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Constantinou%2C%20A.%20%20%28316530%29.docx - Ethical Marketing:

  1. 1. Ethical Marketing: A discussion on the usage of the findings of new developments in economics in marketing campaigns. ERASMUS UNIVERSITY ROTTERDAM Faculty of Economics of Business Marketing, Entrepreneurship, and Organization Name: Andreas Constantinou Exam number: 316530 E-mail address: ac_pashis@hotmail.com Study: Marketing Thesis: Bachelor (FEB13100)
  2. 2. 1 Table of Contents Abstract 2 Introduction 3 New developments in Economics 4 Behavioral Economics 4 Experimental Economics 5 Neuroeconomics 6 Contributions of New Developments 8 Perception Formation 8 Learning and Memory Model 10 Attitude Formation and Behavior Models 11 High vs. Low involvement Decision making models. 13 Models and methods developed to assist in influencing Behavior 15 Branding 15 Mind Mapping 16 Rossiter- Percy - Bellman grid 19 CESLIP Model 21 Argumentative Discussion 23 Arguments For 23 Arguments Against 26 Implications of Discussion 28 Conclusion 30 Reference List 31
  3. 3. 2 Abstract In their book, “Marketing Management” Kotler and Keller make a distinction between a social and managerial definition of marketing. Social marketing is defined as “a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others”1. From a managerial perspective, marketing is “the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value”2. Although these definitions do differ, they circle around the same underlying notion of economics; the creating, communicating, and delivering value to satisfy consumer needs and wants. However, when analyzing recent marketing campaigns and tactics this definition does not seem to be just. Although the defined aim of the marketeer is to satisfy the consumer’s needs and wants, their concurrent personal goal is to sell the product. The problem with this is that many products in the modern marketplace are neither needed nor wanted. So, in order to sell their products, marketeers of today use clever tactics to make their “not sought out” products more desirable. In other words, in many cases they do not focus on satisfying consumer needs and wants, but rather creating them. Therefore my definition of marketing would be the same as before, but I would restructure it as “…satisfying consumer needs and satisfying and creating consumer wants”. With this effort I feel that, in my opinion, I attempt to provide a dimension of honesty as well as a more ethically correct approach to defining marketing. 1,2 Kotler , Keller (2005),“Managerial Marketing” (12th ed. ), US, Prentice Hall,pp. 6
  4. 4. 3 Introduction The topic of ethics in marketing is very vast and hard to define, as what is ethical in one person’s eyes can be unethical in another’s. As with any discussion there are always two sides to the argument. There are those who support the natural law, that is, as in nature, a larger predator will easily use their superiority to tackle a weaker prey, but should nature’s law be the acceptable philosophy in the marketplace? There are two elements in play when addressing this question: using your own advantages, and exploiting another party’s weaknesses. Taking advantage of one’s superior position is ethically acceptable, as this is the foundation of our economical system; each business aspires to grow, as with growth, prosperity and safety follow. However, an ethical issue arises when we are referring to taking advantage of someone else’s weaknesses. As the findings of the new developments in economics grow, the weaknesses of the human mind become apparent. For this paper, I would like to redefine ethical marketing as the design and execution of marketing campaigns without exploiting the weaknesses of the consumer. However, in some situations it is acceptable to exploit these weaknesses. So the question remains, “When is it ethically justifiable to influence consumer behavior?” This article is centered around the argument of whether or not it should be ethically acceptable to employ the findings of the new developments in marketing campaigns in order to persuade the general consumer to purchase and/or use a certain product, good, or service. In the first part of the article I will focus on and describe the new developments in economics that I am referring to. Afterwards, I will denote some of the major contributions of these combined fields. In the third section I will illustrate and describe marketing tools and models which have been derived from these contributions in order to enhance the marketeer’s toolbox when promoting and selling their goods or services. Thereafter, in the fourth and fifth section of the article, I will engage in a discussion focusing on situations where it is ethically justifiable to apply the tactics and models discussed in part three as wells as instances where it is not. Finally, I will go on to denote the implications of this discussion as well as provide the necessary conclusions to the discussion as I attempt to answer my research question.
  5. 5. 4 1. New developments in Economics In this first section I will give a brief overview of the new developments in economics. More specifically I will be discussing Behavioral Economics, Experimental Economics, and Neuroeconomics. Each of these fields attempts to uncover the mechanisms behind consumer behavior. I will give a brief definition of each field, state their goals, and mention some of the methods that the respective economists use to achieve them. Behavioral Economics Behavioral Economics is “a branch of economic research that adds elements of psychology to traditional models in an attempt to better understand decision-making by investors, consumers and other economic participants”3. Behavioral economists apply various methods and techniques in order to uncover the mechanisms behind the individual’s decision making processes, as well as to test previously developed socio-related economic theory. The methods that are usually used by economists in this field are: experiments, surveys and questionnaires, interviews, observation. Experiments: For many years, this method of research has been the main platform for testing economic theory and viewing individuals’ behavior. “Experiments played a large role in the initial phase of behavioral economics because experimental control is exceptionally helpful for distinguishing behavioral explanations from standard ones”.4 (see Experimental Economics section pg. 5 for further information on experimentation techniques) Surveys and Questionnaires: this form of research requires the subject to answer a set of predetermined questions. For instance, the questions in this method could address specific behavior or attempt to place the subject in a hypothetical situation where he/she would have to specify the decision they would make. Although this technique is cheaper to conduct, subjects’ responses are not completely reliable as their behavior in the hypothetical situation might differ if they were confronted with the same situation in real life. Interviews: are usually conducted by an expert in the respected topic. This method allows for flexibility as the interviewer can choose to escape from the predefined format of the interview if 3 http://lexicon.ft.com/term.asp?t=behavioural-economics 4 C.F. Camerer, G. Lowenstein, M.Rabin (2004) “Advances in Behavioral Economics”, NY, Princeton Uni. Press,pp.7
  6. 6. 5 they wish to focus on a certain specific response of the interviewee. However, the difficulties with this method are that the interviewer must be experienced with this technique, and the interviewee must usually be compensated for the extra time and effort required of them to take part in the interview. Observation: this technique allows the researcher to view the actual behavior of the subject in the real world. Although very effective to attain real behavior, it is very limited to situations where it can be applied and to the information that can be retrieved. Economists have often debated the goals of behavioral economists, that is, whether or not behavioral economists’ goal is to prove that individuals are irrational or to disprove the assumption that they do behave rationally. Either way, the contribution of this field to the science of economics has, without a doubt, been substantial. Experimental Economics Experimental Economics, as the name suggests, is the science of adopting experimental methods in order to test current economic concepts, as well as for the development of new theory. Though experimental economics is a field in its own, it is hard to distinguish an experimental economist from a behavioral one, as most experiments are focused on observing the subject’s behavior. However, it is the restriction of the type of research that aids in the distinction between the two fields. “Behavioral economists are methodological eclectics. They define themselves not on the basis of the research methods that they employ but rather on their application of psychological insights to economics. Experimental economists, on the other hand, define themselves on the basis of their endorsement and use of experimentation as a research tool”5. The main concern that any experimenter has to address when carrying out his/her experiments is the reliability of their findings. In other words, are my results true or was my experiment prone to biased outcomes? For this reason experimental economists are in a constant 5 C.F. Camerer, G. Lowenstein, M.Rabin (2004) “Advances in Behavioral Economics”, NY, Princeton Uni. Press,pp.8
  7. 7. 6 battle to receive more reliable results. For instance, traditionally, experiments would be carried out in a laboratory or a closed space, but as subjects would grow weary of the experiment, the economist’s results would not be reliable. Therefore, more recent and modern experimenters have undertaken field experimentation. In addition, experimental economists can use means such as monetary incentives in order to entice the cooperation of their subjects. Experimental economists can carry out real and hypothetical experiments in order to serve their purpose. The reason for this is that experimental economists also have the issue of morality and ethics when creating an experiment. For example, one cannot force someone to starve in order to see how they react when they are offered a piece of bread. Therefore experimental economists will always have to juggle the reality of the experiment, the information they provide, and the circumstances of which their subjects are put in, in order to provide for the most reliable and fruitful outcomes. Neuroeconomics Neuroeconomics can be described as the cooperative efforts of economists and psychologists to analyze brain activity when confronted with certain economic related issues. Neuroeconomists employ recent neuroscientific methods in order to analyze economically relevant brain processes6. In his paper, “A neuroeconomic brain model”, (see et al. Larsen T. 2008) Larsen describes the goal of neuroeconomics as “to provide a descriptive decision-making theory, which is not restricted to economic theory and more realistic than that of economic man”7. One of the most important findings of neurology, which in turn assists neuroeconomists in there line of work, is that the human brain is segmented; that is, certain behavior and emotions are controlled by different areas of the brain. This allows neuroeconomists to see which emotions are triggered when their subjects are faced with an economically related decision. 6 P. Kenning, H. Plassmann (2005) “Neuroeconomics: An overview from an economic perspective”,1 7 T. Larsen (2008) “A neuroeconomic brain model”,2
  8. 8. 7 Neuroeconomists can monitor brain activity through two means: by observing neural activity and metabolic circulation. In order to measure neural activity Neuroeconomists can employ Elektroencephalography (EEG) and Magnetecephalography (MEG). EEG, through electronic stimulation, can monitor the sequence of neural activity on the surface of the brain, but being the eldest technique is limited to the activity only on the surface. This drawback is compensated by MEG which can indeed observe activity in deeper areas of the brain structure as it can depict magnetic currents on individual nerve fibers. For measuring metabolic circulation neuroeconomists can apply three methods: Positron emissions tomography (PET), functional transcranial Doppler sonography (FTCD), and Functional magnetic resonance tomography (fMRI). PET measures blood circulation by inserting a radioactive substance in the blood stream. This radioactive substance can then be monitored with detectors, and therefore the experimenters can observe elevated blood circulation in different areas of the brain, and thus concurrently observe the stimulated behavior of the subject. With FTCD neuroeconomists can measure blood circulation by simultaneously measuring blood flow on both sides of the brain (both left and right cerebral arteries) and therefore determine which side has increased activity. This method, although relatively limited, is the least expensive of all the neurological procedures mentioned in this article. The final method fMRI is extremely accurate, and is the most popular amongst recent neuroeconomists. This method utilizes magnetic fields and can distinguish between different body tissues, which in turn allow the experimenter to observe direct activity in specific part areas of the brain. The problem with neuroeconomics is that observing brain activity does not come cheap as most of the prior mentioned methods are very expensive to administer. Furthermore, neuroeconomists have come under scrutiny as although these methods have, in many cases, successfully proven certain previously developed behavioral mechanisms, they have not provided any new major contribution to today’s economic theory. However, this field shows a lot of potential; for instance, it would be possible to see if a person will prefer to buy a certain product either because they are familiar to it and prefer it, or because it is the cheaper choice. In other words, certain products will stimulate a particular emotion for a one consumer and different emotions for others. Therefore, if one could understand which emotions and behavior is observed
  9. 9. 8 when confronted with a certain choice set, then they could effectively play on these emotions in order to influence the consumer’s behavior. It is implications such as this that make this study so promising to the field of economics and the development of economic theory. “Behavioral economics has mostly been informed by a branch of psychology…. But other cognitive sciences are ripe for harvest. Some important insights will surely come from neuroscience, either directly or because neuroscience will reshape what is believed about psychology which in turn informs economics.”8 Contributions of New developments This section focuses on some of the contributions of the new fields in economics. Due to the vast amount of findings of these subjects I will only illustrate a few, but enough so I can show the correlation between these findings and the techniques developed by marketeers. More specifically the contributions which will be discussed in this section are: Perception Formation, Learning and Memory Model, Attitude Formation and Behavior Models, and High vs. Low involvement Decision making models. Perception Formation Perception describes the process whereby sensory stimulation is translated into organized experience9. It refers to a person’s reaction to a stimulus and the process by which they form their view of that certain entity, may it be real or imaginary. This should not be confused with the attitude that one forms towards an object (discussed in later part; see attitude formation pg. 11). For instance, if two people are shown an image of another person, one might perceive them as tall, whilst the other could perceive them as short. Either way, they are both correct. Although in 8 Camerer C., Loewnstein G, Prelec D “Neuroeconomics:How Neuroscience can inform Economics” Journal of economic literature(March 2005),p.9-64, 9 9 http://www.sapdesignguild.org/resources/optical_illusions/intro_definition.html
  10. 10. 9 some cases a person’s perception of an object is not based on real and/or reliable information, it is in reality the truth of how that person sees that certain entity. When subjected to a stimulus individuals follow certain processes when forming their perception of that entity: Exposure, Attention, Comprehension, Acceptance, and Retention. Figure 1 displays this information processing model. Fig. 1 Perception: the information processing model Exposure: This is the initial stage of perception formation and refers to how long an individual is subjected to the stimulus. The longer one is exposed to the stimulus, the higher the possibility that they will create a more holistic perception of the stimulus. Attention: Although the time of exposure is crucial, if the individual is not paying any attention to the stimulus, then no perception will be formed, regardless of how long they are being exposed to it. For instance, if a song is playing in the background and the individual is not cognitively aware of it, then their perception of that song would be different than someone else’s who was focusing on that song. Also if the individual is being subjected to numerous stimuli, chances are that they will attend to some, but ignore others. Comprehension: This section refers to the individuals attempt to analyze and understand what they are being subjected to. At this point, the subject will most likely categorize the stimulus automatically in order to assist them in the acceptance and retention process. In other words, they will create a mental shortcut to assist them in understanding what they are being subjected to.
  11. 11. 10 This automatic process of categorization of the stimulus allows the individual to quickly process multiple stimuli concurrently without having to exert a large amount of cognitive effort. However it leaves them susceptible to biases as they might not distinguish unique characteristics of each individual stimulus, or might even miss an important feature presented to them that could influence their perception of those stimuli. Acceptance and retention: These are the final stages in the information processing model of perception formation. After the information has been analyzed, it is accepted as such and then retained into the individual’s memory, finally forming their perception of the stimulus. Learning and Memory model The development of the learning and memory model is one of the most important steps in understanding how individuals retain information through their experiences. By comprehending the mechanisms involved in turning short term memory (STM) into long term memory (LTM) economists can map the easiest route in order to get their messages across to their intended consumer. Figure 2 denotes the learning and memory model in further detail. Fig. 2: Memory Model: Learning and Retention When the individual is subjected to the stimulus, it enters first into their sensory memory through their sensory input. For example, if the stimulus is a picture, then the sensory input
  12. 12. 11 would be the eyes. Once attention is given to the stimulus, the information is transferred into the subjects STM. Seeing as the STM is limited to 10-15 seconds, information will be lost unless it is encoded and transferred into the LTM of the individual. However, this process is the most difficult part of the memory retention process. There are two learning processes which an individual can adopt in order to transfer information from STM to LTM: High involvement learning and Low involvement learning. High involvement learning: This is the long classical route to encode, transfer to, and store information in the LTM. Through extensively elaborating and repetitively processing the information one can successfully manage store it in their LTM e.g. cramming for an exam or rehearsing a speech. In addition, organizing or sorting the information as well as being familiar with the topic assists in speeding up the encoding process. Low involvement learning: requires less cognitive effort and time consumption for the encoding process to successfully occur. This method of learning regards creating association with other pieces of information which are easier to remember, and therefore can have the same results as HI learning, but with less effort involved e.g. associating a picture or music tone with a neutral object or new piece of information. Attitude formation and behavior models An attitude is an overall evaluative judgment about an object (thing, action, concept, or person). Economists understood that a consumer’s attitude towards an object was linked to their decision making process and their observed behavior. Therefore, understanding how consumers form their attitudes was one of the primary concerns of economists. Consequently the development of an accurate attitude formation model would be a very exciting discovery for the field of economics. Attitudes are made up of three parts: Cognition, Affect, and Conation. Cognition refers to the individual’s thoughts and beliefs about the object in question e.g. orange juice is good for you. Affect on the other hand depicts the person’s feelings towards the object e.g. I like orange
  13. 13. 12 juice. Conation is regarded as the observed behavior and actions of the individual based on their beliefs and feelings. Fig. 3 Early attitude model Figure 3 denotes a primitive attitude model which illustrates the relationship that these three aspects were believed to have. This relationship suggests that Attitudes were expressed in people’s feelings, thoughts and actions. The reasoning behind this belief was based on the heuristic of consistency. In other words, if a person believes “A” and feels “A”, they will act accordingly to these feelings and opinions as he/she would want to stay true to themselves and to their word. However, further developments in the attitude formation model proved this relationship to be too simplistic, as they suggested a causal relationship between the three components. Fig. 4 Causal relationship in Attitude Formation
  14. 14. 13 Figure 4 illustrates the complete and presently accepted causal relationship between attitude formation and observed behavior. Conation has been removed from the attitude formula, and is considered to be affected by the attitude of the individual rather than being part of their attitude’s development. Therefore cognition and affect are the sole determinants of attitude formation. However, as can be seen in the figure, two more aspects have been added to the behavior functions that also affect the person’s actions: intention and external factors. Intention: can be considered as the willingness to buy the good or service. Although someone’s attitude might be positive towards the good or service, the intention to purchase that good or service must also be present. Without the intention to buy the individual will never behave as their attitude suggests. External factors: are factors which also affect a person’s observed behavior. Some examples of such factors are social influences, price, occasion, and unforeseen circumstances. These external factors can influence the consumer’s intentions to buy the product. For example, if an individual has a positive attitude towards an expensive car, their low budget or salary might impede their willingness to buy that car. Furthermore, as depicted by the red arrow in figure 4, external factors can also directly influence the person’s conation. In other words, even though the consumer’s attitude towards a product might be positive and their intentions to purchase the product are also present, the consumer might still be hindered by external factors to carry out their desired behavior. For example, if a woman likes a diamond ring and is also willing to buy it, there might not be a jewelry store in her area, and therefore she cannot act in the manner which she would have liked. High versus Low Involvement Decision Processes An important realization concerning the decision making process of the consumer was the amount of time and effort exerted by the consumer in order to make their decision. Certain types of products require higher cognitive effort before they are purchased whilst deciding to purchase other products requires less. Figure 5 (pg. 14) displays the four categories in which a consumer’s decision process can be classified depending on two determinants: the extent of the analysis/search for information and the level of the involvement of the consumer.
  15. 15. 14 Fig. 5 High vs. Low involvement matrix 10 High involvement, Extended analysis: regards decisions on goods or services which are of psychological importance to the consumer because social needs or risks are concerned. Another aspect that can be a factor here is the financial risk involved with the purchase as products in this section are usually expensive e.g. cars, homes, vacations. High involvement, Habitual analysis: refers to decisions for goods or services which the consumer seeks out specifically without considering any other available options. This could be attributed to positive previous experiences with similar products of that brand or persistent brand loyalty e.g. cologne, T-shirts, athletic shoes. Low involvement, Extended analysis: can be categorized impulse decisions or decisions made out of the need for variety e.g. snack foods, cereals Low involvement, Habitual analysis: refers to decisions made out of necessity for the good or service e.g. toilet paper 10 Mullins,J.W.& Walker O.C. Jr., (2010), “Marketing management: a strategic decision making approach” , (7th ed.), McGraw-Hill,pp.101
  16. 16. 15 Models and methods created to assist in influencing Behavior In this section I will be denoting methods developed by researchers, economists, and marketeers to assist them in influencing consumer behavior. Whilst describing the models, I will also indicate how they are developed through the models discussed in the previous section. By doing so, one will be able to see how the findings of the new developments in economics have contributed to the field of marketing and to the purpose of influencing consumer behavior. This point is crucial in order to justify the discussion in the next part of this paper. The models and methods which will be discussed in this section are: Branding, Mind Mapping, Rossiter- Percy - Bellman grid, CESLIP Model. Branding The development of models such as the learning and memory model and the attitude model have provided the marketeer with an insight of consumer’s brain. By understanding these models, the marketeer can comprehend the mechanics and processes in work when a consumer is first confronted with an advertisement. They can therefore effectively influence what the consumer retains when they view the ad. Seeing though that consumers are not relatively involved when, for instance, watching a television commercial or looking at a billboard, High involvement learning would be a fruitless approach. Therefore, marketeers must take advantage of Low involvement learning methods in order to seal their company or organization into the consumer’s memory. By using associative memory techniques, marketeers can effectively add present neutral objects next to familiar objects in order to create a positive affective response i.e. create brands. A brand is a “name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors”11. By promoting and aligning their brand with positively associated 11 Kotler , Keller (2005), “Managerial Marketing”(12th ed. ), US, Prentice Hall,pp.G1
  17. 17. 16 objects, marketeers can make sure that consumer’s view their brand positively (good brand image; increase brand equity) as well as easily retain the brand (increase brand awareness). Mind mapping Mind mapping refers to uncovering the consumer’s mental associations with a brand (brand associations) and is based on the consumer’s perception and memory of the brand, as well as their attitude towards that brand. By creating mind maps, marketeers can effectively understand how the consumer perceives their brand in the marketplace and can therefore gain a greater understanding of their brand’s value. In his paper (see et al Keller K. 1993) Kevin Keller describes the two main reasons why one might be motivated to study brand equity: “one is a financially based motivation to estimate the value of a brand for accounting purposes or for merger, acquisition or divestiture purposes…. A second reason arises from a strategy-based motivation to improve marketing productivity”12. Marketeers however are usually more interested in the second reason as increasing the efficiency of their marketing process is key to any company’s success and profitability. BCM or brand concept mapping is one popular technique that marketeers use in order to assist them in determining their brand’s image and the success of their marketing campaigns. BCM is a process by which consumer brand associations are uncovered and then mapped together in order to create a mental mind map. It is broken up into three stages: Elicitation, Individual Mapping, and Aggregation. Elicitation: The first stage of the construction of the concept map is uncovering the mental associations that the consumer might have when confronted with that brand. There are various techniques in order to uncover these connections such as providing pictures, key words, or even an example of another concept map might assist in this process. 12 Keller, Kevin L. (1993), “Conceptualizing, Measuring, and Managing Customer-Based Brand Equity,” Journal of Marketing, 57 (January),1–22, pp. 1
  18. 18. 17 Fig. 6 Volkswagen individual concept map 13 Individual Mapping: At this point the interviewee is asked to draw up their own concept map by using the connections they mentioned in the elicitation stage. Figure 6 illustrates an example of such an individual concept map. In this map you can see direct (good winter car) and indirect (good traction) to the VW brand. Furthermore, we can observe the strength of the connections denoted by single, double, and triple lines (the more the lines the stronger the association). 13 D. Roedder John, B. Loken, K.KIM, A. Basu Monga (2006) “Brand Concept Maps: A Methodology for Identifying Brand Association Networks” Journal of Marketing Research, Vol. XLIII,549–563, 553
  19. 19. 18 Fig. 7 Consensus Mental Map of patients towards Mayo14 Aggregation: This final stage refers to the combination of the individual maps in order to create the complete consensus brand concept map. Figure 7 is an example of such a consensus mind map. All features viewable in the individual map (Figure 6) are still present, as well as the different types of circles which denote core and non-core (dashed line) associations. This classification is based on an amount of times (predetermined by the examiner) that a certain association was brought up by the different subjects taking part in the experiment e.g. 50% of the patients mentioned Known worldwide, less than 50% mentioned “treats famous people” With the consensus brand concept map complete marketeers can now easily see how their brand is perceived by the consumer. Therefore, any adjustments to the brands image can potentially be made by attempting to strengthen any weaker but desired associations, as well as weaken any undesirable associations. 14 D. Roedder John, B. Loken, K.KIM, A. Basu Monga (2006) “Brand Concept Maps: A Methodology for Identifying Brand Association Networks” Journal of Marketing Research, Vol. XLIII,549–563, 556
  20. 20. 19 Rossiter - Percy - Bellman grid The Rossiter - Percy - Bellman grid (RPB grid) has been developed on the foundations of different consumer decision processes as well as the consumer attitude model. The RPB grid classifies products or services dependent on the involvement (high or low) of the consumer decision process as well as the motivation (negatively originated or positive-ending) behind the consumer’s behavior. Negatively originated motivations are motivations such as feeling sick or wanting to lose weight e.g. aspirin, diet coca cola. Positive-ended motivations push decisions with the goal to increase happiness or better off the consumer’s present situation e.g. a new car, a fashionable dress. Advertisers and marketeers use the RPB grid as a guideline when designing their advertisements and brand image. Consequently, they can positively influence the consumer’s attitude towards their brand. Figure 8 (pg. 20) illustrates the RPB grid and the four classifications which a product can belong to. Depending on how their product is classified, advertiser’s can design their message in order to create an efficient and effective marketing campaign.
  21. 21. 20 Fig. 8 The Rossiter-Percy- Bellman grid 15 Low involvement informational: This refers to products whose motivation to buy is negatively originated and whose purchase requires little cognitive effort. Advertising campaigns for such goods or services usually have one or two simple claims e.g. aspirin cures headaches. In addition before and after/problem and solution formats are also effective for such products. High involvement informational: the purchase of these goods or services is also negatively motivated but requires a larger amount of cognitive effort. Seeing as the consumer of this type of product is cognitively involved, its advertisements can be complicated and should contain large amounts of credible information. A comparative format can have positive effects for these types of products e.g. this insurance policy provides “ABC”, unlike other policies that only focus on “A”. Low involvement transformational: ad liking is very important for these types of products as the consumer is positive-ended motivated and not that interested in thinking too much about their decision. Therefore, advertisements should promote one true benefit of the product in an effort to 15 J. Rossiter,S. Bellman (2005) “Marketing Communications:Theory and Applications”,Australia,Pearson Education Inc., pp 152
  22. 22. 21 create a brand specific emotion. Celebrity endorser’s can be very effective in marketing campaigns of this product type. High involvement transformational: the purchase of this type of products is positively motivated and requires large amounts of effort and time before any decision is made. Due to the financial and psychological risks involved when making high involvement decisions, these ads must provide the consumer with a large amount of information about the product. Furthermore, creating an authentic emotion with the brand and product is also critical for the success of the marketing campaign. A complex and attractive ad, constructed through repetition, can have the desired effects as the consumer grows curious about the good or service and seeks more information. CESLIP Model One of the most difficult procedures of a marketing campaign is making sure the consumer remembers your brand and creates a positive affiliation with your products. Therefore, designing the message the consumer receives is only one part of any advertisement. In order to maximize the possibility of success of the advertisement the source must also be carefully selected or designed. The CESLIP model has been developed for this precise purpose. It is a 6 step model which lists the characteristics that a source must have in order to reach the desired goals of the marketing campaign: Celebrity, Expert, Sincere, Liked, Ideal-Similar, and Powerful. Celebrity: someone who is easily recognizable by the target market. Celebrities are brought in in cases where the brand image has deteriorated or needs boosting Expert: refers to the presenter’s expertise with the product or in that product field. All presenters must be either experts technically in the field or expert users. Sincere: the presenter must appear honest in order to gain the trust of the consumer Liked: this characteristics plays of the likeability bias, that is, the individual will pay attention to someone he likes longer than he would someone he doesn’t. Also if the presenter is liked, then
  23. 23. 22 what they say or do will be positively retained, unlike in situations where someone who isn’t liked. Ideal-Similar: If the consumer feels that the presenter is similar to them, then this will have positive effects as the consumer will be able to see themselves in the described situation. Powerful: The presenter can have an authoritative look or voice. This source characteristic works best if the message is fear based or focused on raising social awareness about a concerning topic e.g., anti-drug public announcements, environmental issues. By using associative learning techniques, marketeers attempt to link their brand, company, and products with the credibility of the source/presenter. With the correct combination of characteristics, advertisers can create very successful marketing campaign.
  24. 24. 23 Argumentative Discussion Having thoroughly described some of the models that marketeers have developed based on the findings of the new developments of economics, I will now engage in the discussion aimed answering the questions raised by this paper: When is it ethically justifiable to influence the consumer’s behavior? The first part of the debate will be focused on situations where it is acceptable to influence consumer behavior. These are circumstances where the consumer is actually assisted by the advertisement, or benefited by their subjection to the promotion. The second section will be the counterargument, discussing circumstances where this is not ethically correct and should not be accepted. However, before I proceed with the discussion I must pause to clarify that all the arguments in the debate will be developed only through the perspective of the consumer. Arguments in favor Consumer is better off In some situations using influencing techniques in advertisements can be in the consumer’s best interests. Circumstances where the product is actually superior to that of the competition can be one example of such a situation e.g. an innovative product. If marketing techniques can influence the consumer to switch to the superior good or service, then the consumer would experience an increase in their actual state of happiness. Another situation where influencing consumer behavior can bring about positive effects for the consumer arises when taking advantage of the consumer’s perception heuristics. In their paper, Wansink and Ittersum (see et al. Wansink B. 2003) describe their experiments with professional bartenders and different shaped glass cups (short and wide cups vs. long and narrow cups). After asking their subjects to pour the same amount of liquid in both types of glass cups (using their own judgment), they found that the subjects poured more in shorter rounder cups than they did in the narrower longer ones. The authors concluded by suggesting that this perception heuristic referring to the elongation of cups could be exploited to influence
  25. 25. 24 consumers’ behaviors in self service cafeterias e.g. children at a school will drink more juice if they used shorter wider cups. This research and its results are just one example of how perception heuristics can be exploited through marketing methods to benefit the consumer. Providing information to the consumer The human brain is split up into two sections: the left cognitive side which deals with sequencing and processing information logically, e.g. mathematical equations, and the right instinctive side which processes information in a more emotionally related process, e.g. enjoying a photograph or artwork. Recent neurological studies have shown that whilst watching television, the individual’s instinctive side of the brain is twice as active as his/her cognitive side. In other words, unless they are consciously aware and ready to receive and analyze complex information, then they will not. Therefore, by providing an element of “entertainment” in the advertisement, the marketeer can easily draw the focus of the consumer. This is very useful when trying to provide information to the viewer. One example could be information concerning a certain product which could indeed assist the consumer. For instance, providing information about a new innovative product can be very helpful for the consumer. Attracting the attention of the consumer with an entertaining and informative ad, will allow them to easily analyze and retain the provided information. Advertisements can also use elements of compassion or fear to draw the consumer’s attention & influence their behavior. This is very helpful in situations where the advertisement attempts to draw attention to important societal issues, as this is very important for today’s society. For instance, raise awareness of a charitable effort which is assisting people who are less fortunate than others. Other important topics for which awareness is needed to be raised are environmental issues. In situations like these it is therefore justifiable to influence the consumer’s behavior as such topics address the welfare of the holistic society.
  26. 26. 25 Allows for creativity Today’s advertisements are becoming very abstract, some not mentioning any information about the product, some not even showing the product, and others having nothing to do with the product altogether. In an effort to influence consumers through entertaining means, marketeers use tools like humor, music, and well designed graphics to attract the consumer’s attention and to persuade them to buy the good or service in question. Although in many cases this can be considered incorrect, unethical, and an attempt to manipulate the consumer, one cannot deny the creativity involved in constructing the advertisements. Allowing for such techniques to be applied for influencing consumer behavior, opens the door for other possible creative means for marketeers to promote their products. Furthermore, consumers, at the moment, are actually interested in seeing clever advertisements, and products are usually valued dependant on the creativity applied in the advertisement i.e. the more creative, the more thought has been put into the product, the better the product is. In addition, allow the marketeer to show aspects of the product they could not have in the past. For instance, seamlessly entering and exiting a car to show its features or showing the camera and video applications of a new phone. Therefore, allowing the marketeers to apply influencing techniques in such a manner is not all bad, and restricting this creativity could be damaging to the consumer as well.
  27. 27. 26 Arguments against Situations where the consumer is worse off According to the rational behavior model, individuals act in their own self interest, in order to better their current status, or to reach an aspired state. Therefore, every decision taken by the individual should in theory bring positive results for that individual. However, other developed theories such as Prospect theory and loss aversion show that the individual does not always react rationally. Advertisers seek to take advantage of these heuristics present in consumer behavior. Examples of certain purchase behavior where the consumer is not always better off could be the acquisition of unhealthy products, for instance, buying fast food hamburgers or frozen chicken nuggets. Although the consumption of these food might assist in increasing the present state of the consumer (i.e. not hungry), do leave the consumer worse off in the long run. Therefore not allowing or reducing the promotion of unhealthy products could increase the consumer’s well being. An example of such an action can be seen in the case of cigarettes, where in some countries the advertisement of these products has been completely forbidden (television advertisements are prohibited, but in some cases billboards and promotional signs are still allowed). Creation of wants In the struggle to gain market share, companies are in a never ending battle to predict consumer needs, and create new products and innovations to meet these needs. However, not all products in the marketplace are actually “needed” by the consumer. Therefore, many advertising techniques are directed at making the consumer want the proposed good or service. In order to do this though the marketeer plays on and exploits the consumer’s socio- psychological needs and wants e.g. the need to be accepted by society, the want to be part of a higher societal class. In doing so, marketeers can create psychological instabilities within the individual’s of society e.g. feelings of depression, alienation, and lower self esteem can all be
  28. 28. 27 fueled through the constant bombardment of such advertisements. Furthermore, certain purpose directed products are promoted through the exploitation of the consumer’s psychological weaknesses. For example, “you are fat buy this product” versus “would you like to lose weight?” In these situations marketeers are not serving their societal purpose. They are manipulating the consumer into buying their product, rather than assisting them in their decision making process. Loss of credibility of marketeers and advertisers As the general consumer becomes more educated, they are more aware of the tactics advertisers use to influence their behavior. Thus the general consumer is becoming less susceptible to the persuasion techniques present in today’s advertisements. This has provided for certain attitudinal changes from the side of the consumer. For instance, the development of the phenomenon of “zapping” has become an increasingly real obstacle in the television advertisement world, as more and more people lose interest in advertisements altogether. However the most important attitudinal change has been the increasing loss of credibility of the advertisement industry in the eyes of the consumer. Although this is good in circumstances where the advertisement promotes a product that doesn’t necessarily benefit the consumer, the consumer will lose the opportunity of being informed about a product or service that could indeed increase their well being. Therefore, both the marketeer and the consumer can lose from this perceptional change.
  29. 29. 28 Implications of Discussion As with any debate on a subject concerning ethics and morality there are no clear winners. Both sides of the discussion provide valid arguments. However, the implication of the misuse of influencing tactics raises another question: How can the consumer be protected from such unbeneficial marketing tactics? For instance, an organizational body can be established which will provide true and unbiased information to the consumer in question. The enforcement of legislation can be another option to help address this issue. Consumer protection organization Certain consumer protection organizations already exist. However, they are usually focused on protecting consumer rights and preserving consumer power, for instance, promoting competition between firms in order to make sure that consumers have the right to choose between companies’ products. Therefore, a different type of consumer organization can be created in order to address this issue. Its objectives would be to provide help and true information about the products in the market place. This organization could help the consumer locate the truly beneficial products in the marketplace. In addition, it could assist consumers from being swayed by attractive ad campaigns which they would be prone to fall prey to otherwise. Funding of this organization however, should not originate from profit aimed corporations which are active in the marketplace; rather they should be provided through a sort of membership based fee, where consumers who were interested in this service could pay a monthly or annual amount to receive information about new products in the marketplace. This would ensure that the consumer receives true and unbiased information.
  30. 30. 29 Legislation Legislation can be enforced to help control the amount of money spent on advertisement dependant on the “beneficialness” of the good or service. The food industry is a good example of where such legislation can be effective. Many unhealthy and fast food purchases are usually a consequence of impulse buying. The stimulus to go ahead with this type of behavior can be an advertisement that the consumer was subjected to. Therefore, if the promotion of unhealthy products was restricted, then maybe the consumers would not be swayed to purchase such foods. One way to approach this would be to have the health ministry classify products as beneficial or non-beneficial for the consumer. This could be done on a number scale (e.g. 0-10) rather than on a simple yes or no format. Companies would then be imposed with a spending cap on advertising, depending on the beneficialness of their product. Another aspect that could be addressed could be supermarket positioning of food products, placing unhealthier products on lesser noticeable sections of shelves and displays. A similar legal system can also be applied to address the recyclability of the product or its packaging. Therefore, allowing companies whose products are more environmentally friendly to have a larger advertising budget then those who are not.
  31. 31. 30 Conclusion Understanding consumer behavior has always been of main concern to marketing practices. With the development of fields such as Behavioral Economics, Experimental Economics, and Neuroeconomics, marketeers have a clearer picture of who the consumer really is and the manner in which they go about making their decisions. However, as with every situation where the information about one of the agents in a relationship is found, there is always an ethical line that should be respected and should not be crossed. Marketeers will always be looking for an upper hand which will assist them in promoting their products. However in some situations, from the consumer’s point of view, marketeers end up exploiting rather than assisting the consumer. With the aid of an argumentative discussion, I have managed to point out and elaborate on some such situations as well as suggest certain ways which can help resolve this conflict of interests. The problem however of adding another dimension to provide for more ethical marketing practices is that we could be further complicating an already complicated process. Nevertheless, as with every concept that deals with the human behavior, there are bound to be certain complications, and this should not stand in the way when the wellbeing of individuals is concerned. Furthermore, if the consumer is not protected, then the field of marketing will just be reduced to a manipulative tool of corporations, and all the efforts that marketeers have and will exert to defend their field will fall on deaf ears.
  32. 32. 31 Bibliography Amerer, C., Oewenstein, G. & Relec, D. (2005), “Neuroeconomics: How Neuroscience Can Inform Economics”, Journal of Economic Literature, Vol. 43, No. 1, 9-64 Camerer C., Loewnstein G, Prelec D (2005), “Neuroeconomics:How Neuroscience can inform Economics” Journal of economic literature, March 2005, 9-64 Camerer, C.F., Lowenstein, G. & Rabin M. (2004), “Advances in Behavioral Economics”, NY, Princeton University Press Keller, K. L. (1993), “Conceptualizing, Measuring, and Managing Customer Customer-Based Brand Equity”, Journal of Marketing, 57, 1–22 Kenning, P. & Plassmann, H. (2005), “Neuroeconomics: An overview from an economic perspective” Kotler, P. & Keller ,K. L. (2005), “Managerial Marketing” (12th ed. ), US, Prentice Hall Larsen, T. (2008), “A neuroeconomic brain model” Plassmann, H., Ambler, T. Braeutigam, S. & Kenning P (2007), “What can Advertisers learn from Neuroscience?”, International Journal of Advertising, 26(2), 151-175. Roedder, D.J., Loken , B., KIM, K. & Monga A. B. (2006) “Brand Concept Maps: A Methodology for Identifying Brand Association Networks”, Journal of Marketing Research, 43, 549–563 Rossiter, J. & Bellman S. (2005) “Marketing Communications: Theory and Applications”, Australia, Pearson Education Inc. Mullins, J.W. & Walker O.C. Jr., (2010), “Marketing management: a strategic decision making approach” (7th ed.) McGraw-Hill
  33. 33. 32 Wansink, B. & Ittersum K.V. (2003), “Bottoms Up! The Influence of Elongation on Pouring and Consumption Volume”, Journal of Consumer Research, 30, 455-463 Lecture References Verlegh, P. 2009, “Perception and Categorization”, lecture notes distributed in the topic of “Influencing People: Psychology and Practice”, Erasmus University of Rotterdam, Rotterdam on 2nd of September Verlegh, P. 2009, “Learning and Memory”, lecture notes distributed in the topic of “Influencing People: Psychology and Practice”, Erasmus University of Rotterdam, Rotterdam on 3rd of September Verlegh, P. 2009, “Attitudes and Opinions”, lecture notes distributed in the topic of “Influencing People: Psychology and Practice”, Erasmus University of Rotterdam, Rotterdam on 9th of September Verlegh, P. 2009, “Creating Effective advertising”, lecture notes distributed in the topic of “Influencing People: Psychology and Practice”, Erasmus University of Rotterdam, Rotterdam on 8th of October Verlegh, P. 2009, “How do ads influence people”, lecture notes distributed in the topic of “Influencing People: Psychology and Practice”, Erasmus University of Rotterdam, Rotterdam on 9th of October
  34. 34. 33 Internet References http://lexicon.ft.com/term.asp?t=behavioural-economics http://www.sapdesignguild.org/resources/optical_illusions/intro_definition.html

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