Name: KAM, Ho Yi

Student Number: 382142

Date: 4th February, 2013

Course: 23E48000 Consumer Psychology

Articles: Feinberg, Zhang & Huang

Reaction Paper on Readings Summary Zhang & Huangs article focused on finite undergoing program, like loyalty program. They investigated the effect of program progress on commitment to the program and motivation to commit. Progress was defined as either high or low. High progress meant it required short time or less effort to complete the loyalty program and get a prize, vice versa. Besides, there were endowed progress and earned progress. Endowed meant given without effort. Earned meant acquired with effort. They formulated two hypotheses. First, at low progress, consumers focused on the attainability of the goal and were more motivated by endowed progress. Second, at high progress, consumers focused on the value of goal and were more motivated by earned progress. They ran four experiments with different scenarios to test the hypotheses. In each experiment, respondents were given progress level at high or low, endowed or earned progress, summing up four different groups. Eventually, all four experiments supported their hypotheses. Feinbergs article studied credit cards as stimuli to facilitate spending. He suggested that the presence of credit card stimuli might increase the magnitude of spending response, likelihood to spend, amount to spend and shorten decision time to spend. He ran four experiments too. In each experiment, an insignia of credit card was displayed to respondents without telling them. This was aimed to make respondents aware of credit card spending throughout the experiment when they were told to report their willingness to pay for certain products. At the end, it was concluded that credit card stimuli increased the motivation to spend, the amount spent, and the probability of spending and decreased the decision time to spend.

General Discussion Zhang & Huangs and Feinbergs articles both studied stimuli that encourage spending, one by incentive program progress while another by credit cards usage. However, the nature of the stimuli was not the same. The stimulus studied by Zhang was the progress in a finite program while that studied by Feinberg was the insignia as a visual stimulus. Progress was more complicated to study as researchers had to manipulate the program progress at low and high in order to study the motivation difference, but credit card stimulus was just controlled as either present or absent. Experiment Setting Both articles made good effort to carry out four sets of experiments. Zhangs article included very comprehensive experiments, which consist of four groups with different conditions each time. In this way, he studied two varying factors, which were high or low motivations and endowed or earned progress. Although it had been very good effort to include so many sets of respondents, it would be better to include a control group without any loyalty program in order to justify that any increased frequency or intensity of respondents was due to the incentive program itself to raise internal validity. For example, in the University sandwich shop experiment, researchers can study a group of people that do not receive any loyalty program in that tested period to see if there was still any increase in purchase frequency, which might be caused by seasonal fluctuations or school timetable and so on. Even though the researchers did not include this control set, given that he repeated the experiment in four different scenarios and yielded consistent results, the effect of these uncontrolled variable was believed to be minimal. Besides, repeating the experiment in such a way greatly raises external validity too. The researcher proved that their hypotheses was valid at least in a school sandwich shop setting, in online music rating, in exercising and in questionnaire filling. These scenarios were quite unrelated but it meant a high validity too. Experiment results were likely to apply in other settings that marketers can make use of. Feinbergs article performed some simpler experiments, each consisted of two groups, one with credit card stimuli present and another one without. Despite its simplicity, the researcher did not

clearly state the procedure in great detail. For example, in the last charity experiment, it was unclear if the respondent groups with credit card stimuli actually used credit card to pay to charity. The article had previously mentioned that people generally perceive less amount of money paid by credit card than money. If credit card was just used to be a stimulus while respondents actually had to use real money to pay, it did not accurately test the effect of using credit card on spending. Moreover, the methodology throughout all previous experiments in Feinbergs paper was not convincing. Respondents were asked to write down prices that they were willing to pay for certain products, with or without credit card stimulus. However, the article did not mention any details about the reference price. For example, there was an item dress. The range of a dresss price could vary a lot between respondents. However, uniform results were yielded that supported the hypotheses. Therefore the experiment results were doubtful or the procedure of experiment was not written clearly in the paper. What is more, the use of the insignias as a visual stimulus did not necessarily stimulate respondents thought of using credit card payment, provided that the researchers did not inform respondents that they could use credit card to pay. When respondents came into the experiment room, they might not have paid any attention to the insignias or logo on the table corner. They might just take it as some decorations or sponsors of the research. Instead, the experiment looked like a test done by a credit card company to test on their own logo to see what impressions the logo gave to the general public. The researcher could have used more prominent tools as credit card stimuli or informed respondents that they were to use credit card for payment so that any difference compared to the control group was likely attributed to the credit card stimuli, thus increasing internal validity. Other Discussions Both articles gave a lot of insights for marketers. Zhangs one was especially useful for any companies launching loyalty programs. According to the research findings, they could use endowed progress to increase consumers motivation at a low progress level and make the goals look attainable. Or if any company wanted to include a questionnaire together with a loyalty

program, they could use earned progress to increase consumers motivation at a high progress level, which was rewarded from completing the questionnaire. Other knowledge such as excessive endowed progress lowering goal value was very practical that marketers had to bear in mind when they launched some loyalty programs. In life, having high external validity, the findings can be applied to many scenarios when it comes to encouraging people to complete a task, such as childrens learning and people reducing weight. Understanding consumers psychology could help understand humans psychology and make it practical too. Feinbergs findings were useful to credit card companies, retailers and e-business. Having acknowledged that peoples spending activity would be enhanced by credit card stimulus, companies may introduce more ways to provide such stimuli and encourage people to spend more. It is particularly useful in e-commerce as it involves credit card as the major payment method. Tangible stores may consider opening up an online shop that uses credit card for payment to increase sales, for example, bookstores. It might help this kind of diminishing industry to survive in the digital age as well.