Quality of Purchase Connection by UArts Design for Social Impact MDes / Master of Industrial Design

Quality of Purchase Connection A system for supporting quality purchase decisions and creating positive social, economic, and environmental impacts

Rachael Harr & Jeff Lopez

The University of the Arts Master of Industrial Design Program Philadelphia, Pennsylvania ÂŠ May 2010

About the Authors

Rachael Harr has a Bachelor of Science degree in Design and Merchandising from Drexel University in Philadelphia. She has experience working in the home textile and fashion industries involving consumer products, packaging, marketing, graphics, and sales. This project expanded on her previous explorations of the relationships between consumers and businesses to include understanding of consumption from a holistic, systems perspective. Jeff Lopez has a Bachelor of Fine Arts degree in Photography from James Madison University in Harrisonburg, Virginia. He has experience working in digital imaging and photography, as well as graphic design. He has also worked in the retail industry with consumer products and sales. This project has bolstered his experience with consumer behavior and psychology, and furthered his understanding of systems design and complex problems.

Acknowledgements

We especially would like to thank the people who contributed to our project and believed in us throughout the process of this thesis. Your continued support motivated us and ultimately enriched the value of our project. Our family, friends, and Jeffâ&#x20AC;&#x2122;s fiancee, Nicole Our thesis committee members

Benjamin Olshin, Ph.D., Professor, University of the Arts, Thesis Director

Carrie Collins, Owner, Fabric Horse, Thesis Advisor

Jonas Milder, Director, MID at University of the Arts, Thesis Advisor

The experts who offered their time to answer our questions and provide feedback

Michael R. Solomon, Ph.D., Director, Center for Consumer Research at St. Josephâ&#x20AC;&#x2122;s University

Hardik Savalia, Employee, B Lab

Susan Garrigle, Employee, B Lab

David Genther, Self-employed Architect and Master Craftsman

Will McHale, Senior Lecturer and ID Shop Supervisor, University of the Arts

Our fellow classmates

Abstract By incorporating long-term considerations into the consumer decision-making process, design can elicit and reinforce purchasing patterns based on a high standard of quality in both products and business practices. The revival of a “culture of quality” — as opposed to the current emphasis on low prices — can improve personal spending habits, as well as conditions in the local economy and the environment. Our findings from conducting consumer product testing and interviews reinforce the argument that consumption habits can be effectively altered by reacquainting consumers with decision-making skills that have been repressed by our culture of consumption. We have developed a purchase evaluation system that builds from consumers’ abilities to examine product attributes and connects product performance results with transparency of supply chain practices. The Quality of Purchase Connection uses a digital interface, the power of social networking, and barcode scanning technology to build a community of support around factors of quality and reverse the negative effects of the current discount culture in America.

Table of Contents INTRODUCTION HISTORICAL AND CULTURAL BACKGROUND How the Discount Culture Rose to Prominence

Effects of the Discount Culture

METHODS Research Parameters

60 62

Consumer Study Design

RESULTS Findings from Our Consumer Study

100 102

CONCLUSIONS Consumers and Quality

108 110

A System for Supporting Quality

114

Retail Originates in the Bazaar Culture Shifting of the Marketplace The Catalyst for the Discount Culture: E.J. Korvette Greshamâ&#x20AC;&#x2122;s Law How Consumer Demand for Cheaper Goods was Feuled How Consumer Demand for Cheaper Goods was Served How Consumer Decision-Making Changed

Causes of Short Product Life Spans and a Placebo Effect Causes of Decreased Wages

Plan for Quality Identification Test and Interviews Definitions of Quality Interviews with Experts Observations in a Retail Setting

Choosing and Reaching Our Demographic The Quality Identification Test Interviews with Consumers Meet Our Craigslist Study Participants

Quality Identification Test Results Interview Results

Analysis of User Study

Brainstorming Ideas Review of Existing Systems A Proposal for a Database and Digital Interface Quality of Purchase Hierarchy Determining the Primary Functions and Measures Communicating Information User Experience Benefits

To Make the System a Reality...

8 10

DIRECTIONS FOR FUTURE RESEARCH

174

GLOSSARY, BIBLIOGRAPHY, AND PICTURE CITATIONS

178

INTRODUCTION

Introduction Americans love shopping at mass-retailers, scoring items on sale and hunting down the best knock-offs. The premise of big box retailers and discount stores – to provide products to the masses at affordable prices – seems to be for the greater good. But what do we sacrifice to save that extra dollar? Consuming cheap goods also eliminates choice from the marketplace, increases personal long-term spending, contributes to the divide between social classes, and ultimately lowers the quality of life for the people that low prices are intended to help. This thesis, which was inspired by the book Cheap by Ellen Ruppel Shell, looks at the negative effects that result when consumers base decisions on price and proposes a plan to reverse these trends. Our approach blends the disciplines of systems design and design thinking to look at the big picture of consumption and to begin to address the problems of our current discount culture. “A system is a set of things—people, cells, molecules, or whatever—interconnected in such a way that they produce their own pattern of behavior over time.”1 Although we ultimately intended to work with consumers, to understand the full scope of consumption of cheap goods, we also had to look at the production of such goods, how these goods are marketed and sold, the psychology of how consumers interpret their surroundings, and how the things we buy and sell impact the economy. Understanding the historical and cultural context of consumption showed that before the bombardment of media, people examined the physical attributes of a product and looked for long-term value in purchases. However, as advancements in production occurred and companies rather than individual craftsman came to produce goods, retail shifted from the bazaar, to mom and pop stores, and eventually to chains. The tacit understanding of merchants not to drastically undercut going prices was broken with the opening of one such chain—E.J. Korvette. Retailers became desperate to compete and learned to use marketing to appeal to consumer psychology. Because information became obscure, and consumers had less investment in goods, the process of inspecting product attributes, as in the bazaar, was no longer efficient. Thus, consumers learned to base decisions on perceived quality and price, and a new, short-term mind-set emerged. The plethora of trivial information and the prevalence of decisions based on price characterize the modern American consumer goods landscape, or the “discount culture” as Shell refers to it.

Figure 1 Consumers’ mind-sets, how decisions are made, and the availability of information in the consumer good marketplace are all closely related. 1

Donella H. Meadows, Thinking in Systems (White River Junction: Chelsea Green Publishing Company, 2008), 11.

Bazaar Culture Discount Culture • long-term mindset

• short-term mindset

• decisions based on inherent quality of product attributes

• decisions based on perceived quality of marketing and price

What’s Next?

04 In a quest to get the most value out of purchases, consumers have unwillingly succumbed to the devices of retailers. “…One of the most frustrating aspects of systems is that the purposes of subunits may add up to an overall behavior that no one wants.”2 This could not be more true when it comes to consumption. By buying low-priced goods, consumers enable retailers to mask continual cost cuts, lower quality of goods, lower wages and lower standards. While all of these factors ultimately affect the consumer, they pan out over a long period of time, so the consumer is too far removed from them to realize the harm they cause. Because products need to be replaced more often and people unknowingly treat products less carefully when they spend less, better quality goods can actually save consumers money over time. However, since consumers do not see this, there is little support for more durable, well-crafted products. Additionally, when people think about low wages associated with production, they neglect to include American retail workers in the equation. Low retail wages at discount giants have the potential to lower earnings of other working class positions, and therefore can affect the overall health of our local and national economies. Cheap prices trick the majority of people into thinking they are benefiting, but as prices of consumer goods decrease, more significant costs of living are on the rise. The only way, then, to improve the personal spending power of the masses, the quality of life for these people, and the health of the economy is to reinstate a system that supports long-term considerations. Our goal was to do just that by providing consumers with an alternative to the current emphasis on low prices. “Although Design is most often used to describe an object or end result, Design in its most effective form is a process, an action, a verb not a noun.”3 Design as a process is referred to as design thinking. With this approach, we, as designers, believe that every problem is unique, and therefore, the project outcome should also be unique. Rather than beginning a project with a structured plan, a trajectory is built on some early research. In the case of this thesis, our trajectory was that we would work with consumers to help them distinguish between meaningful and superfluous information, so they could improve their purchase decisions. Additional feedback gained through our methods guided our final deliverables. Since we did not know all the complexities of discount culture at the start of this project, we worked with specialists from related disciplines and actual consumers to expand our knowledge base and make more informed decisions for the future of consumer goods, people and the economy. This means that as our project progressed, the way in which we would assist consumers and the medium for the solution we ultimately proposed was tailored by the insight we gained. To prove that peoples’ abilities to judge the physical attributes of products have become overshadowed by media, we performed product testing with consumers. Our methods also included interviewing several avid discount shoppers to identify

Ibid., 15.

Mark Dziersk, “Design Thinking...What is That?,” 20 March 2006, accessed 19 April 2010 <http://www.fastcompany.com/ resources/ design/dziersk/designthinking-083107. html>.

Introduction commonalities in why they prefer discounters, how they choose what to buy, and their opinions on how price relates to quality. Preparations for our user studies included interviewing experts in retail operations, consumer behavior studies, certification and labeling systems, and construction processes. We used data gathered from our product testing, as well as feedback from our interviews with both experts and users, to direct our focus for changing consumption. We also reviewed existing certification, labeling and rating systems, retail networks, marketplaces, and management approaches. By arranging these systems and organizations in a way that showed what part of the supply chain they address and how they each measure quality, we built a framework of quality that connects the components from each of these operations that are important to purchase decisions. In contrast to buying based on price, our purchase evaluation system promotes consumers to examine product characteristics, to learn about supply chain practices, and to make well-informed decisions. After brainstorming avenues through which we could make our system available to consumers, we determined that a digital interface that draws on the capabilities of social networking and mobile phone barcode scanning would reach the largest number of people and cause the greatest change. The Quality of Purchase Connection system that we designed empowers the consumer with information needed to make decisions based on long-term factors and allows a community of consumers, retailers, and manufacturers to benefit from the sharing of meaningful information. Reinstating quality into our culture of consumption can create a more sustainable system that has positive impacts on personal spending habits, economic conditions, and environmental issues.

HISTORICAL AND CULTURAL BACKGROUND

How Discount Culture Rose to Prominence A review of the historical development of American consumer goods reveals a turning point as to when our current discount culture emerged. There are two defining characteristics of the discount culture: offers of low prices combined with an overabundance of essentially meaningless information from suppliers, along with an increased reliance on price by consumers in the process of making decisions. These two factors reinforce each other, leading to a repeating pattern. The heavy emphasis on price makes it nearly impossible for quality products to arise in the marketplace, and, in turn, standards of quality continue to fall, so that consumers miss out on the opportunity to make wise, long-term purchases.

Historical and Cultural Context

Retail Originates in the Bazaar Culture Retail originated in the bazaar culture, where there was reciprocity between buyer and seller, so both had equal power when it came to making the deal. They relied on each other, yet they were also members of the same community. Each merchant wanted to maximize return on his goods, but overcharging meant he would also be overcharged when making purchases.4 Sales persuasion occurred through conversation, and bargaining was common. Most importantly, consumers in the bazaar culture determined quality by examining the physical attributes of a good, so decisions were mainly based on the inherent long-term value of a product. Today, however, product qualities are outlined by the producer on packaging and marketing materials. Few standards exist to limit what companies can or need to claim, resulting in a lack of reference points on which to base decisions. Value judgments today are based more on perception of quality via marketing cues, which often result in customers buying based on price and short-term benefits of a product. Figure 2 Unlike today, purchase decisions in the bazaar culture focused on closely examining the physical properties of a good.

Bazaar Culture

Discount Culture

Shifting of the Marketplace

Ellen Ruppel Shell, Cheap: The High Cost of Discount Culture (New York: The Penguin Press, 2009), 5.

A long history of contributing factors accounts for the shift towards discount. Prior to the Industrial Revolution, products were handcrafted, each being slightly unique. Because each item was the result of a laborious process, goods of all varieties were available in limited supply. With continuous advancements in mechanization, manufacturing moved away from being people or animal generated. Eli Whitneyâ&#x20AC;&#x2122;s invention of the cotton gin in 1793 was among the first notable achievements. By

How the Discount Culture Rose to Prominence separating and cleaning cotton at impressive rates, manual labor of this same task was no longer productive. Soon after, Simeon North pioneered interchangeable parts when he responded to President George Washington’s call for gun manufacture. North fulfilled his contract to produce 20,000 guns by segmenting the steps required for making a gun and hiring workers responsible for each step. His invention of the milling machine, which allowed rapid shaping of metal, made it feasible to use interchangeable parts for the production of guns. While technological advancements, industrialization, and innovation still allowed quality to be produced, these improvements also made goods less expensive. By the 1850’s, the Industrial Revolution had taken off.5 As goods were produced en masse, companies, rather than individual craftsmen, retained ownership over products. The fields of packaging and branding began to evolve, first in England, and later in the States. Simple metal tins were used for packaging items like cigars; however, they lacked surface decoration. Printing on metal did not occur until 1866, and the first product making use of this technique was Smith Brothers’ tooth powder. Metal packaging was introduced in America in 1836.6 Simultaneously, paper products were also explored. The cardboard box was fabricated in 1817 and the paper bag in 1844. Important American developments during this time include Francis Wolle’s machine to make paper bags in 1852 and the first registered trademark in the States in 1870. Improvements were made in the early years of paper packaging, but the paper bags and cereal cartons we use today have changed very little since the 1870’s.7 For containing liquids, glass and ceramic vessels were most common. Although plastic was discovered in 1831, it did not become trusted until the mid-twentieth century.8 Mass production also allowed for new forms of retail, which gave a broader portion of people access to goods once reserved for the elite. The first retail development in America occurred when John Wanamaker realized he could buy in bulk, cut out the middleman, and streamline distribution of goods, leading to department stores. In the 1860’s and 1870’s, people were moving into the cities. John Wanamaker saw an opportunity to serve larger numbers of people than the traditional mom-andpop establishment. He opened two Philadelphia-based stores before moving John Wanamaker & Co. to the Pennsylvania Railroad freight depot in 1875.9 Much of the inspiration for Wanamaker’s stores came from the grand expositions, which were popular in Europe in the mid-1800’s. The Crystal Palace, which opened in 1851 in London, was at the forefront of this movement. Rather than having a sales clerk walk a shopper through his choices, large quantities of products were placed in the open for equally large crowds. There was an emphasis on experience both in the grand expositions and in Wanamaker’s stores. Because the goods from foreign lands were desired, but also too pricey for the average person, lavish decorations, food, and live entertainment were used to make replicas feel authentic.

12 3

Figure 3 & 4 Mass production and ownership of production systems by companies contributed to a cultural shift in the retail landscape.

Ibid., 11.

Kenneth R. Berger, A Brief History of Packaging, Research Study, Institute of Food and Agricultural Science (Gainesville: University of Florida, 2002), 3-4.

Ibid., 3-4.

Shell, 12-14.

Historical and Cultural Context

Figure 5 John Wanamaker’s Philadelphia store in the Pennsylvania Railroad Freight Depot at 13th and Market Streets.

Figure 6 Inside Wanamaker & Co. in Long Island, NY. Wanamaker paid special attention to his interiors to create a unique shopping experience.

Figure 7 A crowd gathers outside of one of Frank Woolworth’s Five and Dime. Figure 8 The inside of a 1925 Sears’ catalog, which gave people the luxury to order goods from the convenience of their homes.

How the Discount Culture Rose to Prominence

[In the grand expositions]… merchandise formed a decorative motif conveying an exceptional quality to the goods themselves. Silks cascaded from the walls of the silk gallery, ribbons were strung above the halls of ribbons, umbrellas were draped full blown in a parade of hues and designs. Oriental rugs, rich and textural, hung from balconies for the spectators below.10

Wanamaker’s Grand Depot tried to create this same feeling of opulence through merchandising. It included 129 circular counters, an area to exhibit live fashion shows, the second largest organ in the world, and a telegraph station. While goods at Wanamaker & Co. could be bargained for, the creation of the price tag set a ceiling on the asking price. As the price tag became widely adopted, it encouraged retailers to set prices as low as possible to entice customers. Wanamaker also introduced the first sale, the White Sale, to counter the post-holiday season lull so that he would not have to lay-off workers.11 Many of Wanamaker’s innovations have had a profound significance on retail today. Frank Woolworth fed peoples’ desire for bargain over service by introducing the five-and-dime in 1878. Most of his goods were manufactured in Europe prior to WWI because its mass manufacturing process was more advanced. However, when WWI made importing difficult, he introduced European manufacturing techniques to the United States.12 Although cheap goods sold themselves, he had to continually offer new merchandise. The depression became an opportune time for Woolworth; it enabled him to sell finer items, such as leather, because he could get them at affordable costs. Although stores such as Wanamaker& Co. and Woolworth’s Five and Dime began as sole proprietorships, large revenues allowed them to quickly multiply and become chain stores. With minimized costs came sacrifices, one of which was the durability of products. “Woolworth’s and similar chains such as S. S. Kresge Company and W. T. Grant focused on offering the absolutely lowest price even if it meant things would need replacing a lot sooner than they once did.”13 Additionally, Woolworth tried to keep wages low. Not only did he hire fewer sales clerks than department stores, but he also employed mostly unskilled women, since he could pay them less, and they held no expectations of progressing up the company ladder.14 In 1895, Richard Sears’ mail order catalog took goods to people, reaching even those whole lived miles away from a city. Prices were often half the cost of the goods in department stores. Sears bargained heavily with, and at times bought, his manufacturers.15 By the turn of the century, “… improved manufacture and transportation systems had made available a boggling array of consumer goods both domestic and imported … sportswear, imitation jewels, artificial silk and furs, cheap perfume…all geared to make the working and middle classes feel rich.”16

Ken W. Parker, “Sign Consumption in the 19th-Century Department Store: An Examination of Visual Merchandising in the Grand Emporiums (1846-1900),” Journal of Sociology 39 (2003): 353-371, 359.

Shell, 12-14.

Ibid., 15-16.

Ibid., 16.

Ibid., 16-17.

Ibid., 12.

Historical and Cultural Context The escalation of advertising closely followed the rise of chain stores. In the 18th and early 19th centuries, the main outlets for advertising were newspapers and magazines. One of the first successful publications in America was Benjamin Franklin’s Pennsylvania Gazette. In the earliest newspapers, ads were rarely over a column wide and in magazines, they were often placed towards the back of the publication.17 By the mid-1800’s the number of media outlets expanded and a wider audience was reached. A new pulp-based paper process was developed, which along with the advent of the typewriter, allowed for mass-distribution of newspapers.18 Increased advertising in newspapers also made them more affordable. “The newspaper owners were less interested in elite opinion and political leaders than in… providing content that appealed to mass audiences, who in turn would attract advertisers whose expenditure would ensure the profitability of publishing companies”.19 In the 1860’s, experimentation using the telegraph and billboards for advertising took place. To assist in this new, burgeoning field, advertising agencies were opened. Companies such as Proctor and Gamble and John Wanamaker & Co. began dedicating portions of their budgets and hiring positions specifically for advertising ventures.20 An attention to artwork, wording and style ensued.

Daniel Pope, “Making Sense of Advertisements,” 31 March 2006, History Matters: The U.S. Survey on the Web, 8 February 2010. http://historymatters.gmu .edu/mse/ ads/intro.html, 1.

Lyn Gorman and David McLean, Media and Society in the Twentieth Century: A Historical Introduction (Malden: Blackwell Publishers, Ltd, 2003), 7.

Ibid., 8.

Advertising Age, Advertising History Timeline, 1999, Crain Communications, Inc., 8 February 2010 http://adage.com/ century/timeline/index.html, 1.

Gorman and McLean, 20.

Ibid., 20.

William L. Bird, Holidays on Display, 2007, accessed 8 February 2010 http:// americanhistory. si.edu/exhibitions/small_ exhibition.cfm?key=1267&exkey=797, 2.

Macy’s East, Inc., Thanksgiving Day Parade - Macy’s, 2006, accessed 8 February 2010, 1.

Shell, 20.

During WWI, for the first time, media was used to create mass persuasion. “… Psychological warfare supplemented active military engagement [and] the mass press was seen as an ideal vehicle for stimulating nationalist sentiment, maintaining home front morale, attempting to win over neutrals and spreading disenchantment among enemy soldiers.”21 The extent to which media could be used to take advantage of human psychology became evident; the German press admitted that they were caught off-guard by the effects of propaganda and war results may have been different had they been more prepared.22 Although using media to tap into people’s psychology was initially used for military purposes, retailers eventually adopted these techniques to gain a competitive advantage. With the rise of department stores, creating elaborate displays drew in customers. Changes in store themes made merchandise feel new. Store windows and parades, which were as equally ornate and engaging as store interiors, became key to holiday sales in the 1920’s. The Messmore & Damon Company, located in New York City, became the go-to business for papier-mâché sculptures and floats. Anything that could be thought of, from circus animals to a scene showing Washington at Valley Forge, could be created.23 In 1924, the Macy’s Thanksgiving Day parade premiered with floats, music, balloons and people galore.24 Retail continued to be about creating an experience. While many people delighted in the accessibility of consumer products, which chain stores promoted, there were societal pressures to retaliate against them. Sears shipped purchases in brown paper wrapping to keep packages inconspicuous.25

How the Discount Culture Rose to Prominence

Some local governments tried to ban or restrict the number of chains that could be opened within their territory. Despite criticism that these new retail outlets “…did away with the local proprietor, funneled money away from the local community, and traded skilled employees for stock boys…” discounting was quickly gaining traction.26 The number of chain stores tripled between 1920 and 1929 to reach 141,492 establishments.27 Had it not been for the Great Depression, these developments might have caused discount retailing to become the norm in the early half of the decade. It was not until the Great Depression of 1929 that consumers began to distrust large corporations. Retailers broadcasted sales and low prices to urge spending. To consumers, this meant retailers had high initial mark ups, but they failed to realize lower prices could also mean lower quality standards, decreased wages and eliminated jobs. The vicious cycle of continually undercutting competitors and lowering quality was bubbling under the surface, but fixed prices and codes of conduct were established to save the local retailer. Price control remained in the hands of the makers, but only temporarily. 28 9

At this time, advertising was expanding. From the 1920’s until the mass acquisition of the television in the 1950’s and 60’s, radio offered an alterative avenue for advertising exposure. The spread of electricity outside urban centers allowed the majority of people radio access. “Susan Smulyan, examining the commercialization of American broadcasting, argues… ‘Radio became a way to sell products, and most programs merely filled the time between commercials.’”29 Advertising agencies formed strong relationships with developing networks, such as NBC and CBS. Between 1935 and 1944, CBS’ net income from advertisements increased from 3.2 million to 7.4 million.

Figure 9 & 10 With the newspaper and the radio, retailers and producers could advertise to people outside of the store environment.

Ibid., 18.

Ibid., 23.

Gorman and McLean, 48-49.

Historical and Cultural Context Additionally, the growing film industry influenced consumption and persuasion.30 There was economic instability, but advertising created the false belief that everyone owned cars, washing machines, and the like. Most people lived without these things, but aspired to have them.31 World War II was characterized by shortages and inflation. Many items, from coffee to gasoline, were rationed. The problem temporarily became to keep prices from rapidly rising, and the General Maximum Price Regulation did just that.32 Although people were more prudent with their spending, income levels rose at four times the rate of the cost of living. Leading into the 1950’s “… personal saving reached an astonishing 21 percent of disposable income, compared to a mere three percent two decades earlier.”33 When the war was over, people had money to spend, and retailers wanted to capitalize on this.

The Catalyst for the Discount Culture: E.J. Korvette Figure 11 E.J. Korvette was the first discount retailer created, and when suburban sprawl hit, these stores were quick to serve the new market.

Ibid., 43.

Shell, 22.

Ibid., 24.

Ibid., 25.

Ibid., 33.

Ibid., 31.

Ibid., 33.

The catalyst of our discount culture was when Eugene Ferkauf founded E.J. Korvette in 1948, and became the nation’s largest discount store. Ferkauf paved the way for the discount retail model to emerge and for other businesses to profit by promoting slashed prices. Ferkauf proved that cutting the traditional 40% markup on goods in half would make profits soar well above the 50% loss. He circumvented anti-pricecutting laws by making E.J. Korvette “membership only”, and memberships were distributed on the street for free.34 His father, who was also a merchant, warned that “... [this] would anger other merchants. Civility and comradeship, not profit, came first,” but Eugene disregarded his father’s advice.35 Ferkauf reasoned that a dollar profit on one item could become a million-dollar profit when a million units were sold.36 He was determined to give people what they wanted at the lowest price possible, and he could not have picked a better time. The 1950’s were a decade of affluence, the time of the American Dream. There was an influx of people moving to the suburbs. Prosperity was depicted as filling a new home with consumer goods; people wanted items that they thought would improve their

How the Discount Culture Rose to Prominence

quality of life. However, products such as televisions and appliances were costlyâ&#x20AC;&#x201D; eight percent of the average family income, to be exact. 37 Ferkauf eased the pain associated with such large purchases by buying these goods in large quantities and selling them just above cost. As people acquired new technology, through advertising, technology escalated the spread of suburban ideals. Between 1948 and 1953, the number of households which owned a television set increased from 350,000 to 25 million.

A wave of lively and sometimes aggressive advertising rolled over the country and spurred record levels of consumption...Television advertising was particularly vital for the low-service discount chains that, with no experienced sales force to push product, relied on the customer to come to their stores pre-loaded with wants.38

Malls were introduced to satisfy new suburban markets and Ferkauf was quick to open stores in these prime locations.39 Figure 12 Eugene Ferkauf in one of his many E.J. Korvette stores. He ignited the discount culture by drastically undercutting the competitionâ&#x20AC;&#x2122;s prices and generating price wars.

While E.J. Korvette was flourishing, Ferkauf also avoided many threats to his business over the years. He encountered everything from lawsuits to other stores using their buying power to ruin his relationships with manufacturers. Department store owners who could not compete with Ferkauf often made suppliers chose between E.J. Korvetteâ&#x20AC;&#x2122;s and their business. However, Ferkauf was such a significant client that this threat held little weight40; E.J. Korvette seemed indestructible.

Ibid., 33.

Ibid., 26.

Ibid., 34.

Figure 13 A summary of the significant advances pertaining to consumption between the bazaar culture and the start of the discount culture.

Simeon Simeon North North pioneers pioneers interchangeable interchangeable parts parts for for arms arms manufacture manufacture in 1813 in 1813 Industrial Industrial Revolution Revolution reaches reaches its apex its apex

Eli Whitney Eli Whitney invents invents the the cotton cotton gin in gin1793 in 1793

17501750 BAZAAR BAZAAR CULTURE CULTURE

18001800

18501850

TheThe cardboard cardboard boxbox is is developed developed in 1817 in 1817

Metal Metal packaging packaging is introduced is introduced in America in America in 1836 in 1836

Significant Significant events events in: in: American American culture culture

TheThe paper paper bagbag is is developed developed in 1844 in 1844

Retail Retail and and marketing marketing Manufacturing Manufacturing Packaging Packaging

TheThe Crystal Crystal Palace Palace opens opens in London in London in 1851 in 1851

Francis Francis Wolle Wolle invents invents the the paper paper bagbag machine machine in 1852 in 1852

Printing Printing on metal on metal begins begins in 1866 in 1866 TheThe firstfirst trademark trademark is registered is registered in in America America in 1870 in 1870

Store Store windows windows andand parades parades become become key key to holiday to holiday sales sales

TheThe price price tag tag andand firstfirst salesale are are introduced introduced by by John John Wanamaker Wanamaker 1878 1878 Frank Frank Woolworth Woolworth opens opens the the five-and-dime five-and-dime in 1878 in 1878

19001900

TheThe Macy’s Macy’s Thanksgiving Thanksgiving DayDay Parade Parade begins begins in 1924 in 1924

WWII WWII causes causes shortages shortages andand rationing rationing

19501950

DISCOUNT DISCOUNT CULTURE CULTURE

Eugene Eugene Ferkauf Ferkauf founds founds E.J.E.J. Korvette’s Korvette’s in 1948 in 1948

John John Wanamaker Wanamaker & Co. & Co. takes takes off and off and moves moves to the to the Pennsylvania Pennsylvania Railroad Railroad freight freight depot depot in 1875 in 1875 Media Media andand propaganda propaganda are are utilized utilized during during WWI WWI

Richard Richard Sears’ Sears’ mailmail catalog catalog begins begins in 1895 in 1895

General General Maximum Maximum Price Price Regulation Regulation is set is in set1942 in 1942

TheThe stock stock market market crash crash kicks kicks off off the the Great Great Depression Depression in 1929 in 1929

Historical and Cultural Context As the 50’s progressed, retailers became increasingly angry at Ferkauf’s dominance in the industry, and by the 1960’s, price-cutting and fair trade laws were lifted.41 In 1962, E.J. Korvette was selling $240 million each year.42 Everyone wanted a piece of Ferkauf’s success, and without barriers, this was now possible. In 1962, the three leading discount retailers of today opened: Wal-Mart, K-Mart, and Target. Other forms of retail, which did not operate on the discount model, would soon need to prove their added value to consumers or find a way to keep their prices competitive. New competition required innovation. The most notable technological advancement during this time was the computer. Although in its earliest form, the computer was the size of a room, it allowed for a new, just-in-time distribution system. With this development, pricing changed from being a top-down to a bottom-up process, adding leverage to retailers’ ability to compete based on price. Before just-in-time distribution, retailers had to anticipate demand, hold backup stock to replace goods that sold, and swallow the costs of items that did not. “The rise of markdowns has... given merchandisers unprecedented power over manufacturers and suppliers….”43 With computers, retailers could order goods from a manufacturer for arrival the next day. The manufacturer was responsible for managing excess stock and handling the financial burden when items did not sell. It also became easier for retailers to change vendors, so they often went to where prices were lowest. Retailers gained control over determining product and price, and ultimately they wanted to satisfy consumer demand.44 With the opening of E.J. Korvette, Ferkauf initiated a chain of events, which would lead to the discount culture we know today. His determination to by-pass antiprice cutting laws made them no longer justifiable. Once multiple retailers saw the opportunity to vie for market share and the power of determining price became a bottom-up process, competition was able to literally hit lows.

Gresham’s Law

Ibid., 28.

Ibid., 34.

Ibid., 110.

Ibid., 27.

Ibid., 44.

As a result of E. J. Korvette, price wars and marketing became the driving force behind consumer goods and ultimately, choice was eliminated from the marketplace. “Manufacturers had much less discretion in what they could produce or how they could produce it, and consumers, although treated to what seemed like an everexpanding variety of merchandise, were in fact being offered less variety and more variations on a theme.”45 Gresham’s law, which states that bad money drives out the good, exhibits how this occurred. This economic law was named after Sir Thomas Gresham, an English merchant who advised Queen Elizabeth to replace the country’s devalued currency in the 1500’s with new coinage. George Akerlof used milk to exemplify Gresham’s Law. A slight modification of his example illustrates our point. Imagine two gallons of milk with different levels

How the Discount Culture Rose to Prominence of inherent quality. Inherent quality of a consumer good is the durability and functionality of a product, which are a result of the materials and construction used. The inherent quality of a consumable good, like milk, is more subjective, since taste and health benefits are important. However, for the example of milk, we will base inherent quality on the percentage of fat and assume all other variables are identical. Therefore, the better quality, Grade A milk, has more fat and wholesales for $3.50, while the lower quality, Grade B milk, has less fat and wholesales for $2.75. Because the consumer can discern the difference in quality, he may be willing to pay $4.00 for the Grade A milk and $3.25 for the Grade B milk at retail. Both suppliers would receive an equal profit. This was the case in the early American retail landscape. However, a quintessential characteristic of demand is for consumers to continually want the product with the higher inherent quality at a lower price; they ultimately want to improve the value of their purchase. Inevitably, some retailer, such as E.J. Korvette, will step up to satisfy this demand. Not all retailers had the same advantage as Ferkauf of buying in bulk, but they had to find ways to compete, or they would lose market share. After E.J. Korvette was established, retailers like Wal-Mart followed Ferkaufâ&#x20AC;&#x2122;s model and became the norm. Non-discount retailers searched for ways to distinguish themselves and at times, also assumed low prices and more self-service. In order to offer lower prices, retailers needed to cut costs. This often meant lowering the inherent quality of their offerings. However, these retailers could not allow the customer to realize quality was being sacrificed, since sacrificed quality would mean lower inherent value. Almost all retailers and manufacturers learned that using marketing, they could tap into psychological behaviors associated with consumer decision-making by masking low quality with perceived value. Instead of offering Grade B milk at $3.25, they might re-label it Supermilk at $3.25â&#x20AC;&#x201D;in a package almost identical to that of the Grade A milk. As a result of this practice, the market became flooded with meaningless informationâ&#x20AC;&#x201D; marketing ploys rather than truthful information about the inherent attributes of the product. Without the consumer being able to differentiate quality, both grades of milk would have to be sold at the same retail price. If this price were $3.75, the Grade A producer would lose money and go out of business, whereas the Grade B producer would gain extra profits. Only one choice, the lower quality, watered-down milk, is ultimately available for purchase.46 Therefore, once retailers and manufacturers attempted to serve the consumer demand for value, but instead offer lower quality products concealed by marketing, the market lacked reference points and consumers were swayed to make decisions based on unsubstantial information or price. It became more difficult for products of quality to compete, because their added, inherent value became more obscure. Although we are not claiming all quality retailers have been put out of business by the discount culture, standards in the market have declined and it has become increasingly difficult for quality retailers to exist.

Ibid., 6.

Figure 14 An example of Greshamâ&#x20AC;&#x2122;s Law shows how obscurity of meaningful information in the marketplace results in decisions being based on price and elimination of choice.

Two clearly differentiated products with pricing structures based on inherent quality can coexist when a difference in inherent quality, and the corresponding difference in price, is clear to the consumer.

A quintessential trait of demand is that the consumer will always want a higher quality product at a lower price.

To satisfy this demand, retailers learn to lower prices, but also to lower quality and conceal lower quality with marketing. This is illustrated by the opening of E.J. Korvette, which initiated price wars.

When distinguishing between different levels of quality becomes difficult, the lowest price offer wins and the better quality product is knocked out of the marketplace.

Figure 15 These diagrams show the difference in the cycles of the bazaar culture (when conumers demanded qualiy) and the current, discount culture (when consumers demand lower prices).

Consumers Demand Quality

Consumers want a longer lasting product, and expect a fair trade from other merchants

How the Bazaar Culture Works Goods last longer and more repair options exist Quality goods are supported and encouraged

Suppliers offer different levels of quality and prices them accordingly

Consumer decisions are based on the inherent quality of a good

Consumers Demand Lower Prices

Consumers want more value (the same quality for a lower price), but when quality levels are obscured, the demand for value becomes a demand for lower prices

Goods are replaced more frequently, rather than being repaired

Retailers sacrifice quality and mask lower quality with marketing

How the Discount Culture Works

Discount goods rise to prominence

Impulse decisions and short-term thinking are encouraged

Historical and Cultural Context

How Consumer Demand for Cheaper Goods was Fueled The Cold War Push for Consumption As the discount culture began to take off, the Cold War encouraged consumption, further fueling consumer demand for more goods and lower prices. Fears and cultural tensions at the beginning of the Cold War, starting with the launch of Sputnik, contributed greatly to a rise in transitory thinking in America. The ideal of the American Dream was threatened, as an attack from Russia seemed possible at any time. The American government used propaganda to not only prevent mass hysteria and a halt in consumption, but to encourage more of it. Consumption was used as a way to create patriotism on the home front and as a symbol of American superiority to the Soviet Union. Retailers witnessed the power of these tactics and quickly adopted such techniques. Government and retail aims supported each other, resulting in a national push for consumption as a way of life. As previously indicated, a consumer is always going to want better quality products at lower prices, but societal pressure to own more stuff meant the demand for lower prices would also be greater. Thus, the pressure on retailers to reduce costs and disguise changes in quality grew.

Figure 16 Russian media celebrating the launch of Sputnik.

Robert H. Zieger, “Uncle Sam Wants You...To Go Shopping”: A Consumer Society Responds to National Crisis, 1957-2001,” Canadian Review of American Studies 34.1 (2004), 86.

Quoted in: Daniel P. Finney, “One Front Could Be the Storefront,” Omaha WorldHerald 20 September 2001: 1a.

Lizabeth Cohen, “A Consumer’s Republic: The Politics of Mass Consumption in Postwar America,” Journal of Consumer Research, Inc. 31 (2004): 236-239, 239.

When the Cold War presented danger to the security of American living, consumption was pushed by government and businesses as a way for citizens to band together and show their support for the nation. The launch of Sputnik was initially met with awe and wonder, but the reality of the Soviet Union’s technological prowess quickly began to take hold on American citizens. “For the first time since 1814, the American mainland and the American people appeared to be under direct military threat”47, and it had a significant impact on the daily life of the average citizen. Government entities and businesses across the country mobilized to prevent the country from slipping into panic or paralysis. A business owner in Nebraska stated, “We have to get back to business as usual. We have to maintain our quality of life in this country. Part of that quality of life is being able to buy what we want when we want it.”48 As a result, consuming material goods became a solution to feelings of inadequacy; by showing that Americans had a more enjoyable lifestyle, we could show the Soviets that we were superior. In this respect, the consumption of goods improved the image of America, creating an act of defiance to the communist threat. “If citizens had a patriotic responsibility to consume, then denying them was a violation of both a free market and a free society, it was argued.”49 Citizens were almost morally obligated to go out and make purchases, so they would not be labeled as communist sympathizers by their neighbors. In addition to the patriotic consumption habit, there was a strong political agenda to suppress any tendencies to favor communism within America. Working-class citizens were considered a risk, as they might empathize with their Soviet counterparts, desperate for a redistribution of wealth. To counter this, government propaganda

How the Discount Culture Rose to Prominence

claimed that mass production was capable of erasing gaps between social classes, ensuring a patriotic way to improve living standards for all.

As Americans lived better and on a more equal footing with their neighbors, it was expected, the dream of a more egalitarian America would finally be achieved. Politicians never tired of tying America’s political and economic superiority over the Soviet Union to its more democratic distribution of goods.50

As consumption was urged in America to both fortify American pride and extinguish any favorable feelings towards communism, product choices became less about quality and more about show. This was insignificant to American citizens at the time, since the future of America seemed uncertain. Although we put on a front of power to the Soviets, people in the U.S. had a transitory mind-set towards almost every aspect of life. American citizens used whatever means possible to cope with the constant fear of annihilation and trepidation about the future.“…[The] postwar rush into marriage and baby-making, white middle-class Americans’ embrace of traditional gender roles, and their new-found commitment to family life were all responses to ‘the terrors of the atomic age....’”51 This increasing acceptance of traditional roles by young American women gave rise to a new age of femininity, which was quickly flaunted overseas. The American government not only used psychological tactics to encourage consumption at home, but it also used our access to a range of goods to weaken the Soviet threat. “American officials…realized that modern communications technology provided the means to circumvent the barriers of authoritarian states and appeal directly to the peoples inside the Soviet empire.”52 Because women in the Soviet Union were required to work and beauty products were largely unavailable, American propaganda was quick to label them as members of a more primitive culture and as inferior to the American housewife. “Not only did the United States produce more and better consumer goods, press reports implied, it turned out better-looking and more ‘feminine’ women.”53 This argument culminated in the Great Kitchen Debate between President Nixon and Nikita Khrushchev at the American National Exhibition in Moscow in 1959. Nixon, standing before a model American kitchen, argued the “…virtues of capitalism over communism by pointing to the superiority of American consumer goods. In that famous moment, the American housewife, in her wellequipped kitchen, became a powerful symbol of American might.”54 The stylish American woman with a modernized, electronic kitchen was something with which women in the Soviet Union could not compete, and it became a mark of shame for the Soviets. The debate, as inconsequential as the topic may have been, tarnished the reputation of Khrushchev and the Soviet Union as a whole.

Figure 17 American propaganda attempts to create anti-communist sentiment.

Cohen, 237.

Anne M. Boylan, “Containment on the Home Front: American Families During the Cold War,” Reviews in American History. June 1989: 301-305, 302.

Walter L. Hixson, Parting the Curtain: Propaganda, Culture, and the Cold War, 1945-1961 (New York: St. Martin’s Press, 1997), xii.

Boylan, 301.

Ibid., 301.

Historical and Cultural Context

Figure 18 President Nixon and Nikita Khrushchev discussing a kitchen at the American Exhibition in Moscow in1959.

American strategists began formulating ideas to continue to weaken the integrity of the Soviet Union through envy and discontent. A favored tactic, dubbed “Operation Abundance” was based on the premise that:

Susan E. Reid, “Cold War in the Kitchen: Gender and the De-Stalinization of Consumer Taste in the Soviet Union under Khrushchev,” Slavic Review 61.2 (2002): 211-252, 222.

Reid, 225.

Ibid., 240.

…if allowed to sample the riches of America, the Russian people would not long tolerate masters who gave them tanks and spies instead of vacuum cleaners and beauty parlors. The Russian rulers would thereupon be forced to turn out consumers’ goods, or face mass discontent on an increasing scale.55

This plan would essentially slow down arms manufacturing in the Soviet Union to accommodate more consumer goods, giving the United States an advantage in the arms race. While spreading awareness to Soviet citizens was no easy task, the plan did work in creating unrest in Russia and a number of Soviet satellites. American propaganda was quick pointed out that “…the curiosity about the American way of life... is giving Soviet leaders concern that the Russian viewer will become discontented with their own lot.”56 American tactics worked so well that some Russian citizens at a fair collected used Pepsi cups to be more like Americas.57 Khrushchev felt pressure from Soviet citizens to improve the quality of life to one more comparable with the American standard. He created an initiative to have his people

How the Discount Culture Rose to Prominence consume the same amount of meat and dairy products per capita as Americans by 1960.58 It was an ambitious goal that he was not able to meet, leading only to further dissent within the Soviet Union. During the Cold War, the U.S. government successfully used propaganda to sway both Americans and Russians into desiring more consumer goods and to support American government agendas. While the transitory mind-set of American citizens could have been damaging to the economy and threatening to American power had panic hit, instead, uncertainty was transformed into what seemed like improved living. However, pressure to consume more goods, combined with the existing transitory mind-set, further propelled consumer demand for lower prices and the growing lack of concern about long-term quality in products. Consumption was a temporary panacea to citizens’ fears, and the continuation of the American public to consume more at lower price has had more profound negative effects on the lives of Americans. The Rise of Psychological Advertising Retailers, who saw the monetary gains from government tactics, realized they too could sway public opinion. Not only could a retailer add to the encouragement of consumption habits, but it could also turn consumers on to its specific products and deals. In the years following WWI through the 1960’s:

…‘psychological advertising’ was fully developed, inspired by wartime propaganda and by the influence of behavioral psychology, with its claims to hold the key to the manipulation of human desires. The rise of mass media seemed to confirm the lessons of psychology: advertisers looked to the popular appeal of movies, tabloid newspapers, and confessional magazines as evidence that consumers were best reached through emotional appeals rather than reason.59

Retailers learned to embrace techniques of psychological warfare and turn them on consumers, mainly through television. With a TV in every home, any organization could buy time to easily spread any message it wanted. While marketing and advertising may seem far subtler than formal propaganda, it is important to note that little but the name is different. They both involve “…an effort to persuade, to manipulate opinion”.60 Retailers may not be telling people what to say, do, or believe, but they do tell us what we want and need – regardless of whether we actually do or not. Advertising has become increasingly pervasive in American culture. In the 1960’s, an hour-long televised program would typically include 51 minutes of airtime and nine minutes of commercials. However, the total number of commercials and advertisements that air have grown substantially over the years. Today, the number of commercials has effectively doubled, with most hour-long programs only receiving

Ibid., 251.

Gorman and McLean, 67.

Ibid., 78.

Historical and Cultural Context about 42 minutes of total airtime.61 Even as far back as 1977, a child watching cartoons on a Saturday morning could expect to see the same commercial no less than five times within a three hour period.62 Although not all viewers will actually watch or pay attention to commercials, in the United States, the average televisionwatching consumer “…[sees] approximately 100 TV commercials a day.”63 Through advertisement, products are subtly portrayed to bring users marital happiness, economic success and health. Some advertisers even attempt to make it seem as if they are providing expert advice through product endorsements.64 In the 1950’s and 60’s, advertising was aimed at the middle-class, with the intention of shifting people away from using goods to live towards acquiring goods as a way of life.65 Critics “…maintained, [that consumers] choose products not on the basis of quality and price, as should be the case in an efficient economy, but because of the persuasiveness or manipulative influence of advertisements.”66 Psychological advertising supplemented Cold War propaganda in augmenting American consumption and has greatly influenced consumer decision-making. While the government no longer pushes consumption to ease Cold War tensions, marketing and advertising for commercial uses has only increased. Since the 1960’s, both consumers’ desires for material goods and retailers’ and manufacturers’ searches for ways to gain consumer attention continues to escalate.

How Consumer Demand for Cheaper Goods was Served New Retail and Product Models

DirectoryM Articles, TV Advertising, 2006, accessed 6 March 2010 <http://articles. directorym. com/TV_Advertising-a144 .html>.

Gerald J. Gorn and Marvin E. Goldberg, “Children’s Responses to Repetitive Television Commercials,” The Journal of Consumer Research 6.4 (1980), 421.

Leslie Savan, The Sponsored Life: Ads, TV, and American Culture (Philadelphia: Temple University Press, 1994), 1.

Gorman and McLean, 68.

Ibid., 70.

Ibid., 72.

Shell, 40.

In addition to advertising, new forms of retail and an emphasis on pricing strategies were two avenues through which the discount culture began to appeal to consumer psychology in the store environment. Atmosphere, price, and communication of product qualities continue to be studied in depth to influence purchasing and maximize profit. Because psychological appeals have moved to the forefront of sales, distinctions in quality and price have become ambiguous. Subsequently, this prompts consumers to make impulsive decisions that satisfy needs in the short-term. Beginning with the opening of E.J. Korvette, one of the most influential retail models in the latter half of the twentieth century has been the discount store model. Even today it continues to be the prevailing form of retail in America. Discounters attract consumers through convenience and multiple purchases. “…a trip to a discount store often begins with high hopes, moves on to a frustrated search, and ends happily in a surprising number of unanticipated purchases.”67 Discounters offer commodities, which they know will sell, across a wide range of brands—from their own store

How the Discount Culture Rose to Prominence

Figure 19 Psychological advertising, such as this ad from GE, indicate to the reader that products can bring happiness and success.

Figure 20 Other ads attempt to sell goods by delivering expert advice, as seen in this ad from Palmolive.

Historical and Cultural Context brands to national brands. Customers can rely on discounters to have competitively priced options on items, such as shampoo and socks. Unlike department stores, discounters do not have the flexibility to carry a wide variety of specialty goods that sit on the shelves. In specialty categories, such as sports equipment, a smaller variety of items and brands are available. For the consumer, this means the discounter may not have the lacrosse stick she had hoped to pick up for her daughter, but they may have a basketball, which would make a great gift for her nephew’s birthday in a few weeks. Only one brand, the cheapest brand, of basketball is likely to be available. While the customer may not get the exact specialty items on her list, the disappointment of not fulfilling those wants will be overshadowed by other specialty deals the customer was not intentionally seeking out.68 The consumer leaves satisfied, because she accomplished the bulk of her shopping plus more, so she becomes a return visitor. 21

A range of compromises has accompanied the opening of discount stores. Experience and personal attention are no longer paramount in “big box” cement structures with large parking lots. Additionally, when they were first opened, shoppers at these stores were interrupted by the intercom broadcasting specials. Because deals lasted for a matter of minutes, the announcement would be followed by a mad dash of people to the department hosting the sale.69 Discounters also originally only carried about half the selection of goods as department stores. However, people revel in the affordability of an abundance of merchandise and the casual atmosphere of discounters.70 68

Ibid., 40-41.

Ibid., 36.

Ibid., 37.

Thanks to discounters, there was a surplus of goods available at the lowest of prices. Retail models that did not operate on these terms needed to find ways to compete. Several trends occurred in the 1960’s and 70’s, which created a muddled array of

How the Discount Culture Rose to Prominence

different forms of retail and which added to the lack of clarity in the marketplace. One development was market segmentation. Concern began to grow in America about market saturation due to the abundance of mass-produced goods. Many products, such as cars and appliances, were purchased infrequently and in small quantities, threatening to cause stagnation. To accommodate the new market conditions, retailers realized they could target smaller portions of the population more aggressively. Market segmentation, involved “…the division of mass markets into smaller market segments defined by distinctive orientations and tastes, each to be sold different products, or if the same product, to be sold in a totally different way.”71 Category killers thrived on the practices of market segmentation by targeting consumers based on their hobbies and interests.72 Retailers such as Toys “R” Us and Best Buy filled in where discounters fell short; they offered an extensive selection of specialty items. 23

The rise of private label merchandise, which has spread across many forms of retailing from designer and specialty stores to discounters, also offered retailers a competitive advantage.73 Private label merchandise is merchandise that is unique to a retailer and often carries the retailer’s name. This can be seen most in clothing with stores such as the Gap, but West Elm and Kenmore for Sears are two other examples. Retailers learned that if they produced their own products, and therefore had exclusivity to those goods, they did not have to worry about another retailer offering a lower price on that exact item. Retailers that did not have the means to produce their own goods also managed to find ways to attain exclusivity. A retailer simply would work with the manufacturer to brand a widely distributed good under a name specific to its store and sometimes would even brand product attributes. Although the same product, or a slight variation of the product, could be found

Figures 21 - 24 Varied forms of retail, including discount stores, category killers, and outlet malls, have caused distinctions between quality and price to become blurred.

Cohen, 238.

Shell, 46.

Ibid., 105.

Historical and Cultural Context elsewhere, because it had a different brand or different attribute descriptions, the consumer would not realize the two products were comparable. Therefore, some of the power of pricing on these items was retained by the retailer.74 However, one consequence of products that are easy to replicate is that knock-offs quickly follow. There is pressure on private label brands and exclusive products to continually update designs to stay ahead of these followers. Although market segmentation, category killers, and private label brands seem to provide retailers the means to compete on quality rather than price, since the 1970’s, many stores that used these models have evolved to adopt some form of discounting. “The fall in discretionary income and the rise in visibility of private-label merchandise contributed to the outlet boom of the 1970s.”75 The purpose of an outlet is to offer name-brand retailers and producers the ability to sell moderately defective or slow-moving merchandise without tarnishing the reputation of the product line or the retailer. In this case, the quality is only slightly less than products carrying the same name in a department or specialty store, and the consumer gains value from a lower priced purchase. However, many retailers and manufacturers began producing lower-quality products to specifically sell at their outlets. As a result of these practices that continue to take place, the consumer has difficulty telling when value is gained and when it is disguised. One of two things can happen: consumers associate the name with higher quality and believe they are still getting value even when the quality is less, or consumers begin to associate the name brand with lower quality and perceive the value of higher quality products sold at department and specialty retailers to be less.76 Additionally, some retailers forgo the use of outlets and subtly lower the quality of goods in their original stores to be able to compete with discounters. “Warehouse clubs, off-price retailers, and specialty discounters in electronics, toys, office supplies, and home improvement swelled the discounting ranks, while mass merchandisers such as Sears, Ames, The Limited, and the Gap began to operate on the discount business model.”77 Due to the spread of lower quality products and lower priced offerings, the tiered structure of retailers, which once existed, has dissolved. It is easy to see how confusion on the part of the consumer results as standards to compare products are eliminated, the relationship between level of quality and a brand or retailer is inconsistent, and the distinction of retail models has blurred. So, on what, then, can a consumer rely to make a decision? Price. Pricing Strategies

Ibid., 101.

Ibid., 105.

Ibid., 96.

Ibid., 45.

To add to the perplexity of the market, however, retailers also purposely use pricing strategies to make it seem like they are offering a deal. These strategies are not unique to discounters; they can also be found in grocery stores, department stores, specialty stores, and more. While some tactics are subtler than others, over the

How the Discount Culture Rose to Prominence years, retailers have become increasingly strategic with their attempts to exploit shopper decision-making. Pricing strategies are intended to appeal to specific psychological behaviors that humans exhibit, and they result in consumers today having very little on which to base decisions. Psychological Behavior: Numbers have meaning in our culture. We feel comfortable with some prices over others. 5’s and 10’s feel natural and concrete to us, because we are taught to count using our hands. Pricing Strategy: One of the most widely seen tactics in pricing is ending a price with 99 cents. In the 1880’s, it was discovered that “Nines are especially potent … when they make the left-most digit on a price tag jump down a notch—$30.00 to $29.99…the penny reduction lures by conveying the ‘cheaper’ message subliminally.”78 People mentally round down the price a dollar and feel better about their spending.

Psychological Behavior: The concept of loss aversion means that people care less about winning than they do about not losing.79 Studies have shown that it is common for people to prefer buying a product marked down at one store, even if the full price of the exact same item is lower at another store. “…Rather than spending the cost of the product, we’re actually earning the savings.”80 Pricing Strategy: This is why many grocery stores highlight savings earned on the receipt. It is an attempt to appeal to acquiring gains and minimizing loses.

Psychological Behavior: A notion closely related to loss aversion is that, to humans, fairness trumps rational thought. The Ultimatum Game, developed in 1982, exhibits these irrational behaviors. An experiment is held with two participants, in which one is given a set amount of money and asked to divvy it up in any way between himself and the other partner. The other participant knows the numerical value of the money and has to accept or decline the first participant’s offer. Both players understand that the experiment will be held only once, so the second participant will never get to return the offer. If the offer is declined, neither participant gets any money. Logically, participant #2 should accept any offer, because any money is greater than receiving nothing. However, studies found that when this experiment is tested with $10, most participants receiving the offer decline anything less than $3. People turn down a gain, because it is not fair. A low percentage offer is registered as a loss rather than a gain.81

Pricing Strategy: Retailers understand that consumers often see spending as a loss and emphasize savings to make the consumer feel a fair deal is being offered. This is seen when retailers use manufacturers suggested retail prices (MSRP). Many department stores “…lure customers with dramatic reductions off the manufacturer’s suggested retail prices, but the manufacturer’s suggested price is

Ibid., 59.

Ibid., 65.

Ibid., 101.

Ibid., 6.

Historical and Cultural Context not even intended to reflect the real price. More accurately, …it is a mythical price, a reference price with which to manipulate customers’ willingness to buy.”82 The lower price offered by the retailer is many times the real price, calculated on actual costs, whereas the MSRP is inflated. The use of MSRP is especially seen with items, such as mattresses, which are purchased infrequently. Mattress stores always have at least one product on sale, but the sale products are usually the only items priced appropriately. The other mattresses are actually marked up. The product on special is rotated every week to prevent favoritism of manufacturers.83 Psychological Behavior: Hyperbolic time discounting is a phenomenon that explains why people are more inclined to think and act practically when there is more time between the decision and the reward. In one example, people were offered a half a box of chocolates today or a full box in a week. Most people chose the half box today, because it provides instant gratification, even though their gains would have been more had they waited a week. When having to make the same choice, but to receive the half box in a year or the full box in a year and a week, most people chose the full box. Pricing Strategy: Exploding discounts are used by retailers to initiate impulse buys based on the principle of hyperbolic time discounting. By putting a time frame on a discount, people are made to feel as if they will be missing out if they pass on the offer.84

Psychological Behavior: With discounts, we are motivated by the expectation of getting a good deal, the thrill of the hunt, more than acquiring the actual object. This was proven by Brian Knutson, who used an fMRI to show that different parts of the brain are activated when the anticipation of a purchase seems like a good deal or a rip-off. “…The nucleus accumbens, a tiny organ buried deep behind the eyes… plays a central role in the brain’s reward pathways by regulating the ebb and flow of two well-known neurotransmitters: dopamine, which promotes desire, and serotonin, which promotes satiety and inhibition.”85 Dopamine pushes us to embark on thrilling experiences and to act impulsively. One experiment Knuston performed found that the anticipation of winning or losing money set off the nucleus accumbens, but when the money was actually handed over, activation died down.86

Ibid., 98.

Ibid., 100-101.

Ibid., 70.

Ibid., 72.

Ibid., 73.

Pricing Strategy: Mail-in rebates are a method used by retailers, which rely on triggering customer psychology and the thrill of anticipating a purchase. Although a customer has to fill in and send in the rebate after the purchase to obtain the reward, the idea of the rebate makes the customer cognitively assume he is getting the discounted price. Usually, the period for redeeming the rebate is long, so customers forget or later decide the rebate is too much effort. Retailers rely on low claim rates, which average between 5 and 10 percent, so they ultimately sell the item at full price. In the eyes of the retailer, the result is a win-win situation, because even when

How the Discount Culture Rose to Prominence customers fail to submit rebates, they often mentally believe they paid less than full price.87 Pricing is very subjective, but many consumers believe it is objective. Donald Lichtenstein, a professor of marketing at University of Colorado has stated that one of the biggest fallacies consumers believe is that, by law, retailers cannot lie.88 Consequently, pricing techniques are extremely powerful in affecting purchasing, especially when all other reference points are untrustworthy. No Reference Points Consumer decisions should be based on value, a combination of quality of a product and price. In an ideal economy, quality and price should correlate with one another and act as reference points, so the buyer knows for what he or she is paying. Historically, product quality referred to the physical attributes of a good. Although one product may cost less than another, the decrease in cost is directly related to a decrease in craftsmanship or materials. However, as companies gained ownership over production of goods, other business determinants of price have resulted. Not only are materials and construction part of this equation, but consumers also need to understand that non-tangible costs, including labor and benefits, service, company standards, and more, are included. Although these other factors may not affect inherent quality, per se, they contribute to the offering by creating reliability. We will refer to quality based on both tangible and non-tangible components of an offering as expanded quality. Even when these additional components gained importance in the consumer goods marketplace, price and quality should have held a symbiotic relationship, and a tiered structure of retail would have resulted. However, discrete tactics in advertising, variety in forms of retail, and pricing strategies have all contributed to reference points for consumers to base decisions on to either disappear or be clouded. As Robert Schindler, professor of marketing at Rutgers School of Business, stated “‘We pay attention to prices in a way we attend to nothing else.’”89 When neither quality nor price are telling, judgments are all guesswork and the lowest price typically triumphs. We have become so accustomed to buying cheap and discounted goods that it is now an expectation of the shopping experience. For the consumer, when both tangible and non-tangible components of a purchase contribute to price, determining what accounts for the price of something can be a daunting and sometimes impossible task. Brand equity is the extra monetary gains a company makes from using a brand name compared to a product or service that is not recognized by name.90 Brand equity should be an important signifier to the customer, because it typically correlates to some added benefit or level of quality associated with the product or service, and therefore, should inform the consumer of added price. Brand equity can refer to a store, or it can refer to a branded product.

Ibid., 118-119.

Ibid., 99-100.

Ibid., 59.

Kevin Lane Keller, “Conceptualizing, Measuring, and Managing CustomerBased Brand Equity,” The Journal of Marketing 57.1 (1993): 1-22, 8.

Historical and Cultural Context A solid brand communicates its equity to the consumer well. When retailers of many forms begin to compete on price, and the structure of different forms of retail begin to merge, the brand equity of these retailers disappears.

One reason that a lot of department stores are in such trouble these days is that… you talk about Korvette’s…what was their response to that? They said, well we’ve got to cut our prices too. But even when they cut their prices, they couldn’t do it as well as the Korvettes of the world….What they should have done is to focus on what they can do better, which is to provide more expertise and service, which they didn’t do. And so now, when you go to a store like Macy’s, its not quite as cheap as a store like Wal-Mart, but the service people aren’t any better than Wal-Mart and so they kind of don’t have any competitive advantage.91

Other retailers that chose not to lower its prices but were once considered to be of equal quality to the retailer that has lowered its prices, may now seem overpriced. In other words, their brand equity is then either misunderstood or not valued.

Interview with Dr. Solomon, 29 January 2010.

Shell, 101.

Gorman and McLean, 78.

Michael R. Solomon, Conquering Consumerspace: Marketing Strategies for a Branded World (New York: AMACOM, 2003), 156.

Shell, 112.

Ibid., 114.

Further, when some full price retailers cut costs and lower quality, they intentionally try to cause confusion for consumers through advertising and in-store promotions to make them believe that they are continuing to offer quality. We reviewed many pricing tactics retailers use to gain sales, as well as product and attribute branding techniques used to make it seem like a retailer has exclusive rights to an item. Pricing strategies are especially advantageous for the retailer or manufacturer when the consumer has difficulty comparing a given item to similar products in the same category.92 Like propaganda, marketing experts know that their efforts are “…most effective if people do not have access to multiple sources of information and if they are discouraged from thinking critically.”93 Some may argue that today the Internet provides consumers with an abundance of information and counter opinions to retailer or manufacturer claims, but retailers and manufacturers have just become increasingly crafty with their methods. What seems to be a consumer review on a social media site might actually be an employee promoting the company’s product. “When RCA records wanted to create a buzz around teen pop singer Christina Aguilera, they hired a team of young people to swarm the Web and chat about her on popular teen sites like alloy.com….”94 Now, retailers and manufacturers can not only attempt to provide an expert opinion through advertisements, where the source is known, but they have the ability to conceal the source. Consumers become skeptical of most of the information provided by a company trying to sell its products, even if the information is meaningful. The higher quality retailers—that initially did not succumb to low-price competition, that did not lower the quality of their goods, and that provide truthful information— have been impaired as a result of the marketing schemes of lower quality brands.

How the Discount Culture Rose to Prominence Due to confusion over brand equity and skepticism over which media outlets are trustworthy by the consumer, the higher quality retailers that tried to maintain quality, may have to resort to putting items on sale to survive. Now, not only is quality lowered and masked, but also the relationship of quality and price across the market becomes inconsistent. Consumers become trained to hold out for sales to make a purchase, even when they wish to purchase a quality good. “Markdowns have been with us for some time, of course, but until half a century ago, most stores cut prices on merchandise at preordained intervals and for predictable reasons generally involving seasonal change.”95 Today, there is rarely a gap between sales. At almost any given store, we can expect the items we eye at full price to be cheaper in a few weeks time. Two additional contributing factors to the proliferation of sales are globalization and the current economic recession. As more goods come from abroad, lead time to get a good in a store increases. The result is that some items lose their appeal during the transition from conception to the point of sale.96 These items are marked down almost immediately after hitting the retail floor. If a consumer knows a good will be marked down quickly or before the end of the season, the incentive to pay full price is gone. With the recession, people are buying less, so stores are promoting sales to try to encourage spending. It has become almost impossible for retailers to sell quality goods at full price, and when they cannot, profits are lost. Consumers may think they end up winning in this situation, but as with Gresham’s law, quality goods are filtered out of the market place. TIERS OF RETAIL EXIST, SO PERCEIVED VALUE MATCHES INHERENT QUALITY

Figures 25 Varied forms of retail, as well as pricing and marketing strategies have caused distinctions between quality and price to become blurred.

RELATIONSHIP OF QUALITY AND PRICE ACROSS THE MARKET BECOMES INCONSISTENT - PERCEIVED VALUE DOES NOT MATCH INHERENT QUALITY

Quality retailer keeps prices the same, loses some business to discounter Quality goods at a higher price Quality retailer begins to offer lower quality goods for lower price to compete with discounters

Quality retailer has a sale to retain business, but cannot sustain low prices

Low quality goods at a low price

Consumers may or may not understand what they are receiving Keeps business model

Consumers begin to question initial prices, refuse to pay full price for anything after sale

Price makes consumers think value is better

Consumers notice drop in quality, brand equity is damaged

Brand is diluted, company image is less-favorable

Quality retailer may go out of business

Historical and Cultural Context

Advertising, variety in forms of retail and pricing strategies attack the psyche of consumers, creating false needs, while reference points are eliminated from the consumer goods market. The ability of the consumer to perceive quality attributes is obscured, and the potential to form independent opinions is all but negated. When confusion exists over the value of brands and retailers, and the dependability of most media outlets is in question, quality brands have little ground on which to create customer support. Consumers fall back on price to guide their decisions. Thus, an important part of reversing the discount culture in America lies in helping consumers to understand the factors that contribute to quality when a purchase is made and the correlation of quality to a higher price, so consumers can reestablish their intrinsic ability to form educated opinions, make comparisons, and use these abilities to adjust their spending habits.

How Consumer Decision-Making Changed Survey of Choice Perspectives The field of consumer behavior “…is the study of the processes involved when individuals or groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy needs and desires.”97 It has emerged as a way for manufacturers, retailers and marketers to understand consumer psychology in order to strategically formulate tactics based on exhibited behaviors. However, knowledge of this field also provides an explanation of how new and more prevalent forms of information created a widespread transformation in the general population’s mind-set towards purchasing. Many theories exist about what consumers do and why, with influences from psychology, sociology, anthropology, economics, and more. For the purposes of this study, we will focus on choice, because this is the behavior we are attempting to change.

Michael R. Solomon, Consumer Behavior: Buying, Having, and Being, 8th Edition (Upper Saddle River: Pearson Education, Inc., 2009), 7. Ibid., 324.

Traditional decision-making theories focused on maximizing a person’s utility. They were based on economic models. These views saw the consumer as being rational, and a person who gathered as much data as possible to make the best-informed decision. According to such perspectives, the consumer diligently considered the benefits and disadvantages of a decision. Information was also weighed in terms of value, and the most important factors were given the most consideration. The evaluation process concluded when learning increased and the value of the information being gathered decreased.98 Ultimately, the consumer was concerned with elevating utility, or personal gains. Another perspective on choice is the stimulus-response approach. Theories that take this perspective generally believe a decision is instigated by a stimulus, either

How the Discount Culture Rose to Prominence

internally (i.e. hunger) or externally (i.e. smell of food). A stimulus creates a desire, and drive motivates a person to satisfy the desire. Reward or punishment of a particular outcome creates a habit. Future decisions are then based on the levels of drive and habit.99 A third viewpoint is the expectancy-value approach. In this perspective, the consumer anticipates the outcome that will result from a certain action, or expectancy. The value is the level of benefit gained from a particular outcome. Decisions are made based on expectancy and value, and the consumer aims to maximize the value.100 These three approaches may explain some consumer decisions, but they also have limitations. They are not comprehensive, and instead assume the consumer carries out the same process time and time again. Alternatives based on the relative importance of the decision are not provided. Further, maximum utility and expectancy-value perspectives see the consumer as rational. The stimulus-response perspective views the consumer as being passive, and decisions are not made until a person is prompted. However, behavior is not always rational or predictable, and at times, people actively seek information.101 An information processing perspective is more comprehensive, so we will take this vantage point when analyzing consumer behavior. In fact, it also incorporates aspects of the three other perspectives listed above when they are necessary to the decision-making process. In an information processing perspective, the consumer is viewed “…as a processor of information; that is the consumer is characterized as interacting with his or her choice environment, seeking and taking in information from various sources, processing this information, and then making a selection from among some alternatives.”102 The consumer has a limit for processing and storing information. Once a decision is made, the outcome evaluation influences future decisions. Although a beginning and end are assumed to discuss the components of this perspective, choice processes are continuous. Each of the perspectives considered above provides a general framework for analyzing choice. Different experts studying within each perspective provide slight modifications to previously existing frameworks. In understanding choice behavior from an information processing perspective, we have decided to use information from Dr. Michael Solomon’s text book, Consumer Behavior: Buying, Having and Being and from James R. Bettman’s, An Information Processing Theory of Choice. The main components outlined in these texts are similar and support each other. Each framework is filled in with different studies and theories by other experts, which concentrate on specific segments of the framework. After surveying both writings, we have extracted the pieces from each that are most applicable to our study. While there may be slight differences in the terminology associated with each segment, the general beliefs match.

James R. Bettman, An Information Processing Theory of Consumer Choice (Reading: Addison-Wesley Publishing Company, 1979), 5.

100

Ibid., 6.

101

Ibid., 5-7.

102

Ibid., 1.

Historical and Cultural Context

Details about the Information Processing Approach Today it is generally accepted by experts in information-processing that there are five stages in the consumer decision-making process: problem recognition, information search, evaluation of alternatives, product choice, and outcomes. Modern researchers believe that “…decision makers actually possess a repertoire of strategies. A consumer evaluates the effort required to make a particular choice, then chooses a strategy best suited to the level of effort it requires.”103 Sometimes the aforementioned process takes place over many months and at other times, it happens almost instantaneously. The time allotted to a decision is usually dependent on its relative importance to the person making the decision.104 The decision-making process is instigated by a problem recognition, meaning there is a disconnect between a person’s current, actual state and an envisioned, ideal state. A need happens in one of two ways: the ideal state is raised or the actual state is lowered. An example of the ideal state being elevated would be if a person goes for a ride in a friend’s brand new car and therefore, decides he also wants a sleek new car with GPS even though his ’89 Oldsmobile drives just fine. An actual state being lowered would occur if he is driving that Oldsmobile and realizes the gas is on E.105 Additionally, a need can be utilitarian (having functional purpose) or hedonic (appealing to emotional desires). Either way, the imagined end state (new car or more gas) is the goal.106 Figure 26 This diagram, featured in Consumer Behavior: Buying Having and Being, shows that a need is recognized when a consumer’s ideal state increases or the actual state lowers.

NO PROBLEM

OPPORTUNITY RECOGNITION

NEED RECOGNITION

Ideal State Actual State

103

Solomon, Consumer Behavior: Buying, Having, and Being, 326.

104

Ibid., 324-325.

105

Ibid., 328-329.

106

Ibid.,128

107

Ibid.,128-129.

108

Ibid., 138.

109

Bettman, 18.

Need recognition creates anxiety in the consumer, who then aims to minimize this unrest. Motivation is what causes a person to satisfy the need. The strength of the motivation is considered the drive.107 If there is a strong drive to fulfill a goal, motivation to search for information and make a decision will be higher. A consumer’s involvement, or perceived evaluation of how much a stimulus relates to his innate needs, values, and interests, directly corresponds to motivation. Consumers become more involved with ads, products, and packaging when they closely relate to a high-

How the Discount Culture Rose to Prominence

drive motivation.108 Motivation also has a direction, it moves the consumer from one state to another. Usually, a state shift only occurs after some decision is made.109 It is important to note that while a goal is defined by desire to move from an initial state to an end state, there may also be sub-goals, or intermediate states, depending on the complexity of the choice. For example, a person buying a new refrigerator may first need to determine what product attributes are important before certain brands and models are considered. Deciding which attributes are important and the threshold for these attributes is a sub-goal of buying a refrigerator.110 The consumer develops a mental hierarchy of goals and sub-goals. “…When we change the level of detail considered, those sub-goals…at one level become goals at a more detailed level.”111 The inverse, where goals become sub-goals is also possible. For instance, buying a refrigerator becomes a sub-goal when the end goal is renovating the kitchen. LIMITED SUB-GOALSSOLVING LIMITED SUB-GOALSSOLVINGEND GOAL END GOAL

3 Obtain 3 Obtain the Best the Best Alternative Alternative

END GOAL END GOAL

1 Determine 1 Determine Important Important Product Product Attributes Attributes

2 Evaluate 2 Evaluate Brands and and Brands Models Models

LIMITED LIMITED SUB-GOALSSOLVING SUB-GOALSSOLVING

4 Purchase 4 Purchase Refrigerator Refrigerator

2 Evaluate 2 Evaluate Brands Brands and and Models Models

4 Purchase 4 Purchase Refrigerator Refrigerator

3 Obtain 3 Obtain the Best the Best Alternative Alternative

5 Purchase 5 Purchase New New Countertop Countertop

Figure 27 Consumers develop a mental hierarchy of goals when making a purchase decision. However, this hierarchy is very fluid and changes according to the context being considered. Subgoals help the consumer acheive the ultimate end goal. Graphic adapted from James R. Bettman’s, An Information Processing Theory of Choice.

7 Renovate 7 Renovate Kitchen Kitchen

6 Paint 6 Paint Walls Walls

Experts believe the hierarchy of goals used by a consumer is unique to the person, environment, and decision being considered.112 Multiple levels of the hierarchy may be achieved simultaneously. For example, product attributes and brands may be considered at the same time.113 Additionally, people are constantly surveying the environment, even while in the process of attaining a goal. An interrupt mechanism allows for the consumer to quickly adapt to new internal and external stimuli. Although people remain unaffected by much of the information they take in, when

110

Ibid., 19-20.

111

Ibid., 20.

112

Ibid., 48.

113

Ibid., 21.

114

Ibid., 24.

Historical and Cultural Context an environment is different than expected or a stimulus is unusual, the interrupt mechanism may halt progress on a goal. “Thus, the goal hierarchy, rather than being fixed, may change or be restructured in response to demands of the moment.”114 For example, an interrupt, which in this case is related to the goal, occurs if one direction that is chosen does not provide sufficient information. This shows that the goal hierarchy is non-linear. In the case of the refrigerator, the consumer may have determined three possible models that match his criteria. He visits the store to make his purchase. However, while he is there, he speaks to the salesman and learns that kilowatt hours (kWh) per year is an important consideration because it affects the cost of his electric bill. He now re-evaluates the attributes he initially decided on and incorporates kWh in his decision. He chooses a fourth model to purchase.

Figure 28 In Consumer Behavior: Buying Having and Being, Dr. Michael Solomon offers a diagram to show the continuum of effort put forth during the decision making process based on motivation and involvement. This diagram has been slightly adjusted for our purposes. When the consumer has a lower drive, routine response behavior kicks in; limited problem solving falls in the middle; and when the drive is high, extensive problem solving is used.

115

Ibid., 34.

116

Solomon, Consumer Behavior: Buying, Having, and Being, 326-327.

117

Ibid., 346.

118

Bettman, 44.

Howard and Sheath divided the decision-making process, leading up to the product choice, into three levels of complexity: routine response behavior, limited problem solving, and extensive problem solving.115 Routine response behavior and limited problem solving are generally used when the product is less expensive, the purchase is made more often, and the risk associated with the wrong choice is low. Products chosen with these processes are easily replaceable. Many times routine response behavior happens on an unconscious level, and a consumer may not even realize a decision is made. Extended problem solving is usually applied when products are more costly, more complicated, are purchased less frequently and risk associated with the wrong choice is higher. While extended problem solving decisions tend to closely match traditional, rational decision-making theories, routine and lowinvolvement decisions often account for our irrational behaviors.116 ROUTINE RESPONSE BEHAVIOR

LIMITED PROBLEM SOLVING

EXTENSIVE PROBLEM SOLVING

Low-cost Products

More Expensive Products

Low Consumer Involvement

High Consumer Involvement

Frequent Purchasing

Infrequent Purchasing

Low Risk of Wrong Choice

More Risk of Wrong Choice

In-store Decision More Likely

Many Outlets Shopped if Needed

Only Most Prominent Criteria Used

Many Criteria Used

Heuristics Used to Acheive End Goal

Heuristics Used to Acheive Sub-goals

Heuristics are learned short cuts that we rely on to make more efficient decisions, preventing mental burnout. “These rules range from the very general (‘higher-priced products are higher-quality products’ or ‘buy the same brand I bought last time’) to

How the Discount Culture Rose to Prominence

the very specific (‘buy Domino, the brand of sugar my mother always bought’).”117 The consumer uses these to move from one state to the next.118 While they can be used at any level of problem solving, when they are used for extensive problem solving, they are generally used to move from one sub level to the next. Thus, in extensive problem solving, heuristics limit the number of decision criteria. For instance, if buying a new digital camera, a consumer may decide not to consider any item with less than 10 MP. Other considerations, such a screen size and zoom, would also be weighed when making this decision. As problem solving becomes limited or routine, fewer sub-goals are involved, and it becomes more likely the consumer will depend on using heuristics to guide the overall decision. One example of this is “I’m going to buy Coke because it has more fizz than Pepsi.” The specific product contents are not examined and other alternatives, such as Coca-Cola brand’s Sprite, are not considered. Another example is “I will buy the cheapest product.” Impulse, irrational decisions are more likely in situations where problem solving is minimal and one heuristic, or shortcut, determines the overall decision. The Discount Culture Caused Greater Reliance on Heuristics There is a limit to how much information a person can process at any given time, as well as the number of different activities that can be comprehended at the same time.119 Therefore, it can be argued that with the rise of the discount culture and emphasis on marketing, the extent to which consumers rely on heuristics to determine an overall decision (use of routine response and limited problem solving) has increased.

Majority of decisions after mid-1900’s

ROUTINE RESPONSE BEHAVIOR Heuristics Used to Acheive End Goal

Majority of decisions prior to mid-1900’s

LIMITED PROBLEM SOLVING

Figure 29 Because the discount culture is characterized by a plethora of unreliable information, consumers began using mental shortcuts to make the decisionmaking process more efficient.

EXTENSIVE PROBLEM SOLVING Heuristics Used to Acheive Sub-goals

The level of the decision-making process used is largely determined by “…the perceived ‘costs’ of obtaining information (e.g., time costs, monetary costs, effort required), and the value of the information in helping to make a choice.”120 In the bazaar culture, only one layer of information, the quality of inherent product attributes, was available. Information was accessible and comparison of alternatives

119

Ibid., 17-18.

120

Ibid., 29.

Historical and Cultural Context was easy to perform—both by analyzing the object. Objects were also intended to last longer, so purchase decisions were more significant. Costs associated with using extended problem solving were low and the value gained from making educated decisions was high. It is plausible, then, that because there was a limit to number of factors on which to compare products, extended problem solving was more likely. Although some would argue that information today is more accessible, there are many layers of information consumers must dig through to gain meaning from the information. Every day, the average adult comes in contact with 3,500 bits of advertising. Thirty years ago, this number was only 560.121 Not only does today’s consumer have the product attributes to compare, but he may consider if the brand is reliable, which celebrities endorse the product and if their values match his, the social significance of the product, if there are hidden motives in a marketing message, and much more. As the number of factors on which to make a decision rose, so did the costs of using more processing. Also, as seen in the Gresham’s law example, the direct benefits gained from these factors became more obscure, so perceived differences in values became less. When information is not readily accessible or easily interpreted, arbitrary choice and trial of a product may be more productive than using more processing.122

Ironically, for many modern consumers one of the biggest problems they face is not having too few choices but having too many. We describe this profusion of options as consumer hyperchoice, a condition where the large number of available options forces us to make repeated choices that may drain psychological energy while decreasing our abilities to make smart decisions.123

In the discount culture that has emerged, people have created limits which were once natural, and “…heuristics allow adaptation to the potentially complex choices consumers must make.”124 People have adjusted to new sources and new types of information available by relying more heavily on heuristics to determine their overall product decision and to make their lives easier. Figure 30 The type of decision process used by the consumer largely influences product choice. When decisions are more thought out, as in the bazaar, good quality is more likely to be chosen. 121

Solomon, Consumer Behavior: Buying, Having, and Being, 71.

122

Bettman, 23.

123

Solomon, Consumer Behavior: Buying, Having, and Being, 71.

124

Ibid., 324.

Bazaar Culture Discount Culture • long-term mind-set

• short-term mind-set

• decisions based on inherent quality of product attributes

• decisions based on perceived quality of marketing and price

• extensive problem solving used for most product decisions

• routine response and limited problem solving used for most product decisions

What’s Next?

How the Discount Culture Rose to Prominence Comparison of the bazaar culture to the modern American discount culture shows a fundamental historical pattern: people are able to make decisions based on the inherent quality of a product but many times they do not. When the expanded quality of a product gained importance in the marketplace, extended problem solving should have continued to be used, with examining inherent quality as a major component of this process. However, the evolution of the retail environment has caused a lack of meaningful information and distinction of information, resulting in a prevalence of short-cut decisions, many of which are based on price. Both decisions, where quality is thoroughly considered and where it is not, stem from the same process, but properties of the choice elicit different levels of motivation. If this hypothesis is true, we can then work with consumers to pull out the skills associated with an extensive decision-making process and ignite decisions based on the inherent quality of products. Cold War propaganda and advertising, through the use of psychological tactics, alters the mindset of American consumers

New branding techniques are employed

New retail models begin to develop

Consumers Demand Lower Prices

Consumers want more value (the same quality for a lower price), but when quality levels are obscured, the demand for value becomes a demand for lower prices

Goods are replaced more frequently, rather than being repaired

Retailers sacrifice quality and mask lower quality with marketing

How the Discount Culture Works

Discount goods rise to prominence

Pricing strategies evolve to change consumption habits

No reference points exist for consumers to analyze goods Impulse decisions and short-term thinking are encouraged

The use of heuristics to achieve end-goals become more common in consumer decision-making

Figure 31 This diagram further elaborates on contributors to the discount culture after the early 1960â&#x20AC;&#x2122;s and the psychology behind how consumer decision-making changed.

Effects of the Discount Culture While some argue that low prices give all people accessibility to a large selection of goods, the disposability of these products and the decreases in wages caused by cheap goods are often overlooked. A wide range of negative effects on personal spending, on both the local and national economies, and on the environment have resulted from the discount culture. These long-term consequences make the shortterm savings of low-prices insignificant. We have decided to focus on the two effects closest to the individual consumer â&#x20AC;&#x201C; how short product life spans and a placebo effect increase personal long-term spending and how low wages decrease the spending power of the masses in the local economy â&#x20AC;&#x201C; in anticipation that this will cause the greatest change.

Historical and Cultural Context

Causes of Short Product Life Spans and a Placebo Effect Cheap goods, despite being inexpensive and widely available, can actually cause far more harm than good on a personal level. When quality is diminished, the lifespan of a product is shortened. Less attention to craftsmanship and materials results in the product breaking down quicker. A recent study found that “...99 percent of the stuff we harvest, mine, process, transport… is trashed within six months...” of purchase.125 With so much of what we buy heading quickly to the landfill, there does not seem to be much support for durability or longevity. Other than the obvious environmental issues, this behavior affects us as individuals, because it actually depletes our savings in the long run. Although awareness of environmental impact is growing, not everyone in America has concerns about the health of our ecosystems; however, nearly everyone cares about how much money he or she has. The problem is that, over time, people have adopted a transitory mind-set and are concerned with savings in the short-term. Consumers believe that when they purchase a cheaper product over the more expensive, yet higher quality product, the savings add up. People fail to include in their calculations how fast the cheaper product breaks down and the costs associated with replacing or repairing it. When a product does break down, consumers reason that if it was inexpensive to begin with, it is cheaper or more time efficient to just buy a new one. “As Tod Marks of Consumer Reports observes: ‘In the early 1990s, we found that if a product cost $30 or less, people wouldn’t bother to get it fixed. But as the years went by, that price point has steadily gone up – now, it’s probably at about $100.’”126 Additionally, unless the initial experience with the cheaply made product is extremely poor, people rationalize their original decisions after the fact, and are likely to repeat the same behavior.127 Many consumers replace one low-quality product, with another low-cost, low-quality product. “When these objects break or buckle or otherwise disappoint, we don’t ask for sympathy. We [expect] it to happen.”128 An endless loop of buying, using, and replacing takes a toll on the consumer’s spending power, and when not kept in check, the consumer finds him or herself with no option but the cheapest route.

125

Fox, Louis, dir., Annie Leonard, writ., Annie Leonard, perf., Erica Priggen, prod., The Story of Stuff, 2008.

126

Art Kleiner, “Beware the Product Death Cycle,” Strategy + Business 1 March 2005, Spring 2005 ed., 2.

127

Shell, 77.

128

Ibid., 142.

129

Ibid., 71.

People acquire additional long-term costs when choosing the cheaper good due to a placebo effect. “Regardless of what the tag or brand claim…The less we pay for something, the less we value it and the less likely we are to take care of it, with the result of cheaper things—even if made well—seem to wear out and break more quickly.”129 Lets consider two products that have a one to one ratio of dollars to years in their life spans: a high quality one that costs $5 and lasts 5 years, and a low quality one that costs $3 and last 3 years. Although it is more likely the high quality item will cost $20 and last 20 years, we have simplified these numbers to illustrate our point. Over a 15 year time span, the high-quality item would have to be replaced 3 times and would cost $15. The low-quality item would need to be replaced 5 times and

Effects of the Discount Culture

would also cost $15. Even if the two choices resulted in the same cost over time, the higher-quality product would be the better option: the consumer would enjoy an enhanced experience when using the product, less effort would be put forth into buying replacements and less waste would result. However, studies have found that when two identical products are sold to consumers, one at full price and one at a lower price, the one at a lower price breaks down or is reported to work less efficiently than the one sold at the higher price. If we account for this placebo effect in our example, the lower quality product may only last 2.5 years, rather than 3 years, and need to be replaced 6 times in 15 years. The resulting expense of the lowquality product is $18, compared to $15 of the high-quality product. Therefore, high quality products have the potential to actually save consumers money in the long run. 1 year of lifespan

HIGH QUALITY PRODUCT LOW QUALITY PRODUCT LOW QUALITY PRODUCT WITH PLACEBO EFFECT

price

15 15 18

Figure 32 This diagram shows that due to a placebo effect, a lower quality good costs the consumer more than a higher quality good over time.

It is important to note that many corporations and manufacturers support cheap goods for this very reason. Their profits increase the more consumers discard old items and buy new. In a repeat of wasteful behavior that was seen in the 1970s, American corporations are “…once again employing strategies that emphasize shortterm gains from the production of cheaply made, junky products.”130 Two tactics are used to design a short lifespan into the product: planned obsolescence and perceived obsolescence. Planned obsolescence means that the product is intentionally crafted poorly or made with non-durable materials, so it becomes unusable in short period of time. Perceived obsolescence means that although the product continues to function as normal after a short period of time, newer, better looking options are made available and persuade people to replace the old.131 Support for disposable goods has become the norm from both consumers and producers. While producers reap benefits in the form of cash flow, many consumers are unaware of the extreme negative affects of low-prices on their personal spending over time. Thus, one way to encourage support for quality goods from consumers would be to provide them with a system to understand the long-term, harmful consequences on their bank accounts by the short-term savings they are choosing.

130

Kleiner, 2.

131

Leonard, Annie.

Historical and Cultural Context

Causes of Decreased Wages Consumption of cheap goods not only negatively affects personal spending by causing the consumer to replace goods more quickly, but it also further damages the spending power of lower-class citizens through low wages, and it increases the divide between social classes. As a result, the quality of life in the local economies where low-cost goods are sold is decreased. Discounters and retailers of low-price goods pride themselves on making available a range of products to people of all social classes. They argue that affordability provides lower-class citizens with an enhanced quality of life by allowing them to save more, but as Frank Woolworth once stated, “…cheap goods cannot be had without ‘cheap help.’”132 As prices are slashed and margins are narrowed, one way retailers are able to cut costs is through labor. Cheap help can include workers on the manufacturing end, which in today’s marketplace mostly takes place overseas, but it can also include the sales force, who are members of our very own communities. Although both are important, our focus is how cheap labor in America affects the quality of life for the people low-price goods are meant to help. Many US citizens do not realize that the price of goods relates to the payment of workers, which in turn, affects what people are buying and that this all happens within our own economy. In the business world, this cycle is well understood. An early example of this concept was Henry Ford’s “$5 a day” plan. Because Ford’s goods were considered high quality and, therefore, had a lofty price tag, he wanted to improve his workers’ spending power. The low-skilled workers that operated Ford’s famous assembly line were initially paid only $2.25 a day, which was reasonable at that time. However, he quickly found the 40-60% turnover rate in his company to be completely unacceptable. He developed a profit-sharing plan to pay workers $5 a day for remaining loyal to his company. Ford “…[connected] the dots between worker prosperity and profitability.”133 Not only did this plan save hiring and training expenses, but it kept employees motivated, and most importantly, enabled them to buy “the fruits of their labor”— their very own Ford Model T.134 By realizing that every worker should earn a sufficient wage for a secure life, Ford expanded Ford Motor Company’s consumer base.

132

Shell, 161.

133

Ibid., 214.

134

Ibid., 161.

In contrast to Ford, when consumers support low-price operations, the workerconsumer cycle operates in the opposite direction, decreasing the spending power of the lower classes. As people continually pay less and less for a product, the labor that contributes to that product will also receive less and benefits may suffer. Since workers can then only afford low-priced goods, they shop at low-price retailers. The workers ultimately enable the discount retailers to continue to pay them low wages through their shopping habits. “Harvard cultural historian Lizabeth Cohen has pointed out that mass-market consumption offers the façade of social equity without forcing

Effects of the Discount Culture

society to go through the hard work of redistributing wealth.”135 People think they are gaining wealth by acquiring goods at low prices, but what they do not see is how low prices feed into the larger system. Because of their scale, large discount retailers best exemplify the negative effects of this downward cycle. Despite high profits and the many economic advantages of a well-paid workforce, few large discounters pass earnings on to workers, because doing so could jeopardize their market share. The upper management of many companies, such as Wal-Mart, actually want to keep lower-class wages low, because if their workers’ spending power improves, their workers have more options of where to spend that money. Wal-Mart is the largest publicly owned corporation in the world and reported $405 billion in net sales for the past fiscal year.136 However, the average Wal-Mart hourly sales employee wage is approximately $13,861, which falls considerably below the federal poverty level.137 Even the benefits that Wal-Mart provides are insufficient, and the company actually encourages employees to seek welfare and government assistance programs. A recent study shows that Wal-Mart costs American taxpayers over 1.5 billion dollars per year by urging its employees to use state and federal programs. Rather than using its massive profit levels to provide employee health benefits, Wal-Mart is “…having the government take care of it.”138 When the majority of Wal-Mart’s profits go directly to a few high positions and the shareholders, the divide between social classes expands. “A small segment of the population is doing well by what’s happening, but the greater majority of the people are being made subservient to it.”139 This continues to lower the quality of life for the lower-class employees because it is nearly impossible for them to work their way up in the company or in society. The far-reaching effects of wage levels are even more polarizing. When a large discounter, such as Wal-Mart, opens in a town, spending is filtered away from existing retail establishments. To compete, surrounding establishments must also lower prices, and cut wages. If they do not, it is possible that they will go out of business. Wal-Mart “…drives down retail wages $3 billion each year.”140 Additionally, many of these retail workers may scale down their spending at organizations in industries other than retail. A study by Arindrajit Dube at the University of California Berkely “…found that the opening of a Wal-Mart store lowered wages and benefits in the surrounding region by up to 1 percent….”141 Therefore, consumption of cheap goods not only affects pay and the spending power of people who work directly for the lowprice retailer, but when these retailers have a large employee base, they have the potential to drop the floor on wages across multiple industries in the local community. With Wal-Marts popping up all over the nation, they have the ability to bring the national level of wages and quality of life down, and as consumers, we empower this to happen!

135

Ibid., 48.

136

Wal-Mart Stores, Inc., Wal-Mart Reports Fourth Quarter and Fiscal Year 2010 Results, 18 February 2010, accessed 18 March 2010 <http://investors walmartstores. com/phoenix. zhtml?c=112761&p=irolnewsArticle&ID=1392384&highlight=>.

137

Wal-Mart: The High Cost of Low Price, dir. Robert Greenwald, prod. Robert Greenwald, 2005.

138

Greenwald, Robert et al.

139

Ibid.

140

Ibid.

141

Shell, 50.

Historical and Cultural Context Some would argue that if both prices and wages decrease at the same time, lowwage citizens are actually not losing any wealth and the local economy will not be affected. This perspective is correct in that a person’s wealth is determined by the amount of money one has compared to how much one spends.142 However, Ellen Ruppel Shell points out that a look at our current economic situation shows that this view is missing the bigger picture. Discount retailers and some economists argue that discount businesses are helping to combat the recession by keeping prices in check with lowering incomes and unemployment. However, we have already seen that discounters are not an aftermath to low wages, but rather a contributor to them. Additionally, while the prices consumer goods are deflating, the cost of other, more important products and services are inflating. The logic behind an increase in some prices while others decrease is price elasticity, or the relationship between a change in price and a change in demand.143 If demand jumps significantly when a minimal adjustment is made to price, the product is elastic. Elastic goods are usually based on wants and can be replaced easily. On the contrary, inelastic goods are based on need and substitutions are minimal. Examples include medicine, gasoline, and childcare. In today’s economy, the price of inelastic goods are skyrocketing, while the price of elastic goods—the stuff on which discounters are made—are plummeting. “When unemployment and the risk of unemployment keeps wages low, deflation in the price of consumer goods may seem like a panacea. But this is an illusion, because cheap consumer goods do not constitute the bulk of our expenses.”144 People need to earn enough money to pay for the inelastic goods. The root of the problem is lowered wages and unemployment, for which low price and discount retailers are significantly responsible. Comparison of standards in the era following WWII to standards of today further supports that there has been a decrease in quality of life in America despite increasingly cheaper goods and that this is due largely to unfair wages. Between 1947 and 1973 “…real median family income doubled, as did the value of what the typical worker produced.”145 Because of labor unions and a progressive tax structure, wealth was dispersed across a range of classes.146

142

Ibid., 155.

143

Ibid., 149.

144

Ibid., 156.

145

Ibid., 48.

146

Ibid., 48.

147

Ibid., 49.

From the 1970s through 2008, [however,] the national product tripled… Yet at the same time most of us felt as though we were losing ground, not gaining it. Here is why: All that productivity did not benefit us. The median family income had been flat for years, and the youngest earners in particular were hurting. It is well known that even before the crash of 2008, Americans born in the 1990s were in danger of becoming the first generation in history to do less well than their parents….147

When income does not keep pace with the cost of living, it is the equivalent of people earning less. In addition to discount goods costing consumers more in long-term expenses due

Effects of the Discount Culture to replacing items more frequently and a placebo effect, low wages diminish the quality of life for the majority of people in both the local and global economies. Poor wages tarnish the spending power of both lower class citizens who work for lowpriced retailers, as well as similar positions in other industries. Because the lack of affordability of lower-class citizens contributes to discountersâ&#x20AC;&#x2122; success, the huge profits are going to the upper-most class and the divide between classes increases. Low price goods are no compensation to low wage earners when the cost of living is on the rise. Therefore, the only way the negative effects of the discount culture can be changed is from the bottom up. If consumers understand that by purchasing based on price, they are ultimately harming themselves, we can earn their support for knowledgeable decisions and quality goods.

Figure 33 These diagrams show the difference in effects caused by purchasing based on quality and long-term value vs. purchasing based on price and short-term savings.

Fewer resources are used, very little is thrown out or wasted

Consumers Demand Quality

Environmental Effects Consumers and suppliers enjoy improved quality of life

Consumer spends less over time, has more spending power

Consumers want a longer lasting product, and expect a fair trade from other merchants

Personal Effects

How the Bazaar Culture Works

Goods last longer and more repair options exist

Personal Effects

Suppliers offer different levels of quality and prices them accordingly

Consumer decisions are based on the inherent quality of a good

Quality goods are supported and encouraged

Economic Effects

Suppliers can retain fair business models

Raw materials become more expensive

Excess waste is produced and global resources are depleted

Environmental Effects

Consumer has less spending power

Consumer’s long-term spending increases

Workers’ wages Workers’ wages and benefits and benefits reduced areare reduced

Consumers Demand Lower Prices Consumers want more value (the same quality for a lower price)

Personal Effects

Retailers sacrifice quality, but mask lower quality with marketing

How the Discount Culture Works

Goods are replaced more frequently

Because information is obscured, consumers buy the cheapest good

Discount goods rise to prominence

Economic Effects

Manufacturers Manufacturers and retailers and retailers cutcut costs meet new costs to to meet new price point price point

METHODS

Research Parameters The historical and cultural background of the American consumer goods landscape reveals that at the origin of retail, consumer decisions were based on the inherent quality of a product, and benefits gained from longevity of use were appreciated. A shift in the retail culture towards retailers using marketing to offer low prices and mask cost cuts has influenced consumer decisions to be based on price and a lack of understanding of the implications of such choices. Evidence supports the hypothesis that people can make decisions based on inherent quality, but environmental influences result in decisions based on price to triumph. We planned to conduct a study with consumers to prove this hypothesis and to learn more about consumersâ&#x20AC;&#x2122; spending habits. Review of existing definitions of quality, as well as advice from field experts and consumers guided our research parameters.

Methods

Plan for Quality Identification Test and Interviews We planned to conduct a two-prong study with consumers: 1. The Quality Identification Test was designed to prove the above assertion. By having participants analyze a range of products out of context—removing them from the retail environment and covering labels, tags, and visible branding— we aimed to learn how the physical cues of the product influence interpretation of quality. Prior to meeting with users, we would rank three similar objects within the same product grouping (for instance, three polo shirts) in order of low quality, middle quality and high quality. We would then have the consumer inspect the items to see if he or she could place them in the correct order. By having participants walk us through their decision-making process as it happened, we could see which attributes especially spoke to the consumers, and if consumers did not order the products correctly, we could begin to make judgments as to why. Encouraging participants to make decisions based on product attributes would lie not in teaching consumers a new skill, but rather in helping them to recognize and use skills that have been repressed by our culture of consumption. Therefore, during the Quality Identification Test, drawing information from consumers would be a major focus so that individuals could become self-enlightened and come to the appropriate conclusions with knowledge and skills that they unknowingly already possessed. To best achieve this, we relied on a proven method that has existed for centuries – the Socratic Method. In the Socratic Method, subjects are “…urged to come to terms with their beliefs by expressing their conclusions about significant issues, rooting out the assumptions underlying their conclusions and gauging the reality of those assumptions.”148 By removing products from any retail or marketing context and asking subjects to explain their reasoning for making decisions of levels of quality, we would become “…[catalysts], promoting the actualization of the [consumers’] intellectual potential.”149 2. The second part of our study would consist of a formal interview. Like the Quality Identification Test, by interviewing consumers, we would encourage them to reflect on their shopping and spending habits. By talking with consumers, we could learn their priorities when shopping, so we could find the best opportunities to draw out decision-making skills and influence their decisions towards choosing quality.

148

149

Ethan M. Fishman, “Misconceptions about the Socratic Method,” College Teaching 33.4 (1985): 185-188, 186. James C. Overholser, “Socrates in the Classroom,” College Teaching 40.1 (1992): 14-19, 14.

Definitions of Quality Having a concrete definition of quality was important to serve as the basis for choosing the products for the Quality Identification Test and to communicate to participants exactly what we wanted them to look for in the experiment. We

Research Parameters

conducted a survey of existing definitions of quality used in consumer goods to guide our definition. Because at this point of our process we were concerned with how consumers can gain knowledge from product attributes, these definitions all related to differentiating levels of products. Some are focused on manufacturing and internal processes, while others deal specifically with consumer perceptions. Different definitions have been developed for different contexts, so it was important to obtain a complete picture of product quality before determining the most appropriate definition for our purposes. Quality as excellence “…means investment of the best skill and effort possible to produce the finest and most admirable result possible.”150 In today’s mass-production society, thousands, if not millions, of products can be assembled and shipped in a single day. To some, a product that comes fresh off the assembly line, which is produced by laborers, would not constitute a high level of skill and effort. However, according to most experts that apply the quality as excellence definition, the producer must strive to create the best of the best without making any sacrifices in doing so. The result must become an ideal product to which all others will aspire. Some major corporations, such as Mercedes-Benz and British Airways, that build this concept into their marketing campaigns would argue that they provide the promise of excellence and uncompromising standards. In fact, they state consumers who use their products and services “…will be the envy of others who have made less well-thought-out choices.”151 The problems that arise, then, are: Who determines if there are limits to how this ideal can be achieved? If there are parameters to how the ideal is achieved, what are they? Who determines what the ideal is? And how does one know when it is achieved? Most people agree that excellence must be “universally recognizable,” but all other criteria are subjective and change from one person to another. Therefore, this definition cannot be applied on a large scale.152 Quality as meeting consumer expectations is a more all-encompassing and complex definition of quality. This definition grew largely out of the service industry, and looks specifically at the interaction between consumers and the offering. Data gathering for this definition is often conducted through surveys, questionnaires and focus groups after a purchase is made. Some of the major points of interest in this model include how a product or service appeals to users’ wants, level of satisfaction, preferences, and desired product attributes. Like the Quality as Excellence definition, this definition is also highly subjective.153 The standards are entirely determined by consumers who, individually, do not always know what they want. More importantly, they also have become so trained to favor goods based on price that they may not know what they are missing in better quality products and may not consider the unfamiliar in their evaluations. Furthermore, consumers undoubtedly place different levels of significance on the different attributes being considered in the quality

150

Barbara W. Tuchman, “The Decline of Quality,” The New York Times 2 November 1980, 1.

151

Carol A Reeves and David A Bednar, “Defining Quality: Alternatives and Implications,” The Academy of Management Review July 1994: 419-445, 428.

152

Torben Hansen, “Quality in the Marketplace: A Theoretical and Empirical Investigation,” European Management Journal April 2001: 203-211, 206.

153

Reeves et al, 433.

Methods measurement. Because there is no good way to compensate for this variance, determining results from large groups is problematic. Pre-purchase attitudes can also heavily skew responses. While some consumers may have a high degree of knowledge about a specific product or service, others may not, and their expectations going into a purchase are significantly different. Finally, this model does not take into account the difference between short and long-term evaluations of usage. A consumerâ&#x20AC;&#x2122;s immediate response to a purchase may be drastically different from one given after several months. Because judgments in quality as meeting consumer Expectations are gauged against a consumerâ&#x20AC;&#x2122;s previous knowledge or experience with a product or company, this definition would not have been applicable in our test. A product that has low performance results could have technically been considered high quality by this definition if the consumer expected the product performance to be poor. This definition is, instead, most useful for setting and measuring an internal standard of a company.

154

Ibid., 431.

155

Ibid., 432.

If it is difficult to apply a subjective definition of quality on a large scale, how can quality be determined in a manner that is objective? One of the best ways is quality as conformance to specifications, or to routinely examine products and check for consistency, how well they function, and how close they compare to pre-established manufacturing specifications as they are being produced. As irregularities are noticed, adjustments are made to procedures to improve inconsistencies and meet the predetermined measures. This leads to improved accuracy and efficiency, not to mention better reliability of products. Early American munitions suppliers embraced this model, as did Henry Ford in his mission to create interchangeable parts for the Model T. By incorporating this standard into his process, Ford established an identity both as a manufacturing pioneer and a producer of reliable, quality products. Quality as defined by conformance to specifications can be very effective. Several systems of standards based on this definition exist and are widely used by companies and manufacturers, but therein is the problem; this definition is primarily for internal use so the detailed measures and results are usually hidden from the general public. Therefore, even when a product is made by highly objective production standards, the consumer perceives it subjectively.154 Additionally, the system in place and the requirements met may vary from one manufacturer to another, so even if results are public, they may not be universally comparable. The last issue with this model is that implementation becomes difficult in a rapidly changing marketplace. Products and services must be able to adapt to changing conditions, and holding firmly to a specific standard is detrimental to progress and long-term success.155 Because of a lack of transparency, this definition would also not have been usable for our test. Even if we could have gained access to a measurement system to conduct our own tests of the final product, this process would have been too complicated and time-consuming for the scope of this thesis.

Research Parameters

After reviewing existing definitions of quality, we found that none of the aforementioned definitions completely satisfied our needs. We decided to use the definition of inherent quality, which we previously outlined â&#x20AC;&#x201D; the durability and functionality of a product, which are a result of the materials and construction usedâ&#x20AC;&#x201D; to choose and evaluate our products for testing. Although testing the life spans of products would be outside our research parameters, we could gather some information about how well products have endured wear and tear by talking to knowledgeable sales associates. A more important determinant in choosing and ranking products would be combining our prior product knowledge with research on important attributes specific to the products we would choose. We would evaluate the physical quality of the products through the same process in which we wanted the consumers to engage.

Interviews with Experts As we began preparing for our study with users, we met with several experts in fields related to our argument to expand our knowledge base. Our reasons for meeting with each expert were specific, but we also gained some priceless insights into the problems of the discount culture, which were not mentioned in our literature review. Carrie Collins Figure 33 Interview with Carrie Collins in her production and retail space.

Methods Carrie Collins is the founder and owner of Fabric Horse (FH), a company founded in 2003, which produces and retails a variety of bags, utility belts, fancy fannies, spats, costumes and more. FH is local to Philadelphia and takes pride in its commitment to environmental and social concerns. All of the products are hand-made from repurposed, recycled, or environmentally friendly materials. With the bicycle culture as its target audience, FH also stands by the ability of its products to endure rough abrasion and weathering. Fabric Horse’s products are intended to last years and years, so if need be, FH also welcomes repairs. Our interest in meeting with Carrie was three-fold. We were interested to learn: • How she is able to compete in a culture consumed by low-price and how she integrates the pricing of well-made products into her business plan • How she communicates the high level of durability and attention to detail of her products to consumers • How she makes consumers understand that a high-quality product corresponds to a greater price Meeting with Carrie provided us with a more complete understanding of the history and focus of her company, as well as answers to our interests listed above. Carrie informed us that: • She gains a large portion of her customers through word-of-mouth. The bicycle culture is a grass roots culture, so members enjoy finding the hidden gems, like FH, that support the bicycling lifestyle and understand its flair. Bicyclists then share the finds with other people “in the know” and her products almost become a symbol of social status. • When people come into her store and they see bolts of fabric and her sewing machine (all products are also made in the retail location), they have an immediate connection with the product. If they find her products appealing, they are usually also interested to hear her story. • She has found that when people examine her products, they typically can understand the craftsmanship. The problem then, is getting people in the door and to examine the goods. • One problem with the trend towards the crafts is that everyone wants to be part of it, however, many times items are not made well. She said this is also true for people who try to knock off her products. They imitate the style of the goods, but they cannot compare in construction. Some customers are aware of this and have actually brought poorly made copies of FH products to show her. Our meeting with Carrie was supportive. Her statement that people can detect a high-level of quality when they spend time with her products directly supported our thesis statement and our plan for the Quality Identification Test. Additionally, many

Research Parameters

of her comments were particularly useful later on in our thesis when we began conceptualizing ideas to change consumer behavior. Michael R. Solomon, Ph.D.

Unless otherwise noted, all subsequent quotes in this section are from Interview with Michael R. Solomon, Ph.D. on January 29, 2010.

Michael R. Solomon, Ph.D. is a professor in the Department of Marketing and director of the Center for Consumer Research at Saint Joseph’s University in Philadelphia. He also is part owner of Mind/Share Inc., a firm concentrating in marketing research and consulting in consumer behavior. His particular interests include branding, advertising, retail strategy, how consumers experience products, symbolism of products, and virtual communities. He has also authored several books, provided his expertise to national publications such as Newsweek, The New York Times, and The Wall Street Journal, and appeared on television programs, such as The Today Show, Good Morning America, and CNBC. Figure 34 Dr. Solomon explaining to us how the recession has influenced consumer decisionmaking, in his office at St. Joe’s University.

In meeting with Dr. Solomon, we were hoping to: • Verify our main arguments and gain additional knowledge he had on the topics discussed in our Cultural and Historical Research

Methods

• Learn more about his speech topic “Getting Consumers to Consume in Tough Times: How can Marketers Motivate Reluctant Buyers?” Specifically, how has the recession affected buying behavior and is there support for encouraging consumption of well-made products? • Pull from his experience in conducting field research to help narrow the products we would employ in our Quality Identification Test (Prior to meeting with Dr. Solomon we had conducted light exploration into product categories of interest and we had listed some criteria which the products should meet.)

In addition to expanding on some of our main arguments, which have been referenced in the Historical and Cultural Research section of this document, Dr. Solomon supplied the following insights into consumer behavior during the recession and current trends: • The recession has made consumers more demanding and has split people into two groups: those who have become more enticed by price and those who have become more quality conscious. Both groups are ultimately looking for more value, but their ways of achieving it differ. • “We have to do a better job of changing the consumer’s perspective from a short-term one to a long-term one, and making them understand that over time, they’re actually going to save money by buying something of better quality.” One example cited by Dr. Solomon is solar panels. Over a 10-year period, they practically pay for themselves. However, the typical American family does not think about the long term payback of such goods. “We need to be more inventive about ways of showing people that they’re saving money up front…the key is to give people better short-term feedback on a recurring basis and they’ll be more willing to make that investment.” • Brands and retailers, too, get distracted by the short-term. “Six months ago, when things were really, really bad, everyone had the inclination to cut their prices and compete based on price…that’s a short-term solution to a long term problem…you condition…people that your brand is a cheap brand.” • One way that companies are learning to provide added value to consumers is in their corporate responsibility. “…Certainly displaying evidence of corporate social responsibility…You can make more money on your product than the generic, as long as you’re giving back.…Those are the kinds of things people are looking for now. And the priced-based products aren’t going to do that because they have such a low margin.” Dr. Solomon also provided us with the following advice for our Quality Identification Test: • “I would keep the task as simple as possible….If there are one or two physical differences you can manipulate in these products [, try to do that.] …otherwise you wouldn’t [sic.] know what accounts for the difference.” • We should choose products that do not carry a strong social significance,

Research Parameters

so decisions are based on the inherent characteristics of the materials and construction used, rather than what they represent. â&#x20AC;˘ Dr. Solomon also brought to our attention that within each product classification, consumer knowledge ranges from that of a novice to that of an expert.

Talking with Dr. Solomon was extremely helpful in moving forward with choosing products to test. Additionally, his comments about the recession and current patterns in consumer behavior proved to be especially helpful in determining an entry point to influence consumer behavior. The feedback we received from Dr. Solomon and the other experts propelled us into the early stages of analyzing existing systems in consumer goods and possibilities for causing change. Hardik Savalia and Susan Garrigle

Unless otherwise noted, all subsequent quotes in this section are from Interview with Hardik Savalia, on February 4, 2010.

Hardik Savalia and Susan Garrigle are employees of B Lab, a non-profit organization that measures and certifies other businesses based on 5 categories pertaining to corporate responsibility: Environment, Employees, Community, Consumers and Leadership. Since its beginning in 2006, over 250 companies have been certified as B Corporations, or Benefit Corporations. More than 5,000 organizations use the B Lab survey to gauge their performance. Because B Lab believes in transparency of their standards, its full questionnaire is open to the public. Its measures are also very comprehensive and are tailored to different business types. Consequently, categories are weighted according to level of significance in that business classification. To be eligible to become a B Corp., a company must score at least 80 out of a possible 200 points (most standard companies today score around 40). Certification lasts for two years, at which point the company is re-evaluated by the current standards. 40-55% of all B Corporations proudly mark their products with the certification. Figure 35 Meeting at B Labâ&#x20AC;&#x2122;s office in Berwyn. PA.

Methods An additional benefit of becoming a B Corp. is that once a company earns certification, B Lab helps them adopt a legal structure that expands corporate accountability to include stakeholders’ (as opposed to just shareholders’) interests in decision-making. A stakeholder is anyone or anything that is affected by a company’s endeavors. The river that runs through the back yard of a manufacturing plant can be a stakeholder. A shareholder, on the other hand, is a person or entity that has part ownership of a company. A clear example of how B Certification would have been useful in corporate decision-making is the sale of Ben & Jerry’s Ice Cream in 2000. The owners had hopes of selling the company to an organization that would carry on their company morals. However, due to pressure from shareholders, the company was sold to the highest bidder, Unilever, whose business strategy was not in line with that of the owners. In addition to certifying companies, B Lab is working with both local and the national governments to develop policies that support B Corporations. “What we are working towards is a B-Corp, which is a Benefit Corporation that sits somewhere between the forprofit world and the non-profit world, where they’re marrying the power that business can have but with the purpose of what a 501c3 accomplishes.” B Certified companies are already entitled to special tax breaks and other legal benefits in the Philadelphia area, and five other states will be introducing similar legislation within the year. B Lab’s work was relevant to our project because in the “…growing barrage of greenand cause-marketing campaigns…”, it works to separate “… ‘good companies’ from ‘good marketing’…” and communicate the difference to people.156 We wanted to learn from Hardik and Susan: • How the owners of B Lab developed the system, established integrity and spread awareness • Learn more about what quality could mean based on larger impact measures • Because B Lab would have undoubtedly conducted an in-depth search of existing systems before launching, we also wanted to inquire about the feasibility and the potential of some of our early concepts for a project outcome

156

B. Lab, About B. Corp, 2010, accessed 3 March 2010 <http://www.bcorporation.net/ about>.

Hardik and Susan explained the following about how B Lab’s measures were developed and how the company communicates its mission to other businesses and consumers: • B Lab has an independent standards council of 9 people with different areas of expertise that set, weight, and manage the standards. • The council initially developed the survey system by investigating The Global Reporting Initiative or GRI. The GRI is a reporting standard used worldwide by companies to benchmark and report on their performance based on economic, environmental, and social factors. The GRI is often referred to as the Triple Bottom Line. Unlike B Certification, GRI is often

Research Parameters

used for internal purposes. GRI served as the core for the development of B Lab’s survey, but the standards council also used their judgment to tailor these measures for certification purposes. • B Lab communicates its mission by maintaining a presence at a number of trade shows, through press, and by using its B Corp. community to help spread the word.

In regards to our project, Hardik and Susan suggested: • We should work with existing labeling and classification systems rather than creating a whole new one. • A tool to help consumers navigate the sea of information in the retail environment would be advantageous for consumers. Our meeting with Hardik and Susan was informative concerning the importance of business practices on large impact measures, such as the environment, the community, employees, and more. Prior to this point of the thesis, we focused mainly on the inherent quality of products and the larger negative effects that result when consumer decisions are based largely on low price. However, after visiting B Lab, we began discussing the possibility of bringing these large impact measures to the forefront of our project. Large impact measures would not be incorporated into our Quality Identification Test, because we still had to prove that environmental factors in the retail setting influence consumer judgments. However, there was a possibility that large impact measures would be included in our definition of what quality should mean in the future of retail; our proposal for a solution to help consumers make better informed decisions would also center around our ultimate definition of quality. Hardik and Susan provided us with an extensive list of other systems to explore that center around corporate responsibility, including Cradle to Cradle, Fair Trade Certification, and WorldofGood.com. David Genther

Unless otherwise noted, all subsequent quotes in this section are from Interview with Hardik Savalia, on February 16, 2010.

David Genther is a self-employed architect, carpenter, cabinet-maker, and plumber. He is owner of David M. Genther & Associates, which specializes in architectural illustrations for corporate clients. David’s broad range of experience has allowed him to gain an extensive understanding of what quality means across a range of disciplines, as well as thorough knowledge of construction tools. David operates on the quality as excellence definition and will decline clients who request anything less. Additionally, he has gutted his lofty two-story home in Philadelphia and 10 years later, is still in the process of renovating it. His commercial-grade workshop is connected to his home.

Methods

Figure 36 & 37 Images from our visit to David Genther’s house and workshop. The picture on the right of the plumbing in David’s house displays his attention to detail.

We wanted to meet David to find out: • What quality means to him as a contractor and what standards he sets for his work • If he could provide some examples of industry-leading companies that build a reputation on quality • How he is able to sustain his business with a commitment to high quality and how he informs clients of his level of construction and precision We found that once we began talking with David, he was also extremely astute at observing how people shop and how a person’s level of experience relates to his or her choices. He filled us in on both answers to the questions above, and to some particulars to consider when designing for consumers: • David reiterated advice we previously heard from Dr. Solomon, that in any product category, consumers range from novice to expert. David further broke consumers down into three levels: experts, knowledgeable, and novices. • Depending on the category to which a consumer belongs, the consumer will generally look for a product within a specific quality range. “There are instances where something that is cheaper is not necessarily lower quality, it’s just lower precision and accuracy…there are degrees of everything.” • Related to the previous point, David also discussed the purpose of an object. He explained that a casual consumer who is looking to buy a drill for minor home repairs does not have the demand for the best of the best product, or the $300 industrial-grade drill. • As the consumer develops more experience in a certain field, he or she will better understand the products used in that field. “As your skill improve, you will notice that your tools are no longer up to your skills.” At this point, a person’s demand from the product may increase. • While he explained that some products fall in the best quality range (the industrial-grade drill) and others are satisfactory for home repairs, there are also products that will not satisfy the most basic of purposes. “People will stand there looking at the expensive drill bit and the cheap drill bit and

Research Parameters

they’ll pick the cheap one over and over and over again…even though it won’t even do the job.” • David suggested that we also look into the sociological issue of fulfillment. If a consumer needs something, he or she will often purchase the cheapest product, even if it does not work properly. However, if a consumer wants something, he or she will purchase a product that meets a higher standard.

Meeting with David inspired us to look deeper into how levels of consumer expertise and purpose for a product may relate to purchase decisions. First, we realized there is a direct correlation between a consumer’s level of expertise with a product or the field in which the item is used and the level of quality he or she will accept. We compared the three separate categories of consumers David explained to us (the novice, the knowledgeable consumer, and the expert) with the three levels of products he highlighted at different points of our discussion (the best, satisfies a purpose, and does not satisfy a purpose). Ideally no consumers would choose lowest level product. However, a novice may not know or care about what to look for in an object. A novice may buy the best of the best to ensure his need is met, or he may decided to buy the cheapest item since the demand from the product is not extreme. It is less likely that a knowledgeable consumer will pick the lowest tier product, but he may buy the highest level product with hopes of improving his skills in the field. The third category, the expert, is very well acquainted with a type of product, and will use it frequently. This type of consumer will always look for the best of the best, and will typically spend whatever is necessary to obtain it. The chart below illustrates the relationship between expertise and product quality. EXPERT

BEST QUALITY

KNOWLEDGEABLE

SATISFIES NEEDS

NOVICE

DOES NOT SATISFY NEEDS We ultimately want to eliminate these decisions.

Although this chart illustrates what could happen, price is such a driving factor when it comes to decision-making that many times we overvalue it. People buy products in the low end of their spectrum and end up disappointed. We then explored how a person’s level of need or want and anticipated use of a product should relate to the quality level of the product chosen. Need and want

Figure 38 This diagram represents the relationship between knowledge of the consumer in the product area and the level of quality typically desired.

Methods can be seen as a sliding scale, where at one end, a purchase is needed more than wanted, at the other end, the purchase is wanted more than needed, and in the middle, the purchase is both needed and wanted. The intensity of the level of need or want is reflected in the anticipated level of use of a product. This relationship is shown in the X, Y diagram below. The colored arcs represent thresholds for how need / want and use should relate to the level of quality desired. Ideally, the products a person should spend the most money on and strive to find the best quality in are the products which are both needed and wanted, and have a high level of use. These products are most likely to be used by experts. One instance in which a person should attain a “satisfies a purpose” product is when the product is either highly needed or wanted (not both) but the consumer will use it often. Another example of a purchase decision which falls within the “satisfies a purpose” field is a product which is both needed and wanted, but the use is moderate. These products are most likely to be used by a knowledgeable consumer. The purchases which fall within the grey or blue areas are those which the consumer does not really need or want and which he or she will not really use. These products are most often purchased by novices and are the products we wish to redirect the consumer from supporting.

Need More Figure 39 We developed the follow diagram to illustrate the relationship between Need / Want (which is placed on the Y axis), anticipated use (which is placed on the X axis), and level of quality that should be purchased.

Low Anticipated Use

We want to eliminate these purchases

High Anticipated Use

Want More Like the level of expertise compared to quality diagram, this diagram represents an ideal. David Genther informed us that people tend to put forth more effort in deciding upon and acquiring wants than into needs. Therefore, when a product has a high level of

Research Parameters

need and use, and falls within the purple field, consumers often instead choose a product that falls into the â&#x20AC;&#x153;does not satisfy a purposeâ&#x20AC;? category. In analyzing expertise, levels of intent with a purchase, and their correlations to levels of quality, we also examined the point at which the consumer determines the quality of a product. We questioned whether level of quality resided in the store the consumer shops at or the product chosen once the consumer is in the store. When discussing this concept, our focus was on inherent quality. For example, if I decide to go to Wal-Mart, does this automatically mean everything I buy will fall apart within a few weeks or will not live up to my need? While we knew this was true of some products, we were also aware that Wal-Mart sells reputable brands, such as Dyson vacuum cleaners and Black and Decker tool sets. However, Wal-Mart most likely does not sell industrial-strength vacuum cleaners or tools. If a contractor, like David Genther shops at Wal-Mart, he may not be able to find the products to meet his needs. Ultimately, we realized that quality resides both at the level of the store and at the level of the product. Retail models are generally based on both a price range and a quality range. We developed the following chart to show this:

Low Price

Med. Price

High Price

Specialty Stores Specialty Stores

High Quality

Med. Quality

Department Stores

Department Stores Discount Retailers

Low Quality

Specialty Stores Department Stores Discount Retailers

Discount Retailers

Many low quality goods are sold at low prices in places like Wal-Mart, while many high quality goods are sold at higher prices at specialty stores. Department stores often carry a combination of both, along with many medium quality products.

Figure 40 This matrix shows how quality relates to where a good is bought (which is usually determined by a given price range) and the options of products available within that type of retailer.

Methods However, there may also be some overlap. The highest quality product at Wal-Mart may be comparable, or even superior, to the lowest quality of the same product at a department store. This proved to be important for our interviews and when we determined our entry point to adjust consumer behavior, because it showed us that at times, we needed to change the consumerâ&#x20AC;&#x2122;s decision where to shop and other times, the focus would be on what to pick.

Figure 41 Different product categories within the same store may have different levels of quality, and when averaged out, they determine the overall level of quality of the store.

Wal-Mart Overall

Further, the quality range of one product category within a store may vary from the quality range of another product category in the same store. This explains why a store like Wal-Mart carries an extensive selection of the necessities, such cleaning products, but has a narrower quality selection of specialty items, such as clothing. The quality ranges of individual categories combined determine the overall quality range of the store.

Shampoo

Womenâ&#x20AC;&#x2122;s Clothing

Sports Equipment

+ ...

Luggage

We began to wonder if these diagrams could be useful to communicate these differences to the consumer and if they could help to emphasize a higher standard. These charts above were helpful in clarifying the relationship between quality and the consumerâ&#x20AC;&#x2122;s knowledge, quality and intent of a purchase and the point at which the level of quality is chosen or eliminated from a decision. They informed some of our interview questions and were our first efforts at understanding an expanded view of quality, which would eventually lead to our final definition of quality.

Observations in a Retail Setting On several occasions we visited stores with the purpose of observing people as they went about the decision-making process in the retail environment and to take note of the influences of retail tactics on customer behaviors. We mostly visited discount retailers, such as K-Mart and Target. Our observations confirmed our previous assertion, that people have the ability to make decisions based on product attributes, but many retail environments either promote other information or prevent this. At Target, immediately upon entering the store, the customer is confronted with

Research Parameters

a display filled with goods all costing $1. Goods range from folders to bath mats, all of which are low quality but are intended to create impulse purchasing. We overheard a conversation of two girls who scurried towards the bins and gathered between five and ten items each. After one girl picked up a felt St. Patty’s Day hat, she commented, “Should I get this? Oh, it’s only a dollar! Someone will wear it.” In this case, the price enticed her to consume more goods just because she felt the deal was in her favor. In another instance, we saw a woman purchasing a comforter. She slightly unzipped the packaging to feel the softness of the fabric. Even though it appeared as if she instinctively wanted to examine the product attributes, the packaging literally prevented her from acting further on these instincts because she did not want to ruin the packaging. “The Nobel Prize winner Herbert Simon refers to this as satisficing. In this view, we often put out just as much effort as is necessary to make a satisfactory choice rather than killing ourselves to make the selection that is absolutely best.”157 We also talked to a few customers to begin to understand their shopping habits; the answers we received assured us that people could learn to tailor their buying habits to support quality products. One woman, Jenesia, and her mother, Donna, were just browsing on this particular day. However, they shared with us that they recently bought a kitchen table at K-Mart that performed below a satisfactory level— it did not even last a year. When we asked Jenesia if this will change her future purchasing, she commented that she would look for something sturdier rather than looking just at the price. Jenesia stated, “People have to understand that cheap stuff isn’t better, you get what you pay for.” She also told us that, “People check the circulars for sales, but half the time, you [sic] leave with things you didn’t want and you’ve spent $100.” 42

Figure 42 - 44 Visiting stores and talking to customers supported our findings of retail strategies that are used, such as showing savings earned, and consumer behaviors that are exhibited, such as buying unwanted purchases due to the trill of a deal.

157

Solomon, Conquering Consumerspace: Marketing Strategies for a Branded World, 233.

Methods This information was useful in forming questions for users in two ways: â&#x20AC;˘ We wanted to know more about why people choose to shop at discount retailers. It seemed that some people shop at discounters because of convenience and then have a difficult time avoiding unwanted bargains, and other people actually enjoy the thrill of the hunt and searching out such deals. We wanted to know if one type of behavior is more prevalent. â&#x20AC;˘ People can learn to make more informed decisions, especially when the outcome is far below expectations or the item is significant. We were curious to determine if we could create a similar learning process by cueing consumers to look past marketing and at specific product attributes. An interesting observation we made is that some better retailers are beginning to acknowledge the lack of trustworthy information in the marketplace and are attempting to use display techniques to communicate quality. The first notice of this was at Joseph A. Bank. The store uses white, gold and platinum thread in the shoulders of their suits to show the corresponding material of the hidden piping in the shoulder seams (white being the baseline, gold being the middle, and platinum being the best). This tactic, although simple, allows the sales representatives to easily distinguish products and show consumers some of the details that contribute to higher costs. Home Depot uses a similar, Good-Better-Best ranking system to show consumers varying qualities of paintbrushes. These three rankings are based on brand, and bullet points are given to inform the consumer how that brand is known to perform. For instance, the Purdy paintbrushes are ranked best, and are labeled as being durable for multiple uses, providing the smoothest finish, and being easiest to clean. Finding that some retailers want to communicate quality was important, because it showed that there is a need for a system that helps consumers distinguish quality amongst products. Although the retailer displays are a start, it would be more beneficial for both the consumer and retailer if this system existed on a more universal scale. Additionally, since retailers have vested interests, there is the possibility the consumer will approach these systems with distrust.

Research Parameters

Figure 45 Home Depot rates its paintbrushes good-better-best by brand to indicate different levels of quality to the consumer.

Figure 46 Jos. A Bank sews removable thread in the shoulder of its suits to communicate the type of piping used inside the seam, as well as the level of quality of the suit.

Consumer Study Design Working with users is essential to the design process. They can provide the best insight into their preferences and the reasoning behind their decisions. For this reason, we conducted a study with users to prove our argument and guide the outcome of our project. As Dr. Michael Solomon states, â&#x20AC;&#x153;â&#x20AC;Śwhy not enlist the help of people who will use the products you make? Involve them in the design process; get them to work as codesigners to be sure you are producing what they want to buy. When producers and consumers sign off on the process early on, everybody wins.â&#x20AC;?158 After interviewing experts and visiting some stores, we enacted our plan to engage consumers through our Quality Identification Test and interviews.

Methods

Choosing and Reaching Our Demographic Continued from page 63

To prepare for our study with users, we needed to determine the demographic we wanted to reach. Because big-box discounters account for such a large portion of low-priced goods sold and contribute greatly to the negative effects of the discount culture, we felt it was appropriate for our demographic to represent the target demographic of discount retailers, such as Wal-Mart, Target and K-Mart. The median age of consumers is approximately 43 across these three stores159 and the median yearly household income ranges from $40,000 for Wal-Mart to $60,000 for Target.160 However, we were also curious to speak with people who may shop at discount retailers due to budget concerns and out of convenience, possibly due to having children in the home. Studies report that shoppers with children in the home fall in a slightly lower age bracket than the median.161 Also, since our study would be conducted in the Philadelphia area, we researched the median annual household income for Philadelphia, and found it to be $50,088 in 2009.162 We asked for participants to be women aged 25-40 with at least one child in the home and a household income of $40,000 - $50,000 to ensure our group represented both the average discount store shopper and the typical Philadelphia family. We chose to target only women, because studies show women do the majority of shopping for the household.

158

Michael R. Solomon, Conquering Consumerspace: Marketing Strategies for a Branded World, 114.

159

Scarborough Research, Demographics: Discount Stores, Demographic Study (Richmond: Richmond Times-Dispatch, 2005).

160

Steve Painter, Target set to open store in Wal-Mart’s backyard: Retailer welcomed despite state of economy, 1 March 2009, accessed 16 March 2010 <http:// www.allbusiness.com/retail/retailersgeneral-merchandise-stores-discountclub/11948613-1.html>.

161

Scarborough Research.

162

Economic Development Intelligence System, “Philadelphia County Profile,” Economic Study, 2010.

We explored the possibility of hiring a participant recruitment company, but found their prices to be too high. We decided to recruit our own participants using Craigslist at a much more affordable price. In addition to asking that respondents meet the above criteria, we asked that they frequent Wal-Mart, Target or K-Mart. Even though we initially had some doubts about using Craigslist—our ad would not be responded to, respondents ultimately would not show up for the study, participants would lie about meeting the criteria—the number of responses we received pleasantly surprised us. There was no way to confirm respondents were not lying, but to narrow down respondents and to check their reliability, we asked that respondents fill out a brief questionnaire.

1. Name: 2. Age: 3. Household Income: 4. Number of people in household: 5. Age and sex of other household members: 6. Which of these large discount retailer stores do you shop at the most: Wal-mart, Target, or K-Mart?

Consumer Study Design

7. How many times per week do you shop at each of the following: a. Wal-Mart b. K-Mart c. Target 8. When you go to a store, are you usually looking for something specific or do you browse the store without a primary goal?

Figure 47 The questionnaire we sent to our Craigslist respondents to gather some background knowledge of their shopping habits so we could choose our final participants.

9. Which of the following best describes you: a. I shop at the above retailers for almost everything b. I shop at the above retailers when I have a specific purchase in mind. Please list the last purchase you sought out: c. I shop at the above retailers mainly for groceries 10. If costs were not important, where would you prefer to shop?

We invited 8 people to participate in our study and received a 50% attendance rate. Each of the four attendees were given both the Quality Identification Test and a formal interview. We had additional respondents to contact, but after speaking to the four women, we felt this was unnecessary. After completing the study, the four participants from Craigslist received a $30 cash reward. They were asked to sign a receipt as proof of participation and payment. Figure 48 An example of the receipt we had each Craigslist participant sign at the end of the study.

While limiting our responses to the discount target audience was important for interviews, after performing the Quality Identification Test and interviews with the four Craigslist participants, we expanded the Quality Identification Test to incorporate a broader

Methods audience. The Quality Identification Test was to show that all people have an innate ability to examine a product’s physical properties, and they can make an informed decision of the product’s quality. Therefore, we ultimately ran 20 participants through the Quality Identification Test, ranging in age of 21-75, with backgrounds in law, film and video, science, design, engineering, culinary studies, and much more. Expanding our demographics for the Quality Identification Test strengthened our argument and provided a more comprehensive analysis.

The Quality Identification Test Evaluating Products for the Quality Identification Test The second important step in preparing for our study was to select products that consumers would inspect and rate based on inherent quality. We began this process by brainstorming a list of criteria the products should meet. Included in this list was Dr. Solomon’s advice that products should not have a high level of social symbolism.

Figure 49 Brainstorming criteria our products should meet and product options for our Quality Identification Test

Figure 50 Organizing products according to specific traits, so we could choose products to test.

We then went through several retailer sites to create a comprehensive list of product classifications ranging from jewelry to automotive accessories. As we listed each category, we debated which product(s) in that category best met the list of criteria. We also established that testing products across a range of materials and specific uses would make our study comprehensive. We color-coded the products by the following traits: Hard Materials, Fabric, Manual Functionality, Electronic Functionality, Uses Wheels, Wearable, Baby-Related, Contains Wood.

CRITERIA • Timeless • Low turn-over rate • Not reliant on new technology • Wide appeal • Accessible to people in a low income bracket • Range of product prices • Not too attached to meaning • Classic, rather than stylish • Functional • Takes wear and tear • Smaller in size • Not chemically-based or consumable • Longer decision-making process involved

POSSIBLE PRODUCTS • Blender • Stroller • Paintbrush • Bar stool • Bag • Umbrella • Watch • Luggage • Baby bottle • Bathroom rug • Travel mug • Baseball bat • Desk chair • Polo shirt • Kitchen utensil • Gardening tool

Consumer Study Design Through discussion, we narrowed this list to a paintbrush, a menâ&#x20AC;&#x2122;s polo shirt, and an umbrella. It was important when shopping for the three levels of quality within each item grouping that products chosen had minimal differences in functionality, size, and color. Therefore, the materials used and construction would serve as the main differentiators. Once we went shopping, we added UGG-style boots and spoons to our list of products to test, because we were able to find each of these products in three levels of quality with minimal stylistic differences. Increasing the number and variety of products would also make our results more robust. Although we initially felt including a baby-related item was important because we asked that our participants have at least one child at home, and mothers put extra attention into the products they purchase for their children, we later decided there was too much potential for these products to be connected to a strong social symbolism.

The products we ultimately tested were:

Low Quality

Faded Glory Wal-Mart $12.00

Figure 51 A magnification of the inside material shows a clear difference between the high and low quality boots used in the study.

Middle Quality

Sketchers Famous Footwear $79.99

High Quality

UGG South Moon Under $180.00

Important product attributes: outside material, stitching, edging/trim, sole material, sole thickness, sole bottoms/traction, inside material, inner sole Reasons for our evaluation: The Faded Glory Boots were clearly inferior quality to the other two; both the inside and outside fabric felt flat, as opposed to plush in the other two. The padding of the boot had a stiff, cardboard like feel to it. The outer sole was made from thin foam, which felt as if it would flatten out after a few wears. The sole also did not have an arch to support the wearer’s foot. The Sketchers and UGGs were more comparable. The outer sole on Sketcher boots appeared to be most durable. It was made from thick rubber, with large indentations in the bottom for traction. In comparison, the outer sole on the UGG boots was thick foam. It had grooves for better traction than the Faded Glory outer soles, but not as deep as the Sketcher soles. Both the soles on the Sketchers boots and the UGG boots were flexible. The stitching and trim on the Sketchers and UGGs appeared to be comparable, with the UGG edging having more of a luster to it. The material of the upper part of the boot was the biggest contrasting factor. Both the outside and the inside of the Sketchers were faux leather and fur, respectively. The UGGs, on the other hand, were composed of real sheepskin leather and fur. The “fur” in the Sketchers also stopped halfway down the inside the boot, while the fur in the UGGs even covered the inner sole. The UGGs felt softest of the three pairs of boots both inside and out.

Low Quality

Faded Glory Wal-Mart $8.00

Middle Quality

High Quality

Gap Gap $29.50

Jos. A Bank Jos. A Bank $69.50

Important product attributes: fabric thickness, fabric softness, stitching, edging/ trim, cut of front and back of shirt, button flap, buttons, collar stiffness/shape Reasons for our evaluation: Material thickness and softness was a major factor in differentiating quality between the three polos. The Jos. A. Bank shirt felt as if it was double the thickness of the other two shirts. The Faded Glory shirt felt the thinnest, and when picked up, one could see through the fabric. Further, the Faded Glory shirt had many loose threads and uneven stitching. The hem on the Jos. A. Bank shirt was double-threaded and the edging on the sleeves was attached by two parallel seams. The edging on the sleeves of the other two shirts was attached with only one row of stitching. The edging inside the neck of the Faded Glory and Gap Shirts were different shades (cream and charcoal, respectively) than the shirt fabric. However, it is important to note that this was a stylistic difference, and not necessarily a difference in quality. Lastly, the collars on the Gap shirt and the Jos. A Bank shirt felt stiffer and retained their shapes better than the collar on the Faded Glory shirt. The corners of the collar on the Faded Glory shirt curled.

Figure 52 Close examination of the stitching reveals double threading and a heightened attention to detail in the higher quality shirt, compared to loose, single threading in the lower quality shirt.

Low Quality

No Brand Dollar Tree $0.33

Figure 53 The rough, sharp edge of the low quality spoon is easy to differentiate from the smooth, rounded edge of the high quality product.

Middle Quality

High Quality

Mainstays Wal-Mart $0.50

Oneida Bed, Bath, & Beyond $8.00

Important product attributes: weight, material, coated vs. not, finish, edge, curve/ depth of the bowl of the spoon, curve of handle, thickness of the handle Reasons for our evaluation: The spoons are the most simplistic product we tested. Weight and thickness were two important differentiators. The Dollar Tree Spoon was very thin and light. It felt as if it would bend if one tried to scoop frozen ice cream. The Mainstays spoon was slightly better, but still unsubstantial. The Oneida spoon felt the heftiest and sturdiest. It also fit best in oneâ&#x20AC;&#x2122;s hand, because unlike the other two, it had some thickness when viewed from the side. Additionally, the Mainstays and Oneida spoons had slight curves in the handles, while the Dollar Tree handle was completely straight. The bowl of the Dollar Tree spoon was the shallowest, with the other two being incrementally deeper. Finally, the edges on the Dollar Tree spoon were sharp. The Mainstays edges were smoother and the Oneida edges were the smoothest.

Low Quality

Bristle Blend Lowe’s $1.22

Middle Quality

High Quality

Wooster 10th Street Hardware $3.99

Wooster Lowe’s $9.58

Important product attributes: weight, feel of bristles, straightness of bristles, taper of bristles, handle material, hole detail, handle curve/shape, handle thickness, ferrule material (or the metal band), ferrule fold, brads/nails, sturdiness Reasons for our evaluation: Paintbrushes are composed of three main parts: the handle, the bristles, and the ferrule. While the Bristle Blend brush and the Wooster brush from Lowe’s both had wooden handles and the Wooster brush from 10th Street Hardware had a plastic handle, the two Wooster brushes were superior to the Bristle Blend brush in many ways. The handle on the Bristle Blend brush was wide, but very thin. The wood was unfinished. The handle on the plastic Wooster brush was narrower, but slightly thicker than the Bristle Blend brush. Because it was made from plastic, it felt more comfortable in the hand than the unfinished wood. The handle on the wooden Wooster felt the most substantial, and the curve fit comfortably in one’s hand. The wood was also smooth and finished. The bristles served as the biggest differentiator. The bristles on the Bristle Blend Brush were not only shorter than those on the other two brushes, but they were also more rigid and did not lie as straight. The bristles on both Wooster brushes felt similar, but the bristles on the wooden brush were slightly softer. Additionally, the ferrules showed differences in quality. The plastic brush used indentations in the metal to hold the ferrule in place, while the same joints on both wooden handled brushes consisted of miniature nails. The joint is important in determining the overall sturdiness of the brushes. The Wooster from Lowe’s brush did not jiggle when one shook the brush. The Wooster from 10th Street Hardware jiggled slightly and the Bristle Blend brush jiggled the most.

Figure 54 The holes in the high and low quality paintbrushes have stark differences - the low quality brush has small splinters and rough edges, while the other is smooth and finished.

Low Quality

Wal-Mart Brand Wal-Mart $5.00

Figure 55 The tips of the umbrellas have a noticeably different finish - the Wal-Mart umbrella has rough metal points and loose threads

Middle Quality

High Quality

Nicole Miller BBB $16.99

Wind Pro EMS $20.00

Important product attributes: weight, canopy material, stitching, closure strap, velcro strength and size, ferrule (or the uppermost tip of the umbrella), handle material, handle shape, tube, wrist strap material and length, ease of open/close, runner (the piece that moves up and down the main tube and causes the canopy to expand or contract), stretchers (the metal pieces that attach the runner to the canopy), springs, wind flaps, rotation Reasons for our evaluation: The umbrellas were the most complex product choice we tested, with the most parts. The significant differentiators were the feel of the canopy material, the weight of the umbrella, the feel of the handle, and the attention to detail in the springs and stretchers. Both the fabric and the weight of the Wal-Mart umbrella felt flimsy. The canopies of the Wal-Mart and Nicole Miller also felt as if they had plastic coating, while the canopy of the Wind Pro umbrella felt like fabric. Although one would think fabric would be inferior to plastic in the rain, the Wind Pro canopy also felt as if it was a thick, high-performance material. The Wind Pro canopy had flaps for the wind to pass through, so the umbrella would not turn inside out when caught by a draft. The handle on the Wal-Mart umbrella lacked attention to detail that the other two had. It was made of hard plastic, while the plastic of the Nicole Miller handle had a rubberized coating, and the Wind Pro handle was composed of foam. Further, the Nicole Miller handle had indentations for oneâ&#x20AC;&#x2122;s fingers, and the Wind Pro umbrella was rounded to fit in the palm of the hand. Unlike

the other two, the handle of the Wal-Mart umbrella was open around the tube and we saw that the tube of the umbrella was glued into the handle. It also had exposed, silver screws on the outside of the handle. The hand cord on the Wind-Pro umbrella was the thickest, longest, most tightly knit. The cord on the Nicole Miller umbrella was shorter, but flat, wide, and also tightly knit; the cord on the Wal-Mart umbrella was loosely knit and was beginning to pull. The runner and stretchers inside the Wal-Mart umbrella were the most visible and clunky. They were attached to the canopy by loose threads. The runners and stretchers inside the other two umbrellas were more compact. Two tests to show the sturdiness of the umbrellas were the ease with which each umbrella opened and closed, and how much each umbrella shook once it was opened and twirled. All three umbrellas opened by pressing a button on the handle. The Wind-Pro umbrella was the only one that also closed by pressing the button. When the button on the Wal-Mart umbrella was pressed, it telescoped out, had a slight hesitation, and then popped open. The Nicole Miller umbrella opened in one swift motion, as did the Wind Pro umbrella, but with a little more force. The Wal-Mart umbrella shook the most when twirled, then the Nicole Miller umbrella, and the Wind Pro umbrella shook the least. Prior to conducting our study, we removed all of the products from their packaging, and covered any labels or branding that were not removable with painterâ&#x20AC;&#x2122;s tape. Decisions, therefore, could only be based on the product materials and construction. The products were arranged on a long table according to product grouping. The order of products within each grouping was mixed up.

Methods Quality Analysis Cards To aid the participants in their selection process, and to provide ourselves with a quick and easy way to document each participant’s choices, we developed a set of quality analysis cards. There were three types of cards within the set. The first type were quality identification cards, or simply three cards labeled High, Middle, and Low Quality. These cards were also color-coded, with blue being the Lowest Quality, purple being the Middle Quality, and pink being the Highest Quality. One set of these three cards was placed on the table in front of each product grouping. The function of these cards was to give the user a chance to put his or her own label on a product and to ensure that both we and the participant had a collective understanding of his or her decisions. The second type of card was used at the conclusion of the Test. We had a card for each product that showed, through the use of an icon, which grouping it belong to, as well as the brand name, the store at which it was bought, and the price paid. These cards were also color coded Blue for Lowest Quality, Purple for Medium Quality and Pink for Highest Quality, based on our evaluations listed above. Once the participant completed the experiment, we placed the products in each grouping in order from lowest to highest quality. We kept the participant’s quality identification label with the product to which it was assigned. We then placed the product label with our evaluation below the product, and above the participant’s label. This allowed the participant to quickly tell which products he or she labeled correctly.

Figure 56 Our Quality Analysis Cards made it easy to see the participants choices, show the participant the correct answers and to document the results. Step 1

The final type of card simply listed the participant’s name and age. After the participant left the study, we placed this name card above each product grouping and photographed it, so we had a visual record of each person’s choices. Step 2

Step 3

Step 4

Consumer Study Design Performing the Quality Identification Test When we conducted the Quality Identification Test, we broke it down into two phases. During the first phase, the participant was asked to examine each of the products for its physical attributes and to label the three products within each grouping as lowest, middle, or highest quality. We also asked that the participant to explain to us his or her reasons for each judgment. Our responses to the participant’s judgments were neutral, consisting of “Okay” or “Can you please explain that a little more.” We called the second phase of the Quality Identification Test the Slight Induction Phase. Participants were asked to examine all of the products a second time, and this time, we read a list of important product attributes to examine. The important product attributes that we identified are listed under each product beginning on page 87. We did not inform the participant how to make a quality judgment from each attribute mentioned. For example, we asked that each participant examine the inner sole of the boots. We did not mention that if the sole was plush and fuzzy, that this meant the product was better quality than if the sole was not lined. We told each participant that he or she was able to keep his or her previous rankings if all of the attributes mentioned were previously inspected, or the products could be re-examined and the rankings could be changed if some of these attributes were previously overlooked. We performed the slight induction phase for all participants and all product groupings, even if the participant got the order correct in the first phase (the No Induction Phase). This way, the participant did not make assumptions about whether prior judgments were correct or incorrect based on the products we asked him or her to re-examine. The purpose of the Slight Induction Phase of the experiment was to see if judgments improved as more time was spent with each product and awareness of the object was heightened. Each time we ran a participant through the test, one of us served as the narrator, and the other served as the documentarian. Through the Quality identification Test, the narrator used an interview form with the product order and slight induction attributes listed on it to guide the participant through the test. The documentarian took note of any important quotes that were said by the participant. The documentarian was in charge of taking photographs and noting the participant’s judgments. Prior to conducting the experiment, we developed a chart to document these responses. This chart also afforded us the ability to contain participants’ information in one place, reminded us to take photograph of each participant, and enabled us to quickly tally our results at the end of the study. The chart is shown below. Each row contains information about the participant and his or her responses. The columns represent each product grouping. Each product grouping is split into the No Induction and Slight Induction phases. Each of these phases further contains three sub-columns for the low, middle, and high quality

Methods products. The low, middle, and high quality columns are color-coded and the brand initials of the product that fits that level of quality are listed at the top of each. We documented each participant’s judgments on this chart as they were made. When a product was labeled “Low Quality”, we listed an L under that product in the corresponding participant’s row. We placed an M for “Middle Quality” and an H for “High Quality”. When an L was not in a blue column, an M was not in a purple column, and an H was not in a pink column, we could easily see that the judgment was incorrect.

Figure 57 The chart we developed to track and tally results of our Quality Identification Test.

Name, Age, Sex, Occupation

Boots No Induction FG

Slight Induction FG S U

Shirts

Spoons

Slight Induction JA FG G JA

No Induction

DT MS

Slight Induction DT MS O

Paint Brushes No Induction L

Slight Induction L W W

Umbrellas

Slight Induction WM NM WP WM NM WP No Induction

Photo

Interviews with Consumers In addition to preparing for the Quality Identification Test, we devised a list of interview questions for the four Craigslist participants. Each interview consisted of five sections generated to gain insight into a different component of consumer behavior. Figure 58a Our Interview questionnaire was split into 5 sections. The first section focuses on learning about why each consumer chooses to shop at discount retailers and how she defines quality.

Background Information from Questionnaire

Background Name: Information from Questionnaire Age: Name:

Household Income: Times Shopped Per Week At:

Household Income: Wal-Mart:

Age / Sex of Household Members:

Age: Age K-Mart:

/ Sex of Household Target: Members:

HighestPer LevelWeek of Education Times Shopped At: Completed & Occupation:

Wal-Mart: General Questions

K-Mart:

Target:

Highest Level of Education Completed & Occupation:

1. Are your shopping trips usually determined by need or pleasure?

General Questions

2. In your opinion, what traits does a quality product have?

1. Are your shopping trips usually determined by need or pleasure?

3. Do you tend to associate price levels with the longevity and reliability of a product?

2. In your4.opinion, traits does quality product have? Why do what you enjoy most aboutashopping at _____________________? (discount retailer of choice)

3. Do you tend to associate price levels with the longevity and reliability of a product? 4. Why do you enjoy most about shopping at _____________________? (discount retailer of choice)

Consumer Study Design We planned section one to inform us if the consumer enjoys shopping at discounters or if she chooses to shop at them due to budget concerns. By understanding how each consumer defines quality, we could also learn how the consumer chooses a product once she is in the discount retailer, as well as whether the participant feels the goods she is receiving from the discounter constitute quality. Figure 58b The second section focuses on short vs. long-term thinking.

Long-Term vs. Short-Term 1. Do you typically think about the lifespan of a product you are thinking about buying? 2. When making a purchase, do you ever consider the possibility of repairing a product after it begins to break down? 3. Name the last purchase that you made where a product performed below your standards or did not last as long as you had expected. 4. Did this affect they way you considered future purchases?

Section two was aimed at learning how far in advance each participant thinks about making a purchase and how long she feels a product should last. This portion alone would be instrumental in identifying the consumers that are more impulsive or calculated, and how durability of the product as an important attribute relates to these behaviors.

Determining Shopping Behaviors Rate how the following statements apply to you:

strongly disagree

strongly agree

1. My budget dictates how much I can buy

2. I read the circulars to find good deals before I shop

3. Price is my main consideration when I shop

4. I buy items that I hadnâ&#x20AC;&#x2122;t intended to purchase, because they are on sale or I have a coupon for them

5a. I buy items which I donâ&#x20AC;&#x2122;t end up using b. What are some examples of these items?

6. I am disappointed in the quality of items I buy

7. When I buy something at a discount, my family and to each For the third section, we read a list ofI tell statements interviewee 1 2 3 4 and 5 ask her so they can get the same deal to rate eachfriends statement on a scale of one to five, with one being strongly disagree, 8. I feel pleased when I tell others about how much money I saved on a deal

9. To stay within my budget, I have to sacrifice quality

10. The items I buy from Target, Wal-Mart and Kmart are

Figure 58c A sampling of section 3, which aims to determine if certain shopper personalities existed, and if so, what sort of behaviors and philosophies identify each one.

Methods three being neutral, and five being strongly agree. These questions varied, but focused primarily on how each consumer thought and behaved at the point of purchase, so we could compare and identify if there were common shopper personalities.

Figure 58d Section 4 intends to learn about the consumerâ&#x20AC;&#x2122;s knowledge of how purchase decisions affect the economy, long-term personal spending, and quality of life.

Knowledge and Concern for the Effects of Discounting Rate how the following statements apply to you:

strongly disagree

strongly agree

17. Shopping at discounters improves my quality of life by allowing me to have access to a wide range of goods at affordable prices

18. I take better care of products I spend more money on

19. By spending money at a particular retailer, I am supporting their business model and encouraging their practices

20. When people buy based on price, standards in the marketplace are lowered

21. Cheap goods can have harmful effect on the economy Explain

22. I take better care of products I spend more money on

23. I think about the effects of my purchases on working 2 as3 the 4third,5 but focused The fourth sectionand of the theeconomy interview followed the same 1format conditions instead on Explain: the subjectâ&#x20AC;&#x2122;s knowledge of how her behavior plays into the larger picture. These questions tended to be more thought provoking, so many of the questions contained a follow-up portion asking the subject to explain the reasoning for her answer.

Figure 58e The fifth section looks at previous purchases that the subject recently made.

Recent Purchase - Based on Quality Walk us through a recent purchase you have made, where quality was important to you: Recent Purchase - Based on Quality Brand / model__________________ Purchased at__________________ Price_________ Walk us through a recent purchase you have made, where quality was important to you: Did you think about it before you went to the store? Brand / model__________________ Purchased at__________________ Price_________ think about beforesimilar you went to the store? DidDid youyou compare it withit other products? Diddid you compare withspecific other similar products? Why you chooseitthis product? Why didsacrifices you choose thisso specific product? Were any made you could get this product? (savings, put off buying other goods) Were aany sacrifices made so you Ifcould product? (savings,toput off buying Is there warranty on this product? yes, get did this it affect your decision purchase it? other goods) there warranty thisstandards? product? If yes, did it affect your decision to purchase it? SoIsfar, is it aliving up toon your So far, is it living up to your standards?

Consumer Study Design

In the final section, we asked each individual to walk us through two recent purchases she made; one in which quality was a determining factor, and one in which it was not. Subjects would essentially tell the story of their purchase, from the first moment they thought about it up until they shared it with us. This would allow us to see each consumerâ&#x20AC;&#x2122;s reasoning in action, whether or not it served her purpose, and if she felt any level of pride or remorse for having purchased it after time had passed. Each interview was conducted after the Quality Identification Test. We felt by performing the Quality Identification Test first, participants would get acclimated to us and our studio, and would be more willing to provide sincere feedback to our questions. During the interview, the narrator continued to ask questions and the documentarian took meeting notes and photographs. At the conclusion of each interview, we then thanked the participant, had her sign the proof of participation and paid her for her assistance.

Meet our Craigslist Study Participants Irene Meyers, 30

Martha Chapman, 40

Candi Goldate, 32

Michelle Anderson, 35

Figure 59 Us performing the Quality Identification Test and Interviews with the participants we recruited from Craigslist.

RESULTS

Findings from Our Consumer Study At the conclusion of our Quality Identification Test, we tallied the number of participants out of 20 who were able to correctly determine each level of quality within the five product groupings. We separated the number of correct responses in the No Induction Phase from the Slight Induction Phase. We also reviewed how many interviewees, out of 4, provided similar responses to the questions we asked in our interviews.

103

Results

Quality Identification Test Results Across all product groupings, participants were able to determine the correct order of quality for the three products in each category 63% of the time with no induction. When given slight induction, there was an 8% improvement in determining the correct order of quality across all product groupings. In total, 71% of the time, participants were able to correctly order quality across five product groupings.

Interview Results Further, from our interviews, we found that for three out of the four participants (Irene Meyers, Michelle Anderson, and Candi Goldate), shopping trips are determined by need. All three of these consumers mentioned that shopping trips may turn into pleasure once they are in the store, but needs are their first priority. Martha Chapman, however, stated that her shopping trips are usually determined by pleasure. She looks forward to her weekly shopping trip with her sister, and commented, “The sad part is that I always find something to buy.” In relation to this question, we also found that Irene, Michelle, and Candi have clear definitions of what quality means to them. They each used words, such as stability, durability, weather resistant, sturdiness, and comfort to define quality. When we asked Martha to describe the traits that a quality product has to her, she replied “To be honest, I’m not a quality buyer. I go more for price and if it will make do.” Each consumer was also asked if she considers the lifespan of a product when buying, if she ever repairs items she buys, and if poor purchase decisions have influenced future purchases. Candi and Irene both said they often consider the lifespan of a product, while Michelle said she only considers lifespan some of the time. Both Irene and Michelle also informed us that the lifespan of a product is insignificant when they are purchasing items for their children, because kids grow out of clothes, toys, and other products quickly. Irene and Michelle said they often will repair electronic items, while Candi commented that she will repair shoes. Candi, Irene and Michelle all admitted that they have learned to buy better quality products after having a poor experience with a low-priced purchase. Although each of these women’s bad experiences were with different products—ranging from a printer to a microwave—when replacing the item, they all reported that they spent more time investigating what product attributes are important and what each product attribute means. In contrast to Candi, Michelle, and Irene, Martha reported that she rarely considers the lifespan of a product and she will not even repair an item that she considers high-end. However, she will return an item that breaks, if it has a good warranty. When we asked Martha to name the last purchase she made where a product performed below her expectations and if this purchase influenced her future

Figure 53 This diagram shows the results of our Quality Identification Test. Each square represents one of the 20 participants tested.

OUT OF 20 PEOPLE TESTED

Faded Glory Wal-Mart - $12.00 Sketchers Famous F. - $79.99 Faded Glory UGG Wal-Mart - $12.00 S.Moon Under - $180 Sketchers Famous F. - $79.99 Correct Sequence UGG S.Moon Under - $180 Faded Glory Wal-Mart - $8.00 Correct Sequence

correct response from No Induction Phase

correct response from Slight Induction Phase

Gap Gap - $29.50 Faded Glory Joseph Wal-MartA.- Banks $8.00 Jos. A. B. - $69.50 Gap Gap - $29.50 Correct Sequence Joseph A. Banks Jos. A. B. - $69.50 No Brand Dollar - $0.33 CorrectTree Sequence Mainstays Wal-Mart - $.50 No Brand Oneida Dollar Tree - $0.33 Bed, B. & B. - $8.00 Mainstays Wal-Mart - $.50 Correct Sequence Oneida Bed, B. & B. - $8.00 Bristle Blend Lowes $1.22 Correct- Sequence Wooster 10th St. Hdw. - $3.99 Bristle Blend Purdy Lowes - $1.22 Home Depot - $10.27 Wooster 10th St. Sequence Hdw. - $3.99 Correct Purdy Home Depot - $10.27 Wal-Mart Brand Wal-Mart - $5.00 Correct Sequence Nicole Miller BBB - $16.99 Wal-Mart Brand Wind Pro - $5.00 Wal-Mart EMS - $20.00 Nicole Miller BBB - $16.99 Correct Sequence Wind Pro EMS - $20.00 Correct Sequence

MOST OF THE TIME, CONSUMERS CAN DETERMINE QUALITY

105

Results purchases, she shared that she would buy the same brand and same model over and over again. The difference when she replaces a poor-performing product would be that she would be more mentally prepared for it to break down. When asked why she would not try to improve the quality of her purchases, she further explained “They don’t make them [goods] like they used to…” and that she feels all products have the same problems. A few of our questions returned unanimous results. Four out of four interviewees explained their reasoning for shopping at discounters was out of convenience. Candi stated, “Now that they [Target] have a grocery store, its kind of like a one-stop shop.” Michelle mentioned, “You can get a lot in one place [Target], so I don’t have to go to 25 stores.” Irene said that Target and Wal-Mart are “quick” and that she can get everything she needs from them. Martha explained that she can count on Wal-Mart to have a range of goods at the best possible prices. Further, one of the statements we asked participants to rate on a scale of one to five, with one meaning the participant strongly disagrees and five meaning the participant strongly agrees with the statement, was “The items I buy from Target, Wal-Mart and K-Mart are high quality.” All participants rated this statement at a 3.5 or 4, giving it an overall score of 3.875. The statement, “When I buy something at a discount, I tell my friends and family so they can get the same deal” received an overall score of 5. When asked about large-scale effects of the discount culture, our participants rated the statement, “Shopping at discounters improves my quality of life by allowing me to have access to a wide range of goods at affordable prices” a 4.5. Similarly, they rated the statement “ Cheap goods have a harmful effect on the economy” a 1.5. When asked to explain their reasoning for their answers to this statement, two out of the four participants commented that by shopping at discounters, people are putting money back into the economy, and therefore, are helping the recession.

Findings from Our Consumer Study

106

CONCLUSIONS

Consumers and Quality Our study with users reinforced our assertion that people have the innate abilities to make judgments of quality based on product attributes but contextual cues in the retail landscape stifle these abilities. We also learned that discount shoppers can be divided into two groups based on what they are looking to get out of the shopping experience: enjoyment in the hunt of a bargain or a wide selection of goods from which they can select the option they deem to be the best quality. Our findings allowed us to clarify our target market, identify some opportunities to help consumers make decisions based on quality once products are put back into context, and begin brainstorming prototype ideas.

111

Conclusions

Analysis of User Study With a 71% success rate of consumers being able to rank the level of inherent quality of a product when it is removed from the contexts of the retail store and marketing techniques, we proved our assertion that people have an innate ability to detect quality based on the physical properties of a product. Because our research indicated that quality is not a top determinant when the majority of purchase decisions are made in the modern retail landscape, our test shows that the evolution of the consumer goods market has persuaded people away from using these skills. Determining that the retail environment stifles peoples’ ability to consider quality when choosing a product, we could begin to brainstorm ideas to elicit decisions based on quality when products are returned to their normal contexts. A return to decisions of quality is vital to breaking the discount cycle, keeping consumers from continually increasing their long-term spending, and improving the overall spending power of the local economy. Our Quality Identification Test not only provided us with authentic information to support our argument, but it showed the power of having subjects understand their own perceptions through self-reflection. Socrates acknowledged this fact, and believed that, “..self discovery is more influential than direct instruction, producing learning at a deeper level.”163 Several participants commented that they wanted to pull the tape off the product labels to see the brands underneath. When self-reflection was created through the interview questions, we also had participants openly admit that thinking about quality and discussing their personal assumptions out loud was thought provoking and had the potential to change habits. Irene Meyers stated “You guys are going to make me go on a budget.”

163

Overholser, 14.

Based on the answers we received to our interview questions, we were able to segment consumers into three primary types of consumers: Die-Hard Discounters, the Middle Ground, and the Quality Consumers. Both Die-hard Discounters and the Middle Ground shop at discount retailers for convenience. However, Die-hard Discounters are looking to find thrill in a range of bargains, while consumers in the middle ground are looking to sort out the better items from the junk. Die-Hard Discounters may be aware of their spending habits, but they consistently embrace low prices and have little interest in changing their ways. As seen in Martha’s answers, consumers in this segment are so excited by the thrill of the bargain that longevity does not seem to matter. The Middle Ground consists of consumers who are more selective in their product choices once they are in the store. Irene, Michelle, and Candi would all be part of this segment. Consumers in the Middle Ground are more interested in durability and brand names than Die-hard Discounters. The offerings at small, local retailers generally match the attributes Middle Ground consumers are looking for, but these consumers often opt to shop at discounters

Consumers and Quality because it is easy. The final group, the Quality Consumers, are socially, economically, and quality conscious. They will spend a little extra to obtain higher quality goods and support the local economy. While we did not conduct full interviews with Quality Consumers, we felt that it was important to acknowledge that a small portion of the population defy the current trend towards low price.

Figure 60 Our interviews allowed us to distinguish three groups of consumers and to choose consumers in the Middle Ground as our target audience.

Die-Hard Discounters • Enjoy thrill of the hunt • Embrace lower prices, but are not interested in changing The Middle Ground • Dig through junk to find good deals • Would like to shop at small,local retailers, but choose convenience of discounters 1

Ellen Ruppel Shell, Cheap: The High Cost of Discount Culture (New York: The Penguin Press, 2009), 5.

Kenneth R. Berger, A Brief History of Packaging, Research Study, Institute of Food and Agricultural Science (Gainesville: University of Florida, 2002), 3-4.

Berger, 3-4.

Quality Consumers • Socially, economically, and quality conscious, will spend a little bit extra to obtain higher quality goods and support the local economy Our findings showed us that people in the Middle Ground should serve as our target audience for several reasons. First, the majority of those interviewed fell in this category, so the largest percentage of consumers could be reached. Second, many of these consumers know some of the advantages of more quality conscious habits, and may be willing to accept minor changes to their lifestyle if it improved their personal well being. While we found that their knowledge of the economic effects of discounts was off, we felt they would be open to learn about how the health of the local economy could be improved by supporting quality. Finally, because this group of consumers falls between the two extremes, it has the most potential to affect a wider consumer base as positive effects filter out into towards the outliers.

112

Discount

A System for Supporting Quality After wrapping up our study with consumers, we had many ideas for our prototype. All were focused on assisting consumers to improve their purchase decisions by incorporating quality into their evaluation process. As we organized the information we acquired about users and existing systems, we recognized an opportunity to connect measures of product durability and functionality with information about the business practices of the retailer and manufacturer when a purchase is made. We determined a digital interface that capitalizes on the benefits of social networking and barcode scanning technology would be the best avenue to disperse our purchase evaluation system to users and to integrate long-term considerations into the consumer decisionmaking process.

115

Conclusions

Brainstorming Ideas As we worked though our ideas, it became clear that there were three important components to each prototype idea: the point of entry for the prototype, what quality means to the prototype, and the vehicle for the prototype. Early on in our brainstorming, we discussed possibilities for the vehicleâ&#x20AC;&#x201D; Should we create a handbook for consumers? Should we develop a new point-of-purchase display? Should we propose a web interface? However, as we attempted to flesh out each idea we came up with, the importance of the point of entry and defining what quality would mean in our system became evident. The point of entry is the point during the consumer decision-making process that we would intend for the consumer to use the concept. Would the consumer use this before a product was purchased, at the time of purchase, or to evaluate a purchase after it was made? The definition of quality would be if the system we created concentrated solely on inherent quality or if it considered other factors, such as corporate responsibility. Two ideas we had early on from meetings with experts included a guide for consumers and a personal barometer. The overwhelming amount of information that the consumer encounters daily was evident in our background research, as was the need for consumers to distinguish between meaningful information and marketing. The guide received support from both Hardik Savalia and Dr. Solomon. We heard several times that many labeling systems exist, which attempt to provide consumers with unbiased information, but consumers need a way to navigate the sea of information. The guide could be manual or digital and would intend to influence consumer behavior before the purchase decision was made, either at home or in the store. We discussed the possibility of incorporating three sections to the guide. The first section would include diagrams of common products by category and an explanation of important product attributes for the shopper to consider. It could also provide guidelines for each attribute and what certain characteristics might mean. For example, it could inform the consumer that typically double-thread stitching is stronger than single-thread. If the guide took this form, it would closely resemble our quality testing experiment by encouraging consumers to examine the product for its inherent qualities. The second section could outline common retail strategies that are used to encourage impulse decisions, so the consumer would begin to notice these tactics and become less susceptible to them. An example of this would be â&#x20AC;&#x153;If a MSRP price is listed by the retailer through a point-of-purchase display, rather than on the tag produced by the manufacturer, survey other retailers for the same product and prices before making a decision.â&#x20AC;? The third section could include common labeling and certification symbols with a brief description of what each one means. Although the guide related nicely to our thesis argument, we felt that by itself, the possibility of it to create change was not as significant as some of our other ideas.

A System for Supporting Quality We also had an idea of a personal barometer, which would reflect information about a product, a purchase, or the consumer’s spending back to him or her based on factors other than price. The idea came directly from our research into how consumers’ mind-sets have changed from long-term to short-term since the emergence of the discount culture, as well as our discussions with Dr. Solomon and David Genther. While Dr. Solomon said the key to getting people to purchase better quality items is to provide them with short-term feedback as to why improved quality is better, David’s interview led us to develop the Need, Want Use Diagram (from page 75). Our early ideas about the barometer focused mostly on having the consumer evaluate his or her need, want, and use of the purchase being made. When developing the Need, Want, Use Diagram, we determined part of the problem of the discount culture is that when people buy based on price, they under-evaluate their need, want, and use. We began to wonder if we could have consumers answer a list of questions, which would filter into the diagram we developed, and we could help them understand the level of quality that matches their purposes. Since many consumers are on a budget and cannot afford to purchase every item at the highest quality, this system would help them prioritize purchases. When suggesting better quality products, the barometer could highlight the long-term gains of that option. Although people currently often buy items in the blue area, if the user’s need, want, and use ranked low, we could suggest that the consumer either saves the money, or rents or borrows the item. Figure 60 One early idea was a personal barometer using our Need / Want and Use diagram.

Need More

Low Anticipated Use

We recommend renting or borrowing

Want More

High Anticipated Use

116

117

Conclusions If we found that many purchase decisions within the same product category fell within the blue area, we could then also use these results to suggest that manufacturers and retailers serve untapped markets with rental services or repairs. The barometer could also serve as a reflection of that consumer’s specific purchases after they were made. While we liked that this tool would encourage self-reflection in the consumer, there were some major drawbacks to this idea. First, there would need to be a way to identify what products fall into the pink, purple, and blue categories so consumers could match their purposes to the products. Second, consumers may learn to alter their answers to the questions asked to get more desirable results. Finally, there is little incentive for users to want to fill out an extensive questionnaire for each purchase decision, making the system ineffective. Coincidentally, as we developed these early ideas, we came across the article, Cellphones Let Shoppers Point, Click and Purchase, from the New York Times. It discusses the many ways in which retailers are increasingly using cell phone programs to connect with their consumers. One way this is happening is through Red Laser software. When uploaded to a mobile device, this technology allows the consumer to take a picture of any barcode using a cell phone camera, which then “… [turns] people’s mobile phones into information displays and ordering devices.”164 Consumers are scanning barcodes in a store window, if a store is closed, to purchase the outfit on the mannequin or while in a store, to compare in-store prices to online retailers. Other mobile applications that are gaining support from retailers allow consumers to search and locate items within a store, and to track loyalty programs. Another system, Presence by I.B.M, provides ability for promotions to be sent via cell phone channels. “Shoppers who sign up can be detected as soon as they set foot in a store. That enables Presence to offer real-time mobile coupons. And tracking shoppers’ spending habits and browsing time in various departments can help the system figure out who might be moved to suddenly buy a discounted item.”165

164

Stephanie Rosenbloom, “Cellphones Let Shoppers Point, Click, and Purchase,” The New York Times accessed 27 February 2010: A1.

165

Ibid., A1.

This article led us to an idea we called Cellular Conscience. Cellular Conscience would be an application a consumer downloads to his or her phone, which detects when a retailer is sending promotions to the phone. By providing commentary on top of the retail promotions, it would encourage the consumer to consider the opposing side of the argument when impulse thinking is being encouraged. The Cellular Conscience would be used while the consumer is deciding on purchase. We especially liked the idea of turning one’s cell phone into an information display in the retail environment— and using that display to provide thought-provoking and meaningful information— but we felt the content of Cellular Conscience was not right. We realized we could attempt to influence consumers away from the temptation of discounters and promotions, as seen with the Cellular Conscience, but this was unlikely given the power of such large chains. Instead, we could also create appeal in supporting better quality products and local businesses. We decided we would reconsider the use of

A System for Supporting Quality

118

mobile phone technology to achieve the second of these two options.

T-shirts on sale in the clearance

Figure 61 One early idea we had to change consumer decision-making was the Cellular Conscience. If upon entering a store, a retailer notified the consumer that T-shirts are on clearance in the Menâ&#x20AC;&#x2122;s section, a Cellular Conscience note would pop up asking the user if he or she would get his or her moneyâ&#x20AC;&#x2122;s worth out of the shirt.

Do you need one? Will you wear it more than once?

section!

Other ideas that we imagined ranged from a GPS of oneâ&#x20AC;&#x2122;s shopping list at privately owned and local stores to a map that shows a person where in the community his or her money is going. The problem was that these ideas were really varied. To begin to organize our ideas for a prototype, we plotted them along a consumption timeline. This exercise allowed us to see that we should limit our scope to a particular portion of the timeline. Because the majority of our ideas fell in the sections of the timeline that correspond to the time before, during, and after a purchase, we chose to focus on these three segments. While none of the ideas we had at this point were quite right, we began to look at the possibilities of combining aspects from each one. We liked, that all together, these ideas addressed the decision-making process from the point a need is determined to the point at which a product is used. We also felt that by using a web interface and/or barcode scanning technology on mobile phones, each of these segments could be addressed. Point of Need Recognition

Evaluation of Needs Measuring user wants, level of use, and need Rental possibilities

Point of Use

PrePurchase RFID and inventory: what is in stock? GPS: where can I find local retailers?

Point of Purchase Product videos: how was it made? Digital examinations: zoom in on photos

Guide: at what should users be looking?

PostPurchase Map where your money is going Personal barometer of large impacts

Can smart purchases be rewarded somehow?

Repair

Recommend repair based on need Inform retailers of demand for repair

Figure 62 By plotting early ideas we had along a consumption timeline, we realized it was important to determine a point of entry along the timeline. The pink areas are the phases of consumption on which we decided to focus.

Discard

119

Conclusions At this point of our process, our definition of quality was still being determined. Our thesis is rooted in quality as the durability and physical attributes of a product, and some of our ideas were centered around this definition. However, we found most of our ideas, such as the guide, to be insufficient to change behavior. We realized that while the inherent quality of the product should be the most important factor to the consumer, larger impact considerations of a companyâ&#x20AC;&#x2122;s policies are also important. In the bazaar culture, business practices were much more simplified than today, so the correlation between good quality and good business was more direct. While many negative large impact effects have resulted from continually lowering prices, poor business practices are deeply ingrained in our consumption systems. We began to realize that support for inherent quality alone may not be as effective in countering the negative results of the discount culture as bringing awareness of large impact measures to the forefront of consumer decision-making. By showing consumers when a purchase decision is made, they are not only supporting a product, but also the business practices of the retailer and manufacturer, good corporate responsibility changes from being a consequence of good inherent quality to being a factor in determining quality. Some of our other ideas, such as the map of where oneâ&#x20AC;&#x2122;s spending goes, were centered on an expanded definition of quality that incorporated large impact measures of a businessâ&#x20AC;&#x2122; practices in the definition of quality. None of our ideas seemed to bring congruency between inherent quality and business practices, but we kept insisting that both were significant and should not be considered independently.

Review of Existing Systems In an attempt to resolve the incongruency between evaluation of inherent quality and business practices our prototype ideas addressed, and to take our ideas which used a digital interface or the Red Laser technology to the next level, we further researched existing systems in both of these areas. Although we had some prior knowledge of existing systems, creating an in-depth overview of what exists would also prevent us from overlapping with something that has already been done.

166

167

Consumers Union of U.S., Inc., How We Test: Consumer Reports, 2004, accessed 25 March 2010 <http://www. consumerreports.org/ cro/aboutus/test/index.htm>. Consumers Union of U.S., Inc., Overview: Consumer Reports, 2004, accessed 25 March 2010 <http://www consumerreports.org/cro/customer service/overview/index.htm>.

In revisiting existing systems that attempt to create support for quality through both product characteristics and by communicating meaningful information about business practices, we first researched each one. We then condensed the information we gathered to a brief description of what each system does: ConsumerReports provides ratings and recommendations on the performance of consumer products based on extensive research, lab testing, and a subscriber questionnaire.166 It is published by Consumers Union and does not accept samples or advertising from third-party contributors. It reports on the functionality, durability and frequency-of-repair of a product.167

A System for Supporting Quality

120

Good-Better-Best Retail Displays, such as the ones we saw at Jos. A Bank and Home Depot, rank products within a certain product classification based on their reported performance and product attributes. They help the consumer understand which product, and which price point, best suits his or her purposes. The Sustainable Business Network of Greater Philadelphia is a community of “…local triple-bottom-line businesses…who are committed to building a more socially, environmentally, and financially sustainable local economy.”168 Buy Local Philly is a campaign supported by the SBN of Philadelphia to encourage citizens to shop at independent, local retailers and support the local economy.169 The SBN of Philadelphia is a founding member of BALLE (Business Alliance for Local Living Economies). BALLE is a network of independent, local businesses in the U.S. and Canada, which are dedicated to triple-bottom-line principles and improving their own local economies.170 Triple Bottom Line (TBL) is a measurement system, which adds social and environmental accountability to a company’s economic evaluation. It is also referred to as ecological footprint reporting, ESG reporting, CSR reporting, and GRI reporting. It is most often used internally by a company to assess its impact on these factors.171 Several systems exist, which use Triple Bottom Line principles to measure and communicate a high level of corporate responsibility for external purposes. One of these systems is the B Certification, which was built from TBL standards. S-Bar is another emerging business rating system, which is attempting to create a global understanding of what it means to be a sustainable business. Through a comprehensive survey, it will rank companies as good-better-best based on five key business sustainability indicators: Environment; Community; Marketplace; Workplace; and Governance and Management.172 Cradle to Cradle Certification is a methodology and set of guidelines, which reward companies focused on product design while preserving our ecosystems. Rather than incorporating social and economic standards, Cradle-to-Cradle is focused on certifying businesses based on environmental impact. Achieving this distinction helps businesses convey their mission to customers.173 WorldofGood.com by eBay is a marketplace where anywhere from 10% to 100% of a purchase is donated to an upstanding nonprofit organization. Goodprint is a product guide, which allows sellers to communicate their core values to consumers. A seller selects from a pre-determined list of statements that are categorized by: People Positive, Eco Positive, Animal Friendly, and Supports a Cause.174

168

SBN, About Us: Sustainable Business Network of Greater Philadelphia, 9 February 2010, accessed 24 March 2010 <http://www.sbnphiladelphia.org/aboutus >.

169

Buy Local Philly, About the Campaign, accessed 19 March 2010 <http://www. buylocalphilly.com>.

170

BALLE, The Business Alliance of Local Business Economies, accessed 25 March 2010 <http://www.livingeconomies.org/>.

171

The Dictionary of Sustainable Business Management, Triple Bottom Line, accessed 20 March 2010 <http://www. sustainabilitydictionary.com/t/triple_ bottom_line.php>.

172

Rory Bakke, Sustainable Business Achievement Ratings, Project Summary (San Leandro, 2006).

173

MBDC, LLC., MBDC Cradle to Cradle Certification, 2007, accessed 19 March 2010 <http://www.mbdc.com/c2c/>.

174

World of Good, About Us: WorldofGood. com, 2009, accessed 20 March 2010 <http://worldofgood.ebay.com/ns/AboutUs. html>.

121

Conclusions 1% for the Planet is a community of businesses that have vowed to donate 1% of their sales to environmental efforts taking place around the globe.175 TQM is a management methodology intended to empower all employees of a business to participate and collaborate in bettering the organization’s procedures, products, services and workplace environment. Quality is related to customer satisfaction.176 Six Sigma is a management approach, which relies on statistical measurements to pinpoint and correct any inconsistencies in a company’s operations. Although it was originally developed by Motorola (1981) to refine its manufacturing processes, it has been extended for use by other business types. Six Sigma aims to achieve reliability of a business’ practices and quality as meeting customer expectations.177 DMAIC (define, measure, analyze, improve, control) and DMADV (define, measure, analyze, design, verify) are two possible procedures to follow under Six Sigma, depending on the severity of the “defect”.178 Zero Defects is a process management approach, which provides no room for mistakes when taking a product or service to market. By working from the top down, it focuses on understanding the financial losses when a product or service is not developed “right the first time”. Quality is a measure of fulfilling a customer’s needs through conformance to rules.179 Researching the above systems allowed us to then classify them as: certification/ labeling/rating systems, retail networks, marketplaces, and management approaches. We also discovered that each system concentrates on one or two of the three major components of the supply chain: the product, the retailer, and production. Further, within each of these categories, there are several different ways quality is defined.

175

1% for the Planet, About Us, 2009, accessed 20 March 2010 <http://www. onepercentfortheplanet.org/en/aboutus/>.

176

American Society for Quality, Total Quality Management, accessed 21 March 2010 <http://www.asq.org/learn-about-quality/ total-quality-management/overview/ overview.html >.

177

iSixSigma, New to Lean Six Sigma, accessed 19 March 2010 <http://www. isixsigma.com/index.php?option=com_con tent&view=article&id=201&Itemid=27>.

178

iSixSigma, DMAIC vs DMADV, accessed 19 March 2010 <http://www.isixsigma. com/index.php?option=com_k2&view=ite m&id=1252:&Itemid=49>.

179

Lyndsay Swinton, Philip Crosby - “Zero Defects” and “Right First Time”, accessed 19 March 2010 <http://www.mftrou.com /philip-crosby.html>.

Figure 63 By organizing existing systems in the following manner, we were able to see that there is an opportunity for a system which connects product performance to the retailer and production business practices which are involved in getting that product to the consumer.

PRODUCT

quality as functionality and durability

RETAILER

quality as improving the local economy

PRODUCTION

quality as consistency and meeting customers’ expectations

Consumer Reports

SBN

TQM

Good-Better-Best Retail Displays

BALLE

Six Sigma • DMAIC • DMADV

Zero Defects quality as impacting the national economy and the global environment

Triple Bottom Line

(also Ecological Footprint Reporting, ESG Reporting, CSR Reporting, and GRI Reporting)

B Certification S-BAR Cradle to Cradle WorldofGood.com 1% for the Planet Certification / Labeling / Ratings

Marketplace

Network

Management Approach

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Conclusions Although a few existing systems can be applied to more than one part of the supply chain, they evaluate each segment separately. We found many of them to be highly successful in determining some aspect of quality, yet none encompassed an overall evaluation of how a product gets to the consumer and how that same product performs for the consumer. The more we compared the various systems, the more we began to see the potential to incorporate definitions from all three components of the supply chain into a larger framework of quality. Our idea of the Quality of Purchase framework became our answer to finding congruency between varied definitions of quality.

Figure 64 The Quality of Purchase framework connects the performance of a product to the business practices of the retailer where the product is bought and to the business practices of the manufacturer of the object.

Quality of

PURCHASE Quality of

Quality of

The functionality and durability of the product, which result from the materials used and the construction processes.

The business practices which are supported when a purchase is made at a given retailer. The impacts of such practices can include social, economic, and environmental considerations.

The business practices which are supported as part of the production process when a purchase is made. These can also include social, economic, and environmental impacts.

PERFORMANCE

TRANSACTION

ORIGIN

When a purchase is made, a consumer is showing support for three constituents: the product, the retailer and the manufacturer. While prior to this point of the thesis, we focused mostly on a definition of quality, which is inherent to the product, we discovered that other large impact variables must also be considered to address the problems of the discount culture holistically. Our definition of quality from this point on will include assessment of the product (quality of performance), the retailer (quality of transaction), and the manufacturer (quality of origin). As we researched and organized systems related to quality, we also researched digital communication systems. Digital communication, which has exploded in recent years, proved to be a strong direction for our project. We investigated various web interfaces and mobile applications, which aligned with some of the possible project outcomes we had been discussing. Product review sites, such as Consumer Reports and Amazon.com showed us how product information is currently being communicated to consumers. Having experience using these sites as consumers, we knew they also proved to be effective in impacting choices. Social networking sites, such as Facebook and Twitter, are successful in their ability to bring people together online. However, we also came across Blippy, a spin-off of Twitter that uses the power of social networking to share personal purchases in

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a public realm. A member securely links his or her credit card to an account, and purchases made on that card are automatically posted online. Figure 65 With the Blippy interface, a user links a credit card to an account. When any purchase is made on that card, it automatically feeds into friendsâ&#x20AC;&#x2122; home pages to notify them what was bought and where.

Although this site is somewhat controversial, it was of particular interest to us. We felt that consumer spending could be expanded upon to reflect more meaningful information other than just what someone purchased and how much was spent at a particular store. By combining the Blippy system with the measures of some of the labeling and certification systems we had researched, we felt a Blippy-like interface had potential to show the consumer the quality of goods being purchased, as well as the long-term effects of better quality purchases in the here and now. These effects could include personal spending or economic impacts, and they could cause positive change in consumer behavior. Using a digital interface as the vehicle for our Quality of Purchase evaluation would give us access to a large population of people that other mediums would not allow. Our venture into the realm of mobile applications yielded promising results. We were already aware of the ability to use Red Laser software to provide the consumer with feedback about a purchase in the retail environment. We now wondered if we expanded upon Blippyâ&#x20AC;&#x2122;s system to provide the consumer with meaningful purchase feedback, if we could also provide similar feedback before a decision is made. By combining measures from existing quality rating and communication systems with Blippyâ&#x20AC;&#x2122;s social networking interface, and with Red Laser barcode scanning

125

Conclusions

Figure 66 Some of the social networks and mobile device applications we investigated:

Twitter

Facebook

Blippy

Red Laser Foursquare Amazon

technology, we could develop a system that would address the three stages of the consumption timeline we hoped to target: from the determination of a need through the use of a product. Additionally, we discovered Foursquare, which encourages users to explore their local communities through a point system and rewards. The GPS system in a mobile device tells the system where the user goes throughout the day. Users earn points by frequenting participating organizations. There is also the potential to become “the mayor” of a local establishment by being the person to visit it most often. Becoming the mayor may give the user access to special coupons or complimentary goods at these locals. We felt the premise of encouraging local exploration from the bottom up and using a point system could be valuable in promoting local retailers. As we continued to explore these different technologies and services, we revisited our original thesis argument to make sure our project did not veer too far away from our original trajectory. We needed to address how cost relates to the overall lifespan of a product and consider the economic effects of a certain purchase.

A Proposal for a Database and Digital Interface Further brainstorming with these main points in the forefront resulted in a clear design idea: Create a database and web interface (built off of Blippy’s system of linking user credit card purchases to a social networking tool) where users contribute content on product performance so that other users can benefit from their experiences. The system would compile a list of the user’s purchases and encourage the user to review these items. Two components that users would contribute would be the lifespan of a product (or basic review) and visual reviews (or expanded reviews). The lifespan of the product would be collected by prompting the user to simply click one of four boxes pertaining to each product: Works Perfectly, Starting to Break Down, Stopped Using, or Busted. Since the system knows the date of purchase and the date of the review, it can also determine the lifespan. As multiple users report on the lifespan, they can be averaged out. The price paid for a product could then be divided by the number of days of the average lifespan of the product to determine the product’s daily cost. The visual reviews would function similar to the photo tagging system on Facebook. A user could click on the faulty region of a product in an image and then choose words from pre-formed lists to describe what happened and the part of the product that broke. There would be two preformed word banks, one with a list of verbs and one with product parts. For instance, the user would click from the verb word bank “ripped” and from the part word back “shoulder seam”, if the shoulder seam in a

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jacket ripped. The visual review system would allow us to quantify how many people experienced the same problem with a product. Product performance would then be combined with existing product facts, statistics, and certification measures to provide an overview of the quality of purchase. Figure 67 This diagram shows the beginning stages of our database and interface and illustrates how different, existing technologies would be incorporated.

Our System

2 MAIN COMPONENTS:

INTERFACE

social networking TECHNOLOGY:

DATABASE

the visible component of our system

similar to:

basic review

(product lifespan)

the non-visible component of our system

extended review

photo tagging:

set-up similar to:

other measures

Quality of Purchase Hierarchy We now had a solid framework of how we thought quality should be defined and a clear vision for how we could use this framework to influence consumer decisions. The next step was to determine how each of the three sub-definitions of quality would be measured, so we had a way of evaluating purchases based on Quality of Purchase. Quality of Performance is exhibited by systems, such as Consumer Reports and customer reviews. However, we proposed a new method to measure

127

Conclusions performance, which is based on actual usage by consumers and the average lifespan of a product. We found that Consumer Reports is most helpful when purchasing large products, such as vehicles, household appliances ,and electronics, but the ratings for items of a smaller scale are not as comprehensive. It was important that our system could be used for smaller purchases, since these make up the bulk of discount goods. Additionally, we wanted to show consumers how purchases actually affect their wallet over time. Therefore, we would have an algorithm set to divide the average lifespan of a product, as reported by users, by the price paid to get the product daily cost. Quality of Performance would be based on whether a product performed better than or worse than a preset overall average daily cost. Quality of Transaction focuses on retail operations and would be measured by two different indicators: Is the retailer locally owned or not? and Does the retailer have a high level of corporate responsibility? We learned that not only is it important to know if a retailer has high corporate responsibility (pays fair wages, takes measures to care for the environment, gives back to the community, etc.), but whether the retailer is local or not affects how profits are filtered back into the local economy. Buy Local Philly explains that, “For every $100 spent at locally owned businesses, $45 goes back into the community and our tax base. For every $100 spent at a chain store, only $14 comes back.”180 By determining if a retailer is local, we could show consumers the percentage of their spending that is staying local. Corporate responsibility would be determined through the use of existing classification and certification measures; for example, B-Lab’s survey, the most comprehensive system that we have encountered, could be used to measure each company. Although B Lab will not let other organizations certify B Corps., B Lab does lend their survey as a metric. The third component of Quality of Purchase, the Quality of Origin, would measure the manufacturer’s level of corporate responsibility. Using a measurement tool, such as B Lab’s survey would allow for manufacturers to be rated on their adherence to specific requirements, different from the retailer, since this survey caters to different company types. Although in our research we also found that the manufacturer can be measured by quality as conformance to standards, we decided to exclude this from our framework; the consistency of the process through which a product is made is insignificant if the product itself is being measured.

180

Buy Local Philly, 10 Reasons, accessed 19 March 2010 <http://www.buylocalphilly. com>.

After developing our framework, we tested common purchase options against the measures outlined above and found 6 supply chain models to be most common. We determined that if a purchase achieved above or below a certain threshold for the four measures listed above, it would receive points. An overall purchase score would result, in this case, out of a possible seven points. Because inherent quality is the most important aspect of the Quality of Purchase (if a product does not fulfill a need, the other factors are irrelevant) we weighted it four times the other measures so that it takes precedence in decision-making.

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Additionally, in our interview with Carrie Collins, we learned that several people have made attempts to copy her bags. She found that although these people make their products locally and display some corporate responsibility, many times consumers report to her that the imitator products do not hold up to wear and tear. Carrie also found similar models in other product categories, such as jewelry and housewares, at craft shows she has visited. Many times, these retailers are so concerned with promoting their product as local and hand-made that they overlook the construction of the product. Understanding this business model was important when developing our purchasing evaluation process, because we did not want to create support for companies that put on a faรงade of quality. Weighting Quality of Performance heavier than the other factors compensates for this. Figure 68 Us discussing the common supply chain models that would fit into our hierarchy.

It is important to note that at the completion of this thesis, the framework we developed existed as a proposal for a way to change consumer behavior based on our research into the historical context of decision-making. It would take a considerable amount of time and refinement to make it a reality. As we pieced together this framework, we were aware that this was an ideal system and it would be an especially large undertaking to gather the two corporate responsibility measures. We would need to work with an existing measurement system and would have to get retailers and manufacturers to take such a survey. Therefore, we decided to initially focus on what was most feasible if we were to begin building this system tomorrow. The result was a five-point system, which would allow users to become familiar with two, more simplistic measures first. As our database built up and users learned to navigate the first two measures, we could build in the other two measures pertaining to corporate responsibility.

Figure 69 Our 7 point purchase hierarchy was an ideal towards which we would work.

Quality of

PERFORMANCE

PURCHASE

The functionality and durability of the product, which result from the materials used and the construction processes. We proposed a new method to measure the average lifespan of a product based on consumer use. The product price divided by the number of days of the lifespan forms the product’s daily cost. A product with a daily cost lower than average ($0.08) has a high quality of performance.

* examples are estimated

7 points

ex. Fabric Horse “The Classic” Bag Fabric Horse

6 points

ex. Go Lite Backpack Eastern Mountain Sports

5 points

ex. Go Lite Backpack Sports Authority

4 points

ex. Nike Backpack Sports Authority

3 points

ex. Fabric Horse Imitation Fabric Horse Imitation Retailer uncommon uncommon

0 points

ex. Eastsport Backpack Wal-Mart

below $0.08 daily cost

above $0.08 daily cost

Quality of

TRANSACTION

The business practices which are supported when a purchase is made at a given retailer. Quality of transaction is composed of two measures: Is the retailer locally, privately owned or not? and How does the retailer rank on corporate responsibility?

ORIGIN

The business practices which are supported as part of the production process when a purchase is made.

Spendings at a locally owned retailer improves the local economy. According to Buy Local Philly 45% of money spent at a locally owned retailer stays local compared to only 14% from a chain store. Locally owned is indicated by an icon below.

Retail corporate responsibility shows how a retailer affects the national economy and the global environment. The B Certification system is the most comprehensive evaluation method existing to date. A high level of retail corporate responsibility is indicated by an icon below.

Manufacturer corporate responsibility may be different than the retailer. If B Labâ&#x20AC;&#x2122;s survey was used to measure corporate responsibility, it is tailored from manufacturer to retailer. A high level of manufacturer corporate responsibility is indicated by an icon below.

Figure 70 Our achievable 5 point purchase hierarchy was our focus for the remainder of the project.

Quality of

PERFORMANCE

PURCHASE

* examples are estimated

5 points

ex. Fabric Horse “The Classic” Bag Fabric Horse

4 points

ex. Go Lite Backpack Eastern Mountain Sports ex. Go Lite Backpack Sports Authority

below $0.08 daily cost

ex. Nike Backpack Sports Authority

1 point

ex. Fabric Horse Imitation Fabric Horse Imitation Retailer uncommon uncommon

0 points

ex. Eastsport Backpack Wal-Mart

above $0.08 daily cost

Quality of

TRANSACTION

ORIGIN

The business practices which are supported as part of the production process when a purchase is made.

Retail corporate responsibility shows how a retailer effects the national economy and the global environment. The B Certification system is the most comprehensive evaluation method existing to date. A high level of retail corporate responsibility is indicated by an icon below.

133

Conclusions

Determining the Primary Functions and Measures To clarify the intent of our interface, we identified three main functions this system would achieve: Care, Share, and Compare.

Care would teach the consumer how one’s spending affects personal savings and larger impact measures, as well as how these standings compare to others’ standings. It would consist of a personal barometer that would gauge the user’s recent spending and a news feed that would reflect friends’ results. By promoting self-reflection and the display of the effects of one’s spending in a public realm, the system would inspire users to care more about their habits. It would also create a social awareness of what people are buying and where they shop for it.

Share would relate to user, retailer, and manufacturer content added about product performance and the story behind a product. Each product would have a page consisting of reviews, possible repairs, retailer and manufacturer policies, and videos of how the product was made. The page would create a forum for dialogue between consumers, retailers, and manufacturers, as well as transparency of supply chain practices and product performance results.

Compare would be an adaptation of the interface for a mobile phone and for use in the store environment. A consumer could use barcode scanning technology to see how similar purchase options affect his or her measures, what experiences other users have reported with these products, and details about products’ back stories prior to purchase.

Encouraging consumers to continuously interact with the system would require motivation, so we commenced work on the structure of the point system. In addition to receiving points for quality purchases, we wanted to reward users for other actions. Writing reviews is essential to the creation of the database. Although having a particularly positive or negative experience with a product is often enough for a user to write a review, as seen on Amazon, receiving points for basic and extended reviews would encourage consistency. When the user is in the store and considering purchases, scanning barcodes of similar products would also help us to group products by similar functionality in the database. Therefore, we discussed the possibility of providing some benefit to engage in this act as well. However, we ultimately decided against rewarding users for scanning products, to prevent mindless scanning of every item in a store just to gain points.

Figure 71 This diagram provides a comprehensive view of how the pieces of our system fit together. It shows all the technologies we plan to incorporate and where points will be earned.

Our System INTERFACE

2 MAIN COMPONENTS:

care

FUNCTIONS:

TECHNOLOGY:

the visible component of our system

barometer/ social recent networking purchases similar to:

MEASURES: daily cost

POINTS:

similar to:

extended review

photo tagging:

set-up similar to:

retailer local? +1

compare

basic review

DATABASE

the non-visible component of our system

producer/ retailer content

scanning products using::

135

Conclusions As we continued to develop our prototype, we began discussing how the measures we identified in the purchase hierarchy (above or below average daily cost, local or not, % of money that is fed back into the local economy, points, etc.) would be used to reflect meaningful information to the user. Would they be used individually or were combinations of these measures more effective? How far back should an individual’s results date? Should the individual’s results be compared to a cumulative measure? We also had to be sure that the information we chose to feedback to the consumer was, indeed, feasible. To bring clarity to where the measures came from, which ones were possible and how they would be used, we began mapping possibilities for the functionality and use of our interface. Although we did not realize it until a later time, what we were really trying to achieve was to map out the content of the database. As we tried different iterations of maps, we eventually achieved a map of the content of the database for a user’s account. There would be separate parts of the database that would collect information about products, retailers, and manufacturers. There would also be significant overlap between these different collections. Since our main focus was the user experience, we only fully developed the database that would contain all of the information pertaining to the user and his or her purchases. We began by looking at a single user making a single purchase. We organized the content based on the following criteria:

• What information is user added and on what page would the user add this content?

• What information is added by the retailer or the manufacturer and on what page would the retailer or manufacturer add this content?

• What measures would be filled in automatically—either from the credit card, or be previously built in the database?

• What measures would result from a combination of two or more other measures?

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Figure 72 Diagraming the measures that would be in the user database allowed us to determine where each would be collected and when they would be fed back to the user.

USER DATABASE Information and Measures about the User

Single User, Single Purchase

Information and Measures about the User’s Purchases

CREATE ACCOUNT

SWIPE CARD

• create account • credit card • home location • friends

• product • retailer • manufacturer 1 3

3 1

• date 2 • price paid • daily cost 4 possible +4 • $ put back into local economy • 100% potential for $ put back into local economy • where purchase falls on 4 possible +5 purchase hierarchy

user added content

automatically added or stored content

Information and Measures about the Product

Information and Measures about the Retailer

• UPC • item name / model number • category (eventually functionality) • manufacturer

• name • location

BASIC REVIEW

possible +1

• still using • works perfectly • starting to break down •2 date of end-of-product-life • stopped using • busted 2 3

• lifespan EXPANDED REVIEW

possible +4

• frequency of use • daily • weekly • monthly • rarely • tag of where problem occured on picture • part • verb • photo of problem • written commentary

possible +1

possible +1 possible +1

• local or not 1 4 • 45% or 14% of profits remain in local economy

retailer or manufacturer added or stored content

Information and Measures about the Manufacturer • name

possible +1

CREATE ACCOUNT

• mission statement • policies and returns • videos

• location • mission statement • policies, repairs / replacement parts, or warranties • videos of how product is made

139

Conclusions We then considered the most effective accumulations of a single user’s purchases and how either a single user’s single purchases or a single user’s cumulatives could be compared to other single purchases and cumulatives. We investigated the following: • Single User, Single Shopping Trip • Single User Cumulative to a Certain Date • Single User Cumulative of All Time • Single User Cumulative to All Users’ Cumulatives • Single User, Single Purchase to Another Single User, Single Purchase • A Potential Single Purchase to Single User’s Cumulative As we narrowed the combination of measures that would be fed back to the user, we chose to dig through our old receipts to test the effectiveness of the feedback based on real purchases.

Figure 73 Organizing receipts by month and listing purchases by date and category allowed us to determine that some categories should be excluded from the system and to find an average daily cost across all categories.

Using this approach was helpful for several reasons. First, we discovered that a majority of our expenses fell into categories outside consumer goods. Examples included food and services. We would need a way to block such purchases from our system, so our focus on consumer products did not get clouded. Since products would be cataloged by UPCs, we could use information stored within the UPC and data pulled from the internet, to create categories in our database. Eventually, as our database became more robust, we could further break product categories down to compare products based on similar functionality. The second advantage to reviewing our purchases was that we were able to determine an average daily cost across all categories of products. According to our purchases, this number averaged out to approximately $0.08 per day. While we do not expect this number to be accurate for all products, it provides us with a starting point to evaluate products. As product categories and functionality were built up in our database, this threshold could be tailored for a given grouping of products.

A System for Supporting Quality We began to see that the review section of the interface would become a running inventory of everything the user owns, which could be hundreds of items. We had to set some guidelines to control this. To prevent users from being swamped with recent purchases, products in the review section would need to be rotated each time the user logs in. Once a product is deemed “No Longer Using” or “Busted”, it will be removed from the review section and put into a backlog of the users’ purchases. If a product is reported to be “Working perfectly” or “Beginning to Break Down”, it will be removed from the rotation for a few weeks. Lastly, we realized that products with a long lifespan will not have feedback for a long time and by the time they do, the style of the item may have changed. Some product testing would be done before the database is public, but initially it will work best with products that have a lifespan of 1-5 years. However, just seeing that a large number of people have purchased a product and are still finding it to be “Working Perfectly” could be enough to allow others to trust it. Since our interface is also intended to be used by retailers and manufacturers, as styles change, they could have the option to link an old style number to its newer counterpart so the content for that product would be passed along. They could then make a note to the consumer of the updates that have been made to the product. Outlining the database enabled us to organize and prioritize the features of the system so we could begin to determine the appropriate place (what page) and form (color and style) for how to feed these back to the user in our interface.

Communicating Information We ultimately determined that for each product, we needed a way to quickly convey to the consumer how it ranks on the purchase hierarchy and how this ranking correlates to earning points. After all, getting consumers to understand Quality of Purchase is the heart of our project. There are two components to each purchase—if the daily cost is above or below $0.08, and if the purchase is made at a privately owned, local retailer. We began developing a number of trial visualizations, which would ultimately feed into our interface. In our initial versions, we attempted to use a spectrum from blue to pink to show the overall level of a purchase (with blue meaning low quality and pink meaning high quality). We wanted to keep open the possibility of expanding our graphics if we were to later add in retailer corporate responsibility and manufacturer corporate responsibility, and at the time, the spectrum seemed to be the best way to make this possible.

140

141

Conclusions

Figure 74 Some early trials in communicating to the user where a purchase falls on the purchase hierarchy.

Figure 75 Reviewing our visual trials with experts and users helped to refine our graphics.

LOCAL

$0.07

CHAIN

$0.07

LOCAL

$0.09

CHAIN

$0.09

$0.07 $0.07

$0.09 $0.09

$0.07 $0.07 $0.09 $0.09

As in our previous work, we felt that it was essential for us to collaborate with others outside of our project to acquire feedback on our trials in visual communication. We spoke with both fellow designers and others who may be potential users. Ease of use was a primary concern of our evaluators. We found that using the spectrum of color to rank quality was obscure and made it difficult for the user to quickly learn how many points each purchase earned. The user would have had to distinguish between and remember either five or seven colors. Users also expressed interest in some sort of tutorial to guide them through the system. The feedback that we received from sharing our information design with others provided us with a clear path to improve our visual communications. Instead of trying to communicate a combination of daily cost and whether a retailer is local or not through one visual element (color), we decided to communicate the different measures through several visual elements. Since we previously determined that if a product performs better than the average the daily cost was more important than if a product was local, we chose to use color to represent better or worse than average daily cost. We then developed icons, to represent a purchase made at a local retailer (and when later added, high retailer high corporate responsibility and high manufacturer corporate responsibility).

$0.07

$0.09

A System for Supporting Quality Through the use of color and icons, we were also able to clarify where each point was or could be gained. Remembering that pink means plus four points and each additional icon means another added point was much simpler than remembering 5 or 7 colors. In addition to showing daily cost by color, we would provide the actual daily cost score. This was important since a $0.08 average was estimated. Blue means above $0.08 daily cost (low quality of performance) Pink means below $0.08 daily cost (high quality of performance)

+3 pts

Daily Cost

142

Figure 76 Our final visuals to communicate the measures on our purchase hierarchy to the user.

$0.08

$0.07 $0.07 $0.09 $0.09

If icon is filled in, retailer is local

+1 pt

If icon is filled in, If icon is filled in, retailer has high manufacturer has high corporate responsibility corporate responsibility

+1 pt

143

Conclusions

Figure 77 The news feed will show a person’s purchases from a single trip to a store.

This system also worked well, because we could separate daily cost from whether a retailer is local when need be. Using our database diagram, we decided information from the single user, single trip would work best for the news feed. Each time a user went shopping, upon checking out from a store, his or her purchases would show on friends’ pages immediately after a checkout was made. Since multiple purchases may be made at a single retailer, we decided in the feed, we only needed to show if the retailer was local once. Each product would then only need to be labeled for its average daily cost.

gareth spent $120.00 at Local Store

gabe spent $110.00 at Chain Store

$0.09

$0.06

$0.11

$0.06

Flower Backpack $20.00 7 months

The Classic $65.00 3 years

Dome Backpack $10.00 3 months

Go Lite Backpack $100.00 4.3 years

The last important piece of information we needed to feed back to the consumer was what we had been referring to as the barometer. Although we considered comparing a cumulative of a user’s purchases to a cumulative of all users’ purchases or all friends’ purchases, we later decided against this. We did not want a person’s reflection of his or her purchases to be dependent on others’ measures. To make sure the user was not overwhelmed, we split the barometer into two parts. The first part would now be called the Recent Purchase Summary. This would reflect to the user how many of his or her purchases since the last login were above and below average daily cost, as well as how many of these purchases were made at a local retailer. The user could then click a link to receive more information and to pull up a 6-month barometer. Since the Recent Purchase Summary would sometimes be empty if the user did not shop recently, the barometer would serve as a more consistent gauge of one’s performance. The barometer would average the daily cost of the items a

Recent Purchase Summary high $ / day score local retailer

+21

pts pts

Your 6 Month Barometer

$97.49

144

$0.07 high $ / day score $144.09 userchain purchased within the past six months. Because it could take a long time for a retailer product to reach the end of its lifespan, thetodaily of each100% product that contributes contribution the localcost economy local potential low $ / day $352.27 barometer, would be calculated from other consumers’ to the average in the 6-month local retailer reports at the time of purchase. It is important to note that a user’s barometer would $346.41 $455.103 low $ / day be calculated from the product’s average daily cost at the time of purchase, since a $417.54 chain retailer product’s daily cost will fluctuate and we aim would be for users to base decisions on of the information available to them at the time of purchase. The barometer would also help reinforce to the user that the two measurements used to determine purchase of quality have real effects. Figure 78 Final Recent Purchase Summary and Barometer visuals. The Recent Purchase Summary shows how purchases made since the last login rank on the purchase hierarchy, while the barometer Recent Purchase Summary serves as15 aNew consistent You made Purchases! measure of one’s performance. You made 15 New Purchases!

Your Recent Purchase Summary You made 15 New Purchases!

7 are Below Average Daily Cost

+28 pts Rachael H.’s Quality Barometer + 3 pts Local Retailers

8 are Above Average Daily Cost

Chain Retailers

+ 2 pts

33 pts $107.77

Based on 35 Purchases!

$346.41

Recent Purchase Summary You made 15 new purchases! +28 pts 7 below $0.08 daily cost + 3 pts 3

Your Spending That Remains Local

$455.103

7 above $0.08 daily cost $107.77 3

You made 15 new purchases!

if all purchases were local

$455.103

+5 +21

8 are Above Average Daily Cost 2 at Local Retailers

high $ / day score chain retailer

$352.27

low $ / day chain retailer

$417.54

average $/day

$455.103 contribution to the local economy

$346.41

$0.06

100% local potential

$455.103

Your Recent Purchase Summary You made 15 New Purchases!

+21 pts + 3 pts

7 are Below Average Daily Cost

+21 pts + 3 pts

8 are Above Average Daily Cost

+ 2 pts

26 pts

wanna know more?

low $ / day chain retailer

7 are Below Av

You made 15

5 at Local R

810 areat Above Av Chain

7 are Below 8 are Above wanna know more?

Recent 6 MonthPB You made 15

Based on 35 Purch

average cos 7 aredaily Belo

3 at Lo

contributio

ec 8 arelocal Abov

2 at Lo

$346.

wanna know more?

if all$0.07 were local

$144.09 $346.41

low $ / day local retailer

Recent P 7 below $0

Your 6 Month Barometer

Rachael H.’s Quality Barometer

Recent Purchase Summary 3 at Local Retailers

34 pts

high $ / day score $97.49 Your Spending That Remains Local local retailer

You made 15 New Purchases!

7 are Below Average Daily Cost

Your Spending That Remains Local

$107.77

7 are Below Average $/Day 8 are Above Average $/Day

+ 3 pts

$455.103

Recent Purchase Summary

You made 15 New Purchases! 5 at Local Retailers 10 at Chain Stores

216.46 of your spending will stay in the local economy. Could have been 238.64 more if you bought at all local retailers.

from Local Retailers

Recent Purchase Summary

$455.103 You made 15 New Purchases!

$769.81

from Chain Retailers

if all purchases were local

from Local Retailers

100% local potential

Rachael H.’s Quality Barometer

Chain Retailers

if all were local

$0.06

Local Retailers

wanna know more?

26 pts

from Chain Retailers

contribution to the local economy

+ 2 pts

2 at Local Retailers

Your Spending That Remains Local

$346.41

$769.81

216.46 of your spending will stay in the local economy. Could have been 238.64 more if you bought at all local retailers.

$455.103

Rachael H.’s Quality Barometer

$0.07

average daily cost:

+21 pts + 3 pts

8 are Above Average Daily Cost

if all purchases were local

high $ / day score chain retailer

You 15 N1 Youmade made

7 are Below Average Daily Cost

Local Retailers Chain Retailers

Recent Purchase Su high $ / day score local retailer

Your Rec Recent

3 at Local Retailers

from Local Retailers

6 Month Barometer

Figure 79 Early trials for the barometer of our interface.

+21

You made 15 New Purchases!

Your Spending That Remains Local

from Chain Retailers

7 are Below Average $/Day 8 are Above Average $/Day

Recent Purchase Rachael H.’s Quality Summary Barometer

You made 15 new purchases!

wanna know more?

5 at Local Retailers 10 at Chain Stores

$769.81

216.46 of your spending will stay in the local economy. Could have been 238.64 more if you bought at all local retailers.

pts

A System for Supporting Quality

average $/day

7 above $0 3

145

Conclusions

Figure 80 Our interface emphasizes the care and share functions of our system.

After we developed the ways in which information would be fed back to the user, we began to develop a wireframe for the splash page of our interface. The largest portion consists of a live feed of friendsâ&#x20AC;&#x2122; recent purchases. We wanted to emphasize the social aspect of our interface, since we feel that has the highest potential to continually get people to log in. From interviews, we learned people enjoy sharing their purchases with friends and vice versa, so the feed also mimics the shopping experience. The column to the right of the feed is focused on the userâ&#x20AC;&#x2122;s personal purchasing, and it entices the user to interact with the Care and Share functions of our site. The personal statistics and barometer are clearly visible in the upper right hand corner, and recent purchases to be rated lie just below that.

A System for Supporting Quality

146

The Compare component would be accessible by clicking the Purchase Search tab in the navigation toolbar. Since we intended for this component to be used mostly in the retail setting via a mobile device, we also designed how we imagine the mobile adaptation of this part of the interface to work. Users could create a catalog of products they are considering buying. These would be organized by product groupings. For example, a user might have groupings of rain jackets, sneakers and paintbrushes. When two or more items are entered in the same group, the consumer could do a Quick Comparison to see how similar purchases rate on the purchase hierarchy. The user could also further search input specific to one product as added by other users, added by the manufacturer, or generated by the database (suggested alternatives). The information in the square label we developed and in the suggested alternatives page would pertain to the purchase (product and retailer). All other information would be collected from the product (the retailer would be insignificant to this information). Quick Comparison $0.12

Trekker Jacket by Rain Gear $49.99

Purchased by 1,234 members (2 friends) Being used by 211 members

Adventure Jacket by Outdoors, Inc. $64.99

$0.06

Adventure Jacket by Outdoors, Inc. $64.99

Purchased by 862 members (4 friends) Being used by 704 members

Consumer Input

$0.06

Problems Identified Collar - Frayed (7) Zipper - Jamming (6) Fabric - Pilling (5) Other (2)

Consumer Reviews See all 46 reviews

Consumer Photos

Purchased by 862 members (4 friends) Being used by 704 members

Manufacturer Input

Suggested Alternatives

Figure 81 The Compare function of our system is emphasized in the interface adapted for use on a mobile phone.

147

Conclusions

While the interface is an important part of our initiative, refinement of the interface was not our main focus. The database and interface are a plan for a concept that we see most applicable to addressing the larger issues of the discount culture. The last piece of our interface that we designed was our logo. We decided to title our interface Quality of Purchase Connection (QPC) to emphasize the larger scope of our thesis. We have created a purchase evaluation system that integrates longterm considerations into the consumer decision-making process by connecting product performance results with supply chain practices, and simultaneously building a community of support around these factors of quality. By providing consumers with an alternative to the current emphasis on low prices, improvements in personal spending habits and the local economy can result. Figure 82 We designed the logo to emphasize that our system connects three entities that are important to a purchase.

User Experience Since much of our work up to this point focused on refining the details of our database and developing a plan for our interface, we developed storyboards to show how our prototype would work from the perspective of the user. We had to consider the progression of the different pieces we discussed. Developing the storyboard was important in communicating our concept to an outside audience.

Figure 83 The following pages show the sequence of how we imagine the interface to work.

Rachael

HOME

FRIENDS

PROFILE

RETAILERS & MANUFACTURERS

account

PURCHASE FINDER

settings

log out

HOW IT WORKS

Select Your Location

Enter your zip code: Search!

Personal Information

Select below: Your Location

Message Preferences

Credit Card Settings

Privacy Settings

about

The user creates an account

terms

privacy

contact

blog

...and selects a location

Rachael

HOME

FRIENDS

PROFILE

RETAILERS & MANUFACTURERS

account

PURCHASE FINDER

settings

log out

HOW IT WORKS

Privacy Settings

Share my information with: My personal information: Personal Information

My recent purchases:

Your Location

Message Preferences

Credit Card Settings

Using existing technology, a credit card is linked to the account

terms

privacy

contact

Friends only Friends of friends

My personal barometer:

Keep private

My total points:

Friends only

My posts / comments:

Privacy Settings

about

Friends only

My location:

blog

Everyone

Allow friends to comment on my purchases:

Yes

Allow others to search for me:

Yes

The user chooses privacy settings and who can see his or her information

Rachael

HOME

FRIENDS

PROFILE

RETAILERS & MANUFACTURERS

Feed

account

PURCHASE FINDER

settings

log out

HOW IT WORKS

Your Recent Purchase Summary + 10 pts

gareth spent $74.20 at Fabric Horse see all

$0.06

$0.01

The Classic $65.00 3 years

Belt Loop Keyring $5.00 2.5 years

+ 3 pts

see all

$0.13

0 pts

wanna know more?

martha spent $81.61 at Wal-Mart $0.11

You have no new purchases at this time

$0.09

Your Basic Reviews

You have no products eligible for review

.02 $0.02 $0 Works Stopped Starting to Busted! Perfectly Using Fall Apart

Dome Backpack $10.00 3 months

Faded Glory Boots $12.00 3 months

JVC Earbuds $19.99 7 months

gabe spent $222.60 at Eastern Mountain Sports see all

about

Friends are added, and a network begins to form

$0.03

$0.06

$0.02

North face Windfall $99.00 10 years

Go Lite Backpack $100.00 4.3 years

KNOG Black Frog $11.00 2 years

terms

privacy

contact

blog

Faberware Loaf Pan $35.00 5 years

+ 12 pts

The user can then see his or her friendsâ&#x20AC;&#x2122; recent activity on the main page

The user goes shopping!

Using Blippyâ&#x20AC;&#x2122;s system, purchases made on the linked credit card are automatically added to the site

The product is used!

A review section prompts the user to report on the status of his or her items (and earn points!)

Each purchase feeds into the userâ&#x20AC;&#x2122;s personal statistics, which also appears on the main page

The user can expand the statistics to see more detailed effects of his or her spending behavior

33 pts

wanna know more?

+ 3 pts $0.09

0.02 $$0.02

Your Basic Reviews

Works Stopped Starting to Busted! Perfectly Using Fall Apart

Trekker Jacket Rain Gear $49.99

wanna say more?

JVC Earbuds $19.99 7 months

Faberware Loaf Pan $35.00 5 years

ntain Sports see all

$0.02

If the product rips or breaks...

+ 12 pts

Wal-Mart Umbrella Wal-Mart $5.00

wanna say more?

Purdy Angled 2-inch Paintbrush Home Depot $9.58

wanna say more?

Lenox Continental Set Macyâ&#x20AC;&#x2122;s $48.99

The user may want to say more

Step 1: Select Problem Areas Below

Step 2: Select Le

Daily

Weekly

Pick part affected: X

Seam: Shoulder Seam: Underarm Fabric Zipper (pit-zips) Air Vent Other

Step 3: Describe You S

Select problem: X

Seam: Shoulder - Torn / Holes

The extended review will consist of four different parts

Torn / Holes Frayed Discolored Other

Step 4: Upload Yo Upload o

Photo Pho

Using a photo-tagging component, the user can select the faulty area and problem from a word bank

Conclusions

Rachael

account

settings

log out

Step 2: Select Level of Product Use

FRIENDS

RETAILERS & MANUFACTURERS

Rain Gear

PURCHASE FINDER

HOW IT WORKS

Daily

Weekly

Monthly

Yearly

Step 3: Describe Your Product Experience

Go back

Step 2: Select Level of Product Use X Daily

Weekly

Monthly

The material used for this jacket is great for wet weather, but the stitching along the seams is unsatisfactory. I owned this jacket for five months before a seam in the armpit gave out. I have attempted to fix the problem by restitching the material, but have not been successful. Hopefully the manufacturer will fix this problem soon!

Yearly

Step 3: Describe Your Product Experience

The level of use will help to explain differences in the lifespan of identical products

Step 4: Upload Your Product Photos Upload

Upload

Photo

The user can also leave a detailed personal message...

Post Your Review

A Proposal for a Database and Digital Interface

Step 2: Select Level of Product Use

Daily

Weekly

Monthly

Yearly

Step 4: Upload Yo

Step 3: Describe Your Product Experience The material used for this jacket is great for wet weather, but the stitching along the seams is unsatisfactory. I owned this jacket for five months before a seam in the armpit gave out. I have attempted to fix the problem by restitching the material, but have not been successful. Hopefully the manufacturer will fix this problem soon!

oles

Step 4: Upload Your Product Photos Upload

Photo

Post Your Review

contact blog Copyright QPC

...and upload images of how products are holding up

Once the review is posted, the content is merged with other reviews

Conclusions

Common problems are quickly identified

Manufacturers can see these reviews through their own accounts

A Proposal for a Database and Digital Interface

Barcode technology will automatically add existing products to the manufacturerâ&#x20AC;&#x2122;s account

Manufacturers can also contribute information to a product page...

Consumer Input

Manufacturer Input

Product Specifications

Material - Nylon, cotton Machine wash cold, tumble dry low Do not iron Sizing Chart

Repair Notes and Problem Solutions

Due to the large number of customers rep at the armpit, we are now offering free rep experience this problem. Please click her Product Videos

Repair Notes and Problem Solutions Due to the large number of customers reporting tearing along the seam at the armpit, we are now offering free repair services for customers who experience this problem. Please click here for more information. Product Videos Upload

Video

Additional Views

...perhaps repair information for common problems

Videos of how the product was made can be added to give consumers a back story of the product

User feedback inspires manufacturers to make improvements

The consumer can also access all of this information through mobile technology

Conclusions

It will be useful to the consumer when he or she goes shopping

Barcode scanning allows for instant product information in the store

A Proposal for a Database and Digital Interface

Quick comparisons show the longterm value of quality goods in the present

The consumer knows what to look for from other consumersâ&#x20AC;&#x2122; reviews...

Conclusions

...and can access any uploaded manufacturer-added content

The purchase is evaluated and options with better performance are suggested

Conclusions

Your Recent Purchase Summary

7 are Below Average Daily Cost

8 are Below Average Daily Cost

You made 15 New Purchases!

+28 pts

You made 16 New Purchases!

+ 3 pts 8 are Above Average Daily Cost + 2 pts

33 pts

wanna know more?

6 Month Barometer

$346.41

The consumer is empowered to make better-informed, quality purchases

Based on 35 Purchases!

$0.07

contribution to the local economy

+ 2 pts

38 pts

wanna know more?

6 Month Barometer

Based on 35 Purchases!

average daily cost:

+32 pts + 4 pts

8 are Above Average Daily Cost

average daily cost: 100% local potential

$455.103

$0.07

contribution to the local economy

$375.66

100% local potential

$484.353

The userâ&#x20AC;&#x2122;s personal statistics are adjusted accordingly

A Proposal for a Database and Digital Interface

Users take pride in their decisions, have higher quality goods, and spend less money over time

167

Conclusions

Benefits The potential benefits of our system are numerous and the ability of The Purchase of Quality Connection to reverse the negative trends of the discount culture is radical. There are two defining characteristics of the discount culture that our system addresses: the overabundance of meaningless information in the marketplace and consumer reliance on price to make purchase decisions. Using the Purchase of Quality measures, our system provides consumers with an easy-to-use, informative process to make purchase decisions as an alternative to relying on heuristics. QPC mimics an extensive problem solving process in a shorter amount of time, with little effort on the user’s end, by acting as a cognitive artifact. Cognitive artifacts may be defined as “…those artificial devices that maintain, display, or operate upon information in order to serve a representational function and that affect human cognitive performance.”181 Our database draws from a collective pool of knowledge to provide the user with long-term information about a product immediately before and after a purchase is made. Through the Care, Share, and Compare functions of our interface, we are augmenting consumer-decisions making. By encouraging users to reflect on purchases through measures other than money spent, or interface changes the nature of the task of purchasing in many ways. Figure 84 The Quality of Purchase connection allows the user to perform extensive problem solving quicker through the use of a cognitive tool.

181

Donald A. Norman, “Cognitive Artifacts,” John M. Carroll, Designing Interaction: Psychology at the Human-Computer Interface (New York: Cambridge University Press, 1991) 17-38, 17.

Bazaar Culture Discount Culture

QPC Culture

• long-term mind-set

• short-term mind-set

• long-term mind-set

• decisions based on inherent quality of product attributes

• decisions based on perceived quality of marketing and price

• extensive problem solving used for most product decisions

• routine response and limited problem solving used for most product decisions

• decisions based on quality of purchase, including physical attributes and the economic, social and environmental effects of business practices • more efficient extensive problem solving through a cognitive tool

Instead of users thinking about how much a product is costing up front, through the use of daily cost, we are teaching the consumer to think about how the payment of a product pans out over time. According to Dr. Solomon, such information is needed to help consumers see the advantage of investing a little more money up front. We learned in our research that when people buy products, they register payment of goods as a loss. Discounts reverse this psychological effect by highlighting savings

A System for Supporting Quality earned to entice the user to focus on minimizing losses. However, we have also seen that over time, lower priced goods actually deplete consumers’ bank accounts faster than quality goods, so discounts actually create a false pretense of minimized losses. Daily cost urges the consumer to focus on minimizing loses, but based on truthful, long-term information. By showing users the number of one’s purchases which are made at local retailers and making the user aware of how money spent at local establishments funnels back into the local economy, we intend to make users think twice before shopping at a discounter or chain. Making the effects of supporting local easily understood also makes it hard for users to tune out. Our point system takes the benefits of supporting quality purchases one step further by turning them into a tangible achievement. When prompting the user to review his or her purchases, we are making visible to the consumer exactly how much he or she consumes and how quickly he or she is going through goods without any added effort on the user’s part. Currently, for a person to understand his or her consumption habits, one would have to dig through drawers or receipts to know exactly what was purchased and when. People are unlikely to do this, because in many cases, they do not want face the results. Since our system subtly makes consumers aware of spending habits and what they own, it has the potential to limit mindless consumption. The potential of self-reflection to change habits was evident in our interviews when one consumer mentioned that thinking about her recent purchases was going to make her budget herself. Having users report on products through visual reviews after a product breaks down and providing the results of other users’ visual reviews in the store environment prior to making a purchase, elicits from consumers their abilities to examine and make decisions based on product attributes. The Slight Induction Phase of our Quality Identification Test showed improved quality evaluation as participants spent more time with each object, and our interviews showed that consumers make better purchasing decisions after having a bad experience with a low-priced good. The review system in our interface similarly urges the consumer to spend more time with the product up front, reducing the number of decisions based solely on price the first time around. In addition to changing the nature of the task for users, QPC also has the power to affect retailers’ and manufacturers’ perspective on sales. By making the practices and outputs of such businesses transparent, and showing them that there is consumer demand for quality, retailer and manufacturers will strive to sell products that have an above average daily cost, as well as to improve their corporate responsibility. Open lines of communication between the producer and consumer allow the manufacturer to respond to negative product reviews immediately through repairs in their products and later, through improvements.

168

169

Conclusions For consumers, retailers and manufacturers, our system changes purchasing from being a private act to a public one. 100% of our interview participants reported that they enjoy sharing special deals with family and friends. Our system expands on the concept of sharing and encourages sharing based on long-term factors rather than price. Poor decisions reflect poorly on the user, and as seen in the early 20th century, a stigma would be attached to bad choices. If a userâ&#x20AC;&#x2122;s purchase scores well, others will be inspired to look into similar purchases and make decisions that also score well. Lastly, we previously saw that there are few reliable reference points in the current discount culture and even when systems attempt to provide the consumer with meaningful information, the user has to question the source of such information. Only those who purchase a product can leave a review with the Quality of Purchase Connection, therefore, fake posts are eliminated and the consumer can knowingly trust the information provided. From both the supply and demand sides of consumption, The Quality of Purchase Connection has the ability to reverse the negative effects of the discount culture. Making consumers aware that supporting quality products saves them money in the long term will improve their spending power and will help quality goods rise to prominence once again. Making manufacturers and retailers accountable for their business practices has the potential to improve wages and benefits in the local economy and to help distribute wealth, so all people can experience improved quality of life. Consumption of fewer disposable goods could also curb waste and depletion of resources in the global environment. A more responsible system of consumption and sustainable way of life could result from the Quality of Purchase Connection.

A System for Supporting Quality

170

Figure 85 These diagrams show the potential of the Quality of Purchase Connection System to reverse the negative effects of the Discount Culture.

Raw materials become more expensive

Excess waste is produced and global resources are depleted

Environmental Effects

Consumer has less spending power

Consumerâ&#x20AC;&#x2122;s long-term spending increases

Workersâ&#x20AC;&#x2122; wages and benefits are reduced

Consumers Demand Lowe w r Prices e Consumers want more value (the same quality for a lower price)

Personal Effects

Retailers sacrifice quality, but mask lower quality with marketing

How the Discount Culture Works

Goods are replaced more frequently

Because information is obscured, consumers buy the cheapest good

Discount goods rise to prominence

Economic Effects

Manufacturers and retailers cut costs to meet new price point

Cost of raw materials levels out, prices can be maintained

Less waste is produced and global resources are sustainably harvested

Consumers Demand Quality

Environmental Effects

Consumer has more spending power

Consumers spend less over time

Consumers want a longer lasting product, and the demand for better quality becomes a demand for products with a lower daily at local retailers

Personal Effects Goods are replaced less frequently, and repair options are offered

Personal Effects Workersâ&#x20AC;&#x2122; wages and benefits are increased

How the Quality of Purchase Culture Works

Retailers are accountable for actions and products, must sell quality goods

Long-term decisions and the examination of details are encouraged

Quality goods and purchases rise to prominence

Economic Effects

Manufacturers and retailers strive for a high level of corporate responsibility

DIRECTIONS FOR FUTURE RESEARCH

175

Directions for Future Research

To Make the System a Reality... A number of steps would need to be taken to make the Quality of Purchase system a fully functioning interface and database which would largely involve working with outside specialists and organizations. First and foremost, we would need to work with web developers and programmers to build the QPC database and interface. Since neither of us have extensive experience building websites, we would rely heavily on the expertise of external contractors to turn our wireframe into a fully functioning, attractive, and user-intuitive system. As the database and interface began to take form, we would also test the effectiveness of the QPC system with users. We would closely analyze the feedback of measures on test userâ&#x20AC;&#x2122;s consumption habits to make sure QPC reached its full potential. While the framework of the system would not drastically change, user feedback would be incorporated into the design of the interface to improve the details of our system. Once QPC was launched and users compared products with similar functionality via their mobile devices, we could further break down the product categories in the database based on product functionality. Instead of having one average daily cost to measure products of all categories against, the threshold for daily cost could be tailored to be specific to the product category or based on similar functionality. As a result, our system would become more robust. Since there would no longer be one universal average, labeling products as pink (above average daily cost) or blue (below average daily cost) would become an even more important identifier for the user. As people learned to use the QPC system, efforts would be made to work with an existing corporate responsibility certifier, to use its measures to fully gauge quality of transaction and to add in quality of origin. Steps would be taken to introduce these two additional measures to the consumer in an easily understandable way, possibly through a tutorial. Although we would begin the process of working with a certification system and adding in corporate responsibility measures immediately after launching the interface, we anticipate this would take several years to fully develop. We would also look into the possibility of gaining funding for the QPC system by allowing retailers and manufacturers to conduct in-depth surveys through our interface. Since the current plan for our system would build a collection of users who own a particular product, we could sell the ability to reach a retailerâ&#x20AC;&#x2122;s or manufacturerâ&#x20AC;&#x2122;s customers to them. Retailers and manufacturers could ask their consumers directed questions about experience with the product and services it offers. Such a survey could be built into the extended review, but the results of the

176 retailer or manufacturer questions would only be accessible by them. Additional points could be offered to the user for filling out a survey. The most promising direction for the QPC system would be to work with locationbased credit unions to issue credit cards to our users and to manage the point system. “A federal credit union is a nonprofit, cooperative financial institution owned and run by its members. Organized to serve, democratically controlled credit unions provide their members with a safe place to save and borrow at reasonable rates. Members pool their funds to make loans to one another.”182 A credit union can be organized by a company or by a local community, and these area-based credit unions would be our main focus. The credit unions working with the QPC would offer low-interest loans to the local, independent retailers and manufacturers that are part of our system, as well as part of its territory. The credit union would also issue credit cards to consumers in their territory. The credit unions would benefit by expanding its membership and pool of funds, while minimizing the risks associated with providing loans to these retailers and manufacturers, because the system encourages card-carrying members to spend their money at member retail and manufacturing establishments. Since the credit unions’ vested interest would be the same as that of QPC, they could also further incentivize card-carriers by providing them with monetary rewards as points are earned. The credit union could also choose to allow its consumers to “pay points forward”. Instead of rewarding the consumer directly, the consumer could choose his or her favorite retailers and manufacturers, which the credit union would provide with a cash prize. To an independent establishment, a small donation could make a substantial difference in allowing it to achieve its commitment to quality. Non-credit union members would be able to still use the system, but perhaps these members would not be able to contribute points to an actual reward.

182

NCUA, Frequently Asked Questions, accessed 2010, 14 April 2010 <http://www. ncua.gov/About/FAQ.aspx#14>.

GLOSSARY, BIBLIOGRAPHY, AND PICTURE CITATIONS

179

Glossary, Bibliography, and Picture Citations

Glossary brand equity: the extra monetary gains a company makes from using a brand name compared to a product or service that is not recognized by name consumer hyperchoice: a situation where the consumer is given too many choices, and the plethora of options prevents the consumer from making a well-informed decision cognitive artifact: an object or action that symbolizes information and improves human memory or ability credit union: a cooperative financial organization that is owned by its members and that pools member funds to offer other members low interest credit rates direction: a characteristic of motivation that explains the order in which goals are met drive: the strength of a personâ&#x20AC;&#x2122;s motivation expanded quality: the reliability of one offering over another that includes both tangible and non-tangible components, such as materials and construction, labor and benefits, service, and company standards expectancy-value approach: an approach to understanding consumer behavior that states the consumer makes a decision by anticipating the outcome of a certain action (the expectancy) and weighing the potential benefit from an outcome (the value) exploding discounts: a tactic used by retailers in which a short time frame is put on a sale to encourage consumers to act on impulse and buy the item on sale field of consumer behavior: the study of the activities associated with choosing, buying, using, and disposing of products and services by people goal: an aim a consumer works towards to make his or her current mental or physical state match an imagined, improved state Greshamâ&#x20AC;&#x2122;s law: an economic principle which states that bad money drives out good heuristics: learned shortcuts people rely on to make more efficient decisions and prevent mental burnout hyperbolic time discounting: a phenomenon that explains why people are more inclined to think and act practically when the time between a decision and a reward is extended

180

inherent quality: the durability and functionality of a product, which are a result of the materials and construction used information processing perspective: an approach to consumer decision-making that explains how consumers are constantly encountering and actively seeking new information, evaluating this information, and making choices from a variety of options involvement: a consumerâ&#x20AC;&#x2122;s evaluation of how much a stimulus relates to his or her innate needs, values, and interests, which is closely linked to motivation loss aversion: a concept that suggests people care less about winning than they do about not losing manufacturer suggested retail price (MSRP): a price for a product which is recommended by the manufacturer; over time, retailers have begun to use inflated MSRPs as a tactic to make consumers think they are receiving a good deal product maximum utility perspective: an early, traditional decision-making theory that views the consumer as being rational, and a person who gathers as much data as possible to make the best-informed decision motivation: a force that causes a person to satisfy a need placebo effect: a condition that results when people pay less for a product and unknowingly treat the product with less care, so the product lifespan is shortened Socratic Method: a strategy proposed by the philosopher Socrates in which openended questions are asked and answered to spark reflection and self-discovery stimulus-response approach: a choice perspective that states there is a relationship between an instigator of a need and whether satisfying the need results in reward or punishment; positive or negative outcome affects how similar future needs are achieved quality of purchase: a definition and framework for evaluating quality that we created, which connects product durability to supply chain practices

181

Glossary, Bibliography, and Picture Citations

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Picture Citations

We borrowed the following images and graphics from the sources listed below:

Figure 2, page 11: Bazaar image: flickr.com Discount image: http://blogs.abcnews.com/theworldnewser/ 2006/11/black_friday_br.html Figure 3, page 12: http://www.loc.gov/pictures/item/oem2002001981/PP/?sid=7142 c87fbfc891a04dd28d64a42461a Figure 4, page 12: http://www.flickr.com/photos/69145729@N00/405095215/ Figure 5, page 13: http://en.wikipedia.org/wiki/File:City_Hall_and_John_ Wanamakers,_Philadelphia,_Pa.,_U.S.A,_by_Kilburn,_B._W._ (Benjamin West),_1827-1909.jpg Figure 6, page 13: http://www.loc.gov/pictures/item/gsc1994002086/PP/?sid=51bb 7bfcc9d524a75d41e99a2ab617f Figure 7, page 13: http://commons.wikimedia.org/wiki/File:Bundesarchiv_Bild_183 1990-1205-008,_Halle,_Warenhaus,_Woolworth.jpg Figure 8, page 13: http://www.flickr.com/photos/hadesigns/3410721136/in/set 72157616230287495/ Figure 9, page 16: http://www.loc.gov/pictures/item/ncl2004003470/PP/ Figure 10, page 16: http://en.wikipedia.org/wiki/File:Girl_listening_to_radio.gif Figure 11, page 17: http://www.flickr.com/photos/42444189@N04/4019656384/ Figure 12, page 18: http://www.life.com/image/50370146 Figure 16, page 27: http://www.flickr.com/photos/peterwright/4428342932/ Figure 17, page 28: http://www.designer-daily.com/examples-of-american-cold-war -propaganda-2918 Figure 18, page 29: http://fansinaflashbulb.wordpress.com/2009/09/28/william-safire and-the-kitchen-debate/ Figure 19, page 32: http://www.flickr.com/photos/18668478@N00/3250517999/ Figure 20, page 32: http://www.flickr.com/photos/x-ray_delta_one/4444229965/ Figure 21, page 33: http://www.flickr.com/photos/sadrzy/330078708/

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Figure 22, page 33: http://www.flickr.com/photos/atwatervillage/2521983605/ Figure 23, page 34: http://www.flickr.com/photos/asbasb/4412470638/ Figure 24, page 34: http://www.flickr.com/photos/visit-carlsbad/4332860391/ Figure 26, page 43: Michael R. Solomon, Consumer Behavior: Buying, Having, and Being, 8th Edition (Upper Saddle River: Pearson Education, Inc., 2009), 329. Figure 27, page 44: diagram adapted from: James R. Bettman, An Information Processing Theory of Consumer Choice (Reading: Addison Wesley Publishing Company, 1979), 21. Figure 28, page 45: Michael R. Solomon, Consumer Behavior: Buying, Having, and Being, 8th Edition (Upper Saddle River: Pearson Education, Inc., 2009), 326. Figure 65, page 124: www.blippy.com