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Reflection on customers’ knowledge and perceptions about marketing

Master's Thesis 2016 108 Pages

Communications - Public Relations, Advertising, Marketing, Social Media

Excerpt

Table of Contents

List of Figures

List of Tables

List of Abbreviations

1 Introduction
1.1 Background Situation and Research Problem
1.2 Research Objectives and Research Questions
1.3 Scope and Limitations
1.4 Research Methodology and Justification
1.5 Structure of the Thesis

2 Theoretical Exploration of current Perceptions of Marketing
2.1 Perception and Knowledge in Research
2.1.1 Perception and Knowledge
2.1.2 Persuasion Knowledge Model
2.2 Public Criticism about Marketing
2.2.1 Scepticism towards Advertising
2.2.2 Manipulative Marketing Practices
2.2.3 Deceptive Pricing Policies
2.2.4 Consumption-Oriented Lifestyles
2.2.5 Scepticism towards Green Advertising
2.3 Marketers’ Responses to Public Scepticism
2.3.1 Academic Understanding of Marketing
2.3.2 Demarketing and Mindful Consumption
2.3.3 Reforming Pricing Strategies
2.3.4 Sustainable Marketing Practices

3 Empirical Research
3.1 Research Objectives
3.2 Research Methodology
3.2.1 Focus Group Composition
3.2.1.1 Sampling Technique
3.2.1.2 Recruiting of Participants
3.2.2 Data Collection
3.2.2.1 Interview Guideline
3.2.2.2 Focus Group Execution

4 Analysis and Interpretation of Collected Data
4.1 Data Analysis Method
4.2 Presentation and Interpretation of Findings
4.2.1 General attitudes towards Marketing
4.2.1.1 Advantages and positive perceptions
4.2.1.2 Resentments and negative perceptions
4.2.1.3 Functional versus social understanding of Marketing
4.2.2 Marketing as Manipulation
4.2.2.1 Dimensions of Manipulation
4.2.2.2 Objectives of Manipulation
4.2.2.3 Receptive target groups
4.2.3 Consumption-oriented life-styles
4.2.3.1 Meaning of Consumption
4.2.3.2 Marketing as driver of Consumption
4.2.3.3 Consequences of over-consumption
4.2.4 Pricing Policies
4.2.4.1 Social versus personal (un)fairness
4.2.4.2 Pricing strategies and objectives
4.2.5 Sustainability and Greenwashing
4.2.5.1 Purchasing motives
4.2.5.2 Marketing and Sustainability
4.2.5.3 Marketing and Greenwashing

5 Final Discussion
5.1 Summary
5.2 Limitations
5.3 Implications and Recommendations
5.4 Future Research

References

Annex

List of Figures

Figure 1: The Persuasion Knowledge Model

Figure 2: A process model of the PKM in a sales context

Figure 3: Advertisement "Ruby" by The Body Shop

Figure 4: Qualitative Content Analysis Process

Figure 5: Categories of Focus Groups

Figure 6: The added-value perception of marketing in literature

Figure 7: Conducted Perceptions of Marketing

List of Tables

Table 1: Overview of sampling criteria

Table 2: Overview of the methodology and organization of the focus groups

Table 3: Participants of Focus Group 1

Table 4: Participants of Focus Group 2

Table 5: Structure of Focus Groups

Table 6: The Participants' perceived Attitudes towards Marketing Practices

List of Abbreviations

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Abstract

Customers have gradually started emphasising on emerging marketing practices that seem to harm individuals, societies and the environment. However, marketing scholars believe that marketing has positive impacts and creates values and satisfaction for all stakeholders.

This Master Thesis presents findings with regard to the stated discrepancy by means of a literature analysis and qualitative research in the form of focus groups. The research objective is to investigate customers’ and marketing professionals’ attitudes towards the discipline and how knowledge and/or experiences contribute to a positive or negative perception of marketing. The results suggest that customers are aware of the tactics used by marketers to deliberately mislead their target groups. Consequently, customers develop negative attitudes towards persuasive marketing efforts.

This thesis highlights the gap between laypersons’ negative perception and marketing academics’ added-value perception towards the discipline. In order to overcome this discrepancy, marketers need to consider customers’ scepticism as a compass and address positive impacts of marketing on customers and society.

Keywords: Marketing criticism, customer attitudes, positive marketing, persuasion knowledge

1 Introduction

The concept of marketing stresses the importance of customers as the core element of all marketing practices. However, the discipline has faced criticism from customers for engaging in harmful tactics that try to manipulate them. This master thesis aims to answer questions like: Which marketing practices are being criticised by customers and marketing professionals at present? How does marketing as a discipline respond to public criticism? How do knowledge about and experiences in marketing influence these perceptions?

The first chapter gives an overview of the background situation and the research problem of this master thesis. Additionally, the research objective and the research question including the two sub-questions are introduced and followed by the scope and limitations of the thesis. After mentioning the research methodology and justification, the first section closes with an outline of the entire thesis.

1.1 Background Situation and Research Problem

The emergence of marketing practices can be traced back to ancient times when people discovered that trading and selling were efficient ways to satisfy basic needs like food and clothing. Over the centuries, modern societies have experienced a remarkable growth in human living standards, economic welfare and technological opportunities. Due to path-breaking managerial and technological innovations, the rise of interest in marketing theory and practice have played a crucial role in the development of new forms of market exchanges. Consequently, new ways have emerged to satisfy customers’ desires, needs, and wants, which in turn lead to financial income for various stakeholders emerged (Stoeckl & Luedicke, 2015, p. 2452).

From this perspective, it seems as if marketing contributes to social and economic welfare for individuals, societies, and business institutions. In this context, in their annual conference, The Center for Positive Marketing celebrated the benefits of marketing and its practices bring to the public (The Center For Positive Marketing at Fordham University, 2015). From an academic and practical view, marketing is often described in a transformative role including definitions that emphasise marketing’s positive impact, values, and satisfaction specially created for customers.

On the contrary, according to a recent study on the popularity of public services amongst German citizens, employees of advertising agencies earned the second last position of esteem (Bundesleitung des dbb beamtenbund und tarifunion, 2014, p. 20). Existing literature suggests a rather negative image of the discipline. Associations like “dishonest” (Sheth and Sisodia, 2006, p. 4), “manipulative” (Kelley, 2007, p. 54) or “amoral” (Heath and Heath, 2008, p. 1027) are often connected with marketing as a discipline and its practices.

1.2 Research Objectives and Research Questions

Based on the background situation outlined above, the author plans to examine different attitudes and perceptions of marketing and how these are influenced by the individuals’ knowledge about marketing.

With respect to previous research, it can be mentioned that there is little known and truly accessible in order to easily analyse the situation. Consequently, the author concludes that the topic has to be broken down into its various perspectives in order to able to investigate both the professional, value-added perspective of marketing and customers’ criticism about the discipline.

The aim of this Master Thesis is to provide a better understanding of the different attitudes towards the discipline and practices of marketing.

More importantly, the objective is to identify how knowledge and/or experiences contribute to a positive or negative perception of marketing and which consequences regarding consumption arise. Furthermore, managerial implications should be derived from the conducted focus groups.

The Thesis also aims to give an insight into the various academic marketing concepts that emphasize rather positive impacts like customer satisfaction. These will be compared to current findings of public criticism.

In order to provide the reader with an overview of the Master Thesis, a well- formulated research question is developed. In addition, the research question outlines the planned investigation, while it presents direction for the researcher, to eventually set boundaries to the whole research project (O´Leary, 2010, p.64).

In order to meet the mentioned research objectives the following research question has been formulated:

How, if at all, does knowledge about marketing influence customers’ perception about marketing?

As the overall research question is rather difficult to answer directly, the author has decided to break it down into two sub-questions in order to provide a better understanding of the planned outcomes and directions of the whole research project:

- How can the value-added perception of marketing in popular literature be described?
- What are the current (positive and negative) attitudes towards marketing amongst marketing professionals and customers?

Whereas the first sub-question can be answered after an extensive theoretical exploration, the second sub-question intends to be answered after analysing the conducted focus groups.

1.3 Scope and Limitations

The scope and limitations are essential in order to properly investigate the overall research topic. Thus, the following part provides an overview of the content included in the master thesis and the limitations therein.

This thesis aims to explore how knowledge about marketing influences the perception about marketing. In this regard, the Persuasion Knowledge Model (PKM) and its application to marketing are taken into account. Although different research works on perception and marketing theories offer diverse benefits, only one model is analysed in order to ensure accuracy in the research without overlapping of data Additionally, the thesis does not reflect on key moral demands (e.g. healthy lifestyles, respect for consumer privacy) that drive consumer criticism and resistance projects. These demands change and shift on a regular basis and therefore do not present a steady justification for customers’ criticism.

The thesis does not take into consideration the ways in which customers express their dissatisfaction concerning marketing, for instance through consumer activism, resistance efforts, or boycotts, as these would exceed the usual scope of master thesis. Moreover, the thesis does not consider cases of consumer passivity or indifference as these cases lack academic foundation.

1.4 Research Methodology and Justification

In order to examine the mentioned topic appropriately and thoroughly, two different research methods are applied. First, a profound literature review is carried out in order to provide the author with a comprehensive understanding of the overall topic. Secondary data from books and journals are examined and analysed. Secondary data is the term used to describe information that has been gathered by previous researchers through their investigation on a certain topic. It can thus be considered as fundamental element of any research, as it functions as a source of information for the researcher (Veal, 2011, pp. 44-45).

Secondary data from books and articles related to topics such as perception theories, marketing concepts and marketing criticism are taken into consideration. Furthermore, statistical reports and internet research provide an overall comprehension of the nature and criticism of marketing and allow the researcher draw conclusions with regards to the practical marketing applications.

The primary purpose of the Master Thesis is to obtain information about how customers’ knowledge about marketing influences their perception of this discipline. Therefore, the author plans to use a qualitative research method and to arrange two focus groups with six to eight participants each, because focus groups are rich in data. Alternatively, the author could conduct surveys or in-depth personal interviews. Quantitative studies (e.g. online surveys) would yield large sample of beliefs and perceptions of customers and marketing experts at a specific place and time. The method is ultimately rejected as important issues that are not covered in the questionnaire will not be included in the final analysis and therefore the results would be biased. Unlike quantitative methods, focus groups allow the author (or the moderator) to probe issues in detail, approach new issues as these arise and ask participants to elaborate on their responses. Focus groups save time and money compared to individual interviews (Flick, 2015). More importantly, the introduction of the collective interaction is considered as to be the main benefit of using focus groups. Collective discussion permits the development of an intense discussion that reveals the attitudes of the participants, and it turn attests the relevance of the question (Liamputtong, 2011). Focus groups offer the possibility to analyse the real reactions of participants. Nevertheless, they cannot respond to all cases or applied to all research projects. Therefore, it is important to understand that the author does not intend to focus on agreeing with or contradicting on the topic, but to create clear in-depth reactions.

For the evaluation of the transcribed and analyzed data, the qualitative content analysis by Mayring (2010) is used. This approach helps researcher to understand social reality in a subjective but scientific manner and to receive a structured as well as verifiable evaluation of the conducted data.

1.5 Structure of the Thesis

After the introduction chapter that provided a detailed description of the respective background situation and the methodology applied to find answers to the outlined research questions, the thesis has been divided into two parts.

The main part (second chapter) opens with a theoretical preamble that defines and analyses the available research on perception theories. The chapter continues with a detailed elaboration of public criticism with four domains in which marketing impacts consumers' lives. The chapter then identifies the academic approaches of marketing that study the positive impacts on individual and societal welfare.

Next, chapter 3 introduces the empirical part of this thesis; it presents the methodological approach and research design of this thesis. It starts by describing the conceptual framework. Furthermore, the selection of the focus groups participants, the design of the interview guideline, and the actual procedure of the focus groups are all examined.

Further, chapter 4 describes the process of analysis of the focus group data. Afterwards, the chapter presents the results of this data, beginning with a general description of the participants’ viewpoints of marketing.

Finally, chapter 5 finishes by answering the research questions based on the findings generated in chapter four. Additionally, the fifth chapter elaborates upon the implications arising from the thesis findings, both for academics and practical marketing management. This chapter also mentions the major limitations and shortcomings of the thesis and provides suggestions for future research

2 Theoretical Exploration of current Perceptions of Marketing

The second chapter will open with a theoretical preamble, which will define and analyse available research on perception and knowledge and how this is linked to marketing. This section will then identify public criticism of marketing. Afterwards, the chapter will continue with a detailed elaboration of academic approaches of marketing that propose positive impacts on individual and societal welfare.

2.1 Perception and Knowledge in Research

In marketing, according to Kotler and Keller (2012, p. 161), perceptions are far more important than the actual reality, as they directly influence customers’ actions. The following chapter will define the term *perception” and, furthermore, investigate how customers perceive persuasive attempts used by marketers.

2.1.1 Perception and Knowledge

Perception can be defined as the complex process by which individuals “select, organize, and interpret information inputs to create a meaningful picture of the world“ (Berelson and Steiner, 1962, p. 88).

In this context, Anderson (2005, p. 101) argues that individuals’ knowledge about objects provides the basis for recognition. Knowledge directs perception towards the interpretation of the current environment. This interpretation allows individuals to compensate for the missing components of a situation by extending the exposed edges to complete the perception. Additionally, the context that surrounds a feature or object helps to resolve perception. As an example, the context can facilitate recognition when it is ancillary or damage recognition when it is misleading.

2.1.2 Persuasion Knowledge Model

According to Friestad and Wright (1994) who conceptualized the Persuasion Knowledge Model (PKM), persuasion knowledge can be defined as customers’ knowledge of and expertise in marketing. They add that this knowledge includes the goals, strategies, and tactics of marketers, as well as production and consumption processes. This kind of knowledge can arise and grow through education, personal experiences, or socializing (Tan & Tan, 2007). Thus, persuasion knowledge may influence customers’ attitudes towards and their understanding of marketing. The model proposes that customers “persuasion coping knowledge enables them to recognize, analyze, interpret, evaluate, and remember persuasion attempts and to select and execute coping tactics believed to be effective and appropriate” (Friestad & Wright, 1994, p. 3). In this context, customers’ perceptions of persuasion tactics used by agents (e.g. sales persons) to influence them are essential as these are the initial processes for encountering persuasive situations. The perceptions significantly shape customers’ responses towards persuasion attempts. By using their persuasion knowledge, customers decide whether to agree to or resist the persuasive situation (Friestad & Wright, 1994; Taylor & Nelson, 2012).

Persuasion knowledge serves as a significant knowledge domain in consumers' daily behaviour and prompts customers to be aware of situations where an external agent attempts to affect their decisions, attitudes, thoughts or emotions, (Friestad and Wright, 1999). With regard to the perception of marketing, persuasion knowledge reflects both customers’ knowledge about how marketers seek to persuade customers as well as how these strategies evoke and control psychological changes (Hibbert et al., 2007).

As Taylor and Nelson (2012) state, the more sophisticated knowledge customers have, the more easily they can perceive persuasive communication and marketers’ goals. Therefore, customers with sophisticated knowledge tend to be more sceptical towards persuasion attempts. Kirmani and Zhu (2007) argue that customers get more suspicious about a company’s marketing activities when their persuasion knowledge is extensive. In this context, online product reviews are an example of the present-day application of the PKM. Through news reports or word-of-mouth, customers begin to understand that service or product reviews can be easily manipulated by marketers, e.g. by giving a positive evaluation for their own company or by commenting negatively on rival products. Customers thus consider reviews less trustworthy and less authentic than they might have otherwise done before acquiring the knowledge. As a result, the more knowledge customers have about manipulated reviews, the weaker are the effects of product evaluations.

Friestad and Wright (1994) specify the role of customers (as the target audience) in coping with persuasive attempts by means of knowledge structures. As shown in Figure 1, these types of knowledge structures include topic knowledge, agent, or target knowledge and persuasion knowledge, and all three of them interact with each other in order to frame and determine the outcomes of the marketers’ persuasion attempts.

In an advertising context, topic knowledge refers to the knowledge and beliefs of customers about the topic being advertised in a persuasive situation. In this case, the persuasion attempt may include everything that is part of a marketing strategy, ranging from television ads to PR campaigns. Agent knowledge focuses on the traits and feelings of the customers towards the advertiser’s message. It also covers knowledge about the advertiser that has been fixed in customers’ mind due to previous information or situations. Finally, persuasion knowledge enables the customer to recognize tactics used by marketers in their persuasion attempt (Friestad & Wright, 1994).

According to Friestad and Wright (1994), the knowledge structures of customers are considered by the advertisers, when developing persuasion attempts. The authors state that the roles of customers and marketers frequently and quickly swift in everyday life situations as communication goals change, too, e.g. when a customer attempts to negotiate or bargain. In other words, sending, or receiving a persuasive attempt is not restricted only to customers or advertisers.

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Figure 1: The Persuasion Knowledge Model

Source: Adapted from Friestad & Wright, 1994.

This implies that the roles of customers and agents are equally important as different communication goals and situations call for the application of divergent knowledge structures and behavioural strategies. Nevertheless, the PKM assumes that both customers and marketers change their perceptions towards each other. In this context, a customer’s knowledge or beliefs about the marketer, his goals, or the persuasion attempts varies over time. Similarly, marketers’ knowledge and beliefs about customers’ expectations, needs, and interests are also likely to shift over time. Consequently, customers’ behaviour and responses towards marketing activities must be re-examined in order to ensure that they are still valid.

Additionally, the PKM rests on a persuasion episode, and on persuasion coping behaviours. According to Friestad and Wright (1994), a persuasion episode signifies a marketer’s persuasive attempt that can be easily recognized by the customer. On the other hand, persuasion coping behaviour refers to the physical and cognitive processes that the customer goes through before responding to the persuasive intent of the marketer. Therefore, persuasion coping behaviour involves either acceptance or rejection towards a persuasive situation and an anticipation of the marketer’s next persuasive attempt and, how the customer’s best reaction to this situation (Russo & Chaxel, 2010). Irrespective of the role customers or marketers play, the PKM resumes that both parties try to boost the effectiveness of their persuasion intent and persuasion coping behaviour.

Concerning customers’ motives for developing persuasion knowledge, Friestad and Wright (1994) had some fundamental assumptions. According to the authors, there are three common motives. First of all, customers are likely to evaluate claims about a product or service. Second, customers want to form an opinion about the agent. Finally, consumers are curious about the reasons behind the development of sales presentations, campaigns, or advertisements.

Regarding the use and practical applications of the PKM, scholarly work has been conducted in order to provide thorough explanations about the role of persuasion knowledge in influencing customers’ information processing as well persuasion resistance. The studies have demonstrated that factors like age, socialization and education influence the level of persuasion knowledge. Specifically, younger, less educated, and less socializing customers possess lower levels of persuasion knowledge than other customers. Older customers possess more negative attitudes about advertising than younger customers do, as they have more knowledge about persuasive attempts and are able to easily deal with manipulative and exaggerated messages (Boush, Freistad & Rose, 1994; Taylor & Nelson, 2012). Moreover, as Feick and Gierl (1996) add, older customers are less likely to trust advertising messages or purchase advertised and branded products.

Campbell and Kirmani (2000) examined how persuasion knowledge is used by customers in the context of sales. The authors conducted two studies and concluded that customers apply their persuasion knowledge when they draw an inference that a persuasion motive may underlie an agent’s (e.g. salesperson’s) behaviour, such as a flattering speech. Customers’ perceptions of the salesperson are influenced by these motive inferences. Campbell and Kirmani used four experimental studies including role-playing scenarios to test their conceptual model:

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Figure 2: A process model of the PKM in a sales context

Source: Adapted from Campbell and Kirmani, 2000.

As shown in Figure 2, the model describes accessibility of persuasion motives and cognitive capacity to be significant factors for influencing the consumers’ use of persuasion knowledge. According to the authors, the two variables are manipulated in a retail sales context. Before a purchase decision is made, the accessible persuasion motives are the salesperson’s assertion about flattering. On the other hand, if the same assertions appear after the purchase decision, this implies a lower level of the accessible persuasion motives. The other variable - cognitive capacity - can be manipulated by using subjects like the actual customer. Finally, the study concludes that in certain persuasive situations, customers’ persuasion knowledge can be more easily activated when they identify the sales persons’ persuasion motives.

In addition, Mangleburg and Bristol (1998) suggested that there is a close relation between customers’ persuasion knowledge and their scepticism about the trustworthiness of the motives behind advertisements and marketers’ messages. The authors argue that customers who are more experienced and knowledgeable about marketing are more likely to question the trustworthiness of marketers’ messages and motives. Consequently, these customers are more sceptical about persuasion attempts. Similarly, Feick and Gierl (1996) give evidence that scepticism about advertisements and persuasion knowledge differ between nationalities. For example, East Germans, who are said to have low knowledge about free market system, are less sceptical of ads than West Germans, who have had more experience and exposure to branding and marketing (Feick and Gierl, 1996). One may conclude that persuasion knowledge, on the one hand, increases customers’ understanding and awareness of a company’s marketing efforts, and, on the other hand, influences their scepticism and capacity to critically process information.

Another research stream that has been applied to persuasion knowledge focuses on the effects of new advertising formats such as advergames1, in-game advertising2, and product placements (PPL), on customers’ reactions. Marketers have designed new advertising formats with similar characteristics in order to conceal their intention of persuading customers and selling products (De Pelsmacker and Neijens, 2012). Customers hardly realize that they are seeing an advertising as products are presented as a part of a game or TV program. For example, some studies have focused on whether children are able to perceive persuasion attempts and process advertising messages in advergames (An & Stern, 2011; Reijmesdal, 2012). The studies concluded that children cannot determine the agents of advergames or perceive their primary message of selling products because they have low persuasion knowledge and cognitive inability to understand advertising.

2.2 Public Criticism about Marketing

As customers are the core element of marketer’s attention, it is essential to understand their attitudes, motivations, and behaviour. However, little research has been done to examine consumers’ perception about marketing. The few studies that do exist provide a rather negative image of the discipline. Associations like “dishonest” (Sheth and Sisodia, 2006, p. 4), “manipulative” (Kelley, 2007, p. 54) or “amoral” (Heath and Heath, 2008, p. 1027) are often connected with marketing as a discipline and marketing practices.

2.2.1 Scepticism towards Advertising

From a theoretical understanding, scepticism towards marketing and advertising is a complex approach and is defined as the “tendency towards disbelief in advertising claims and mistrust in advertisers’ motives” (Boush, Freistad & Rose, 1994). The framework provides general insights into consumers’ perceptions about the marketplace and impersonal communication (Obermiller & Spangenberg, 1998). According to the authors, customers consider advertising to be exaggerated and ambiguous if they realize that the advertisers’ main purpose is to sell products. As a consequence, the customers’ scepticism results in negative responses towards advertising as well as in resisting persuasive communication. Notably, customers, who are particularly sceptical are prone to disregard advertising claims (Obermiller, Spangenberg & MacLachlan, 2005). Additionally, consumers with a high degree of scepticism do not regard advertisements as a piece of information, and their purchasing habits are weaker compared to consumers with low levels of scepticism (Chen & Leu, 2011; Obermiller & Spangenberg, 1998).

As mentioned earlier, scepticism towards marketing in general and advertising in particular can be influenced by factors such as the characteristics of a product category (Diehl, Meuller & Terlutter, 2007). Previous studies held the view that both product involvement and the characteristics of a product are closely linked to scepticism towards advertising. Mueller (2006) suggested that high customer involvement can reduce scepticism towards advertising, and, furthermore, that customers are more likely to trust advertising claims about high involvement products. As Diehl, Meuller and Terlutter (2007) demonstrated, because of governmental regulations on pharmaceutical advertising, customers are less sceptical of pharmaceutical advertising than of advertising in general.

Lack of faith in advertising claims and mistrust of advertisers motives are the main results of research streams that have emerged from earlier studies concerning the effects of scepticism. The first research stream focuses on the effects of different types of advertising messages on scepticism, such as subjective/objective claims, or search/experience/credence claims. According to Feick and Gierl (1996) and Ford et al. (1990), customers are more sceptical of subjective advertising claims than of objective advertising claims. Furthermore, there is a greater scepticism about experience-based claims than-based search claims. Additionally, as further research suggests, factors like brand familiarity (Hardesty, Carlson & Bearden, 2002), information types (Ford & Smith, 1990; Obermiller & Spangenberg, 2000) or source credibility (Moore & Rodger, 2005) also influence the customers’ scepticism towards advertising.

The second research stream examines the relation between the advertisers’ objectives and the scepticism and responses of customers. As studies have shown, altruistic intentions such as concern for social or environmental issues lead to lower level of customer scepticism and more positive responses as compared to the advertisers’ self-serving motives of advertisers, such as increasing sales or enhancing the company’s reputation (Manuel et al., 2012). Consequently, marketing communication that pursuing the self-serving motives of the company evokes negative attitudes towards the advertising and increases customer distrust (Manuel et al., 2012).

2.2.2 Manipulative Marketing Practices

According to Sheth, Sisodia and Barbulescu (2006,p. 27), customers cynicism towards marketing is increasing while the level of trust is declining. Especially the consumer market is meant to not view any relationship between themselves and companies they do business with. As cited in Mitchell (2001), a survey by the Marketing Forum/Consumers’ Association showed that 83 % of consumers feel that companies see them only as solvent individuals. Moreover, the survey found that 78% of the customers do not recognize substantial differences between different brands. This discontent towards marketing was expressed by not only customers but also professionals from non-marketing departments, who share a negative attitude towards the performance of marketers. Only 34% of the respondents agreed that marketers are strategic thinkers, while 18% of the professionals considered marketing executives to be results-oriented.

Amongst these criticisms, the manipulative nature of practical marketing deserves particular attention. In the given context, manipulation implies “an ability to control the action of another event to the extent of circumventing normal rational processes” (Engel, 1974, p. 6) and the “clever use of influence, especially to one’s own advantage” (Barnhart and Steinmetz, 2008: 630). Furthermore, marketing is accused of using tricks in order to make customers behave in the company’s interests (Sheth and Sisodia, 2005).

Moreover, deceptive marketing practices are considered deliberate or intentional acts implemented by manipulating information about a product in a certain way (Xie and Bousch, 2001). Gardner’s (1975) definition focuses on an orientation towards societal marketing. According to the author, deception in an advertisement occurs when it uses misleading, confusing, or untrue statements to promote a product or service. Even if facts are provided, they are either false or do not provide complete information.

Prior studies on deceptive marketing practices have mainly focused on the areas advertising, and personal selling. In this context, unethical personal sales tactics include brief sales conversations in which the salesperson may take advantage of (Román and Ruiz, 2005). Examples of unethical activities include exaggerating or lying about the benefits of a product or the demerits of a rival brand, or selling products that are not needed (Danciu, 2014). In the summer of 2015, the German online retail store Zalando was accused of applying one of these tactics. Usually, when customers put goods to their virtual shopping cart, they receive a note about how many items of these products are on stock. As Baumeister and Bushman (2011) state, scarce products are more attractive than plentiful ones. In the case of Zalando, the goods were not as scarce as the store pretended. According to the German Wettbewerbszentrale, this information deceives customers as it puts pressure on them in order to make quick purchasing decisions (Kontio, 2015).

According to critics, the misleading use of scientific evidence is another form of deceptive practice in advertising. With regard to the cosmetic industry, Singer claims that “for decades, cosmetics companies have coined their own multisyllabic pharmacological-sounding words” (Singer, 2008). As the author states, this specialized, industry-related vocabulary continues to grow with additions such as ‘skin-illuminating complex’, ‘elastin-refirming complex’, or ‘ceramide’. Without doubt, these terms are introduced to customers in order to highlight the benefits of the products. Nevertheless, companies do not explain what these specific terms actually mean. Singer calls this practice “skinflation‟ (Singer, 2008). Based on this example, advertisers may assume that the use of such language can attract the customer and seduce them into making a positive purchase decision, However, the use of scientific expressions may have the opposite effect, when customers either do not understand these terms or regard them as ‘mock science’.

Apart from linguistic manipulation techniques, advertisements also relay on visual adaption3. By manipulating photos and colours in advertising, feelings and emotions can be provoked or suppressed. On the other hand, the products can be advertised in the sort of lighting that can positively influence the customer. Moreover, it can be claimed that advertising is ‘standardizing’ the expectations of beauty across different ethnical groups, ages, and sexes and creating a concept of the ‘ideal beauty’. The manipulation effect is more than apparent.

As Sheth and Sisodia (2006, p. 6) argue that companies practice unethical and exploitative marketing behaviour in order to increase their sales and achieve their market share targets. According to the authors, unethical marketing takes place when marketing professionals try to spread wrong information, deceive their customers, or engage in activities that are harmful to the public. In other words, marketers attempt to “benefit at the expense of customers rather than with them” (Sheth and Sisodia, 2006, p. 6). In particular, vulnerable like the elderly, children or indigents are affected by the misinformation, false sense, of objectivity or price gouging by companies. These practises do not constitute an exception but do perform an integral part of today’s marketing and can have significant effects for the company. Ethical marketing, on the other hand, may appear to not pay off in the short run, but it builds customer trust and is financially beneficial. Ethical marketing is crucial for building employee morale and loyalty, which are essential conditions for delivering exceptional customer service and providing customer satisfaction (Sheth and Sisodia, 2006, p. 6).

2.2.3 Deceptive Pricing Policies

The term price gouging generally describes increases in the prices of commodities following a disaster (Snyder, 2009, p. 275). As researchers state, price gouging carries a negative moral meaning as in involves profiting unethically from other people’s misfortune. In certain cases, price gouging economically benefits from preventing customers access to essential goods and thus, takes advantage of their needs (ibid). Customers’ knowledge about prices, costs, and profits influences the perceptions of unfair prices in the marketplace. In this context, customers miscalculate the effects of inflation, “even when provided with explicit inflation rates, current prices, and historical data” (Bolton, Warlop & Alba, 2003, p. 488).

In the context of price differences across competitors, customers assume that unequal prices are due to profit interests rather than costs. Equally, when customers compare prices, they consider how profits are made. They also evaluate certain marketing strategies (e.g. margin versus volume strategies) as relatively unequal, even if the store is not responsible for this unfairness. Customers believe that fair price differences can be justified by differences in quality attributions. Moreover, customers tend to ignore cost categories beyond the actual cost of goods. Other cost categories like promotional costs stimulate resentments about unfairness and unethical behaviour (ibid, p. 489). Similarly, Kahneman et al. (1986) argue that customers accept differences in price only when the company tries to maintain a fair profit. This implies that it is fair for retailers to increase prices of snow shovels, for example, if the wholesale price for increases, as well, but not when a snowstorm leads to excessive demand (Anderson & Simester, 2008, p. 493). The emotional aspect of economic decisions is expressed by the concept of fairness. Additionally, the intensity of emotional response to unfair prices depends “on whether the norms of either personal fairness or social fairness have been violated” (Maxwell, 2008, p. 41).

Carr (2000) distinguishes between two forms of fairness. Personal fairness meets an individual’s own personal standards and thus describes his or her preferences. Personal fairness accepts prices that are predicable or prices that are just less than anticipated. Violations of these norms cause unhappiness or dissatisfaction. On the other hand, social fairness assumes that society’s standards are taken into consideration and outcomes and procedures meet the public’s expectations. Hence, socially fair prices are the same for every customer and do not take advantage of customers’ demand. When customers perceive a price as personally unfair, they will be agitated but also motivated to identify the reason for the unfairness. If customers recognize that the personal unfairness is rationale to social fairness, they will buy the product or service. However, if customers figure out that the price is socially unfair, they will certainly be distraught and not make the purchase. In the context of prices, personal and social unfairness are not mutually exclusive. For example, prices of textbooks are considered unfair because books are too expensive for students who need to buy them. Pharmaceutical prices are also seen as unfair because they are higher than anticipated by customers and they are more expensive in Germany, for instance than in Great Britain or France (Kuhrt, 2014)

2.2.4 Consumption-Oriented Lifestyles

This discontent amongst consumers substantiates academic criticism that marketing “rests of its promotion of a consumption-oriented vision of life” (Sheth and Sisodia, 2006, p. 4). It is argued that marketing has led to serious changes in the buying behaviour of customers and therefore has harmed both individuals and society. Marketing is considered an important factor in the emergence of present- day society where individuals are focused on growing and unsustainable spending. Consequences of excessive buying have developed, including increasing consumer debt, economic difficulties and negative emotions like anxiety have developed (Malhorta et. al, 2006, p. 45). More than 40 years ago, Peter Drucker (1973, p. 64) recognized the evolution of consumerism: “Despite the emphasis on marketing and the marketing approach, marketing is still rhetoric rather than reality in far too many businesses. ‘Consumerism’ proves this. For what consumerism demands of business is that it actually market. It demands that business start out with the needs the realities, the values of the customer. It demands that business define its goals as the satisfaction of customers’ needs. It demands that business base its reward on its contribution to the customer. That after twenty years of marketing rhetoric consumerism could become a powerful popular movement proves that not much marketing has been practiced. Consumerism is the ‘shame of marketing”.

Even though it is not a new approach in marketing, consumerism is growing in importance. The term can have various meanings whereas key principles are not clearly defined. Papasolomou (2014, p. 2) suggests that consumerism is revealed in three different concepts: The first definition refers to a negative, manipulative business approach that tempts customers to buy more than they need. In this context, consumerism means the overuse of promotion and aggressive selling and advertising techniques that aim to expand customers’ desires and needs (Day and Aaker, 1997, p. 44).

A second definition of consumerism is used to describe the public efforts to protect customers’ rights. As Papasolomou states, the consumerist movements refer to consumer activism that seeks marketing practices as honest advertising communications and improved safety standards. Consequently, this definition can be summarized as the reactions of society to the first definition. As Kotler (2000, p. 152), states, consumerism is “an organized movement of citizens and governments to strengthen the rights and powers of buyers in relation to sellers”. Similarly, consumerism is defined as “organized group pressure which has become a set of values held not only by the consumers of a company’s products but also within the wider society” (Jones et al., 2005, p. 35). The customer movement expanded from the USA to Western Europe with U.S. President Kennedy’s call for “Bill of Customer Rights”, in which he announced customer rights such as the right to be informed, the right to be heard, the right to choose and the right to safety (Lampman, 1988). In light of this perspective of consumerism, marketing exaggerates the customers’ short-term needs by impairing their long-term wellbeing. Therefore, the second definition evokes the need for sufficient satisfaction of customer needs.

The last definition of consumerism refers to buying as a process for achieving wellbeing and happiness. As Murphy (2000, p. 636) states, consumerism is “the doctrine that the self cannot be complete without the wealth of customer goods and that goals can be achieved and problems solved through proper consumption”. This implies that individual happiness equals material consumption. From a social perspective, customers acquire products in order to display their wealth and use possession as status symbols. Consequently, consumerism is a means for demonstrating one’s social standing and power to others.

As studies by neuro-economics and behavioural economics suggest, shopping activities are emotional reactions and not rational decisions as assumed by the media. Moreover, customers are subject to manipulation (Shermer, 2008). On the one hand, shopping has become a popular pastime. On the other hand, disposable incomes in prosperous societies have grown far above the minimum income needed to exist. As a consequence, impulse shopping takes up an increasing part of the consumers’ budgets. As Schore (1998, pp.8) mentioned, spending is an increasingly competitive activity for affluent customers, and the idea of ‘keeping up with the neighbours’ has transformed into keeping up with people, who have higher incomes, as can be estimated, from their private environment, workplace and/or the media. This behaviour suggests that customers are behaving less rationally (van Tuinen, 2011, p. 7).

[...]


1 Advergames are customized online-games around products or services with the aim to create branded entertainment for the participant and to increase customer interaction with the promoted product or service (Interactive Advertising Bureau, 2010, p. 9; Moore & Rideout, 2008; Dahl, Eagle and Benz, 2009).

2 In-game advertising is the inclusion of products or services in digital games, usually in the form billboards or sponsor signage, in order to entertain the user. Unlike advergames, games with in- games advertising are not specifically designed or created to promote the product (Terlutter & Capella, 2013, p. 95).

3 In 2008, L’Oréal was criticized for using a picture of the singer Beyoncé Knowles in which both her hair and her skin were looking much lighter than usual. As Paris states is this is the “ultimate insult to every black woman out there” (Paris, 2008).

Details

Pages
108
Year
2016
ISBN (eBook)
9783668607989
ISBN (Book)
9783668607996
File size
1.7 MB
Language
English
Catalog Number
v383158
Institution / College
University of applied sciences
Grade
1
Tags
Marketing Perception Advertising Manipulation Criticism Knowledge Customer Persuasion Positive Marketing Customer attitudes

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Title: Reflection on customers’ knowledge and perceptions about marketing