Contributor / Kent Grayson
Breaches,Definitions,Economic Exchange,Legal Guarantees,Mergers and Acquisitions,Regulation,Vulnerability
The first thing that people think about when they think about marketing is advertising because that’s the primary way that companies communicate with customers.
And because of that, a lot of people think that if you study marketing, you probably study advertising. And there are marketing researchers who do study advertising. But there are also marketing researchers who study a lot of other things.
And a common interest that unifies all marketing researchers is not an interest in advertising but an interest in what makes economic exchange possible, an interest in the conditions that facilitate economic exchange.
By economic exchange I mean any buyer-seller relationship. So, it could be a relationship between a consumer-products firm and a shopper in a grocery store. It could be a raw-material supplier and an automobile manufacturer. It could be a client and a lawyer. It could be a lemonade stand and a neighbor.
Any buyer-seller relationship like that, marketing researchers are interested in, what factors facilitate that exchange, make it happen, make sure that the buyer and seller are happy at the end? And also, what factors might hinder that exchange?
So, among people who study marketing, there is a bunch of us who study trust. And what’s interesting about trust and trust in marketing is that trust can be broken. We can get burned by trust. And for me, one of the most interesting things is understanding how we as consumers navigate this minefield of the possibility that trust might be broken.
One of the key things that makes it possible for trust to get broken in economic exchanges is this thing called “information asymmetry.” Information asymmetry refers to the fact that buyers know more about themselves than the sellers do, and sellers know more about themselves than buyers do.
And buyers and sellers can take advantage of that information asymmetry and create conditions where they get more out of the exchange than maybe they deserve. But let’s look at information asymmetry as a problem from the buyer’s perspective to start with.
So, let’s say you go into the grocery store, and you see on the shelf a product that promises to clean your clothes if you just hang up the article of clothing and you spray it with this bottle three times. And they claim that it’s going to wash your clothes just as well as in a washing machine.
The thing is, you know that when you buy that product, you’re not going to know if it’s going to work until after you give the supermarket its money, after you drive home, and after you try it on maybe a few articles of clothing to make sure that it doesn’t fade certain clothing or stain certain clothing.
And, on the other hand, the company knows a lot more about how well it works and under what conditions it works and under what conditions it doesn’t work — because no product is perfect. And they may take advantage of that.
They may put only in the fine print that it doesn’t work on jeans or it doesn’t work on cotton, or they may create a formulation that makes it look like your clothes are clean, smell like they are clean, but it actually doesn’t clean as well as a washing machine does.
So, when you as a buyer are about to make that purchase, you have to have a level of trust in the purchase and in the person selling the product. And marketing researchers are interested in what brings you to that point of trusting the product.
Now, the really cool thing about buyer-seller relationships and information asymmetry is the fact that it goes both ways. So, the information asymmetry is a problem for sellers as well as for buyers.
One example is, when you rent out your apartment or you do an apartment share, you’re the seller in that situation, and the buyers are the people coming in to use your apartment. Now, you’re not going to know what they’re doing in your apartment. There is information asymmetry there.
They may use it in ways that you don’t want them to use it, or they may break something without you knowing — you might not find out until later. In business-to-business relationships, if you’re a supplier selling to a manufacturer, they may agree to, for example, pay you in 90 days. They do a big contract with you for a year, and they agree to pay you in 90 days.
But after you work with them for a while, you realize — they’re not actually paying you in 90 days. And they know that you’re not necessarily going to break off that relationship, and they’ve taken advantage of information asymmetry.
So, marketing researchers who study trust are interested in how buyers and sellers can think about all these questions, can navigate all these problems, to minimize these concerns about information asymmetry. And trust is one way that they can do that.
So, as you look across research that’s done by marketing researchers on trust, it comes really in two types. The first type is more psychological in orientation. This research looks at how people think or feel or attitudes towards trust, and how those attitudes towards trust influence their likelihood of exchange or keep them from wanting to exchange.
There is another group of research, or another area of research, where people take more of an economic perspective. And here, the focus is on the kinds of contracts or agreements or norms or expectations that buyers and sellers can bring to the exchange that keep people from taking advantage of information asymmetries and encourage them, or incentivize them, to live up to the expectations of the exchange.
So, what is trust? In marketing, we define trust in the way that many other disciplines define it — which is, it’s a willingness to depend on someone else to do something under conditions where they may not actually do the thing that you want them to do.
And marketers understand that willingness in terms of three dimensions — or three factors influence people’s willingness to depend on someone else to do something that they don’t necessarily have to do or they’re not required to do.
The first dimension, or the first influence, is competence, perceived competence: a belief that your exchange partner is competent to deliver the kinds of things that they’ve promised to do as part of the agreement.
The second dimension is honesty. It’s a belief that your exchange partner is going to tell the truth and keep their promises. The more you believe they’re honest, the more you trust them and the more the economic exchange is enhanced.
The last dimension of trust, or the last factor of trust, is benevolence. It’s a belief that your exchange partner will think about you at critical times in the exchange when they can use information asymmetry for their own benefit, and they’re willing to think about your needs and wants.
And they’re maybe even willing to make sacrifices because they know that making you happy in the exchange is part of making a successful exchange.
Now, these three dimensions are interrelated, but honesty and benevolence are particularly highly correlated, and it’s very hard to tease them apart because a benevolent partner is often thought to be honest, and an honest partner is often thought to be benevolent.