The second of four forums hosted by Better Marketing for a Better World, in conjunction with the Wheeler Institute, featured three articles from the Special Issue addressing Economic & Social Empowerment. In the first hour, the authors discussed their inspiration for their research, the implications of their findings for practice, and ideas for future research.
Differentiation through marketing is key to driving growth for micro-entrepreneurs
In the first study, titled “Do Marketers Matter for Entrepreneurs? Evidence from a field experiment in Uganda”, authors Anderson, Chintagunta, Germann and Vilcassim tested whether the addition of marketing coaches could positively impact entrepreneurial performance in Ugandan markets. The inspiration for this project was based in the knowledge that often businesses in emerging markets are too small and undifferentiated from others that they tend to fail, or fail to grow. By the same token, entrepreneurship is considered a critical mechanism for economic development and a key method of alleviating poverty. How can we foster differentiation in emerging markets and foster growth? This study, undertaken in partnership with Grow Movement, connected entrepreneurs in emerging markets with marketing professionals in advanced markets remotely over the course of ~2 years. Coaches were assigned to ~530 entrepreneurs in Uganda, while a further 400 entrepreneurs served as a control group and the virtual meetings took place via Skype over a 2-6 month period, supported by local intervention managers. The coaches came from a wide array of functional backgrounds, and were split into three expert groups – Marketing, Consulting and Other (incl. Accounting, Finance, Strategy and Legal). The study found that those marketing coaches significantly and positively impacted the enterpreneurs – average sales increased by 51% and monthly profits by 36% on average for this group, compared to the control group which dropped in performance over the same time period. The team found that marketers focused on differentiation, which was previously neglected, leading to such effective results.
This study supports the premise that marketers should increase their presence in emerging markets, proving that marketers can assist entrepreneurs in differentiating themselves and their product offerings – a key driver for growth. We know that flourishing entrepreneurship is an effective method to alleviate poverty and this study indicates the potential that marketers have to support this. Governments and NGOs spend billions of dollars on poverty intervention supporting emerging markets annually, and these findings suggest that influential organizations in this space – such as the World Bank, the UN and IMF – should consider how marketing tools and professionals can be integrated into solutions for stimulating growth, earning marketers a seat at the table in these discussions.
Further research is required to understand whether volunteers and entrepreneurs could be better matched to foster greater diversity and inclusion efforts; the interface of marketing and entrepreneurship, exploring other ways marketing can benefit entrepreneurs in emerging markets; and understanding whether research targeted at poorer firms can assist in their access to customers and capital.
Increasing marketplace access and literacy increases wellbeing and leads to income generation
In the second study “Marketplace literacy as a Pathway to a Better World: Evidence from field experiments in Low-Access Subsistence Marketplaces”, authors Viswanathan, Umashankar, Sreekumar, and Goreczny proposed that increased marketplace literacy would increase psychological well-being, and consumer and entrepreneurial outcomes related to wellbeing by empowering people with the skills and knowledge to make decisions as customers, and better understand marketplaces to support their own entrepreneurial efforts.
This study assessed subsistence marketplaces – a growing segment of consumer spend, accounting for almost $5T in consumption spending annually and attracting the attention of large conglomerates to create products specifically for low-income consumers (e.g. Nokia cellphone products) – but with a client base that has to overcome severe constraints to participate. Marketplace literacy, defined as the knowledge and skills to enable participation as both a consumer and an entrepreneur, helps consumers to understand why products are sold or marketed in certain ways and leads to better decision-making. This literacy is often experiential, arising from physical access or participation in marketplaces, which rural communities visiting marketplaces may lack due to geographical limitations. Moreover, the authors posited that there is a gap in that past researchhas focussed in a limited way on consumer literacy. In contrast, marketplace literacy encompasses both consumer and entrepreneurship literacy, enabling holistic understanding of the marketplace. They made three predictions: 1) that an increase of marketplace literacy would be associated with increase in psychological wellbeing, 2) an increase in consumer outcomes related to well-being, i.e., confidence and decision-making; and 3) an increase in entrepreneurial outcomes related to well-being – the intent or action to begin a micro-enterprise.
The study utilized an already established program as an external intervention to participants, running field experiments across villages in South India and Tanzania, with low to extremely low marketplace access. The authors found support for their prediction, with an interesting nuance being that the psychological and consumer benefits were higher for those with relatively lower marketplace access, whereas entrepreneurial related benefits were increased for those with relatively higher marketplace access, even within the narrow range of low to very low access contexts studied. An implication of this study is that knowledge and skills to effectively participate in a marketplace are required to improve both lives and livelihoods. The team also found that it leads to income generation – in a post-hoc field study in Tanzania, 25% of participants started a micro-enterprise as a result of this short and scalable intervention.
This study shows that marketplace literacy can assist consumers to make better decisions. Knowing how businesses sell and market to consumers is critical in benefiting consumers and improves wellbeing, especially when marketplace access is an important barrier to gaining these skills. As part of this research, the team developed a scale for measuring marketplace literacy that can be adopted by governments and NGOs in designing and implementing interventions to benefit customers and entrepreneurs in different geographies. Moreover, the authors suggest that non-profit or policy actors, develop and provide the physical and virtual infrastructure that will allow rural communities greater access to formal marketplaces – facilitating market access will increase participation and ultimately, wellbeing. Using digital means, such as WhatsApp videos, as a way to scale marketplace literacy training programs was another call to action made to large-scale public and private actors by the research team. Lastly, the team identified that marketplace literacy needs to be better measured and understood in future, especially as a core way that marketers can support entrepreneurship efforts in emerging markets.
Asking people to assess their spending behavior against the relative frequency of similar others can be more effective in encouraging saving than pushing positive illusions
The third and final study in this series, “Popping the Positive Illusion of Financial Responsibility Can Increase Personal Savings: Applications in Emerging and Western Markets”, authors Garbinsky, Mead and Gregg investigated why people tend to believe they are more financially responsible than they are, developing an intervention to assist people to view their spending habits more realistically and in a bid to motivate them to increase their savings. Drawing on literature on positive illusions, the authors found that people tend to think they are better than they are in a range of domains (not just financial) and the common perception is that while bad things happen to others, they won’t happen to me. This, coupled with a second illusion that someone can act in an ideal manner at a later point in time, despite not acting ideally now, means that people also believe they will have the option to save at a later date. Moreover, if people do not perceive a discrepancy between their actions and ideal standard of behavior, they do not change their behavior – so where people do not notice a difference between their past financial behaviors and the ideal standard of a financially responsible person, they will continue to behave the same way. Through this study, the team wanted to develop an intervention that helps people to view themselves and their financial behavior more realistically, in a way that can be implemented in practice. The goal was to make people realize they have not acted in a financially responsible way, perceive the difference between their actions and the ideal standard and be motivated to save money in a bid to restore their positive self-perception of financial responsibility.
First, the team conducted a series of pre-tests to identify a pool of behaviors they termed ‘superfluous spending behaviors’, where people elected to spend money instead of save – behaviors such as eating at an expensive restaurant instead of a cheaper one. By analysing these behaviors and their frequency, they were able to develop a scale measure such that majority of participants would fall on the upper end of the scale. This was crucial as prior work has proved that when people fall at the upper end of a spectrum, they are more likely to be inferring information about themselves. This meant that participants would view the relative frequency of their behaviors as higher than others across measures like ‘buying at full price instead of waiting for a sale’, alerting them to the fact they are less financially responsible than they assumed, and motivating them to assess their spending patterns. The team tested this on many populations, with one of the field experiments in emerging markets being centered on Ugandan coffee growers. Here, the team measured the savings behavior of ~250 coffee growers across one week before randomly assigning the growers to a ‘superfluous spender’ or control condition and measuring their savings behavior for two weeks afterward. In both trial conditions, participants were asked the same 5 questions on spending behaviors identified in the first week e.g. how often they might purchase a soda instead of drinking water, with the only difference being that in the ‘superfluous spender’ condition, participants were asked to answer according to a 5 point scale. The experiment was designed so that ~90% of participants would fall in the upper end of the scale for these behaviors; in the control condition, the questions were open-ended and participants could not infer their relative frequencies. The team found that in the absence of relative frequency information, the control group did not change behavior at all, saving ~12% of their income on average both pre and post the intervention. However, the participants in the ‘superfluous spender’ condition significantly increased their savings post-intervention, to almost double pre-intervention levels.
While prior research has argued that one method of encouraging people to save more is by making them feel good about themselves, this study would suggest otherwise: in this instance, shattering people’s positive self-perceptions and making them realize they are not as financially responsible as they may assume actually motivated them to save more. Saving money is positively associated with both financial and emotional wellbeing posing the question – how can we implement these findings to encourage people to save for the future?
The team posits that for developed economies, it is crucial to administer this question in the form of 5 key questions surrounding superfluous spending behaviors at crucial decision points, such as opening a savings account, setting a savings goal or planning for retirement. This could incentivize people to commit to saving more at these crucial points. In developing economies, the authors suggest that these behaviors could be administered through cell phones by community based savings or loans organizations. The team also acknowledges there are emerging questions to consider:
- Is there a relationship between personal savings and self-enhancement on a global level? Does saving money always have positive association, or are there some parts of the world where this has a negative association e.g. coming across as stingy or frugal?
- Could this intervention affect outcomes other than increasing savings? E.g. are people likely to change other behaviors, like getting a second job or selling unwanted goods to increase cash reserves, when alerted to their spending behaviors?
- How does this complement or compare to other interventions?
Further detail on each study:
- Stephen Anderson, Pradeep Chintagunta, Frank Germann, and Naufel Vilcassim, “Do Marketers Matter for Entrepreneurs? Evidence from a Field Experiment in Uganda”
- Madhu Viswanathan, Nita Umashankar, Arun Sreekumar, and Ashley Goreczny, “Marketplace Literacy as a Pathway to a Better World: Evidence from Field Experiments in Low-Access Subsistence Marketplaces”
- Emily Garbinsky, Nicole Mead, and Daniel Gregg, “Popping the Positive Illusion of Financial Responsibility Can Increase Personal Savings: Applications in Emerging and Western Markets”
The Better Marketing for a Better World (BMBW) initiative has been established as a collaboration between Professor Rajesh Chandy, Professor Gita Johar from Columbia Business School, Professor Christine Moorman from Fuqua School of Business and Professor John Roberts, Professor at the University of New South Wales, Sydney Australia. The aim of the BMBW initiative is to build community and support the development and dissemination of knowledge on how marketing can improve lives, sustain livelihoods, strengthen societies and benefit the world at large. There is natural synergy with the aspirations of BMBW and the Wheeler Institute, and therefore under the guidance of Rajesh Chandy the Wheeler Institute has taken a significant role in supporting the launch of the BMBW initiative (bmbw.org). Going forward members of the Wheeler Institute team will undertake a secretariat role in support of the BMBW initiative developing its operational frameworks related to organising forums, facilitating training, and maintaining online resources.