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The strength, impact and value of a brand are embodied, fairly concisely, in the concept of ‘brand equity’. However, there are different views on how to express and measure brand equity, whether from a consumer (customer) perspective or a firm perspective. Metrics based on a consumer viewpoint (measured in surveys) raise particular concern as to what actual effects they have in the marketplace. Datta, Ailawadi and van Heerde (2017) have answered to the challenge and investigated how well Consumer-Based metrics of Brand Equity (CBBE) align with Sales-Based estimates of Brand Equity (SBBE). The CBBE metrics were adopted from the model of Brand Asset Valuator (Y&R) whereas SBBE estimates were derived from modelling market data of actual purchases. They also examined the association of CBBE with behavioural response to marketing mix actions [1].

In essence, brand equity expresses an incremental value of a product (or service) that can be attributed to its brand name above and beyond physical (or functional) attributes. Alternately,  brand equity is conceived as the added value of a branded product compared with an identical version of that product if it were unbranded. David Aaker defined four main groups of assets linked to a brand that add to its value: awareness, perceived quality, loyalty, and associations beyond perceived quality. On the grounds of this conceptualization, Aaker subsequently proposed the Brand Equity Ten measures, grouped into five categories: brand loyalty, awareness, perceived quality / leadership, association / differentiation, and market behaviour. Kevin Keller broadened the scope of brand equity wherein greater and more positive knowledge of customers (consumers) about a brand would lead them to respond more favourably to marketing activities of the brand (e.g., pricing, advertising).

The impact of a brand may occur at three levels: customer market, product market and financial market. In accordance, academics have followed three distinct perspectives for measuring brand equity: (a) customer-based — an attraction of consumers to the “non-objective” part of the product offering (e.g., ‘mindset’  as in beliefs and attitudes, brand-specific ‘intercept’ in a choice model); (b) company-based — additional value accrued to the firm from a product because of a brand name versus an equivalent product but non-branded (e.g., discounted cash flow); financial-based — brand’s worth is the price it brings or could bring in the financial market (e.g., materialised via mergers and acquisitions, stock prices)[2]. This classification is not universal:  for example, discounted cash flows are sometimes described as ‘financial’; estimates of brand value derived from a choice-based conjoint model constitute a more implicit reflection of the consumers’ viewpoint. Furthermore, models based on stated-choice (conjoint) or purchase (market share) data may vary greatly in the effects they include whether in interaction with each competing brand or independent from the brand ‘main effect’ (e.g., product attributes, price, other marketing mix variables).

A class of attitudinal (‘mindset’) models of brand equity may encompass a number of aspects and layers: awareness –> perceptions and attitudes about product attributes and functional benefits (+ overall perceived quality), ‘soft’ image associations (e.g., emotions, personality, social benefits) –> attachment or affinity –> loyalty (commitment). Two noteworthy academic studies have built upon the conceptualizations of Aaker and Keller in constructing and testing consumer-based measures:

  • Yoo and Donthu (2001) constructed a three-dimension model of brand equity comprising brand loyalty, brand awareness / associations (combined), and perceived quality (strength of associations was adopted from Keller’s descriptors of brand image). The multidimensional scale (MBE) was tested and validated across multiple product categories and cultural communities [3].
  • Netemeyer and colleagues (2004) demonstrated across products and brands that perceived quality, perceived value (for the cost), and uniqueness of a given brand potentially contribute to willingness to pay a price premium for the brand which in turn acts as a direct antecedent of brand purchase behaviour [4]. Price premium, an aspect of brand loyalty, is a common metric used for assessing brand equity.

Datta, Ailawadi and van Heerde distinguish between two measurement approaches: the consumer-based brand equity (CBBE) approach measures what consumers think and feel about the brand, while the sales-based brand equity (SBBE) approach is based on choice or share of the brand in the marketplace.

The CBBE approach in their research is applied through data on metrics from the Brand Asset Valuator model developed originally by Young and Roubicam (Y&R) advertising agency (the brand research activity is now defined as a separate entity, BAV Group; both Y&R and BAV Group are part of WPP media group). The BAV model includes four dimensions: Relevance to the consumers (e.g., fits in their lifestyles); Esteem of the brand (i.e., how much consumers like the brand and hold it in high regard); Knowledge of the brand (i.e., consumers are aware of and understand what the brand stands for); and  Differentiation from the competition (e.g., uniqueness of the brand)[5].

The SBBE approach is operationalised through modelling of purchase data (weekly scanner data from IRI). The researchers derive estimates of brand value in a market share attraction model (with over 400 brands from 25 categories, though just 290 brands for which BAV data could be obtained were included in subsequent CBBE-SBBE analyses) over a span of ten years (2002-2011). Notably, brand-specific intercepts were estimated for each year; an annual level is sufficient and realistic to account for the pace of change in brand equity over time. The model allowed for variation between brands in the sensitivity to their marketing mix actions (regular prices, promotional prices, advertising spending, distribution {on-shelf availability} and promotional display in stores) — these measures are not taken as part of SBBE values but indicate nonetheless expected manifestation of higher brand equity (impact); after being converted into elasticities, they play a key role in examining the relation of CBBE to behavioural outcomes in the marketplace.


  • Datta et al. seem to include in a SBBE approach estimates derived from (a) actual brand choices and sales data as well as (b) self-reported choices in conjoint studies and surveys. But subjective responses and behavioural responses are not quite equivalent bases. The authors may have aimed reasonably to distinguish ‘choice-based’ measures of brand equity from ‘attitudinal’ measures, but it still does not justify to mix between brands and products consumers say they would choose and those they actually choose to purchase. Conjoint-based estimates are more closely consumer-based.
  • Take for instance a research by Ferjani, Jedidi and Jagpal (2009) who offer a different angle on levels of valuation of brand equity. They derived brand values through a choice-based conjoint model (Hierarchical Bayes estimation at the individual level), regarded as consumer-level valuation. Vis-à-vis the researchers constructed a measure of brand equity from a firm perspective based on expected profits (rather than discounted cash flows), presented as firm-level valuation. Nonetheless, in order to estimate sales volume they ‘imported’ predicted market shares from the conjoint study, thus linking the two levels [6].

 

Not all dimensions of BAV (CBBE) are the same in relation to SBBE: Three of the dimensions of BAV — relevance, esteem, and knowledge — are positively correlated with SBBE (0.35, 0.39, & 0.53), while differentiation is negatively although weakly correlated with SBBE (-0.14). The researchers reasoned in advance that differentiation could have a more nuanced and versatile market effect (a hypothesis confirmed) because differentiation could mean the brand is attractive to only some segments and not others, or that uniqueness may appeal to only some of the consumers (e.g., more open to novelty and distinction).

Datta et al. show that correlations of relevance (0.55) and esteem (0.56) with market shares of the brands are even higher, and the correlation of differentiation with market shares is less negative (-0.08), than their correlations with SBBE (correlations of knowledge are about the same). The SBBE values capture a portion of brand attraction to consumers. Market shares on the other hand factor in additional marketing efforts that dimensions of BAV seem to account for.

Some interesting brand cases can be detected in a mapping of brands in two categories (for 2011): beer and laundry detergents. For example, among beers, Corona is positioned on SBBE much higher than expected given its overall BAV score, which places the brand among those better valued on a consumer basis (only one brand is considerably higher — Budweiser). However, with respect to market share the position of Corona is much less flattering and quite as expected relative to its consumer-based BAV score, even a little lower. This could suggest that too much power is credited to the name and other symbols of Corona, while the backing from marketing efforts to support and sustain it is lacking (i.e., the market share of Corona is vulnerable).  As another example, in the category of laundry detergents, Tide (P&G) is truly at the top on both BAV (CBBE) and market share. Yet, the position of Tide on SBBE relative to BAV score is not exceptional or impressive, being lower than predicted for its consumer-based brand equity. The success of the brand and consumer appreciation for it may not be adequately attributed specifically to the brand in the marketplace but apparently more to other marketing activities in its name (i.e., marketing efforts do not help to enhance the brand).

The degree of correlation between CBBE and SBBE may be moderated by characteristics of product category. Following the salient difference cited above between dimensions of BAV in relation to SBBE, the researchers identify two separate factors of BAV: relevant stature (relevance + esteem + knowledge) and (energized) differentiation [7].

In more concentrated product categories (i.e., the four largest brands by market share hold a greater total share of the category), the positive effect of brand stature on SBBE is reduced. Relevance, esteem and knowledge may serve as particularly useful cues by consumers in fragmented markets, where it is more necessary for them to sort and screen among many smaller brands, thus to simplify the choice decision process. When concentration is greater, reliance on such cues is less required. On the other hand, when the category is more concentrated, controlled by a few big brands, it should be easier for consumers to compare between them and find aspects on which each brand is unique or superior. Indeed, Datta and colleagues find that in categories with increased concentration, differentiation has a stronger positive effect on SBBE.

For products characterised by greater social or symbolic value (e.g., more visible to others when used, shared with others), higher brand stature contributes to higher SBBE in the market. The researchers could not confirm, however, that differentiation manifests in higher SBBE for products of higher social value. The advantage of using brands better recognized and respected by others appears to be primarily associated with facets such as relevance and esteem of the brand.

Brand experience with hedonic products (e.g., leisure, entertainment, treats) builds on enjoyment, pleasure and additional positive emotions the brand succeeds in evoking in consumers. Sensory attributes of the product (look, sound, scent, taste, touch) and holistic image are vital in creating a desirable experience. Contrary to expectation of Datta and colleagues, however, it was not found that stature translates to higher SBBE for brands of hedonic products (even to the contrary). This is not so good news for experiential brands in these categories that rely on enhancing relevance and appeal to consumers, who also understand the brands and connect with them, to create sales-based brand equity in the marketplace. The authors suggest in their article that being personally enjoyable (inward-looking) may overshadow the importance of broad appeal and status (outward-looking) for SBBE. Nevertheless, fortunately enough, differentiation does matter for highlighting benefits of the experience of hedonic products, contributing to a raised sales-based brand equity (SBBE).

Datta, Ailawadi and van Heerde proceeded to examine how strongly CBBE corresponds with behavioural responses in the marketplace (elasticities) as manifestation of the anticipated impact of brand equity.

Results indicated that when relevant stature of a brand is higher consumers respond favourably even more strongly to price discounts or deals  (i.e.,  elasticity of response to promotional prices is further more negative or inverse). Yet, the expectation that consumers would be less sensitive (adverse) to increased regular prices by brands of greater stature was not substantiated (i.e., expected positive effect: less negative elasticity). (Differentiation was not found to have a positive effect on response to regular prices either, and could be counter-conducive for price promotions.)

An important implication of brand equity should be that consumers are more willing to pay higher regular prices for a brand of higher stature (i.e., a larger price premium) relative to competing brands, and more forgiving when such a brand sees it necessary to update and raise its regular price. The brand may benefit from being more personally relevant to the consumer, better understood and more highly appreciated. A brand more clearly differentiated from competitors with respect to its advantages could also benefit from a protected status. All these properties are presumed to enhance attachment to a brand, and subsequently lead to greater loyalty, making consumers more ready to stick with the brand even as it becomes more expensive. This research disproves such expectations. Better responsiveness to price promotions can help to increase sales and revenue, but it testifies to the heightened level of competition in many categories (e.g., FMCG or packaged goods) and propensity of consumers to be more opportunistic rather than to the strength of the brands. This result, actually a warning signal, cannot be brushed away easily.

  • Towards the end of the article, the researchers suggest as explanation that they ignored possible differences in response to increases and decreases in regular prices (i.e., asymmetric elasticity). Even so, increases in regular prices by stronger brands are more likely to happen than price decreases, and the latter already are more realistically accounted for in response to promotional prices.

Relevant stature is positively related to responsiveness to feature or promotional display (i.e., consumers are more inclined to purchase from a higher stature brand when in an advantaged display). Consumers also are more strongly receptive to larger volume of advertising by brands of higher stature and better differentiation in their eyes (this analysis could not refer to actual advertising messages and hence perhaps the weaker positive effects). Another interesting finding indicates that sensitivity to degree of distribution (on-shelf availability) is inversely associated with stature — the higher the brand stature from consumer viewpoint, larger distribution is less attractive to the consumers. As the researchers suggest, consumers are more willing to look harder and farther (e.g., in other stores) for those brands regarded more important for them to have. So here is a positive evidence for the impact of stronger brands or higher brand equity.

The research gives rise to some methodological questions on measurement of brand equity that remain open for further deliberation:

  1. Should the measure of brand equity in choice models rely only on a brand-specific intercept (expressing intrinsic assets or value of the brand) or should it include also a reflection of the impact of brand equity as in response to marketing mix activities?
  2. Are attitudinal measures of brand equity (CBBE) too gross and not sensitive enough to capture the incremental value added by the brand or is the measure of brand equity based only on a brand-intercept term in a model of actual purchase data too specific and narrow?  (unless it accounts for some of the impact of brand equity)
  3. How should measures of brand equity based on stated-choice (conjoint) data and actual purchase data be classified with respect to a consumer perspective? (both pertain really to consumers: either their cognition or overt behaviour).

Datta, Ailawadi and van Heerde throw light in their extensive research on the relation of consumer-based equity (CBBE) to behavioural outcomes, manifested in brand equity based on actual purchases (SBBE) and in effects on response to marketing mix actions as an impact of brand equity. Attention should be awarded to positive implications of this research for practice but nonetheless also to the warning alerts it may signal.

Ron Ventura, Ph.D. (Marketing)

Notes:

[1] How Well Does Consumer-Based Brand Equity Align with Sales-Based Brand Equity and Marketing-Mix Response?; Hannes Datta, Kusum L. Ailawadi, & Harald J. van Heerde, 2017; Journal of Marketing, 81 (May), pp. 1-20. (DOI: 10.1509/jm.15.0340)

[2] Brands and Branding: Research Findings and Future Priorities; Kevin L. Keller and Donald R. Lehmann, 2006; Marketing Science, 25 (6), pp. 740-759. (DOI: 10.1287/mksc.1050.0153)

[3] Developing and Validating a Multidimensional Consumer-Based Brand Equity Scale; Boonghee Yoo and Naveen Donthu, 2001; Journal of Business Research, 52, pp. 1-14.

[4]  Developing and Validating Measures of Facets of Customer-Based Brand Equity; Richard G. Netemeyer, Balaji Krishnan, Chris Pullig, Guangping Wang,  Mahmet Yageci, Dwane Dean, Joe Ricks, & Ferdinand Wirth, 2004; Journal of Business Research, 57, pp. 209-224.

[5] The authors name this dimension ‘energised differentiation’ in reference to an article in which researchers Mizik and Jacobson identified a fifth pillar of energy, and suggest that differentiation and energy have since been merged. However, this change is not mentioned or revealed on the website of BAV Group.

[6] A Conjoint Approach for Consumer- and Firm-Level Brand Valuation; Madiha Ferjani, Kamel Jedidi, & Sharan Jagpal, 2009; Journal of Marketing Research, 46 (December), pp. 846-862.

[7] These two factors (principal components) extracted by Datta et al. are different from two higher dimensions defined by BAV Group (stature = esteem and knowledge, strength = relevance and differentiation). However, the distinction made by the researchers as corroborated by their data is more meaningful  and relevant in the context of this study.

 

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Oftentimes references to and appraisals of product design (e.g., on websites, in magazines) concentrate on the aesthetics of the product’s visual appearance. The importance of this facet of visual design of products is now well acknowledged, particularly in attracting consumers to them. This is of no dispute. Visual design, however, has an informational capacity and it can communicate to consumers on other aspects embedded in the product or reflected from it.  These facets are functional, symbolic (personal, social) and ergonomic (affecting ease-of-use) that may be inferred from visual design or appearance of a product. They deserve no less attention than aesthetics in discussions of product design from a marketing point-of-view.

Product design did not gain much awareness or interest from marketing and consumer scholars until the mid-1990s. The researchers Peter Bloch and Robert Veryzer made each this critical observation in separate articles in 1995 as they started to conceptualise the meanings and roles of product design with respect to consumer behaviour.  Bloch referred to the powers of good design in attracting consumers, communicating to them, and adding value by enhancing the quality of their usage experiences (1). Veryzer wrote of the low relevance consumer researchers attributed to product design and aesthetics (e.g., superficial styling, related primarily to works of art) that impeded the progress of consumer research to that time in these areas. He set out to start developing a theory on the contributions of product design to consumer-product interactions, and how different considerations (e.g., aesthetic, functional, communication) affect varied consumer reactions (e.g., understanding the product, aesthetic response)(2). Both Bloch and Veryzer recognized the importance of the communicative functions of visual product design beyond aesthetics.

The aesthetics of appearance of a product ascribe to its beauty, evoking visual appeal. It relies on physical properties in the design, such as form, size (proportions), texture (materials) and colours, and how they combine or belong together (i.e., a holistic view, unity of design elements). professional designers may relate to harmony and balance. More commonly, innate preferences of people are shaped by Gestalt rules pertaining, for example, to symmetry, similarity, proximity, repetition and closure. An aesthetic pleasing appearance  increases consumers’ attraction to look at products longer, hold and obtain them.

Nevertheless, the visual design of a product can tell consumers beyond experiencing its aesthetics and appeal. Design of a product entails generally the composition and arrangement of components and overall configuration of the product. Only some of the components are readily visible to consumers (i.e., on surface); many others most relevant to the product’s orderly functioning are hidden from them, and for a good reason. Thereof appearance plays a vital role in communicating to consumers about the function and usage of a product. While it is widely accepted that “form follows function”, one should observe that in many cases form tells people how a product can or should be used (i.e., from a consumer perspective, function is determined by form). In its communicative role, design incorporates important visual and iconic cues about product use and mode of operation. The visual comprehensibility of a product is therefore vital to successful consumer-product interaction (2).

  • Features of products (e.g., electric, electronic and digital), and how to activate them, should be easily identifiable; symbols need to be self-explanatory as much as possible or be easily learnt. The consumer should be able to make basic operations without reading a manual, especially if he or she is experienced with that type of product (e.g., setting parameters and taking a photo shot on a camera). Manuals are more often refered for performing more complex or specialised tasks. Consumers expect to receive fundamental information about the product from its appearance.

Crilly, Moultrie, and Clarkson elaborate on Shannon’s model of communication, as formerly interpreted in the context of product design.


  • The source is the designer or design team
  • The transmitter is the product by its (visual) design
  • The channel is the environment in which consumer-product interaction occurs
  • The receiver entails the perceptual senses of the consumer
  • The destination is the consumer’s faculty for response, incorporating cognitive, affective and behavioural responses.

The researchers concentrate on cognitive responses to visual product design, and identify through a literature review three categories: (a) Aesthetic Impression is the sensation that results from perception of attractiveness; (b) Semantic Interpretation pertains to what a product seems to say about its function, mode-of-use and qualities; and (c) Symbolic Association relates to what a product may say about its owner or user (personal and social significance attached to the design). Decoding the “design message” from appearance and making judgements thereafter is part of cognitive response (3). Crilly et al. note that different types of emotions may stem from all cognitive categories; moreover, there are considerable interdependencies between cognitive and affective responses, where cognition is leading to affect and affect is influencing cognition.

Crilly and his colleagues suggest that aesthetic impression should account for objective qualities of design as well as subjective experiences of consumers. As a second dimension they distinguish between information and concinnity (harmonious arrangement of elements) originating in design. Information may objectively refer to the level of contrast between elements comprising the product’s design against its surroundings or among the elements themselves, while subjective information reflects a degree of novelty perceived by consumers, arising from deviation of the design from forms familiar to them. Novelty induces greater interest, but care should be taken because excessive deviations might cause greater difficulty for consumers to identify the correct category a product belongs in (e.g., by comparing to familiar prototypes), leading to confusion. Concinnity at an objective level would indicate whether the design is in good order (e.g., following Gestalt rules); subjectively, it reflects the extent to which the design makes sense to viewers (i.e., easier to understand, assign meaning, based for example on cultural norms or comparison to other relevant objects).

Semantic interpretation and symbolic association may play a more complex or nuanced role in communication from design (Veryzer recommended distinguishing between aesthetic and communicative roles). The semantics of design pertain primarily to qualities of the product, mode-of-operation and ease-of-use. Physical properties are relevant mainly with respect to how a product should be handled (e.g., its density, stability, fragility). Most importantly, Crilly et al. refer to how consumers may infer from visible components of the product — its layout, feature buttons or switches, levers etc. — how to operate it correctly and more effectively, and how easy using the product is going to be. Among the examples they give: a grooved handle may suggest in what direction it should be turned and how much force should be applied, or flashing switches signal they should be switched off.

The semantics implied from design may refer in particular to affordances (what a product is suitable for or made to do, given its form); constraints (what a product is limited in doing and should not be forced to do); and mappings (how a user’s actions relate to corresponding behaviour of the system). Mapping suggests in this context an interesting aspect of visual compatibility that seems desirable between ‘handles’  for operating a product and its form and response — buttons of a gas stove arranged to fit the layout of burners in the stove itself; levers in an electric-car-seat-control-panel for moving the seat arranged to represent the seat itself.

Think for a moment of TV sets, but not the current flat screens; reflect instead on TV “boxes” from past decades, before the 1990s. This domain demonstrates so well how technology and tastes in design have changed side-by-side over the years. The TV sets from the 1940s to 1970s were casted in a wooden “box” housing.  The TV set was perceived to a great extent as a piece of furniture in the house, and very likely it was designed in wood to match better in look with other furnitures. Early on owners used to put their TV set in a cabin with doors, as if they were not sure about its nature and wanted to conceal it in a furniture. From the 1950s the attitude changed and people were more open and happy to show the innovative technological appliance in their house. From the late 1970s the wooden housing was replaced with injection-moulded plastic. At first frames still adopted a wooden look but the appearance has gradually changed to black and grey-metalic look. The trend transformed from reflecting craftmanship and traditional warm appearance to modern cool appearance that puts technology a front.

Through several decades control panels were usually visible on the right-hand side of the screen. In the 1990s, as remote control handsets became more prevalent, control panels were reduced and became less apparent. This was partly done to leave more space for larger screens (e.g., 26”). Then came the flat screens (plasma or LCD, >32”), and control panels vanished from the front of TV.  Some controls may be found on the TV back but most selections and tuning the viewer is expected to perform on the remote control.  This is the second important change in TV sets: they leave no visual cues for their mode-of-operation easily accessible on the product itself, relying on its remote accessory. The TV sets are now made to take least space possible in the house. Manufacturers of flat screen TVs give priority to a “clean” visual design outwards and their advanced technology inwards. But from a communicative perspective, one may ask if this is the better user-friendly approach. It could be more comfortable and re-assuring for users to place a few controls (e.g., power, sound, channel buttons) on a front panel below the screen rather than hide them on the TV back.

Symbolic association turns our attention from the product to its owner or user. It may involve attributes that correspond to the user’s own personality (e.g., enhance or corroborate one’s self-image) as well as reflect desirable attributes or social standing of the user to others based on product’s appearance. Those product-person symbols may be shaped by the sociocultural context of use. Symbolic associations have been classified in literature, for example, as self-expressive symbolism (supporting one’s unique personality, idiosyncrasy or distinction, and differentiation from others) and categorical symbolism (suggesting one’s group membership, including social position and status, as reflected frequently via shared consumption symbols)(3).

One of the more prominent examples given for products with strong symbolic associations are clothing garments, especially the more fashionable they are, and contingent on type (materials), purpose and style of the garment. Let us look, however, to another domain perhaps less often used as an example: Think of bright beige leather seats in a car. Such seats reflect elegance and high quality; to the car’s owner the leather may also signal softness and comfort (semantic meanings). The leather seats may symbolise elegance of the car owner himself, enhance self-importance to the owner and suggest to others who see the car on the street that the owner has to be a respected person of higher prestige. (The implied symbols seem to matter to men more than to women.)

Consumers perceive physical properties in forming impression of a product’s visual design and appraising it. But to formulate their experience or judgements they translate or map the physical terms (e.g., form, size, colour, surface and texture) onto abstract attributes. Blijlevens, Creusen and Schoorman who studied and identified three such attributes for durable products note that consumers differ, however, from professional (industrial) designers in their understanding and the attributes they use to describe a design. Design literature uses terms such as harmony, unity, symmetry, typicality, massiveness and naturalness that ordinary or design-novice consumers are not familiar with and may not understand. The undesirable implication is that consumers frequently do not grasp the meaning of appearance embedded in the product as intended by its designers (4).

  • The three attributes in the model based on consumer descriptions constructed by Blijlevens et al. are: (a) Modernity (descriptions of ‘modern’, ‘oldish/old-fashioned’ [reversed], ‘futuristic’; (b) Simplicity (‘simple’, ‘minimalistic’, ‘plain’); (c) Playfulness (‘playful’, ‘funny’). Of the three attributes, modernity coincides directly with a parallel attribute used by designers while simplicity correlates inversely with an attribute of ‘complexity’ in design literature. Yet, playfulness  is an attribute more distinctive of consumers with no attribute close enough in meaning as used by designers (regarded as more accurate and deeper attributes).
  • The researchers suggest that (i) consumers’ attributes should complement, not replace, those used by designers to provide consumer viewpoint; (ii) there should be continued effort to study the mapping of physical properties onto consumer attributes; and (iii) marketers should be cognizant of changes in tastes and fashions of aesthetics and visual design that may alter existing relations or mappings over time.

Aesthetic appearance of products is a likely source of pleasure; consumers enjoy talking about appealing and creative visual design, the more so when they have greater acumen in these matters. But the picture cannot be complete, from a marketing perspective, without relating to semantic and symbolic connotations emanating from the visual design of a product because they have important influence on consumer decisions. They are significant to the practical use of a product as well as extended psychological (self-image) and social implications of product ownership and usage.

Ron Ventura, Ph.D. (Marketing)

References:

(1) Seeking the Ideal Form: Product Design and Consumer Response; Peter H. Bloch, 1995; Journal of Marketing, 59 (3), pp. 16-29.

(2) The Place of Product Design and Aesthetics in Consumer Research; Robert W. Veryzer Jr., 1995; in NA — Advances in Consumer Research, Vol. 22, F.R. Kardes and M. Sujan (eds.), pp. 641-645, Provo, UT: Association for Consumer Research.    http://www.acrwebsite.org/search/view-conference-proceedings.aspx?Id=7824

(3) Seeing Things: Consumer Response to the Visual Domain in Product Design; Nathan Crilly, James Moultrie, & P. John Clarkson, 2004; Design Studies, 25 (6), pp. 547-577.

(4) How Consumers Perceive Product Appearance: The Identification of Three Product Appearance Attributes; Janneke Blijlevens, Marielle E.H. Creusen, & Jan P. Schoorman, 2009; International Journal of Design, 3(3), pp. 27-35.  http://www.ijdesign.org/ojs/index.php/IJDesign/article/view/535/272

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Consumers like to talk about the brands in their lives. Brands may be connected to their personal history or to a narrative which describes their current lifestyle; people can tell others about a variety of brand experiences they have had, for better or worse. Consumers use likewise word-of-mouth information they receive from friends and relatives, but not only from them. They refer to product reviews, user-generated blogs, as well as stories, opinions and suggestions conveyed in forums of digital social networks from people they may not know so well but consider convincing or trustworthy. The proliferation of user-generated content through Web 2.0 and mobile applications did a great deal to facilitate the spread of word-of-mouth (WOM) and increase consumer reliance on this type of information. However, it does not preclude the still dominant transfer of brand-related WOM offline between people more closely connected in face-to-face meetings and phone conversations.

But brands do not exert WOM to the same extent. Some brands get more of such informal publicity than others. The question thence becomes: What characteristics of a brand make it more interesting, important or relevant to consumers to talk about with friends, family and others? In such discourse consumers could be mainly in the role of providers or receivers of information, and they may share personal experiences, viewpoints, and recommendations, or conversely warnings, regarding any brand.

Researchers Lovett, Peres, and Shachar (2013) took the challenge of investigating the relations of brand characteristics to stimulation of WOM shared among consumers, and they offer some interesting insights, especially on the differences between offline and online channels. At start, it should be clarified that drivers for engaging in WOM are originated in the consumers for satisfying their personal needs; the brand characteristics may be seen as operational instruments that link with the drivers that stimulate brand-related WOM. The researchers identify three main drivers in their guiding theoretical framework:

  • Social driver — Concerned with a need of consumers to express themselves to others, showing their uniqueness, for self-enhancement, and out of desire to socialize with others;
  • Emotional driver — Associated with excitement and pleasure of satisfaction (emotional sharing);
  • Functional driver — Related to the need to obtain information and the tendency to provide information to others, moderated by aspects such as complexity and knowledge.

The researchers collated information on over six hundred US national brands of products and services as well as corporate and retailer names (covering the period of 2008-2010). The brands spanned across 16 broad product categories (e.g., beverages, children’s’ products, clothing, department stores, cars, media and entertainment).

  • Data sources on brand characteristics included a consumer survey in the US (primary source) and several datasets of proprietary research programmes (secondary sources), the major of them is the Young and Rubicam Brand Asset Valuator (characteristics corresponding to brand equity “pillars”:  Differentiation, Relevance, Esteem, and Knowledge).
  • The level of WOM generated about a brand (operated as count of mentions of a brand) was modelled and analysed separately in offline conversations and online settings or forums. Data of brand mentions in face-to-face and in phone conversations were obtained from the TalkTrack project of Keller and Fay (a diary-based survey) whereas data on online WOM were adopted from the Nielsen McKinsey Incite tool (a search engine that can retrieve brand mentions in settings such as discussions groups, blogs and microblogs). [The count of brand mentions was modelled under the assumption that it follows a Negative-Binomial distribution.]

We will take here a quick look at results and insights from the research that I find the more revealing and interesting, with an emphasis on distinctions between offline and online channels:

The Social Driver — A brand that is better differentiated from competitors can make an easier and more effective vehicle for a consumer to express his or her own uniqueness to others. Greater brand differentiation contributes to more brand mentions offline and online. Yet, the positive effect on WOM online is stronger. There could be greater motivation for consumers to utilise brands for highlighting their uniqueness when communicating online because they can address much larger audiences than offline, and a reference to the relevant brand can efficiently deliver the message, particularly when cues of visual appearance or sound cannot be used. Brand differentiation is a newly studied characteristic in relation to WOM in this research project.

The volume of brand WOM also increases with higher perceived quality of the brand’s products, and is larger for more prestigious, premium brands. Associating with brands of higher quality products (represented by Esteem) can serve to demonstrate the consumer’s expertise in a category — it has a positive effect on WOM offline and online, but the effect online is twice as large.  A premium brand characterization, that reflects a higher social status, has a significant effect only in an online channel. Enhancing one’s self-image through expertise or social status, as with highlighting personal uniqueness, is possibly felt more needed by consumers in the less intimate interactions that take place online with people whom they are less familiar with than those they interact with face-to-face or on the phone. A consumer may have more to “prove” to or impress “friends” who are known primarily and even solely as members in his or her virtual social network.

The Emotional Driver — Being excited about a brand seems as a very plausible motive to arouse consumers to talk about it. Lovett and his colleagues indicate that excitement, a brand personality trait, has not been studied yet in the context of WOM.  As expected, brands that evoke more excitement lead consumers to engage more in WOM about the brand, both offline and online. While the effects of excitement are similar between the channels, there is a distinction between them, as addressed below, with respect to the emotional driver in general.

The researchers expected that a higher level of WOM would be generated when satisfaction with a brand is very high or very low. Their model results showed, however, that only very low satisfaction yields a peak in WOM, and that as satisfaction rises the level of WOM drops (i.e., a relationship described by a monotonic descending concave curve). The finding that very low satisfaction induces consumers to talk (critically) more about a brand is frequently supported in other studies.

  • The proposition about the effect of very high satisfaction may have not been supported, according to the researchers, because it has confounded with the effects of esteem and excitement included in their model and not in previous research. But one cannot ignore that the dataset included satisfaction scores for just a third of the brands analysed, as reported, and scores for the remaining 2/3 of brands with missing data were imputed based on the distribution of the available scores. Consequently, it is hard to conclude based on the evidence whether the effect of high satisfaction indeed exists.

The Functional Driver — This driver has two dimensions: obtaining information and providing information through WOM. Consumers often require assistance when learning complex product information (e.g., prior to purchase) or dealing with complex technical details and instructions (e.g., for correct product utilisation). Complexity matters primarily to those who wish to obtain information. This research reveals that greater complexity is related to more brand mentions only in offline conversations. That is, more immediate, direct and intimate interactions offline between consumers are adopted as more suitable for discussing together and clarifying information that is complex and more difficult to comprehend about products. It may be added that such conversations are also more likely to be held between consumers who know each other better, and that allows for a better flow of interaction. Less complex information can be obtained from online forums. Online conversations, as the authors argue, tend to be asynchronous, and entail longer delays in responding to questions that may hinder clarification of confusing matters and information exchange. Complexity is another characteristic included in this study yet not in previous research in the context of WOM.

Interestingly, consumers also engage more in WOM on younger (i.e., newer) brands when communicating offline but not online —  brands possibly perceived as innovative, intriguing, exciting or still ambiguous appear also to be more appropriate to talk about in person.

From the perspective of those who provide information, producing and disseminating WOM on brands would depend on how knowledgable consumers feel they are on the subject.  The results confirm that brands that are perceived to be more familiar to consumers and better known are more likely to be talked about, similarly offline and online.

The researchers further extracted and compared the relative importance of each main driver between the two settings of offline and online channels. The social driver is the most important stimulant of online WOM followed by the functional and lastly the emotional driver. In contrast, in offline conversations the emotional driver is the most important, followed by the functional driver, and relatively the least important driver is social. Notably, while the emotional driver has a positive effect in both types of channels, it is more prominent in driving brand mentions in conversations offline. These differences exemplify the difference in nature between offline and online interactions — offline interactions are more intimate and open between people, more accommodating to share excitement and satisfaction, whereas online interactions are less personal, tend to promote “broadcasting” information to many people and social signalling with verbal cues.

  • The different nature of offline and online channels may also be evident in an almost complete separation between lists of leading brands (top 1o) in number of their brand mentions between those two settings: Offline we find Coca-Cola, Verizon, Pepsi, Wal-Mart, Ford, AT&T, McDonald’s, Dell Computers, Sony, and Chevrolet. Online, on the other hand, arrived on top the brands of Google, Facebook, iPhone, YouTube, Ebay, Ford, Yahoo, Disney, and Audi. Only Ford is on both lists. The contrast between “new” and “old” or “physical” and “virtual” brands speaks for itself.

The models furthermore demonstrate the positive role of brand equity in encouraging consumers to talk more about a brand. Stronger brands — more encompassing in their areas of activity and influencing many more people — command more conversation (e.g., information exchange and sharing opinions). First, we may recognize an implicit effect of brand equity on WOM through factors represented in the models such as perceived quality, differentiation, knowledge, and visibility that contribute to enhancing the equity of a brand. Second, nonetheless, the researchers included in their two models a control variable of brand equity, represented as the inclusion of brands in the list of 100 top brands constructed by Interbrand. It is thereby confirmed that brands on this list enjoy higher WOM. One should keep in mind, however, that being more frequently the subject of conversation, offline or online, is evidence of greater importance and relevance of a brand, and in turn may increase its equity further, when WOM is positive, but may also decrease its equity when the WOM is negative.

The authors acknowledge some limits of their research. In particular: (1) The brands included are the most talked about in the US (i.e., covering reduced variation in level of WOM over brands); (2) The models refer to “offline” and “online” in wholesome as types of channels — more research is needed to investigate effects on WOM in separate online spaces like the blogosphere and social media networks; (3) Since the units of information are brands rather than individual consumers, the ability to describe and explain the processes in which consumers exchange, produce or obtain WOM information on  brands is impaired, inviting more research in this respect.

Marketing communication managers may use the results (effect estimates) and insights from these models of WOM to identify characteristics of brands in their responsibility that can be expected to yield more WOM and learn of gaps between actual and expected levels of WOM when planning where and how to invest their effort for evoking more WOM on their brands. However, it is most important for marketers, as Lovett, Peres, and Shachar stress in their article, to keep offline and online channels distinguished and plan their measures for each environment separately — what may work well in an online environment can prove ineffective offline, and vice versa. In each environment it is necessary to emphasise different aspects and goals and take appropriate measures.

Ron Ventura, Ph.D. (Marketing)

Reference:

On Brands and Word-of-Mouth; Mitchell Lovett, Renana Peres, & Ron Shachar, 2013; Journal of Marketing Research, 50 (August), pp. 427-444.

The authors won a grand award for their research project in a joint-competition of the Wharton Customer Analytics Initiative and the Marketing Science Institute.

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The past thirty years in Great Britain have been marked by some major economic and social changes, most notably de-industrilisation, decline in job security, a transition to service economy, and the rise to dominance of the financial sector. These developments have occurred to differing degrees in other Western countries as well but perhaps not in as a dramatic way as in the UK. Only in the past month we have witnessed the awakening of a heated public debate on these socio-economic developments in reaction to the death of late Baroness Margaret Thatcher, Prime Minister of the UK between 1979 and 1990, due to her reforms in the 1980s. Most people would describe themselves nowadays as “middle class” and yet people are at difficulty to define and agree on what that status means. The gross division of the British society into upper class, middle class and working class does not seem to hold any longer.

The BBC’s research branch Lab UK launched in 2011 a major research project, the Great British Class Survey (GBCS), in co-operation with an academic team led by Professors of Sociology Mike Savage of London School of Economics and Political Science (LSE) and  Fiona Devine of the University of Manchester. They embarked on developing a new model of social class whilst taking, however, a different approach to defining the determinants of social status that is not based solely on occupation and other economic variables.  At the core of the project the BBC underlines the large Web survey it has carried out, in which 161,400 respondents in Great Britain participated; this survey was accompanied nevertheless by another national survey in a representative sample of about 1,000 respondents interviewed face-to-face (the use of two data sources is discussed later in the post-article).

The model developed by the research team working with the BBC includes seven classes. The model still identifies layers of social class but their organisation is different from previous models that relied primarily on indicators of education, occupation and economic wealth; the model thus reveals new types of class segments. Most remarkably, the “middle class” is more diffused, splintering horizontally across more unique and distinct class segments, also replacing the reduced traditional working class.

The unusual structure of this social class model can be attributed primarily to the acknowledgement by the researchers that the social standing of people depends not only on the stature of their occupation and their economic wealth but also on additional personal resources that people develop over time. They rely on a schema developed by French sociologist Pierre Bourdieu that recognizes in culture a crucial pillar contributing to a person’s competences and stature. Bourdieu identified three forms of capital: economic capital (wealth and income), cultural capital (based upon educational upbringing, it defines a person’s tastes and ability to appreciate and engage with cultural goods such as arts and food), and social capital (the breadth and nature of contacts and connections in a person’s social networks that can benefit him or her). The expansion of the concept of “social class” hereby suggested by the researchers deviates from the concept’s “classical” economic foundations but it nonetheless enriches the model by bringing it closer to the concept of “lifestyle” — a connection that should be well appreciated in a marketing context. It allows one, for instance, to account for whether a person has more fine tastes or a stronger tendency to open-mindedness that may enhance his or her standing in society. Savage and Devine and their colleagues argue in favour of their approach that:

“This recognition that social class is a multi-dimensional construct indicates that classes are not merely economic phenomena but also are profoundly concerned with forms of social reproduction and cultural distinction” (2, p. 5).

A quick review of the new seven class segments (1):

  • Elite — The most privileged group with highest levels on all types of capital, but particularly distinguished by the greatest economic capital.  The largest (over-) representation of CEOs and other senior managers is found in this class.
  • Established Middle Class — Not as wealthy as the elite but still very high on all three capitals. The most gregarious group that also scores the second highest on cultural capital.
  • Technical Middle Class — A small but distinctive new class that is prosperous but more secluded, concentrating on its links to other profession experts. They are distinguished by their social isolation and cultural apathy.
  • New Affluent Workers — A rising group of young people who are successful in their jobs, with middling levels of economic capital though without acquiring higher education; yet, they are socially and culturally active that appears to give them a leverage.
  •  Traditional Working Class — Relatively older people, they constitute the remaining working class of the past (their offsprings are believed to belong in the new segments of New Affluent Workers and the Emergent Service Workers.) They are low on all forms of capital though not completely deprived, reliant especially on current high values of their houses.
  • Emergent Service Workers — They are young and urban though less well-off economically than the new affluents, positioned in relatively basic and low paying jobs in services (e.g., at call-centers, bars and restaurants); they are also characterised as highly active socially and culturally.
  • Precariat — The most poor and deprived group of precarious proletariat with low scores also on social and cultural capital.

The young segments that represent the newer generation of the “working class” seem to be a more savvy generation, less indifferent to or accepting of their social status, better connected, and working to improve their well-being, not only at their jobs. Are they types of “middle class” or “working class”? This is unclear — those familiar classes seem more confounded. The place of the lowest social class is taken now by the Precariats. Division in the British class system may have changed in form and structure but it remains powerful: Savage argues that the society is increasingly polarised between the elite at the top and the ‘precariat’ class at the bottom and with divisions growing deeper (3).

Hereafter a question is raised: What does this model imply for consumer behaviour?  The model provides a new foundation upon which marketing researchers and managers may develop better understanding of consumers’ motives and drivers, and the background to their behaviour. It can help answer not just what consumers can afford but what they may aspire for. It may further reveal how consumers aim to achieve their goals or implement their interests, suggesting specifically what kinds of products and services are utilised in the course of doing so. But the social class model is not sufficient to that end — it has to be joined by another model that elaborates on consumer lifestyles. The new opportunity for improvement that unveils with the new model is in creating a more meaningful and congruent bridge between a social class model and a lifestyle model. This bridge would be primarily cultural but there may also exist a social common denominator.

  • Economic capital is measured by household income, household savings and house value (the latter two are joined in a ‘wealth’ index).
  • Cultural capital takes in consideration leisure interests, taste in food, taste in music, use of media, and travel destinations for holiday. The researchers have borrowed the conceptual distinction of Bourdieu between elevated “highbrow” genres of culture and “popular” culture, but they apply it in a more flexible manner. First, following recent research, the model assumes that respondents from any class may simultaneously practice genres of both “highbrow” and “popular” culture (i.e., each type receives a separate score). Second, they furthermore refrain from making judgement about forms of culture that may appear degrading and use the term “emerging” instead of “popular” for describing culture forms like sports, playing video games, browsing the internet and participating in social media networks. Forms of “highbrow” culture include among others engaging with classical music or jazz, visiting museums, art galleries, theatres, and French restaurants. On these facets “social class” and “lifestyle” meet.
  • Social capital is evaluated through two metrics: the number of occupation groups (out of 34 possible groups) of the people with whom a respondent has social connections and a mean status score of those occupations. Models of lifestyle should now also relate to socialising activities and the kinds of information consumers share, given the significant place in time and content that social media networks fill in their lives. A lifestyle model may contribute some additional information on connections in the “real world” and/or in the “virtual world” that the social class model does not seem to distinguish (though it accounts for use of social media under “cultural capital”.)

It is not proposed to build a single integrative model that stands the risk of diluting either construct of “social class” or “lifestyle”. Rather, the new social class model and a lifestyle segmentation model should be married by crossing one with the other, the former focusing on the resources consumers hold and the latter elaborating on how those resources are expressed and employed in reference to consumer behaviour.

We would want to know more about the psychographics of members of the new social classes to understand how they can be expected to behave as consumers. Here are two issues to consider for probing:

What kind of shoppers the New Affluent and Emergent Service workers are likely to be? — more critical, cautious and price-conscious or more easy-spending on any products and services and their brands? They may choose products and brands they believe can improve their well-being or their image in the eyes of others. How do these two segments differ? (hint: the emergent service workers are said to be more eager to “live the day”, more seeking experiences rather than products (1)).

Consumers in the Established and the Technical middle class segments both have plenty of economic resources but the former has a much more varied range of social connections and is more culturally active, mixing highbrow and emerging forms of culture — how does that distinguish them as consumers with respect to time and money they spend with family and friends at home or outdoors, on their personal interests and hobbies, on the Internet, etc.?

It should be noted that this model outcome could not be obtained if based only on the web survey of the BBC’s GBCS. The researchers found a strong selection bias in the large web sample, lifting it socially upwards, that is, the web sample exhibited over-representation of Britons from well-educated social groups. It means that this sample could not be adequate for modelling social classes of the whole British society. The GBCS received high publicity in media channels of the BBC which may have served well for recruiting a sample of its audience but not beyond that. However, the bias may also be due to low rates of Internet literacy and usage in older and less privileged social groups.

Compared with the second national sample in a parallel survey conducted by GfK, it clearly shows how the web survey is biased upwards with respect to occupations, household income and ‘wealth’. The model was built by a method of latent class analysis on an integrated sample dataset where respondents in the national sample received their original weights to reflect the correct composition of the population, while respondents in the web sample were “fragmented” by giving each a weight of 1/161,400. All cases are classified simultaneously, yet the class system structure is based more heavily on the national sample and the GBCS sample serves primarily to provide greater detail on the profiles of those classes.

  • The differences between the two samples remain clear: the Established Middle Class is the largest segment, 25% of GfK national sample but it “grows” to 43% of GBCS web sample; the Elite is just 6% of GfK sample but 22% of GBCS sample; conversely, the New Affluent Worker is 15% of GfK sample but just 6% in the GBCS sample; and the Precariat segment that takes 15% of the GfK sample is almost non-existent in the GBCS sample. (2)

The new British social class model recently published reveals additional important facets to social standing, based not just on economic resources but influenced also by social relationships and cultural capital. The enriched model also offers a bridge to associate with a lifestyle model that would shed more light on implications of the classes for consumer behaviour and marketing. It may also give encouragement to consumers that they can invest in their social and cultural capital to improve their well-being and social standing before they are able to increase their economic capital.

Ron Ventura, Ph.D. (Marketing)

Sources:

1. The Great British Class Survey (GBCS) Special Section on BBC News Online:

(a) “Huge Survey Reveals Seven Social Classes in UK”, BBC News: UK, 3 April 2013 http://www.bbc.co.uk/news/uk-22007058

(b) “Class Calculator: Can I have No Job or Money and Still Be Middle Class?”, BBC News Magazine, 4 April 2013    http://www.bbc.co.uk/news/magazine-21953364

2. “A New Model of Social Class: Findings from the BBC’s Great British Class Survey Experiment”, Mike Savage, Fiona Devine et al., Sociology (Online), April 2013 (link is available on BBC website, 1b)

3.  “The British Class System is becoming more polarised between a prosperous elite and a poor ‘precariat'”, Prof. Mike Savage discusses the results of the research, London School of Economics: British Politics and Policy at LSE (Blog), 4 April 2013,   http://blogs.lse.ac.uk/politicsandpolicy/archives/32264

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That the music retail industry is in trouble is no secret. When we look, however, at what happened to major music store chains over the last five years it may become much clearer how serious the crisis is. Here are some highlights:

  • In 2007 Richard Branson decided time was up for Virgin‘s music Megastores and sold his chain of 125 stores in the UK and Ireland in a management-buy-out to a team of executives. The new retail brand Zavvi took place of the Virgin name that after thirty years vanished from High Street in the UK, particularly its famous flagships on Oxford Street and in Piccadilly Circus in London. By 2009 Virgin closed the last of its stores in the US. Stores in other countries were also closed while a few stores may still be found under the Virgin brand  in France, Greece, and in the Middle East. 
  • Zavvi survived no more than a year. It was dependent on a unit of Woolworths (Entertainment UK) as its primary supplier and with the collapse of the veteran retail chain, Zavvi ran into serious difficulties, forced into unfavourable new trade agreements. It entered administration in late November 2008 and within 3 months the chain ceased to exist. 14 of its stores were sold to HMV, 7 others and all stock sold to Head Entertainment, and all remaining stores were liquidated.
  • The once giant American music retailer Tower Records got into troubles already in 2004 when it sought bankruptcy protection and was doomed just two years later in 2006. Great American Group that bought the retailer in an auction soon declared its plan to shut down the music retail chain. All US stores were closed by the end of 2007 and in the following three years many stores overseas were sold or closed down. The stores in the UK closed in fact already in 2003 (Virgin took over its flagship in Piccadilly Circus but as noted above it did not last long).
  •  And now we hear that HMV is in trouble and struggling to keep its head above water. It is threatened by an increasing debt and a difficulty in keeping with terms of a bank loan. To be accurate, it is since January that news of troubles at HMV have been coming in about unsatisfactory sales results over the holidays shopping period and three consecutive warnings of dropping profits. First it announced plans for the UK and Ireland to close 40 music stores along with 20 book stores of Waterstone’s that HMV Group apparently also owns. Then it became known HMV intends to split Watesone’s from its core business in music, video, and games ; this prospect sale is still in negotiations. Analysts predict that break up is inevitable but still express concern that this will not be enough and HMV will be forced to close more stores to avoid administration.  

Explanations given by analysts for these misfortunes are probably not surprising many: the growing shift of consumers to digital download of music, video and games, and the tight competition from stores like supermarkets that sell discs at low-cost. While retailers started offering their merchandise online on their websites several years ago they were quite unprepared for the trend of digital download.

As implied above the problem is centered on but not limited to music. More than ten years ago music chain stores have actually transformed into entertainment media stores in order to expand their business and not be reliant only on music. Yet, the retailers could not cope with the fast technological developments in this field during the years 2000s that altered consumer behaviour patterns. This is not just about low price but also convenience, flexibility of choice and immediacy. True, especially in the early Internet years but even nowadays items can be obtained for free on the net and this phenomenon poses problems for many in the industry, perhaps mostly to the artists. This issue is complex with legal ramifications beyond the scope of this article-post. However, the whole field encompassing the different types of entertainment media has progressed considerably and broadened in the past five years and it would be too simplistic to attribute it squarely to price.

Music stores should not be given up too quickly. There are certain things about the stores — the sights of loaded stands of products, colours and sounds, movement on the floor and buzz — that the Internet and various electronic devices cannot provide. Many private stores, small or niche stores, may still remain but the chain stores were the real engine of this retail industry. It is worth investing much more effort to create a new model for music or entertainment media stores that will retain some of their more traditional virtues in new forms and yet offer new benefits. I suggest two dimensions for development in which strong advantages can be created: personal customization and social interaction. These can be sources for strong shopping values and enjoyment.

Personal Customization

Consumers want to choose more freely their favourite songs and create their own song compilations. They are much less willing to wait for record companies to produce albums and compilations based on their judgements. Consumers are less tolerant towards albums that contain 2-4 really good songs and 8-10 mediocre ones. The choice has to be delegated more extensively to the consumers. This phenomenon is becoming stronger and wider.

Perhaps as some analysts claim there is less justification for the large space of stores we have known so far. Stores may restructure and re-allocate floor space between product displays and personal self-service stations. A shopper will be invited to sit on a stool in front of a flat screen at his eye-level and use a multimedia programme to search and scan the store’s wide selection of music pieces as well as films, TV series episodes or games and choose whatever he or she likes. When the shopper completes, for example, to create a song compilation to his/her taste, an instruction will be given to the computer system to burn it on a CD, DVD, Blue-Ray disc or alternatively be saved on some other memory device such as Disk-on-Key. Appropriate payment arrangements may be devised including advance deposits and pay-as-you-collect at the cashier or pay with credit card at the station. Sessions may be limited in time.

Why doing this at the store and not at home? First, it may be because of powerful utilities of the multimedia programme that makes the shopping experience smoother and more enjoyable — well-designed graphic displays of items planned with consumer search behaviour in mind and friendly tools for building and displaying at any time the content of the shopper’s basket. The display may incorporate information structures such as a matrix or table of a relatively large variety of items , a “ribbon” mounted across the screen (moved left and right) for quick scan in a narrowed-down set of items, or “wheels” that include possibly artists in an inner tier and song pieces in an outer tier. Second, the programme may allow playing songs or showing short samples from film in live-streaming directly from the store’s library (if the system works on an Intranet it may work faster than on the Internet). Third, when required the shopper may consult with a personnel adviser, assuming hopefully that the store employs people expert in various genres of entertainment.

It should be remembered, however, that there are different types of shoppers. We may distinguish primarily between (a) those who come with a more clear and well-defined plan of specific songs, artists, TV programmes etc. that they wish to find and buy, and (b) “explorers” who have a more general idea, perhaps only at the level of a style or genre, of what they want and whom in the “old days” liked to browse through items on display with their fingers. For consumers who do not have well established preferences and who even seek surprising discoveries the old format was simpler and easier to explore and probably less time-consuming compared with a computer application. A multimedia programme with a search engine may be less advantageous for them. In order not to lose those customers the store will have to devise more creative solutions, combining intelligent computer-based cues and guiding tools, physical displays even if more limited than before, and human advice.

Notwithstanding, there are types of music pieces and areas in which it should be sensible to offer physical copies on display. For instance stores can continue to offer films, live concerts,  TV series by season, and games as ready-made products. In addition, areas like jazz and classical music should still deserve special rooms with most space allocated to displays of physical items to accommodate usually more conservative habits of amateurs of these types of music.

Social Interaction

Consumers of entertainment of sorts, especially younger ones (say under 30), prefer to sit in front of the computer at the comfort of their homes, sometimes for hours, surf the network for various music and video pieces. They also like to download pieces onto portable devices such as MP3 players, smartphones and tablet computers. But they do not truly perform this activity all alone. Conspicuously as they sit on their own with the computer they often communicate with friends and relatives, consulting and change ideas or recommendations talking on the phone or chatting in social media communities.

So why not offer these consumers a more lively social way to interact with friends face-to-face  in a store? For that purpose, special sitting sets for 2-4 people can be installed in special areas of the store (not to disturb other customers). At the set a small group of customers-friends can sit together, use each his or her multimedia application to explore and examine favourite pieces while from time to time conversing with each other on their findings. This setting offers people a more natural, direct and open way of socializing, and it has a good chance of producing richer shopping baskets.

These are two directions for developing a new model for music or entertainment media stores that I conceive as promising from a consumer perspective. More generally and beyond the proposed directions, stores will have to create benefits that enrich the whole experience of shoppers during their visit and that the Internet and personal electronic devices (i.e., for online sales and digital download) cannot in their capacity replace (e.g., contact with expert staff, events, sensual stimuli in the store’s scene).  For stores’ owners and managers, the goal is clearly to convert shoppers into happy customers who enjoy returning frequently to the store(s).

Ron Ventura, Ph.D. (Marketing)

Media Sources:

“Branson sells Virgin Music Stores”, BBC News, 17 Sept., 2007

“Zavvi placed into administration”, BBC News, 24 Dec. 2008

“Tower Records victim of iPod era”, Associated Press at MSN Money, 10 Oct. 2006

“HMV prepares for split to stem rising debt“, Financial Times FT.com, 28 March 2011

“HMV in its third profit warning of this year”, The Guardian (online), 5 Apr. 2011

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