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European Journal of Marketing From segmentation to fragmentation: Markets and marketing strategy in the postmodern era A. Fuat Firat Clifford J. Shultz II
Article information: To cite this document: A. Fuat Firat Clifford J. Shultz II, (1997),"From segmentation to fragmentation", European Journal of Marketing, Vol. 31 Iss 3/4 pp. 183 - 207 Permanent link to this document: http://dx.doi.org/10.1108/EUM0000000004321
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From segmentation to fragmentation
Markets and marketing strategy in the postmodern era
A. Fuat Firat and Clifford J. Shultz II Faculty of Marketing, Arizona State University West, School of
Management, Phoenix, USA
Introduction There have been several philosophical debates in the history of marketing thought about the discipline’s mission and role within business and society. Among these debates are science versus art, the extent to which the marketing concept should be broadened, and the recent debates on method and philosophy. From them emerged and continue to emerge new directions and challenges for marketing and marketers. Of course, these debates are (were) usually spurred by social forces or evolving business conditions that inspire(d) the need for fresh thinking. One of the most compelling forces today would appear to be the advent of postmodernism. As a new perspective, which has been very effective in the arts and humanities (Foster, 1985; Kaplan, 1987; Stephanson, 1988), as well as in architecture (Jencks, 1987), postmodernism seems likely to make, and by some accounts is already making (Gitlin, 1989; Habermas, 1983; Hutcheon, 1988; Jameson, 1992), an impact on contemporary culture, generally, and consumer culture, specifically. This impact has not been lost on marketing scholars, many of whom have begun to examine postmodernism within the context of their discipline (Brown, 1993a, 1993b; Firat, 1990, 1991, 1992, 1993; Firat and Venkatesh, 1993, 1995; Firat et al., 1993, 1994; Ogilvy, 1990; Sherry, 1991; van Raaij, 1993; Venkatesh, 1989, 1992). Moreover, subsumed under the impact of postmodernism across institutions is the belief that postmodernism may also considerably affect the way that marketing organizations will need to conduct business into the next century. Inde ed, the modus operandi for marketers in a postmodern era may be “business as unusual”. Consequently, there may be a need for traditional marketing management practitioners to reassess their assumptions about markets and the strategies they use to create competitive advantage and to capture market share.
Contributions by marketing scholars have generally focused on the implicit impact of postmodernism on marketing (Brown, 1993a, 1993b; Firat, 1992; van Raaij, 1993), yet our review of the literature led us to conclude that the implications of postmodernism for strategic marketing have received little if any attention from marketing scholars. Our objective, then, is to expand the discussion of postmodernism’s impact on the discipline of marketing and, more
European Journal of Marketing, Vol. 31 No. 3/4, 1997, pp. 183-207.
© MCB University Press, 0309-0566
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specifically, to suggest strategic contingencies for marketing managers and research opportunities for marketing and consumer research scholars.
The expanding influence of postmodernism Postmodernism, for a time considered to be a fad by some members of almost all academic disciplines, could prove to be a serious contender as a new perspective from which to view and to act in the world, generally, and the business world, specifically (see Brown, 1993b). This premiss clearly has far- reaching implications for marketing managers. Despite its academic and popular adversaries (see Bhaskar, 1991; Eagleton, 1990; Habermas, 1983; Hill, 1993), postmodernist insights and ideas seem to be commanding growing attention and creating serious interest across many disciplines, including architecture (Frampton 1983; Jencks, 1987), art (Levin, 1988; Wallis, 1984), philosophy (Derrida, 1982; Lyotard, 1984; Madison, 1988), literary criticism (Jameson, 1992; Wilson, 1989), women’s studies (Nicholson, 1990) and history (Winders, 1991). Although marketing and consumer research disciplines have been relatively slow to recognize the impacts and existence of postmodernism as compared to sociology (Bauman, 1992), political science (Angus and Jhally, 1989; Aronowitz, 1988), and even the management discipline (Bergquist, 1993), recently postmodernist implications have begun to be explored by marketing scholars (as previously cited). In marketing, these implications may be more than practical, operational, or even theoretical. They may, by some accounts (Firat and Venkatesh, 1995), result in substantial redefinition of the character and the role of the field. For example, an articulation of postmodernist insights for marketing and the consumers of a possibly postmodern era may suggest that some of the most central tenets and/or principles of marketing – e.g. the marketing concept – be re-thought and modified extensively. The purpose of this paper is to explore these practitioner relevant implications, especially as they pertain to segmentation and positioning, two of the most central and strategic concepts in marketing management (Kotler, 1991).
Segmentation and positioning have been singled out because they are cornerstones of marketing management, yet emerging trends would suggest traditional conceptions of either may not be as meaningful or satisfactory as once thought, if we hope to understand or explain emerging market conditions. Therefore, marketers may ne ed to develop different conceptions and approaches to segmentation and positioning if they wish to achieve marketing objectives. The aforementioned literature implies the need for transformation(s) in how we view markets. That is, if and when postmodern changes (further) entrench themselves in our societies, no clear or specific recommendations have been promulgated that will enable practitioners to respond to the concomitant marketing challenges. We intend to recommend proactive strategies and frameworks for marketers interested in successfully responding to those challenges.
To accomplish this task we shall refer to the framework developed by Firat and Venkatesh (1993), taking into consideration the extensions to this
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framework offered by van Raaij (1993) and Brown (1993a, 1993b). These authors have provided insights into the complex and at times confusing discussions on the meaning and domain of postmodernist discourse and culture in order to discer n the connections and mutual influences betwe en postmodernism and marketing. In this vein, each paper has proposed several connections betwe en postmoder nism and, for example, marketing and advertising practices, which demonstrate the postmodernist tendencies of marketing, especially in recent years.
In their framework, Firat and Venkatesh (1993) offer five conditions of postmodern culture:
(1) hyperreality;
(2) fragmentation;
(3) reversal of consumption and production;
(4) decentring of the subject; and
(5) paradoxical juxtapositions (of opposites)
and a general consequence of these conditions – loss of commitment. Van Raaij (1993) adds to these conditions the consequence of openness, which he defines as pluralism; that is, pluralism as the dominant approach to all relationships, or as the acceptance of difference. Brown further expands the framework by articulating three tendencies of the postmodern consumer(s):
(1) readiness for living a perpetual present;
(2) emphasis on form/style (Brown, 1993b); and
(3) greater acceptance of or resignation to (a) state(s) of disorder and chaos (Brown, 1993a).
Brief descriptions of these conditions are provided in Table I. The purpose of this paper is not to discuss postmodernism per se since such discussion is available in the aforementioned literature. Instead, we shall try to elaborate points that will help us to provide some further understanding of the transformation mentioned in the title of this paper: “From segmentation to fragmentation”.
A recognition of the rudimentary aspects of a transition from modernity to postmodernity will highlight the differences that such a transformation will affect on the constitution of the market. We shall discuss these market implications of the transition throughout the following sections of the paper. We shall also propose, at different points in the paper, marketing strategies that will be required to keep up with or proactively respond to the changes in the market.
Foundations of modern marketing thought A brief discussion of the tenets of modern marketing is in order to help a better understanding of the changes required for transition to postmodern marketing strategies. Marketing thought and practice have experienced changes in
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orientations and approaches across history. While present in the practices of certain organizations early in the development of modern business practices (Fullerton, 1988), “modern marketing” thought has not dominated practice until after the Second World War (Kotler, 1972). Modern marketing is distinguishable from other marketing orientations in several aspects, among which is the “marketing concept”. This concept, as articulated by several marketing scholars (e.g. Alderson, 1965; Bagozzi, 1975; Kotler, 1972; Kotler and Levy, 1969; Levy and Zaltman, 1975) captures many of the more essential characteristics of modern marketing; characteristics which reflect its indebtedness to tenets of modernism in general.
Modern thought put the subject (human being) at the centre and elaborated the project of modernity in terms of the relationships this subject develops with the objects he or she acts on in order to improve conditions of life. The totality of these subject-object relations constitute the economy, and the rationality of
Postmodern conditions Brief descriptions
Openness/tolerance Acceptance of difference (different styles, ways of being and living) without prejudice or evaluations of superiority and inferiority
Hyperreality Constitution of social reality through hype or simulation that is powerfully signified and represented
Perpetual present Cultural propensity to experience everything (including the past and future) in the present, “here and now”
Paradoxical juxtapositions Cultural propensity to juxtapose anything with anything else, including oppositional, contradictory and essentially unrelated elements
Fragmentation Omnipresence of disjointed and disconnected moments and experiences in life and sense of self – and the growing acceptance of the dynamism which leads to fragmentation in markets
Loss of commitment Growing cultural unwillingness to commit to any single idea, project or grand design
Decentring of the subject Removal of the human being from the central importance she or he held in modern culture – and the increasing acceptance of the potentials of his/her objectfication
Reversal of consumption and Cultural acknowledgement that value is created not in production production (as posited by modern thought) but in
consumption – and the subsequent growth of attention and importance given to consumption
Emphasis on form/style Growing influence of form and style (as opposed to content) in determining meaning and life
Acceptance of disorder/chaos Cultural acknowledgement that rather than order, crises and disequilibria are the common states of existence – and the subsequent acceptance and appreciation of this condition
Table I. Brief description of postmodern conditions
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managing these relations is the substance of economics. It could be claimed, therefore, that the economy and its science, economics, had to take “centre stage” in modern society. In fact, it would be difficult to argue the contrary; that the economy does not constitute the major interest in modern society. The dominant train of thought throughout modern history has been that if the economy is not healthy, nothing else can survive.
Marketing and the marketing concept tend to be products of this modernist focus on the economy. The success of the marketing organization is contingent on the acceptance of its products in the market and to the resolution of the product offering in a market exchange (in a transaction involving economic resources). Marketing textbooks (see Bagozzi, 1986; Kotler, 1991; Park and Zaltman, 1987; Stanton, 1975) usually indicate that the final purpose of marketing practice is to maximize in the long-term (or optimize) such exchanges, or sales, and thereby, profits. While the social reason for being (raison d’être/justification of existence) is professed to be the satisfaction of consumer ne eds, existence is proclaimed to be possible only through economic/financial success in a competitive environment. Given that the whole society’s existence depends on economic health, economically rational behaviour becomes central to the operation of any institution or entity, and the focal importance of the health of the economy above all else (including, some critics would contend (Evernden, 1989; Henion, 1976), human, animal and plant life) is reaffirmed in the individual behaviours of marketing organizations. Social and political order comes to be perceived as dependent on a healthy economic order (Schmookler, 1992). Each marketing organization reflects this order in its own operations. One major reflection is in the centrality of the product and each product’s contribution to the success of the organization, since, in modernism, economic value is represented in and by the benefits inherent to the uses of the product. In other words, value is a property of the product; it is “[t]he total utility which is yielded by the object in question” (Bannock et al., 1978). The marketing organization realizes or actualizes economic value through its products. One reason for the centrality of the product is that modern marketing presupposes that value for the consumer is materialized in the prescribed benefits of product attributes being offered, and that it is this value which results in consumer satisfaction. Postmodernists would suggest that all of the above assertions are suspect, as we shall discuss.
The above premisses are also reflected on the conceptualizations of the consumer in modern thought. The consumer, as the subject at the centre of the modernist project, is an individual with a mind that can be independent from the natural, sensational (emotional) limitations and weaknesses of the body (Rorty, 1979). As such a subject, the consumer is not only conceptualized to be the centre of the modernist project (i.e., improving human lives by controlling nature through scientific technologies), but also to be very centred, self- conscious, and committed to a reasoned and reasonable goal or end. Consequently, modern marketing thought tends to hold that a unity (in some
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arguments, authenticity) of self or self-concept, a sense of one’s identity and character, can and does exist. The consumer, then, armed with such a united concept of self and a commitment to it (many times represented in a personal quest) strives for the satisfaction of (clearly) identified needs for this self. Such unity of purpose, character and self logically suggests a stability in the consumer’s orientations and behaviour. This allows segmentation into relatively homogeneous behaviour/need/orientation groups, or the more recent types (as in the VALS typology) possible and useful as a marketing principle and tool.
Postmodern impacts on marketing Openness/tolerance Postmodernists have argued that many of the modernist premisses, including those which shaped modern marketing thought, are based on myths, in the same vein that any social existence is (Campbell, 1990). The postmodernist position is generally that since all social experience is founded on a narrative – that is, a story constructed by a social group about life, its conditions, and its requirements – in which a community believes and, by acting upon such belief, transforms it into the social reality it experiences, no narrative ought to have a privileged status. Postmodernism, therefore, is open to and tolerant of all narratives, even including the modernist ones, as long as they tolerate other narratives also. They do, however, challenge and object to, especially, two aspects of modern narratives: the modernist assumption that a social reality independent of a socially constructed one (or of human agency) exists; and the modernist claim to having the only tr ue way of objectively knowing and, therefore, accurately representing this reality thanks to traditional methods of scientific enquiry. These aspects suggest that knowledge and understanding can only be determined by a given set of prescribed orientations and methods, however imperfect, whereas for the postmodernist – as for Mill (1859/1978) or Nietzsche (1954) – richer insights may be provided by knowing that the imperfections of one’s methods limit how much one may ever know. Postmoder nist thought especially challenges these narratives because, perceiving such a unique quality in themselves, the modernist narratives suggest superiority to all others and tend to reject all others as irrational, insensible, unrealistic, utopian, and even as fantasy and palmistry. Unfortunately for those who would wish to benefit from postmoder nist insights, there may seem to be an incommensurate ontological schism between modernist and postmodernist positions. As opposed to the knowing subject of modernity, postmodernism conceptualizes the consumer as the communicating subject, one who actively communicates the social reality she or he prefers to live rather than passively inheriting one constr ucted without his/her participation. Marketing in a postmodern culture, therefore, has to be open to and tolerant of the non-traditional demands communicated by consumers, including those of interference into organizational cultures.
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Hyperreality and perpetual present The disillusionments with the modernist project have given rise to many diverse movements, especially in the most modern societies of the world, which seem to have eroded the commitment to modernity. One result of the erosion of commitment to modernity is an increasing tendency and willingness on the part of the members of society to seek the “simulated reality” rather than an extant reality, imposing and immutable (Baudrillard, 1983; Eco, 1986; Postman, 1985). There are many indications of this tendency that have an impact on marketing. One is the transformation of our urban centres into theme parks (Sorkin, 1993). Indeed, the city, itself, the reality that much of modern society experiences in everyday life, is a simulation completely constructed by the human imagination (Gottdiener and Lagopoulos, 1986). Yet, increasingly, we find different sections of our cities replicating/reflecting different thematic constructions. In Beverly Hills, California, for example, one finds Rodeo Drive (named “Via Rodeo”), a very well-known part of this well-known town, representing a theme from Rome. The shopping malls, most imposing parts of our (sub)urban experience, of course, are theme parks in their own right. The Borgata in Scottsdale, Arizona, which replicates a Renaissance Italian town, or the Raffles Center in Singapore, the Circular Quay in Sydney, Australia, represent good examples of this thematization of these important landmarks of our time, where, possibly, outside their homes and work places, (sub)urban populations may be spending the largest portions of their time. Clearly, however, shopping malls do not stand alone as theme parks. Thematization is well integrated into work areas, park areas, wharf areas, etc. In this sense, markets are increasingly de(re)constr ucted by thematizing marketers in conjunction with the consumers who seek the simulated experiences that enhance and re-enchant their present encounters with(in) life.
For postmodernist observers of contemporary culture, these environments represent a nostalgia on the part of contemporary urban populations for experiencing what, in the imagination, once was or could have been. This is a partly disinterested nostalgia, however, not a wish to be indeed transported totally into such a time or existence, but only voyeuristically to experience it for the moment that it excites and titillates the senses. Furthermore, this interest is not solely for what could have been in the past but also in the future. It is the representation of an imagined past or future in the present, and the present is the period on to which postmodernism turns its gaze. Premodern culture focused on the past, the moder n culture on the future. The focus in postmodernism is: right here, right now. But this immediacy does not have to stabilize, become uniform and boring. The postmodern consumer wants to experience the diversity of many themes, past and future, not get fixed in any single one.
The hyperreal – reality based on simulation (Baudrillard, 1993; Eco, 1986) – allows the realization of this wish. The touristic consumer samples the many sights, sounds, themes and tastes of yesterday and tomorrow – which are all now and here, in the present (Gitlin, 1989) – immersing themself into the
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experiences and moving among them to experience each for a moment, as long as it keeps its appeal. The postmodern consumer seeks those experiences that can make “present” all or most of the exciting elements of space/time settings without the difficulties and hardships. This postmodern claim seems to find support in the interest that consumers display for the IMAX Theatre at the Grand Canyon where they can really experience the canyon in all its (historic) grandeur without the trekking, the heat or the cold, and the possibility of missing many sights. The interest in simulation seems to be evident in the fact that visitors to the cloud forest in Costa Rica have to be shown in slide shows all that they will miss when hiking the forest. It is evident in the numbers of tourists who visit EPCOT Center’s World Showcase in Disney World, Orlando, Florida, from around the world to experience Paris and London and Italy and Morocco, etc. It is evident in the interest in the volcano in front of The Mirage Hotel in Las Vegas, Nevada, the safari at Fossil Rim Park in Texas, and the San Francisco earthquake showcase on Pier 39 in San Francisco. Each place is one where consumers go to have sensational experiences without the dangers involved. Finally, it is very evident in the extraordinary interest exhibited in all media for the coming advent of virtual reality and/or integ rative communication technologies that will allow simulated presence and sharing of virtual spaces by people actually far away from each other (Bylinsky, 1991; Daily News Tribune, 1990). The success of the marketing examples above indicate the greater attention marketing organizations have to give to the hyperreal and its representation in the present.
Fragmentation and loss of commitment Rather than suppress fragmentation or try to find unifying themes to resolve it, postmodernism calls for an unabashed practice of it. Recognition of the above discussed interest among the consumers of, especially, contemporary market economies in experiencing the different simulated existences, and an interpretation of human history in terms of socially constructed realities, lends validity to making such a call. This is a call for a tolerance towards different ways of being, life styles and realities. The postmoder n sensibility even encourages the experiencing of many different ways of being, not conforming or committing only to a single one. Such a stance clearly allows for an expansion of fragmentation, of fragmented moments of experience and existence in a lifetime. Since contemporary consumers find commitment to a single project or metanarrative across modernity to have brought little promise but much misery, they have an affinity to not commit or conform to any unified, consistent, centred field, idea, system, or narrative (Jay, 1986; Lyotard; 1992; Wilson, 1989), or “regime of truth” (Foucalt, 1980). Fragmentation seems to be omnipresent in the everyday lives of modern consumers.
Indeed, to the postmodern observer, fragmentations abound in everyday life experiences. They dominate the media, the most important and omnipresent mode of exposure to our universe in contemporary society. Fragmentation in the medium of television permeates advertisements, music videos, situation
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comedies and other prog rammes. Advertisements and music videos, increasingly resembling each other, are collages of fleeting moments that excite the senses, yet rarely connect to a central, unified theme or focus. Consider the “Just do it” Nike advertisements. The purpose of the collage is to leave the consumer not with a centred idea or cognition but with an overall image, an image that is, itself, not linked to the fragmented images in the collage, but triggered by their impact on the senses. The programmes on television or the most popular films from the movie establishments are not really that different. Each is made up of largely independent but highly exciting, short, fleeting segments that stand on their own through their spectacular qualities, whether technical, artistic or stylistic. While in modern film, for example, each scene was constructed to contribute to the narration of a story line, as postmodern trends diffuse in the film industry, films increasingly concentrate on the spectacle with inconsequential story lines that enable the spectacular scenes that can be created through technique and style (Marchetti, 1989). Similar fragmentation is also experienced in the spoken or printed vignettes on the radio or in newspapers and magazines, as well as in the highlighted brand names that flash by on billboards to reinforce the experiences on television and films. The fragmentation in everyday life experiences and the loss of commitment to any single way of being result in “bricolage” markets, that is consumers who do not present a united, centred self and, therefore, set of preferences, but instead a jigsaw collage of multiple representations of selves and preferences even when approaching the same product category. The market is increasingly constituted of individual consumers who, for example, express preference for punk, g r unge, conservative and preppy clothing styles simultaneously (Lacayo, 1994; Tully, 1994). In effect, the market may be constituted of tribes which allow greater freedom of movement within and among them than did any class, sub-culture or segment (Cova, 1995).
Paradoxical juxtapositions As well as fragmented from each other, postmodernists would argue that these fleeting spectacles are also fragmented from any context (Gitlin, 1989). They do not belong within a specific context or history. “Anything can be juxtaposed to anything else. Everything takes place in the present, ‘here,’ that is, nowhere in particular”(Gitlin, 1989, p. 350). On television, as well as in other media that dominate much of our lives, we see programmes, including news programmes, where events, scenes and personalities are often superimposed and juxtaposed on to each other from completely independent and disconnected contexts. Such fragmentation from contexts in our media surrounding and informing us reinforces, for the moder nist critic, a failure on the part of the young postmodern generation to connect to history and other worldly events around them (American Broadcasting Corporation, 1988). For the postmoder n generation that extends from Berlin, to Bangkok, to Boston and that is perhaps best represented by the MTV generation, Generation X, and the Boom Busters – well over 100 million consumers between the ages of 15 and 29 (see Business
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Week, 1992; Tully, 1994) – this is an alternative form of being and, ultimately, consumption; one that liberates from more modernist pressures to conform to the status quo.
Such postmodern existence is reinforced by another set of fragmentations; that of the signifier from the signified, the object from the function, and the product from the need. That all signifiers are only arbitrarily linked to the signified (and the referent) has been well recognized by semioticians at least since Saussure and Pierce (Eco and Thomas, 1983; Santambrogio and Violi, 1988). The link is only pragmatic, that is, culturally, linguistically imposed. As in the case of marketing campaigns, the “free-floating” signifiers can be gainfully employed in (re)signification. They can be constantly imbued with novel or nostalgic or reinforced meanings to represent a multiplicity of ideas, things and positions.
As in the case of the fissure between the signifier and the signified, so is there one between the object and its function. All objects, including those specifically produced for a particular function, are, nevertheless, only arbitrarily connected to that function. Imagine, for example, the number of different uses a child or even an adult not acculturated to a Western kitchen could find for a kitchen implement, such as a mixer. This freedom of objects from their intended functional uses was well recognized by surrealist and other artists, such as Duchamp et al., who turned utilitarian objects (toilet seats, meat grinders, Coca- Cola bottles) into icons and art pieces in their own right.
Finally, given a postmodern analysis, the product acquired in the market is independent of the need(s) for which the consumer initially sought it and the producer provided it. This, of course, is just an extension of the separation of the object from its original function. In effect, the consumer acquires the product for the image that it represents, and this image is only partially, if at all, constructed on the basis of a functional need. Furthermore, a single product is capable of representing multiple images, as signified by culture and by the marketing effort. Consequently, the disconnectedness of images and products from each other, from their original contents and from their contexts, is complete.
Decentring, consumption/production reversal, and the emergence of the Homo consumericus The fragmentations discussed certainly reflect on the everyday life and being of the consumer. Marketing’s growing influence and role in human life, in terms of an increasing, almost complete, domination of life by the products purchased in the market, renders the consumer’s life a series of fragmented self-definitions determined by consumption. In consuming each product, as the consumer eats a frozen dinner, watches television, feeds the cat, washes dirty clothes in the clothes washer, they are involved in an independent, separate task which is only connected in the culture’s imaginary narratives of purpose regarding a healthy life, a long life, an enjoyable life, a free life, etc. The consumer is no longer defined by the cost/benefit assessments of choices, but by the experiences
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acquired through consumption. Yet these are indeed narratives through which consumers seem to seek a central, unified meaning and purpose for a life that is increasingly fragmented into moments dominated by tasks required by products consumed. In effect, these are modernist narratives, products of the modernist imaginary (Kellner, 1989).
Conversely, postmoder n consumers are said to be transcending these narratives, no longer seeking centred, unified characters, but increasingly seeking to feel good in separate, different moments by acquiring self-images that make them marketable, likeable, and/or desirable in each situation or moment. As a result, one finds a growing playfulness with the game of simulating and switching images to make the best of each situation in which the consumer finds themself (Ewen, 1988; Kaplan, 1987; Moyers, 1989). In short, modernist Homo sapiens evolved into Homo economicus, a creature defined by time and resource allocations, costs and benefits. The postmodern individual has evolved into Homo consumericus, a creature defined by consumption and the experiences derived therefrom.
Thus occurs the fragmentation of the self. In postmodern culture, the self is not consistent, authentic or centred (Gergen, 1991; Laing, 1969). Postmodernists will argue that it never was, in its core, or in tendency, but that in modernity the illusion of such a self was sanctified and, therefore, sought. The postmodern generation has transcended this quest and neither seeks it nor feels a guilt in not seeking it. On the contrary, this ability to switch images and represent different selves by switching products that represent the images – allowing oneself to lay claim to powerful successful images – is considered as a liberation as freedom from monotony, boredom and the necessity to conform. Many consumers, for example, find energy, excitement and fun in playing personalities through “look-alike” parties, contests and life styles (Moyers, 1989). On the other hand, in societies where modern culture and rhetoric are still strong, the experience of seeking such image and personality switching, such endless array of situations necessitating variations, seems to create, in some individuals, a counter-seeking of conformity and belonging to permanent and tightly-knit groups, such as cults and gangs, or clubs and other groups of various sizes that require conformity based on an array of agendas.
In a market exchange economy, all these self-images are represented through the products acquired in the market and, thus, the market becomes the locus of realizing the fragmented self, the fragmented moments of feeling good. The market is, itself, fragmented, since it appears to have no central, unified agenda. It is construed of many consumers and products, and all relationships in the market are truly momentary; each transaction requiring no deep commitment on the part of the consumer. Indeed, the consumer can do a trial purchase, as long as the buying power is present, and drop the product, or use it momentarily as required in representing an image in one situation, then move to another, with other products. The moments of involvement in the market are, thereby, fragmented. Yet, in contemporary times where the market mentality is so pervasive, the consumer seeks self-images to be marketable – that is, to be
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represented in a social or economic market – and these marketable self-images are represented through acquisition of products in the market. In this sense, the market and its fragmentation become the centre of all activity and the medium through which all is signified and represented without the appearance of any unified purpose, ideology, or narrative. This may indicate, contrary to the postmoder nist claims that all meta-nar ratives have come to an end, the existence, at this juncture of the postmodern, of a new meta-narrative that is not recognizable with the modernist categories and constructs that historically enabled the perception of existence of a meta-narrative. Fragmentation, itself, and its medium, the market, constitute, in fact, this new meta-narrative. The deliberate practice of the market, marketing, then becomes the culture of contemporary life. For consumers to fulfil their desires, marketing organizations will need to empower the consumers to become marketers of (self) images themselves.
Emphasis on form/style The fragmentation, the dynamic of continuous communication of new images and imaginaries through creative signification and representation of “free- floating” signifiers subsequently necessitates that each communicative moment be independently exciting. In the culture of disjointed images (re)presented in collages the possibility of substantive linkages among and within communicative moments is greatly eliminated and an increasing sophistication in form and style, where technique and pace gain utmost importance, is necessitated. The communicating, touristic, customizer markets (consumers), and the marketers, rely on the form and the style of their communicative messages (whether it be in verbal, visual, sonic or other media) to address and represent their content. Form becomes content in remaining the only way to represent it (Ewen, 1988). Concurrently, the markets become image rather than brand markets, remaining loyal to brand names only as long as they maintain fresh and up-to-date images – a circumstance experienced by brand names such as Brylcreem, Ovaltine and Lifebuoy (Elliott, 1993). In effect, the markets are fluid, constantly ready to switch and re-switch, constantly ready to try several or many images, brands and products, both sequentially and simultaneously. This is, by no means, a senseless “try anything” movement, however. The image must be right – it must be the image sought – whether in terms of quality and value, or in terms of expressing the consumer’s own momentary image. Marketers “better get things right, especially when it comes to cultural icons” (Steinhauer, 1994).
Acceptance of disorder/chaos The ability to move among the fragmented moments and experiences heightens the scepticism among contemporary consumers that a single order is present or necessary. Rather, the consumer generally takes the existence of disorder and chaos as the norm with the cognizance that different orders, even if temporary and momentary, is to be constr ucted through signifying actions and
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negotiations with others and with the objects. The markets, therefore, have to be considered as fluid and not stable.
In the postmodernist sensibility, chaos and disorder are not to be feared but to be critically played with. Increasing numbers of consumers seem to have lost their trust in the industrial, technological order which promised brighter and improved futures but largely failed to provide it for large majorities of the world’s population – although the successes in medical technologies cannot be denied, they are considered to have benefited small minorities around the world – instead creating much pollution, misery, loss of responsibility, depletion of the Earth’s resources, extinction of species, and possibilities of immense destruction (Baudrillard, 1987; Chomsky, 1989; Kellner, 1990; Postman, 1985) Therefore, marketing strategies that will provide the possibilities for critical play with chaos and disorder will empower the contemporary consumers, give them greater control over the order(s) they wish to see in their lives, and bring success to the marketing organization.
Marketing in postmodern culture In a culture of fragmentation where consumers are neither committed to nor captivated by a single narrative, state of being, or self, and where they assert their existence through the power of the images they represent (Moyers, 1989), marketing indeed becomes the cultural sensibility. Both the spectacles, now representing attractive images and vying for consumers’ momentary experiences, and the consumers themselves, representing images that make them attractive in different moments, have to acquire the marketing acumen. In an environment where there is increasingly less commitment to any one spectacle, product, brand, but only a momentary attachment – so long as the image represented is seductive, as experienced by several brands that enjoyed high popularity for a period, such as LA Gear and, to a certain extent, Lacoste – a continual (re)production, (re)formulation, (re)positioning and (re)generation of images (image marketing) is necessitated. In a system of fragmented narratives where none has power beyond the image that it represents through signifying the elements of the bricolage it offers, success is only possible through a marketing sensibility that recognizes the linguistic, symbolic and communicative aspects of signifiers to employ and (re)signify them in ways that represent spectacular images. Any signifier (including the Homo consumericus) that cannot achieve this tends to be lost in the market, now the only medium of existence.
The postmodern consumer, therefore, recognizes that they are not just a consumer, but a customizer and a producer of (self-)images at each consumptive moment (Firat et al., 1995). Marketing with a postmodern perspective must no longer conceptualize any consumer unit as a point of conclusion (the end user), but as a moment in the continual cycle of (re)production. And, since this consumer is no longer representing a centred, unified, consistent, single self- image, but a fragmented and fluid set of self-images, conceptualizing the consumer as a member of a relatively homogeneous market segment is
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increasingly difficult. Rather, marketers will have to revisualize the market as a set of fragments, as we shall discuss. Already, marketing organizations are realizing that they may be encountering segments of one (Blattberg and Deighton, 1991). That is, as consumers are starting to seek unique self-images and computer technologies are allowing, in some cases, personalized production of products, the segments are breaking up into individual customers. An example is the advent of personalized greeting cards. While modernity created mass-production of greeting cards with their specialized messages for different segments and occasions, computerization now allows personalized messages, yet still on mass-produced cards. The personalization of the cards themselves is also likely to follow soon, since technology allows it and fragmentation demands it. This forces the greeting card company to transform from one of manufacturing and marketing greeting cards (a product) to one of marketing a process whereby consumers can, themselves, produce cards. In Japan, some marketers of kitchens are using virtual reality technology to allow the future owners of kitchens to participate in the designing of their kitchens (Bylinski, 1991). The customer is increasingly becoming the customizer (McKenna, 1988; Moyers, 1989). Such transformation is likely to affect many, if not most, marketing organizations, especially since it enables consumers to construct different versions of products that in their imagination best represent the images they wish to create when marketing themselves. Furthermore, given fragmentation, marketing techniques which allow consumers to construct different styles, forms, types and versions of the same product for use in representing different self-images in different situations (spectacle marketing) are likely to become necessary. This may most likely require the greatest ingenuity and creativity on the part of organizations that market high-price durable products.
Marketing strategy in fragmented markets Fragmented markets are likely to render segmentation strategies and techniques founded on the more traditional bases of segmentation, such as demographics and psychographics, and even the more recent typologies (for example, VALS typology (Mitchell, 1984)) less and less useful. Such strategies depended on the modern premisses, discussed earlier in the paper, regarding, for example, a consistent, centred and unified character or self-concept for the consumer. The consumer was conceptualized as a subject, a human being who was qualitatively different from objects and who acted on and through objects to realize superordinate goals for life. Ability to act on and manipulate objects to fulfil the goal in the future afforded this consumer their power. The postmodern consumer is conceptualized (and conceptualizes themself) in a substantially different way, as a product which asserts its power through objectification, (re)presenting an image, thereby, the ability to seduce (Baudrillard, 1990) in order to achieve a position that makes one marketable in the present, in each moment of exposure. For postmodern consumer markets,
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using segmentation strategies that try to constrain or anchor consumers to a single, consistent, stable way of behaving is likely to lead to marketing failure.
Fragmented markets and fragmented experiences signal both the increasing possibility – and maybe necessity – and the growing consumer desire for fluid movements among different experiences, images and meanings in and through life. As a result, the offerings of marketing organizations that have greater sensitivity to changes in the market and the desires of contemporary consumers exhibit the postmodern characteristics discussed above. We are witnessing the success of those marketers who provide consumers with products that help projection of (self-)images and, especially, of those marketers who offer consumers (con)texts within which consumers can have experiences and experiment with (self-)images different from those required by the roles they played in modern society. Las Vegas, which Time Magazine declared as the “New All American City” (Anderson, 1994), a city that has flourished even during times of general economic stagnation in the USA, and a city that many postmodernists consider as the prototype postmodern space, is a case in point. It is increasingly being constructed as a city of themes and is no longer simply a gambling town. The themes offered to the consumers, such as Ancient Egypt (Luxor Hotel), Roman Empire (Ceasar’s Palace Hotel), or pirate land (Treasure Island Hotel), present such (con)textual experiences and represent experiments toward postmodern marketing. We must assess these experiments, along with those of Disney, Universal Studios, Nike Town, Legoland and others as examples of early (or immature) postmodern marketing, however. While they allow consumers different experiences and possibilities of playing with (self) images, they are highly commercial and predetermined offerings not leaving much scope for the consumer to participate in their design and construction. A more mature postmodern marketing practice will empower consumers for greater participation in such play and construction of experiences, images and meanings.
An example of relatively more mature postmoder n marketing may be presented by the Electronic Café International experiment (Galloway and Rabinowitz, 1989). Started by two artists in Santa Monica, California, electronic cafés – now about 50 exist around the world – provide an environment in which consumers from all walks of life can experiment with new integ rative information and communication technologies, including virtual reality and hypermedia technologies, in order to try out and construct experiences they feel may be maningful. As already mentioned, mature postmoder n marketing strategies will be those that empower the consumers to become partners with marketing organizations as influential participants in the construction of experience(s) and (self-)images when and if they choose.
Currently, as we have tried to express, such constr uctions are g reatly dependent on the market and on the ability to make the images and offerings marketable. This is due to the g rowing influence of the market globally. However, the meanings and the difference that the consumers are seeking to construct in their lives may come to be considered to be restrained and limited
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by the necessities of making them marketable. Postmoder n marketers, therefore, need to be alert and ready to respond to significant qualitative transformations in the very nature of the market itself.
Is it at all possible to plan and develop marketing strategies in an environment of fragmented and fluid spectacles, images and lives? How does any marketer, including the consumer, market their products themself and know which images will attract? The purpose of the remainder of this paper is to propose some answers to these questions in order to alert opinion leaders and innovators in the field of marketing to the possible opportunities and pitfalls in a possibly increasingly postmodern global market.
Image is the product While modernist meta-narratives declared that value was a property of the product and that the image represented this value, as we discussed earlier in the paper, the postmodernist insights regarding the simulation and the symbolic tend to lead to a claim that the relationship between the product and the image are reversed. Marketing practitioners have known for a long time that, in many instances, the product’s image deter mines whether an exchange is consummated. The consumer purchases a product to realize the value that they perceive in the image. For marketing to be successful, therefore, the product must represent the image well; otherwise the consumer will be disappointed. Thus, value is the property of the image, it is the image that the consumer seeks, especially at a time when the principal goal of the Homo consumericus is to (re)produce and (re)present oneself as an image. Marketers need to think in terms of (re)producing images and of then constructing products that represent the images. That is, they must think in terms of products representing the images, not images representing the products.
In concordance with the increasing importance of the symbolic and the image over the functional (specifically, utilitarian functions) and the material, the images that the consumers se ek in objects (products) are likely to increasingly emphasize the symbolic aspects. That is, the image of the object is likely to be increasingly dependent not on the (utilitarian) functions it serves but on its contributions to self-image and its contributions to happiness (or feeling good). Consequently, there is a need to pay greater attention to the tacit and the visceral, especially to the feelings of the consumers. How consumers feel, therefore, is going to play an increasingly important role among who they are (demographics), what they do (activities and interests, life styles), what they think (opinions and beliefs), and what they value (values and attitudes), aspects of consumer behaviour that have been more heavily researched in modern marketing. Researchers can expect to find feelings to be more fluid or fickle than the other variables, that is changing more often and rather substantially as the consumers move from one situation or life sphere to another. We are defining life spheres as the domains within which an individual performs, usually at different moments of their life. These spheres are, generally, culturally considered or perceived to be relatively separate from each other in that the
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individual rarely transports the roles he or she plays in one sphere into another. In contemporary society, such life spheres within which consumers will most likely seek different images include, but are not limited to, the work sphere, the domestic sphere and the recreational sphere. It is imporant to recognize that since the spheres are culturally constructed and bound, they are dynamic and in rather constant (re)definition.
Fragmented images If the arguments of the postmodernist scholars are correct, it will be rather futile to try to find consistent, centred, or stable self-images in postmodern markets. Rather, within each life sphere there will be several self-images that a single consumer may subscribe to at different times, under different circumstances. Therefore, in postmodern markets the marketer’s purpose will increasingly be to understand the elements of the types of images represented in Figure 1, for example, in order to try to provide processes for the consumers to immerse themselves into and find the elements that they seek in (re)presenting and (re)producing their self-images. It is possible that research will expose the existence of greater affinity among certain images in different life spheres, as illustrated by three such spheres in Figure 2. There may be found, therefore, some image clusters within and across life spheres. While it is unlikely to expect any single postmodern consumer to adhere to any single image within the life spheres (due to the aforementioned fragmentations), there may be higher propensities to switch among certain images that belong to the same clusters (due to the image clusters). Any image cluster should be considered rather temporary and transitory, however, given the characteristics of postmodern markets. Furthermore, it may be reasonable to expect that the life spheres that seem to be so clearly defined and different at present – that is, work life, domestic life, and life outside the home spent for recreation and leisure, for example, are currently rather well delineated from each other – will begin to merge, either creating new configurations of life spheres or a life that is not differentiable into distinct spheres, but completely fragmented into dispersed moments.
Figure 1. Constitution of images
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Merging of the consumer and the producer (organization) Based on our discussion of the developments observed in postmoder n culture(s), we have already tried to illustrate the increasing propensity of the consumer to act as a producer. This propensity seems to occur along two dimensions: the Homo consumericus perceives themself as a product to be (re)presented in market(s), and participates in the market to (re)produce their marketable self-image(s); and they increasingly become a partner in the process of production of the products that they use in (re)producing their self-images. Both dimensions indicate a merging of the consumer and the producer since at each instance of activity there is, simultaneously, both consumption and production occurring – as the individual consumes products she or he finds in the market, for example, they are (re)producing their self, both physically and mentally. At each moment, whether there is a clear and conscious intention on the part of the individual or not, consumption also produces the self-images.
Figure 2. Fragmented images in life spheres
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Given the postmodernist insights, therefore, consumption and production are inseparable, contrary to the modernist contentions and efforts to define these two moments separately (Mill, 1967/1836; Say, 1964/1821). Coincidentally, the consumer is also a producer at each moment. Postmodernist insights may alert us to the fact that, while culturally we may wish to make a distinction between the two (i.e. consumption and production, consumer and producer) to help us order things in our own minds, any distinction is only arbitrary. The cultural recognition of such identity of consumption and production, consumer and producer, and the technological advancements in the computer/information field which allow greater customization in organized production, may be the impetus behind the greater participation of the individual in the process of production, not as an employe e of the producing organization but as its customer/partner.
We mentioned above the examples of personalized greeting cards and virtual reality kitchens whereby the customer participates in the process of finalization of certain features of the product that they will eventually possess and use. Clearly, such offerings of process instead of a product are at their early stages. Yet, if we were to carry this trend to its logical end, it represents a merging of the customer and the organization, where the customer becomes a complete partner in the production process(es) of the organization(s). While, currently, this may seem far in the future, it also seems to be an increasingly inevitable trend for many product categories and services. The implications of postmoder n conditions for the market and for marketing strategies discussed above are summarized in Table II.
Future research Certainly, social trends and the emergence of Homo consumericus would suggest the mutually evolving concepts of marketing and postmodernism, i.e. postmoder n marketing, warrant further research. We believe the most compelling research would investigate the developments in the market and the corresponding marketing responses to these developments. To a large extent, this paper discussed the developments that are taking place in contemporary markets as a result of the postmodern trends by utilizing the insights from mostly postmodernist observers of the qualitative changes that are occurring. One of the central conclusions from the discussions was that the realm of images is increasingly asserting its dominance, both in terms of what consumers seek and in terms of determining what value(s) the products in the market will eventually represent. Thus, one major area of research required is:
• How the images – that at a certain time tend to be especially preferred within different life spheres or dispersed moments – are constructed. And similarly, how the level of participation by individual consumers, marketing organizations, and other cultural institutions in the process of signification and representation of these images interact presently and interact over time.
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Another important conclusion from the discussions provided in this paper is that the consumers are in the market to produce themselves, specifically, their self-images which will make them successful, that is, attractive and marketable, in the different situations (which are unfolding increasingly as market relations) that they encounter in every sphere of their lives. Therefore, a second important area of research is:
• How the consumers select the different images to represent in different situations. (W hat is the deg re e of contribution from the elements depicted in Figure 1 in the preference of the images selected?)
The situations for which the consumers customize themselves as marketable images are increasingly fragmented as we have already illustrated. Consequently, the individuals are representing not singular images but multiple images fashioned for the many occasions that each individual encounters. As producers of self-images, the consumers need to manage this multiplicity and
Postmodern condition Market implications Marketing strategies
Openness/tolerance Communicating Flexible marketing (rather than knowing) markets Adaptive marketing
Hyperreality Constructed (rather Thematization than given) markets Simulation
Perpetual present Consumer preference Immersion for simulations “Here-and-now” markets
Paradoxical juxtapositions Bricolage markets Image fragmentation Fragmentation Fragmented markets Image clustering Loss of commitment “Touristic” markets Spectacle marketing
Decentring of the subject Consumers with Continual image fragmented selves (re)generation
Reversal of consumption Customizer markets Market de (re)construction and production Producer markets Process marketing
Emphasis on form/style Image (rather than Image (versus brand brand) markets marketing)
Acceptance of disorder/chaos Fluid markets Empowerment marketing Note: Concepts are positioned in the table for reasons of parsimony and clarity; readers should understand that while we intentionally denote some specific relationships in the table, in fact the concepts, as discussed in the text, are very dynamic and each is related to and impacts all the others
Table II. Implications of postmodern conditons for market and marketing strategies
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fragmentation. This, as discussed, may be achieved through some clustering of images. Thus, another area of research needed is:
• How the image clusters form, transform and reform. (What are the major factors that play a role in these transformation processes?)
Our earlier discussions indicate that, as a result of the changes in the nature of the consumer and the market, important changes are also taking place in the nature of the product and marketing. We elaborated the transformation from product to process in the marketing organization’s offering. Cur rently, marketing organizations are largely oriented towards providing finished products for their customers. Thus, a much-needed research area is:
• How to identify, cope with, and manage the differences during the times of change from marketing a product to marketing a process.
As processes are offered to customers to enable them to participate in the designing of the final product in order to customize the products to the images sought by the consumers, the marketing organizations will be responsible for making these processes friendly and approachable and thus attractive to their customers. This is a new area of expertise and it requires research into:
• How the participation of the consumers in the processes for customization of products to represent preferred images are or can be enhanced and made more effective.
Finally, all the transformations discussed above point to substantive and qualitative changes in what marketing is and will become. Beyond the different, specific research needs listed above, a much more general and conceptual, as well as practice-oriented rethinking of the role of marketing, indeed of its identity, its definition, will be necessary. Therefore, as the merging of the customer and the organization becomes increasingly complete, important avenues of research will involve:
• How to reconceptualize and practise marketing; positioning, pricing, distribution, promotion (information and conversation) and product (process).
• How to develop new marketing strategies based on these reconceptualizations.
• How to operationalize the role of marketing in order to avail it to all marketers, including, specifically, the Homo consumericus.
Conclusion That the world is presently undergoing extraordinary change can hardly be debated. Moreover, this change seems to be affecting all people and institutions. However, the appropriate way to make sense of it, to explain it in such a way that marketers can seize opportunities that emanate from this phenomenal change, is the source of frequent and sometimes divisive debate. The purpose of this paper has been to provide an objective overview of the emergence of a social
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phenomenon, postmodernism, and to discuss the impacts this phenomenon may have on the marketing discipline, especially strategic contingencies for marketing managers and research opportunities for marketing and consumer research scholars.
We submit that postmodernism, so influential in other disciplines, has the potential to reframe our thinking about social trends and business practices in an increasingly global, but fragmented marketplace, and thus to give marketing managers insights that, in turn, can abet strategic decision making. Finally, we suggest that a better understanding of the underlying macro social forces and micro human behaviour associated with postmodernism can ultimately be leveraged by marketers to obtain competitive advantages in an increasingly dynamic, unpredictable and unstable marketplace.
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92. Ian A. CombeLondon Metropolitan University, London, UK Günther BotschenThe Institute of Brand Logic, Innsbruck, Austria. 2004. Strategy paradigms for the management of quality:dealing with complexity. European Journal of Marketing 38:5/6, 500-523. [Abstract] [Full Text] [PDF]
93. Ahmad JamalCardiff Business School, Cardiff, UK. 2003. Marketing in a multicultural world. European Journal of Marketing 37:11/12, 1599-1620. [Abstract] [Full Text] [PDF]
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95. Ahmet BardakciFaculty of Economics and Administrative Sciences, Pamukkale University, Denizli, Turkey Jeryl WhitelockSchool of Management, University of Salford, Salford, UK. 2003. Mass‐customisation in marketing: the consumer perspective. Journal of Consumer Marketing 20:5, 463-479. [Abstract] [Full Text] [PDF]
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98. Cathy BakewellCathy Bakewell is a Lecturer in Marketing at Manchester Metropolitan University, Manchester, UK.Vincent‐ Wayne MitchellVincent‐Wayne Mitchell is Professor of Marketing at Manchester School of Management, UMIST, Manchester, UK.. 2003. Generation Y female consumer decision‐making styles. International Journal of Retail & Distribution Management 31:2, 95-106. [Abstract] [Full Text] [PDF]
99. Paul R. Baines, Robert M. Worcester, David Jarrett, Roger Mortimore. 2003. Market Segmentation and Product Differentiation in Political Campaigns: A Technical Feature Perspective. Journal of Marketing Management 19:1-2, 225-249. [CrossRef]
100. C. S. Leung, W. C. Chu, T. S. Lee. 2003. ‘Non-utilitarian’ Shopping: Young Female Fashion Consumers' Emotional Motives and Experiences. Journal of the Textile Institute 94:1-2, 89-98. [CrossRef]
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103. Tony ProctorTony Proctor is Professor in Marketing, Chester Business School, Chester College, Chester, UK.Philip KitchenPhilip Kitchen is Professor in Business Strategy, The Queen’s University, Belfast, UK.. 2002. Communication in postmodern integrated marketing. Corporate Communications: An International Journal 7:3, 144-154. [Abstract] [Full Text] [PDF]
104. Maurice Patterson, Richard Elliott. 2002. Negotiating Masculinities: Advertising and the Inversion of the Male Gaze. Consumption Markets & Culture 5:3, 231-249. [CrossRef]
105. Janet L. BorgersonStockholm University, Sweden Jonathan E. SchroederRoyal Institute of Technology, Stockholm, Sweden. 2002. Ethical issues of global marketing: avoiding bad faith in visual representation. European Journal of Marketing 36:5/6, 570-594. [Abstract] [Full Text] [PDF]
106. Steven M. KatesDepartment of Marketing, Monash University, Caulfield East, Victoria, Australia. 2002. AIDS and community‐based organizations: the marketing of therapeutic discourse. European Journal of Marketing 36:5/6, 621-641. [Abstract] [Full Text] [PDF]
107. Bernard CovaESCP‐EAP, European School of Management, Paris‐Oxford‐Berlin‐Madrid Véronique CovaUniversity of Toulon‐Var, France. 2002. Tribal marketing. European Journal of Marketing 36:5/6, 595-620. [Abstract] [Full Text] [PDF]
108. Matthew HigginsLecturer in Marketing, University of Leicester, Leicester, UK Mark TadajewskiDoctoral Student, University of Leicester, Leicester, UK. 2002. Anti‐corporate protest as consumer spectacle. Management Decision 40:4, 363-371. [Abstract] [Full Text] [PDF]
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113. J. Tomás Gómez AriasChief Trade Officer, Spanish Trade Commission, Consulate General of Spain, Hong Kong Laurentino Bello AcebrónProfessor of Marketing and Director, Department of Economic Analysis and Management, School of Economics and Business, University of Coruña, La Coruña, Spain. 2001. Postmodern approaches in business‐to‐business marketing and marketing research. Journal of Business & Industrial Marketing 16:1, 7-20. [Abstract] [Full Text] [PDF]
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115. Jillian DawesUniversity College, Northampton, UK.Reva Berman BrownReva Berman Brown is Professor of Management at Oxford Brookes University, Oxford, UK.. 2000. Postmodern marketing: research issues for retail financial services. Qualitative Market Research: An International Journal 3:2, 90-99. [Abstract] [Full Text] [PDF]
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Role of Marketing - past, present and future - Reading.pdf
Journal of Marketing Practice: Applied Marketing Science The role of marketing past, present and future Tim Denison Malcolm McDonald
Article information: To cite this document: Tim Denison Malcolm McDonald, (1995),"The role of marketing past, present and future", Journal of Marketing Practice: Applied Marketing Science, Vol. 1 Iss 1 pp. 54 - 76 Permanent link to this document: http://dx.doi.org/10.1108/EUM0000000003880
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The role of marketing past, present and future Tim Denison and Malcolm McDonald
Introduction In a recent McKinsey Quarterly article, Brady and Davis (1993) expressed a concer n that is surfacing in industry, questioning the contribution that marketing is making to businesses in the 1990s. They refer to the growing attention being paid to the typically large budgets associated with marketing departments and the doubts that are being cast in industry about its value for money. It seems that the halcyon, post-war decades of commercial marketing are going, and a new, “lean and fit” era is beginning. Following on its heels, a Coopers and Lybrand survey of senior executives in large FMCG, retail and service sector organizations, fuelled the growing debate about the contribution of marketing to contemporary business.
The purpose of this article is threefold: first, to outline the major issues and challenges that confront businesses today, which impact on marketing and have led to the current wave of criticism; second, to signal past failings in marketing that need to be addressed to secure its pivotal role in business success; and third, to illustrate the ways in which UK-based companies are responding to these issues. The latter draws on the results of a survey commissioned by the Chartered Institute of Marketing and carried out by the Cranfield School of Management Institute for Advanced Research in Marketing. This third objective represents the primary focus of the article. The other two, which put the primary research into context, have been the topic of many previous studies (see below), therefore warranting less attention in this article. The overall aim is to describe and comment how marketing is evolving in British industry, as we approach the twenty-first millennium.
Research protocol and methodology The research programme was carried out over the course of five months, beginning in September 1993. In essence , the study combines a catholic literature review of the state and contribution of marketing to businesses with an empirical, case-based approach, to generate and refine theories about the future evolution of marketing. This qualitative approach was the preferred means to develop forward-looking insight and substance, rather than a more quantitative study, geared at the statistical testing of narrow, deductive hypotheses, and
Journal of Marketing Practice: Applied Marketing Science, Vol. 1 No. 1, 1995, pp. 54-76 MCB University Press, 1355-2538
The findings from the fieldwork summarized here are based on the CIM research carried out by the Cranfield School of Management Institute for Advanced Research in Marketing. Copyright in this report is held by CIM. The extracts in this article are used with kind permission from the CIM.
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constructed around reflective explanation. The remit was not to look back on marketing’s performance, drawing on the past to address the future, but to take a visionary perspective of where marketing practices are heading and to be prescriptive in terms of how marketing should evolve. The study required a symbiotic relationship between the research team, leading academics and consultants and industry. Above all, it required a healthy respect for the experience and views of practitioners as an input to theory building.
Rather than cover all types of UK businesses in detail, the study focuses on the industrial, consumer durables and services sectors, though not at the total exclusion of the FMCG sector. To date, the state of marketing in these sectors has been overshadowed by marketing practices in FMCG companies, generally acknowledged to be at the leading-edge of best practice. The scope of the study and sample frame is justified on two counts. First, FMCG manufacturers represent a relatively small proportion of British companies, bearing little resemblance, in a marketing sense, to common practices among the population as a whole. By concentrating the study outside the FMCG sector, we wanted to generate results and draw conclusions which would impact on western industry at large. Second, in the past it has been assumed that the marketing lead taken by FMCG manufacturers is relevant and wholly transferable to others, and should set the precedent for those that follow in their wake. This assumption is now being questioned, particularly in light of the growing competitive pressures that many FMCG companies have come under in recent years. Perhaps classical 4Ps marketing, with changes in emphasis to its constituent parts, is not as relevant a framework outside the FMCG domain as we have become prepared to accept all too easily?
The aim of the study is to fill the gaps in those areas not yet researched with the best knowledge available – namely from those who operate where it is all happening. The science of marketing certainly needs the contribution of what Schon (1983) describes as “the reflective practitioner”.
Several steps were taken to ensure that such practical experience and intuition were incorporated intelligently into scientific enquiry.
First, a literature review of the state of marketing practice in the UK was undertaken, so that we could build on the knowledge base that already exists. While this aspect of the study gave us some insights into the past performance of marketing, it was of limited value for helping us project into the future, as the majority of previous papers and articles have taken a retrospective, normative approach. However, the literature was more helpful in determining the key challenges that are affecting businesses in the 1990s.
Second, the study features a series of in-depth, one-to-one interviews with leading marketing academics and consultants. In all, the views of 17 eminent thinkers were canvassed regarding the business challenges that organizations face, the past failings in marketing and the ways in which the organizations they work with are changing their approaches to marketing. In reality, this sample frame provides far more than the views and experiences of 17 individuals. Through the daily contact they all enjoy and the privileged information they
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share, with the practitioners they train and advise from all manner of companies, their collective perspectives represent a much wider and more valuable window on the world of current organizational practices and marketing issues. It is our belief that the broad base of knowledge generated this way is equally valid, and perhaps even more so, than were we to have undertaken a large-scale quantitative survey of British-based companies, based on limited response questions, developed around our own mindsets and those exposed in past studies.
Third, in order to validate the findings from the first two stages of the study, and to add more depth, vision and clarity, a series of 15 case studies was undertaken with companies that were selected on the basis of their marketing competence and maturity. Targeting suitable companies presents its own set of difficulties. We chose not to select the sample purely on the grounds of current financial performance, because there is no absolute guarantee that this is a reflection of good marketing practice. Instead, we selected primarily on the basis of peer respect and marketing reputation. This was supported via referrals, made in conversation with the leading academics of companies that they consider to be strong and forward-thinking in their marketing approach and which is reflected in their market performance in their own industry sectors.
The case studies comprise five service-based, four industrial, and six consumer goods companies, including one FMCG manufacturer. They include both large, multinational leaders and smaller niche players. The case studies have been constructed around a series of iterative, in-depth, semi-structured interviews of key marketing and managing personnel within each company, ranging from CEOs to functional specialists. We relied on a “snowballing” technique, cascading from the most senior marketing executive downwards, to identify the key people to interview. On average, approximately six hours were spent with employees from each of the 15 companies.
Our case-study approach is atypical of many past studies which have looked at the marketing effectiveness of British companies. The difference reflects our intent not to benchmark performance and develop key, general indicators of marketing success, but to look for guidance and vision over the ways in which companies will best meet customer needs in the future. The approach that we have chosen to compile this paper is to take holistic views of “good marketing practices” in leading companies and then compare them with one another and with the perspectives of leading academics and consultants. It enables us to generalize analytically and derive conclusions about where the future of marketing lies, built around a scaffold of previous thinking and explanation. (A list of the leading academics and comp anies interviewed is given in the appendix).
The academic perspective: literature review and consultation The state of marketing in the UK Research interest developed in this area during the 1980s, when a series of formative studies was undertaken, which set out to review the state of marketing
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practice in UK businesses. The investigation was led by a CIM-sponsored project by Hooley et al. (1984), which surveyed, at a very general level:
● company management’s inter nal attitudes towards marketing (its definition, role and function);
● the way that the function is organized (activities performed, involvement in strategic planning, level of co-ordination and information seeking across functions);
● the practices of the function (use of marketing research, planning, new product development input, etc.).
This set the mould for other UK studies in the series reported in academic journals (Baker et al., 1986; Doyle, 1987; Doyle et al., 1988; Norbet et al., 1988; Piercy, 1985) which mirrored similar work done earlier in the USA (Barksdale and Darden, 1971; Griffin, 1982; Hise, 1965; Lusch et al., 1976; McDaniel and Hise, 1983; McNamara, 1972; Varadarajan, 1983).
The key conclusions that the UK studies reached were, first, that few British companies were marketing-oriented, or competent practitioners at the operational level, and second, that the minority that were performed better, in terms of ROI and market share. This series of studies in the mid-1980s, therefore, justified the importance of marketing in the contemporary business environment.
During the late 1980s and early 1990s, a second wave of like-style studies, conducted mainly by the same researchers in the UK, have revisited the scene, with the main intention of establishing if practices have changed over time (Doyle, 1992; Liu et al., 1991; Lynch et al., 1990; Shaw and Doyle, 1991; Wong et al., 1989). At the same time, a similar move was underway primarily in the USA, but also in other countries around the world (Avlonitis et al., 1992; Jaworski and Kohli, 1993; Mueller-Heumann, 1993; Narver and Slater, 1990; Wink, 1992).
The second phase of UK studies reconfirmed the importance of marketing to business success and, inde ed, found signs that British comp anies were improving their marketing competence, though more in terms of organizational acceptance of the philosophy (i.e. the need to be customer-oriented, market integrated and profit focused – see McGee and Spiro, 1988, for an example) than in their functional abilities. Marketing academics have remained largely critical of British marketing practitioners:
It is now well accepted that poor marketing has been the single most important constraint on British companies’ domestic and overseas market shares. But the transition to greater marketing effectiveness in British firms is slow and remains the major concern of UK CEOs, far outweighing all other factors combined (Wong et al., 1989).
The researchers generally ag re ed that the main inhibito r of marketing effectiveness in UK businesses in the late 1980s and early 1990s, lay not in poor managerial acceptance of marketing thinking, but in poor implementation of basic marketing, (i.e. in its functional activities).
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On the evidence of past studies, we conclude that, despite the poor marketing ability of British companies in the 1970s and 1980s, the criticism remained external to industry. However, as the environment in which British industry competes has toughened over the late 1980s and into the 1990s, marketing has begun to attract heavy criticism from within industry.
The remainder of this article sets out to explore the three themes that we identified at the start: the business challenges that are facing marketing, the failings of marketing and the ways in which marketing can respond to perform more effectively as we move into the twenty-first century.
The business challenges facing marketing Without appreciating the ways in which the business environment is changing, we cannot hope to propose ways in which marketing will evolve with any accuracy or credibility. The literature review, albeit limited, gave us a platform on which to build. Drawing on this, we conducted in-depth, personal interviews with 17 eminent academics and consultants. The purpose of this part of the research programme was to substantiate the views of previous writers and gain peer consensus on the set of core challenges that are facing western-world businesses in the 1990s, and which have an impact on the marketing discipline. As mentioned earlier, we were particularly concerned about capturing the challenges facing companies in the industrial, consumer durables and service sectors. The series of interviews confirmed the list of business challenges identified in the literature review, and provided greater depth and insight into the causes and consequences of these changes and challenges. Each of these challenges is outlined briefly below, to give context to the current debate about the role of marketing. We highlight the specific challenges that these trends present to marketing practices.
● The internationalization of businesses. Garda (1988) and Lazer (1993) cite globalization as the challenge which will have the most impact on marketing. Buyers and suppliers of products and services are becoming more global in their approach to business. The concept of nationally separate markets is no longer relevant, except where strong differences in consumer tastes and cultural preferences exist and as a consequence, competition amongst suppliers is intensifying. Industry deregulation and the creation of the single European market (bringing with it common standards, safety and technical requirements and the end of discrimination by public autho rities) have served to hasten and encourage the trend. The challenge in marketing ter ms is one of restructuring domestic marketing operations to compete internationally in larger, more disparate markets. In effect, globalization complicates all aspects of the traditional 4Ps of the marketing mix.
● Customer expertise, sophistication and power. Customers, generally, are becoming more demanding as their expectations of quality, reliability and durability grow constantly. This is as true of the customers of consumer
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and industrial goods manufacturers as everywhere else. It stems partly from a better knowledge base, largely brought about through the developments in communications and IT, and partly from the concentration of buying into fewer hands, evident in many industries. Accompanying these changes, the development of buyer g roups, networks and alliances are all recent phenomena which have swung market control away from manufacturers in many industries. Their response, such as it is, has been to switch wherever possible to multi- channelling, including the opportunity to sell direct either through established channels, such as the postal service or telesales, or through new ones, such as the television shopping channel and warehouse selling. The marketing challenge is twofold: first, of exploring ways to become closer to the consumer; second, of developing a means and experience base to cope with the complexity presented by multiple market channels.
● Lack of market growth. In many sectors, market maturity has been reached, characterized by overcapacity and exacerbated by current recessionary forces. Margins are being driven down, calling for greater operational efficiencies and “value for money”. Under these conditions, the emphasis rests as much on customer retention as on catching new customers. It also presents a new challenge to marketing, namely, how to create and stimulate new-to-the-marketplace demand, rather than be satisfied simply by competing purely on a market-share basis. McKenna (1991) warns that the latter approach simply “turns marketing into an expensive fight over crumbs, rather than a smart effort to own the whole pie”.
● Process thinking. A direct outgrowth of the technology explosion in information handling and communications has been the switch out of a single-product approach to business to systems thinking. The shift from selling ready-made, tangible products to selling by reputation and on capability to manufacture according to exact client specifications, on an “as needed” basis, is one of the most fundamental challenges facing businesses today. It promotes the importance of forging longer term relationships with customers and being more customer committed.
● Time-based competition. Time horizons continue to become mo re compressed and the pace of change is still accelerating. The development of the likes of flexible manufacturing and control systems has encouraged companies to compete on time, ie. the speed with which they can deliver products to the marketplace. Concurrent with this, is the g rowing transience in consumer preferences. As time has become a majo r determinant of competitive advantage, so businesses need to ensure that they are more closely in touch with their customers and the general marketplace. The need to hit the market early and recover the investment fast is very apparent. In this context, price-setting becomes vital.
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These challenges present industry with the need to restructure and re-evaluate the way in which it undertakes marketing, in a functional sense, as well as to re- examine the ways in which marketing can be introduced and accepted as a business philosophy. These themes are addressed in the following section.
Garda (1988) suggests that marketing is becoming not only more complex as a function, as a result of these changes to the business environment, but more of an analytical science that uses logic, systematic data analysis and sophisticated market research. This, he comments, is far removed from the art form that marketing used to be in the 1950s and 1960s, when it was practised by the creative, intuitive and inspirational. If marketing, as a discipline, does little to respond to this set of new challenges, there is a very real danger that marketing, as a function at least, will be marginalized. The signs are there. “Business process redesign”, rather than marketing, has taken a major role in the corporate restructuring of the USA in recent times as the means for companies to become more customer focused (Hammer, 1990; Pallister et al., 1993).
Changing the marketing mindset How is marketing evolving to respond to the changing business environment? Very few papers have been written which address this topic squarely. However, some of the most recent empirical studies which were mentioned earlier have made a contribution by identifying the criteria associated with the better performers over the last decade (Doyle, 1992; Liu and Wensley, 1991; Lynch et al., 1990; Whittington and Whipp, 1992). Lazer (1993) and McKenna (1991) and Hansen et al. (1990) are other noteworthy contributors in this area. There are, however, weaknesses in flagging up the actions of the best performers as recommendations for others to follow. It is difficult to measure performance in any way other than retrospectively, so any deductions made about criteria associated with best performers, may be misleading. As Doyle (1992) observed, many of the leading companies of an age do not manage to continue there for very long. Perhaps one of the reasons for this is that if you are the market leader you have a vested interest in maintaining the status quo and you can become guilty of not moving forward, only to be overtaken by the competition. With this in mind, we have drawn more on the thoughts and comments of le ading academics and consultants, expressed during interview rather than rely heavily on the literature. Marketing academics in business schools are in the privileged position of seeing the changes underway in businesses on a day-to-day basis, through their close links and in-company work. We have drawn on this experience base to highlight and discuss the changes that are underway in companies that continue to lead from the front and are proactive in developing their markets, rather than include the actions of those current leaders whose future is geared solely to exploring their market position.
It is helpful to differentiate between changes that are occurring in the marketing function and those that relate to marketing’s philosophical and strategic role in the company.
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(1) Strategic changes ● Structure. Common to many of the above papers is the notion that the
organizational structure of the marketing department is having to change to accommodate the business challenges that we have described previously. In effect, leading companies appear to be moving away from a formal, top down, hierarchical structure, which is bureaucratic, but effective in terms of administrative costs as well as being risk-aversive, in so far as everyone is directly accountable for their actions. In the past, this structure served companies well, but it is now being criticized because it impedes the creation of innovative ideas and it hinders the company’s ability to respond quickly to market opportunities. In its place, a move to a flatter, more flexible, open system structure is being adopted, in which traditional job titles and responsibilities are being replaced.
● Focus. As companies become more global in their outlook, the effectiveness of controlling marketing operations from a centralized position is being questioned. Many companies are disbanding their central function and establishing multiple cores, comprising multifunctional, customer-facing teams. Potentially, the move to decentralization hinders marketing strategy cohesion. Companies overcome this problem in different ways; some use working groups, or task forces, (Unilever refer to them as category management teams), with representation from the various units, to steer strategic issues, others, such as P&G designate “lead countries” to take lead roles in projects and then to disseminate the knowledge to the other units. This enables companies to take a focused search for areas of competitive advantage. Increasingly, companies are looking towards strategic alliances, other “lock-in” relationships, and more informal networks to expand their avenues for business growth.
● Future driven. To date, companies have assumed a largely reactive approach towards the way they conduct their business. There are signs that organizations are beginning to take a more proactive approach to the future and are becoming tr uly market-driven. McKenna (1991) describes this as changing culture from the “tell us what colour you want” school of marketing to “let’s figure out together whether and how colour matters to your larger goal” marketing. In essence, it implies moving towards a position of genuine involvement with customers and, where necessary becoming familiar with the customer’s customer. It assumes a “future backwards, market inwards” approach. Successful companies seemingly evolve with or in front of markets.
(2) Operational and functional changes Accompanying the strategic and philosophical changes is the need to implement changes at the functional level.
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● Professional ism. There is indication from the literatu re and discussions with academics that leading companies are becoming more professional in their marketing operations in a number of different ways. They attach more importance to formal marketing training and qualifications and make greater use of marketing research and marketing planning, as well as heavier investment in market intermediary and internal analysis.
● Market and performance assessment. It is apparent that leading companies are moving away from discrete time assessments based around weekly, monthly or quarterly periods, towards continuous, ongoing monitoring and analysis, so that they can react quickly to market changes and prevent getting stuck in antiquated paradigms. Lazer (1993) thus described marketing as becoming a process of “striving, but never arriving”, of “pursuing a journey, not reaching a destination”. In today’s fast-changing marketplace, the traditional NPD process of getting an ide a, developing a prototype, testing the market, and launching, is judged to be “slow, unresponsive and turf-ridden” (McKenna, 1991). The alternative is to nurture continuous innovation fed by monitoring the market wants and competitive activity on an ongoing basis.
In conclusion, it is apparent that marketing success is a matter of doing the right things as well as doing things right. This section has reviewed the lessons that have been drawn from the little empirical evidence that has been documented and reflects the current thinking of leading academics and consultants.
An industry perspective: fieldwork findings How accu rately do these thoughts and views reflect the practitioner’s perspective? Fifteen case studies of leading marketing companies provide us with a unique window through which to observe cu r rent practices and experience live issues.
The changing business environment The views and opinions of senior managers in the 15 leading UK-based comp anies confir med the main challenges to business as being those highlighted by academics and described above. Our intent here, however, is mo re about providing insight and de pth of understanding than about generating a substantiated “pecking order” of issues.
Internationalization is undoubtedly one of the most important challenges currently facing organizations across the service, consumer durable and industrial sectors. It is an issue to which they are reacting. It is now a key element of strategic planning for these excellent companies, though all of our sample companies acknowledge the need to “think global, act local”.
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Their motivations, however, are somewhat different. In the service companies we studied, the driving force is largely internal and centred around an inherent quest for fast growth (fast access to fast-growing markets). In effect, the consequence is that service companies can control their own destiny and speed of internationalization to suit their own development. The service companies in our sample see internationalization primarily as a growth opportunity, met primarily through alliances and acquisition. This is underlined by a comment made by Sir Colin Marshall of British Airways, in the 1993 accounts: “We have been able to implement a significant part of our overall strategy for the future through major investments in the USAir Group Inc., the fourth largest of the US airlines in passenger number terms; in Quantas … in TAT European Airlines, the second airline in France, and in Deutsche BA, operating both domestic and international routes in Germany”. Rentokil, another of our sample base, provide further evidence of this, having made 120 acquisitions in 10 years.
In the consumer durables companies that we studied, the motivation is, once more, internally derived, rooted mainly in the opportunity for growth, but also in securing sustained performance, through insuring against local economic downturns. As one senior manager in our sample said: “When one country falls over, usually one somewhere else is doing well”. Consumer markets are very susceptible to changes in discretionary spending levels.
In contrast, the main force behind internationalization in industrial companies se ems to be more exter nally driven. As their customers are, themselves, becoming more global, so customers expect their suppliers to be able to service them at a global, not just local, level. This is reflected in a comment from AT&T Global Information Solutions: “One of the things that we are working on is to help customers who are themselves truly global players and deal with them as a single organization. As customers become more international, either through acquisition or organic growth, they will expect us to be able to address them as one unit internationally”. A lack of ability to meet this demand is causing accounts to be lost, as buyers rationalize their numbers of suppliers.
In essence, we suggest that the challenge of internationalization is a more pressing one for industrial companies than others, as the required pace of change is governed externally by their customers.
Increasing sophistication and power of customers is, without doubt, another key challenge to industrial companies at present. This increased sophistication, however, is not primarily technical among the companies we studied. It is rather the opposite; customers are less interested in purely technical matters, but are becoming more professional in their buying habits. This is illustrated by a comment from Rolls-Royce Aero Engines: “Product attributes are swamped by huge financial considerations … Our customers have always been clever [but]…they are not as engineering-oriented as they were. They are more concerned about the bottom line. Their area of sophistication has switched into finance and economics”. Product performance is increasingly becoming a given, not a cause of differentiation.
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Likewise, consumer durable manufacturers are equally concerned by the growing sophistication and importance of their customers and of end users. To them, this is less of a new challenge, but more of a continuing one, which now extends down to even the smallest of customers. The sophistication extends to buying systems and processes, requiring suppliers to respond more quickly.
It seems that customer power and sophistication has less impact on the service companies we studied. Perhaps this stems from the market growth that is still being enjoyed by many of them. It may stem also from the lower knowledge base that customers tend to possess when dealing with intangible products. Despite this challenge being less threatening, service companies do concede that customers are becoming more price sensitive and quicker to criticize and voice their opinion. One BA manager commented that “passengers are increasingly telling us what they want”. Consolidation of suppliers and the concomitant concentration of their power is of more concern to leading service companies than the rise in customer power. “Eat or be eaten” is the motto by which they survive and compete.
Industrial companies are the only group in our sample to cite lack of market growth as a high impact issue. This stems partly from the relative contribution that single customers and national markets can make to their businesses. If one or two of their customers slip into difficulties or one or two markets into recession, the whole of the business is more likely to suffer. It is encouraging the better performers to seek new markets more actively than ever before and place g reater emphasis on new product development and innovation. To other companies in the sample, outside the industrial sector, the issue is more about increased competition rather than lack of market growth.
It is clearly evident from our study that good marketing companies are aware of the need to think more in terms of processes, particularly in relation to delivering customer value, than specific functional tasks. They are coming to understand and define their roles in terms of customer service and support. Some organizations have even gone so far as to change job titles and department names so that they explicitly mention customers.
One result of moving thinking away from functions towards processes seems to be a much clearer understanding of what makes the customer buy. Once organizations understand the customer’s decision process, they are able to align their own processes and ways of doing things to the ways in which customers think and operate. This makes them much more sensitive to quality being seen as an “end-to-end” process from the customer’s service-delivery perspective, rather than in any abbreviated form.
Likewise, the challenge of time-based competition and the pace of change highlighted in the earlier stages of the study, is impacting on all three sectors studied. This is typified by the experiences of Standard Life, another of the companies in our study. In the insurance business, traditional pension products, for example, have had 40- or 50-year lifespans. The kind of pension products that were being sold to customers in the 1980s would not have been unfamiliar to actuaries in the 1820s. Suddenly, however, the boom in unit-linked products and
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changes in regulation and taxation regimes means that product life cycles for some products are down now to three or five years.
In order to respond to shorter product lives, the style of new product development is also changing: “We are tackling this [shortening new product lead times] by bringing along more options…keeping our options open for longer than we have done in the past…if you have a failure with one, you have got a couple of others to go on with. In the past this was not the case; they did something, failed and then started all over again”. The whole process is driven by the desire to anticipate the service that customers will want next year and then to provide it today.
Past failings in marketing Besides the changing environment in which businesses operate today, marketers are confronted by general low regard of their discipline, as a consequence of a number of longstanding weaknesses associated with it. It is beyond the scope of this article to describe these failings in depth. It is, nevertheless, necessary to mention them and report their presence or absence in the companies we studied, so that we can take stock of all the challenges that face marketing today, before signalling where marketing is going.
Poor image, complacency, poor integration and lack of a secure knowledge base are all criticisms made about marketers, but which have been rarely conceded openly. Our case studies suggest that image and integration are failings less associated with marketing in the services sector, perhaps because of its relative youthfulness there, captured in a typical response from BT:
Marketing in BT…is in early adolescence. It has come through its childhood but it is not yet mature, and, like most adolescents, it is having an influence on the family – it is keeping the family young.
Elsewhere, even in the companies we studied, where marketing practices are considered to be better than most, the people we interviewed admitted that there are still problems, albeit that they are being eroded. In the industrial sector, for example, one spokesman testified that there is still “a lot of scepticism in this organization towards marketing and its values”. In the consumer goods companies that we approached, the signs are more encouraging. There is a belief that complacency and poor integration are becoming a thing of the past.
Yet poor image and lack of a secure skill and knowledge base continue to dog marketing and marketers in many organizations in the UK. The problem of poor image seems to arise where marketing has allowed itself to become merely a sales support function, or where companies have tried and failed to implement certain aspects of marketing. As one senior manager in a consumer durable company reflected: “Coming back to the UK from North America is like stepping back in a time warp. Management sciences are underdeveloped in this country and are paralysed by analysis, and UK companies are not performing as well as could be expected”. Only exceptionally do we find examples of companies in which marketing is becoming recognized as possessing a valued set of skills.
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The effect of poor image and professional arrogance over time has created a cultural divide in many British companies between marketing and other functions. Poor integration with other parts of the organization has been a common consequence. Such is the stigma that some marketers feel, they have become trapped in their vertical silos, frightened to step out, mingle and communicate with the other functions. The companies we studied, however, demonstrate a trend towards increasing integration of marketing with other departments.
The final weakness associated with marketing is that it is coming under attack for being increasingly risk-aversive, for failing to recognize the opportunities of internationalization and for generally losing its commitment to innovation. Nevertheless, as product life cycles continue to shorten, the need to take risks in new product development will grow, as one manager from Boots pointed out: “Now, you have to develop the ability to take risks, knowing that not everything will work. You have to be a bit risky and put a bit of life back into marketing”. Clearly, decisive steps have to be taken to overcome the persistency of the past failings in marketing.
It is evident, from our brief review, that marketing’s achievements in British industry over the last few decades have not been impressive. Yet academics strongly reject the claims made by some commentators recently that marketing is failing. Research continues to show that those companies with a strong marketing focus perform better (Narver and Slater, 1990). The current criticism that marketing is attracting relates, we suggest, more to the function than the philosophy. However, only a minority of companies still achieve a strong marketing focus. Figures 1 and 2 summarize the evolution of marketing to date.
From our discussions with leading academics and practitioners, together with a review of the literature, we have highlighted the key business challenges that face British industry and to which marketing must respond. We have also highlighted the failings that exist in current marketing practice. Armed with this background knowledge, where is marketing heading and how should it evolve to meet these business challenges?
Discussions and conclusions Marketing: the way forward The strongest message to emerge from the companies that took part in this study is that they are redefining marketing. Marketing for the excellent companies is now about customer service in a very special sense. The excellent companies are talking not just about satisfying present customer needs, but about anticipating the customer needs of the future and delivering them today. This deceptively simple reorientation is beginning to have the most profound impact on the ways in which excellent companies do business.
The introduction of a customer-oriented business philosophy across the whole organization is critical to effective marketing and business success. While many senior executives across different industries have come to accept
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that, over the last decade, the stumbling block has been how actually to implement it.
Corporate cultures are impossible to change overnight; no-one denies that. And this is borne out among the companies that we studied. Even successful organizations like BT, admit that there are still some attitudinal barriers to
Figure 1. The evolution of
marketing in industrial and service companies
to date
Focus on promotion, selling and market research
Marketing =
selling
● Sell what we make well
Marketing =
selling +
●
Marketing =
accepted philosophy
● Market-led
● More sophisticated at selling what we make well
● Attention on segmentation and positioning
● Internal conflicts and focus
Marketing effectiveness
?
1950s 1 960s
1970 s
1980s leade
rs
1950s 1960s 1 960s
1960s lagga
rds
Figure 2. The evolution of
marketing in fast moving consumer
goods companies to date
1950s
196 0s-
197 0s
1980s
Market-led
Marketing =
selling+
● 4Ps
Marketing =
driving philosophy
●
Marketing =
mechanistic ritual
● Market muscle-bound
Marketing effectiveness
?Committed to customers● Superior value proposition to customers
●
External focus●
● Little innovation
● Slow response
● Analysis paralysis
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overcome before the marketing philosophy is embraced fully by all its personnel. If the case studies that we have analysed are a reasonable reflection of state-of- the-art practices across the three sectors, industrial companies have the most ground to cover. The signs, though, are very encouraging; leading industrial companies are moving in the right direction – the supertanker is changing its course.
According to the study, there are a number of ways which help organizations achieve an overarching business philosophy centred around the customer. From the evidence in the case studies, it is clear that these mechanisms are being adopted. The first is customer focus through leadership; the cultural change has to be driven from the top. Both in the service and consumer goods companies that we studied, the precedence here is to bring in senior executives from outside the company to drive the cultural change. There is a tendency to recruit senior managers from the FMCG sector, where customer culture has become second nature. Among the companies we spoke to, Allied Dunbar, British Airways and British Telecom have all taken this line.
The second mechanism that leading companies are adopting to become more customer focused is through the introduction of cross-functional mobility to their managers. This is particularly apparent in the service and consumer goods companies we studied. Leading companies do seem to encourage mobility not just within the company, but also outside it as well. External secondment is becoming an accepted and useful means of encouraging new perspectives. As one British Airways manager pointed out: “Anyone who comes in brings a new perspective… I think that it is terribly important that we remain very open to new ideas and experiences”.
Company restructuring is the third mechanism to help break down inherent cultures and reorientate around a customer focus. Whether the primary catalyst to restructuring has been the need to become market-led, or whether it has been to respond to the business challenges (such as internationalization) that confront industry today, we are left with little doubt that leading companies are in the throes of major reorganizations. There is a firm belief in the companies that we studied that restructuring around customers is necessary, both to become closer to customers and to be able to respond quickly to their ne eds. Company str uctures are becoming flatter, as hierarchies are being delayered, and responsibilities are being devolved.
In many of the companies that we spoke to, there is a move underfoot to restr ucture around markets. Currently, the standard practice is still to be organized around products and product categories. In industries where customer power has g rown the quickest and become highly concentrated, leading companies are regrouping around key accounts and market segments, creating customer focus teams and equipping them with the necessary responsibility and authority. One company we studied, AT&T Global Information Solutions, has created 23 customer focus teams in the UK, as part of its restructuring, and has reduced the layers in its hierarchy to just three. This new organization structure is being adopted worldwide, with the aim of creating a culture of market
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awareness. The company is striving to reach a point where there are no more than two organizational levels between the customer and the service solution. They are supported by centralized, functional, specialist departments. In other companies we studied, cross-functional teams are being introduced to take on special projects. There is every sign, in these cases, that they are having great impact and will assume a more permanent and mainstream role in the future.
In the companies we studied which have adopted a marketing orientation, invariably marketing escapes from the traditional marketing department. This is being reflected in its size. The lead taken by good marketing companies to smaller functional marketing departments looks set to be followed by others. Crucially, however, its influence is growing, not diminishing, as companies recognize the pivotal role it plays in two-way communication with customers and in delivering customer satisfaction against their needs. The future role of centralized marketing departments is seen increasingly as being split between the policeman of corporate identity and the ombudsman of the customer.
Accompanying restr ucturing, a strong feature of the good marketing companies we studied is the heavy influence that the customer-facing divisions are having on strategy formulation. Unquestionably, the ways in which strategy is being developed are becoming more customer-sensitive and dynamic. Strong direction is being provided from the top, but this tends to be in outline form. Strategic detail, as well as tactics, are being developed lower down, or, at least, away from central HQ.
Besides restructuring, the largest, single initiative in strategic marketing today is the current emphasis being given to building relationships with customers and even customers’ customers. This is apparent in all of the case studies that we made and is reflected in an obvious way by the restructuring that is underway.
In order to achieve marketing excellence at an operational level, there are three distinct trends that are emerging among the leading companies, irrespective of their industry sector. The first is the renewed emphasis that is being placed on the collection, analysis and use of marketing information. In particular, the companies that we studied are giving more emphasis on catching information which provides a better depth of understanding about their customers and their motivations to buy. Some leading companies believe that there is now too much emphasis being shown towards competitor analysis and benchmarking. By focusing on the competition, you can easily loose sight of the customer.
The quest for more, and better, market information is being met as new sources of information provision open up. Now, more than ever before, there are new third-party, industry-specific providers coming on stream, as a result of the growing amount of data that is being captured by IT systems. Suppliers are finding, also, more willingness on the part of their buyers to share more sales information with them, as relationships betwe en buyers and suppliers strengthen.
The second trend that is developing at the operational end of marketing, is the growing use and importance being given to performance measurement and
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monitoring. This is, beyond doubt, a feature associated with leading companies. The number and scope of performance measures are growing, as companies establish and fine-tune the measure they need to take in order to deliver customer satisfaction end-to-end. The measures are not restricted to assessing external customer satisfaction levels, but, increasingly, are becoming more sophisticated to cover the whole value chain, including internal customers. In the industrial sector, there is, generally, more reliance on the vendor analysis and league tables, provided by their customers, than on self-derived measures.
With the advent of performance measuring, have come steps to relate performance to pay, right the way down the chain. One of the companies we studied, now dispenses 25 per cent of its total bonus pay on the basis of customer satisfaction levels. This acts to reinforce the importance attached to customer satisfaction across the whole organization.
The third and final trend that is helping leading companies to achieve marketing excellence is the investment made in the training and development of staff. All of the companies we studied invest heavily in ongoing training programmes, to ensure that they possess leading edge skills and knowledge to defend their positions of competitive advantage.
The evolution of marketing – a summary The simple conclusion we reach is that marketing is still evolving and that it is, currently, in a growth cycle rather than in decline, as some commentators have suggested. The current criticism that marketing is attracting relates, we suggest, more to the poor functional marketing capabilities of many businesses, than to the failing of the philosophy or its uptake. The evidence from the companies that we have studied is that marketing is increasing in influence. Companies are moving away from applying marketing in a relatively tactical way. Marketing in leading companies is now truly becoming adopted as a philosophy for everyone in the organization. The leading companies of the 1990s are likely to demonstrate the following characteristics. They will be market-led, responsive and flexible, organized around core processes that reflect the customers’ preference, and with a high multi-skill base.
One consequence of this trend is that for mal, traditional marketing departments are likely to shrink in size, as marketing escapes from the marketing department and permeates the whole organization. This is already happening in some of the companies that we have studied. In terms of the marketing life-cycle, we find that marketing is somewhere between childhood and adolescence.
The growing importance of marketing The prizes for those companies that successfully adopt a truly customer-facing orientation and are able to anticipate and meet the needs of their customers are likely to be immense. From our research, we are conscious that internationalization is the key change in the business environment that offers a major opportunity as well as a major threat. Leaders have the potential to
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become very large and will make the leap to global operating. AT&T Global Information Solutions and Rentokil, for example, have already made the leap.
Internationalization of markets implies that national markets are becoming merely niches of global markets. In our view, companies that are not able to make the leap to global status will find themselves increasingly on the sidelines and targets for acquisition by the global giants. This picture of a few winners, and the potential to find oneself sidelined, explains why internationalization is so important to the companies we studied. The trend, itself, is irreversible; companies say that it is often their customers who are leading the way to international markets. When they become global players themselves, they expect their suppliers to be able to supply them on a global basis. We anticipate an increased polarity between four types of market-positioning strategies. Their relative positions in terms of the key dimensions of differentiation and cost-effectiveness are shown in Figure 3.
The emergent marketing orientation Finally, our research suggests that there are certain key aspects to achieving a true marketing orientation. Some of these, such as leadership, reorganization and the move to process thinking, have already been mentioned.
The key to managing the change process to make an organization truly marketing and customer-orientated seem to be leadership, flexibility and empowerment.
Leadership refers to the change driver in the organization and its visible commitment to the new philosophy, which must be at the very highest levels of the organization.
Flexibility means being prepared to accept change, not just as a one-off, but constantly. Given that the needs and wants of customers and consumers are constantly changing, tr uly marketing-led organizations cannot expect to change once and then to stay still. Flexibility must be built into the organization by methods such as cross-functional working, so that customer wants can be anticipated.
Figure 3. Four market
positioning strategies in global markets
Global player
Small niche
Generic
National or local
High
Low
High Low Differentiation
Relative cost- effectiveness
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Empowerment has two meanings for the market-led company, one internal and one external. Internally, it means encouraging the customer-facing teams to feed information back to the organization, particularly for the purpose of strategy development. Externally, it means allowing the customer-facing teams latitude to implement the strategy in the way that they believe will truly delight the customer. In order to do this, they will need not just to be empowered, but also to be equipped with the necessary marketing skills.
In essence, the emergent marketing orientation combines company-wide embracement of the marketing philosophy with the necessary functional skills to deliver the needs of customers.
We show in Figure 4 a matrix of marketing philosophy, on which we have plotted, in diagrammatic form, the relationship between the adoption of marketing as a philosophy with the levels of marketing skills within the organization. Box 4 represents all that is worst in industry i.e., a low marketing skills base and weak customer orientation.
Box 3 represents organizations that have recruited managers with excellent marketing skills, but which do not have an overarching marketing philosophy. In these organizations, marketing is likely to be tactical rather than strategic. In box 2 we find organizations that have recognized the need to be market-led, but which do not yet have the marketing skills fully to achieve this.
It is organizations in boxes 2, 3 and 4 that have led to the criticisms levelled against marketing in the past. In contrast, the excellent companies in our study were either in box 1, or moving rapidly towards it. For organizations in box 1, marketing has a major contribution to make to business success in the 1990s.
In conclusion, it is clear that marketing, both as a philosophy and as a function, is still in its infancy. In part, difficulties in implementing “marketing” in British industry have stifled its growth. However, this article highlights the steps that leading companies are now taking in order to implement marketing practice and the success they are achieving. It provides a route plan for others to follow. In excellent companies, marketing is now rapidly evolving into
1
3
2
4
"Marketing excellence"
High Low
High
Low
Marketing philosophy
Marketing skills
Figure 4. The new marketing orientation
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The role of marketing
73
manhood and will clearly be a major driving force in the late 1990s, for those companies that embrace it in the manner shown in Figures 5 and 6.
For further details of the full, 120 page report, please contact the Chartered Institute of Marketing, Moor Hall, Cookham, Berkshire SL6 6QH. The report is entitled Marketing – The Challenge of Change.
Figure 5. The evolution of
marketing in industrial and service companies
Marketing =
selling
● Sell what we make well
Marketing =
selling+
● Focus on promotion, selling and market research
Marketing =
accepted philosophy
● Market-led
Marketing =
driving philosophy
● Market-led
● More sophisticated at selling what we make well
● Attention on segmentation and positioning
● Internal conflicts and focus
● Committed to customer
● Superior value proposition to customer
● External focus
Marketing effectiveness
1950s 1960s
1970s
1950s 19 60s 197
0s 19 80s
1990s laggar
ds 1980s lea
ders 199
0s l ead
ers
Marketing =
selling +
● 4Ps
Marketing =
driving philosophy
● Market-led
Marketing =
mechanistic ritual
● Market muscle-bound
Marketing =
postmodernist philosophy
● Market-led
● Committed to customers
● Superior value proposition to customers
● External focus
● Little innovation
● Slow response
● Analysis paralysis
● Responsive and flexible
● Organized around core processes
● Functional excellence
● High skill base
1950s 196
0s- 197
0s 1980s 19
90 s
Marketing effectiveness
Figure 6. The evolution of
marketing in fast moving consumer goods companies
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Appendix: list of respondents
Academics Professor Patrick Barwise London Business School Professor Martin Christopher Cranfield School of Management Dr Gordon Greenley University of Birmingham Professor Graham Hooley Aston University Professor Gerry Johnson Cranfield School of Management Dr Simon Knox Cranfield School of Management Visiting Professor Simon Majaro Cranfield School of Management Professor Malcolm McDonald Cranfield School of Management Professor Stephen Parkinson University of Bradford Professor Adrian Payne Cranfield School of Management Professor Nigel Piercy Cardiff Business School Professor John Saunders Loughborough University Business School Professor Peter Turnbull UMIST Professor Robin Wensley Warwick Business School
Consultants Tom Brannan Primary Contact John Brady McKinsey & Co Mike Wilson Marketing Improvements
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“Marketing excellent” companies ● Service sector
Allied Dunbar British Airways British Telecom Rentokil Standard Life
● Consumer manufacturing Black & Decker Boots Healthcare International Johnson & Johnson Land Rover SmithKline Beecham Sony (UK)
● Industrial manufacturing and distribution AT&T Global Information Solutions Electrospeed Renishaw Rolls-Royce Aero Engines
(Tim Denison is Senior Research Fellow and Malcolm McDonald is Professor of Marketing Planning, both at The Cranfield School of Management, Cranfield, Bedford, UK.)
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Transformation of Marketing in a digital world - Reading.pdf
European Journal of Marketing Troubled waters: the transformation of marketing in a digital world Lee Quinn Sally Dibb Lyndon Simkin Ana Canhoto Mathew Analogbei
Article information: To cite this document: Lee Quinn Sally Dibb Lyndon Simkin Ana Canhoto Mathew Analogbei , (2016),"Troubled waters: the transformation of marketing in a digital world", European Journal of Marketing, Vol. 50 Iss 12 pp. - Permanent link to this document: http://dx.doi.org/10.1108/EJM-08-2015-0537
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Troubled waters: the transformation of marketing in a digital world
Introduction
The rapidly-evolving digital marketing landscape has far-reaching managerial and strategic
consequences. While studies have long supported the marketing function’s central role in
connecting customers to products (Moorman and Rust, 1999), a broadening range of
problems has undermined credibility in the marketer’s role, threatening marketing’s distinct
organizational capability (Rust et al., 2004). Although the changing role of marketing has
resurfaced for debate from institutional (Webster, 1992; Deshpande and Webster, 1989) and
operational (Walsh and Lipinski, 2009) perspectives throughout the past sixty years (Bund
and Carroll, 1957; Webster, 1981; Moorman and Rust, 1999; Rust et al., 2004), compelling
evidence confirms that marketing “must be an integral part of the organization's decision-
making framework" (Kumar, 2015, p. 4; see also: Homburg et al., 2015). However, despite
considerable research attention, little consideration has been given to the impact of data
proliferation and advances in data analytics on functional or strategic responsibilities (Chari
et al., 2012), or on the varied nature of marketing practice within the firm (cf. Wensley, 1995;
Thorpe and Morgan, 2007; Roberts et al., 2014). A central aim in our study is, therefore, to
reveal ways in which the strategic role of marketing is changing as a consequence of the
many challenges presented by an evolving technological landscape. In addressing this
concern, we reveal that the advancing digital landscape has precipitated a managerial sense of
crisis for marketing, triggering a transformation that has repercussions for the future of the
discipline and its practice.
The Evolving Marketing Landscape
Following Drucker’s (1954) articulation of the marketing concept, the discipline quickly
attracted attention as a distinct organizational function (Webster, 2005). Throughout the
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1960s and 1970s, research attention switched from conceptual concerns of managing the
marketing function to the strategic pursuit for competitive advantage (Porter, 1985). In
particular, researchers in the fields of strategic management and strategic marketing (e.g.
Anderson, 1982; Day and Wensley, 1983) increasingly emphasised the managerial role of
strategy formulation, while strategy implementation notably served as an “invariable
consequence of planning” (Thorpe and Morgan, 2007, p. 660). Fortunately, as Thorpe and
Morgan (2007, p. 660) continue, insights have since “tempered our knowledge of developing
marketing strategy with the realities of executing it”. While strategic planning fell out of
vogue in the 1980s (Webster, 2005), debates concerning marketing’s central role in strategy
formulation (e.g. Browne, 2014; Davies & Ardley, 2012; Engelen, 2011; McDonald, 2009;
Palmer & Simmons, 2010; Varadarajan, 1992) and implementation (e.g. Bonoma, 1984;
Chebat, 1999; Chimanzhi and Morgan, 2005; Homburg et al., 2004; Miller et al., 2004;
Noble, 1999; Noble, and Mokwa, 1999; Olson et al., 2005; Piercy, 2002; Qi, 2005;
Ramaseshan et al., 2012; Varadarajan et al. 2001; Wind and Robertson, 1983) continue to
elicit strong interest today (Kumar, 2015; Morgan, 2012).
The reasons for this interest are clear but by no means straightforward to address within
empirical research inquiry, not least because the breadth of debate has fragmented the
research agenda (Browne, 2014). For example, Varadarajan (2010, p. 119) views the
evolution of the field of strategic marketing as “a confluence of perspectives, paradigms,
theories, concepts, frameworks, principles, methods, models and metrics from a number of
related fields of study”. While he suggests that this cumulative body of literature is indicative
of substantive, theoretical and methodological advances, concerns that have been repeated over
a number of decades are widely evident (e.g. Bartels, 1974; Wind and Robertson, 1983; Day,
1992; Reibstein et al., 2009), triggering the feared realization of an irretrievable disciplinary
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collapse. In highlighting the fundamental research challenges, we particularly note the
following themes, which have precipitated the current sense of urgency. These include: (a)
marketing strategy research fragmentation; (b) marketing’s inability to communicate
organizational performance and a return on investment; and (c) the increasing dispersion of
marketing activities.
(a) Marketing strategy research fragmentation
While recent evidence supports the argument that marketing benefits an organization
(Homburg et al., 2015), debates around marketing’s influence on strategic decision-making in
the firm have become prominent. This is, perhaps, unsurprising as it has long been
recognized that, “conflicting empirical results founded upon contrasting theoretical premises
indicate that marketing strategy implementation is a complex phenomenon” (Thorpe and
Morgan, 2007, p. 660). Consequently, Reibstein et al. (2009, p. 1) reinforce the pragmatic
view that, “we need to ensure that the concepts and methods employed are appropriate for
generating valid insights into critical research questions, not whether the methods are the
most advanced”. Closely aligned to this issue, the dominant methodological nature of
scholarly research attention in the discipline (cf. Homburg et al., 2000) leads us to recognize
that, “the growing balkanization of academic marketing into quantitative modelling and
consumer behaviour [is diminishing] research on strategic marketing issues” (Reibstein et al.,
2009, p. 1). This trend is an important consideration for the design and scope of any
marketing research inquiry which probes managerial implementation challenges across
sectors and industries. It remains a particular managerial concern, not least because of Thorpe
and Morgan’s (2007, p. 660) widely-held view that, “a critical determinant in the success and
survival of the firm lies the successful implementation of marketing strategies”.
(b) The inability to communicate organizational performance and return on
investment
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The second issue highlights marketing’s apparent inability to demonstrate its value (Boyd et
al., 2010; Rust et al., 2004; Verhoef & Leeflang, 2009; Webster et al., 2005), thus
undermining its influence within the firm (Homburg et al., 2015). Although evidence
suggests that, “an influential marketing department makes the greatest contribution to
company performance” (Homburg et al., 2015, p. 1), marketing’s loss of influence within the
firm can substantially be blamed on its lack of financial accountability (Boyd et al., 2010;
O’Sullivan et al., 2009; Tavassoli et al., 2014). Consequently, the degree to which
“marketing can evidence proof of its contribution to company performance” (Tollin and
Schmidt, 2012, p. 509) remains limited. This particular challenge raises immediate concerns
for the longer-term strategic role of marketing within the firm.
(c) The dispersion of marketing activities
An increasing dispersion of marketing activities coupled with marketing’s subsequent loss of
influence within the firm has become an overarching research priority over the past decade.
As Webster et al. (2005, p. 36) note, “many elements of the central marketing function have
been ‘centrifuged’, [thus framing the marketing department] as a diaspora of skills and
capabilities spread across and even outside the organization”. This raises important questions
about the degree of influence that marketing has upon strategic decision-making and the
extent to which strategic decisions are being shaped and challenged in marketing practice
(Krohmer et al., 2002). For Homburg et al. (2000) this poses an interesting proposition for
researchers, especially in terms of the perennial question as to whether such changes are
initiated within the firm, or as a reaction to environmental transformation.
In this sense, Homburg et al. (2000) recognize that, “organizations should structure
themselves in order to be more market-oriented and responsive to changing customer needs
and market conditions” (p. 475). However, understanding the complex and evolving
managerial nature of this strategic problem remains a central to informing understanding of
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how marketing responsibilities impact upon strategic capabilities in the selection of target-
markets. As Webster et al. (2005) explain:
“Absent a vocal champion for reinforcement and development of marketing skills
across the company - without a corporate marketing ‘centre of excellence,’ in effect -
the company is less able to identify and isolate future customers and customer needs
and will be less efficient at creating, communicating and delivering value to them.”
Browne et al. (2014) raise an additional concern in response to marketing’s increasing
marginalization. Following Skålén & Hackley (2011) they highlight a lack of research which
explores how marketing practice actually influences top management strategy making. If
marketing managers wish to re-stablish their organizational influence, research studies
addressing this concern are an immediate priority (Browne et al., 2014).
Environmental change and the impact on target market strategy
While environmental forces continue to pressure the marketing function (Webster et al.,
2005), in recent years some of these have rapidly and dynamically altered the traditional
ways in which managers identify market opportunities and shape strategy (Dibb and Simkin,
2009; Quinn and Dibb, 2010). For example, the transformational socio-economic effects
triggered by the recent global financial crisis (ONS, 2008; 2009), the ever-present
requirement for enhanced marketing accountability (Goodell and Martin, 1992; Shama, 1993;
Roberts, 2003; Srinivasan et al., 2005), and an increased emphasis on the strategic role of
customer insight are prominent issues in the identification of target markets as organizations
struggle to adapt to destabilising patterns of consumption (Bainbridge, 2009; ESRC, 2009;
MSI, 2014). At the same time, the proliferation of data, particularly data from electronic
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sources, and advanced analytics (Brady et al., 2002) are providing an opportunity to enrich
market insight, leading to enhanced strategic planning forecasts and operational efficiencies
(Srinivasan et al., 2005). These developments are shaping the disciplinary imagination of
marketing practice to an unparalleled degree. However, some commentators express a
concern that the traditional strategic underpinnings of marketing may be cast aside (Leeflang
et al., 2014) in favour of a new agenda underpinned by the digital landscape (Durkin, 2013)
and couched in an alternative managerial language of reach, acquisition and conversion
targets (Han et al., 2012). Indeed, ‘digital marketing’ has emerged as a panacea (Kiani, 1998;
Parsons and Waitman, 1998; Wind and Mahajan, 2001), reshaping the commercial agenda,
transforming the research landscape, and promising a new dimension in the strategic
management of markets (Germann et al., 2012). Mass surveillance and data capture are held
as key managerial facilitators in pursuit of understanding and benefiting from the complex
and seemingly irrational consumption patterns of today’s consumers. Big data, emerging
visualisation techniques, and enhanced computing power, promise rich and actionable
customer insights of the kind that are fundamental to firms’ strategic decision-making (Day,
2011). Those who champion a digital revolution see this as an exciting opportunity for the
discipline (Baker, 2009; Barwise and Farley, 2005; Day and Bens, 2005; Kietzmann et al.,
2012), and argue for marketing to reshape itself in order to survive.
Marketing as a domain is inescapably driven by advances in technology, where every
electronically-enabled consumer becomes a research participant, driving the realisation of a
digitally-encoded Orwellian society (Berger, 2010; Slettemeås, 2009). Yet few authors have
considered the managerial and functional consequences of this rapidly evolving, increasingly
digitalized agenda. The implications for marketing, and how to reframe and integrate the
conceptual underpinnings of marketing strategy creation and implementation, have been
overlooked from the marketing practitioner’s perspective. This omission presents an
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important question central to the current study as those concerns implicated by the changing
technological and social environment have become increasingly exposed in the marketing
literature. For example, managers have often struggled to keep pace with the impact of
technological change and a widening gap has been noted between what is technologically
possible and what occurs in practice (Day, 2011; Wymbs, 2011; Finch et al., 2013). Indeed,
the practices of many marketers are far removed from considering customers at the granular
level that e-technology enables (Feit et al., 2013). Furthermore, although consumer concerns
about privacy are increasing resistance to intrusive tracking and monitoring initiatives (Lyon,
2004; Ball and Haggerty, 2005), the widespread acceptance and consumption of digital and
social media suggests that consumer paranoia may have been misjudged. The extent to which
this apparent contradiction is a consequence of the gap between the tracking and monitoring
possibilities espoused in theory, and the profiling initiatives implemented in practice, is
unclear. Despite calls for researchers to keep pace with the corollary of these developments
(e.g. Sheth and Sisodia, 2015; Wind, 2014), there is a paucity of research examining the ways
in which marketing responsibilities are delineated and strategic opportunities are being
shaped or compromised in the digital era. The first research question (RQ 1a & RQ1b) for our
study focuses on both aspects of this issue:
RQ 1(a): How are strategic decisions being shaped and challenged in marketing
practice?
RQ 1(b): Who are the key internal decision-makers driving the strategic direction and
accountability of marketing activities within organizations?
While some debate exists around the opportunities and barriers that digitalization presents for
organizations operating in hyper-competitive business environments (Simmons, 2008; Boyd
and Crawford, 2012; Walker and Fung, 2013; Stone and Woodcock, 2014), few studies have
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specifically examined the role of digitalization alongside the noted managerial drivers which
are shifting, or outsourcing, marketing’s functional responsibilities and diminishing its
influence within the firm (e.g. Homburg et al., 2015; Krohmer et al., 2002; Tollin and
Schmidt, 2012; Webster et al. 2005; Homburg et al., 2000). Accordingly, the consequences
for the role of marketers or the function of marketing as a result of these disciplinary
developments remain unclear. While external agencies (e.g. digital consultancies) or
customer insight teams within the firm may in some instances be leveraging customer insight
and acquisition responsibilities away from client-side marketing teams (Leeflang et al.,
2014), there is less clarity as to which marketing actors are accountable for strategic
marketing decisions. A compounding factor is that many studies concerning the
organizational response to the commercial opportunities promised by advancing technology
and big data are conceptual or quantitative (Reibstein et al., 2009). They seldom engage
discursively with the key marketing actors facing these challenges in their day-to-day roles.
For example, as Tollin and Schmidt (2002, pp. 509) argue, “although top marketing managers
are regularly asked to characterise their company’s market orientation, capability, structure,
innovation orientation and so on, their ideas principles and doings are rarely the primary
object of study (Boyd et al., 2010; Lamberti and Nocia, 2009)”. While research has focused
on the technological barriers arising from digital data, new metrics and advanced analytics
(Sorescu et al., 2011; Snijders et al., 2012; Humby et al., 2008), little attention has been
given to the impact of advancing technology and data proliferation on how marketing is
practiced. Therefore, a more substantive question concerns how such developments might be
shaping functional contours.
This leads to the final two research questions:
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RQ 2: How is strategic target market identification decision-making evolving in
response to the increasing prevalence of data, new metrics and advanced analytics?
RQ 3: What disciplinary pressures and implications are presented as a consequence
of marketing’s changing technological landscape?
Methodology
Qualitative research inquiry was the means to critically evaluate perspectives across different
organizations and industry types and to inform a detailed understanding of the issues raised.
Participant organizations were selected for inclusion on the basis that they would enable
exposure to a substantial depth of insight across a broad range of industry types. While the
objective of this study is not to generalize across organizations or industries, we aim to
empirically evaluate a range of marketing-related problems and challenges, allowing us to
comment upon sensitive issues that may be impacting upon functional responsibilities. The
intended theoretical contribution is a substantive one in that it lies central to identifying the
changing disciplinary nature of marketing as an organizational function.
Key-informant selection
Given the aim was to examine a range of managerial issues, a convenience sampling design
and a key-informant interviewing method (Mitchell, 1993; 1994) were appropriate (Gill and
Johnson, 2002). The research team used personal networks to identify and obtain access to a
number of UK-based, globally-represented firms. Taking advantage of snowball sampling
(Noy, 2008), informants from twenty organizations were interviewed, representing specialist
data and research consultancies, manufacturing and service organizations, as well as digital
marketing agencies. Managerial exposure to high-level strategic decision-making was a
primary driver for sample selection and many informants possessed significant experience
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within high-level strategic marketing contexts (e.g. Global Heads of Digital, Innovation and
Cloud-based Marketing, and Marketing Directors). We chose not to limit the empirical scope
of our inquiry to the functional context (usually located within client-side organizations)
because there is no evidence that the challenges identified are wholly located within
functional marketing teams. Furthermore, as many organizations’ strategic marketing
activities are not limited to the functional domain, we did not want to limit the scope of our
findings. Half of our informants were employed within specialist marketing strategy
consultancies and digital marketing agencies, operating on a global scale among the leading
firms in their respective sectors. On the client-side, the following retail and service sectors
were represented: mobile telecommunications; air travel; FMCG manufacturing;
petrochemical; betting and gaming; and financial services. A key strength of our study is the
access we achieved to this senior level of informant. Such insights are seldom documented in
empirical marketing studies, despite evidence suggesting that higher-ranking informants tend
to be “more reliable sources of information than their lower status counterparts” (Phillips,
1981, p. 412). Table 1 details the range of organizations taking part in the research along with
the key-informants’ roles. In order to retain a necessary degree of ethical integrity and to
protect each organization’s commercial interests (Kirkup and Carrigan, 2000), the names of
organizations and key-informants are disguised.
Data collection and analysis
Key-informant interviews took place between April 2013 and December 2014. The
interviews were guided by a semi-structured checklist of issues (Appendix 1) informed by
our three central research questions. In common with many qualitative studies, it was
important to allow respondents to talk openly about the issues; in particular, marketing’s role
in shaping and accounting for the strategic direction of the organization. The semi-structured
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interview template supported this aim, allowing us to explore the key issues freely and
without prejudice (Irvine et al., 2013). All interviews were audio-recorded and subsequently
transcribed verbatim. Each interview lasted between 90 and 150 minutes, allowing us to
access over 40-hours of interview material. Internal company documentation was also
provided by interviewees, allowing detailed operational overviews of case organizations.
Some of the organizations were known to members of the research team through previous
research and consultancy exercises, some going back over a thirty-year period. This
experience enabled a fuller and broader exposure to the research context, something not
easily established by qualitative researchers when gaining organizational access (Easterby-
Smith et al., 2012). The depth of insight drawn from the empirical aspect of the inquiry
enables us to assert a substantial degree of qualitative credibility (Tracy, 2010) to the data
gathered.
Following an established inductive process (Corbin and Strauss, 2008; Strauss and Corbin,
1998) of applied thematic analysis (Guest et al., 2012) the interview transcripts, which were
our primary data source, were initially freely coded as possible interpretations and themes
were explored. The analysis began with four members of the research team reading the
transcripts, then sharing their notes, allowing the core themes to emerge iteratively (Spiggle,
1994). The core themes were subsequently refined by one member of the research team,
before being independently assessed by the others (Campbell et al., 2013). During this
process the text was systematically ordered to establish a number of “categories, types and
relationships of meaning” (cf. Guest et al., 2012, p. 52). Consequently, we use the
terminology of Corbin and Strauss (2008) when we refer to our themes as core categories
(core themes) and concepts (sub-themes). This does not alter the interpretivist
epistemological basis of our claims but does provide a level of consistency in our reporting of
them.
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The validity of the research process reflects the degree to which we captured the views and
experiences of those we interviewed (Easterby-Smith et al., 2012) and the extent to which the
method and analysis robustly address the research questions. The sampling of senior
informants with a high level of expertise added to the face validity of the data, while
sampling from a range of organisation types and sectors increased the credibility of the
findings (Miles et al., 2014), albeit within the limits of the scale of the study. This approach
also allows for ‘maximum variation’ within the sample (Miles and Huberman, 1994),
exposing us to a greater breadth of contextual insight without losing focus on the central
research questions concerning disciplinary and organisational change (Pettigrew, 1985).
Involving four members of the research team in the data gathering and coding process helped
to minimise bias. This investigator triangulation (Denzin, 1989) also helped to corroborate
the emerging themes and to increase confidence in the validity of the findings.
As the analysis evolved, many themes were reviewed and revised, to reveal a number of core
categories and concepts across the data set. At this stage in the analysis, NVivo was used to
help organise the data, so that interview quotes relating to the themes and sub-themes that are
used to support the plausibility of the findings could be readily identified. In total, three core
categories (crisis, transformation and vision) and eight concepts (complexity, role, tradition,
power, interpretation, integration, collaboration and control) were established, respectively
forming the structural and discursive basis of our subsequent presentation of findings.
INSERT TABLE 1 ABOUT HERE
Research Findings
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A striking feature of the findings is that all informants drew upon the metaphor of ‘change’ to
explain their experiences, the challenges they faced and their views about how marketing’s
preoccupation with the generation and analysis of customer insight is shaping the trajectory
of their professional activities. These arguments are meaningful in relation to the research
questions outlined. We use three core categories of crisis, transformation and vision to frame
an instrumental narrative to capture and make sense of the ways in which managers shape
marketing strategy and identify target market opportunities within a changing technological
and digital landscape. In the following discussion we evaluate arguments raised in the
marketing literature, presenting excerpts from the transcripts which support our thematic
interpretation of the data (Alvesson, 2003). Table 2 provides an overview of our findings,
summarising the core categories (in columns) and indicative concepts (illustrated in
brackets). The purpose is to supplement our discussion, aiding in the transparency of our
“thick” description (Ryle, 1971) of organizational cultures across the data set. This approach
enhances the plausibility of our interpretive construction as we attempt to establish “the
significance of an experience, or the sequence of events, for the person or persons in
question” (Denzin, 1989, p. 83).
INSERT TABLE 2 ABOUT HERE
Marketing: Towards a Disciplinary Crisis
Although the measurement of marketing productivity is not a new concern for the discipline
(e.g. Rust et al., 2004), understanding this challenge within the context of big data and digital
reinforces and elucidates some of the difficulties that arise. Identifying how increasing
digitalization may influence and shape strategic marketing practice also becomes pivotal to
comprehending how managers respond to the dynamic technological environment.
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Informants articulated that the rapid pace of economic and technological change and the
immediacy of big data and digital insight is driving a volatile period of disciplinary
uncertainty. Those we interviewed remained sensitive to a changing commercial climate,
framing the beginnings of an intense period of transition following the recent global
recession. As one digital agency informant commented:
“[Our clients] realised that they didn’t know who their customer was any more. The
period of progressive growth that they’d been through throughout the nineties and the
noughties meant that they hadn’t really spent much time investing in working out who
their customer was or what their customer profile was; they didn’t need to. We’d also
moved into the period where, for many, your customer could age from 15 to 95, it
didn’t really matter; you could target them all with exactly the same method and with
the same message. [Clients] suddenly looked around and because the consumer was
no longer behaving in the way that they were supposed to, according to marketing
metrics which had defined growth for that 20-year period: ‘I don’t know who my
customer is any more. I have no idea how they behave. I have no idea what they’re
interested in. I’ve really lost sight of who they are.’” (Informant, Digital Agency C)
Researchers have for many decades been preoccupied with the evolution of target-market
identification in response to increasing data and enhanced analytic capability (e.g. Wind,
1978; Wedel and Kamakura, 2002). The challenge of integrating digitally-sourced data
within the strategic planning process (Peltier et al., 2012) is therefore not new. Managers
have always sought quicker and greater access to data as a route to more sophisticated
insights. However, recent developments have transformed the potential of marketing into the
realms of science fiction. The following comments illustrate the novel ways in which those
we interviewed from each of the three groups explain the significance of this evolution:
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“Big data means enormous complexity. It means very sophisticated methods. It means
more powerful algorithms, and computer hardware to crunch the data, than we ever
used before. The NASA guys get nervous when they look at the hardware that
marketing people are using nowadays because it’s better than what they used for their
missions to the moon ten years ago.” (Informant, Strategy Consultant B)
“It’s much easier executionally to refine what we’re doing: we have more data, we’ve
got better tools, we can make decisions based on bigger, better data-sets more quickly
than we could do. And because we can now look at attribution modelling, we can look
at it across channels. We can say: ‘Okay, so what this tells us is that if we create more
visibility at this part of a user journey we’re going to sell more stuff for you.’ Five
years ago that would have been science fiction.” (Informant, Digital Agency D)
“Social media has changed marketing a lot and one thing that is new is definitely
targeting: we can target people much better and have to target people much better, so
that you are relevant to your audience …. if you’re not relevant you’re just
annoying.” (Informant, Client A)
However, while the potential of recent technological advances is significant, other informants
emphasized that unlimited access to data alone is not the solution. One client saw it as “…a
plus and a negative”, and went on to explain that “It really depends which curve you’re
riding at that time so… if things are going bad then the digital world doesn’t help you.”
(Informant, Client J). Another informant commented:
“If you look at some of the High Street big names that have gone under. They’ve gone
with data that was maybe not their own, or they’ve gone with an approach where
they’ve built something a long time ago and they’ve not refreshed it, or they’ve not
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adjusted to the fact that the marketplace is different and a completely different
dynamic.” (Informant, Strategy Consultant C)
As in the ‘pre-big data era’ (Dibb and Simkin, 2001; Dibb and Simkin, 2009), a number of
barriers to marketing strategy are associated with the ability to source meaningful and
actionable insights from data. Informants in each of the groups we interviewed recognised the
difficulties clients are facing in managing these issues, as this consultant explains:
“There aren’t enough people and businesses that understand how to use data… The
single biggest problem is that they’re focused on 1980s principles: you need a data
warehouse; it needs to have all of your data in it and it needs to be accurate; it needs
to be robust; it needs to be absolutely 100% trustable. Today’s world doesn’t work
that way … the data that we’ve got is emerging, it’s proliferating, it’s huge,
voluminous; it comes from new sources every day. The corporates are struggling to
keep pace with the marketplace that’s going on around them.” (Informant, Strategy
Consultant C)
These concerns were also articulated by the client informants, many of whom express
concerns about generating good quality insights from the mast amount of available data. One
pointed out that, “…there is more and more data in this day and age, but that doesn’t mean
there is more insight”(Informant, Client E); while another explained that, “In our experience,
you always end up having more data and research than you need and the tricky question is to
see which we use and how we actually digest it” (Informant, Client C).
This argument supports the view that meeting the demands of a data-driven marketplace has
placed increasing pressure on managers to either develop new skills, or to attract suitably
qualified and experienced personnel (Day, 2011; Ready and Conger, 2007). Client informant
C spoke about the pressure of “…putting the right kind of people in the right roles, who can
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analyse the data, who can work with us on getting the insights”; while another talked about
the marketing department needing to be “knowledge experts” (Informant, Client J).
However, this call for external resource (Ernst, 2003) is not instigated from within
established marketing teams as it might have been in the past; instead it originates from
higher up in the organization:
“It was very clear through the way we were being approached that it was coming
from very high up, it would have been from COOs, from FDs, and from CEOs who
were turning to their teams, asking the questions and getting lots of shrugged
shoulders. So, while we would have been approached traditionally through brand
managers and marketing directors, there was clearly a different type of imperative in
the sort of work that we saw and the scale and the scope of what we were being asked
to do.” (Informant, Digital Agency C)
The increasingly complex nature of marketing as an organizational function is clearly
apparent. For many informants, particularly on the client side, a combination of tighter
budgets, pressures to provide actionable insights, data proliferation from a broader range of
sources, the increasingly sophisticated technological focus, and the demand for new skills
signposts what we label a moment of crisis. The role of others from outside the marketing
department – and often from outside the company – in providing the new skills and
addressing the knowledge gap – presents a new challenge; one which infringes on the scope
and contribution of the marketing department and potentially diminishes its role.
Furthermore, the increasingly digitalized marketing landscape is compounding the troubled
situation, and uncertainty prevails. For example, one area of uncertainty highlighted by all of
the informant groups concerns the ability to harness the benefits of social media:
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“We dabbled into it [social media] … mainly Twitter … and mainly as a channel to
leverage or to distribute thought leadership on an ongoing basis. What we discovered
was that it wasn’t necessarily reaching the decision makers that we needed to get the
information in front of. So, social media for us tended to be a less effective channel.
But worse than that, and more importantly, what it did create was an awful lot of low
value noise.” (Informant, Client F)
“There are a lot of questions at the moment being asked of social media in general,
the effectiveness of it and are people really engaging with my brand, the cost to them
of just liking something is very trivial. So what do I get for it?” (Informant, Strategy
Consultant A)
For many marketing practitioners, the emergence of these issues suggests a significant period
of transformation for the discipline.
Marketing: A Functional Transformation
Since the widely accepted origins of the market segmentation debate (Smith, 1956), key
developments in the segmentation literature have reinforced the view that access to more
robust data offers greater opportunities to enhance target propositions (e.g. Quinn et al., 2007,
p. 442). However, all of those interviewed suggest that interpretation, rather than access to
data, is now the real concern:
“There is more and more data in this day and age but that doesn’t necessarily mean
there is more insight. You get drowned in numbers.” (Informant, Client C)
“We frequently come across situations where there are big variances in data …
sometimes the ability to measure and refine does create a level of strategic blindness
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to actually just making the right decision and doing things.” (Informant, Digital
Agency D)
The implication is that decision-making is impeded by what Langley (1995) describes as
‘paralysis by analysis’. This inability to draw meaningful and actionable insights has long
been recognized as a difficulty for managers implementing market segmentation solutions
(Piercy and Morgan, 1993) central to the strategic planning process. These circumstances
encourage a reversion to simpler, more usable, schemes as one of the digital agency
informants explains:
“Say you have six or seven groups, about 15% in each group, or whatever it is.
That's fine because mentally I can get my head around that but actually in truth
there's 36, 100 different segments. I can't get my head around that, so I'm not going to
use that.” (Informant, Digital Agency B)
However, while conceptual and methodological concerns prevail among some agencies - and
clients in particular - the strategy consultancies are embracing the opportunities that this
situation offers. For these informants:
“In the past, we were extremely worried about within segment heterogeneity. It was a
methodological problem. Nowadays … you look for it … and you try to use it. The
segments are rough patterns that you apply, but within these patterns your algorithm,
then, is using the heterogeneity to fine-tune the value proposition.” (Informant,
Strategy Consultant B)
The changing nature of the digital marketplace, arguably driven by online business models,
has completely destroyed traditional marketing understandings for some organizations. The
online retailer, Amazon, was frequently cited as a leading driver of this transformation:
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“Amazon has an enormous potential to individualize the value proposition. There’s
the one big target segment and that’s people who buy products or services online.
That’s it. Within that target segment, they try to develop an almost completely
individualized proposition. And now they even translate it into local deals. They know
where you’re living; they know what you like. The algorithms might still need some
tweaking, but they’re getting there.” (Informant, Strategy Consultant B)
The Amazon model, however, is not necessarily a generalizable solution. Not every
organization can or needs to individualize the value proposition. While there is very little, if
any, available cross-sectional evidence, informants suggested that in many organizations
traditional segmentation solutions still have an important role to play:
“If you’re buying media in the old fashioned sense of buying media - TV slots, radio -
you’re going to need some sort of demographic, some sort of target segmentation
profile; because otherwise you’re really flying blind. But equally you would think that
most brands would be interested in things like lifetime customer value, but for some
brands that’s got no relevance whatsoever ... you’ve got a lot of diversity there.”
(Informant, Digital Agency D)
Differences in opinion were evident in relation to how the targeting process should be
operationalized according to specific circumstances. In this sense, the digital revolution
(Wind and Mahajan, 2002; Charlesworth, 2009) compounds the problem and reinforces a
substantial degree of misunderstanding:
“There’s almost a new attitude amongst young marketing people, or the ones that
grew up in the digital era, that everything has to be instant, everything has to be real
time or nearly real time; that all data sources have to be linked and so on, that it’s not
applicable to all channels and all sources. The more seasoned marketing people say
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we can only do that for digital, and they almost don’t embrace it, because to them this
is still a niche phenomenon that only applies to the digital world.” (Informant,
Strategy Consultant B)
More importantly, informants offered insights to suggest that these tensions were beginning
to fragment the role of marketing as an organizational function:
“Marketing’s almost at the point of being commoditised … and what I observe and
hear from a lot from my colleagues as well, is that traditional marketing is … being
alienated. So the traditional marketing guys - the ones who plan the TV campaign …
print campaigns … promotional activities and whatever, and the digital marketing
guys, are separate. And that’s a very unhealthy set-up.” (Informant, Strategy
Consultant B)
“The procurement function is dominating, the finance function is dominating and
even the HR function is dominating. As the environment's become more pressured,
marketing has got pushed down the pecking order. Most of the marketing expertise
sits in activation and delivery, not in actually answering some of those harder to
answer questions like: How much shall I spend? Where shall I spend it? Those core
questions, if you like.” (Informant, Digital Agency B)
For many organizations, outsourcing digital and analytic components of the marketing
function has become the norm, something that exposes a skills gap among practitioners and
fractures the consistency of strategy formulation and implementation:
“So many clients still don’t have analytics departments; still don’t have the ability to
do stuff in-house, so they rely on third parties.” (Informant, Strategy Consultant C)
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“In the business to business world I think it’s a little bit more challenging. I’m not
sure I’ve really been able to identify an organization that’s really been cutting edge in
terms of how they go to market.” (Informant, Client G)
“We totally have influence because most companies are in a panic about what they’re
going to do.” (Informant, Digital Agency A)
As the last of these three informants reveal, this situation has presented a lucrative
commercial opening, especially for digital marketing agencies. Digital agencies are fully
aware of the client-side crisis and, as these informants observe, appear more than happy to
exploit the opportunity:
“The challenge always is to go more senior… get into the boardroom, if you can, and
have a sponsor for the work. You really need to have a top-down buy-in and I think
it's hard to do this without that because what tends to happen is it affects most things
across the business. It can change internal agendas as much as external agendas; in
that sense, the more senior the better.” (Informant, Digital Agency B)
“If clients are prepared to share their own data with the agency, the agencies will
create their own performance dashboards. They'll take clicks, sales, whatever
measures they've mapped out. Typically, it goes to the agency to create that capability
on behalf of clients. And marketing people need to do that for themselves to be able to
have control over their businesses and understand what's happening. (Informant,
Digital Agency B)
Without the necessary skillset, there is a real danger for client organizations seeking to
identify beneficial collaborative relationships. Consequently, functional dangers for the role
of marketing are exposed within the client-agency relationship as a result of this situation:
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“Big data is a wonderful thing and yes, it’s amazing all the fantastic things we can do
with that data. But as a data analytics person, I have to say that you’d better know
what to do with your big data. You better know how to get rid of the noise. You better
know how to extract real relationships, real causal relationships from that data, and
these are enormous challenges.” (Informant, Strategy Consultant B)
“Skills, processes, structures need to realign… Digital is part of doing business. It's
now in the mainstream. So, by having digital experts, you're marginalizing other
people in the organization. It's got to be in the mainstream of everyone's title and job
spec, regardless of age. [Get it] integrated and the word digital disappears. It just
becomes part of doing business, digital cuts through everything … organizational
design has to deal with that reality.” (Informant, Digital Agency B)
The growth in digital has been accompanied by a proliferation in digital agencies, big data
experts and social media analysts. At best, this represents a growing complexity to manage;
but at worst, there is potential for these diverse stakeholders to compete with the incumbent
marketing function for the ear of senior executives, for budgets and to shape marketing
strategy and programmes. Failure to develop the necessary skills and capabilities compounds
this threat to the traditional role of marketing. In terms of the growing complexity, one client
commented, “And now we have to make all these external partners communicate with each
other and sometimes that is not very easy!” (Informant, Client A). The risk posed by having
to manage additional stakeholders, some of which are external to the organisation, is captured
in the words of one senior marketing executive:
“We weren’t really identified specifically on any of the management teams… it was a
feeling of floating and trying (sic) to have an influence. We’re trying to know who the
customers are, but what has changed is the amount of other people who are involved
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in the decision-making, or potentially have an influence on the end result.”
(Informant, Client B)
Outsourcing the digital and/or analytic resource is creating other problems, too. The
requirement for organizations to remain compliant with constantly changing legislative
requirements expands the functional role of marketing teams and also impacts on the
operational possibilities in practice:
“Quite often there is also a compliance unit that sits external of marketing that then
has to be engaged through marketing and the processes. If that compliance side
doesn’t exist in the client – because often it doesn’t – does that present an opportunity
that underpins the role of the agency, the consultant?” (Informant, Strategy
Consultant C)
In addition to the compounding pressures of legislation, barriers to implementing effective
target-market strategy (Dibb and Simkin, 2001) also resurface. Such barriers are especially
prevalent in larger, more inflexible, client-side organizations. As one informant explained,
“Big organizations have a massive challenge in joining those things up, because they’re
organizationally very siloed … they just don’t talk to each other very much.” (Informant,
Digital Agency D). Those that outsource various aspects of their strategic planning also face
difficulties:
“The other observation I have is some of the big strategic segmentations that are
done early on in the process are rarely applied effectively ... segmentations are used
to help thinking when you're trying to develop a strategy, then they're abandoned and
at different stages, reinvented by different parties further down the line.” (Informant,
Digital Agency B)
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“A business needs to have a hierarchy to understand what the KPIs are at every level
of business. That rarely happens… measuring impact and so on at different levels,
businesses have not really embraced that. They will not all get the most out of this
more complex world until they do that.” (Informant, Digital Agency D)
These issues portray a transformational period for the role of the marketing function, driven
by changes in technology, the financial climate, resourcing costs, legislation and the
provision of outsourced services. Furthermore, client-side marketers are under increasing
pressure to maximize organizational returns on investment; as one informant explained,
“[Marketing] has to find the right language for itself that is accountable” (Informant, Digital
Agency B). All of this, at a time when key planning and analytic processes are often
conceded to external agents. Ultimately, the marketing function has to evidence its
contribution to organizational performance (Tollin and Schmidt, 2012), while hindered by
digital developments that cannot, due to inflexible organizational structures, be seamlessly
integrated within planning processes. This is an important finding in our study, as subsequent
conflation of strategic planning with tactical implementation is also altering the strategic role
of marketing within the firm:
“… in terms of the selection of those markets that’s, obviously, that’s a decision that
involves marketing, legal, ... within [Client H we have] the corporate development
office who focus very, very strategically around potential opportunities for growth,
and mergers and acquisitions within any given market; but ultimately the decision is
made by the Chief Exec.” (Informant, Client H)
“If you [deliver] that message across six channels and they [the customer] start off on
their phone, they decide they want to switch halfway through that to a call centre and
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then they need to complete via a postal application... Who gets the credit for that
sale? Is that through the third party that it sold through on an app? Is it the website
that they also researched on before they went on the app? The ability to measure and
track and hone your performance metrics need to be that much more evolved.”
(Informant, Strategy Consultant C)
This period of transformation suggests that the future role of marketing as a function is
uncertain. Its place within the strategic planning process has become tenuous, a vulnerability
that signposts a period of opportunity and further growth for those organizations with the
capabilities to take advantage. This future is being shaped, at least in the short-term, by those
with vested interests, particularly by managers who are more familiar with the language and
practices that digital specialists use. Consequently, the following section frames our final core
category to provide a disciplinary vision of how managers across industry types are shaping
that future.
Marketing: A Disciplinary Vision
Strategy consultants and digital agencies highlight two contradictory trends shaping the
future for client-side marketing teams; both revolving around the utilization and integration
of ‘big data’. These trends reveal that while seeking to embrace and capitalize on data, client
organizations also expect simplicity in how the solutions are presented:
“One trend is that the CMO wants a dashboard in his office that aggregates
everything that’s happening with the brand and the product and so on, to whatever
three KPIs. And he wants them in real time, nice pie chart, nice bar chart, and maybe
a word cloud … the most dramatic simplification. At the same time, you have the big
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data phenomenon, and big data means enormous complexity.” (Informant, Strategy
Consultant B)
“Big data is not the solution. Big data is actually the problem. What clients really
want is small data which is simple; it’s the needle in the haystack. It’s not the big data
they want.” (Informant, Strategy Consultant A)
Many clients share this view. As one client informant explained, “We still have a lot of
agency data that we don’t have time to digest, sometimes less data is better than more data”
(Informant, Client C). Another mentioned that, “Data overload doesn’t mean quality of
insight is improving” (Informant, Client E), continuing to explain that, “Today you’ve got a
huge amount of data but not necessarily more insight… unless you try very hard”.
In practice, because these client organizations often lack the capabilities to capture a holistic
view of their markets, they find themselves exposed to shifting consumer behaviours,
vulnerable to everyday marketplace uncertainties, and at a distinct competitive disadvantage.
Worse still, our findings reveal that many such organizations may never be able to integrate
their strategic vision across multiple channels. They simply do not have the organizational
infrastructures or the degree of accountability that will enable them to achieve this aim as the
following comment illustrates:
“The power will be with the organizations that have these ecosystems. And the big
ecosystems are Google, Amazon… Amazon has a huge ecosystem, nobody really
realises it. And then I guess the logical conclusion is that brands will kind of buy from
these ecosystems or work with them. That’s where the data is going to be because
they’ve got the unifying view; they’re not just looking at my shop or your shop or
another shop, they’re looking at behaviour on a much larger scale than any single
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retailer can do but Google will have a single customer view.” (Informant, Digital
Agency D)
Undoubtedly, some of the client organization interviewees are aware of the need to evolve,
with some evidence pointing towards the development of a collaborative model of knowledge
transfer (Hansen and Nohria, 2004). Such a model, would involve a more iterative way of
working, in which clients and agencies pool their resources to co-create systems for gathering
and exploiting customer insight as the following informants expose:
“Increasingly … the parent company is encouraging people across different brands to
work with each other, learn from each other, but also, in terms of career development
as well, so there’s lots of encouragement to actually try and keep the right people, or
the people that the organization want to keep. So that’s encouraged quite a lot … it’s
interaction on a daily basis in terms of work but also in terms of moving across
businesses.” (Informant, Client J)
“We’ll increasingly work in a more collaborative kind of way. I don’t think it will be
feasible to have agency [plus] client relationships; I think it will be much more
collaborative. We’ll spend more time with clients and they’ll spend more time with us.
And if we can invest them with the skills that we have it’s kind of a win-win situation:
it makes them look good; it means they can be advocates in their business about
digital marketing and what that really means.” (Informant, Digital Agency D)
Evaluative Discussion of Findings
While this study was motivated by the need to better understand how the role and activities of
marketing within the firm are changing as a consequence of technological advance associated
with the digital era, it also contributes to ongoing debates concerning the functional influence
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of marketing (Homburg et al., 2015) and its inability to demonstrate a return on
organizational performance (Boyd et al., 2010; Rust et al., 2004; Verhoef & Leeflang, 2009;
Webster et al., 2005). Furthermore, our findings begin to remedy the lack of research which
explores how marketing practice influences top management strategy making (Skålén &
Hackley, 2011). In addressing these issues, we have investigated how marketing
responsibilities are delineated and strategic opportunities are formulated. Our findings
highlight changes in how marketing is practised, as a consequence of the evolving
technological landscape, and show the implications for marketing within the firm. In
particular, we reveal how rapid technological change has precipitated a functional
transformation, which is having repercussions for the future of marketing and its practice.
The following discussion frames these findings in relation to the three research questions that
guided the study and, in each case, pinpoints proposals for further research.
Strategic decision-making and the accountability of marketing
The recent proliferation in data and developments in data analytics bring huge opportunities
in relation to market insight and the identification of target markets, as well as providing
broader insights which can inform marketing strategy. Paradoxically, many managers now
have more data than they can realistically manage; a situation that continues to raise
difficulties of its own (Langley, 1995). Just as in the past, when many organizations lacked
the necessary in-house skills to manipulate and model customer data (Dibb and Simkin,
2001), technological knowledge gaps are proving to be a major challenge. Senior marketing
managers, who have not ‘grown up’ in a digital environment, find themselves technically ill-
equipped; a lack of understanding that is limiting how creatively the data can be used in
practice (Slater et al., 2010).
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Organizational responses to these skill shortfalls include outsourcing the manipulation of data
to agencies, or transferring the responsibility to insight managers or data officers who may
not be located within the marketing team. This is creating a new type of a crisis for marketing
than previously has been described in the literature (e.g. Bartels, 1974; Wind and Robertson,
1983; Day, 1992; Reibstein et al., 2009). The growing role of insight teams not located
within the marketing function and the use of external digital agencies which often have the
ear of the client’s leadership team risk marginalising and subordinating the marketing
function. Both the richness of the data and sophistication of the routines available for its
manipulation, enable segmentation projects and market assessments to be completed more
quickly and at lower cost than in the past. Where there is a separation of data handling from
the marketing team there are, however, several consequences. A principle concern is the
extent to which marketers have control over the market insights that arise from digital data;
insights which are an essential input to strategic decision making. This issue of control is
compounded by the fact that other senior stakeholders recognise the valuable insights that
digital data can offer and increasingly go direct to those handling the data. Consequently,
while the availability of this data is crucial in helping firms become more market-led, it is not
necessarily marketers who are leading the charge. Accountability for marketing strategy
decision-making is also more ambiguous, often falling outside of the sole control of senior
marketers.
We find that in sectors such as retailing and FMCG manufacturing these changes are
affecting the perceived currency of fundamental concepts such as market segmentation and
market strategy development. In other areas, for example, in B2B or the financial services
sector, where media placement decisions utilize traditional marketing channels (e.g.
television, print, etc.), we find that traditional strategic marketing practices remain an
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essential element of managers’ decision making. These contradictions are partly reconciled in
consumer markets by the fact that ‘one-to-one’ and ‘micro segments’ - which are enabled by
big data - can often be generated by breaking down more traditional market segments. In
other words, the ‘one-to-one’ digital vision is effectively delivered alongside or within
traditional segmentation approaches. In B2B settings, particularly those typified by high
customer contact and customer adaptation, while the strategic value of these fundamental
practices is well recognized, we also find evidence of social media and other digital insight
supporting targeting activities and relationship building.
Overall, our findings suggest that digital solutions are an additional management tool to be
integrated within strategic and tactical processes (Brodie et al., 2007). However, ambiguity
over which organizational functions own and use these data obfuscates the measurement and
assessment of marketing’s contribution. Even so, we find mixed results in the extent to which
this is being achieved. Consequently, in the absence of convenient shorthand metrics,
operational decision-making at all levels within the organization is compromised. In
particular, the extent to which marketers can demonstrate accountability for the firm’s
strategic marketing activity is diminished; an essential requirement if the functional role of
marketing is to be represented at the highest organizational level (Walsh and Lipinksi, 2009).
Future research should examine the differing impacts of digital across sectors, so that a
clearer picture of the interplay between traditional marketing approaches, and those inspired
by digital, can be developed. A more nuanced understanding is needed of the extent to which
the traditional and the new sit alongside each other, the relationship between them, and the
degree to which they mutually reinforce or are integrated. In light of the variations we found
across firms, the extent to which this interplay is influenced by factors such as industry
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context, firm size, the nature of the customer base, and the type of strategic or tactical
projects that are supported, also needs to be investigated.
The evolution of marketing decision-making
The situation we have described has consequences for how marketing decision-making is
evolving. In particular, we note a reduction in the voice of marketers in driving organizational
strategic direction. Instead, we find an increasingly divisive remit for the marketing function
and those who practice marketing within the firm, elevating a new agenda revolving around
the tactical implementation of digital metrics aligned to consumer response and social media.
To be clear, we do not see a lessening in the extent to which firms are market-led; rather we
see changes in which stakeholders are central to bringing this about. In this regard, there is
further evidence of a threat to marketing’s distinct organizational capability (Rust, et al.,
2004). For some of the interviewed client organizations, the situation is both volatile and
fluid; as other organizational stakeholders deepen their engagement with digital data, using it
to strengthen their influence over strategic decision-making.
A central theme in this evolution of marketing decision-making has been the extent to which
marketing channel integration has been achieved. We report mixed findings in this regard.
Whereas the agencies we interviewed perceived such integration as a barrier for clients still to
overcome and were critical of what has been achieved, we also found examples of good
practice among clients and confidence that effective progress is being made. The strategic
integration of other organizational functions including sales, distribution and customer
service has also been exposed as a major difficulty in many organizations, further serving to
diminish the strategic nature of marketing practice (Chari et al., 2012).
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Further research should unpack the relationship between data proliferation and
functional/strategic responsibilities within the firm. Longitudinal case studies could help to
pinpoint the changing roles of different organizational stakeholders. Studies which focus on
strategic marketing projects as the unit of analysis could provide valuable insights into how
these responsibilities are shared through the life of an initiative. Researchers should also
consider how responsibility for marketing decisions is dispersed and the extent to which
digital advances are altering where in the firm and how these decisions are made. These
concerns are intertwined with the issue of accountability; as only through a more nuanced
understanding of the changing ownership of marketing decisions will it be possible for
marketing to demonstrate its accountability.
Studies are also needed which explore the extent to which marketing decision-making is
being affected by the erosion of control over data insight and analytics that is evident in many
organizations. In instances where market insights are gathered at a distance from those who
are responsible for strategic and tactical decisions, more needs to be known about the short-
term impacts on measures such as customer relationship management, customer satisfaction
and marketing control; and about how these changes affect competitiveness and business
performance in the long term.
A changing role for marketing in the evolving technological landscape
Finally, we sought to identify the implications of this period of crisis, transformation and
vision, for marketing’s role within the firm. We argue that it is not technology per se that is
changing the way that marketing activities are conducted but how, where and by whom, these
activities are being carried out. It is, therefore, the discourse surrounding technology and
organizational change that is shaping these shifting functional responsibilities (Postman,
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2011). Once seen as essential to business insight and commercial survival, more sophisticated
data analytics are increasingly being exposed for their inability to address strategic questions.
Managers’ interpretations of data, particularly digital data, are changing the ways in which
organizations communicate and integrate strategic decisions. Among digital agencies and
some consultancies, we observed a denial of the relevance of fundamental strategic marketing
principles, such as the multi-layered organizational integration of KPIs, channel cohesion and
marketing accountability, in favour of a narrative premised on what Arndt (1985) previously
labelled as managerial control. On a positive note, most of the client organizations continue
to recognise the value of traditional marketing practices and strategic marketing principles.
For example, we found that normative segmentation practices maintain both a strategic and a
tactical role in management practice.
Even so, we uncovered a range of operational barriers that impede both the strategic
integration and functional accountability of marketing. Curiously, while the digital agenda
that is creating these problems is in its infancy, the resulting implementation barriers are not
new. Neither are they confined to the marketing discipline. For over twenty years, problems
associated with internal communications, sharing of the strategic vision and data quality,
have impeded the development of strategy in organizations (cf. Wensley, 1995). Ultimately,
while the digital agenda is changing the ways in which strategic solutions deliver measurable
outcomes, the managerial implementation barriers remain the same. Old stories, but new
narratives nonetheless. A more detailed understanding is needed of the nature and impacts of
the barriers that impede strategic and tactical marketing activities; which barriers are the
same as in the past, which are new, and which are being expressed in new ways to reflect the
changing technological environment. If practitioners can improve their understanding of
these challenges, they will be much better placed both to anticipate and overcome them.
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Concluding Remarks
We conclude that the changing digital environment has potentially serious consequences for
how marketing is practiced and for the marketing function as a subordinate domain of
management. Our research findings contribute a current perspective to ongoing debates
concerning the evolving and increasingly troubled nature of marketing’s role within the firm.
In a managerial sense, client-side organizations are authoring marketing’s destiny by placing
it in the hands of intermediaries such as digital agencies; agencies with their own commercial
agendas. Furthermore, while a digital marketing skills gap is clearly exposed within this
changing technological climate (cf. Day, 2011), the gap is widening - particularly within
client organizations as internal and external relationships continue to change - and especially
because efforts to integrate new insights are so far removed from strategic planning
processes. Consequently, while our findings suggest that a limited group of sophisticated
practitioners are adopting innovative approaches that involve detailed analysis of large
datasets (Roberts et al., 2014), this is not necessarily true of most, who are either not adopting
such approaches or are out-sourcing to independent specialist companies. This situation raises
the question as to whether there are: (a) important contextual factors behind this difference
or, rather, another example of (b) the phenomenon of limited absorptive capacity (Cohen and
Levinthal, 1990) among the majority of businesses in this domain. Further research is
therefore needed to align the strategic focus of academic research in marketing with the
requirements of business and government research policy. The volatile period of social,
economic and technological change, continues to have a significant impact on the function of
marketing, as well as on the economy, society and the teaching of marketing as an academic
discipline.
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Acknowledgments
We would like to acknowledge the financial support of the Economic and Social Research
Council, Digital Social Research programme in funding this project.
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Appendix 1: Semi-Structured Key-Informant Interview Template
Aims
How are strategic priorities in relation to targeting decided? How and in what ways is this changing? Who are the key internal and external decision-makers and influencers? How does this impact on the
strategic direction of the organization? And where does the ‘power’ lie in terms of this decision
making?
How are these decisions implemented and what does the execution phase involve?
What has been the impact of the digital era in this decision-making?
1. Project background
• Informants to be given an explanation of the project, focusing on brief background and aims.
2. Respondent background
• Their current/previous roles/remits.
• Their Marketing interests/experiences.
3. Current target-market approach (RQ 1)
• Tell us about the markets your organization is currently targeting.
• How are decisions made about these target markets? Please talk us through the process that is
followed. Feel free to talk about a specific target marketing example if that helps.
• What does the process involve?
• Who in the organization is involved; who owns/drives the process?
• What information is used in making targeting decisions?
• What other influences are there on the process?
• What is the role of metrics and how is success evaluated?
4. Rethinking targeting and target markets (RQ 2)
• How often does your organization rethink its targeting?
• What factors prompt such a rethink? Can you give us an example or two?
5. How targeting practice is changing (RQ 2)
• Compared with ten years ago, how has the organization’s targeting approach changed?
• Who decides about the target markets? Where does the balance of power lie in the decision-
making?
• In what ways have the insights used changed? For example, the types of data used, data providers,
providers of analytics, and the parties involved in providing these insights.
6. Reflecting on the process (RQ 3)
• What problems does the organization face with its targeting process?
• How are these problems evolving in light of the changes described above?
• Are some aspects easier or more difficult than before? Which and why?
• What has been the impact of digital and social media on the process?
• Is the use of digital and social media accompanied by particular problems?
• How do you envisage targeting practice will change in the future?
7. Closing questions
• Which other organizations are driving the agenda in this area?
• Who else should we contact?
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Table 1 – Research Informants and Respective Organizations
Case Organization Type Case Organization
Descriptor
Organization Details Key-Informant Role
Strategy Consultants
Consultant A $60million turnover. 700 employees. Global US-head-quartered agency specialising in digital data collection, with expertise in online panels.
CEO
Consultant B €1.3 billion sales. Over 12,000 employees.
Global Head of Innovation and Digital
Consultant C $90 billion annual revenue. 350,000 employees globally.
Head of Analytics/Director
Consultant D £1.6billion annual revenue. Over 10,000 employees (UK/Eire).
Global Head of Cloud Marketing and BD
Consultant E £7million annual turnover, 70 employees.
CEO
Digital Agencies
Agency A Marketing and communications agency. Eur. 100m sales in 2014. Circa 100 employees.
Communications Consultant
Agency B Recent start-up behaviour change consultancy company.
Founding partner and Director of Marketing
Agency C Leading futurologists and trend forecasters in the UK, with operations in North America and Europe.
Founding Partner and Director of Insight
Agency D £25 million annual revenue, circa 200 employees. Fast growing UK-based global digital agency.
Head of Marketing (UK)
Agency E £5million turnover, circa 30 employees. Digital agency, specialising in social media management and data analytics.
Online Marketing Manager
Client Organizations
Client A €2,500million annual turnover. Air travel business.
Social Media Manager
Client B kr23billion. Petrochemical business.
Head of Marketing for UK, Nordic and Continental Europe
Client C £6million annual revenue. Retail mobile telecommunications business.
Head of New Proposition
Client D Multi-billion turnover, top five European insurance business.
Senior VP Marketing
Client E £4million annual revenue. UK-based branded food company operating in 28 countries.
Head of Marketing
Client F £25 million annual turnover. Dynamic change management consultancy business.
Head of BD and Marketing
Client G Leading software supplier to the retail sector.
General Manager and Marketing Head
Client H £14,000 million annual turnover. Large gambling and gaming business.
Customer Engagement Director
Client I £60million annual turnover. Regional insurance brokers
Chairman and MD
Client J €40million global sales. Construction materials manufacturer.
Head of Marketing & Strategy
(Sources: Internal Company Documentation)
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Table 2 - Summary of Research Findings
Core Theme
Case Organization
Crisis
Transformation
Vision
Strategy Consultant A Big data is the problem not the solution (complexity)
Channel integration is a key
challenge (integration)
Tactical organizational role and
USP limitations (control)
Strategy Consultant B Decisions require simplicity, data creates complexity
(interpretation)
Tension between strategic
propositions and tactical
implementation (integration)
Functional focus on ROI (role)
Strategy Consultant C Sound judgment is required (interpretation)
Channel integration is key
challenge (integration)
Functional focus on ROI (role)
Strategy Consultant D Data is the problem, interpretation is the solution
(interpretation)
Channel and strategy (integration) is the
challenge.
Strategic opportunities only limited by a lack of
creativity/skill (power)
Strategy Consultant E Increasingly driven by COOs, CMOs, CFOs (role)
Channel integration is key
challenge (integration)
Channel advantage increasingly
held those with the ecosystems in
place, e.g. Amazon (power)
Agency A Uncertainty driving change (role)
Client collaboration is a
priority (collaboration)
No strategic future for marketing
function (role)
Agency B Sound judgment is required (interpretation)
Channel integration is key
challenge (integration)
No strategic future for marketing
function (role & power)
Agency C Uncertainty driving change (role)
Channel integration is key
challenge (integration)
Analytics, innovation and
logistics: re-engineering
brands/products (collaboration)
Agency D Data is not the solution (integration)
Primary focus on ROI
(power)
The legislative situation (role)
Agency E Sound judgment is required but ROI is critical (control)
Client collaboration is a
priority (collaboration)
No strategic future for marketing
function (role)
Client A Sound judgment is required (interpretation)
Channel integration is key
challenge (integration)
Blurring of strategy and tactics.
(integration)
Client B Access to data is often limited but seen as essential
(power)
Primary focus on ROI
(power)
Only beginning to grasp benefits
of digital/focus on ROI (power)
Client C Sound judgment is required (interpretation)
Decisions require simplicity,
data creates complexity
(interpretation)
Multi-platform opportunities
(integration)
Client D Opportunity to support marketing decision-making
and ROI (integration)
Data was seen as the solution but now presents
the problem (complexity)
Focus on ROI (power)
Client E Big data is the problem not the solution (complexity)
Channel integration is key
challenge (integration)
Retail power increasingly held
those with the ecosystems in
place (e.g. Amazon) (power)
Client F Can now drive ROI and resourcing but needs clarity
(interpretation)
Keeping activities and
internal operations simple
(integration)
Only just recognising the benefits
of digital engagement (role)
Client G Greater visibility and topicality than ever before
(power)
Resourcing across
channels/new media options
(integration)
Still constrained by limited and
patchy B2B client uptake (role)
Client H Client-led micro-based engagement and experience
around better ROI (role)
Internal channel integration,
coordination, resourcing
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Using EEG to predict consumers future choices - Reading.pdf
© 2015, American Marketing Association Journal of Marketing Research PrePrint, Unedited All rights reserved. Cannot be reprinted without the express permission of the American Marketing Association.
Using EEG to predict consumers’ future choices
Ariel Telpaz1, Ryan Webb2, and Dino J Levy3, 4
Ariel Telpaz, PhD:
Affiliation: 1Faculty of Industrial engineering and management, Technion - Israel Institute of Technology Address: Technion City Haifa, 32000, Israel Tel: 972-546969568 Email: [email protected] Ryan Webb, PhD:
Affiliation: Rotman School of Management, University of Toronto Address: 105 St. George St, Toronto, Ontario, Canada, M5S3E6 Tel: 4169784418 Email: [email protected] Dino J Levy, PhD:
Affiliation: 3Marketing Department, Recanati Business School and 4Sagol School of Neuroscience, Tel-Aviv University Address: 55 Haim Levanon st. Tel Aviv University, Ramat Aviv 69978, Israel Tel: 972-3--6409565 Email: [email protected]
2
Using EEG to predict consumers’ future choices
It is now established that neural imaging technology can predict preferences over consumer
products. However the applicability of this method to consumer marketing research remains in
question, partly because of the expense required. In this article, we demonstrate that neural
measurements made with a relatively low-cost and widely available measurement method —
Electroencephalogram (EEG) — can predict future choices over consumer products. In our
experiment, subjects viewed individual consumer products in isolation, without making any
actual choices, while we measured their neural activity with EEG. After these measurements
were taken, subjects then made choices between pairs of the same products. We find that neural
activity measured from a mid-frontal electrode displays an increase in the N200 component and a
weaker theta band power that correlates with a more preferred good. Using state-of-the-art
techniques for relating neural measurements to choice prediction, we demonstrate that these
measures predict subsequent choices. Moreover, the accuracy of prediction depends on both the
ordinal and cardinal distance of the EEG data: the larger the difference in EEG activity between
two goods, the better the predictive accuracy.
Keywords:
EEG, Choice prediction, Consumer Neuroscience, Theta power, N200
3
INTRODUCTION
Over the past 15 years, our understanding of the neuroscience underlying decision-making
has advanced rapidly (see Glimcher 2011; Glimcher and Fehr 2013 for reviews), raising hopes
that measurements of neural activity — and a deeper understanding of neural mechanisms — can
be applied to marketing research. Two promising avenues for such a contribution have been
previously identified (Ariely and Berns 2010). First, there is the possibility that insight from
neuroscience might improve the marketing message for existing products. Second, there is the
possibility that neuroscience can provide insight into how products are valued before they even
exist in the marketplace, improving product design.
Both of these avenues rely on the proposal that neuroscience will reveal information about
consumer preference that is unobtainable through conventional methods. There is certainly room
for improvement. Previous studies have demonstrated that different preference elicitation
methods can result in different subject responses (Buchanan and Henderson 1992; Day 1975;
Griffin and Hauser 1993; McDaniel et al. 1985). The use of questionnaires for evaluating
consumers’ preferences, attitudes, and purchase intent can result in a biased or inaccurate result
(Fisher 1993; Neeley and Cronley 2004). A verbal statement of preferences can also generate
conscious or unconscious biases. In some cases, consumers decline to state their actual
preferences (for reasons such as discretion or shame), and in other cases consumers cannot
verbalize a justification for their preferences (Johansson et al. 2006; Nisbett and Wilson 1977).
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It can also be difficult (or sometime impossible) to directly elicit a consumer’s preferences
through choices. This may arise due to high product cost, ethical considerations, or the fact that
the product does not yet exist. This forces the marketer to examine hypothetical choices with
hypothetical rewards, yielding a potential bias in which responses are overstated compared to
incentive-compatible choices (Blumenschein et al. 2008; Cummings et al. 1995; Johannesson et
al. 1998; List and Gallet 2001; Murphy et al. 2005) or plans (Ariely and Wertenbroch 2002;
O'Donoghue and Rabin 2008; Tanner and Carlson 2009). These results are bolstered by
neuroscientific evidence suggesting variations in value computations between real and
hypothetical choice situations (Kang and Camerer 2013; Kang et al. 2011).
Since the marketing message in many campaigns is presented with the hope that it will affect
consumers’ preferences, attitudes, and/or actual purchases sometime in the future, all the factors
above confound the task of evaluating consumer preferences and limit the ability to predict
choice at the time of the purchasing decision. Therefore, finding a cost-effective tool that can
predict consumers’ future behavior in response to marketing messages and forecast future
preferences over novel goods will be beneficial in consumer marketing applications.
Substantial recent progress directly addresses these two avenues for neuroscientific methods
in marketing research. Evidence from functional magnetic resonance imaging (fMRI) suggests
that the same brain areas that represent values in a choice situation – primarily the medial
prefrontal cortex (mPFC) and striatum (for three recent meta-studies, see Bartra et al. 2013;
Clithero et al. 2009; Levy and Glimcher 2012) - also represent values when subjects are
evaluating individual goods in the absence of choice behavior (Falk et al. 2012; Lebreton et al.
5
2009; Levy et al. 2011; Smith et al. 2014; Tusche et al. 2010).1 The magnitude of these signals
correlate with the trial-by-trial likelihood that a consumer will choose a particular good, and can
be used to predict subsequent choices using a fully cardinal choice model referred to as the
Neural Random Utility Model (Webb et al. 2013). This model extends the choice prediction
results of the familiar Random Utility framework (Becker et al. 1964; McFadden 1973) to neural
measurements, with the important distinction that there are no unobservable latent variables. In
doing so, it characterizes neural sources of the stochasticity observed in choice behavior (Huettel
and Payne 2009; Yoon et al. 2009) and improves upon choice prediction results.
These results are in line with many studies demonstrating that activity in the mPFC and
striatum correlate with various value-related attributes, and correlate with known methods for
estimating the values subjects place on choice objects - ranging from consumable goods, to
money lotteries, charitable donations, durable goods, social preferences, and political preferences
(for reviews see: Bartra et al. 2013; Grabenhorst and Rolls 2011; Kable and Glimcher 2009;
Levy and Glimcher 2012; Padoa-Schioppa 2011; Platt and Huettel 2008; Rushworth 2008).
Importantly, these same areas are also active for the valuation of novel goods that the consumer
has never before experienced (Barron et al. 2013).
However the applicability of these findings to consumer marketing research remains in
question, with the current cost of obtaining and operating an fMRI scanner preventing their
broad application. Most prominently, an fMRI scanner has a very large fixed cost component. It
1 We note that each of these “non-choice” studies also find activity in other areas, varying from the dorsomedial prefrontal cortex (dmPFC), the insula, the anterior and posterior cingulate cortex (ACC, PCC), hippocampus, and parietal cortex. However the mPFC and Striatum are the only regions common across these studies, and the only regions identified in the meta-studies referenced above (which include the “non-choice” studies).
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is expensive to purchase (~$1M-$2M), expensive to keep operational ($100K-$150K for
insurance, maintenance, and support staff), expensive to locate (requiring a customized
room/building), and immobile. Compared to the fixed-cost component, the marginal cost of
running an fMRI experiment is relatively low, but still on the order of $500 per experiment.
These relatively high costs severely limit the use of fMRI in both academic and commercial
applications.
There are also technical limitations to fMRI, primarily a relatively low temporal resolution
on the order of 2 seconds (Huettel et al. 2004). This resolution makes it difficult to examine the
rapid dynamics of neural signals that are relevant for the neural mechanisms underlying value
representation. A faster sampling rate might convey predictive information for consumers’
valuation and choice, information that is blurred by fMRI. For instance, consumers can make
decisions for consumable goods in as little as a third of a second (Milosavljevic et al. 2011). It
may well be the case that a particular, rapid, component of the neural signal has more indicative
and predictive power for consumers’ preferences than the more global signal of fMRI.
To address these concerns, in our study we use an alternative neuroscientific tool called the
electroencephalogram (EEG). From a fixed cost standpoint, EEG is orders of magnitude cheaper
than fMRI (roughly $50K compared to $1-$2M per unit), requires little support and maintenance,
and is widely available in neuroscience laboratories. The marginal cost of running an EEG
experiment is only a few dollars, more than an order of magnitude cheaper than an fMRI
experiment. From a technical standpoint, EEG also has a very high sampling rate (on the order of
1-2ms, Luck 2005) which enables identification of very fast changes in the neural signal over
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short time scales (on the order of 50ms, Luck 2005) that may carry strong predictive information
about consumer preferences and choice behavior.
In this article, we rigorously examine if EEG measurements of neural activity — recorded
while subjects view individual consumer goods on a computer screen without making any
choices — can be used to predict both rank-ordered preference ratings and actual choices in a
subsequent behavioral choice task. We demonstrate that this is indeed the case. We show that
specific spatial and temporal components of the EEG signal correlate with subjects’ future rank-
ordered preferences and can be used to predict subsequent choices. To our knowledge, this is the
first EEG study to demonstrate a basic principle: we can use measured neural activations to
predict choices without the need to ask consumers anything.
LITERATURE REVIEW
Link Between EEG Recordings and Valuation and Choice
There have been several studies linking EEG activity with some aspect of consumer preferences.
One of the first studies that used EEG data in consumer research, conducted by Ambler et al.
2004), demonstrated a link between EEG activity in the parietal cortex and the familiarity rating
of a good. Evidence for hemispheric asymmetry in the EEG signal and preferences has also been
uncovered. Subjects with greater resting activity in left-frontal electrodes (as reflected by lower
power within the alpha EEG band, 8–13 Hz) selected more pleasant stimuli in a subsequent
behavioral task compared to subjects with greater resting activity in right-frontal electrodes
(Sutton and Davidson 2000). A related study also examined the relationship between
8
hemispheric asymmetry in the EEG signal and an aspect of preferences (namely risk aversion),
but in the absence of choice (Gianotti et al. 2009). In the initial phase of this experiment, subjects
sat quietly in a room while their baseline or “tonic” neural activity was measured. After the
measurements, subjects then engaged in a behavioral task to elicit their preferences for risk.
Gianotti and colleagues found that higher tonic activity in the right prefrontal cortex, measured
before the behavioral task, correlated with a higher level of risk aversion (an avoidance-related
behavior) as measured in the behavioral task. Importantly, this study demonstrated that EEG
activity, measured in the absence of choice behavior, can be used to predict a preference trait.
Several studies have also demonstrated that EEG activity, measured concurrently with choice,
is related to choice behavior. For instance, both gamma band (20–45 Hz) and alpha band (8-13
Hz) oscillations were correlated with subjects’ choices of consumer goods in specific time
epochs and brain locations (Braeutigam et al. 2004). In a more recent study, Ravaja et al. 2013)
demonstrated that relatively greater left frontal activation (in the alpha band), measured just a
few seconds before choice, predicted the affirmative decision to purchase a given consumer good.
Higher perceived need for a product and higher perceived product quality (as measured by a
questionnaire answered at the end of the decision phase) were also associated with greater
relative left frontal activation (also in the alpha band). However, note that in both of these studies
subjects made actual choices during the EEG recording. Therefore, it is still an open question
whether we can use EEG data during passive viewing of goods in order to predict choices over
some substantial time horizon.
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An important step forward on this question is a recent study by Vecchiato et al. (2011). The
authors recorded EEG activity while subjects viewed video commercials and subsequently
related these measurements to the responses from a questionnaire regarding the pleasantness of
the same commercials (conducted two hours following the EEG session). This study
demonstrated that theta and alpha band activities were related to the subsequent pleasantness
ratings, with activity in the left frontal cortex related to “pleasant” commercials and activity in
the right frontal cortex associated with “unpleasant” commercials. Although this study
demonstrated a link between EEG recordings and a subsequent behavioral response, the use of
pleasantness ratings might not be correlated with the actual valuation and subsequent choice of a
good, as noted above. Additionally, there was no means to assess predictive power and/or the
precision of predictions. Therefore, in the current study we sought to overcome these limitations
and demonstrate the applicability of using EEG for predicting consumer choices.
Technical Aspects of EEG Measurement
Neurons in the brain communicate via electrical impulses. EEG measures the oscillations of the
resulting electrical potentials (voltages) with electrodes located on the human scalp. Each
electrode reflects the summation of the synchronous activity of thousands or millions of neurons
that have similar spatial orientation. Because voltage fields fall off with the square of distance,
activity from deep brain areas is more difficult to detect than activity near the skull. Hence, most
of the measured EEG signal originates from cortical rather then subcortical areas. It is well
established that behaviors and mental processes are the result of complex interactions between
multiple brain areas in various spatial and temporal scales. Only part of this dynamic activity can
be measured at the macroscopic level by scalp EEG (Luck 2005; Nunez and Srinivasan 2006).
10
In the current study, we examined the EEG response to commercial goods using two
common methods, both of which have been shown to represent mental processes that emerge in
reaction to various stimuli. The first method is the event related potential (ERP), which measures
the changes in the voltage level in response to a stimulus presented as a function of time.
Because the temporal resolution of these measurements is on the order of tens of milliseconds,
ERPs can accurately measure when rapid processing activities take place in the human brain, and
can provide information about a broad range of cognitive and affective processes (Luck 2005;
Nunez and Srinivasan 2006). With regard to decision processes, such as categorizing and
evaluating a stimulus, two well-known ERP components have been identified: the P300 wave
component (i.e. a positive deflection in the scalp potential starting 300ms after stimulus
presentation, see reviews by Polich 2007; Soltani and Knight 2000), and the N200 wave
component (i.e. a negative deflection in the scalp potential starting 200ms after stimulus
presentation; see review by Folstein and Van Petten 2008).
The second method we employ is termed event related spectral perturbations (ERSP).
Similar to the ERP technique, ERSP measures the response to a stimulus over time, but it divides
the EEG signal into different frequency bands. The ERSP method then examines if, and to what
extent, there is a change in the power of a given frequency band across time. Importantly, the
measured change in power provides both a temporal and a spatial code, which adds additional
valuable information to the ERP data. The frequency spectrum is usually subdivided into
frequency bands: delta (1-4 Hz), theta (5-8 Hz), alpha (8-12 Hz), beta (14-30 Hz) and gamma (40
Hz).
11
There is ample data linking changes in these frequency bands to various cognitive processes
such as changes in mental state (Moretti et al. 2004), changes in attention allocated to a task
(Klimesch 1999), memory processes (Klimesch 1996), motivation and emotional processes
(Knyazev 2007), different sleep stages (Keenan 1999) and consciousness levels (John 2002),
among others. For example, the alpha band has been associated with attention focusing (Prime et
al. 2003), the theta band with inhibition of elicited responses (Kirmizi-Alsan et al. 2006;
Yamanaka and Yamamoto 2010), and the beta band with alertness (Pfurtscheller and Lopes da
Silva 1999). However, it is important to emphasize that each frequency band can be associated
with many cognitive processes and one can not conclude a particular mental process is active
simply by examining changes in a specific frequency band (Poldrack 2006).
It is also important to remember that because the spatial resolution of the EEG signal is very
poor, any conclusions regarding the exact localization of the signal should be taken very
cautiously and should not be used as conclusive evidence that an identified brain area is related
to a measured behavior.
METHODS
Our study follows the three-stage experimental procedure laid out in Levy et al. (2011). In
the first stage, subjects received a general description of the study procedure and familiarized
themselves with ten consumer goods. In the second stage, neural activity was measured with
EEG while subjects viewed pictures of the goods they encountered in stage one. The aim of this
12
stage was to acquire independent measurements of neural activity for each good in isolation. In
the third stage, subjects were presented with pairs of the consumer goods, made binary choices
between all the goods they saw during the EEG stage, and were also asked to rank order the
goods according to their preferences. We now describe these stages in detail.
Stage 1: Familiarization with the goods
The experimenter briefly described each good and subjects were invited to examine them (the
products were in their original packages). Subjects were not informed of the actual prices of the
goods. After all goods were presented, we informed subjects that at the end of the experiment
they would get the product they wanted most. The consumer goods used in the study were
randomly chosen from the on-line website of one of Israel's largest retail stores (‘HomeCenter’).
The goods were: 1) white digital stereo headphones, 2) a white plastic kettle, 3) a pink bulb desk
lamp, 4) a red optical wireless mouse, 5) a red and black 16GB USB flash drive, 6) a magnetic
message board, 7) a rainbow colored hammock, 8) a white & blue steam iron, 9) a pink yoga mat,
and 10) a yellow fry pan. Importantly, the average price of a good was 80 NIS, ranging from 70
to 90 NIS. This limits the possibility that the value differences we observe are due to differences
in purchasing price. A full description of the goods, including images, is given in the Web
Appendix.
Stage 2: EEG Measurement
After examining all the goods, the second stage of the experiment began. Each subject was
seated in a comfortable chair in a dimly lit soundproof room and an EEG electrode cap
was placed on their head. Subjects were asked to minimize head and body movements as much
13
as possible at the time of the recording. On a standard computer screen, images of all ten goods
encountered in stage 1 were sequentially presented. Only one good was presented in each trial,
and subjects were simply instructed to think about how much a good is worth to them. Note that
during EEG recordings, subjects did not make any actual choices nor did they execute any other
motor response.
Figure 1A depicts the visual presentation of a consumer good. On each trial a fixation cross
was presented at the center of the screen for a randomly varied interval of 800 – 1200ms,
followed by the presentation of a good for 2sec. The fixation period of the next trial started
immediately at the offset of the previous trial. To improve the signal-to-noise ratio of our
measurement, each good was presented 50 times, in a random order, resulting in 500 total trials.
These 500 trials were divided into 10 blocks, consisting of 50 trials in each block. Subjects were
allowed to take short breaks between the blocks. At the end of each block a message appeared on
the screen stating that the subject can continue the task whenever she is ready by pressing the
mouse button. The total time of the EEG recording stage was 25 minutes. Please see the Web
Appendix for a full description of the technical details regarding the EEG recording and
preprocessing of the signal.
- INSERT FIGURE 1 HERE -
Stage 3: Choice Stage
After the EEG recording was finished, the EEG electrode cap was removed and subjects waited
10 minutes before starting the behavioral choice task. Figure 1B depicts the visual presentation
for this task. On each trial, two goods appeared simultaneously on a computer screen and the
subject stated which good they preferred (under no time limit). All possible pairwise
14
comparisons of the 10 goods were presented, totaling 45 pairs, and each pairwise choice was
repeated six times, totaling 270 randomly-ordered choice trials. The repetition of six choices is
important for the measurement error correction we will employ in our choice prediction analysis.
The location of each good on the screen (left or right) was also randomly altered.
To further validate the results of the behavioral choice task, we conducted two additional
measures. First, subjects were asked to answer a brief computerized questionnaire, in which they
were requested to rate how much they liked each good on a 7-point scale ranging from ‘dislike a
lot’ (=1) to ‘like a lot’ (=7) and also to rate how much do they want each good on a 7-point scale
ranging from ‘don't want at all’ (=1) to want very much (=7). Second, subjects had to rank order
the goods from 1 (most preferred) to 10 (least preferred). Finally, in order to control for any
possible ownership effects, we asked subjects to state, for each good, if they own a similar
product. The goods on all questionnaires were randomly ordered. At the end of the experiment
the participants selected their favorite good.
To ensure that the possession of similar goods will not effect the correlation between each of
the questionnaires and the scores of the behavioral choice task, we conducted a Pearson partial
correlation between the questionnaires and the choice preferences while using the possession of
the goods as a binary control variable. The analysis revealed that possession of similar goods did
not have any significant effect on the magnitude or significance of the correlations.
EEG Measurements
15
To analyze the EEG data, we used two distinct, well-established, methods (Nunez and Srinivasan
2006). In the first approach, termed ERP, the general waveform for each electrode (of the 19
electrodes in our setup) is averaged across all repetitions of the same event locked to stimulus
presentation. Therefore in our study, we averaged the waveforms of all 50 presentations
separately for each good and for each subject. This allowed us to look at the averaged waveforms
across the different goods for each subject and examine whether there are systematic differences
that predict future choices. The second approach, termed ERSP, looks at specific frequencies
embedded within the general EEG signal. The ERSP analysis reflects changes across time in the
power of specific frequency domains as response to stimulus presentation. Therefore for each
frequency, average event-locked deviations from baseline activity (mean power) can be tracked
(Makeig et al. 2004). We then examined whether specific frequencies could be used to predict
subjects’ future choices.
In order to avoid the issue of multiple comparisons and post-hoc hypotheses, we used both
previous literature and a basic visual and statistical analysis conducted on our first five subjects
to determine which electrode to focus on, which ERP and ERSP components to analyze, and the
duration of the time window. We continued with our remaining subjects -- and with the choice
prediction exercises that constitute the main hypothesis of the study -- only after we decided on
these basic aspects of the EEG analysis.
For our first five subjects, we compared the average ERP signal in response to a median split
of the top 5 most-preferred goods in the sample (across all subjects) and the bottom 5 least-
preferred goods. A full report of this analysis can be found in the results section and Table WA1
16
in the Web Appendix. We found that the mean amplitude of the N200 component could
differentiate between high- and low-preferred goods, however a non-significant P300 component
was present in the ERP signal. Based on previous studies (Folstein and Van Petten 2008) and the
known dynamics of the N200 component (Folstein and Van Petten 2008; Naatanen and Picton
1986; Sutton et al. 1965) we thus focused the remainder of our analysis on a 100ms time window
(200ms-300ms following stimulus presentation) that was centered on the N200 peak amplitude
(typically observed near 250ms).
With regard to electrode choice, ample data from EEG studies (Holroyd and Coles 2002;
Nieuwenhuis et al. 2004; San Martin et al. 2010; Yeung and Sanfey 2004) and fMRI studies
(Bartra et al. 2013; Grabenhorst and Rolls 2011; Kable and Glimcher 2009; Levy and Glimcher
2012; Padoa-Schioppa 2011; Platt and Huettel 2008; Rushworth 2008) suggest value
representation is located in frontal areas. In accordance with this preliminary hypothesis, we
identified that the strongest difference in N200 amplitude (between the top 5 most-preferred
goods and the bottom 5 least-preferred goods) was evident in the front of the of the scalp map,
with the strongest effect in electrode Fz. Because we decided to focus our analysis on the N200
component, and because this component is mainly evident in frontal central electrodes (Folstein
and Van Petten 2008; Luck 2005; Nunez and Srinivasan 2006), we focused the rest of our
analysis on electrode Fz — a central electrode located near the front of the brain.
This same strategy was repeated for the ERSP analysis. The average ERSP signal in the
frequency range 0-40Hz could differentiate between a median split of the top 5 most-preferred
goods and the bottom 5 least-preferred goods (again, see the results section and Table WA1 in
17
the Web Appendix). This guided us to focus on the theta band activity (5-8 Hz) within a time-
window of 100-400ms following stimulus presentation. This observation is in line with previous
studies demonstrating a link between theta band activity and valuation (Cohen et al. 2007;
Gehring et al. 2012). Based on previous literature we also hypothesized that alpha waves might
also be related to subjects’ subsequent choices. However, we found no evidence to support this
hypothesis (see Table WA1 in the Web Appendix).
The accumulation of these results led us to focus our subsequent analyses for the entire
subject sample on the N200 and ERSP theta component in electrode Fz (in the time windows
noted above). Importantly, in our subsequent analysis and choice prediction exercise, we did not
run any statistical analysis on any other time windows or any other electrodes. To examine the
robustness of our findings, at the end of the study we repeated the initial median-split analysis on
the remaining ten subjects that were initially held out, and repeated our entire analysis on a
control electrode described shortly. These results matched our initial findings reported above
(see Table WA1 in the Web Appendix).
Control Electrode
After conducting all of our correlation and choice prediction exercises on the frontal electrode Fz,
we aimed to examine whether the predictive information of the EEG signal originates in more
frontal areas (as would be expected from previous findings), or whether the predictive signal
could be detected in other electrodes. Therefore we engaged in a control exercise by repeating all
of the analyses in a more posterior but still centrally located electrode - Pz.
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RESULTS
Establishing Consistency in Choices and Liking Ratings
The first step in relating neural measurements to choice data is determining the consistency of
choices over the six repetitions of each choice pair, and gauging the degree of stochasticity in
choice behavior. The existence of consistent preferences and/or a clear rank-ordering over the
consumer goods will presumably ensure a suitable range of valuations that can be measured via
EEG.
The proportion of choice pairs that resulted in an even split between the two goods (each
good was preferred in half a subject’s choices) was markedly low (0.02, SE = 0.01), suggesting a
clear rank order preference of goods for all subjects. Furthermore, the proportion of the six
repeated pairs in which the subjects switched their preference at least once was 0.25 (SE = 0.02)
(over all subjects). This proportion is relatively low when you consider that this would be the
probability of observing at least one switch out of six trials from the binomial distribution with a
success probability of 0.795 on each trial.
To gauge how much of the switching arose from possibly inconsistent preferences, we also
examined the proportion of stochastic transitivity violations (Tversky 1969). For each triplet of
consumer goods {A,B,C}, such violations occur when P(A|{A,B})>=0.5, P(B|{B,C}) >=0.5 , but
P(A|{A,C})<0.5. Across all subjects, the proportion of violations (out of all possible violations)
was extremely low (0.02; SE = 0.003), with 7 subjects exhibiting no violations. All together,
these results suggest that subjects had relatively clear rank-ordered and consistent preferences
19
over the goods, but with an element of stochasticity in choice behavior that is commonly
observed.
Behavioral Choice Task Scoring
Following Levy and colleagues (2011), we assigned a preference score for each good based on
the total number of times the subject chose it across all trials (see Table WA2 in the Web
Appendix and the text below for detailed description of the preference scores). To assess the
validity of these preference scores, we compared them to questionnaire responses and to the
results of the rank-ordering task. The correlation (across subjects) between the average
preference score for each good and the average ranking given to each good in the rank-order
questionnaire was large and significant (r = 0.97, p < .001). In addition, there was also a large
and significant correlation between the behavioral task preference scores and liking of the good
(r = 0.82, p < 0.001) and with wanting of the good (r = 0.96, p < 0.001) as measured in the self-
report questionnaire2. These high correlations support the validity of the behavioral choice task
preference scores as measuring subjects’ rank-ordered preferences.
Finally, because the ability to predict subjects' preferences depends partly on the ‘strength’ of
their preferences, we computed a min/max range by subtracting the preference score of the
lowest good from the score of the highest good. For a full description of these dispersion rates
see Table WA2 in the Web Appendix. Importantly, the average range across subjects was large
(M=52, SD = 2) and very close to the maximal possible range of 54. Therefore, it seems that
2 We computed for each questionnaire how well it was able to predict the choices subjects made in the behavioral task. For the ranking questionnaire the proportion of correct predictions of actual choices using the ranking given to each good was 0.88 (SD = 0.07) and significantly different from chance level (t(14) = 22, p < 0.001). Liking the good was also a significant predictor (M = 0.67, SD = 0.11; t(14) = 5.98, p < 0.001). The same was evident for wanting the good question (M = 0.69, SD = 0.09; t(14) = 8.17, p < 0.001).
20
subjects had relatively strong preferences across goods, which increases our chances for
successfully predicting subjects’ future choices from the neural data. Notably, there was also a
degree of homogeneity in the preferences of the subjects (i.e. they tended to choose the same
goods; see Table WA2 in the Web Appendix). This fact will enable a population-level analysis
of the EEG signal, which we expand on in the next section.
EEG Differentiates Between Most- and Least- Preferred Goods Across Population
We begin with a simple population-level analysis of the EEG signal. Can we identify a
difference in the EEG signal in response to a median split of the number of times a good was
chosen in the binary choice task across the entire sample of subjects? A breakdown of this
analysis for sub-samples of the subjects is reported in the Web Appendix (Table WA2).
Figure 2 reports the average mean amplitude of the N200 component across subjects (in
electrodes Fz and Pz ) for the 5 most-preferred goods in our study versus the 5 least-preferred
goods. Evidence for an association between neural activity and behavior can be observed in the
downward (negative) deflection of the N200 signal starting 200ms following the stimulus
presentation. The average deflection of the N200 is larger in magnitude for the 5 low-preference
goods compared to the 5 high-preference goods, and this difference was significant in both Fz
(paired t-test, t(14) = -2.72, p < 0.05) and Pz (t(14) = -3.18, p < 0.01) electrodes. However, note that
the overall deflection of the N200 component across all goods is much larger in electrode Fz
(M=-4.925 µV, SD=5.55) than in electrode Pz (M=-1.09 µV, SD=3.96), suggesting that the
origin of the signal is more frontal. As illustrated in the scalp map in Figure 2, the largest
21
difference in the average voltage distribution for low-preference minus high-preference goods
(within the N200 time frame) is evident in the frontal parts of the scalp.
- INSERT FIGURE 2 HERE -
In addition to the population level correlation found in the N200 component, we examined
whether a specific frequency domain within the EEG signal carries predictive power via an
ERSP analysis. Figure 3 compares the mean theta band activity in response to the 5 most-
preferred goods compared to that of the 5 least-preferred goods. The average theta power
following the presentation of low-preference goods (M = 1.72 dB, SD = 1.36) was significantly
stronger compared to the high-preference goods (M = 1.28 dB, SD = 1.07) in electrode Fz (t(14) =
-3.75, p < 0.01). However, this difference was not apparent in electrode Pz (t(14) = -0.58, p <
0.57).
- INSERT FIGURE 3 HERE -
Because previous studies demonstrated a correlation between the slow alpha waves (8-10Hz)
and valuation (albeit using an hemispheric asymmetry analysis, Vecchiato et al. 2011), we also
computed the difference between high-preference goods and low-preference goods in respect to
slow alpha waves activity. Slow alpha waves were identified from the same ERSP analysis but
now focused on the 8-10Hz frequency band. There was no significant difference between the
groups (Mhigh-preference = 0.86, SD = 1.22; Mlow-preference = 1.05, SD = 1.5; t(14) = -1.18, p = 0.25).
This suggests that, at least in our experiment, the predictive information of the frequency domain
is relatively narrow; predictive information is not a general trait of many frequencies, but it is
rather focused on the theta frequency band.
22
Correlation of EEG Activity and Preference For Goods Across Population
Having established an average, population-level, difference in the N200 component for high- and
low-preference goods, we now examine whether the EEG activity measured for a particular good
is correlated with the ranking of that good across all subjects. For each good, we observed the
magnitude of the N200 amplitude (averaged over 50 repetitions and over all subjects) and the
preference scores for each good (the number of times each good was chosen by all subjects).
As illustrated in figure 4A, the correlation between the average N200 amplitude for a good
and the preference score for each good across all subjects was high, positive and significant (Fz:
r = 0.76, p < 0.01; Pz: r = 0.75, p < 0.05). That is, the lower the measurement of (negative) N200
amplitude, the higher the preference ranking of that good in the subsequent behavioral choice
task across the population of subjects. Note, that the correlation remained significant even when
we analyzed the data using spearman correlation, which is much less sensitive to extreme values
(Spearman’s r = 0.64, p < 0.05).
In a similar manner, for each subject, we correlated the average theta activity response to
passively viewing each good (averaged over 50 repetitions) with the preference scores for all
goods. As illustrated in figure 4B, the correlation between the average theta activity and the
average total number of times that good was chosen across all subjects, was high, negative, and
significant in electrode Fz (Pearson r = -0.83, p < 0.001; Spearman r = 0.76, p < 0.05, left panel)
but not in electrode Pz (Pearson r = -0.08, p = 0.82, right panel). That is, the lower the theta
activity measured in electrode Fz during passive viewing of a good the higher the preference
ranking of that good in the subsequent choice task. The existence of a significant effect only in
23
electrode Fz suggests that the predictive information of the theta power originates in more frontal
areas.
- INSERT FIGURE 4 HERE -
For illustrative purposes, we binned the rank-ordered goods (across the population) into two
element bins and plotted the ERSP levels as a function of good presentation. Figure 5A describes
this relationship in electrode Fz for an example subject (subject 3) and figure 5B is the group
average. As can be seen in both panels, the power in the theta frequency band is decreasing as a
function of preference score. Therefore, the weaker the theta activity, the higher the preference-
score.
- INSERT FIGURE 5 HERE -
The correlation that we found between EEG activity and preference for the goods across
subjects is noteworthy. This correlation informs us that it is possible to use EEG to identify
goods that are ranked highly by a population of subjects. Of course, this is only possible because
such a population-level ranking exists (i.e. subjects have relatively similar preference ranking of
the goods). Table WA2 in the Web Appendix reports the total number of times a good was
chosen (of the 54 possible trials) by each subject, as well as the total across the population (810
possible trials). For example, the USB flash drive was chosen in 75% of the choice trials it was
presented across subjects, in contrast with the magnetic message board, which was only chosen
in 27%. For these two goods, such a stark ordering will yield a correlation with our neural
measure when the corresponding EEG measurements of these two goods are very different. For
example, the average N200 value for the flash drive across subjects was -5.23 µV, and
significantly larger than for the magnetic message board at -8.95 µV (p<0.0001).
24
To examine the full sample, we computed the inter-subject correlations of the preferences
rankings between every pair of subjects. As can be seen in Table WA3 in the Web Appendix,
there was a range of inter-subject correlation values with six (out of 105) correlation coefficients
significantly different from zero (p<0.05), and another five with marginally significant
coefficients (p<0.1). The average correlation coefficient was raverage = 0.12, which was not
significantly different from zero due to the high range of coefficient values (from -0.50 to 0.83
with a cronbach alpha reliability index of α=0.67). Therefore, the correlation that we found
between EEG activity and preference for the goods across subjects is partly due to the inter-
subject correlation, which induces a sizable population-level ranking.
Correlation of EEG Activity and Preference Within Subject
Having established an average population-level effect of the N200 component and the number of
times a consumer good was chosen in the population, we next examined whether this component
was correlated with the ranking of a good at the subject level. For each subject, we observed the
preference scores for each of the ten goods (the number of times each good was chosen by the
subject). Thereafter, for each subject we ranked the goods from one to ten, and observed the
corresponding amplitude of the N200 component (averaged over 50 repetitions of each good).
We then averaged each of these ranked scores and each of the corresponding N200 amplitude
across all subjects.
As illustrated in Figure 6A, the correlation between the average N200 amplitude and the
average preference score for the ranked goods was high, positive and significant (r = 0.7, p =
0.023) in electrode Fz, but not in electrode Pz (r = 0.34, p = 0.33). That is, the smaller the N200
25
deflection (less negative magnitude), the higher the preference score of that good in the
subsequent choice task. The correlation was stronger and remained significant using the
spearman correlation (Fz: r = 0.77, p = 0.013; Pz: r = 0.35, p = 0.31).
We analyzed the theta power band of EEG signal in a similar manner. As illustrated in figure
6B, the correlation between the average theta power and the preference score across all subjects
was high, positive and significant (Pearson r = -0.77, p < 0.01; Spearman r = -0.60, p =0.07, left
panel) in electrode Fz, but not in electrode Pz (Pearson r = 0.05, p = 0.88; Spearman r = 0.04, p
=0.91, right panel). That is, the lower the theta activity measured in electrode Fz during viewing
of a good, the higher the preference ranking of that good in a subsequent behavioral choice task
conducted 10 minutes later. Again, the existence of a correlation only in electrode Fz suggests
that the predictive information of both the N200 and the theta power originate in more frontal
areas.
- INSERT FIGURE 6 HERE -
CHOICE PREDICTION USING EEG MEASUREMENTS
Having established that the average EEG activity within goods and within subjects correlates
with choice preference, we wanted to answer the main hypothesis of our study: Can EEG data be
used to derive a measurement of the value a subject places on a consumer good, and can this
measurement be used to predict their trial-by-trial choices? To answer this question, we
conducted analyses on both the N200 and the theta power activity using two methods recently
introduced in the neuroeconomic literature.
26
Ordinal Analysis
A first requirement for relating neural measurement to choice prediction is establishing that the
ordering of the neural measurements corresponds to the choices observed in the behavioral task.
To verify this, each good was rank-ordered according to its EEG measurement(s) of neural
activity. We then report the number of correct predictions of pairwise choices in our choice task,
assuming that a good with larger magnitude is chosen. For ERSP theta power measurement, the
good associated with the strongest theta power was ranked last and the good with the weakest
theta power was ranked first. For the ERP measurement, we ranked each good according to the
mean (negative) deflection of the N200 response. The good associated with the largest N200
deflection was ranked last and the good with the smallest N200 deflection was ranked first.
Both the ERSP and the ERP measurements in electrode Fz predicted choice behavior. Using
the theta power of electrode Fz, the proportion of correct predictions of pairwise choices was
0.59 (SD = 0.12), ranging from 0.42 to 0.73 across subjects, and significantly different from
chance (t(14) = 2.83, p < 0.05). Results for the N200 amplitude were similar, with a prediction
rate of 0.57 (SD = 0.15) and marginally significant (t(14) = 1.84, p = 0.09). Importantly, this
predictive power was not evident in electrode Pz for both the theta power (Mean = 0.48, SD =
0.11, t(14) = -0.84, p = 0.41) and the N200 (Mean = 0.50, SD = 0.16, t(14) = -0.12, p = 0.90). This
demonstrates the specificity of the predictive power of the EEG signal to more frontal areas.
Intriguingly, as can be seen in Figure 7, the proportion of correct predictions improved as a
function of the ordinal distance of the ranked goods for electrode Fz but not for Pz. For example,
in the 54 trials where the pairwise choice involved goods with adjacent neural ranking (ordinal
27
distance of 1), the proportion of correct predictions was not different from chance (M=0.53,
±0.02). At an ordinal distance of 9, involving the 6 pairwise choices between the highest ranked
and lowest ranked goods, the proportion of correct predictions was 0.79 (±0.1). Results for the
N200 amplitudes were similar, with a proportion of correct predictions of 0.53 (±0.02) for goods
with adjacent neural measurements, and a prediction rate of 0.70 (±0.10) for goods with an
ordinal distance of 9.
To capture the trend statistically, we conducted a linear regression analysis between the
ordinal distance of the theta band and the proportion of correct predictions. The relationship is
strong and significant in electrode Fz (R2 = 0.91, p < 0.001), but not electrode Pz (R2 = 0.32, p >
0.05). Results are similar for the N200, Fz: (R2 = 0.50, p < 0.05), Pz: (R2 = 0.01, p > 0.05). This
again strengthens the notion that the predictive information is specific to frontal areas.
- INSERT FIGURE 7 HERE -
Cardinal Analysis – Neural Random Utility Model
Our observation that the magnitude difference in the ranking of the EEG measurements for each
good carries predictive power is noteworthy. This observation is consistent with a possible
cardinal scale underlying the measure of value on which the ordinal ranking is based. This is
because knowing “how much” a subject values a consumer good (relative to another) can yield
improved prediction rates.
To examine this possibility, we use the Neural Random Utility Model (NRUM) and choice
prediction procedure laid out in Webb et al. (2013). This model estimates the likelihood that a
subject will choose one good over another based on the difference in neural activity recorded for
28
those two goods. An additional advantage of this model is that it applies standard econometric
techniques (e.g. a Random-Effect Probit model) to partially account for the large amount of
measurement error present in neural variables. Repetitions of choice trials per choice pair (six
repetitions in this experiment) are used to estimate the variance of the measurement error via a
random effect. This partially corrects for the downward bias introduced by measurement error,
and yields improved choice prediction results when using neural data.
In panel A of Figure 8, we report the estimated Probit coefficient from the NRUM for each
subject for the N200 signal. An increase in the difference of our neural measurement led to a
significant increase in the likelihood of choosing the higher alternative for 7 of our 15 subjects.
For 5 subjects there was no significant result, and the parameter estimate went in the opposite
direction for the remaining three, a result consistent with the high degree of measurement error
observed in our neural signal.3 We should note that by chance we would only expect ~1 subject
to have a positive and significant result, and the magnitude of these results are similar to those
observed in Webb et al. (2013).
To examine the magnitude of the choice prediction results from the model, we took the fitted
choice probabilities on each trial and simulated 1000 choices for each trial. The fraction of
simulated trials on which the simulated choices match the actual choices from the behavioral
data are reported in panel B. Prediction rates significantly lie above chance for all but one of our
subjects, and range up to 0.76. Across the entire sample of subjects, the average prediction rate is
0.64 (p < 0.01), and rises to 0.65 if we drop the 3 subjects with negative parameter estimates. To
3 We refer the reader to Webb et al., (2013) for an in-depth discussion of measurement error and its impact on relating neural measurement to choice prediction, in particular section IV.C and footnotes 19 and 20.
29
verify that our prediction rates hold up out-of sample, for each subject we also estimated the
NRUM on only half of the choice pairs and repeated our prediction exercise for the remaining
choice pairs. This exercise therefore uses half of the data (for each subject) to predict the
remaining choices of that subject. Prediction rates remained significantly above chance for 13 of
15 subjects, and the average ‘out-of-sample’ prediction rate across the subject pool was 0.59 (p <
0.01).
Similar results for the ERSP theta band are reported in panels C and D, although note that for
this measurement an increase in the differenced theta band activity significantly increases the
likelihood for choosing the lower valued alternative. Choice prediction rates are reported in panel
D, range up to 0.78, with an average prediction rate of 0.65 (before and after dropping the 1
subject with a positive estimate). The average ‘out-of-sample’ prediction rate was 0.60 and
significantly different from chance (p<0.01).
- INSERT FIGURE 8 HERE -
DISCUSSION
In the current study, we demonstrate that EEG measurements of neural activity, taken while a
subject visually evaluates a consumer good, can predict preferences in a subsequent binary
choice task over the same goods. Importantly, the accuracy of our predictions depends on both
the ordinal and cardinal distance of the neural measurement. The bigger the magnitude
differences in our EEG measures, the better the predictive accuracy. A smaller (negative)
deflection in the N200 amplitude and a weaker theta band power correlated with a more
preferred good at the subject level, and intriguingly, these same measurements, averaged over the
30
entire sample of subjects, correlates with the frequency that a particular good was preferred in
our subject population.
Our findings have clear implications for marketing research and applications. First, this study
demonstrates that consumer preferences can be predicted using EEG methods. Relative to other
measurement techniques in neuroscience, EEG is less expensive, widely available, and even
portable enough to be used in the field. While our results focus on consumer goods, the general
nature of evidence for value measurements in the pre-frontal cortex using fMRI methods (e.g.
Bartra et al. 2013; Levy and Glimcher 2012), suggests that, in principle, EEG may also be used
for predicting the outcome of marketing related strategies or campaigns, not simply preferences
for consumer goods. This result may even extend to the valuation of novel products that the
consumer has had no previous experience with (Barron et al. 2013), or products that are currently
under development.
Second, the EEG measurements used to predict choices were obtained while subjects were
not making actual decisions, or any motor response whatsoever, but simply viewing each good in
isolation. This procedure is relevant to situations in which the marketer can not directly ask
consumers for their preferences (via questionnaires or actual choice tasks) or in situations where
consumers passively view advertising messages on various content delivery media. By
eliminating the need to directly elicit any response from the consumer, our methods avoid many
elicitation biases and may cause less interference in the valuation process.
31
Link to Feedback Related Negativity
From a technical standpoint, our observed correlations of preferences with both fronto-central
N200 amplitude and theta power are in line with previous studies. Previous work has suggested
that Feedback Related Negativity (FRN), a fronto-central negative potential, shares similar scalp
distribution, time course, morphologies, and functional dependencies as the N200 component
(Holroyd et al. 2008) and is strongly linked to subject’s choices (for a review see: Walsh and
Anderson 2012). Importantly, the FRN component is mainly identified in response to a feedback
(Simons 2010). For example, the FRN appears 200 – 300ms after the display of unfavorable
versus favorable outcomes and indexes how ‘‘good’’ or ‘‘bad’’ an outcome is within a given
context (Goyer et al. 2008; Hajcak et al. 2006; Kreussel et al. 2012; Masaki et al. 2006;
Nieuwenhuis et al. 2004). It has also been found that for unfavorable outcomes, the more
negative they are perceived the stronger the FRN response they elicit, and the FRN also emerges
in response to passively viewing outcomes (Yeung et al. 2005).
Importantly, there is also a link between FRN activity related to choice values and theta
power. Studies that have focused on the frequency characteristics of the FRN found that strong
frontal theta power activity is linked to FRN activity and emerges in response to the presentation
of unfavorable outcomes (Cohen et al. 2007). In addition, Gehring et al. 2012) extracted theta
oscillations using the Morlet wavelet transform and found a frontally focused theta (4–7 Hz)
activity for monetary losses compared to monetary gains.
The FRN component is not only observed in experiments involving active choice, but is also
identified in in experiment that do not involve active choice but involve receiving outcomes that
32
serve as the feedback For example, it has been shown showed that the FRN could be elicited for
choices that resulted in unfavorable outcomes even when they were not actively made and were
only passively viewed by the subject (Yeung et al. 2005). However, in our experimental design,
goods were not regarded as feedback or outcomes following choice. Hence, this raises the
possibility that the unfavorable outcome related negativity (as identified by either the N200 or
the FRN) emerges not only in response to actual feedback, but it emerges also in valuation
without choice situations or feedback, suggesting that it is a more general valuation response to
unfavorable stimuli. This possibility strengthens the notion that, even at the level of EEG activity,
there is evidence that the neural representations of values share similar properties and are located
within the same brain structures when we make actual choices and when we only evaluate
options without having to choose between them.
Hence, like other scholars (Holroyd et al. 2008), we suggest that both the FRN (which
involves an actual feedback) and the N200 originate from the same value-related cognitive
mechanism. We suggest that the N200 value-related signal is similar to the FRN value-related
signal but in situations where there are no choices involved. We believe that this is a strong
demonstration that we can use EEG signals without feedback or active choice to measure how
valuable an option is.
Response Inhibition as Possible Mechanism for N200 Amplitude
Another possible mechanism that could be related to our findings is that the increased N200 and
theta power following the presentation of an unwanted good is a manifestation of response
inhibition, however without the need for inhibiting an actual motor response. Studies that used a
33
Go/No-Go task, which requires a participant to perform an action given certain stimuli (e.g.,
press a button - Go) and inhibit that action under a different set of stimuli (e.g., not press that
same button - No-Go), have demonstrated that the fronto-central N200 generates a larger (more
negative) deflection following a presentation of a No-Go signal as compared to a Go signal
(Enriquez-Geppert et al. 2010; Falkenstein et al. 1999; van Veen and Carter 2002). The Go/No-
Go task also elicits frontal theta power activity. It has been shown that theta power activity is
higher in response to a No-Go signal as compared to a Go signal (Kirmizi-Alsan et al. 2006;
Yamanaka and Yamamoto 2010). However, note that most of the studies investigating event
related brain activity using the Go/No-Go task focused on situations where the participants had
to actively inhibit an immediate motor response (Yeung et al. 2004).
Importantly, in our study subjects did not engage in actual decisions while we measured their
EEG activity. Therefore, this suggests that the N200 component identified in the current study
might have a larger deflection in response to more unwanted goods because these goods elicited
a stronger response inhibition, which could occur even without active choice. Our findings
regarding the theta power activity agree with this notion as well. The stronger theta power we
observed for less-preferred goods might be because these goods elicited a stronger response
inhibition compared to more-preferred goods. This possibility again strengthens the notion that
similar neural value representations are in operation when we evaluate options for active choice
and when we evaluate options without any active choice or any motor action.
Classification of N200 Signal
34
Previous studies characterized several distinct N200 potentials. The N2a, which is also termed
the mismatch negativity potential (MMN), is mainly localized to the fronto-central areas of the
scalp and is typically elicited in response to unpredictable, low probability, auditory stimulus in a
sequence of stimuli (Naatanen et al. 2007). On the other hand, the N2b component, which is not
restricted to auditory tasks, is seen only during conscious attention to various stimuli and is
mainly associated with response selection, inhibition, and error monitoring with maximal effect
at electrode Fz (Patel and Azzam 2005). A third type, the N2c, is mainly associated with
categorization of stimuli in classification tasks, and is larger for infrequent stimuli compared to
frequent stimuli. The N2c is typically localized to posterior scalp sites and is usually
accompanied with a larger P300 component (Luck 2005), which we did not observe in our data.
Therefore, we suspect that the N200 found in our study could be classified as an N2b potential.
First, it is localized in the fronto-central areas of the scalp. Second, it is probably not the N2a
component since our study focused only on the visual aspects of the goods, and did not involve
any auditory stimuli. Third, the N2b is related to response inhibition, and inhibition is possibly
one of the mechanisms underlying the N200 effect found in our study.
Relationship Between EEG, fMRI, and Choice Prediction
Previous EEG studies have demonstrated a link between hemispheric asymmetry in the theta
band (although using a different type of measurement then in the current study) and some aspects
of valuation of consumer goods such as pleasantness and liking ratings (Lee et al. 2013;
Vecchiato et al. 2011). Our data extend these findings in several ways. First, we found a
correlation between the theta band power and a subjects’ rank ordered preferences without
requiring any hemispheric asymmetry in our analysis. Second, to our knowledge this is the first
35
study to correlate a component of the general EEG waveform (N200), identified in an event-
related potential, with subsequent choice behavior. Third, we demonstrated that the predictive
power depended on the magnitude of the theta power band, suggesting a cardinal scale for our
measurement. Finally, we demonstrated that the signal likely originates from frontal areas. We
now briefly discuss each of these contributions.
In our study, the most predictive information representing subjects’ preferences originated
from a more frontal electrode (Fz) compared to a more posterior electrode (Pz). This renders the
possibility that the most informative neural activity originated from more frontal areas. Note
however, that with sufficient power, volume conduction can lead any EEG effect to be detected
in any electrode. Therefore it is important to note that the localization of EEG waveforms is
inaccurate and not specific to an area of the frontal cortex. In addition, it is very hard to find
source signals of the EEG data that originate from deep brain areas such as the vmPFC, dmPFC,
insula, or ACC as associated in previous fMRI studies that predict subjects’ subsequent choices
(Falk et al. 2012; Smith et al. 2014). Hence the important finding in the current study is that
stronger predictive power originated from a frontal electrode (as opposed to the more posterior
Pz electrode), rather then a specific localization of the source.
Our finding that the predictive accuracy depended on ordinal and cardinal distance in EEG
measurements is in line with the fMRI results reported in Levy et al. (2011) and Webb et al.
(2013). These studies used a measure of neural activations in the medial PFC and striatum (brain
areas that are known to represent expected and perceived subjective values for various reward
types; Bartra et al. 2013; Levy and Glimcher 2012) while subjects passively viewed different
36
goods inside the scanner. These measured neural activations were then used to construct an
ordinal neural ranking of the goods and this ranking predicted choice outcomes with accuracy of
up to 82%-83% for goods with the greatest neural ranking distance. Perhaps surprisingly, given
the nature of EEG technology, we achieved 79% accuracy for goods with the greatest neural
ranking distance. In a similar fMRI experimental setup, Smith et al. (2014) report within-subject
correlations of a similar magnitude, as well as a 77% prediction rate for preference ratings for
specific goods across the population. This result, together with our observed correlation between
EEG activity and the frequency that a good was chosen in the population, suggest that neural
activity measured either using fMRI or EEG can have significant predictive power, both within-
and across- subject for each good. Both measurement techniques convey important information
regarding current valuations and subsequent choices.
Although our prediction rates were significant when averaging over all of the goods, it is
important to emphasize that the predictive power we found depended on both the neural distance
and on the preference distance found in behavior. An accuracy rate of almost 80% was only
possible when subjects had very stark preferences between the goods considered. When the
goods were close in preference — and in neural distance — then prediction was not above
chance. The magnitude of these results, and the effect of measurement error in choice prediction,
is in line with previous studies (Webb et al., 2013), and our prediction rates using EEG are
similar to at least some of the prediction rates reported in the previous fMRI studies (Falk et al.
2012; Lebreton et al. 2009; Levy et al. 2011; Smith et al. 2014; Tusche et al. 2010). Table 1
reports the prediction rates from these studies alongside our results.
- INSERT TABLE 1 HERE -
37
We conclude from this exercise several points. First, this is the first study to show significant
prediction rates of subjects’ future choices using EEG methods. Second, although our prediction
rates are not exceptionally accurate, they are in line with the current state of fMRI studies
(perhaps surprisingly given the low single-to-noise ratio typically associated with EEG methods).
Third, because the prediction rates vary across all these studies, prediction rates are probably
sensitive to the choice set that is chosen in a given experiment and the analysis methods chosen.
To conclude, we believe that EEG can be a practical tool for the marketing research industry.
The ability to predict preferences without the requirement to elicit any response from the
consumer is a valuable research tool, and EEG has several important advantages over fMRI for
commercial purposes. The purchase and operational costs of an EEG system are relatively low, it
is portable, less restrictive for subjects, and the data-sampling rate is very high. However, we
emphasize that more studies are needed in order to understand the generality of our findings
before one can reliably use this technique for commercial purposes.
38
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FIGURES
Figure 1: Experimental design. A) Stimuli design and timing of goods’ presentation during the EEG recording phase. On each trial subjects first saw a fixation cross for a randomly varied interval of 800-1200 ms. thereafter, an image of a good was presented for 2 seconds. B) Examples trials of the behavioral choice task. After the end of the EEG recording phase, subjects were asked to make pairwise choices between all goods that were presented to them during the EEG recording phase. There was no time limit for making the behavioral choices.
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Figure 2: Grand-average ERP waveforms recorded at electrode site Fz (top left) and at Pz (top right) during the EEG recording phase. The red line shows the average ERP response to the 5 least-preferred goods, and the green dashed line corresponds to the 5 most-preferred goods. There is a significant N200 effect (p < 0.05) with larger (negative) deflection to low preference goods in both electrodes. The scalp maps show the distribution of voltage from 0 - 500ms following the goods presentation divided to time intervals of 100ms for low preference minus high preference goods. According to the map, the effect is prominent during the 200-300ms time window and focused at the frontal parts of the scalp.
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Figure 3: ERSP at electrode Fz (top) and at Pz (bottom) for high preference (left) and low preference goods (right). Logarithmic scale of EEG frequency (3 to 40 Hz) is indicated on the y-axis. Hot colors indicate higher power, as shown on the scale on the right. The power in the theta frequency band (5-8 Hz) for low preference goods was stronger than for high preference goods (p < 0.01) only at electrode Fz. The scalp map shows the distribution of theta power from 100 - 400 ms following the goods presentation for low preference minus high preference goods. According to the map, the effect is primarily located at the frontal parts of the scalp.
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Figure 4: Goods level analysis. The graph shows a scatter plot of the correlation across goods between the average EEG activity (A – N200 ERP component; B – Theta band (5-8 Hz) power) in response to viewing the goods and the preference scores of the goods as measured by the total number of times each good was chosen for all subjects during the subsequent behavioral task for electrodes Fz (left) and Pz (right). The horizontal error bars denote the standard error of the EEG activity for each good across subjects. The vertical error bars represent the standard error of the means of the preference ratings for each good across subjects. As shown in panel A, smaller deflection (less negative) N200 amplitude was strongly associated with higher preference scores (p < 0.01) in both electrodes, while stronger theta power (panel B) was negatively correlated with higher preference scores (p < 0.01) only at electrode Fz.
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Figure 5: ERSP response from Fz electrode to rank ordered goods. ERSP activity as a response to viewing the 10 goods (each plot represents the average of two goods) ordered by their preference scores as measured in the subsequent behavioral choice task. 1 represents the two goods that were least preferred and 5 represents the two goods that were most preferred. Logarithmic scale of EEG frequency (3 to 40 Hz) is represented on the y-axis. Hot colors (red) indicate higher power (in dB), as shown on the scale on the right. A) The ERSP activity by preference score for a single subject (subject 3). B) The average ERSP activity by preference score across all subjects. Black doted line (Zero on the x-axis) represents stimulus presentation onset.
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Figure 6: Subjects level analysis. The graph shows a scatter plot of the correlation across subjects between the preference score of each good in each subject (as measured by the total number of times each good was chosen by each subject during the subsequent behavioral task) with the corresponding average EEG activity for each good (A – N200 ERP component; B – Theta band (5-8 Hz) power) for electrodes Fz (left) and Pz (right). The horizontal error bars denote the standard error of the EEG activity for each good across subjects. The vertical error bars represent the standard error of the means of the preference ratings for each good across subjects. As shown in panel A, smaller deflection (less negative) N200 amplitude was strongly associated with higher preference scores (p < 0.01) only at electrode Fz, while stronger theta power (panel B) was negatively correlated with higher preference scores (p < 0.01) also only at electrode Fz.
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Figure 7: Ordinal prediction as a function of neural distance. Data represents the proportion of correct choice predictions as a function of theta power (top) and N200 (bottom) distance at electrode Fz (A) and at Pz (B). The goods were ranked according to the theta power or N200 they generated, and proportions of correct predictions were calculated separately for each ordinal distance. Error bars represent 1 standard error of the means of the proportion of correct predictions across subjects.
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Figure 8: Cardinal analysis. A) The estimated Probit coefficient from the NRUM for each subject for the N200 signal at electrode Fz. B) The fraction of simulated trials on which the simulated choices match the actual choices from the behavioral data. C) The same as A but for the theta power. D) The same as B but for theta power. The sub- sample of the first 5 subjects are denoted in white. Error bars represent the 95% confidence intervals. For full description of this method see Webb et al., (2013).
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Study Average Prediction
Rate Analysis Method
Imaging Tool
Tusche et al (2010) 70%‐82% within subject (SVM) fMRI
Levy et al (2011) 56% within subject (ordinal analysis) fMRI
Webb et al (2013)* 56% cardinal NRUM fMRI
Webb et al (2013)* 69% cardinal NRUM + other observables fMRI
Smith et al (2014) 61% within subject (ordinal analysis) fMRI
Smith et al (2014) 77% within group (cardinal analysis) fMRI
Smith et al (2014) 61% across groups (cardinal analysis) fMRI
Telpaz et al (2014) 59% within subject (cardinal analysis) EEG
Telpaz et al (2014) 65% cardinal NRUM EEG Table 1: Average prediction rates. The average prediction rates for future choices in different studies where subjects did not make actual choices while their brain activity was measured. Analysis method refers to the prediction methods used in the study. Note that all prediction rates are significantly above chance level of 50%. SVM – support vector machine. NRUM – neural random utility model. *The prediction rates reported in Webb et al (2013) are for multiple choice trials. The single trial probabilities are reported here for easy comparison with other studies.
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WEB APPENDIX
Subjects
Fifteen subjects (7 females; mean age = 26.47, SD = 2.82) from the Technion, Israel Institute of
Technology took part in the study. All subjects were right handed, and had normal vision and
normal color vision. All subjects reported that they are healthy and free of neurological or
psychiatric disorders. Before the experiment started, subjects gave their written informed consent
to participate. They were paid a fixed fee of 100 new Israeli shekels (NIS) for their participation
in the study.
Data acquisition
EEG was recorded using the ActiveTwo Biosemi system from 19 electrode sites on the scalp
(Fp1, Fp2, F7, F3, Fz, F4, F8, T3, C3, Cz, C4, T4, T5, P3, Pz, P4, T6, O1, O2) mounted on an
elastic cap (BioSemi, Amsterdam, the Netherlands) and placed according to the international 10-
20 system. The EEG system included two additional electrodes, a Common Mode Sense (CMS)
active electrode and a Driven Right Leg (DRL) passive electrode serving as ground. Active
electrodes integraded the first amplification stage directly with the Ag/AgCl sensor, significantly
reducing the effects of noise. The output impedance of the active sensor was smaller than 1 Ω.
To monitor artifacts originating from eye movements and blinks, four additional electrodes were
used (two placed at lateral canthi and two below the eyes). In addition, two other electrodes,
placed behind the ears, were used for offline referencing. Continuous EEG was recorded from
0.5-80 Hz and digitized at 256 Hz, using BioSemi ActiveView acquisition software.
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EEG Data Analysis
Analysis for the electrophysiological data obtained during the EEG recording phase was
performed with EEGLAB 10.2.2 (Delorme and Makeig, 2004). The EEG data was filtered
offline with a pass band from 0.5 to 40 Hz. Epochs were extracted for a time window of 800
milliseconds post-stimulus, relative to a 200 milliseconds pre-stimulus baseline. Artifacts caused
by eye movements and muscular activities were removed using independent component analysis
(ICA).
To generate ERSP time–frequency representation of the EEG data, the wavelet
transformation using the Morlet waveform as a mother wavelet was performed as implemented
by EEGLAB (Delorme and Makeig 2004). The 500ms time window prior to stimulus
presentation served as baseline for the ERSP analysis. For baseline correction we used the
default model in EEGLAB, which is the gain model (see Delorme & Makeig, 2004). We focused
our analysis on the theta band activity (5-8 Hz) at the time frame of 100 to 400 ms following
stimulus presentation.
To examine if and to what extent is the N200 related to the theta power we calculated for
each subject the correlation between the theta power and the N200 amplitude within the entire
set of trials each subject encountered (total of 500 trials). The average correlation across subjects
was r = -0.02 (p>0.05), ranging between -0.16 and 0.05. This suggests that the two components
are poorly correlated and are probably independent measures.
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The Commercial Goods
The commercial goods that we used in the study were: A red optical wireless mouse (Teac media
systems, model OX-1600R, made in China); White digital stereo headphones (Hama, model HK-
260, made in Germany); Pink bulb desk lamp (ZHEJIANG dongshun, model E27, made in
China); Red and black 16GB USB flash drive (Sandisk, model Cruzer EDGE, made in China);
Yellow fry pan (Fresco, made in Canada); White plastic kettle (Goodfriend, model EF-539A,
made in China); White & blue 1800W steam iron (Ultimate Group, model EF-632, made in
China); Rainbow colored hammock, size 200x100 cm (Orange and Dragon, Made in China);
Metallic magnetic message board, size 50x35 cm (Orange and dragon, model HSM—0082,
made in China); Pink yoga mat, size 183x61x0.6 cm (Orange and Dragon, made in China). The
average price of the goods was 70 NIS, ranging from 60 to 80 NIS.
The width and height of the good’s images that were presented on the computer screen ranged
from 350 to 450 pixels (9.26 to 11.90 cm). See Figure WA1 in the Web Appendix for pictures of
the actual goods.
Check Trials
Because the EEG recording part was relatively long and involved only passive viewing of the
goods’ images, we wanted to make sure that subjects were paying attention to the goods
presented to them. Therefore, in each block we introduced several check trials. The probability to
encounter a check trial was 0.04 in each trial during the task. In a check trial, all ten goods
appeared on the screen at the same time with a number from 1-10 associated with each good. The
subjects were asked to state which of the ten goods appeared on the last trial by pressing the
numbers on the keyboard. There was no time limit to give an answer in the check trials. Subjects
57
were motivated to answer correctly since they were informed, at the beginning of the task, that
for each mistake they will make there is a 2% chance they will not receive any show-up fee for
their participation in the experiment. On average, subjects faced 23.46 (SD = 1.64) check trials
throughout the EEG recording stage. The average proportion of wrong answers was very low:
0.04 (SD = 0.06), implying that subjects paid attention to the images presented to them. We did
not need to implement the penalty on any subject and all of them received the 100 NIS show-up
fee. We used the following procedure to determine when to implement the penalty (of not paying
the endowment) for subjects who didn’t answer all check trials correctly. We generated a random
integer between 1 and 100. If the drawn number was larger than 100 minus the number of
mistakes multiplied by 2 the participant was punished. For example, if a subject made two
mistakes, then only if the drawn number was above 96 he would have been punished.
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Figure WA1. The goods that subjects saw during the experiment. 1) White digital stereo headphones. 2) White plastic kettle. 3) Pink bulb desk lamp. 4) Red optical wireless mouse. 5) Red and black 16GB USB flash drive. 6) Magnetic message board. 7) Rainbow colored hammock. 8) White & blue steam iron, 9) Pink yoga mat. 10) Yellow fry pan.
59
A EEG Neural
Measure Electrode Entire Sample
Sub Sample 1 (5 participants)
Sub Sample 2 (10 Participants)
N200 Amplitude (µV)
Fz Mlow-preference = -5.44 (0.15) Mhigh-preference = -4.41 (0.14)
t(14)= -2.72, p < 0.05
Mlow-preference = -6.11 (0.16) Mhigh-preference = -4.62 (0.19)
t(4) = -4.36, p <0.05
Mlow-preference = -5.12 (0.13) Mhigh-preference = -4.31 (0.13)
t(9) = -1.50, p = 0.16
Pz Mlow-preference = -1.44 (0.11) Mhigh-preference = -0.73 (0.09)
t(14) = -3.18, p < 0.01
Mlow-preference = -3.45 (0.08) Mhihg-preference = -2.44 (0.08)
t(4) = -3.48, p < 0.05
Mlow-preference = -0.43 (0.11) Mhigh-preference = 0.12 (0.09)
t(9) = -1.87, p = 0.09
ERSP Theta power (dB)
Fz Mlow-preference = 1.72 (0.05) Mhigh-preference = 1.28 (0.04)
t(14) = 3.75, p < 0.01
Mlow-preference = 1.72 (0.02) Mhigh-preference = 0.95 (0.02)
t(4) = 5.28, p < 0.01
Mlow-preference = 1.72 (0.06) Mhigh-preference = 1.44 (0.05)
t(9) = 2.10, p = 0.06
Pz Mlow-preference = 0.41 (0.04) Mhigh-preference = 0.33 (0.04)
t(14) = 0.58, p = 0.57
Mlow-preference = 0.65 (0.04) Mhigh-preference = 0.58 (0.05)
t(4) = 0.21, p = 0.84
Mlow-prefernce = 0.29 (0.04) Mhigh-preference = 0.21 (0.04)
t(9) = 1.01, p = 0.34
ERSP Alpha Power (dB)
Fz Mlow-preference = 1.05 (0.05) Mhigh-preference = 0.86 (0.04)
t(14) = 1.18, p = 0.25
Mlow-preference = 0.91 (0.05) Mhigh-preference = 0.48 (0.04)
t(4) = 1.71, p = 0.16
Mlow-preference = 1.13 (0.06) Mhigh-preference = 1.04 (0.05)
t(9) = 0.52, p = 0.62
B
EEG Neural Measure
Electrode Entire Sample Sub Sample 1 (5 participants)
Sub Sample 2 (10 Participants)
N200 Amplitude (µV)
Fz Mlow-preference = -6.30 (0.21) Mhigh-preference = -5.42 (0.20)
z = -3.06, p < 0.01
Mlow-preference = -4.75 (0.13) Mhigh-preference = -3.72 (0.13)
z = -5.42, p <0.01
Mlow-preference = -7.08 (0.24) Mhigh-preference = -6.27 (0.22)
z = -2.48, p = 0.01
Pz Mlow-preference = -8.46 (0.22) Mhigh-preference = -7.11 (0.21)
z = -4.38, p < 0.01
Mlow-preference = -5.80 (0.14) Mhihg-preference = -4.64 (0.14)
z = -5.71, p < 0.01
Mlow-preference = -9.96 (0.26) Mhigh-preference = -8.51 (0.24)
z = -4.15, p < 0.01
ERSP Theta power (dB)
Fz Mlow-preference = 0.17 (0.06) Mhigh-preference = -0.05 (0.06)
z = 2.56, p = 0.01
Mlow-preference = 1.88 (0.06) Mhigh-preference = 1.69 (0.06)
z = 2.25, p = 0.02
Mlow-preference = -0.70 (0.06) Mhigh-preference = -0.93 (0.06)
z = 2.83, p < 0.01
Pz Mlow-preference = -1.89 (0.04) Mhigh-preference = -1.83 (0.04)
z = -1.05, p = 0.29
Mlow-preference = -1.47 (0.04) Mhigh-preference = -1.53 (0.04)
z = 0.96, p = 0.34
Mlow-prefernce = -2.12 (0.04) Mhigh-preference = -1.99 (0.04)
z = -2.19, p = 0.03
ERSP Alpha Power (dB)
Fz Mlow-preference = -1.67 (0.04) Mhigh-preference = -1.71 (0.04)
z = 0.69, p = 0.49
Mlow-preference = -1.56 (0.42) Mhigh-preference = -1.60 (0.40)
z = 0.74, p = 0.46
Mlow-preference = -1.73 (0.04) Mhigh-preference = -1.77 (0.04)
z = 0.66, p = 0.51
Table WA1: Top 5 vs. Bottom 5 analyses for sub-samples of subjects. To determine which EEG components and which electrodes to use in our subsequent analysis, we conducted a basic analysis on the first 5 subjects (middle column). A) The average ERP (N200 component) and ERSP (theta and alpha power) signals in response to a median split of the top 5 most-preferred goods and the bottom 5 least-preferred goods in both electrodes Fz and Pz. To check for robustness of our results we have repeated the analysis on the subsequent sub sample of the 10 remaining subjects (right column). The left column describes the results reported in the main text for all subjects combined. Note that most results are similar in all the columns. B) The same analysis, but with the top 5 and bottom 5 goods for each subject individually. M – mean activation. The number in parenthesis represents the standard error.
60
GOODS DISPERSION
SUBJECTS 1 2 3 4 5 6 7 8 9 10 MAX‐MIN
1 8 12 16 5 38 30 53 20 43 45 48
2 17 6 41 53 42 14 29 44 0 24 53
3 18 39 44 6 53 0 28 40 17 25 53
4 48 30 22 7 39 0 45 13 47 19 48
5 12 28 41 44 54 15 9 31 1 35 53
6 19 13 7 26 27 1 54 42 48 33 53
7 47 13 19 38 37 24 53 33 0 6 53
8 54 28 6 42 48 17 36 0 26 13 54
9 42 3 7 39 36 9 26 20 35 53 50
10 48 26 0 41 52 22 17 36 7 21 52
11 41 15 30 39 21 0 54 12 44 14 54
12 17 3 20 23 25 26 50 15 52 39 49
13 27 30 45 39 52 18 6 0 12 41 52
14 14 17 40 18 45 35 29 1 17 54 53
15 31 22 0 14 36 14 12 54 41 46 54
Total 443 285 338 434 605 225 501 361 390 468
Table WA2: The number of times each good was chosen in the behavioral task for each subject. The right column shows the Min/Max dispersion (the amount of times the most preferred good was chosen minus the amount of times the least preferred good was chosen).
Subject # Ss 1 Ss 2 Ss 3 Ss 4 Ss 5 Ss 6 Ss 7 Ss 8 Ss 9 Ss 10 Ss 11 Ss 12 Ss 13 Ss 14 Ss 15
Ss 1 1.000 -0.237 0.080 0.315 -0.289 0.581 -0.148 -0.097 0.269 -0.337 0.119 0.829 -0.224 0.490 0.236
Ss 2 -0.237 1.000 0.282 -0.377 0.741 0.046 0.500 -0.042 0.127 0.339 0.039 -0.194 0.305 0.078 -0.128
Ss 3 0.080 0.282 1.000 0.326 0.503 0.106 0.016 -0.140 -0.201 0.057 -0.079 -0.277 0.271 0.146 0.173
Ss 4 0.315 -0.377 0.326 1.000 -0.385 0.458 0.149 0.539 0.277 0.026 0.666 0.336 -0.069 -0.079 0.148
Ss 5 -0.289 0.741 * 0.503 -0.385 1.000 -0.296 0.058 -0.040 0.048 0.365 -0.340 -0.455 0.741 0.371 -0.037
Ss 6 0.581 # 0.046 0.106 0.458 -0.296 1.000 0.131 0.059 0.477 -0.033 0.540 0.660 -0.499 -0.232 0.489
Ss 7 -0.148 0.500 0.016 0.149 0.058 0.131 1.000 0.522 0.091 0.566 0.369 -0.110 -0.135 -0.219 -0.239
Ss 8 -0.097 -0.042 -0.140 0.539# -0.040 0.059 0.522 1.000 0.423 0.607 0.514 0.039 0.273 -0.045 -0.124
Ss 9 0.269 0.127 -0.201 0.277 0.048 0.477 0.091 0.423 1.000 0.384 0.342 0.463 0.208 0.201 0.501
Ss 10 -0.337 0.339 0.057 0.026 0.365 -0.033 0.566 # 0.607
# 0.384 1.000 -0.109 -0.420 0.197 -0.216 0.347
Ss 11 0.119 0.039 -0.079 0.666 * -0.340 0.540
# 0.369 0.514 0.342 -0.109 1.000 0.492 -0.126 -0.209 -0.239
Ss 12 0.829 **
-0.194 -0.277 0.336 -0.455 0.660 * -0.110 0.039 0.463 -0.420 0.492 1.000 -0.265 0.306 0.093
Ss 13 -0.224 0.305 0.271 -0.069 0.741 * -0.499 -0.135 0.273 0.208 0.197 -0.126 -0.265 1.000 0.642 -0.246
Ss 14 0.490 0.078 0.146 -0.079 0.371 -0.232 -0.219 -0.045 0.201 -0.216 -0.209 0.306 0.642 * 1.000 -0.210
Ss 15 0.236 -0.128 0.173 0.148 -0.037 0.489 -0.239 -0.124 0.501 0.347 -0.239 0.093 -0.246 -0.210 1.000
Table WA3: Inter-subject correlations. Each number represents the correlation coefficient between the preference ranking of the goods of a given subjects to that of another subject. # 0.05<p<0.1, * p<0.05, **p<0.01
The author has requested enhancement of the downloaded file. All in-text references underlined in blue are linked to publications on ResearchGate.The author has requested enhancement of the downloaded file. All in-text references underlined in blue are linked to publications on ResearchGate.
