International Consumer Behaviour

ROBOLOVE

Théo LAMARE
By Robolove, we do not mean a feeling of love towards robots like it is depicted in Spike Jonze’s disturbing movie “her”, even if humanity could be soon exposed to this unexpected situation. Here, we rather mean the phenomenon characterized by the fact that there are more and more robots presents in our daily lives, which is also true in the business world. People will be more frequently in contact with robots in circumstances that they are rather used to communicate with humans so far.

If this trend can be qualified as worldwide, I have decided to focus on a specific market: Switzerland. This country, whose capital city is Bern, is located in Western and Central Europe.
From a political point of view, Switzerland is one of the most stable in the world, it remains a high performer according to the World Bank’s global governance indicators that rank between 91 and 99,5 in all parameters. Switzerland’s government is a team composed of seven members with equal rights. Thus, President and Vice President are elected by the Federal Assembly. The executive power is exercised by the government and the federal administration so it is not concentrated in any one person.
Concerning its economic landscape, Switzerland ranks as one of the world’s most competitive economies, with a GDP of around $685bn in 2013. With prudent monetary and fiscal policies in place, the country has resisted to the economic recession much better than many of its European neighbours. The unemployment rate remains rather low and is set to around 3.5% in 2015.
On a social point of view, like any developed country, Switzerland has an aging “8 million inhabitants” population. Nevertheless, it is highly educated and modern, the country is even considered as “the best place to be born in the world” according to Economist Intelligence Unit. As Switzerland is composed of four main ethnic groups (65% German, 18% French, 10% Italian and Romansh 1%), there are also four official languages which is very rare for a country.
Switzerland is also famous for its strong capacity for innovation. According to a report conducted in 2012 by Insead Business School and the World Intellectual Property Organization (WIPO) and, it is considered as the first innovative country in the world. The country also provides strong intellectual property protection. This healthy innovative capacity is obvious seen the high number of patents granted every year. According to the Global Information Technology Report (GITR), in 2014 Switzerland was the fourth most tech-ready country in the world (percentage of population online, level of technological innovation and the concerted efforts of governments, business and individuals investing in ICT).
In addition to this, the Swiss legal environment is favourable to investment as there are no significant barriers to starting a business in the country and all is made easy for foreign companies to be attracted, especially concerning the taxation system.
In terms of environmental performance, the country is high ranked (standing among the top 5). Also, Swiss are one of the most recyclers in the world, with 66% to 96% of recyclable materials being recycled.

Now that we have presented the overall features of the country, we can concentrate on the cultural framework of the country (noticing that everything mentioned above is actually part of it) especially the consumer practices inside of it.

To start with, let’s have a look at Hofstede dimensions about Switzerland. This helps us have a good overview of the drivers of the Swiss culture compared to other countries. It is important to take into consideration that the different ethnic groups within Switzerland have widely different scores. We have therefore several sub cultures inside a same country, each subculture being a sub culture of the neighbour country. For example, the Swiss French people have customs and social behaviour that are more similar to the French than Swiss German who are rather influenced by the German culture. We can obviously say the same thing between the all four main ethnic groups mentioned earlier.
The Power Distance dimension is defined by Hofstede as “the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally.” The Swiss score is quite low as it is set at 34. This means that it is a society which believes that inequalities should be minimized and hierarchy is accepted for convenience only. The power is decentralised and the managers can rely on the experience of their teams who also expect to be consulted. In the French speaking region, PD is higher and hierarchy is more accepted.
Concerning Individualism, “the degree of interdependence a society maintains among its members” according to Hofstede, both German and French speaking regions have a high score (68) which makes Switzerland an individualist society. “This means there is a high preference for a loosely-knit social framework in which individuals are expected to take care of themselves and their immediate families only. In Individualist societies offence causes guilt and a loss of self-esteem, the employer/employee relationship is a contract based on mutual advantage, hiring and promotion decisions are supposed to be based on merit only, management is the management of individuals” according to Hofstede.
About Masculinity, “the fundamental issue here is what motivates people, wanting to be the best (Masculine) or liking what you do (Feminine)” says the Dutch social psychologist. He estimates that Switzerland scores 70 for both German and French speaking regions. People are highly success oriented and driven.
The fourth dimension, Uncertainty Avoidance, is defined as “the extent to which the members of a culture feel threatened by ambiguous or unknown situations and have created beliefs and institutions that try to avoid these”. Here Switzerland scores 58 and Hofstede believes that it could be explained by the difference between Latin ethnic groups (French and Italian), which are rather characterised by a careful analysis of all available information to take a decision, and on the other hand, German ethnic group which can take more risks. Anyway, the mix of everything lets a rather high score coming out.
The Long Term Orientation describes “how every society has to maintain some links with its own past while dealing with the challenges of the present and future”. With a high score of 74, Swiss culture is defined as pragmatic, i.e. they encourage efforts in modern education as a way to prepare for the future. People adapt easily to changed conditions.
As last dimension, Indulgence can be defined as “the extent to which people try to control their desires and impulses”. Switzerland scores high in this dimension (66) which shows that people “exhibit a willingness to realise their impulses and desires with regard to enjoying life and having fun. They possess a positive attitude and have a tendency towards optimism. In addition, they place a higher degree of importance on leisure time, act as they please and spend money as they wish” according to Hofstede.

Once we know the cultural practises of this country, we can try to depict how they are as consumers. Traditionally, the Swiss appreciate the brands’ quality and value and are often ready to pay a little more if that improves satisfaction and utility, in other words, if he is convinced by the product. However, with the deterioration of the economical environment, price becomes an important factor in consumers’ criteria of choice. Services before and after sale are really important on this market. The choice of a given product or service highly depends on the after sale service offered by the company. Swiss consumers enjoy new and innovating products, but they stay in the same time loyal to brands they know.

Let’s now describe the emerging trend spotted. First of all, we can see that there are more and more robots in the business world. This trend is a worldwide trend as searchers from all over the world try to develop robots that facilitate our everyday life. Robots can do routine tasks that are codifiable. There are many non routine tasks that cannot be done by robots (as they are so far) like for example managing teams…).
Human beings remain at the centre of attention. The aim of such a development is not to transform humans into cyborgs. It is just improving humans; it is at their service, either for its survival (security), to improve its health or to stimulate its personal development. Robots won’t replace humans: they might take on a few jobs with repetitive tasks but it is just to place humans on more interesting and valuing tasks. According to Schumpeter’s theory, creative destruction, innovation can destroy some things but in the end many new associated jobs and markets will emerge. Alfred Sauvy explains it on the job market with its transfer theory (“Théorie du déversement” in French). Sauvy says that technical progress causes a transfer of the jobs from a given sector to another. For example, there were a lot more countrymen before the industrial revolution, with the development of some machines, farmers were more efficient with less employees, so those employees had to find other jobs but thanks to the development of agricultural machines many new jobs were available in the machine construction sector. The transfer has been done. Here with robots it is exactly the same. Garry G. Mathiason, chairman of law firm Littler Mendelson, which has a specialization in robotics employment law issues says quite the same: "There will be a displacement and there will be a repositioning of people into jobs that we don’t even have today that we will have in the future. If you look back in history, you’ll see that this disruption has been going on for some time. Not as fast as what we’re currently experiencing, but nonetheless there."

And Switzerland plays an important role in the development of robots. People first think about Japan when it comes to robots but Swiss research in that industry is one of the best in the world. One of the main actor in industrial robots is the Swiss-Swedish company ABB and in addition to this giant we can find many start up companies like BlueBotics and K-Team. This industry benefits from the Swiss expertise in micromechanics and watchmaking which show some similarities. Another example is the Swiss based company Nestlé who tries in the Japanese market to use a humanoid robot to sell Nescafé in Japan. Pepper is the first robot in the world which is able to read and respond to human emotions through facial expressions and tone of voice. It will be able to explain the products and services and engage conversations with consumers. Besides all this, the Swiss invest a lot in research and development in new technologies and universities are really committed to it.
In one hand we have robots that operate in the value chain, that is to say on everything that happens behind the scenes of the product (logistics, fabrication, marketing...), and in the other hand, we have robots that appear at the last level of the distribution: the first contact with customers (like the Pepper robot for example). We will focus on those last ones and their interactions with humans and how they can behave to them.

To get a better understanding of those consumer behaviours towards robots in point of sales, here are some concepts we will use.
First of all, among external influences, we can say that robots intervene in each level of the 4 A’s of marketing. Indeed, this framework is a tool that helps marketers to put in place actions in the four essential values searched for by customers. These four values if they are reached are essential to a product or service’s success. First we have Acceptability, the extent to which the company’s offer matches and exceeds the consumers’ expectations. Secondly, we have Affordability that can be defined as the extent to which customers are able and willing to pay the product’s price. Then, we have Accessibility that represents the extent to which customers are able to readily to purchase and use the product. To finish with, we have Awareness defined as the extent to which consumers are informed concerning the characteristics of the product and want to try it.
As a second concept but still in external influences, we can use to better understand consumer behaviours towards robots we have subculture. Subculture is defined as “a segment of a larger culture whose members share distinguishing values and patterns of behaviour” according to Hawkins & Mothersbaugh. And as said before, Switzerland is composed of different ethnic groups, so we can the two researcher’s definition of ethnic subcultures: “An ethnic subculture is defined as a subculture whose members’ unique shared behaviours are based on a common racial, language or national Background.”
Then, as first concept that plays as an internal influence on consumer behaviours, we will also talk about Information Processing, which is considered as “a series of activities by which stimuli are perceived, transformed into information, and stored”. Perceptions and memory are extremely selective and individuals are not passive receivers of the marketing messages.
Those perceptions and memory can have an effect on people’s emotion which is a second concept we can categorise in internal influence too and that can help us in our work. Emotions are “strong, relatively uncontrolled feelings that affect behaviour” according to Hawkins & Mothersbaugh.
Attitudes are another concept part of the internal influences of the consumers. Fazio gives a definition to them: they are “associations between a given object and a given summary evaluation of the object – associations that can vary in strength and, hence, in their accessibility from memory” and can be activated on a mere exposure (cf perceptions) to the attitude object. The attitudes can be affective (liking, feeling for), behavioural (how people behave towards the object in question) or based on cognition (people’s beliefs/thoughts towards the object in question).
To finish with, all those internal and external influences affect people’s decision making process. It is the reason why we use concepts to understand people’s behaviour towards robots, because it is by analysing inner workings of behaviours consumers can have that companies can get how positively it can alter their decision making, i.e. move into the act of purchase.

Now that we have described our theoretical framework, we will give a proposition of a set of actions that could be considered as a proactive strategy to apply this Robolove trend in Switzerland for the companies who don’t want to be lagging behind.

To start with, the implementation of such a technology requires a complete rethinking of the companies’ overall organizational design. For example, modern technology calls for high-performance work practices like problem solving teams, job rotation, information sharing, etc. This means that Swiss companies, according to their sector and activity, will have to decide whether the robots they want to implement in their teams will completely replace some jobs, or accompany them, or can be used as completely different but new tasks. For each kind of implementation, a precise assessment of the consumers’ needs and also of the possibilities in terms of managerial organisation has to be conducted. So Swiss companies should start as soon as possible to think about it, because robots are already invading our stores.
In addition to this, companies should conduct surveys to their customers to have a grasp of who are their customers and how they behave in order to evaluate if they are ready to face robots in the points of sale.
Once this is done, they should develop robots according to what they think their consumers will be willing to interact with in terms of size, colour, voice, design. Nothing has to be forgotten about the compatibility with consumers AND the environment (i.e. the store itself and the image the brand wants to convey).
Then, as the country’s population is aging, they should as well think of adapting those robots to the elderly people, and it is all the more important as it is a population which is not used to interact with new technologies (fortunately, this is less and less the case today).
Companies will also have to adapt their robots to people’s language. If ethnic groups are rather separated in terms of location, the country is not separated neither and bigger agglomerations mix up almost all king of Swiss subculture. As a consequence, robots must be able to recognise, understand and talk several languages to be really efficient and helpful to everyone.
To apply all this, not only companies have a role to play, but also the Swiss government: it has to keep investing in research and education in the new technologies. The Swiss are already in the right way as it is ranked the sixth most tech ready country in the world by GITR, but they don’t have to lower their efforts. Several companies have shut down their local R&D centres due to cost cuts, but the country has to keep retaining them through tax incentives, more partnerships with universities or other ways that can be relevant. The government should also adequate policy responses to the effects of robots on workers, firms and consumers for sure.

Now that we have seen those few recommendations, we can observe that it is really important for the companies to clearly take into consideration consumer behaviour towards robots to set those advices into implementation.

First of all, Switzerland seems like a good country to start its robot implementation strategy as people are interested in new technologies and have a positive view on robots according to the Eurobarometer’s study. So, let’s have a look again at our theoretical framework to apply this trend in a perfect accordance with consumers’ behaviours.
As said, people’s behaviours are influenced externally and internally. Concerning the external influences, we mentioned first the four A’s of marketing essentials to a product’s success. To buy an offer, consumers need to “accept” it (i.e. it matches or exceeds consumers’ expectations). Robots can help reaching and exceeding those expectations by simply providing some information (Pepper) or physically helping consumers (car parking robots, Amazon’s delivery robots…). Concerning Affordability, the use of robots is first a heavy investment for the company so it could raise prices in the short term. But Swiss people are long term oriented and they encourage efforts in modernity to prepare for the future. Plus, quality of the offer is really important to them and they are not afraid to pay a bit more for a better service. In the long run, if companies are betting on such heavy investments, it is because they are aiming for economies of scale so the use of robots will be less and less expensive making the offer even more affordable with a same (or higher, due to improvements) level of quality. Concerning Accessibility, the use of robots can also make companies’ offers more accessible. Amazon’s case is a perfect example here as they are thinking of using drones to deliver their purchased products to end customers. To finish with the four A’s, robots can also improve consumers’ awareness to the brand and/or products.
To stay in the external influences, we talked about the concept of subculture. As said before, robots will have to be designed to be used easily taking into consideration the population targeted. The problem in Switzerland is that target is so wide and differentiated that the way robots work has to be understandable by everyone, even people who never use new technologies (elderly), and quickly so that they don’t have time to be fed up searching for how to use them. As mentioned earlier, robots must be able to recognise, understand and talk several languages to be really efficient and helpful to everyone. Lexical, idiomatic, grammatical and syntactical details must not be underestimated. To be perfect, when recognising a language, robots would even be able to adapt to sub cultural subtleties. For example, as Latin ethnic groups have a higher score on uncertainty avoidance, robots would give more factual information than for the Swiss German when advising consumers, so that everything is done to help them in their rational choice. In this way, people facing robots will feel in a comfortable situation and could even feel amused which is capital for a country estimated as indulgent (cf Hofstede dimensions). This sympathetic side of robots could be emphasised by the fact that robots can trigger a flashbulb memory to the consumers reminding them some super heroes from their childhood for instance.
Now talking about internal influences of the consumers that companies have to be attentive to, we cited first Information Processing. As well as culture, subculture, education and family can influence consumers externally, perceptions, memory, emotions and attitudes can influence them internally in their behaviour towards robots.
First, people who get in touch with working robots are exposed to them as a physical entity in front of them. A study conducted by the barometer shows that European people in general, so it is also true for Swiss, are more likely thinking of robots as instrument-like machines than human-like machines. This has to be taken into consideration when designing them because people’s expectations really matter. Those expectations are based on what people are used to see according to their experience of life. Memory here plays an important role in people’s perception, so the robots must be adapted their habits.
Companies also have to consider the fact that, sometimes, people act because of uncontrolled feelings that affect their behaviour: emotions. This is all the more difficult to anticipate as in addition to alter according to people’s personality, it is an uncontrolled phenomenon. Nevertheless, emotions can be reduced or aroused by marketers through hidden tricks. For example, in order to avoid anger from a loyal customer who comes back quite often in store, the robot’s greeting message “Hello, how can I help you?” is fun at the first time. But in the case of that customer, he could get easily angry if the robot is always asking the same sentence every time. It could also get other people in the store angry if they stay quite a long time and they hear 50 times “Hello, how can I help you?” in 3 minutes because 50 people entered the store. It would be much more pleasing that sentences vary. It would be even better that robots could recognise loyal customers and ask as first question a personalised one. We could develop tricks like this for every emotion and situation, the hardest par for companies is obviously to think about as many situations as possible.
As last internal influence on consumers’ behaviours towards robots that companies should not avoid, we have attitudes. The robot's movements, timing of behaviours, etc. must be carefully designed for the specific purpose of interacting with people. Thus, it can not only approach and avoid, but also interact verbally and non-verbally in a variety of ways inspired by human behaviour (body language, speech, gestures, etc.). Attitudes are either affective, behavioural or cognitive. Marketers should first aim at people’s affective side of attitude trying to establish a first good experience. A first good experience is key because it will make customers like the robot, so that they will have a good behavioural attitude to them later which sets a positive cognitive attitude. This is also important because as the customer is satisfied, he can more easily talk to it to friends or relatives which will make the company benefit from a good reputation.
All those external and internal influences affect customers’ decision making process. The use of robots make it tend towards high-involvement purchase as it causes curiosity first, and then the need from customers for more trustworthiness. People’s decisions are not always rational because of all those external and internal influences, but people like to say their decision are rational –especially in the Swiss context - so they need test the robots’ abilities to see if they can consider them as reliable or not. Therefore, they will really seek information about the robots and how they work. The problem for companies here is that they have to be equipped with nearly flawless robots. A single defect could stain the brands reputation for a long time. We can here remind that Swiss bring a high importance to before-sale and after-sale services. So it would be better not to place a robot at an after-sale service desk if the complaining customers are coming because of a robot’s problem.
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