BizEd

SeptOct2009

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Research a weak-satiation category—as one's income increases, so can one's motiva- tion to spend. Food, insurance, auto services, and banking services, on the other hand, fall into high- satiation cate- gories—most consumers limit what they'll spend, no mat- ter what their income. Companies Andrea Godfrey well aware of this concept, says Voss. They know that even if they offer wonderful service, a person of mod- est income is unlikely to spend any more than he already is. Therefore, they create promotions to try to take "100 percent share" of a customer's potential spending. Especially now, when customers Gl enn Voss The Limits of Consumption How much consumers are willing to spend depends greatly on what they're buying, say marketing professors Glenn Voss of Southern Methodist University's Cox School of Business in Dallas, Texas; Andrea Godfrey of the Anderson Graduate School of Management, University of Califor- nia, Riverside; and Kathleen Seiders of Boston College's Carroll School of Management in Massachusetts. In some categories, consumers will only buy so much; in others, they often can't buy enough. Consumers make purchases in what the researchers call "weak- satiation" and "high-satiation" categories. Clothing, for example, is 56 BizEd SEPTEMBER/OCTOBER 2009 in weak-satiation categories can use a wide range of tools to attract customers, including new ad campaigns, cus- tomer rewards programs, pleas- ant shopping environments, and trained staff. Those in high-satiation categories Kathleen Seiders must take more careful approaches. Additional advertising will fall on deaf ears if customers already have spent all they intend to spend, the research- ers say. It's also unlikely that major improvements in service will result in more sales. Instead, say the authors, these companies should identify and target less-satisfied customers—those who have not yet reached satiation— and elevate their satisfaction by building relationships, providing more convenience, and offering new products. Banks, which often have poor customer satisfaction ratings, are have become more careful with their money, it makes sense to know how to market effectively in high-satiation environments, the researchers sug- gest. Their paper, "Does Consump- tion Know No Limits? The Moderat- ing Role of Satiation in Determining Customer Repurchase Rates," is under review. Promotional Tests Lead to Anxiety While some organizations use standard- ized tests to determine promotions, they may do more harm than good. This is a finding of a new study by Julie McCarthy, professor of organi- zational behavior at the University of Toronto's Rotman School of Management in Ontario, Canada; Coreen Hrabluik, now at Deloitte; and R. Blake Jelley, professor of organizational behavior at the Uni- versity of Prince Edward Island's School of Business in Canada. McCarthy, Hrabluik, and Jel- ley studied the use of promotional exams with Ontario police officers. They found that these tests could discourage candidates from apply- ing or create anxiety that could hurt their performance. They argue that organizations can help employ- ees do their best in promotional processes by developing test prepa- ration tools designed to manage exam anxiety. Organizations "need to ensure

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