Influence of Customer Quality Perception on the Effectiveness of Commercial Stimuli for Electronic Products

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Creating and maintaining customer loyalty are strategic requirements for modern business. In the current competitive context, product quality, and brand experience are crucial in building and maintaining customer loyalty. Consumer loyalty, which may be classified into cognitive loyalty and affective loyalty, is related to customers’ quality perception. Cue utilization theory distinguishes two dimensions for perceived quality, extrinsic quality—linked to the brand—and intrinsic quality—related with internal product characteristics. We propose that (i) cognitive loyalty is more influenced by intrinsic product quality whereas extrinsic product quality (brand name) is more salient for affective loyalty and, (ii) different commercial stimuli have a differential effectiveness on intrinsic and extrinsic perceived quality. In fact, in this study, we analyze how perceived quality dimensions may influence the effectiveness of two different commercial stimuli: displays and advertising flyers. While displays work within the point of sale under time-constrained conditions where consumers are more likely to use heuristics to simplify their decisions, advertising flyers work outside of the point of sale under low time-constrained conditions, and therefore favor a more reasoned purchase decision where systematic processing will be more likely. We analyze the role of quality perception in determining the effectiveness of both these commercial stimuli for selling products that induce high purchase involvement and perceived risk. The empirical analysis focuses on computer products sold by one of Europe’s largest computer retailers and it combines scanner, observational, and survey data. The results show that both dimensions of quality perceptions moderate the influence of displays and advertising flyers on sales, but their impact is different on each commercial stimuli. Extrinsic quality perception increases to a greater extent the effect of displays due to the use of a brand name heuristic. However, intrinsic quality perception improves to a greater extent the effect of advertising flyers, which in turn are more closely related to systematic decision processing.

Introduction

Today the current economic situation is reflected in the slowdown in household consumption expenditure in Europe in recent years. In fact, some Euro area countries, such as France, Germany, Italy or Spain, have presented negative year-on-year average rates in 2013 or 2014 (The World Bank, 2015). Therefore, the economic situation causes increasingly more competition for both retailers and manufacturers that are struggling to attract consumers to their stores and products (Lin et al., 2013). Because of this, retailers and manufacturers try to analyze consumers’ needs and preferences in order to be able to adapt the offer to increase customer loyalty to their stores/brands. Therefore, they adjust their prices, improve their product quality and increase their communication effort to make their new offers more noticeable in order to improve their sales (Cant and Hefer, 2014).

In fact, retailers use different commercial stimuli that take place both inside and outside the store. On one hand, in-store stimuli, such as merchandising tools or special displays, are noticeable by customers inside the store at the moment in which they carry out their purchase decision (Bava et al., 2009; Bezawada et al., 2009; Phillips et al., 2015). Therefore, in-store stimuli trigger unrecognized needs and desires or trigger memories for forgotten needs, leading to in-store decision making, or unplanned purchasing (Inman et al., 2009), such as the purchase of one particular substitutive product or one particular brand instead of another. These stimuli usually trigger unplanned purchases, which now represent about 70% of total purchases (Stilley et al., 2010; Bell et al., 2011). On the other hand, out-of-store commercial stimuli, such as advertising flyers, are mainly used by retailers to increase traffic to the store or to publicize other promotions (Gijsbrechts et al., 2003; Schmidt and Bjerre, 2003; Ziliani and Ieva, 2015). Advertising flyers are sent to potential consumers’ homes, facilitating their purchase planning (Schmidt and Bjerre, 2003), as they may carry out a more reasoned purchase decision under low time-constrained conditions.

The academic literature on commercial stimuli effectiveness has analyzed the moderating role of specific attributes of the stimuli on sales (e.g., redemption time in coupon effectiveness or placement of the display or number of pages and size of the advertising flyers; e.g., Bawa, 1996; Gijsbrechts et al., 2003; Bezawada et al., 2009; Barat and Ye, 2012; Luceri et al., 2014) or the effect of more general characteristics, such as consumer characteristics (e.g., price sensitiveness, value consciousness, coupon properness, variety seeking, impulsive personality, or planned and unplanned consumer; e.g., Bawa, 1996; Laroche et al., 2003; Wakefield and Inman, 2003; Swaminathan and Bawa, 2005; Govindasamy et al., 2007; Haans and Gijsbrechts, 2011; Lin et al., 2013; Gázquez-Abad et al., 2014; Gázquez-Abad and Martínez-López, 2016). Moreover, previous studies have shown the moderating role of product and brand characteristics (storage and perishable conditions, impulse purchase, hedonic/utilitarian nature, interpurchase cycle, brand tiers) on the effectiveness of commercial stimuli (e.g., Narasimhan et al., 1996; Lemon and Nowlis, 2002; Pauwels et al., 2002; Wakefield and Inman, 2003; Inman et al., 2009; Castro et al., 2013).

One very important product characteristic is customers’ perceived product quality, as it is a key determinant in building and maintaining customer loyalty (Brakus et al., 2009; Pan et al., 2012; Akdeniz et al., 2014). Despite this, the research literature on the influence of perceived quality on commercial stimuli is limited. Furthermore, previous studies such as Lemon and Nowlis (2002) use price tiers as proxy of perceived quality and do not distinguish between different quality attributes. Product quality comprises two types of attributes: extrinsic and intrinsic attributes (Bava et al., 2009; Gooner and Nadler, 2012; Akdeniz et al., 2014). Whereas, extrinsic attributes (e.g., brand name) are more related to affective loyalty (customers build affect toward the brand on the basis of cumulatively satisfying usage occasions), intrinsic attributes have a more objective nature (e.g., the technical characteristics of electronic products), which can be compared easily by seeking out information about the product (Szibillo and Jacoby, 1974; Richardson et al., 1994) and, therefore, are more related to cognitive loyalty. Consequently, in this paper we attempt to fill in this gap by analyzing whether perceived product quality (extrinsic and intrinsic attributes) has a moderating role in the effectiveness of different commercial stimuli (product displays and advertising flyers).

The objective of this paper is to extend the research on commercial stimuli effects on sales by (i) examining and comparing the direct effect of one in-store stimuli (special displays) and one out-store stimuli (advertising flyers) on the sales of infrequently purchased products with high perceived risk and high involvement and (ii) analyzing the moderating role of perceived quality (intrinsic and extrinsic attributes) on the effectiveness of both commercial stimuli on sales.

Our paper contributes to the marketing, retail and consumer behavior literature by providing a theoretical framework based on cue utilization theory and consumer processing information and by making an empirical analysis to ascertain the differences in effectiveness of commercial stimuli regarding both dimensions of perceived quality on sales of technological products. Specifically our paper contributes to previous research in four ways.

First, we consider the two dimensions of perceived quality, intrinsic (product characteristic) and extrinsic (brand). Previous research has not analyzed the moderating role of intrinsic perceived quality and brand perceived quality on the effectiveness of commercial stimuli. The present study seeks to extend and improve the insights of the few previous studies that have attempted to capture the quality effect on effective commercial stimuli. For example, Lemon and Nowlis (2002) use price tiers as proxy of perceived quality of the brand. Liu-Thompkins and Tam (2013) have researched the differential effectiveness of cross-selling promotion on attitudinal loyal customer and spurious loyalty, but they ignore the differences between intrinsic perceived quality-cognitive loyalty and extrinsic perceived quality-affective loyalty which may undermine the effectiveness of commercial stimuli. Therefore, this study aims to analyze the effectiveness of different commercial stimuli depending on the intrinsic perceived quality of product and brand.

Second, we combine three data sources in our analysis: scanner data and observational data and customer surveys to conduct the empirical analyses. Previous studies assume the brand quality or use price tiers as proxy of perceived quality and do not distinguish between different quality attributes (e.g., Lemon and Nowlis, 2002). By contrast, this study obtains customer perceived quality by collecting a consumer survey (extrinsic perceived quality) or analyzing the product characteristics (intrinsic perceived quality).

Third, we study a high involvement product. Most prior studies about the effectiveness of commercial stimuli analyze frequently purchased products with low perceived risk and low involvement (e.g., Burton et al., 1999; Lemon and Nowlis, 2002; Gijsbrechts et al., 2003; Van Heerde et al., 2004; Bezawada et al., 2009). We study a high involvement product to generalize previous findings about the effect of commercial stimuli on frequently purchased products or detecting different effects due to differences in this type of product, such as the greater effect of perceived quality (extrinsic and intrinsic) compared to price. In this paper we study infrequently purchased products (computers), which involve high customer perceived risk and involvement. Previous studies on sales of technological products have analyzed the direct effect of the brand and objective quality on product sales (Neelamegham and Chintagunta, 2004; Sriram et al., 2006); however, the effect of different commercial stimuli have not been previously analyzed. Identifying the drivers of customer loyalty can help us attain a better understanding of consumer behavior and also allow resources to be allocated among marketing tactics.

Four, we analyze the effect of two different commercial stimuli, one in-store stimulus (product displays which represent a time-constrained condition) and one out-of-store stimulus (advertising flyers which represent a low time-constrained condition) on the sale of computer products. Some studies have used different tools at the same time (Narasimhan et al., 1996; Van Heerde et al., 2004; Ailawadi et al., 2006; Haans and Gijsbrechts, 2011); however, most of them use these commercial stimuli as control variables when they analyze promotion effectiveness on frequently purchased products and, therefore, do not compare and explain their effect on product sales depending on the customer perceived quality as we do in this study.

The next section offers a conceptual framework that leads directly into the study hypotheses. After a description of the methodology, we provide details on the empirical analysis and results, along with their interpretations. The final section summarizes the conclusions and implications of the present study.