The Mediated Purchasing Decision
A sneaker company faced a marketing dilemma. Young urban males from working-class neighborhoods loved their basketball shoes. These young males viewed the shoes as not only having the coolest designs, but also as the most comfortable shoes to play basketball in. A sizable number of these young men would often scrap together their limited resources so that they could buy a pair. They were also very keen to provide positive reviews via social media and other outlets. As such, the sneaker company often involved this demographic group in the product development process through market research, focus groups and product testing.
No problem right? Well, company executives also had market data indicating that the vast majority of their sneaker revenues actually came from white suburban males who were over 45 years old. These older men had the financial resources to buy sneakers on a consistent basis. Interestingly, they bought the shoes, not to play ball, but to go for walks and mow their lawns on Saturday afternoons.
Within the company there were often conversations on where marketing and product developments efforts should be focused. If the older segment is most lucrative, should the company focus on them and design shoes to serve their needs? Should the company bring the 45-year-old male segment into the product development process for feedback and reviews? In other words, should this segment have say in shoe design? The obvious answer seems to be “Yes”, since older men are the most lucrative market segment. The sneaker company should follow the money… Right?
It turns out that the reason older men were buying the sneakers was because they thought that younger men viewed the shoes as cool. The older men were relying on signals from the younger men to make decisions on whether to buy a certain pair of shoes. This social validation was important to them. As such, it made little sense to involve the older males in the product development process. It was more important from a revenue perspective to obtain positive reviews for young and hip urban males. This would, in turn, drive purchases from older men.
A Mediation Effect
This case illustrates a phenomenon that is often described within psychological research as a mediation effect. Mediation occurs when researchers initially notice a relationship between two variables. However, in exploring why these two variables are connected they then discover that the relationship is fully explained by a third variable. This is why researchers often say that correlation is not causation.
A good example of mediation is the famous Theory of Planned Behavior within which researchers have shown that the relationship between attitude and behavior is mediated via intentions. In statistical terms, the way researchers illustrate a mediation effect is through the following steps.
There is a significant relationship between a predictor variable X and an outcome variable Z.
There is a significant relationship between the predictor variable X and a proposed mediator variable Y.
There is a significant relationship between the mediator variable Y and the outcome variable Z.
Finally, and this is the most important step, when both the predictor variable X and mediator variable Y are put in same equation as simultaneous predictors of the outcome variable Z, the relationship between X and Z should disappear, while the relationship between Y and Z remains strong.
So for example, within Theory of Planned Behavior to show that the relationship between attitude and behavior is mediated via intentions, a researcher needs to show that:
There is a significant relationship between attitudes and behavior.
There is a significant relationship between attitudes and intentions.
There is a significant relationship between intentions and behavior.
Finally, both attitude and intentions are entered as simultaneous predictors of behavior in the same equation. If mediation is present then the relationship between attitudes and behavior should disappear, whereas the relationships between intentions and behavior should stay strong.
The point of entering both variables as predictors in the same equation is to check for statistical independence. If the variables are independent then both attitudes and intentions should predict behavior within this equation. However, if there is mediation, whichever variable that is the ‘last man standing’ is the mediator. It has absorbed the effects of the other variable. This basically means that attitudes can only influence behavior to the extent that they influence or are related to intentions. Intentions are the most proximal predictor of behavior.
The Mediated Purchasing Decision
Back to our sneaker company. Remember that the company noticed that their most lucrative segment were older males. But this segment only bought the shoes that they perceived as being positively evaluated by younger males. Lets look at this case through a mediation lens.
Older males’ positive evaluation the shoes is related to their purchasing of those shoes.
Older males’ positive evaluation of shoes is related to younger males’ positive evaluation of the shoes.
Young males’ positive evaluation of shoes is related to older males’ purchasing decisions.
When you put the older males’ evaluation of shoes and the younger males’ evaluation of the shoes as predictors of the older males’ purchasing decisions, the only relationship that remains significant is that between the younger males’ evaluations of the shoes and the older males purchasing decision.
This effectively means that older males purchasing decisions are strongly predicted by the young males evaluation of the shoes. Their own attitudes to the shoes are not as important or proximal to their purchasing decisions. Their own thoughts and feeling about sneakers only influence their purchases via the perceived attitudes of the younger males.
This gives the company strong signals about how they should be doing product development and marketing. They should do product development with the younger males and make sure that this segment thinks the shoes are cool. They should then use the positive reviews from this segment as a marketing tool to convince their most lucrative segment of older males to buy.
Companies should not assume that correlation is causation. They need to look at the underlying reason that customers buy a product. Clayton Christensen’s Job To Be Done concept proposes that if you notice a relationship between a demographic segment and purchasing decision, it is not the demographic characteristics that are driving that purchase.
Customers have underlying reasons why they buy products. They have jobs to be done. These jobs to be done are your mediator. They explain the relationship between demographic characteristics and purchases. If you focus on these underlying and more proximal reasons for purchasing, you are much more likely to succeed and also provide a great product for your customers.