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MARKETING & TECHNOLOGY
Knowing what they know: A managerial perspective on consumer knowledge Debbie Vigar-Ellis a, Leyland Pitt b,*, Pierre Berthon c a
Royal Institute of Technology, Stockholm, Sweden & School of Management, IT and Governance, University of KwaZulu-Natal, South Africa b Beedie School of Business, Simon Fraser University, 500 Granville Street, Vancouver V6C 1W6 BC, Canada c McCallum Graduate School of Business, Bentley University, Waltham, MA, U.S.A.
KEYWORDS Subjective knowledge; Objective knowledge; Consumer demographics; Wine marketing; Information-rich products
Abstract What a consumer knows about a product or service is crucial to how it is marketed, and this is particularly true in the case of information-intensive products. However, there are two important sides to consumer knowledge: first, there is what consumers really know, or objective knowledge; second, there is what consumers think they know, or subjective knowledge. Interestingly, relatively little is known about the relationship between these two aspects of consumer knowledge or about the variables that impact this knowledge. Using data from a study of consumers’ knowledge of wine, the relationships between and influencers of objective and subjective knowledge are explored in this installment of Technology & Marketing, and a typology of customer knowledge is developed. This has useful implications for the marketing of wine and other information-rich products. # 2015 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved.
1. Knowing about consumer knowledge While good for pinot noir, sales of merlot wilted in both the United States and the United Kingdom when Miles, the anti-hero in the 2004 hit movie Sideways, opined: ‘‘If anyone orders Merlot, I’m leaving. I am NOT drinking any f#*%ing Merlot!’’ (Harlow, 2005). Also disparaging of the cabernet franc varietal, Miles is the ultimate wine snob,
* Corresponding author E-mail addresses:
[email protected] (D. Vigar-Ellis),
[email protected] (L. Pitt),
[email protected] (P. Berthon)
who thinks he knows about wine. Miles then meets a romantic interest, Maya, who is a real wine connoisseur. She knows about wine. Maya asks Miles about his cellar, and he tells her that his best bottle is a 1961 Cha ˆteau Cheval Blanc. When he tells her that he is keeping it for a special occasion, she replies that any day he drinks it will be a special occasion. At the end of the movie, Miles’ life has fallen apart and he is sitting alone in a Jack in the Box fast-food restaurant, eating a greasy cheeseburger and drinking the Cheval Blanc from a polystyrene cup. The joke is once again on Miles: The’61 Cheval Blanc, regarded as one of the great wines of the 20th century, was a blend of mostly merlot, with a little cabernet franc added.
0007-6813/$ — see front matter # 2015 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved. http://dx.doi.org/10.1016/j.bushor.2015.07.005
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Consumer knowledge–—or in simple terms, what a consumer knows–—lies at the heart of many marketing strategies. From a practical perspective, it is extremely important to marketing decision makers as they contemplate target markets through a process of market segmentation and develop marketing strategies that will best align with those target customers. What the consumer knows is important in every stage of the purchase decision-making process: from the time the individual becomes aware of a need, through defining their problem, searching for information, evaluating alternatives, making a purchase, and then consuming the product or service and entering the post-purchase phase. From a consumer behavior perspective, knowledge has been defined as ‘‘the information stored within memory’’ (Engel, Blackwell, & Miniard, 1990, p. 281). Alba and Hutchinson (1987) believe that consumers are overconfident and that they think they know more than they do. The links between objective and subjective knowledge are therefore worthy of consideration by marketing decision makers. In the aforementioned movie scenario, Miles thought he was knowledgeable about wine while Maya really was knowledgeable about wine. Consumer psychologist Merrie Brucks (1985) facilitates our understanding of this difference by distinguishing between three types of consumer knowledge:
Subjective knowledge–—what the consumer thinks he or she knows (where Miles would score high);
Objective knowledge–—the actual knowledge an individual possesses as measured by some sort of test (where Maya would score a lot higher than Miles); and
Experiential knowledge–—‘‘the number of productrelated experiences accumulated by a consumer’’ (wine in the case of Miles and Maya; Rao & Monroe, 1988, p. 254). Consumer researchers have given considerable academic attention to subjective knowledge and experience in particular. However, far less attention has been devoted to how managers might know and understand consumer knowledge and how they might use this understanding in the formulation and implementation of marketing strategies. That is the objective of this article. We begin by giving a brief overview of the literature on consumer knowledge. Then we describe, in a non-technical way, a recent online study that investigated consumer knowledge of wine from both subjective and objective perspectives. We use the insights gained from the study to suggest strategies
that marketers might wish to pursue in order to extract as much value as possible from consumer knowledge, both objective and subjective.
2. Consumer knowledge: The consumer researcher’s perspective A number of early consumer researchers (e.g., Engel et al., 1990; Howard & Sheth, 1969; Nicosia, 1966) sought to develop models of the consumer purchase decision-making process, realizing that this relied heavily on the notion of consumer knowledge. However, many of these early attempts failed to distinguish between the different kinds of knowledge–— objective, subjective, and experiential–—and tended to use them interchangeably. Once Brucks (1985) made clear the distinction between the three kinds of knowledge, researchers began to uncover interesting (and sometimes contradictory) relationships between these and other facets of consumer purchasing behavior. Brucks showed, for example, that objective knowledge was positively related to the number of attributes considered by consumers when searching for information. Selnes and Grønhaug (1986), and later Park, Mothersbaugh, and Feick (1994), found that subjective knowledge was a stronger motivation of purchase-related behaviors than objective knowledge. Consumers with more product or service experience tended to engage in less search behavior before a purchase (e.g., Moore & Lehmann, 1980; Newman & Staelin, 1972), but consumers with greater objective knowledge actually engaged in a higher degree of search activity (Selnes & Troye, 1989). Consumer researchers then began to develop measures of both objective and subjective knowledge. Measures of objective knowledge tend to be in the form of tests for which there are right and wrong answers, and are obviously product- or categoryspecific. Subjective knowledge has typically been measured using scales on which respondents are required to indicate their perceptions of how much they know (or don’t know) about a particular product or service category; as such, there are no right or wrong answers. Past research has shown the two constructs to be at least moderately but significantly correlated, with the correlation coefficient R typically in the range between .30 and .60 (e.g., Brucks, 1985; Goldsmith & Goldsmith, 1997; Raju, Lonial, & Mangold, 1995). A general conclusion from the research is that it is easier to measure subjective knowledge than objective knowledge (Brucks, 1985). Whereas the measurement of objective knowledge requires setting up a test with right and wrong answers robust enough to distinguish
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MARKETING & TECHNOLOGY more-knowledgeable consumers from less-knowledgeable consumers, it is possible to construct a generic scale to measure subjective knowledge that can be applied across a range of different product and service categories. Defining subjective knowledge as ‘‘a consumer’s perception of the amount of information they have stored in their memory,’’ Flynn and Goldsmith (1999, p. 59) developed a short scale to measure consumers’ perceptions of their own knowledge of a category. The nine-item version of this scale was used to measure consumers’ subjective knowledge of wine in the research project described below.
3. Consumers and wine knowledge: A simple study
3 In an online survey of 187 American wine consumers, we measured consumers’ objective wine knowledge using the Forbes et al. (2008) fivequestion test, and subjective knowledge using the Flynn and Goldsmith (1999) nine-item scale. We also asked respondents to tell us about their gender, their age, their education, how much wine they consumed, and how many wine blogs they read. We found that:
Objective and subjective wine knowledge were significantly correlated, but exhibited low covariance; in simple terms, while they were related, they did not vary in tight unison. Thus, if a person says they know a lot about wine (subjective), this is a weak indicator of their actual knowledge (objective), and vice versa.
Female consumers, older consumers, and betterWine is a product that can be described as information-intensive; that is, knowledge of the product can change why it is purchased, when it is consumed, and how it is experienced. There is a lot of potential information about a bottle of wine: where it comes from, what grapes have been used, how old it is, who made it, how it was made, what occasions and with what food it best might be consumed, et cetera. One of the main reasons that wine is such a fascinating product to consumers and such a challenge to wine marketers is that consumer evaluations of a wine can differ substantially. While one individual may love a particular wine, another consumer may be completely indifferent to it. The popular media is awash with stories of how expensive wines do not always perform well in blind tastings (e.g., Kramer, 2011; Lehrer, 2011; Wine X Magazine, n.d.), and books have been written (e.g., Taber, 2005) and movies (e.g., ‘‘Bottle Shock,’’ 2008) produced about the real, or supposed, inability of experts to accurately identify and judge wine. While Nobel Laureate Gary Becker (1996) disagrees, economists generally argue that there is no accounting for taste. Wine marketers and wine marketing scholars alike have long been interested in how knowledge impacts an individual’s ability to taste wine accurately and to make decisions. Despite the work of Forbes, Cohen, and Dean (2008), little attention has been paid to the relationship between objective and subjective wine knowledge and the impact of broader demographics–—such as gender, age, education, and actual wine consumption–—on wine knowledge. The simple study described here attempted to bridge this gap by offering additional evidence on the relationship between objective and subjective wine knowledge and consumer demographics, in addition to further exploring the nature of subjective wine knowledge.
educated consumers in the sample had significantly higher levels of objective wine knowledge.
Amount of wine consumed and number of wine blogs regularly read had no significant impact on respondents’ objective wine knowledge.
4. What does this mean to marketers and wine marketers in particular? The simple study described here tells marketers quite a bit about what consumers think they know and really do know about wine. It informs that what consumers think they know (subjective knowledge) and really do know (objective knowledge) are significantly related, but because the covariance is weak, this doesn’t always mean that they move in the same direction. This is a useful insight for market segmentation purposes, as we shall soon illustrate. There is also evidence that older consumers tend to know more about wine than younger consumers. Perhaps this is because they have learned from experience, or perhaps older consumers are simply more interested in wine. Similarly, women have higher objective wine knowledge than do men. It may be that they buy wine more frequently and thus want to learn about it, are more interested in wine, or have better memories for consumer products. Educated consumers also have greater objective wine knowledge. This might be because level of education is positively related to income, and income allows these consumers to buy and consume a greater variety of wines. Or it could be that consumers with a higher level of education are more interested in learning about wine; perhaps they retain the information easily. Objective wine knowledge does not seem to be significantly related to the amount of wine consumed, and it also appears
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4 that the number of wine blogs accessed by a consumer has an insignificant effect on their objective wine knowledge. The latter finding might indicate that consumers are getting their knowledge of wine from other, more traditional sources, such as books and magazines. This may be corroborated by the inference that older, more-knowledgeable consumers are likelier to have learned about wine through traditional media. The findings have managerial relevance, particularly for wine marketing decision makers, but also for anyone who makes marketing decisions about information-rich products, such as–—among many–— other beverage products (e.g., single malt whiskey), food products (e.g., cheeses), automobiles, art, and high-tech offerings. For marketers, the questions this simple study raises are fundamental: What do my target customers know about my product? How much do they think they know? To what extent are these two types of knowledge related? Do subjective and objective knowledge about my product vary according to demographics such as age, gender, income, education, and consumption level? If so, how does this inform my marketing strategy? How much target consumers know or think they know about wine can potentially impact every aspect of wine marketing strategy, so we illustrate with a series of examples. However, we reiterate that all marketers of information-rich offerings could be considering similar questions and issues. Product knowledge is especially relevant to branding decisions, pricing decisions, distribution strategy, and marketing communication tactics. At times, the wine marketer might wish to target high-knowledge consumers in a branding strategy. The Australian wine company Penfolds targets connoisseurs with the legendary Grange Hermitage at around $500 per bottle, but also markets Rawson’s Retreat and Koonunga Hill at around $10 per bottle. Wine beginners might associate Mouton Cadet with Bordeaux’s first growth, Chateau Mouton Rothschild –—as the company intends. Connoisseurs know that the grapes in Cadet are not even all sourced in bulk from the Pauillac appellation, let alone grown at Mouton. Wine marketers might offer lower-priced products to consumers with less wine knowledge, who might believe there really is no discernible difference between expensive and cheap wines. Or they might use lower prices as a way of attracting novice buyers, who may then be willing to pay more for better wines once they develop taste and knowledge. Of course, an opposite strategy would be to target less-knowledgeable buyers with high prices, for in some cases these buyers might use price as an indicator of quality. Distribution decisions are also impacted by the wine marketer’s assessment of the
MARKETING & TECHNOLOGY levels of knowledge within their target market. Marketers who target connoisseurs will choose outlets with skilled and knowledgeable sales staff and excellent storage facilities (e.g., Berry Bros. & Rudd in London, Zachys in New York). Those who target lowknowledge consumers might choose supermarkets. Marketers who target high-knowledge wine consumers might use specialist media such as Wine Spectator and Decanter magazines. Those aiming at novices will probably use mass media, such as television. Their messages will differ as well. Messages targeted at connoisseurs will be technical, detailed, and descriptive. Messages about the fun of drinking wine and unpretentious and sometimes silly brand names–— such as (oops), Mad Housewife, Frog’s Piss, and Elephant on a Tightrope (these are all genuine, by the way)–—might be employed to convey to novices that they should not take wine too seriously.
5. A useful market segmentation tool: The product knowledge grid Recall Alba and Hutchinson’s (1987) belief that consumers are overconfident and that they think they know more than they do. In order to explore this conjecture, we split our sample into four groups based on their levels of subjective and objective wine knowledge. We used a median split on both facets of knowledge in order to create ‘Low’ and ‘High’ divisions on subjective and objective knowledge. This enabled us to identify four wine knowledge types (see Figure 1):
Those who scored low on both facets (Neophytes); Those who scored high on subjective but low on objective (Snobs); Figure 1.
Wine knowledge types
High Modest N = 17
Expert N = 38
Neophyte N = 79
Snob N = 53
Objecve Wine Knowledge
Low Low
Subjecve Wine Knowledge
High
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Those who scored low on subjective but high on objective knowledge (Modests); and
Those who scored high on both facets (Experts). As can be seen in Figure 1, the majority of the respondents (79 individuals) knew little about wine, and also believed they knew little about wine. We labeled these consumers ‘Neophytes.’ A neophyte is defined by the Merriam-Webster Dictionary as ‘‘a person who has just started learning or doing something.’’ The second-largest group (53 consumers), labeled ‘Snobs,’ overestimated what they really know about wine–—as Alba and Hutchinson would have predicted. A small group of 17 respondents, labeled ‘Modests,’ knew more than they thought they did. Finally, a group of 38 individuals not only thought they knew a lot about wine, but actually did; we labeled this group ‘Experts.’ While the consumer categories constructed have been identified with specific regard to wine, we would argue that the typology is applicable to all information-intensive products. The wine knowledge types identified here are also potentially useful classifications for marketing segmentation strategy by wine marketers. By extension, similar classifications of consumer knowledge types could prove insightful to marketers of other information-intensive products. Obviously, more research and investigation would need to be done, but we suggest that wine marketers could target these groups in reasonably distinct ways. The main thrusts of a focus on Neophytes might be product simplicity, easy availability, lower prices to mitigate purchasing risk and, of course, education. Modests represent a different challenge: allowing them to discover just how much they actually know. This might be achieved by blind tastings or wine quizzes sponsored by wineries, where group members could realize their wine knowledge, and perhaps begin to enjoy and exploit it. Snobs represent a separate opportunity. We suspect they might be adventurous in their exploration of new products but also brand loyal, and therefore less price sensitive. They would probably also be swayed by wines that are highly rated by critics or wines that display on their labels any awards won. Finally, Experts represent a valuable resource to wine marketers. They are consumers who will likely impart their genuine knowledge to others in a credible way. Matrices such as that in Figure 1 provide useful frameworks for marketers of information-intensive offerings. A fundamental issue facing marketers of these types of products and services is how little or how much information to provide to customers. On the one hand, providing too much information might
5 lead to attention overload and confusion; providing too little could cause customers to refrain from purchase because they are insufficiently informed. On the other hand, a careful withholding of information could cause customers to actively seek additional details because they love marketing secrets (e.g., Hannah, Parent, Pitt, & Berthon, 2014)–—and in so doing, become more knowledgeable and more interested in the offering category. The typology in Figure 1 also suggests that marketers can consider strategies that shift market segments between the cells, depending on how much knowledge the consumer has–—or thinks he/she has–—as implied by the arrows in the figure. While it might be difficult to directly change Neophytes into Experts, it could be feasible to turn them into Modests or Snobs first, and then into Experts. Converting Neophytes into Modests would rely heavily on educational strategies driven either by firms or industry bodies. In the case of wine, this happens when individual wineries hold tastings onsite or in sponsored events in restaurants. Industry bodies in wine-producing countries and consortiums of wine purveyors also hold courses that allow consumers to move from being novices all the way up to Master of Wine qualifications. For example, the Wine & Spirit Education Trust, usually referred to as WSET, is a UK-based organization originally set up by wine retailers and wholesalers in that region to serve their own employees. Nowadays, it is generally regarded as one of the world’s leading providers of wine education. WSET courses, offered in many different parts of the world, are increasingly attended by non-professional wine lovers ranging from enthusiasts to connoisseurs.1 Changing Neophytes into Snobs is also feasible, and will best be accomplished through clever marketing communication. Advertising could emphasize that the consumer has a better palate than he or she thinks. Wine companies could motivate servers in good restaurants or their own staff who conduct estate tastings to praise the diner’s choice, or to agree with consumers’ comments on a wine. These suggestions do of course assume that Experts are likelier to consume more wine and be willing to pay higher prices; however, this is not always true. There is evidence that Snobs are far more likely to value and consume wines simply because they are expensive: in 2006 it was observed that the best-selling wines in Moscow’s top restaurants were whichever happened to be priced the highest by each particular establishment (Deighton, Pitt, Dessain, Beyersdorfer, & Sjo ¨man, 2006).
1
See See http://www.wsetglobal.com
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6 Experts are often ‘in the know’ and as a result might be less willing to pay high prices. In Australia, for example, many prominent wine producers dispose of excess production by selling it in the form of ‘cleanskins’: bottles with simple labels identifying cultivar and geography (e.g., Hunter Valley Merlot, Barossa Valley Chardonnay) but not brand or producer. In this case, producers are trying to withhold information from the market. However, many Experts pride themselves in being able to identify the source of the cleanskins and then buying them at prices substantially lower than their branded counterparts. Another reason for not communicating knowledge is that by denying the availability of information and keeping things secret, products can become more appealing (e.g., Hannah et al., 2014).
6. Conclusion Product knowledge is a critical but mostly overlooked aspect of consumer behavior. If marketing strategists know about consumer knowledge, they can use these insights to target customer groups via all aspects of the marketing mix: product and branding decisions; pricing; distribution strategy; and effective messaging in mass media, online forums, and personal selling. We chose to focus on wine because as an information-intensive product; it provides an ideal arena for considering the implications of consumer knowledge. A number of conclusory observations can be made. First, subjective and objective knowledge, although correlated, are largely independent: what a person thinks they know is not a good predictor of what they actually know. This questions a common assumption marketers make: that customers select what they want, and by offering more alternatives, marketers increase the chance of meeting consumers’ needs and creating satisfied customers. Our observations explain, in part, why consumers are often disappointed with their purchase decisions: customers select what they think they want, and this subjective knowledge is poorly correlated with objective knowledge. Second, pursuant to the first insight, marketers can construct a typology of customers based on knowledge: those who have an accurate perception of their knowledge about a given product (be this knowledge high or low) and those who have an inaccurate or distorted perception of their knowledge about a given product (be this knowledge high or low). Third, marketers might usefully explore another important distinction: consumer knowledge can be further refined. As well as subjective and objective knowledge, we can introduce the distinction of
MARKETING & TECHNOLOGY product knowledge and self-knowledge. Customers make decisions based on the relationship between knowledge of themselves and knowledge of products. We might postulate that consumption satisfaction is highest when customers have an accurate perception of self-knowledge and an accurate perception of product knowledge, and lowest when customers have inaccurate self-knowledge and inaccurate product knowledge. These insights are likely to be relevant for all information-intensive offerings. And thinking about consumer knowledge from two perspectives –—objective (what consumers really know) and subjective (what consumers think they know)–—allows marketers to develop creative ways to segment markets and target strategies toward these. Our observations here have shown that a large number of customers in a target market overestimate what they know. In the case of a product like wine, the effects for the individual consumer are probably not too serious. However, when managers overestimate what they know about their target customers, the consequences could have more substantial impact. Perhaps it is time for marketers to devote a little more time and effort to knowing what customers know.
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