How Advertising Impacts Consumers Decisions to Purchase

Consumer Behavior The study by Royne, Martinez, Oakley and Fox (2012) tests consumer behavior regarding perceptions of pricing and advertising for pro-environmental products: it looks at the effect that products priced with a .99 ending have compared to products with a .00 price ending. The researchers find in their own review of the literature that the latter has a "heuristic" effect on the consumer, who sees that the .00 indicates that the product has "value," while the .99 priced item indicates that it is priced at a bargain.

These are the common perceptions that consumers have regarding pricing (Royne, Martinez, Oakley, Fox, 2012, p. 96). However, in their tests, they found that the appeals that price and product have are influenced by "context," and so it is not always the case with consumers that they regard the .00 priced item as being of the higher quality or the .99 item being a bargain (p. 97). They judge the items and their appeals in a contextual manner -- which is a finding, the researchers note, that is supported by Luchs et al.

(2010), "who noted that the effectiveness of advertisements with pro-environmental benefits may be context-specific; what is effective for one type of environmentally friendly product may not be effective for another" (p. 97). The context that the researchers found in their study was that "environmental skepticism moderated the relationships between the benefit appeal and perceptions of quality and price" (p. 97).

Thus, there were numerous variables impacting the consumer's desire to purchase the product -- price was one, but so too was quality, and environmental safety (as well as the consumer's own skepticism about environmental-friendliness). In short, it is a complex relationship of various factors that interconnect and communicate with one another in the consumer's cognitive processes that determine the end result of purchase.

The study utilizes a two-fold study technique, with the first part of the test dealing with one product and the second part of the test dealing with another. The two factors that are tested in each case are benefit type and price appeal. Benefit type is represented by whether the product has environmental or personal appeal and the price appeal is represented by whether the product is priced with a .00 ending or a .99 ending. The first product tested was a liquid body wash product advertised as being environmentally friendly.

The second product tested was a car wash product. One of the problems of the study is that it is too narrow in its focus, and does not test for other variables or factors that would surely play a part in a consumer's decision to purchase a product. For example, the researchers state that the liquid body wash is a product typically bought by women and so for the second product they wanted a gender-neutral product that was similar to the first, so they chose a car wash product.

Yet gender is not one of the variable studied in the test, and so how impactful gender is on the cognitive processes is undetermined. It could possibly be that there is a significant effect on the cognitive process that results for gender perception. The researchers, however, are only testing their hypotheses regarding the appeal type (environmental vs. personal) and price appeal (quality vs. bargain as identified by odd or even price ending).

The researchers admit in their concluding remarks that the study is limited in the sense that they only tested two products with "relatively low involvement" and that "consumers may not perceive quality in the same way for commodity and luxury goods" (p. 97). Thus, the researchers state that there are even more factors and variables that could impact the decision-making process and that their approach does not produce conclusive results. Other limitations that the researchers identify are the student sample, which "restricts generalizability" and reduces external validity (p. 98).

What is significant about the study is that it "is the first study to assess advertising appeals and price endings in the environmental advertising arena" -- however, the results and scope of the project indicate that there are more factors that need to be considered and tested before any real understanding of this arena can be produced (p. 98). Logic Flow for Hypothesis The researchers devise several hypotheses for their study.

The first hypothesis is: "The perceived quality of an advertised product will be lower when the advertisement uses an environmental benefit appeal than when it uses a personal benefit appeal" (p. 87). This hypothesis is based on the researchers' understanding of Prospect Theory which "suggests that consumers view known personal gains as risk averse and more positive while viewing environmental gains as riskier" (p. 87). Thus, the logic for the first hypothesis flows from the researchers' review of literature on the subject.

The second hypothesis that the researchers formulate is: "The perceived price of an advertised product will be higher when the advertisement uses an environmental benefit appeal than when it uses the personal benefit appeal" and it is based on the logic that environmental appeal is rooted in quality and thus reflected in .00 price ending whereas personal appeal is marketed via bargain pricing and a .99 ending and this logic flows from the same source as the first hypothesis.

The third hypothesis is made of two parts and the first part is: "Products featured in ads with .00 price endings that emphasize environmental benefits will be perceived as more expensive than those featured in ads with .99 price endings that Winter 2012 89 emphasize environmental benefits or those featured in ads with .00 price endings that emphasize personal benefits" and the second part is: "Products featured in ads with .99 price endings that emphasize personal benefits will be perceived as less expensive than those featured in ads with .99 price endings that emphasize environmental benefits or those featured in ads with .00 price endings that emphasize personal benefits." The logic flow for these hypotheses is also based on the literature review performed by the researchers, who cite various studies by several researchers as the basis for the formulation of their hypotheses: the cited sources include "Dehaene and Mehler 1992; Hornik, Cherian, and Zakay 1994; Hultsman, Hultsman, and Black 1989; Huttenlocher, Hedges, and Bradburn 1990; Schindler and Wiman 1989; Tarrant and Manfredo 1993" (p.

88).

The fourth hypothesis is also of two parts and the first part is: "Hypothesis 4a: Products featured in ads with .99 endings that emphasize environmental benefits will be perceived as lower in quality than products advertised with personal benefits paired with a .99 ending, or products advertised with environmental benefits paired with a .00 ending" and the second part is: "Hypothesis 4b: Products featured in ads with .00 endings that emphasize personal benefits will be perceived as higher in quality than products advertised with personal benefits paired with a .99 ending, or products advertised with environmental benefits paired with a .00 ending" (p.

89). Again, the logic flow for these hypotheses stems from the literature reviewed and follows the same precedent set by research in the field regarding price, quality, and environmental awareness. The fifth hypothesis is: "Environmental skepticism will moderate the relationship between benefit appeal and perceived quality. More specifically, when ads include environmental benefits, (a) lower levels of environmental skepticism will result in higher levels of perceived quality, and (b) higher levels of environmental skepticism will result in lower levels of perceived quality" (p.

93) and the sixth hypothesis is: "Environmental skepticism will moderate the relationship between benefit appeal and perceived price. More specifically, when ads include environmental benefits, (a) higher levels of environmental skepticism will result in higher levels of perceived product price, and (b) lower levels of environmental skepticism will result in lower levels of perceived product price" (p. 93).

Each of these hypotheses is again based on the researchers' use of literature previously written by researchers in the field and the researchers cite various studies as forming the basis of these hypotheses, from "Gregory and Di Leo 2003; Mayer, Scammon and Gray-Lee 1993; Shrum, McCarty, and Lowrey 1995" to Walker 2011 and Appell 2007 among others (p. 93). Stimuli in Experiment The stimuli used in the experiment consisted of the advertising techniques offered on the products.

The ads stressed certain aspects of the product that correlated with the focus of the researchers -- so the first product used the stimulus of being pro-environmental and represented itself as having an environmental appeal over a personal appeal. The second product used a personal appeal stimulus and marketed itself as have a more personal appeal. Likewise, the pricing stimuli were "manipulated by presenting each product in the ad as priced with either a .99 or .00 ending" (p. 89).

Thus, the stimuli used in the products were the ones focused on by the hypotheses. However, there are no doubt other stimuli that are also given in the products and the advertisings that the study did not examine, which accounts for the limited applicability of the study overall. Procedures of Experiment The sample was selected from the student body at Stanford University and the method was a field test that included manipulating advertisements so as to test the variables under scrutiny.

The participants (57 respondents) were then asked about their experience/interaction with the ads and what they thought. Answers were recorded and analyzed using multivariate analysis of covariance (MANCOVA). MANCOVA results are indicated in Table 1 and show that the independent variables included price ending, benefit appeal, prior knowledge of the product, and price x benefit for each of the two products. The researchers showed that there could be potential correlation between the two dependent measures (perceived price and perceived quality), which is why MANCOVA analysis was used.

Table 2 shows the descriptive statistics for the two products, with the variables under scrutiny being the benefit appeal (environmental vs. personal), price ending (.00 vs. .99), cell size, perceived price means, and perceived quality means. This table arranges the data in a numerical order to show the mean results gathered from the respondents. Figure 1 depicts the Interaction Effects of the Body Wash Product, with perceived price interacting with perceived quality -- with the .00 ending having more environmental quality relevance than the personal quality relevance of the .99 ending.

Table 3 depicts the Means for Main Effects of the two products, highlighting the dependent variables (Benefit -- environmental vs. personal) and price ending (.99 vs. .00) as dependent upon perceived price and quality factors.

The body wash scored higher than the car wash in both areas but the study does not indicate whether the respondents were mainly young men or young women or if gender perceptions had any impact on the outcome (body wash could easily be associated more as a feminine product and car wash as a more masculine product, since it deals not with the body but with a machine).

Yet the researchers do not factor these variables into their study and thus ignore a potentially very useful factor in advertising, which is marketing to gender. Figure 2 represents the Interaction Effects.