Surrogate Buyers

An executive summary for m anagers anagers and execut execut ives can be found at the end of this article

Surrogate buyers and the new product adoption process: a conceptualization and managerial framework Praveen Aggarwal and Taihoon Cha

Introduction

Since its introduction to marketing in the early 1960s, the innovation diffusion research has made significant progress. Bass (1969) suggested a model of diffusion of innovation based on innovative and imitative behavior. Numerous shortcomings, refinements, and modifications of this basic model have since been suggested[1].

Adopting innovation

One of the major assumptions of all such existing models is that the end-user is also the decision maker for adopting an innovation[2]. Although the role of external influences, such as that of opinion leaders, can be accommodated in these models, the final adoption decision is still assumed to be made by the buyer/user. buyer/user. This assumption, though valid in many cases, may not hold for some product categories/purchase situations. Thus, it would be interesting to examine how the diffusion process is affected if this basic assumption is relaxed. The objective of this paper is to offer a framework that would help managers rethink the diffusion process in this modified adoption structure and how this modification influences the process of diffusion. We shall examine the reasons why the buyer (who pays for the product) delegates the decision to choose to someone else. We shall also study the implications that this kind of behavior has for product managers and how they need to modify their marketing strategies to reflect accommodation of such behavior. behavior. At first, it may appear that the t he buyers hardly ever delegate the purchase/adoption decisions to anyone else. But the following examples would illustrate a few instances where decision making is often delegated to someone else: •

Wardrob ardrobee consul consultan tants ts are are being being increa increasin singly gly used used by by women women in the the acquisition of business apparel. For example, Dayton Hudson reported an increase in sales through wardrobe consultants and personal shoppers from $3 million in 1985 to $15 million in 1988 (Agins, 1988). Similarly, Solomon (1987) cites a study conducted by the magazine Savvy in which 17 percent of those responding had used the services of a wardrobe consultant.

•

Nine Nine out of ten ten bestbest-sel sellin ling g OTC drug drugss start start as prescr prescript iption ion-on -only ly drugs drugs (Haas and Kindel, 1992). Thus it is reasonable to assume that most of the popular drugs are either prescription drugs or at least they started as

The authors gratefully acknowledge the financial support offered by the Earl V. V. Snyder Innovation Management Center, School of Management, Syracuse University. University. The authors are also thankful to Dave Wilemon, Pat Meyers, Pat Auger, and the three anonymous reviewers for their helpful comments and suggestions. JOURNAL OF CONSUMER MARKETING, VOL. 14 NO. 5 1997, pp. 391-400 © M CB CB U NI NIVERSITY PRESS, 0736-3761

391

prescription drugs. Hence, at least in the initial st ages of the PLC of these drugs (if not throughout the PLC), the decision to adopt/buy these drugs is not made by the final buyers/users. It is the intermediaries like physicians and pharmacists who make the decision to buy/adopt. Even for OTC drugs and generic substitutions of prescription drugs, final buyers often rely on the advice of pharmacists/physicians (Caves et al, 1991). •

Many service providers end up choosing a product for the buyer who buys their services. Take, for example, the case of automobile repairs. For services like oil change or brake pads replacement, the service provider often chooses or recommends the brand of oil or brake pads to use. The client pays for these products but does not always participate in the choice decision. The same is true for service providers like stockbrokers, interior decorators and wine stewards who make a choice on behalf of their clients.

The concept of surrogate buyers

Delegates authority

The underlying theme in all the above cited examples is that the final buyer in each case willingly delegates the authority to choose/adopt to a third party. Very often, this third party is an expert in a particular product category/industry. These experts have been referred to as “surrogate buyers” by Solomon (1986) who defined them as “agents retained by a customer to guide, direct, and/or transact marketplace activities.” Why would a buyer, who pays for the purchase, delegate the important task of choosing to someone else? A few reasons can be cited for this behavior. First, buyers have too much information to process (Keller and Staelin, 1987). Given this information overload, the buyers may feel incapable of processing such large volumes of data in any efficient fashion. Second, we are living in an age of innovation overload (Herbig and Kramer, 1994). There has been a sharp increase in the number of options available to the buyers in recent times, and this increase has inhibited their decision-making abilities too. Third, an increased role-specialization, changing family roles and structure, and an increasingly mobile lifestyle result in a situation where there are not many friends, peers, or opinion leaders to turn to for informal advice (Solomon, 1986). Under these circumstances, buyers may be forced to rely on more formal experts for help and advice. These experts perform the tasks of information gathering and filtering, weighing of alternatives, making customized recommendations, and even conducting transactions on behalf of their clients. It is expected that, as the information-gathering process gets more tedious and complex because of growing markets and increasingly complex technologies, surrogate buyers will play an increasing role in a variety of purchase decisions (Ratchford, 1982; Stigler, 1961). Traditional vs surrogate buyer models

How does the inclusion of surrogate buyers in the decision making influence the choice process? What differences should a product manager be aware of if he/she is dealing with surrogate buyer intermediaries? We explore these issues next. In the traditional diffusion model, recall that the adopter is also the buyer and hence it is implied that the manufacturer would focus on final buyers for generating sales. In our model, which we shall call the surrogate buyer (SB) model, however, it is the surrogate buyer who makes the choice (or recommendation) on behalf of (to) the final buyer. This makes our model 392

JOURNAL OF CONSUMER MARKETING, VOL. 14 NO. 5 1997

Traditional model Suppliers of innovation

SB model Suppliers of innovation First level adoption

Single-stage adoption Opinion leaders

Surrogate buyers Second level adoption

End-users

End-users

Key Primary influence Secondary influence

Figure 1. New product adoption process: traditional vs SB model

two-staged as against the single stage of the traditional model (see Figure 1). In the SB model, a product has to be adopted by the surrogate buyers first before it can be adopted by the final buyers.

Gatekeepers and facilitators

Therefore, in the SB model, the final buyers delegate, wholly or partially, the decision to choose/adopt to the surrogate buyers. Surrogate buyers thus act as gatekeepers as well as facilitators for choosing a product. As gatekeepers they selectively choose which innovations to adopt, and as facilitators they help diffuse the chosen innovations among the final buyers population. Although friends, peers, and opinion leaders continue to influence the decision process, the degree of influence decreases sharply when the surrogate buyers are involved. Note that for this reason, we have not shown the influence of opinion leaders in the SB model i n Figure 1. Surrogate buyers not only gather, filter and process the information, but also make it self-relevant (Bargh, 1984) for the final buyers by matching the individualspecific needs of the final buyers to an innovation. At this point it is important to distinguish surrogate buyers from opinion leaders. The role of opinion leaders in the adoption process has been extensively researched[3]. Opinion leaders influence the adoption process by acting as social role models whose innovative behavior is imitated by others. They derive their power to influence through informal means rather than through their formal position or status in a social system. In contrast, the surrogate buyers have a more formal status and role in the purchase decision; they get paid for their services, and they are l ikely to be more monomorphic than opinion leaders. Refer to Table I for a summary of major differences between opinion leaders and surrogate buyers. Model of surrogate buyers’ influence

Expertise in information processing

Surrogate buyers play a unique role in the diffusion process. They have characteristics not shared by any of the players in the traditional model. They also have unique relationships with the supplier of the innovation as well as with the final buyer. We examine the impact of these defining features of surrogate buyers on various aspects of the diffusion process. Unlike the adopters in the traditional model, surrogate buyers are specialists. Thus they are likely to process and interpret information differently than


393

Opinion leader

Surrogate buyer

1. Informal relationship with end-users

1. Formal relationship; occupation-related status 2. Information exchange in the form of formal instructions/advice 3. Heterophilus to end-users (that, in fact, is the source of power) 4. Usually hired, therefore gets paid 5. Not necessarily socially more active than end-users 6. High level of accountability

2. Information exchange occurs in the context of a casual interaction 3. Homophilous (to a certain extent) to end-users 4. Does not get paid for advice 5. Usually socially more active than end-users 6. Accountability limited regarding the outcome of advice 7. As accountability limited, rigor in 7. Search and screening of alternatives more search and screening of rigorous alternatives low 8. Likely to have (although not always) 8. May not have used the product for personal used the product personally consumption 9. More than one can be consulted 9. Second opinion taken on rare occasions before making a final decision 10. Same person can be an opinion 10. Usually specializes for a specific product/ leader for a variety of related service category product categories

Table I. Key differences between opinion leaders and surrogate buyers

would the final buyer in the traditional model (Duncan and Olshavsky, 1982). The kind and nature of information sought by surrogate buyers will also be different. Because of their expertise, surrogate buyers are likely to place greater emphasis on functional rather than peripheral attributes of an innovation (cf. Park and Lessig, 1981). Thus, as compared to final buyers, surrogate buyers are less likely to rely solely on factors like brand recognition and product promotion. In other words, surrogate buyers in the SB model are likely to seek innovation-related information (for the purposes of making adoption decision) which is more functional, attribute related and technical in nature and content. For example, although the information related to a company’s performance and financial status may be public and hence available to everyone, an investment consultant (as against a layman) is more likely to pick up relevant pieces of that information and process them more efficiently, before making an investment decision. Not only do surrogate buyers have information needs different from those of the final buyers, they are also likely to be more efficient at processing information (Alba and Hutchinson, 1987). Given their larger knowledge base and extensive experience, the surrogate buyers are likely to be better and faster problem solvers (Sternberg, 1986) than the non-expert final buyers in the traditional model. This would lead to a faster first-level innovation adoption decision as compared to the adoption decision made by the final buyers in the traditional model.

Propensity to innovate

394

In the traditional model, the final buyer may or may not actively seek an innovation. In most instances, the supplier of an innovation has to deal with a pool of potential adopters which is neutral (or even negatively disposed) toward the innovation. In contrast, the surrogate buyers in the SB model are likely to actively seek information related to innovations in their areas of expertise (Johnson and Russo, 1984) which can help them stay at the “cutting edge”. For example, compared to final buyers, surrogate buyers such as wardrobe consultants and physicians are more likely to attend trade JOURNAL OF CONSUMER MARKETING, VOL. 14 NO. 5 1997

shows and professional conferences where they could get acquainted with the latest that is happening in their fields. This could prove to be a doubleedged sword for the new product managers. On the one hand, they can expect a more receptive audience in surrogate buyers who are likely to be willing to try out new products, but on the other hand, these very people can act as gatekeepers and restrict the diffusion of any new product that they find unacceptable. Thus it becomes extremely important for managers to gather feedback from surrogate buyers (as they are the primary adopting units) very early in the diffusion process to gauge the initial mood and response to the innovation so that they can take corrective actions, if required.

Homophily

Homophily has been defined as “the degree to which pairs of individuals who interact are similar in certain attributes, such as beliefs, education, social status, and the like” (Rogers, 1983). Homophily helps improve communication between individuals (Takada and Jain, 1991). Surrogate buyers are likely to be a homophilous group as they are in the same profession, share similar interests and concerns, and in many instances, are likely to come from similar social and cultural backgrounds (cf. Coleman, et al., 1966). This homophily will support communication between surrogate buyers which in turn would help diffuse the innovation within this group more rapidly. As surrogate buyers share the same occupation, their professional role within society is similar (e.g., all wardrobe consultants help their clients dress well). Burt’s (1987) structural equivalence model also predicts that there would be a sense of competition among surrogate buyers to adopt fast as the imitators run the risk of getting substituted by the innovators in their role relation with other members of the society.

Heterophily

Heterophily is the reverse of homophily and represents the degree to which pairs of individuals who interact are different from each other. Although surrogate buyers are fairly homophilous as a group, they are quite heterophilous to the final buyer population, at least on the knowledge (about the innovation) dimension. Heterophily can slow down the diffusion process as it impedes communication. Heterophilous groups are likely to talk different languages, have widely varying grasp on the technical aspects of an innovation, and have different social backgrounds (Gupta and Rogers, 1991). However, the surrogate buyers’ professional role provides a formal mechanism to help overcome the hurdle of heterophily as the expert advice bears a stamp of authority. The “bridge-tie” (Rogers and Kincaid, 1981) between a surrogate buyer and the final buyer can be classified as a strong tie, whereas it is a weak tie between the heterophilous opinion leader and the end-user in the traditional model. Hence, heterophily provides expert power to surrogate buyers which induces confidence in the final buyers to follow the advice of the surrogate buyers.

Monomorphism

An individual can be classified as a monomorphic opinion leader if he/she acts as an opinion leader for only one “product category.” Polymorphism is “the degree to which an individual acts as an opinion leader for a variety of topics” (Rogers, 1983). Opinion leaders are likely to be polymorphic. In contrast, however, the surrogate buyers are typically monomorphic. This helps them achieve economies of scale in terms of information gathering, processing, storing, and retrieval. Because of this specialization and monomorphism, surrogate buyers are likely to be perceived by the final buyers as highly knowledgeable. This high level of “perceived expertise” will help surrogate buyers to command strong influence over the final buyers (Witt and Bruce, 1972). This high level of influence is likely to lead to a better compliance rate (i.e., a large proportion of end-user population will accept the surrogate buyer’s advice to adopt an innovation). Therefore, if a


395

manufacturer is able to convince the surrogate buyers to accept its product, the subsequent diffusion among the final buyers population would be relatively fast and easy.

Accountability

Whereas opinion leaders play an informal role as information disseminators, the surrogate buyers have a more formal role to play as they usually sell their advice for a price. Because of this monetary exchange, a surrogate buyer can be held accountable for the advice given. This sense of accountability is likely to increase the level of confidence the final buyer has in accepting the advice since it reduces the perceived risk of adopting the innovation. For example, a final buyer is likely to have more confidence in the formal advice of a physician than in an informal suggestion of a friend, as the physician can be held (legally) accountable for the advice he/she gives. This high level of confidence is likely to lead to a higher compliance rate too. Managerial implications and recommendations

The presence of a surrogate buyer changes the adoption decision process significantly. The final buyer delegates the decision to adopt to the surrogate buyer thereby making the surrogate buyer the primary adopting unit. How can a manufacturer handle this situation which is simultaneously a threat and an opportunity?

Information needs

The marketers of new products which have surrogate buyers as the primary adopting units have a more complicated task of promoting their products. In most instances, they not only have to promote their products to the final buyers, but also have to do so to the surrogate buyers. The promotional messages to these two groups will also have to be very different, as surrogate buyers are experts and their information needs are likely to be very different, from those of the final buyers. Surrogate buyers are likely to seek more attribute-related technical information and ignore “nonfunctional” or irrelevant information (Park and Lessig, 1981; Punj and Staelin, 1983). Thus, for example, meaningless product differentiation[4] like “including silk in the shampoo” may work with the final buyers, but is unlikely to cut ice with the surrogate buyers. Not only does the message have to be different but also even the medium in which it is carried has to be different. Surrogate buyers are more likely to look for information in trade journals and specialized publications. Thus, the marketer of a new product could tap them in a more efficient and cost-effective manner by placing its message in such media. Another managerial implication is related to the issue of channel management and channel conflict. Surrogate buyers can facilitate as well as hinder the diffusion of an innovation. They may hinder the spread of an innovation if their interests are not properly addressed by the manufacturer. In the case of the pharmaceutical industry, for example, intermediaries (surrogate buyers such as physicians and pharmacists) are known to have facilitated the diffusion of new drugs with higher margins over other drugs (Caves et al., 1991; Mason and Steiner, 1985). The manufacturers need to recognize the critical role of surrogate buyers as channel members who can influence the adoption of their new products.

Rate of di ffusion

396

Even though the process of diffusion becomes two staged by the inclusion of surrogate buyers, we still expect the two-stage rate of diffusion in the SB model to be faster than the single-stage rate of diffusion in the traditional model. There are two key reasons for this belief. First, in the traditional model, the adoption decision can be delayed significantly because of the time spent by the final buyers individually to collect and analyze innovationrelated information. In the SB model, however, a major portion of the JOURNAL OF CONSUMER MARKETING, VOL. 14 NO. 5 1997

information processing is done by the surrogate buyer who then disseminates it to a large number of final buyers. Thus the overall cognitive efforts that need to be spent prior to adoption of an innovation decrease substantially. Second, in the traditional model, an opinion leader may have an influence over a small circle of his friends and peers. But a surrogate buyer is likely to have a larger clientele, thereby having influence over a larger proportion of the potential final buyers population. Thus, based on these two factors, we would expect that the overall rate of diffusion will be faster in the case where surrogate buyers play a part in the adoption process. It is therefore more important to reach any given surrogate buyer than it is to reach a given opinion leader or the final buyer. Summary

In this paper we introduced a new category of an intermediary decision maker who can have significant impact on the new product adoption process. Although Rogers (1983) recognized this category of innovation diffusion as a distinct possibility (calling it “authority innovation decision”), this area of innovation diffusion has largely been ignored by researchers. In this paper we have examined the role surrogate buyers play in the adoption and diffusion of new products and the implications this i nclusion of new intermediary has for new-product managers. Given the fact that our society is becoming increasingly information intensive, resulting in an information and innovation overload, surrogate buyers are likely to play an increasingly important role in the consumer decision-making process[5]. The proposed model helps provide a framework for examining the role of these intermediaries in the decision process and points out the issues that managers responsible for success of new products need be aware of in order that they may effectively deal with this new market structure. Notes

1. Refer to Mahajan and Peterson (1985) for a discussion of key modifications and refinements to the Bass model. 2. We restrict the scope of our paper to individual consumer level only. Specifically precluded from our analysis is the adoption of innovations in organizational settings, where the purchasing agents/departments may already have the necessary expertise. For an excellent analysis of the role of mediating institutions in the spread of technological innovations among organizations refer to Attewell (1992). 3. For discussion of the role of opinion leaders in the adoption process refer to Myers and Robertson (1972), Robertson (1971), and Westbrook and Fornell (1979). 4. For an interesting discussion of meaningless product differentiation refer to Carpenter et al. (1994). 5. Two issues not covered in this study could be of interest for future extensions: first, how does the final buyer choose a surrogate buyer, and second, how does a recommendation from a surrogate buyer influence the information search of the f inal buyer. References and further reading

Agins, T. (1988), “Retailers turning to personal shoppers to boost sales, win customers’ loyalty”, The Wall Street Journal, 23 December, p. B1. Alba, J.W. and Hutchinson, J.W. (1987), “Dimensions of consumer expertise”, Journal of Consumer Research, Vol. 13, March, pp. 411-54. Attewell, P. (1992), “Technology diffusion and organizational learning: the case of business computing”, Organizational Science , Vol. 3, February, pp. 1-19. Bargh, J.A. (1984), “Automatic and conscious processing of social information”, in Wyer Jr, R.S. and Srull, T.K. (Eds), Handbook of Social Cognition. Vol. 3, Erlbaum, Hillsdale, NJ, pp. 1-43. Bass, F.M. (1969), “A new product growth model f or consumer durables”, Management Science, Vol. 15, January, pp. 215-27. Burt, R.S. (1987), “Social contagion and innovation: cohesion versus structural equivalence”, American Journal of Sociology, Vol. 92, May, pp. 1287-335.


397

Carpenter, G.S., Glazer R. and Nakamoto, K. (1994), “Meaningful brands from meaningless differentiation: the dependence on irrelevant attributes”, Journal of Marketing Research, Vol. 31 August, pp. 339-50. Caves, R.E., Whinston, M.D. and Hurwitz, M.A. (1991), “Patent expir ation, entry, and competition in the US pharmaceutical industry”, in Baily, M.N. and Winston, C. (Eds), Brookings Papers on Economic Activity: Microeconomics, The Brookings Institution, Washington DC, pp. 1-66. Coleman, J., Katz, E. and Menzel, H. (1966), Medical Innovation, The Bobbs-Merrill Company. Inc., New York, NY. Duncan, C.P. and Olshavsky, R.W. (1982), “The role of consumer beliefs”, Journal of Marketing Research, Vol. 19, February, pp. 32-43. Gupta, A.K. and Rogers, E.M. (1991), “Internal marketing: integrating R&D and marketing within the organization”, Journal of Consumer Marketing, Vol. 8, Summer, pp. 5-18. Haas, N. and Kindel S. (1992), “Drugstore cowboys”, Financial World , 28 April, pp. 54-57. Herbig, P.A. and Kramer, H. (1994), “The effect of information overload on the innovation choice process”, Journal of Consumer Marketing, Vol.11, No.2, pp. 45- 54. Johnson, E.J. and Russo, J.E. (1984), “Product familiarity and learning new information”, Journal of Consumer Research, Vol. 11, June, p p. 542-50. Keller, K.L. and Staelin, R. (1987), “Effects of quality and quantity of information on decision effectiveness”, Journal of Consumer Research, Vol. 14, September, pp. 200-13. Mahajan, V. and Peterson, R.A. (1985), Models for Innovation Diffusion, Sage Publications Inc., Beverly Hills, CA. Mason, A. and Steiner, R.L. (1985), Generic Substitution and Prescription Drug Prices: Economic Effects of State Drug Product Selection Laws , Federal Trade Commission, Washington DC. Myers, J.H. and Robertson, T.S. (1972), “Dimensions of opinion leadership”, Journal of Marketing Research, Vol. 9, February, pp. 41-6. Park, C. W. and Lessig, V.P. (1981), “Familiarity and its imp act on consumer biases and heuristics” , Journal of Consumer Research, Vol. 8, September, pp. 223-30. Punj, G.N. and Staelin, R. (1983), “A model of consumer information search behavior for new automobiles”, Journal of Consumer Research, Vol. 9 March, pp. 366-80. Ratchford, B.T. (1982), “Cost-benefit models for explaining consumer choice and informationseeking behavior”, Management Science, Vol. 28 February, pp. 197-212. Robertson, T.S. (1971), Innovative Behavior and Communication , Holt, Rinehart & Winston, New York, NY. Rogers, E.M. (1983), Diffusion of Innovations, The Free Press, New York, NY. Rogers, E.M., and Kincaid, D.L. (1981), Communication Networks: Toward a New Paradigm for Research, The Free Press, New York, NY. Solomon, M.R. (1986), “The Missing Link: Surrogate Consumers in the Marketing Chain”, Journal of Marketing, Vol. 50, October, pp. 208- 18. Solomon, M.R. (1987), “The wardrobe consultant: exploring the role of a new retailing partner”, Journal of Retailing, Vol. 63, Summer, pp.110-28. Sternberg, R.J. (1986), “Inside intelligence”, American Scientist , Vol. 74 March-April, pp. 137-43. Stigler, R.J. (1961), “The economics of information”, The Journal of Political Economy, Vol. 69 Ju ne, pp. 213-2 5. Takada, H. and Jain, D. (1991), “Cross-national analysis of diffusion of consumer durable goods in Pacific Rim countries”, Journal of Marketing, Vol. 55, April, pp. 48-54. Westbrook, R.A. and Fornell, C. (1979), “Patterns of information source usage among durable goods buyers”, Journal of Marketing Research, Vol. 16, August, pp. 303-12. Witt, R.E. and Bruce, G.D. (1972), “Group influence and brand choice congruence”, Journal of Marketing Research, Vol. 9, November, pp. 440-3.

Praveen Aggarwal is a Doctoral Candidate in Marketing at Syracuse University, Syracuse, New York. He did his masters in Economics and Business Administration from India. His research interests include consumer decision making, diffusion of innovation and marketing models. Taihoon Cha is also pursuing his Ph.D. degree in the same department. He got his MBA degree in Korea. His research interests include consumer behavior and strategic issues in marketing. s 398


This summ ary has been provided to allow managers and execut ives a rapid appreciation of the content of this article. Those w ith a particular interest in t he topic covered may then read t he arti cle in toto to take advantage of the more comprehensive descript ion of the research u ndertaken and its result s to get the full benefit of the m aterial present

Executive summary and implications for managers and executives

Intermediaries, consumer services and surrogate buyers: the new face of consumer marketing It is odd when you come across something in consumer marketing that strikes you as obvious but nevertheless you wonder why you had never thought of it before. The surrogate buyer is such a concept. Perhaps – while the idea of using specialist purchasing advice is standard practice for businesses – the idea has developed in consumer marketing as we have become richer and more able to afford the price of specialist advice. Certainly the wardrobe consultants described in Aggarwal and Cha’s article are a novelty to me. At the same time, there have always been certain markets where people who make choices and recommendations about what we should buy are a routine part of a more general service (such as in the authors’ example of a car repair firm). In either case the decisions made by the specialist are based on a different (perhaps more rational and less risk averse) manner. For marketers across many product areas the influence of the advisors or specifiers could have an impact on a significant chunk of their business. Certainly people selling materials for home improvement, gardening supplies, vehicle parts and even fashion clothing, must now consider the influence of the trusted personal intermediary. And, as Aggarwal and Cha show us, such intermediaries adopt new products very differently from the ordinary consumer. Intermediaries have: (1) greater knowledge about the product category, (2) business purchase so driven by business rather than personal benefits, (3) the desire to innovate so as to appear at the forefront of the market, (4) a wider marketplace in that the purchase affects many customers rather than one individual. From these differences it is plain that we need a different strategy and a different set of tactics from normal consumer marketing. In effect what is needed is a business-to-business marketing strategy designed for a consumer product. Rather than general advertising, sales promotions and the other practices of standard consumer marketing businesses must consider: (1) using targeted promotions such as direct mail and telemarketing rather than consumer-targeted advertising, (2) where an advertising campaign exists it should incorporate specialist publications aimed at the intermediary or surrogate buyer, (3) changing the thrust of public relations activity from newspapers, broadcast media and magazines toward exhibitions, conferences and trade bodies, (4) employing sales people rather than relying on consider pull to generate sales. All these activities require a subtly different marketing mindset but, for many of the markets, such approaches cannot wholly replace direct-to-consumer promotions. After all, not every pot of paint is bought by a professional decorator nor every brake pad by a car repair workshop. And, in markets such as fashion clothing, nearly all the purchases are by individual consumers on their own or their family’s behalf. Combining the sophisticated, exclusive promotions needed to appeal to surrogate buyers


399

with the image-oriented, general advertising needed in a consumer mass market presents a challenge for any business targeting consumer markets serviced by surrogate buyers. For new products, as Aggarwal and Cha discuss, the opportunities are considerable since the specialist represents a more attuned and more interested audience for a new product. Such people are needful of new products in order to justify their existence. For new product teams such interest presents considerable opportunities including: (1) Customer involvement in the new product development process at an earlier stage than the test market. In business-to-business product development the involvement of customers in new product development teams represents a chance to bring genuine customer issues to bear on the development process. With intermediaries who understand both customer wants and the product category there is the chance to do this in consumer marketing without endless qualitative research that can sow as much confusion as it provides answers. (2) Developing database marketing and relationship marketing strategies in a large and diverse consumer market. You could consider promotional and other support for the intermediary’s business or propose shared information about product preferences and market changes. (3) Establishing a more direct route to launch a product rather than rely on the slow adoption process in traditional consumer markets. The initial stages of a new product launch could be targeted solely at the surrogate buyers rather than the market as a whole. Not only does this speed adoption but it reduces risk by securing a lower cost launch and more immediate feedback. (4) Creating more dynamic product adoption and extension programmes by tapping into the richer and more sophisticated buyers through their advisors. It is likely that right across consumer marketing we will see the development of intermediaries and surrogate buyers. Not only will consumers have less time to spend willingly on product selection but also increasing income levels and greater wealth encourage the desire to use that money to employ specialists. On top of full-time employees like gardeners and maids we could see the increased use of specialist catering services, wardrobe advisors, interior designers and personal health and beauty consultants. At the same time the development of buying clubs and related consumer services could increase as the use of electronic media and private money grows. Such clubs could buy anything from consumer electronics and cars right down to the week’s groceries. And in doing so, competition between such organizations must create a demand for new products. It is entirely possible that, at some point in the future, much of consumer marketing will differ very little from business-to-business marketing – at least so far as manufacturers and larger retailers are concerned. Individual buyers will “protect” themselves from old-style marketing gimmicks by using experts to advise on purchase decisions. Certainly the sensible consumer marketer will plan carefully for this eventuality. If they do not the chances are that, in many product categories, the market will slip away to those businesses that have geared up to selling through surrogate buyers.

(A précis of the article “Surrogate buyers and the new product adoption process: a conceptualization and managerial framework.” Supplied by Marketing Consultants for MCB University Press) 400


Surrogate Buyers

Recommend Documents