Research

Shared values help companies connect with consumers

Online retailers looking to connect with customers and increase sales and profits would be wise to demonstrate values that appeal to those customers, according to researchers in the Department of Information Systems. A pair of experimental studies conducted by Associate Professor Benjamin Shao and Professor Robert St. Louis found that consumers respond very differently to the values a company projects. Subjects in experiments were more likely to buy a product — and to pay more for it — if the seller's values were aligned with those of the buyer.

2011-01-11

A pair of experimental studies, conducted by Associate Professor Benjamin Shao and Professor Robert St. Louis, with Joseph A. Cazier of Appalachian State University, found that consumers respond very differently to the values a company projects. Subjects in experiments were more likely to buy a product — and to pay more for it — if the seller's values were aligned with those of the buyer.

Also, in instances in which the buyer and seller have shared values, consumers are more likely to disclose to the seller certain information that is valuable for marketing, such as email address, phone number, and home address. "If the buyer and seller have shared values, it can have a tremendous effect on information sharing, purchase intention, and price premium," Shao says.

Why doing good can boost the bottom line

Many companies have recognized the importance of projecting values to the buying public. Every October, during breast cancer awareness month, businesses wrap advertisements — and, in some cases, products themselves — in pink to demonstrate support for breast cancer research and treatment.

To project a commitment to the environment, many companies tout their green credentials and use the color green and images of trees and unspoiled landscapes in their marketing. The two studies provide strong evidence that paying attention to projected values can be a valuable strategy for retailers.

"When people perceive positive value congruence with an organization, they often want to help that organization since it supports the causes that they believe in," the researchers write in the article, "Sharing Information and Building Trust through Value Congruence," published in Information Systems Frontiers.

"They often have greater goodwill toward the organization, and feel like they are almost in a partnership with the organization as they strive to meet a common goal." For Internet retailers, projecting values is an important way to build relationships with customers, according to St. Louis and Shao.

"E-retailers cannot establish the face-to-face interaction with their customers because they don't have the physical stores," Shao says. "In a brick-and-mortar store, you might be friends with the salesperson, and you trust that salesperson. You don't have that kind of interaction on the Internet."

Consumers who shop online want to feel trust toward the company they are dealing with, according to Shao. "An e-retailer first has to have a good reputation. After that, it can project itself in a way that lets potential customers know the company supports a set of values that are appealing to the consumers."

St. Louis says, "After a minimum threshold is met with respect to trust, increasing value congruence becomes more important than increasing trust for getting people to share information and for increasing their intention to purchase and willingness to pay a price premium."

Deciding how much to pay for digital goods

In one experiment conducted by the research team, a group of subjects was asked to consider making three purchases, which would be used as gifts for a friend. The subjects were asked to look into buying a digital media player, as well as a movie and a song, which would be loaded onto the player and given to the friend.

The subjects were questioned first about their own values and then divided into three groups. Each group was given different information about a fictitious company, dubbed "Media Magic," selling the products. One group was told that the company was very committed to environmental causes. Another group was told that Media Magic had been cited for violations of environmental laws. And a third group was not told anything about the company's environmental stance.

Then, the subjects were given different purchase options for the three products. "We found a significant difference, both in the purchase intention and price premiums," Shao says. "People were more willing to buy and also were willing to pay a higher price when they perceived the values of the company to be in line with their own."

Giving your phone number to a company

In the other study, the researchers explored the effects of values on the willingness of individuals to share information about themselves. The 775 individuals participating in the experiment were given information about the values of three different real-world organizations, two of which are on opposite sides of the pro-life vs. pro-choice issue and a third, which is known for its stands on environmental protection and preservation.

The subjects first were tested to see how their values line up with the pro-choice Planned Parenthood, the pro-life Reachout for Life, and the pro-environment Body Shop, a natural beauty products retailer known for its environmentally friendly practices. Then the participants in the study were asked whether they would be willing to share certain types of information online with the organizations.

"We find that by and large values do matter when it comes to sharing information, but it also depends on the level of sensitivity of the information," Shao says. The subjects were unwilling to divulge information that is extremely sensitive, regardless of the values of the organization requesting the information, the researchers found. Such information included social security and bank account numbers.

At the other extreme, subjects were willing to share with any organization non-sensitive information, such as preferences for snacks or television shows. "But value congruence has a huge impact on semi-sensitive information, like contact information — phone number or email address or your home address. This is the information most companies would love to have for marketing purposes and sales promotion," Shao says.

Choice of values matters

Companies that want to use values to connect with customers need to be careful about choosing which values to highlight, according to Shao. On the pro-life vs. pro-choice issue, subjects in the experiment responded very negatively to organizations that were on the opposite side of the issue, the researchers found.

"Unless you are trying to target a niche market that has a very specific value, it's better for companies to promote or support a value that is widely accepted, like fighting hunger or breast cancer awareness," Shao says. "To choose a side in a very controversial issue would mean ignoring or even offending the other half of the market."

St. Louis says that the studies highlight the risks companies face if they become associated with values that clash with those widely held by the public. "If somehow you are harming the environment, and people find out about it, that has very significant negative consequences," St. Louis says. "People will decide they are not going to buy from you no matter what the price."

One of the best known lessons in marketing is the importance of the "four p's" — product, price, place, and promotion — which are touted as the keys to success. But for Internet marketers, 'place,' is not a factor, Shao points out. "We argue that there is another 'p' that can substitute for place, and that is 'perception' — perception of the values projected by the company."

Bottom Line:

Projecting values that appeal to people can help companies connect with consumers and increase sales and profits.
Subjects in an experiment were more willing to disclose information with organizations that share the subjects' values. In another experiment, subjects said they would be more likely to purchase a product and also pay more for it if values of seller and buyer were aligned.
For Internet retailers, demonstrating values can be an important business strategy. Unlike brick-and-mortar stores, e-retailers cannot gain competitive advantages from their location or face-to-face contact with customers.
Projecting values that are controversial is a risky strategy. If public opinion is evenly divided on an issue, a retailer can lose half of the potential market by becoming identified with one side or the other.
Becoming associated with an unpopular cause can harm a business. If consumers believe a firm's behavior runs counter to a widely held value, then many consumers will not purchase from the business at any price.

Managing IT Faculty