The Effect of Outliers on Consumer Choice

This research investigates the effects of an extreme value (outlier) on a consumer’s reference price, and ultimately, the consumer’s choice. In a controlled experiment two hundred Bryant University students were presented with a choice task to select a cell phone plan from a set of plans described by price and six other features. Some choice sets contained a moderate outlier, an extreme outlier, or both a moderate and extreme outlier. Students who saw any of the outliers expected to pay an average of $4.40 more and ultimately chose a higher priced plan. However, there was no significant difference between reference price change or plan choice and the type of outlier seen. In addition, even students who recognized that the outlier was an inferior choice were still influenced by its presence in the choice set. The results of the study display two major outcomes useful to marketers. First, consumers will be willing to pay more for a product or will choose a product that costs more, if they see any type of outlier when making a choice. Second, irrelevant information is encoded, processed and used in decision making even when consumers recognize that it should not be used

Small business sport sponsorship: A case study

Within a reasonably short timeframe sponsorship has morphed from a passive form of marketing that was often philanthropic in nature (Morgan et al., 2014), to a legitimate element of the promotional mix (Segium & O’Reilly, 2007), and a key strategic business partnership initiative (O’Reilly & Horning, 2013). Sport sponsorship has been defined as the provision of assistance by commercial organisations (sponsors), in cash or kind, to a sports property (sponsee), in exchange for the rights to be associated with the sports property for the purpose of gaining a commercial and economic advantage (Triodi, 2001). While substantial research has been directed towards large organisations and corporate sponsorship, little interest has been focussed on the relationship between small businesses and sport sponsorship (Mack, 1999, Jing 2010). Small businesses are extensively involved in the sponsorship of sports organisations, teams, individuals and events (Slack & Bentz, 2010). As more and more local and regional sport organisations look towards sponsorship as a means to financially support their organisations this relationship will continue to grow. Given that 97% of all enterprises in New Zealand are defined as “small” this research aims to address the gap in the literature and to contribute to the advancement of the ‘philanthropic-sponsorship’ continuum. The Waikato Rugby Union (WRU) was selected as the case study due to the nature of the sporting code, its established history, and its strong brand. The research applied a qualitative, exploratory approach in order to explore small business perceptions and experiences with sport sponsorship. A series of in-depth semi-structured interviews were conducted with relevant personnel from selected WRU small business sponsors. Interviews were recorded, transcribed and then analysed using grounded theory coding techniques, allowing for key themes to emerge. The study examined the objectives, practices and perceptions of small businesses related to sponsorship decision making. For the purpose of this study, a small business was defined as any enterprise with less than 20 employees. The research findings contradicted previous small business – sport sponsorship literature. The findings highlighted that there was long-term strategic planning, with 75% of the businesses initiated the first contact with the WRU. While decisions were still predominantly made by one individual, they were clearly based on ‘corporate’ objectives rather than personal preferences and/or a sense of “giving back” to the community. The three top objectives were hospitality, brand awareness and networking. The strength of the WRU brand was also a factor in the decision-making. However, there were little or no formalised internal policies to guide the small business sport sponsorship screening and selection processes in terms of sponsorship opportunities, and limited sponsorship evaluation. As sponsors become more and more a part of the social context that shapes and sustains local and regional sport it is important that both sport organisations and small businesses understand better what motivates, attracts and sustains small business sponsorship. It is unclear is this stage if the findings are a result of the status that Rugby holds in the New Zealand psyche and the professionalisation of the sport, or if this is an evolving trend. Further research into other sporting codes would contribute to the understanding of the small business – sport sponsorship dynamics