Applications of the Laddering Technique in Marketing

ABSTRACT - In this exploratory study several applications of the laddering technique are evaluated. For this paper the technique was used for high and low involvement products, for different cultures and for consumer and business-to-business markets. The hypothesis was that applicability of the technique is better in some market situations than in others. The reliability of the found cognitive structures is discussed and conclusions are formulated about the meaningfulness of the research findings for marketing management decisions.

Citation:

Ed Peelen (1993) ,"Applications of the Laddering Technique in Marketing", in E - European Advances in Consumer Research Volume 1, eds. W. Fred Van Raaij and Gary J. Bamossy, Provo, UT : Association for Consumer Research, Pages: 474-478.

European Advances in Consumer Research Volume 1, 1993      Pages 474-478

APPLICATIONS OF THE LADDERING TECHNIQUE IN MARKETING

Ed Peelen, University of Amsterdam, The Netherlands

[The author likes to thank Co Honkoop, Daniel Huisman, Tom van Lambaart and Rob Nijst since they agreed to use the laddering technique when they studied the market for fruit juice, movies and trucks.]

ABSTRACT -

In this exploratory study several applications of the laddering technique are evaluated. For this paper the technique was used for high and low involvement products, for different cultures and for consumer and business-to-business markets. The hypothesis was that applicability of the technique is better in some market situations than in others. The reliability of the found cognitive structures is discussed and conclusions are formulated about the meaningfulness of the research findings for marketing management decisions.

PROBLEM DEFINITION

Laddering is a relatively new technique that can be used to describe cognitive structures of individuals or groups (Reynolds and Gutman, 1984, 1988). In marketing it can be applied to describe the knowledge consumers have about a product or a brand. The technique has brought some advantages to the marketing discipline. For instance, in the pre-laddering period we hardly structured consumer's knowledge about products in a hierarchical way. We only made the distinction between attributes and benefits and qualified them as intrinsic or expressive. In many studies attributes and benefits were also mixed up.

Several marketing decisions can be based on the insights in the cognitive structures of consumers. We can think of (Pieters, 1989):

- the segmentation decisions: markets can be segmented effectively in homogeneous groups of consumers which have the same cognitive structure of a product group;

- the marketing communication decisions: which aspects of the cognitive structure will we communicate and how?

- several product decisions: which attributes should our product have? what should be the quality perception of the attributes and of the entire product?

Since it is a new technique, especially in marketing, several questions however can be asked.

First of all, can we analyse cognitive structures in marketing in a reliable way with the laddering technique? Referring to the assumption we can wonder if the underlying knowledge always has a hierarchical structure. Also we do not know if in all market situations the laddering technique is adequate to make the structure manifest. Perhaps some respondents do not have a clear meaning structure about a product or brand; but the questions of the interviewer might stimulate them to create one.

Secondly, in which market situation is the usefulness of the outcomes most meaningful? Of course the usefulness depends highly on the possibility to formulate a real meaning structure. Besides that, the usefulness is increased if the respondents base their actions on their meaning structure; for example they do not buy products impulsively.

HYPOTHESES

This study intends to explore the reliability and the meaningfulness of the laddering technique in marketing.

Therefore several applications of laddering in different market circumstances will be analyzed. In order to get a clear view of the reliability and the meaningfulness a classification will be given of the market situations. Are there types of markets where the cognitive structures have a specific nature? Beforehand we might expect a difference between high and low involvements products; cognitive structures for high involvements products will contain more elements than for low involvements products.

Also cognitives structures in business-to-business markets will differ from those in consumer markets. End values will probably be related to the mission and objectives of the organization, and not, as in consumer markets, to the values in life.

Differences in structures might also be expected between cultures. End values for people in for example Asia are different from those in Europe and America. Persons in some cultures express their inner feelings easily while others are not used to do this. As a consequence it can be difficult to explore their cognitive structures.

Cognitives structures for several product types can also differ. Some products only have very few attributes and will have very simple cognitive structures and other ones can be very complex.

Besides these four classification criteria others can be distinguished. Think for example about the competitive market situation. In highly competitive markets producers can try to add new attributes, consequences and end values to the cognitive structure. Cognitive structure can become more complex and of a different nature than in less competitive markets.

This study is however limited to the first four criteria, as we think they are the most important ones since they directly relate to the structure. Many other criteria can be deducted from those four.

Based on the classification criteria four marketing applications of laddering will be analyzed. We will analyze laddering for packed fruit juices for the Thai market, trucks for the Dutch business-to-business market and movies for the Dutch consumer market. These three cases will cover the different segments.

TABLE

The realibility and the meaningfulness of the laddering technique depends on:

* the influence of the above mentioned criteria on the cognitive structures, and

* the willigness of respondents to discuss them with an interviewer.

As a consequence we can expect laddering to be reliable and meaningfull in the following cases:

TABLE

Less reliale and meaningful results are predicted in the Thai culture, because respondents might not express the end values and consequences and with low interest products because a complete meaning structure might not exist or respondents may base their actions on situational factors.

RESEARCH DESIGN

All three studies covered four phases. During the first phase the attributes were formulated. Respondents were asked which movies or packed fruit juices they preferred and had to explain their selection. In their answers they mentioned the attributes. Attributes were also generated because respondents had to explain why they preferred several brands or product types in specific situations. Why did they prefer this packed fruit juice for breakfast? Why did they choose this movie when they were accompanied by their partner?

At last, attributes were found because respondents had to clarify the differences between two groups of product types. In the truck industry, for example, they had to tell what the difference was between brand A and brand B trucks.

In this phase respondents also had to specify which attribute scores they preferred? If one of the attributes for a truck was horse power they had to specify how much horsepower their ideal truck had. Or: they had to specify how much action (1-7 scale) an ideal movie should contain.

In the second phase the respondents were asked to rank the attributes in decreasing importance. The most important ones were used in the next phases of the laddering technique.

In the third phase the meaning structures were analyzed. This phase in essence covered the laddering technique. Respondents were asked to explain "why" they thought a specific attribute was important for them. The answer of the respondents was followed by the same type of question: "why"? Following this procedure, it was possible for every respondent to link attributes with consequences and end values. To improve the quality of their answers the "why"-questions sometimes were specified: why is humor important, if you watch a movie with a group of friends? Or: why is it important to have a packed fruit juice with a concentration of natural fruit juice?

The fourth phase was used to aggregate the results of the individual respondents. In a so called implication matrix the direct and indirect links between two attributes, consequences and/or end values were counted. A link is direct if the respondent associate the purchase price of the truck with the durability of it. It is indirect if the purchase price is firstly related to the horse power of the truck and secondly related to the durability. Before this matrix could be filled, several attributes, consequences and end values had to be reformulated. Several respondents used somewhat different words for the same aspects of the product. Since the influence of the researcher on the final results is very large in this phase a second person checked the interpretations of the researchers.

Based on the frequencies in the implicationmatrix the hierarchical value maps were finally constructed. They were analyzed to identify market segments and to specify their contribution for product and communication decisions.

RESULTS

In the truck, movie and packed fruit juice market approximate twenty-five respondents were interviewed.

The above mentioned four phases were followed. Attributes were generated and related to consequences and end values. The individual results were aggregated for the sample. The implicationmatrix was filled. In order to get a clear map we omitted the links that were mentioned infrequently. In the packed fruit juice market direct links mentioned two times or less were omitted, in the movie branche only once mentioned direct links were left out and in the truck industry the minimum was four.

The hierarchical value maps for the three industries are portrayed in figure 1, 2 and 3.

Based on the value maps the markets can be segmented. The segmentation can be based on different end values, consequences and attributes. As there are many attributes it is hard to segment the market in sizeable segments. Also many of the attributes are not a brand/product selection criteria; therefore the segments based on attributes are not very homogeneous and predictive for consumer reactions towards marketing stimuli. In the movie industry attributes were nevertheless the best basis for segmentation since respondents based their selection for a movie on attribute scores. However there had to be made a selection out of the attributes. Not the concrete but the abstract attributes offered the best basis for a segmentation. In that way we distinguished serious-emotional movies, romantic movies, thrillers, action movies and humorous movies.

What proved to be a very meaningful segmentation method for the fruit juice market is the following one: choose the consequences that have the most direct and indirect links with attributes and values. Consumers told us the consequences and not the attributes or the end values were the most decisive criteria when they had to choose a fruit juice. In that way the packed fruit juice market consisted of three relevant segments: the accomplishment, the self esteem and the "fit in lifestyle". The fourth one was a miscellenuous segment.

The truck market was hard to segment with the hierarchical value map. Attributes, consequences and end values did not provide criteria based on which groups of buyers could be distinguished with a specific truck purchasing behavior. Everything was related to the same economic criteria, so it seemed there was only one segment.

DISCUSSION

Based on the results we will discuss the reliability and the meaningfulness of the laddering technique in the different market situations.

Reliability

Culture differences did not appear to be a factor that influences the usefulness of the laddering technique. Thai respondents did not have any problems to express the consequences and end values of the meaning structure of packed fruit juices. Two important factors probably will have improved their openess. First, they were questionned by Thai interviewers and not by one of the Dutch researchers. The idea is it is felt easier to express your feelings to someone of your own culture, however unknown, than it is to tell it to someone from another culture, who might have different thoughts about your meaning of the product. Second, in Thailand packed fruit juices were products that could be used to give expression to others about your success in life and business. Among others it is associated with western successful economies. Since the product is already used to give expression to your feelings it should not be too hard to tell it to an interviewer also.

FIGURE 1

HIERARCHICAL VALUE MAP FOR MOVIES

FIGURE 2

HIERARCHICAL VALUE MAP FOR PACKED FRUIT JUICES

Of course for other less expressive and/or western products the influence of culture on the willingness of respondents to express their inner feelings about a product may be less. The application of the laddering technique might become difficult.

In the research design the packed fruit juices were classified as a low interest product for which it could be difficult to construct a meaning structure since people did not have very elaborate thoughts about the product. This a priori classification proved to be incorrect. Packed fruit juices appeared to be products with expressive values and therefore are involved in the purchase and usage of the products. Therefore the hypothesis that the construction of meaning structures for low involvement products can be a problem, could not be falsified.

The application of the laddering technique was less successfull in the Dutch industrial market for trucks than it was in the Thai fruit juice market. Three problems were faced. First of all, the most important persons in the decision making unit for the purchase of a truck wanted to present themself as rational managers. They said the most important end values were related to the profitability of the firm and the satisfaction of customers. The purchase of a lot of high power trucks can however, not even in their perception, be explained by the before mentioned end values. Somehow they tried to find arguments. They told the interviewer for example that maintenance costs for high power trucks were lower than for smaller trucks, they could resell the high power truck after some years for a higher price on the second hand market, it was faster, and so on. To justify their purchase they sometimes introduced attributes they did not consider very important. In some cases the explanation even resulted in inconsistencies in the meaning structure for trucks. Earlier remarks about the truck were denied. In reality however there must have been some emotional factors that influenced the purchase decision: they must feel some professional proudness to drive a very large truck and their purchase has to be influenced by the size.

Secondly, it appeared to be difficult for a complex product such as a truck to formulate a meaning structure. The respondents need a lot of hierarchical structured knowledge about trucks to be able to give answers to the interviewer and to construct a complete and consistent meaning structure. In some cases respondents did not have this knowledge or did not have correct information about the effect of horse power, brand name, and other attributes on the exploitation costs of a truck and the profitability of the company.

Thirdly, we limited the number of attributes during the interview in order to reduce the complexity. We concentrated on the attributes (14) the average respondent thought were most important. A consequence was that the meaning structure was not complete; not in all cases the necessary attributes were mentioned to explain the economy of a truck and the profitability of the company.

For a product as movies the application of the laddering technique did not result in any special problems. Although movies are a very heterogeneous product it was possible to construct a meaning structure for movies in general. Attributes, consequences and end values could be related to each other very well.

Meaningfulness

The usefulness of the results for marketing decisions differed for the three applications.

Most usefull were the results for the Dutch movie market. Based on the hierarchical value map we were able to segment the market in several types of movies. For the different kind of movies we could specify which attributes, consequences and end values were important. The study also showed us how the different types of movies should score on these aspects. Since we also interviewed the respondents about how they value Dutch movies on these criteria we could also formulate recommendations about the product and communication policy for the Dutch movie industry.

The meaning structure of packed fruit juices in Thailand resulted in a benefit segmentation of the market. Consumers told us the consequences and not the attributes or the end values were the most decisive criteria when they had to choose a fruit juice. Therefore we prefer to base the segmentation of the market on the different consequences consumers associated with packed fruit juice. Based on this segmentation and the hierarchical value map we delivered input for the positioning and advertizing strategy and the product policy.

For the Dutch truck market the usefulness of the laddering technique was not satisfactory. Thanks to the meaning structure a better understanding of how buyers perceived trucks was obtained for not only ourselves but also for the truck company. However, as mentioned before, the results were not complete and consistent. Furthermore it was not possible to segment the market based on the meaning structure. All respondents argued that every purchase of a truck should be related to the company profitability. They had very uniform ideas about this matter. Based on end values it was therefore hard to distinguish different segments. Also based on the consequences we could not segment the market completely meaningful. The consequence-based-segments did not result in groups of customers that reacted in a specific way on marketing stimuli. They had many similar wishes about trucks.

For product decisions the truck study provided more information. Based on the hierarchical value map and the preferences for several truck characteristics (attribute scores) of respondents we were able to formulate an idea about how a low score on one attribute could in some way be compensated by higher scores on other attributes. Since the meaning structure however was incomplete and not consistent on all aspects these recommendations were preliminary. Further research in this field is necessary. Conjoined analysis can be further used to quantify how far highers scores on several attributes and a lower score on another one influenced the preference for a certain truck.

CONCLUSION

The laddering technique is relatively new in the marketing discipline. To get a better understanding of the applicability of the technique we distinguished market situations in which the reliability and the usefulness would differ. We supposed culture, product complexity, involvement and the difference between consumer and industrial markets that would influence the cognitive structures and respondent's cooperability during interviews. We formulated hypotheses for the different market situations and the applicability of laddering. This exploratory study of the Dutch truck and movie market and the Thai packed fruit juice market falsified the hypotheses. It appeared that the hypotheses about the Thai (Asian) culture, the industrial market and the complexity of products have to be rejected. Thai respondents expressed their inner feelings about the packed fruit juice, a product with expressive values, truck buyers did not have a complete, correct meaning structure, and were not willing to express all of their values and consequences. In the other market situations the laddering technique provided us with information which we could use for segmentation and targeting and product and communication decisions.

FIGURE 3

HIERARCHICAL VALUE MAP FOR TRUCKS

Since this is only an exploratory study, further research to the applicability of the laddering technique in different market situations seems desirable. The results show the application of laddering is less obvious than we might expect beforehand.

LITERATURE

Aaker, David A., 1991, Managing brand equity, The Free Press, New York.

Honkoop, C.W.H., 1991, Vruchtesap, wat betekent dat? [fruit juice, what does it mean?], Erasmus University, Rotterdam, doctoral thesis.

Huisman, D., 1991, De Nederlandse film: op hoop van zegen? [The Dutch movie: let's hope the best for it], Erasmus University, Rotterdam, doctoral thesis.

Lambaart, Tom van en Rob Nijst, 1992, Laddering op de vrachtwagenmarkt [Laddering on the truckmarket], Erasmus University, Rotterdam, doctoral thesis.

Pieters, R.G.M., 1989, Een nieuwe ontwikkeling in segmentatie en positioneringsonderzoek: laddering [a new development in segmentation and positioning research: laddering], Tijdschrift voor Marketing, october, pp. 30-41.

Raaij, W.F. van and T.M.M. Verhallen, Domain-specific market segmentation, Papers on Economic Psychology, Number 93, Erasmus University, Rotterdam.

Reynolds, T.J., and J. Gutman, 1984, Laddering: extending the Repertory Grid Methodology to construct Attribute-Consequence-Value Hierarchies, in: R. Pitts and A. Woodside, Personal Values and Consumer Psychology, vol. II, Lexington Books, Lexington, MA.

Reynolds, T.J., and J. Gutman, 1988, Laddering Theory, Method, Analysis and Interpretation, Journal of Advertizing Research, vol. 28, pp. 11-31.

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