MRKT 640 Week 1 DB Forum 1 Example

Discussion Board Forum 1: Thread and Two Replies

MRKT 640 Consumer Behavior, Discussion Board Forum 1 (thread and two replies)

Thread by [Student Name]

The prompt, the retailer and the classmates' posts are composites standing in for the course's own forum; the textbook, Scripture and published studies are real; the requirements follow Liberty's public course guide for MRKT 640.

Thread

A family-owned outdoor retailer in the Shenandoah Valley has sold kayaks, tents and hiking gear for thirty years. Sales of new kayaks have flattened, and the owners are considering a rental program for kayaks and camping kits. The decision is a good test of the claim in Mothersbaugh and Hawkins (2016) that marketing strategy succeeds only when it rests on an understanding of consumers, because renting changes what the customer is buying.

The textbook frames strategy with a market analysis of four parts: the consumers, the company, the competitors and the conditions. For the consumers, the store's sales records show two groups, experienced paddlers who buy and maintain their own boats and newcomers who visit the river a few times each summer. The second group is growing, and a kayak that is used three times a year and stored in a garage the rest of the time is a poor purchase for them. For the company, the store has a fleet trailer, staff who already teach paddling and a location ten minutes from two river access points. For the competitors, an outfitter upstream offers guided trips but no self-guided rentals, and big-box stores sell inexpensive boats with no service. For the conditions, the region's tourism has grown and the river access points have new parking, which makes self-guided trips easier.

The textbook defines customer value as the difference between all the benefits a consumer derives from a total product and all the costs of acquiring them, which echoes the classic definition of perceived value as a judgment of what is received against what is given (Zeithaml, 1988). For a newcomer, a rental gives the benefits that matter, a safe boat, a paddle, a life jacket and a shuttle back to the car, while removing the costs of purchase, storage and transport. For an experienced paddler, the value runs the other way, since owning a boat fitted to their body and skill is part of what they want.

Research on access-based consumption suggests that renters relate to products differently from owners. In a study of car sharing members, Bardhi and Eckhardt (2012) found that users felt little attachment to the cars, did not identify with the brand as a community and expected the company to police the behavior of other users. For the retailer, this means a rental customer will judge the program by convenience and reliability, not by loyalty, and will expect clean, checked equipment every time. Lamberton and Rose (2012) found that consumers' willingness to join commercial sharing systems depended on costs, on how well the shared product fit their needs and on the risk that the product would not be available when they wanted it. That last point matters on summer weekends, so an online reservation system would reduce the scarcity risk that keeps people from relying on a rental.

The textbook also asks what outcomes a strategy produces for the firm, the individual and society. For the firm, rentals would bring repeat visits and introduce newcomers who may later buy. For individuals, they lower the cost of trying a sport. For society, a shared fleet means fewer boats bought and abandoned in garages. My recommendation is a pilot season with twelve kayaks and six camping kits, booked online, with a rental credit toward any purchase, so that the program also feeds the store's core business. Tracking how many renters later buy would show whether the program builds future owners or only serves visitors.

Proverbs observes that a buyer complains about a price while bargaining and boasts about the purchase afterward (English Standard Version Bible, 2001/2016, Proverbs 20:14). The verse is an early observation about consumer behavior: what people say while deciding is not always what they value. A retailer serves customers well by learning what they actually need, which for many newcomers is a day on the river rather than a boat in the garage.

Classmates: when have you seen a company change what it sells because it learned how its customers actually used the product?

Reply to Danielle

Danielle, your thread on the streaming service that raised its monthly price by three dollars and lost subscribers is a sharp example of consumer behavior overriding a pricing model. You argued that the company misjudged how consumers weigh price against value, and I think you are right. My addition is that the research on price fairness suggests the anger came less from the amount than from how subscribers explained the increase to themselves.

Xia et al. (2004) built a framework in which consumers judge a price as fair or unfair by comparing it with reference points, such as past prices, prices paid by others and what they believe the seller's costs are. When a price seems unfair, the framework predicts negative emotions and actions such as complaining, switching or spreading negative word of mouth. A three-dollar increase with no new content gives subscribers an easy comparison with last month's price and no visible reason for the difference.

Bolton et al. (2003) add an explanation for why consumers so often reject increases. In their studies, consumers believed that prices were well above fair levels, underestimated the costs sellers face and tended to attribute price differences to profit. If subscribers do not see the cost of licensing films or producing series, they will tend to read an increase as greed. The same studies found that information about costs could improve fairness judgments, though not completely. That finding matters for a streaming service, whose largest costs, licensing and production, are invisible to the people paying the bill, while the price appears on a statement every month as a single, easily compared number.

This suggests that the service's problem was partly one of communication. Mothersbaugh and Hawkins (2016) describe customer value as a balance of benefits and costs, and a price increase changes the balance only if the benefits stay invisible. Announcing the increase together with specific additions, such as a new season of a popular show or an ad-free option, could have changed the reference point subscribers used.

Your post also raised the question of whether companies owe customers an explanation at all. Scripture's standard for commerce is honesty: the law of Moses required full and fair weights and measures and promised blessing to those who kept them (English Standard Version Bible, 2001/2016, Deuteronomy 25:15). A transparent explanation of what a price pays for is a modern application of that standard, and it may also be good business, since it addresses the attribution to profit that Bolton and colleagues found.

I wonder whether the subscribers who left were the ones with the weakest attachment to the service. Did your sources say anything about which subscribers canceled, and would a cheaper ad-supported tier have kept them? If light users left and heavy users stayed, the increase may have worked financially even while it hurt the brand, which would be a useful distinction for your analysis.

Reply to Marcus

Marcus, your thread on the regional sandwich chain's new loyalty app made a convincing case that the program changed customers' behavior, since you reported that visits rose among members in the first three months. You attributed the change to the free sandwich after ten purchases. I think research on reward programs suggests a more specific explanation, and one the chain could use.

Kivetz et al. (2006), in a field study of a café reward program, found that members' purchases sped up as the free drink drew near, a pattern they called the goal gradient. Members accelerated their purchases near the end of the card, and those who accelerated more were also more likely to keep participating after earning a reward. The study also found that customers who were given illusory progress, a card that started with stamps already marked, behaved as though they were closer to the goal.

A related field experiment at a car wash showed how strong that illusion can be. Customers given a card that needed ten stamps but came with two already filled in completed it far more often than customers given a card that needed eight stamps and had none, even though both groups needed eight purchases (Nunes & Drèze, 2006). The authors called this the endowed progress effect.

For the sandwich chain, the two studies suggest that the app's design matters as much as the reward. Both studies were run in ordinary service businesses with small, frequent purchases, which makes them closer to a sandwich chain than laboratory studies would be, and both measured actual purchases rather than intentions. If the app showed a member starting with one or two sandwiches already credited, and displayed progress visually, the chain might see more members complete the card. Mothersbaugh and Hawkins (2016) describe how marketers can shape consumer learning through reinforcement, and a visible progress bar is a form of reinforcement on every visit.

There is an ethical side to this. Jesus taught that whoever is faithful in small things will be faithful in larger ones (English Standard Version Bible, 2001/2016, Luke 16:10). A loyalty program asks customers to be faithful to a brand in small, repeated purchases, and the brand should keep faith with them in turn, honoring rewards without changing the terms midway and avoiding designs that push people to buy more food than they want.

Your data showed that visits rose among members. Do you know whether those visits continued after members earned their first free sandwich, or did they fall back to their old pattern? Tracking a few hundred members for six months would settle it, and Kivetz and colleagues' finding about acceleration and retention suggests that the answer would tell the chain whether the app is building habits or only pulling purchases forward.

References

Bardhi, F., & Eckhardt, G. M. (2012). Access-based consumption: The case of car sharing. Journal of Consumer Research, 39(4), 881-898. https://doi.org/10.1086/666376

Bolton, L. E., Warlop, L., & Alba, J. W. (2003). Consumer perceptions of price (un)fairness. Journal of Consumer Research, 29(4), 474-491. https://doi.org/10.1086/346244

English Standard Version Bible. (2016). Crossway. (Original work published 2001)

Kivetz, R., Urminsky, O., & Zheng, Y. (2006). The goal-gradient hypothesis resurrected: Purchase acceleration, illusionary goal progress, and customer retention. Journal of Marketing Research, 43(1), 39-58. https://doi.org/10.1509/jmkr.43.1.39

Lamberton, C. P., & Rose, R. L. (2012). When is ours better than mine? A framework for understanding and altering participation in commercial sharing systems. Journal of Marketing, 76(4), 109-125. https://doi.org/10.1509/jm.10.0368

Mothersbaugh, D. L., & Hawkins, D. I. (2016). Consumer behavior: Building marketing strategy (13th ed.). McGraw-Hill Education.

Nunes, J. C., & Drèze, X. (2006). The endowed progress effect: How artificial advancement increases effort. Journal of Consumer Research, 32(4), 504-512. https://doi.org/10.1086/500480

Xia, L., Monroe, K. B., & Cox, J. L. (2004). The price is unfair! A conceptual framework of price fairness perceptions. Journal of Marketing, 68(4), 1-15. https://doi.org/10.1509/jmkg.68.4.1.42733

Zeithaml, V. A. (1988). Consumer perceptions of price, quality, and value: A means-end model and synthesis of evidence. Journal of Marketing, 52(3), 2-22. https://doi.org/10.1177/002224298805200302