Journal of Business Research 63 (2010) 1066–1072

Consumer response to norm-breaking pricing events in e-commerce

Ellen Garbarino a, , Sarah Maxwell b
a University of Sydney, Sydney, NSW 2006, Australia
b Fordham University, 33 West 60th Street, New York, NY 10023, USA

abstract
e-commerce allows for many innovations in pricing: some have been embraced by consumers, others rejected. Using an online experiment, we explore the role of norms in predicting consumer responses to differential pricing arrived at either by violating an established pricing norm (dynamic posted pricing; setting prices based on individual consumer demand) or not (two retailers pricing differently). Our findings support the critical role of norms, such that belief in the norm is a strong predictor of negative responses (i.e., fairness, trust, purchase, search and complaint intentions) and priming people to consider norms generally increases the negative response. We also find that prior trust in the firm acts as a partial buffer against the negative response to norm breaking but at a diminishing rate as prior trust increases.
© 2009 Elsevier Inc. All rights reserved.
1. Introduction
The expansion of e-commerce allows for many new retail practices. In the pricing context, the lowcost of managing data via the Internet has allowed e-commerce to explore a variety of pricing practices that have previously not been cost-effective in the consumer setting (Dixit et al., 2005). The success of online consumer auctions and ‘name-your-price’ websites shows that consumers have embraced a number of these pricing innovations. However, other pricing innovations have generated significant consumer backlash. For example, Amazon's early experiments with individual demand-based pricing met with dramatic consumer resistance (Rosencrance, 2000). Why are some pricing innovations accepted while others are not?
The difference is driven by whether or not the practice breaks an existing social norm. Social norms are an important factor in consumer response to pricing, especially in terms of perceived fairness (Xia et al., 2004). When sellers violate a social norm, consumers judge the outcome as unfair and demonstrate a negative attitude toward the seller (Maxwell, 2002). Buyers then lose trust in the seller (Garbarino and Lee, 2003). Social norms are enforced by individual actions designed to punish norm-breaking parties. Hence, violating pricing norms should decrease perceived fairness and trust and increase punishment behaviors. Grewal et al. (2004) find results consistent with these effects and conjecture, but don't directly test the importance of norm violation in driving their results.
To answer theGrewal et al. (2004)) call to examine the role of norms, the current research explores how consumers' reactions differ when confronted with a pricing situation that either does or does not violate an established pricing norm. We expand the existing knowledge of consumer price response by considering a wide array of potential reactions, including both perceptions (i.e., fairness and trust) and punishment responses (e.g., purchase intentions, search intentions and complaints). To verify the criticality of norms, we explore the moderating role of belief in the pricing norm on the strength of response and whether priming the norm exaggerates the response to norm violations. Finally we explore the potential for prior trust in the firm to attenuate or exacerbate the response to norm violation.
2. Internet pricing
The Internet has facilitated information flow for both buyers and sellers. Buyers can find product level information with an ease never before possible. Sellers also benefit from new-found information on consumers' price sensitivity and preferences. Retailers have traditionally used information like zip codes to differentiate prices. But the
Internet allows individual level tracking of sites visited and actions taken, while memberships and user registrations provide additional customer information. This increased information combined with technology-enabled, low-cost price changing opens up new opportunities for price discrimination. Discriminatory pricing is part of “dynamic pricing,” defined “as a strategy in which prices vary over time, consumers, and/or circumstances” (Haws and Bearden, 2006, p. 304). Dynamic pricing encompasses many of the quick, effortless pricing methods which the Internet now makes possible.
The present research focuses on price discrimination between groups, what economists consider third degree discrimination. This is where a less price sensitive group is identified (e.g., by its demographics or previous buying history). This group is then charged a higher price than another, more price sensitive group. This is what Amazon was accused of when they offered some customers higher prices. Third degree price discrimination is common and can be highly profitable since it captures the differing consumer surplus of two or more market segments.
Charging different groups different prices is frequently accepted. Diners who come early pay less for the “Early Bird Special.” Late night telephoners are charged less. Those who buy items on sale get a bargain. All of these price differentials are accepted. So why the consumer backlash when Amazon charged some customers more than others? The answer proposed here is that Amazon unwittingly violated a social norm.
3. Social norms
Social norms are the unwritten and often tacitly understood rules of a society. They can be broadly defined as “expectations about behavior that are at least partially shared by a group of decision makers” (Heide and John, 1992, p. 34). They arewhat Kahneman et al. (1986a,b) called “community standards.” In the case of pricing, the social norms are the rules that the community agrees sellers should follow when setting prices, the rules people in general expect that sellers will follow.
A number of pricing norms have been established in the literature. For example, cost-based price increases are accepted (Kahneman et al. (1986a). And periodic price promotions are both expected and applauded (Grewal and Marmorstein, 1994).
In a study of pricing norms, Maxwell and Garbarino (2008) find that there are established norms in the U.S. against charging either loyal/frequent or new customers higher prices. They also find a norm that a given retailer should charge the same amount for the same good to all customers, but not a norm that multiple retailers should charge the same amount. The empirical evidence is consistent with the finding that all customers should be charged the same price by the same retailer but that independent retailers are not normatively constrained to charge the same price (Darke and Dahl, 2003; Grewal et al., 2004; Haws and Bearden, 2006). It is therefore expected that the discriminatory practices of single Internet retailers will lead to negative attitudes and punishment responses, but those of multiple retailers will not. Fig. 1 visually represents our hypothesized model.
4. Responses to norm violation
4.1. Fairness
Social norms and fairness are fairness has been theorized in the fair price model of Xia et al. (2004). And a violation of the social norms has been empirically shown to lead to judgments of unfairness (Maxwell, 2002). Thus, violating a norm should closely linked. Kahneman et al. (1986a,b) called social norms “rules of fairness.” When the rules are broken, the action is deemed unfair. The influence of social norms on lead to lower perceived fairness.
4.2. Trust
Research shows that fairness and trust are highly interrelated (e.g., Colquitt, 2001) and trust is also sensitive to normative effects. Singh and Sirdeshmukh (2000, p. 153) contend that agents' behaviors that uphold social norms generate trust. Grewal et al. (2004) argue that pricing tactics contrary to norms, such as charging a frequent customer more, engender less trust than pricing tactics consistent with norms.
Conversely, trust will be destroyed when a trusted seller does not behave according to the social norms of fairness. Trust is seen to be “so closely related to basic norms of behavior and social customs that most actors take it for granted until it is violated” (Zucker, 1986, p. 54).
Consensus is growing that trust has two dimensions (e.g., Garbarino and Lee, 2003; Selnes and Gønhaug, 2000; Singh and Sirdeshmukh, 2000). For example, Garbarino and Lee (2003, p. 500) identify benevolence trust (“willingness of the trustee to behave in a way that benefits the interested of both parties”) and competence/ credibility trust (“intention and ability to keep implicit and explicit performance promises”) dimensions.
A trust breaking event, such as a normviolation,will not necessarily affect both dimensions of trust equally. A violation of a pricing norm is likely to have its major impact on consumers' trust in the firm's intention to behave in the customer's best interest (i.e., benevolence trust) rather than on consumers' trust in the firm's ability to perform its duties. This argument is supported by the findings of Garbarino and Lee (2003) that discriminatory pricing led to a decrease in benevolence trust but had no significant effect on competence trust.
4.3. Punishment intentions
An essential part of social norms is the sanctions that are applied for infractions. As DeRidder and Tripathi (1992, p. 22) conclude, “Norms imply sanctions.” There are many ways to punish a firm for violating the norm: consumers could decrease their purchase intentions, increase their intention to extend their search, and complain both privately and publicly. But any punishment requires some effort and possible cost. If consumers switch supplier, they incur the time and energy costs of finding another supplier. If they complain, they incur the costs of writing an email or phoning the customer service center.
Nonetheless, the evidence indicates that consumers are willing to incur costs just to punish what they see as a norm violation. As Bougie et al. (2003, p. 377) proclaim, “Angry customers don't come back, they get back.” Kahneman et al. (1986b) showed that 68% of respondents would drive an extra 5min rather than buy from a druggist who raised prices after a competitor left.
H1. Relative to a non-norm violating pricing practice, the same pricing outcome arrived at via the violation of a pricing norm leads to: lower perceived fairness, lower benevolence trust, lower purchase intentions, higher intention to continue searching, higher intention to privately complain, higher intention to publicly complain.
To test the direct connection between norm beliefs and negative responses, we explore whether those who believe more strongly in the norm will exhibit a stronger response to the norm violating event.
According to Adams (1965, p. 283), a norm-breaking event like perceived inequity will create a tension “proportional to the magnitude of inequity present.” Testing this idea, Maxwell (2003) found that the greater the perceived unfairness, the greater the severity of the sanctions proposed. Hence, the greater the belief in a norm, the more severe the response to breaking it.
H2. The stronger the belief that a given pricing practice is a norm of American society the more intense the effects of breaking that pricing norm. If norms are the mechanism underlying consumer's response, drawing people's attention to pricing norms should heighten the negative effects of violating these norms. Previous research has demonstrated that priming respondents to think of fairness intensifies their sensitivity to social concerns (Maxwell et al., 2003). Since fairness and social norms are so closely linked, we test a logical extension of this result: that priming people to think of social norms will increase their negative response to a norm violation.
H3. Priming people to consider a pricing norm will intensify the effects of norm breaking.
Buyers' prior trust can lessen the impact of sellers' norm-breaking behavior. For example, in marketing research Campbell (1999) found that a company's good reputation led consumers to infer more positive motives for a price increase. And Robinson (1996) found that employees' high initial trust ameliorated the effect of their managers breaching trust. Thus, prior trust in the firm may buffer negative responses to norm-breaking activities.
Alternatively, prior trust may lead to a sense of betrayalwhen norms are violated. Gregoire and Fisher (2008) term this the “love becomes hate” thesis: they find that those who have the strongest trust in the organization respond most negatively to a norm violation due to their higher sense of betrayal. Although the “love becomes hate” process has been proposed repeatedly (Gregoire and Fisher, 2006), most researchers find only the positive effects of prior trust. Consequently,we list the buffering effects of prior trust as the dominant hypothesis but also explore the less common betrayal prediction.
H4. Having prior trust in an organization attenuates the negative effects of breaking a pricing norm.
H4alt. Having prior trust in an organization exaggerates the negative effects of breaking a pricing norm.
However, the effects of betrayal may not be linear. Gregoire and Fisher (2008) argue that the sense of betrayal driving the exaggerated response to norm violations will be strongest in those who have the highest level of prior trust in the organization. This argument suggests betrayal effects will be nonlinear, such that at modest levels of prior trust the positive buffering effects occur but as prior trust increases the sense of betrayal increases which should decrease the positive buffering effect or even reverse it completely.
H5. Prior trust in an organization has nonlinear effects on responses to norm violation.
5. Methods
5.1. Procedures
5.1.1. Measures
Using an online scenario-based experiment, subjects were shown two different prices for the same item in a way that either does or does not break anywell-established pricing norm(i.e., one store charging the same customer different prices for different accounts compared to two different stores charging different prices). Hence the design involved four possible between-subject conditions; seeing two different stores with awell known retailer charging the higher (1) or the lower price (2), or a well known retailer charging a single customer's regular account a higher (3) or a lower price (4) then the same customer's new account.
The stimulus product, a Canon Sure Shot digital camera, was selected as familiar and attractive to a wide range of participants. The prices were $78.75 and $101.25 (this range includes the camera's true price at both retailers used). The wide price range crossing of the $100 threshold insures respondents notice the price difference. Two actual online retail sites were used (one a well known retailer, one a largely unknown retailer); the stimuli included screen shots of the real website pages with only the prices manipulated.
Respondents were first asked their familiarity with and trust in the well known retailer. They were then shown one of the scenarios (see Appendix A for examples) followed by screen shots with the prices modified to suit the scenario so they could verify that the items were exactly the same. Subjects were then asked about the fairness of the pricing in the scenario, their post-scenario trust (using the same scales as used prior to the manipulation), and their intentions toward purchasing from this retailer, searching for additional information, and private and public complaint behaviors. Finally, they were queried to determine whether a variety of pricing practices, including those manipulated in the study, were considered norms. The task took approximately 15min and, as is typical with the panel used, respondents were entered in a gift certificate lottery.
5.1.2. Measures
The specific itemwordings, factor reliabilities, and squared multiple correlations (SMC) are included in Appendix A. Six items were drawn from the fairness literature to measure perceived fairness (α=.93).
Perceived trust of the online retailer (overall, competence and benevolence trust) was captured using the 13 items used in Garbarino and Lee (2003). Since Garbarino and Lee find only benevolence trust is directly affected by dynamic pricing, only the five benevolence trust items are used (α=.97). Four items based on those used by Biswas et al. (2002) addressed the respondent's willingness to purchase from this retailer now or in the future (α=.95). Three items explored the respondent's likelihood of engaging in additional search because of the experience (modified for the Internet context from Grewal et al., 1998; α=.93). Singh's (1988) nine item consumer complaint scale was used to capture the likelihood of private (α=.85) and public (α=.89) complaining. To assess strength of belief in the relevant pricing norms, respondents were asked their agreement with nine statements about pricing practices. The two critical questions to this analysis were “In American society is it generally believed that prices for the sameproduct should be sameacross retailers?” and “InAmerican society is it generally believed that prices from a single retailer should be the same for everyone buying the same product?” All items were 7-point scales.
5.2. Respondents
The data were collected from members of a national online panel maintained to represent the U.S. online population. The demographics of the sample (415 responses) are comparable to the national numbers (83% Caucasian; average age 37, modal education level “some college”).
The percentage of females was somewhat higher (60%) than national average (52%) probably due to the study's focus on shopping. (See Table 1 for details about the sample by condition.) Respondents followed the embedded link and were randomly assigned to one of the four treatment conditions. Given the desire to test the factors moderating responses to norm breaking, assignment was weighted to collect twice as many respondents in the norm-breaking conditions.
6. Results
6.1. Validation of measurement
Although Singh (1988) argues for a three factor solution to his complaint intentions scale, our analysis only uncovers two factors, representing private and public responses. A confirmatory factor analysis indicates a reasonable fit for the proposed model (χ2=591, pb.00; TLI=.97; NFI=.95; CFI=.97; RMSEA=.05). Although the χ2 goodness of fit statistic is significant, the model fit meets the recommended standards of fit indices of .95 or above and RMSEA below .06 (Hu and Bentler, 1999). All items are significantly related to their proposed constructs (all p-valuesb.000) and all have SMCs .30 or above except for ‘fairness to the seller’ (SMC=.21); hence this item was drop from the analysis. Composite variables were therefore created for each factor and used in the subsequent analysis.
6.2. Main effects of norm breaking
As expected, the various outcome measures are significantly correlated (p-valuesb.01) (see Table 2). Given this large number of correlated outcome measures, MANOVA analysis is used to account for their intercorrelation and to control for family-wise error.
Whether the differing prices came from a non-norm violating (different retailers) or from a norm violating (different accounts at the same retailer) event had a significant multivariate effect on the outcome measures (two-store vs. dynamic pricing Wilks' Lambda= .64, pb.000).
The specific effects of the pricing manipulation are shown in Table 2. As expected, receiving the different prices due to a pricing situation that breaks the norm (i.e., dynamic pricing) leads to significantly lower perceived fairness of the pricing, lower benevolence trust towards the firm, lower intention to purchase from this retailer, higher likelihood of both private and public complaint (all pvalueb. 001) and marginally higher likelihood of additional search (pb.10). Thus H1 was supported, although the prices were the same across the two conditions, whether the pricing event broke an established social norm or not had a profound influence on respondents' reactions.
6.3. Intensifying effects due to belief in social norms
H2 argues that those who believe more strongly that a behavior is normative should show an exaggerated response to the breaking of that norm. Similar to Maxwell and Garbarino (2008), we find a broadbased and strong belief in the norm that all customers of the same retailer should be charged the same price (72% think it is norm with a mean value of 5.32 (SD 1.86)). Also similarly, we see no consistent norm that prices should be the same across retailers (39% think it is a norm with a mean value of 3.81 (SD 1.75)). However, respondents still vary in how much they believe this is a norm. Hence respondents' beliefs that the retail actions in the treatment conditions are norms were added to the MANOVA model to test whether the strength of their belief in the normative nature of the actions exaggerated their negative responses (H2).
Belief that the action (i.e., the one-store dynamic pricing event and the two-store event) is normative contributes significantly to predicting the consumer responses (All customers same Wilks' Lambda=.94, pb.000; All stores sameWilks' Lambda=.93, pb.000). The presence of a significant interaction between each norm belief and the pricing conditions indicates that the reaction is not the same for the two treatments (All customers same*Treat Wilks' Lambda=.94, pb.002; All stores same*TreatWilks' Lambda=.94, pb.003).
A simple effects analysis of the treatments elucidates the nature of the interactions (see Table 3). In the two-store condition, the overall effect of belief that there is a norm that all retailers should charge the same is a highly significant predictor of the outcome responses (Wilks' Lambda=.75, pb.000), whereas the overall effect of the belief that there is a norm that all customers of the same retailer should be charged the same is only marginally significant (Wilks' Lambda=.89, pb.07). Conversely, in the one-store dynamic pricing condition the overall effect of belief in the norm that all customers of the same retailer should be charged the same is highly significant (Wilks' Lambda=.75, pb.000), whereas the overall effect of the belief that all stores should charge the same to all customers is not significant (Wilks' Lambda=.96, pN.10). Thus, in both conditions (i.e., two-store and one-store dynamic pricing) it is the belief in the norm that parallels the condition that predicts consumer response, supporting the direct role of norms.
The nature of the effects of the belief in the norm is largely as expected (see Table 3), those people who believe more strongly that all stores should charge the same price feel the two-store experience is more unfair (pb.001), are less likely to purchase (pb.005), and are more likely to complain both privately (pb.03) and publicly (pb.002).
Amongst those who experienced one-store dynamic pricing, those who believe more strongly that all customers should be charged that same by a given retailer saw the dynamic pricing experience as more unfair (pb.000), had lower subsequent benevolence trust (pb.000), were less likely to purchase from this retailer (pb.000), were more likely to engage in additional search (pb.000), and were more likely to complain both privately (pb.000) and publicly (pb.000). Thus, in both conditions a stronger belief in the relevant norm led to an exaggeration of almost all of the responses, supporting H2.
6.4. Intensifying effects by priming pricing norms
To test H3 that priming norms would exaggerate their effects, a second data collection was conducted. This collection mirrored the first except that the beliefs in the social norms were collected prior to the exposure to the stimuli, hence priming pricing norms. This second dataset was collected from different members of the same panel. The demographics of the second sample look quite similar to the first sample; N=391, 57% women, 71% Caucasian, average age 39, modal education ‘some college’.
Priming the norms had a significant multivariate effect on the outcome variables (Wilks' Lambda=.95, pb.003). However, the specific findings are only modestly supportive of the hypothesized exaggeration of effects (see Table 4). We find a marginally significant decrease in perceived fairness when norms are primed (means: norms primed=2.43, norms not primed=2.64, pb.10) and a marginally significant increase in the likelihood of further searching when norms are primed (means: norms primed=6.37, norms not primed=6.19, pb.09). However, we actually find a significant decrease in the likelihood of publicly complaining when norms are primed (means: norms primed=3.49, norms not primed=3.96, pb.001). Thus, there is only partial support for hypothesis that priming norms intensifies the negative effects of norm breaking (H3).
6.5. Effects of prior retailer trust
H4 argues that pre-existing trust in the retailer buffers the negative effects of norm breaking. However, as is noted in H4alt, it is also possible that pre-existing trust will lead to a sense of betrayal in the face of norm breaking which might intensify the negative effects.
Given that our dynamic pricing scenario involves a well known retailer, we can credibly explore whether prior trust attenuates or intensifies the response to the norm violation. We are interested only in the moderating effects of prior trust when a norm has been violated, hence only the dynamic pricing condition is examined. Prior trust in the retailer was assessed before exposure to the experimental stimuli, using the same scale used to assess post event trust. Analysis was based on a composite measure averaging across the 13 items.
As hypothesized, prior trust is a significant predictor of response (Wilks' Lambda=.55, pb.000). In general prior trust protects the firm from the adverse consequences of dynamic pricing (see Table 5).
Amongst those who experienced the dynamic pricing event, those with higher prior trust had higher perceived fairness (B=.23, pb.003), higher post event trust (B=.87, pb.000), were more likely to purchase from this retailer (B=.67, pb.000), and were less likely to privately (B=−.37, pb.000) or publicly complain (B=−.14, pb.07).
Thus, prior trust operated as a buffer against the negative effects of norm breaking, offering support for H4.
The main effect of prior trust is buffering the negative consequences of norms violation. However, the betrayal effects may only occur for those with strong prior trust. Hence, a prior trust squared term was added to test for curvilinear effects of prior trust such that extreme levels of prior trust lead to less buffering or even a reversal of effects. The second column of Table 5, shows that this hypothesis is partially supported; the squared terms reach at least marginal significance for perceived fairness (B=−.09, pb.10), intention to extend search (B=.08, pb.06) and public complaining (B=.14, pb.01). Given the much larger coefficients for the linear effects and the opposite sign for the squared terms, the nature of nonlinear effects is that prior trust buffers negative responses to norms violation but at a decreasing rate as prior trust increases. However, even at the highest level of prior trust (7), the betrayal effects are not strong enough to override the positive effects of trust. While not as strong a support for the betrayal process as a complete reversal, the results are consistent with idea that the buffering effects of trust diminish as prior trust increases, supporting H5.
7. Conclusion
As a reviewer so rightfully pointed out, the experimental approach used in this research suffers necessarily from questionable external validity due to common variance, limitations on the number of variables investigated, demand bias and the assumption that respondents' behavior corresponds to their intentions. Nonetheless, the research does give a clear indication that it is not just the price itself that makes the difference in fairness perceptions and intentions. Instead it is whether or not a norm has been broken. When different prices are charged by different retailers, it is accepted as fair since this does not violate an established norm.However,when the price differential comes from a single retailer, it is considered not fair because it does violate a norm. As a result, trust is lost and negative intentions are increased. Our results highlight that understanding norms is a vital part of predicting consumer response to dynamic pricing. Thus, while dynamic pricing actions may lead theoretically to profit maximization, the finding that such actions break a strong pricing normin U.S. retailing suggests that its usefulness may be limited.
Given the economic advantages to price discrimination, retailers are likely to continue searching for ways to diminish the potential for negative responses. Our findings suggest that prior trust offers one possible buffer. We find that having a pre-existing level of trust in the retailer offers a significant buffer against backlash, although at a diminishing rate for their most trusting customers. Other potential moderating factors have been explored in the literature including the effects of offering explanations for price differences (Vaidyanathan and Aggarwal, 2003; Grewal et al., 2004) and educating the customer on actual costs (Bolton et al., 2003) as well as introducing the role of perceived control (Vaidyanathan and Aggarwal, 2003; Choi andMattila, 2008). Hence, it may be possible to design situations that diminish the effects of norms; for example by providing different incentives (e.g., new customers get a discount while loyal customers get frequent user points), credible explanations (e.g., differing costs of servicing) or allow customers to opt-in to special conditions (e.g., Saturday stay over).
On the other hand, the new power that sellers have to manipulate pricing over the Internet suggests that some means to protect the consumermay be required. The concern is not just price discrimination but also privacy. According to Odlyzko (2003, p. 1) “privacy [on the Internet] appears to be declining largely in order to facilitate differential pricing.” Weiss and Mehrotra (2001, p. 8) comment that “if industry analysts are correct and dynamic pricing becomes the wave of the future, the FTC will have no choice but to intervene to insure that dynamic pricing remains a reasonable business practice—one that does not exploit the potential of new technology to extract a consumer's entire willingness to pay.” In conclusion, e-commerce offers the ability to differentiate pricing, but sellers need to be careful that they do not violate any social norms when practicing discriminatory pricing.
Example scenarios (without company identifiers) Two-store scenarios Imagine you are in the following situation. You are looking to buy a Canon Sure Shot Camera for your upcoming vacation, since you frequently buy things from xxx.com you logon to xxx.com from your regular account to buy the camera. You find the camera you want and print out the webpage but before you purchase it you remember that you saw an ad for another online camera store that you wanted to check out. So you log onto their website and find the page for the camera you want and see that the alternative store gives a lower/higher price quote than your regular xxx.com account. You take out your printout from your regular xxx.com account and compare it to the computer screen. It is the same camera, same features, both are new and the price quotes were requested only minutes apart, only the prices are different. You log back into your regular xxx.com account to check the price again and see it is still offering a higher/lower price.
Differing account scenarios Imagine you are in the following situation. You are looking to buy a Canon Sure Shot Camera for your upcoming vacation, since you frequently buy things from xxx.com you logon to xxx.combut since your regular email account has been having troubles you set up a new xxx. com account using an alternative email address. You find the camera you want and print out the webpage but before you can purchase it your computer freezes up. When you have rebooted your computer, you log back into xxx.com but forget to login to the new account and instead login to your regular account. You find the webpage again for the camera you want and see that your regular account was given a lower price quote than the new account. You take out your printout from the new account and compare it to the computer screen. It is the same camera, same features, both are new and the price quotes were requested only minutes apart, only the prices are different. You log back into the new account to check the price again and see it is still offering a higher price.
Imagine you are in the following situation. You are looking to buy a Canon Sure Shot Camera for your upcoming vacation, since you frequently buy things from xxx.com you logon to xxx.com from your regular account to buy the camera. You find the camera you want and print out the webpage but before you purchase it you remember that you have been having trouble with your email account so you set up a new xxx.com account using an alternative email address. You find the webpage for the camera you want and see that the new account was given a higher price quote than your regular account. You take out your printout from your regular account and compare it to the computer screen. It is the same camera, same features, both are new and the price quotes were requested only minutes apart, only the prices are different. You log back into your regular account to check the price again and see it is still offering a lower price.
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www.emeraldinsight.com

“Mind the gap”: the rise of political marketing and a perspective on its future agenda

Phil Harris
Faculty of Business, Enterprise and Lifelong Learning, University of Chester,
Chester, UK, and
Andrew Lock
University of Leeds, Leeds, UK

Abstract
Purpose – The purpose of this paper is to introduce a selection of papers on such subjects as: increased application of marketing to modern politics; the perceptions of its effectiveness – particularly in closely contested elections; the escalation in funding of campaigns; and the increase in international collaboration.
Design/methodology/approach – There has been a marked increase in the quantity and quality of research since the first EJM special issue in 1996. Political marketing is now in the mainstream of research in marketing. The themes in the earlier special issues are tabulated to provide a comparison with those in this issue. The contributions in each paper are summarised.
Findings – The paper reveals key issues for research. One is the rapid rise in influence of the internet in the political sphere, particularly in blogging and social networking, although it presents major methodological challenges. There is also a need for more studies crossing cultures and electoral systems and empirical work to establish a firm basis for key constructs and relate those to voter attitudes and behaviour.
Originality/value – Drawing on a number of these papers, key issues for research in political marketing going forward are identified.
Keywords Marketing strategy, Politics, Lobbying
Paper type Viewpoint
In the last 20 years political marketing has moved from being the relatively obscure concern of a small group of academic marketers who were also interested in politics, to a significant area of international research in contemporary marketing. High quality research is now being published regularly on all aspects of political marketing whether it is related to the different political environments of the USA, Europe, Asia or Australasia or the political processes involved with international bodies such as the WTO. There has been an increasingly active dialogue between academics and practitioners which have contributed to both theory, the practice of political marketing and associated processes such as lobbying, and approaches to regulation in these areas. It has also gained the acknowledgement from political scientists that political marketing has something to offer beyond the black arts of propaganda! Since the first special issue on this area in the EJM that we edited, there has been a huge growth in both the quality and volume of work in this area, reflected in the number of submissions that we received for this special issue. This led to some very difficult decisions about what research to include, there being so many really good papers to choose from. To plug gaps in theory development we have deliberately selected empirical work linked to construct development, and also given preference to international coverage crossing cultures and voting systems, plus the insightful work on young people and young Moslems in particular.
While one can see evidence of political marketing from the earliest days of political activity, the origins of it as field of study, albeit highly practice-related, are to be found inwork of early authors such as Kelley (1956) who first defined the term to refer to this domain of activity. The subject’s development was strongly aided by Rothschild’s (1978) work on political advertising effectiveness and segmentation and also his later work extending this to social policy and political policy making. These early foundations of political marketing research were strengthened by the growing professionalism of campaign management, particularly in the USA, the rise of television in the second half of the last century and the later growth of pressure group politics. However, big your campaign budget might be, it still had to be deployed to its best effect. A decade into the new century, the range and quality of published research and the growing influence of the area may be seen to be rising rapidly. The fragmentation of traditional media and the growth of new ones are particularly important factors in this.While political marketing’s most visible influence has been in communications during electoral campaigns, it has become increasingly important in the development of long term political strategies and positioning for parties. Marketers’ understanding of consumer behaviour has provided particularly valuable insights into voter behaviour which is an important strand in the success of political marketing. It is frequently forgotten by political commentators and academics that the majority of voters do not share their fascination with politics.
In the past decade political marketing has become involved in policy development, service delivery and the engagement and targeting of the citizen and voters in politics.
The rise in political marketing activity and its wider applications has been accompanied by an increase in significant quality research beginning perhaps with Newman and Sheth (1985) on one side of the O’Shaughnessy (1990) pivotal work Phenomenon of Political Marketing which stimulated much of British interest in the area. Newman’s Handbook of Political Marketing (Newman, 1999), Harris and Lock’s review of political lobbying in the UK (Harris and Lock, 2002), Henneberg’s (2004) overview with its challenges to the discipline and Butler and Harris’ (2009) review of political marketing theory have all contributed to shaping the current form of the discipline.
As we enter the second year of the Obama Administration and observe the resurgence of the Conservatives in the UK and the growth of international issue campaigning such as that on climate change and CO2 emissions policy post Copenhagen, it is time to reflect on the state and future direction of political marketing.
As the nations which participated in the coalition consider their involvement in Iraq and Afghanistan, there are interesting intellectual questions about the initial promotion of those military interventions and the maintenance of political commitment to them over time (see, for example, O’Shaughnessy, 2004).
The earlier EJM special issues on political marketing in retrospect The first special issue of the EJM on political marketing in 1996 focussed on establishing key concepts and attempting to define the subject boundaries. The special 1996 double edition brought together, for the first time in an international research journal, work in the area and showcased new developments such as strategic analysis, social propaganda, corporate lobbying and the application of marketing management techniques to referenda. Our own contribution in the editorial pointed out the significant differences between political marketing and most mainstream marketing activity. The area was very much in its formative years. Positioning and specific applications dominated the contributions and the articles were primarily from the UK with features such as the images and positioning of Margaret Thatcher and Neil Kinnock. The first significant attempt at a definition of the subject in an academic journal was made: [. . .] the study of the processes of exchanges between political entities and their environment and among themselves, with particular reference to the positioning of those entities and their communications (Lock and Harris, 1996, p. 28).
We did consider a definition around the aspects of marketing that might be translated into the political area and related domains, though that would have begged the question of a definition of the boundaries of marketing.
The other papers included work from the USA on the Californian initiative (referendum) process and the political marketing industry, a theory and application paper from Australia and one on membership marketing issues in Germany. There was also what has become a seminal article on UK political lobbying. It was on Trident submarines and strategic naval infrastructure investment by Leighton Andrews (then of the BBC, now a Welsh Assembly Member for the Rhondda). This may acquire new relevance as the UK reassesses its defence commitments in a changing environment with weak public finances.
The key themes, authors and article titles that appeared in that edition are summarised in Table I.
Five years later in 2001 a second special issue of the EJM (Vol. 35, Number 9/10) was published, and this base of material was extended to include work on gender in electoral decision making, branding of candidates and parties, segmentation strategies in electoral campaigns and agenda setting as a modern political communications technique as well as a range of research covering lobbying through to US presidential campaigning (see Table II).
The second special issue of EJM, on political marketing, focused on the evolution of the discipline and how it was being applied to both winning elections and strengthen democracy and citizen engagement. It included articles from the USA on presidential election image making and positioning, Greece on agenda setting and Europe on the limitations of the “Americanisation” of its politics. Lobbying again was explored and the positioning process as part of applied marketing to politics was discussed in depth.
The 1996 and 2001 special issues of EJM were well received. They helped to establish the identity of the area and to stimulate the subsequent growth of the discipline. There are now major conferences such as the annual International Political Marketing Conferences and the yearly sessions on political marketing at the Political Science Association Conferences in the UK, USA and further afield. In addition, major texts are starting to appear such as the innovative work by Lee-Marshment (2009) and of course the field has been enriched by edited handbooks by leading figures (Newman, 1999; Johnson, 2008). In addition, there are two leading journals in the field around the subject area: The Journal of Political Marketing, which covers the main core area concerned with electoral politics; and the Journal of Public Affairs, which looks at the business and politics interface, particularly lobbying and corporate campaigning. A number of other special issues of journals have appeared and the number of international gatherings and doctoral colloquia is steadily rising. It is also becoming a critical area for dialogue on a multi dimensional subject basis within the social science subjects.
The contents of the current issue The first article, “Decision-based voter segmentation: an application for campaign message development”, is by Joan Phillips and Thomas and Kate Reynolds. It shows how the segmentation of voters utilising decision-making processes, such as  means-end laddering research innovations and real-time interactive online interviewing, can aid in the formation of political communications strategy, including theme and message development. Data are used which have been taken from a sample of 114 voters who were interviewed during the 2004 US presidential election campaign. The paper draws on three recent innovations in the means-end laddering methodology: elicitation questioning techniques that allow for a decision equity analysis between targeted groups; decision segmentation analysis; and real-time interactive online interviewing; and applies them to an electoral context.
These techniques in combination were found to provide an efficient set of methods to serve as the foundation for the campaign message development process. The paper provides deterministic research techniques for campaign strategists who want to understand voter decision making and demonstrates a combination of methodological and technological innovations that addresses the time, cost, and geographic limitations often associated with conducting voter decision making research.
The second article is by Gary Davies and Takir Mian. In in their work “The reputation of the party leader and of the party being led” they explore the similarity of the reputation of political leaders with those of their parties and assess the claim that there are causal links. The findings highlight the role of the leader’s reputation in managing that of a political party. A change of leader, Davies and Mian argue, will, inevitably, produce a change in party reputation. The two reputations interact and monitoring such effects can predict electoral outcome and success. Interestingly they found some unexpected effects in comparing their 2001 and 2005 data in that the effect of a change in leader’s reputation appears to be contingent on the voter’s intention to vote for or against the party being led. The research has some interesting findings and emphasises that changing leader is evidently more critical to the attractiveness of that party and motivation of its membership to supporters rather than attracts new voters or benefits its opponents. Drawing on the Corporate Reputation literature it makes a significant contribution to establishing political reputation as a formal construct.
“Towards the development of a cross-cultural model of voter behavior: comparative analysis of Poland and US”, by Wojciech Cwalina, Andrzej Falkowski and Bruce Newman, is a major quantitative study on the prediction of election results. Data from Polish and US political elections are assessed using Newman’s origin model of voter choice behavior. The prime objective of the study was to test empirically the model of voter behavior, where three elements influencing the choice of a given candidate were included: the media, cognitive domains, and emotional feelings. The results reveal a great deal of similarity in the voter behavior of Poles and Americans. The defined notion of cognitive stability of the electorates allow the authors to propose empirical indexes which they suggest could be useful to predict the outcome of elections. The results of the analyses also demonstrated the differences in the importance of the media for the election process. It is hoped that this work can be further replicated to explore the effectiveness of the effectiveness of voter choice behaviour theory.
In “Interpersonal and political trust: modelling levels of citizens’ trust” Leon Schiffman, Shawn Thelen and Elaine Sherman argue that that generally, trusting people are any more likely to be the same people who are alsomore politically trusting. And that if such a link is established between the two domains of trust, then there is an opportunity to identify citizens-voters who are open to a shared perspective with candidates. The work focuses in particular, on the relationship between interpersonal trust and three political trust-related constructs: trust of government form, political cynicism, and incumbent trust. The strong relationship between interpersonal trust and incumbent trust suggests the importance of public officials striving to identify the issues critical to the citizen-voters they serve, and to pinpoint the most important shared issues of agreement, for these issues are likely to reinforce the concept of mutual trust.
In contrast, due to the relatively weak relationship between interpersonal trust and political cynicism, it is anticipated that candidates who stress trust will be unable to convince the more cynical voters. For even when a candidate is sincere, the cynical voter is most likely to dismiss or downplay such declarations, given their cynical nature. The research should prove useful to academic research, campaign managers, and political strategists in terms of reinforcing the importance of different aspects or components of trust, as well as their interrelationship, and how they might impact on political strategy, tactics and campaign development.
“An investigation into the relationship between political activity levels and political market orientation” by Robert Ormrod and Stephan Henneberg is one of the first studies that investigates empirically the concept of political market orientation. In particular it focuses on a wide range of respondents, in line with recent developments in research on commercial market orientation and provides a useful analysis of the varying perception-patterns of party stakeholders. The study finds that less active party members perceive a wider range of attitudinal concepts to be of significance, compared to active members, politicians and party professionals.
In “The influence of promotional activity and different electoral systems on voter turnout: a study of the UK and German Euro elections” Amy and Jeryl Whitelock and Jennifer van Heerde evaluate EU election data for the UK and Germany and examine the influence of promotional activity (party campaigning) on the different voting systems prevailing in these two countries – first past the post (FPTP) in the UK and mixed member proportional representation (PR) in Germany – on voter turnout. This is interesting as in New Zealand they also use the same electoral system as that used in Germany and the work explored by Claire Robinson in her article may also apply equally to Berlin as Wellington.
The findings imply a general link between electoral systems, party campaigning and voter turnout. Individuals are more likely to turn out under PR systems, while “party campaigning” – including door-to-door canvassing and leafleting – also had a substantial positive effect on self-reported turnout. The research also confirms a strong positive relationship between direct campaigning and voter turnout, promotional activity (party campaigning) appears to account for at least part of the strong effect of PR systems on voter turnout.
In “Young people and voting behaviour: alienated youth and (or) an interested and critical citizenry?” Janine Dermody, Stuart Hanmer-Lloyd and Richard Scullion examine the impact of trust, cynicism and efficacy on young peoples’ voting and non-voting behaviour in the 2005 UK General Election campaign. The findings show that young people were generally very distrustful of politicians and in particular the Prime Minister (Tony Blair). The article outlines a contemporary contextualized understanding of young people as an interested and critical citizenry and raises a number of important questions that set a new agenda for political marketers researching young people’s electoral engagement.
In “If Kate voted Conservative, would you? The role of celebrity endorsements in political party advertising” Ekant Veer, Ilda Becirovic and Brett Martin examine whether celebrity endorsers in political party advertising have a significant impact on UK voter intentions. The use of celebrity endorsements is commonplace in the USA, but little is known about its effects in the UK. This research incorporates the use of celebrity endorsements in political party advertising with the political salience construct. Political salience represents how prominent politics and political issues are in the minds of the eligible voter.
In “Political advertising and the demonstration of market orientation”, Claire Robinson explores the relationship between market orientation and the achievement of electoral objectives. Robinson uses an analysis of advertising content against a framework of criteria drawn from key marketing concepts using examples from recent New Zealand general elections.
By viewing advertising as a symptom of parties’ broader market orientation, the political marketing factors that differentiate the “winner/s” from the others in an election campaign can be uncovered. Although the framework has only been applied to the New Zealand Mixed Member Proportional (MMP) electoral system and associated campaigns it has the potential to be applied to other countries and their electoral systems. It suggests a potential fruitful way of relating political advertising content to electoral outcome. The framework has not been used before in the political advertising or political marketing fields. It strengthens the utility of political marketing explanations in relation to voter- and media-generated explanations of election outcomes and may well provide a very useful tool to explore advertising and campaigning effectiveness in future campaigns.
In “Measuring political brand equity: a consumer oriented approach” Alan French and Gareth Smith examine how voters view the political brand by analysing the mental maps that voters create when asked to think about a political party. The analysis is both in terms of the nature of the maps and also in terms of the equity associated with a map.
The method provides interesting insights into the nature and equity of brand associations for the two main political UK party protagonists, i.e. Conservative and Labour. Key branded characteristics are highlighted for each party, both in terms of general structure, and also those associations which form a central role in voters’ maps.
The method is easy to apply and provides important information to political marketers about the nature and power of the associations held in memory by voters.
The research provides a means by which a brand mapping process, new to politics, can be combined with methods facilitating the analysis of brand maps to produce a means by which brand equity can be measured.
The eleventh article in this special issue is by Paul Baines, Nicholas O’Shaughnessy, Kevin Moloney, Barry Richards, Sara Butler and Mark Gill In their article “The dark side of political marketing: Islamist propaganda, reversal theory and British Muslims” they explore the perceptions of British Muslims towards Islamist ideological messaging and contribute to the general debate on “radicalisation”.
The article discusses the findings of discussion groups in the light of research previously undertaken in the propaganda/psychology fields, adopting the perspective of Reversal Theory and emphasises the complexity of undertaking research in such a sensitive field. The authors propose a series of four testable propositions to guide future research looking specifically at whether those subjects who are more likely to be excited by Islamist communication, include those with weakly held identities, younger males, those with contempt for Western culture, and the use of specific media genre formats. The authors argue that just as democracies use political marketing to recruit voters, so terrorists can utilise political marketing/propaganda techniques to recruit sympathisers or even would-be suicide-bombers (i.e. the “dark side of political marketing”).
“The duality of political brand equity” by Marcus Phipps, Jan Brace-Govan and Colin Jevons examines the under-researched area of consumer behaviour and political branding. The role of highly involved political consumers in constituency politics is used to show a politician’s brand equity. This stimulates a discussion of the politician’s brand alongside the political party and alongside the Davies and Mian article gives campaign managers an insight into how to manage politicians and party members and associated brands and reputations.
The final article is by Joseph Ben-Ur and Bruce Newman. In “A marketing poll: an innovative approach to prediction, explanation and strategy” they explore various methods of voter surveys which can generate different results and give the example that, using different channels of communication to facilitate data collection from voters could: reach different types of voters; generate different response rates; and represent voters who belong to different parts of the political spectrum. The authors utilise a marketing poll that does more than simply predict a voter’s behaviour and argue that it offers an extra explanatory component, which can be of considerable benefit in the development of marketing strategies during a campaign.
Political marketing research looking forward Reviewing the articles for this special issue, one is struck by the increased sophistication of the concepts, constructs and analytic methods being deployed.
Schiffman, Thelen and Sherman’s paper on trust is a good example a strong empirical paper which also gives us real insights into the nature of trust in a political environment. At a time when voters’ opinions of politicians have rarely been lower (at least in the UK!), this is a critical area and one in which political marketing can make an important contribution.
One of the reasons for picking out the key themes of papers in the earlier special issues is to help identify the areas which have been covered and to start defining gaps in the literature. In broad terms, we have concluded that there is a general acceptance of the core concepts and constructs in political marketing, though some need to have tighter formal definitions based on good empirical studies. In very general terms, we need more work that crosses cultures and electoral systems, either as cross-cultural papers in themselves or replicatory (or even meta studies) to test the extent to which concepts, results and the effectiveness of strategies hold in different settings and over time. The paper and ongoing work on political choice behaviour by Cwalina, Falkowski and Newman in this journal is an excellent example of what can be done to test internationally good theory and put in solid foundations for the discipline. There is shortage of good longitudinal studies in the area, Newman’s work being a notable exception.
The 2008 Obama Campaign has been hailed as the first to make effective use of the internet. There is clearly a major need to study the whole range of ways in which virtual media impact on political communication and marketing. This is not a trivial task as one is trying to cover vast volumes of communications in an environment which is rapidly evolving both in terms of technology and the life and death of sites. Because of the very nature of the web, these are not easily managed by large corporations, let alone political parties, and success may be achieved by embracing diversity (or even anarchy) rather to control it. The decline in membership of political parties has been widely documented.
This is also a decline in the social networks which link politicians to wider communities. Whether social networking sites offer much potential to politicians and political parties remains to be established. One phenomenon which appears having a substantial effect is political blogging. Interestingly the leading UK political blogs seem to be Conservative leaning (www.totalpolitics.com/blogs/index.php/2009/09/15/the-top-100-political-blogs).
The number of hits the leading blogs are getting suggest that they are reaching considerably more people than the traditional political magazines. We may have to develop s ome new concepts and theories to deal with virtual communities and communication particularly that used for activist advocacy and communications. For as Burns (2009) has highlighted on the 60th anniversary of the People’s Republic of China in October 2009, the nations QQ social networking site overtook the Facebook platform to reach 330 million users. If it were a country QQ, would be the fourth most populous nation on earth. Irrespective of whether we do, this a major future area for research and the development of effective practice.
Whilst pressure and single interest groups can be very visible and consequently, politicians are naturally very wary of them (particularly in the USA), there are few studies looking at the effectiveness of different campaigns. How much impact do they have on public opinion in general and voting behaviour in particular? There has been a shortage of recent studies of campaign effectiveness on the lines of that on the 1995 Irish Divorce Referendum (Harris et al., 1999). We believe that there is a real need for a study that brings together a series of cases from different countries with a view to drawing some general conclusions of the key determinants of effectiveness. At some point this needs to be combined with a specific study of the impact of internet campaigns but this would be pushing the limits of what could be achieved in a single study too far.
Finally, we suggest that it would be good to return to the subject of our understanding of voter behaviour from a political marketing perspective. The “tribal” allegiance of many voters to a particular party seems to be weakening. Is anything taking its place?
In a similar vein, Baines et al’s work in this volume on the views of British Muslims provides significant insights into a sensitive topic. Dermody et al. find significant suspicion amongst young voters about politics and politicians. These both raise major questions about how to engage significant sub-groups in our society.
The European Journal of Marketing has played a pivotal role in developing awareness in political marketing, consequent theory development and helping frame the agenda for future research, through its significant special issues on the subject in 1996 and 2001. It is hoped that this third special edition of EJM on political marketing will further strengthen and add to the substance and growing tradition of what has become a very vibrant part of the marketing discipline:
A prudent man must always follow in the footsteps of great men and imitate those who have been outstanding. If his own prowess fails to compare with theirs, at least it has an air of greatness about it (Nicollo Machiavelli, The Prince).

References
Burns, W. (2009), “Social media and the corporation – friend or foe”, Corporate Public Affairs,
Vol. 19 No. 3, pp. 1-7.
Butler, P. and Harris, P. (2009), “Considerations on the evolution of political marketing theory”,
Marketing Theory, Vol. 9 No. 2, pp. 149-64.
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pressure group representation at the major UK party conferences”, Journal of Public
Affairs, Vol. 2 No. 3, pp. 136-51.
Harris, P., Lock, A. and O’Shaughnessy, N.J. (1999), “Measuring the effect of political advertising
and the case of the 1995 Irish divorce referendum”, Marketing Intelligence & Planning,
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Johnson, D.W. (ed.) (2008), Handbook of Political Management, Routledge, London.
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Press, Baltimore, MD.
Lees-Marshment, J. (2009), Political Marketing: Principles and Applications, Routledge, London.
Newman, B.I. (Ed.) (1999), Handbook of Political Marketing, Sage, London.
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Corresponding author
Phil Harris can be contacted at: p.harris@chester.ac.uk

ScienceDirect
Procedia - Social and Behavioral Sciences 103 ( 2013 ) 637 – 646
13th International Educational Technology Conference

Marketing Education Online: A Case study of New Zealand Higher Education Institutions

Rubaiyet Hasan Khana*
a Lecturer, AIS St. Helens, 28a Linwood Avenue, Mount Albert, Auckland 1025, New Zealand
Abstract
Social Media interaction, an off shoot of web 2.0 environment has caused a paradigm shift in the way we communicate in a society. The modality of the purchase decisions has been radically influenced by this mode of communication. It is only a matter of capitalizing on this opportunity and having the best strategy in the current environment to succeed in changed market environment. Marketers should start focusing on developing high quality marketing strategies conforming to this new environment. This study investigates Social Media Marketing attributes of Higher Education institutions from New Zealand. It uses a customized tool namely Social Media Marketing Attributes (SMMA) Analysis to benchmark the practices from the institutions. Very little participation in using Social Media as a communication channels for marketing has been identified. A number of strategies are recommended to align the marketing with the demand and make the best use of this effective medium namely Social Media. The findings of this study have practical implications for the organizations working in this industry; where they can use the findings in developing effective customer centric marketing strategies.

© 2013 Published by Elsevier Ltd.
Selection and peer-review under responsibility of The Association of Science, Education and Technology-TASET, Sakarya Universitesi,Turkey.

Keywords: Social Media Marketing, Higher Education Institution, Services Marketing, Internet Marketing.

1. INTRODUCTION
The Internet is a medium of communication that was developed in the late 20th century. We have experienced the growth of an entire new industry that has changed the social structure, business culture and even individual attitudes because of the wide use of this medium. The communication achieved through this medium has made the world a global village. Physical distance has been conquered by using constant communication through the Internet using websites, emails, Internet phones, and lately the Social Media that provides an opportunity for two way communications between the producer and the consumers. This medium has been recognized as an important medium for marketing by many researchers in their studies (Belch & Belch, 2007; Keegan & Green, 2008) but the growth of marketing by using this particular tool has reached its highest pinnacle with the availability of Social Media through the Internet. Many businesses have started exploring this opportunity and have started playing around with the strategies to utilize this new found opportunity to achieve micro-customization of services for their customers. We have seen businesses cash in using this new found tool and achieve unprecedented communications success (Smith & Zook, 2011, p.31). We also see scepticism from corporations and managers in using this medium as a vehicle for their advertisements (Kelly, 2012). Overall, this medium has caused waves of changes in the marketing world but impacts are still uncertain and require further investigation before this can really be proven as an effective tool for marketing.
Nevertheless, the enthusiasm with this medium demands in-depth analysis and exploration and many industries are trying their luck with this bidirectional flow of information. The travel, tourism and hospitality industry that was one of the first to have used this powerful tool certainly set benchmarks for the usage of this tool in marketing. The Education industry being a service oriented industry also has very similar characteristics as the Travel and Tourism industry, where the students are their customers and they opt to make their purchase decision based on the information available (Shanka, Quintal & Taylor, 2006).
This gives us reason to believe that this medium might prove to be as effective as in the cases of TripAdvisor, Webjet etc. in the travel and tourism industry, where they have successfully incorporated Social Media as a tool for spreading the word and used the personal recommendations as a tool for success in their marketing efforts. This study takes into account the usage of Social Media Marketing in Higher Education institution.
1.1 Research problem statement
The extent of globalization has certainly influenced the nature of business processes in the education industry. With a history of internationalization since the beginning of the education industry; it has been a common practice to seek international education overseas. Many have travelled continents to seek new knowledge and entrepreneurship under the pioneers of technology, innovation and renowned scholars. The availability of technology such as Internet has made it possible for the education providers to offer educational services in an unprecedented way. Today courses are being delivered thousands of miles apart over the Internet and it is possible to follow the learning processes on a regular basis even though the learners and the teachers are geographically distant. This new form of education has not only changed in the supply side the demand i.e. the learners has also evolved and they have started considering many new factors in choosing their education destinations.
Brand in the form of referrals from the people they know is a key determining factor in this process (Malmarugan, 2008). The fact that the word of mouth has been indicated as a key influencing factor in making purchases in this industry points us towards the media that are now commonly used in carrying out this task. The success and effectiveness of education providers depends on how well their marketing and public relations efforts are implemented and understood.
The importance of marketing as a key for success even in the education industry has been mentioned by Brown (1984) when he developed the model of “Steps in marketing programs”. In his model, the marketing mix of a marketing strategy includes the “four Ps” factors of Product, Price, Promotion and Place in educational programmes. In the case of educational institutions it has always been a struggle to disguise these marketing efforts and putting their services at a much higher level than the commodities. The recent political changes in the world and liberalization of trades has changed this scenario and commodified education as a service (Mohammedbhai, 2002). This redefinition of the services opens up the market for education services to be exported as goods. The variation in cultural, societal, regulatory and economic aspects of the customers (students) of educational institutions makes it a big challenge for the market planners and managers to streamline the marketing efforts and find the right segment for the products they offer, the price they can offer, the channel they can use and develop the right promotional plan targeted towards the right segment of customers. In today’s globalized world it is almost a fruitless exercise to come up with a global marketing plan that fits all the segments scattered all around the world. With a globalized approach in delivering their services the educational institutions need a marketing strategy that will enable them to customize the strategies at a micro level. This calls for development of tool that understand the needs and wants of the customers at an individual level.
The New Zealand Market Development Board recommended opening up the international education market following the shift from ‘aid’ to ‘trade’ approach by Australia in 1987 (Alvey, Duhs&Duhs,1999; Harman, 2004). This has remarkably transformed this sector in New Zealand and introduced a new sector for foreign currency earnings for New Zealand (Martens & Strake, 2008). Tougher competition from other providers in the English-speaking world has made it difficult for New Zealand to keep up its numbers of foreign students in recent years. There has been a declining trend in the majority of the source countries of Foreign Fee Paying students (EducationNZ, 2010). Australia-New Zealand’s direct competitors for Asian students, the UK and Canada, are now improving their visa accessibility for foreign students and have invested heavily in the promotion of their educational services, particularly in the Chinese market. As a result, New Zealand could be losing its comparative advantage in this industry. Major market players in this industry are looking for ways to have paradigm shifts to reach their customers and secure their share of the global education market.
1.2 Research objectives
This research endeavors to identify the practices and expectations of the usage of Social Medium as a channel for marketing Higher Educational institutions. The research looks in to the following objectives to understand the practices of Social Medium in marketing;
Is there a demand for Social Medium as a preferred medium of marketing communications from the consumers end?
What is the Higher Educational institution marketers’ opinion about using Social Medium as a channel for marketing?
What are the current practices prevailing in using Social Medium in marketing Higher Educational institutions?
In considering the above mentioned objectives the research further investigates the trends in other similar industries in using the Social Medium but focuses on the education industry. New Zealand being one of the latest countries to offer international education as global destination makes it an interesting case to study since it had good opportunities to implement a Social Media marketing strategy in formulating their national marketing strategy as a preferred destination choice.
1.3 Significance of the study
Foreign students play a major role in the sustained economic growth and continue to impact positively in creating a multicultural nation in New Zealand (Bedford, 2006). A diverse student population enriches the learning environment and study experiences of the local students. But the choice of destinations now demands a higher degree of resource mobilization as it involves motivating the consumers on a one to one basis since Higher Education is considered as a high involvement choice (Gary, 1991). This study investigates a novel tool that has potential to gain a ripple effect in the market and establish a long term brand value through word of mouth. This is achieved through engaging the potential customers by mobilizing existing ones in creating this ripple. To the best of this researcher’s knowledge this is one of the pioneering studies about the medium of Social Medium usage in marketing particularly by the education industry of New Zealand. The findings of this study will establish a benchmark for these highly disorganized industry standards by using this social medium in marketing.
This standard might contribute towards the growth in this potential sector to compete in this highly competitive international market. The marketers need evidence that the customers of the Higher Educational institutions have gone through a paradigm shift and trust their peers more than the claims made by reputable institutions. This study provides the opportunity to collect this evidence and recommend possible strategies in this new marketing environment. This study could potentially present an advantage for New Zealand Higher Education organizations to optimize fully their Internet marketing strategy and cash-in to this opportunity as a market leader in utilizing Social Medium as a marketing tool. The findings of this study will be particularly beneficial for universities and other Higher Education institutions as it directly investigates the needs and demands for their potential customers (students). The findings of this study also indirectly influence the policies governing the market development for education industry by the New Zealand government and contribute towards their strategy formulation. The academic world also benefits by recording the application of various Social Media theories and testing various hypotheses through this conceptual framework.
1.4 Research scope and limitations
Due to limitations of time and budget, the study was only focused on a snapshot at a particular time. Any wider impacts through the development of different international factors of decision making (e.g. the world economy, culture, comparative status of the New Zealand institutions by world standards) could not be incorporated in the study.
2. Literature review
The fairly new field of Social Media Networking has created a ripple in the business world and is a subject of considerable interest among the practitioners as well as academicians as discussed in chapter one. This section aims to establish a knowledge gap in this field and propose the focus of this study through a comprehensive review of the current literature about the theories and practices in this field.
2.1 Marketing defined
The definition of Marketing is a highly debated subject among the academicians and the practitioners who actually apply the theories in the field (Hunt, 1976; Dann, 2010; Morgan, 1996). It really is a matter of conceptualizing the contextual aspects that should perhaps define the scope of a marketing effort. Wiebe (1952) for example, asks, “Can social products be marketed?”. If marketing is simply a process of accommodating exchanges between two or more parties (Chartered Institute of Marketing (CIM), 2005) can this be generalized for any business or social transactions? Should marketing be considered solely as a business function or can various other social behavioral theories be applied to understand the processes better and as a result relate this understanding with the phenomenal changes that are being reported by various marketing practitioners due to the availability of Social Media networks among the consumers. Is this a myth? Or are we really experiencing a paradigm shift that is redefining the processes of how we, as consumers, make our decisions of choice and purchase?
2.2 Higher Education in New Zealand
New Zealand: a player in the international education market enjoys a new entrant status among all its competitors. The economic reforms by the David Lange government in mid 1980s transformed the domestic labour market creating demands for “White collared” jobs. The skill requirement variation led more and more students to seek tertiary education resulting in new enrolments in the Higher Educational institutions. Enrolment has risen from roughly 120,000 in 1985 to 431,573 in 2011 (Education counts, 2011). This fourfold increase in the student numbers can be rationalized in two basic influences. One of course, was the increase in domestic demand due to the policy changes but the major contribution towards these additional numbers coming was when New Zealand opened up their market for Higher Education from 1990 as a possible destination.
The Higher Educational institutions including the universities, polytechnics and private tertiary educators became good candidates as destinations for international students in a globally competitive market. This new approach of delivering the services in a competitive market transformed the age old universities and their business processes. Suddenly the universities were competing for their share of the market not only internationally but also for the domestic market. Universities and other Higher Education providers had to have a strong marketing team and effective strategies to market their courses in the market.
This has lead to a continuous process of innovative marketing strategies resorting towards latest technologies to reach their markets. Recent news reports shows considerable interest in using Social Media by the Higher Education institutes (Scoop, 2013) there are demands from their students. But before these claims can be generalized it is necessary to rationalize the decision through considerable research and practical studies of the return on the investment in this media. Managers certainly will be skeptic in adopting a media without testing it further.
2.3 Social Media as a vehicle for marketing
This section addresses the first research question of this study. Social Media as noted by Google (2013) makes up most of the current web traffic. Facebook followed by YouTube are the top two web sites that attract the most visitors all around the world. And the unprecedented growth of the Internet as reported by Internet World Stats (2013) of 566% over the last twelve years established this medium as one of the most accessed medium the nature of this medium being less resource demanding (cheap), accessibility (24/7 availability), ability to provide interactive communication makes it one of the richest medium for marketing. Many practitioners and market leaders have effectively used Internet to gain considerable profits through better reach and market penetration. Social Media as one of the offsets of this rich media carries all the attractive characteristics and in addition to that it introduces the novelty of interactivity and consumer generated contents to add additional value to the marketing efforts.
The theoretical framework of rationalizing the popularity of this medium has been the focus of many recent researchers (Gaudin, 2010; Contractor, 2009 and Evans, 2008). This research limits its scope of analysis with the context of Higher Educational institutions and attempts to relate the summary of their analyses with the purchase funnel of the students making their decision about destination of their study.
2.4 Student decision making on choice of institution
As a result of the transformation of educational services it is becoming a commercialized product, strongly influenced by the expectations of its consumers. The other key characteristic of educational services is it is inseparable from the service provider. This poses an extra challenge to the marketers as that will force them to bring their consumers to them or take the services to their customers. This is a life changing decision for the customers and considered as a high involvement choice (Gary, 1991; Mazzoral, 1998; Mazzoral and Soutar, 2002). The students are influenced by a complex matrix of factors that includes both intangibles and tangibles. Intangible factors may include the brand of the institution, the quality and relevance of the courses that they offer or even the reputation of the educators involved in those institutions. Lamb et. al. (2008). investigated the decision making process and proposed a few tangible elements that can be used for marketing efforts. He termed them as ‘cues’ that include physical facilities, staff profiles and their publications that sends the signal to the prospective learners to choose their destination institutions. Lamb et.al. (2008) proposes that these cues can be marketed aggressively to achieve the expected marketing outcome.
The focus on tangibility is perhaps an easy way of pushing the prospective students through the purchase funnel but it will not be prudent to question this strategy’s affectivity when thinking about a long term competitive advantage through a well designed marketing strategy. In a high involvement purchase decision perhaps the students might put more emphases on the intangible factors as mentioned earlier. And it is perhaps the referral process through word of mouth that will be given more importance compared to the claims made by the degree offering institutions on their websites. Many researchers have identified this source of information as more credible than the latter one (Crotts, 1999; Perdue, 1993). With the availability of Social Media spreading this word has become much easier than it was in the past. One cannot emphasize more, the power of the post purchase feedbacks in an educational institution’s marketing context.
2.5 Theoretical relevance of the Social Media marketing
Psychological Ownership theory
Asatryan and Oh (2008) using the example of the hospitality industry explained the affinity towards feedbacks from a Psychological Ownership Theory perspective. Consumers tend to grow an affinity towards the organizations that they receive service from and take ownership of the feedback that they leave on their sites. This comment shows justification why Social Media users might be inclined to actively spread by word of mouth, their experiences about a school if suitable platforms are provided. And this is perhaps where the greatest possibilities for Higher Educational institutions exist in gaining a long term intangible asset through the branding process from their customers, the students.
Social Exchange theory
The Social Exchange Theory formulated by Emerson (1976) considers the cost benefit analyses as the basis of any social interaction. To get involved in a social behaviour one should have vested interest within an interaction. Both the parties should feel obliged to attain a social interaction through benefits for each. The social interactive environment should be designed in the virtual world in such a way that the parties involved can identify these benefits. For example, the leading Social Media, Facebook, creates its tangible benefits through a sense of personal information sharing within their networks, LinkedIn creates the same through building professional networks. Any organization attempting to make marketing advantage should carefully consider the inner strategy of benefit design and choose the relevant media to their marketing objective.
Social Network Analysis
The traditional social network theory (Wasserman and Faust, 1994) treats the members of a community as nodes of communication and the nature of interaction between these nodes will determine the affectivity of each edge. The mathematical modelling, using this theory, will determine the reach of each of the networks. Social Media reach can be estimated using this theory.
McLuhan’s Media Theory
One of the major aspects of interest for the marketers in the Social Media context is the content generated by the users of Social Media. This is important because it is the content created within a context that will have an elaborated impact in the potential market. McLuhan (1995) explained, this generation of contents by dividing the media into two distinctive categories.
He explained that ‘cool’ media requires the viewers to make considerable effort and involvement to understand the context whereas the ‘hot’ media will require comparatively lesser effort. Perhaps this author’s famous quote, “the media is the message” explains this best in apply this theory in a Social Media context. This why the marketers should be very careful in determining the right media for the message they are sending. One might speculate having the right media is more important than the message in it. As the messages being generated by the users will be determined by the Social Media that they are using. A “Like” and a “Comment” on the Facebook will have much elaboration compared to the 140 character limitations on Twitter. An update on class cancellation may be effective on Twitter but this might not be a very effective medium to generate interest about a particular course or service within a Higher Educational institution.
2.6 The framework for study
The above discussion using the relevant theories of Social Media clearly indicates that an existing robust framework is available for creating a basis of an exploratory study about affectivity of Social Media usage and benchmarking a standard for future practices. The discussion summarizes that a Social Media decision, in order to measure its effectiveness can be measured in three distinct areas asking the following questions:
Firstly, effectiveness will involve whether the players will have sufficient incentive to get involved in these interactions?
Secondly, whether the reach can be estimated of a particular media that the marketers will be using?
Finally, whether the message that the marketers are trying to send will fit into the medium that they are trying to use?
The marketing goals will be achieved if a Social Media marketing strategy of a Higher Education institution can push the consumer through the final decision making process, i.e. purchase decision. Due to the ever changing environment of this particular sector it has become very important to understand how to employ this powerful tool, i.e. Social Media on the Internet to motivate the consumers to consume and stay competitive in the global market.
3. Methodology
The framework of this study guides the research for collection and analysis of relevant data. A customized tool was developed (Appendix I) to compare and contrast the Social Media Usage of the New Zealand Higher Education institutions. The tool was named Social Media Marketing Attributes (SMMA) Analysis tool. For every institution using Social Media, 1 point was allocated, and for every negative answer, 0 points were allocated. Further categorization of the institutions was carried through allocating points on the depth of involvement of these institutions in using Social Media for their marketing and communication purpose. An overall score for each institution was analysed after totalling the score for each institution.
Institutions from the New Zealand tertiary sector were randomly selected from the New Zealand Qualifications Authority (NZQA, 2012) website. A simple random sampling technique was selected to ensure representation of the entire population.
An overall population size was determined by simply identifying the total number of institutions listed on the NZQA website.
The total number of enlisted organisations was nineteen hundred and four. The sample size decision in of the study was decided by using the table developed by Krejcie and Morgan (1970). The minimum sample size determined for the study was 320. The analysis was carried out on 349 sample institutions from this list.
4. Results
New Zealand has three types of Higher Education institutions: universities, polytechnics and private tertiary educators (PTEs). Out of this population, a sample size of 349 institutions was chosen for this study. All the university websites (8), polytechnics (13) and three hundred and twenty eight private tertiary educators’ were investigated in this part of the study.
The private tertiary educators were picked up randomly from the New Zealand Qualifications Authority (NZQA) website.
The representation in the sample as summarized in the following table 1 is in line with the total population where majority of the population of Higher Education institutes are privately owned followed by a limited number of polytechnics and universities in New Zealand.
Proportionately the types in the sample representation could be summarized as Universities: Polytechnics: PTEs = 2: 4: 94.
That also reflects the population characteristics. Different types of organizations clearly demonstrated a varied performance on the scale. Out of a total score of 5; Universities scored the highest (3.375) followed by Polytechnics (2.230) and PTE scoring the least (0.948). This shows that while the universities are much more proactive in using this Medium compared to the other two groups they still can improve their performance by increasing their involvement in this Medium. Overall mean average of only 1.05 out of a total of 5.00 is considered to be a very poor performance and indicates the lack of attention and efforts to use this Medium as a mode of communication.
Further to this analysis the research was interested in categorizing these institutions based on their performance and the nature of participation within the Social Media pages. Since there are many forms of Social Media including Facebook, Twitter,
Blogs, MySpace, YouTube etc. the comments recorded were generalized comments made by the surveyors on overall performance. In order to keep the comments unbiased a code book was used by all the surveyors and three surveyors were used for the same sample and results were averaged to make the assumptions as close to reality as possible.
Analysis on the usage and practices of Social Media needed further in depth look rather than just who are using this medium.
Following table 2 summarizes the nature of the usage of this medium as a communication and marketing channel. This also gives a snapshot of different categories of usage among the sample that rightly represents the population.
Out of the 349 educational institutes surveyed only 134 institutes had some sort of Social Media presence one way or another.
This represents only 38.40 % of the total institutes surveyed. Since the researcher could not find any similar surveys in the literature review it could not be compared with a benchmark standard but less than half of the organizations using this easily accessible, readily available medium for marketing communications show some degree of scepticism and to some extent distrust.
Among the 134 institutes who are using this medium only 1 (0.29%) had more than one pages and the marketing department and various other departments are actively posting updates and news to influence user interaction among this channel. This reflects a clearly defined Social Media Strategy that seems to be rare in most of the organizations that have been surveyed.
Another type of organization that has been identified in this survey represented a group, which had more than one page/channel on Social Medium. They posted regular updates which were being posted by different departments and they seem to have been running their efforts independently. This shows a lack of overall integrated strategy for Social Media marketing among these organizations. They represented about 2.5 % of the total organizations surveyed. The third category that was identified included organizations that had a single page/channel running on this media and the students were interacting with each other commenting on various events and news that are posted by their institutions. This represented major portion of the sample i.e. 33%. A fourth type of Social Media behaviour was observed in another category where there were initiatives by the institutes of participation in the Social Media though a single page/channel but they are used for intermittent organizational notices but are seldom noticed by the target audience and commented upon. This represented 2.5% of the samples. A fifth category that had no Social Media activities represented 215 (61.60%) who seem to be the single major portion of the sample. The following table 3 summarizes the results described above; In the above categorization institutions scoring of 3 and 4 in the Social Media performance were grouped together as they demonstrated very little difference in their level of involvement with the Social Media communications. Type of institutions included in each of these categories also gives a distinctive profile which can be correlated with their overall marketing efforts. Majority of the institutions from category 1 and 2 were Universities or Polytechnics having a robust administrative structure and ensured government funding that probably induces them to have a well maintained marketing team and infrastructure to use the latest medium of communications in their communication channels and marketing media. Above results when summarized indicates very little current interest in committing resources towards Social Media Marketing. This provides us with an indication of what the higher educational institution marketers thought about this medium as a marketing tool, our second research question. Their lack of interest clearly demonstrates the distrust on this tool.
5. Discussions on findings
Extending the analysis in Table 3, each of these categories can be utilized to establish the types of activities that they are doing and explore a link with the Constantidines’s (2004) model where he proposed that the organizations can influence their consumers’ purchase decision in two basic approaches; through Active involvement and Passive influence using Social Media.
Table 4 explains different types of strategies adopted by the Higher Education institutions from New Zealand. This summary indicates that there are still opportunities for this medium in this industry if the demand from the customer end can established through a research. The above section addresses the third research question of this study.
Social Media is a very interactive dynamic medium that provides with a lot of opportunities. At the same time it creates challenges for the marketers to develop conforming marketing strategies. Previous researchers have certainly supported this claim that this conformation needs to be carried out in order to stay competitive in the market (Kreutzer & Hinz, 2010; Mangold & Faulds, 2009). Affectivity of traditional media and current marketing strategies using unidirectional communications and mass marketing efforts have been questioned as the target audience seem to have lost trust on this medium (Constantinidines & Fountain, 2008). Customers seem to value this new media more through direct involvement and looks at this from a sense of ownership as they also generate the contents within them (Mangold and Faulds, 2009).
Although New Zealand Higher Education institutions compete in a global market, the findings from this study questions the current media that they are using and their effectiveness. There have been very few studies carried out in the New Zealand market that enlightening with the choice of medium for marketers in this industry. Khan & Ali (2011) claims that the choices in this market seem to be very unpredictable and often on a make shift basis that lacks overall strategic goals. This research also discovered similar trends where lack of attention towards a strategic choice might have contributed towards the low usage of this medium within the New Zealand Higher Education institutions. The greatest challenge that using interactive Social
Media creates is establishing the context where the target audience are motivated enough to involve themselves in the discussion. Without their participation this medium perhaps is left with a dead effort. This is perhaps why we see, almost 36% of the samples from categories 3 and 4, although they were involved in Social Media marketing in one way or another, were failing to create the so called “Buzz” that is targeted in using this medium for marketing purposes.
The following Figure 5-A discuss a process model development based on the Gr nroos (2004) framework to work out a value creation process within these Higher Education institutions.
Gr nroos (2004) describes three major elements in an effective Social Media strategy: Knowledge Creation, Interaction, and Relationship. The participants could find themselves involved in all these three aspects in order to take part in the Social Media interaction and start adding value to the marketing efforts of the institutions. These objectives are very contextual and need to be customized based on the institutions’ internal stakeholder (shareholders, teachers and administrators) needs, market (students) needs. As well they are based on actual resource analysis where a practical analysis was carried out to establish the market readiness for a dynamic medium such as Social Media. If all these relationships are assessed in creating the marketing communications objectives the stakeholder participation should ensure the constant conformation of the Social Media contents which will help the choice of the right platform for the organization to communicate constantly with the prospective customers.

6. Conclusion
The study gives a snapshot of the supply side of the information for Higher Education institutions’ Social Media strategy for New Zealand. In answer to the research questions set forth, we can conclude that there is a clear demand from the consumer end for this medium to be used as a marketing channel. Higher educational institutions lack confidence on this medium thus the lack of current use. And due to the distrust and lack of commitment the resource mobilization for identifying clear effective strategy in using this medium is evidently absent among the current practices by the higher educational institutions from New Zealand.
Information gathered and analysed in this study will be a valuable resource in understanding the strategy formulation process in these institutions. But in order to establish an overall picture of this media further study is required on the demand side of this medium. The data can be used to triangulate an overall picture of the current state of strategies of Social Media marketing of these institutions. Further studies may include focuses on inter-industry comparison of Social media usage in marketing, a time series analysis of development of this medium as a marketing tool.
7. References
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Bedford, R. (2006). A2 Skilled Migration in and out of New Zealand: Immigrants, Workers, Students and Emigrants. Evaluation of the general skilled migration categories, p. 219-246.
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Constantinides, E., & Fountain, S. J. (2008). Web 2.0: Conceptual foundations and marketing issues. Journal of Direct, Data and Digital Marketing Practice, 9(3), 231-244.
Contractor, N. (2009). The emergence of multidimensional networks. Journal of Computer Mediated Communication, 14(3), 743-747.
Crotts, J. C. (1999). Consumer decision making and prepurchase information search, Consumer Behavior in Travel and Tourism, edited by A. Pizam and Y. Masfeld. New York: The Haworth Hospitality Press, 149-168.
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Research, 63(2), 147-153.
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http://www.educationcounts.govt.nz/statistics/tertiary_education/provider_summary EducationNZ. (2010). Overall student approvals by nationality and year. Retrieved on 13/04/2010 from
http://www.educationnz.org.nz/policy-research-stats/statistics
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https://www.google.com/adplanner/#listdetails?id=607600

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CENTERIS 2013 - Conference on ENTERprise Information Systems / PRojMAN 2013 -
International Conference on Project MANagement / HCIST 2013 - International Conference on
Health and Social Care Information Systems and Technologies

Approaching Market Intelligence concept through a case analysis: Continuous knowledge for marketing strategic management and its complementarity to competitive intelligence

George Leal Jamil*
Universidade Fumec – gljamil@gmail.com; jamil@fumec.br

Abstract
This article aimed to detail the comprehension of Market Intelligence (MI) concept, working theoretically and with a case study analysis. In this work, MI is defined as a cyclic, continuous process designed to continuously produce knowledge from raw and dispersed data and information, added with the notion on how to apply this knowledge for strategic marketing management for a business sector. In the end, a study case is conducted, reaffirming the theoretical findings, to improve MI concept definition through its complementarity with Competitive Intelligence (CI) organizational process.

© 2013 The Authors Published by Elsevier Ltd.
Selection and/or peer-review under responsibility of SCIKA – Association for Promotion and Dissemination of
Scientifi c Knowledge

Keywords: Market intelligence; competitive intelligence; marketing strategic management; information and knowledge management.

1. Introduction
Market intelligence (MI) concept calls more attention as demands for knowledge in organizations became increasingly critical in the last years, simultaneously with the phenomenon of data and information disorganized abundance. It is expected, from a strategic point of view, that one organization not only reacts to external factors or sectors, but also try to lead its business segment proposing and executing innovative plans and differential strategic positioning [1; 2; 37]. Market intelligence is defined as a process designed to constantly produce knowledge for business sectors from dispersed data and information for strategic market positioning, as an organizational continuum that aims to answer typical decision problems faced by firms when competing in actual business environments [3; 4]. This concept will be developed in the present paper, first from a theoretical point of view, to understand its formation and conceptual network. In this approach it is also an objective to distinguish it from several other fundamentals which MI is frequently confused – as with competitive intelligence (CI) process, studied as a complementary process – and forming a base in order to objectively affirm MI as a formal concept. In the end, a study case from information technology group of companies is observed, which helps to get to the desired objectives for the paper.
2. Conceptual background
The theoretical work starts with the exam of some fundamentals of information science, needed to compose a coherent base to affirm market intelligence concept. This conceptual background starts with data, information and knowledge definitions and advances with the elaboration of a primary view of MI concept which will be concluded in the end of the article with the case study.
2.1 Data, information and knowledge
These basic concepts have been debated by scholars and practitioners of various areas for decades and are essential in the present observation. Here it is presented a particular, referenced and coherent relationship that offers possibility to define and understand market intelligence process as it was previously stated.
As stated in Davenport [5], Tuomi [6] and Lucas Jr. [7] these concepts were defined not only in their fundamentals, but also observing its relationship and integrated application views. Data is considered as an absolute value, as it could be obtained directly from a measurement or collected from an automated source, among many other signals and origins. It shows flexibility to communicate, as it can be easily processed by automated instruments and machinery, but lacks more profound meaning, as it is almost impossible to deduce anything in more detail from the context or process it was created, being just an instantaneous observation of a reality. From those and other authors, information is conceptualized as a collection of correlated data added with context, providing a better condition for deciding, but offering more complexity to be treated or processed.
Information increases decision capabilities, but demands additional work to be finally applied [3; 4; 5; 6; 7].
Knowledge is considered to be composed through a collection of information, including descriptions of the processes which produced that information. Knowledge allows maximum decision capabilities, for example, enabling even prediction capabilities [5; 8; 9; 10]. But on the other hand, it shows difficulties to manage, communicate, and presents questionable storage conditions and is critical to be shared, resulting in the need of a specific process to treat it, defined as knowledge management [11; 12; 13; 14; 15].
As another important concept an organizational process can be understood as a complex task which can be integrally or partially managed, showing clear division and relationship among its internal phases, specifying in objective ways when one starts and ends and what are the internal and final results expected to be produced [3; 4]. It is important to note that market intelligence and related factors, as competitive intelligence, both are here studied as organizational processes.
2.2 Market Intelligence
Derived from many areas, intelligence is another concept that motivated various studies and expressive debate. It is opportune, though, to evaluate contributions from other scientific fields and also applied practice to improve market intelligence concept and its relation, answering to the objectives of the present study, considering it for the focus of business strategic marketing decisions.
First, it is opportune to discuss about the definitions of competitive intelligence, as it is detailed by SCIP [17] as a The process of monitoring the competitive environment and analyzing the findings in the context of internal issues, for the purpose of decision support. CI enables senior managers in companies of all sizes to make more-informed decisions about everything from marketing, R&D, and investing tactics to long-term business strategies. Effective CI is a continuous process involving the legal and ethical collection of information, analysis that does not avoid unwelcome conclusions, and controlled dissemination of actionable intelligence to decision makers [17].
As differences and complementarities of these two processes – competitive intelligence and market intelligence – were suggested before by Jamil [4], there are also some similar aspects that reinforce the conceptual base, demanding a comprehensive observation. Competitive intelligence is affirmed by Kahaner [18] and Miller [19] as a continuous process, so configuring a strategy demand-driven process that has the goal to provide decision support specifically for strategic levels in any organization. It is important to notice that as a process originally designed to produce knowledge from external environment interpretation, CI offers a higher level response with the access to external of sources of data and information, composed mainly from historical phenomena. Market intelligence, on the other hand, composes internal, sectorial (external, but correlated by internal organizational configurations) and external sources to produce specific, focused knowledge to marketing processes and decision making guided to implement aggregated value positioning – specifically strategic marketing planning tasks and choices, acting as an organizational continuum [3; 4], designing strategies and tactics for a future positioning to be considered, planned and executed by an organization [1; 2; 4].
The convergence of strategic results of both processes – CI for strategic decision, such as those in planning and executing strategies and MI for strategic marketing decisions – also allows to understand how they can be complementary and interrelated, reiterating that market intelligence has a more practical, applicative, “to the market” objective as it is designed to support a connection between organizational strategy formulation and answers provided by strategic marketing decisions.
From information technology (IT) and computing science fields, “business intelligence” arises as a relevant and broadly discussed concept. It is used for many interpretations of tools, techniques, methods and integration of resources oriented to produce specific knowledge from disperse sources of information and data, as analysed by [20; 21; 38; 39; 40]. The IT literature concentrates predominantly in technical issues, such as implementation models, physical storage, database structuring and integration. From this point of view, intelligence results from applications processed over technological infrastructure, which offers not only the mechanisms for its development, correlation between logical models to physical implementations, but also for knowledge codification, process modelling, sharing and distribution. Another special aspect is integration, as the business intelligence usually is based on an infrastructure that is implemented through an associated arrangement of organizational resources, not regarding aspects such as cyclic updates or evolution, but thinking it as a solution-driven knowledge provider [15; 21; 22; 34].
For the purpose of this study, market intelligence process is affirmed in terms of its main phases [3; 4; 28; 30; 31; 38; 39; 40]:
• Aggregated chain modeling: to allow understanding how the sector works, where data and information are produced and where knowledge is more critical for strategic marketing decision situations.
• Data and information diagnosis: where business sector data and information are evaluated to constitute a model that represents what is available for initial process design.
• Knowledge diagnosis: to conceive, initially, what are the main contents of knowledge demanded by typical market competitors for decision taking in their strategic market plans.
• MI Process modeling and implementation:
o Collection: gathering of data and information from organizations of the analyzed sector. External sources, as governmental agencies, research institutes and other partners, if diagnosed as essential or opportune, are also collected.
o Validation: normalization and correction of data and information collected, as those sources can produce different or mistreated contents that have to be leveled or worked to be compatible (format, updates, identification, etc.) to become understandable as similar for cyclic analysis.[38; 39]
o Processing: usage of business rules, logic modeling, statistical and other mathematical analysis applied to data and information to produce specified knowledge contexts in terms of reports, concise graphical and dynamic spreadsheets, databases, competitive scenario previews and so on.
o Communication: results sharing of the processing that are delivered, presented, transmitted to interested market players for further application in their decision scenarios.
Additionally, it can be affirmed for MI process:
• It is a continuous business process, equivalent to that proposed by competitive intelligence fundamentals, but with addition or composition of external and sectorial (similar firms and organizations, related to a commercial or marketing sector) sources of data and information, with more specific goal – strategic marketing management [19].
• It is structured over some predictable and managed tasks, as collection, validation, processing, sharing and results production (for strategic marketing planning) and communication [23].
• This process can be adapted, expanded and improved along the cycles of its complete function in one or in various correlated organizations.
It is opportune to consider this concept as suitable to help or support other managerial task concerning data, information and knowledge, as information systems design, information technology resources application (such as data warehouse and data mining) and marketing strategies propositions (such as customer relation approaches, commercial distribution issues, trademark reformulation and many others) and its implementation.
These repercussions improve the understanding of MI organizational application and bringing relevance to the present study [8; 20; 21].
For Maltz & Kohli [28], market intelligence is a business component which improves the quality of scenario prediction, allowing better planning capabilities, especially those related to marketing strategies. Their study can be related to Cornish [29] as a definition of the MI process, with this former author adding a relevant detail about how MI can be applied to process external and internal data and information, allowing to perceive it as tool associated to strategic planning abilities, given by the contribution for the application of strategy analytical models such as the five competitive forces – from Porter [8] - or Swot analysis [1; 2; 8]. In this association of concepts, it is possible to understand a perspective of relationship between tactical planning and strategic, and also about the relationship of the two processes, competitive intelligence and market intelligence.
Makadok and Barney [30] evaluated how market intelligence is related to the strategy and, referring to one remarkable study by Jay Barney, sought to present it as a firm´s resource, treated by the RBV (resource based view) techniques, a set of related theories which that was first announced by Edith Penrose in 1958, which considers organizational critical factors, methods, tools, knowledge, processes and assets as resources. This important theoretical definition allowed many authors and researchers to study how tasks such as planned generation, defence, maintenance, change management, valuation and many others are related to strategic resources positioning and how to evaluate what are organizational most critical resources [1; 2; 8]. For these authors, market intelligence process really allowed one company to understand its competitive position and actual scenario and depict new proposals which can define a business situation in a future moment, retaining and develop competitive differentials, or resources. It is important to reaffirm that strategic marketing basic orientation is to propose competitive differentials in value aggregation on products and services, as it will be perceived by customers. This planning will be done proposing to execute a strategy proposed by a firm, thus relating both areas – strategic and marketing planning – and its theoretical contributions to this study [24].
These findings also can reach new trends when by Hawtorne & Kromity [31] it is observed how to plan and execute strategic marketing, in modern social network tools and environments. Market intelligence, announced by the authors in a very similar way to that worked in this paper, is presented as a set of processes for dynamic product and services offer, as those social networks create expressive amount of enabling factors to obtain those results – information and knowledge to be processed and applied.
Finally, it is important no notice that, as developed in [3; 4; 22; 35] one special aspect which differs but also offers a relevant complementarities between CI and MI is the main objective of these processes: while competitive intelligence is devoted to provide detailed answers for strategic decisions for one company, market intelligence has as its principal goal to supply strategic marketing planning knowledge continuously. Thinking this way, based on the references cited above and others which constitute the fundamentals of each concept isolated, it is opportune to think how CI has, for instance, a goal to produce a clearer scenario for a strategic decision which will probably asks for a marketing plan, which, by its turn, driven by strategic objectives previously defined [1; 4]. As this integration performs, it can be designed an association where CI helps to solve problems in the strategic planning phase, which produces detailed strategic goals. On the tactical level, specifically at marketing planning, MI provides improved conditions to plan and execute marketing positioning according to strategies thought by the organization, bringing a clearer view of various market signals, aspects and facts. CI has the organization as its first objective; MI has the market, a complete business sector.
Concluded this conceptual framework discussion, it is possible to develop a further work about the integration and a case study where it is shown, as cited in the last words of the former paragraph.
3. Strategic decision scenarios and its demands for continuous knowledge
Strategy is here presented still close to conceptual background section and initiating the case study segment of this article. It can be regarded, initially, as a discipline oriented to propose future positions for one organization as it studies its competitive resources, capabilities, perspectives and possibilities to implement actions designed to reach established goals [1; 2; 24]. It is renowned as a “knowledge demanding” process based on evaluations such as:
• External environment analysis, considering competitors, suppliers, customers, legal aspects, business rules, etc. and its changes along a period of time [1].
• Correlated competitive scenarios proposition as simulations, business metaphors, cases and models, as strategic business games [14; 25].
• Indicators proposition and monitoring, as financial quantitative analysis, reputation, performance and many other factors that can be set by strategy staff and followed through a plan execution in order to assess for its success [25].
In all these cases and in many others, strategic planning and execution demands market knowledge to evaluate results, redesign plans, set new goals, manage resources, modify and adapt business positioning. The “meaning” or “sense” about competitive scenarios which will result in more precise strategic propositions are affirmed by various authors as related with structured knowledge availability [12; 13; 32].
As it can be seen from this context, strategy formulation and execution are knowledge dependent, demanding for its continuity reliable and updated knowledge availability and is related to practical marketing planning, evidencing an opportunity for relationship between CI and MI processes, as intended phenomenon for this study.
Strategic marketing decisions are the objective of the MI process, as the knowledge provision aims to solve problems, allowing decisions with clear risk delimitations and implementation results with better customer aggregated value perspectives, attending to the basic organizational marketing demands [24; 26; 27]. Typical decisions of marketing processes that can benefit from market intelligence are: product line configuration and distribution, pricing, advertising and general communication, differentiation as a value-based strategy and marketing channel analysis. As examples of knowledge needed in usual marketing decisions it can be perceived: consumer behaviour details, demographic perspectives and constraints, customer reaction to distribution forms and communication, distribution channels performance and financial performance for all productive chain components.
4. A case study in information technology market
As defined in the former sections of this work, market intelligence will be discussed as it was proposed for a real project, planned and being in use for IT sector companies in Brazil. The objective of this case study is to precisely understand its capabilities as a process to offer strategic marketing decision support when it continuously produces knowledge for a competitive sector. With the definition objective, MI process will be presented and discussed in its complementarity to competitive intelligence analysis, adopted by some companies of this sample sector, resulting in more precision to MI conceptualization.
4.1 Case sample
For this study, a group of sixteen companies, from the Brazilian information technology market were considered, forming a representative association of final user-oriented software developers. These companies didn´t show expressive diversity in their development software processes – both had a quality certification similar to CMMI practiced in Brazil, called MPS.Br [33] – although having different target markets – public, health, management, operations, etc. – and also over their organizational structures and product lines. As these conditions show, the group was formed by almost homogeneous companies which could benefit from both processes – competitive intelligence and market intelligence.
A first study with the group was conducted, using interviews with owners and managers of the companies to understand how they plan and execute their strategy and marketing, according to their strategy. This first research phase showed a predominant scenario of personal, owner-centered, conduction of strategic planning and execution. Two companies were specially selected for the additional observation as they presented a more structured strategic decision-making process for planning and monitoring. These two sample companies also had evidences of competitive intelligence procedures, as they had a cycle of problem-solving approach for strategic problems, executed by specialists – in one company, the board of directors and tactical managers and in the other by a special board, invoked when a decision of this level is identified – to produce scenarios and presenting to companies directors for final decision. These two companies, regarding this approach to CI process, were observed for the study progression.
Analyzing for market intelligence perspective, all sixteen companies were considered, as they contracted a service for MI development from a consulting company, specialized on designing and implementing these processes for sectors, in this specific case as a “pilot” project. This group can be increased by adhesion of other interested firms, even associations, in the future, with the executive adaptation of the MI process executed by the consulting firm. For our study purposes, this scenario is considered correct, as there is a group of sixteen companies that are in a marketing intelligence process and a subset of two that were precisely regarded as practicing competitive intelligence also to promote a better strategic decision, through a problem-solving specific cycle.
4.2 Competitive intelligence in the subset
Two of the sixteen companies applied decision-making procedures that can be considered competitive intelligence approaches, as described in the following.
The first company has a monthly strategic planning review meeting where some decisions are classified as “complex” and sent to a board composed of the directors and some invited tactical managers to clarify the strategic goals, identify key process indicators and its repercussions, and detail some alternative scenarios with its corresponding risk levels. This work is done usually in “one-day focused” journey which, at the end, generates a composed presentation for the board that, in an additional level, decides in favour of some scenario.
It is possible to understand the internal phase in responsibility of this specific “council” of strategic and tactical managers as a competitive intelligence cycle, based also in the standards adopted by their work which were identified in the personal, interview-based research, as composed of question proposition; related information collection; processing; analysis and result communication. This cycle is similar to the theoretical propositions by [17; 18; 19].
The second company has a less precise cycle, with participation of external consultants as a permanent configuration of a special board who is invited to answer to strategic questions periodically. Although less formal, it has adherence to competitive intelligence principles and is also regarded to be of strategic contribution by the organization, allowing the same perception as in the first case, as this second company showed also a structure, more implicit, of data and information collection to solve one specific strategic problem, which was identified and provoked the CI-like cycle.
4.3 Market intelligence and its association with competitive intelligence
The group of sixteen companies is being attended by a consulting firm which works configuring and implementing market intelligence processes. As a representative group of firms, relating to commercial, management and strategic and marketing positioning, it was initially composed through invitations, in a commercial contract, sent by the consulting company and was finally formed two years ago. Its market intelligence project originally intended to execute a complete cycle every semester, after the modelling of sector´s value chain and the diagnosis of data and information available and needed knowledge study was conducted.
The process itself, which was agreed by the consulting company and the members of IT group was configured as cited above, consisting of the phases of collection, validation, processing and knowledge sharing, following a schedule distributed over the semester and also with previously agreed forms, reports and communication material also defined in the beginning of the first MI cycle. MI process was executed four complete times before this study was conducted, enabling to affirm the findings related above, which details the complementarity of CI and MI processes, as it was examined in the two group members.
For the particular study of market intelligence, it is possible to confirm that the concepts detailed before for the process, as exposed in the previous theoretical work, were found in the results produced by the consulting company, delivering strategic marketing planning knowledge as agreed with the group of IT companies. The next section will then discuss how the complementary association of CI and MI is useful to confirm MI concept, as an objective of this study.
4.4 Complementarity with CI and the confirmation of MI
It was perceived that expected results for both tasks – competitive intelligence and market intelligence – were delivered as expected. The process of MI held by the consulting was working consistently with the start of data and information collection on the beginning of every semester, followed by a semi-automatic (data analysis tools, some manual comparison in a “by sample” criterion and direct interviews when needed) validation, processing and production of the negotiated results. Competitive intelligence process was being in use by the two firms, as presented in a former section, answering asynchronously strategic questions for planning.
The complementarity was evaluated in the precise moment when, in order to answer for execution of a strategic goal, a marketing plan was demanded, and its two initial phases – opportunity analysis and segmentation – was elaborated and executed. These two phases, denoted as “strategic level marketing” or “strategic marketing management” [23; 24; 39; 41] have strict relationship both to strategic and marketing decisions, analysing external information and relating it to internal knowledge in order to set goals and correspondent actions to be taken to reach those established scenarios.
The content connection between those process occur exactly when the two organizations needed support to correlate its internal resources – as internal teams configuration, action plans, usage of information technology resources (for instance, to put a remote point-of-sales to operate directly reporting to the company´s headquarter) – to external events. Competitive intelligence process, held as announced above, identified precisely these resources based on the objective design of external demands.
Market intelligence process provided the suitable level of detail, producing a coherent view of the competitive environment – informing about typical product lines, distribution channels performance, customer interests and chances, market share precise levels and so on – allowing to activate the competitive intelligence cycle, demanded by a more precise strategic question / problem to be solved.
So, the complementarity helped to conceptualize correctly what MI can do in a planning effort by one company: dynamically provision of knowledge (as some of the results are clearly trends, historic performances, analytical market views and so on), enabling to compose decision situations that can be adjusted or clarified through a competitive intelligence analysis. The final result is a more manageable plan, with correct connection between strategic, tactical and operational levels, precise identification of key process indicators (“KPI”s) and their correct expected values and range of variation, risks and their associated mitigation, among many other details that qualifies a strategic plan with more chances to be successful. CI and MI processes work together, each one with its conceptual background, which is confirmed exactly by their cooperation providing better planning and execution conditions.
5. Conclusion
Informational processes are among the most demanded managerial support tasks for modern organizations.
As more data and information are produced in disorganized way, dispersed through complex business structures, in unplanned manner, resulting even in controversial and conflicting strategic scenarios, a demand for applicable knowledge became more noticeable.
Improved by information technology, communication support and efficient management structures, knowledge management is indicated to produce the needed clarification for those decisions. As demands grow, these processes to produce knowledge are implemented in reactive way by organizations, resulting eventually in their lack of configuration and imprecision.
In this paper, market intelligence process was conceptualized, based on a theoretical review that was based in information science, information technology, business strategy and marketing contexts. MI concept was initially affirmed to be a process, a continuum, which produces knowledge to a company, based on a series of phases as aggregated value chain modelling, knowledge diagnosis, collection, validation, process and knowledge sharing for similar companies, forming a representative group of a business sector.
To detail and validate this conceptual definition, a study of its complementarity to other related concept, competitive intelligence, was conducted. This analysis was opportune, as both identified correctly MI definition, confirming the former findings from the literature and established a potential relationship with CI, a concept already discussed and with a more stable definition. This theoretical separation and correlation was explored in a case study of a group of firms of information technology sector – software development – where two of them practiced competitive intelligence-like processes.
The final result of this study is the reiteration of market intelligence concept, both from specific theoretical review and its complementarity for competitive intelligence concept, studied in a theoretical context and through a case analysis. Further studies which search to generalize these findings are recommended, together with application of classical models that associate market intelligence to strategic marketing planning, organizational learning, strategic monitoring and other aspects or study fields that look to understand deeply how organizations apply knowledge – produced by themselves or by its competitive sectors – for decisions.

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ScienceDirect
Procedia Economics and Finance 6 ( 2013 ) 550 – 561
International Economic Conference of Sibiu 2013 Post Crisis Economy: Challenges and
Opportunities, IECS 2013
Flow Theory and Online Marketing Outcomes: a Critical Literature Review
Daniel Rare Obad a*
aFaculty of Economics and Business Administration, "Alexandru Ioan Cuza" University of Iai, Romania
Abstract
The aim of this paper is to provide a critical review of flow theory - a psychological state - and its marketing outcomes in online environments. Despite the strong interest of researchers from various disciplines, adapting the flow theory to online environments has been problematic. Based on a careful examination of the literature, we identified conceptual challenges confronted when studying flow online. The paper further discusses some possible solutions for challenges and underlines the need for more studies in this research area. Finally, marketing outcomes of applying flow theory in online environment were examined.

© 2013 The Authors. Published by Elsevier B.V.
Selection and peer-review under responsibility of Faculty of Economic Sciences, Lucian Blaga University of Sibiu.

Keywords: flow theory; online environment; marketing outcome; consumer behaviour.

1. Introduction
The growing importance of technologies in today's information economy has created a significant interest among academia and industry worldwide for understanding and delivering compelling experiences to online consumers.
Flow is an important construct for companies and worthy to be considered for understanding and improving customer relationships in online environments.
Many researchers have studied flow in different contexts (Agarwal and Venkatesh, 2000; Chen et al., 1999; Chen, 2000, 2006; Csikszentmihalyi, 1975, 1988, 1989, 1990, 1992, 2000, 2004, 2005; Hoffman et al., 1996; Huang, 2003; Koufaris, 2002; Novak et al., 2000, 2003; Trevino et al.,1992; Webster et al., 1992) such as sports (Jackson, 1996), reading (McCuillan and Conde, 1996) or in work environments (Allison et al., 1988). Flow was recognized to be a useful variable for explaining online consumer behavior (Hoffman et. al., 1996; Koufaris, 2002). Siekpe (2005) showed that "flow construct [...]" is important "for understanding the nature of the consumer experience."
Flow is a hedonistic construct, whose importance has been widely recognized as having a major impact on the user’s behavior of information systems (Csikszentmihalyi, 1975). According to Csikszentmihalyi (1975, 1988), flow is a "crucial component of enjoyment" and is "the holistic sensation that people feel when they act with total involvement". In a flow state, the consumers perceive an effortless action, loss of time and a sense that the experience stands out as being exceptional compared with daily activities (Csikszentmihalyi, 1997). Flow is a continuous variable that in different levels of flow can occur, ranging from none to an intense (or complete) state (Csikszentmihalyi and Csikszentmihalyi, 1988). The research to dates studied flow experience as an independent variable, as a dependent variable, and lately, as a mediator variable. Since 1996 (see Hoffman and Novak) the universal applicability of flow theory was extend to online environments and scholars suggested that the success of online marketers depends on their ability to create opportunities for consumers to experience flow. Despite the strong interest in adapting the flow theory for online environments, the literature shows inconsistency and discrepancies. Many studies are hampered by conceptual ambiguities and a confusion about construct dimensions. Conceptual and empirical models of flow still need to clarify the relationship between the construct and its dimensions.
Based on an extensive review of existing research on flow theory, we emphasize possible solution to clarify the theoretical framework of studying online flow.
This paper is structured as follows: in the beginning, we present the origin and meaning of the flow construct and differenced it from similar experiences. Then, different conceptualizations of flow and construct dimensions.
Further, we continue with the review of the most important conceptual and empirical models of optimal experience, both in online and offline environment and undertake a comparative analysis of them. Finally, we present the marketing outcomes of online flow and other consequences that may affect consumer behavior in the online environment.
2. Flow Theory
Flow theory received a growing attention in the last years as a basis to understand the facilitators for develop compelling experiences in online environments. The origin of this theory can be traced back in the papers of Csikszentmihalyi. While interviewing certain professional and amateur dancers, chess players, rock climbers, surgeons, and many others that expressed a deep devotion for their preferred sort of activity, Csikszentmihalyi selected a special feeling, called "optimal experience". During the interview sessions, Csikszentmihalyi found that individuals verbalize it as "being in the midst of a flow". Csikszentmihalyi (1975; 1990) called this holistic experience flow.
Flow theory is one of the two theories of intrinsic motivation developed in positive psychology paradigm (Seligman and Csikszentmihalyi, 2000). The other theory (Self-Determination Theory) was developed and presented by Deci and Ryan (1985). In fact, the theory of optimal experience or flow is not only motivational.
Csikszentmihalyi and his colleagues were engaged in serious efforts to present flow experience as: (1) an cognitive artifact (the starting point is the center of attention), applied for the description of holistic personal development
(Csikszentmihalyi, 1978, 1975), (2) an important factor in the evolution of bio-culture and selection
(Csikszentmihalyi, 1990; Massimini and Delle Fave, 2000), (3) a theory of creativity, work well done and talented adolescents (Csikszentmihalyi, 1996; Csikszentmihalyi, Rathunde and Whalen, 1993; Gardner, Csikszentmihalyi and Damon, 2001), (4) a psychological theory of development (Csikszentmihalyi, 1990; Csikszentmihalyi and Larson, 1984); (5) a basis for psychological rehabilitation practice (Delle Fave and Massimini, 2004, 2005).
Despite the variety of interpretations, in this study the flow experience is discussed as a motivational paradigm. Flow theory was first applied to online environments by Hoffman and Novak (1996). They extended the universal applicability of flow to computer-mediated environments and suggested that "optimal experience" can contribute to the success of online marketers by creating exciting experiences to consumers. Because the Internet is an interactive environment, it provides opportunities to customers to experience flow during their navigation (Chen et al., 1999). Because of its marketing outcomes, flow experience is a desirable consequence of online interaction between the consumer and firms.
2.1. Definitions of flow
Despite its relevance for the online environment, flow proved to be an elusive construct. What is flow?
Csikszentimihalyi (1977) describes the flow experience as "holistic sensation that people feel when they act with total involvement" (Csikszentimihalyi, 1977), but other scholars focus their conceptualization on other constructs that seem to characterize the flow experience. Some of these constructs affect or are a cause of flow, and others are experienced as a result of the individual’s flow state.
Perhaps the most comprehensive definition is provided by Csikszentmihalyi (1997), who discusses the following major characteristics of flow: (1) clear and distinct goals, (2) temporary loss of self-consciousness, (3) distorted sense of time, (4) actions merging with awareness and immediate feedback, (5) high concentration on the task, (6) high level of control, (7) a balance between the available skills of the individual and the task challenges, and (8) autotelic experiences. Lutz and Guiry (1994) state that: "psychologists use the term ‘flow’ to describe a state of mind sometimes experienced by people who are deeply involved in some event, object or activity...they are completely and totally immersed in it...Indeed, time may seem to stand still and nothing else seems to matter while engaged in the consumption event."
Hoffman and Novak (1996) extended the applicability of flow theory in online environments, such as the World
Wide Web, and defined flow as the state occurring during network navigation which is: (1) characterized by a seamless sequence of responses facilitated by machine interactivity, (2) intrinsically enjoyable, (3) accompanied by a loss of self-consciousness, and (4) self-reinforcing.
Analyzing the conceptual definitions of flow in both online and in the offline environment, we noticed that many ambiguities makes it difficult to measure this construct. However, various characteristics of flow show conceptual similarities. The literature review on flow theory reveals that flow is considered to be a multidimensional complex construct characterized by relations between a large set of unidimensional constructs which have been proposed as components of flow theory by different researchers (Koufaris, 2002; Hoffman and Novak, 2009; Bridges and Florsheim (2008).
2.2. Concepts related with flow: peak experience and peak performance
Over the time, researchers in psychology have developed several concepts that are similar with flow because they can be considered optimal experiences. In this section we compare and contrast two of those concepts: peak experience and peak performance. On one hand, peak experience is "a generalization for the best moments of the human being, for the happiest moments of life, for experiences of ecstasy, rapture, bliss, of the greatest joy" (Maslow, 1971). The difference between flow and peak experience is that both may involve high levels of enjoyment. Peak experiences differ from flow experiences in which ‘the former is "all or nothing" while the latter varies in intensity’ (Walker et al., 1998, p. 455). For example, a student who is at his graduation ceremony could experience peak experience. On the other hand, peak performance is "superior use of human potential" and "it refers to the full use of human power, whether if that will be physical strength in a crisis, creative expression through an artistic endeavour, intellectual mastery of a problem, or another experience that significantly taps human potential (Privette, 1983). For example, winning the world cup (and receiving the trophy) could be a moment when a soccer player experiences a peak performance. The main idea is that peak performance can be compared to both peak experience and flow in terms of the levels of enjoyment and performance that are involved. Peak performance involves a high level of performance, but is not necessarily accompanied by enjoyment. Flow involves both enjoyment and performance, but is not defined by their level of intensity. Finally, we draw a line between attention, involvement and flow. Privette (1987) considers attention and involvement as common qualities for the state of flow, peak experience and peak performance they are not optimal experiences.
3. Flow Models
In this section we present a short descriptions and an analysis of the main flow models in online and offline environment that could be useful for a better understanding of flow theory.
3.1. Four Channel Flow Model
According to flow theory (Csikszentmihalyi, 1977), the flow state is determined by two factors: skills (a person’s ability to successfully perform a task) and challenges (the necessary efforts to perform a task). The four channel model proposed by Csikszentmihalyi (1977) is the original flow model and it is shown in Figure 1.
We can see that figure illustrates the flow state through two axes: skills and challenges. If the level of challenge is higher than the level of skills, individuals will be overwhelmed by anxiety because they are not able to handle task.
When the level of challenge is lower than the level of skills, and a small effort is needed to perform a task, the individual will experience boredom. If the level of skills and the level of challenge are extremely low, the person will feel apathetic. Flow occurs only when a difficult task is in balance with the person’s skill, meaning that both skills and challenges are high.
3.2. Model of Flow in Human Computer Interaction
In 1995, Ghani developed a model of flow in human-computer interaction. His model, shown in Figure 2, considers the antecedents of flow: fitness of task (the balance between skills and challenges), perceived control, and cognitive spontaneity ("playfulness"). The flow state can be measured through the constructs of enjoyment and concentration.
The consequences of flow are: focused on the process, increased learning, and increased creativity.
This model proposed by Ghani illustrates the complexity of the balance of a user’s skills and challenges. For example, with a high level of skills, the user feels more in control, which can lead to flow. However, when the level of skills greatly exceed challenges, boredom will likely result, providing a negative influence on flow. Also, Ghani finds that the construct of fit (challenges and skills) influences flow indirectly, mediated through perceived control.
The model of flow in human-computer interaction proposed by Ghani can be considered a "transition" model because is a bridge between offline flow models and online flow models.
3.3. Model of Flow within a Computer-Mediated Envoirment
Hoffman and Novak (1996) develop a theoretical model of flow within the hypermedia environment of the Web (Figure 3).
Based on Csikszentmihalyi’s studies, they show that primary antecedents to flow are: challenges, skills, and focused attention. They add two secondary antecedents from Steuer’s communication work: interactivity and telepresence. Steuer (1991) defines telepresence as "the extent to which one feels present in a mediated environment, rather than in the immediate physical environment" and identifies vividness and interactivity as two dimensions which determine the degree of telepresence within a particular technology. Hoffman and Novak use vividness and interactivity as content characteristics that directly influence telepresence and focused attention.
Also, they add the construct of involvement (intrinsic motivation and self-reliance) which is influenced by whether the activity is goal-directed or experiential. They label goal directed and experiential as process characteristics. In this model, consequences of flow are: increased learning, perceived control, exploratory mind-set, and positive subjective experience.
In 2000, Novak and colleagues make some adjustments to their 1996 theoretical model and test it empirically using structured equation modeling to create a revised theoretical model. One important change in the flow model within a computer-mediated environment is the shift of control construct from a consequence to an antecedent of flow. Also, is added the construct of arousal as an antecedent of flow, and is a dependent variable of challenge. In the revised model, the primary antecedents of flow are skill/control, challenge/arousal, and focused attention. The secondary antecedents are experience with the Web, interactive speed, and importance. Novak et al. (2000) do not find support for the hypothesis that greater flow corresponds to greater exploratory behavior. Instead, exploratory behavior corresponds with telepresence. Thus, telepresence contributes to flow and exploratory behavior.
3.4. Model of flow antecedents, flow experience and flow consequences
In his dissertation, Chen (2000) finds empirical evidence for a correlation between a Web user’s flow experience and ten flow dimensions originally proposed by Csikszentmihalyi (1990).
Using factor analysis, Chen breaks down the ten dimensions into three factors labeled flow antecedents, flow experience, and flow consequences (Figure 4). In this model, the flow antecedents are: clear goals, immediate feedback, potential control, and merger of action and awareness.
The flow experience dimensions are: concentration, telepresence, time distortion, and loss of self-consciousness.
The flow consequences are positive affect and autotelic experience.
The model proposed by Chen is important to clarify the flow phenomenon and his stages, although the studies that followed attempted to confirm or deny the dimensions of antecedents, flow experience, and flow consequences.
3.5. Person–Artifact–Task model of flow antecedents
Finneran and Zhang (2003) develop a model that focuses on flow antecedents and identifies the importance of separating the task artifact in computer mediated environments (Figure 5). The person-artifact-task (PAT) model of flow antecedents was developed to conceptualize three distinct components, such as: person, task and artifact – that interact a contribution to a person’s flow state, as antecedents.
The PAT model is important because it contributes to the re-conceptualization of the original flow theory for a better understanding of flow antecedents in online environment.
Finneran and Zhang state that the value of PAT model is that using it, researchers will be in a better position to say unequivocally that the artifact contributed to the flow experience as opposed to a particular absorbing task and will help them to conceptualize the flow dimensions.
We consider this flow model important for a better understanding of the flow phenomenon in online environments.
However, the PAT model emphasizes only the flow antecedents stage, not the entire flow framework and clarifies some of the conceptual differences found in the existing flow models.
3.6. Flow Model within Context of Tourism Website
In 2004, Skadberg and Kimmel proposed a flow model to predict the level of flow for a tourism website (Figure
6).
The user's domain knowledge represents user’s skill and the content of the Web pages represents the challenge.
The third direct antecedent of flow is telepresence, which is influenced by site attractiveness and interactivity, the latter is further influenced by speed and ease of use. Flow is measured by time distortion and enjoyment. The consequence of flow is increased learning, which impacts attitude and behavior. This flow model is important because it can be used by marketers and designers in order to create compelling websites for firms.
3.7. Models of Flow as Reflective and Formative Conceptualizations
More recent, Siekpe (2005) developed and tested two models of flow (Figure 7) for specifying the right measurement model and to provide a practical way for researchers to decide on the causal interrelations among variables employed in their research.
His results suggest that challenge, control, curiosity, and concentration (FO latent variables) are better formulated as reflective dimensions of the flow construct rather antecedent dimensions.
He concluded that, in order to assess flow: (1) the direction of causality is from the HO construct to the FO latent
variables, (2) The FO variables are manifestations of the HO construct, and while changes in the FO variables should not cause changes in the HO construct, changes in the HO construct do cause changes in the FO variables,
(3) The FO variables should share a common theme and are expected to co-vary with each other.
3.8. Conceptual challenges of flow: a comparison of flow models
Analyzing the summarized flow models, we see that some of the constructs are present in all of the models, while others are unique to a particular model. The same concepts may be referred to with different construct names. For example, Ghani (1995) and Chen (2000) focus on primary antecedents, but Hoffman and Novak (1996) and Skadberg and Kimmel (2004) also look at secondary or indirect antecedents that yield flow through a mediating construct. In general, the models and other empirical flow studies seem to suggest the following three stages as a flow framework: flow antecedents, flow experience, and flow consequences (Chen, 2000; Ghani, 1995; Ghani and Deshpande, 1994; Trevino and Webster, 1992). However, we can identify also discrepancies of the constructs and their structure within each model. For example, perceived control is considered an important antecedent by Ghani (1995) and Chen (2000), but, in another study, Hoffman and Novak (1996) consider perceived control to be a consequence of flow. Hoffman and Novak (1996) and Novak et al. (2000) include aspects of the interface such as interactivity in their model, yet Chen ignores such characteristics.
4. Marketing outcomes of online flow
From a marketing perspective, flow theory proved to be very important for understanding the consumer’s behavior in online environments. In this section we underline the marketing consequences (outcomes) of online flow.
4.1. Learning
One important consequences of online flow is an increased learning. Researchers confirmed that consumers who experienced flow during Web usage are more likely to retain more of what they perceive, with implications for the effectiveness of marketing communications (Hoffman and Novak, 1996). Flow was found as the increase learning, and the increased learning, along with Website attractiveness, was the most important factor affecting change of attitude and behavior (Skadberg and Kimmel, 2004).
In their study, Choi, Kim, and Kim (2007) revealed that flow experience was positively related to learning outcomes among participants in a Web-based firm resource planning training program. In other studies, learning was also an important consequences of online flow (Hoffman and Novak, 2009; Ho and Kuo, 2010).
4.2. Attitudes, behavioral intentions, and behavior
Flow experience has been proven to influence online consumer’s attitudes, behavioral intentions and behavior.
For example, in some studies flow has been found to influence attitude toward online purchasing (Korzaan, 2003), attitude toward e-learning (Choi, Kim, and Kim, 2007), brand attitudes (Mathwick and Rigdon, 2004; Sanchez- Franco, 2006). Also, Hsu and Lu (2004) concluded that flow influence attitude toward Web and brand. Luna,
Peracchio, and de Juan (2003 found that attitude toward a Web site influenced flow. Hoffman and Novak (1996) found positive subjective experience to be an outcome of online flow. Reid (2004) showed that flow influence user satisfaction and creativity.
In other studies, flow has been found to influence behavioral intentions. Luna, Peracchio, and de Juan (2002, 2003) and Richard and Chandra (2005) showed that flow influence online purchase intentions. Flow also influence revisit intentions (Koufaris, 2002; Luna, Peracchio, and de Juan, 2002, 2003), intention to use the Web (Agarwal and Karahanna, 2000; Sanchez-Franco, 2006), and intention to play an online game (Hsu and Lu, 2004).
Korzaan (2003) found that flow experience influence indirect, through attitude purchase intention, intention to use the Web (Sanchez-Franco, 2006) and intention to play an online game (Hsu and Lu, 2004). Some other researchers tested the impact of flow on online purchase (Bridges and Florsheim, 2008) and Web usage (Sanchez- Franco, 2006).
4.3. Exploratory behavior
Another outcome of flow experience was an increased exploratory behavior (Novak, Hoffman, and Yung, 2000; Koorzan, 2003). In their study, Agarwal and Karahanna (2000) defined flow as a higher-order factor and found that the curiosity contributed to flow; Chou and Ting (2003) found that discovery contributed to flow.
4.4. Control
Flow scholars found a correlation between flow construct and perceived control (Webster, Trevino, and Ryan, 1993). Others, proposed that perceived behavioral control was an outcome of flow (Hoffman and Novak, 1996), or as contributing to a higher-order flow construct (Agarwal and Karahanna, 2000; Huang, 2006).
5. Conclusion
Online environment evolved rapidly since its inception in 1990. The total number of users raised in 2012, according to Internet World Stats, at 2.4 billion with a penetration rate of 34.3% in world population. Understanding the consumer’s online behavior is important in today's economy in order to create effective online marketing strategies. Flow theory has been found useful in understanding the factors which enhance compelling online experiences for the customers.
This paper attempts to provide a critical analysis of flow, a useful construct that can be used to explain online consumer behavior.
First, analyzing the definitions from flow studies in both online and offline environment, we noticed that there are many ambiguities and vagueness which makes it difficult to overcome the conceptual challenges confronted when studying flow online. Although considerable efforts have been made over time to provide clear and accurate definition of flow, it could not be identified a central definition of the flow, but with a variety of constructs that are experienced when an individual enters in flow state. However, various characteristics of flow show conceptual similarities but it seems that a comprehensive understanding of flow remains elusive.
Second, we noticed that flow models, both in offline and online environments are significantly different and, sometimes, even contradictory in terms of flow dimensions, direction of influence and stages where each dimension is located. The same concepts may be referred to with different construct names. We conclude that, most of flow models suggest the following three stages as a flow framework: flow antecedents, flow experience, and flow consequences.
Third, the marketing outcomes of flow experience proved to be important for understanding the online consumer’s behavior. The accelerated pace of Web evolution requires a continuous study in time to see effective internal and external changes in online consumer experiences. Flow experience has been proven to influence learning, attitudes, computer use, positive experiences, behavioral intentions and customer’s behavior.
The researchers had the vision to use flow theory as a way to understand consumers behavior in online environments, and thus to help marketers to create efficient and effective marketing strategies. The implications are clear. Future research should continue to study the marketing outcomes of flow experience in online environments.
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ScienceDirect
International Conference on Applied Economics (ICOAE) 2013
Marketing of Educational Services: Research on Service Providers Satisfaction
Nataliya Kalenskaya, Ilshat Gafurov, Aida Novenkova*
Kazan Federal University, Kremlyovskaya 18, Kazan 420008, Russia
Kazan Federal University, Kremlyovskaya 18, Kazan 420008, Russia
Kazan Federal University, Kremlyovskaya 18, Kazan 420008, Russia
Abstract
Marketing is the art of creating a demand and the process of pursuing customers – existing as well as potential.
Competition is everywhere; educational service sector is not an exception. Interestingly, the need to “market” their services has not really been felt by Russian education sector, as not so long ago educational institutions have faced more demand than they could cope with. At some point it is still especially true for high rank universities. However, significant demographical decline intensified competition in this sector. For specialized fields like management and computer education, where attractive market potential has increasingly caused more and more institutions to be set up, competitive situation is changing rapidly. Even the institutions facing heavy demand have been confronted with the question of being able to choose the desired target customers, and therefore face issues like product differentiation, product extension, diversification and service integration. All this has activated an interest in previously neglected area of marketing of education services.

© 2013 Kalenskaya, Gafurov, Novenkova. Published by Elsevier B.V.
Selection and/or peer-review under responsibility of the Organising Committee of ICOAE 2013.

Keywords: marketing of educational services; education; service sector.

1. Introduction
Education is a pure service sector, which is characterized by intangibility, inseparability, heterogeneity and perishability. In addition to that, ownership or the lack of it characterizes this type of service. Education as a service, then, can be said to be fulfilling the need for learning, acquiring knowledge-providing an intangible benefit (increment in knowledge, professional expertise, skills) produced with the help of a set of tangible (infrastructure) and intangible components (faculty expertise and learning), where the buyer of the service does not get any ownership (Gibbs and Maringe, 2008). He may have tangible physical evidence to show for the service exchange transaction but the actual benefit accrued is purely intangible in nature.
In the context of education, the customer only buys access to education, or derives the learning benefit from the services provided (Bado and Nyangau, 2012). There is no transfer of the ownership of tangibles and intangibles, which have gone into creation of the service product. Payment of fees (price for the service) is just the consideration for access to knowledge and for the use of facilities for a given tenure.
Most educational institutions are product oriented rather than market or student oriented. They perceive themselves as producers of certain educational programs, rather than as satisfiers of certain learning needs.
This lack of marketing orientation, keeps those managing educational institutions from realizing and exploiting the role that promotion could play in attaining their organizational objectives.
2. Marketing of education services
Marketing of education is gaining momentum with the entry of private institutions, change in people's attitude towards education and the changing scope for the different courses being offered. The technological changes and shrinking global boundaries have increased the significance of marketing for education services.
The education service can be described as a high contact, consumer and people based service (Gibbs and Maringe, 2008). However, innovative methods like using multi-media kits while providing the service are making interaction between and instructor and student less significant. With the changes in customer education and the job market, the market for unconventional courses is increasing. So no marketer can afford to ignore these markets. As the education service is intangible, inseparable and perishable, certain implications exist for marketing. And service quality is not consistent for all customers, or even a single customer at all times. So the marketers' job becomes tough. They are required to ensure that these features of the education service are better utilized to meet the varying needs of customers.
2.1. New relations in educational economy
The current stage of higher education development and changes in educational paradigm are mostly predestined by a variety of factors, most important of which include: processes of globalization and integration into the international educational space; development of information society and economy based on knowledge. New benchmark of XXI century is the development of society and individual based on knowledge and intellectual capacities. Entrepreneurial spirit, systemic thinking, originality and speed of decision-making, creativity, ensure the survival, competitiveness and become the most valuable intangible assets, High speed of life and constant change, introduction of new technologies, increased competition, growth of revenues from the use of intellectual property, Internet penetration in all economical sectors, global informatization and knowledge exchange – all these factors marked the beginning of a new stage in economic development and birth of ''knowledge'' economy (Hemsley-Brown, 2008).
Orientation to the world standards of education, improving the quality, relevance and practical applicability of educational products and services become an obligatory part of universities competitiveness. Learning, curriculums and standards are being renewed according to current advanced technologies as well as requirements of labor market to the level of competence among future specialists. In process of strategical development universities start to consider versatile customer needs, capabilities and motivation of academics (Bado and Nyangau, 2012). All this helps to introduce more marketing tools to the work of universities.
2.2. Service providers and service delivery
Educational service providers, more than anything, need to be competitive. Often it is the key component of success. The customer simply shows up at the service scape expected to be “serviced". The delivery system in place will satisfy, dissatisfy, or please the customer. And it is always important to remember that the customer cannot be completely separated from the service. Here, the service providers mean teaching fraternity and non-teaching community directly and indirectly associated with the services rendered to the students. Satisfaction and retention of the students solely depends on the way the teachers are in a position to deliver their best services to them. Teachers are not treated as “guru”, rather they are known as facilitators / services providers. Growth and existence of an educational institute, particularly the professional educational organization depends on the competency, effectiveness, efficiency, sincerity, dedication and devotion of the teaching community of the institute. People proved as the most vibrant component of educational services marketing mix.
In the present era, it is not natural resources or natural wealth, which distinguish an affluent society from a backward one; it is the accumulation and development of the knowledge resource. Education was never as important a utility as it is today. People however differ in the benefits they seek from the educational services offered to them. It is important, then, in order to be able to satisfy these needs and wants effectively, that a marketing orientation be applied to the conceptualization, design and delivery of educational service.
Education planners, in order to plan the service offer well and deliver it effectively, need to understand the behavior of the target population, and the criteria they use to exercise choice. Another key issue to better delivery of the education service is that it is performed for people and by people. People therefore represent the starting point for analysis to precede conceptualizing the service offer and developing it into a marketable service package. The education service offered by the institution must reflect the organizational response to the identified needs and wants of the target segment, in a given socio-economic context. However, the beginning of successful service delivery in this case is in satisfying the needs of service providers.
If university focuses its marketing activities on the needs of practical implementation of gained knowledge, it is particularly important to develop requirements for the quality of educational services and technology to maintain the quality management system. Quality of education is necessary condition of university’s competitiveness in context of international integration and high domestic competition. It most importantly depends on the quality of human resources and so one of the main directions of higher education development should be the development of teachers potential.
In this regard, development the strategy of university professors’ potential evolvement plays an invaluable role in internal relationship marketing. Each school must have a current program of training and supporting its personnel, which, in turn, is part of the strategic marketing plan for the development of the institution.
At this moment building an effective system of respectable earnings for higher education employees is task of socio-economic nature. Reputational strength and position of university's employees in education market depends on how well this system built.
3. Research on service providers’ satisfaction
In this research we analyzed the effectiveness of salaries and incentives for employees of higher education system. The research was conducted on the basis of motivational factors listed in Table 1. It allows selecting the basic categories for wage system formation in both individual and differentiated approach.

Based on these factors we developed a questionnaire (Table 2).

The questionnaire was designed so as to identify how existing motivational policy in the university meets the needs of its faculty. It should be noted that participants of this survey were only employed teachers from Kazan public universities. The wage policy of private higher education institutions has a number of features that is not the object of our analysis.
The survey involved 1000 people, survey results are presented in%.
Among 100% of respondents:
􀁸 12% have a teaching experience of less than 5 years;
􀁸 24% have a teaching experience of 5-10 years;
􀁸 16% have 11-20 years of teaching experience;
􀁸 32% have 21-35 years of teaching experience;
􀁸 16% have a teaching experience of more than 35 years.
The largest share of respondents are employees with 21-35 years of teaching experience, so we can say that the greatest number of teachers surveyed are between the ages of 44 - 56 years, therefore, they fall into the category of working pensioners. Of all respondents 88% are teachers who have a degree and academic title.
In addition to the wage system analysis it seems necessary to consider and analyze intangible factors motivating people to begin teaching activities. The questionnaire includes questions to identify key points in choosing teaching profession. Responses had to specify the weight of a motivational factor (Table 3).
Wage system formation of university's employees consists of salary based on formal positions:
􀁸 Assistant;
􀁸 Senior Lecturer;
􀁸 Associate Professor;
􀁸 Professor.
It is mostly based on scientific degree and academic title, state and governmental rewards. In addition to that, there are bonuses for work intensity (e.g. extra administrative work). Also, there is a separate premium for working on economic projects based on contracts between university and businesses or organizations in different fields and industry sectors.
After analyzing the data there are 40% of respondents involved in the implementation of economic contracts. Of them - 80% satisfied with the payment system under this type of project work, and 20% are dissatisfied with the system of payment.
Motivational factors in universities personnel policies also include a range of social issues (see Table 4).
Since 2009, new wage system of Russian universities’ workers was introduced. In this study we analyzed how this new system satisfies public universities teachers (see Table 5).

The survey data show that new wage system does not suit most of the respondents (80%), even though the salary stayed at about the same level. The most important reason for this to happen is that new wage system requires a significant additional input in university's activities, including scientific work, extra work with students etc. Which is quite difficult to perform for those who combine the work in two or even more universities. Higher education specificity allows moonlighting at other institutions, usually private-owned (commercial) colleges on 0.25 or 0.5 rate (usually associate professors, in rare cases, professors, doctors of science).
In this study, we found out if there is a way to earn money and to have additional income for teachers in universities (see Table 6).
Teachers themselves based on their experience, qualifications and needs can also evaluate university teachers’ wage system effectiveness. In order to evaluate this factor we asked the respondents to identify the optimal salary, that represents the ideal number that they think they are worthy of. The results are presented in Table 7.
This data show that the higher the professionalism, the more modest needs and a real look at the system of payment of pedagogical work is (teachers with more than 35 years of experience expect the same average amount as those with experience of 5 to 10 years).
As average salary of university's lecturer we take the salary of typical assistant professor in Kazan. In state university it is on average from 12,000 to 18,000 rubles. Typically, this is a teacher with 5 – 20 years of experience. According to our data we can say that the optimal wage for lecturers should be around 30,000 rubles, which is almost two times more than at the moment.
In this case, 30,000 rubles were considered by respondents as basic salary.
In practice, university teacher can receive 30,000 rubles and even more based on the involvement in economic contract projects; also, if he is suitable for academic premiums; and has professional experience of at least 10 years.
4. Conclusions
􀁸 The system of payment and incentives for university workers requires significant adjustment by university's social policies strengthening.
􀁸 Current payment system does not take into account teacher rating made by students (the main consumer of educational services). Many universities hold contests for the title of ''Best Lecturer", but this is not stimulated in any significant material way.
􀁸 Motivation for instructional and guiding work virtually does not exist.
􀁸 Most faculty members do not understand new wage system; therefore, the attitude toward it is ambiguous.
􀁸 The majority of teachers moonlight in other universities in part-time status, considering the possibility to look for jobs as an extra incentive to teaching.
According to relationship marketing concept human resources are crucial for market success. The value of human resources in marketing mix of the university is not limited by availability of highly qualified, professional teachers, transferring knowledge in classrooms. From marketing perspective university staff has a huge impact on the consumer, i.e. the student both directly in the learning process and in extracurricular time – it is a style of communication with students and other clients of the university, the speed of response to inquiries, complaints, etc. Teachers and staff should establish an educational environment that best meets the needs of a quality education.
Human factor is critical strategic resource of university effectiveness in education market. In this case teaching resources appear as human resource and component of strategic resources that contribute to an increase in marketing opportunities of the university. Human resources formation in terms of marketing is subject to the problem of achieving university competitiveness and further sustainable integrated development of human resources on labor market. Further development of university staff is based on principles of material resources rational use; modernization of the educational process based on innovative educational technologies according to customer requirements for quality education. The basic problems of university human resources in modern world is the need to find new forms and methods in accordance to new educational paradigm that requires a change in teaching and teacher's role (Table 8).
As we move to a knowledge society education technologies are becoming more customer-oriented, and the recipients of knowledge become more responsible for their own learning. It should be noted that the process of teaching and methods of knowledge transfer over 50 years virtually unchanged. However, modern conditions require educational systems to be more flexible, able to quickly adapt to change. Also, position of teacher fundamentally changed. Now university professor must not only transmit knowledge to learners, but to be their consultant to the world's knowledge, help them to understand the importance of learning and personal responsibility for the results of their studies.
Examination of educational trends, terms of university development, marketing principles and problems of university human resources transformation led to the conclusion that modern university is in dire need for highly qualified teaching staff, that is able to adapt quickly to new educational standards, accept changes, create high quality educational products. Time of spontaneous management has passed. Now it is necessary to build a systematic approach to solving of teaching resources complex development problem according to the criteria of modern education system and differential requirements for the quality of education for all segments of consumers.
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