How Consumers Assess Free E-Services

cyberspace-2784907_1920[We’re pleased to welcome authors Björn A. Hüttel of the University of Passau, Jan Hendrik Schuman of the University of Passau, Martin Mende of Florida State University, Maura L. Scott of Florida State University, and Christian J. Wagner of the University of Passau. They recently published an article in the Journal of Service Research entitled “How Consumers Assess Free E-Services: The Role of Benefit-Inflation and Cost-Deflation Effects,” which is currently free to read for a limited time. Below, Dr. Hüttel reflects on the inspiration for conducting this research:]

02JSR13_Covers.inddWhat motivated us to pursue this research was that free digital services are dominating the Internet, however to date it is not well understood why free online services are so successful. In particular, the business model of successful service firms such as Google or Facebook rest on consumers’ nonmonetary payments, for example users must pay the “free” service by giving their attention to advertising. To illustrate further, consumers may receive a free email account or music subscription, but incur nonmonetary costs through exposure to advertisements or disclosure of personal information. Due to the importance of nonmonetary costs for the design of free digital services, we were interested in how consumers perceive nonmonetary costs and how these cost perceptions influence their decisions for or against the usage of free online services.

Because we identify novel mechanisms that help explain free services’ success we believe that our findings can impact the research field of “free” as a business model as well as the behavior of consumers when deciding to purchase free digital services. Specifically, from a consumer perspective, we find that consumers should be cognizant that their decision for or against the usage of free online services is influenced by two distinct effects: a benefit-inflation effect, such that they tend to overemphasize the benefits of free service offerings, and a cost-deflation effect, such that they judge the corresponding nonmonetary costs as lower. These two effects are separate drivers of the success of free digital offerings and consumers must recognize that the effects can and will be leveraged by marketers such as by bundling free services with relatively more advertisements. Consumers thus must realize that a label “free” means that they often have to contribute more nonmonetary costs, a fact which they should consider when evaluating a free digital service offering.

From an industry point of view, our findings have implications for the success of business models in the online environment. Firms that intend to switch their business model from free to fee and offer e-services for very low prices (i.e., apps for $.99) should note that consumers will likely judge the associated nonmonetary costs as significantly higher in the presence of the monetary fee, with negative downstream effects on demand. Therefore, it may be more effective to offer the service for free and benefit from the cost-deflation effect by selling more advertising

We like to thank Kristina Shampanier, Nina Mazar, as well as Dan Ariely for their inspiring initial work on the zero-price effect, on which we build heavily. To continue, we believe that future research in this field is necessary, especially in light of the growing importance of nonmonetary cost-related topics in the society such as consumer privacy concerns, private data usage and the employment of customers for conducting co-creation tasks in order to receive free offerings.

02JSR13_Covers.inddStay up-to-date with the latest research from the Journal of Service Research and sign up for email alerts today through the homepage!

Customer Service photo attributed to jarmoluk. (CC)

Do Consumers Avoid Genetically Modified Wines?

25725080022_cd89993d82_z[We’re pleased to welcome Christina Chi of Washington State University. Christina recently published an article in Cornell Hospitality Quarterly entitled “Ready to Embrace Genetically Modified Wines? The Role of Knowledge Exposure and Intrinsic Wine Attributes” with co-authors Lu Lu of Washington State University and Imran Rahman of Auburn University.]

  • What inspired you to be interested in this topic?

The consumption of genetically modified (GM) products is one of the most debatable and significant issues that influence consumers’ purchase behaviors and dining trends. As a critical component of hospitality business, alcoholic beverages (e.g., wines) are highly influential on guests’ dining experience and business revenues. However, existing research provides little insight concerning consumers’ experience with GM wines and their purchase decisions. Therefore, we were inspired to open up a research avenue in this area.

  • Were there findings that were surprising to you?

What slightly surprised us was the strength of aroma and taste in wine drinkers’ decision making. Our study reveals that consumers’ decision making is solely driven by wines’ aroma and taste, which override health or environmental concerns. This finding is critical for wine sellers to better understand the importance of different wine attributes in influencing wine appreciation and purchase decision making.

  • How do you see this study influencing future research and/or practice?

CQ CoverIn addition to opening up a significant but underexplored research stream, this study highlights the rigor of using experimental approach and sensory techniques to understand the behavioral dynamics of experiential products, which may not be fully captured using self-report surveys. More importantly, this research delivers timely strategies for the industry against the backdrop of labeling GM products and offers an in-depth analysis of wine drinkers’ behavior involving conflicts of choice.

The abstract for the paper:

This study examines whether knowledge exposure and supreme wine attributes such as appearance, aroma, taste, and hangover avoidance influence consumers’ quality evaluation and purchase intentions of genetically modified (GM) wines. We conducted two experimental studies in two different settings involving a total of 321 subjects. Results indicate that educating consumers with knowledge on GM wines efficiently reduces the fear caused by GM identity. Importantly, the desirable organoleptic and functional performances of GM wines not only reduce consumers’ concerns with GM products but also enable GM wines to surpass conventional options that are less salient in these performances. Specifically, consumers would choose a GM wine over traditional options if the GM wine has a superior appearance and the ability to eliminate a hangover. Furthermore, consumers express equal acceptance of GM wines and traditional counterparts when there are no differences in aroma and taste. This research delivers significant implications for wine marketing through examining a timely and controversial subject matter.

You can read “Ready to Embrace Genetically Modified Wines? The Role of Knowledge Exposure and Intrinsic Wine Attributes” from Cornell Hospitality Quarterly free for the next two weeks by clicking here. Want to know all about the latest research from Cornell Hospitality QuarterlyClick here to sign up for e-alerts!

*Wine image attributed to James Petts (CC)

Christina Geng-Qing Chi is an associate professor at the School of Hospitality Business Management in the Carson College of Business, Washington State University. Her area of research includes tourism marketing, hospitality/tourism consumer behavior and sustainability in tourism/ hospitality industry. Her research has been published broadly in top tier tourism/hospitality journals and presented at numerous hospitality/tourism conferences. Dr. Chi serves on the editorial boards for several hospitality/tourism journals and reviews papers for top tier hospitality/tourism journals.

Imran Rahman is an Assistant Professor in the department of Nutrition, Dietetics, and Hospitality Management at Auburn University, Auburn, Alabama, USA. His current research program focuses on sustainability in the hospitality industry with an emphasis on consumer behavior in green hotels. He is also actively researching in food and beverage emphasizing primarily on wine consumer behavior.

Lu Lu is a Ph.D. candidate and instructor of School of Hospitality Business Management, Carson College of Business at Washington State University. Her research interests encompass consumer behavior in food and beverage consumption, culture and tourists’ destination experience and complaining efforts.

Diversify and Conquer: An Argument for Reinvigorating Marketing Science with Behavioral Science and Humanities

[We’re pleased to welcome Gerald Zaltman of Harvard Business School and Olson Zaltman Associates. Dr. Zaltman recently published an article in Cornell Hospitality Quarterly with co-authors Jerry Olson and James Forr of Olson Zaltman Associates, entitled “Toward a New Marketing Science for Hospitality Managers.”]

In “Toward a New Marketing Science for Hospitality Managers,” published in the Cornell Hospitality Quarterly, Jerry Olson, James Forr, and I point out that much of CQ_57_1_Cover.inddmarketing research and a great deal of marketing thought and action is influenced by the ideas and methods of an old marketing science.  We argue that a New Marketing Science is needed in which scientifically sound ideas and methods from the behavioral sciences and humanities are integrated around a coherent scientific perspective.  We feel this is especially important since life in the marketplace is experienced holistically and not in the silo like ways that companies, universities, and specific professions are organized.

Although current marketing does explore new ideas and methods, including neuro/biometric methods and big data approaches, these ideas are often treated piecemeal — used in isolation or as independent add-ons to more traditional work.  In contrast, we advocate integrating the best ideas and approaches from diverse fields to develop a new marketing science.  In “Toward a New Marketing Science” we focus on how key ideas from the mind sciences can produce a deeper and richer understanding of the minds of customers and also the minds of managers.  Other fields containing equally exciting marketing related advances include, linguistics, anthropology, sociology, philosophy, ethnomusicology, and art therapy, to name a few.

We provide four examples of applying a New Marketing Science approach to create emotionally resonant hospitality experiences.  However, the principles of a NMS can be applied to any marketing problem in any industry.  Practicing the NMS requires bold, imaginative thinking that goes beyond simple borrowing of ideas and imitation of best practices.

The abstract:

A New Marketing Science (NMS) is proposed that can dramatically improve a firm’s marketplace performance. The NMS challenges managers to dare to think and act differently. It generates deep insights into the thoughts and actions of both customers and managers and how the two mind-sets interact. As several examples illustrate, it departs from the “old” marketing science by its emphasis on imagination, knowing how and why a practice works, understanding the total customer experience, and focus on effectiveness over efficiency. The NMS is grounded in principles from the behavioral sciences and humanities such as the importance of the unconscious mind, the way mental frames serve as interpretative lenses, the centrality of emotions, the reconstructive nature of memory, and the importance of metaphor for learning about and influencing choices.

You can read “Toward a New Marketing Science for Hospitality Managers” from Cornell Hospitality Quarterly free for the next two weeks by clicking here. Want to know all about the latest research from Cornell Hospitality Quarterly? Click here to sign up for e-alerts!


 
Gerald ZaltmanGerald Zaltman is Founding partner in Olson Zaltman Associates and the Joseph C. Wilson Professor of Business Administration Emeritus at Harvard Business School, where he also was co-director of The Mind of the Market Laboratory. He has authored over 20 books including: How Customers Think: Essential Insights into the Mind of the Market and Marketing Metaphoria: What Deep Metaphors Reveal about the Minds of Consumers.

Jerry OlsonJerry Olson is Founding Partner in Olson Zaltman Associates and Professor Emeritus at Penn State University’s Smeal College of Business where he was Earl P. Strong Professor of Marketing and Department Chair. He has published more than 60 papers on these topics in conference proceedings and academic journals , including Journal of Consumer Research, Journal of Marketing Research, and Journal of Marketing.

James ForrJames Forr is a director at Olson Zaltman Associates. He has led projects for Fortune 100 clients including IBM, Bank of America, PepsiCo, and P&G along with non-profit and public sector clients such as the AFL-CIO and the Funeral Service Foundation.  He also has led two projects that have helped clients win prestigious Ogilvy Awards from the Advertising Research Foundation.

 

Gerald Zaltman on New Marketing Science for Hospitality Practitioners

cqx coverGerald Zaltman, Joseph C. Wilson Professor Emeritus at Harvard Business School and creator of  the first patented market research tool in the United States titled the Zaltman Metaphor Elicitation Technique, recently collaborated with Jerry Olson and James Forr of Olson Zaltman Associates on their article “Toward a New Marketing Science for Hospitality Managers” from Cornell Hospitality Quarterly.

The abstract:

A New Marketing Science (NMS) is proposed that can dramatically improve a firm’s marketplace performance. The NMS challenges managers to dare to think and act differently. It generates deep insights into the thoughts and actions of both customers and managers and how the two mind-sets interact. As several examples illustrate, it departs from the “old” marketing science by its emphasis on imagination, knowing how and why a practice works, understanding the total customer experience, and focus on effectiveness over efficiency. The NMS is grounded in principles from the behavioral sciences and humanities such as the importance of the unconscious mind, the way mental frames serve as interpretative lenses, the centrality of emotions, the reconstructive nature of memory, and the importance of metaphor for learning about and influencing choices.

You can read “Toward a New Marketing Science for Hospitality Managers” from Cornell Hospitality Quarterly for free by clicking here. Want to know when all the latest research like this is available from Cornell Hospitality Quarterly? Click here to sign up for e-alerts!

Listen to the Podcast on Cornell Hospitality Quarterly’s 2014 Best Article Award Winner!

cqx coverWe’re pleased to congratulate Kathryn A. LaTour of Cornell University and Lewis P. Carbone of Experience Engineering, winners of Cornell Hospitality Quarterly‘s 2014 Best Article Award for their article “Sticktion: Assessing Memory for the Customer Experience.” The pair discussed their study on assessing memory for the customer experience in the latest podcast from Cornell Hospitality Quarterly.

You can click here to download the podcast. You can also read the article for free by clicking here.

Want to know about more research like this? Click here to browse all of the podcasts from Cornell Hospitality Quarterly and here to subscribe to the SAGE Management and Business podcast channel on iTunes. You can also sign up for e-alerts and have notifications of all the latest articles from Cornell Hospitality Quarterly sent directly to your inbox!

klatourKathryn A. LaTour, Ph.D., is an associate professor of services marketing at the School of Hotel Administration, Cornell University (kal276@cornell.edu). She is a consumer psychologist focusing on how consumers remember and learn from their consumption experiences. Her current research involves understanding how expertise is developed within the context of wine.

lou-carbone-lgLewis P. Carbone (“Lou”) is a chief experience officer at Experience Engineering, a consulting company based in Minneapolis, Minnesota, that works with many Fortune 500 companies on the design of their experience offerings (http://www.expeng.com) (lcarbone@expeng.com) He earned a bachelor’s degree in political science from Thiel College, Greenville, PA.

Designing Better Customer Service Experiences Using “Sticktion”

The customer may always be right, but research has shown that their memory can sometimes fail them when recollecting service experiences. Fortunately, there may be a solution in the form of “sticktion.” Kathryn A. LaTour and Lewis P. Carbone discuss the use of this technique in their article from the November issue of Cornell Hospitality Quarterly entitled “Sticktion: Assessing Memory for the Customer Experience.” The authors also had a chance to sit down and talk about their findings in the video below:

Click here to read “Sticktion: Assessing Memory for the Customer Experience” from Cornell Hospitality Quarterly! Want to know about all the latest news and research from Cornell Hospitality Quarterly? Click here to sign up for e-alerts!

Using “Sticktion” for a Better Customer Experience

Businesses work hard to ensure that their customers walk away happy. But just how much of a good experience dodont-forget-729159-m customers even remember? What can be done to make sure they remember more? That’s what Kathryn A. LaTour and Lewis P. Carbone set out to discover in their article “Sticktion: Assessing Memory for Customer Experience,” published in Cornell Hospitality Quarterly.

The abstract:

In the quest for better service design, hospitality and service firms have often been frustrated to find that service experiences that are based on what customers say they want are not always successful. A psychological analysis of this phenomenon suggests the following premises: (1) Customers’ memory of an experience fades quickly; (2) customers’ memory of an experience comprises many sub-experiences; (3) customers’ memories of experiences are multidimensional and cqx coverunintuitive; and (4) consumers cannot accurately predict what they will learn or remember. The goal of an experience design is to create a series of sub-experiences that will “stick” with the customer. This “sticktion” analysis is applied to the practical challenge of redesigning the customer experience at Pizza Hut UK. This consumer research provides a test of the four premises and an application of the underlying sticktion principles. Surveys of Pizza Hut customers found that the existing experience had its bright spots but was generally forgettable. Not only could customers not predict what they would remember about the experience, but one week after visiting the restaurant, the customers also filled in memory gaps with details that did not appear on their initial description of the visit. Even more troublesome was the fact that the invented details tended to be negative. To fill these gaps, the researchers tested specific aspects of the experience that would “stick” and included those in the new restaurant concepts. Using this approach, the chain was able to roll out new concepts that met with initial favorable results.