The hierarchy of effects is:
Marketing term for the sequence of five steps a consumer passes through from the initial exposure to a product or advertisement to the purchasedecision: (1) awareness, (2) interest, (3) evaluation, (4) conviction, and (5) purchase.
Why we should care about the hierarchy of effects
Recently, I wrote a post suggesting that measuring ROI is stupid given the hierarchy of effects necessary to drive purchase behavior (among other reasons). As you look at the model to the left, you can see that assessments of ROI only capture the last in a chain of events leading to sales. Assessing marketing efforts based solely on ROI assumes the other stages in the hierarchy of effects are unimportant in achieving future sales and that couldn’t be farther from the truth. Ignoring the impact of your marketing efforts on each stage of the hierarchy of effects is lazy, short-sighted, and will likely lead to inaccurate decisions.
In fact, you can find inaccurate advice given all over the internet and in books simply because sales can’t be tracked to specific marketing actions. A study by Foresee, for instance, shows only 1% of website visits are motivated by social media. This data is used to argue that firms are wasting their time and money on social media. What isn’t measured in this study is the enormous impact of social media on creating brand awareness — not only that, but social media creates positive affect.
Social media drives consumers far down the hierarchy of effects by creating liking, preference, and conviction that the brand is “for them” based on the engagement of their friends with the brand. To ignore the impact of marketing on the hierarchy of effects is senseless.
How to take advantage of the hierarchy of effects
Monitor
Monitoring the effect of your marketing actions on phases in the hierarchy of effects will help you make informed decisions. For instance, you can monitor mentions of the brand across social media and record these as favorable or unfavorable mentions — favorable mentions create brand awareness and may create liking, preference, and conviction (which can be assessed using traditional market research to measure changes in attitudes).
Maximizing Decisions
Tracking how marketing actions change the level of awareness, liking, preference, and conviction also helps improve your decision-making. Marketing actions creating large changes in the level of these cognitive or affective stages should be used frequently, marketing actions creating little or no change in the level of these stages should not be used again.
Generating Sales
Despite my feelings about assessing ROI alone, its still valuable to map the increase in sales as part of the hierarchy of effects. An important consideration in this assessment is tracking how earlier elements in the hierarchy of effects translate into increased sales. That’s because consumers can back up in the funnel and fail to move all the way down to the purchase stage. That’s not good. Consumers can also flow out of the funnel (as if it were porous). Hence, while all stages of the hierarchy of effects are important, consumers must be drawn from stage to stage all the way to the purchase stage.
If too many consumers are either getting stuck at one point in the funnel or flowing out of the funnel altogether, there’s a problem. Maybe there’s a communication problem, maybe a product problem, or maybe there’s an influencer out there complaining loudly about the brand. While the hierarchy of effects model won’t help you figure out what the problem is, it will tell you there IS a problem and tell you at what phase the problem arises — which makes identifying the problem easier. If consumers are aware of the brand, but fail to migrate to the liking stage– maybe the communication they’re getting isn’t doing a good job of pointing out the benefits of the brand to them, for instance.
Extending the hierarchy of effects
While I’ve shown the traditional version of the hierarchy of effects model, that’s not the end of it. Based on modern interpretations of the role of marketing, the hierarchy of effects needs to be extended to include:
- Repeat purchase
- Loyalty
- Advocacy
- Evangelism
I’ll save this topic for a subsequent post.
Questions???? Comments??? You’re always welcome and encouraged to share you’re perspectives.
I am kind of amazed by the results provided by foresee because I was reading an article in Bloomberg (entitled Are social Networks gonna blow?) which was arguing that social networks monitor people buying habits in order to propose them items when they research online. Anyway, if only 1 % comes from social media, then I would like to know about the remaining 99%. Thanks
Kobenan, great question. I think the results from Foresee are accurate, its the interpretation that’s off. They measured people buying online based on social media and there are lots of places to buy rather than online (none of this was reflected in the data they analyzed). A bigger issue is the Foresee results are based on consumer retrospection, which is notoriously inaccurate — folks just don’t know why they do things. A better measure would have been to ask them if they remember any of their “friends” mentioning brands in social networks.
Speaking from a student’s prospective who is always on the go with work, school, and extracurricular activities majority of the products I use from hair care to the best restaurant’s in DC are all suggestions from friends. I have seen plenty of companies surround students with advertisements especially on the internet which is very annoying and does not want to make me purchase the product.
I think many people would agree with you, Shanneika. I do, however, think there’s a place for traditional advertising as it helps get the ball rolling in social media. Traditional media also has a wider reach than social media, so its still necessary. However, I do think they could do a better job of advertising and I certainly think there could be better integration with social media and traditional advertising.
Sounds like an interesting thesis. However, I’ve updated the Hierarchy of Effects model for the digital age. You can find it at: http://www.hausmanmarketingletter.com/social-media-hierarchy-of-effects-maximize-your-roi. Obviously, I think this variation is more valid for social networks. I’d be interested in your findings.