Extrinsic Motivation in Marketing

In an ideal world of rational customers, extrinsic motivation would not be necessary.  Customers would purchase items for the value they receive from using them and vendors would be satisfied with getting the business of customers with a genuine need for their product.   The use of extrinsic motivation, adding some additional incentive to convince a customer to purchase a product for which he seems no intrinsic value, is a questionable practice and I find arguments to the contrary difficult to accept.

The main argument in favor of extrinsic motivation is that customers are not rational or particularly intelligent, and that an extrinsic reward can provide motivation to purchase a product whose intrinsic reward is not recognized until it is owned.   Aside of the condescending attitude, there is a grain of truth: people do not know the value of something they have never tried, so the "free sample" is an effective way to get a product into a customer's hands so that he can determine whether he has a genuine need for it - and other forms of extrinsic rewards can likewise be used to convince someone to try a product or brand that they might not have otherwise considered.

But this seems to be rational only if it is used to introduce a new product to the customer.   Once they have tried a product and experienced it, the customers are able to make a realistic objective of whether they value it for its intrinsic value.   So if a firm offers extrinsic enticements on an ongoing basis, there is clearly a lack of intrinsic value.   Interestingly enough, few customers seem to consider an enticement to be an indicator of such a problem - one would think that more people would have caught on by now.

Another argument is that the intrinsic reward may be perceived as being worth less than the effort required to obtain the product, and as such the additional enticement tips the scale in the advantage of one brand over another.  This also seems valid, though it is also a shabby (and costly) alternative to rectifying the problem with the product or acquisition process that causes it to be unacceptable without the additional incentive.    Until the real problem is solved, additional incentives are necessary to convince customers to take the brand's offer instead of a different offer that is functionally better.

A rather interesting argument is made that extrinsic rewards are useful when an individual does not wish to admit to being interested in the intrinsic value.  For example, someone who  purchases a box of cookies claims to have done so because the brand donates to a given charity, and in that way is able to escape the embarrassing admission that they simply wanted a sweet snack.   This seems entirely valid, though it does seem to reflect poorly on the culture itself - it requires customers who are hypocritical and disingenuous, which seem to exist in ample supply.

In all, I'm led back to the initial consideration: that customers are naturally motivated to purchase products that provide intrinsic value and that extrinsic motivation is unnecessary - and this does seem to be the practice in (true) luxury good and B2B  marketing, neither of which typically use extrinsic incentives.

Innovation: Vision, Strategy, and Execution

Lately, there has been a major push across multiple industries to be "innovative" - that is, to come up with wild and crazy ideas that will take the market by storm and build them right away.  It's a spirit of adventure that has not been seen since the years leading to the dot-com crash - and unfortunately, it is the exact same spirit that resulted in the dot-com crash.

As with anything, there is a "right way" and a "wrong way" to approach innovation, and I have the distinct sense that many firms are going about it with reckless abandon, resulting in nonsensical ideas rushed to market and, ultimately, in embarrassing and expensive failures.   It's possible to innovate quickly and effectively, but it require a more measured and sober approach.   Specifically, consider a three step process:

1. Vision - Come up with a bunch of wild and crazy ideas, ignoring all constraints.
2. Strategy - Filter those ideas to see which ones are actually worth pursuing.
3. Execution - Once an idea has been qualified and vetted, seek to bring it to the market quickly and efficiently.

My sense is that many firms are completely skipping the second step and seeking to bring fresh ideas to the market as quickly as possible without asking key questions such as:  Is this idea something people want enough to pay for?  Is it in line with the mission and purpose of the firm?   Is it something that can be done in a financially sustainable manner?   Is it even legal to do such a thing?

Granted, that is a generalization.  There are also problems that arise (chiefly stagnation) when the vision step is omitted and firms remain too grounded in the constraints of business as usual.   This happens quite frequently in stodgy and slow-moving industries where there is higher demand than supply and little competitive pressure.  But such situations are fewer in the present day, where every industry seems to be crowded with firms that are striving to lead the field, desperately trying to be innovative, and making the most tragic mistakes.

It was most often the case in the years leading to the dot-com crash that the strategy step was skipped: a novel idea was struck upon, funded, and built, without any sense of whether it was worth pursuing.   And I see this tragic perspective becoming dominant again in the present day.  And as amusing as it is to watch, it's certainly worth pausing to consider in order to avoid a repeat of those events.

Back from the Break

I’ve taken a month off from posting, and now I’m back at it and will resume posting a meditation/rumination about every five days.  

I wish I could say that I’ve built up a backlog of material, or am returning with a fresh sense of purpose – but no, just took some time to put my mind on other things, and it’s going to be as random and unstructured as before.

On Hiatus

I’m taking a month off from posting –it’s been five years and 500 posts, so I’m due for a break.   I’ll resume in January.

Social Media and Social Posturing

I’ve read a few articles in various sources about the distortion and perversion of social media and the way in which people use social media as a means of creating a false impression of themselves.   It’s an interesting behavior, both psychologically and sociologically, but it also has significant implications for online marketing, particularly to the validity of information harvested from social media and its reliability as a basis for strategic decisions.

Everyday Narcissism

The core theses of these articles is that social media encourages antisocial behavior, which seems a bit melodramatic and alarmist, but is to some degree true: people choose what they share about themselves of social media, and attempt to portray themselves in the best possible way.   I don’t see this as being any different than what is done in everyday life.  On a first date or a job interview, we present our best selves, and this has been done long before social media.

However, the practice becomes questionable when people feel that their “best selves” are not good enough, and they begin to embellish their personalities with false information – they lie to make a positive impression.   I would say that this, too, is normal – consider the way in which children show up on “picture day” at school dressed and groomed much better than they are on any other day of the year.

But normal people are also more conservative about the falsehoods they present in real life: they may reinterpret the facts to conceal the negative and accentuate the positive, but they remain largely genuine in what they present. The difference is similar to that between using make-up and garments to conceal blemishes and accentuate attractive features as opposed to wearing a disguise that completely alters and conceals one’s real self. The latter is clearly crossing the line, and it’s much easier to do in social media, where the “friends” one has are people that will likely never be met in real life and the disguise is much easier to maintain.

So while primping up and presenting one’s best side is perfectly normal, it crosses the line into dysfunction when it becomes an act of falsification.   While it seems like conceitedness, it is really an expression of self-loathing: a person presents a fake self because they feel their genuine self is not “good enough” to be liked by other people.   And the result is that they become more detached and withdrawn from others because they are in constant fear that their trickery will be discovered, called out, and they will be shamed for it. 

For that reason, such people have thousands of online “friends” but fewer social acquaintances in real life than an average person who presents an accurate (albeit groomed) version of themselves.  It’s been suggested that the average person has less than a dozen close friends, fifty or so casual friends, and up to 200 people with whom they have compartmentalized friendships (such as co-workers who are congenial at the office but do not associate after hours).   If these estimates are accurate, then the average person would have less than 300 “friends” in real life.  So the person with thousands is faking it, or enabling others to fake it.

Ultiamtely, the person who fakes themselves in order to gain popularity becomes more withdrawn and less likely to form actual social relationships.    In that sense, it’s a vicious cycle of anti-social behavior.   People fake their personality because they feel their real selves are inferior, but they do not associate with the “friends” they make online because they fear being discovered, and as a consequence they are just as isolated and detached as they originally were, perhaps more so, but they feel it more poignantly and maintaining the deception means avoiding meaningful contact in real life – because anyone who gets close to the real person is going to discover they are quite different than they claim to be.

Falsified Attitudes and Behaviors

The method by which a person fakes their personality is in the expression of attitudes and the allegation of behaviors that are not merely embellishments of the truth, but complete falsehoods.

People claim to believe things they do not believe, but are merely expressing opinions that they believe others will admire (as evidenced by the number of people who claim to support social causes and “like” them online, but do not give a minute of their time or a cent of their income to actually support) and claim to behave in ways that they actually do not (they have cool hobbies and interests in which they have no involvement and very little knowledge).

This crosses into the commercial realm when they falsify attitudes and behaviors about brands – they “like” and claim to use brands that they do not purchase or use, because associating with these brands creates an impression on other people.   It is most obvious when young people who do not have sufficient income to consume luxury brands wish to associate with them online by “liking” them – and in the offline world, it often happens when a person purchases brand merchandise for brands they do not own (a keychain, t-shirt, or other cheap item bearing the marque of a luxury brand).

In essence, this is conspicuous consumption, but without any genuine consumption.

Issues for Marketers

The issue for marketers is in the reliability of social media research, which again is not a new phenomenon.  It’s generally accepted that when surveys or laboratory experiments are conducted, that people engage in some degree of posturing, responding in a manner that presents their best selves rather than their real selves, and that this causes the findings to be biased and dilutes the effectiveness of any decisions made based on those findings.   If social media behavior is further removed from real-world behavior, the dilution is more severe.

If a brand assumes that everyone who “likes” the brand is a customer or strong prospect, then it may be mislead.  Particularly for products that are conspicuously consumed, there will be many online fans who do not, and never will, actually purchase and use the brand.   Arguably, the distortion will be less severe for brands that are not conspicuously consumed, but even these will have fewer fans to draw from – fakers are less prone to “like” a brand of detergent than a designer fashion label, but then so are real people.

The problem is further compounded because those who falsify their association to a brand are also likely to falsify their attitudes and behaviors, so research of that nature is also highly corrupted.  And further, since fakers tend to have the most “friends” online, they are often mistaken for being influential people (which may be their aim), such that the brand’s association is drawn away from the individuals who are genuine customers and are genuinely influential with other customers.

Ultimately, real behavior is driven by real causes and is associated to real attitudes and behaviors.   Any strategy that is based on falsified information is likely to have little genuine effect.

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In the end, what’s suggested here is not the complete abandonment of social media research, but a careful consideration of the degree to which it will be corrupted by false claims on the part of those who wish to associate with the brand for narcissistic reasons.   I expect this will pose a serious problem to luxury brands that have high esteem and are conspicuously consumed, and a less serious one to humdrum brands that are consumed in private, and for which little esteem is afforded to the consumer.