Do We Really Like Honest Brands Best? The Effect of
Transparent Marketing on Consumer Choice.
An Experimental Study
Master Thesis MSc Business Administration University of Amsterdam 1 July 2014 Author: Claire Wientjes Student number 10670661 c.e.wientjes@gmail.com Supervisor: Joris DemmersContent
Introduction ... 2 Literature review ... 5 Discrete choice ... 5 Transparency ... 6 Nature of Information ... 8 Disclosure source ... 10 Method ... 12 Results ... 15Descriptive data analysis ... 15
Hypotheses testing ... 16
Discussion ... 18
Managerial implications ... 21
References ... 22
Appendices ... 26
Appendix A: Stimuli in experiment ... 26
Abstract
The information flow is growing rapidly and there is a trend indicating that consumers are demanding more transparency from companies. Transparency has been a well-researched concept, except in relation to marketing. This study aims to shed light on the effect of marketing transparency on consumer choice, together with disclosure source and nature of information. A field experiment was conducted in a local supermarket, where 134 by passers where exposed to advertising of a drink which was either transparent or non transparent, and for which the information was either positive or negative, brand disclosed or experimenter disclosed. Then, the probability of choosing to taste that drink was reported. Results indicate a marginally significant effect indicating that transparency in marketing communications has an effect on consumer choice, which is especially positive for positive information and negative for negative information. Experimenter disclosed information did not have any effect on consumer choice. These findings could have interesting implications for the marketing field, in which transparency could be key to positive consequences. However, more research is necessary to explore whether there are more positive consequences to be gained.
Introduction
One of the richest assets of this era is information. The amount of information available to us globally increases tenfold every five years, according to Moore’s Law (Economist, 2010). Today, consumers have access to many sources of information. The increased information flow has made them “much better informed, connected, capable and empowered than in the past” (Macdonald & Uncles, 2007, p.3). Next to that, they are becoming more experienced with marketing and more demanding (Keller, 2013). Among others, there has been a general trend of people demanding more transparency from companies’ products and business practices (Bhaduri & Ha-Brookshire 2011). Especially in the food industry, consumers are becoming more conscious about what they buy and eat. A consumer study conducted by BBMG, Globescan and SustainAbility (2013) found that for 9 out of 10 consumers, ingredient transparency is the most important factor in a purchase decision, after quality and price. Transparency is even considered to be more important to consumers than brand appeal when it comes to buying products or dealing with a business or organization (Cohn & Wolfe, 2012). That means that an appealing brand, one that has is attractive or interesting to the consumer (Oxford Dictionaries, 2014), is merely not enough anymore. Transparency has a greater weight in the choice of which brand to buy than just liking for the brand.
According to Shaw (2010, p.30), companies use advertising “to inform people about new products and services offered by an organization, persuade people to buy these products or make use of the services offered and then to remind people about the organization and encourage repeat purchase and use”. Indeed, there is general agreement that informing and persuading consumers is an important aspect of marketing and advertising (AMA, Peter & Olson 2001). As such, consumer communication such as advertising helps consumers exercise an informed choice (Nestlé Communication Principles, 2011). However, most of the marketing and advertising is aimed at disclosing mainly positive information about a brand. Companies tend to “present positive features of the brand or associate the brand with positive symbols” (Crowley and Hoyer, 1994, p.561). For that reason, marketing is seen as a profession that can be considered misleading to consumers. There are many examples of brands (e.g. Coca Cola, McDonald’s, Kellog’s, Nutella, Danone Activia and Becel Pro Active etc.) that were under fire for their health claims leading consumers “to acquire false information, form misperceptions, and become involved in consumptive behaviors to their detriment” (Xie and Boush, 2011, p293). From an informational perspective, a lack of transparency may exist if access to information is denied, if the information given is irrelevant to the issue at hand, or if the information is misrepresented, inaccurate, or untimely (Vishwanath & Kaufmann, 2001). In that sense, deceptive advertising can be considered as non-transparent information. In response to consumer concerns, regulatory bodies, consumer agencies and even television programs have taken up the role of informing consumers even better about food products. From a regulations perspective, it is generally the company’s responsibility that the product claims do not “mislead the consumer as to the foodstuff’s characteristics or effects” and “guarantee that consumers have access to complete information on the content and composition of products, in order to protect their health and their interests” (Europa, 2011). The Council of Consumers International put forward “right to be informed” as one of the eight basic consumer rights, meaning that consumers are “to be given the facts needed to make an informed choice, and to be protected against dishonest or misleading advertising and labeling” (Consumers International, 2014). Also, there is a Dutch television program called Keuringsdienst van Waarde (Food Inspection Authority) that aims to reveal deceptive advertising claims and show consumers the truth behind their everyday products. More people want to know what is inside the food and drink products before they buy, let alone use it. Should future marketers anticipate on this trend by equipping their brands with the information that consumers are demanding?
FMCG companies are fighting to differentiate themselves from competitors in the full and ever-changing shelves. The availability and convenient access to information that Internet offers has enabled everyone to check if a company misrepresents the truth (Fournier
and Avery, 2011, p.198). They state that one thing is certain, “what can be exposed will be exposed”. This poses an opportunity for companies to reap the positive consequences of being transparent, as well as a threat to damage brand equity if the disclosed information is poorly evaluated. Some companies have picked up on the consumer need for honest marketing and have integrated it into their marketing practices. Take for example Nestlé, which has included transparency as one of the Consumer Communication Principles as “all representation including text, sound and visual should accurately represent the product, including taste, size and content” and “nutrient content information, including fortification and nutrition claims, must be made in a way that accurately reflects the nutrition composition of the product” (Nestlé Communication Principles, 2011, p.2). Could transparent marketing be a new strategy to positively influence the consumer’s choice? If consumers really care about product transparency (which they say they do), what would be the effect of increased transparency on their choice in the store? Could transparent marketing be interesting from a profit perspective? Managers will know whether it pays off for companies to increase transparency in marketing. And whether consumers really like “honest branding” better.
While transparency has been widely studied in an organizational and financial context, the effects of transparency in marketing are largely unknown. Marketing, given its consumer orientation, might be one of the most relevant fields to incorporate transparency. Given the clear consumer interest in transparency in the marketing of products, and its possible positive consequences, it is definitely a literature gap that is worth investigating. The aim of the study is to test the effect of transparency in marketing on consumer choice, and how favorability of information and disclosure source influence this relationship. The article will contribute to the literature by contributing to knowledge about the effect of transparency in marketing and putting marketing transparency as a concept stronger on the scientific map. Hopefully, it will spur more future research in this direction.
The question that remains and which the study aims to answer is therefore: “How does transparency in marketing affect consumer choice?” It will be answered by conducting a field experiment in a local supermarket. Food products were chosen as the topic of interest. There are several reasons why the results are especially interesting for this industry. First, consumers generally believe it is important what they eat, taking the ingredient claims that are made into consideration. Second, food products generally make use of many claims to communicate product benefits (ex. added vitamin C, lowering cholesterol, healthy choice). Third, consumers generally buy food products frequently and make many purchase decisions in-store based on some claims. An environment where people do their regular shopping for food products is the chosen location so that the field experiment blends in as much as possible in the natural habitat of the grocery shopper.
The paper will take on the following structure. In order to make contributions to existing literature, the next section aims to summarize and contrast the existing literature on the relevant concepts. It is concluded with the conceptual model of this study. It is followed by a description of the field experiment used to obtain the data. Then, the data is analyzed and the hypotheses are tested. Concluding the paper there will be an extensive discussion of these findings and managerial outtakes for the field of marketing. In the same chapter, suggestions for further research are made in the hope to give direction to future studies on marketing transparency.
Literature review
Discrete choice
“Two or more alternative actions exist and, therefore, choice must occur” (Olshavsky and Granbois, 1979, p.93).
On a continuous basis, consumers need to make choices about what products they try, buy or use. These decisions are not made easy to them due to the full and ever-changing shelves that are available in the supermarket. Information is fired at them from many different sources, such as packaging claims, advertisements, salespeople and recommendations from relatives. And to make matters worse, all buying decisions are accompanied by certain risk, as there will always be uncertainty about the workings of the product or service (Keller, 2013).
What makes that a consumer would choose the product a marketer offers to market? Consumer decision-making literature proposes techniques for consumers to cope with the making of choices. One approach to decision making is the classic economical perspective. The homo economicus (economic man) suggests that consumers are rational actors who evaluate all relevant choice alternatives, access the utility that each can provide, and choose the one that they expect to provide the most utility (Yang and Carmon, 2010). However, as Gigerenzer and Gaissmaier (2011) point out, we do not live in a world in which consumers have perfect information about relevant alternatives, their consequences and probabilities. Therefore, the economical perspective is not a feasible method of decision-making in today’s world. Instead, consumers tend to use heuristics, which are “strategies that ignore information to make decisions faster, more frugally, and/or more accurately than more complex methods” (Gigerenzer and Gaissmaier, 2011, p.453). Looking at consumer behavior, people are “looking to simplify the decisions they make, and irrelevant cues are used as a mental shortcut to determine product quality and popularity, rather than any kind of serious analysis of product attributes” (Lewis, 2013). Mere brand familiarity, for example, can
be one such shortcut to produce confidence, which in turn is recognized as a determinant for intention to buy (Laroche et al., 1996).
Choices can be made in different consumption contexts. One can choose to try out, intend to buy, buy or use a product or brand. The difference between choosing a product yes or no may depend on many factors. Consumers tend to want to “act only if the balance of benefits and costs is favorable” (Amir and Ariely, 2004, p.3). As such, product attributes and price are the main variables of interest. According to Chang and Wildt (1994), the consumer takes the two variables together to form one perceived value, which is a major determinant in purchase decisions. There are many other factors that exert influence on our decisions. Just attractiveness of packaging, for example, can trigger the region of the brain associated with visual attention, memory and reward and eventually lead to a more positive response according to a fMRI-study conducted by Stoll et al. (2008). Ethicality can make a difference as well. Creyer and Ross (1997) found that ethicality of a firm’s behavior is expected, considered during the purchase decision and rewarded with a higher willingness to pay. From a societal perspective, these results are encouraging. It suggests that firms’ honesty in marketing could be rewarded with positive consumer responses. Of these many influences on consumer choice, many are beyond the scope of this research. However, the effect of transparency is yet to be added to them, as attempted in this study. Here, the focus will be on the probability that someone chooses to taste a sample of a product, which might come close to actual purchase decision in store.
Transparency
Previous literature shows that the concept of transparency has spread into different contexts like an oil stain. From a classical economic perspective, transparency is captured into the rationality assumption of neoclassical school as “all parties have perfect and complete information” (Conner, 1991, p.123). Later on, transparency was mainly studied in relation to financial markets. In this context, it can be defined as “the extent to which financial reports reveal an entity’s underlying economics in a way that is readily understandable by those using the financial reports” (Barth and Schipper, 2008, p.174). A more consumer-oriented definition comes from Cohn and Wolfe (2012, p.6), who describe transparency as “an openness and willingness to share information about various elements of […] operations with consumers”. Today, transparency has evolved into a whole new level: being transparent. In essence, transparency is about information (Christensen, 2002; Vishnawath and Kaufmann, 2001; Tapscott and Ticolli, 2003). The concept has transcended the boundaries of economics and the financial market to include marketing. This is a logical step, since marketing serves an important role of providing consumers with the information to make informed decisions. On the receiving side, consumer are to a lesser or more extent
susceptible to advertising, as defined by Bar and Kellaris (2000, p.230) as “the extent to which individuals attend to and value commercial messages as sources of information for guiding their consumptive behaviors”.
According to Vishnawath and Kaufmann (2001) propose a framework for transparency that encompasses four required dimensions. The first of them is access, or timely availability and accessibility of useful information. Second, comprehensiveness, which entails an individual’s ability to access, interpret and respond to information. Third, the information should be relevant to the needs of the user. In this study the users would be consumers in the supermarket. And fourth, quality and reliability of information should be ensured by providing effective information that is fair, reliable, timely, complete, consistent and presented in clear and simple terms. Alternatively, a lack of transparency may exist if access to information is denied, if the information given is irrelevant to the issue at hand, or if the information is misrepresented, inaccurate, or untimely (Vishnawath and Kaufmann, 2001). Non-transparent marketing, therefore, can be considered marketing that does not truthfully represent the product or brand. For example, sometimes brands “successfully differentiate on an attribute that appears to create meaningful product difference but on closer examination is irrelevant to creating that benefit” (Carpenter et al. 1994, p.339). These are called ‘trivial attributes’. Such type of marketing, in which the information is unclear or irrelevant for the consumer, can be considered non-transparent marketing.
In the literal sense of the word, the feeling of being transparent as a company is intensified by the great availability of information and the pressure to contribute by sharing relevant information (Christensen, 2002). One could say that companies are in a love-hate relationship with transparency. Companies face a difficult trade-off between the positive consequences of transparency and the dangers of causing damage to the brand with information. On the one hand, there is support that transparency and corporate values are keys to increasing market value (Tapscott and Ticolli, 2003). On the other hand, negative information about a brand significantly damage brand equity and affect it in the long run (Fournier and Avery, 2011). Cohn and Wolfe (2013, p.6) suggest that “business leaders must be one step ahead and have a system in place to identify and disclose information before involuntary disclosure unravels years of hard-earned trust”.
Consumers’ need for information is growing. While 53% of UK consumers considered ‘transparency and honesty’ to be important when buying from a brand, it has increased to 66% in 2013 (Cohn and Wolfe, 2013). Also, literature suggests that transparency should lead to positive effects in the mind of the consumer. Transparency has been related to multiple positive consequences such as purchase intentions and consumers’ evaluations of products, brands or companies (Bhaduri and Ha-Brookshire, 2011). Consumer studies confirm this in numbers. Cohn and Wolfe (2013) found that 9 out of 10 consumers indicate transparency is
very important in a purchase decision, after quality and price (Cohn and Wolfe, 2013). It is therefore hypothesized that brands that disclose more accessible, comprehensible, relevant and qualitative information will benefit from higher consumer choice. The expectation is that products that have been transparently marketed have an increased probability for discrete choice.
Hypothesis 1: Transparency increases the probability that consumers choose a particular product
Nature of Information
The presence of information is one thing. The nature of information, being perceived either positively or negatively by the consumer, is another. The goal of traditional advertising has been primarily to provide consumers with positive information about a product. Companies that attempt to win consumer preference tend to present their brand in the best light “by presenting positive features of the brand or associating the brand with positive symbols” (Crowley and Hoyer, 1994; p.561). This is what led to the dominance of the one-sided message strategy. This type of marketing can be seen as the traditional, or normal, marketing. Marketing has many times been found to have positive consequences in the market, such as brand awareness and recognition, favorable attitudes and loyalty (Keller, 2013). That is why it is expected that positive information has the tendency to result in higher probability of choice.
Hypothesis 2: Positive information positively influences probability that people choose a particular product.
There is ample evidence that disclosing negative information can have a positive effect in marketing (Eisend, 2006, 2007; Crowley and Hoyer, 1994). This is especially true for two-sided advertising, in which the “message […] provides both positive and negative information attributes of a product or service, with the negative information included voluntarily” (Crowley & Hoyer, 1994; p562). It has even been proven to be even more persuasive in some cases. For example, when consumers already hold negative beliefs or attitudes about a brand (Eisend, 2007). From a social perspective, the advertiser is more honest in recognizing attributes that could make the product less desirable, apart from making positive claims.
Both animals and human suffer from the negativity bias, which means that in most cases negative information is more dominant than positive information (Cacioppo, 1997; Ito et al., 1998; Rozin and Royzman, 2001; Baumeister et al., 2001). Applied to the real world,
people give greater weight to negative information when making evaluations (Ito et al., 1998). It also leads people to react more strongly to negative information (Cacioppo, 1997). As such, the negative information has greater valence and often is more extensively processed (Baumeister et al., 2001). However, the subject of the negative information is an important determinant for its effect. According to Crowley and Hoyer (1994; p. 562), one important negative attribute represents relatively more negative information than an unimportant negative attribute. This makes the way in which negative information is processed quite subjective, since the attributes that are considered important varies per person.
Disclosing negative information can also result in higher credibility for the source of the message, the brand for example (Kuster and Eisend, 2012). Being vulnerable by being transparent can be beneficial. In crisis situations, stealing thunder by breaking the news before other interested parties discover, has proven effective for increasing credibility and minimizing the damage on purchase intention (Arpan and Roskos-Ewoldsen, 2005). Therefore, disclosing information, even negative of nature, can be a strategic move. However, it does carry risk, since negative information about brand attributes can be just as well translated into negative attitude towards the brand as a whole (Eisend, 2007). In the same vein, negative information from fellow consumers in the form of online reviews are found to have a detrimental effect on customer based brand equity (Bambauer-Sachse and Mangold, 2010).
Past literature suggests that negativity certainly plays a role in the consumer’s decision-making process. We see that people increasingly seems to demand and appreciate a brand’s honesty about more negative aspects in marketing. In some cases, such as two-sided advertising and crises, disclosing negative information can lead to positive results. In others, it has the potential lead to negative evaluations or damage brand equity. Therefore, an “it depends” perspective should be taken. A shift to more truthful and transparent messages in marketing has created the need for more knowledge about the effect of relatively negative messages. Consumer studies (Cohn and Wolfe, 2012; 2013) point in the direction that consumers care about honest information being disclosed by the firm, and as such, it is expected that it weights positively in their decision making. Could it be true that these times, in which consumers demanding more honesty from companies, are more suitable for negative but honest information in marketing? Like past literature on stealing thunder, the information will become available eventually, so the first one to disclose it is the winner. It could be expected that honest brands that come forward with more truthful information about the more negative attributes of a product could be more positively evaluated by consumers, leading to an increased probability of consumer choice. Therefore, it is hypothesized that even transparency with negative information will have a positive effect on discrete product choice.
Hypothesis 3: Negative information positively influences probability that people choose a particular product.
Disclosure source
Whatever the amount or nature of the information, the way in which information is received is highly dependent on the source of the message. According to McGuire’s (1978) Information Processing Model, source is one of the five components of persuasive communication. Pornpitakpan (2004) elaborates further on the source variable credibility by stating that in the absence of source expertise (or task-related characteristics), people tend to look at more irrelevant cues such as physical attractiveness. They “may rely on (typically) more accessible information such as the source’s identity […] in deciding to accept a message’s conclusion” (Chaiken, 1980; p.752). In relation to brands, it could be that a brand which is not especially perceived to have expertise in healthiness of food, can have its claim accepted make up by marketing a very attractive-looking product or being from a cool brand. From an objective point of view, the consumer’s judgment would be less reliable since it is not based on benefits and costs, but on some more irrelevant cue.
In some cases, consumers already have some brand knowledge stored in memory. The cases that companies have built up some brand reputation, this can work in their advantage. Among others, it has the ability to attract customers to its product, thereby impacting bottom-line profitability (Ruth and York, 2000).
However, years of deceptive advertising have also led to an increase in skepticism towards product claims. A consumer study by Cohn and Wolfe (2013) found that 22% of people think that products are only presented in the most positive light and 14% believes that big businesses deliberately lack transparency and honesty in order to make more money. According to Koslow (2000; p.265), “consumers are skeptical of advertising not simply because advertisers sometimes lie or because their arguments lack credibility in the marketplace but also because skepticism helps individuals resist or cope with an advertising system that is frequently perceived as trying to sell them rather than to inform them”. For this reason, making many claims can even make the source seem unreliable. The optimal number of positive claims should be three, as the first three have a positive effect on consumer perception, but more than three claims tends to cause consumer skepticism (Carlson and Shu, 2014).
Literature suggests source characteristics such as attractiveness or reputation can have a positive effect in the mind of the consumer. At the same time, more consumers tend to view brands through a lens of skepticism. According to consumer studies, consumers tend
to should view a brand that embraces transparency in marketing more positively. And as a result of that, could enhance the acceptance of the message. Therefore, information disclosed by the brand should have a larger effect than the same information not being disclosed by the brand. It is expected that transparency in marketing by the brand itself should be more effective.
Hypothesis 4: Brand disclosure has a positive effect on discrete choice.
When information is communicated, the nature of information and disclosure source play a role in its response to it. In order to really test and separate the effect of transparency on the probability of choice, it was necessary to control for the nature of information and disclosure source. That is why these are vital variables in this study. Following from previous literature, this study is based on the conceptual model as depicted below. Transparency is expected to have a positive effect on discrete choice, and even stronger with both positive and negative information and when disclosed by the brand. Furthermore, the control variables education and health consciousness are expected to moderate the relation between transparency and consumer choice.
Method
Sample
The experiment sample consisted of 134 participants, who where each a by passer in a local supermarket and selected by means of convenience sampling (asked to participate). The sample contains 55.2% male and 44.9% female participants. About 64.7% of the sample is highly educated (HBO level and higher). The mean age for the respondents is 45 years old (SD=14).
Design
The research is conducted by means of a 2x2x2 factorial field experiment (n=134). This method of research was chosen to approach conditions of actual choice behavior. It was designed to show the effect of transparency in marketing on consumer choice, while also testing the differential effect of disclosure source and favorability of information. Discrete choice, the dependent variable, is conceptualized as probability that people choose to taste
Coco Water. Each of the variables is dichotomous of nature.
Table 1. Potential levels per variable.
Variable Type Levels
Discrete choice Dependent variable o Do not choose to taste Coco Water o Choose to taste Coco Water Transparency Independent variable o Not transparent
o Transparent
Disclosure source Moderator o Disclosed by other than brand o Disclosed by the brand
Nature of information Moderator o Negative information o Positive information
Pre-test
In a pre-test (n=28), the data was examined to find transparent statements to represent the low favorability of information (negative) and high favorability of information (positive) conditions. Participants were asked to rate each claim on the five criteria for transparent information, which should be (a) accessible (b) relevant (c) comprehensive (d) qualitative (e) reliable. Also, they were asked to indicate on a 7-point Likert scale how negative (1) or positive (7) they perceived each claim to be. First, the normality tests found that data was
normally distributed, which is a necessary condition to conduct an ANOVA. In the ANOVA, a significant difference was found between the different groups meaning that we can continue looking at the specific comparisons between statements using the contrast test. The range for negative information was set at a score of 1-3, and that of positive information was set at 5-7, all the rest is considered neutral information. When looking at the dataset, the first claim is rated very low, and the second very high on a 7-point Likert scale. The contrast tests show that the statements are not significantly different (p>0.05) when it comes to transparency value. The contrast tests show that the statements are significantly different (p<0.05) when it comes to favorability value. As such, they were the most extreme cases in the dataset that were equally transparent, thus qualify for the information to be disclosed in the field experiment.
Table 2. Suitable claims per condition.
Condition Claim Mean
transparency
Mean favorability
Transparent + positive information
Contains 98% coco water, 2% fruit sugar and citric acid
5,38 5,29
Transparent + negative information
Contains 2 sugar cubes per glass (200ml)
5,41 2,86
Field experiment
The experiment was conducted by means of sampling in a supermarket. A table was set up with two types of drinks, Hero Coco Water and Hero Orange Juice. The poster for Coco Water would be changed to reflect the different conditions of transparency (see appendix A). The poster of Orange Juice would be kept constant. Offering a second drink was necessary to make sure that the probability of choosing Coco Water was not just the result of people’s overall willingness to taste a free drink, but due to the effect of the marketing of Coco Water in the presence of a comparable alternative. That way, the probabilities of choosing Coco Water in the different conditions could be compared to see which variable would have the largest effect. There are two main reason for using Hero Coco Water in the experiment, as (1) there is detailed information to be found on the website about the specific ingredients of the product (coco water 98%, fruit sugar 2%, citric acid) that can be used to manipulate the transparency and (2) it is a relatively new and unknown product which makes that many people will not have brand knowledge about the product that could bias their decision.
For the coco water drink only, claims about the ingredients of the drink were added or left out to represent a particular transparency condition. In the brand disclosed conditions the information would be available on the posters. Where in the non-brand disclosed conditions
the experimenter would communicate the information verbally, and no information would be available on the poster.
First, participants are asked to give their opinion about the design of the poster, and notes are being made. This primarily serves as a way to distract the participants from the real behavior of interest, and to make sure that all participants have actively looked at both posters and have processed the information available to them in that particular condition. Then, they were asked if they would like to taste one the drinks. Their choice would serve as the primary data for studying the effect of transparency on product choice. After tasting, participants were asked to fill in a questionnaire (see appendix B). The experiment should shed light on the question whether consumers actually prefer a transparent, more honest, product over a less transparent product. It should show the how disclose source and nature of the message influence the probability of choice.
Survey
Each respondent was subject to one of the conditions, and made a mutually exclusive choice about which drink to taste: coco water, orange juice or none. This was reported on the form by the experiment. Furthermore, participants answered questions regarding their highest current or completed education and health consciousness. The first was measured in ordinal form. The latter consisted of four questions on the participants’ self-reported health consciousness when it comes to fat, sugar, vitamins / minerals and added flavorings / conservatives (table 3). Together, the questions amounted to a Crohnbach Alpha of .775 and thus could be transformed into one construct for “health consciousness” for each participant. Age and health consciousness could be used in later analyses, to see whether they lead to a different response to marketing transparency.
Table 3. Constructs regarding health consciousness.
To what extent do you take the following into account when determining what you eat and drink? (Please rate on a 7-point scale)
1 2 3 4 5 6 7
Fat level o o o o o o o
Sugar level o o o o o o o
Vitamins / minerals o o o o o o o
Results
In the first stage of the analysis, the data was analyzed in order to better understand the consumer responses in the different conditions. Frequencies are used to draw general conclusions about the percentage of the people that choose the coco water. In the second section of the analysis, a logistic regression analysis is performed on the model to test the effect between variables.
Descriptive data analysis
The survey results showed that the respondents liking for taste of the drink was significantly related to the type of drink was chosen (B=.503, p<0.01). The respondents considerably liked the taste of Hero orange juice better (mean=7.1/10) than the taste of Hero coco water (mean=4.9/10). Also, on average the respondents indicated that 43.09% of the price would be a fair share for the farmers cultivating the main ingredients of the drink. This was not significantly different for the ones who chose coco water or orange juice. When the respondents buy food and drink products, on average they care somewhat about fat (3.3/5), sugar (3.9/5), vitamins/minerals (3.4/5) and added flavorings/conservatives (3.5/5). It seems that sugar and additives are the most relevant subject to disclose information about in marketing. People that chose coco water cared about the same about these aspects as those choosing the orange juice. In the different conditions, the probability that someone would choose coco water was distributed as follows in figure 2. It is evident that in the non-brand disclosure conditions, the effect of either positive or negative information is minim compared to the control (non transparent condition). However, in the brand disclosure conditions, positive information leads to a higher probability of choice and negative information leads to a lower probability of choice. In the next section we will know more about the statistical significance of these effects.
Figure 2. Discrete product choice in different conditions (n=134).
59.30% 44% 58.30% 0.00% 20.00% 40.00% 60.00% 80.00% Control condition Brand disclosure Non-brand disclosure Negative information 59.30% 76.70% 53.60% 0.00% 20.00% 40.00% 60.00% 80.00% Control condition Brand disclosure Non-brand disclosure Positive information
Hypotheses testing
In testing the overall effect of transparency, it was not possible to make a distinction in the data between transparent and non-transparent, since all the transparent conditions were already disclosed by the brand or experimenter, and the information was already positive or negative. However, one could say that the mere availability of the information in all the transparent conditions could have an effect. Therefore, a dummy variable was computed for transparency, in which the non-transparent condition was coded as 0 and the four transparent conditions were coded 1. It was found that overall transparency did not have a significant effect on consumer choice (p=.974). Therefore, hypothesis 1 should be rejected. One disadvantage of this experiment was the small sample size, which contained only 27 cases in the non-transparent condition and together 107 cases in the transparent conditions. This would already make any effect less significant.
However, in combination with the interactions, we could take a look at the effect of the different types of transparency. In order to be able to test the interactions for both disclosure source and nature of information, it was necessary to perform two separate logistic regressions (table 5 and 6). Although this method increases the chance of a type I error, it was the preferred way to go since the interactions could be better interpreted when in separate models. Age and consciousness were included as well. Results indicated a marginally significant effect of the brand disclosed positive information (B=.882, p=.137), in support of hypothesis 2. Brand disclosed negative information (B=-.860, p=.149) was found to show a near significant trend in the opposite direction (lower probability of choice), thereby rejecting hypothesis 3. No significant effects on consumer choice were found when information, either positive or negative, was disclosed by the experimenter. While marginally significant results were found for transparent information disclosed by the brand, thereby supporting hypothesis 4. Age was weakly related to discrete choice in the negative information model (B=.041, p=.032) but not in the positive information model (p>.05). Health consciousness was not significantly related to the effect of transparency on consumer choice.
Table 4. Logistic regression part I: Effect of transparency.
B S.E. Wald df Sig. Exp(B)
Transparency -.015 .441 .001 1 .974 .986
Age .006 .013 .184 1 .668 1.006
Consciousness -.151 .184 .673 1 .412 .860
Table 5. Logistic regression part II: Interactions within positive information conditions.
B S.E. Wald df Sig. Exp(B)
Non transparent 3.723 2 .155 Brand disclosure .882 .593 2.210 1 .137 2.416 Experimenter disclosure -.246 .561 .192 1 .661 .782 Age -.019 .018 1.047 1 .306 .981 Health consciousness .112 .248 .205 1 .651 1.119 Constant 1.002 1.110 .815 1 .367 2.723
Table 6. Logistic regression part III: Interactions within negative information conditions.
B S.E. Wald df Sig. Exp(B)
Non transparent 2.360 2 .307 Brand disclosure -.860 .595 2.086 1 .149 .423 Experimenter disclosure -.141 .593 .056 1 .812 .869 Age .041 .019 4.623 1 .032 1.042 Consciousness -.198 .257 .591 1 .442 .821 Constant -.989 1.097 .813 1 .367 .372
The results of the research are set out in table 7. Although we found evidence for acceptance of hypotheses 2 and 4, no support was found for hypotheses 1 and 3. However, this is an interesting result in itself. In the next section the results will be discussed and put into perspective.
Table 7. Hypotheses underlying the research.
H1: Transparency increases the probability that consumers
choose a particular product
Rejected H2: Positive information positively influences probability that
people choose a particular product.
Marginal support H3: Negative information positively influences probability that
people choose a particular product.
Rejected H4: Brand disclosure has a positive effect on discrete choice. Marginal support
Discussion
The experiment has showed some interesting results. Just the communication of accessible, relevant, comprehensive, qualitative and reliable information (regardless of the nature of information and disclosure source) does not have the expected effect on consumer choice.
However, the factors disclosure source and nature of information have shown to have a marginally significant influence on the effectiveness of transparency. With caution, the model suggests that for transparency to have an effect on consumer choice, it should be disclosed by the brand. With caution, the results suggest that disclosure source is weighed significantly in the choice decision of the consumer. When someone other than the brand disclosed either positive or negative information, respondents acted similar to the non-transparent condition, where disclosure by the brand led to marginally significant effects. As such, there is evidence that marketing transparency can indeed be effective. This result is promising for the marketing field. When looking at the literature, the confirmation of this hypothesis is not surprising since there are many factors possible that could lead a participant to accept the source’s message more easily. For example, existing brand knowledge, brand attractiveness or credibility could be responsible for this effect (Keller, 2013).
But, the nature of information had a determining effect on which direction the effect would go. For positive information, brand disclosed information was rewarded with higher probability of choice. This is supported broadly by the literature since marketing has traditionally been about disclosing positive information, which has often been related to positive effects (Keller, 2013). It is therefore not surprising that positive information compared to no information leads to a positive result such as an increase in probability of choice.
When it came to negative information, the model showed an effect in the opposite direction. Negative information did not have the hypothesized effect of increasing the probability of choice, in fact it deceased it quite drastically. However, these results can be placed in line with existing literature. This finding is in line with two-sided messaging, where negative information can be effective, on the (important) condition that it is balanced by positive information (Eisend, 2006, 2007; Crowley and Hoyer, 1994). Other cases in which negative information has proven effective is when there were already negative beliefs about the brand (Eisend, 2007) or in times of crisis (Arpan and Roskos-Ewoldsen, 2005). None of these situations were the case in the field experiment. It could also be that, as the negativity bias predicts, a natural human tendency is to attach more weight to negative messages and to accept them more easily and act accordingly, eventually lowering probability of choice (Ito et al., 1998; Rozin & Royzman, 2001; Baumeister et al., 2001). Also, the negative information
could be more salient when it is about an important attribute to the product (Crowley and Hoyer, 1994). In this experiment, the subject of the information (sugar) could be perceived as very important to the participants and therefore would make the negativity of the message even stronger. This would indeed be in line with existing literature on negative information and consumer responses. The last explanation could be found in literature on cognitive dissonance, that explains the human reaction to unfavorable information. The obvious downside of disclosing full information, including the negative product attributes, is that people do not like what they see or hear. The theory as introduced by Festinger (1957) states that people avoid inconsistencies in their attitudes, beliefs and behaviors. Thus, information that does not fit with what we belief or want to belief will be sorted out and will not be taken into account. Later research of Stone and Cooper (2011) support the fact that self-consistency and self-affirmation can be a reason of how people might prefer not get certain information, because it means they have to change their attitudes, beliefs and behavior to create a harmonious situation again. In the context of this experiment, it could be that people see themselves as responsible and health-focused for example. Disclosing the amount of sugar in marketing might be sorted out in the information processing or will give a highly cognitive dissonance feeling which is rather unpleasant. Even though the product would seem attractive to them, the cognitive dissonance effect will make sure that they would not choose to taste the drink. Therefore there might be a chance that cognitive dissonance plays an important role in how transparent messages, especially negative ones, are received by consumers and the way they act on it.
It was expected that especially people with higher health consciousness would be affected by the negative information. This result was not supported. This is a surprising finding since self-reported health consciousness should have an even greater effect on actual choice according to the coherence principle (Stone and Cooper, 2011). People that see themselves as health-focused should make decisions in line with that self-concept.
This study was aimed at investigating the openness of people to information, even if that information is negative of nature. The results suggest that while positive information seems to be embraced and rewarded with a stronger overall preference, negative information seems to have a deterring effect that lowers that preference. The negativity effect is overruling the potential liking for the brand and its honesty. Since marketing transparency in this case has to be positive in order to have a positive effect on consumer choice, one could say that “honesty” in marketing is still not welcomed with open arms. Transparency is thus not a miracle concept in itself, but should be executed with care.
The study has contributed in putting marketing transparency on the map even stronger, showing a clear trend that it has an effect on consumer choice. Hopefully, it will
spur future research on the subject. As with every research, this study has its limitations. First, it has been limited of scope. Due to relatively small sample size, the results have not been as significant as they could have been. Since there was clearly a trend in the data, duplication of the research with a larger sample size could be useful to find a true effect of marketing transparency. Also, many other factors could be of importance in determining the effectiveness of transparency. For example, think of medium, timing and possible endorsers of the message, which could have an influence on how to message is received, and how people will act on it. Instead of focusing just on discrete choice, research should be done to unravel possible effects on other relevant variables such as purchase intention, loyalty, attitude etc.
The research conducted was only conducted in a sampling setting, and may be more reliable when conducted in a real shopping environment on shelf. Possibly, the experiments have probed participants to pay more attention to the information on the poster, and therefore they would have been more involved (Petty and Cacioppo 1986). This could lead to the information more salient to the respondent than it would have been in normal marketing. People might then only see the poster in a split second, among with many other marketing stimuli. Also, more research could be done about the way we process the information given to us in the transparent conditions. In future studies, it could be interesting to test the participants on the information that was given to them, to see what was successfully transmitted, and what was exactly the input for their decisions. Since consumers process a lot of information unconsciously, it could be interesting to conduct a study using heat mapping technology. This way, experimenters could visually study how consumers look at the information that is disclosed. Of course, the study was conducted in a local supermarket, and should be conducted on a larger scale in order to generalize the findings to the Dutch shopper population. The study would be even more interesting in a cross-country design, to shed light on the difference in receptiveness of marketing transparency.
Especially the cases in which disclosing fair information about ingredients, health effects and composition can be effective remain relatively unknown. “Honest branding” has proven to be an interesting direction of research that deserves more attention in research.
Managerial implications
There is clearly a gap between deceptive marketing on the part of brands and informed choice on the part of the consumer. It is up to brands to find a balance between positive consequences for the brand and providing the necessary information. This study has found evidence that transparency can have positive effects. It could, with more research, even be considered something that is beneficial for companies to incorporate in marketing, creating a win-win situation for both companies and consumers. Given the current consumer sentiment about misleading marketing, and growing skepticism, transparency in marketing could even be something that upgrades the marketing profession to a higher level of respect.
The findings of this study have interesting implications for the marketing field. Positive information, as has been used extensively in traditional marketing, has yet proven to lead to positive results. Transparency in this sense is backing up the brand by positive information that is accessible, relevant, comprehensive, qualitative and reliable. In short, which is useful for the consumer. The framework by Vishnawath and Kaufmann (2001) could prove a suitable tool for designing the information before it is being disclosed. Marketing, which is already key to building brand equity, could be even more effective being more transparent. Next to increasing the probability of consumer choice, there could be other positive consumer responses that are yet to be discovered. The obvious downside of disclosing full information, including the negative product attributes, is that people do not like what they see or hear. That is why practitioners should be aware of how possible negativity in the message influences consumers. Although consumers seem to demand more transparency, consumers can be sensitive to the negative loading of the message. When disclosing negative information, marketers should be aware of the amount of negativity of the message, and make sure that it is not about an attribute too important to the product, or too negative in the sense that people cannot relativize the message.
Consumer reports show that being transparent as a company is becoming more important. Global consumers have ranked companies such as Apple, Microsoft, Body Shop, Procter & Gamble and Google in the top 10 of most transparent companies (Cohn and Wolfe, 2013). Practitioners should keep a close eye on their competitors who have already incorporated the trend of being more transparent about, for example, ingredients. The effects of this type of marketing on consumer buying behavior and attitudes are becoming clearer by the day. However, especially in the food industry, practitioners should mind the fact that there is often a gap between what people say (having the need for more honest information or having high consciousness for health) and do. Incorporating apparent consumer needs is only beneficial when it also leads to positive results, which should be how consumers show that a brand accurately responds to their needs.
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Appendices
Appendix A: Stimuli in experiment
Condition I: Non transparent Condition II: Transparent; brand disclosure; positive information
Condition III: Transparent; brand disclosure; negative information
Condition IV: Transparent; non-brand disclosure; positive information * & Condition V: Transparent; non-brand disclosure; negative information *
