The Discounting Principle in the Perception of Advertising

ABSTRACT - Previous researchers have used either Kelley's ANOVA model of Jones and Davis' correspondence theory to investigate consumers perceptions of advertisements. This paper examines the applicability of the discounting principle to advertising. It concludes that the discounting principle may be better suited to this purpose than either of the other theories.

Citation:

Richard M. Sparkman, Jr. (1982) ,"The Discounting Principle in the Perception of Advertising", in NA - Advances in Consumer Research Volume 09, eds. Andrew Mitchell, Ann Abor, MI : Association for Consumer Research, Pages: 277-280.

Advances in Consumer Research Volume 9, 1982      Pages 277-280

THE DISCOUNTING PRINCIPLE IN THE PERCEPTION OF ADVERTISING

Richard M. Sparkman, Jr.

ABSTRACT -

Previous researchers have used either Kelley's ANOVA model of Jones and Davis' correspondence theory to investigate consumers perceptions of advertisements. This paper examines the applicability of the discounting principle to advertising. It concludes that the discounting principle may be better suited to this purpose than either of the other theories.

INTRODUCTION

Studies based on various attribution theories have been appearing in the consumer behavior literature for the last ten years. A surprisingly small number of these have dealt with advertising. Mizerski, Golden, and Kernan (1979) cite only four advertising studies (Robertson and Rossiter (1974), Swinyard and Ray (1977) and Smith and Hunt (1978 a and 1978 b). A* least two others should be added to this list, Settle and Golden (1974) which was inadvertently omitted and Sparkman and Locander (1980) which was published later. Three of these, Settle and Golden, Smith and Hunt (b), and Sparkman and Locander have experimentally investigated the effects of attributionally based manipulations on advertising effectiveness. Settle and Golden and Smith and Hunt studied advertising copy using Kelley's (1967: 1973) ANOVA model and Jones and Davis' (1965) theory of correspondent inference respectively. Sparkman and Locander used the ANOVA model to investigate advertising context.

Similar investigations of advertising effectiveness based on Kelley's discounting principle have not been reported. The purpose of this study is to extend the earlier work by applying the discounting principle to the study of advertising. Previous research based on the discounting principle addressed one of three areas. Mizerski (1975, 1976, and 1978) and Mizerski and Green (1978) used the discount principle and the related concept of causal schemata to investigate the causal complexity of consumers. Dholakia and Sternthal (1977), Swinyard and Ray (1977), and Sternthal, Phillips and Dholakia (1978) used discounting to explain self perceptions of consumers. Calder and Burnkrant (1977) used the discounting principle in their investigations of the perceptions of store and product selection by consumers.

The Discounting Principle

All attribution theories attempt to explore how observers assign (attribute) causes to an actor's behavior. The discounting principle is perhaps the most easily stated and understood of all the attribution theories. According to the discounting principle: the role of a given cause in producing a given effect is discounted if other plausible causes are also present" (Kelley 1972 (a) p. 8). If for example, an associate tells us how much he enjoys driving his automobile, we tend to attribute his behavior to the characteristics of the automobile itself. When we later learn that he is trying to sell the automobile, a second plausible cause, the desire to make a sale, is introduced. We might, therefore, discount the automobiles characteristics as a cause for the statement.

Both the automobile itself and the money which could be obtained through its sale are external causes for behavior. They exist outside the actor but may be perceived to influence his behavior. They should be contrasted with internal causes such as the honesty of the actor. Honesty might, for example, be the perceived cause for a statement such as "the car gets terrible gas mileage (see Sparkman 1980 for a more complete discussion on the relationship between perceived trustworthiness and discounting).

In the example above, the actor described an object which was for sale. this situation is somewhat similar to that of a spokesperson advertising a product. In advertising, there are usually at least two plausible external causes for the spokesperson's behavior, the money he is paid and the product itself. The spokesperson whose behavior is attributed to the advertised product is more likely to be believed than is one who is perceived as being motivated only by the money he is being paid. It is thus in the advertiser's interest to decrease the importance of one plausible external cause (money) and to increase the importance of another (the product itself). While the discounting principle can be applied to the comparisons of two external causes (Kelley 1972 a), it will be shown that neither the ANOVA model nor the theory of correspondent inferences are as well suited for this type of comparison. The discounting principle thus offers a unique opportunity to investigate the effects of the money paid to product spokespersons.

The theory of correspondent inferences is internal in its orientation. "A correspondent attribution occurs when causation for the event is assigned to dispositional properties of the actor, rather than external or situational constraints." ( Smith and Hunt 1978 b p. 12). The variable of most interest is the importance which the observer attaches to internal causes. This led Smith and Hunt (1978 b) to calculate a "correspondence score" =

Internal Causes + External Causes   X   10

              Internal Causes

The theory is limited to inferences from comparisons between two conditions: internal plausible cause only and internal plus external plausible causes (Kelly 1972 a). It is of limited use for cases involving multiple external causes.

The ANOVA model focuses on behavioral patterns which distinguish between internal and external causes. If actor "A" performs behavior "B" toward object "0", the ANOVA model would be used to determine if that behavior was caused by the object itself or by some characteristic of the actor, (Kelley 1973). me model is based on the covariance principle. The behavior is attributed to the factor with which it covaries. For example, increasing the length of time over which the behavior is performed toward the object increases the covariance between behavior and object and thus the probability of an object attribution (Kelley 1973). McArthur (1972) demonstrated that the theory works well in noncommercial situations. Unfortunately, it does not work nearly as well with commercial communications. me object of primary interest in advertising is the advertised product. Sparkman and Locander (1980) attempted to increase product attribution by increasing the length of time over which the spokesperson advertised the product. This manipulation increased the covariance between the behavior and the product but did not produce the predicted increase in product attribution. a e authors concluded that money was a confounding factor which prevented the hypothesized increase in product attribution. Increasing the time increased not only covariance with the product but also was perceived as increasing the amount of money paid to the spokesperson. Thus, it might be concluded that this second plausible external cause caused product attribution to be discounted.

Money will be a second plausible external cause for any ad for which the spokesperson is perceived as being paid. Therefore, investigations in this area will be of potentially practical as well as theoretical interest. It is hoped that this study will be of useful extension of the earlier work.

Research Design and Hypotheses

The study was conducted using a consumer mail panel in a medium size southwestern city. Panel demographics are given-in Table 1.- The experimental treatment and the data collection instrument was included in the regular panel mailing. Data was collected during June, 1980. At this time information on Frank Sinatra's $1.00 a year contract with Chrysler had appeared in the trade press but not in any media for the general public.

TABLE 1

Panel members were randomly assigned to one of two groups, a discounting group or a control group. The control group treatment was:

"We are interested in your reaction to the Frank sinatra ads for Chrysler, which are being tested in your city.

The discounting group was given additional information intended to discount attributions to money. They were told:

"We are interested in your reaction to the Frank Sinatra ads for Chrysler, which are being tested in your city. As you may already know, Mr. Sinatra is working for the same $1,00 a year as Mr. Iacocca. (Chairman of Chrysler). He has said, 'I was impressed with Iacocca's personal crusade to save Chrysler and protect American Jobs.'"

The application of the discounting principle to commercial communication requires that the observer be given information to discount the monetary reward as a perceived cause for the spokesperson's behavior. If this information is accepted, attributions to money would be reduced and the discounting principle would lead us to expect increased attributions to other causes. However, if the discounting treatment was rejected, there would be no change in attributions to money and no reason to expect a change in any other attributions. It is, therefore, necessary to conduct a manipulation check.

H1: Subjects in the control group will have significantly stronger attributions to money than will subjects in the discounting group.

A successful discounting treatment is expected to result in greater product attributions. Hypothesis two is:

H2: Subjects in the discounting group will have significantly stronger product attributions than will subjects in the control group.

A spokesperson motivated by money should be perceived as less truthful than one motivated by the characteristics of the product he describes. Hypothesis three is:

H3: Subjects in the discounting group will perceive Frank Sinatra as being significantly more truthful than will subjects in the control group.

Dependent Variables

Hypotheses one and two were tested using five point Likert scales ranging from:

    strongly agree  -  agree  -   neither agree nor disagree   -  strongly disagree   - disagree

For both treatments, the instructions to the subjects were:

"We are interested in why you think Mr. Sinatra will appear in these ads. Please indicate the extent to which you agree or disagree with each of the possible causes below.

The possible cause given for hypothesis one was:

"For the money he will be paid."

The possible cause for hypothesis two was:

"Chrysler is a good automobile."

For hypothesis three subjects were asked to respond to this question:

"How truthful do you believe Mr. Sinatra will be in these ads?"

by rating Frank Sinatra on a five point truthfulness scale:

    not at all truthful   -  slightly truthful  -  somewhat truthful   -  very truthful   -   completely truthful

Results

One-hundred fifty two questionnaires were sent to female panel members and 152 to the husbands of other female panel members. 96 usable responses were returned from females (54 control and 42 discounting). One hundred twenty five usable responses were returned from males (62 control and 63 discounting). me answers for the questions designed to test hypotheses one and two were coded as 1" for Strongly Agree, 2" for Agree", and town to "5 for strongly Disagree." Nonresponses were coded as "3". The truthfulness -question was coded as 5" for "Completely Truthful" down to "1" for "Not at all Truthful." Nonresponses were coded as "3".

Data were analyzed using the SPSS ANOVA procedure for unequal cell sizes. There were no significant differences between the response of males and females. Hypothesis one was supported at = .001. The manipulation was successful in that subjects in the discounting condition attributed Frank Sinatra's behavior less to money than did control subjects. The average money attribution score was 2.28 for subjects in the control group and 3.11 for subjects in the discounting group. Hypothesis two was supported at a = .001. Subjects in the discounting condition had higher product attributions (mean score = 2.51 vs. 2.91), than did subjects in the control group. This is as predicted by the discounting principle. Hypothesis three was also supported at a = .003. Subjects in the discounting group perceived Mr. Sinatra as more truthful than did control group subject (3.18 vs 2.82).

Summary and Implications

The results of this experiment demonstrate that the discounting principle can be applied to advertising. The effects that the discounting principle predicts in social situations are shown to occur in situations involving commercial communication. This study represents an extension of earlier work in that it demonstrates a method for increasing product attributions by explicitly reducing attributions to money. This is an important extension since money is a second plausible external cause present in most advertising situations. The decrease in the money attribution had a secondary effect. It causes an increase in the perceived trustworthiness for the spokesperson.

This study demonstrates that the discounting principle can be applied to advertising and that it can be used effectively to reduce unwanted external attributions. For an advertiser, the discounting principle offers significant advantages over both the ANOVA model and the theory of correspondent inferences. The discounting principle has an advantage over the theory of correspondence inferences in that it can be used to focus directly on the external cause or causes of interest. It also avoids the confounding of external causes which can occur with attempts to apply the ANOVA model to advertising. Perhaps the biggest advantage of discounting over the other two theories is that it allows for comparisons between two or more external causes. This allows the advertiser to strengthen product attribution by weakening other external attributions such as money.

The simplicity of the discounting principle is also an advantage to both researchers and practitioners. It is unnecessary to determine prior probabilities or to even distinguish between internal and external causes. The discounting treatment itself is much more direct than the ANOVA treatments or correspondent inference treatments employed in earlier studies. Discounting treatments would also be safer for an advertiser to employ. For example, both Settle and Golden (1974) and Smith and Hunt (1978 b) attempted to increase advertiser credibility by providing unfavorable information about the advertised product.

This approach is of theoretical interest but would be risky to apply since any prospect who considered the negative information salient would be discouraged from purchasing the product. me discounting approach is safer since it does not require the use of unfavorable information. Instead, it leads to treatments intended to directly reduce attributions to causes which might compete with the product attribution.

There appear to be at least three applications for the discounting principle to either the practice of advertising or to further research in commercial communication . First the results of this study would seem to be directly applicable to the practice of advertising. It would seem that ads using uncompensated spokespersons would be more effective if that fact were publicized. Second, although this study should not be extended beyond advertising, the results do indicate that other discounting techniques should be investigated. One possibility would be to test the effects of a salesman making the statement that he doesn't work on commission. Finally, discounting treatments may be of use in increasing the effectiveness of the ANOVA model. Discounting might, for example, be able to reduce or eliminate the confounding effects of money on the ANOVA treatments.

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