Sales influence strategies within the retail scuba diving market
Table of Contents Acknowledgments iii List of Tables vi CHAPTER 1. INTRODUCTION 1 Purpose of the Study 7 Research Questions 10 Significance of the Study 11 Definition of Terms 11 Assumptions and Limitations 13 Nature of the Study (Theoretical/Conceptual Framework) 14 Organization of the Remainder of the Study 15 CHAPTER 2. LITERATURE REVIEW 16 History of Influence Strategy Theory 16 Social Power and Influence Strategy 19 Communication and Influence Strategies 27 Influence Strategy, Customer Satisfaction, and Sustainability 30 Influence Strategy and Choice 33 Retail Scuba 37 Hartman Study 38 Contributions to the Field 40 Conclusions 41 CHAPTER 3. METHODOLOGY 44 Research Design 44
Sample 46 Instrumentation/Measures 47 Validity and Reliability 49 Data Analysis 50 Ethical Considerations 53 CHAPTER 4. RESULTS 54 Overview of Sample Data 54 Hypotheses Testing 55 CHAPTER 5. DISCUSSION, IMPLICATIONS, RECOMMENDATIONS 70 Summary and Discussion of Results 70 Conclusions 73 Recommendations 75 REFERENCES 77 APPENDIX A. SURVEY INSTRUMENT 85
APPENDIX B. DEMOGRAPHIC DATA 91 APPENDIX C. LOGISTIC REGRESSION OUTPUT 93
List of Tables Table 1. The Effect of Negotiations on Purchases 57 Table 2. The Effect of Compliments on Purchases 58 Table 3. The Effect of Consultations with Other Salespersons on Purchases 58 Table 4. The Effect of Expertise on Purchases 59 Table 5. The Effect of Negative Information on Purchases 60 Table 6. The Effect of Negative Outcomes on Purchases 61 Table 7. The Effect of Gratuities on Purchases 61 Table 8. The Effect of Information About Other Customers on Purchases 62 Table 9. The Effect of a Bonus on Purchases 63 Table 10. Customer Reactions to Influence Strategies 67 Table B1. Gender 91 Table B2. Marital Status 91 Table B3. Race 91 Table B4. Education 92 Table B5. Income 93
CHAPTER 1. INTRODUCTION According to MacCarthy, O’Nell, and Williams (2006), in order to increase or sustain profitability, dive shop operators should focus on those aspects of sales and service interactions within their own control. When a business begins to focus on the customer, at least to the extent that they focus on sales, it can potentially increase sales volume and profits because it will be meeting the needs of the customer. Customer based strategies would require that sales staff close sales in a positive manner that allows the customer to feel that his or her needs were met during the exchange. Such actions will strategically position businesses with a type of brand equity by building a strong name for themselves recognizable within the industry (Hoeffler & Keller, 2003; Keller, 1993). The sporting goods industry offers its own challenges because new customers are often confused by highly specialized equipment and may not want to invest a great deal of money in a sport that they might not ultimately like (McCune, 1999). This presents a two-fold implication of the problem for retail scuba diving; customer reluctance (for varying reasons) to make a purchase, and the need for a trained sales staff capable of providing expertise in the area of scuba diving. Bennett and Lackowetz (2004) assert that companies have the potential to sell more equipment if a sport thrives and prospers, implying the need for customer retention within an industry that, according to the Diving Equipment and Marketing Association (2005; 2008), has seen a decline in new certified divers since 2000 and further stressing the need for dive shops and centers to close sales to their customer base. Customer retention, directly linked to customer satisfaction and service quality
(MacCarthy, O' Neill, & Williams, 2006), is vital for sustainability within many businesses or market segments. At its core, sustainability requires that businesses optimize their operations in order to grow or maintain current levels of operations within the industry (Hart, 2005; Hart & Milstein, 2003). This view demands that retail businesses be proficient in the sale or marketing of goods and services and, like all other sectors of the sporting goods market, scuba diving depends upon sales in order to sustain and grow. The vehicle for these required sales is the individual salesperson and the tools and methods that they employ to make or close a sale. In order to obtain the overall objective of a sales encounter, salespersons often find themselves in situations in which it is necessary to assist a prospective customer in reaching a positive decision to complete the purchase (Kidwell, McFarland, & Avila, 2007). The idea of confronting customer reluctance through persuasive sales strategies requires first that a sales person needs to be able to read the customer (Kidwell, McFarland, & Avila, 2007) and then adapt sales techniques to fit the individual customer (Mallalieu & Nakamoto, 2008). Adaptive selling requires more than sales staff simply being able to read the needs and wants of the customer, it also mandates that they respond to the customer in a way that is deemed satisfactory to the individual customer in order to complete a sales transaction (Mallalieu & Nakamoto, 2008). Sales influence strategies then become an adaptive selling tool used to persuade reluctant customers into completing sales transactions through customer satisfaction, thereby retaining customers. Because it can be argued that sales influence strategies are an exercise of power by a sales person over a potential buyer, it is important that the origins of influence
strategy be reviewed. The theoretical foundation for sales influence strategies began with the research of French and Raven (1959) in which they discussed their five bases of social power through which one can obtain and exercise influence over a subordinate. French and Raven’s (1959) five bases are listed as reward power, coercive power, legitimate power, referent power, and expert power. Together, these five bases of power form a conceptualization of social power that is among the most widely accepted of all the social power conceptualizations (Podsakoff & Schriesheim, 1985) and appears to be at the root of all influence strategy theory. Despite that it is generally accepted that the work of French and Raven (1959) laid the foundation for the emergence of sales influence strategies (Hartman, 2005), there are only a handful of studies (Hartman, 2005; McFarland, Challagalla, & Shervani, 2006; Palan & Wilkes, 1997; Skinner, Dubinsky, & Donnelly Jr, 1984) that appear to have expanded or applied the theory to the area of retail sales. In order to provide ample reasoning for the current study, each of these studies will be discussed briefly. The first of these studies, conducted by Skinner, Dubinsky, and Donnelly Jr. (1984), was aimed primarily at applying French and Raven’s (1959) bases of power to the retail sales setting. The authors specifically explored the relationship between management power and the salesperson’s job related outcome. Through a series of surveys the researchers in this case, sought information from workers and managers regarding motivation, role conflict, job satisfaction, and organizational commitment. Although the study was aimed at the process of sales rather than the outcome of the sales, the authors did report, and were among the first to do so, that of French and Raven’s
(1959) five bases of power, coercive power appeared to be the least effective when attempting to modify behavior (Skinner, Dubinsky, & Donnelly Jr, 1984). Palan and Wilkes (1997), appear to have been the first researchers to go beyond the original bases of power of French and Raven (1959) by developing new constructs which resulted in a total of seven influence strategies seen as being commonly used within family purchase decisions. These influence strategies, bargaining, persuasion, emotional, request, expert, legitimate, and directive, as described by the authors, were methods that adolescents and parents frequently use within the family setting primarily when influencing the outcome of family purchase decisions. It is important to note here, however, that while this study appears to be the first to posit or suggest strategies that influence retail sales, Palan and Wilkes (1997) framed their study in a setting other than that of the retail interaction between the salesperson and customer. McFarland, Challagalla, and Shervani (2006) identified six influence strategies that they referred to as “seller influence tactics” (p. 103); information, recommendations, requests, threats, promises, and legalistic pleas. These strategies were framed in the area of retail sales between buyers and sellers and were approached from a position of determining which strategies were most appropriate for certain types of buyers. The researchers concluded that when utilized, salespeople are often able to positively influence a customer’s decision towards making a purchase and suggested that there is no single strategy that is effective across all types of buyers. Most importantly though, relating to the current study, McFarland, Challagalla, and Shervani (2006) recommended that further studies be conducted that apply the concept of sales influence strategies, not
necessarily those they posit, to specific markets within the retail setting. In her study of sales influence strategies, Hartman (2005) appears to have taken a more practical approach of applying the strategies to the retail sales market. Hartman (2005) conducted a mixed method study in which observations of retail attempts by salespeople and actual transactions took place. From this Hartman (2005) identified nine influence strategies, the most identified in any of the present research. Hartman’s (2005) strategies are identified as bargaining, compliments, consultation, expert information, negative information, pressure, reciprocity, referent information, and reward. Hartman (2005) also conducted an internet survey in which members of a marketing panel were asked to opt in and answer questions about their most recent sales interaction. The results of the survey allowed Hartman (2005) to make conclusions about the frequency of use of the nine identified strategies as well as identify which strategies were most commonly associated with positive purchase decisions in buyers. While Hartman’s (2005) study identified these strategies and further bridged the gap in then existent literature between industrial and retail strategies, the study was aimed at the general retail setting without focusing on individual market segments. In order to further test empirical results of Hartman’s (2005) study, additional studies need to be conducted within specific market segments and compared with Hartman’s (2005) results. Of the above-mentioned studies that directly concern themselves with influence strategies, the studies of Palan and Wilkes (1997), Hartman (2005), and McFarland, Challagalla, and Shervani (2006) are the most closely related in that retail sales are a primary issue of the respective studies. These studies differ however, upon closer
examination of the theoretical models involved. While Palan and Wilkes (1997) did conduct their research in the area of retail sales, the researchers were concerned more with the communications tactics employed between purchasers than the sales setting itself. McFarland, Challagalla, and Shervani (2006) on the other hand were concerned with the retail sales setting, but appear to have focused more on buyer orientations rather than the simple responses to given strategies. Of the three studies, only Hartman (2005) appears to have been concerned with not only identifying the influence strategies, but discovering the effectiveness of identified strategies on the buyers themselves. In addition to the lack of research focusing on influence strategies within the retail setting or specific markets there has also been a lack of research aimed at the retail scuba diving industry in general. While there have been studies related to scuba diving as it pertains to physical science and psychology, such as Green’s (1985) study of personal experience and performance in scuba diving, there is a lack of research into the business side of the diving industry. While this could be interpreted to suggest that the retail scuba industry is just like any other retail industry, it appears that research into the industry has simply been approached from the position of either being included as a generic sport, or high risk sport, or as simply being another hedonistic sport (MacCarthy, O' Neill, & Williams, 2006). Because of the lack of related research in the area of retail scuba diving marketing, it is not known how and to what extent sales influence strategies influence customer purchase decisions within the scuba diving industry.
Purpose of the Study According to one study (Sanchez-Garcia, Moliner-Tena, Callarisa-Fiol, & Rodriguez-Artola, 2007), the buyer-seller relationship, present within all sales interactions, begins to develop at first contact between sales staff and customer and greatly affects the outcome of subsequent sales transactions. Because buying behavior is influenced heavily by the beliefs, perceptions, attitudes of the buyer (Boshoff, 2003), and the buyers knowledge and experience, it is important that a channel of communication be open between sales staff and customers in order for both parties to relay information necessary for the sale to the other party. When contextualized through the lens of communication, each sales encounter then becomes a conversation in which sales staff attempt to determine customer needs or wants (Kidwell, McFarland, & Avila, 2007; Webster, 1968) in order to satisfy the customer by delivering the right products, at the right time and under conditions acceptable to the customer (Sanchez-Garcia, Moliner- Tena, Callarisa-Fiol, & Rodriguez-Artola, 2007; MacCarthy, O' Neill, & Williams, 2006). In terms of the sales encounter, the use of influence strategies is an attempt by the salesperson to wield social power over the customer in an effort to persuade the customer to make a purchase (Duncan & Moriarty, 1998). While the power base may well be wielded by the sales person, the amount of power perceived and the response of that perception is also based largely on the power, or in this case knowledge base, of the customer (Handgraaf, Van Dijk, Vermunt, Wilke, & De Dreu, 2008). This suggests that those more experienced or more educated divers are less likely to be influenced by the
attempts of a sales pitch or influence strategy than newer divers, possibly due to the amount of importance that new divers, having a lower knowledge or power base, place on the sales encounter (Guinote, 2008) and the experience of the sales staff. The application of influence strategies also represents the opening of a seller- buyer dialogue (Gardener & Trivedi, 1998) in which the salesperson has the opportunity to learn the needs and wants of the customer and assess their willingness to purchase based on reactions to applied influence strategy. According to Webster (1968), the final outcome of the sales interaction depends largely upon the amount and quality of communication that takes place between the sales person and the customer. Similarly, many customers place great emphasis on the quality of the relationship that develops between the sales person or organization and the customer (Dell, 1991) which suggests that sales staff need to make customer level communication a top priority in order to help create a sustainable bond with the customer. For the current study, the researcher chose to utilize the theoretical model of influence strategy developed by Hartman (2005) as a basis for studying the use of influence strategies within the retail scuba diving market. The primary reasoning for choosing Hartman’s (2005) model is due to it being the only model known to have been developed to directly study retail sales between a non-organizational purchaser and the seller. Because Hartman (2005) also studied the effectiveness of each of the nine identified influence strategies in a general retail setting, a foundation exists through which the current study can examine the effectiveness of these strategies in a sub- category (retail scuba) of the general retail market.
Through the data collected from an Internet-based survey, the first objective of this study was to investigate the correlation, if any, between the application of Hartman’s (2005) nine influence strategies and positive purchase decisions on the part of the customer. Secondly, this study was aimed at determining the overall effectiveness of each of the nine influence strategies within the retail scuba diving setting. Hartman’s (2005) nine identified influence strategies can further be defined as 1. Bargaining takes place when the sales person and buyer enter into negotiations about the purchasing of a product or service, the goal of which is a mutual agreement between both buyer and seller. 2. Compliments occur when the sales person provides complimentary information to the buyer as a means of encouraging the buyer to complete a purchase. 3. Consultation occurs when the sales person seeks out another person who provides his or her advice about the product. 4. Expert information is given when a sales person provides or references an expert within the field pertaining to the purchase, such as when a sales person would present him or herself as a scuba diving instructor to provide information from a professional perspective. 5. Negative information occurs when a sales person offers negative information about a competing product or service. 6. Pressure takes place when a sales person provides negative implications to a buyer for not completing a transaction.
7. Reciprocity occurs when a sales person offers a potential customer a gratuity or other offer that might make the buyer feel compelled to complete the purchase. 8. Referent information is used when a sales person refers the buyer to another person who purchased a similar product or service for a recommendation. 9. Reward occurs any time a buyer receives a gift or other compensation for completing a purchase.
Research Questions In attempting to determine how and to what extent Hartman’s (2005) nine influence strategies are used within the retail scuba diving industry, there are four main research questions that were answered: 1. To identify if there was any evidence that the sales strategies were used to any extent within the retail scuba market. 2. To identify the strategies most commonly used and the frequency for each strategy. 3. To identify which of the strategies, if any, resulted in a positive purchase decision on the part of the customer. 4. To determine how the use of Hartman’s (2005) nine strategies was perceived by customers and any correlation between positive or negative reactions and purchase decisions.
Significance of the Study The research conducted through this study will contribute to the field of marketing within the retail scuba diving industry, an area that, from the apparent lack of existent research, has drawn little interest from researchers to date. Because this study applies Hartman’s (2005) theory in a more focused direction, knowledge will be obtained testing the generalization of that theory to help evaluate whether Hartman’s (2005) nine strategies are universal in nature, applying to all areas of retail sales, or if certain specialized market segments require specialized sales influence strategies. This research makes contributions to the growing body of research into the area of buyer-seller relationships and provides information into the area of customer motivation by providing insight into which influence strategies might be more effective in specialized markets. In addition, management practice will benefit from this study as it will further the available knowledge on the need for training of sales staff in the area of customer communication, strategy implementation, and the use of adaptive selling techniques.
Definition of Terms In order for the reader to fully comprehend the meaning of some of the terms used in the current study, this list is provided to ensure these terms are understood in the proper context as pertaining to this study. Certified diver (or scuba certification) is used to describe those divers who have completed training and received certification to conduct their own scuba diving without
the aid of professional assistance or outside of the direct supervision of a scuba diving instructor. Customer (or buyer) is a term used to refer to anyone involved in a sales interaction with a salesperson for the purposes of making a purchase or gathering information for a later purchase. Divemasters are professional divers who have completed extensive training and demonstrated high levels of scuba diving skills subsequently receiving the divemaster rating for the purpose of supervising professional scuba diving activities such as operating dive operations on a charter boat. This rating is normally viewed as being one step below the certified scuba instructor. Dive shops are retail scuba diving centers or operations in which scuba diving equipment and services, such as dive training, dive charters, or equipment service, are offered to customers. Influence strategies are techniques used by salespeople to prompt a change in behavior, usually toward making a purchase decision. Most influence strategies are rooted in the Five Bases of Power as described by French and Raven (1959). Salesperson (or seller) is a term used to refer to anyone in a position of authority within an organization that has the ability to conduct business and close a sale for the respective organization. Sales interactions are, for the purposes of the current study, face to face encounters between a salesperson and a potential customer during which information is gathered and exchanged for the purposes of making a purchase, even when no purchase is
made. Scuba certification agency or organization is a term used to refer to the wide number of organizations that oversee and conduct the certification of scuba divers to conduct scuba operations. Scuba instructors are individuals who have completed extensive training and demonstrated high levels of proficiency of scuba diving skills subsequently receiving an instructor rating through a recognized scuba certification agency for the purpose of training people as scuba divers.
Assumptions and Limitations Due to the nature of Hartman’s (2005) nine influence strategies, this study was directed solely at face-to-face sales encounters rather than internet, phone, or mail order sales. Several of these strategies, by design, require that the salesperson and customer both be present in a face-to-face encounter before the strategy can be applied. Additionally, because it can be argued that customers younger than 18 years of age would normally have less control over purchases than those 18 and over, data collected from participants under the age of 18 was not used for this study. Likewise due to existing social power theory concerning the influence that knowledge and experience may have during sales interactions, this study focused only on those divers who have been certified within the two years prior to data collection or were enrolled in a basic scuba diving certification course at the time in which they responded to the survey request. Because buying behavior is largely influenced by the beliefs, attitudes,
perceptions, and norms of the customer (Boshoff, 2003) it can thus be argued that buying behavior can potentially vary greatly from country to country or region to region. Due to the variations between economic systems throughout the world and the varying norms, it might also be argued that the success or failure of certain influence strategies will vary from place to place as well. With these potential arguments in mind, and the goal of narrowing the study to a level that can be more easily controlled, this study only utilized information obtained from purchases made in retail scuba settings within the United States and makes no attempt to generalize the findings to a global setting.
Nature of the Study (or Theoretical/Conceptual Framework) The research topic for this project relied upon the effectiveness of Hartman’s (2005) nine sales influence strategies within the retail scuba diving industry. This project sought to identify those strategies that are most effective as a foundation for sales strategy revision within the industry, if necessary. Because this research design is a fixed design, dealing with figures and percentages, the variables were simplistic cause and effect oriented, that is the independent variables were applied to the dependent variable to determine any result. The independent variable for this study includes all nine of the sales influence strategies, that is each of the nine strategies is an independent variable. The dependent variable in this case is the end result of the purchase encounter, whether or not a purchase was made. In terms of a control variable, the face-to-face requirement of the sales interaction is constant throughout the study.
Organization of the Remainder of the Study The remainder of this study is organized in the traditional five-chapter model. The literature review in Chapter 2 details the history of sales influence strategies as well as covers some of the key associations that can be made in terms of common business elements. A descriptive summary of the findings of Hartman (2005) in her study of influence strategies is also provided in chapter two before closing with some of the conclusions that can be drawn from the review of literature. Chapter 3 of this study outlines the methodology used in this research and provides the rationale behind the research questions and hypotheses that were developed for the study. This section includes an overview of the research design as well as sample selection and method of data collection and analysis. Chapters 4 and 5 of this study list the results of the data collection and analysis and discuss the implications of the data and make final conclusions and recommendations for further research. The remainder of the manuscript offers traditional lists of references and attachments such as the data collection instrumentation used for the current study.
CHAPTER 2: LITERATURE REVIEW In order to adequately research the uses and applications of sales influence strategies within the retail scuba diving industry it was first necessary to research theoretical foundations pertaining to the development of sales influence strategies and the methods by which those strategies were previously applied. Further, the researcher found it necessary to research existing theory in terms of influence strategy as pertaining to various levels of the sales interaction and choice theory from a seller to customer perspective.
History of Influence Strategy Theory The history of influence strategy theory can be traced back to the five bases of power as presented by French and Raven (1959). Although these power bases are not influence strategies in and of themselves, many of the sales influence strategies described in much of the extent literature (Hartman, 2005; McFarland, Challagalla, & Shervani, 2006; Palan & Wilkes, 1997; Skinner, Dubinsky, & Donnelly Jr, 1984), when deconstructed, correspond with one of French and Raven’s (1959) five power bases 1. Reward power, defined as the power a person has over a subordinate to provide rewards or other incentives as a means of changing behavior. 2. Coercive power, defined as the power a person has to inflict punishment or withhold reward from another as a means of changing behavior. 3. Legitimate power, defined as power based on the belief that the person wielding power has the right to use that power to direct others and that those
directed have a responsibility to follow those in power. 4. Referent power, defined as power based on identification with another person and the belief that individuals are influenced by the actions or behaviors of other people. 5. Expert power, defined as power based on the belief that some individuals have advanced knowledge or information and that people can be influenced by this knowledge when so shared. The development of sales influence strategy appears to have progressed over a period of about 40 years from social power theory (French & Raven, 1959), to organizational theory (Frazier & Summers, 1984; Skinner, Dubinsky, & Donnelly Jr, 1984; Spiro & Perreault Jr, 1979), to the retail sales theory (Hartman, 2005; McFarland, Challagalla, & Shervani, 2006) with most of the existing literature being targeted at the organizational performance and sales levels. Despite the relatively long history of influence strategy theory research and its basis in social power research, it has only been within the last 15 to 20 years that influence strategy has been studied at the personal retail sales level. Early influence strategy theory began when researchers (Ivancevich & Donnelly, 1970) simply applied the French and Raven’s (1959) five bases of power to the field of marketing, organizational performance, and leadership. While it does not appear that French and Raven (1959) intended their power bases as a means of reforming or modifying the sales and marketing fields, such has apparently been the case as these power bases have been used as a means of better illustrating the power that the sales