eLearning Session

After completing this chapter, you should be able to:

1. Describe consumer acquisition strategies, behaviors and major models of exchange.
2. Be familiar with some basic approaches to consumer purchase decision-making.
3. Recognize some links between purchase timing, frequency and marketing tactics.
4. Explain the relationships between brand switching and marketing tactics.
5. Discuss the nature of barter behavior and its implications in marketing.
6. Identify the uses of countertrade in interorganizational purchase behavior.
7. Recognize the importance of gift exchange in consumer behavior.
8. Describe the differences between interpersonal and self-gifts.

1. Introducing Acquisition
• Acquisition is at the heart of the consumer research. Consequently, it is that part of the wheel of consumption that marketers know the most about. There is a sense in which all persuasive marketing efforts are directed at facilitating commercial exchanges that lead to consumption behaviors. We might assume that such transactions are the universal vehicle through which customers obtain necessary goods and services in exchange for money. Marketers do tend to focus their attention on this kind of purchase behavior. Also, purchase behavior is a good label for impersonal marketplace transactions and exchanges of money for goods or services.
• Purchase behaviors as diverse as haggling in a Turkish bazaar or buying Tupperware at a home-party sale are embedded in interpersonal relationships. Interpersonal ties may cause customers to buy when they have reasons for avoiding or postponing such a purchase. It may cause sellers to extend favors to good customers or cause buyers to exhibit loyalty to a particular retail outlet or service provider. Thus, purchase behaviors often include more than just impersonal acquisitions of need-fulfilling goods and services. For example, embedded purchases are an integral part of the surrounding social world.
• Acquisition is a more general consumer behavior concept than purchase behavior. For example, acquisition may involve goods and services, but not involve money. This is the case in barter transactions, also called countertrade. Countertrade is quite common in international marketing and in transfers of assets within large diversified holding companies or corporate conglomerates. Barter is also common in unofficial, informal economic transactions. In many developing nations, some consumers organize local bartering networks where goods and services are exchanged.
• Other types of acquisition behaviors may involve money, but the tangible goods or services obtained are de-emphasized in favor of the meanings or feelings evoked by the goods and services. This is the case with gift-giving behaviors. Gift giving is at the heart of a enormous amount of consumer behavior, and the retail industry often lives or dies by its sales of gifts during Christmas and other important international holidays. In the United States, for example, consumers spend $4 billion per day or $2.8 million per minute during the Christmas season.
• Discretionary purchase behavior, purchases devoted to satisfying wants rather than needs, is a relatively recent phenomenon even in the Triad countries, although it has a history in ancient China. So-called lifestyle shopping, shopping as a form of leisure devoted to cultivating aconsumer's self-image, is a phenomenon that emerged only in the 19^th century with the growth of the department store in Europe.
• Shopping is still an occasional activity in developing parts of the world, especially where discretionary spending is quite limited. In these regions, the values and habits of older, gift-based economies characterize acquisition behaviors. In such economies, the value of possessions is realized primarily through acts of generosity, literally giving things away.
2. Acquisition Models
• Consumer researchers and marketers examine acquisition behavior from five perspectives: 1) utility-maximizing, 2) decision making, 3) experiential and hedonic, 4) behavioral influence perspectives, and 5) meaning transfer. The utility-maximizing view is derived from classical micro-economic theory. Marketers explore how consumers deliberately collect information, weigh alternatives, and make acquisition decisions that lead to the largest net benefit to them in terms of the exchange resources at issue. From the decision making perspective, consumers engage in problem-solving tasks, in which they move though a series of stages.
• The experiential or hedonic perspective holds that, in some cases, consumers acquire things in order to create feelings and experiences rather than to solve problems. The behavioral influence approach argues that consumers often act in response to situational, environmental pressures, such as perceptual cues in retail environments. The newest view, the meaning transfer view, argues that acquisition and consumption behaviors are often motivated by the desire to obtain meanings that are valuable within consumers' life stories. Each approach has merit. None alone is adequate to account for the full range of acquisition behaviors.
• The five perspectives are complementary because they focus on different aspects of the acquisition process. More than one type of behavior may occur simultaneously, as illustrated in The Gap interview presented inm Consumer Chronicles 10.1.

Consumer Chronicles 10.1: Shopping at the Gap (50.0K)

• In this description the consumer is influenced by (1) utility-maximizing factors ("I always bought on sale. The better the sale the more I bought"; "On top of buying their clothes I also buy stock in the company"); (2) decision making factors ("Everything in The Gap matches each other from belts, to socks, to slacks, and shirts"); (3) hedonic factors ("It was almost a sickness of some sort"; "I just love it. I feel like I am their friend and they are mine"); and (4) meaning-transfer factors ("They have stood the test of time and hiking in Colorado").
3. Social Exchange
• The sociologist, George Homans, proposed a model of exchange that is shown in Exhibit 10.1. One key idea presented in Homans'smodel of enchage is that buyers and sellers exchange resources (i.e., time, money, goods, services, social status, information, emotion) in varying proportions to meet their needs and in conformity with generally understood standards of fairness and propriety, subject to constraints of time, knowledge, and experience. Homans' exchange model also includes the idea that consumers derive value both from the things acquired and from the processes of acquisition, such as shopping, bartering, or gift giving.

Exhibit 10.1 Homans Model of Exchange Resource Flows and Outcomes (42.0K)

• Successful marketers blend resources in novel ways to create distinctive market positionings and strive to ensure that both parties of an exchange derive benefit from it. In a simple purchase of a packaged good, we derive the benefits of the good while the marketer derives the benefits of the money we exchange for it. All acquisition behaviors can be represented on an exchange continuum between "real barter" and "pure gifts.""Social exchange" also appears on this continuum, as a mid-point between real barter and pure gifts.
• Real barter conforms to the economic man acquisition model where we imagine exchange partners to be calculating and highly rational in their exchange behaviors. At this end of the continuum, we also imagine that transactions are a one-time phenomenon. Partners place no value on future exchanges, so they try to maximize current value of exchange resources. Real barter is associated with the ideal markets of micro-economic theory. Commodities markets, used car sales, utilitarian shopping, or flea market haggling all provide examples of such utilitarian acquisitions.
• Purchases may also fall more towards the social exchange part of the continuum shown in Exhibit 10.2. In social exchange, utility maximizing motives are present, but other factors moderate these motives. For instance, cultural norms of fairness may come into play. Exchange partners also may consider the long-term value of ongoing exchanges, and hence be willing to sacrifice current utility for the sake of the long-term relationship. Sometimes an emotional, personal relationship develops with the exchange partner; mutual favors are exchanged; social debt is incurred.

Exhibit 10.2: A Continuum of Acquisition Mechanisms and Motives (50.0K)

• Marketers such as those created by in-home purchase parties can be explained as a form of social exchange in which social outcomes are equal to, or larger than, material ones. For example, many home shopping parties (where Tupperware or cosmetics might be sold) exhibit traits associated with social exchange rather than pure barter. The "relationship marketing" strategy in a business-to-business setting recognizes that embedding acquisition in social ties can increase customer loyalty and enhance organizational performance. Relationship marketing recognizes that firms should manage their customer interactions with a long-term view, as repeat purchase behavior is a key to creating a sustainable competitive advantage.
• At the other extreme from pure barter are pure gifts. Here, acquisition processes are embedded in relationships of generalized reciprocity. In such cases, exchange partners who assume things will work out in mutually beneficial ways worry little about short-term costs and benefits. Some behaviors characteristic of Japanese keiretsu, the immense interlocking holding companies that dominate much of Japanese business, has a gift-like quality. Such behavior is also characteristic of channel partners in some developing countries, such as wholesalers and retailers who may prefer to "accumulate together" rather than seek to maximize individual gain in their volatile marketing environments
• Good marketing managers recognize that buying and selling involves multiple motives and exchange orientations. No single orientation will drive every participant in a market transaction.

1. Types of Purchase Decisions

Purchase Decisions

• Consumers make many kinds of purchase decisions. We can distinguish a number of them, each of which has different managerial implications. First, consumers may make a basic purchase decision in response to need recognition, as when communication needs trigger the decision to purchase a telephone. Second, the consumer may opt to make a particular product category decision, such as buying a cellular phone rather than a conventional phone or a short-wave radio. Third, consumers may make a brand purchase decision, as when consideration of alternatives leads to the choice of a Nokia, Ericsson, Philips, or Motorola cell phone. Much marketing communication in the Triad countries, especially manufacturers' advertising campaigns, aims to influence this kind of decision. Fourth, consumers make channel purchase decisions. That is, they decide whether to purchase from a retail outlet, directly from a manufacturer, through a catalogue, in a duty-free airport shop, or perhaps on-line. Fifth, a payment decision is made to determine the payment method and terms of payment. Both retailers and credit card companies seek to influence these types of decisions. Sixth, we can distinguish between an initial purchase decision and repeat purchase decision. This is especially important in organizational buying decisions. Many utilities companies and consumer marketers have become interested in trying to automate repeat purchase decisions through such devices as automatic payroll deduction plans.
• Purchase decisions need not be made in the order indicated above. For example, a payment decision may precede and even determine a brand decision or channel purchase decision. An international business traveler may seek out a restaurant that accepts American Express cards, because she lacks local currency.
• Exhibit 10.3 portrays a simple model of the brand (or product category) purchase decision model widely used in consumer behavior research.

Exhibit 10.3: Alternative Evaluation and Selection Process (50.0K)

• The model presented in Exhibit 10.3 suggests that, in anticipation of making a purchase, consumers develop lists of criteria that are of significance to them because of the perceived benefits (e.g., needs, feelings, meanings) they provide. In addition, the model suggests that consumers rate these criteria in terms of importance. When making a product category decision, buyers might rate communication effectiveness highly, thus evaluating conventional versus cellular phones differently. In deciding where to shop, buyers might rate discount stores differently than specialty stores, depending upon whether price or selection and service were more important criteria. Consumers also develop a set of alternative products, brands, or stores that they think will provide these benefits from memory, through external information search, or some combination of the two. They then combine all three types of information to reach a decision.
• Marketers seek to understand the criteria that consumers use to select and rank stores or products or brands. Such knowledge can be used to position market offerings effectively by highlighting these criteria and rankings in promotional messages or other communications targeted to consumers.
2. Impulse Purchases
• A good example of a common purchase decision not explained well by the decision-making model of acquisition is impulse purchases. Although impulse purchases are typically unplanned, not all unplanned purchases are impulse purchases. Impulse purchases occur when a consumer experiences a sudden, often powerful, and persistent emotional urge to buy immediately. Impulse purchases also entail a sudden mental match between the meaning of a product and a consumer's self-concept.
• Impulse purchases do not conform to economic man or decision-making man perspectives in consumer behavior. Instead, the impulse to buy is a hedonically (pleasure seeking) complex one. High emotional activation, low cognitive control, and largely reactive behavior characterize impulse buying. In one study, more than 75 percent of impulse buyers reported tht they felt better after making such a purchase. Those with positive feelings believed that they got something they needed or accomplished a necessary task. In contrast, 16 percent reported that they felt no different and only 8 percent reported that they feel worse after such a purchase. Those with negative reactions reported feelings of guilt or ambivalence.
• Impulse purchases have the potential to disrupt the consumer's ordinary behavioral stream. Because of the urge toward immediate action, impulse buying is prone to occur with diminished regard for the consequences of making the purchase. It may stimulate emotional conflict. Respondents often describe how the impulse arouses both pleasure and guilt. Many consumers report negative consequences from impulse buying such as financial problems, disappointment with the product, or the disapproval of significant others.
• Some impulse buying is related to various aspects of general acquisitiveness and materialism associated with the overall development of consumer culture. An increase in recreational shopping is probably linked to impulse purchases too, since the positive mood generated in recreation may decrease self-control. It may also be that various marketing factors support impulsive purchase behavior, such as the availability of consumer credit, credit cards, ATM machines, television and on-line shopping, and long retail store hours.
• Finally, impulse purchase behavior varies with individual personality traits such as variety seeking and risk aversion. Variety seekers may be more prone to impulse purchases, whereas risk-averse persons may be less prone.
• On the surface, impulse purchases seem harmless enough. However, in some cases, impulse purchase behavior is transformed into compulsive purchase behavior. This is a "darkside" of consumer behavior-a clinical condition similar to eating disorders and compulsive gambling that may require medical treatment. Good Practice 10.1 shows questions researchers have used to screen for consumers' tendencies toward compulsive purchase behaviors. Care to take the test?

Good Practice 10.1: Questions Associated with Compulsive Buying (50.0K)

3. Managing and Controlling Purchases
• One goal of marketing is to predict and manage consumers' purchasing behavior. A great deal of the work in this area has been spurred by the growth of purchase behavior databases. Begun by the hotel and airline industries, database marketing has been adopted by many retailers and financial services companies. To implement the technique, marketers combine sophisticated marketing tools with equally sophisticated statistical methods to manage purchase frequency and timing, repeat purchase behavior and market share, and other indicators of marketing success.
• Work focused on managing purchase timing and quantity traditionally adopts an economic or decision-making perspective on consumer purchase behavior, more rarely a behavioral influence perspective.
1. Timing and Frequency
• Marketers are very interested in the timing of consumer purchases. Purchase timing refers to sequences of repetitive purchase events that occur over time. Consumers dispose of many goods and therefore must replace them at regular intervals. Since a current purchase is worth more to a firm than a future purchase, marketers stimulate consumers to purchase frequently, and they attempt to shorten the interval between purchase occasions. Some tactics used to stimulate purchases include coupons, price cuts, point-of-sale purchase displays, and feature advertisements.
• The notion of purchase frequency, especially repeat purchase behavior, is closely related to timing. A knowledge of purchase frequency helps marketers time promotional mailings, encourage greater purchase frequency, or estimate sales for particular product or service categories. Generally, it is more profitable for a firm to stimulate repeat purchases among loyal customers than to attract new ones. Through databases that identify frequent shoppers, firms can target customers for promotional mailings that they hope (based on past purchase behavior) will stimulate increased purchase frequency.

Predicting Timing and Frequency

• Marketers are interested in predicting and influencing purchase timing and frequency. Predicting timing and frequency makes it possible to plan production, delivery, and estimate revenues and profits. The goals of managing timing and frequency means that marketers can improve their knowledge of how modifications of the marketing mix will affect buying behavior.
• We could assume that purchase timing is totally random. At the other extreme, we could assume purchase behavior to be totally regular like clockwork. We call this deterministic timing. What researchers have found is that for consumer goods like crackers, coffee, yogurt, toothpaste, and the like purchase timing and frequency are neither purely random, nor totally deterministic, but somewhere in between. To simplify, the chance of a repeat purchase occurring over time varies. Most researchers agree that there is a kind of dead period after a given purchase. Then the probability of a purchase reoccurring increases for a while. After a certain interval, the probability of the purchase reoccurring begins to decrease. In other words, for a segment of consumers, marketers can predict the likelihood a purchase will occur, but they can never be certain when a particular household or individual will make a purchase. This means that purchase timing and frequency can be predicted using the laws of probability.
• In addition to product purchases, probabilistic models have also extended to describe frequency of household trips to grocery stores over time. Models that provide a standard against which repeat purchase behavior can be compared are quite useful in stable markets. Knowledge of purchase frequency enables marketers to time promotions effectively.

Managing Purchase Timing and Frequency

• Promotions are often designed to increase purchase frequency; promotions are a powerful tool for managing purchase timing. The three top promotion-using industries in the U.S. are all markets crowded with many similar brands: a) food products, b) toiletries and cosmetics, and c) beer, ale, and soft drinks. In the late 1980s, U.S. manufacturers spent over $20 billion on trade incentives and distributed over 215 billion manufacturer coupons per year. Behind the promotions are fulfillment houses which process coupon redemption's and consumer mailings (e.g., sweepstakes entries, rebates), mail out checks or merchandise, and judge sweepstakes or contests. The global market research firm A.C. Nielsen is the largest coupon redemption firm in the U.S., as it handles coupon offers from over 180,000 retailers.
• Direct marketers use computerized databases to identify customers who are most likely to provide repeat business. Cooperating clients are asked to answer questionnaires and surveys in return for a coupon or premium. Results are entered into a database and the information is used to determine the best promotional tactics for communicating with these buyers in the future. By observing the purchase patterns from their customers lists, early direct marketers developed a theory of purchase frequency known as the RFMrule (recency,frequency, monetary value). That is, the likelihood of a response to a particular promotional mailing was influenced by the recency of the last purchase, the frequency of purchases over the past year, and the monetary value of a given customer's purchase history. Segmenting markets in terms of deal proneness on the basis of criteria such as these three variables, recency, frequency, and monetary value, helps marketers to predict the impact of promotional programs on purchase timing.
• Promotions are used to influence timing especially in product categories where there is little reason for consumers to choose between competitive brands. Purchase timing is also found to accelerate with advertised price cuts.

Limitations on Trying to Control Timing and Frequency

• The goal of managing purchase timing and frequency is likely to remain elusive in spite of improvements in predictive models. One reason for this is that consumers are not passive but active agents. Marketing tactics designed to influence purchase timing and frequency can and do backfire. For example, marketing tactics may backfire in catalog sales. Customers reach a catalog saturation point and tune out offers that exceed this threshold. Catalog purchase frequency increases at low levels as more catalogs are received within a year-until the mailbox hits "tilt" at some saturation point. After that point, consumers become less likely to purchase if they receive more catalogs.
• Promotions and other incentives designed to increase frequency can prove to be counter-productive in the long run. This effect occurs when consumers buy because of the promotion, not because of the product itself. In some Triad countries, there is concern that consumers buy many packaged goods only when they are on some special deal or sale. Brand loyalty is thus sacrificed for purchase frequency. Consumers switch brands in favor of promoted brands.
2. Purchase Quantity and Brand Switching
• Many marketing efforts are designed to create and maintain brand loyalty. Thus, marketers are concerned with brand switching. Brand switching is the tendency for consumers to purchasecompetitor's brands within a product class. Many factors stimulate brand-switching behavior. Environmental causes include: stock-outs, price changes, deals and advertising. Consumer-related activities include curiosity, boredom, and the need to balance among different needs and attributes possessed by competing brands and products. Consumers may also engage in switching when motivated by the desire for identification with an admired valued reference group.
• Through switching, consumers sometimes seek to achieve a desired combination of attributes or benefits that do not exist in any one brand. That is, consumers may have a sense of an ideal product.
• In a study of the French automobile market, it was found that brand-switching patterns are non-random and structured. That is, managers can study these patterns and discover underlying patterns that can help them understand and predict market behavior.

Managing and Controlling Brand Switching

• Determination of the brand switching cycle length can help managers develop a product line and create competitive strategies.
• Deals and promotions affect switching behavior. That is, differences between brands can influence brand-switching behavior. For example, retailers and manufacturers have an interest in determining the cross-price elasticity (or price sensitivity) and switching behavior associated with the complete set of ground and instant coffee brands. Such a determination enables managers to evaluate the impact of a price change or a competitor's price change on the sales of all brands in a product class. Managers can also develop indicators of the clout or vulnerability of individual brands. Clout can be measured by evaluating the effect of a price cut on one brand on sales of theother brands. Vulnerability is measured by summing the effects of price cuts of the other brands on sales of the brand of interest.
• Advertising affects switching behavior, as does consumers' need for novelty. That is, brand switching may result from the fact that desires for the perceived benefits of competing brands often fluctuate while perceptions of the brands remain stable. One of the marketing implications of this idea is that advertising for an established brand, particularly a well-defined one, will be more effective if it exploits the brand's positioning. Specifically, advertising should exploit the important elements of positioning that differentiate the brand from competing brands in a cluster in order to stimulate desire for the particular pattern of benefits it provides relative to other, similar brands.

• Countertrade is an inclusive term used to describe transactions where all partial payment is made in kind (goods and services) rather than in cash. The basic countertrade where goods are traded for other goods is an age-old feature of foreign trade. Countertrade moves us away from Homans model of "pure barter" and towards the "social exchange" part of his exchange continuum.
• Countertrade is a popular means of acquisition. Estimates of the extent of countertrade in international trade range from 20 to 30 percent. Countertrade in North America alone amounted to $8.4 billion in 1997.
• Why is countertrade a popular means of acquisition? Countertrade is a good way for firms to open new markets and establish long-term relationships with new customers, while reducing costs. Countertrade is also a good way of disposing of unwanted products and services. Shortages of hard currency (convertible, stable money) plus the massive foreign debt that burdens many of these countries makes countertrade an attractive alternative to purchase. Countertrade is also a way to get around protectionist policies that limit foreign imports in some countries. The countries where countertrade is popular are also those most likely to experience rapid economic growth in the coming decades.
• Firms engage in four types of countertrade. The first is barter. Barter is the direct exchange of goods between two parties in a transaction. Corporate barter is attractive because firms can usually recover their costs of goods and ultimately make a profit. It also allows them to do business in regions of the world where traditional economic transactions are somewhat difficult to secure.
• Consumers also engage in barter trade. In every developed economy some people trade goods and services informally through garage sales, swap meets or car boot sales to earn extra income, to get around the market economy, for fun, and/or to avoid paying income taxes.
• Compensation deals are barter transaction that involves payment, both ingoods and in cash. The former Soviet Union made frequent requests to Western suppliers for deals of this type. In one deal, General Motors Corporation sold $12 million worth of locomotives and diesel engines to Yugoslavia and took cash and $4 million in Yugoslavian cutting tools as payment.
• Counter purchase is the most common type of countertrade. In counter purchase, the seller agrees to sell a product at a set price to a buyer and receives payment in cash; however, the first deal is contingent on a second agreement in which the original seller buys goods from the original buyer for the total monetary amount involved in the first sale, or for an agreed uponpercentage of that amount. There is often a delay between completion of the first and second transaction so that the buyer of the goods in the second transaction has the time to find markets for them.
• Product buy-back agreement is the final type of countertrade. This type of agreement usually involves an initial sale of plant, equipment, or technology. In one kind of buy-back agreement, the seller of the plant or equipment accepts as partial payment a portion of the output of the new facility. In the other, the seller receives full price initially, but agrees to buy back a certain portion of the output.
• Countertrade arrangements enjoy both advantages and disadvantages. Obviously, they involve a higher level of trust and relationship management than a simple cash-for-goods purchase. Hence, Countertrade gives rise to specialized firms and corporate departments (Ford Motor Company has one, for example) that act as go-betweens and guarantors of a partner's trustworthiness. Industry Insights 10.2 summarizes some of the objectives buyers and sellers have in such transactions.

Industry Insights 10.2: Objectives in International Countertrades (50.0K)

• Critics of business-to-business Countertrade point out that it increases administrative costs, undercuts prices of competitive goods since goods are often sold at a discount, can lead to charges of "dumping" in the country receiving the goods, and can be used to conceal bribes or evade taxes. These criticisms have merit, but there is no doubt that Countertrade is an effective means of clearing imperfect markets in a dynamic global economy.

• As distinct from other acquisition strategies, gifts are ritualized offerings thatfrequently represent connections to other people. Gift exchanges have the potential to affect social relations in a way that purchases often do not. By "ritualized," we are referring to conventional gift-giving occasions when items or resources are given and occasions where the giving/receiving partners conform to cultural norms.
• The economic significance of gifts attracts marketers' attention. Consider that at least 10 percent of retail purchases in North America are given as gifts. Recognizing the social importance of gift giving, on-line retailers have jumped into the gift business.
• The importance that consumers attach to gift giving provides many opportunities for marketers. Although gifts often convey meanings that are difficult to put into words, many find the language of gift giving hard to master. Mistakes, disappointment, and gift-giving failures are not uncommon.
• Marketers may try to position objects to reinforce their suitability as gifts. The cut-flower market in the United States provides an example of a product category where promotional campaigns are used to strengthen the positioning of the product as a gift. Finally, marketers may try to provide gifts to match occasions or even create occasions for gift giving, such as "Secretaries Day" in the U.S., Mother's and Father's Day in China, or Christmas in non-Christian countries.
• Although gift giving is universal, the language and rituals associated with gift giving are culturally specific. Guide books on doing international business sometimes feature useful discussions of the dos and don'ts associated with gift giving. In business-to-business contexts, marketers often must distinguish gifts from bribes, and learn a new etiquette for appropriate gift-giving to avoid embarrassment. Hence, analysis of gift giving as a mode of acquisition and consumption requires culture-specific analysis of consumer behaviors.

1. Gift Exchange in Cross-Cultural Perspective
• Gift giving predates marketing; it is as old as human culture. The norm ofreciprocity describes the fact that receiving a gift often creates a strongsense of obligation to make a return gift. Such reciprocity may take the form of a tangible object, but also of such intangible resources as deference (status) and gratitude. As the Homans' model suggests, such exchanges tend to strengthen social bonds. Because of the norm of reciprocity, gift giving encourages return giving, which, in turn, stimulates further giving.
• In pre-market societies, gift exchanges organized numerous economic, social, and religious activities.
2. Types of Gift Exchange
• Modern gift giving is different from that practiced in traditional societies. To understand modern practices, we focus on gift relations between persons and groups.
1. Interpersonal Gifts
• Exchanges of interpersonal gifts are provoked by specific conditions. These conditions can be either structural or emergent. Among the structural occasions, gift-giving marks territorial passages, such as housewarmings, reunions, bon voyage parties, visiting and farewell parties. Second, gift-giving occasions establish social placement, such as weddings, showers, baptisms, and christenings. Structural gift-giving occasions include those associated with rites of passage, such as debutante balls of society girls, initiation into a motor cycle gang, French wedding showers, bar or bas mitzvahs, graduations, and retirements. Third, there are those structural occasions associated with rites of progression such as anniversaries, birthdays, and all the calendric holidays such as Christmas, Mother's Day, Halloween, and New Year. In part due to marketing activities, many countries have imported these gift-giving holidays.
• Among the emergent occasions for gift giving, we identify types. The significance for marketers lies in identifying products that help consumers mark both structural and emergent occasions, and in some cases, identifying and inventing occasions for gift giving such as Secretaries Day.
• Exhibit 10.4 presents a two-by-two table of interpersonal gift giving. The table contrasts altruistic with self-serving gift giving and voluntary with obligatory gift giving and provides examples. This contrast exits cross-culturally.

Exhibit 10.4: Interpersonal Gift Giving (50.0K)

• Gift giving differs from other modes of acquisition discussed here and in later chapters. This is because gift giving, especially voluntary, altruistic giving, resists explanation in terms of the economic man model of acquisition. Pure gifts are non-calculating, and non-rational. They are altruistic, voluntary and may express unselfish love. Pure gifts are given with no expectation of return. We sometimes refer to this form of giving as generalized reciprocity. Donating time at a soup kitchen, cooking a casserole for a bereaved neighbor, making a sacrifice in order to present a lover with a special gift, provide examples of pure gifts.
• Voluntarily, altruistic gifts are associated with devotion for a beloved person or even an institution, such as a university or an historic building.
• People are often willing to make low-value charitable donations, such as a bag of old clothes or can of food, voluntarily. Such gifts are relative easy to elicit, but contribution-driven organizations often have difficulties eliciting donations above a certain threshold.
• Unlike altruistic giving, self-serving gift giving is undertaken withsomeinstrumental purpose; it is a means to an end. Of course, altruistic giving may make givers feel better about themselves, but this does not make it less antisocial. Similarly, instrumental giving to enhance personal relationships is not necessarily anti-social.
• Self-serving or instrumental giving often expresses power dynamics.
• Self-serving gifts are also employed to communicate identity. A number of studies show that gifts chosen in North America usually represent something about the giver's self-concept. "Unique" gifts help givers express their feelings about the uniqueness of the recipient as well.
• Voluntary giving is motivated by personal, idiosyncratic reasons, but social norms or pressures drive obligatory giving. Some structural gift giving occasions such as an exchange of Christmas cards or wedding gifts have an obligatory dimension to them.
• Obligatory gift giving is associated with many structural gift-giving occasions, and lends itself to stereotypical giving. This is the type of gift giving that communications can be employed to create or reinforce associations between conventional items and conventional gift-giving occasions.
2. Self-Gifts
• Self-gift behavior is not documented in pre-market societies and does not seem to be recognized in China, but is common in Western societies. In self-gifts, consumers give to themselves. Self-gifts are differentiated from other personal acquisitions by their situational and motivational contexts. Self-gifting often occurs in a context of personal accomplishment, distress, or holiday occasion. In terms of outcomes, self-gifting can positively enhance self-concept, consistency, or esteem. Self-gifts can be products, services, or experiences, such as the Hawaiian holidays popular among single Japanese women.
• Self-gifts include ritualistic dimensions. For instance, self-gifts establish "reward" versus "therapy" and can involve sacrifices, such as abstaining from personal acquisitions in preparation for self-giving. Certain products are conventionally used as self-gifts. Clothing and travel are more frequently used as reward gifts than as therapy gifts, while fast food, grocery food, and personal care services are more often used as therapy gifts than reward gifts.
• Self-gift behavior correlates with socioeconomic traits such as age, financial condition, and gender.
• Self-gift purchasing may be linked to both cultural and personal values. A study showed that materialists are more likely to give self-gifts than non-materialists. Self-gift behavior may be particularly linked to cultural beliefs that purchasing and consumption are appropriate to the pursuit of individual happiness.
• Factors in the retail setting that affect self-gift behavior include the novelty or preselection of the brand, the brand's price, and the salespersons empathy for the buyer's personal situation.
3. The Power of Gifts and Marketing Implications
• Marketers will be most interested in gifts that take tangible form, although understanding the intangible resources they convey (investments of love, status, and time is critical to the successful gift marketing). Tangible gifts include items consumers have made themselves or those held in their possession for a long time, such as heirlooms, and gifts purchased with the intention to give them to others.
• As shown in the Heirloom Pocket Watch ad, marketers sometimes position purchased gifts as future heirlooms because of the value of heirlooms to consumers.

Positioning a Gift as a Potential Heirloom Can Increase its Worth (50.0K)

• Some categories of goods are only given as gifts, such as greeting cards. Other categories of goods may be treasured by particular market segments as especially appropriate to give as gifts. Flowers, perfume, expensive liquors, or diamonds often serve this function in the west. Status brands are preferred by new elite consumers in the NIC countries and many Japanese tourists who shop for omiyage while abroad.
• Is money an appropriate interpersonal gift? We recognize enormous cultural variation in the symbolism of money that influences its suitability. Not surprisingly therefore, money is sometimes an appropriate, sometimes an inappropriate gift depending upon cultural and situational context. One poll conducted in the U.S. found that for nearly every age, education, and income group, money is the most popular gift. Cash gifts lessen the uncertainty felt by givers, but also increase anxieties associated with potential violations of social norms.
• Other studies reveal the existence of constraints on the use of money as a gift. Marketers can provide alternative forms of giving money as gifts, such as American Express Gift Cheques, investment accounts, cash contributions to charities, and gift certificates that provide more symbolically suitable means of giving money than cash.
• Gift shopping affects product category purchase selections. Sales may be affected when a product is classed as appropriate for gift giving or as product classification changes.
• As Consumer Chronicles 10.4 illustrates, marketing communications can create or sustain the associations between goods and their suitability as gifts. For example, marketers may encourage gift givers to reduce the risks of their purchase decisions by buying status brands as gifts that may impress receivers and increase the symbolic meaning of the presents.

Consumer Chronicles 10.4: Restoration Hardware Encourages Self-Gifts (50.0K)

• The behavior associated with gift shopping search tends to differ from shopping for personal use. For instance, consumers respond differently to pricing tactics when shopping for gifts than for personal items. As the success of Restoration Hardware indicates, high-status retailers can merchandise highly profitable, high-status brands that are purchased as gifts effectively.

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• Perhaps the most dramatic influence of gift giving on retailing concerns specialty gift stores. This type of store is found throughout the Triad countries and is also common in tourist destinations that serve Triad consumers. Ethnographies of specialty gift retailers lead to several managerial propositions. First, shoppers experience the store itself as a gift. By creating delightfully fantastic environments, gift stores can impart an added significance to the merchandise that consumers in turn imbue with meanings. Second, because gift giving is the work of women in North American culture, gift stores play an important role in the giving that helps them to maintain a gift economy. Third, personnel, browsers and purchasers alike appreciate the objects in the store. Meanings imputed to and through these objects by all of these stakeholders create and reinforce particular values associated with the items selected as gifts. Hence, encouraging interaction in gift stores is valuable to management. Fourth, purchasers recount that gift choice often is imprecise or indescribable. Shoppers know the gift is concealed somewhere within the store and assume it will reveal itself to them eventually. Search behavior for gifts appears to be motivated by hedonic processes, involving longing, imagination, romance, and desire. This finding suggests designing stores to facilitate a kind of treasure hunt and training service personnel to aid consumers in the hunt. Fifth, successful owners are highly involved with their businesses. Merchandise selection often reflects owners' identity and values. Hence, target markets and merchandise should be allowed to evolve with the owners' interests over time.

Gifts Shape and Influence Behavior

• Gift giving can shape and influence consumer behavior. Often marketers use gifts in an effort to command a counter gift. Experimental research provides support for use of this tactic.
• Gift giving can be used to improve customers' evaluations of services. Providing "extras" or unexpected touches can lead to an increase in customer satisfaction.
• Gifts are often used in direct mail campaigns. Here they can be used as a foot-in-the-door tactic to induce a purchase or charitable contribution, or to encourage participation in marketing research. In devising direct mail campaigns, studies encourage the use of free gift offers to get better responses from customers.
• Tangible gifts are just one element of a successful direct-marketing campaign. Such campaigns may also stress the intangible benefits of the offer. There is value in providing a money-back guarantee, which customers may interpret as a kind of (intangible) gift that lends credibility to the offer and confidence to the buyer. Encouraging the consumer to interact with the company may also increase sales, by offering the (intangible) gift of information.
• The propriety of using gifts as a marketing tactic varies globally. Given its universality, exchanges of token gifts among business partners are a widespread practice. However, one must always be sensitive to the boundaries between relatively altruistic gifts and relatively self-serving bribes. With this in mind, many countries restrict the use of premiums, coupons, rebates, and other "gifts" to consumers. Nonetheless, in most developing countries, the practice of occasionally gifting regular customers with extras is widespread.