is common and affect in the satisfaction formation process. The in practice for managers to think of customer satisfaction fundamental proposition is that the role of cognition and in a logical, rational manner (i.e., if the product or service affect may change over time. We argue that affect plays its performs well, satisfaction will be higher). The results of strongest role at the early stages of satisfaction develop- this study point out that affect can play a critical role as ment, whereas the impact of cognition should increase well, particularly in the early stages of the satisfaction over time. In addition, we build a case that this phenom- formation process. Thus, for new relationships or new enon also depends on the level of consistency of the products and services managers must pay close attention consumption experience (i.e., is it consistently positive or to affective aspects and be careful to manage them effec- consistently negative). Furthermore, we argue that satis- tively. faction judgments should become more stable over time

For further information contact: Christian Homburg Institute for Market-Oriented Management (IMM) University of Mannheim 68161 Mannheim Germany Phone: +49.621.181.1555 FAX: +49.621.181.1556 E-Mail: [email protected]

American Marketing Association / Winter 2005 222 MARKETING SIX SIGMA: ZERO DEFECTS IN INTERCULTURAL SERVICE QUALITY

Martin C. Reimann, Freiberg University, Germany Ulrich F. Luenemann, California State University, Sacramento

ABSTRACT were the two factors integration of the external factor and service quality variation. It was assumed that, as a result The Six Sigma methodology, traditionally referring of cultural value differences between the service provider to defect reduction and quality improvement in manufac- and the customer, the integration of the external factor turing, can also be applied successfully to marketing. could be defective. This might be based on the perception Some service quality defects are related to intercultural of the customer, who measures the service’s quality differences, especially when taking the direct integration according to his/her own specific cultural values while the of external factors – international customers – into ac- service provider might base the service on another culture count. In a study involving German, Spanish, and Swed- value. Thus, the integration of external factor – the inter- ish customers, the authors found that people from cultures national customer – is defective. Since the perceived with a high degree of uncertainty avoidance were less service quality varies based on cultural value differences satisfied when their service expectations were not met. and there is a dependency between service quality and the This suggests that Six Sigma can reduce service quality integration of the external factor (Hutchens 1989; Stamatis defects related to intercultural differences if preceded by 1996), another assumption was that if the integration of sound intercultural operative planning and training of the external factor was defective, the level of perceived service personnel. service quality would be low.

INTRODUCTION In this paper, different cultural values and their impact on international service marketing will be explained Six Sigma, originally developed in Japan and adapted first. Subsequently, the two relevant service characteris- at Motorola in the late 1980s to eliminate waste by tics – the integration of the external factor as well as achieving near-perfect results in production processes, is quality variation – will be examined with regard to cus- credited with saving billions of dollars also at other well- tomers responding differently to a delivered service and known U.S. multinational companies, like General Elec- its quality. At this stage, cultural value differences and tric and Allied Signals, just to name a few (Biolos 2002). their influence on customer and service provider interac- Traditionally, Six Sigma refers to reduction of defects and tions will be taken into account. In this intercultural improvement of quality in manufacturing; however, it can context, the Six Sigma methodology will be introduced. be applied to marketing as well (Ehrlich 2002). Especially The study will show how Six Sigma can help to reduce the services with high involvement of the customer, the Six defects in the integration of the external factor by focusing Sigma methodology can help to improve service quality on quality variation. Thus, this paper suggests that Six (Pande, Neuman, and Cavangh 2000; Biolos 2002; Ehrlich Sigma can be used as a workable tool for enhancing 2000). In this regard, Six Sigma can be defined as a data- international service marketing provided that it is built based methodology or process to prevent service defects into the company’s operative programs and the service and improve customer satisfaction. The statistical concept personnel has undergone adequate cultural awareness and behind it represents the amount of process variation in intercultural preparation training. relation to customer requirements as the source of all service quality considerations. If a process functions on CULTURAL VALUES the Six Sigma level, variation is almost non-existent. Thus, the process results are defect-free in 99.9997 per- The growth and spread of multinational business on cent of all cases, which means only 3.4 defects per million a global scale puts strong emphasis on the importance of process steps. integrating cultural elements in international service marketing. According to Hofstede (1997, p. 9), culture is “the According to Kotler (2003), a service features the collective programming of the mind which distinguishes following three characteristics: (a) the intangibility of the the members of one group or category of people from service; (b) the integration of an external factor (an object another.” Thus, “culture is not a characteristic of individu- or a subject on which the service is applied and which is als; it encompasses a number of people who were condi- integrated into the service process); and (c) the quality tioned by the same education and life experience” (Hofstede variation of the service. Of special interest for this paper 1997, p. 5). Values, the most basic manifestation of

American Marketing Association / Winter 2005 223 culture, are defined as “broad tendencies to prefer a • the degree of long-term orientation (indicating the certain state of affairs over others” (DeMooji 1997, p. 46). extent to which a society exhibits a pragmatic future- Values are among the first things children learn, not oriented perspective rather than a conventional, his- consciously but implicitly. Developmental psychologists toric short-time point of view. consider that by the age of 10, most children have their basic value system definitely in place and that changes These five cultural value dimensions (Hofstede 1997; beyond this age are difficult to obtain (Rokeach 1973). Hofstede and Bond 1988) can be used to make important Since people are not consciously aware of the values they predictions of intercultural differences in work-related hold, it is difficult to discuss or observe them (DeMooji values including customer satisfaction. 1997, p. 46). Based on the receptivity to the idea of cultural values as an important factor for organizational success, INTEGRATION OF THE EXTERNAL FACTOR however, the need for intensified cultural value research – AND CULTURAL VALUE DIFFERENCES especially for multinational companies – became widely acknowledged. During the last two decades, many re- Cultural values influence how service providers in- searchers have tried to make specific predictions of inter- teract with customers. This paper assumes that service cultural differences and the related behaviors (Hall 1984; defects in the integration of the external customer will Hall and Hall 1990b; Trompenaars and Hampden-Turner happen if different cultural values are not understood. The 1998; Schwartz 1999). The most comprehensive study to analytical ability to determine the uncertainty avoidance date on cultural differences in work-related values was orientation seems to be the most important cultural value done by Hofstede (1980, 2001), who obtained data from dimension that refers to defects in intercultural service over 116,000 questionnaires answered by employees at quality. Uncertainty avoidance posits that humans reduce all levels of a large U.S. multinational company. His their inherent uncertainty by dint of technology, law, and research took place in more than 60 countries around the general rituals (Hofstede 2001, p. 147). As shown in world over a period of six years. In his fundamental Figure 1, the degree to which uncertainty is generally approach, Hofstede (1980) concentrated on four basic acceptable within a given culture can differ greatly from dimensions of cultural values to which the selected coun- another (Hofstede 2001, p. 151). For this study, the tries have found different answers in explaining. These German, Spanish, and Swedish cultures were selected due dimensions were: to availability and easy access of data.

• the degree of power distance (indicating the extent to In his research, Hofstede (1980, 2001) compares low which a society accepts the fact that power in institu- and high uncertainty avoidance in societies and uses the tions and organizations is distributed unequally); degree of uncertainty avoidance to distinguish between societal norms. With regard to peoples’ beliefs, attitudes, • the degree of uncertainty avoidance (indicating the and behaviors, low uncertainty avoidance refers to: low extent to which a society tries to avoid uncertain levels of stress and anxiety; weaker superegos and less situations by, for example, establishing more formal showing of emotions; aggressive behavior is frowned rules and believing in, and/or striving for expertise); upon; greater tolerance and acceptance of diversity and uncertain situations; strong belief in general approaches • the degree of individualism (indicating the extent to and common sense to problem solving, where people which relationships are based on loose social frame- should be rewarded for innovative approaches; commit- works rather than on collectivism, where people are ments are less binding and relationships are built quickly tightly integrated in primary groups, such as families but can also be dissolved as quickly; focus on short-term and organizations); planning (up to five years); rules and laws should be adaptive and changed if they don’t work; more acceptance • the degree of masculinity (indicating the extent to of dissent; and willingness to take unknown risk. which dominant values or roles in society are viewed “masculine,” for example achievement, assertive- On the other hand, high uncertainty avoidance refers ness and performance, when measured against its to: higher stress levels and an inner urge to be busy; robust opposite pole, femininity, defined as quality of life, superegos and more showing of emotions; aggressive caring for other people as well as social and gender behavior of self and others is accepted; less tolerance and equality (Hofstede 1980, 1997, 2001). acceptance of unclear situations; less acceptance of dissent and strong need for consensus, clarity and structure; Based on their research in Asia, Hofstede and Bond strong belief in expertise and knowledge for problem (1988) found a new dimension, which was later added to solving, where accuracy should be rewarded; commit- Hofstede’s (1997, 2001) research as a fifth dimension and ments are long-lasting and relationships, which are built labeled: slowly, are expected to last for a long time; focus on long-

American Marketing Association / Winter 2005 224 IrelandSweden 35 29 FIGURE 1 Germany 65 Switzerland 58 Denmark 23 * UAI = Uncertainty Avoidance Index GreecePortugalGuatemalaUruguayBelgium 112El Salvador 104 101PolandJapan 100Peru 94 94Argentia ColombiaChile Brazil Venezuela 93 Italy 92 Czech Republic 80 86 87 Austria 76 76 86 Pakistan 74 Taiwan 75 Norway 70 Ecuador Arab World South Africa New Zealand 70 Indonesia 69 68 49 Canada 50 49 67 United States 48 Philippines 46 48 China India Malaysia 44 40 36 40 Costa RicaFrancePanamaSpainSouth Korea 86TurkeyHungary 86 86Mexico 85Israel 86 Thailand 85 82 Finland Iran 82Africa West 64 81 Netherlands East Africa 59 54 Australia 59 United Kindom 53 52 35 Hong Kong Jamaica 51 Singapore 29 13 8 Country UAI*

American Marketing Association / Winter 2005 225 term planning (up to 20 years); strong need and adherence process variables, which will then be measured, ana- to rules and regulations to make behavior predictable; lyzed, improved, and controlled. The Measurement concern with security in life; and knowing about risks phase comprises the setup of a capable measurement (Adler 1997, p. 53; Hofstede 2001, p. 161). Based on these system to measure the dependent variables: in this general comparisons, service providers can and should case customer satisfaction with regard to a specific use Hofstede’s (1980, 2001) uncertainty avoidance index service. In the Analysis phase, the independent vari- to integrate the external service factor in their operations ables are assessed, which was the service variable by defining service quality for international customers in “delivery time” in this study. Then, in the Improve- terms of cultural awareness and intercultural prepared- ment phase, the value of the independent variables ness of service employees in addition to their obvious will be increased. Finally, the Control phase is neces- business and organizational skills. A specially tailored sary to review the measurement system and the cor- intercultural training – including service factors such as rectness of its outputs (Pande, Neuman, and Ca- reliability, responsiveness, competence, courtesy, credi- vanagh 2000, p. 39). bility, security, access, communication, and understanding the customer – can provide appropriate and useful • Customer Satisfaction Measurement: Six Sigma aims approaches for adaptation to international customers’ at the achievement of fullest customer satisfaction by different value systems and behaviors. This is especially providing a defect-free process or service. As already true when the training focuses on the aforementioned mentioned above, customer satisfaction can be se- uncertainty avoidance differences as the result of different lected as dependent target variable, which is influ- cultural backgrounds. Therefore, to achieve a high level enced by one or more process drivers. Its measure- of external factor integration, service providers should ment should be done before as well as after the strive continuously to improve the level of customer process improvement to compare and view progress. satisfaction, which should include intercultural understanding and display of correct and appropriate behavior • Cultural Awareness and Preparation Training: Six towards international customers. Based on the cultural Sigma also integrates change management. Improv- differences in Hofstede’s uncertainty avoidance dimen- ing a process also means changing human behavior in sion, it can be hypothesized: H1: Customers from cultures organizations to minimize defects. In international with a high degree of uncertainty avoidance will be less service marketing, operational planning for special satisfied when their service expectations are not met. cultural awareness as well as preparation training on Consequently, in order to achieve customer satisfaction intercultural differences is necessary and especially with people from high uncertainty avoidance cultures, the essential for the integration of the external factor service provider needs to meet all relevant service expec- when service providers and customers have different tations. cultural backgrounds and opposing views on how to deal with uncertainty avoidance. As explained be- QUALITY VARIATION AND SIX SIGMA fore, the differences between low and high degrees of uncertainty avoidance can be so severe between Quality variation characterizes service as well. The people from diverse cultural backgrounds that under- central source of quality variation is the defective integra- standing their behavior and being aware of their tion of the external factor (Hutchens 1989; Stamatis different perceptions are very important to prevent 1996). Among the reasons for defective customer integra- irreparable service defects. Therefore, proactive in- tion are some of the following service personnel short- tercultural communication training programs based comings: lack of responsiveness and timeliness, missing on Hofstede’s (1980, 2001) uncertainty avoidance competence and courtesy, miscommunication and faulty dimension have to emerge as critical events in the understanding of the customer (Heineke and Davis 1994). development of the international service provider’s Kotler (2003) identifies three actions to overcome quality management strategies to improve service quality. variation: process improvement, customer satisfaction Such training can effectively enhance future service measurement, and service personnel training. All three quality both for service providers and customers in actions can be achieved with the Six Sigma methodology: overseas assignments, as well as in multicultural and ethnically diverse domestic settings. The information • Process Improvement: Six Sigma not only implies gained and behavioral skills learned will not only statistics; it also uses managerial tools for process help to prevent service defects, but also enable the improvement. A Six Sigma project usually follows service provider to perform on a much higher quality the so called D-M-A-I-C approach (Define-Measure- level. Thus, customers will experience the service Analyze-Improve-Control). In the Definition phase, function on a much higher satisfaction level. customer requirements are surveyed, potential savings are evaluated and the process is mapped. The There are basically two ways to achieve a Six Sigma customer requirements directly lead to the relevant level. One way is through reduction of scattering, the

American Marketing Association / Winter 2005 226 other is through expansion of tolerance. As shown in ened as much when encountering deviations from their Figure 2, the defects in the upper normal distribution refer normative expectations. To use the same hotel example, if to a three sigma level with a possible yield of 93.32 customers with a low degree of uncertainty avoidance do percent. not get the expected and/or reserved room at check-in, they are more likely to accept a wider range of alterna- The two lower distributions refer to a six sigma level tives. Thus, a possible conflict can be contained on the with a 99.9997 percent yield. While the reduction of level of fairness, flexibility, and common sense without scattering focuses on minimizing variance, the expansion leading to a service defect. Even if all service expectations of tolerance focuses on the customer-related requirements are not met, such customers are still able to come across (the acceptance of a longer-than-promised delivery time). with a positive and satisfying service experience. If confronted with such a situation, the service provider can Achieving Six Sigma Through Reduction of Scat- safely assume that the customers’ tolerance level is high tering: As the description of differences between low and enough to allow for certain deviations from the expected high uncertainty cultures has shown, customers coming service and still perceive a high quality service. As a from cultures with a relatively high degree of uncertainty result, it can be hypothesized for this study: H3: If custom- avoidance have a much lower tolerance for ambiguity. ers posses a low degree of uncertainty avoidance, then a They do not accept unclear situations and deviation from wider tolerance with regard to the promised delivery time the normal variation as easily as customers coming from will be accepted. Consequently, the expansion of toler- cultures with a relatively low degree of uncertainty avoidance could be an adequate instrument and part of the ance. A high uncertainty avoidance index generally also service provider’s operational planning to meet the re- indicates higher anxiety and stress levels, a greater pro- quirements of customers with a low degree of uncertainty pensity to display emotions, and a tendency towards avoidance. aggressive behavior when challenged. If a service provider interacts with such an external factor, there is only very STUDY AND HYPOTHESES TESTING little chance to prevent a service defect if the customer encounters a situation or behavior that does not conform To test all three hypotheses, a study was carried out to the customer’s cultural and normative expectations. within a Six Sigma project of a global company from the For example, if hotel customers with a high degree of chemical industry. In a questionnaire, which was filled out uncertainty avoidance do not get the expected and/or immediately after a specific service was delivered, 500 reserved room at check-in, they might not accept any customers of three different national cultures were asked alternate arrangements without aggressive, emotional, about a certain service quality as well as their satisfaction and stressful behavior which, in turn, may lead to a full- level with regard to only this service. Of the 303 received size service defect. In such a situation, the service provid- responses (equaling a response rate of 60.6%), 34 percent er has to consider the customers’ level or degree of were from Germany, another 34 percent from Spain, and tolerance to be so narrow that any deviation or scattering 32 percent from Sweden. Using the Six Sigma methodol- from the promised or expected service would automati- ogy in this study, customer satisfaction was treated as the cally lead to the customers’ perception of low service dependent variable, whereas a culturally varying degree quality or even total dissatisfaction. Therefore, and within of uncertainty avoidance, which influences customer ser- the scope of the specific study, it can be hypothesized: H2: vice quality satisfaction, was the independent variable. If customers posses a high degree of uncertainty avoid- The study had the following parameters: it used a precise ance, then a wider tolerance with regard to the promised delivery time of 240 hours to measure the degree of delivery time is not accepted. Consequently, the reduction customers’ service expectation; both data streams were of scattering (or upgrading of service) should be an discrete: the degree of customer satisfaction (from 1 = adequate instrument and part of the service provider’s “very satisfied” to 5 = “not satisfied”) as well as the degree operational planning to meet the requirements of custom- of uncertainty avoidance; and it featured three cultures on ers with a high degree of uncertainty avoidance. three different degrees of uncertainty avoidance (1 = “high,” 2 = “medium,” and 3 = “low”). The question asked Achieving Six Sigma Through Expansion of Toler- regarding customer satisfaction was: “In compliance with ance: Contrary to the previous example, customers com- the achieved delivery time for this delivery, were you ing from cultures with a relatively low degree of uncer- satisfied with our service?” According to Hofstede (2001, tainty avoidance have a much higher tolerance for ambi- p. 151), and as shown in Figure 1, Spain ranks fairly high guity. They see uncertainty as an inherent part of life and on uncertainty avoidance, Germany takes a rather medi- accept more easily each situation as it comes. A low um position, and Sweden has a fairly low uncertainty uncertainty avoidance index generally also indicates that avoidance index. Based on these different ranking posi- people are more at ease, show less emotions and frown tions, the study was able to compare the relevant degrees upon aggressive behavior. Based on their higher level of of uncertainty avoidance in the target cultures. Given the tolerance, they are more flexible and do not feel threat- same performance level, hypothesis H1 predicted that

American Marketing Association / Winter 2005 227 FIGURE 2

American Marketing Association / Winter 2005 228 customers from cultures with a high degree of uncertainty 71.9%; the p-value is always below 0.05) between all avoidance, in this case Spain, will be less satisfied then three variables. customers from Sweden when their service expectations were not met. To test this hypothesis, a Chi-Square-test When inserting the values for the degree of uncertain- was applied. As shown in Figure 3, the test of hypothesis ty avoidance (“1” for Spain with a high degree, “2” for H1 displayed a high chi-square (χ2 = 141.947) as well as Germany with a medium degree, and “3” for Sweden with a p-value below 0.05 (p = 0.000). The high Chi-Square a low degree) as well as for delivery time (for example 238 resulted from combining the degree of uncertainty avoid- hours versus 245 hours) into the regression equation, it ance with the level of customer satisfaction based on the showed that Spanish customers were less satisfied – and outcome of the study. Therefore, the linkage between a much earlier – than their German and Swedish counter- high degree of uncertainty avoidance and a certain satis- parts although the same level of service quality (slower faction level was established. While 37.8 percent of the delivery time) was provided. Therefore, the central find- Spanish customers were satisfied and 62.1 percent were ing of the study was that the degree of uncertainty avoid- dissatisfied, there was almost the opposite picture for ance as a cultural variable has significant influence on German customers (62.1% satisfied versus 14.6% dissat- customer satisfaction. As stated in hypothesis H2, it was isfied). In Sweden, however, most customers were satis- found that customers from cultures with a high degree of fied (85.5% satisfied versus 0.0% dissatisfied). In com- uncertainty avoidance do not accept a wider tolerance of parison, this means that people in Spain were overall less quality variation as measured by the length of the time for satisfied than those in Germany – and especially Swe- delivery. Customers from cultures with a low degree of den – given the same service performance level. Thus, it uncertainty avoidance, however, do accept a wider toler- was found that customer satisfaction is influenced by a ance as was hypothesized in hypothesis H3. Consequent- culturally varying degree of uncertainty avoidance, which ly, H2 and H3 were also strongly supported. strongly supports hypothesis H1. LIMITATIONS After that, hypotheses H2 and H3 were tested. As already stated above, it was assumed that the customer Although this study provides a unique insight into the with a lower degree of uncertainty avoidance would relationship between service quality, cultural value differ- accept a wider tolerance in service quality, whereby a ences, and customer satisfaction, some limitations have to fulfilled service would be referred to as a high service be highlighted. First, the study was conducted only in the quality. In the study, a fulfilled service was the accom- chemical industry with a rather small sample of custom- plishment of a specific product delivery in a certain ers. Second, although the observed cultures represented a amount of time. The average delivery time was 240 hours. high, medium, and low degree of uncertainty avoidance, Thus, it was defined that a faster or on-time delivery members of only three different cultures were inter- (below or within 240 hours) would be perceived as high viewed. Thus, conducting more research in other cultures service quality while a slower delivery (above 240 hours) is recommended. Third, the use of additional cultural would be perceived as low service quality. This relatively variables, for examples Hall’s (1984) distinction of small variation in delivery time referred to the “just-in- chronemics, which relates to the culturally different per- time” production at the customer side. Taking longer than ception of time as a form of non-verbal communication, or 240 hours meant loss of production or sales since the economic differences in supply and demand situations of customer was running empty on the chemical product the target cultures, may have changed or influenced the delivered by the service provider. Thus, and according to study’s outcome. Fourth, the application of Hofstede’s the Six Sigma methodology, a delivery taking longer than cultural value dimensions to further research has to be 240 hours was considered a defect in the service process. considered carefully. Critics argue that Hofstede’s model The study found that customer satisfaction varied across lacks transferability and, therefore, is not representative cultures even if the same variance within the service for a specific nation or a culture since only data from one quality (slower delivery time) had been provided. The single U.S. company (IBM) were used as samples (Triandis reason for this finding was the culturally varying degree 1982; Yoo and Donthu 1998). On the other hand, this also of uncertainty avoidance. Respondents from cultures with ensures some consistency in the research since IBM a higher degree of uncertainty avoidance were less satis- employees are somewhat similar in regarding organiza- fied with the provided service quality than their counter- tional culture, job description, or educational level (Lowe parts from cultures with a lower degree of uncertainty 1996). Overall, the above listed limitations show that avoidance. As illustrated in Figure 4, it was found that further efforts must be made to understand the behavioral service quality as well as cultural value differences (in this impact of cultural differences and, if possible, incorporate case the degree of uncertainty avoidance) will influence other cultural values in future research models for more customer satisfaction. The regression equation shows a complete explanations. significant relationship (R2 = 72.1% and R2 adjusted =

American Marketing Association / Winter 2005 229 satisfied TOTAL

Expected Count FIGURE 3

(Observed Count – Expected Count)

12345

97 89 38 38 41 303

very satisfied not

0.029 + 0.101 + 9.508 + 0.336 + 13.937 + 7.195 + 2.541 + 0.277 + 12.165 + 13.125

= 5.922 + 3.475 + 12.917 + 7.870 + 52.549 +

= 141.947

p = 0.000

Observed Count 19 20 0 23 41 103

Observed Count 32 32 24 15 0 103

Observed Count 46 37 14 0 0 97

Spain (high degree Percentage 18.4% 19.4% 0% 22.3% 39.8% 100% of uncertaintyCount Expected 32.97 30.25 12.92 12.92 13.94 avoidance)

Germany (medium Percentage 31.1% 31.1% 23.3% 14.6% 0% 100% degree of ExpectedCount 32.97 30.25 12.92 12.92 13.94 uncertainty avoidance)

Sweden (low degree Percentage 47.4% 38.1% 14.4% 0% 0% 100% of uncertaintyCount Expected 31.05 28.49 12.17 12.17 13.13 avoidance)

TOTAL Observed Count

American Marketing Association / Winter 2005 230 FIGURE 4

American Marketing Association / Winter 2005 231 DISCUSSION customer satisfaction measurement tool based on uncertainty avoidance that there are major differences in the For quite a while, cultural issues had been closely customers’ perceptions of service quality across cultures. observed in terms of overall life and job satisfaction Subsequently, service process improvement should be (Hofstede 2001). Previous research, however, has not applied according to the customers’ requirements in each looked into the relationship between certain levels of country or culture (Fitzsimmons and Fitzsimmons 1994). service quality satisfaction and cultural values. While The study’s findings clearly show that only a narrow some researchers have recognized that international ser- service quality tolerance delivered in the service process vice is people-centered and, therefore, culture must some- will be accepted by customers from cultures with a high how play a role (Clark, Rajaratnam, and Smith 1996; De degree of uncertainty avoidance. This means that service Ruyter, Wetzels, and Lemmink 1996; Dahringer 1991), managers have to especially plan and aim for a defect-free their focus has not been on the impact of cultural values on process in high uncertainty avoidance countries like Spain customer satisfaction in terms of a delivered service. in this case. One could also deduct from the findings, Based on the study presented in this paper, it has been however, that cultural differences can play a role as a shown that uncertainty avoidance – a very important moderator between lower service performance and cus- cultural value – has a significant influence on global tomer satisfaction in low uncertainty avoidance countries business and how customers from different cultures per- like Sweden. ceive a certain service quality level differently. Given the variance of uncertainty avoidance across cultures, the Therefore, and in addition to a stringent service study also shows how global service marketing can im- process improvement, new operational service planning prove efficiency and reduce customer dissatisfaction by for increased quality should include intense cultural aware- adopting cultural education and training programs for ness and intercultural preparation training for all involved service personnel. With regard to this study, the research service personnel. More specifically, training with the implications demand a closer investigation of the cohe- main focus on Hofstede’s (1980, 2001) cultural dimension between cultural values and customer satisfaction in sion of uncertainty avoidance must be seen as critical part terms of delivery time. For example, not only Hofstede’s of the Six Sigma methodology to achieve zero defects in degree of uncertainty avoidance but also that of long-term intercultural service quality. The increased intercultural orientation could have implications on the service of competence derived from such training not only gives the delivery time. Furthermore, cultural value items of other multinational service provider the opportunity to adjust researchers, such as Hall and Hall’s (1990a) degree of behavioral patterns accordingly, but can also help to timing, which differentiates between cultures working relieve much of the normal anxieties experienced by parallel on many tasks versus cultures working on one trying to integrate the external customer in a novel but task at a time, might be taken into account as well. As satisfying cultural setting. It will also help to strive for a suggested by Kotler (2003), one key characteristic in defect-free service process and enable the international service marketing is quality variation. The managerial service provider to perform on the highest achievable implications in service quality variations are straightfor- service quality level, which will result in an even higher ward and can be achieved by applying the Six Sigma satisfaction level on the customers’ side. methodology. The presented study illustrates through a

REFERENCES DeMooij, Marieke (1997), Global Marketing and Adver- tising: Understanding Cultural Paradoxes. Thou- Adler, Nancy (1997), International Dimensions of Orga- sand Oaks, CA: Sage. nizational Behavior. Cincinnati, OH: South-West- De Ruyter, Ko, Martin Wetzels, and Jos Lemmink (1996), ern. “The Power of Perceived Service Quality in Interna- Biolos, Jim (2002), “Six Sigma Meets the Service Econ- tional Marketing Channels,” European Journal of omy,” Harvard Management Update, 7 (11), 10. Marketing, 30 (12), 22–38. Clark, Terry, Daniel Rajaratnam, and Timothy Smith Ehrlich, Betsie H. (2002), Transactional Six Sigma and (1996), “Towards a Theory of International Services: Lean Servicing. Boca Raton, FL: St. Lucie Press. Marketing Intangibles in a World of Nations,” Jour- Fitzsimmons, James A. and Mona J. Fitzsimmons (1994), nal of International Marketing, 4 (2), 9–28. Service Management for Competitive Advantage. Dahringer, Lee D. (1991), “Marketing Services Interna- New York: McGraw-Hill. tionally: Barriers and Management Strategies,” Jour- Hall, Edward T. (1984), The Dance of Life. Garden City, nal of Service Marketing, 5 (3), 5–17. NY: Doubleday.

American Marketing Association / Winter 2005 232 ______and Mildred Hall (1990a), Hidden Differ- ment in Hong Kong,” Asia Pacific Business Review, ences: Doing Business with the Japanese. New York: 2 (1), 120–33. Anchor-Doubleday. Pande, Peter S., Robert P. Neuman, and Roland R. Ca- ______and Mildred Hall (1990b), Understand- vangh (2000), The Six Sigma Way: How GE, Motor- ing Cultural Differences: Germans, French, and ola, and Other Top Companies Are Honing Their Americans. Yarmouth, ME: Intercultural Press. Performance. New York: McGraw Hill. Hofstede, Geert (1980), Culture’s Consequences: Inter- Rokeach, Milton (1973), The Nature of Human Values. national Differences in Work-Related Values. Bever- New York: The Free Press. ly Hills, CA: Sage. Schwartz, Shalom H. (1999), “Cultural Value Differenc- ______and Michael Bond (1988), “The Con- es: Some Implications for Work,” Applied Psycholo- fucius Connection: From Cultural Roots to Econom- gy International Review, 23. ic Growth,” Organizational Dynamics, 16 (4), 4–21. Stamatis, Dean H. (1996), Total Quality Service. Delray ______(1997), Cultures and Organizations: Soft- Beach, FL: St. Lucie Press. ware of the Mind. New York: McGraw-Hill. Triandis, Harry C. (1982), “Culture’s Consequences,” ______(2001), Culture’s Consequence: Com- Human Organization, 41 (1), 86–90. paring Values, Behavior, Institutions, and Organiza- Trompenaars, Alfons and Charles Hampden-Turner tions Across Nations. Thousand Oaks, CA: Sage. (1998), Riding the Waves of Culture. New York: Hutchens, Spencer (1989), “What Customers Want: Re- McGraw-Hill. sults of ASQC/Gallup Survey,” Quality Process, Yoo, Boonghee and Naveen Donthu (1998), “Validating (February), 29–35. Hofstede’s Five-Dimensional Measure of Culture at Kotler, Philip (2003), Marketing Management. Engle- the Individual Level,” Proceedings of the 1998 Sum- wood Cliffs, NJ: Prentice-Hall. mer Marketing Educators’ Conference of the Amer- Lowe, Sid (1996), “Culture’s Consequences for Manage- ican Marketing Association, Boston, MA.

For further information contact: Martin C. Reimann Marketing and International Trade Freiberg University Lessingstrasse 45 Freiberg, Germany 09596 Phone: +49.3731.392004 FAX: +49.3731.394006 E-Mail: [email protected]

Ulrich F. Luenemann Department of Communication Studies California State University, Sacramento 6000 J Street Sacramento, CA 95819 Phone: 916.278.6688 FAX: 916.929.1638 E-Mail: [email protected]

American Marketing Association / Winter 2005 233 THE IMPACT OF EXPERIENTIAL KNOWLEDGE AND CREATIVITY ON PERFORMANCE OF INTERNATIONAL PROJECT

Taewon Suh, Texas State University, San Marcos Hongxin Zhao, Saint Louis University, St. Louis Seung H. Kim, Saint Louis University, St. Louis Mark J. Arnold, Saint Louis University, St. Louis Mueun Bae, Inha University, Republic of Korea

SUMMARY edge as intellectual market-based assets was assessed at the multilevel. Both team-level and firm-level experien- This study focuses on testing the relationships be- tial knowledge were identified as unique, independent tween the constructs of knowledge and creativity of an constructs, exerting important roles in the proposed mod- international project team and their consequential perfor- el. Particularly, team-level experiential knowledge was mance. More specifically, this study attempts to fill in the significant on knowledge implication and transfer, and research void by (1) establishing a research model at the firm-level experiential knowledge played importantly on project-team level; (2) centering on the crucial factors the outcomes. Third, this study differentiated the two concerning knowledge and knowledge-creation for the creativity constructs and their unlike influences in the success of the international project (i.e., experiential knowl- modeled relationships. With the dual conceptualization, it edge and creativity); and (3) constructing a structural is quite effectively questioning the seemingly uncon- model comprising the multiple relationships between the scious assumption that creativity is a unitary construct. explaining factors and performance. In the research mod- Fourth, this study has confirmed the fact that project el, the constructs of experiential knowledge measured at performance is nested in the organization recognizing the both the firm- and the team-level make the exogenous need for a multi-level study using the broad framework of variables in the model. Experiential knowledge as pre- the resource-based views. sented is associated with team creativity, project creativity, and project performance. Team creativity, subse- For better performance of a project, we can find two quently, influences the other two endogenous variables, important factors according to the current research set- project creativity and project performance. And, project ting: firm-level experiential knowledge and team creativ- creativity is associated with project performance. ity. MNCs should accumulate the domain-specific knowledge at the firm level and encourage creative behavior by Hypotheses are tested through structural equation nurturing supportive environments and organizational modeling using Korean MNCs’ sample. Hypothesis 1, culture. First, in terms of the experiential knowledge, predicting that Team-Level Experiential Knowledge (EKT) knowledge accumulation would better be focused on positively affects Team Creativity (TC), was supported developing routines and structures to manage operations (EKT Î TC: t = 5.62, p < .001). The influence of firm- since such routines and processes are not sensitive in level experiential knowledge on creativity was presented terms of geographic application. Second, summarizing in Hypothesis 2. Firm-Level Experiential Knowledge the literature, the following actions will prove beneficial (EKF) is not significantly associated with Project Cre- for better team creativity. Encourage employees to ex- ativity (PC) (EKF Î PC: t = .93, p > .05). As predicted, press their ideas openly; provide help in developing ideas; TC was highly associated with PC (t = 3.89, p < .001), provide time for individual efforts; encourage risk taking which supports Hypothesis 3. Hypothesis 4 and 5 were and initiative; provide freedom for employees to enable also held up. Project Performance (PP) was significantly them to do things differently; provide a non-punitive influenced by EKF (t = 5.27, p < .001) and TC (t = 2.72, environment using a low level of supervision; encourage p < .01). However, as the impact PC on PP failed to team members to interact and participate with other groups achieve significance (t = -.80, p > .05), Hypothesis 6 was besides their own; maintain an optimal amount of work not supported. pressure; provide realistic work goals; encourage the delegation of responsibilities; demonstrate confidence in Theoretical contributions of this study are summa- the workforce in a climate of mutual respect; allow indi- rized to few points. First, the study first used creativity viduals to be part of the decision-making process; encour- construct in the international business setting, investigat- age management to provide immediate and timely feed- ing the structured relationships with experiential knowl- back to their team members. edge and performance. Second, related, experiential knowl-

American Marketing Association / Winter 2005 234 For further information contact: Taewon Suh Department of Marketing McCoy College of Business Administration Texas State University 601 University Drive San Marcos, TX 78666 Phone: 512.245.3239 E-Mail: [email protected]

American Marketing Association / Winter 2005 235 CHANGE AND THE MARKETING ORGANIZATION

Kelly D. Martin, Washington State University, Pullman Jean L. Johnson, Washington State University, Pullman

SUMMARY the alpha type occurs within a fixed and stable system and can be accurately measured with reliable dimensions. More than ten years ago, Achrol’s (1991) work on the Beta change also involves periphery change within a fixed evolution of the marketing organization envisaged the system, but is complicated by the fact that the dimensions dynamic environment in which marketers exist today. He of measurement or calibration have changed as well. Beta portends, “The future will be characterized most notably change may be likened to changes occurring in a stable by unprecedented levels of diversity, knowledge rich- system, however fluctuating “rubber yardsticks” provide ness, and turbulence” (Achrol 1991, p. 77). Our discipline unreliable measurement. We extend the discussion of this has witnessed Achrol’s prophecies come to fruition, as the type of change by proposing two distinct forms of beta marketing environment is characterized by unprecedent- change. The typology has relevant application to a broad ed dynamism and turbulence. Broad social and cultural spectrum of change affecting marketing strategy, and we change in the form of technological intensity, globaliza- highlight some examples for illustration. tion and global outsourcing, and regulatory and political unrest is illustrative of our marketing landscape. There- In response to the unique impact of change, a few key fore, to extend the predictions of Achrol into the present, organizational phenomena will combine to determine and in the spirit of “understanding diverse and emerging marketing’s ability to overcome change. Three relevant markets, technologies, and strategies,” our aim is to ad- factors instrumental to the marketing function’s change vance appreciation of change and its role in the marketing response include opacity, asperity, and intricacy. Re- organization. search has demonstrated these variables’ impact on an organization’s ability to manage and ultimately survive Little is known about the effects of broad social, significant change (Hannan, Pólos, and Carroll 2003). cultural, and strategic change on the marketing organiza- Opacity describes phenomena at the individual level, tion in particular. Further, no commonly accepted frame- specifically concerning marketing managers’ perceptions, work exists by which to categorize and thus better under- actions, or possible oversights. In particular, we consider stand specific types of change in marketing. As a founda- opacity as marketing mangers’ inability to foresee, effec- tion, we draw from existing literature in organizational tively comprehend, and thus plan accordingly in the face theory on change. Most organizational theorists agree that of change. Asperity describes normative, cultural phe- change may occur either incrementally and peripherally nomena affecting large groups or subgroups within the which causes a small scale impact, or radically by altering organization. Within marketing, interrelatedness between the core functioning of the organization. Because this normative structures and organizational culture makes the first-order or periphery change is the most predominant marketing function more or less susceptible to failure in type of change to be experienced by organizations (Fox- light of change. Finally intricacy describes the overall Wolfgramm, Boal, and Hunt 1998), it is surprising that organizational design, specifically the degree of intercon- contemporary research has made little attempt to refine nectedness between relevant organizational units. Al- this conceptualization further. One important exception is though highly interconnected organizations may promote the typology introduced by Golembiewski, Billingsley, positive communication structures and decentralized de- and Yeager (1976), which delineates three distinct cate- cision making for example, organizations that are too gories of change. This typology is considered a relevant highly interconnected may lose flexibility. Achrol (1991) lens through which to view marketing specific change, emphasizes that the impact of change will be intensified in and has been usefully employed in other marketing re- densely interconnected and interdependent settings. We search (e.g., Cooper 2000). apply these organizational phenomena to the marketing discipline with specific descriptions and examples of each Similar to the radical change classifications of core opacity, asperity, and intricacy. and second-order change, the typology considers gamma change. The authors define gamma change as a “quantum Our research marries these marketing organizational shift in ways of conceptualizing salient dimensions of phenomena to the various conceptualizations of change. reality,” (Golembiewski et al. 1976, p. 138). Alpha change Just as alpha, beta, and gamma changes are defined so involves smaller scale change such as that described by differently, it follows that their impact on opacity, asper- the terms periphery, non-core, or first-order. Change of ity, and intricacy will fluctuate and vary. In worst-case

American Marketing Association / Winter 2005 236 situations, these variables combine in such a way to divert ring as a result of missed opportunities. The ultimate marketing managers’ time and attention away from op- consequence of missed opportunities and subsequent re- portunities and thus potential resource generating activi- source depletion is marketing failure or even death. It ties (Hannan et al. 2003). Thus, missed opportunities follows that understanding how specific combinations of become the key, detrimental outcome of change misman- opacity, asperity, and intricacy impact the marketing agement in the marketing organization. Depletion of organization’s ability to capitalize on, rather than neglect, resources through missed opportunities can ultimately important resource-generating opportunities is impera- drain the life from a marketing organization. Only signif- tive. We consider the consequences for other strategic icant caches of resources accumulated prior to the change marketing outcomes, as well as overall firm performance. can possibly offset substantial resource depletion occur- References are available from the authors upon request.

For further information contact: Kelly D. Martin Department of Marketing College of Business and Economics Washington State University Pullman, WA 99164–4730 Phone: 509.335.5848 FAX: 509.335.3865 E-Mail: [email protected]

American Marketing Association / Winter 2005 237 PRIVACY CONCERNS AND CUSTOMERS’ WILLINGNESS TO PROVIDE INFORMATION: A REVIEW WITH IMPLICATIONS FOR FUTURE RESEARCH

Mona Srivastava, Texas A&M University, College Station Robert Harmon, Portland State University, Portland

SUMMARY even the customer’s awareness or permission, and has also helped make the provider, delivery process, and Organizations and customers are engaged in a battle process controls invisible especially in an online environ- over information. Too much information being collected ment, which has had a negative effect on trust. We posit has raised privacy concerns amongst customers whereas an inverse relationship between privacy concerns and too little information hampers organizations in their ef- trust which may be accentuated or attenuated depending forts to create long-term customer relationships. Although the organizations’ need-to-know that information. Fur- society may force privacy regulations on marketers through ther trust is the mediating factor in the relationship be- governmental action or legal initiatives, we believe that a tween privacy concerns and the customer’s motivation for market-based solution focused on educating organiza- a relationship with the organization. tions on the benefits of finding the right balance between too much and too little information would alleviate cus- Organization’s Need-to-Know: When approached tomers’ privacy concerns as well as translate into cost- by an organization for information customers are con- savings for organizations. This paper reviews extant liter- cerned about how this information will be used, can the ature on the factors that affect the customer’s willingness organization can be trusted with this information and most to provide information to organizations and explores importantly, whether the organization needs to have this implications for future research to draw managerial atten- information for better satisfying its customers’ needs? tion towards the ethics of collecting customer information. The potential relationships between the factors that P1: The relationship between the customer’s privacy impact the customer’s willingness to provide information concerns and the customer’s trust in an organization to organizations are detailed below. is moderated by the organization’s need-to-know that information. Customer’s Privacy Concerns: Sieber (1998, p. 136) has defined privacy as a person’s “degree of control Customer’s Motivation for a Relationship: Bendapu- of the access that others have to them and to information di and Berry (1997) argue that individuals participate in about them.” Customers are increasingly concerned about relationships either because they want to or because they retaining control over their personal data, and want orga- have to. Intrinsic desires like dedication drives high mo- nizations to reward them for giving information and tivation for a customer relationship and such relationships allowing for its use (Hof 2001). The degree of privacy are based on trust as well as dependence. However, when concern differs as per the type of information (Nowak and customers are constrained to maintain a relationship, Phelps 1992, 1995), type of industry, culture, age, and perhaps due to lack of alternatives, then dependence, gender (Petrison and Wang 1995; Milne and Boza 1999; without trust, leads to a low motivation for a customer Sheehan 1999). We posit that privacy concerns directly relationship. We believe that customers with a high moti- impact trust. Since the role of trust in the relational context vation for a relationship would be more likely to acquiesce has been acknowledged as crucial, it is important to study to an organization’s request for information, providing the impact of privacy concerns on trust (Regan 2003; better quality and/or quantity of information, to achieve Fonseca and McCarthy 2003; Cavoukian et al. 2002; Miln mutual benefits. and Boza 1999). P2: The customer’s trust in an organization increases the Customer’s Trust in an Organization: Some of the motivation of the customer to have a relationship factors that may determine the degree to which customers with an organization. are willing to trust an organization include who their personal information is shared with, how it is used, what P3: Customers with a higher motivation for a relationship is the cost-benefit of sharing their information, and the with an organization would be more willing to pro- reliability of the organization. Technology has enabled vide better quality and quantity of information to the the collection and use of customer information without organization, than those with a lower motivation.

American Marketing Association / Winter 2005 238 Customer’s Technology-Readiness: Parasuraman readiness index would be more willing to provide and Colby (2001, p. 27) define technology-readiness as information to an organization. “people’s propensity to use, embrace and employ new technologies for accomplishing goals in home life and at P4b: Customer with high scores on the technology-readi- work.” On one hand it may be argued that people who are ness index would be less willing to provide infor- more technology-ready would be better able to interact mation to an organization. with the technologies that organizations use to collect customer information. However a counter argument may P5: The customer’s motivation for a relationship mod- be that highly technology-ready customers would be more erates the relationship between the customers’ tech- aware of how their information can be surreptitiously nology-readiness and the customer’s willingness to collected and used, and so would be less willing to provide provide information. information to organizations. Further we believe that the impact of the customer’s technology-readiness on the P6: The customer’s technology-readiness moderates customers’ willingness to provide information occurs the relationship between customers’ privacy con- only in a relational context. So despite the customers’ cerns and the customers’ trust in an organization. technology-readiness, they may not be willing to provide information to an organization unless they trust the orga- The answer to this privacy question is not simple and nization and have a relationship with that organization. opens up new avenues for research geared towards resolv- Additionally we argue that the technology-readiness of ing the tug-of-war between organizations and their cus- customers also impacts the relationship between privacy tomers over customer information, and thus making mu- concerns and trust. For different levels of technology- tually beneficial customer relationships more fact than readiness, the relationship between privacy concerns and fiction. By protecting customer privacy, the contribution trust may be accentuated or attenuated, again depending made to society would be tremendous and the onus of on the industry context i.e., the organizations’ need-to- protecting the rights of customers may shift somewhat know. from policymakers to organizations, which then would become the enforcers of privacy protection rather than P4a: Customers with high scores on the technology- perpetuators of what has become a societal dilemma. References available upon request.

Mona Srivastava Texas A&M University College Station, TX 77843 Phone: 979.845.4525 FAX: 979.862.2811 E-Mail: [email protected]

American Marketing Association / Winter 2005 239 SHIFTS IN WORKPLACE ETHICS: OPPORTUNITIES FOR CONFLICT?

Paul L. Sauer, Canisius College, Buffalo Paul Chao, Eastern Michigan University, Ann Arbor

SUMMARY For each workplace behavior we use two scales, one to measure a self-report of strength of personal belief as to The increased availability and use or abuse of office how wrong that behavior is and a second to measure self- technology in the workplace is the concern of recent ethics report of perceived commonality of that behavior in the research (Oz 2001; Stone and Henry 2003). Victor and respondent’s workplace. All items use a 7-point bi-polar Cullen (1987, 1988) develop a classification of nine types scale with end-points anchored by strongly agree and of ethical climate that vary along two dimensions: types of strongly disagree. This is equivalent to the wording of criteria (or ethical criteria) and level of analysis (or locus items and scales used to assess ethical beliefs and confirm of analysis). Peterson (2002) shows that giving gifts and dimensions of climate (Cullen and Victor 1987; Peterson favors such as described in items that are contained in our 2002). We operationalize perceived incongruence by gifts and entertainment section, is related to both the subtracting each respondent’s perception of ethical cli- personal morality and corporate rules dimensions of the mate rating score from that respondent’s ethical belief Victor and Cullen (1988) theoretical framework. Peterson rating score for each behavior. A score of zero would (2002) also provides evidence that calling in sick and indicate a consonant state. The greater the positive differ- lying such as described in items that are in our truth and ence, the greater is the potential for compelled incongru- lies section, are related to Victor and Cullen’s (1988) ence. The greater the negative difference, the greater is the ethical climate dimensions of personal morality and cor- potential for restraint incongruence. porate rules. The purpose of our research to examine the extent of temporal shifts in personal beliefs, in percep- The overall sample consisted of 14.8 percent top- tions of the ethical climate in the workplace, and in the level managers or directors, 31.7 percent middle level potential for conflict caused by changes in incongruence managers, and 35.5 percent lower level staff such as between self-reported beliefs and climate perceptions technical employees or assistant managers. Regarding office technology, independent sample t-tests reveal two Building on the concept of value congruence be- significant shifts in the direction of weaker ethical beliefs tween and individual and the office environment (Liedtka for Midwest respondents and three significant shifts occur 1989), an approach is developed to assess the shifts in the in the direction of stronger ethical beliefs for Northeast congruence between individuals’ beliefs and their work- respondents. Midwest respondents indicate that use of place climate. Subjective perception is the determinant of company e-mail for personal reasons is significantly more whether conflict exists (Moser 1988) and depends on the common while Northeast respondents perceive use of an ethical congruence between the individual and his or her office computer for Internet shopping to be more common workplace. Restraint incongruence occurs when the indi- in post-2001. For Northeast respondents perceived com- vidual does not perceive a behavior as wrong, but per- pelled incongruence increased for use of company e-mail, ceives that such behavior is not common in the workplace. use of the office computer for Internet shopping Compelled incongruence occurs when an individual perceives a behavior as wrong, but the perceives the same Midwest respondents exhibited a shift toward weak- behavior as common in the workplace. er beliefs regarding gifts and entertainment. For gifts and entertainment, Midwest respondents perceive receiving a Because there is evidence of regional geographic $50 gift from the boss as being significantly more com- differences in individuals’ consumption habits, lifestyles mon while Northeast respondents’ perception of receiv- and values (Kahle 1986; Mittal, Kamakura, and Govind ing $200 football tickets from a supplier is significantly 2004), we administer the survey to working professionals less common after 2001. Perceived restraint incongru- enrolled in part-time management programs operated by ence increased for a $25 gift certificate from a supplier. a private university in the northeastern region of the For Midwest respondents an increase in perceived re- United States and a public university in the Midwest. The straint incongruence for a $75 raffle prize at a suppliers’ time frames for administration include pre-2001 and post- conference occurred. There were no shifts in ethical 2001 survey administration. We chose these time frames beliefs about truth and lies. No significant shifts in climate to span the time before and after ethical scandals revealed occurred with respect to the two items measuring truth and in late 2000 and in 2001. We did pre-2001 sampling in the lies. Overall only four (4) of the 108 tests for pre-2001 and first half of 2000 and post-2001 in spring and fall of 2003. post-2001 differences for the gifts and entertainment and

American Marketing Association / Winter 2005 240 truth and lies items were significant which is less than uals simply do not associate the personal behaviors used chance. in this study with the higher corporate level of illegal and unethical behavior. Another problem is that the pre-2001 Results with respect to shifts in beliefs indicate that and post-2001 data came from two different sets of there is some change with respect to office technology, but respondents, thus there is no way to know if individuals essentially none with respect to gifts and entertainment or changed, only if the aggregate sample changed. This also truth and lies. In spite of the fact that no significant shifts may explain that not only were there a large number of occur with respect to truth and lies behaviors, these forms non-significant differences, but also that there were dif- of ethical abuse appear to provide the most fertile ground ferences that went in the opposite direction of what was for perceived incongruence and conflict. Personal beliefs hypothesized. Improvements would include using match- are very strong that these two behaviors are wrong, yet the ing samples over time and confining the study to employ- perception is that they are generally common in the ees in one or two companies. References available upon workplace, especially after 2001. One reason for the lack request. of more significance effects may be the fact that individ-

For further information contact: Paul L. Sauer Canisius College 2001 Main St. Buffalo, NY 14208–1098 Phone: 716.888.2631 FAX: 716.888.3215 E-Mail: [email protected]

American Marketing Association / Winter 2005 241 INTERACTION BETWEEN THE SALESPERSON AND CUSTOMER: A FRAMEWORK FOR IMPROVING THE SALES OUTCOME

Elizabeth Hemphill, University of South Australia, Australia Chris Dubelaar, Monash University, Australia Steven Goodman, University of South Australia, Australia Gus Geursen, University of South Australia, Australia

ABSTRACT “sales” on behalf of the principal? Industry view has long held the importance of rapport building to lead to sales. This paper examines the role of disclosure on agency This paper examines this notion from an academic sense. establishment. Structural Equation Modeling reveals the The objective of this paper is to explain what a salesperson need for salespeople to reach a level of “rapport” for a should do to maximize their chances of establishing phase transition prior to any eventual sale. Reaching this agency agreements by assembling and empirically testing level is a key driver of successful outcomes, rather than a model of agent-principal relationship establishment. the negotiating skills. LITERATURE AND BACKGROUND INTRODUCTION The roots of agency relationships come from legal Marketing centres on the process of exchange be- literature that adopts a perspective of enforceability of all tween buyers and sellers (Kotler, Adam, Brown, and terms, covenants, and conditions of the agency agree- Armstrong 2001). As sellers enter into relationships with ment. In legal literature (Reuschlein and Gregory 1990) suppliers they act as agents in pursuit of consumers/ and contract law (e.g., U.S.A. District Court Case: Paul T. buyers to the extent that “most of the world’s work is done Freund Corp. v. Commonwealth Packaging Co.) ele- by agents” (Reuschlein and Gregory 1990). To date ments of agency include: consent, fiduciary agreement, marketing literature has adopted a focus on relationship absence of gain or risk to the agent, and control by the maintenance (Weitz and Jap 1995; Dahlstrom and Ingram principal (Reuschlein and Gregory 1990). Legally this 2003), essentially skirting around formation of this rela- fiduciary consensual relationship between agent and prin- tionship (Dahlstrom and Ingram 2003) so that how sales cipal exists when “one person manifests an intention that relationships are developed is not well covered, even in another shall act in his behalf and the other person con- personal sales (Weitz and Jap 1995). This paper examines sents to represent him” (Reuschlein and Gregory 1990). what it is about a specific seller that maximizes their Marketing literature has studied the application of agency chance of establishing the right to pursue buyers in a way theory and the role of information in relationship forma- overlooked until now in the literature. Specifically, the tion (Dahlstrom and Ingram 2003); the purchaser’s per- approach taken in this paper is to understand the role of spective of influences that determine a decision to commit rapport building in the establishment of agency relation- (Bagozzi and Dholakia 1999; Bagozzi 2000); relationship ships. maintenance (Sitkin and Roth 1993; Sheth and Parvatuyar 2000; Singh 2000); agency relationship definitions and When a seller (agent) is engaged by a supplier (as outcomes (Bergen, Dutta, and Walker 1992); drivers of principal) to undertake some action (such as pursuing agent behavior (Richins, Black, and Sirmons 1987; Moore, buyers) on behalf of that principal, an agency relationship Smolen, and Conway 1992; Marsh and Zumpano 1998); is established. Thus, formation of the agency relationship and significant behavioral predispositions of a salesper- is essential prior to any longer term association or market- son that influence sales performance (Weitz 1981). ing exchange. In forming the agency exchange, an agent “sells” to a buyer (principal) their offer to serve in a Relationship marketing literature adopts a focus on master-servant relationship governed at least by the “rules the relationship rather than the transaction resulting from of agency” (established consensually between agent and relationship formation (Sheth and Parvatuyar 2000), in principal) and both agency and partnership law (Reus- which a process model clearly differentiates formation of chlein and Gregory 1990). On the surface, establishing the the relationship from other aspects of relationship main- agency agreement therefore looks like a normal sales tenance. However, even this literature fails to adequately transaction. As a purpose driven process (Sheth and define the process of formation, slipping quickly into an Parvatuyar 2000), the question remains: What can a sales emphasis demonstrated by Levitt (1983) in which the real person really do to increase their chance of forming an value of a relationship between customer and seller occurs agency relationship so they can subsequently pursue after a sale. Such a relationship is dependent on establish-

American Marketing Association / Winter 2005 242 ing trust and cooperation (Morgan and Hunt 1994) and social self-disclosure in sales exchanges between life avoiding cognitive dissonance (Festinger 1957) in order insurance sales agents and potential customers/investors for it to continue. If we accept Sheth and Parvatuyar’s (Jacobs, Hyman, and McQuitty 2000). A seller’s commit- (2000) observation that forming a relationship is more ment to a sale therefore depends on information disclo- important than customer acquisition, agency formation sure between the principal and seller (as agent) on both emerges as a critical part yet to be examined empirically transactional and personal levels (Jacobs et al. 2000). for marketing. This paper is therefore an essential first step in understanding how a supplier of agent services is Negotiation: Weitz and Jap (1995) further find that selected from a pool of potential agents. This paper firstly the sales presentation comes before, and leads to, negoti- adopts the agent’s perspective. Due to imperfections in ation. A clear link from salesperson’s behavior to a self-assessment noted by authors such as (Jaramillo, Car- principal’s decision to commit exists in personal sales rillat, and Locander 2003), we secondly offer results from literature based on appraisal of interactions with the sales a pilot study of principals as a basis for future research to person (Lee and Dubinsky 2003), despite the specific further compare the agent’s perspective with that of the decision influencing criteria of the principal being un- principal. available to the salesperson as a matter of competition (Spekman 1988). Lee and Dubinsky (2003) establish that Theoretical Model courteousness, expertise, and friendliness are assessed to determine satisfaction levels which then influence a pur- Based on a number of propositions framed by Weitz chase decision. Throughout this process, known as “prim- and Jap (1995) and Jacobs et al. (2000) we examine how ing” (Whittler 1994), purchase decisions can be influ- the salesperson influences formation of the agency rela- enced by at least the salesman depending on their capacity tionship. Weitz and Jap (1995) argue that relationships are to establish a sense of trust (Morgan and Hunt 1994), by built around trust, communication and negotiation in what achieving a level of acceptance by the principal. This is described by other authors as the first stage of relation- research paper tests the conceptual model below (Fig- ship building, known also as pre-sale distinct from sale ure 1) using adaptations of propositions offered by Weitz (Sheth and Parvatuyar 2000, p. 332). and Jap (1995) and Jacobs et al. (2000).

Communication: Models of customer-salesperson METHOD interaction traditionally include an element of information exchange. For example: Information exchange drives This study empirically tests propositions detailed in a negotiation process (Olekalns 2002), the final stage of Table 1 above that have only previously been tested in which is a level of “give and take” that result in a mutually other environments by Weitz and Jap (1995) and Jacobs agreeable outcome; And a noted distinction between the et al. (2000). These are based firmly on avoiding cognitive contributions of exchange specific self-disclosure and dissonance (Festinger 1957; Spekman 1988; Hunt 1991)

FIGURE 1 Conceptual Model

Social Disclosure P2, P5 People Skills Negotiation Relationship P1, P3 P6 Establishment Exchange Disclosure P4

Empirical examination of the propositions presented in Table 1 tests this graphical model.

American Marketing Association / Winter 2005 243 TABLE 1 Propositions Tested In This Research

Propos- Research Propositions Instrument Item Construct tions

Interest is communicated and partner The agent came across as People P1 worthiness assessed (Weitz and Jap 1995) being competent Skills

Norms are used to provide a context for Information the agent acquired Social P2 messages (Weitz and Jap 1995) included which other agents Disclosure were being considered

Communication increases over time spent The agent got to know the People P3 on the relationship (Weitz and Jap 1995) principal Skill

Salespersons must be skilled active listeners The agent got to know the People that have the ability to communicate (Weitz principal Skill and Jap 1995)

Exchange specific self-disclosure influences The agent got the principal to Exchange P4 the outcome of a sales attempt (Jacobs et al. share good things about the Disclosure 2000) property

Social self-disclosure influences the The agent got the principal to Social P5 outcome of a sales attempt(Jacobs et al. share why they were selling and Disclosure 2000) if they had already purchased

Negotiation of terms leads to a sale (Weitz The amount of changes to the Negotiation P6 and Jap 1995) agent’s proposed service offering (sales commission, list and reserve price, advertisements) and aim to determine which agent characteristics influ- cipal relationship is established (a sale of agent services ence whether an agent-principal relationship was formed occurs). If unsuccessful, no legally binding agreement is between agent and principal. established between that agent and that principal (no sale occurs). Whether an agency agreement is established with In this paper real estate agents, or realtors, are used as another agent, or does nothing at all is not measured. sellers to examine agent-principal relationship establishment because they engage in commonly occurring agency Construct Operationalisation experiences with property sales (and purchases) that require establishment of an agent-principal relationship for Based on Churchill’s (1979) paradigm, discussions technical or economic reasons. They operate in agent- provided a breadth and depth of qualitative data required principal relationships in which people generally have for empirical instrument development to test Figure 1. multi-agent experiences as they sell houses and property at different points in their lives. In general, people who For this research we define negotiation as: the bar- have engaged in such agent-principal relationships as gaining, trading-off, “haggling,” that results in change to either agent and/or as principal (property vendors that the terms of the agent-principal agreement. This excludes wish to sell their properties with the assistance of an agent) the design, plan, and assembling of the agent proposal, readily share information about their experience. The anything prior to the completion of initial principal eval- dependent variable for this research is a relationship uation of the agent proposal, anything prior to both parties establishment attempt. This can be either successful or establishing their goals, measurement of the principal’s unsuccessful. If successful, a legally binding agent-prin- previous experiences, and anything to do directly with

American Marketing Association / Winter 2005 244 potential buyers. We did this because the literature clearly ing in total 274 usable sale attempts. Each response indicates this as an important stage of negotiation (Ole- included information on two sale attempts – one success- kalns 2002). We measure negotiation from the perspec- ful and one unsuccessful. tive of its contribution to agent-principal relationship establishment by examining the amount of change to a Differences between the two groups were examined proposed agency agreement. closely to ensure that data were not distorted by self- validity bias. Based on McQuitty (2003), sufficient level Information disclosure underpins negotiation (Ole- of power was achieved to enable the model to verified kalns 2002). We define this as the acquisition of exchange using SEM. Missing answers were imputed using expec- information (about the property) and social information tation maximisation (Figueredo, McKnight, McKnight, (about the property owner that is the potential purchaser and Sidani 2000; Flury and Zoppe 2000) to best preserve of the agent services). Exchange disclosure is important in the integrity of this data set. The final response rate was this sales process [Agent Focus Group]. “If a house has around eight percent. Although this could be considered white ants we need to know it is fixed . . . and if buyers ask a major limitation to this research, there is only a six we tell them to get an inspection done . . . we tread percent (.060412) chance that the sample does not repre- carefully” [Agent W]. Due to legal requirements of full sent the population through calculation of the margin of disclosure in the final sale to a property purchaser, we error (Kline 1998). suggest that agents filter information by probing for resolutions of potentially problematic information but Verification of sample representativeness involved otherwise do not probe for information, thus the amount examining respondents’ personal previous month’s medi- and nature of exchange information is important. an residential property price sold and comparing this to published property prices for their city of operations. Social information is important in the process of From this, two different types of agent sales performance establishing an agent-principal relationship. Real estate estimations were evident. Firstly, a large number of agents agents continually ask questions like “What were you estimated their sales performance close to published pric- thinking of? Is that all right with you? Do you agree with es. These agents, on average, underestimated their sales that?” [Agent Z] and “We try to find out who else the performance compared to published sales figures by only vendor is considering and shy they are selling” [Agent approximately 12 percent. This is a relatively small dis- W]. Agents in fact selectively appropriate social informa- crepancy, suggesting that respondents were representation in relationship establishment to simplify agent-prin- tive of their locations. In these cities, property prices were cipal relationship maintenance and increase their chance relatively stable at the time of this research. of being accepted by the principal. Our definition excludes how the agent uses the information, how the agent Secondly, a number of agents underestimated their acquires the information, whether the information was sales performance compared with published property requested, offered directly, observed indirectly, or ac- prices by up to 50 percent. Notably these agents operated quired by other means, and the quantity of information in cities that experienced large house price increases over about the vendor. We did this because “In any negotiation, the past 18 months revealing a telescoping effect resulting information is power” (Latz 2001). Measurement of in- from agents being asked to consider back over time whilst formation disclosure is focussed on the opportunity for we take a single snapshot. This means that should this selective acquisition of property and property seller spe- research be replicated at a later date, with more stable cific information. As agents’ selectively appropriate in- property prices, it would be reasonable to expect fewer formation that will improve their chances of selling their discrepancies between estimations and published prices. services to the principal, measurement of information is Responding agents were found to be reasonably represen- focussed on the selectivity of exchange specific informa- tative of the regions in which they operate. tion and more personal social information. Anderson and Gerbing’s (1988) approach to Struc- Data Collection and Analysis Method tural Equation Modeling (SEM) was used for data analysis to test the theoretical model (Figure 1) so that indirect A self-completion mail questionnaire was developed effects of model constructs could be estimated and inter- and sent to 1600 real estate sales agents (as sellers) that actions between constructs could be examined. Direct had experienced both successful and unsuccessful at- influences of model constructs on the dependent variable tempts to establish supply relationships with property were examined with Logistic Regression (McFadden vendors. These were randomly selected from the Real 1976). Variance and correlations were examined to affirm Estate Institute of Victoria’s member database but follow- measure reliability, validity, and purity based on Camp- up data collection involved convenience sampling from bell and Fiske (1959), Churchill (1979), Cronbach (1951), the original database. Respondents were screened to en- Finn and Kayande (1997), Menezes and Elbert (1979) and sure they were representative of agents in general provid- Peter (1981) prior to structural model evaluation in order

American Marketing Association / Winter 2005 245 to justify implementation of a model evaluation technique Examination of Bollen and Stine p-values reveals (Bagozzi 1982; Bhargava, Dubelaar, and Ramaswami that similar results could be expected in 39.9 percent of 1994; Churchill 1979; Finn and Kayande 1997; Menezes cases (95.6% for sales compared to 16.3% for no-sales). and Elbert 1979; Nunnally and Bernstein 1994; Peter Such poor model indicators for the unsuccessful relation- 1981). ship establishment attempt (no-sale model) suggest that it is not just the interaction with the salesperson that ac- RESULTS counts for no-sale being made. Table 3 shows differences between a sale and no sale estimates. Incorporating the Diagrammatic representation of the resulting struc- work of Pearl (2000) links tested with SEM are significant tural equation model is shown in Figure 2 below with when Critical Ratio estimates are greater than 1.96 (Ar- Table 2 detailing results of model statistics. buckle and Wothke 1999, p. 74); or Differences between relationship establishment attempt outcomes for a single Structural equation model indicators in the Table degree of freedom are significant (if Discrepancy esti- show the structural model estimated in the Figure below mates are less than 3.84146 then estimates are considered delivers a reasonable fit within the measurement model significantly different from each other at a significance (with Fit indicators close to 1), confirming a significant level of 0.05). difference between successful (a sale) and unsuccessful (no sale) relationship attempt outcomes. The likelihood This Table shows that people skills are significantly that test statistics are correct exists because there is nearly related to exchange (CR > 1.96) and social disclosure an 80 percent chance that acceptable structural models (CR > 1.96) and that the importance of social disclosure were rejected, meaning that if not rejected the statistics are differs significantly between successful and unsuccessful more likely understated than overstated to a level of 0.8 relationship establishment attempts (Significant differ- for the full data set (McQuitty 2003, p. 7). ence between estimate of 0.40 and -0.47). Logistic regres-

FIGURE 2 Structural Model Estimates

1.07 1.68 2.01 2.23 eq 14 a eq 14 d eq 11 e eq 11 k

1 1 11

q 14 a q 14 d q 11 e q 11 k 1.23 1.15 1.00 .73 eppl 1.03 1.00 e exch 1 1 People .68 Exchange Skills Disclosure

.33 -.05 6.16 .63 eneg esoc 1 .02 1 Social Negotiation Disclosure

2.14 1.59 1.00 1.00 .90 1.03

q 11 d q 11 b q 11 a q 13 a q 13 b q 13 c 1 1 1 1 1 1 4.08 3.58 3.38 1.08 4.60 1.85 eq 13 a eq 13 b eq 13 c eq 11 d eq 11 b eq 11 a

American Marketing Association / Winter 2005 246 TABLE 2 Model Statistics

Boot Bollen Incre- Strap & RMSEA Normed Relative Mental Comparative Mean SE of Stine Chi-Sq Df P max Fit Fit Fit Fit Disc MEAN P-value

M’ment 18.97 29 .922 .02 .95 .92 1.03 1.00 38.38 .30 .97 Model

Structural 40.26 31 .123 .06 .94 .92 .99 .99 38.53 .26 .40 Model

Sale 21.20 31 .906 .03 .94 .91 1.03 1.00 41.47 .32 .96

No sale 47.72 31 .028 .10 .87 .81 .95 .95 36.78 .26 .16

TABLE 3 Differences Between a Sale and No-Sale (SEM Results)

A Sale (Successful No Sale (Unsuccessful Relationship Relationship Significantly Establishment Attempt) Establishment Attempt) Different

Est. S.E. C.R. P Est. S.E. C.R. P

People Skills to Exchange Disclosure 0.63 0.16 3.98 *** 0.68 0.25 2.73 0.01 No

People Skills to Social Disclosure 0.32 0.10 3.19 0.00 0.38 0.15 2.53 0.01 No

Social Disclosure to Negotiation 0.40 0.28 1.43 0.15 -0.47 0.36 -1.28 0.20 Yes

Exchange Disclosure to Negotiation -0.19 0.25 -0.75 0.46 0.16 0.31 0.53 0.60 No

sion results in the table below show significant relation- On a theoretical level, negotiation should depend on ships between modelled constructs and the outcome of an information disclosure for setting up terms of a business agent-principal relationship establishment attempt when relationship. Personal relationships set up the clients’ Sig. < 0.05. satisfaction prior to any sharing of information that may lead to commencement of negotiations, or eventuate in a These results show that getting to know the customer sale. We propose therefore that this can be viewed as two (sig. = .009 in Table 4) is the best way to (a) achieve social distinct phases of the sales process. The people skills disclosure and (b) establish the relationship that deter- construct can be viewed as what is commonly discussed in mines the likelihood that a marketing exchange will industry sales literature and training courses as “rapport occur; Knowing the competition is important aspect for a building,” or “empathy selling” (Golis 1991). These re- sale (sig. = .037 in Table 4); That negotiation and ex- sults give empirical support to the notion that the selling change specific disclosure will not assist in establishing a process can be observed as a “phase transition” where sales exchange without the support of the people skills people skills (the ability to build rapport) are most impor- component. tant and come first. Without establishing rapport, and

American Marketing Association / Winter 2005 247 completing the phase transition to commitment to pur- strates the need for research in which data are gathered chase, a sale (and an agency agreement) is not likely to be from the client side of the agency exchange. Admission of achieved. personal inadequacies such as this would be unlikely, as individual agents seek to preserve their self-esteem. Con- The notion that self-evaluation in the area of sales and sequently, steps were taken to overcome such a bias in this agency relationships is unreliable is supported in our research by conducting an exploratory pilot study of 200 results on the basis that people skills are clearly attribut- principals. able to success but not necessarily attributed to failure to achieve a sale. Model differences suggest a distinct inabil- This Table shows that the most important “sale” ity to acknowledge fault when the sale relationship is not influences mirror closely the aspects that significantly established. Given the nature of sales and personal selling, differ between the model for a “sale” and “no sale.” That this difference is to be intuitively expected and demon- is, personal relationships between agent and vendor are

TABLE 4 Logistic Regressions Results

Construct Measured Instrument Item Wald Sig. by Instrument Item

Why the vendor was selling 0.046 0.830 Social Disclosure Which other agents they were considering 4.351 0.037 Social Disclosure If the vendors had already purchased 1.127 0.288 Social Disclosure Good things about the property 0.568 0.451 Exchange Disclosure All there was to know about the property 0.157 0.692 Exchange Disclosure Change in sales commission 0.409 0.523 Negotiation Change in property list and reserve price 0.005 0.942 Negotiation Changes in the advertising campaign 0.088 0.766 Negotiation Agent persuasively demonstrating competence 0.428 0.513 People Skills Agent getting to know the vendor 6.901 0.009 People Skills

TABLE 5 Purchaser Pilot Study Results

Influence in Purchase commitment Count % Responses

Relationship(acquaintance) with agent 101 27.2 Reputation 74 19.9 Recommendation 55 14.8 Results 31 8.4 Market Share 26 7.0 Verbal/written submission 16 4.3 Corporate identity 16 4.3 Media presence 12 3.2 Auction/For Sale boards 12 3.2 Website 5 1.3 Other 23 6.2 Total responses 371 100

American Marketing Association / Winter 2005 248 established as the agent gets to know the vendor and We argue that it is not just trust and satisfaction that lead perceives a position of competitive advantage in the to a sale but the degree to which a salesperson can “Get to agent’s ability to perform contracted services after the know” the customer, thus entering their “space.” Direct purchase. These results further support our view that the interaction and information disclosure between agent and personal relationship with the agent is most influential in purchaser results in a level of commitment to a purchase moving the purchaser through the initial phase of their decision prior to the actual sale transaction. However, purchase commitment and accept the salesperson and only if rapport is right then transition can be direct to their competence to perform tasks of the agency agree- relationship establishment without incurring further risk ment. to the outcome via negotiation.

DISCUSSION/IMPLICATIONS This paper strongly argues therefore that agency establishment (as a normal sales exchange) is a multi- This paper examines the point of a sales relationship phase process. In this process the first phase requires establishment from the perspective of agent-principal establishment of trust between the seller and purchaser relationship establishment. We do this because (i) an (Morgan and Hunt 1994) and establishment of a personal agent must establish these relationships with a principal relationship. This relationship must in fact include a level prior to any further money making transactions on behalf of satisfaction (Weitz 1981) and avoidance of cognitive of that principal (ii) as part of a sales transaction marketing dissonance (Festinger 1957). Subsequent to moving is dependent on establishment of these relationships and through this first phase other elements of buyer behavior (iii) more and more, business structures can be seen as models may account for the eventual outcome of a sales agency structures as often business is conducted through attempt but in the first instance of phase transition, estab- networks of independent agents. Establishment of the lishing rapport with a potential customer is critical. agency agreement is clearly similar to normal sales transactions in which the agent’s role of establishing rapport This paper confirms that agency establishment is a with the principal is critical as purchasers are led to a sales normal sales exchange on the basis that (i) legal require- commitment by their personal rapport with a salesperson. ments prescribe steps prior to agent action on behalf on the principal (ii) vendor (principal) selection of an agent is a The key principle this research addresses is the way competitive process and (iii) the transaction is basically a in which a salesperson (agent) contributes to a position of services marketing transaction in which personal skills of competitive edge in the mind of the purchaser (principal) the agent are the driving force. This paper also establishes in what is essentially a normal sales process (establish- that the process of negotiation is incorrectly positioned in ment of the agent-principal relationship). Sales literature existing literature because it: (i) cannot occur until a strongly suggests that a movement towards commitment personal relationship has been established; (ii) does not to a sale is based on the customers’ perception of trust and necessarily lead to a final sales transaction; and (iii) does satisfaction with the sales person (Morgan and Hunt 1994; not necessarily rely on information disclosure from the Weitz and Jap 1995; Jacobs et al. 2000; Olekalns 2002). principal (vendor).

FIGURE 3 Revised Model

Social Disclosure P2, P5 People Relationship Negotiation Skills Establishment P6 P1, P3 Exchange Disclosure P4

American Marketing Association / Winter 2005 249 Significant implications for practitioners (general Gopinath, and Nyer 1999; Bagozzi 2000). Adding to sales people, agents, and agencies) and theory exist from Bagozzi and Dholakia’s (1999) definition of the consum- these findings because: er’s pursuit of specific goals, this paper contributes to sales presentation literature by empirically demonstrating “Selling is a process of influence . . . the ability to that, as the interface with the client, the sales presentation present information, without being abrasive or apol- is the highest level predictor variable. People skills are the ogetic, is a learnable and important skill . . . [involv- agent’s mechanism (as a salesperson) with which to enter ing a] . . . willingness to be shaped, influenced, and a client’s space so these skills represent the highest order impacted upon by the customer” (Shaw 1981). of the variables in relationship establishment.

The important practical implication from our re- Negotiation emerges as a demand side benefit (post search is in the area of sales training known currently to be relationship establishment, post-“sale”) for pursuit of a a process of (i) developing a taxonomy of behaviors (ii) final transaction and is not needed for relationship estab- practicing skills and (iii) providing support and reinforce- lishment. Currently, agent-principal relationships (sales) ment (Shaw 1981). This research takes the first step in begin in the case of real estate by presenting a proposed defining a taxonomy of behavior that leads to sales rela- marketing campaign to a client in the context of selective tionship establishment. successes and failures that is often tweaked and altered. Our research demonstrates that negotiation is not even By modeling and empirically testing behavior that desirable when tendering a relationship proposal to a influences the likelihood that a sale is made, the outcome potential client. As a result agency owners should hire of a sales attempt is found not to be determined, as agents that have excellent people skills and can get along described by Bergen et al. (1992), by processes that follow with a potential client because of the importance of these initial contact between an agent and a principal in which to a relationship establishment attempt outcome directly; terms of an agency agreement are negotiated. It is instead have adequate processes in place so that agents are not put determined at the point at which an initial context, or in the position of having to negotiate terms of an agent- reference point, is established. This point is translated by principal relationship because this will not assist in rela- the principal into their measure, or perception, of equity tionship establishment; and ensure adequate training pro- and fairness that actually determines the outcome of the cesses are available for personal skill acquisition, prac- agent-principal relationship establishment attempt rather tice, and support. than any negotiation. Agents need to be most concerned about gaining For the literature, this paper contributes the finding acceptance by a client at the initial point of contact so that that information disclosure is seen as an influence of the the client will disclose sufficient information to the agent likelihood that a sale will result, rather than negotiation so that the agent can consolidate the initial relationship although social information is seen as an influence on into a sales transaction. As a result, the client is less likely negotiation. Quigg and Wisner’s (1998) work needs to be to experience cognitive dissonance that will result in an reworked to reflect the contributions of Levitt’s (1986) unsuccessful relationship establishment attempt. consumer reference point thereby acknowledging attitudinal psychology; Braun’s (1999) work needs to be mod- CONCLUSION ified to reflect the substantial benefit to agent-principal relationship establishment from identification of Kahne- A fresh view of the selling process as one of phase man, Knetsch, and Thaler’s (1986) framing effects (iden- transitions offers great potential. At a practitioner level, tification of the competition); and Jacoby, Chestnut, and the notion of “rapport” reaching as a prerequisite for a Fisher (1978) and Marsh and Zumpano’s (1998) work phase transition to negotiation and then onto a sale offers needs to be modified because these authors incorrectly empirical evidence not provided in this way before whilst detail the role of information in agent-principal relation- not being a startling new insight for the sales profession. ship establishment. Thus this research provides new support for existing training methods. Gathering further data from the client Although we do not specifically focus on communi- side of the agency transaction and replication in other cation, interpersonal communication between agent and industries offers much scope for developing the model client (in generally getting along and getting to know each into accountable marketing knowledge. The scope also other) is shown to be paramount to a sale. Bagozzi (2000) exists for work across cultures and geographic locations clearly acknowledges the role of emotions in consumer to even further refine and confirm the model. Interesting purchase decisions and the level of rationality behind insights may result from the application of the model in a agents’ efforts to avert cognitive dissonance on the part of cross-cultural setting. Importantly, this research is held the purchaser (Bagozzi and Dholakia 1999; Bagozzi, out for comment, and contribution to the divide between

American Marketing Association / Winter 2005 250 academic knowledge and practitioner experience and use that can assist in the production of research outcomes that in the area of personal selling. In the theme of this are of assistance to both industry and academia. conference, it is presented as a piece of marketing research

REFERENCES “Starting to Solve the Method Puzzle in Salesperson Self-Report Evaluations,” Journal of Personal Sell- Anderson, J.C. and D.W. Gerbing (1988), “Structural ing & Sales Management, 23 (4), 369–78 Equation Modeling in Practice: A Review and Rec- Kahneman, D., J.L. Knetsch, and R. Thaler (1986), “Fair- ommended Two-Step Approach,” Psychological ness as a Constraint on Profit Seeking: Entitlements Bulletinm, 103 (3), 411–23. in the Market,” The American Economic Review, 76 Arbuckle, J.L. and W. Wothke (1999), AMOS 4.0 User’s (4), 728–41. Guide. USA, Smallwaters Corporation. Kline, R.B. (1998), Principles and Practice of Structural Bagozzi, R.P. and U. Dholakia (1999), “Goal Setting and Equation Modelling. New York: The Guildford Press. Goal Striving in Consumer Behaviour,” Journal of Kotler, P., S. Adam, L. Brown, and G. Armstrong (2001), Marketing, 63, 19–32. Principles of Marketing. New South Wales: Pearson ______, M. Gopinath, and P.U. Nyer (1999), Education. “The Role of Emotions in Marketing,” Academy of Latz, M.E. (2001), “Give and Take,” American Bar Asso- Marketing Science, 27 (2), 184–206. ciation, 87, 66. ______(2000), “On the Concept of Intentional Lee, S. and A.J. Dubinsky (2003), “Influence of Salesper- Social Action in Consumer Behaviour,” Journal of son Characteristics and Customer Emotion on Retail Consumer Research, 27 (3), 388–96. Dyadic Relationships,” The International Review of Bergen, M., S. Dutta, and O.J. Walker, Jr. (1992), “Agen- Retail, Distribution, and Consumer Research, 13 (1), cy Relationships in Marketing: A Review of the 21–36. Implications and Applications of Agency Related Levitt, T. (1986), The Marketing Imagination. New York: Theories,” Journal of Marketing, 56 (3), 1. The Free Press. Braun, K.A. (1999), “Post experience Advertising Effects Marsh, G.A. and L.V. Zumpano (1998), “Agency Theory on Consumer Memory,” Journal of Consumer Re- and the Changing Role of the Real Estate Broker,” search, Gainesville, 25 (4), 319– 34. Journal of Real Estate Research, 13 (2), 151–64. Churchill, G.A., Jr. (1979), “A Paradigm for Developing McFadden, D. (1976), “A Comment on Discriminant Better Measures of Marketing Constructs,” Journal Analysis ‘Versus’ Logit Analysis,” Annals of Eco- of Marketing Research, 60–73. nomic and Social Measurement, 5 (4), 511–23. Dahlstrom, R. and R. Ingram (2003), “Social Networks McQuitty, S. (2003), “Statistical Power and Structural and the Adverse Selection Problem in Agency Rela- Equation Models in Business Research,” Journal of tionships,” Journal of Business Research, 56, 767– Business Research, 5641 (In Press). 75. Moore, G.S., G.E. Smolen, and L.V. Conway (1992), Festinger, L. (1957), A Theory of Cognitive Dissonance. “The Effects of an Informational Disclosure Form on Row, Peterson. the Real Estate Agency Representational Model,” Figueredo, A.J., P.E. McKnight, K.M. McKnight, and S. Journal of Real Estate Research, 7 (2), 217–26. Sidani (2000), “Multivariate Modeling of Missing Morgan, R.M. and S.D. Hunt (1994), “The Commitment- Data Within and Across Assessment Waves,” Addic- Trust Theory of Relationship Marketing,” Journal of tion, 95 (11 supp 3), 361–81. Marketing, 58 (3), 20–45. Flury, B. and A. Zoppe (2000), “Exercises in EM,” Olekalns, M. (2002), “Negotiation as Social Interaction,” American Statistician, 54 (3), 207, 3. Australian Journal of Management, 27 (Special Is- Golis, C. (1991), Empathy Selling. Port Melbourne, Vic- sue 2002). toria, Australia: Lothian Publishing. Pearl, J. (2000), Causality. United Kingdom: Cambridge Jacobs, R.S., M.R. Hyman, and S. McQuitty (2000), University Press. “Exchange-Specific Self-Disclosure, Social Self- Quigg, B. and B. Wisner (1998), Selling the Right Way. Disclosure, and Personal Selling,” Journal of Mar- New Jersey: Prentice Hall. keting Theory and Practice, (Winter). Reuschlein, H.G. and W.A. Gregory (1990), The Law of Jacoby, J., R.W. Chestnut, and W.A. Fisher (1978), “A Agency and Partnership, 2nd ed. St Paul, MN: West Behavioral Process Approach to Information Acqui- Publishing Co. sition in Nondurable Purchasing,” Journal of Mar- Richins, M.C., W.C. Black, and C.F. Sirmons (1987), keting Research, 15 (November), 532–44. “Strategic Orientation and Marketing Strategy: An Jaramillo, F., F.A. Carrillat, and W.B. Locander (2003), Analysis of Residential Real Estate Brokerage Firm,”

American Marketing Association / Winter 2005 251 Journal of Real Estate Research. Spekman, R.E. (1988), “Strategic Supplier Selection: Shaw, M. (1981), “Sales Training in Transition,” Train- Understanding Long-Term Buyer Relationships,” ing and Development Journal, (February), 74–83. Business Horizons, (July/August), 75–81. Sheth, J.N. and A. Parvatuyar (2000), Handbook of Rela- Weitz, B.A. (1981), “Effectiveness in Sales Interactions: tionship Marketing. California: Sage Publications. A Contingency Framework,” Journal of Marketing, Singh, J. (2000), “Agency and Trust Mechanisms in 45 (Winter), 85–103. Consumer Satisfaction and Loyalty Judgements,” ______and S.D. Jap (1995), “Relationship Mar- Journal of Academy of Marketing Science, 28 (1), keting and Distribution Channels,” Journal of Acad- 150–67. emy of Marketing Science, 23 (4), 305–20. Sitkin, S. and N. Roth (1993), “Examining the Limited Whittler, T.E. (1994), “Eliciting Consumer Choice Heu- Effectiveness of Legalistic ‘Remedies’ for Trust/ ristics: Sales Representatives’ Persuasion Strategies,” Distrust,” Organization Science, 4 (August), 367– Journal of Personal Selling & Sales Management, 92. XIV (4), 41–53.

For further information contact: Liz Hemphill School of Marketing University of South Australia 27 North Terrace Adelaide, South Australia 5000 Phone: +61.8.8302.0623 FAX: +61.4.1788.2176 E-Mail: [email protected]

American Marketing Association / Winter 2005 252 COUPONS: THE INSIDE SCOOP

Somjit Barat, University of North Texas, Denton

SUMMARY The author also categorizes coupons into two major classes: buy-one-get-one-free and half-off coupons, the Coupons are distributed with the intent of promoting reason being, they influence the customer’s coupon-value the product through an increase in sales or encouraging perception and savings-perception in different ways. The new trials. Even though this widely popular medium of conceptual framework, therefore, may be laid out as promotion has been extensively researched (Ailawadi follows: The perceived value of a coupon affects the et al. 2001; Bawa et al. 1997; Garretson et al. 1999; direction and magnitude of income and substitution ef- Heilman et al. 2002; Lichtenstein 1990; Mittal 1994; fects and are moderated by the type and face value of Raghubir 1998; Reibstein 1982; Ward 1978; Taylor 2001; coupons, which, in turn, affects the price-perception of Nevo 2002) in social science, this paper contributes to the the product. Based on this framework, eight hypotheses body of knowledge by addressing at least one major are suggested out of which, five are strongly and two are shortcoming, that coupons have some inherent disadvan- partially supported, while one is not supported. tages. These latent weaknesses might eventually act as a detriment to the “promoted” product. Such a possibility As far as implications are concerned, a good knowl- arises from the disposition of customers towards coupons edge of how coupons might adversely affect sales pros- in general and the promoted product in particular. pects is critical for managers, manufacturers, and retailers alike. Even within a single product category, one should Data was collected from a sample consisting of both note what kind of coupon is more appropriate for what students and non-students at a large university in the kind of products. It also helps to address what face-value southwestern part of United States. While students are a to put on a coupon so that it encourages the customer to major segment of coupon-users, the analysis was also redeem the coupon as well as increases the bottom line of restricted to convenience products because this category the coupon issuer. Results from this study can help the is one of those where coupons are redeemed the most. The customer use coupons in a more efficient way. Moreover, author attempts to buttress his point by investigating how given that the sample consists of both students and non- customers evaluate a coupon when they see one. For students, the results can be generalized with reasonable example, results showed that such an evaluation is based level of comfort. on how strongly customers feel towards a coupon per se as well as on how they view the savings that results from On the other hand, future studies can investigate how redeeming a coupon. Similarly, on encountering a cou- customers actually utilize the “extra savings” they enjoy pon, customers feel suspicious as well as confused about by redeeming coupons i.e., whether they just hold on to the real price of the product. Finally, seeing a coupon also their savings, buy more of the same or of some other influences the perception of the promoted product by the products. Information on redeeming specific type of cou- customer. This perception can be operationalized through pons (e.g., half-off vs. buy-one-get-one-free) can be used the income effect and substitution effect, both of which to target specific customers, thereby making the whole are concepts well grounded in economic theory. process more efficient.

For further information contact: Somjit Barat University of North Texas P.O. Box 311396 Denton, TX 76203–1396 Phone: 940.565.3121 FAX: 940.565.3837 E-Mail: [email protected]

American Marketing Association / Winter 2005 253 WHAT NEXT? EXPLAINING REPURCHASE DECISIONS AFTER JOINING A LOYALTY PROGRAM

Shirley Y. Cheng, The Chinese University of Hong Kong, Hong Kong Jessica Y. Kwong, The Chinese University of Hong Kong, Hong Kong

SUMMARY Thus, we propose that compared to someone who does not join the LP, an LP participant is expected to In the past few years, loyalty program (LP) started evaluate a repurchase decision with the LP-offering com- drawing attention from researchers. However, extant lit- pany more favorably due to the prospect of reward. On the erature focused mainly on consumer behavior before other hand, an LP participant may evaluate a similar joining an LP (e.g., joining decisions and program evalu- transaction with a non-LP-offering company less favor- ations); how consumers perceive and response to LPs ably, because the loss in prospect of reward would result during the program is left largely unexplored. This paper in a deduction of acquisition utility. Due to risk aversion, draws on mental accounting theory to explain how LP we predict that losing prospect of reward has greater joining affects a consumer purchase decisions after join- impact than gaining the same prospect of reward on ing an LP. This focus on purchase decisions subsequent to transaction. program joining is crucial because getting the reward requires a consumer to make a series of purchase with the In view of the effects of prospect of reward on LP-offering company. This extended effort-investing pro- acquisition utility, this paper proposes that evaluation of cess (Kivetz and Simonson 2003) implies that consumers acquisition utility can be influenced by an LP structural can decide at any time whether to keep pursuing or not, features, which either: (1) make the value of the prospect and the effectiveness an LP depends largely on whether it definite; or (2) segregate the prospect of reward from can influence participants subsequent purchase decisions other components (e.g., price and value of products) of the in favor of the LP-offering company. transactions.

How Does an LP Work? Making the Prospect of Reward Definite

According to Thaler (1985) mental accounting theo- To many participants of LPs, the program rewards are ry, consumers evaluate the acquisition utility of transac- uncertain and delayed because they are contingent to a tions, combining what is obtained relative to its price and series of subsequent purchases. In response to uncertainty valuating the utility, in accordance to Kahneman and and delay outcomes, people discount their values and Tversky (1979) prospect theory. Prospect theory holds impacts on present decisions (Frederick, Loewenstein, that utilities are evaluated as gains and losses relative to and O’Donoghue 2003; Rachlin, Raineri, and Cross 1991). some reference point, and while both gain and loss func- One could thus predict that the effect of reward prospect tions are concave (i.e., displaying diminishing sensitivi- on acquisition utility can be very limited especially at the ty), loss function is steeper (i.e., loss aversion). Based on early stage of program completion. A transparent medium these features of value function, Thaler (1985) formulated system may counter the effects by making the prospect of principles of hedonic framing, which specifies the way of reward definite at the time of transactions. We define the evaluating joint outcomes to maximize resulting utility. transparency of a medium system as the extent to which the monetary value of each unit of medium is made When a consumer joins an LP, he/she has an expec- explicit to the consumers. A transparent medium system tation of a future reward. Subsequently, every time the will make the reward prospect more definite in values, consumer makes a purchase after he/she joined the LP, he/ thus enhance its effect on evaluation of acquisition utility. she is approaching the program reward. We termed this partial realization of reward rospect of reward Although Segregating the Prospect of Reward the program reward is not obtained in a single transaction, the prospect of the reward does carry utility that, as a part Because the gain function is concave, segregating the of what is obtained in the transaction, represents a gain in prospect of reward from other components in utility acquisition utility in every transaction with the LP-offer- evaluation enhances resulted acquisition utility. Offering ing company, but a loss in every transaction with a non- incommensurate reward will prevent consumers from LP-offering company. integrating the reward prospect with product value and

American Marketing Association / Winter 2005 254 price when evaluating the acquisition utility. Incommen- Another way to segregate the reward prospect is to offer surate rewards, in the context of LPs, are defined as multiple rewards. Suppose an LP offers three different rewards that are of different units of measurement from gifts as reward, the prospect of each gift will be segregat- that of the effort. Incommensurate reward relative to ed. The separate prospects of the three gifts will have commensurate reward is expected to have higher value, greater value than the prospect of a single reward with and thus, more positive impact on acquisition utility. same value.

For further information contact: Shirley Y. Cheng The Chinese University of Hong Kong Shatin, Hong Kong Phone: 852.2609.7808 FAX: 852.2603.5473 E-Mail: [email protected]

American Marketing Association / Winter 2005 255 NOT ALL DEALS ARE CREATED EQUAL: TWO DIFFERENT ROLES OF SALES PROMOTION

Dongwoo Shin, Texas A&M University, College Station James H. Leigh, Texas A&M University, College Station

SUMMARY Disturbance refers to a process whereby a sales promotion influences a consumer’s buying behavior by Shopping behavior is goal-directed and often planned. breaking his/her current implementation intentions. When Shoppers seek desired outcomes (e.g., obtaining a desired a consumer encounters a promotion stimulus, it often product) or positive experience (e.g., having a relaxing breaks his/her original implementation intentions and vacation experience). A consumer often sacrifices other induces him/her to switch to purchase the promoted alternatives to achieve his/her chosen goal and imple- product since it provides an alternative with additional ments various self-regulatory strategies to prevent him/ benefits. In this disturbance process, the values (i.e., her from giving in to the alternatives. Many sales-promo- motivations) from the sales promotions should provide tion strategies are designed to affect such self-regulatory sufficient force to break the current action plan. When the strategies by providing economic and psychological in- incentive is sufficient, the shopper halts the execution of centives. The action-oriented framework proposed in this his/her current implementation intention (i.e., it breaks the paper emphasizes the influence of sales promotions in a cognitive link between the environmental cues and the consumer’s goal-striving process and regulatory func- desired behavior), and activates a disturbance feedback tions of implementation intention. The main premise of loop to reevaluate the current and new options. the suggested framework is that sales promotion influences not only the process of formulating goal intentions but We introduce Kuhl’s (1994) action orientation ten- also the process of creating and executing implementation dency as a moderating variable that influences the forma- intentions (Gollwitzer 1999), the building blocks of an tion and disturbance processes. An action-oriented person action plan, which play the key-mediating variable be- can maintain and execute goal intentions more efficiently tween goal intention and buying behavior. The model than a state-oriented person because he/she focuses more hypothesizes that a sales promotion stimulus influences a on a realistic action plan. In contrast, a state-oriented consumer’s goal striving process via two routes: forma- person focuses more on the evaluation of the present state, tion and disturbance processes. a past state, or a future state and lacks the flexibility of his/ her action plan. Since most sales-promotion stimuli con- Formation refers to a process which a sales promo- tain the information required to create an implementation tion motivates a consumer to form a new set of implemen- intention (when, where, and how), an action-oriented tation intentions. The process of formation starts with consumer can quickly establish, maintain, and execute an creating a purchase intention. When a consumer encoun- effective and well-developed shopping plan. However, ters a sales promotion stimulus before developing a pur- since a state-oriented consumer tends to overanalyze chase intention, he/she includes the additional benefits information about alternative goals (end states) even after (i.e., informational, economic, and affective, Raghubir he/she created a goal intention and implementation inten- et al. 2004) from the promotion to their decision process. tions, he/she is more easily distracted from the current After considering the alternatives, the consumer makes up action plan. Therefore, a sales promotion strategy focused his/her mind and creates an intention to purchase a certain on the formation process will influence action-oriented product. The purchase intention summarizes the strength people more since they utilize the provided information of motivation that provides the consumer energy to devel- and motivation better for creating implementation inat- op, pursue, and realize his/her action plan. After the tentions. On the other hand, since state-oriented people consumer created a purchase intention, he/she seeks in- are easily distracted from the current goal pursuit process, formation concerning when, where, and how to formulate a sales promotion strategy focused on the disturbance implementation intentions. The information from sales process will influence them more fully. promotion provides not only value-related but also plan- related content (i.e., the information about the store loca- It is also hypothesized that a state-oriented consumer tion, the period of the promotion, etc.). Such plan-related will have a higher correspondence between his/her past information is connected with appropriate purchase be- behavior with the current behavior since a state oriented haviors, creating new implementation intentions leading person tends to delegate their regulatory functions to the to a higher chance of realizing the purchase behavior. situational cues when they perform repeated behaviors in

American Marketing Association / Winter 2005 256 a stable environment. A stable environment generates current behavior when performing a habitual behavior. little variation in the past, present, and the future. When Because their main concern is in developing efficient and state-oriented people experience such stability over a effective action plans, they will generate more contingen- period time, they would have less motivation to evaluate cy plans in a stable environment, compared to state- alternatives possible states. Consequently, they develop a oriented consumers. Instead of spending their cognitive strong cognitive schema that connects the stable environ- resources evaluating alternative end states, action-orient- mental cues with the routine behavior and will create ed people will spend their cognitive resources developing strong correlations between past and future behavior as more flexible action plans because their main concern is long as such routines can provide means to achieve their in developing efficient and effective action plans. There- desired goals. On the other hand, an action-oriented fore, when thy encounter the right opportunities, they will consumer, even though she/he usually has a higher corre- change their habitual behavior by activating another im- spondence between intention and behavior, he/she will plementation intention. have a lower correspondence between past behavior and

REFERENCES tion,” in Volition and Personality, Julius Kuhl and Jurgen Beckmann, eds. Gottingen, Germany: Hogre- Gollwitzer, Peter M. (1999), “Implementation Intentions: fer & Huber. Strong Effects of Simple Plans,” American Psychol- Raghubir, Priya, J. Jeffrey Inman, and Hans Grande ogist, 54 (7), 493–503. (2004), “The Three Faces of Consumer Promotions,” Kuhl, J. (1994), “A Theory of Action and State Orienta- California Management Review, 46 (4), 23–42.

For further information contact: James H. Leigh Texas A&M University TAMU 4112 College Station, TX 77843–4112 Phone: 979.845.5893 FAX: 979.862.2811 E-Mail: [email protected]

American Marketing Association / Winter 2005 257 THE EFFECTS OF RESERVE PRICES ON BIDDING BEHAVIOR IN ONLINE AUCTIONS

Marla Royne Stafford, The University of Memphis, Memphis Ashley Kilburn, The University of Memphis, Memphis Barbara B. Stern, Rutgers, The State University of New Jersey, New York

SUMMARY H2: The number of bidders participating in the auction is positively related to the total number of bids The influence of reserve prices on bidder behavior placed during the auction. and bidding activity in online auction exchanges is examined. A reserve price is “the minimum price a seller is H3: The total number of bids placed throughout the willing to accept for the item” (eBay 2002), and sellers use auction is positively related to the final bid price. it to specify a hidden amount not disclosed to the bidder that seller designates as a minimum acceptable bid price. H4: The presence of a reserve price is associated with Despite the potential influence of reserves on online a higher final bid price. bidding activity, there is little research about consumer behavior in response to it. Insofar as general research on Method consumer behavior in online auctions is quite sparse (Chui and Zwick 1999; Wilcox 2000), the aim of our study To test the hypotheses, two sets of observational data is to examine the impact of reserve prices on online bidder were collected from a list of Bay completed sales includ- strategy, and in this way contribute to understanding ing all main eBay categories to ensure a variety of prod- online consumer behavior. To do so, we investigated ucts and price ranges, but excluding real estate and cars. buyers’ bidding responses to items with and without a Study 1 consisted of 198 listings (of which 14% had reserve price. reserve prices) that were gathered over a one-month period. To more adequately assess the impact of reserve The theoretical basis of the study is grounded in the prices on bidding activity, a second stratified random set risk perception literature, in which the level of perceived of data was collected with the intent of increasing the risk is viewed as a powerful tool for predicting and number of items with reserve prices, while maintaining explaining consumer behavior (Mitchell 1999). Under the sample characteristics from the first study (i.e., repre- conditions of uncertainty (Bauer 1960; Cox and Rich senting all product categories and including those listings 1964) such as an online auction in which buyers must rely which generated activity). Therefore, Study 2 was de- on a picture of the item and a verbal description in the signed to include at least one item with a reserve price in absence of physical examination (Stern and Stafford, each selected subcategory (e.g., clocks, postcards and forthcoming). Decision-making under uncertainty has paper, doll clothes and accessories, glassware, classic been associated with risks of not only monetary loss but toys) resulting in a sample of 137 completed sales listings also negative psychological and/or behavioral conse- each from different subcategories (of which 32.2% had quences (Stone and Winter 1987; Sitkin and Pablo 1992). reserve prices). Two independent coders unaware of the We propose that a seller’s decision to use a reserve price study’s purpose analyzed the items to determine the diminishes the buyer’s level of perceived risk and out- presence or absence of a reserve price (coded as 1, 0, come uncertainty by signaling to a potential bidder that respectively); the total number of bids placed; the total until the reserve price is met, no contractual agreement number of different bidders; and the final bid amount. obligates the bidder to buy. Inter-rater reliability was 100 percent, as expected in analysis of observational data. The study examines the following hypotheses: Analysis and Results H1A: The presence of a reserve price is positively related to the number of bidders involved in an auction. AMOS 4.01 was used to test the hypotheses via path analysis. The model fit was strong for Study 1. The H1B: The presence of a reserve price is positively related Normed Fit Index (NFI) = .996, the Relative Fit Index to the total number of bids placed during the (RFI) = .960, the Incremental Fit Index (IFI) = .997, and auction. the Comparative Fit Index (CFI) = .997. The RMSEA =

American Marketing Association / Winter 2005 258 2 .094, and the X (1) = 2.75, p = .097. In short, the proposed robust, indicating once again that the proposed model model seems to reproduce the covariance matrix well. reproduced the covariance matrix well; the NFI = 1.0, the Further, four of the proposed hypotheses were supported RFI = .999, the IFI = 1.0, the CFI = 1.0. The RMSEA = 2 (H1A, H2, H3, H4). Results from Study 1 suggest that .000 and the X (1) = .072, p =.789. In contrast to the results there is a positive direct effect of reserve prices on the from Study 1, all five hypotheses were supported included number of bidders to participate in their auction, thus H1B (t = 2.6, p < .05), which suggests that the presence of supporting H1A. Further, in accordance with H2, there is a reserve price is positively related to the number of bids a positive direct effect of number of bidders on the number placed by an individual bidder. These findings suggest a of bids placed. As suggested by H3, Study 1 found that an positive relationship between the use of reserve prices and increased number of bids results in a higher final bid. number of bidders, number of bids, and final bid prices, Finally, a significant direct relationship was found be- indicating that reserve prices may be an important tool for tween the presence of a reserve price and a higher final bid online auction sellers. References available upon request. price, showing support for H4. Study 2 results were more

For further information contact: Marla Royne Stafford Department of Marketing and Supply Chain Management Fogelman College of Business and Economics The University of Memphis Memphis, TN 38152 Phone: 901.678.2499 FAX: 901.678.4052 E-Mail: [email protected]

American Marketing Association / Winter 2005 259 ADVERTISING GOES MOBILE: EXPLAINING ATTITUDE TOWARD M-ADVERTISING

Parissa Haghirian, Kyushu Sangyo University, Japan

SUMMARY H3b: The higher the informativeness of the mobile advertising message, the higher the perceived value Devices and systems based on mobile technologies of m-advertising. have become a commonplace in our everyday lives (Bal- asubramanian, Peterson, and Jarvenpaa 2002) and have H4: The higher the irritation of mobile advertising also changed the marketers’ world. Opportunities for message, the lower the perceived value of m- direct contact with consumers are unprecedented. Con- advertising. sumers can be provided with information they are interested in, which gives marketers the chance to build customer H5a: The higher the credibility of the mobile advertising relationships of a new dimension. They also enable inter- message, the more positive consumers’ attitude actions between customer and advertiser which become toward m-advertising. increasingly rapid and easy. As a result, modern advertisers are increasingly relying on various modes of interac- H5b: The higher the credibility of the mobile advertising tive technology to advertise and promote their products message, the higher the perceived value of m- and services (Pavlou and Stewart 2000). advertising.

Despite this, potential customers did so far not have H6a: The lower the age of the consumer, the more many opportunities to signal their likes and dislikes with positive consumers’ attitude toward m-advertis- marketing activities via mobile devices. This puts marketing. ers at a high risk (Robins 2003). If marketers want to use the communication channels that mobile media provide in H6b: The lower the age of the consumer, the higher the an efficient way, they need to understand how mobile perceived value of m-advertising. consumers perceive and evaluate mobile devices as a source of advertising. A major issue in advertising re- H7a: Perceived value of m-advertising differs between search is measurement of the effects of advertising on the men and women. recipient. This paper aims to contribute to this objective and presents results of a survey on consumer attitudes H7b: Attitude toward m-advertising differs between men toward advertising via mobile devices (m-advertising). and women. The objective of this study was to examine the relationships between attitude toward m-advertising and key H8a: The lower the education of the consumer, the more influence factors. positive consumers’ attitude toward m-advertising. The following hypotheses were examined: H8b: The lower the education of the consumer, the H1: The higher the perceived value of m-advertising, higher the perceived value of m-advertising. the more positive consumers’ attitude toward m- advertising. The study was conducted over a six week period in autumn 2003 during which 815 mobile phone owners H2a: The higher the entertainment factor of the mobile were interviewed on their attitude toward m-advertising. advertising message, the more positive consum- The interviewed persons have been selected on the basis ers’ attitude toward m-advertising. of a quota sample that is representative for the Austrian population. The Austrian market shows the highest pen- H2b: The higher the entertainment factor of the mobile etration of mobile phone users in Europe and is therefore advertising message, the higher the perceived val- very suitable for investigation on mobile marketing and ue of m-advertising. advertising. All measures were assessed via a 5-point- Likert-type scale ranging from “strongly disagree” to H3a: The higher the informativeness of the mobile ad- “strongly agree.” vertising message, the more positive consumers’ attitude toward m-advertising.

American Marketing Association / Winter 2005 260 Evidence in support of hypotheses H4, H6a, H6b, Focus of the study are influence factors on consum- H7a, H7b, and H8b could not be observed. Significant ers‘ attitude toward m-advertising. The results show that relationships (at a .05 level) were observed between consumers’ attitude toward m-advertising but also per- entertainment, informativeness, credibility, educational ceived value of m-advertising are strongly related to level, and the dependent variable perceived value of m- advertising message content. Most surprisingly, consum- advertising. Perceived value of m-advertising as well as ers‘ attributes (apart from educational level’s influence on entertainment, informativeness, and credibility are re- attitude toward m-advertising) do not play such a domi- flecting positively on attitude toward m-advertising. nant role regarding attitude toward m-advertising and perceived advertising value. References are available upon request.

For further information contact: Parissa Haghirian Department of International Management Kyushu Sangyo University 3-1-2 Matsukadai, Higashi-ku Fukuoka 813–8503 Japan Phone: 0081.92.673.5331 E-Mail: [email protected]

American Marketing Association / Winter 2005 261 REGULATORY FOCUS AND RELATIONSHIP MARKETING SUCCESS

Maria Sääksjärvi, Swedish School of Economics and Business Administration, Finland Johanna Gummerus, Swedish School of Economics and Business Administration, Finland

ABSTRACT tionship marketing tactics given that there is a fit between the consumer’s inherent regulatory focus and that tempo- Regulatory focus theory proposes consumers to nav- rally evoked by relationship tactics. Second, it affects a igate towards goals using either a promotion or prevention customer’s relational orientation, thereby influencing focus. We link regulatory focus to relationship marketing customer commitment indirectly. Acquiring relationally success by proposing that the persuasiveness of relation- oriented customers is seen as the outcome of successful ship tactics can be enhanced by inducing a regulatory fit, relationship tactics since they are likely to contribute to and that regulatory focus impact relational orientation and firm profitability (Grönroos 1997). By recognizing what thereby commitment. contributes to relational orientation and matching relationship tactics to fit a consumer’s inherent regulatory INTRODUCTION focus, firms are likely to know “when and why consumers respond favorably and strongly to companies’ relation- Regulatory focus theory states that consumers pursue ship building efforts” (Bhattacharya and Sen 2003, p. 76). goals with two different orientations: promotion or prevention focus (Higgins 1987). Promotion-orientation in- The fit we are proposing contributes to existing volves approaching pleasure, and relates to advancement, literature by suggesting that marketers that evoke tempo- achievement, and aspirations. In contrast, prevention- ral regulatory focus and match it with a consumer’s orientation involves avoiding pain in terms of negative inherent regulatory focus to yield optimal relationship outcomes such as responsibilities, obligations, and secu- marketing strategy outcomes. We also contribute to the rity (Higgins 2000). The type of focus evoked is of current literature by examining relational orientation, importance as it has been found to affect goal pursuit, which despite its importance to relationship marketing motivation, and perceived value (Higgins et al. 2003; has received little attention in academia, as well as its Shah, Higgins, and Friedman 1998; Spiegel, Grant-Pil- impact on customer commitment. low, and Higgins 2004). We examine these issues by bringing forward a Although regulatory focus has received attention number of propositions. Our conceptual framework de- within social psychology, research addressing this con- picting these propositions is presented in Figure 1. cept in marketing is still scarce (for exceptions see Aaker and Lee 2001; Zhu and Meyers-Levy 2003). Linking the THE FIT BETWEEN CONSUMERS concept of regulatory focus to relationship marketing is a AND RELATIONSHIP fruitful avenue due to the established, but unexplored, MARKETING STRATEGIES linkage between regulatory focus and relationship marketing outcomes, such as the effectiveness of relationship Relational Mode marketing tactics and commitment. Support for this linkage comes, for example, from Fennell (1978) who postu- In this article, relational orientation is depicted by lated that consumers faced with interest or pleasure op- means of a consumer’s relational mode, “a consumer’s portunities (promotion goals) are more likely to explore relatively stable tendency to engage in a relationship with brands, whereas those facing problems try to solve or a certain company” (Grönroos 1997). Relational mode is prevent the problem (prevention goals). Of interest to an indicator of a consumer’s receptivity to relationship marketers is also the proposition of an optimal fit between with a specific firm, and is characterized by consumers personal goals and means to achieve these goals made in reacting favorably to relationship marketing activities the regulatory focus literature. For instance, a person with (Grönroos 1997). Relational mode measures openness for a promotion goal is more likely to exert behaviors that aim ongoing relationships and thus differs from a transaction- for positive outcomes, whereas a person with a prevention al mode where consumers are only motivated to engage in goal directs behaviors towards minimizing negative out- exchanges. It is thus seen as a pre-commitment phase that comes. facilitates relationship maintenance and durability.

The central tenet of our paper is that regulatory focus As suggested by Grönroos (1997), the relational impacts relationship marketing success on several levels. mode can be seen as a continuum ranging from passive to First, regulatory focus enhances the effectiveness of rela- active. Consumers in an active mode seek contact, where-

American Marketing Association / Winter 2005 262 FIGURE 1

P1 P6 Commitment Regulatory Focus Relational Mode - Affective, Normative, Passive-Active Calculative P3 P2 P5 P4

Need for Connection/ Regulatory Focus Belongingness (Temporally Induced)

Relationship Tactics

as those in a passive mode rely on the existence of the We propose a consumer’s regulatory focus to be relationship, considering it as a kind of safety net. More linked to his/her relational mode. More specifically, as active consumers are often desirable from a marketing promotion-oriented consumers are consciously aspiring point of view: the more active the customer’s role in towards goals, they believe in a relationship with a com- service production is, the better the outcome. This is pany as it might enable goal achievement. They are thus especially the case when the service requires customer likely to be more active than other consumers in the participation or customer self-service reduces costs to a relationships they have as to ensure a successful outcome. considerable extent. In contrast, prevention-oriented consumers are more receptive to establish relationships with firms to the extent The relation between relational mode and regulatory they believe it helps them avoid losses or fulfill a duty or focus is closely related to goal independence (Tjosvold obligation. This inclination, however, is likely to be 1993), which states that customer willingness to bond passive in nature, as it is based on vigilance and only doing may depend on the extent to which customers believe they what is necessary (Shah and Higgins 1997). For example, need the firm’s support to achieve important, personal a prevention-oriented consumer could be willing to be goals. Regulatory focus is suggested to facilitate goal linked to a firm as a result of potential cost savings (avoid pursuit (Shah, Higgins, and Friedman 1998) and is thus losing money) or out of a sense of duty (e.g., as a sense of likely to relate to the effectiveness of a firm’s marketing reciprocity upon receiving excellent service), but is not strategies. likely to actively contribute to relationship maintenance. In essence, we propose promotion-orientation is likely to Regulatory Focus contribute to an active willingness to engage in a relationship, whereas prevention-orientation is likely to lead to a Regulatory focus theory (Higgins 1987) brings for- passive one. ward the idea that consumers not only care about what goals they reach, but also how they reach them. It proposes P1a: Promotion-orientation has a positive impact on consumers to utilize two different self-regulation strate- relational mode. gies in goal striving: promotion or prevention orientation. The promotion orientation emphasizes the pursuit of P1b: Prevention-orientation has a negative impact on gains (or the avoidance of nongains) and aspirations relational mode. toward ideals (Higgins 2000). It is related to eagerness; consumers engage in tasks since they are motivated by Need for Connection achievement and aspiration (Crowe and Higgins 1997). The prevention orientation, on the other hand, emphasiz- Not all consumers, however, are interested in having es the avoidance of losses (or the pursuit of nonlosses) and relationships with companies. Need for connection (Ander- the fulfillment of obligations. It is related to vigilance sen and Chen 2002) or belongingness (Baumeister and (Crowe and Higgins 1997). Consumers perform tasks as Leary 1995) describes “the need of people to form and a sense of duty. They feel it is their responsibility, what maintain strong interpersonal relationships” and is mani- they ought to do, but do not feel passionate about tasks the fested in “frequent, nonaversive interactions with an on- same way as promotion-oriented consumers do. going relational bond” (Baumeister and Leary 1995).

American Marketing Association / Winter 2005 263 Research in social psychology has also shown that the ceive they receive in return for their loyalty) (De Wulf, mere belongingness of self to a certain object (thus refer- Odekerken-Schröder, and Iacobucci 2001). More inti- ring to its ownership) leads to an increased liking of it mate, or higher levels of relationship tactics are signified (Feys 1991). Given that relationships, as objects, can be by preferential treatment (the degree to which consumers seen as extensions of the self (Andersen and Chen 2002) perceive that regular customers are being better treated and that consumers are more likely to establish relation- than others) and interpersonal communication i.e., how ships with service organizations than goods (Berry 1995) warm and personal the interaction between the company we expect need for connection to have a positive effect on and the customer is (De Wulf, Odekerken-Schröder, and relational mode. Iacobucci 2001).

P2: Need for connection has a positive effect on rela- Relationship tactics are likely to encourage custom- tional mode. ers to become relationally involved and committed. For example, warm and personal service, or participation in We also expect a significant interaction effect to special events can show consumers the advantages of occur between regulatory focus and need for connection. being actively involved with a company. Furthermore, Although promotion-orientation is linked to eagerness customers may want to reciprocate and become more and a more active relational mode, a consumer low in need active in the relationship if they perceive the relationship for connection might not simply find relationships impor- tactics to offer value beyond the exchange. Companies tant. As one of the main benefits of relationships to that use relationship tactics and thereby communicate a customers is the perceived social bond the interaction long-term orientation are believed to restrain from oppor- creates (Gwinner, Gremler, and Bitner 1997), those lack- tunistic behavior (Ganesan 1994) and are therefore likely ing the need for such connections might not pursue them to be preferred by relation-oriented customers. as means of achieving goals. For example, a promotion- oriented consumer might purchase most items from a P4: Relationship tactics have a positive influence on particular retailer, but might feel no need to belong or relational mode. identify him/herself with it. In this case, the consumer is more passive in the relationship. In contrast, need for The Perceived Fit Between Relationship Tactics and connection might serve to make a prevention-oriented Regulatory Focus consumer more active in the relationship. For example, a consumer not wanting to avoid missing out on great Relationship tactics as other persuasive messages promotions might be in active contact with the company usually involve some goal to be attained (e.g., an increase if she/he feels a need to belong to their network of in the number of loyal customers). When firms employ customers and interact with them on a frequent basis. In them, they present arguments in support of the advocated this case, the need for connection heightens the consum- position, which can be framed as in terms of either gains er’s activity level in the relationship while helping him/ or losses (Cesario, Grant, and Higgins 2004). For exam- her achieve the same goal, thus contributing to a more ple, when trying to recruit customers for a loyalty proactive relational mode. gram, a firm could frame the arguments in terms of eagerly ensuring gains (e.g., join our loyalty program – you will P3a: For consumers high in need for connection, pre- receive special promotions) or in terms of losses (if you do vention-orientation has a positive impact on rela- not join our loyalty program you’ll miss our special tional mode. offers). Thus, the firm can temporally induce a regulatory focus as means of influencing their customers. P3b: For consumers low in need for connection, promotion-orientation has a negative impact on relational If these arguments presented match the regulatory mode. orientation of the customer, s/he should experience regulatory fit and feel right, which heightens his/her perceived Relationship Tactics evaluation of an event and the value derived from it (Higgins et al. 2003). Thus, we propose that if the relation- Relationship tactics are means firms employ to in- ship tactics employed by a firm evoking a particular crease customer retention. They can be viewed as a regulatory focus matches that of the customer they will be continuum ranging from direct mail, tangible rewards, perceived as being more persuasive, enhancing consumer and preferential treatment to interpersonal communica- willingness to engage in a relationship with a firm. Since tion (Berry 1995). The lowest (i.e., least intimate) levels regulatory fit also enhances motivational strength (Spie- of relationship tactics are represented by direct mail (the gel, Grant-Pillow, and Higgins 2004), we also propose perceived degree of contact that companies have with consumers to take a more active role in the relationship if their customer via direct mail) and tangible rewards (the there is a fit between the consumer’s and the firm’s specific benefits e.g., savings in price that customer per- regulatory focus.

American Marketing Association / Winter 2005 264 P5: Relationship tactics employed by a firm that fit the activities. Indeed, it has been suggested that affective regulatory focus of the consumer contribute posi- commitment leads to expansion and enhancement of the tively to a more active relational mode. relationship, whereas calculative commitment supports the maintenance of the relationship (Bendapudi and Berry Building commitment in customer relationships is 1997). Thus, we propose: one goal of relationship marketing. Commitment is considered as beneficiary to companies since it reflects a P6a: An active relational mode contributes to affective customer’s lasting orientation to maintain a long-term commitment. relationship (Dwyer, Schurr, and Oh 1987; Moorman, Zaltman, and Deshpande 1992; Morgan and Hunt 1994), P6b: A passive relational mode contributes to normative and is coupled with excluding other alternatives and being or calculative commitment. resistant to change (Pritchard, Havitz, and Howard 1999). Commitment differs from relational mode by being a CONCLUSIONS AND FUTURE RESEARCH lasting tendency gradually built over time, instead of an inclination or disposition towards relationship building. It The present article brought forward a number of can thus be seen as an outcome of a customer’s relational propositions concerning the link between relationship mode. marketing tactics and regulatory focus. Empirical testing should be undertaken to verify the propositions we have Commitment takes different forms depending on the presented. To assess fit, regulatory focus could be induced customers’ reason for staying in a relationship. Previous by assessing consumer’s inherent regulatory focus (using literature highlights three mains reasons as of why cus- the self-guide strength measure, see Higgins and Spiegel tomers stay in relationships: (1) they want to (affective 2004) and then match it with a situationally induced commitment), (2) they perceive they have no other choice marketing message framed as either involving a gain (calculative commitment) or (3) they feel obliged to do so (promotion) or a loss (prevention). (normative commitment). Affective commitment captures issues such as contentment and affection and is The linkage between relational mode and regulatory based on emotional attachment to a firm (Allen and Meyer focus can be extended and studied at three different levels 1990). Calculative commitment in turn stems from an of relationships specified in relationship marketing liter- acknowledgment of costs associated with leaving a firm ature, namely relationship initiation, maintenance and (Meyer and Allen 1991) and is often characterized by “a dissolution (Grönroos 1990). For example, during rela- sense of being locked in” (Meyer and Herscovitch 2001, tionship initiation, a consumer’s regulatory focus could p. 307). Normative commitment can be best described as guide his/her relationship formation in the following a feeling of obligation to stay in a relationship (Fehr 1999; manner. A consumer with a promotional focus is likely to Meyer and Allen 1991). Obligation as a state of mind engage in relationship with a firm that emphasized the could also be related to consideration of moral rightness positive outcomes of it. In opposition, a consumer with a of maintaining a relationship (Marsh and Mannari 1977). prevention focus will choose a relationship that s/he perceives as safe, i.e., encompassing a minimum likeli- We suggest that affective commitment stems from hood of negative outcomes or avoid the obligations relat- active relational mode that induces customers to bind ed to relationships and choose not to enter a relationship. themselves to relationship-building efforts and thereby Similarly, a promotion focus may trigger relationship deepens the relationship, whereas calculative and norma- dissolution since it is associated with openness for change, tive commitment follow from passive relational mode in whereas a prevention focus is likely to prevent the con- which the customer is more inclined to engage in relation- sumer from leaving an existing relationship, since it poses ship maintaining activities than relationship enhancing a threat to stability (Liberman et al. 1999).

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American Marketing Association / Winter 2005 266 ing Organizations That Take Pride in Serving. San of Regulatory Focus on Consumer Information Pro- Francisco: Jossey-Bass Publishers. cessing,” in Advances in Consumer Research, 30, Zhu, Rui and Joan Meyers-Levy (2003), “The Influence 116–17.

For further information contact: Maria Sääksjärvi Department of Marketing and Corporate Geography HANKEN – Swedish School of Economics and Business Administration Arkadiankatu 22 P.O. Box 479 00101 Helsinki Finland Phone: +358.9.4313.3227 FAX: +358.9.4313.3287 E-Mail: [email protected]

American Marketing Association / Winter 2005 267 PREDICTING USAGE LEVEL AND UPGRADING BEHAVIOR OF SERVICE CUSTOMERS: A MODEL FOR LIFETIME VALUE ESTIMATION AT EARLY RELATIONSHIP STAGES

Florian V. Wangenheim, University of Dortmund, Germany

SUMMARY where

The concept of customer lifetime value (CLV) is CLV, = Lifetime value of customer I. receiving increased attention in the current literature on customer equity (CE) and on linking marketing to finan- TNT, = Total number of transactions made by cial performance. Previous CLV research (e.g., Rust, customer I in period t. Lemon, and Zeithaml 2004) has investigated predictability of CLV and its drivers mainly in established customer CMNRT = Average contribution margin of base relationships. The objective of the present paper is to transaction. investigate how future customer transaction behavior and lifetime value can be forecasted particularly at an early PUPit = Proportion of “upgrade” transactions stage of the customer relationship. By differentiating by customer I in period t. between frequency of customer transactions and upgrad- ∆ ed transactions, not only CLV, but also the relevant CLV CMUp = Additional contribution margin for high drivers can be determined. In addition, for a subsample of value transactions. customers, the paper links the derived CLV prediction error to survey data, thereby determining whether predic- d = Discount rate. tion inaccuracies can be partially explained by customer attitudes that reflect the firms’ failure to retain a potential- t = 1. . .T = Number of time periods considered. ly high-value customer. CLV Driver Prediction The key focus of the paper is relationship depth (while relationship length is inherently considered due to As CLV predictors, customer channel usage, enable- the longitudinal study design). In accordance with Bolton, ment of direct communication, competitiveness of choice, Lemon, and Verhoef (2004), relationship depth is defined past behavior, and demographics are used. Channel choice as the intensity or usage level of services over time, and refers to the differentiation between direct and indirect specifically includes upgrading behavior (i.e., purchasing channel usage. Direct communication enablement is re- of higher value or margin products instead of low cost lated to the decision whether to allow the firm to get into “basic” alternatives). Consequently, in the present study direct contact with the customer. Competitiveness of choice which focuses on the airline industry, relationship depth refers to the variety of providers from which customers is conceptualized as two-dimensional: Usage level per choose. Past behavior is given by exhibited flying behav- period is reflected by the number of flights per period. ior at the time the prediction is made. Upgrading refers to the proportion of upgrades, i.e., flights in a “higher” booking class (where the baseline Model, Estimation, and Results level is economy class) in the same period. Focusing on those two drivers of the relationship depth dimension Data on the above described dependent and indepen- rather than directly modeling the monetary transaction dent variables are taken from the frequent filer customer value per period offers additional insights for firms and base of a large European airline. Two samples, one academics, as it allows to differentiate between, e.g., consisting of 2,900 customers acquired in the first quarter high-value customers whose value mainly derives from a of 1999, and one consisting of 3,200 customers acquired large number of transactions, and another, potentially in the first quarter of 2000, the latter serving as hold-out equally valuable group, which is valuable not because of sample, are analyzed. The predictive power of the inde- a large number of transactions, but because it has a strong pendent variables on number of transactions and propor- disposition to use high-value services (i.e., business class). tion of upgraded transactions is tested using a nested tobit In general, the CLV of a customer in this context is given model. The model results yield strong support for an effect by of all predictors on number of transactions, and also T . ∆ support for the effect of past upgrading behavior and TNTit [ CM NRT + (PUPit CM)] CLV = Σ (1) direct communication enablement on future upgrading i t t = 1 (1 + d)

American Marketing Association / Winter 2005 268 behavior. Fit of the estimated models is generally well, a high predicted CLV, and those could receive loyalty and hold-out predictions do not perform much worse, program benefits before they have reached the formal suggesting some stability in the relationships researched. “hurdle” set by the firm. Further, firms should try to move their customers towards direct channels and direct com- Further, customer satisfaction and share of wallet munication. Once customers have made those specific data that are available for a subsample of those customers investments, firms are better able to increase usage fre- are correlated with the standardized residuals from a quency and upgrading behavior. regression model where predicted CLV is regressed on actual CLV. Since negative residual values indicate that The fact that the study focused on two central drivers CLV was overpredicted, both SOW and satisfaction are of CLV jointly (i.e., number of transactions and upgrad- expected to be positively correlated with the residuals ing) offers additional insights for CLV-driver based mar- from the regression. The results show that in all cases, ket segmentation. Based on the model, firms can early on there is a positive and statistically significant correlation in the relationship predict which customer will be valu- between the residuals and the share of wallet data, sug- able mainly due to which driver, and firms can make gesting that indeed customers with a low share of wallet specific offers addressing the specific needs of “upgrad- were systematically overvalued. Further, customer satis- ing” customers as opposed to “frequency” customers. faction is also positively related to both the residuals and Customer segmentation solely based on CLV would not the SOW data, suggesting that customers overvalued by be able to identify those distinct segments. the model tend to be less satisfied with the airline, and that increases in satisfaction would increase SOW, thereby Future research should compare industries with re- decreasing the gap between predicted and actual CLV. gard to the effect of predictor variables and the degree of CLV predictability. In various service settings, other CLV Discussion, Implications, and Conclusion components than those addressed in the present applications, especially cross-buying, are important CLV driv- The results of the study suggest that managers can, at ers. It would be interesting to extend the applied CLV a fairly early stage in the customer relationship predict model to account for cross-buying and further CLV com- their customer’s future CLV. There are a number of ponents. References available upon request. opportunities for firms to concentrate on customers with

For further information contact: Florian V. Wangenheim Service Management Otto-Hahn-Str. 6 University of Dortmund 44227 Dortmund Germany Phone: +49.231.755.4611 FAX: +49.231.755.5254 E-Mail: [email protected]

American Marketing Association / Winter 2005 269 THE IMPACT OF PERCEIVED LANGUAGE STATUS ON PRODUCT AND SERVICE QUALITY EXPECTATIONS

Melissa Maier Bishop, University of Texas at Arlington, Arlington

SUMMARY living in the United States. Specifically, Hispanics demonstrated a higher affect for advertising that used at least Decisions to standardize or localize international and some amount of English as compared to advertisements cross-cultural advertising campaigns are usually made that used all Spanish when controlling for cultural sensi- with a cost-benefit analysis (Onkvisit and Shaw 1987), as tivity of the advertiser. Extended to PQ and SQ, the it is expensive to target every ethnic group within a region language used in communication and its perceived status with an individualized campaign. Regarding ethnic lan- may affect formation of these expectations through the guage, few advocate advertising in a single, more domi- phenomenon of the halo effect. nant language (such as English or another Westernized language) outside of the benefits achieved through costs- The halo effect has been defined as the tendency to let savings. The approach to look at the possible beneficial our assessment of an individual on one trait influence our effects of standardized language advertising or the poten- evaluation of that person on other specific traits (Blum tial negative effects of localized language advertising that and Naylor 1968). Halos have been typically treated as extend beyond the “bottom line” is not normally taken (for rater errors and viewed as something to overcome in the a notable exception, see Koslow, Shamdasani, and Touch- research process (Murphy, Jako, and Anhalt 1993). How- stone 1994). ever, they can be beneficial to advertisers that understand how to effectively employ them. For example, halo effects In terms of product quality (PQ) and service quality may contribute to increased or decreased quality expecta- (SQ) expectations, it is not clear how perceptions of tions based on the perceived status of the language used in language used in advertising affect their formation. In- advertising. That is, positive or negative perceptions of creasing expectations regarding both PQ and SQ is impor- the status of the language used in advertising may transfer tant, as individuals tend to interpret stimuli consistent to congruent expectations regarding PQ and SQ. Thus, the with their initial expectations (Hawkins, Best, and Coney following proposition is proposed: 2004). Further, higher product or service quality expectations are generally believed to lead to higher patronage or Proposition: The relationship between product and purchase intentions. For example, previous research ef- service quality expectations and language used in forts have identified a direct relationship between service advertising depends on the perceived status of the quality and patronage intentions (Sirohi, McLaughlin, language. That is, using a language in advertising that and Wittink 1998; Zeithaml, Berry, and Parasuraman is viewed as relatively superior (inferior) in language 1996). It is possible that the perceived status of the status will result in higher (lower) product and ser- language used in advertising may be an important moder- vice quality expectations among viewers. ator in the formation of both PQ and SQ expectations. If the above proposition holds, advertisers may gain Language status refers to the perceived relative posi- increased insight into the need for standardized or local- tion or standing of an ethnic language in a society. Strong ized campaigns that goes beyond issues related to costs. If support has been found for the existence of the language- a foreign language is viewed as superior to the local one, related inferiority complex (LRIC) in which one language advertisers may benefit due to halo effects, in which is viewed to be inferior to another (see Haarmann 1986; positive perceptions of the language transfer to positive Koslow, Shamdasani, and Touchstone 1994; Christie expectations of the product. These findings may be partic- 1990; Adegbija 1994). The LRIC phenomenon has been ularly relevant to advertised products that require low found in many countries and in many cultural groups, and levels of information processing, such as commodities. varies by severity. For example, Roos (1997) found that Advertising in a “superior” language may give relatively although the government of South Africa officially recog- undifferentiated products such as these an advantage over nizes eleven languages, the process of developing these products advertised in the “inferior” language, due to languages “is complicated by negative attitudes which increased PQ expectations – even if slight. “Image” prod- hold that indigenous languages are somehow ‘inferior’ to ucts or services may also benefit from using a foreign English and other Western languages” (p. 171). Applied language that is perceived as having a higher status so to to advertising, Koslow, Shamdasani, and Touchstone equate the image (or status) of the product with the image (1994) found support for the LRIC among Hispanics (or status) of the foreign country. For example, Takashi

American Marketing Association / Winter 2005 270 (1990) found this effect among younger Japanese con- a communicative tool. Ethnic language may also contrib- sumers, who viewed products that were advertised with ute to image formation by cueing product and service some amount of English as more sophisticated and mod- quality expectations. Empirical work should focus on ern as compared to products advertised in Japanese. measuring perceived language status across a variety of languages and ethnic groups to determine how it can In conclusion, the primary purpose of this study is to strategically influence these expectations. References encourage researchers to consider language as more than available upon request.

For further information contact: Melissa Bishop Department of Marketing University of Texas at Arlington Arlington, TX 76019 Phone: 817.272.2330 FAX: 817.272.2854 E-Mail: [email protected]

American Marketing Association / Winter 2005 271 EFFECTS OF POSITIONING A FOREIGN BRAND AS A DOMESTIC BRAND IN COUNTRIES WITH DEVELOPED (U.S.) VERSUS TRANSITIONING (ROMANIA) MARKET ECONOMIES

Lada V. Kurpis, Gonzaga University, Spokane Simona Stan, University of Oregon, Eugene Carmen Barb, University Lucian Blaga, Romania

ABSTRACT association of the custom brands with their foreign owner is not mentioned in marketing communications and, pre- When companies enter foreign markets they usually sumably, it remains unknown to or it is overlooked by the market their brands by openly communicating the “for- majority of their consumers. eign-owned” status of their brands. However, these companies sometimes prefer to develop custom brands for a Creating the appearance that a foreign brand is do- particular international market and position these brands mestic might enhance or lower brand attitudes when as seemingly domestic for that market. This papers reports consumers become aware of the true origin of the brand. the results of an exploratory study conducted in the U.S. On the one hand, consumers may perceive the foreign and Romania which suggest that, in a transitioning econ- company’s practice of LCCP as a positive effort to cus- omy, consumers are likely to reward a foreign marketer’s tomize the brand to their specific market. On the other effort to customize the brand so that it seems domestic. On hand, consumers may perceive the practice as a manipu- the contrary, in a developed economy, consumers are lative attempt. Whether a positive response prevails over likely to penalize a marketer’s attempt to position a a negative response may depend on the international foreign brand as a seemingly domestic one. The paper market’s characteristics, such as level of economic devel- provides theoretical arguments based on differences in opment. Research suggests that there is a generalized consumers’ persuasion knowledge, inferences of unfair preference for nonlocal brands in developing economies, marketing tactics, and perceptions of expended marketing due mainly to symbolic, status-enhancing reasons (e.g., effort. Batra et al. 2000). However, it is not clear whether this preference would be affected by a foreign company’s INTRODUCTION explicit use of a LCCP or FCCP strategy. No known research has addressed these issues, in spite of the signif- When established companies enter foreign markets icant attention paid to branding in international markets. they usually market their existing brands by openly communicating the “foreign-owned” status of their brands. The purpose of this paper is to explore the following Such brands often employ a “foreign consumer culture research questions. First, does the practice of positioning positioning” (FCCP), in which the brand is associated a foreign brand as a seemingly domestic brand, as in a with a specific foreign culture, through symbols, images, LCCP strategy, have advantages over openly communi- and/or language (Alden, Steenkamp, and Batra 1999). cating the foreign origin of the brand, as in a FCCP However, these companies sometimes prefer to develop strategy? Second, will this practice have different results custom brands for a particular international market and in a developed free market versus a transitioning econo- position these brands as seemingly domestic for that my? The paper starts with a brief review of several market. These brands would employ what Alden et al. call theoretical perspectives, followed by hypotheses and the a “local consumer culture positioning” (LCCP), by using description of an exploratory study conducted in the U.S. symbols of the local consumer culture. For example in and in Romania. Russia, in addition to its traditional brands, Swiss-based Nestle Corporation produces and markets Rossia choco- THEORETICAL BACKGROUND lates and Choc candy bars. The advertising themes for both brands are very “a la Russ” (Russian-like) styled. Perceived Marketing Effort Similarly, tobacco factory RJR-Petro in St. Petersburg, Russia, owned by RJR Nabisco Holdings, produces and Kirmani and Wright (1989) demonstrate that under markets Peter I cigarettes along with Winstons and Cam- certain conditions consumers use the perceived effort a els (The Peter I brand bears the name of the first Russian company invests in a persuasion attempt (e.g., the cost of emperor Peter the Great, which confers a positive appeal advertising) as a signal of their strength of belief in their to the glory of the Russian past for most Russians). The product quality, resulting in more favorable brand atti-

American Marketing Association / Winter 2005 272 tudes. Kirmani and Wright (1989) conceptualize per- developed and more accessible body of persuasion knowl- ceived effort in terms of marketer’s investment of scarce edge than consumers in a transitioning economy. In par- resources such as money, managerial time, thought, etc. ticular, consumers in a developed economy might have They propose that spending more than other brands in the better understanding of the tactical meanings of messag- product category or spending large amounts relative to the es. The PKM posits that if a consumer becomes aware of company’s available resources would be considered ef- the tactical meaning of messages (e.g., use of celebrities in fortful. advertising), natural processing of a persuasion message might be disrupted and intended persuasion will be under- Consumers in developed economies, such as the mined (Friestad and Wright 1994). Hence, it is expected U.S., are used to the foreign manufacturers who are ready that persuasion is undermined more for consumers in a to go at great lengths in customizing their brands specif- developed economy than in a transitioning economy. All ically for the lucrative American market, with examples of these theoretical considerations conduct to the following such brands ranging from Toyota Tacoma trucks to the hypotheses: Swiss-owned Poland Springs water. Therefore, it is likely that American consumers will not perceive efforts associ- H1: In a developed free market economy, a foreign brand ated with developing yet another customized brand as positioned as a seemingly domestic brand will evoke something out of the ordinary. On the contrary, consum- less favorable responses (brand attitudes and pur- ers in transitioning economies are not “spoiled” by having chase intentions) than the same foreign brand posi- too many foreign brand offerings customized for their tioned as a foreign brand. local markets. Consequently, they are more likely to perceive the company’s marketing effort as substantial H2: In a transitioning economy, a foreign brand posi- and positive. tioned as a seemingly domestic brand will evoke more favorable responses (brand attitudes and pur- Inference of Unfair Marketing Tactics chase intentions) than the same foreign brand positioned as a foreign brand. Although appealing to the values of the local consumers seems to be an advantageous strategy for a foreign METHODOLOGY brand, marketing literature contains some indications that the favorable effect might be weakened, and even re- The hypotheses were tested using a between-subjects versed, if the true origin of the brand becomes known to experimental design in which subjects were exposed to the consumer. Campbell (1995) demonstrates that if con- three conditions: a foreign brand positioned as a seeming- sumers infer a manipulative intent on the part of the ly domestic brand using LCCP (custom foreign); a foreign advertiser, advertising persuasion is lowered. We suggest brand positioned as a foreign brand using FCCP (foreign that the likelihood of consumers’ interpreting the posi- “as is”); and a truly domestic brand (used as a base level). tioning of a foreign brand as a seemingly domestic brand The experiment was performed in the U.S., a developed to be a manipulative intent (i.e., deception) is higher in a market, and in Romania, a developing Eastern-European developed than in a transitioning economy. The rationale market which continues to struggle with the transition is that consumers in developed markets have more expe- process from a centralized to a free market economy. rience with marketing, have benefitted from more con- Certainly, country-of-origin effects (e.g., Batra et al. sumer education, and therefore have more persuasion 2000; Maheswaran 1994) are capable of augmenting or knowledge. attenuating the responses to a foreign brand positioned as a seemingly local one. As this research is not interested in Persuasion Knowledge COO effects, efforts were made to identify a product category and a country-of-origin for the foreign brand that Lay persons’ persuasion knowledge as described by would have similar COO effects both in Romania and in Friestad and Wright (1994, 1995) consists of a system of the U.S. Based on interviews and pretests, chocolate was beliefs that consumers hold about marketers’ persuasion chosen as the product category and Belgium as the foreign goals and tactics, as well as about their own coping country of origin. Both Romania and the U.S. have strong strategies in dealing with persuasion attempts delivered domestic chocolate brands and both recognize Belgium, by the marketers. The Persuasion Knowledge Model along with Switzerland and Germany as “chocolate coun- (PKM) posits that lay persuasion knowledge is develop- tries.” mentally contingent and improves with frequent practice (Friestad and Wright 1994). Since consumers in a devel- Subjects oped economy have to cope with a larger number of persuasion attempts (e.g., telemarketing, advertising) it Subjects were recruited among the students of two seems plausible that these consumers will have a better mid-sized public universities in the U.S. (n = 99) and

American Marketing Association / Winter 2005 273 Romania (n = 97) to participate in a marketing product brand attitude index. Purchase intentions regarding Rhap- concept test for a fictitious brand of boxed chocolate. sody were measured on a 5-point scale with response Respondents in both samples did not differ significantly options from (1) definitely will not buy to (5) definitely will in terms of age (mean = 22.5 in Romania; mean = 23.3 in buy. An open-ended question: “What do you think the the U.S., F(1,207) = 2.4, n.s.), or gender composition company is trying to tell you by developing a special (42.7% female in Romania, 50.5% female in the U.S., design of packaging featuring [name of the landmark] for χ2(209) = 1.26, n.s.). this market?” was used to assess the cognitions underlying the responses. Company’s sincerity was measured Procedure using two 7-point semantic differentials (insincere – sin- cere, dishonest – honest). Country-of-origin effects were A fictitious brand name Rhapsody (in English) and measured by asking the subjects to rate perceived quality Rapsodia (in Romanian) was selected on the basis of pre- of chocolate from a number of countries, including the testing for use with the American and Romanian samples, target countries of Belgium, USA, and Romania on a 7- respectively. All subjects saw the same picture of fine point scale from 1 (very poor quality) to 7 (very high chocolate confections and read the same paragraph de- quality) with an additional response category 0 (“I don’t scribing the test brand as a high-quality brand of gourmet know”). To test whether subjects believed that featuring a chocolate that is owned and manufactured by a family- national landmark on the packaging would be sufficient owned company with a long successful history of making for misleading the customers about the origins of the chocolate confections. The brand’s owner was described brand, respondents were asked: “If an average consumer as either domestic (American or Romanian, respectively) just sees the packaging of this chocolate brand, how likely or foreign (Belgian, for both the U.S. and Romanian is it that he/she will perceive it as a genuine American samples). Different pictures featured on chocolate pack- [Romanian] brand?” (1–very unlikely genuine; 7–very aging were used to manipulate the three conditions. In the likely genuine). truly domestic brand condition and the custom foreign (foreign positioned as domestic) brand condition, the Manipulation Check design of the chocolate box featured a landmark from the target market country. The American subjects saw a box As expected, the subjects in both countries thought featuring the Golden Gate Bridge and the Romanian that the custom brand was just as likely to be considered subjects saw a box featuring the Romanian Atheneum. In domestic as a true domestic brand (t(68) = .16, n.s. in the foreign “as is” brand condition, the chocolate box Romania; t(64) = -.41, n.s. in the U.S.). The respondents featured a Belgian landmark, a Canal in Bruges (see also believed that the foreign brand was much more likely Table 1). to be considered domestic when it featured a landmark from the target market country (Foreign – Custom Posi- Measures tioning condition) relative to the case when it used a landmark from the country of origin (Foreign – No Cus- Brand attitude was measured using three 7-point tom Positioning): t(63) = 4.3, p < 0.001 in Romania; semantic differential scales (bad – good, poor quality – t(61) = 9.7, p < 0.001 in the U.S. These results suggest that high quality, not appealing – appealing). Reliability of subjects believed that the packaging for the custom brand the three-item brand attitude scale reached .81 in Romania was likely to mislead the uninformed consumer about the and .86 in the U.S. The items were averaged to form a brand’s true origin.

TABLE 1 Summary of Experimental Conditions

Brand Origin Brand Positioning

Romanian Romanian Local: Romanian landmark (Atheneum) picture on the package Sample Belgian Custom foreign (seemingly local): Romanian landmark (Atheneum) Belgian Foreign “as is”: Belgian landmark (The Grand Canal in Bruges)

American American Local: American landmark (The Golden Gate) picture on the packaging Sample Belgian Custom foreign (seemingly local): American landmark (The Golden Gate) Belgian Foreign “as is”: Belgian landmark (The Grand Canal in Bruges)

American Marketing Association / Winter 2005 274 RESULTS positioning a foreign brand as seemingly domestic remains advantageous even after target consumers learn First, the direction and magnitude of the country-of- about the true origin of the brand, the attitudes toward the origin effect was evaluated. For both the Romanian and custom foreign brand were compared to the attitudes the U.S. sample, Belgian chocolate, in general, is per- toward the foreign brand positioned as foreign (“as is”). ceived as of significantly better quality than the domestic These differences reached marginal significance for both chocolate (mean = 5.4 versus 3.7, t = 5.4, p < 0.001 for the the Romanian (t(62) = 1.47; p = .07, one-tailed test) and Romanian sample; mean = 6.2 versus 4.5, t = 6.6, p < 0.001 the U.S. (t(61) = -1.4, p = .08, one-tailed) sample. As for the U.S. sample). Hence, both the Romanian and the expected, the Romanian subjects liked more the foreign U.S. samples showed country-of-origin effects for Bel- brand positioned as a seemingly domestic brand, while the gium in the same direction and of similar magnitude. American subjects liked more the foreign brand positioned as foreign. These findings suggest some support T-test analyses were used to test the directional hy- for the advanced hypotheses. A comparison of the pur- potheses regarding brand attitudes and purchase inten- chase intentions failed to render any significant differenc- tions. The results are presented in Table 2 and Figure 1. To es. However, the pattern in purchase intentions was sim- test whether the strategy of developing custom brands by ilar to the pattern in brand attitudes.

TABLE 2 Means for the Dependent Variables by Country and Brand Positioning

Positioning Brand Attitude Index Purchase Intentions

Romania Local 5.15 3.6

Custom Foreign 5.7 3.9

Foreign “as is” 5.2 3.8

U.S.A. Local 4.9 2.7

Custom Foreign 4.7 2.5

Foreign “as is” 5.2 2.8

FIGURE 1 Brand Attitude Index Means by Brand Positioning and by Country

5.8 5.6 Romania 5.4 5.2 USA 5.0 4.8 4.6 4.4 4.2 Local Custom Foreign “Foreign as is” (seemingly local)

American Marketing Association / Winter 2005 275 In order to explore in more depth the reasons why nian culture and tradition; they used the picture of the consumers evaluated a foreign brand positioned as seem- Atheneum because it is an important Romanian landmark ingly domestic differently than a foreign brand positioned and therefore it would give the product a Romanian as foreign, several other analyses were performed. First, image”); (2) thoughts that infer an explicit attempt by the we wanted to know whether consumers would evaluate marketer to persuade the customer about the quality and the custom foreign brand differently than a truly domestic uniqueness of the product (e.g., “they are trying to give the brand. Since these conditions differed only in the disclo- product a true European feel, to make their chocolate look sure of the marketer’s true origin (domestic versus for- more authentic and of higher quality”); (3) thoughts that eign), any difference in brand attitudes would be more infer the marketer’s attempt to persuade customers to buy likely due to the interpretation of the marketer’s brand the product (e.g., “the company wants to attract more position as a persuasion/manipulation attempt or as a customers to buy the chocolate”); and (4) thoughts that positive customization effort. Romanian respondents’ infer a deceptive manipulation attempt by the marketer attitudes toward the custom foreign brand were more (e.g., “they trick me; they make me think it is an American favorable than their attitudes toward the true Romanian product”). The first category seems to be related to “per- brand (t(67) = -1.8, p = 0.03, one-tailed). This difference ceived marketing effort” (Kirmani and Wright 1989), was not significant in the U.S. (t(64) = 0.43, n.s.), although while the other three correspond to Friestad and Wright’s respondents seemed to evaluate the true domestic brand (1994) persuasion knowledge categories represented by slightly more favorable. It seems that consumers in Roma- beliefs about marketers’ tactics and persuasion goals. nia, a transitioning economy, were not concerned with the Finally, some respondents provided seemingly neutral deceptive positioning of a foreign brand as domestic. On thoughts (e.g., “the Bruges picture shows the origin of the the contrary, in this case, they tended to evaluate the Belgian company”) which were not classified. custom foreign brand more favorably, which is consistent with the direction of country-of-origin effect. This phe- The results are summarized in Table 3. Overall, it nomenon seems to be reversed for the consumers in the seems that respondents’ thoughts were consistent with the developed country. pattern of brand evaluation, in which Romanian respondents were most favorable to the foreign brand positioned Second, we investigated respondent’s perception of as a seemingly domestic brand while the U.S. respondents company’s sincerity in the different conditions. The pat- were least favorable to this customized foreign brand. tern of company sincerity perceptions followed the pat- Romanians seemed more likely than Americans to inter- tern of brand attitude ratings in Romania, but not in the pret a foreign brand’s position as seemingly domestic as U.S. Sincerity ratings of the Belgian company using a positive customization effort (44% of the total number custom foreign positioning (essentially, using deception) of thoughts provided versus 37%, respectively). In con- were significantly higher than sincerity ratings of the trast, Americans seemed more likely than Romanians to domestic company in Romania (t(68) = -2.6, p < 0.01). interpret it as a deceptive manipulation attempt (19% of Sincerity of the Belgium company not using custom the total number of thoughts provided versus none). positioning was still higher relative to the local Romanian Interestingly, both the U.S. and Romanian respondents company (t(61) = -1.9, p = 0.06). One possible explana- were most likely to interpret the communication of the tion is that Romanian subjects are chronically suspicions foreign brand as being foreign as an attempt to persuade of everything that is domestic. The foreign company customers about the quality and uniqueness of the product might have benefitted from a halo effect. Interestingly, (41% of Romanians’ thoughts and 58% of Americans’ there were no significant differences in the U.S. sample. thoughts). These results support our arguments that consumers in a developed country differ from consumers in Third, in order to gain an insight into respondents’ a transitioning country in terms of persuasion knowledge thinking processes, while evaluating the brand, we ana- and perceptions of a marketer’s effort to customize a lyzed the open-ended responses to the question about the foreign brand to appeal to the domestic market. company’s rationale to feature the specific country landmark. The coding scheme was based on the theoretical CONCLUSIONS perspectives described in Friestad and Wright’s (1994) classification of lay persuasion beliefs. Two judges coded In summary, the results of the reported exploratory the open-ended responses for the number of thoughts study suggest that, in a transitioning economy, consumers expressed and the category to which each thought be- are likely to reward a foreign marketer’s effort to custom- longed. ize the brand so that it seems domestic. On the contrary, in a developed economy, consumers are likely to penalize a The categories that emerged from the data coding are: marketer’s attempt to position a foreign brand as seeming- (1) explicit inference about the company’s attempt or ly domestic, instead of communicating it as a foreign effort to customize the brand in order to have a domestic brand. Due to lower exposure to marketing tactics and less appeal (e.g., “the Belgian firm learned about the Roma- choice of high quality products, consumers in transition-

American Marketing Association / Winter 2005 276 TABLE 3 Thoughts Concerning Company’s Intent in Brand Communication

Local Brand Custom Foreign Foreign Brand (Seemingly Local) Brand (“as is”)

Romania U.S. Romania U.S. Romania U.S.

Sample size 39 36 39 30 37 33

Total number thoughts 33 38 36 32 29 33

Customizing effort/ domestic appeal 8(24%)* 13(34%) 16(44%) 12(37%) – –

PK: Product quality inferences 12(36%) 11(29%) 7(19%) 3(9%) 14(41%) 19(58%)

PK: Sales/Customer attraction inferences 1(3%) 1(3%) 9(25%) 2(6%) 5(17%) 5(15%)

PK: Manipulation/ deception inferences – – – 6(19%) – –

*Note: Percentages are computed out of the total number of thoughts.

ing markets are less likely to be suspicious of a foreign of college students, from only two universities, one in a marketer’s persuasion attempts and more likely to appre- developed and one in a transitioning country. Further, ciate the marketer’s effort to appeal to the domestic only one product, chocolate, was used. Future research consumer. It seems that these consumers are likely to be should use multiple products from different product cat- more suspicious of marketing actions undertaken by do- egories and more representative samples in order to draw mestic producers than the actions undertaken by foreign more definite conclusions. Future research should test producers. Evidently, this situation holds if the country- whether the effect is moderated by product category. In of-origin effect is favorable to the foreign producer. In particular, it is plausible that effects for the “good” prod- contrast, an international company attempting to enter a ucts, such as chocolate, might differ from the effects for developed market with a strategy of positioning the for- the “stigmatized” products, such as cigarettes. The current eign brand as seemingly domestic will encounter consum- study opens a program of research that intends to replicate ers’ suspicions and lack of acceptance. In this case, the and extend reported findings. The study needs to be company may benefit from explicitly communicating the replicated with various brand and packaging stimuli. foreign origin of the brand as a signal for product quality. Further exploration is also needed to understand the mechanism that brings about the effects of custom posi- Evidently, the results of this exploratory study should tioning a foreign brand as domestic. be interpreted with caution. The study used small samples

REFERENCES keting, 63 (1), 75–87. Campbell, Margaret C. (1995), “When Attention-Getting Alden, Dana L., Jan-Benedict E.M. Steenkamp, and Ra- Advertising Tactics Elicit Consumer Inferences of jeev Batra (1999), “Brand Positioning Through Ad- Manipulative Intent: The Importance of Balancing vertising in Asia, North America, and Europe: The Benefits and Investments,” Journal of Consumer Role of Global Consumer Culture,” Journal of Mar- Psychology, 4 (3), 225–54.

American Marketing Association / Winter 2005 277 Batra, Rajeev, Venkatram Ramaswamy, Dana L. Alden, About the Psychology of Advertising,” Journal of Jan-Benedict E.M. Steenkamp, and S. Ramachander Consumer Research, 22, 62–74. (2000), “Effects of Brand Local and Nonlocal Origin Kirmani, Amna and Peter Wright (1989), “Money Talks: on Consumer Attitudes in Developing Countries,” Perceived Advertising Expense and Expected Prod- Journal of Consumer Psychology, 9 (2), 83–95. uct Quality,” Journal of Consumer Research, 16, Friestad, Marian and Peter Wright (1994), “The Persua- 344–53. sion Knowledge Model: How People Cope with Maheswaran, Durairaj (1994), “Country of Origin as a Persuasion Attempts,” Journal of Consumer Re- Stereotype: Effects of Consumer Expertise and At- search, 21, 1–31. tribute Strength on Product Evaluations,” Journal of ______and ______(1995), “Persuasion Consumer Research, 21, 354–65. Knowledge: Lay People’s and Researchers’ Beliefs

For further information contact: Lada V. Kurpis School of Business Administration Gonzaga University 502 E. Boone Ave. Spokane, WA 99258–0009 Phone: 509.323.7033 E-Mail: [email protected]

American Marketing Association / Winter 2005 278 CAN SELF-AFFIRMATION REDUCE PREJUDICE EXPRESSION TOWARD STEREOTYPED BRANDS?

Huimin Xu, University of Arizona, Tucson

ABSTRACT consumption. Toward this end, the validity of the metaphor of brands as people is investigated. (2) Borrow Prejudice toward brands is recognized as a distinctive relevant theories from social psychology, and conceptual- construct. Holding prejudice against stereotyped brands ize brand prejudice expression as a means of embracing serves to defend one’s worldview and to maintain self- certain worldview and maintaining self-esteem. This study esteem. However, when a chance of self-affirmation is proposes that self-affirmation decreases the tendency of provided, the need to maintain self-esteem through prej- brand prejudice. A 2x2 factorial experiment is conducted udice expression is reduced. The implication for effective to examine the proposition. In doing so, the current study marketing communication is discussed. takes the lead in empirically studying the antecedents of brand prejudice. The empirical result might help assess INTRODUCTION the effectiveness of some relationship marketing techniques that provide consumers with opportunities of self- The equation of consumption with choice and wants/ affirmation. desire has long pervaded consumer research. This dominant paradigm treats wants/desire as the only, or at least BRAND PREJUDICE the main motive in consumption. This equation biased various fields of consumer research. For example, it Consumer research has long been focused on acqui- disregards the pushing force of brand loyalty, and ne- sition behavior. How consumers identify themselves with glects the negative form of relationship with brands (e.g., certain brands has been intensively studied, while how Fournier 1998). Consumers’ prejudice and other negative consumers deny association with brands remains under- emotions at the brand level are vastly ignored, though explored. This biases research on consumer emotions. there are some works on emotions in ads. watching and Reducing the multi-dimensional consumption emotions product consumption (e.g., Richins 1997). Realizing that to a range of satisfaction, researchers frequently ignore there has been almost no systematic empirical work on the fact that there are a variety of both positive and consumer prejudice, the current study stresses that preju- negative emotions (Westbrook and Oliver 1991). Though dice is another way that consumers relate to the commod- some scholars have paid attention to emotions in ads. ity world on a daily basis. Some scholars in social psychol- watching, product consumption, and service encounter ogy and consumer research even take a more assertive (e.g., Richins 1997), one specific category of negative stance, suggesting that the avoidance of an undesired state consumption emotions, namely, consumer prejudice, has is a stronger driving force of behavior than the pursuit of been largely overlooked. Nonetheless, its existence is a desired state (Wilk 1997), and a better predictor of abundantly documented in mass media. The intellectuals satisfaction (Ogilvie 1987). Their view suggests that dismiss rap music as vulgar. Abstract art may be accused studying consumer prejudice is indispensable. as pretentious by the working class. “The worst dressed celebrities” exposes and ridicules fashion mistakes. Con- It might be due to the following two reasons that scant sumer prejudice permeates our daily conversations. attention has been paid to consumers’ prejudice: (1) Consumers’ prejudice come side by side with anti-con- The brand level of consumer prejudice is termed as sumption, which usually leaves no material traces. If brand prejudice. Brands prejudice is the emotional antip- prejudice is not expressed explicitly, there is no visibility athy toward brands. This emotional antipathy is mainly at all. Understandably, it is more difficult to study preju- based on stereotypic perception of the symbolic meaning dice than to study more visible consumption; (2) Out of of the brands. It is not merely involuntary visceral disgust, managerial interest, it is more profitable to focus the though it could be accompanied by the latter. Instead, it marketing effort on current and potential consumers, than often reflects deliberation. To give an example, the fol- on people who show resistance against that product/ lowing is an excerpt from interviews conducted by Ban- brand. ister and Hogg (2001).

The current study tries to fill the gap by doing the “The typical Sharon is . . . that girl, she had this tiny following: (1) Advance the notion of consumers’ preju- little dress on and she was absolutely hammered dice against brands, and address its important role in (English slang for drunk ) with her mate and she was

American Marketing Association / Winter 2005 279 trying to chat up this group of lads . . . because she had a similar way they perceive people. Brands are perceived obviously decided that everybody else wore the short to possess demographic characteristics such as age, gen- strappy little dresses, and that was what she was der, and socioeconomic class (Levy 1959). Country-of- wearing . . . she looked dreadful. . . .” Another origin renders brands a nationality. Besides demographic example is the prejudice against Starbucks. This characteristics, brands also have human-like personali- brand is stigmatized as yuppie haven: rushed, imper- ties. Brand personality is a well-accepted concept, which sonal, overly analytical, and sterile. Plus, as a domi- refers to the set of human characteristics associated with nant chain store brand, it is charged as contributing to a brand (e.g., Aaker 1997). Paralleling the “Big Five” corporate spread and cultural homogenization (Th- dimensions of human personality, a reliable, valid, and ompson et al. 2004). generalizable scale was developed to measure the five dimensions and 42 personality traits of brand personality Brand prejudice is a construct distinctive from con- (Aaker 1997). Sound analogy can be drawn between three sumer dissatisfaction. Unlike consumer dissatisfaction, of the five dimensions and their counterparts from human brands prejudice does not need to be preceded by direct personality scale (i.e., sincerity with agreeableness, ex- experiences of purchase or consumption. Rather, it often citement with extroversion, competence with conscien- comes together with anti-consumption, which refers to tiousness) (Aaker 1997). Furthermore, just like a person the deliberate avoidance of products and services. Even in is perceived as a knot in a interpersonal relationship the absence of direct consumption experience, one’s ob- network, a brand is perceived to be embedded in its servation is sufficient to form stereotypes as the cognitive relationships with other brands, e.g., competing brands, basis of prejudice. Second, brand prejudice is based alliance brands, and ingredient brands (Keller 2003). It is mainly on a brand’s unpleasant symbolic implication, argued that the personification of brands origins from the while dissatisfaction frequently stems from the utilitarian universal human need for animism (Gilmore 1919), which dimension of brands. The third thing that differentiates gives rise to the tendency to imbue brands with a variety brand prejudice from dissatisfaction is that prejudice of human traits. Both marketer and consumers contribute holders demand no constructive change to the targeted toward this state, with the former consciously spending brands, while dissatisfied consumer might require the efforts to enhance certain personification, and the latter problems to be corrected, performance to be improved, or willingly accept such personification. Marketers might the brand to be removed from the market. Why don’t employ techniques including anthropomorphization, cre- brand prejudice holders demand constructive change? ation of user imagery, celebrity endorsement, event spon- Anthropologists contend that the existence of prejudice sorship, and corporate image presentation. In addition, target brands might be of positive value to prejudice human-like traits are also associated with a brand in a less holders, by serving as “a reminder of the war against the direct way through product-related attributes, product others and their despised way of life” (Douglas 1997). category associations, association with other brands, brand Finally, more than what they do with dissatisfaction, name, symbol/logo, packaging, advertising style, price people express their prejudice to seek affiliation and and distribution channel. maintain their social identity (Tajfel and Turner 1986). This is why brand prejudice exists abundantly and vocally Prejudice’ Role in Consumption as Another Motive at group level (Muniz and O’ Guinn 2001; Thompson et al. 2004), besides the private, individual level. The dominant paradigm treats wants/desire as the only motive for consumption. However, some research Brand prejudice is an ongoing phenomenon. Most suggests that consumer prejudice, including brand preju- people reported that their experiences of disgust and dice, constitutes another motive. Prejudice may be even revulsion had changed a great deal during their lifetimes more important and effective than consumption in form- (Wilk 1997). Greater education, moving into adulthood, ing a consumer’s identity. This might be particularly true increased wealth, and foreign travel are correlated with a in contemporary developed societies, where status sym- greater diversity of likes, a broadening of tastes, and fewer bols are rapidly disappearing in the face of abundance. In hate (Belk et al. 1982; Wilk 1997). These evidences Wilk’s study (1997), it was found that most people, demonstrate consistency with findings in social psychol- regardless of class and ethnicity, seemed to like approxi- ogy: Education, especially specific intercultural educa- mately the same foods, the same TV shows, and the same tion, helps engender tolerance (Allport 1954) music. People rarely got excited about things they liked. Few relationships surfaced between specific tastes and Both stereotype and prejudice are concepts that orig- social class, income, or ethnicity. In contrast, distaste and inated from psychology and are usually used on people. prejudice are much more powerful social predictors. This The metaphor of brands as people needs to be established finding is consistent with Bourdieu’s observation that to justify the construct validity of brand prejudice and any consumption choices are often constituted in opposition further discussion on this topic. People perceive brands in to the choices of other social groups. It is through negation

American Marketing Association / Winter 2005 280 of others’ choice, that one claims his/her position (Bour- which is not found in animals. This awareness, combined dieu 1979). Being more articulate, people in Wilk’s inter- with the animal instinct for self-preservation, creates view (1997) would often get deeply involved in discuss- terror of mortality. To buffer the fear, we immerse our- ing the things they hated or disliked and the reasons of selves in a cultural worldview, which “imbues life with their hates/dislikes. In his interview with Belizean high meaning, order and permanence, and the promise of school students, it was found that only a tiny minority safety and death transcendence to those who meet the pursued the most fashionable, while most students’ con- prescribed standards of value” (Greenberg et al. 1997). By sumption choices were driven by anxiety over consuming living up to these cultural standards, one gains self- the wrong things. That means, most were more concerned esteem, the belief that he/she is “an object of primary with being out of fashion than they were with being in the value in a meaningful universe” (Greenberg et al. 1997). latest style. It appeared that the more important daily Terror management theory has two implications: first, we consumption skill is that of knowing what not to wear. need to have faith in a particular cultural worldview, Literature in social psychology provides an explanation defending it when threatened; Second, we need to believe for this phenomenon, if we think of prejudice as vocaliz- that we live up to the cultural standards. The need for self- ing the undesired self and desire/preference reflecting the esteem drives both noble and contemptible human behav- ideal self. It was argued that the undesired self is less iors. A point relevant here is that holding and expressing abstract than the content of the ideal self, since it is more prejudice is fundamentally motivated by the striving for experience based than the ideal self. Thus the undesired self-esteem. This causal link has garnered empirical sup- self is a more stable standard against which one judges his/ port. For example, when subjects faced self-esteem threat her present level of well-being. The distance between the in the form of receiving negative bogus feedback on their real self and the undesired self is a better predictor of life intelligence, they expressed more prejudice toward a satisfaction than is the distance between the real self and negatively stereotyped ethnic group, compared to sub- the ideal self (Ogilvie 1987). Similarly, of what to con- jects receiving neutral feedback. Such derogating in re- sume and what not to, prejudice/avoidance may be a sponse to self-image threat was of positive value to the stronger motive than wants. It may be the more frequently prejudice holder, since it mediated increase in self-esteem used anchor against which we gauge our consumption (Fein and Spencer 1997). satisfaction. The desire and prejudice toward brands are closely related with each other. Learning good tastes is Holding prejudice against out-groups helps to guard largely a matter of learning what bad tastes are. Philoso- one’s cherished worldview (Allport 1954). The question phers like Bataille and Derrida have argued that all desire arises as to whether brand prejudice in particular serves to is ultimately rooted in disgust or rejection. Choices based defend one’s worldview. It has long been proposed and on wants are always choices based on aversions and empirically supported that personal values and consump- distaste as well. tion choices are consistent (e.g., Homer and Kahle 1988; Pitts and Woodside 1983). By contrast, the relation be- Why Brand Prejudice? Can Self-Affirmation Reduce tween values and anti-consumption choices has been Prejudice Expression? escaping most consumer researchers’ attention. The current study would argue for this statement’s validity in the Although there are works which recognize the exist- arena of consumer behavior. Not only consumption choic- ence of brand prejudice and its important role in consump- es, but also anti-consumption choices announce cultural tion choice, the following questions remain understudied: allegiance. This relation has been documented through Why do consumers develop prejudice against brands that out various historical eras. Particular kinds of food were have not done any economic or physical harm to them? consciously renounced by medieval monks, for whom Under which condition are people more likely to express rejecting meat and other luxuries was a repudiation of the prejudice toward particular brands? The current study values that placed eating first among worldly values. It tries to investigate these research questions by conceptu- was once a chic protest against U.S. involvement in the alizing brand prejudice as a means of self-esteem mainte- Vietnam War to drive a Swedish-made Volvo, because nance. Cognitive, socio-cultural, and motivational factors the Swedish government was vocally criticizing U.S. all promote and maintain prejudice. The need for self- involvement at that time. The resistance to IBM and esteem has frequently been mentioned as the motivational Microsoft’s overwhelming dominance coexists with the factor of prejudice (Allport 1954; Tajfel and Turner ideology of democracy. Basically, brand prejudice re- 1979). Many researchers contend that there is a universal flects prejudice against the cultural worldview brands need for self-esteem (Greenberg et al. 1997, 1999; Heine represent. Prejudice expression serves two purposes in the et al. 1999). Terror management theory proposes that process of boosting self-esteem. First, by belittling the humans use self-esteem to bring the fear of mortality ideology underlying an out-group’s consumption, preju- under control (Greenberg et al. 1997). Terror of mortality dice expression affirms the validity of our own cultural is engendered by awareness of the inevitability of death. worldview, or at least one aspect of that worldview. Humans’ cognitive capacity gives rise to this awareness Second, by contrasting ourselves with the out-group along

American Marketing Association / Winter 2005 281 the scale defined by our cultural criterion, we strengthens pared to a brand stereotype that does not reflect the belief that we fulfill the cultural standard well enough, worldview incongruence. since apparently there are some people worse off than ourselves. H2 For incongruent brand stereotype, when individuals are given an opportunity to self-affirm, they are less Fortunately, prejudice is not the exclusive means to likely to express prejudice toward the stereotyped promote self-esteem. An individual may also increase brands, compared to individuals who are not given self-esteem by enhancing the belief that he/she lives up to such an opportunity. the cultural standards. The stronger the belief that he/she lives up to the cultural standards, the smaller the need to When the focal brand is not incongruently stereo- defend his/her cultural worldview by prejudice expres- typed, this study does not expect prejudice to exist. sion. In earlier social psychology research, this substitut- Whether the self-affirmation is available or not should not ability is found between non-prejudiced self-affirmation affect the likelihood of prejudice expression. and prejudice (Fein and Spencer 1997). Self-affirmation is the tendency that people avoid to confront a threat, H3 When a brand stereotype does not involve worldview instead, they affirm some other important aspect of the incongruence, lack of self-affirmation doesn’t in- self to reinforce one’s overall self-adequacy (Steele et al. crease the tendency of prejudice expression. 1993). The substitutability exists because they both serve a common, higher-order goal: Self-esteem. Self-affirma- METHODOLOGY AND INITIAL EMPIRICAL tion is a relatively general substitute for many self-esteem SUPPORT processes. It means self-affirmation can turn other means of self-esteem maintenance on and off, while other pro- The pretest was a 2x2 factorial between-subjects cesses are able to turn self-affirmation on and off. experiment and was of preliminary nature. Seventy-eight undergraduate students participated. The IVs are avail- In Fein and Spencer’s study, Ss were either given an ability of self-affirmation and availability of brand stereo- opportunity for non-prejudiced self-affirmation or not. type incongruence. Manipulation of self-affirmation is All Ss were asked to rank order 11 personal characteris- borrowed from psychology, as described earlier. The tics/values according to their personal importance. Ss in other IV has two levels: whether the brand stereotype is the self-affirmation conditions were then asked to write perceived to be incongruent with the specific sample’s down the nunber one personally important value, and worldview, or there is no such perceived incongruence. describe a time in his/her life when it has been important. Since two real wine cooler brands were used as stimuli, Research has shown that causing Ss to think about a brand familiarity was measured as a covariate. Conven- personally important value is an effective means of pro- tional attitude semantic differentials, combined with six ducing self-affirmation (Steele 1999). Ss in the no self- newly written items that purportedly captured “perceived affirmation conditions were asked to indicate the number value incongruence” and “refusal of association,” were nine personally important value, and write about a time used as the measure of brand prejudice. ANCOVA shows when it may be important to a typical student. The second significant interaction between the two independent vari- independent variable was the target’s ethnicity. Targets ables (p = 0.019). For Boone’s Farm (a brand supposedly were from either a negatively stereotyped ethnic group or involving stereotype incongruence in the subjects’ per- not. It was found that Ss given the opportunity to self- spectives), self-affirmation decreases brand prejudice affirm expressed less prejudice toward members from the expression (p = 0.064). Therefore, hypothesis 2 is mar- negatively stereotyped ethnic group, compared to Ss who ginally supported. For Seagram’s (a brand supposedly were not given the self-affirmation opportunity. This involving no stereotype incongruence), there is no signif- finding has potential managerial implication in market- icant difference across the two levels of affirmation avail- ing. If self-affirmation can substitute for prejudice expres- ability (p = 0.124). Hypothesis 3 is thus supported. H1 is sion, providing a source of self-affirmation can reduce the not supported. The author is fully aware of the limitation holder’s prejudice and lessen the negative influence on of the pretest design. Since real brands were used, alterna- others through interpersonal interactions. tive explanations can not be ruled out. More rigorous design should be used in the future. To sum up, this study is interested in replicating this relation when the prejudice targets are stereotyped brands. FUTURE DIRECTION: THE POWER OF Specifically, this study investigates the following hypoth- PREJUDICE eses: Once we conceptualize attitudes with certain charac- H1 When a brand stereotype reflects worldview incon- teristics as prejudice, a new area is open up for study. gruence, more brand prejudice would occur, com- Singling out certain attitudes as prejudice has proved to be

American Marketing Association / Winter 2005 282 profitable in social psychology. Prejudice definitely adds to consumers and help them maintain a positive self- beyond the more aged construct of attitude. For example, regard. On the other hand, communications utilizing fear prejudice predicts discrimination far better than heavily appeal or making upward social comparison salient threaten cognitive attitude (Dovidio et al. 1996); It is held more consumers’ self-esteem. Therefore, such communications firmly (Abelson et al. 1982), and is more effectively land on the lower end of the self-affirmativeness contin- altered by affective rather than cognitive persuasion (Ed- uum. Communication high in self-affirmation, via preju- wards and von Hippel 1995). It would be interesting to dice reduction, enhances consumers’ trust and contributes find out whether these findings could be replicated in the to a better buyer-seller relationship. arena of marketing, after we conceptualize certain brand attitudes as brand prejudice. Service marketing managers can reduce prejudiced expression against their brands, utilizing the abundance of Based on shared stereotype, brand prejudice is also interpersonal communication. The concrete implementa- culturally shared. When stereotype and prejudice toward tion is: service personnel employ face-to-face communi- brands are recognized as socio-cultural phenomenon, we cation to affirm consumers’ self-esteem. Provision of self- can go on to examine the societal factors that lead to brand affirmation is not restricted to one-on-one service en- prejudice, instead of being confined to the paradigm of counters. It can also be delivered through mass media. For individual information processing. In such inquiry, vari- example, advertisement of both services and commodities ous social psychology theories can be utilized. This would can convey pleasing messages such as “you are worth it” give rise to a new scope of questions which have not been or “you can do it.” Sometimes, provision of self-affirma- fully explored before. For example, does excessive homo- tion goes farther than pleasant verbal or nonverbal com- geneity in demographics and psychographics lead to munications. Helping some consumers to achieve major greater brand prejudice, according to social identity the- life goals or resolve troubling issues, and hopefully boost- ory (Tajfel and Turner 1986)? Can we predict the content ing their self-esteem subsequently, has long been used by of brand prejudice once we know the associated user business. Walmart offers school supplies to needy chil- group’s niche in the social structure? Particularly, does dren. Beverly Hill stylists make over consumers into more higher social class unavoidably hold paternalistic preju- glamorous people, who are finally happy with them- dice toward brands associated with lower class as a means selves. Negatively stereotyped brands and professions of system justification (Glick and Fiske 2001)? Do dom- have improved their images by improving consumers’ inant corporate brands in different societies possess sim- self-images first. In such cases, consumers who witness ilar stereotypes and prejudice held against them, accord- self-affirmation provision, though they do not directly ing to the transcultural principle of stereotyping (Stephan experience it, might feel self-affirmed too. At present, this and Rosenfield 1982)? Are brands associated with con- is only a speculation. Whether vicarious self-affirmation flicting user groups derogatorily viewed by each other, in could actually occur constitutes a topic for future investi- line with the realistic conflict view of prejudice (Taylor gation. Another subtle issue that awaits future research is and Maghaddam 1987)? To embark on these intriguing the distinction between prejudice and prejudice expres- issues more effectively, researchers need to recognize the sion. As a value, prejudice is stable and resistant to distinctive contribution of the construct of brand preju- attempted influence. By comparison, expression of prej- dice. udice is more variable, since it is subject to the salience of prejudice content and social norm. Thus the question DISCUSSION arises as to self-affirmation’s impact on these two different constructs. Does providing self-affirmation really Provision of self-affirmation, via prejudice reduc- reduce prejudice, or does it merely temporarily hold back tion, eventually strengthens buyer-seller relationship. the expression of it? Plus, how long will the curbing effect Buyer-seller relationships are a focal concern of market- last? These questions remain for exploration later on. ing as a discipline (Day and Montgomery 1999). Commu- nication between the two parties, among others, is seen as Although brand managers do not always worry about one antecedent to good buyer-seller relationship (e.g., reducing prejudice toward their brands, this does become Nonaka 1994). Particularly, communication increases a concern when a brand attempts to penetrate into a new trust and cooperation (Morgan and Hunt 1994). However, segment which holds prejudice against the brand. The this line of research has been largely confined to commu- current study, though preliminary in nature, points out nication frequency as the independent variable. The spe- self-affirmation provision as one way to bring down brand cific characteristics of communication content, among prejudice. Besides its obvious managerial benefit, self- which being self-affirmative is one, have been ignored. affirmation provision caters to the universal need for self- This study contends that communication could be of esteem, delivering genuine value to consumers. There- variable magnitude of self-affirming from a consumer’s fore, this research quest fits in the recent trend of stressing angle. Highly self-affirming communications pay respect communication, value and customer relationship, as re-

American Marketing Association / Winter 2005 283 flected in the American Marketing Association 2004 experimental design, would be worthwhile to pursue this definition of marketing. More research, with rigorous research stream.

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For further information contact: Huimin Xu Marketing Department University of Arizona 1130 E. Helen St. Tucson, AZ 85721 Phone: 520.621.7485 FAX: 520.621.7483 E-Mail: [email protected]

American Marketing Association / Winter 2005 285 SELF AND BRAND IMAGE CONGRUENCE: DRIVING CONSUMER VALUE

Adam Marquardt, University of Oregon, Eugene

SUMMARY along a given set of specific image traits and characteristics, and the individual’s perceived categorization of a As firms attempt to create value for consumers, many product along the same dimensions increases in congru- rely on brand image as an effective tool to reach and ence, that consumer value will also increase. penetrate their target markets (Park, Jaworski, and MacIn- nis 1986). This study explores how consumers relate to When areas of customer-desired value are success- their chosen brands, specifically investigating the degree fully identified, integrated and communicated, consumers to which a consumer’s actual and/or ideal self-image is will be more likely to buy the brand, often paying a congruent with the images of his or her preferred brands, premium in the process (Romaniuk 2001; Keller 1993). and how this impacts the consumer’s level of perceived Keller (1998) posits the importance of congruence be- value. This research combines qualitative interviews with tween user imagery and brand personality in building exploratory empirical studies to examine this relationship brand image, and suggests that this congruence is partic- from the consumer’s viewpoint. Preliminary findings ularly “relevant” regarding the more extrinsic benefits support the role of congruence between the individual’s associated with symbolic brands. Brand personalities and self-image and the brand image, predicting that as congru- images appealing to a consumer’s actual or ideal self- ence increases, consumer value (customer-based brand image can help to create consumer value, and thus a equity) will also increase. deeper level of rapport (Fournier 1998; Aaker 1997). For illustrative purposes, inner-city basketball players pro- A strong brand presents consumers with consistent vide a good demonstration of how this process operates. and positive messages, differentiating it from competitive For many “streetballers” their chosen brands are not only offerings and assisting in the consumer decision-making functional, but also symbolic. Some of these basketball process (McDonald, de Chernatony, and Harris 2001; players select athletic apparel and footwear based on their Blankson and Caliphates 1999). Firms can create favor- actual level of performance, reputation and status, choos- able positions in the minds of their customers by presenting brands that provide a reflection of their actual self. ing attractive brand images. Park, Jaworski, and MacInnis Other less accomplished and respected players may select (1986) argue that firms that are able to introduce, elabo- the same merchandise based on their desire to project an rate, and fortify the brand’s concept (brand image) will be image or attitude consistent with their ideal self-image better able to attract and retain customers, creating stron- (projection of who they want to be). Still others select their ger and more profitable brands. In doing such, brands are apparel and footwear utilizing a combination of their able to generate value for the consumer (customer-based actual and ideal self-images. brand equity), and comparative advantages for the firm (McAlexander, Schouten, and Koenig 2002; Keller 1993). This study utilized a two-part methodological approach. The first approach involved conducting explor- The consumer’s self-image plays a critical role in atory interviews with subjects from differing demograph- perceiving brand image, and can be described in terms of ic and geographic environments. The purpose of these the imputed brand personality (Aaker and Biel 1993). The interviews was to determine if a brand’s image was consumer’s self-image refers to an individual’s ideas and important to these consumers and if it played a role in their feelings about one’s self (Underwood, Bond, and Baer decision-making processes. It was determined that many 2001), and the basic premise held within this study is that consumers value a brand’s image, and in fact make the consumers’ possessions contribute to and reflect their brand image an important factor within their decision- identities. This study explores the individual’s actual and making process. The second methodological approach ideal self-images, where the individual’s actual self-im- involved an exploratory online survey based on informa- age refers to how respondents relate their current self- tion extracted from Study 1. The survey provides evi- image along predetermined self-concept scale measures, dence that consumers are inclined to place higher levels of while the ideal self-image refers to how respondents relate value on brands that exhibit the image traits that they have, their image perceptions of an ideal person along the same or desire to have. Perhaps more importantly, the survey scale dimensions (utilizing projection theory to derive indicates that brand image plays an important role in characteristics consistent with the individual’s ideal self- consumers’ decision-making processes and in their pur- image). This study proposes that as the degree of per- chasing intentions. ceived fit between an individual’s self-categorization

American Marketing Association / Winter 2005 286 The definitive goal of a brand is to signal added value image (projection of an ideal self), or some combination to the consumer such that they look to purchase and/or of the two has broad implications for branding, marketing repurchase the product, thus developing a competitive and strategic management. This is particularly true if the advantage for the provider. Determining the degree to degree to which self-image and brand image align truly which consumers place value on brands that embody their does create superior consumer value (customer-based actual self-image (reflection of self), their ideal self- brand equity). References available upon request.

For further information contact: Adam Marquardt Charles H. Lundquist College of Business 205B Peterson Hall University of Oregon, Eugene 1208 University of Oregon Eugene, OR 97403 Phone: 541.346.1438 FAX: 541.346.3341 E-Mail: [email protected]

American Marketing Association / Winter 2005 287 THE SPILLOVER EFFECTS OF PRODUCT-HARM CRISES IN A BRAND PORTFOLIO

Jing Lei, Universiteit Maastricht, The Netherlands Niraj Dawar, University of Western Ontario, Ontario Jos Lemmink, Universiteit Maastricht, The Netherlands

SUMMARY over to other brands in a portfolio. This is primarily due to the lack of understanding about how brand portfolio In the current marketplace, complex brand portfolios information is cognitively organized and represented in with multiple brands and sub-brands are often developed consumers memory. The cognitive representation of brand by companies to fulfill market segmentation and brand information is of central importance to the understanding strategy objectives (Aaker and Joachimsthaler 2000b). of consumer behaviour and marketing. As evidenced in For instance, Laforet and Saunders (1994) state that, previous literature, many different conceptualizations have nowadays, the conventional single-brand company is rare been used to study this construct, including nodes in an and 95 percent of companies have more than one brand for associative network (Alba and Chattopadhyay 1985, 1986; their products. Our starting point is that brands in a Nudungadi 1990), semantic categories (Dawar 1996; portfolio are not cognitively independent in the way that Park, Milberg, and Lawson 1991), schemas (Sujan and consumers store them in memory. Rather, due to a variety Bettman 1989), and bundles of associations (Keller 1993; of reasons, including common corporate logos, similar Krishnan 1996; Lawson 2002). Common to these concep- trade dress and design, similar or related advertising, tualizations is that they place the representation of indi- complementary usage, and even common shelf location, vidual brands in the context of a larger cognitive structure consumers may establish associations and linkages be- (e.g., a category), and attempt to understand how such tween brands in a portfolio to help them navigate the representation influences the processing of new informa- randscape in which they consume. tion. However, despite examining brands as part of larger structures, past research has largely neglected the interde- Once these linkages are established in consumers pendency between brands. In particular, there has been memory, a brand cannot be isolated from exposure to little research on networks of brands where brands are information about related brands in the same brand port- associated with each other (as opposed to cognitive net- folio. This phenomenon, termed pillover effect (e.g., works that link brands to associations, products, and Balachander and Ghose 2003), refers to the extent to product categories). As a spillover effect is expected to which external information (e.g., a product-harm crisis) occur only if these brands are in someway interrelated in about a brand changes attitudes about other brands that are consumers cognitive memory, the unawareness of possi- not directly involved. For instance, if Kellogg Cornflakes ble linkages between brands in a portfolio might have suffer severe quality problems, consumers might update hidden the spillover effect from attention in previous their attitudes not just about Cornflakes, but also about studies. SpecialK and other Kellogg brands. Therefore, companies with a brand portfolio need to look beyond the impact Therefore, the first objective of this paper is to ex- of external information on the directly involved brands to plore the cognitive representation of brand portfolios in other affiliated brands. In some cases, spillover effects consumers memory. Second, we expect to use this knowl- may even explain more variance in attitude change on a edge to better understand the spillover effect of external brand than external information that directly addresses information, especially the impact of product-harm cri- this brand. For instance, in the previous example about ses, in brand portfolios. Based on the network association negative information at Cornflakes, the spillover effect on theory, we conceptualize the representation of brand SpecialK might overwhelm the effect of an advertisement portfolio information in consumers memory as an asso- on SpecialK in altering consumers attitude towards Spe- ciative network, where a parent brand, sub-brands, and cialK. Hence, neglecting spillover effects provides a linkages between them form the basic elements. We limited view of the antecedents of brand equity (of which examine the structure of this network and the consequent brand attitudes are one component) and may lead to spillover effect by introducing negative information at inappropriate managerial actions. one brand node and studying the differential effects on related nodes. We suggest that the primary characteristic Yet to our knowledge no research has yet addressed of a brand network, the strength of association between the impact of external information on a brand portfolio, brands, determines the magnitude of spillover effects. and critically, if and how the impact on one brand spills Three consecutive experiments are developed to test these

American Marketing Association / Winter 2005 288 hypotheses. The first experiment measures the strength of the parent brand and from one sub-brand to other sub- association between brands in a portfolio, and the second brands. The results of Experiment 2 indicate that the experiment manipulates the strength of association and increased strength of association between a sub-brand and validates the findings of Experiment 1 in a different brand the parent brand leads to greater spillover effects from the portfolio. On the basis of the findings from the first two sub-brand to the parent brand. Furthermore, the increased experiments, we test the differences between the pro- strength of association between the sub-brands and the posed brand network model and the existing categoriza- parent brand also leads to a greater spillover effect be- tion model in explaining the spillover effect in Experi- tween sub-brands. The results of Experiment 3 show that, ment 3. in the same product category, brands in the same portfolio will have a stronger influence on each other than brands In the results of Experiment 1, the evidence of spill- across brand portfolios. This finding suggests that the over effects supports our proposition that there are asso- proposed network model is a stronger explanation for the ciative linkages between brands in a portfolio forming a spillover effect in a brand portfolio than the categorization brand network. The results also suggest that strength of model, even if all sub-brands in the portfolio are in the association is a significant predictor of the spillover ef- same product category. References available upon re- fects of a product-harm crisis, both from the sub-brand to quest.

For further information contact: Jing Lei Department of Marketing Universiteit Maastricht P.O. Box 616 NL–6200MD Maastricht The Netherlands Phone: +31.43.3884945 FAX: +31.43.3884918 E-Mail: [email protected]

American Marketing Association / Winter 2005 289 MARKET DRIVEN INTANGIBLES AND SUSTAINABLE PERFORMANCE ADVANTAGES

Matti Tuominen, Helsinki School of Economics (HSE), Finland Sheelagh Matear, University of Otago, New Zealand Sami Kajalo, Helsinki School of Economics (HSE), Finland Saara Hyvönen, University of Helsinki, Finland Arto Rajala, Helsinki School of Economics (HSE), Finland Kristian Möller, Helsinki School of Economics (HSE), Finland Gordon E. Greenley, Aston University, United Kingdom Graham J. Hooley, Aston University, United Kingdom

SUMMARY be examined in more depth (Weerawardena and O’Cass 2004). This paper takes this argument and expands the In recent years there has been considerable debate on framework of Day (1994). Our conceptual model is ground- the role of marketing in firm strategy and competitive ed on the theoretical foundation of the RBT. We argue that performance. Several scholars have argued that one way superior performance is initiated by the degree of market for marketing to make a more significant contribution to orientation and market driven capabilities developed. the development of a managerially oriented theory of the Performance advantage is defined in this study as the firm is by better articulating the constructs of market achievement of overall profit levels, profit margins, and orientation, marketing capability, innovativeness and com- ROI, emphasizing especially financial outcomes, while petitive superiority, and their interrelationships as well sustainable edge is specified here as a durable and defen- (for an in-depth discussion see e.g., Stoelhorst and van sible competitive posture a firm possesses. We forward Raaij 2004). From marketing point of view, the emerging the premise that market driven intangibles facilitate firm resource based theory (RBT) of the firm declares the competitive performance, and suggest that the link ap- importance of intangible resources – in particular capabil- pears to be even stronger in small open economies, where ities and relationships – in explaining firm competitive the highly “marketized“ environmental setting – regard- superiority. However, there seems to be a lack of under- less of its location in the globe – is determined by an standing when certain types of marketing intangibles are increased degree of customer sophistication and technol- most critical, even though the marketing literature has for ogy proliferation, just, like in the case of New Zealand and long argued that by leveraging these resource endow- Finland. The rationale behind our argument is grounded ments firms could be in a stronger position to succeed in on the “rules of the game in different institutional set- the marketplace (e.g., Day 1994). tings.”

This paper adopts a capabilities view and introduces The study involved three main phases. First, in-depth a conceptual model consisting of three types of market interviews were conducted with senior marketing execu- driven intangibles, namely, outside-in capability, inside- tives in 24 organizations. Thereafter, a questionnaire was out capability, and spanning capability grounded on the developed and piloted. Finally, a representative-mailed theoretical foundation supplied by Day (1994), and ar- survey was undertaken. Our survey was carried out in gues that these firm intangibles contribute differently to 2001–2002 (coordinated by Aston Business School, U.K.). sustainable competitive edge and superior performance Following the SIC (Dun and Bradstreet), our sample advantages. Our argument, thus, follows the path depen- covered small (20–99 employees), medium (100–499 dence assumptions of the RBT traced back to the work of employees), and large (500 or more employees) firms Penrose (1959). Market driven intangibles can be defined representing business products, consumer products, busi- as any attribute, intellectual or relational, that can be ness services, and consumer services. The sampling frame deployed advantageously in the marketplace. Following was supplied by national research institutes in both coun- this conceptualization, we distinguish between two key tries involved. In total, 799 usable responses were re- marketing intangibles: market orientation with a market ceived: 472 in New Zealand and 327 in Finland, and a driven emphasis (Jaworski et al. 2000) and market driven response rate over 20 percent. No significant differences capabilities (Day 1994). It has been argued, that as part of in means were found between early and late respondents enhancing our understanding of market driven intangi- on the scales studied (t-tests at .05 level), indicating that bles and performance, the relationship among innovative- non-response bias is unlikely to be a problem. Similar ness, market orientation, and marketing capabilities should studies are underway in other countries (e.g. the U.K.,

American Marketing Association / Winter 2005 290 Ireland, Australia, Austria, Germany, Greece, Hungary, recommended levels, respectively of: 0.60 or greater for The Netherlands, Poland, Slovenia, China, Hong Kong, the former, while 0.50 or higher for the latter, providing a and Brazil) and at various stages of completion to allow set of reliable and valid metrics for the constructs in- the international robustness of the scales to be gauged. volved. Our hypotheses were tested simultaneously with LISREL 8.51 (Jöreskog and Sörbom 1996). Modeling Market orientation was captured deploying 14 items was undertaken deploying covariance matrix and the from the scale first reported by Narver and Slater (1990). maximum likelihood estimation procedure. The fit index- The measures of market driven intangibles, sustainable es for the structural model (χ2 =0.96; df = 3; p = 0.811; edge, and performance advantage were developed for the RMSEA = 0.000; CFI = 1.000; NNFI = 1.022; CFI = research questions at hand. In this respect, the proxies 1.000) indicate that the model fit is very good. To summa- comprised new items and were initially developed by rize, we found generally good empirical evidence for the identifying and creating questions on the basis of the hypotheses stated and all the relationships analyzed were literature review, expert opinions, and field-based inter- significant. views. Following the analysis of the pilot data, the seminal questionnaire was further refined. Subsequently, the final The study makes a number of academic and manage- questionnaire was developed deploying 20 capability rial contributions. Although the literature on the role of items generated through the above, hypothesized as three market driven intangibles in competitive superiority has separate factors following the three proposed by Day grown in significance over the last decade, few efforts (1994). Besides, the questionnaire consisted of 19 advan- have been made to operationalize the key constructs and tages items, hypothesized as two separate factors based on synthesize the arguments in a single rationale or frame of the taxonomy of Day and Wensley (1988): one set for reference. This study contributes to the capabilities view positional advantages and one set for performance advan- on competition by developing metrics for the two con- tages. structs of market driven intangibles, namely, outside-in capability and inside-out capability, and, thereafter, eval- Confirmatory factor analysis (CFA) was deployed uating them in international context. In a nutshell, the for scale construction and validation. Overall, the fit structural model demonstrates the importance of market indexes for the measurement model (χ2 = 788.40; df = 174; driven intangibles in contributing to the explanation of p = 0.000; RMSEA = 0.067; CFI = 0.914; NNFI = 0.927; superiority in firm competitive performance. By elaborat- CFI = 0.940) indicate that the scale structures fit the data ing the competitive nature of market driven intangibles acceptably and the developed proxies perform well in the this approach may help business executives better under- ρ context concerned. Composite reliability values ( c) and stand the resource endowments a firm possesses, and ρ values of average variance extracted ( v) were calculated thereby align competitive moves within the market pos- following the general instructions, and all exceed the ture adopted. References available upon request.

For further information contact: Matti Tuominen Helsinki School of Economics (HSE) POB 1210 (Lapuankatu 6) FIN-00101 Helsinki Finland Phone: +358.9.43138735 FAX: +358.9.43138660 E-Mail: [email protected]

American Marketing Association / Winter 2005 291 UNDERSTANDING CREATIVE CAMPAIGN IMPLEMENTATION: AN INVESTIGATION OF ITS ANTECEDENTS

Atlanta L. Stoyle, University of Queensland, Australia Leonard V. Coote, University of Queensland, Australia

SUMMARY and perceptions of campaign success might be conceptualized as stages of an implementation process (Noble and The process of strategy development and implemen- Mokwa 1999). Campaign implementation is clearly an tation within the context of buyer–supplier relationships important theoretical and managerial construct and fur- is an important yet under-researched area of marketing ther research on its antecedents and outcomes is warrant- theory. Much of the strategy literature examines imple- ed. mentation from a macro perspective, for example, examining the effects of market orientation, positional advan- The potential antecedents of commitment to cam- tages, and environmental factors on strategy implementa- paign implementation and success are drawn from the tion and firm performance (Im and Workman 2004). relationship marketing, fit, and innovation literatures. Absent from these theories, however, is a detailed consid- Trust is conceptualized as the confidence that an adver- eration of implementation issues from a more micro tiser places in the reliability and integrity of an advertising perspective. While several recent studies examine micro agency (Ganesan 1994; Morgan and Hunt 1994). Rela- characteristics, such as organizational commitment and tionship commitment is defined as the degree to which an “buy-in” to a proposed strategy, their focus is on strategy advertiser perceives a relationship with an advertising making within the context of organizational settings agency as valuable and worth working on to ensure that it (Menon et al. 1999; Noble and Mowka 1999). Few studies continues (Garbarino and Johnson 1999; Moorman et al. consider strategy commitment and implementation within 1993). Trust and commitment are drawn from the rela- the context of buyer–supplier relationships. Both inter- tionship marketing literature and are key characteristics of organizational factors (e.g., relationship commitment and effective relationships. The fit literature emphasizes the trust) and strategy-specific factors (e.g., strategy fit) are importance of goal congruence or “fit” as an explanatory important when strategy implementation is viewed from variable (Chatman 1991; Netemeyer et al. 1997). Cam- this perspective. The specific context in which this re- paign fit is the degree to which a creative campaign search is set is advertiser–advertising agency relation- proposed by an agency matches with the goals, objectives, ships. Drawing on several diverse literatures, a conceptual and vision of an advertiser (Noble and Mokwa 1999). framework of the potential antecedents and outcomes of Campaign fit exists when the themes and objectives of a commitment to campaign implementation is advanced. proposed creative campaign are in alignment with the strategic direction and goals of a client. Campaign charac- Strategy implementation is posited as a key driver of teristics include creativeness and radicalness (cf., Amabile marketplace and financial performance (Bonoma 1985; 1983; Im and Workman 2004). Campaign creativeness is Cespedes 1991; Walker and Reukert 1987). The contin- conceptualized as the level of novelty and newness of a ued success of firms depends not just on recognizing campaign; whereas a radical campaign represents a “break strategic alternatives (e.g., positional advantages), but on from the past.” Both concepts may be important in the committing to strategy implementation. Creative cam- process of campaign implementation. paign implementation is operationalized as an advertisers’ commitment to a campaign developed and advanced A number of theoretical and practical implications by an agency specifically for an advertiser and an adver- can be drawn from the conceptual framework, including tisers’ perceptions of the success of a campaign (Menon directions for further research. Perhaps the main theoret- et al. 1999; Noble and Mokwa 1999). An advertiser must ical contribution is to cast the strategy implementation commit itself, as well as necessary resources such as time issue within the context of buyer–supplier relationships. and money, to campaign implementation in order to From this perspective, relational factors such as trust and ensure maximum effectiveness (Menon et al. 1999). Thus, commitment, which are drawn from the relationship mar- campaign commitment is a fundamental prerequisite of keting literature, emerge as a possible a starting point in campaign effectiveness; that is, the commitment of an the process of strategy implementation. The framework advertiser to a campaign partly determines the effective- has implications for agencies and advertisers. Sophisticat- ness of the campaign itself. Implementation is successful ed agencies should recognize that relationships with cli- when a client perceives a campaign as effective and ents are a valuable strategic asset. The ability of an agency fulfilling its stated objectives. Commitment to a campaign to develop and maintain high levels of trust and to build an

American Marketing Association / Winter 2005 292 advertiser’s commitment to a relationship is important. within the context of advertiser–agency relationships. Furthermore, advertisers might consider trust as an im- Although much of the supporting discussion contextual- portant screening criterion. In addition to providing eval- izes the model within advertiser–agency relationships, the uative criteria for selecting potential partners, the frame- model may generalize to other contexts. The model may work might suggest useful metrics for managing relation- help to inform strategy implementation across a range of ships with agencies, for example, managing fit through inter-organizational contexts, for example, relationships the communication of goals and objectives. Implicit in between marketing strategy and research firms and their this paper are a number of directions for further research. clients, and more generally, the strategy implementation A first step is to empirically test the proposed framework process within networks of marketing relationships.

For further information contact: Atlanta L. Stoyle or Leonard V. Coote UQ Business School University of Queensland Brisbane, Qld 4072 Australia Phone: +61.7.3365.9721 FAX: +61.7.3365.6988 E-Mail: [email protected]

American Marketing Association / Winter 2005 293 VALUE-BASED DIFFERENTIATION IN BUSINESS RELATIONSHIPS: GAINING AND MAINTAINING KEY SUPPLIER STATUS

Wolfgang Ulaga, ESCP-EAP European School of Management, France Andreas Eggert, University of Paderborn, Germany

SUMMARY Lohmöller’s (1989) partial least square (PLS) latent path modeling (see Figure 1). Our findings suggest that each Many business customers today consolidate their value driver contributes to some extend to explain ob- supply bases and implement preferred supplier programs. served variance in overall value. Though none of the As a consequence, vendors increasingly face the alterna- differentiators should be neglected, the potential for dif- tive of either gaining a key supplier status with their ferentiation varies considerably. customers, or being pushed into the role of a back-up supplier. As product and price are no longer key differen- In our study, relationship benefits display a stronger tiators, suppliers search for new ways to differentiate potential for differentiation than cost considerations when themselves in a buyer-seller relationship. it comes to deciding which supplier to name “primus inter pares” among a set of available suppliers (77% of ob- This research investigated avenues for differentia- served variance versus 17% of observed variance in our tion through value creation in business relationships. study). At first sight, this result appears contradictory to Building on Cannon and Homburg’s (2001) categoriza- conventional wisdom emphasizing costs in general and tion of relationship costs, we first developed an integrated price in particular as key variables in purchasing deci- framework of relationship value. In our research, we sions. A closer look at the sampling procedure employed, conceptualized value in business relationship in terms of however, resolves the apparent contradiction. As we a two-by-three matrix distinguishing between two funda- intended to understand what sets a main supplier apart mental dimensions of value creation, i.e., relationship from competition, we focused on incumbent suppliers benefits and costs, and three levels at which these value that already made their way on the shortlist. Hence, drivers operate, i.e., the supplier’s core offering, the whereas cost factors often serve as qualifiers to get a sourcing process, and the customer firm’s internal opera- supplier on the shortlist of those vendors considered by a tions. customer for business, benefit dimensions put a vendor in the key supplier’s position. Next, we designed a qualitative study to identify and describe customer-perceived key value drivers in each Looking at individual value drivers, we identify category of our framework. Using a grounded-theory service support and personal interaction as core differen- approach, we conducted depth-interviews with ten senior tiators. In the present study, these sourcing benefits offer purchasing managers in nine U.S. manufacturing compa- the strongest potential for differentiation, explaining more nies. The results of this exploratory step suggested that than half of the observed variance (52%). They are fol- nine core drivers allow suppliers to set themselves apart lowed by operation benefits. A supplier’s know-how and from competition in buyer-seller relationships. These key its ability to improve a customer’s time-to-market explain differentiators are product quality, delivery performance, 21 percent of the observed variance. Operation costs and direct product costs at the level of a supplier’s core (10% of observed variance), along with core benefits, i.e., offering; service support, personal interaction and acqui- product quality and delivery performance (8% of ob- sition costs in the sourcing process; and supplier know- served variance), and acquisition costs (7% of observed how, time-to-market, and operation costs at the level of variance) display each a moderate potential for helping a the customer’s operations. Our depth-interviews further firm gain and maintain key supplier status. Finally, direct allowed to probe into the various facets of each value product costs, i.e., price, show the weakest potential for driver and to provide directions for collapsing the dimen- differentiation (3% of observed variance). sions into an overall value index. Overall, these findings provide strong empirical ev- We finally conducted a nationwide cross-sectional idence that the core product and its price are no longer key survey among 400 senior purchasing managers in U.S. differentiators in customer-supplier relationships. Rather, manufacturing companies to specifically assess how the offering value through personal interaction and service, value drivers identified in the previous qualitative stage access to know-how and increased time-to-market, have contribute to differentiating key suppliers in a business become key to securing a key supplier position. relationship. Empirical data were analyzed using

American Marketing Association / Winter 2005 294 FIGURE 1 Formative Higher-Order Measurement Model

R2 = 0.73 Relationship Value

0.77 -0.17

Relationship Relationship Benefits Costs

0.11 0.68 0.27 0.22 0.44 0.61

Core Sourcing Operations Direct Acquisition Operation Benefits Benefits Benefits Costs Costs Costs

(N.B.: All parameter estimates are significant at the 5 percent level. The variance explained by each formative value dimension is obtained by multiplying the path coefficient of the second-order dimension with the coefficient of the respective first-order dimension. Example: variance explained by sourcing benefits = 0.77 x 0.68 = 0.52).

For further information contact: Wolfgang Ulaga Marketing Department ESCP-EAP European School of Management 79 avenue de la République 75543 Paris Cedex 11 France Phone: +33.1.49.23.26.10 FAX: +33.1.49.23.22.48 E-Mail: [email protected]

American Marketing Association / Winter 2005 295 AFFECT AND CONATION IN BUSINESS-TO-BUSINESS RELATIONSHIPS: AN EMPIRICAL ANALYSIS OF LOYALTY LIFECYCLE SEQUENCE

Chad Ruel Allred, Brigham Young University, Provo

SUMMARY ship maturity: relational governance (Heide 1994; Mac- neil 1980; Rindfleisch and Heide 1997), core loyalty Loyalty measures in early loyalty studies were often (Dick and Basu 1994), and perceptual orientation in overly simplistic, concerned primarily with repeat pur- marketing exchange (Konovsky 2000). Contrary to theo- chase behaviors (Jacoby and Chestnut 1978). Researchers ry, results show greater relationship maturity to be more now believe loyalty to be a more complex phenomenon, indicative of affective loyalty than conative loyalty. High- manifest through both attitude and behavior (Day 1969), er levels of relational governance increase the likelihood and that the attitudinal components of loyalty may be of membership in the affective phase of the lifecycle. Core characterized by the psychological processes of cogni- loyalty is greater for members of the affective phase. Core tion, affect, and conation (Dick and Basu 1994). Recent loyalty has a greater marginal effect on exchange satisfac- theory further suggests that these processes constitute a tion for members of the affective phase. Members of the loyalty lifecycle: cognitive loyalty affective loyalty con- affective phase place comparatively less weight on distri- ative loyalty (Oliver 1999). Little has been done to corrob- butional outcomes in marketing exchange. orate or refute this perspective of loyalty. This study seeks to (1) classify business-to-business exchange participants Results suggest that a naïve form of conative loyalty into either affective or conative phases of the loyalty can develop in business-to-business relationships prior to lifecycle, (2) identify the sequencing of these two loyalty the development of affective loyalty. It is likely that naïve phases, and (3) determine how loyalty phase might influ- conative loyalty is fostered by socio-emotional cues with- ence performance evaluations of complex business-to- in the business-to-business “consumption community” business marketing exchange. that are telegraphed by firm reputation and brand image (Friedman, Vanden Abeele, and De Vos 1993). A similar Three thousand four hundred eighty six business- phenomenon occurs in consumer markets where brands customers of a large systems software producer represent- are routinely extended to embrace new or unfamiliar ing 2,730 institutional buyers and channel firms from 46 products. For these products, naïve conative loyalty drives countries are classified into affective or conative phases initial purchase and use, which ultimately leads to expe- of the loyalty lifecycle using a finite mixture model. rience and the formation of affective loyalty. In business- Results show repeat purchase intent to be highly correlat- to-business relationships, naïve conation and affect may ed with cognitive and affective attitude. Latent class then interact to create the more complex form of conative regression shows these measures to explain 67 percent of loyalty characterized in loyalty lifecycle theory. the variance in repeat purchase intent. For members of the affective class, repeat purchase intent is most highly Loyalty-to-action defines to the focal objective of a correlated with overall product and service satisfaction. loyalty behavior, such as loyalty-to-purchase or loyalty- For members of the conative class, repeat purchase intent to-recommend. Study results also show loyalty lifecycles is most highly correlated with a strategic commitment to to be influenced by loyalty-to-action. In the modeled the producer. business-to-business relationships the transition from naïve conation to affection occurs more rapidly in the loyalty- Affective and conative lifecycle phase sequence is to-purchase lifecycle than in the loyalty-to-recommend manifest through correlations between business-custom- lifecycle. References available upon request. er loyalty phase membership and three proxies of relation-

American Marketing Association / Winter 2005 296 For further information contact: Chad Ruel Allred Brigham Young University 683 TNRB Provo, UT 84602 Phone: 801.422.3540 FAX: 801.422.0108 E-Mail: [email protected]

American Marketing Association / Winter 2005 297 THE EFFECT OF TOTAL AND ASYMMETRIC SPECIFIC ASSET INVESTMENT ON SUPPLIER-BUYER RELATIONSHIP: A STRUCTURAL MODEL

Taewon Suh, Texas State University, San Marcos Henry Yu Xie, Saint Louis University, St. Louis Ik-Whan G. Kwon, Saint Louis University, St. Louis

SUMMARY also found for the effect of asymmetric specific asset investment on conflict among the partners to a relation- Although a body of research on specific asset invest- ship. The asymmetric specific asset investment, as a result ment has been built and conducted on channel relation- of the difference of specific asset investment among ship, to the best of our knowledge, few studies have partners in a relationship, was found to be positively examined the direct impact of specific asset investment related to conflict among the partners. Asymmetry in (SAI) on commitment, trust, and conflict in an exchange specific asset investment by partners in the relationship relationship. More specifically, magnitude and symmetry denotes lower reciprocal engagement in the relationship, of specific asset investment hasn’t received considerable therefore leading to possible rise of conflict and decline of attention in the literature yet. The current study attempts trust among the partners. This finding is in conformity to to extensively analyze the effect of specific asset invest- the previous findings that power asymmetry in channel ment in supplier-buyer relationship by dealing with mag- relationship is likely to generate lower trust and continuity nitude and symmetry of specific asset investment. This than symmetry in the relationship. In summary, this cur- study is posited to fill the void in the following research rent study confirms our observation on the focal effects of areas. First, this study measures and uses SAI from both specific asset investment on business relationship/part- sides of a channel relationship to investigate more detailed nership. The results also reveal that the effect of specific effect of SAI on variables of relationship, i.e., commit- asset investment is mediated by decision-making uncer- ment, trust, and conflict. Second, this study also intends to tainty. That is, the magnitude and symmetry of the specific test the mediating role of decision-making uncertainty asset investment in a channel relationship is closely asso- between SAI and the three dependent variables. The ciated with uncertainty in decision-making, which inten- purpose of this study is to build upon previous studies on sifies their effect on commitment, trust, and conflict. specific asset investment and relationship and to further our understanding of specific asset investment and ex- Some interesting managerial implications are evident change relationship. The rest of the paper is organized as in this current study. Firms should work to strengthen follows: First, a brief literature review on specific asset their business relationship by increasing the total specific investment (SAI) is presented. Second, we propose a asset investment from all the partners in the relationship conceptual framework based on the literature review and with aim to increase the trust and commitment. Alterna- theoretical discussion. Third, we discuss data analysis tively, firms can also strive to avoid potential conflict by using structural equation modeling as well as results. reducing the asymmetric specific asset investment. Al- Lastly, we discuss the conclusions and directions for though specific asset investment is likely to yield stronger future research. relationship, asymmetric specific asset investment, as a result of difference in partners’ investment, can potential- The results of this current study have indicated that ly increase the conflict among the partners. Therefore, both total specific asset investment and asymmetric spe- firms should specially pay attention to the level of asym- cific asset investment have exerted considerable impacts metry in the specific asset investment among the partners on facets of relationship, i.e., commitment, trust, and in the relationship. Efforts should be taken to reduce the conflict. We found the evidence of a positive effect asymmetry in specific asset investment in case of increas- between specific asset investment and commit, as well as ing asymmetric specific asset investment. between specific asset investment and trust. Total specific asset investment is positively related to commitment and As the case for any study in marketing context, the trust in the relationship. When all the partners to the generalizability of our findings beyond our specific sam- relationship mutually commit specific asset investment in ple may be limited. Our sample might not be representa- the relationship, the interdependence between them is tive of all firms in supply chain as a whole. Further subsequently boosted, resulting in a more solid and inter- research is needed to determine whether similar findings dependent relationship. On the other hand, support was can be obtained. Further research is needed to enrich the

American Marketing Association / Winter 2005 298 literature on specific asset investment. The interaction The counterbalance of effect of increasing total specific between total and asymmetric specific asset investment asset investment and decreasing asymmetric specific as- and its effect on the relation should be explored further. set investment is worth noticing in future studies as well.

For further information contact: Taewon Suh Department of Marketing McCoy College of Business Administration Texas State University – San Marcos 601 University Drive San Marcos, TX 78666 Phone: 512.245.3239 E-Mail: [email protected]

American Marketing Association / Winter 2005 299 AUTHOR INDEX

Adams, Russell 147 Dickinson, John R. 22 Allred, Chad Ruel 296 Dorsch, Michael J. 98 Antia, Kersi D. 111 Dubelaar, Chris 242 Arnold, Mark J. 234 Duffy, Cameron 18 Arnold, Todd 130 Echambadi, Raj 177 Atuahene-Gima, Kwaku 185 Eggert, Andreas 294 Aubert, Benoit 136 Evanschitzky, Heiner 63, 220 Baack, Daniel W. 159 Feick, Lawrence 125 Bae, Mueun 234 Foley, Janice 132 Baldauf, Artur 87 Foley, Linda M. 138 Bansal, Harvir 187 Fürst, Andreas 89 Barat, Somjit 253 Gangadharbatla, Harsha 24 Barb, Carmen 272 George, Morris K. 65 Barczak, Gloria 185 Geursen, Gus 242 Bates, Kenneth W. 134 Gold, Melanie A. 216 Bearden, William O. 59, 157 Goodman, Steven 242 Bischof, Christian 87 Gooner, Richard A. 32 Bishop, Melissa Maier 270 Greenley, Gordon E. 290 Blankson, Charles 13 Griffith, David A. 77 Blocker, Christopher P. 47 Griffiths, Merlyn A. 209 Blunch, Niels J. 198 Grove, Stephen J. 98 Bottomley, Paul 168 Grünhagen, Marko 132 Brady, Michael K. 91 Gummerus, Johanna 262 Briggs, Elten 130 Haghirian, Parissa 260 Brocato, E. Deanne 128 Hardesty, David M. 157 Brown, James R. 200 Harmon, Robert 238 Bush, Victoria D. 138 Harmon, Tracy R.7 Cable, Daniel M. 11 Hausman, Angela 207 Calantone, Roger J. 30, 140 Helm, Sabrina 202 Carlson, Jay P. 157 Hemphill, Elizabeth 242 Carlson, Les 98 Hennig-Thurau, Thorsten 136 Cavusgil, Erin 94 Hirunyawipada, Tanawat 73, 183 Chan, Haksin 61 Hollmann, Thomas 218 Chang, Joseph W. 75 Holzmüller, Hartmut H. 96 Chao, Paul 240 Homburg, Christian 89, 179, 222 Chaudhuri, Arjun 161 Honebein, Pete C. 136, 194 Chen, Qimei 77 Hooley, Graham J. 290 Cheng, Shirley Y. 254 Hopkins, Christopher D. 98 Childers, Terry L. 154 Horowitz, David M. 91 Chmielewski, Danielle A. 79 Hoyer, Wayne D. 222 Choi, Pilsik 105 Huggins, Kyle A. 134 Conant, Jeffrey S. 177 Hyvönen, Saara 290 Coote, Leonard V. 28. 112, 292 Ingram, Kendra 20 Coulter, Keith S. 155 Jarvis, Cheryl Burke 218 Coulter, Robin A. 155 Jensen, Ove 179 Cravens, David W. 87 Johnson, Devon 58 Crittenden, Victoria L. 18 Johnson, Jean L. 236 Cui, Anna Shaojie 30 Jones, William J. 154 Daugherty, Terry 24 Kachroo, Pushkin 200 Dawar, Niraj 288 Kahn, Barbara E. 196 de Almeida, Stefânia Ordovás 36 Kajalo, Sami 290 de Gregorio, Federico 26 Kalafatis, Stavros P. 13 DelVecchio, Devon S. 154 Kaleka, Anna 32 Dev, Chekitan S. 200 Kilbourne, William 132 Dholakia, Ruby Roy 204 Kilburn, Ashley 258

American Marketing Association / Winter 2005 300 Kim, Seung H. 234 Rice, Marshall1 Kleiser, Susan B. 128 Rindfleisch, Aric 111 Koschate, Nicole 222 Rupp, Deborah 181 Krishen, Anjala S. 200 Russ, Courtney 20 Kurpis, Lada V. 272 Sääksjärvi, Maria 262 Kwon, Ik-Whan G. 298 Sauer, Paul L. 240 Kwong, Jessica Y. 254 Sebastiao, Helder J. 114 Lam, Desmond9 Shin, Dongwoo 256 Lambert, Claire 101 Singh, Jagdip 96 Landry, Tim 130 Sirdeshmukh, Deepak 96 Leach, Mark P. 126 Srivastava, Mona 238 Lee, Alvin9 Sit, Alfred Y. 61 Lei, Jing 288 Slotegraaf, Rebecca J. 107 Leigh, James H. 256 Spotts, Harlan 168 Lemmink, Jos 288 Stafford, Marla Royne 258 Lentz, Patrick 96 Stan, Simona 272 Lim, Lewis K.S. 107 Stephen, Andrew T. 28, 112 Liu, Annie H. 126 Stern, Barbara B. 258 Lou, Yung-Chien 75 Stoyle, Atlanta L. 292 Lu, Min 148 Suh, Taewon 234, 298 Luce, Mary Frances 196 Sung, Yongjun 26 Luenemann, Ulrich F. 223 Tang, Felix T. 92 Lukas, Bryan A. 79 Thota, Sweta Chaturvedi 103 Malhotra, Neeru 15 Till, Brian D. 159 Mani, Sudha 111 Townsend, Janell D. 94 Marquardt, Adam 286 Troy, Lisa C. 117 Martin, Kelly D. 236 Tu, Yanbin 148 Matear, Sheelagh 290 Tuominen, Matti 290 Menon, Kalyani 187 Tzeng, Dale Taoping 168 Miller, Elizabeth G. 196 Ulaga, Wolfgang 294 Milward, Mary Anne 20 Vahie, Archna 183 Mintu-Wimsatt, Alma 20 Voorhees, Clay M. 91 Mitchell, Vincent-Wayne 44 Vorhies, Douglas W. 138 Mittal, Vikas 125 Voss, Glenn B. 11 Mizerski, Dick9 Voss, Zannie Giraud 11 Mizerski, Katherine 99 Walsh, Gianfranco 44, 220 Mizerski, Richard 99, 101 Walters, Rockney G. 107 Möller, Kristian 290 Wangenheim, Florian V. 63, 268 Money, R. Bruce 59 Weinberger, Marc 168 Morgan, Neil A. 32 White, J. Chris 177 Mukherjee, Avinandan 15 Widing II, Robert E. 79 Nevins, Jennifer L. 59 Wilson, Elizabeth J. 18 Nijssen, Ed 96 Winsor, Robert D. 126 Nique, Walter Meucci 36 Wong, Andrew K.C. 34 Noble, Stephanie M. 77 Wood, Charles 130 Nyaga, Gilbert N. 140 Xie, Henry Yu 298 Page, Thomas J. 140 Xu, Huimin 279 Parker, Andrew M. 216 Ye, Yun 118 Paswan, Audhesh K. 117 Yeniyurt, Sengun 94 Punj, Girish N. 65 Yim, Frederick Hong-Kit 46 Qiu, Tianjiao 181 Zahay, Debra 206 Qualls, William 181 Zhang, Yinlong 125 Rajala, Arto 290 Zhao, Hongxin 234 Rajamma, Rajasree K. 109 Zhao, Miao 204 Reimann, Martin C. 223 Zolfagharian, Mohammadali 73, 109 Rexha, Dafina 99

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