Dialog Marketing Competence Center

Exposé

Sustainable Product Offerings –

Consumer Preference Elicited by

Positive Emotions

Submitted by: Simona Hollstein (33248237)

Berliner Str. 108

34253 Lohfelden

Tel.: 05608-3672

Submitted to: Prof. Dr. Ralf Wagner

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Table of content

List of Figures .......................................................................................................................... III

List of Tables ........................................................................................................................... III

Abbreviations ........................................................................................................................... III

1. Introduction ......................................................................................................................... 1

2. Theoretical Consideration ................................................................................................... 7

2.1 Pricing Strategies ................................................................................................................ 7

2.1.1. Multi-Dimensional-Prices .............................................................................................. 11

2.1.2. Surcharged Prices........................................................................................................... 14

2.1.3. Discounted Prices........................................................................................................... 16

2.1.4 Per Unit Prices ................................................................................................................ 18

2.2. Buy-one-Donate-one Strategy .......................................................................................... 24

2.3. Consumer Motives for Pro-Social Behavior ..................................................................... 28

2.4 Emotions in Decision-Making with Reference to Charity Giving ................................... 37

3 Case Introduction .............................................................................................................. 45

3.1 Research Question and Hypotheses .................................................................................. 46

3.2 Methodology ..................................................................................................................... 52

3.3 Further Procedure ............................................................................................................. 55

4. References ........................................................................................................................ IV

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List of Figures

Figure 1. Classification of multi-dimensional pricing strategies............................................. 14

List of Tables

Table 1. Product properties with attribute levels ..................................................................... 53

Table 2. Time schedule ............................................................................................................ 55

Abbreviations

CBC Choice Based Conjoint

CRM Cause Related Marketing

DP Discounted Prices

EU European Union

HBM Hierarchical Bayes Model

PAD Pennies a Day Pricing

SP Surcharged Prices

MDP Multi Dimensional Prices

PUP Per Unit Prices

fMRI Magnetic Resonance Imaging

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Background: Today, there is a change of consumption behavior recognizable. Grasping the

trend of sustainable consumption, current literature points on consumers´ willingness to pay a

price premium for a product characterized by sustainable “green” or “social” attributes. The

awareness of purchasing and doing good the same way impacts product perception and

purchase intention. Another stream of research studies challenges marketing strategies to

effectively impacting customers´ price perception and purchase intentions. The thesis combines

these two research streams and follows the notion that an elicitation of single or multiple

emotions, based on the application of marketing strategies, significantly impacts product

preference building. To investigate this effectivity of marketing strategies in the context of

social product offerings, different product and price strategies will be tested and compared.

Objective: The thesis aims to test marketing strategies which are suggested to have a significant

impact on consumers´ product and price perception through the elicitation of emotions and

hence influence product preference building. In detail, these strategies consider the application

of a choice of multi-dimensional pricing strategies and the Buy-one-Donate-one strategy.

Method: To evaluate product preference building and especially the indirect impact of single

or multiple emotions, a choice experiment using a conjoint analysis based on a hierarchical

Bayes model will be conducted.

Key words: social product, multi-dimensional prices, Buy-one-Donate-one, emotions in

decision making, choice based conjoint, Hierarchical Bayes model

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1. Introduction

“Promoting sustainable consumption and production are important aspects of

sustainable development, which depends on achieving long-term economic growth that is

consistent with environmental and social needs.” – OECD (OECD, 2008, p. 7).

Today, governments, non-government organizations, researchers, theorists, and a

representative part of individuals claim sustainable development. Today, there still exists

massive gaps between living and working conditions in developed countries, industrializing

countries and the base of the pyramid of undeveloped countries. Indeed, ordinary workers in

undeveloped countries have been exploiting from reckless entrepreneurs focusing profit

margins and caring less about wages and healthy working conditions. On the other side,

inhabitants of Western countries having a comparable big purchase power often unconsciously

support the business of these entrepreneurs, because of their product preference based on cheap

prices and easily all days’ accessible products.

But, grasping the rising trend of sustainable consumption referring to green and socially

responsible products, it follows the conclusion that modern society became aware about the

challenges of globalization and sustainable economic growth. Especially non-government

organization have been promoting and negotiating the necessity of achieving a long-term

economic growth considering the protection of living and working conditions as well as

environmental issues. Due to this enlightenment, sophisticated citizens in Western countries

have been starting to reconsider their living concepts of individual wealth fare. In fact, every

person as a consumer with the opportunity to choose between varieties of product offerings can

impact the establishment of a sustainable economy. It is relevant to mention individual´s

income and logistics as limiting factor of product preference building and purchase behavior.

Although, every person is able to inform about production fairness, working conditions, or

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environmental exploitation concerns and thus change individual consumption behavior to

follow the path for a more sustainable economic growth.

The European Commission also contributes to the development of social businesses. In

2011, they launched an initiative to financially and legally support social enterprises. They

define social enterprises as businesses, whose target is to achieve social impact rather than

generating profit for owners or shareholders. They consider companies which use their earnings

for achieving a social mission, and firms which are managed by social entrepreneurs in an

innovative way. So far, the European Commission publishes relevant numbers showing that

social economy already has a share of 10 percent in Europe in 2014 (referring to GDP). They

add that more than 11 million workers, which means 4.5 percent of the active EU population

are employed in this economic sector and that new social enterprise foundations increases

(European Commission, 2014).

Individual´s consumption behavior usually follows self-interested motives (Small and

Cryder, 2016). These motives might concern the objective to safe money through favoring

cheap products. It also might become obvious that individuals favor strong luxury brands

providing a certain status or prestige to the owner. The new concept of sustainable lifestyle

follows opposite motives. The consumption might not only involve selfish interests, but also

sacrifice for the well-being of other foreign persons, the environment or the society at all (Small

and Cryder, 2016). To offer a better understanding of this lifestyle, a definition of sustainable

consumption communicated within the symposium of sustainable consumption is going to be

introduced. The expression was stated during the Oslo Roundtable symposium in 1994:

“The use of goods and services that respond to basic needs and bring a better quality

of life, while minimizing the use of natural resources, toxic materials and emissions of

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waste and pollutants over the life cycle, so as not to jeopardize the needs of future

generations”. (Shao, Taisch, and Mier, 2016).

The symposium highlights the necessity of consumption but claim the relevance of fair living

and working conditions for every human being on earth. These conditions need to contribute to

overall living quality. Besides, the conditions emphasizes the limitation and impact of natural

resources. They do not used to be exploited by humans and especially the utility of toxic

materials and the generation of emission and waste has to be diminished. Finally, the speaker

announces a given responsibility regarding the life of future generations which also need to

contribute of human living and working conditions, a moderate utility of limited natural

resources and a working eco-system on earth.

From the company perspective, a study conducted in 2010 illustrates that a 77 percent

share of consumers claim firms´ sustainable operations. Moreover, a Nielsen survey of 2012

outlines that nearly the half of all respondents are willing to pay more for a socially and

environmentally responsible product feature (Becchetti et al., 2014). This clarifies the already

existing awareness and contradicts the argumentation that consumers can be only attracted by

price arguments. Firms already recognized the opportunity related to this trend and incorporate

it into their marketing strategies and product development efforts. On the other side a lot of new

firms have been emerging to working on social issues. Also scholars recognized the awareness

and relevance of sustainable economics and the effectivity of promoting environmental and

social practices (Shao et al., 2016).

Empirical work in the field of consumer behavior manifests consumers´ increasing

demand for sustainable products. This becomes obvious in consumers´ attitude. Today´s

consumers do not only aim to satisfy elementary needs, they also want to use their purchasing

habits to represent and express a certain lifestyle and attitude. Current papers additionally

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suggest that consumers are willing to pay a price premium for socially responsible product

attributes, for instance non-animal experimentation or products produced without child-labor

(Shao et al., 2016). Small and Cryder (2016) propose several motives for pro-social behavior.

They refer to a pursuit of pleasure which might be connected to positive emotions and well-

being. Another study considers consumers´ attitude which leads to a certain feeling of altruism

and concern and finally prompts the consumers to buy a sustainable labeled product. Gutierrez

and Seva (2016) further mention that “eco” or “social” orientated consumers experience a

satisfaction occurred by contributing to a specific mission of environmental or social concern.

There is the assumption that this kind of altruistic action is significantly connected with a

feeling of well-being which however might involve the experience of positive emotions

(Gutierrez and Seva, 2016).

From another perspective, reality shows that missing communication and promotion of

a product´s origin leads to a slow development of green or social markets. A study of 2016

outlines three relevant factors influencing green purchase behavior: the individuals´

environmental attitude, cultural values and eco-labels. Especially according to eco-label the

study offers evidence that trusting and awareness of eco-label can have a relevant influence on

consumers´ green purchase intention. Researchers further argue that labels increase consumers´

familiarity and positive perception of green products in comparison to ordinary alternatives.

The same study finds out that premium price offerings have no moderating effect or even

though no negative effect on purchase intentions and that the outlined factors are greater

referring to the target group of educated individuals and in particular female consumers.

(Chekima, Syed, Oswald, Sohaib, and Sondoh, 2016). However, Rex and Baumann (2007)

emphasize that managers cannot expect increasing market shares by only using ecolabels as

marketing instrument and purchase argument of sustainable consumers. From the marketing

perspective they add, that ecolabels only serve as a technical information on product packaging.

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To make products sustainable or green, they claim further research within the field of

sustainable and green marketing, as for instance the analysis of consumer requirements and

promotion is needed. Research has to be obtained according to the effects of promotional

strategies on consumer behavior. They emphasize that there is no way to only improving the

existing labels on packaging, it is necessary to generate efforts in other parts of market

communication strategies (Rex and Baumann, 2007).

Main objective of this investigation is to confirm a significant impact of emotions

elicited by the application of marketing strategies. Marketing strategies are used to elicit

emotions and there is evidence given that emotions are heavily impacting product preference

building and purchase behavior. Current research within the field of psychology confirms that

the majority of human decision making is based on non-cognitive reasons. Consumers tend to

choose the product or the service which promises ”a better feeling” and the one with obviously

the best price-utility-combination. Even if conditions and situations lead to cognitive effort,

emotions are able to guide the perception in on or another direction. Thus, emotions are relevant

within purchase decisions as well as for the acceptance or the refusal of promotion strategies

and advertising appeals (Wagner, 2014).

Research Gap

The investigated marketing strategies consider the application of multi-dimensional

prices and Cause Related Marketing (CRM), in detail the application of the Buy-one-Donate-

one model. Thus, the relevant research gap lies in the interaction of different research streams.

In detail, the gap can be generalized as a missing investigation of marketing strategies in the

context of sustainable product offerings. Pursuing the confirmation of the suggested significant

impact of positive emotions, a market research survey testing marketing strategies developed

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for a real case social product is going to be conducted. The underlying conditions can be

summarized as the work on a sophisticated marketing strategy for a sustainable product offering

which shall be successfully launched in near future. As a trigger for the elicitation of positive

emotions and thus a positive impact on product evaluation and purchase intention, the

application of temporal reframed prices and a Buy-one-Donate-one strategy are going to be

tested. In addition, it is scheduled to test the impact of product extras serving to increase the

involvement of emotions.

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2. Theoretical Consideration

The thesis needs theoretical consideration regarding different research streams: the

investigation of marketing strategies, especially multi-dimensional prices as well as the study

of cause related marketing, especially the buy-one donate-one strategy. Further, a review of

current research on motives for pro-social behavior as well as the role of emotions in purchase

situations has to be outlined in detail. To do so, the following part is going to outline pricing

literature and especially different forms of multi-dimensional prices. Following this, the new

concept of the buy-one-donate-one strategy is described and manifested by current cases.

Theoretical consideration closes with the research status-quo of motives for pro-social behavior

and the impact of emotions in decision making with reference to charity giving.

2.1 Pricing Strategies

Pricing or price is one element of the 4Ps marketing mix framework introduced by the

researcher McCarthy in the second half of the last century. The framework completey consists

of product, price, promotion and place. Researchers as well as practioners embrace the

paradigm, utilize it in marketing theory and operational marketing management or critice the

integrity of its elements (Constantinides, 2006). Nonethless its critism, the model states the

most refered marketing framework and serves as the base for the development of marketing

strategies. Even if it is useful to always consider all marketing mix elements, there is a special

relevance of pricing as the most powerful marketing instrument. Today, based on the

globalization and the fact that in many sectors product qualitiy differences disappear so that the

main and only argument is the price. No other marketing instrument has a comparable power

impacting sales, turnover and even profits in a short time period (Decker, Kroll, Meißner, and

Wagner, 2015). The following part primary gives a status-quo of pricing literature development.

Then, the integrated pricing approach obtained by Estelami is going to be outlined in detail.

The ongoing development of this approach and the systematic differenation of three forms of

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multi-dimensional prices is going to be described in detail. Emphazise leis in the strategy of

temporal reframing of prices and the pennies-a-day pricing strategy.

The following brief literature review illustrates a choice of relevant studies within the

field of pricing strategies. Objective is to offer an understanding about the development of

pricing research towards the development of the integrative concept of multi-dimensional

prices. An early pricing study by Russo (1977) focuses on consumers´ limited ability to

compute unit prices. The conducted study differ between the presentation of unit prices on

individual shelf tags or a list where all unit prices of different brands are included. As assumed,

there is a better perception of the prices on the list confirmed. But, it is interesting that the

author refers to the difficulty of shelf tag unit prices. He argues that this method leads to the

choice of better unit prices, but not to the switch to another cheaper brand (Russo, 1977).

A few years later Capon and Kuhn (1982) publish a study testing the calculation of unit

prices. They investigate the question whether subjects are able to calculate the best possible

buy. They surprisingly outline that only a few subjects within their study made use of a ratio

strategy and calculated the per unit price, when various package prices and sizes are offered

(Capon and Kuhn, 1982). Moreover, other test results, containing the situation that the unit

price of the bigger package is higher than the price of the smaller package, confirm that

consumer rarely conduct required computations (Estelami, 2003).

Greenleaf, Morwitz and Johnson test consumers processing according to the application

of partitioned prices. This incorporates the procedure to charge a product with two mandatory

prices, for instance a base price and the delivery charge. The output leads to the assumption that

partitioned prices leads to the decreases of consumers processed total expenditures, hence it

increases the demand. Supplementary, the authors outline that the price presentation manner

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and the consumer´s brand affinity impacts the perception of this pricing strategy (Morwitz,

Greenleaf and Johnson, 1998).

Another pricing research field refers to price semantics which means the specific

wording used for price presentations. Commonly used semantics consider for instance price

reduction presentations as “… was $50, it is now $34.99!”. Also frequently used are

comparisons with a competitor´s current price or some other reference prices which show that

the given offer is the cheapest and best one (Estelami, 2003). The researchers around Grewal

(1996) conduct a study examining these price semantics and their moderating effects caused by

situation and discount size. Their study confirms that both effects impact the effectiveness of

price semantics. Besides, there exists a classification of widely used semantic cues as either

low-consistency or high-distinctiveness (Grewal, Marmorstein, and Sharma, 1996).

Empirical evidence is given according to the field of temporal reframed prices. The

researcher Gourville (1998, 1999, 2003) efforts its concept of temporal reframing of prices. His

Studies confirm that the temporal reframing, for instance as a “pennies-a-day price strategy”

can help to reduce the perceived monetary value of the transaction. He further investigates

different levels of aggregation and their impact as well as the dollar magnitude. He confirms

that a pennies-a-day strategy does not depend on per-day framing but more aggregated framings

are preferred in comparison to for instance per-year framing. Additionally, he manifests the

relevance of the adequate way of framing and that the effectiveness reverses with the magnitude

of related expenses (Gourville, 2003).

The framing of price promotions is another relevant pricing strategy. Price promotions

can be designed as illustrated reductions in dollar sums or the framing of several percentages

off the regular price. A study conducted by the researchers around Chen (1998) emphasizes this

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strategy and test the different price promotion framings according to high-price and low-price

products. The main results outline that regarding high-price products a price reduction framed

in dollar terms seems to be more significant and the opposite conclusion is given for low-price

products (Chen, Monroe, and Lou, 1998).

The idea to establish complicated price endings in favor to gain consumers attention

belongs to one of the most popular and best documented pricing strategies (Estelami, 1999).

Regarding modern Western-markets, the majority of product offerings in media as well as the

frame of sales promotions of retailers communicate odd prices. These special prices can be

further distinguished between irregular price endings (e.g. $1.99) or as the last number before

a higher and round price level begins (e.g. $199). The strategy is based on the common belief

that minor changes in price ending can impact consumers’ price perception. Today, it is a

general practice of retailers to offer the assumption of a lower price without minimizing it

considerably (Estelami, 1999). Field studies confirm the effectivity of 9 $ price ending

strategies and thus increase the demand for the product. Another evidence of 9$ price endings

is given. They are less effective when sale promotions are used (Anderson and Simester, 2003).

One argument to explain this phenomenon is the common price reading procedure to start left

and follow the line to the right. Consumers have learned that the rightmost numbers correspond

to lower monetary values so that their attention primary concerns left numbers (Estelami, 1999).

Another perspective offers a more recent study investigating odd price endings comparing the

threshold in consumer response of odd prices referring to cent digits a well as an odd number

left of the decimal point. The findings demonstrate that both methods, odd prices for cent digits

as well as odd numbers of Dollar or Euro amounts do not generally lead to a threshold in

consumer response. The authors further manifest the existence of conflicting empirical results

and advice managers to do not apply an overall odd price strategy, but to check threshold for

their brands and products individually (Wagner and Beinke, 2006).

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2.1.1. Multi-Dimensional-Prices

Consistent to the literature review of pricing strategies, marketing studies often focus

on single factors of price perception. For instance, they refer to odd price endings, price

promotions or price semantics. The conclusion is drawn that every price complexity leads to

difficulties in processing prices accurately (Estelami, 1999). The new approach of multi-

dimensional pricing strategies is primarily developed by the researcher Estelami (1997, 1999,

2003). He approaches the issue of increasing price complexity and works on an integrative

concept of price influencing factors. Within his first paper referring to this special topic in 1997,

he offers a definition of multi-dimensional prices (MDP):

“Multi-dimensional prices are prices which consist of multiple components-such as

prices quoted in terms of the combination of monthly payments and number of payments

rather than a single lump sum dollar amount.”(Estelami, 1997, p. 392).

The author highlights the different price components a product offer might consist off. He

points on the integrative approach and hence not only one component but the interaction of

different characteristics influences consumers’. In a later publication he enhances that multi-

dimensional prices are prices which require mental computation to determine the real monetary

value behind the offer (Estelami, 2003).

Within its first study according to this topic Estelami confirms that consumers do not

evaluate multi-dimensional prices rationally. He further points out that consumers perceive

multi-dimensional prices by integrating different price dimensions independently. Besides,

subjects evaluate prices less accurate when the number of dimensions increases. Another

interesting evidence is that consumers pay stronger attention on monthly payment amounts than

on the number of payments at all (Estelami, 1997). This underlines the utility of installment

payment offerings.

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Estelami (1999, 2003) invests efforts in further research in the field of multi-

dimensional different ways to design multi-dimensional prices. He offers various examples of

multi-dimensional calculations. For instance, if there is a given price communication like “100

$ original price, 10 per cent off”, then the customer has to obtain different calculations (for

instance “100*(1-0.9)”) to calculate the final monetary value of the considered expense.

Multiple dimension are represented by a two-step calculation. The same strategy works for the

drawing of a discount of a total amount like “50 $ original price, 5 $ off.” The consumer needs

to define and subtract the discount of the total amount, no matter if it is a percentage off or a

total amount discount. Another common way to create multi-dimensional prices is to add

surcharges, for instance plus five percent sales tax or 30 $ delivery charge. These prices also

lead the consumer to carry out multiplications and/or addition tasks. According to Estelami´s

approach, other multi-dimensional prices are leasing amounts or packaged good prices which

always require mathematical calculations. Lastly, there are opportunities to offer down

payments or prices which are difficult to evaluate, for instance 200 $ versus 198 $ (Estelami,

2003).

Estelami explains the effect behind these kinds of prices. Easy or difficult arithmetic

tasks lead to inaccuracy and cognitive stress. Media advertising or retail sales efforts promoting

a product with multi-dimensional prices communicate the way that consumers still have to

calculate the total amount. Consumers at the early stage of decision making process or during

a daily purchase act in a convenient store or super market do not use a computer, pen and paper

or other tools to calculate the total expense for every chosen product. This leads to an uncertain

price perception or failing cost estimations as well as cognitive stress (Estelami, 2003).

Already Hitch (1978) offers evidence that a mental overload during the price

computation process leads to cognitive pressure and inaccuracy in the related decision-making

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process. Estelami completes this approach by mentioning the restricted capacity of human

short-term memory. Price design using multiple dimensions and requirements for mental

computations might result in an overload of the use of an individuals´ short-term memory due

to the mental arithmetic (Estelami, 2003). Estelami points to the fact that multi-dimensional

prices demotivate consumers to combining different price dimensions and hence evaluating the

considered expense. In contrast, consumers tend to pay attention on one of several dimensions

and to ignore others (Estelami, 2003). This evidence manifests the opportunity marketers have

to introducing multi-dimensional prices to increase sales. Overall, the complexity of the

arithmetic operation, the numerical complexity of prices are the main trigger of a consumer´s

price evaluation effort (Estelami, 2003).

Paper Main Findings

Hitch (1978) Experiments investigate the role of information storage in working memory in mental arithmetic tasks. Study confirms human difficulty and certain tactics to solve complex arithmetic tasks.

Estelami (1997) Introduction and definition of multi-dimensional prices (MDP). Study investigates the perception of multi-dimensional prices. Evidence is given for irrational evaluation of these complex prices.

Estelami (1998) Authors examines the effect of various price ending strategies on consumers' computational efforts.

Estelami (2003) Paper concludes implications of MDP on past research findings and reflects the existing understanding of consumers response to prices.

Kim & Kachersky (2006) Paper investigates the importance of price fairness. Empirical findings according to price fairness are given.

In 2006, the authors Kim and Kachersky incorporate Estelami´s findings and develop a

classification of price arithmetic. They propose a distinction of three groups classifying

different MDP strategies. These groups are announced as: Surcharged Prices, Discounted

Prices, and Per Unit Prices.

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Figure 1. Classification of multi-dimensional pricing strategies

Based on Kim and Kachersky (2006). Additional focus on Temporal Reframing of Prices and

the strategy of Pennies-a-Day Pricing.

The following part of this chapter will offer relevant insights of the drawn classification

groups. The group referring to Per Unit Prices (PUP) will be described in detail. Special

relevance lies in the development of the underlying concept of Temporal Reframed Prices and

the application of Pennies-a-Day pricing (PAD) strategies.

2.1.2. Surcharged Prices

Prices, which consist of minimum two single price components, belong to the field of

surcharged prices (SP), also called partitioned prices. This pricing strategy includes the splitting

of total prices into for instance a bigger amount for products or services and a smaller amount

for surcharges staying in a strong relation to product or service (Morwitz, Greenleaf, and

Johnson, 1998). Instead of offering an all-inclusive price, many firms, for instance online

sellers, appreciate product offerings with an extra charge for installation, handling, or service

efforts. For instance, a hi-fi module is priced to $ 900 plus a surcharge of 10 % for delivery and

installation. In contrast, a combined price would consider the hi-fi module as well as delivery

and installation to a fixed price of $ 1,200 (Lee and Han, 2002). Obviously promoting the base

Multi Dimensional Prices (MDP)

Surcharged Prices (SP)

Discounted Prices (DP)

Per Unit Prices (PUP)

Temporal Reframing of

Prices

Pennies-a-Day Strategy (PAD)

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price and informing about surcharges after convincing the customer to buy is a common way

to increase the offer´s appeal and hence sales of the product. This is simply based on the

promotion of a smaller amount.

Another critical point of view is the firm´s responsibility for surcharges. Consumers

develop discrepancies and feel manipulated when companies seem to be responsible for

surcharges or even worse try to increase their revenue through them. Sometimes, firms cannot

avoid invoicing surcharges to their customers, but there is a difference between a surcharge for

delivery or city tax fees during a hotel stay (Bambauer-Sachse, and Mangold, 2010).

The researchers around Greenleaf (2016) recently publish an overview about the status-

quo of SP literature One of the main evidence given within their illustration of various studies

is the fact that surcharge salience mainly impacts positive perception of SP (Greenleaf, Johnson,

Morwitz, and Shalev, 2016). The acceptance of the surcharge depends on the individual benefit

itself. Testing a product by obtaining different surcharges but keeping the same total price leads

to different consumer evaluations, depending on which product component is surcharged

(Hamilton and Srivastava, 2008). The effectivity of the strategy also depends on the amount of

surcharges offered. SP are moderated by referenced surcharge amount and surcharge

presentation format. More than one surcharge leads to a decrease of purchase intention. Finally,

consumers are more sensitive to product prices than to additional sales taxes (Xia and Monroe,

2004). Another study confirm that consumer good demand decreased when price tags including

sales taxes are presented in comparison to tags without taxes (Chetty, Looney, and Kroft, 2009).

SP belong to a pricing strategy utilizing a level of price complexity and the inaccurate

price perception of consumers. Thus, studies confirm the positive effect to enlarge demand and

sales for a product, but is heavily dependent on choosing the right strategy for the right product

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(Bambauer-Sachse and Mangold, 2010). Discrepancies and the feeling to be manipulated are

negative customer perceptions this strategy might evoke.

Paper Main Findings

Morwitz, Greenleaf & Johnson (1998)

Study investigating consumers processing and recall of total costs and their purchase intention according to SP. The results suggest that SP decrease consumers recalled total costs and increase their demands.

Lee & Han (2002) Study according print advertising of SP shows that the usage of SP may generate negative reactions among consumers and this may adversely affect their attitude towards the brand.

Hamilton & Sirvastara (2008)

Four studies examine how SP differently affect consumers’ preferences. Consumers’ reactions according to SP are moderated by the perceived consumption benefit of the individual components.

Chetty, Looney & Kroft (2009)

Experiment in grocery store presenting price tags with and without taxes. The researchers found out that posting tax-inclusive prices reduced demand by roughly 8 percent.

Bambauer-Sachse & Mangold (2010)

Study confirms the impact of marketer´s responsibility for a surcharge. This responsibility plays an important role regarding the effects of SP in comparison to total prices.

2.1.3. Discounted Prices

It is a widely shared opinion that price discounts are the most common form of sales

promotion (Palazon and Delgado-Ballester, 2009). Discounted prices (DP) can be understood

as a reduction of a standard promoted price of a product or service. It is often framed as either

an amount off or percent off. It is generally presented on an additional price tag. Even if both

discount forms need the arithmetic calculation to determine final prices, there are differences

according to their effects. A possible explanation also lies in the consumers’ inaccurate

performance of mental computations and the individuals tendency to use simplifying heuristics

to form an opinion about a product or service (Weisstein, Monroe, and Kukar-Kinney, 2013).

Studies according to discount framing for high-price and low-price products

demonstrate the advantageous tactic of both product segments. Promotions in amount terms,

for instance in dollar, are more useful for high-price products. As explanation can serve the

aspect that percent terms appear small in comparison to dollar terms (10 % of 1,000 dollar ver.

100 Dollar off discount). The opposite is observed according to low-price products. For instance

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super markets benefit of price promotions in percent terms, because these terms appear higher

than the discount of a cent amount. These relative price reductions of, for instance 50 %, appear

high, even if the real saving is only $ 0.25 (Chen, Monroe, and Lou, 1998). Other findings show

that percentage-off promotions tent to contribute to higher post promotion price expectations.

Additionally, post promotion choice is more likely, when the DP is framed as percentage off

and not cents-off (DelVecchio, Krishnan, and Smith, 2007).

Three later experiments test the impact of dynamic price-framing tactics for the same

product of the same retailer according to consumers´ perceived price fairness and purchase

intentions. These studies confirm that the application of various price framing strategies,

compared to no framing, impact and mitigate consumers´ negative reaction to transaction

dissimilarities. Further, as the degree of perceived offer dissimilarity increases, price

disadvantaged consumers´ perceived price fairness, trust, and repurchase intentions are

improved. The authors of the same study also examined price framing tactics according to

different product price levels, customer segments, and framing formats. In the same line with

Chen et al. this study confirms that percent off framing is more effective regarding low priced

products and that is more useful to obtain dollar of framing for high priced products. Further,

prospective customers, which buy the first time of this specific retailer, favor discounts no

matter the framing in comparison to gift cards. In comparison, regular customers prefer gift

cards in comparison to percent of discounts. The alternative offer of a free gift in comparison

to the gift card is less attractive. Caused by the missing choice it limits the perceived transaction

value (Weisstein, Monroe and Kukar-Kinney, 2013).

Research within this pricing field mainly refers to discount effects, explicit versus

implicit discount forms, discount size, reference prices, and discount frame. Similar to the brief

overview about different surcharged pricing strategies, various studies offer evidence for

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positive as well as negative effects. To draw a brief summary, positive effects are a probable

chance for sales enlargement, the opportunity for brand changes, stockpiling purchases as well

as the expansion of perceived product value. Negative effects of DP consider the decrease of

future purchase intentions, the loss of perceived product quality or finally the reduction of

reference price formation (Würtz, 2015).

Paper Main Findings

Chen, Monroe & Lou (1998)

Study examining discount framing in percentage and dollar terms according to high-price or low price products. According to high price products a price reduction in dollar terms is more useful than the same price reduction framed in percentage terms. The opposite is observed regarding low price products.

DelVecchio, Krishman & Smith (2007)

This research investigates how promotion frame and depth moderates price expectations and choice. Findings show a direct effect of promotion depth. It is confirmed that compared with cents-off promotions, high-depth percentage-off promotions lead to higher post promotion price expectations. Following this, post promotion choice is higher when high depth promotions are framed in percentage terms.

Weisstein, Monroe & Kukar-Kinney (2013)

Experiments test the impact of dynamic price-framing tactics according to consumers perceived price fairness and purchase intentions. Further investigation shows that various framing tactics have different effects regarding various product price levels, customer segments, and framing format.

2.1.4 Per Unit Prices

Nowadays, companies contribute of technologies and are able to monitor consumers´

usage behavior easily, for instance mentioning mobile phone service contracts. This monitoring

allows them to offer new pricing schemes like per-use or per unit prices (PUP), which means

to pay for the usage of an amount of products or services or the contradictory concept of flat

rate tariffs, which means to pay a fixed fee for a period of time to use a product or service

without limits (Lambrecht and Skiera, 2006). Further, it also exists mixed concepts, called two-

part tariffs, where consumer pays both. They pay a certain fixed amount (like a flat-rate), for

instance for the access, as well as the sum of defined amounts of usage (Wolk and Skiera, 2010).

As examples serve Internet access flat rate tariffs, mobile phone contracts or the membership

in a health or fitness clubs. In detail, mobile phone contracts usually offer a monthly fee for a

choice of services and for a period of 24 months (Lambrecht and Skiera, 2006).

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As outlined the field of PUP can be distinguished by the contradictory concept of flat

rate tariffs as well as a mixed concept combining these two pricing strategies (Würtz, 2015).

Evidence of current studies focusing on the effects of PUP or flat rate pricing indicate that

customers tend to choose the wrong payment opportunity. They often choose the price charge

which does not diminish their expenses. Consumers tend to underlie biases. Flat-rate bias

explains that an individual chose a flat-rate tariff, even if per use charging would cost less. On

the other side, it is possible that individuals prefer choosing PUP, even if a flat-rate tariff would

fit better their usage behavior. Studies further show that flat-rate bias are more relevant than

bias based on the PUP strategy (Lambrecht and Skiera, 2006). Further, a study manifests that a

lack of flexibility leads to the choice of a flat-rate (Krämer and Wieworra, 2012).

Today, consumer have the opportunity to choose between a range of optional tariffs that

differ in their conditions for access and usage. A study refers to this flexibility and analyzes the

impact of tariff-specific preferences on responsiveness of consumers ‘usage and tariff choice

to changes in prices. This investigation shows that consumer heterogeneity according to tariff

preferences leads to heterogeneity according to their price sensitivity. Especially, consumers

with tariff-specific preferences are less sensitive to price changings of their preferred tariff in

comparison to other consumers. This manifests that firms should offer a variety of different

tariffs than a single pricing plan (Wolk and Skiera, 2010).

Further studies outline different causes for tariff based choice bias. They refer to the

insurance effect, the so called “taxi meter effect”, the convenience effect, and the over

estimation effect. As the focus of the underlying study of this paper lies on the development of

PUP to the concept of temporal reframing, the effects of these biases will not be considered in

detail.

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Paper Main Findings

Lambrecht & Skiera (2006) The authors conduct four empirical analyses showing that flat-rate bias is more relevant than pay per use bias based. They classify potential causes of flat-rate and pay per use biases.

Wolk & Skiera (2010) Study analyzing the impact of tariff-specific preferences on responsiveness of consumers ‘usage and tariff choice to changes in prices. Consumers´ heterogeneity leads to varying tariff preferences.

Krämer & Wieworra (2012) This investigation adds findings on tariff biases by manifesting that a lack of flexibility leads to choosing a flat rate. According to tariff biases the insurance and overestimation effect are confirmed.

Temporal reframing of prices

Temporal reframing of prices is not investigated by many researchers yet. One reason

to explain the poor investigation might be the underlying contradiction of the prospect theory

based on Kahneman and Tversky (1981). The theory underlying function primary explains that

several small losses harm more than one big loss. Thus, several small expenses might harm

more than one big expense for a product or service. Although, it developed a pricing strategy

using the presentation of reframing prices in several small amounts.

Especially the researcher Gourville (1998, 1999, 2003) deals with this special pricing

strategy. He emphasizes on a strategy of heavy price division and the price presentation as a

small ongoing expense, like a daily product or service fee (Gourville, 1998). This strategy

allows marketers to promoting small, partial prices. Although, these partial prices often only

serve price presentation utilities and the total price stays aggregate, they effectively impact

customers´ price perception and purchase intention. Gourville mentions different examples for

a useful application of temporal reframed prices. For instance, magazines per-issue subscription

prices or charities which frame their donation request and membership fee as a daily amount

instead of a yearly fee (Gourville, 1998). The most extreme way of price reframing the

researcher calls “Pennies-a-Day” strategy (PAD). He finds evidence for the effectiveness of

PAD in the conduction of multiple research studies. PAD price framing simply means that the

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total price is presented as an ongoing daily amount of less than one dollar. The strategy benefits

of the attractive price promotion linking the product with a daily expense, for instance the cup

of coffee in the morning, to demonstrate affordability to the customer (Gourville, 2003).

Studies within this field examine different transaction scenarios where costs are

temporally changed. It was mainly predicted that PAD framing in comparison to aggregated

price framing leads to a decrease of price perception and the enhancement of transaction

compliance. Three pilot studies, amongst others also referring to a donation case, point out that

PAD framing can significantly decrease monetary magnitude of a consumer transaction relative

to a more aggregate framing and hence improves the attractiveness of the promoted product. A

study confirms PAD effectiveness especially at small daily dollar amount and the existence of

a monetary threshold. Another one demonstrates that the effect of this pricing strategy also

depends on the nature of expenses a consumer recall for the comparison of affordability. The

results imply the opportunity of PAD strategies to increase the primary demand of products and

to increase the important perception of affordability. The author also concludes that they might

support the fighting of market shares within a highly competitive product category (Gourville,

1998).

Extending the research review within this field, it is relevant to mention another study obtained

by Gourville in 1999. The underlying experiment shows that the promotion with a per-day

framing of price as well as the explicit comparison with a daily expense do not further increase

effectivity of PAD pricing strategy. On the other hand, if there is a promotion of an aggregate

price framing and an easy comparison to a daily expense is drawn, it is already possible to

develop a PAD perspective. Based on these results. It can be followed that it is not necessary

the per-day framing which leads to an effective strategy, it is even more the realization of the

expense comparison either implicitly or explicitly (Gourville, 1999).

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Another more recent paper of Gourville also works on the extension of PAD strategy

(2003). He supplementary investigates the strategy´s robustness referring to the time period of

reframing and the transaction amount size. He studies college students which have to decide

between different framings and dollar amounts. The findings show that the effectiveness

depends on the underlying expense. He manifests that a spending of $4 or less benefits of PAD

strategy and that a relative big expense of $11.50 negatively impacts this strategy. These

reference amounts lead assume the existence of a reversal point from which students are less

attracted by PAD pricing. The further prediction states that this reversal points might change

across target groups. Another finding leads to the assumption that the PAD concept is part of a

bigger phenomenon which is based on the idea that relative aggregation of prices makes product

offerings more attractive, even if the total price is reframed to per day, per month or per year

charges (Gourville, 2003).

Complementing these positive effects, Bambauer-Sachse and Mangold (2009) outline

positive as well as negative effects on product evaluation by temporal reframing.

Disadvantages especially become obvious through higher price complexity perception and the

increasing probability of the feeling being manipulated by the marketer. The researchers

conclude the overall effect might be either negative so that they do not give a recommendation

for the application of this strategy. They further advice that it can be useful to distinguish

positive and negative effects according to the related product.

Bambauer-Sachse and Grewal (2011) extend the research within this field and conducts further

studies to investigate the role of four moderating factors: price endings, price level reframing

time period and the individuals´ calculation affinity. In comparison to even price endings,

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temporal reframing with odd prices achieves a lower price attractiveness and leads to the feeling

of being manipulated. It is also presented that low price levels contribute of aggregated prices,

even though high price levels can benefit of temporal reframing. Moreover, reframed prices are

mostly effective in short time periods and with the consideration of price conventions. Another

relevant study gives insight that individuals with a high calculation affinity are more suspicious

regarding temporal price reframing. They act rationally, calculate total costs easily and hence

do not perceive price attractiveness of reframed smaller partial amounts. Instead, they prefer

more transparent aggregated price offerings (Bambauer-Sachse and Grewal, 2011).

Paper Main Findings

Gourville (1998) Identification and definition of special temporal reframing pricing tactic: the so called ‘‘pennies-a-day’’ (PAD) strategy. A series of laboratory studies confirm effects based on PAD pricing.

Gourville (1999)

Experiment shows that the promotion with a per-day framing of price as well as the explicit comparison with a daily expense do not further increase effectivity of PAD pricing strategy. But implicit PAD framing by the presentation of an aggregate price and the comparison to a daily expense is already useful to develop a PAD perspective.

Gourville (2003) Study tests the robustness of temporal reframing to reducing perceived costs of transaction. Other reframing tactics next to per day amount presentation are mentioned.

Bambauer-Sachse & Mangold (2009)

The results of this study show positive as well as negative effects of the usage of temporally reframed price tactics. Negative effects overcompensate the advantages.

Bambauer-Sachse & Grewal (2011)

Study investigates different reframing tactic (shorter or longer period of time) as well as the impact of reframing regarding high-prices products and low-price products and the usage of odd and even price endings.

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2.2. Buy-One-Donate-One Strategy

Cause-related marketing (CRM) is a marketing strategy adopting the philantrophy trend of

supporting charities or public projects (Chang, 2008). Firms make use of CRM promoting their

products by communicating the direct link of sales with a donation of a certain good or amount

to a nonprofit organization or social cause after every purchase of their product or service. Firms

benefit of this strategy according to shaping consumer behavior, impacting purchase intention,

brand choice and willingness to pay, but also to generating a long-term positive brand image,

because of the company´s investment in corporate social responsibility and the creation of

shared value together with their customers (Chen and Huang, 2016).

Combining products with a charity donation has the advantage to market two different

positive outcomes for one price. Consumers purchasing a product bundled with a social or

environmental donation gain the product itself as well as a good feeling generated from

knowing that one is supporting a good cause. In comparison with other discounts, for instance

coupons, free gifts or lotteries, charity support provides a more selfless utility that comes from

the act of giving to others as well as a certain satisfaction for the donator (Strahilevitz and

Myers, 1998).

A study of Strahilevitz and Myers. (1998) examines product bundling offerings

according to the impact of promoting contribution to a charity project. The researchers conduct

several studies comparing the effectiveness of different product types. Thus, they differ

between frivolous products which belong to a luxurious lifestyle and practical products which

belong to daily household expenses. The results of their studies mainly outline that frivolous

products seem to be more effective in promoting social related products.

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A succeeding study of the same researcher examines the impact of product nature and

the donation magnitude on the effectiveness of the charity related product bundling. In detail,

the study compares consumers’ sensitivity according to charity contribution size per purchase

and the sensitivity according to percentage of a price discount per purchase. The researcher

points out that sensitivity according to charity product bundling purchases is lower. Further

findings refer to the one year earlier study of 1998 and examine the magnitude of donation

components and monetary incentives. The point is that large donation magnitudes are more

effective in promoting frivolous products. In contrast, there is no significant difference

regarding the promotion effects of small donations and small monetary incentives. Examining

product type and donation magnitude by choosing among diversifing brands, the results show

that large donations are more likely to be appreciated regarding frivolous products and smaller

donations are more likely to be favored regarding practical goods (Strahilevitz, 1999).

The Buy-One-Donate_One concept is relative new and rarely examined in literature. An

approach of Marquis and Park (2014) works on the explanation of this concept. The theorists

highlight the importance of four business characteristics and describe them in detail: the typical

companies adapting the concept for their product strategy, the companies´ pricing and cost

considerations, different types of charity donations and finally the most relevant characteristic

the marketing and economic advantages (Marquis and Park, 2014).

The majority of firms using this concept are selling consumer products, especially

clothes or accessories, because these products benefit of the opportunity to express an

individuals attitude, consumption behavior and life style. A few companies try other product

types and offer for instance two meals, one for the donor and one for a person in need. A

completely new approach does not refer to a donation item, but offers for instacne the

opportunity of education. There is the example of domestic student loans which also fund one

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year education of a student abroad. This example especially shows that the concept can be

enlarged to various application and business fields (Marquis and Park, 2014).

From the market perspective, the business concept is attractive, because of the

combination of marketing benefits. One benefit is based on the simple purchase promoting

message that every sold product leads to the donation of the same or similar products to persons

in need. This promoted social cause is clear, understandable and more personal than the promise

to support projects with the fund of a certain share of sales or dollar amount. Another argument

emphazises the image value a social or environmental concsious company might gather and

transfer to their customers. Consumers often are attracted by the gain of a certain image or

status and not only by the functional utility of the product. An active promotion of this social

cause might broaden the segment of potential customers. As literature already points out to the

relevance of consumer loyalty, the buy-one-give-one concept influence customers’ perception

and triggers the emergence of personal passions. Based on the emotional attraction , customers

might be more loyal to these kind of companies (Marquis and Park, 2014).

To offer a brief overview about cases and companies which follow this CRM strategy, the

following part of the thesis introduces companies and their individual products and donation

offering concepts:

The company Warby Parker produces glasses and distributes donated glasses via a non-

profit organization Vision Spring to children in need. The firm Soapbox offers various kinds of

soaps and body wash products. Soapbox corporates with non-profit organizations which

distribute hand soaps to homeless shelters. Their mission is to improve hygenic standard with

the base of society. The second big social project of the company is to provide clean water for

people in need during a period of one month. Another case refers to s2 smile squared. This firm

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offers toothbrushes for a premium price and donates for every sold toothbrush another one to a

child in need (Marquis and Park, 2014). A similar concept is followed by the company

Everything Happy. It offers premium priced baby blankets and promotes its products by

offering a one-to-one-donaton to babies in need. Besides, it directly involves the customers and

let them decide which social project they want to support through the delivery of a second baby

blanket. After purchase, every customer receives a code to register himself on the homepage to

deciding which charity he wants tu support (Company Everything happy, 2016).

Also relevant to mention is the case of the social company TOMS. This is an

internationally operating company which started its business model by offering shoes. Today,

it extends its concept and is selling shoes, bags as well as glasses. The original project refers to

a one-for-one donation of shoes for children in need. Nowadays, every sold bag supports the

safe birth of a pregnant mother and baby in need. Finally, every sold pair of glasses contributes

to the distribution of a pair of glasses to a person in need (TOMS EMEA B.V, 2016).

Another German case is the bag label “beliya”. The company follows the concept of ucycling

and produces quality hand bags and accessories for women based on leather materials. The

characteristic of the bags is that every sold bag partly supports the education and livelihood of

a child in a developing country. Additionally, every bag and product description in the web

shop provides the specific kind of support (school fees, school bus, school meal, …) as well as

the name of the child you might help by purchasing the product. On the website the company

also published personal information and a picture of every supported child (beliya, 2016).

In general, all outlined companies follow different communication strategies promoting

their social missions. On the one hand, one find cases like TOMS and Soapbox which activily

promote their mission in connection to their products. On the other hand, there are companies,

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for instance Warby Parker, which avoid the direct connection of social mission and product

offering. These firms follow the strategy to promoting the product as fashion brand and lifestyle

product. Thus, the social mission is a suprising positive factor which becomes obvious when

someone is interested in the company behind the product (Marquis and Park, 2014).

2.3. Consumer Motives for Pro-Social Behavior

Philosophers and researchers have been working on motivation for pro-social behavior

since centuries. Focus of the related discussion refers to the question about the existence of a

pure form of altruism. Altruism requires a pure form of selfless motivation and that only the

positive consequences for someone else affect one´s own choice and behavior. A definition of

altruism is given by the philosopher Thomas Nagel who explains the concept as follows: "By

altruism I mean not object self-sacrifice, but merely a willingness to act in the consideration of the

interests of other persons, without the need of ulterior motives” (1970, p. 79) (Nagel, 1970). This

explains the purity within the willingness to help others without any additional selfish objectives or

motives (Andreoni, Harbaugh, and Vesterlund, 2010).

Nontheless, modern theorists assume that there is only an impure form of altruism and

investigate self refered motives influencing humans to help others. Giving a donation, whether

it is provided for a charity project or the support of a social enterprise, is always based on self-

centred motives. Already the researcher Olson (1965, p. 60) mentions additional motivation

through motives like winning prestige, respect, friendship or other social and psychological

objectives. A few years later Becker (1974, p. 1083) amends that a donation can be given on

the base of the desire to gain social appreciation. Later, Adreoni (1990) ties in with these

approaches and adds following motives: social pressure, guilt, sympathy and simply the desire

for a “warm glow”. As the introducer of the theory of warm glow giving, Adreoni explains the

35

fact that donators do not only benefit of sympathy or other positive motives and feelings. They

also gain ulitiy from the act of giving itself which stands for the impure form of altruism

(Andreoni, 1990).

Indeed, the concepts of altruism and warm glow are complements. Even if warm glow

emerges independent from altruism, both concepts follow the idea that “the stronger your

desire to act unselfishly, the greater the personal satisfaction from doing so.” (Andreoni,

Harbaugh, and Vesterlund, 2010, p. 1). Being altruistic requires altruistic acts in the past as well

as the maintenance of a current generousity. It explains the evidence for altruistic behavior, but

as the warm glow concept shows, further different motives additionally impact the act of social

giving. One relevant motive is the warm glow which stands for the gain through the act of

giving (Andreoni, Harbaugh, and Vesterlund, 2010).

Today, neuromarketing is an emerging field within marketing research combining science of

consumer behavior and neuroscience. Even if this field is in its infanty, marketers are

discovering the opportunities offering brain circuits involved in seeking, choosing, and buying

a product and therefore imaging emotions as brain activties (Morin, 2010). As a kind of

satisfaction, warm glow can be understood as conscious or uncouncsious emotion experienced

by an individual doing good through the support of others, for instance donating money to a

charity. One of the main methods measuring and mapping brain activitiy is already used to

investigate the feeling of warm-glow. Resarchers use magnetic resonance imaging (fMRI) to

investigate motives of impure altruism and warm-glow according to donations and taxations.

Thy examine individuals during a dictator game and observe and analyze neural responses in

the ventral striatum. The study finds evidence for warm-glow theory, because of the fact that

during the game brain activity was strengthened, especially in the voluntary giving situation.

Further, the researchers outline a similarity of neural activation according to donation

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transactions with ones from receiving money for oneself. Thus, they go in line with Adreoni

and confirm that altruistic behavior and warm-glow are important motives for charitable giving

(Harbaugh, Mayr, and Burghart, 2007).

Small and Cryder (2016) work on social giving motives and illustrate four possible

motives for pro-social behavior. In doing so, they primary consider self-interested motives. For

instance governments in the US offer tax advantages for donations. A confirmation of self-

interested habits lies in the annual US charity increase during the end of the year. Next to these

material incentives, they claim that donors profit of the status and the respect emerged by being

perceived as generous. Many individuals appreciate the publication of their financial

participation in a certain social project. In the USA, it is common to sell naming rights to

buildings or parks and to publish the donation via websites or social media. The second motive

is announced as self-perception. This motive mainly refers to a negative crowding-out effect

caused by the offer of incentives. Individuals often belief their act of donation should be

altruistic and truly kind. Additional benefits, like a thank you gift for a blood donation, triggers

the perception of being less generous. A further motive considers the impressions empathy and

sympathy. Research outlines a strong interaction between a single identified victim and the

donor. People are more likely to save an individual personalized life than a statistical life. This

understanding is commonly used in advertising for social projects, where the problem often

receives the face of a victim. Additionally, it is argued that people donate with their heart and

not with their heads. Finally, the fourth and most relevant motive describes hedonic benefits.

The relevant aspect refers to warm glow theory and manifests that consumers simply enjoy

giving money for good. Based on neuro scientific evidence, individuals are pleasured from

being generous which is confirmed by the link to the pleasure centers of the brain (Small and

Cryder, 2016).

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As literature shows, individuals enjoy the act of donation giving as well as they follow

additional mostly self-referring motives. Different studies offer insight according to different

motives like prestige, respect or empathy. The following points outline a theoretical

consideration regarding emotions in decision making process, especially with reference to

charity giving. An introduction in decision making process and the relevance of emotions in

marketing follows the differentiation of affect expressions. Then, relevant studies show the

impact of positive as well as negative emotions in decision making and purchase situations.

The point finally closes with a brief summary of relevant studies.

2.4 Emotions in Decision-Making with Reference to Charity Giving

The early research in decision making emphases the underlying cognitive process. Main

part of this research steam deals with alternative actions offering the most positive

consequences. During the 60s of the last century critics raised referring to person’s cognitive

errors and that individuals simplify heuristics to cope with the complexity of decision making

(Tversky and Kahnemann, 1974). Years after, the behavioral decision making theory emerged

and the role of emotions was still ignored until the 90s, where new studies regarding the role of

emotions were conducted. These studies outline that even an incidental affect without any

relation to the decision itself can significantly influence a choice. On the other hand, emotional

deficits trigger a worse quality of decision making. The inclusion of emotion in decision making

models can strengthen the explanatory power (Loewenstein and Lerner, 2003). Later, empirical

evidence for the relevance of emotions in decision making is given by Ariely (2008) and

Kahneman (2011) too. Human behavior and decision making is rarely based on rational

considerations. Unconscious controlled processes determine human behavior and decision

making in every individuals´ daily life. These processes are controlled by emotions and

routines. Thus, the successful marketing of a product or brand affords targeted communication

38

eliciting emotions which leads to purchase decisions. Today, consumers benefit of nearly

boundless product offerings across the majority of product segments purchasing online or

offline, of local retailers, small specialists or big retailer groups and whenever and from

wherever they want. The opportunities are immense but also overstrain individuals’ daily

decision making. To buy a product of a recalled brand which is associated with learned

attributes, like for instance fair trade or eco-friendly, means to buy the “good feeling” to making

the right decision. In the context of quick and intuitive decisions, successful brand

communication and easily understandable product offerings elicit the human automatic

evaluation processes and guide individuals through the mass of purchase decisions in daily life

(Wagner, 2014).

To offer a useful approach of emotion in decision making process or even more specific

their role in consumption und purchase situations, it is necessary to illustrate the underlying

expression adequately. The following part briefly describes feeling and mood and exhaustively

explains affect and emotion. Important to mention is that the expressions are used

interchangeable and a solid distinction cannot be drawn (Khalid, 2006).

Arnold (1960) describes feeling as a positive or negative response on an experience that

affects the human body. Solomon (2000) outlines that feelings are not enough to develop

emotion (Lewis and Haviland-Jones, 2000). He highlights that it is less intensive and does not

lead to actions. Additionally to mention is that feelings are not well scientifically investigated,

but a broad opinion is given that feelings are sometimes indescribable and cannot be measured.

Similar to feelings, mood is characterized through less intensive as well as diffuse and as an

enduring affective state. Mood examples are for instance happiness and sadness (Gutierrez and

Seva, 2016).

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Khalid (2006) understands affect as “an intensive and relatively short-lasting emotional

state” (p. 412). Another definition of core affect manifests it as a neurophysiological state that

individuals consciously experience as a basic feeling that is not obviously expressed (Russel,

2003). Literature closely associates affect with pleasure. A framework presenting four different

kinds of pleasure with products is introduced by Tiger (1992). Helander and Khalid tie in this

approach and develop a further fifth pleasure type and call it taxonomy of pleasure. This

taxonomy contains physio-pleasure, socio-pleasure, psycho-pleasure, reflective pleasure and

ideo- or also called normative pleasure (Khalid and Helander, 2006). Relevant is, that socio

pleasure stresses the status or prestige that a product provides. On the other hand, ideo-pleasure

deals with societal values such as moral judgment and the awareness about the necessity to

protect environment and humans. For instance it refers to a product which is made from

biodegradable materials to protect the environment (Gutierrez and Seva, 2016).

Emotion as one type of affect can be characterized by the circumstance of a clear trigger

and a short but intense effect on individuals. Emotion is always an individual affect which is

strongly related to the individual’s motives. These motives can be self-orientated or refer to

others or the environment. Overall, they contain objectives, needs or concerns. Further,

emotions are influenced by situational events and the person´s environment and not by internal

factors. As soon as the stimulus or the related cognition and perception disappears, the emotion

also withdraws (Lingyao and Alan, 2014). Already Plutchik (1980) reviewed 28 definitions of

emotion and emphasized the difficulty to offer an all containing definition (Plutchik, 1980). He

argued the existing definitions often are not explicit enough and they do not offer a clear idea

about emotion (Richins, 1997). Since Plutchik findings, theorists have been tried to overcome

the definition lack by collecting specifying characteristics. Clore et al. (1987) propose a

framework explaining emotion as an affective reaction caused by the perception of situations

(Clore, Ortony, and Foss, 1987). Caused by the fact that emotion are a part of life and affect a

40

humans feeling and behavior, it gains significant attention in product design and advertising

(Khalid and Helander, 2006).

Since the emergence of the new research field of neuro marketing, it has been becoming

clear that modern technologies scanning brain images can be used to investigate consumers´

seeking, choosing and buying a product as well as the underlying advertising appeals. Appeals,

emotions and behavior elicit brain activities which can be observed and used to identify

marketing opportunities. The human brain is responsible for all consumer behaviors. Through

the day individuals manage the majority of behaviors and decisions below the level of

consciousness. Only about 20 % of the brain energy can be used consciously. The other share

manages basic instincts scanning our environment unconsciously (Morin, 2010). The researcher

Stanovich and West (2000) explain the management of the brain as following. They distinguish

between two information processing systems within the human brain. System I is the implicit

automatic information processing system, which is able to process big amounts of information.

The processing within this system is very fast and high efficient. Cognitive, implicit mechanism

are processed and thus spontaneous unreflecting behavior is triggered. The system II is the ratio

processing system, which leads to cognitive conscious mechanism processes and rational

behavior and actions. The processing within this system happens comparatively slowly. The

information capacity within system II is heavily limited. Generally round about 4 information

can be recognized and processed. Processing needs cognitive effort (Wagner, 2014).

Following studies already combine the research streams pro-social behavior and

emotions in decision making. They refer to emotions occurred in a process of donation giving

or the purchase of ecological friendly products. These studies are a relevant fundament for the

targeted study about social conscious products and the role of emotions within the processes of

product evaluation, preference forming and purchase intention. People experiencing positive

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emotions are likely to broaden their thought-to-action repertoires. This means they are willing

to play or explore. Additionally, it is assumed that positive emotions produce comprehensive

flexible cognitive organization and that these effects are visible in increased brain dopamine

levels (Fredrickson, Mancuso, Branigan, and Tugade, 2000). On the other hand, there is also

evidence given, that negative emotions, especially guilt, impact the behavior of individuals. For

instance, there is a notion that individuals are cautious to reduce negative emotions after

experiencing a certain emotional state (Hibberts, Smith, Davies, and Ireland, 2007).

A relevant approach and several studies suggest that giving a donation to a charity leads

to an emotional state. Literature specifies this emotional state by highlighting the experience of

pleasure and guilt. The experience of these feelings might enlarge the individual´s likelihood

to support a charitable cause. Further, scholars outline that products appeal these contradictory

emotions in different levels. For instance, there might be a different appeal between the

consumption of practical goods, such as dish washing liquid, and hedonic or also called

“frivolous” products, for instance chocolate truffles. Between researchers´ opinions, there is no

doubt that some product types are more enjoyable than others. But especially the consumption

of luxury goods can generate a feeling of guilt. This negative feeling diminishes the perceived

pleasure. The tasty expensive dinner leads to an experience of pleasure and guilt in the same

time. The experience of positive and negative feelings impact the likelihood of supporting a

charitable project, because it strengthens the pleasure and more important, it moderates the

feeling of being guilty (Strahilevitz and Myers, 1998). The authors set this phenomenon in

relation to hedonic products, because these products often trigger a strong experience of both

feelings. In comparison, practical goods do not trigger both feelings in the same strong level or

even only one of them. Main conclusion of several studies indicate, that charity incentives

might be more efficient by offering them in the bundle with frivolous products (Strahilevitz,

1999).

42

Several studies in the USA confirm the suggestion that spending money for others predicts

greater happiness than spending it on themselves. Researchers obtain both national cross-

sectional longitudinally surveys and field studies of windfall spending. The cross-sectional

study illustrate that how individuals spend their money is as relevant as how much money they

earn as well as that spending money on others might represent a more effective path to

happiness than spending it for themselves. A study with employees which were observed in

periods without and with a financial bonus, shows that the ones that devote more of their bonus

to-prosocial spending experienced broader happiness. Summarizing this, it demonstrates that

the manner they spent their bonus is more important than the size of the bonus itself. Finally, a

field study with participants, which were asked about their happiness and instructed to spend

money for themselves or others, also presents direct support that spending money for others

promotes happiness (Dunn, Aknin, and Norton, 2008).

More recently, researchers obtain a study to find out an interaction between social spending and

well-being. Summarizing the results, there is evidence given for a positive feedback loop which

can be seen as an important path towards sustainable happiness. The underlying study follows

an interview frame. First, one ask about the respondent’s recall of a previous purchase for

themselves or someone else. According to the given answer the respondent has to appraise its

feeling of happiness regarding the remembered shopping experience. The second step of the

interview refers to the experience of an unexpected monetary gain which can be spend for

themselves or to someone else. After choosing the way of spending respondents have to

estimate their feeling. Main results is that the happier participants felt, the more likely they were

to choose to spend the money gain to another person (Aknin, Dunn, and Norton, 2012).

43

A more recent study obtained by Gutierrez and Seva (2016) examines affective impacts

of ecological consumers. The researchers aim to determine emotions occurred by the purchase

of these eco conscious products. It is assumed that buying eco products trigger the occurrence

of different types of emotions and that mostly positive emotions are related to the conscious

ecological purchase. The conduction of a pre-purchase affect survey collects information about

the shoppers ‘feelings while eco products purchase situation. The results stress that participants

significantly recognize more positive than negative emotions when purchasing eco-products.

In comparison, recipients are indifferent regarding the experience of emotion when buying non-

eco products (Gutierrez and Seva, 2016).

The impact of negative emotions, especially the arousal of guilt, is another approach which has

to be considered regarding the impact of emotions in decision making, especially in the case of

donations. Research in guilt appeals describe the idea that the experience of guilt has a threshold

which means that humans want to change this emotional state and reduce the experience of this

negative emotion. In the context of donation giving. A reduction of guilt is linked with egoistic

motives for helping, individuals simply want to feel better and to benefit of the confirmation to

be a good person. Advertising makes use of guilt arousing communications and hence persuade

individuals´ behavior and decision making. On the other side, individuals are aware about the

manipulative tactics of advertising. A study investigates the relationship between awareness of

persuasion tactics and the level of guilt aroused in response to an advertisement communication

donation intentions. The results outline that guilt experience is positively related to donation

intention. Further, manipulative persuasion awareness and a skeptic opinion about the

effectivity of the charity support lead to the decrease of guilt arousal (Hibberts, Smith, Davies,

and Ireland, 2007).

44

A relevant notion is the arousal of guilt based on the awareness of differences in well-being

between people as well as the sense that one should support those less fortunate. As the outlined

studies confirm guilt can either follow or lead to an action. An approach obtained by Basil,

Ridgway, and Basil (2006) introduce two elements for guilt induction. One of them is

responsibility. Individuals do not want to feel responsible for causing something or failing from

avoiding a negative situation. The second element is the circumstance that the action or the lack

of action leads to harm which could be starvation or the missing of minimum subsistence

means. Based on the suggested role of responsibility two studies are obtained examining

whether guilt appeals lead to responsibility feeling and hence leads to a stronger charitable

donation intention. The study investigates if responsibility on donation intention is facilitated

by the feeling of guilt. The findings show that guilt appeals lead to a guilt response and the

impact of this response on charity donations is facilitated by the outlined notion of

responsibility. Following this there is to assume that elicitation of the feeling of responsibility

is effective to receive donations. The study outlined a further relevant element to create

effective guilt appeals. Empathy can enhance the emotional state of feeling guilt. Although it

is necessary to dose guilt appeals to avoid reactance. Empathy support the arousal of guilt

without generating reactance (Basil et al., 2006).

The studies confirm the impact of donation giving in promoting happiness and positive

emotional states of donators. It is even more documented that the happier participants feel in

front of a decision whether to spend money for themselves or for unknown others, the more

likely they are to donate the monetary windfall. Another study dealing with an ecological

product offering finds out that the purchase of eco products generates more positive than

negative emotions. Ecological products might have the opportunity to generate altruistic care

for the environment and positively impact consumers emotional state (Gutierrez and Seva,

2016). An additional approach stresses the boosting impact of the experience of both, positive

45

as well as negative emotions. Furthermore, charity bundling with the offer of luxury goods is

more efficient than offering a charity incentive related to a practical good. Further studies focus

negative emotions to investigating the role of guilt according to the impact on donation giving.

The confirmation of a positive relation between guilt experience and donation intention follows

the manifestation of two elements inducing a feeling of guilt. The first element is responsibility

and the second is the circumstance that an individual´s action or avoiding an action leads to the

harm of others. The elicitation of guilt is strongly connected to the awareness of responsibility

which can be effectively used to increase donations. Finally, the supplementary element

empathy is able to enhance the emotional state of a person and the experience of guilt without

generating reactance or the feeling being manipulated by the product offering or the

advertisement.

3 Case Introduction

The thesis captures the idea of a social enterprise startup of the University of Kassel.

The social startup´s objective is to provide cooking stoves for developing countries to

contributing to the decrease of air pollution and serious diseases and on the other hand to

improving energy usage and earnings of inhabitants. The social entrepreneurs do not only face

the problem of health threatening and energy wasting open cooking fires, they also find a

solution to distribute energy saving stoves to rural regions in developing countries and thus to

offer job opportunities for inhabitants: they develop and offer an assembly set of a cooking

stove and organize material production, shipment and marketing for organizations in

developing countries. Now, based on the purpose to realize a successful crowdfunding

campaign, the startup plans to offer the stoves as a barbeque gadget to well situated persons,

for instance in Germany. They want to use the profit margins out of these sales to financially

support their social mission in developing countries (GloW Energy, 2016).

46

3.1 Research Question and Hypotheses

Facing the challenge of the startup, the investigation conducts a choice experiment

testing the application of pricing strategies and the Buy-One-Donate_One strategy as useful

opportunities to market socially conscious products. The experiment, serving the purpose of

social entrepreneurs, especially encounters marketing strategies which elicit emotions and thus

support a positive product evaluation and preference building. These underlying and often

unconscious processes are used to finally increase demand and sales.

Experiments examining product offerings with social or green value are already purpose

of current research. Within this research stream evidence is given that social product features

can increase product attractivity (Auger, Devinney, Louviere, and Burke, 2008). But several

studies also show that sustainable attributes are inferior to functional product attributes (Luchs,

Brower, and Chitturi, 2010; Luchs and Kumar, 2015). They outline that consumers are willing

to pay more for sustainable product offerings, but to do so they do not give up a minimum

threshold of functionality (Luchs et al., 2010). A study published in 2015 illustrates consumers´

greater likelihood to trade-off hedonic value (esthetics) for social attributes in comparison to

trade-off utilitarian (functionality) for social value. Even if this study highlights the relevance

of product functionality, the same researchers offer the implication to not only invest in

functional expertise, but also to actively promote all relevant product features (Luchs & Kumar,

2015). A contradictory approach offers evidence for the effectivity of social attributes showing

that these attributes can indeed include functional as well as symbolic benefits. All values can

positively impact product evaluation, especially if the benefits are in line with product category

benefit. As functional benefit serves, for instance, products which are made of recycled

materials. As a symbolic benefit can be understood the status a product communicates. For

instance, a status is a brand or symbol, which confirms that the product is manufactured without

child labor or sold under fair trade conditions (Bodur, Gao, and Grohmann, 2013). Even if a lot

47

of consumers care about sustainable issues, they do not always associate ethicality the same

way. This is the reason why product preference depends on the degree to which sustainable

product attributes are valued by consumers. The results of an underlying study, dealing with

different kinds of product benefits in the context of ethical product offerings, shows a positive

effect on consumer preference, when safety and health attributes are integrated. In comparison,

the effect decreases when attributes, like power and durability, are mentioned. This study also

supports the notion that sustainable product features can positively impact consumers´ product

preference. It further manifests that functionality, in the shape of benefits like power and

durability, do not lead all attributes within the product evaluation process. Sustainable product

features, for instance communicating health and safety, can have a positive effect on product

preference though (Luchs, Walker Naylor, Irwin, and Raghunathan, 2010).

Also altruistic motives can influence consumers to buy sustainable products. This

altruism can be understood as a costly product attribute directly connected to consumer status.

A study impacts consumers’ willingness to take costs for other´s benefit through the activation

of altruistic motives. This study illustrates that altruistic motives can ameliorate green product

preference under certain conditions. These conditions refer to the situation that recipients shop

in public and that sustainable products are more expensive than conventional alternatives

(Griskevicius, Tybur, and Van den Bergh, 2010). The detailed discussion about motives for

pro-social behavior already outlines that donors profit of status and respect connected to their

support of others. Furthermore, individuals enjoy the act of giving money for a social mission

and experience pleasure in doing so This satisfaction, no matter if it refers to a real donor or the

purchase of a product with social value, supports the notion that individuals focus their own

self-interested benefit and undervalue the monetary effort the purchase or donation includes

(see point 2.3).

48

Following this focus on self-interested benefits, consumers might prefer to separate their

emotional contributions into a series of purchases or donations (see point 2.1.4). This wish of

partitioned emotions can be assigned to the offer of partitioned prices. Thus, the investigation

aims to adopt the pennies-a-day pricing (PAD) strategy introduced by Gourville (1998). The

researcher examines multi-dimensional prices and finds out that temporal price reframing in a

daily or monthly or any another individual manner enables marketers to increase price

attractiveness, particularly by price comparisons with common daily expenses. PAD

effectiveness especially exists by referring to the utilization of small daily dollar amounts. The

effectiveness depends on the nature of expenses used to compare costs. In every target group

exists a reversal point which signalize the most effective price reframing as well as the decrease

of the strategy´s effectiveness. Furthermore, it is necessary to vary the underlying time frame

and price amount according to product nature and target group. This experiment follows the

notion that the application of price reframing leads to a positive impact on price perception and

product evaluation. It is expected that the offering of a constant small dollar amount in the shape

of a membership fee leads to the elicitation of multiple positive emotions and hence increases

product preference. In this case, this fee is an additional monthly-reframed price, which is about

less than 5 Euros.

Another useful multi-dimensional pricing concept refers to the strategy of surcharged

pricing which stands for the separation of base price and surcharges. Studies within this pricing

field offer altering results according to the strategy´s effectiveness (see point 2.1.2.). There is

evidence given that surcharged prices decrease consumers recalled costs and thus increase their

product preference and finally their demand (Morwitz, Greenleaf and Johnson, 1998). On the

other hand, the researchers Bambauer-Sachse and Mangold (2010) approach this concept by

highlighting the relevance of surcharge origin. Customers take into account, if the company is

responsible for the surcharge or not. If it is, customers tend to develop discrepancies which

49

influence price perception and purchase intentions negatively. This manifests that the

application of partitioned pricing needs trustworthy explanations regarding the offered

surcharge. The product within this study will be offered by a base price for the stove and an

additional donation amount used for the distribution of one further stove in a developing

country. This additional donation amount will be presented in two different versions: as a single

donation amount and as a monthly membership fee. Thereby, the surcharge is actively promoted

and described as donation or membership. The underlying notion is that a trustful explanation

of the price premium lead to a better acceptance of the total price. Thus, these described price

strategies can have a positive impact on product preference building, which leads to the

following hypothesizes:

P1: Pricing strategies improve positive product evaluation and consumer´s preference.

P1a: The application of partitioned prices (level 2) shows a significant positive relation

to the preference for the barbecue gadget.

P1b: The application of surcharged prices (level b) shows a significant positive relation

to the preference for the barbecue gadget.

Several studies investigating social product offerings manifest that functional attributes

outweigh social attributes. A current paper also claims to further investigate the prevention of

negative effects occurred by ethical product attributes (Bodur, Gao, and Grohmann, 2013). This

experiment aims to reveal these findings and confirm that social product attributes can offer a

significant positive impact on product preference building. As product preference depends on

consumers´ appreciation of sustainable or social product attributes, the experiment tests

different social product attribute offerings to value their individual impact on product

preference building. The recognizable trend of social conscious consumption and its wide

spread application in cause related marketing (CRM) offers the opportunity to test marketing

50

strategies which communicate social value through a purchase connected activity of the

company.

One common method to involve customers or donors is to offer a membership

subscription. This membership might lead to a feeling of being part of the project itself and thus

strengthens customer loyalty. Another useful strategy is the product offer together with a

request for the support or the donation for a social project. The researcher Strahilewitz

investigates the effectivity of this strategy in several studies, outlining that it is particular

applicable for frivolous product offerings. Additionally, he finds out that large donation

amounts are more likely to be appreciated by offering frivolous products and smaller donations

by practical goods (see point 2.2.). Target of this study is to reveal this suggestion either,

because it follows the notion that the Barbecue stove is not a frivolous product, but applicable

to realize project support by using in comparison to stove price large donation amounts.

Another opportunity can be described as the strategy that every product purchase generates the

donation of the same or a similar product to a social project. A given study offers managers an

implication to consider the role of emotions in consumers´ decision process, especially

according to sustainable product offerings. A study highlights the role of pride and advises

managers to obtain an offensive marketing strategy to promote their products by connecting

positive emotions. These researchers mention TOMS which serves as an example for a

successful company applying the Buy-One-Donate-One strategy (Luchs & Kumar, 2015).

Thus, these hypothesizes are formulated to investigate the effectivity of social product attributes

on consumers´ preference according to a non frivolous product offering:

P2: Social attributes improve product evaluation and consumer´s preference.

51

P2a: The project membership offering (level 2) shows a significant positive relation to

the preference for the barbecue gadget.

P2b: The offering (level 3) shows a significant positive relation to the preference for the

barbecue gadget.

A qualitative study about product values referring to sustainable product offerings

outlines three different value forms: emotional, social and functional value. In line with the

presented research, the findings show that emotional or social value has lower priority for

consumers. Indeed, these results also manifest that a sustainability attribute can generate two

or even three value forms within one product simultaneously. In the best case the values

complement each other so that they increase the overall perceived product value (Green and

Peloza, 2011). Through an energy saving and emission reducing application of the introduced

barbecue stove, the functional value is provided. The additional offer of product extras aims a

positive cooperation of different kinds of product values so that functional, social and emotional

values complement each other and hence offer additional consumer benefit. The experiment

underlies the assumption that the offered product extras trigger the complementation of values

and thus the individuals´ experience of emotions. Furthermore, the effectivity of the applied

marketing strategies can be enhanced. Accordingly, it is suggested that the offers of sustainable

product attributes in combination with a related product extra are especially effective in eliciting

emotions and impacting customers´ product preference. Following hypothesizes summarize the

described notion:

P3: Emotions, elicited through the additional offer of product extras, positively impact product

evaluation and consumer´s product preference.

P3a: The Buy-One-Donate_One offer + get to know of the person in need shows a

significant positive relation to the preference for the barbecue gadget.

P3b: The project membership offer + monthly newsletter shows a significant positive

relation to the preference for the barbecue gadget.

52

3.2 Methodology

The empirical part of the thesis is based on a conjoint analysis. In market research practis,

this is a commen methodology applied to acquire useful information about customers´ product

and purchase preferences (Herrmann, Homburg, and Klarmann, 2008). Based on the wide

application field of conjoint, the analysis cannot be understood as a single, fixed methodology,

but it consists of a variety of similar approaches including strenghts and weaknesses. The

researchers Green and Srinivasan understand cojoint analysis as any decompositonal method

that estimates a consumer´s preferences (for instance preference parameters such as part-worths,

importance weights or ideal points) and gives an overal assessment of a variety of alternatives

which contain different attribute levels (Green and. Srinivasan, 1990). The following study

utilizes one special decompositional conjoint method. Based on a relatively high reality concern

and an associated good validity in comparison to other methods, it is focused to conduct a

choice based conjoint analysis (Herrmann, Homburg, Klarmann, 2008).

The tested product is linked to a real case: a social start-up of the University of Kassel,

offering a barbeque gadget to support a social cause: the distribution of energy saving stoves in

developing countries. On the one hand he study concentrates on respondents who already faced

the topic sustainable growth and green or social conscious consumption. The other effort lies

in the response of individuals who see barbeque and cooking as a hobby or even a personel

passion and might be open minded to become conviced by the offer of a sustainable barbecue

gadget. The web based questionnare will be distributed via e-mail and social media with the

focus on barbeque interest groups and persons which are especially accessible by topics of

social concern and the idea of sustainable consumption. To link statistics to the characteristics

of these kinds of participants, the survey will include a variety of questions refering to barbecue

as passion, personal attitude, individual consumption behavior and descriptive statistics.

53

The main part of the study deals with the employment of a trade-off study in which

respondents have to provide product preferences in a choice-based setting. The questionnaire

guides the respondents through several choice settings where they have to choose between two

nearly similar products which only differ in some relevant product properties. The investigated

product is a social conscious barbeque gadget. It contains three relevant product attributes:

Product, Extra and, Price (see table 1). All these attributes involve three different levels chosen

according to the outlined marketing strategies and the evidence for the impact of positive and

negative emotions.

Table 1. Product properties with attribute levels

Attribute Level 1 Level 2 Level 3

Product

Barbeque gadget

Survey product description:

„einen nachhaltigen

Barbecue Grill“

Barbeque gadget

+ project membership

Survey product description:

„einen nachhaltigen

Barbecue Grill und die

Projektmitgliedschaft zur

Unterstützung der Arbeit des

Startup in Entwicklungs-

ländern“

Barbeque gadget

+ 1 stove donation

Survey product description:

“mit jedem Kauf eines

nachhaltigen Barbecue Grills

auch die Spende eines Grills an

eine Person/Familie in

Entwicklungsländern“

Extra Weak single emotion

through choice of specific

support

Survey extra description:

„die Wahlmöglichkeit,

welches Projekt/Person

genau unterstützt werden

soll“

Multiple Emotions through

the subscription to a

monthly newsletter

Survey extra description:

„einen monatlichen

Newsletter mit

Projektupdates und Koch-

und Grillrezepten aus

Afrika“

Strong emotion through the get

to know of the supported

person in need

Survey extra description:

„einen persönlichen Kontakt mit

dem Spendenempfänger

(Website/Brief/Email)“

Price Aggregate price without

social component

Survey price:

80 Euro

Partitioned price with

monthly reframing

Survey price:

40 Euro + monthly 3,50 Euro

Aggregate price with surcharge

for social component

Survey price:

40 Euro + 40 Euro donation

In detail, the study aims to outline significant part-worths of the product attributes

presented in table 1. Within the analysis, it is relevant to find an significant path-worth of the

54

chooen product and price attributes. Moreover, it is scheduled to investigate the additional

attribute Extra. The study follows the methodology of Allenby and Ginter (1995). A

hierarchical Bayes random-effects model is planned and utilized to conduct a choice based

conjoint study focussing on sustainable consumption, especially related to multi-dimensional

pricing strategies and the application of the Buy-One-Donate_One strategy. The hierarchical

Bayes model directly refers to the product properties: Product, Extra and, Price. To estimate

the model, the adaption of an algorithm is necessary. Hence, one opportunity is to apply the

Monte Carlo Markov chain algorithm. The strength regarding this algorithm is the opportunity

to easily calculate the respondent´s part-worth, the person related responses, and the random-

effects hierarchy (Allenby and Ginter, 1995).

55

3.3 Further Procedure

According to the structure of the Exposé following agenda is considered:

1. Abstract

2. Introduction

3. Theoretical consideration

3.1 Pricing strategies

3.1.1 Multi-Dimensional-Prices

3.1.2 Surcharged Prices

3.1.3 Discounted Prices

3.1.4 Per Unit Prices

3.2. Buy-One-Donate_One Strategy

3.3. Consumer Motives for pro-social behavior

3.4. Emotions in decision making with reference to charity giving

4. Case introduction

5. Empiric

5.1. Research question and hypotheses

5.2. Methodology and data collection

5.3. Data analysis

6. Results

7. Discussion

8. Summary

9. Literature

10. Appendix

Table 2. Time schedule

May June July August September October

- Application

master thesis

- Submission

exposé

- Design of

questionnaire

- Finalization

theoretical

consideration

and explanation

of methodology - Field period

- Promotion of

study

- Field period

- Promotion of

study

- Data analysis

& interpret-

tation

- Description of

results

- Concluding

discussion

- Finalization

- Submission

IV

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