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Otnes Research: All Wrapped Up


11/11/2011

All Wrapped Up

[Reprinted from Perspectives Fall 2011]

 

It may not yet be Thanksgiving, but holiday shopping is well underway. Some view the search for the perfect gift to be a big challenge; others see it as a big headache. But no matter how you look at it, one thing's for sure. It's big business. Understanding what motivates gift givers is important for retailers, manufacturers, and marketers who are looking to capture their attention—and their dollars.

 

Cele Otnes

What Kind of Gift Giver Are You?

The perfect gift, says Cele Otnes, is not necessarily the most expensive or the most popular. According to Otnes, a professor of marketing and advertising whose research focuses on ritual-based consumer behavior, it's much more personal.

"If you found a soda can that was run over in the road and you and your best friend had a private joke about soda cans run over in the road, that might be the greatest gift you ever give that person," Otnes says. "On the other hand, if you are in a hellacious relationship with someone and you give them a diamond ring, that might be the worst gift you could give. So it's not about the gift."

Instead, Otnes says, it's about the relationship. And she should know. Along with two other researchers, Otnes conducted a 12-year study in which they monitored the buying patterns of the same five people as they did their holiday shopping for an extensive number of family and friends. What Otnes found is that our gift purchases are driven by how much—or how little—we care about the relationship.

Otnes and her colleagues discovered six roles that people fill when buying gifts:
• The Pleaser, who tries to please the recipient;
• The Provider, who purchases needed items as gifts;
• The Compensator, who makes reparations for a loss the recipient suffered;
• The Socializer, who wants to pass on values or knowledge;
• The Acknowledger, who buys obligatory gifts; and
• The Avoider, who, through a lack of gift-giving, sends a deliberate message.

While you might not be cognizant of what role you are filling when you give someone a gift, you should be, Otnes says. "Think about what the gift says about the relationship. And what you want it to say about the relationship. Do I want it to keep saying what it's always been saying or do I want to take it to a different level?"

Gifts not only say something about the relationship; they say something about you, says Brittany Duff, assistant professor of advertising. Duff notes that she might not care what the tag inside a sweater says if she buys it for herself, "But if I give it to somebody else, I'm going to care a lot more about what that label says. Because when I give them a gift, it says something about me. So the brand becomes increasingly important there, as do little things like perception of price or time spent."

Brittany Duff

More Than Ribbons and Bows

With holiday gift-giving alone estimated to be more than a $65-billionper-year business, and weddings, birthdays, Valentine's Day, and other special occasions adding to the coffers,how can retailers and marketers increase their chances of capturing a share of the lucrative gift-giving market? It's important for business to understand the roles that gift givers fill, to assess how their products can fill those roles, to build connections with customers around this understanding, and to target advertising to capitalize on the roles and connections.

Otnes, Duff, and Tina Lowrey, a professor of marketing at the University of Texas at San Antonio who earned her Ph.D. at the University of Illinois, offer some practical suggestions for businesses to follow as they position themselves in the gift-giving market or fine-tune their relationship with consumers in order to improve their position—and their sales.

• Anticipate recipient reaction. Many advertisers—such as jewelers—focus on the response of the recipient to the gift. The consumer thinks, "Oh, she's going to love this!" Or they envision the joy on their children's faces as they rip open their packages. "This is wise," Duff says, "because gift-giving is, among other things, a bonding experience."
• Consider the role of the consumer. "It's important that marketers realize that gift selection is almost as much about the self-identity of the giver as it is about the recipient," says Lowrey, who conducted multiple research studies on gift-giving with Otnes for over a decade, first as a doctoral student and later as a professor. "Only 'The Pleaser' sincerely wants to select gifts that the recipient will like. All other identities are more about the giver."
• Identify products as gifts during the holiday season. "At holiday time, people have gift-giving in mind, so it's a smart move to highlight products as gifts, not just as general sales," Duff says. "People are more likely to attend to it if it's matching something they would like to accomplish."
• Customize products. "Customers are really concerned with customization these days," Otnes notes. "For example, good old M&Ms, this plain chocolate product that's been around forever, has repositioned itself into this wonderful, almost luxury brand because you can customize it with pictures, with colors, with words. Right off the Internet you can order these things—and the prices are ridiculously high!" But people are buying, because they love the customization. Businesses that find original ways to offer customization find more customers interested in
their product.
• Accommodate customers. "The number one thing businesses should do to attract gift-buyers is to offer better service from start to finish," Lowrey says. "For online purchasing, this includes easier navigation, more timely and less costly shipping, more lenient return policies, etc. For brick and mortar purchasing, it means more salesclerks to help customers with their gift selections, free wrapping, and, again, more lenient return policies."
• Consider how rational arguments play out in emotional ads. "When you start bringing rational arguments into more emotional ads, you aren't making a singular connection," Duff says. "I don't care about your message for the most part, but if I am giving it a little bit of attention, I want something in return. I either want to feel good, be happy, or learn something or find a solution to a problem. I need to get something back. If you're giving me a jumble of things, that doesn't help. Having one main thing for consumers to grasp is probably best.
• Grasp consumer psychology. "Just increasingly understanding consumer psychology is incredibly important," Duff says. "Understanding the context in which your product or brand is used becomes very important also, because there's an increased understanding that people don't necessarily always use a product or do things the way you tell them to."

Less to Spend

The strategies these experts suggest are even more important as retailers continue to face the prospect of lower consumer spending in the current economic conditions. A 2009 study conducted by the International Council of Shopping Centers, reported that over three-fourths of more than 2,500 consumers said they had cut back their shopping in the past year (and women were much more likely to cut back than men). Most kept a tighter fist on their dollars as either a "precautionary measure" or because it "seemed like the right thing to do." While this study looked at all spending—not just on gifts—it's apparent that gift purchases have taken a hit during the recession. People are cutting back on how much they spend, how many people they buy for, and when they begin shopping (many start earlier, to spread the costs out). In addition, more shoppers are frequenting discount or outlet stores and finding other ways to save money on gifts.

"The recession has likely led to selecting less expensive gifts," says Lowrey. "Many people are also foregoing tangible gifts altogether—for example, going out to eat to celebrate an anniversary, rather than exchanging gifts."

"You might make group family decisions like, this year we'll do 'X' instead of giving Christmas presents— we'll take our trip and that will count," adds Otnes. Likewise, she says, the recipient of a Wal-Mart gift card might decide to spend it on needed groceries or other practical items instead of what we would traditionally consider a "gift." On the other hand, it's ironic that a recession can also do just the opposite—that is, it can prompt people to buy items that they might not normally buy. "You might not want to spend money, but maybe a $10 bar of soap will get you out of your funk— for example, if you didn't get a raise," Otnes says.

Pricing and bargains have become more salient during the recession. "People have gotten much more bargainconscious, and it's really shifted the way we shop for gifts," Otnes says. "In the good old days, the Christmas shopping season started the day after Thanksgiving. Then retailers started to push the season to start in September. Now retailers are really worried because consumers are waiting as long as they can, gambling that prices are going to go down as Christmas gets closer."

Gifts at Your Fingertips

If fallout from the recession doesn't complicate matters enough, e-commerce has created additional challenges, and opportunities, for retailers. Internet Retailer magazine estimates that more than 70 percent of consumers shop online during the holiday season.

"The Internet has changed gift shopping forever," Otnes declares. "Some folks resist it, because it doesn't allow them that ambient spirit of Christmas shopping—it dilutes the whole running around the night before and getting hot chocolate at Panera. So you have to choose as a consumer: What do you want to do? Most people do a little bit of both."

One great advantage of the Internet, Otnes says, is it puts stores at your fingertips that you would otherwise never have access to. "I would say," Lowrey adds, "that the Internet is probably the single most important change in shopping in general in our generation." It's not only
great for consumers, she says, but for businesses as well. "It has given businesses the ability to reach a much larger group of customers in a much easier way."

And it has spawned gift sites such as etsy.com, which specializes in handmade items, and redenvelope.com, through which you can purchase gifts by various categories. Sure, you lose out on the hustle and bustle of holiday shopping among the crowds, but you gain bargains, the ability to compare products and prices, and access to pretty much whatever you want when you let your fingers do the shopping.

And, if you're overwhelmed by all the choices, you can always go the increasingly popular route of gift cards. "There was this belief that consumers would resist this influx of gift cards because they're not very personal," Otnes says. "But the truth is they're so convenient and they take the risk completely out, unless you completely blow it and get a card from a store that someone is boycotting."

Getting Down to Business

So, if gift-giving is big business, even in down times, what do retailers and marketers need to know to get their share of the gift-giving pie?

First, their advertising must be relevant. Keep in mind, Duff says, that the typical person sees about 5,000 ads a day. She recently asked her students to recall as many ads as they possibly could from the day before, and the most a student could recall was eight. The other 4,992 ads are filed under "Sensory Overload/Not Paying Attention/Don't Care."

The only way advertisers can get people to care is to be relevant. Duff likens it to what is called the "cocktail party effect," which is the general ability to filter out important, relevant noises or those that require a response when there are many competing background noises. For instance, at a party, you focus on the people you're talking with, and try to block out all the other noise around you. But if you happen to hear your name spoken at a nearby table, you pay attention. "We're bombarded with messages as consumers, and don't have the time to pick through the things that we are exposed to every day," Duff says. "But we perk up when we hear something relevant." Being relevant—and thus being heard above the din—is perhaps the highest priority of an advertiser.

What makes an ad relevant? "At the core," Duff notes, "you look at a brand and say that it should communicate specific, constant things, things that don't change over time. But you need to communicate that brand messaging in a way that's current and relevant. Advertising is culturally situated—which is why I can show an ad from the '70s or '80s and my students just laugh. The ads might still hold the same idea for now, but the ads themselves are so situated in a time and place that they don't seem relevant anymore."

The content of an ad is not the only consideration as to its relevancy with an audience. Connection planning, which focuses on how companies connect with their existing and potential customers through ad placement, is a growing consideration as well. The process has evolved from just knowing, say, what demographic reads Woman's Day to understanding the mindset of readers or viewers who encounter their ads. "Connection planning brings in the emotional context," Duff says. "People have shifting identities. Through connection planning, companies can
better understand who people are while they are consuming their media or while they are reading their message."

The best ads, Duff says, understand a product from a consumer's point of view. "Advertising has increasingly moved from this idea that everything is about our product to maybe it's a little bit about you, too."

And that includes, she says, the realization that people might have a relationship with the product or store or brand. Again, just like gift-giving, it's all about relationships.

–Tom Hanlon

 

 

UIUC College of Business