Who Responds Best to Exclusive Price Promotions: Men or Women?

Michael Barone and Tirthanker Roy mention in their 2010 article that “the notion that targeted deals are more efficient than across-the-board sales promotions, that provide unnecessary discounts to price-insensitive consumers, has prompted a dramatic growth in customized pricing and sales promotions. Recently, however, questions have been raised regarding the efficacy of targeted offers in general (Homburg, Droll, and Totzek 2008) and customized price promotions in particular (Acquisti and Varian 2005; Feinberg, Krishna, and Zhang 2002)” (p.121).

One might be tempted to assume, without checking the research, that targeted deals will always be the better way to go, both for the customer and the organisation. Yet, Barone and Roy highlight how “equity theory suggests that evaluations of a targeted offer will depend not only on the relative outcomes associated with the offer (i.e., whether the consumer is a recipient or non-recipient) but also on the inputs or costs associated with receipt of the promotion,” (p.122).

In a world where we’re often told it’s every man for himself the theme adds further credence to the logic that any exclusive price promotion must be beneficial to those receiving it and the offer ‘bought’ with appreciation and thanks.

What’s interesting is how Barone and Roy highlight that “research on self-construal suggests that recipient gender can influence how deal exclusivity affects the evaluations of customized offers. Specifically, Western men are often characterized as possessing independent self-views, while Western women more typically adopt interdependent self-construal’s (Markus and Kitayama 1991). Men’s independent self views should prompt them to value unique (i.e., exclusive) offers that provide them with the basis for self-enhancement to a greater extent than women, whose interdependent self views should result in less favourable evaluations of targeted deals,” (p. 123).

The research by Barone and Roy addresses an important theoretical void in the current literature by establishing the presence of ‘deal exclusivity effects’. Across their three different studies, they demonstrate that some consumers (e.g., male participants and those with independent self views) favour exclusive deals over inclusive ones. The findings further show that under certain conditions (e.g., when the level of relationship equity consumers have built with a marketer through their past patronage is low), both types of offers are evaluated equally favourably.

Perhaps most intriguing are the results indicating that certain consumers (e.g., female participants and those with interdependent construal’s) react negatively to receiving a targeted offer that is exclusive, instead preferring discounts that are more widely available, (Barone, M.J. and Roy, T.; 2010, p.129).

There can be a temptation at times like this to think of the women we know who don’t fall into this category – but that is often the natural inclination when one finds that the conclusions and answers to the research don’t meet our previous expectations. We also have to be honest with ourselves in respect of how much information we had prior to the research becoming available.

Bayone and Roy mention how “these results indicate that consumers who prefer more exclusive deals do so because receiving selective offers provides them with a basis for self-enhancement (e.g., by helping them attain values related to autonomy). In contrast, the negative reactions of participants exhibiting an aversion to exclusive promotions were driven by the superiority of inclusive offers to allow them to self-enhance (e.g., by confirming their desires to maintain harmony with others),” (p.129).

Barone and Roy conclude by highlighting how “evidence documenting the moderating effects of self-construal and gender on deal exclusivity underscores the need for marketers to judiciously consider the use of targeted offers on a segment-by-segment basis. Although gender has long been employed as a segmentation variable, note that self-construal is correlated with several demographic variables that represent market segmentation bases, such as country and ethnic group (Ahluwalia 2008). For example, consumers in the United States tend to have independent self-views, while those in other countries (e.g., Mediterranean nations) typically exhibit interdependent self-construal’s (Oyserman, Coon, and Kemmelmeier 2002),” (p.130).

Maybe it’s worth evaluating your customer base again and looking at how you can optimise your marketing and promotional strategies with your current target markets. Getting the strategy right will add value directly to your bottom-line; where as getting it wrong not only gives you a sub-optimal bottom-line, but can seriously upset some of your current customers. It’s worth giving your strategy another look.

References.

Barone, M.J. and Roy, T. (2010). Does Exclusivity Always Pay Off? Exclusive Price Promotions and Consumer Response. Journal of Marketing; Vol. 74 Issue 2, p.121-132.

Murdoch: Evil Tyrant or Brilliant Strategist?

Like many in the UK I went to buy the last ever copy of the News of the World this morning; after over 200 employees of the NotW lost their jobs yesterday as the paper printed its last Sunday paper and closed its doors over allegations of phone hacking that the current staff weren’t even party too.

Entities like a newspaper don’t make mistakes, only the humans running them do, and it’s this human element that must be held to account when laws have been broken and distasteful reporting allowed. Here we have a newspaper that was first published in 1843 closing down after 168 years and the woman at the helm during the phase of the ‘phone hacking’ allegations and the current CEO of News International, Rebekah Brook’s, stays in her job with the full support of the owner Rupert Murdoch.

In the old days, the passengers and crew were ushered to the life-boats while the Captain stayed behind and went down with the ship. Today, with the Murdoch Empire, we have a new sordid form of ‘honour’ where the leaders rush to the life-boats and leave the crew to go down with the ship.

It’s believed that at least nine journalists and three police officers are facing jail in connection with the NotW phone hacking scandal and Scotland Yard have accused NotW of orchestrating a five year cover up (The Sunday Times, 10th July, p.1).

This story will be a blockbuster movie soon, as we have a media empire hacking phones of celebrities, royalty, missing children, families of dead soldiers, and God knows who else. We have police officers who were bribed for information and we have members of parliament, including the current Prime Minister, who kowtowed to this media mogul because of the ‘power’ he wielded over their future aspirations.

But behind the repulsive hacking of phones of missing children and the deletion of messages by private investigators, giving the family the belief that their child was still alive; and the sacrifice of a paper and its hardworking staff there is a leadership team that seems to have very little feeling towards the human race. Rupert Murdoch, his son James and Rebekah Brooks have a lot to answer for and personally hope they are brought to account for their actions sooner rather than later.

This story clearly has a long way to go – if it is ever given the opportunity to run its full course. But one can’t help wondering just how much ‘dirt’ these media moguls have on their ‘pray’ and what strings they will pull to ensure their tune is still played out to the public.

The Murdoch bunch knows that the ‘public’ are a less than attentive crowd, who can quickly turn their attention from one issue to another at the drop of a hat – especially if sufficiently motivated. A scandal with the Prime Minister or the head of the Metropolitan Police would probably be enough to change peoples focus from the disgusting hacking claims.

Murdoch hasn’t got this far without knowing how to deflect issues and play people off against each other. So is Murdoch an evil tyrant or a brilliant strategist. Some might admire this man who, through his mafia style, is able to control politicians and big business. They may think he's doing what they believe any good businessman should do – maximising shareholder value.

I didn’t get the memo indicating the changes to a leader’s responsibility myself, but I remember a time when leaders were held accountable for their actions and their organisations. A time when giving an excuse like ‘I didn’t know’ wasn’t acceptable, as it was the very fabric of their job to know (besides they were paid massive salaries to know as well).

If leaders can simple use the phrase ‘I didn’t know’ every time something goes wrong then it looks like the organisational pyramid is about to be turned upside down; and leadership programmes will need to change much of their content.

The Murdoch’s along with Rebekah Brook’s need to step up and face up to their responsibilities, even if it takes them all the way to a public trial and to face the consequences of their actions. Currently too many of the top organisations seem to be portraying a very poor level of leadership and basic judgement.

Do You Always Apply ‘the Golden Rule’ in Business?

The Golden Rule, or the Ethic of Reciprocity, states that we should treat other people as we would wish to be treated ourselves. As a concept, the Golden Rule has a history that long predates the term itself, as the ethic of reciprocity was present in certain forms in the philosophies of ancient Babylon, Egypt, Persia, India, Greece, Judea, and China.

Harry Gensler mentions that “the golden rule is best interpreted as saying: ‘Treat others only as you would consent to being treated in the same situation.’ To apply it, you'd imagine yourself on the receiving end of the action in the exact place of the other person (which includes having the other person's likes and dislikes). If you act in a given way toward another, and yet are unwilling to be treated that way in the same circumstances, then you violate the rule.”

The Golden Rule has received a lot of criticism as we don’t all have the same likes and dislikes and questions the basic assumption that others would want to be treated like we would, in the first place.

George Bernard Shaw commented that if your values are not shared with others, the way you want to be treated will not be the way they want to be treated; stating that the sadist is just a masochist who follows the golden rule. An example of an inconsistency of the Golden Rule would be a man walking into a bar looking for a fight.

Further, the philosopher Immanuel Kant (1724-1804) famously criticised the golden rule for not being sensitive to differences of situation, noting that a prisoner duly convicted of a crime could appeal to the Golden Rule while asking the judge to release him, pointing out that the judge would not want anyone else to send him to prison, so he should not do so to others.

Gensler states “that to apply the golden rule adequately, we need knowledge and imagination. We need to know what effect our actions have on the lives of others. And we need to be able to imagine ourselves, vividly and accurately, in the other person's place on the receiving end of the action. With knowledge, imagination, and the golden rule, we can progress far in our moral thinking.”

In US history, President John F. Kennedy appealed to the Golden Rule in a 1963 anti-segregation speech at the time of the first black enrolment at the University of Alabama. He asked white members of the audience to consider what it would be like to be treated as second class citizens because of the colour of their skin. He asked whites to imagine themselves being black and being told that they could not participate in voting, or go to the better public schools or eat at public restaurants or sit at the front of the bus. Would whites be content to be treated that way? He was sure that they wouldn’t and yet he noted that this is what that particular demonstration was all about. He further said that the “heart of the question is whether we are going to treat our fellow Americans as we want to be treated.”

Marilyn Lustgarten makes a great point when she states “treat people like assets and they’ll create wealth,” which might be a play on the golden rule, but is surely worth remembering in the business environment.

But how often in business do we take the time to think about the Golden Rule and treating people like we would want to be treated. Does an effective leader need to apply the Golden Rule consistently or is there a time and a place when the Golden Rule doesn’t apply?

Gensler concludes by mentioning that “the golden rule is best seen as a consistency principle. It doesn't replace regular moral norms. It only prescribes that our actions (toward another) aren’t out of harmony with our desires (toward a reversed situation action). It tests our moral coherence. If we violate the golden rule, then we're violating the spirit of fairness and concern that lie at the heart of morality.”

References:

Gensler, H. [On-line] http://www.jcu.edu/ philosophy/ gensler/ goldrule.htm [last updated: unknown] Reviewed 3rd July, 2011.

Lustgarten, M [On-line] http://www.imcstlouis.org/ artman/ publish/ article 12.shtml [last updated: unknown] Reviewed 3rd July, 2011.

The Golden Rule [On-line] http://www.wlconnect.com/ pubs/ golden.pdf [last updated: unknown] Reviewed 3rd July 2011.

How Do You Respond in a Crisis?

I’m reminded of the announcement from an airline that said, “in the event of a sudden loss of cabin pressure, masks will descend from the ceiling. Stop screaming, grab the mask, and pull it over your face. If you have a small child travelling with you, secure your mask before assisting with theirs. If you are travelling with more than one small child, pick your favourite."

The word Crisis is derived via Latin from the Greek root definition, meaning a decision, a choice, a turning point for good or bad. It should strictly refer to a moment rather than a continuing process, so that uses such as a prolonged crisis are strictly speaking self-contradictory. However, a word as useful as crisis will not allow itself to be strait-jacketed in this way, and many examples of the disputed use will be found.

Crisis is often used with a defining word, either an adjective or an attributive noun as in economic crisis, energy crisis, financial crisis, food crisis, hostage crisis, identity crisis, midlife crisis, refugee crisis, etc.

It’s interesting that the Chinese word for crisis is written by joining two ideograms together. When these ideograms, are presented separately they stand for two different ideas or concepts. The first ideogram stands for danger and the second ideogram stands for opportunity.

What’s also interesting about the word crisis is that it relates to an unstable condition, as in political, social, or economic affairs, involving an impending abrupt or decisive change; and is usually linked with an emotionally stressful event or traumatic change in a person's life.

We, as individuals, will respond to a crisis in many different ways, as a ‘crisis’ is felt on a personal level. Even a ‘global crisis’ effects people in different ways, so the immediate response from individuals will be based on their perception about the ‘crisis’ (in respect of what they feel is at stake) and their ‘skills’ in dealing with it.

The two ideograms for the Chinese word for crisis give us a good indication of an effective approach to dealing with a crisis – first to appreciate the danger, but second to see the opportunity.

A crisis has the ability to bring out the best and worst in people (at all levels of an organisation). Some people simply cannot handle certain crises and will turn and run for the hills. This is often due to panicking about the perceived outcome from the crisis and its implications on the individual; and is also due to the person not having the skills to deal with the crisis in a timely and efficient way. These are the people that work on the principle that “eagles may sore, but weasels never get sucked into an airliners engine intake.”

In any crisis, business or personal, the most important thing is to remain calm. You must be strong enough to appear calm, regardless of how you might feel inside.

Effective leaders give inspiration in a crisis through their controlled approach, bringing calm to almost any crisis situation. They attract followers by having a confident plan of how to deal with the crisis and communicate this calmly and clearly to the whole organisation. This gives the organisation a confidence that the crisis will be averted and things will either return to normal or, in fact, get better.

Effective leaders vary their behaviour in a crisis, reacting to individual situations and use their words sparingly but clearly throughout the crisis situation. In fact maybe one of the true tests of an effective leader – is how they deal with a crisis – and how their organisation follows them through the crisis and comes out the other side.

In conclusion we should always remember that: Conflict builds character. Crisis defines it.

References:

Crisis: Definition, Synonyms from Answers.com: Found on 26th June 2011 at [http://www.answers.com/topic/crisis]

Wilken, T. (2001). Crisis: Danger and Opportunity. Uncommon Sense Library, Volume IV.