August 31, 2009

Engaging Consumers, Creating Value

Findings on value creation and regulatory fit offer far-ranging implications for management, marketing and even mental health.


Value — how much importance or worth people place on any given thing — is a big idea packed into a small word. But to get at where value comes from, says Professor E. Tory Higgins, value must not be thought of exclusively as a positive thing. Higgins, who has spent much of his career considering questions related to motivation, investigates the origin of value not by focusing on where it comes from, but instead by asking, “What is it that makes something valuable — whether positively, so that you are attracted to it, or negatively, so that you are repelled by it?”

Motivation is part of the answer. For centuries, motivation has been attributed to pleasure and pain; Higgins has shown that pleasure and pain give direction — attraction or repulsion, toward or away from — to motivation. “Simply put,” he says, “pleasure is related to something that we approach, something we want to happen; pain is something we avoid and want not to happen.”

Intensity, too, plays a role in value. “Whether you are choosing a partner or choosing between different dishes at a restaurant, many of our choices are between positive things, all of which would give pleasure. So the question of intensity is critical.”

The accepted view about intensity is that it is driven by pleasure and pain: the more pleasure something gives, the more intensely positive it is, and the more it avoids or takes away pain the more positive it is. But Higgins’ research implies otherwise. “Yes, pleasure and pain contribute to intensity. But it’s not clear that pleasure and pain make the biggest contribution.”

Instead, Higgins suggests that a bigger contributor may be engagement. “We are constantly moving from act to act in which we are more or less engaged in what we are doing.” How strongly we are engaged, says Higgins, is a major determinant of how much we value things. Unlike pleasure and pain, engagement doesn’t give direction — it doesn’t attract or repel people to things. Instead, it intensifies, making positive things more positive and negative things more negative.

To explore the role of engagement in intensity, Higgins theorized that people are more likely to become fully absorbed in the present when preparing for events that are likely to happen in the future. He and his coresearchers asked subjects to rate two different yogurts (one flavored with nutmeg to taste good, the other flavored with clove to taste bad) as part of a study the subjects believed would help a dairy company determine which new yogurt flavors to feature.

In some conditions subjects were told either that there was an 80 percent likelihood that they would later receive other good-tasting yogurts or that there was an 80 percent likelihood that they would later receive other bad-tasting yogurts. In other conditions, subjects were told there was a lower likelihood of later receiving good or bad tasting yogurts. The researchers were able to show increased engagement in the present when subjects heard that a future yogurt tasting — whether for good yogurts or for bad yogurts — was likely to happen, as reflected in the good yogurt in the present becoming more attractive and the bad yogurt in the present becoming even more repellant.

How people face obstacles is another important facet of engagement. Higgins has found that when people take action to overcome (or oppose) obstacles, both internal or external — even when doing so is very unpleasant — their engagement is increased. This makes their ultimate goal more attractive: consider a climber ascending Mount Everest. “The fact that it is difficult actually increases both their engagement in the activity and the value they place on completing the work,” Higgins says. Conversely, when someone gives up on pursuing a goal or decides not to start at all, engagement is weakened and value decreases.

Differences in how people perceive obstacles can also influence engagement. In one of Higgins’ studies, subjects were eligible for a prize if they completed an anagram. There were primed to perceive aversive background noise — a conversation or a dentist drill — as either interference to overcome or as something to be coped with (a more passive act).

Consistent with the researchers’ hypothesis, subjects who took the more active step of opposing the distracting background noise became more engaged in completing the anagram. This group also attached a higher value to their prize, while the subjects who merely coped became less engaged with their task and did not value the prize as much.

“That the value of the prize increases even though the experience is negative is not something that is obvious from the conventional view of hedonic pleasure and pain,” says Higgins.

Higgins’ insights into engagement and value may upend one axiom of economics. “The principle of scarcity assumes that the value of any scarce thing goes up and, accordingly, becomes more positive or attractive. But in most cases when that happens, it is something positive that is scarce.”

Higgins thought that scarcity might function more like a barrier — as something that can increase or decrease engagement — than a motivator. Higgins and coresearchers returned to yogurt once more, finding that when subjects believed the slightly bitter yogurt they were tasting was scarce they valued it even less than when they believed it was not scarce. Further, the study was set up so that all subjects had to violate social norms to participate (either by “selfishly” choosing the more scarce yogurt or by giving up scarcity value by choosing the less scarce yogurt). This ensured that subjects would have to overcome personal resistance — increasing their engagement.

“While supplies last,” “Last day of sale” or “Limited edition” campaigns are common marketing tactics that employ the scarcity principle. But marketers should be careful about playing hard to get, warns Higgins: this approach only works with products for which the consumer already has a positive outlook or established relationship.

Higgins’ past work on motivation and regulatory fit taken in conjunction with these insights about engagement may open other doors for marketers.

Regulatory engagement theory separates people into two basic types. Promotion-driven individuals pursue goals in an eager way, constantly looking for ways to advance; they are risk-tolerant and likely to consider a number of courses of action when confronted with a task or problem. In contrast, prevention-driven people tend to pursue their goals in a cautious way, acting vigilantly to avoid errors and minimize risk. [Read more on regulatory engagement theory in Ideas at Work here.]

When a person in a promotion state finds himself working in an organizational culture that prizes risk taking and innovation, he is said to experience regulatory fit. If that same person then goes to work for a company whose ethos emphasizes vigilance over risk, he will probably have a hard time — the work culture is a nonfit for his regulatory state. Likewise, when a prevention person finds herself in an eager, risk-taking work culture, she’s in a nonfit. And, Higgins has found, when people experience nonfit environments — whether they are promotion- or prevention-driven — they disengage.

Combining the principles behind intensification and engagement can work across a broad range of situations. Managers and influencers can consider ways in which engagement needs to be strengthened or weakened, which can often serve the dual purpose of creating a more positive experience (in the case of strengthening engagement) for staff while at the same reducing operational costs associated with reduced resistance.

Marketers may be able to use nonfit as a tool to prompt consumers to think about reasons they have not, for instance, purchased green products in the past. For example, a promotion person does not tend to make decisions in a careful, thorough way, and being asked to do so creates a nonfit. The disengagement brought on by the nonfit condition can deintensify some beliefs and perceptions. “If you ask a promotion person to write down the evidence for why they don’t like or aren’t willing to buy green products, that sort of vigilant approach is a nonfit. In a nonfit their positive attitude toward their evidence is deintensified. They may in fact be running through evidence for their position, but that act can undermine their bias against purchasing green products,” Higgins explains.

Because experiencing regulatory fit tends to make people “feel right” about what they are doing, Higgins suggests that people try to carry out difficult tasks in a fit way. For example, parents contemplating buying life insurance may see it as important but feel anxious about doing so given that it implies their impending deaths, however far removed that may be from the moment. In such an instance, strengthening engagement to intensify their positive view on buying life insurance in a way that make them feel less anxious about the decision could be useful.

Finally, there is some evidence that people feel better when they manage their emotional problems consistent with their regulatory fit; Higgins is now exploring possible mental health applications of regulatory fit [read more about this on the Public Offering blog].

Higgins is not surprised to find value woven so deeply into so many assorted disciplines. “Value is central to theories of psychology, consumer behavior and political science, management, organizations and marketing,” says Higgins. “And motivation is all about value and value as incentives. It is present in every aspect of life, in everything we do.”

E. Tory Higgins is professor of management at Columbia Business School.

Read the Research

 

E. Tory Higgins, Abigail Scholer

“Engaging the Consumer: The Science and Art of the Value Creation Process”

View abstract/citation

 

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