Agent Licensing Effect of Cause-Related Activity on Product Choice Justification

Jihye Park, Youngsung Kim (2013), "Agent Licensing Effect of Cause-Related Activity on Product Choice Justification,"  Journal of Korean Marketing Association, 28, 93-114.

김영성 상무(Ph. D)

ABSTRACT

Consumers are motivated to enjoy hedonic aspects of consumption. However, due to unjustifiable nature of hedonic consumption, pursuing fun and enjoyment and spending more on hedonic products often accompany negative feelings such as a sense of guilt and regret. Hedonic consumption is perceived relatively more discretionary and less valuable for spending than utilitarian consumption. People often avoid choosing and consuming hedonic products in the purchase decision context. However, when justifiable cues are available, people choose more hedonic alternatives than utilitarian alternatives. Past research found product choice justifiable cues from the purchaser's prior behavior. After volunteering community service and committing to a charitable act, people were likely to purchase hedonic products than utilitarian products. Opportunity to appear altruistic in a prior task enabled people to feel licensed to subsequently choose a hedonic item and reduce negative feelings associated with the product choice.People believe that they have earned the right to indulge after altruistic activities are performed. In this study, we attempt to extend Khan and Dhar(2005)'s licensing effect to corporate cause-related marketing activities. Licensing effect for the hedonic product choice can occur when the corporate altruistic activities are used for justifying hedonic consumption. Thus, the purpose of our study was to examine the agent licensing effect of cause-related marketing activity on product choice.

The first experiment was conducted to examine if Khan and Dhar(2005)'s licensing effect occurs when people are exposed to the information about the corporate cause-related activity. A total of 94 students participated in the experiment. In the agent licensing condition, participants were asked to read a news article about the recent corporate social activity, whereas those who were assigned to the control condition read a common story about the company. After reading the news article, both groups were asked to select one of two product choices (utilitarian vs. hedonic product). Results revealed that when people were exposed to the agent licensing condition, they chose a hedonic alternative more than a utilitarian alternative. Also, those who chose a hedonic alternative in the agent licensing condition had less negative feelings than those who chose a utilitarian alternative.

The agent licensing effect can occur through biased information processing. When people are exposed to the information about cause-related activity, they are likely to process the information to justify their product choice. Congruency bias occurs with pre-existing attitude or preference in order to maintain own existing beliefs and values. When consumers encounter information about a brand, they are likely to retrieve a brand attitude from memory and use their attitude as a basis to evaluate the incoming information. If new information challenges their initial attitudes, they are more likely to counterargue and reject the information. Therefore, the second experiment was designed to examine if consumers bias information in the agent licensing condition in order to justify their product choice. In addition, the magnitude of cause-related activity was investigated if it mediates the agent licensing effect under the licensing condition. A total of 119 undergraduate students participated. Different from the experiment 1,multiple choice sets were provided and the ratio of choosing hedonic options was calculated. Results revealed that people were likely to choose more hedonic options than utilitarian options when the donation size increased. Also, those who chose more hedonic options generated less counter arguments than those who chose more utilitarian options when the donation size was larger. However, the difference of support arguments was not found.

The third experiment was conducted to examine if the agent licensing effect persists with the exposure to the negative information. Confirmation bias occurs if the decision makers feel committed to a preferred alternative after the decision has been made. Once committed to a decision alternative, people prefer congruent or supportive information over incongruent or challenging information to avoid post decisional tension. Thus, it seems when people face with negative information that is contradictory to their prior decision on hedonic products, they are likely to ignore the information and persist their post decision. 2 (Information consistency: consistent vs. inconsistent) X 2 (Product type: hedonic vs.utilitarian) between subjects design was employed. A total of 98 undergraduate students participated in the third experiment. After the exposure to one of the four stimuli, participants were asked to attend the class for one hour and participate the second phase of the study. In the second phase, all participants read a news article about the negative event that recently occurs in the company. Results revealed that product choice difference was not found before and after people were exposed to the negative information. Also,differences of negative feelings were not detected in both conditions. The results confirmed that people tend to persist their product choice decision even with exposure to the disconfirming information.

This research has some contributions to extend choice justification and licensing literature. Consumers use not only their own altruistic service, but also corporate altruistic activity as a choice justification.This research also provides alternative explanation to the effect of cause-related marketing activity.Cause-related activity can be more powerful when it relates to the hedonic aspect of products. Academic and practical implications were further discussed.

- Key Words: Agent licensing, Choice Justification, Cause-related activity, Information processing bias

This paper is an excerpt of the abstract of a paper registered in the 2013 Marketing Research.

Research Summary

Consumers develop feelings of guilt when purchasing pleasure goods (e.g., perfume, alcohol, luxury items). Conversely, when purchasing utilitarian goods (e.g., a vacuum cleaner, books, functional clothing, etc.), no guilt arises because one can justify consumption by oneself. The results of three experiments show that companies can reduce the guilt consumers experience when purchasing pleasure goods. For example, consumers showed a stronger purchase intention toward a perfume product from a company that donates to society than toward one that does not, and their feelings of guilt decreased. Consumers who recognize the company’s good-faith behavior can reduce the guilt associated with purchasing pleasure goods, and their purchase intention can be found to increase. As a result, it can be seen that a company’s official-linked marketing, corporate social responsibility activities, and ESG initiatives not only create a positive external image but also influence actual product purchases.

Key Implications

Corporate public-interest activities are expanding through initiatives such as cause-related marketing, fair trade, corporate social responsibility, sustainability, and creating shared value. Recently, ESG management has been a trend of evaluating environmental, social, and governance factors and reflecting these in corporate investment. Major global private equity firms and institutional investors measure individual companies’ ESG indicators and decide whether to invest based on the results. In the case of Blackstone, the world’s largest private equity firm, it has stated that it will not invest in companies that do not properly implement ESG. Going forward, while it is important for companies to offer consumers “good products,” “affordable products,” and “diverse products,” if they fail to reach a social consensus on environmental, social, and governance issues, they are expected to be rejected by consumers.

Consulting inquiries (Director Youngsung Kim): yskim@eoncg.com

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