Keeping up with the Kardashians may be the latest fad, but keeping up with the Joneses has never gone out of style.
Certain consumers are keen about adopting new products and are prone to mimicking the product choices of others. But when it comes to status-enhancing products, people in the middle of the status hierarchy are most likely to adopt a new product quickly, according to a recent paper co-authored by Yansong Hu, a professor at the University of Warwick in the U.K., and Wharton marketing professor Christophe Van den Bulte. The paper, “Nonmonotonic Status Effects in New Product Adoption,” was published in the May 2014 edition of the journal Marketing Science.
“People with very high status say, ‘I don’t care. I already have high status; I’m not going to lose it. I don’t need to adopt a new tool or work hard. I feel pretty secure,’” Van den Bulte says. “Very low status people say, ‘I’m so low that whatever I do doesn’t really matter. People will barely notice what I do.’ But those in the middle feel there is room for improvement, as well as a risk for slipping down. These are the people who are most sensitive to keeping up with the Joneses.”
Essentially, he notes, people in the middle of the status distribution are most concerned with elevating their standing and are therefore most interested in buying a product or tool that they think will provide a boost. Among the study’s key findings was the tendency of those with middle status to quickly adopt products, to be the most susceptible to the opinions of others and to care about what others are doing.
Additionally, the study found that it is indeed people with high status who are most influential. “That’s not surprising, although it’s good to have it confirmed,” Van den Bulte adds. Generally referred to as opinion leaders or “influentials,” these people are more respected and are given more attention than others, which means they have higher status. It was this very relationship that initially intrigued Van den Bulte and propelled him to explore status as it pertains to new product adoption.
“Old money doesn’t need to show off. People know their status. It’s the nouveaux riches who care about showing off.”
But what also prompted Van den Bulte to dig deeper were the findings of a study he had worked on two years prior. The study showed that people who believe they are opinion leaders are less sensitive to contagion — they don’t really care what other people are doing. Another of the study’s conclusions was that people who actually are opinion leaders are not more or less sensitive to what other people are doing.
Like Scientist, Like Consumer
One challenge in studying status is the need to separate status from education, income or wealth. Van den Bulte points out that these things tend to go hand in hand, particularly in the U.S. “If you’re wealthier, people respect you more; you have more prestige. If you’re well educated, odds are that others will defer to you and hold you in esteem,” he says.
The subjects for Van den Bulte’s new study were more than 6,000 life scientists from all over the world, all with PhD degrees, which ruled out the variable of education. And because the scientists were not paying out of their own pockets for a commercial genetic engineering kit (SDM kit) — a productivity tool that promised to improve their status — income did not matter, either.
The SDM kit was a product that promised to help researchers work faster and be more productive. The decision to use the SDM kit came almost by accident. Van den Bulte’s coauthor was trained in biochemistry and had already collected data on the use of the kits for another purpose, when the two met at a marketing conference.
“He asked me if I thought this data is interesting, and I said, ‘Hell, yes!’ because it had two very clean measures of status. The first was each researcher’s centrality in the network of scientific collaboration, and the second was how often his or her work had been cited by others.”
Hu and Van den Bulte determined whether each scientist had low, middle or high status based on these two factors. They then analyzed data on how quickly each of the 6,000 scientists started using SDM kits, and how that decision was affected by their status.
One of the biggest challenges in conducting the study was collecting the data, a lengthy process done by research assistants who held master’s degrees or PhDs in molecular biology or biochemistry, and who were therefore qualified to look at the scientists’ research papers and make a proper judgment call as to data coding.
“We wanted to have very rich data. We studied over 6,000 scientists from all over the world and had to find out where they got their PhD, [and] who their doctoral advisor was at the time. We had many variables to measure, not only on the 6,000 scientists of focal interest, but also on their colleagues, professors and universities,” Van den Bulte explains.
“One of the reasons people tweet is to help others, to share information. But another reason is to feed their ego, to gain status.”
Another reason that the study worked so well in a scientific setting is that “scientists care a lot about being held in high regard by other scientists,” Van den Bulte notes. “And respect comes from research achievements. So, if there is a tool out there that will allow them to do more and better research quickly, then scientists who care most about their status will be most attracted to that product.”
In fact, Van den Bulte has a forthcoming paper with Wharton marketing professor Raghuram Iyengar that focuses on physicians and essentially replicates the results from this study of scientists. However, the middle status effect is not just a phenomenon within the scientific community, as these two studies seem to illustrate. Van den Bulte says this concept can be observed among typical consumers as well. “Really rich people don’t need to drive around in a BMW or a big Mercedes Benz,” he notes. “Old money doesn’t need to show off. People know their status. It’s the nouveaux riches who care about showing off.”
But a key condition for the middle status effect to hold true is that the product must have the promise and potential to boost a person’s status. Only then will people with middle status care more than those of low or high status, Van den Bulte notes. As for consumer products that would fit this condition, Van den Bulte cites a luxury watch or car, the latest iPhone, a fancy handbag or even enrollment in a prestigious high school or college.
But the question remains — how can you measure status for typical consumers? Van den Bulte points to the many online social media networks where people pay attention to what others have to say, and even share and retweet those ideas. “These social media leaders get likes, retweets and comments, so we can measure the status of particular communities using network data,” Van den Bulte notes.
He is currently working with colleagues on a new study to find if there are middle status effects with tweeting behavior. “One of the reasons people tweet is to help others, to share information. But another reason is to feed their ego, to gain status,” he points out. This new study asks the question: Are people who are in the middle status distribution more likely to generate new content?
A ‘Turbo Boost’ on Your Marketing Spend
According to Van den Bulte, a key takeaway from the study is that it identifies who is most susceptible to peer influence. For many companies, the idea of peer influence is extremely important in promoting a product. Firms want to identify people who hold above-average sway over others in order to leverage them and “get a turbo boost in their marketing,” Van den Bulte notes. “Instead of having to communicate with one million potential customers, the company can focus its resources on just 5,000 or 1,000 opinion leaders. You could get a bigger bang for your buck if you can leverage word of mouth by targeting opinion leaders.”
“You should target only part of your marketing efforts on influentials.”
Of course, to get that turbo boost, marketers must first be able to identify the opinion leaders. Van den Bulte says that concerns have been raised about the ability to identify such people, because using demographics or income data does not really work in this situation. But studies by Van den Bulte and others show that companies can use networks to identify people who are high, middle and low on the status distribution, and to see how status affects their product purchasing and usage behavior.
From a targeting perspective, once the high, middle and low status people have been identified, the question is whom to spend the most money on. Typically, a company focuses its spending heavily on the high status influentials. Van den Bulte suggests otherwise. “When people of middle status are the most likely to adopt a new product and are the most susceptible to peer influence, they also deserve special attention.
“You should target only part of your marketing efforts on influentials Twitter ,” he adds. “The other part of your budget should be allocated to these middle-status types. Not high or low, but middle, because they are most likely to be interested in your product, and therefore they need less convincing and less marketing efforts to push them over the threshold…. [They] will give you a nice return on your marketing investment. It’s the old insight of focusing on the median voter who is on the fence, but applied to word-of-mouth marketing. And that is a novel implication — I’ve never seen it being discussed or implemented by marketers.”
It is important for a company to make the middle status consumer feel confident that the product will deliver on its promise to boost status, which is this group’s main concern.
“If you can get a high ROI, you can keep your budget the same and you gain more profits. Or you can obtain the same outcome with less marketing effort and a smaller budget,” Van den Bulte states. “The key is to focus not only on high status, but also the middle status. That is the novel idea that flows from our findings. I would love to test it in a controlled field experiment with a company.”