Can your loyalty be bought? 💰

Apple have iPhone, Sony have PlayStation, but is having one successful product enough for any business? If consumers are already satisfied by one product a company has to offer perhaps they are more likely to trust the business with other product lines.

Wilson & Persson (2017) refer to this behaviour as brand loyalty and describe it as when the consumer perceives a brand to offer more value over other brands and are willing to pay more for it because of the brand attached to the product.

Image: Source

For example someone who already has an iPhone may value Apple’s brand more than someone who has no Apple products. The customers that already have products from a particular brand may be more likely to purchase new products from the same brand because they value the brand more.

This theory of brand loyalty works well in Apple’s favour because they have a premium pricing strategy so their customers are willing to pay more for their products if they already value the brand. Every year consumers buy the new iPhone despite despite only purchasing one the previous year. This “upgrade” tradition is a form of brand loyalty consumers have with Apple.

Brand loyalty also works well for Samsung as they have a wide range of tech products such as smart TVs, smart phones, and freezers. Consumers looking to purchase new equipment for their household who already own a Samsung phone may value Samsung enough to purchase one of their smart TVs.

Self categorisation is another theory that affects brand loyalty. This involves when an individual places themselves in a social category. When a consumer purchases an Apple product and becomes loyal to that brand they sometimes place themselves in a category of an “Apple user” and relate less to products from other brands. The same applies to Samsung users who may relate less to Apple products for this same reason. (Templeton, 2017)

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Templeton (2017) explains that self categorisation can change how a consumer perceives other individuals. For example if you attend a concert and you are surrounded by people who also like the same music, the individual identifies more with the crowd and finds the environment less crowded. This can cause consumers to form rivalry between brands and the people that associate with rival brands.

Sometimes consumers can form an emotional attachment to products which expands to the brand itself. (Badrinarayanan et al, 2016) This behaviour can further encourage brand loyalty from consumers.

All three of these theories combined contribute to what makes consumers identify with a brand and cause them to form a preference on which brand to buy from.

Joe Okay of Smart Vendee

References

Templeton, A.M., 2017. Physical crowds and psychological crowds: applying self-categorization theory to computer simulation of collective behaviour (Doctoral dissertation, University of Sussex).

Badrinarayanan, V., Suh, T. and Kim, K.M., 2016. Brand resonance in franchising relationships: A franchisee-based perspective. Journal of Business Research, 69(10), pp.3943-3950.

Wilson, A. and Persson, N., 2017. The Interplay Between Brand Loyalty and Brand Satisfaction: A qualitative study of consumers in the clothing industry.

Images

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🤑 CONTROLLED BY TRANSACTIONS 🤑

There are many applications that involve repetitive gameplay and grinding to progress within the game. Last week I mentioned how microtransactions can be used to buy cosmetic features within games or apps. This week I’m going to refer to how they can give the user an actual benefit that effects how they play the game or app by progressing them further.

Some microtransactions involve the consumer paying for a boost or bonus within an game or app that allows them to save time. Usually the microtransaction products can be earned within the app or game which gives users a choice of grinding for the product or buying for it and receiving it immediately. This type of microtransaction is known as “pay to win“.

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Repetitive application games and microtransactions

A common format of microtransactions in app games for smart phones is based within games that encourage the player to complete repetitive tasks to unlock further in-game features and make progress. In these instances the player becomes bored of waiting for cooldowns and repetition which is meant to make them view the microtransactions as making the game more enjoyable. (Stephenson, 2016)

This type of microtransaction rewards the player instantly by speeding up cooldowns and making the player feel more powerful. This can lead to a positive reinforcement that influences the consumer by associating the rewarding feeling with purchasing the microtransactions. (Cooper et al, 2007)

Baumeister et al. (1998) refers to a term called ego depletion which involves a temporary reduction in a persons capacity or willingness to commit to a particular action. Baumeister et al. (1998) explains this using an example of a two groups of individuals who both were asked to complete a set of puzzles. Both groups had chocolate and radishes in front of them while doing the puzzles. One group was asked to ignore the chocolate and help themselves to the radishes if they were hungry. The other group was welcome to take either the chocolate or the radishes.

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The group that was resisting the chocolate throughout the set of puzzles were not able to complete as many as the group who had the choice or radishes and chocolate. The reason for this is because they were resisting eating the chocolate (Baumeister et al. 1998)

Another example of ego depletion is common within casinos where the individual has more self control early on in their bets and gambles than later on. This is because the games in casinos can be repetitive and cause the player to play multiple times to satisfy their gambling binge. (Søraker, 2016)

To conclude, this theory applies to the microtransactions I’ve mentioned because at first the consumer wants to resist the microtransactions as they want to progress in the game legitimately. However, after some time the choice of purchasing a boost to progress faster becomes more tempting for the consumer as they lose their self-control and will power to choose between grinding and progressing immediately.

Joe Okay of Smart Vendee

References

Baumeister, R. F., Bratslavsky, E., Muraven, M., & Tice, D. M. (1998). Ego depletion: Is the active self a limited resource?. Journal of personality and social psychology, 74(5), pp 1255-1256

Søraker, J. H. (2016). Gaming the gamer?–The ethics of exploiting psychological research in video games. Journal of information, communication and ethics in society, 14, pp 115.

Stephenson, T. 2016. Evaluating the brand equity of brands using the micro-transaction strategy in the video gaming industry through consumer perceptions.

Cooper, J. O., Heron, T. E., & Heward, W. L. (2007). Applied behavior analysis.

Images

http://pocketnow.com/wp-content/uploads/2014/09/candy-crush-bank-in-app .jpg

https://content.artofmanliness.com/uploads/2012/01/ego .jpg

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It’s yours, it’s free, it’s forever.

Welcome back to another blog post from Smart Vendee. Today I’m going to talk about how microtransactions are used within free to play content.

Microtransactions are form of payment in which a consumer pays for a product or service within a video game or application. I’m going to be focusing on a type of microtransaction which offers only customisation within games or apps and not any actual game changing benefit.

Some games such as League of Legends (LoL) and Smite are free to play but offer microtransactions within the game that allow the user to purchase “skins” which can change the appearance of already existing characters. This makes the player feel more unique as they look different to the base character’s design. (Mackiewicz, 2016)

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In the past I have purchased microtransactions on free to play games as I have enjoyed the game and I wanted to buy something custom for my character which also supports the developers. However I don’t usually purchase microtransaction products, especially when I have already paid for the base game.

So are consumers more likely to purchase microtransactions if the base game/app is free? 

Stephenson (2016) suggests that a consumer feels more value towards a product they already own than towards one they do not. This experience is known as the endowment effect and it could be used to explain why consumers may be more willing to pay for in-game purchases within a free to play game than a regular game which costs money to play. Because the free to play games make you feel like you already own the game the consumer is more likely to spend money on it because they value it more.

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Knetsch & Siden (1984) identified this behavior of the endowment effect by carrying out a test with 76 students from the University of New England. The test involved offering all of the students a lottery ticket in which they could win either a $70 voucher or $50 in cash. Half of students were asked to pay $2 to keep their ticket whereas the other half were offered $2 to have their ticket taken away. 50% of students asked to pay kept their ticket, whereas 76% of students refused the $2 offer for their ticket.

To conclude, in free to play content such as Smite/LoL the microtransactions are tempting because you download the game and play for an hour or two each day and begin to find favourite characters that you enjoy playing and associate your play style with. This is what attracts the consumer to purchase the “skins” as they value the game and its content more because they feel as if it belongs to them already despite never making a transaction prior to the skin purchase.

That’s how they get you.

Joe Okay of Smart Vendee

References

Knetsch, J. L., & Sinden, J. A. (1984). Willingness to Pay and Compensation Demanded: Experimental Evidence of an Unexpected Disparity in Measures of Value. The Quarterly Journal of Economics, pp 510-511.

Mackiewicz, J. 2016. The Psychology Behind Microtransactions–What psychological processes drive us to spend money on initially free games?.

Stephenson, T. 2016. Evaluating the brand equity of brands using the micro-transaction strategy in the video gaming industry through consumer perceptions.

Images

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Types of Impulse buying.

Every week I go shopping for groceries at a supermarket, sometimes more than once if I forget something I needed. I always think of what I need from the store before I go so that I get the most value of the trip and don’t have to return there the next day. However, almost every time I end up purchasing goods I had not planned to buy.

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Stern (1962) describes this activity as impulse buying. This involves any unplanned purchases a consumer makes. The cause of this is because the consumer is presented with a variety of options, some of which they may not have realised they needed or wanted.

There are different types of impulse buying which form an “impulse mix” as suggested by Stern (1962). These types are known as;

• Pure Impulse buying
• Reminder Impulse buying
• Suggestion Impulse buying
• Planned Impulse buying

The various impulse buying behaviours that occur happen for different reasons.  For example pure impulse buying is the most unplanned version of impulse buying. It is when a consumer purchases a product which they had no plans to buy and had not even considered buying the product beforehand. (Stern, 1962.)

Adelaar et al. (2003) describes reminder impulse buying as only occurring when the consumer is reminded of having low stock of a product they need such as kitchen paper or ketchup. Upon seeing the product in stores they have an impulse to purchase based on their low quantity of the product. This type of impulse also occurs when a consumer recalls an advertisement about a product.

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Suggestion impulse buying is when a consumer visualises a need for a product after seeing it for the first time, for example I saw a lamp in a store last week and considered whether I could benefit from purchasing it. (Adelaar et al. 2003)

Planned impulse buying is when a consumer plans to purchase a product but a discount sale influences their decision to buy a different brand. (Adelaar et al. 2003)

As the consumer only goes to the supermarket to purchase a few products each time, most of the products available to purchase are bought on impulse. According to smallbusiness.co.uk  consumers in Britain spend 21.7 billion on impulse purchases each year. So supermarkets offering more choice and high variety increases the amount of impulse sales accumulated in the store.

Furthermore there are businesses such as telemarketing channels with solely rely on their audience making impulse purchases for their business to survive. As each product they present to their consumer is meant to offer them something new or innovative that they don’t already have.

References

Stern, H. 1962. The significance of impulse buying today. The Journal of Marketing. pp. 59-62.

Adelaar, T., Chang, S., Lancendorfer, K.M., Lee, B. and Morimoto, M.(2003). Effects of media formats on emotions and impulse buying intent. Journal of Information Technology, 18(4), pp.250

Owen Gough, 2017. “British consumers spend £21.7 billion on impulse purchases each year”. Available at:  http://smallbusiness.co.uk/cambridge-best-start-business-2535226/ [online]

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Product placement in music videos.

Product placement has been used to influence consumers for decades. Its when a branded product is used tactically in a TV show, music video, or other multimedia. In the form of music videos a product is usually shown for 2-3 seconds on screen before cutting back to the lead singer/rapper.

Screenshot from: https://www.youtube.com/watch?v=fyaI4-5849w 

For example the producer DJ Khaled uses product placement in his music video for “Wild Thoughts” featuring Rihanna & Bryson Tiller, in which he holds up a bottle branded “Ciroc” for only 2 seconds. This is alcoholic drink which is paying for its product placement to be featured in the video. During these frames the lighting of the music video also changes from a warm red to a cold blue colour. This is a good example of how subtle product placement can be.

(Cowley, E. & Barron, C. 2008) suggests that exposure to a brand in the form of a product placement makes the audience more likely to remember the brand and recall seeing it before. Furthermore they suggest that if the viewer becomes aware that there is a usage of product placement in a TV show they may enjoy the show less.

Favourable brand attitudes can be formed when a consumer sees brands in the music videos they watch. (Schemer, C., Matthes, J., Wirth, W. & Textor, S. 2008) This is good for businesses interested in using product placement in music videos as usually the placement doesn’t take away from the vibe of the video, which means the audience will not be overwhelmed with advertisements.

Screenshot from: https://www.youtube.com/watch?v=weeI1G46q0o

Another DJ Khaled music video I noticed also featured product placement was “I’m the One”. The difference with this video was that the product placement was much more obvious and frequent. There were advertisements of various products from Vape pens to Snapbacks, Young Money merchandise, Bumbu Rum and more. Each product placement was short but because there were so many that it lost the subtle approach the previous video I mentioned had used. To some this may make the music video less enjoyable as Cowley & Barron’s theory suggested.

In some cases the brands were associated with female models wearing brands or holding them. Reichert & Lambiase suggest that some consumers find brands or products more appealing when associated with a person they perceive as attractive. (Reichert, T. & Lambiase, J. 2003.) Overall product placement is a useful marketing tool for businesses and when used effectively and subtly each consumer can build an opinion upon the brand.

Joe Okay of Smart Vendee 

References

Cowley, E. & Barron, C. 2008. When product placement goes wrong: The effects of program liking and placement prominence. Journal of Advertising. 37 (1). pp. 89-98.

Reichert, T. & Lambiase, J. 2003. How to get” kissably close”: Examining how advertisers appeal to consumers’ sexual needs and desires. Sexuality & Culture. 7 (3). pp. 120.

Schemer, C., Matthes, J., Wirth, W. & Textor, S. 2008. Does “Passing the Courvoisier” always pay off? Positive and negative evaluative conditioning effects of brand placements in music videos. Psychology & Marketing. 25 (10). pp. 923-943.

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Screenshot from: https://www.youtube.com/watch?v=weeI1G46q0o

 

Incentives of a healthier lifestyle.

I try to change the topic on this blog each week to keep things interesting. So we’re going from streaming music to healthy lifestyle incentives this time round. I’ve been thinking about the various incentives that could change someones behaviour to choose a healthier meal over a unbalanced meal.

(Arno, A. & Thomas, S. 2016) Suggests that the nudge theory introduced by Thaler and Sunstein can be used to influence a consumer’s decision to purchase an item by offering them a choice that can entice the consumer to a healthier lifestyle. For example in the supermarkets in Bangor, Morrisons and ASDA both place their vegetable/fruit isle near the front door of their establishment so that the this is the first isle that the consumer goes through.

Image: ASDA Supermarket

Another example of using the nudge theory to encourage consumers to eat healthier foods could be in a buffet scenario. Offering the salad options before the chips could make consumers fill their plates before they get to the unhealthy section of the buffet.

New years resolutions also can be an incentive for people to change their behaviour and lifestyle. According to The Telegraph, January is the most popular time for newcomers to sign up to the gym. 30% of these newcomers stop attending the gym by February. (http://www.telegraph.co.uk) This change in lifestyle also affects the way people purchase their foods during the January period. Healthier choices are likely to be made in January whereas Easter invites consumers to purchase more  unhealthy snacks.

The reason many people drop out of their gym contracts is because they fail to change their current habits and result in returning to their routine of eating unbalanced meals and exercising less.

Image:Gym equipment

(Wood, W., Tam, L. & Witt, M.G. 2005.) suggests that habits can be changed by disrupting them.  As an example, if a student were to watch TV every day at their home and then move to a student accommodation where they had to pay for a new TV license, the student may choose to no longer watch TV.

In the case of the gym membership, some accommodations in Bangor come with membership to the gym included and are placed close to a gym. According to the nudge theory this may influence more people to use the gym as the choice is available to them and they are already paying for the service.

Joe Okay of Smart Vendee

References

http://www.telegraph.co.uk/news/uknews/1538419/So-how-long-before-you-give-up-the-gym.html

Wood, W., Tam, L. & Witt, M.G. 2005. Changing circumstances, disrupting habits. Journal of personality and social psychology. 88 (6). pp. 920.

Arno, A. & Thomas, S. 2016. The efficacy of nudge theory strategies in influencing adult dietary behaviour: a systematic review and meta-analysis. BMC public health. 16 (1). pp. 2

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Does streaming make the music industry more profitable?

Until recently most albums released by a record label would be shipped via physical format and digital format. In recent times record labels are dropping support for the physical format and moving onto digital only formats by supporting a variety of streaming services. For example Tidal, Spotify, Soundcloud, iTunes & Apple Music are all streaming services.

The positive about streaming music is that the consumer doesn’t have to pay for it. The money is raised through advertisements or premium subscriptions. So if a user wanted to listen to an album without purchasing it, they could do that through an app such as Spotify and have advertisements in between songs. Alternatively they could pay for a premium subscription and listen to as many songs they like without advertisements. Both of these methods earn the musician a small amount of money per listen of their song.

Image: https://static.highsnobiety.com/wp-content/uploads/2016/09/13120557/apple-music-vs-tidal-vs-spotify-feature.jpg

Before streaming the only way to listen to the songs you enjoy was to purchase the album. This may be an expensive purchase if you only enjoy 2 or 3 songs on a 16-track album. So if the product is free are consumers more likely to use it/purchase it? Yes. According to (Li, S., Sun, Y. & Wang, Y. 2007) consumers are more likely to purchase a product if there is a promotion such as “buy one get one free”. In supermarkets this promotion is used to give customers an additional value to their purchase. It’s unlikely for a consumer to turn down the free item.

Can this consumer behavior be applied to streaming? Absolutely. Because consumers are able to listen to their music for free and legally. Before streaming there was more piracy in the music industry. Albums were put online in their entirety to be downloaded and shared which harmed the musician’s album sales.

Streaming also slightly solves the “free rider problem” as people are less likely to search for pirated albums as they can stream it for free with the many streaming services available. Before one consumer could purchase the album, upload it and have many consumers benefit from their upload for free. (Kim, O. & Walker, M. 1984) suggests that consumers are more likely to use the free rider option if it is made available to them. For example if you live next to a concert you may choose to just enjoy the concert from your home rather than pay for tickets and attend it.

Image: (Lil Wayne, Nicki Minaj, Drake) https://pbs.twimg.com/media/DAZOlBLXcAAQwBi.jpg

So essentially more people are using streaming that ever before and albums are being pirated less which means that relevant artists are able to sell more units. Drake’s latest project “More Life” is a great example of this. Every song on the project made its way onto the billboard hot 100 charts making Drake have a total of 154 billboard hits, higher than any other rapper and solo artist. Giving him in a strong lead in front of label founder, Lil Wayne with his total of 135 billboard hits.  (http://www.billboard.com/)

Joe Okay of Smart Vendee

References

Li, S., Sun, Y. & Wang, Y. 2007. 50% off or buy one get one free? Frame preference as a function of consumable nature in dairy products. The Journal of social psychology. 147 (4). pp. 415

Kim, O. & Walker, M. 1984. The free rider problem: Experimental evidence. Public Choice. 43 (1). pp. 3

http://www.billboard.com/articles/columns/chart-beat/7736706/drake-breaks-hot-100-records-most-hits-solo-artists-more-life-songs

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Does gaming help maintain friendships?

The timeline of a friendship varies from person to person. Some people we meet throughout school or university may only feature as friends during these periods as you are assorted with them because you both share the same year of birth and choice of region to study. As you get to know them you find a group that you share a handful of common interests which bring you closer together.

From my own personal experience I began my education in the city of Bristol in England. When I reached the age of 13 I moved to a town called Harlech in Gwynedd. This resulted in leaving behind a lot of the friends I had made during the early years of my life. Some of the friends I had made were too important for me to not try to find a way to keep in contact with them. Social media was on the rise at the time and so I had joined Facebook in 2008 to keep in contact with them. This method of communication was limited as although I was able to learn about how their lives were going their was a lack of interaction and not enough content for us to discuss on a regular basis.

Image: https://www.elblogdelseo.com/wp-content/uploads/2014/06/Ornament-6.jpg

(Dyson, R.G. 2004.) Suggests that maintaining friendships requires a proximity to the person and that friendships end when “people move”.  I agree with this theory, in my case I wasn’t seeing my friends anymore so I had less interaction with them. I also had to make new friends in my new region.

After not speaking to my friends from Bristol for 3 years. I eventually began speaking to one friend from Bristol again through the form of Skype and pc gaming. We found a common interest in a game called Minecraft which was a fairly new indie game in 2011. This game was great for maintaining a friendship because of how vast the minecraft worlds are. This interest allowed for my other friends from Bristol to join us. To further maintain this friendship beyond gaming, I created a YouTube channel to provide a platform in which we were able to create content from the games we were playing.

Essentially gaming gave us a reason to speak with each other on a daily basis as we could interact within the game and still share stories about our lives outside of the game as we used to do via social media.  (Kowert, R., Domahidi, E. & Quandt, T. 2014) Also argues that gaming can be used to maintain existing friendships and that offline contacts can become online contacts as well.

Image: (Destiny 2, Bungie) http://cdn.mos.cms.futurecdn.net/yoNuS4R2Ewji2apPBE8Dzk-1200-80.jpg

(Trepte, S., Reinecke, L. & Juechems, K. 2012.) suggests that the progression and leveling systems in video games is what makes us spend more time in them. However being involved in social activities such as clans and supporting the clan by earning xp also makes players more involved in the game. This article supports the theory that friendships can be maintained through gaming and also provides evidence that businesses can benefit from this culture as it expands their player base and retains their consumers.

To conclude, gaming has allowed me to maintain contact with friends I no longer see in person and changes the way we purchase our games. We collectively decide which games to move onto which gives us variety and new experiences. As consumers of these products we seek multiplayer support that allows for us to experience the game as a group.

Joe Okay of Smart Vendee

References

Dyson, R.G. 2004. Strategic development and SWOT analysis at the University of Warwick. European Journal of Operational Research. 152 (3). pp. 279

Kowert, R., Domahidi, E. & Quandt, T. 2014. The relationship between online video game involvement and gaming-related friendships among emotionally sensitive individuals. Cyberpsychology, Behavior, and Social Networking. 17 (7). pp. 450.

Trepte, S., Reinecke, L. & Juechems, K. 2012. The social side of gaming: How playing online computer games creates online and offline social support. Computers in Human Behavior. 28 (3). pp. 834.