Ko de Ruyter, Professor and Chair, Marketing Department, Maastricht University The Marketing-Finance Interface: A Relation...
No school for old men… <ul><li>During the past two decades strong focus on the marketing of services, specifically financi...
2004 New Kid on the Block: <ul><li>JBR paper A Marketing-Finance approach towards industrial channel contract relationship...
We fast forward to 2008:  Research on the Formation of Online Investors’ Self-Efficacy
Current Trend <ul><li>Online consumers are active co-producers of financial services </li></ul><ul><li>Not only trust the ...
Service Providers Educate Customers <ul><li>Bank of America: “tools and independent research to help you choose the right ...
Managerial Problem: How can customers adapt to their new service role? <ul><li>Online investment induces self-defeating be...
Research Questions <ul><li>How can novice investors be successful online?  </li></ul><ul><li>Does investors’ self-efficacy...
Research Design <ul><li>Computerized survey using online investment context </li></ul><ul><li>Respondents were asked to in...
Example: Third-Party Web Site
Research Findings <ul><li>Highly efficacious consumers: </li></ul><ul><li>achieve higher profits  </li></ul><ul><li>have h...
Research Findings <ul><li>Information source credibility and argument quality increase self-efficacy </li></ul><ul><li>Con...
Research Findings <ul><li>Amount of search does  not  affect self-efficacy </li></ul><ul><li>Consumers’ engagement impacts...
Research Findings <ul><li>Multiple investor segments exist based on response to information:  </li></ul><ul><ul><li>Segmen...
Research Findings <ul><li>Increasing segment: inexperienced, spends high effort, obtains high profits (€ 61.27 after 2 mon...
Implications <ul><li>Control investors’ information search by partnering with and linking to credible external information...
Implications <ul><li>Inexperienced investors make up for lack of experience by spending high effort </li></ul><ul><li>This...
Implications: What to do with underperforming customers?  <ul><li>Convince customers that spending high effort on informat...
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"The Marketing-Finance Interface: A Relational Exchange Perspective" - Prof. Dr. Ko de Ruyter

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"The Marketing-Finance Interface: A Relational Exchange Perspective" - Prof. Dr. Ko de Ruyter

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  • customers represent an opportunity to increase competitive advantage. Example: online investment services
  • Self-efficacy = task-specific confidence, confidence in online investment ability. Does is affect investment performance, i.e., actual profits, and service evaluations? If so, how is it influenced by consumers’ information search? When confronted with online self-service options, customers often need to deal with multiple information sources , including those that extend beyond the information provided by the firm, such as online magazines and consumer communities.
  • In this study we let consumers read and evaluate three different information sources (firm, third-party, peer). They are also asked to indicate their level of self-efficacy after reading each source. Finally, they are asked to make an investment decision based on this information and indicate their future usage intentions, perceived value, and perceived performance.
  • Respondents could browse freely on each site for as long as they wanted.
  • source evaluations, such as credibility and argument quality, influence novice customers’ self-efficacy during information search because these serve as informational cues. It is important to note that this process is mainly applicable to novice consumers, as these consumers will not be able to rely on previous experience to form self-efficacy judgments. Specifically, third-party credibility and firm argument quality affect self-efficacy more than the other sources. Firm information is inherently biased, because the firm has a financial stake in the consumers’ decision resulting from the provided information (Beales et al. 1981). Therefore, firm credibility carries low information value for consumers, even if that firm is a bank recommending in which stocks to invest, and consumers are forced to focus mainly on argument quality. Surprisingly, the effect of the peer source is less than the third-party for credibility and the firm for argument quality. Since this is a forum of private investors, it is difficult to determine the expertise of the people who post. Especially for novice consumers it is difficult to verify the usefulness of this source, thus it makes sense to make less use of the peer source than of the other sources.
  • Both credibility and argument quality increase self-efficacy, whereas amount of information search does not. Engagement: credibility stronger effects, argument quality less effect.
  • This study took place in 2006 before credit crisis! Profits are corrected for overall positive market development of AEX stocks.
  • Our finding that self-efficacy sometimes deteriorates during search has serious implications for marketers; providing more information to customers is not always beneficial. Most likely, a lack of motivation to spend effort on reading and using information causes the negative effects. Thus, unless investors critically assess the information provided, this information may be useless. This means that overconfident customers are a real problem for service providers, even though this group is relatively small. Setting realistic service expectations before trial is pivotal to ensure service satisfaction. In addition, being able to spend less effort on search while still receiving all required information (e.g., by providing a summary section in addition to more detailed task information) will probably serve these customers better. In general, convincing consumers that spending high effort pays off for them is the biggest challenge service firms face.
  • "The Marketing-Finance Interface: A Relational Exchange Perspective" - Prof. Dr. Ko de Ruyter

    1. 1. Ko de Ruyter, Professor and Chair, Marketing Department, Maastricht University The Marketing-Finance Interface: A Relational Exchange Perspective
    2. 2. No school for old men… <ul><li>During the past two decades strong focus on the marketing of services, specifically financial services </li></ul><ul><li>Tracing back the origins of the MF interface; The Marketing-Finance: A Relational Exchange Perspective, Journal of Business Research (2000) </li></ul><ul><li>Wall street vs. Main street </li></ul><ul><li>Marketing managers: Procedural Fairness (+) </li></ul><ul><li>Finance managers: Interfunctional Rivalry (-) </li></ul><ul><li>Both: Mutual Resource dependence </li></ul><ul><li>The Marketing-Finance Interface: A Relational Exchange Perspective </li></ul>
    3. 3. 2004 New Kid on the Block: <ul><li>JBR paper A Marketing-Finance approach towards industrial channel contract relationships: a model and application </li></ul>
    4. 4. We fast forward to 2008: Research on the Formation of Online Investors’ Self-Efficacy
    5. 5. Current Trend <ul><li>Online consumers are active co-producers of financial services </li></ul><ul><li>Not only trust the bank, but also trust themselves </li></ul><ul><li>Confidence or self-efficacy is based on increasing variety of information sources </li></ul><ul><li>As a result self-efficacy updating is a dynamic process </li></ul><ul><li>We suspect that different patterns will exist! </li></ul>
    6. 6. Service Providers Educate Customers <ul><li>Bank of America: “tools and independent research to help you choose the right investments” </li></ul><ul><li>Alex: Alex Academy </li></ul><ul><li>ABN-AMRO: TradeGlobe Academy, TradeBox </li></ul>
    7. 7. Managerial Problem: How can customers adapt to their new service role? <ul><li>Online investment induces self-defeating behaviors such as excessive trading because of overconfidence </li></ul><ul><li>This is particularly problematic because: </li></ul><ul><ul><li>customers tend to attribute service failures more to the firm than to themselves, </li></ul></ul><ul><ul><li>share these bad experiences effortlessly with online peers, </li></ul></ul><ul><ul><li>and can seamlessly switch to a competitor’s web site </li></ul></ul>
    8. 8. Research Questions <ul><li>How can novice investors be successful online? </li></ul><ul><li>Does investors’ self-efficacy matter? </li></ul><ul><li>How is self-efficacy formed during pre-purchase information search? </li></ul>
    9. 9. Research Design <ul><li>Computerized survey using online investment context </li></ul><ul><li>Respondents were asked to invest a predetermined sum of money in stocks </li></ul><ul><li>Respondents were asked to look at three websites; a firm, expert, and peer information source of which source evaluations and self-efficacy were recorded </li></ul>
    10. 10. Example: Third-Party Web Site
    11. 11. Research Findings <ul><li>Highly efficacious consumers: </li></ul><ul><li>achieve higher profits </li></ul><ul><li>have higher usage intentions </li></ul><ul><li>Perceive higher service value </li></ul>
    12. 12. Research Findings <ul><li>Information source credibility and argument quality increase self-efficacy </li></ul><ul><li>Consumers differentiate among information sources and weigh associated evaluations differently </li></ul><ul><li>Focus on third-party credibility and firm argument quality. Surprisingly, peer source is less relevant. </li></ul>
    13. 13. Research Findings <ul><li>Amount of search does not affect self-efficacy </li></ul><ul><li>Consumers’ engagement impacts effect of source evaluations </li></ul>
    14. 14. Research Findings <ul><li>Multiple investor segments exist based on response to information: </li></ul><ul><ul><li>Segment 1 (n = 89): increases self-efficacy during search </li></ul></ul><ul><ul><li>Segment 2 (n = 146): maintains self-efficacy </li></ul></ul><ul><ul><li>Segment 3 (n = 22): decreases self-efficacy </li></ul></ul>
    15. 15. Research Findings <ul><li>Increasing segment: inexperienced, spends high effort, obtains high profits (€ 61.27 after 2 months) </li></ul><ul><li>Maintaining segment: experienced, little less effort, medium performance (€ 52.09) </li></ul><ul><li>Decreasing segment: experienced, low effort, low performance (€ 1.29), less motivation than other groups </li></ul>
    16. 16. Implications <ul><li>Control investors’ information search by partnering with and linking to credible external information providers </li></ul><ul><li>Provide high quality information: authenticity, consistency, clarity of content and style, and an explicit and transparent service recovery strategy </li></ul><ul><li>Increase customers’ engagement by incorporating interactive user forums, real-time updates, customizable home pages, and virtual agents </li></ul>
    17. 17. Implications <ul><li>Inexperienced investors make up for lack of experience by spending high effort </li></ul><ul><li>This strategy pays off for novices compared to experienced investors </li></ul><ul><li>A minority of investors is unmotivated and performs poorly </li></ul>
    18. 18. Implications: What to do with underperforming customers? <ul><li>Convince customers that spending high effort on information evaluation and investment decision pays off </li></ul><ul><li>Set realistic service expectations; customer makes own success </li></ul><ul><li>Make information easy to digest; summary section with necessary info, click-through to details </li></ul>
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