Antonios (Adoni) Stamatogiannakis, Ph.D.
Assistant Professor of Marketing
IE Business School – IE University
A banker, a personal trainer, a charity organizer, a sandwich shop owner, and a business school professor are talking about business…
A widespread opinion about business is that every business sector has its own particularities, and therefore making generalizations across different sectors is risky, at best. Thus people who hold this opinion might consider the opening statement of this article as the beginning of a business joke. It is not. But how can all these people, with such different types of business, find a common ground for discussion? The answer is simple: Consumer Behavior.
It is often the case that the market is broken down into different industry-based areas. In marketing, for instance, we have consumer marketing, shopper marketing, online marketing, non-profit organizations marketing, and so on. Clearly, this distinction is helpful, as many of the above industries face special conditions that need attention. However, at the same time, this distinction prevents us from seeing what these industries may have in common, and therefore, what they can learn from each other; they all deal with consumers. Thus, the way that consumers perceive and store information, the way they make judgments and form preferences, the way they make choices and behave post-choice, are relevant for all of them.
Let’s take the example of consumer goals, which is the area of my research focus. A consumer goal is basically anything desirable that consumers have in their mind. Anything! It can be an amount of money, it can be an exercising routine, it can be giving to a favorite charity, it can be a sandwich, it can be an academic grade, or it can be anything else. And, surprisingly –not just to the lay person but also to many managers– consumer behavior can be strikingly similar in all these different situations.
Let me give you two examples. First, an academic one. My own research (in projects with professors Haiyang Yang from Johns Hopkins University, Amitava Chattopadhyay from INSEAD, and Dipankar Chakravarti from Virginia Tech) shows that there are fundamental differences between “attainment goals” – in which people strive for a new and better state– and maintenance goals, in which people strive to at least maintain the current state. These differences persist across goal categories. For instance, attainment is better when people’s “independent side” is active, but maintenance is better when their “interdependent side” is active. In addition, attaining may look easier than maintaining, although objectively the opposite is the case. Most importantly, these differences hold across goal domains: weight, money, donations, position in a race, academic performance, shopping, etc.
Second, a practical example. Airline companies (supported by academic research) realized that giving consumers a few free miles in their loyalty program motivates them to start being loyal. Sandwich shop and gas station owners stole this idea. These days, many airlines give a few bonus miles and many sandwich shops give a few bonus stamps to new members of their loyalty programs. The principle that “endowing progress” is motivational applies to consumers in both cases, although clearly an airline is very different from the sandwich shop around the corner.
More broadly speaking, the fact that different business sectors require different business practices should not prevent learning across sectors. Businesses can learn a lot from successful practices in completely different industries. This learning of course must be targeted, not random. To borrow a successful business practice, a company must first identify the consumer behavior principles that may be common to other industries, even though the latter are seemingly very distant. Then, try to understand and apply the practices that capitalize on these principles, adapting them to the specific circumstances that the company may face.
On a related note, this is why many business schools opt for hiring academics as an important part of their faculty: because they can deliver meaningful insights to the great majority of a group of students who are likely to follow very diverse career paths. To follow up on my example above, imagine the CEO of Subway (a very successful chain of sandwich shops) teaching future airline executives how to do business…It may work well, but it could also end up really ugly.