This I Like, That I Don’t Like: How Consumers’ Attitude About a Brand Influences Sales

Marc Vanhuele , Professor of Marketing - September 15th, 2009
This I Like, That I Don’t Like - happy and unhappy emoticons

Key Ideas 

• Consumer mindset accounts for approximately a third of sales variance, according to a sales response model that also takes into account the direct effects of the marketingmix.
• Competitors’ marketing mix and mindset metrics also have a major impact on brand performance. The former accounts for 13.8%of sales variance and the latter 7.9%.

Marc Vanhuele ©HEC Paris

Marc Vanhuele (PhD UCLA) is Professor of Marketing. His research focuses on how customers treat price information and how marketing managers can improve their decision making (...)

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Researchers have been trying to assess marketing effectiveness for many years. The purpose of many studies has been to enhance the relevance of marketing schemes. People have been striving for realistic insights as to which marketing investments actually translate into sales. Marc Vanhuele has conducted extensive research on consumer behavior, and Shuba Srinivasan is an expert on marketing metrics. The two of them decided to pool their expertise to conduct the first longitudinal study measuring the real impact of consumer mindset on brand performance.


MARKETING AND SALES

Two approaches have generally been used to investigate the effectiveness of marketing schemes.

• Quantitative analysis of the direct influence of the marketing mix on sales;

• Tracking of consumer mindset about a brand.

The first approach reveals how the four Ps* of the marketing mix affect brand sales; the second uses consumer mindset metrics (in particular, advertising awareness, brand consideration and brand liking) to portray brand “health.” In most companies, the second approach is used to explain brand performance after the fact, but it cannot be used to forecast future sales.


CONSUMER MINDSET AND SALES

The correlation between mindset and purchasing behavior is widely viewed as a fundamental aspect of marketing; yet, until now, no long-term quantitative study has ever made it possible to test this notion. “It is generally believed that consumer mindset, along with the marketing mix, is an influential element in the sales process. However, this assumption has hardly ever been the subject of serious study,” Vanhuele explains. Opening up this “black box” will permit a better understanding of sales variance and help generate more accurate forecasts of marketing relevance and effectiveness. It will ultimately enable marketing professionals to adapt their initiatives to consumers’ states of mind and thus make more effective use of their budgets.


THE IMPACT OF MARKETING AND MINDSET ON SALES

Vanhuele and Srinivansen’s model includes both types of variables—the marketing mix and consumer mindset metrics. According to the model, marketing explains 23.1% of a brand’s sales variance. Among the four components of the marketing mix, “place” (distribution) is the most influential, followed by “price” and then “promotion.” The three elements of consumer mindset that were measured account for 8.4%of sales variance, with brand consideration being the most significant factor. The study thus illustrates that consumer mindset has a direct, non-negligible influence on total brand sales. The other significant factors are habit, or “purchasing inertia” (46.8%), and competitors’ marketing. Vanhuele stresses the impact of competitors’ initiatives on purchasing behavior. Indeed, competitors’ marketing mixes account for 13.8% of sales variance. Similarly, consumers’ attitudes toward competing brands are responsible for 7.9% of sales variance. RESPONSE


TIMES AND MARKETING MANAGEMENT

“While it is important to understand that mindset metrics have a considerable influence on sales, managers must also be aware of the time component of marketing,” says Vanhuele. For instance, how much time is there between the day consumers start liking a brand less and the day they actually start buying it less? To answer such a question, you have to figure out how long it takes for the combination of mindset and marketing mix to reach its highest level of impact on sales. For “awareness,” the answer is 2.3months; for “brand consideration,” it is 2.2months; for “liking,” it is 2months. Associating this data with reaction times for the marketing mix (1, 1.6, and 2.1months, respectively, for promotion, price, and place)will facilitate marketing planning. For example, “in face of a significant decrease in ‘brand consideration’ (which will have its greatest impact on sales within 2.2months),marketing managers might focus on price or promotion, whose impact will be felt more quickly (within less than 1.6 months).”

* The four Ps: Product, price, place (distribution), and promotion.


Based on an interview with Marc Vanhuele and on his article, “Mindset Metrics in Market Response Model: An Integrative Approach,” co-authored with Shuba Srinivasan (associate professor of marketing and dean’s research fellow at Boston University School of Management, United States) and Koen Pauwels (associate professor of marketing at Ozyegin University of Istanbul, Turkey and at the Tuck School of Business, Dartmouth University, United States), forthcoming in Journal of Marketing Research .

BUSINESS APPLICATIONS
BUSINESS APPLICATIONS

This study provides valuable insights for the marketing of consumer goods. First of all, it illustrates the impact of consumer mindset on purchasing behavior. It measures its actual effects and shows how managers can use mindset metrics as a tool to forecast brand performance. Second of all, the study highlights the importance of taking into account not only your own marketing initiatives and consumer attitudes towards your brand, but also competitors’ marketing schemes and attitudes toward their brands. Finally, the findings concerning the reaction times for different types of marketing action will enable marketing professionals to more effectively target their intervention.

RESEARCH METHOD
RESEARCH METHOD

Research data was provided by Promethee, a brand performance tracker developed by TNS Worldpanel France. The researchers analyzed 62 mass-market brands in four product categories (breakfast cereal, bottled water, juice, and shampoo) over the period from January 1999 to May 2006. Their goal was to discover to what extent the marketing mix and consumer mindset were responsible for sales variance for each product.