Executive summary of “Who pays the price for loyalty? The role of self-consciousness”
Article Type: Executive summary and implications for managers and executives From: Journal of Product & Brand Management, Volume 23, Issue 4/5
This summary has been provided to allow managers and executives a rapid appreciation of the content of this article. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefits of the material present.
Securing the loyalty of customers has always been high on the agenda for shrewd firms. As the competitive landscape grows ever more challenging, its importance rises even further. The attraction of customer loyalty is enhanced by the assumption that faithful patrons are less price-sensitive toward the firm’s offerings. But the relationship must provide benefits to both parties if it is to flourish over the longer term. In addition, as many customers regard lower prices as a key benefit, a conflict of interests can easily arise. It is, therefore, of considerable interest for firms to identify reasons why certain loyal customers may prove more willing to pay higher prices than others.
Consumer loyalty toward a particular retailer emerges as a result of positive attitudes formed through their prior experiences with the firm. Among the different forms of loyalty defined in the literature is the behavioral type indicated by a commitment to engage in repurchase behavior toward the same company.
People are likelier to remain in relationships when they perceive that the retailer provides them with value. Perception of value is not determined by price alone but on the trade-off between benefits received and the “monetary sacrifice” the customer has to make. It is thus assumed that customers will feel they are increasing the value obtained when a lower price is paid.
Research has found that shoppers are influenced by the combined effects of attitudes and social norms in their purchase decision-making. Attitude in this context refers to their perceptions of a specific retailer based on previous experiences. Societal norms include being a savvy shopper who is able to act astutely and secure the best prices possible. The dilemma for such individuals is how to reconcile this norm with their positive attitudes toward a retailer when prices are higher.
Self-consciousness is used to explain how consumers might behave in this situation. The concept incorporates the subscales public self-consciousness and private self-consciousness to distinguish between concern for social approval and attention to self. A desire to create a positive impression on others and a fear of being rejected by them drives people rating highly in public self-consciousness. Such individuals worry about how society views their actions and are thus more inclined to conform to group expectations. Their ideal notion of self is being someone who does not “rock the boat”.
On the other hand, those who score highly on private self-consciousness are more inwardly reflective. Being independent is a crucial aspect of their identity. Behavior is guided by their beliefs and attitude, meaning that social norms are largely irrelevant. Scholars also claim that maintaining the “status quo” is also high on the list of priorities for such people. This is significant in terms of their relationship with a particular retailer or firm. Existing favorable perceptions toward the retailer are threatened when products are offered at a high price. But private self-consciousness prompts the individual to reflect on past experiences with the retailer and focus especially on the positive aspects. The outcome will usually be to assess the current product and conclude that charging a higher price is justifiable because of the quality and other benefits that are obtained in return. It is suggested that private self-consciousness is less significant when prices are low because such circumstances do not challenge how a consumer perceives the retailer.
Evidence indicates that divided loyalty moderates the impact of self-consciousness. This refers to consumers who are not exclusively loyal to a single company but prefer instead to shop around. Connections to a specific retailer are inherently diluted when loyalty is diluted in this way and experiences will be “less memorable” as a result. One likely major consequence of this is that price evaluation will not be differently impacted by the respective self-consciousness types.
Following a pilot study which confirmed that finding low prices is normative behavior, a pretest helped determined choice of retailer and target product. The choice was a clothing retailer and Levis brand of jeans. Questions also established acceptable cost and $20.99 and $56.99 were set as low and high prices, respectively, for this product.
College students took part in the main study in which they were randomly presented with a scenario involving the purchase of jeans. The scenarios combined low or high price with exclusive or divided loyalty. Participants first answered questions relating to public and private self-consciousness. They then responded to various statements measuring their evaluation of the retailer and perception of its corporate image. A total of 198 usable responses were obtained, with females accounting for 48 per cent of the sample. Mean age was 21.45 years.
Analysis confirmed that perceptions of value are influenced by:
high public self-consciousness when the price is relatively low, but not when the price is relatively high; and
high private self-consciousness when the price is relatively high, but not when the price is relatively low.
As predicted, neither of the self-consciousness type influences consumer perceptions of high or low prices in the condition where loyalty is divided between several retailers.
The study additionally revealed that in the exclusive loyalty condition:
attitudes toward the retailer offering the products at a higher price increased in favorability when private self-consciousness was high; and
a markedly reduced inclination to look for cheaper alternatives was evident among consumers indicating increased levels of public self-consciousness.
Private self-conscious consumers loyal to one retailer held favorable impressions about quality when the product price was relatively high. The same perceptions held for low prices among those indicating public self-consciousness. Consumer perceptions of what they had sacrificed in terms of monetary loss were not influenced by either form of self-consciousness in high or low price conditions. Tolbert et al. infer an indication that consumers attach greater weight to the benefits they receive in return for their outlay.
The authors point out the difficulty for retailers posed by this apparent “heterogeneity in behavioral loyalty”. Identifying the behavioral tendencies of different groups of loyal consumers and targeting them with appropriate pricing strategies is recommended. In addition, retailers should place greater emphasis on the factors which increase consumer value perceptions. A deeper understanding of consumer self-awareness can help firms reduce perceived sacrifices and positively impact on loyalty.
Replicating the study to investigate different service industries where interpersonal relations contribute significantly to loyalty creation is a future research option. Brand loyalty and the presence of other consumers are among the situational factors that might also be examined for their impact on consumer analysis of value and price.
To read the full article, enter 10.1108/JPBM-08-2013-0375 into your search engine.
(A précis of the article “Who pays the price for loyalty? The role of self-consciousness”. Supplied by Marketing Consultants for Emerald.)
