Knowledge that Transforms

When designing their products, companies try to employ shapes that are both emotionally appealing and compatible with the brand's image. One way to accomplish these aims is to anthropomorphize a product's appearance. The current research investigates how people decode emotional “facial” expressions from product shapes and how this affects liking of the design, using three studies in the domain of cars and one in the domain of cellular phones. In accordance with theories on the perception of human faces, the first study shows that perception of friendliness is limited to the grille (mouth), while aggressiveness can be communicated with both grille and headlights (eyes). The next study examines the best-liked combination of these two emotional expressions and finds that consumers prefer the combination of an upturned (friendly) grille with slanted (aggressive) headlights. The authors further explain this finding on a process level by showing that this combination triggers a positive affective state of both high pleasure and arousal. The third study validates the results with automobile sales data, and a fourth study extends the findings to another product category.

Four theories on the economic rationale for warranty provision have been proposed in the literature: (1) Warranties provide insurance to customers and work as a risk-sharing mechanism, (2) warranties are a sorting mechanism and work as a means for second-degree price discrimination among customers with different risk preferences, (3) warranties work as a signal of product quality to consumers under information asymmetry, and (4) warranties work as an incentive mechanism for firms to reveal and improve product quality. The authors examine the conditions under which each theory would apply and derive testable implications from the data. They then assess whether these theories have empirical support in the U.S. computer server and automobile markets in the context of manufacturer base warranties. The results indicate that in both markets, warranties primarily provide customers with insurance against product failure, and warranties of different durations work as a sorting mechanism across customers with different levels of risk aversion. Warranties are not used to signal product quality or to provide an incentive for manufacturers to reveal or improve product quality.

Referral programs have become a popular way to acquire customers. Yet there is no evidence to date that customers acquired through such programs are more valuable than other customers. The authors address this gap and investigate the extent to which referred customers are more profitable and more loyal. Tracking approximately 10,000 customers of a leading German bank for almost three years, the authors find that referred customers (1) have a higher contribution margin, though this difference erodes over time; (2) have a higher retention rate, and this difference persists over time; and (3) are more valuable in both the short and the long run. The average value of a referred customer is at least 16% higher than that of a nonreferred customer with similar demographics and time of acquisition. However, the size of the value differential varies across customer segments; therefore, firms should use a selective approach for their referral programs.

This article examines the economic worth of product placement in movies over a time span of 40 years (1968–2007). The authors find an inverted U-shaped relationship between the year of the movie release and the returns associated with product placements. In addition, a similar inverted U-shaped relationship characterizes the economic worth of tie-in campaigns associated with product placements. These findings are consistent with the habituation–tedium theory used to explain the inverted U-shaped pattern in response to novel advertisements and suggest that the same mechanism could be influencing the response to an entire marketing medium. Overall, the results reinforce the notion that marketers find it increasingly difficult to get their message across using traditional media and underscore the need for the marketing industry to reinvent itself when new tactics lose their luster. The authors conclude with a discussion of additional empirical regularities.

In today's age of relational selling, a key challenge for salespeople is to determine the degree to which their customer-oriented behaviors drive sales performance. Therefore, this study analyzes whether a salesperson's customer orientation in sales encounters has an optimum level with regard to sales performance and customer attitudes. Using triadic data from a cross-industry survey of 56 sales managers, 195 sales representatives, and 538 customers, the authors provide strong empirical support for a curvilinear, inverted U-shaped effect of a salesperson's customer orientation on sales performance, whereas the effect of customer orientation on customer attitudes is continuously positive. Moreover, the findings reveal that the optimum level of customer orientation with regard to sales performance is higher for salespeople selling individualized products, in firms pursuing a premium price strategy, and in markets with a high degree of competitive intensity.

This research examines how sales professionals use emotions in marketing exchanges to facilitate positive outcomes for their firms, themselves, and their customers. The authors conduct three field studies to examine the impact of emotional intelligence (EI) in marketing exchanges on sales performance and customer relationships. They find that EI is positively related to performance of real estate and insurance agents, even when controlling for the effects of domain-general EI, self-report EI, cognitive ability, and several control variables. Sales professionals with higher EI are not only superior revenue generators but also better at retaining customers. In addition, the authors demonstrate that EI interacts with key marketing exchange variables—customer orientation and manifest influence—to heighten performance such that high-EI salespeople more effectively employ customer-oriented selling and influence customer decisions. Finally, the results indicate a complementary relationship between EI and cognitive ability in that EI positively influences performance at higher levels of cognitive ability. These findings have implications for improving interactions between buyers and sellers and for employee selection and training.

Marketers in the past have based their strategies on the assumption of infinite resources and zero environmental impact. With the growing recognition of finite resources and high environmental costs, marketers need to reexamine their theory and practices. They need to revise their policies on product development, pricing, distribution, and branding. The recent financial meltdown has added another layer of concern as consumers adjust their lifestyles to a lower level of income and spending. Companies must balance more carefully their growth goals with the need to pursue sustainability. Increased attention will be paid to employing demarketing and social marketing thinking to meet the new challenges.

While interest in customization is growing among consumers and academics, researchers have focused on consumers designing products for themselves. Many customization firms, however, are successfully positioning themselves as key sources for unique gifts. In this research, the authors examine whether factors under the firm's control (i.e., the level of design support provided and the presence of a strong brand) are differentially effective when consumers design products for themselves or as gifts for others. Using participants drawn from the relevant target market, they report two studies involving real customization tasks undertaken on fully functioning customization websites. The findings lead to the surprising conclusion that design support is less effective for consumers designing products intended as gifts rather than for themselves, raising expectations without a corresponding rise in evaluations. However, the results offer some good news to firms targeting gift-giving consumers. Both Studies 1 and 2 reveal that gift-givers place a higher value on their own time and effort and thus report a higher willingness to pay than those designing for themselves. This effect is diminished, however, when a strong brand is present and consumers share credit with the brand for the product's design.

This article examines key success factors for designing and delivering combinations of goods and services (i.e., hybrid offerings) in business markets. Goods manufacturers, unlike pure service providers, find themselves in a unique position to grow revenues through hybrid offerings but must learn how to leverage unique resources and build distinctive capabilities. Using case studies and depth interviews with senior executives in manufacturing companies, the authors develop a resource–capability framework as a basis for research and practice. Executives identify four critical resources: (1) product usage and process data derived from the firm's installed base of physical goods, (2) product development and manufacturing assets, (3) an experienced product sales force and distribution network, and (4) a field service organization. In leveraging these specific resources, successful firms build five critical capabilities: (1) service-related data processing and interpretation capability, (2) execution risk assessment and mitigation capability, (3) design-to-service capability, (4) hybrid offering sales capability, and (5) hybrid offering deployment capability. These capabilities influence manufacturers’ positional advantage in two directions: differentiation and cost leadership. The authors propose a new typology of industrial services and discuss how resources and capabilities affect success across categories of hybrid offers.