Impact Podcast | What drives us to consume?

KANINA BLANCHARD: Exclusive insights, actionable strategies, and ideas that ignite change. You're listening to the Ivey Impact Podcast from Ivey Business School.

JULIAN BIRKINSHAW: Hello and welcome to Dialogue with the Dean – the inaugural series on the Ivey Impact Podcast. I'm Julian Birkinshaw, Dean of the Ivey Business School, and in this series, I'm sitting down with Ivey's world class faculty to explore their research and their perspectives on the challenges and opportunities facing business and society. In this episode, we're talking to June Cotte, Kraft professor of Marketing at Ivey, who is a thought leader on the topic of consumer behavior.

In other words, she studies how and why we act the way we do when buying products and services. As co-editor of the Journal of Consumer Research, she's also a world renowned academic. June, welcome to Dialogue with the Dean.

JUNE COTTE: Oh, it's my pleasure to be here. Thanks for asking me.

JULIAN BIRKINSHAW: Thanks. So, I'm going to dive into a couple of your research papers. You've had a very long, illustrious career. You've done so many studies. We're not going to cover them all, of course. I just wanted to pick up on 2 or 3 of the ones I found interesting, and I’ll just get you to share a little bit about what those studies were.

So, one of your earlier studies – this was probably 20 years ago - you were looking at the influence of parents versus siblings on how we, as individuals, sort of innovate in terms of trying out new products or whatever. Just tell us a little bit about that study. What were you trying to get at? What did you discover?

JUNE COTTE: So, I had been studying family as part of my dissertation before that, and looking at what family does and what kind of causes are related to family influence. And at the time, this was in the late ‘90s, there was a lot of new consumer innovations: cell phones, online ordering, a lot of new digital innovations. And so, we decided to look at an ongoing question in the literature, which is: do peers, in this case siblings or parents, have more influence?

And we thought innovation was one of those areas that might be interesting to look at, because we tend to think of, well, I don't want to be like my parents – they’re old, they don't use tech, that sort of thing. And so, we looked at that by looking at adult siblings and their parents and looking at their perceptions of their parents’ innovativeness, and their perceptions of their siblings innovativeness. We basically had them predict each other's adoption of innovations. And then we actually measured how many new innovations they had tried or used regularly. And we showed that, in fact, contrary to what maybe people would expect, the parents had the stronger influence on the child's innovation.

JULIAN BIRKINSHAW: And this is adult children? This is kids in their 20s.

JUNE COTTE: Exactly. That's right.

JULIAN BIRKINSHAW: So, my own children, who are in their 20s, are actually influenced by me?

JUNE COTTE: Absolutely.

JULIAN BIRKINSHAW: I really struggle to believe that. But you actually proved this. And just as a quick note: how do you study something like that? Do you ask them questions? Do you do monitor what they actually do?

JUNE COTTE: So, the latter answer is yes. We monitor what they do. So, we actually ask them, you know? I think there were 15 different innovations, and we basically just said, “how many of these have you tried?” So that that's what we would call the “dependent variable” that was the actual trial of these innovations.

But in terms of looking at innovativeness, it turns out that there's a couple of aspects to that. One is need for stimulation. One is need for cognition, like learning new things. And so, we measured those with established sort of psychological traits. They are the kind of things about us that are kind of enduring.

JULIAN BIRKINSHAW: And did you take that particular line of research further in terms of trying to understand peer effect? Because ultimately, if you're a company and you're trying to sell your products, of course you're trying to figure out ways of influencing adoption. So how did you do follow up work, or do you have any advice for companies in terms of how to how to apply this to that?

JUNE COTTE: We did. And so, a different group of coauthors and I actually looked at what we would call “upward influence” in China. So, we looked at adult kids in China influencing their parents to try new innovations. Because the one child policy led to you know, one child, typically, and those children influence their parents to a greater extent than North American families might do.

In terms of recommendations, one of the things that's interesting is that from parent side, there's a modeling and a learning effect. So, if companies want to get in on this, so to speak, they can encourage conversations between parents and kids, but also just acknowledging the fact that what the parents do is seen and adopted by the kids as well. So, the way they behave is something that the kids end up doing. So, a recent domain we're looking at is financial and debt - the way parents are with debt and finances is likely going to be the way their kids are, on average.

JULIAN BIRKINSHAW: Well, that's reassuring. So, my influence, as a 60-year-old parent, is actually still to some extent enduring in terms of modeling good behaviors and hoping that rubs off on the kids. Yeah. And, this may not be your research, but I've got to ask anyway because we live in a TikTok generation or age, where influence is the common narrative and that the kids of today are being heavily influenced by what they see when they're scrolling through TikTok or whatever. Have you done research on that? Do we know how powerful those influences actually are on buy behavior amongst kids?

JUNE COTTE: I haven't looked at it – lots of people in marketing are looking at that. It certainly is powerful - peer influences on things like fashion and music are really strong. Obviously, kids are not dressing like their parents or listening to the same music most of the time. So, there is a strong effect of peers. And what's interesting in that shift is that the peers are now digital. And so there's always been a strong peer effect. But it was typically what we call like the “high school effect,” which everybody can see. But now it's a much more digital global effect.

*MUSIC TRANSITION* 

JULIAN BIRKINSHAW: So, you were studying expert reviewers on sites like TripAdvisor. And we've all, of course, gone to TripAdvisor when we're trying to decide should I go to this hotel? Then we look down the list and we look at the average ratings, we look at some of the comments, and it's a bit of a mess. I mean, you've no idea how much credence to put in what you see.

So again, tell us a little bit about the study you did there and what you found.

JUNE COTTE: So that was part of an Ivey PhD dissertation work actually. So, Peter Nguyen’s dissertation looked at ratings. And in that study, a series of studies, what we really looked at is the hotels and restaurants. They all try to invite experts in and they want to be rated by experts. They want influencers to come, for example.

But what we found is the more expertise you have in an area, the more graded your responses. So, you know the difference between a 3.8 and a 4.3, whereas a novice doesn't. So, novices tend to rate one or five, right? It's either really good or it's really bad. And so, the novices actually drive the average rating. So, when you see the average star rating, it's driven largely by the novices and not by the experts. And there's more novices out there.

And so, it has interesting implications for who you want to review. And, are there ways to set up your reviews differently? So, in some cases you've seen, like YouTube has moved from a star rating to a thumbs up, thumbs down, which is reflecting that it's either good or it's bad.

And so that's what we saw, is that the experts, people with more familiarity in rating, write longer reviews. But they tend to be clustered more in the middle of the scale, and so they don't drive the overall average very much.

JULIAN BIRKINSHAW: So, if I'm a consumer and I'm looking on one of these websites, I've got to try to hopefully home in on the experts. Are these things usually kind of privileged in terms of you see them first?

JUNE COTTE: That's the issue – they’re often sometimes ordered by recency. But you can look for experts. So, Travelocity, Yelp, they identify their experts. And so, you can sort and find the expert ratings. And you might find some more nuance there than you would by just sort of taking the ones that are listed in the last ten kind of thing.

JULIAN BIRKINSHAW: Okay. And then the third study I wanted to talk about, really fascinating, looking at funding to entrepreneurs and particularly differences between male and female entrepreneurs. And I was given this statistic: a study by the Women Entrepreneurship Knowledge Hub revealed that women entrepreneurship, while it's on the rise, women founders in Canada only receive 4 per cent of venture capital funding. Which is too low. And it's a bit worrying. Tell us again, what did you study? I understand that you studied in the context of crowdfunding. You might even want to explain what crowdfunding is, first of all.

JUNE COTTE: Absolutely. And that actually also explains: what is a consumer behavior researcher doing looking at entrepreneurship? The reason why we're looking at this is crowdfunding is, a site like Kickstarter, for example, that's the quintessential crowdfunding site where, average people can go and look and see whether they want to invest in an entrepreneur's project right now.

I said invest – so I could invest to get a return. So, if a project needs a founder, for example, needs $100,000 to launch a product, then I could decide to give that founder $1,000. My thousand dollars will bring the equity if it launches, or my thousand dollars might buy the product if it's produced. And that's where the consumers come in.

Because if I'm thinking like an investor, what we call a decision frame. As an investor, I might be thinking quite differently than if I'm thinking as a consumer. I want that product, so I want that creator to make it so that I can have it. And so crowdfunding, you have both types of purchases. You have consumers and you have investors.

And we thought it was kind of an interesting way to look at the effect of gender on entrepreneurial success, because in the literature, the academic literature, that finding about females not getting as much funding tends to be on the venture capital side. On the crowdfunding side, the results have shown that women do better than men. And so, we were sort of like, okay, what's going on there?

And so, we were trying to explain that discrepancy, why women seem to do better in crowdfunding. And what we found in a nutshell is when you use a consumer mindset, you for definitely sure support female entrepreneurs much greater than you do male entrepreneurs. When you're thinking like an investor, you support males. There's a complicated explanation for that.

But basically, one of the things that matters there is that men are seen as less disadvantaged or more determined. So, these are stereotypes. And but because women are seen as disadvantaged in the crowdfunding site, people are more willing to support them.

JULIAN BIRKINSHAW: So that is what you found. And this is real data. I mean, this is literally people raising money on Kickstarter. This isn't some sort of lab experiment.

JUNE COTTE: This is a combination. So, we started with the Kickstarter data, and there we did like 72,000 projects in every single category across Kickstarter and found that for sure, there is a definite favoring of women. So, they do better on crowdfunding sites. Okay, so that's where we started. And then we wanted to say why. So, then we went into the lab and started turning little levers. Let's turn this on, let's turn that on, and see what could explain that real data.

JULIAN BIRKINSHAW: So, you come the result, which is as the world is. And we may not like that, but that is what's happening. And as you say, you've got these stereotypes of women versus men. So just making it more if you like normative, what would you do if you're looking for money? Are you trying to almost get a male partner if you're female to make sure that you can get access to money?

JUNE COTTE: No! So that's the great thing; we actually looked at things that an entrepreneur can change. Obviously, they can't change their gender. Now, sometimes there are partners or there are teams. And in that case, you would definitely want to pick wisely who's the face of the project. But most entrepreneurs are just who they are.

But, what's interesting is you can write your profile with a different angle. So, you can talk about, for example, the disadvantages you faced on your way up as an entrepreneur. If you're a man, doing that eliminates the female advantage, because that's really one of the drivers of the female advantage is this perception of disadvantage. And so, people want to kind of root for the underdog.

So, if you're a male, make your story about disadvantage. Similarly for the women. They were actually able to get rid of some of the male advantages in the investor mindset by talking about their determination, their passion, and their prior successes – making their profile much more fit the investor mindset.

JULIAN BIRKINSHAW: Yeah. It's very practical.

*MUSIC TRANSITION* 

We've just talked about three different studies. I mean, very different studies. And of course there's 50 other studies you've done, which we haven't talked about. Well, give us a sense of what brings these together? What motivates you to do a particular type of study? I mean, to some degree, obviously you're working with Delta students, but you've got to you've got a coherence to your own agenda.

JUNE COTTE: Right. So, right from the get-go, I was always interested in why people behave the way they do.  And I wanted to look at it from a sort of a higher level, if that makes sense? I joked when I was a doctoral student, I don't want to explain why people buy brand A versus brand B. I really wanted to look at why do people buy anything at all, what are some of their influences? And so I started big picture with cultural influences, family influences, some of that early work. And I've always been interested really in understanding behavior that doesn't make sense to me.

JULIAN BIRKINSHAW: Sort of puzzle about why would someone do that?

JUNE COTTE: Yes. Why would somebody do that? And so, the work that I'm doing with Miranda Goode here at Ivey on debt is one of those projects. Because, my husband and I tend not to have debt or try to carry debt. And so, when you see people with massive amounts of debt, do you think why is that happening? A lot of my research has been on gambling over the years. I don’t Gamble

JULIAN BIRKINSHAW: In terms of why people gamble?

JUNE COTTE: … why people gamble, what are some of the influences? And so, I look at that because I think that's fascinating because it doesn't make sense to me.

JULIAN BIRKINSHAW: And so, why? Because it doesn't make sense to me either. Why do people gamble? It's a guaranteed way over the long term of losing money.

JUNE COTTE: Exactly. A lot of it is the ability to - this sounds too simplistic – but the ability to experience some risk, in a life that otherwise has no risk. So, you know, if you think of an adrenaline junkie who bungee jumps, a gambler actually looks similar to that just with financial risks.

JULIAN BIRKINSHAW: Yeah. Understood. No, it's a fascinating phenomenon. Not necessarily one that we wish existed, but it does. And it's legal. Therefore let’s try to understand why it happens.

JUNE COTTE: And, what's interesting is when you really study it, you find people that actually use gambling as entertainment without problematic aspects – so the people that say, well, we could go for dinner and a movie or we could go spend 150 at the casino – that’s totally healthy because they're thinking about it as spending.

JULIAN BIRKINSHAW: Exactly. But of course, the risk is always that it leads to a bit of a habit.

Anyway. You're fascinated by these sort of interesting puzzles. And then, we won't get into the details, but you then got to somehow take an interesting puzzle and find a way of designing a study that allows you to the heart of these things. And in many ways, I think that is the trick of an academic. A lot of people see problems in the world, but to be able to boil it down to a what ultimately is quite a simple study in a lab or using survey data or whatever. That's the trick, right?

JUNE COTTE: It is a real trick! And in experiments eliminating all the extraneous explanations is very difficult. And, it's why experiments take so long to design. In some of my other research where I do qualitative interviews that skill is entirely different. It's really about active listening and empathy, but in experiments it is very controlled.

JULIAN BIRKINSHAW: Now, as you say, a lot of these Procter and Gamble type marketing companies, they employ ethnographers down there to go in and they observe people using their products in order to intuit why it is that they're behaving the way they are, which is a completely different style of research.

JUNE COTTE: My very first paper was on ethnography in a casino. Because I wanted to learn the skill and the supervising professor said, “well, can you think of a place you've never been?” And I said, “a casino.” And so, I spent months in and out of the casino studying behavior there.

JULIAN BIRKINSHAW: Beautiful. So, we must move on. I've got a couple of more questions to ask you. Quite meaty questions, actually. One is about artificial intelligence. I mean, you can't talk about business at all today without bringing it in at some point. But I noticed that you'd written a paper, as one of the editors of the Journal of Consumer Research and the title was will we be the last human editors of this journal?

I'm hoping the answer is no, but just help us with your thinking there. What is it that AI does that make journal editors well, under threat?

JUNE COTTE: So, it was a bit of a tongue in cheek title, but, and our team of coeditors really varies on sort of our acceptance of where generative AI fits in the process. And so, we try to get together and say, okay, let's break down the research and publishing process and see where AI could really help us right now and where we may want to be a little bit more cautious or thoughtful about it.

But in terms of journal publishing, at a very high level, lots of articles come into the journal, many of them are not suitable to even go out for peer review. And for a human editor to go through these and do what we would call “desk rejects” is a very onerous task. We can easily see those kinds of things getting done by AI.

But we wanted to look at the more fun things. So, things that make an academic career so fulfilling. Writing is one of those things. So, some people really hate the writing part and other people thrive on it. And what we were saying is, look, should it be a writing assistant or should it be a writer? How do you go on those continuums?

And so we looked at the process and broke it down and said where on each stage of the research process would AI make sense right now. Where could it be in the future? And what happens to the research academic over time?

JULIAN BIRKINSHAW: And I'm guessing you came out – I mean, certainly this is where I come out – is that, yeah, AI is absolutely going to be helping us in significant ways. But the creative human piece is always going to be needed because almost by definition, if AI is available to everybody, then the answers it's giving are to some degree generic or mediocre. And cutting-edge research will always be something a little bit beyond the ordinary. At which point, we do need that uniquely human thing to make it work.

JUNE COTTE: I agree, but one of the things that when you really sit down and think about it from a publishing perspective that's fascinating is it really levels the playing field. So, for scholars from around the world that are not in a North American based research institution with lots of resources, AI allows them to access literatures, to get access to the kinds of connections that we take it for granted that we have.

JULIAN BIRKINSHAW: I mean, there's an expression that AI excels at mediocrity. In other words, if you are at the lower level, it will bring you up to that basic, mediocre sort of acceptable level. And, just simply writing high quality English is now just taken for granted. It wasn't ten years ago.

JUNE COTTE: Absolutely.

JULIAN BIRKINSHAW: And what about using artificial intelligence for creative activities, for example, advertising?

JUNE COTTE: Well, it's happening. And I don't know if you recently saw the Coke commercial, it was kind of blasé. They actually identified that it was created by AI, which I think is accurate. I think they should do that, but it created all sorts of backlash online where people said, there's jobs going out the window and the end results? The ad was kind of boring.

JULIAN BIRKINSHAW: I haven't actually seen, I'll be honest. But it was a fairly generic ad, obviously professionally done, but nothing exciting?

JUNE COTTE: No, it just didn't have that spark.

JULIAN BIRKINSHAW: And of course, that's the thing with AI. It’s really good at creating generic things, which you've kind of seen before, but that mark of individuality or quirkiness is missing, right?

JUNE COTTE: Yeah, absolutely.

JULIAN BIRKINSHAW: I found this lovely quote, and I'm just going to share it with you because it provokes a follow up question. And it was just on Twitter: You know, the problem with AI, this person said, was it's going in the wrong direction. I want AI to do my laundry and my dishes so that I can do art and writing. I don't want it to do my art and my writing, so that I have to do my own laundry and dishes. And so, the problem with AI is that we don't know in advance what tasks it’s going to be good at. And those of us who love our professions, and we like the kind of creative parts of it, we've got this nagging worry that it's going to actually take away some of that fun, if you see what I mean.

Does that reflect your experience as well?

JUNE COTTE: Yeah. That's what we were worried about because this is not a factory job. And so, we don't want it to take away the fun parts of it. And I tell people, “Well, think about the parts that we really don't like,” right? So, for example, checking statistics when we're reviewing a paper, most of us don't love to do that. So, could we outsource that? Or grading papers? The secret of the professor's life is that grading papers is a terrible part of our jobs. But we have to fairly assess our students. And so, is there a role there?

JULIAN BIRKINSHAW: And indeed, one of my roles as Dean, is, of course, thinking about using AI in a sort of systematic way within our programs. Exactly to the point of making sure that the classroom experience is as high value as possible. I don't think that's ever going to go away. But ensuring that the stuff around it pre-class, post-class is AI enabled.

And yes, you’ve got 800 students in our HBA program, so no professor is going to write 800 individualized reflections on their essay. But AI actually can do that to some degree. Because the professor's going to feed in some specific answers where they maybe are going to grade five papers, and then the AI will somehow be able to take that and then apply it across the board.

That's the sort of thing you're thinking of, right?

JUNE COTTE: Yeah. So for right now, because I have a little bit less teaching than some, I still do all my grading myself. But lots of us have used graders in the past. And with a human grader you also have to grade a bunch of papers, show them how you graded it, give them a rubric so that they can reflect how you would want the papers to be graded. So I don't see why we couldn't train an AI to do that.

JULIAN BIRKINSHAW: That's right. And the students might say, “well, this was written by AI.” Well, it's still better than getting no feedback. I mean, we've still got many, many experiments to do on this, and we as Ivey will absolutely be wanting to stay on the cutting edge of this. So, we'll come back to this question in a year’s time and see how we're getting on.

*MUSIC TRANSITION* 

A final question. We talked about artificial intelligence changing the business world, but there are other megatrend changes underway in the world – the way that consumers behave in aggregate changes in consumerism. Can you just reflect on a couple of the big changes we see going on in the way that people are consuming products and services?

Perhaps it changes by world region? Perhaps it's driven by technology? Because what I'm trying to get out here is: what are we trying to teach our students? We're trying to give them the tools of becoming marketers or consultants or whatever. But we've also got to give them a point of view on the way the world is moving. We want to help them see not what the world is looking like today, but what it’s going to look like five years from now. What are some of the megatrends you’re seeing in consumerism that our students need to know more about?

JUNE COTTE: So, I would say one of them – which sounds like a specific but is part of a megatrend – which is huge in Asia, less so in North America, is buying and purchasing and engaging in live streams. So live streams are all over North America, but in Asia, the idea of live streams is quite different. They're very much almost like QVC. You know, the home shopping network? Except much blown up. And so, you have comments, you have people engaging with the influencer, you have sales going on at the moment...

JULIAN BIRKINSHAW: So, to make sure I understand a live stream, meaning a person doing something and they're just literally streaming themselves…

JUNE COTTE: Yes. They stream themselves for hours, and there are products available. I'm forgetting his name, but there's a male makeup influencer in Asia, that one of our Ivey researchers is studying, and he'll be on for eight hours a day, talking about different things. And there are lots of products available to buy.

So, that's how a lot of people shop - they go to view this live stream and do their shopping while they're viewing this live stream. So, some version of that is going to become global at some point. And so, I think understanding how that works, cognitively, and how people process that kind of information is interesting.

I know you spoke to Tima on the last podcast. Sustainability and sustainable purchasing, so consumers looking at the ethical dimensions of their products, I suspect – and this is a pessimistic view – but with the global economy getting much more difficult and inflation rising, my suspicion is that is taking a little bit of a lower seat, which is unfortunate. And so, I would love to see us find ways to bring that back. I mean, it's not gone. But, where we could get people to maybe not do the direct tradeoff between cost and sustainability. And so that's another trend that's happening. I suspect that people are just prioritizing basics.

JULIAN BIRKINSHAW: Understood. Ok, final, final question: What's your next project?

JUNE COTTE: My next project! So, one of the projects that I'm really, really interested in working on is with one of my former doctoral students, Mike Moorhouse. He and I have been working for years on the sharing economy and particularly ratings. So back to this issue of ratings. Because, and this is just over very simplified, in peer to peer businesses like Uber and Airbnb as the quintessential ones, everything's five star all the time. There's no difference in ratings. And so, the problem is then there's no information. And so, we're trying to explain not only why that happens, but what platforms could do about that so that the consumers and the users get more information.

JULIAN BIRKINSHAW: Got it. Wow. Fascinating. So, thank you for that. And thank you for all your thoughts.

This has been Dialogue with the Dean from Ivey Business School. Thank you to my guest, June Cotte, Kraft Professor of Marketing at Ivey, for joining me today.

JUNE COTTE: It's my pleasure.

JULIAN BIRKINSHAW: Thank you. And of course, thank you to our listeners for tuning in. In our next episode, I will be joined by Dusya Vera, the Executive Director of the Ian O. Ihnatowycz Institute for Leadership and Professor of Strategy for insightful discussion on the complexities and impact of leadership in today's business world. It's a conversation you won't want to miss. Until next time. Goodbye.

KANINA BLANCHARD: This was Dialogue with the Dean, an Ivey Impact Podcast series. For more insights from Ivey, including thought leadership on critical issues and additional podcast episodes, visit Iveyimpact.ca or subscribe on your preferred podcast platform. Thanks for tuning in.