Entourage Effect Has Significant Consequences for Any Brand - Coursework Example

RESEARCH ARTICLE REVIEW By Name Course Instructor Institution City/State Date Table of Contents Table of Contents 2 The Research Problem and Objectives McFerran and Argo (2014) article seeks to verify that VIPs experience higher status levels when they are offered privileged treatment with an entourage, although this leads to the depreciation of the rewards related to this treatment. McFerran and Argo exhibit that the effect of VIP treatment is attributed to the increasing connectedness feeling with one’s guests. In their study, the authors provide a discussion about the entourage effect, and their contributions are rooted in comprehending how guests’ presence changes the status that is experienced by the VIP. Generally, the authors seek to analyse how the VIPs feel when they are offered an entourage. Further, the authors aspire to validate that having an entourage improves the social connection feelings, and this is rooted in the assumption that social connection feelings mediate the effect of the felt status while having an entourage as well as that influencing (dis)connectedness feelings directly weakens the effect. Besides that, McFerran and Argo study seeks to disprove numerous alternative explanations with regard to the entourage effect, rather they endeavour to justify that entourage effect ascends because of an augmented sense of social connection, which is experienced by the VIP. The authors further seek to justify that the entourage effect cannot arise because of a repugnance of being unaccompanied, improved public perceptibility, lack of sharing ability, or perceived acknowledgement. The key objective of McFerran and Argo study is to examine whether having an entourage during preferential treatment can neutrally, positively, or negatively the idiosyncratic status feelings that is experienced by a VIP. Overview of Theories and Hypotheses Concurring with numerous studies such as Dre`ze and Nunes (2009), McFerran and Argo posit that preferential treatment have an effect on status felt by the recipient, and this consequentially results in stronger relationships between the customer as well as the company, and also improves both purchase volume as well as customer satisfaction. Considering that a high percentage of the company’s sales frequently derive from a few consumers, McFerran and Argo assert that finding way to reward such loyal customers should at all times be a vital business question. Even though numerous existing literature talks about the effect of VIP treatment on the recipient’s felt status against those who do not receive such treatment, they failed to examine how individual guests for a VIP can influence the experience of the VIP. Echoing Fombellea et al. (2015, p.1) sentiments, the authors argue that comprehending the effect of entourage on a VIP is very imperative. They key assumption in this study is that having an entourage during a preferential treatment can positively, negatively, or neutrally impact the individual status feelings that is experienced by the VIP. As mentioned by McFerran and Argo members of entourage have characteristically not done anything so as to earn the favoured treatment, and can possibly weaken the services’ prestige, since the rewards are extended to ordinary people. Simply, entourage members according to Gherasim (2013) are receiving unjustifiable perks, and such individuals make VIP rewards less limited. McFerran and Argo hypothesis that an entourage can reduce VIP’s individual status is derived from previous works. According to Dumont et al. (2006, p.16), individuals from high-status group always feel vulnerable when the boundaries of the group seem to be unstable. Hypothetically, the authors posit that an entourage presence can essentially boost VIP’s felt status. Subjective backing for this hypothesis originates from the past, whereby having many servants, slaves, together with other domestic help symbolised social stature. This is also supported by Kruglanski and Mayseless (1990), who argued that an entourage status is based on social comparison theory, and that having an entourage can offer a VIP more benefits as compared to those lacking, and as a result, can improve VIP’s felt status. This argument is further echoed by Morgan et al. (2015, p.105) research on loyalty programs, who established that VIPs get their status feelings more from social comparisons to other VIPs. According to Social comparison theory, people determine their own personal and social worth in terms of how they measure up against others. In consequence, they are continuously making self-evaluations across various domains; for instance, based on wealth attractiveness, success, as well as intelligence. Comparative impartiality amongst VIPs may instigate a need for consumption that is conspicuous in order to signal authority; therefore, being offered an entourage can make a VIP feel more important than other VIPs, consequently improving the felt status. Another theory used in article is network theory terminology; whereby the authors argue that individuals with an entourage have one entity with a high centrality level in a network. Considering that network structure connections are related to status, McFerran and Argo managed to describe how status is predicted by connectedness as well as why the consequential entourage situation network structure can lead to high connectedness. Similarly, social impact theory state that when social sources’ group (in this case the entourage) concentrate on certain person (in this case the VIP), the impact level (in this case connectedness) that the targeted individual experience heightens with the number of sources. As mentioned by Forsyth (2009, p.183), social impact theory envisages that power increases with resources. So when a VIP is offered with an entourage, they feel more powerful and influential than other VIPs without entourage. Rooted in this theory, Yoon et al. (2014) posits that it is imperative to differentiate VIPs from other divisions of consumers. This is for the reason that they are not the same; rather they should be defined in terms of attitude and economics: they are more motivated with products that improve their VIP status. Overview of Studies and Findings The first study was designed by the authors to examine the basic effect of entourage, whereby they measured if a VIP has an entourage and the size of the entourage. The first study demonstrated the effect of the entourage in a real field environment. In this case, the authors established that the entourage presence heightened the level to which a status was felt by the VIP. Additionally, the authors established that the entourage size did matter, in that a bigger entourage was related to high felt status. The second study was designed mainly to examine the effect of the existence (vs. nonexistence) of an entourage based on how felt status is experienced by the VIP in a more controlled environment. In this study also, the authors examined whether any noted heightened felt status is a result of distaste to being unaccompanied; which definitely needs no preferential treatment. Precisely, McFerran and Argo established that if consumers experience high felt status in the presence of an entourage even with no preferential treatment, it exhibits a an effect of belongingness, but if more status is experienced by the consumers when accompanied with other individuals together with preferential treatment presence, it exhibits an effect of entourage. The third study was designed with the purpose of comprehending when and why the effect of entourage takes place. Foremost, McFerran and Argo indicate that an entourage offers a VIP with a chance to confer preferential treatment on others given that they have the role of gatekeeping. Therefore, it is likely that the capability to bestow valued resources on one’s entourage can improve a felt status experienced by the VIP. To examine this likelihood, McFerran and Argo included a condition wherein similar preferential treatment on others is bestowed by the VIP, but the individuals are physically absent. The third study results highlighted that physical distance effects discards the likelihood that the effect of entourage only arises due to the ability of the VIP to bestow resources on others. Rather, it recommends a condition for the boundary: the preferential treatments of the entourage have to be conferred in the attendance of the VIP. The third study as well rendered a justification rooted in the less likely obligation: the entourage must feel obligated for the passes of the VIP even though they are not physically present with the VIP, and as a consequence may boost the felt status experienced by the VIP (in contrast to the single condition, wherein indebtedness was not accounted). The fourth study examined simultaneously numerous process explanations with the intention of exhibiting that an entourage improves the VIP’s feelings of connectedness. Moreover, this connection feeling envisaged the level to which a VIP feels status in a context of preferential treatment. Even though the authors exhibited other variables, which are impacted by existence of an entourage, as well as other factors predicting status, the effect was only considerably mediated by connectedness and according to McFerran and Argo mediation holds subsequent to justifying any quota of the effect illuminated through other measures. In their last study, the authors tried to triangulate their process findings through the experimental causal chain technique, instead of mediation. They established that if connectedness feeling certainly steer the effect, directly influencing such feelings can diminish the effect of being offered an entourage with regard to the felt status. So, while lack of connectedness feelings weakened the entourage effect, the authors established in their final study that connectedness feelings essentially underlined the entourage effect. Theoretical contributions McFerran and Argo study provide numerous theoretical contribution, whereby the provide theoretical and empirical evidnece that VIPs feel improved status when sharing their rewards with friends. Besides that, they argue that increased sense of importance is not a utility of being accompanied, but of conferring a gift or of generating a sense of obligation in others. Also, they have confirmed that the effect continues even after dilution of the VIP treatment by the entourage. According to the study exclusion has its own consequences and so recommends that if a company desires to make its VIPs feel unique, it has to allow them to include guests. This without a doubt is imperative for consumer behaviour study, especially for companies seeking to implement loyalty program. Another notable contribution is attributed to the evidence that scarcity normally heightens the level of status endowed by the reward; still, McFerran and Argo established that even though entourage is not more beneficial as that permitted to bring guests, those accompanying the VIP actually outmanoeuvres scarcity in envisaging the status that will be experienced by VIPs individually. Moreover, the study exhibits not just an exceptional entourage effect but as well the approaches underlying it; that is social connection. Whereas connectedness according to the study facilitates the entourage effect, the authors do not expect the connected feeling can continually result in heightened feelings of status. Akin to materialism research by Gera and Belk (1996), which pointed out that consumers attempt to feel status through attainment of goods whose quantity is continually increasing, McFerran and Argo exhibited that guests had an impact on felt status. Recommendations As evidenced in McFerran and Argo study, the entourage effect has significant consequences for any brand having a premium loyalty scheme. In this numerous recommendations are offered: it is imperative to comprehend that even though loyalty programs frequently endeavor to generate the feelings of exclusivity as well as scarcity, research also verifies that prohibiting can have its own ramifications. In this case, if a company desires to make its VIPs feel really superior, it must adjust its present program to as well enable the VIP include guests. Besides that, if a company is running a premium loyalty program, it should understand that addition of guests related to the key VIP member, results in the elevation of the VIP’s apparent status, in spite of the reduced shortage of the preferential treatment. As evidenced in McFerran and Argo paper, adding guest related to VIP member results in a prevailing opportunity to boost both sales and loyalty from the VIP’s customer segment. Companies should know that the concept of another person elevating the status of the VIP is not applicable in loyalty program; rather it is the company responsibility to promote as well as maintain the connection with the entourage. Moreover, when creating a loyalty program for the VIP customers, the company must view the VIP as a group, and not as an entity. Reference list Dre`ze, X. & Nunes, J.C., 2009. Feeling Superior: The Impact of Loyalty Program Structure on Consumers’ Perceptions of Status. Journal of Consumer Research, vol. 54, pp.980–85. Dumont, M., Seron, E., Yzerbyt, V. & Postmes, T., 2006. Social comparison and the personal-group discrimination discrepancy. Catholic University of Louvain; University of Exeter. Fombellea, P.W., Siriannia, N.J., Goldsteinb, N.J. & Cialdini, R.B., 2015. Let them all eat cake: Providing VIP services without the cost of exclusion for non-VIP customers. Journal of Business Research, pp.1-10. Forsyth, D., 2009. Group Dynamics. New York: Cengage Learning. Gera, G. & Belk, R.W., 1996. Cross-cultural differences in materialism. Journal of Economic Psychology, vol. 17, no. 1, pp.55–77. Gherasim, T., 2013. Behaviour Social Factors. Economy Transdisciplinarity Cognition, vol. 16, no. 1, pp.5-14. Kruglanski, A.W. & Mayseless, O., 1990. Classic and current social comparison research: Expanding the perspective. Psychological Bulletin, vol. 108, no. 2, pp.195-208. McFerran, B. & Argo, J.J., 2014. The Entourage Effect. Journal of Consumer Research, vol. 40, pp.871-84. Morgan, R.M., Parish, J.T. & Deitz, G., 2015. Handbook on Research in Relationship Marketing. New Jersey: Edward Elgar Publishing. Yoon, E., Carlotti, S. & Moore, D., 2014. Make Your Best Customers Even Better. [Online] Available at: https://hbr.org/2014/03/make-your-best-customers-even-better [Accessed 27 April 2015]. Read More