III
A New Framework
9
THE INFLUENCE MIX
WE DOUBT THAT many readers of this book frequently visit certain fan pages on Facebook, such as those dedicated to paper towel brands like Bounty or Brawny. So if youâve ever wondered whatâs happening on those pages when youâre not looking, hereâs a quick snapshot from a random week in the winter of 2012. On the Bounty page, the moderator asked fans: âHave an endless to do list? If only Bounty could wipe away some chores. What do you want to wipe away this week?â Nineteen people had something to say about that. At the Brawny Towels page, a different question was presented: âEat a Red Apple Day is tomorrow. Name one of the messiest recipes that calls for apples!â Thirty-four people responded (applesauce seemed to be the winner).
With marketersâ rush to social media, we often see strategies that are adopted across categories without much attention to how well they are aligned with the way consumers make decisions in a certain domain. Inviting fans to âjoin the conversationâ can be perfect in some categories, but the potential impact of engaging consumers in a conversation about paper towels is limited at best.
Things work differently in different categories. The shifts we describe in this book will not happen evenly across the board. There are areas where they are in full swing, then there are areas where they are progressing very slowly, and there are domains they will most likely never reach. We donât expect these trends to apply in the same way to cars and paper towels, to well-connected and to less connected consumers, and to decisions made with or without time pressure. In this chapter we introduce a frameworkâthe Influence Mixâthat lays the foundation for this discussion. Simply put, this framework should help marketers determine the relevance of the trends weâve described to their particular situation. From brands losing their role as proxies for quality to the declining effectiveness of persuasion techniquesâthe extent to which these trends apply to a particular firm depends on its customersâ Influence Mix.
We start with a simple idea: A personâs decision to buy is affected by a mix of three related sources:
- The individualâs Prior preferences, beliefs, and experiences (P)
- Others. Other people and information services (O)
- Marketers (M)
For example, when you buy a new cell phone, youâre influenced by your prior attitudes, habits, and pre-stored information (P), by your friends, reviewers, and experts (O), and by the cell phone marketer (M). Letâs briefly discuss the main characteristics of each of these sources.
PâOften Vague and Unstable
Prior preferences refer to all the consumerâs pre-stored information, attitudes, beliefs, and feelings about something. As consumers, we like to think that our preferences are well defined and clear, but this is often not the case. As we explained in Chapter 2, because preferences (especially for less frequently purchased products) are often vague and not so stable, they can be influenced by the context (or the options that happen to be in front of you), how you are asked to express your preferences, and the description of options. Although we have argued that these arbitrary influences become less effective and controllable in the new environment, there is still plenty of evidence that preferences can be influenced. Such vagueness and instability are inherent to preferences and are unlikely to change regardless of the amount of available information. P also has a stable, âharderâ part, which we will discuss later in this chapter, but if we have to leave you with a couple of keywords regarding P, we would say that, more often than not, these words would be âvagueâ or âunstable.â
OâOften Trusted and Diverse
O is an umbrella notation that we use for âother peopleâ and information services. It includes all the information sources other than P or M: reviews from other users, expert opinions, price comparison tools, and other emerging technologies or sources. When making purchase decisions, consumers want to make good decisions and avoid risk. And O is often regarded as the most useful source. In some cases (as many consumers have learned from experience) information from O can be just as biased as information from M, but even when that is the case, many consumers perceive the opinions of O as more credible. They love the feeling of âgoing behind the backâ of M to get the real scoop from O. A big asset of O is in its richness and the nuanced information it provides, which derives in part from the large and diverse sample size. When you look at a hotel on a review site, you see it through the eyes of dozens, sometimes hundreds of reviewers. These reviews are based on different times people visited the hotel, the particular employees who happened to serve them, and each reviewerâs specific point of view. O includes a wide range of information providers and influencers, which are quite diverse in terms of their characteristics, how they are perceived, and their roles across product and service categories and consumer segments. Within the different O contributors there is kind of a division of labor, with each party doing what it can do best. For example, while regular users tend to emphasize their experience, experts such as Consumer Reports or CNET emphasize what they do betterâcomparison of specs and objective performance.
MââThe Usual Suspectâ
It wonât come as a surprise to most readers that consumers donât trust marketers as much as marketers would like them to. At its core, this doesnât originate from marketers being dishonest but from the fact that they have an obvious vested interest. Given this inherent mistrust, it may sound surprising that people even look at ads, engage with brands on Facebook, or visit company websites, but this can be easily explained. For one, consumers are often fine with getting basic information from brands; they trust marketers when it comes to specifications, color, availability, or special deals. (The number-one reason for why consumers âlikeâ brands on Facebook is to be eligible for special offers.)1 But when it comes to assessment of the quality of a product, marketers are not seen as objective as experts or other consumers.
WHEN âVAGUEâ MEETS âTRUSTEDâ
We think of the Influence Mix as a zero-sum game. For any given decision, the greater the reliance on one source, the lower the need for other sources. So a rise in the weight of one factor must come at the expense of another. For example, if the impact of O on your camera purchase goes up, the influence of M and/or P must be lower. To be clear, weâre not talking about a Rock, Paper, Scissors game among P, O, and M, with one source coming on top. Itâs simply that the three sources are compensatory and together drive decisions, so an increase in one diminishes (but usually doesnât eliminate) the importance of another.
Reliance on information sources is, of course, a function of their costs and benefits, and in the past decade weâve seen a significant rise in benefits and a simultaneous decline in costs of information from O, which has drastically increased the relative contribution of this source.2 The main winner is O and the main loser is M because in most cases O is a direct, dominating substitute for M. Marketersâ self-interest makes them inherently suspect, whereas O (despite its limitations) offers much richer and more credible information about products.
What about P? Why doesnât P take over the mix more often? To understand the answer, a few more words are due about its vagueness. Thereâs a great scene in the Marx Brothers movie Duck Soup in which Chico tries to pass himself off as Groucho. He places a fake mustache under his nose and sticks a cigar in his mouth, but one of the characters, Mrs. Gloria Teasdale, is skeptical because she just saw the real Groucho leave the room. To persuade her that he indeed is Groucho, Chico delivers a killer argument: âWell, who you gonna believe, me or your own eyes?â3 As it turns out, this line is not as absurd as it might sound. There are experiments that show that sometimes we are willing to rely so much on other people, that we are willing to push aside not only our preferences, but the evidence in front of us.4 And plenty of research shows that peopleâs beliefs and preferences are often ill-defined, so information from O may overshadow prior beliefs and perceptions.
We can think of the impact of O in terms of the classic economic distinction between âsearch goodsâ and âexperience goods.â5 The quality of search goods and their attributes, such as the beauty of flowers, can be inspected and determined before purchase, whereas experience goods and their attributes, such as cars, movies, and new types of food, can be assessed accurately only after gaining personal experience.6 Now, if reliable O provides accurate information about quality, then more and more products become effectively like search goods, for which quality can be assessed before purchase. In fact, in many (but certainly not all) cases, the information available before purchase is a better predictor of an individualâs long-term consumption experience than that personâs own initial personal experience with the product. For example, a car may have an unexpected problem during the first week of ownership, but its reliability ratings, for example, in J. D. Power and Consumer Reports, are likely to be better predictors of the consumerâs long-term experience with that car.
If youâre looking for a summary of how influence is transforming in many categories, here it is: Since P is vague and unstable, other sources usually capture âdecision shareâ from it. In the past, M gladly played this role, but with the rise in availability of O (which is perceived as more informative and reliable), O is taking over.
NOT SO FAST, MY FRIEND
Itâs important to understand that while the last paragraph reflects the general trend, there are cases in which P or M still dominates the mix. If youâre a parent, weâre sure youâre well aware that O has its limits. Your children donât automatically like brussels sprouts or broccoli just because they see you eat them and hear from you how good they are. People can have strong preferences that dominate their decisions. Consider how the authors of this book feel about dark chocolate. Emanuel cannot stand it. Itamar, on the other hand, considers 90 percent cocoa content chocolate a healthy delicacy and has communicated his love for this confection to Emanuel many times (some would say, too many times). But this O influence has not left a dent on Emanuelâs preferences. Ads or articles that highlight the health benefits of dark chocolate have not been successful, either. In other words, Emanuelâs deeply rooted, well-rehearsed (negative) preferences for this product donât leave much room for O or M influence. There are cases where P is clear and transparent, and in those cases it dominates the decision.
Think about how you feel about cilantro, licorice candy, or jazz. Your preferences for these things are probably stable and very clear to you. Could someone simply trick you into liking or disliking these things? Probably not. You either like jazz or you donât. The existence of stable preferences sounds pretty obvious, but for the past few decades, researchers in the area of behavioral decision theory have raised serious doubts about the existence of any such stable preferences (except for repeat, habitual decisions and brand loyalty). Instead, the common belief in the field has been that preferences are typically constructed when decisions are made, and then they usually dissipate. Yet in some cases, stable preferences play a bigger role than they get credit for.
Incidentally, the roots of theses stable preferences may surprise you. The results of a study that Itamar recently conducted with Aner Sela from the University of Florida suggest that peopleâs preferences for jazz, chocolate, sci-fi movies, compromises, and (maybe) hybrid cars appear to have a large heritable component. No, people donât have a Prius gene, but the study suggests that a certain combination of heritable traits leads a large group of consumers to behave in a similar way. What does this mean? It means that part of your liking (or disliking) of dark chocolate doesnât come from your experience with chocolate and from M and O influence. Rather, it may be in your DNA. (Notice the words âpartâ and âmay.â Nobody is arguing that chocolate preferences are totally genetic. And it will take years before we fully understand the exact meaning of these results.)
When you walk into the supermarket, many of your routine or habitual purchases are dominated by P. Getting milk, bread, and eggs into your shopping cart is a matter of habit and is affected mainly by your prior preferences, leaving little room for M or O influence. Of course, at some point P may have been shaped by M and O. Your long-term preferences for chocolate are also influenced by chocolate inputs in the environmentâboth the actual chocolate and the abstract concept of chocolate. Everything people around you said about chocolate. All those Hersheyâs or Cadbury commercials youâve seen over the years. So advertising (M) and your friends (O) can, over time, help shape your preferences (P). These external forces can also affect whether your hidden preference tendencies will see the light of day. For instance, while many video game players had the potential to enjoy a motion-sensitive remote, without the creative idea of the Wii inventor that preference would not have come to light.
Our main point is this: With all due respect to O, marketers should understand its proper role in each category. While people may, once in a while, talk about paper towels, their choice is not significantly influenced by their peers in this domain. Even in categories that people discuss more often, the chatter doesnât always mean that O dominates the decision. Hereâs an example: Around the turn of the millennium, everybody was talking about Krispy Kreme doughnuts. Nicole Kidman reportedly referred to them as âGodâs gift to doughnut loversâ and, according to Fast Company, Willard Scott of NBC revealed that he worships in âthe church of Krispy Kreme.â At first, this may seem to imply that the Influence Mix was dominated by O, but think about the way consumers make decisions in this domain. While itâs true that people tell their friends about a new doughnut place (and weâve seen a few doughnut shops with more than a thousand reviews on Yelp), by and large people donât decide on getting a doughnut by reading reviews, listening to Nicole Kidman, or conducting extensive research. Having lots of people buzz about your product can certainly be a good thing, but it doesnât automatically mean that O is a major component in consumersâ decisions. When it comes to doughnuts, decisions are influenced by things like prior preferences, store location, and promotional activities, which means that managers like those at Krispy Kreme should not be blinded by the buzz about their brand (which is bound to die out, as it did around 2004 for Krispy Kreme) and should continue to invest in marketing activities such as coupons and other promotions.7
When O or P donât play a major role in a purchase decision, it means that room is left for M influence. Think about buying a toothbrush, for example. Standing at the drugstore in front of an aisle of toothbrushes, a shopper is likely to be influenced by whatever is at her eye level, the packaging of the product, and by brand. So makers of toothbrushes are likely to operate under different rules than carmakers, for example. Yet too often we hear sweeping generalizations about âmarketingâ regardless of the product category.
SO WHATâS YOUR CUSTOMERSâ MIX?
Marketers must understand their customersâ current and future Influence Mix, that is, the importance of P, O, and M for their customersâ purchase decisions, given the product category, their customersâ characteristics (which, of course, vary by customer segment), and the brand position. As a framework, the Influence Mix can help marketers analyze how the weights of the three sources are likely to evolve over time and, accordingly, how much and where to invest their marketing dollars. Put a different way, your Influence Mix can help you understand the significance of absolute evaluations in your case, and, in turn, this may determine whether your company should use its traditional marketing framework or adopt a whole new way of looking at things.
The critical questions for you to ask are: To what extent do my customers currently depend on O and on specific O types or ingredients in making their purchase decision, and to what extent might they depend on O in the future? Since weâre not dealing wit...