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This is the author’s final version of the work, as accepted for publication

following peer review but without the publisher’s layout or pagination.

The definitive version is available at


Zorn, S.F., Lee, R.Y. and Murphy, J. (2009) Marketing

implications of traditional and ICT-mediated leisure activities.

Behaviour & Information Technology, 31 (4). pp. 329-341.

http://researchrepository.murdoch.edu.au/4032/ Copyright: Taylor and Francis It is posted here for your personal use. No further distribution is permitted.

Marketing Implications of Traditional and ICT-Mediated Leisure Activities Abstract This study investigates the role of traditional and information and communication technology (ICT)-mediated leisure activities in consumer behaviour. An online survey of 558 members and 1,319 ex-members of an Australian DVD rental company gathered preferences for nine traditional leisure activities and seven ICT-mediated leisure activities. The results of a cluster analysis showed four clusters with significant cluster differences across leisure activities as well as across demographics and consumer behaviours. For practitioners, the study illustrates how profiling customers on their leisure preferences can increase advertising effectiveness, reflect loyalty and help predict customer lifetime value. For academia, the results reveal how another consumer dimension, leisure activities, relates to demographic and behavioural characteristics.

Keywords: ICT, consumer behaviour, preferences, leisure

1. Introduction Traditional leisure activities such as reading, gardening and travel have entertained society for millennia. Furthermore, technologies – Gutenberg’s printing press in the 1400s, movies in the early 1900s, radio, TV, the Internet and other Information and Communication Technologies (ICTs) – alter how people spend their leisure time. Yet to the authors’ knowledge, few studies have investigated how traditional and ICT-mediated leisure relate to each other and to consumer behaviour. For example, advertisers could target consumers interested in travelling if these same consumers had a high interest in cinema. Tourism destinations could show travel spots in the cinema and movies could advertise on travel websites. Firms could improve their marketing by segmenting customers on leisure activities and linking these segments to demographic and behavioural variables.

1 For example, significant differences in customer lifetime value (CLV) across customer segments could help predict which customers, prospective and existing, would become valuable customers. CLV, the discounted difference between a customer’s lifetime revenue and expenses, helps firms allocate resources to acquire valuable prospects and retain valuable customers (Cao & Gruca, 2005; Lewis, 2006). Furthermore as products and processes become standardised, a customer-centric approach gives companies a competitive advantage (Jain & Singh, 2002).

As CLV forms through customer consumption behaviours and perceptions (Bolton, Lemon, & Verhoef, 2004), investigating how leisure activities relate to consumer behaviour could help practitioners increase advertising effectiveness and influence customer lifetime value. For example, firms could increase CLV by examining leisure activities of valuable customers and then target prospective customers with similar leisure activities.

For academia, relationships among CLV, leisure activities and demographics should highlight another aspect of consumer behaviour, the importance of leisure activities. Research suggests distinct user profiles relate to leisure use of the Internet in general (Bellman, Lohse, & Johnson, 1999; Fallows, 2006; Mokhtarian, Salomon, & Handy, 2006), as well as on the burgeoning phenomenon of social networking sites such as Facebook and MySpace (Hargittai, 2007). Thus, this study investigates how clusters based on leisure activities – traditional and ICT-mediated – relate to consumer demographics and CLV.

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2.1 The importance of CLV CLV is the net profit or loss from a customer during a relationship with the firm (Berger & Nasr, 1998; Jain & Singh, 2002). Some authors adjust this CLV, positively or negatively, for customer word of mouth about the firm (Bayon, Gutsche, & Bauer, 2002). At an aggregate level, a firm’s customer equity is the sum of all customers’ CLV (Blattberg & Deighton, 1996).

2 Research provides multiple models to calculate CLV, albeit with limitations. Most models are deterministic, require sufficient data and omit competition or company marketing activities (Villanueva & Hanssens, 2007). Furthermore most models ignore the importance of the acquisition stage in the customer life cycle. Or in the retention stage, models may ignore customer behaviour such as usage (Bolton, Lemon, & Verhoef, 2004; Thomas, 2001).

Neglecting customer behaviour in the retention stage could lead to false CLV estimates. For example, declining use could indicate little interest in the relationship. In the acquisition stage, high costs such as discounts could reduce an individual’s CLV, as it takes time to reach the break-even point for new customers. Furthermore, customers acquired with discounts could have no interest to pay full price and quit when faced with the full price.

To identify and manage high CLV customers, a model should overcome these limitations. In acquiring customers, firms should predict a prospect’s potential CLV. This prediction helps firms allocate resources to valuable prospects and avoid ‘switchers’, customers that switch from competitor to competitor in response to attractive offers (Kamakura, Wedel, Rosa, & Mazzon, 2003). ICT leisure preferences could help predict customer CLV in both the acquisition and retention stages.

2.2 ICTs and consumer lifestyles

Information and communication technologies such as the Internet and mobile phones influence many aspects of today’s lifestyles. These technologies affect leisure activities – social and recreational – by replacing traditional activities such as playing board games, writing letters or watching television. ICTs generate new leisure activities, reallocate time to other leisure activities and facilitate existing leisure activities (Mokhtarian, Salomon, & Handy, 2006). In addition, the importance of ICT-mediated leisure grows in parallel with the growth of leisure time. As the standard of living rises, people tend to have more leisure time due to retiring earlier and working part-time (European Conference of Ministers of Transport, 1998). Demand for leisure activities, and the role of ICT-mediated leisure, increase as economic prosperity rises (Mokhtarian, Salomon, & Handy, 2006).

3 Complementing ICTs’ influence on leisure, ICTs influence and create new media. Most new media do not arise spontaneously or independently, or succeed overnight. New media emerge from and coexist with old media, usually for decades (Fidler, 1997). Consequently, old media change or even disappear in response to a new medium. For example, radio survived after television arrived, transforming itself from a mass- to a niche-medium (Fidler, 1997). Apple’s new iPhone may transform existing technologies such as mp3 players, mobile phones and hand-held computers, as well as how consumers interact with traditional media such as radio and TV.

A recent media and leisure adaptation, and the context for this paper, is online DVD rental companies such as Netflix (netflix.com) in the USA and Quickflix (quickflix.com.au) in Australia. These companies use a sophisticated website to manage member movie requests and use surface mail to deliver DVDs. Members subscribe to one of several monthly plans and unlike renting DVDs from bricks and mortar stores, members pay no late-fees. The evolution of watching movies − from movie theatres to drive-in movies, to television broadcasts, to video recording, to cable television, to DVD rental, to online DVD rental, to online downloads, to the future − exemplifies the need to review motivations for leisure activities.

2.3 Motivation to engage in leisure activities

In their literature review, Manfredo et al. (1996) describe research streams examining consumer engagement in leisure activities. Building on motivation theory, some authors argue that consumers engage in leisure activities to attain a specific physical or psychological goal.

For example, one swims to keep fit, look sporty or increase self-esteem. Building on this framework, other authors focus on the leisure experience as a psychological outcome. People consume leisure for experiential aspects, for example they go on holiday to experience foreign cultures. Leisure research also focuses on expectancy-valence motivation concepts; behaviour is a function of ability and motivation.

Ryan and Gledon (1998) in their literature review note the Beard and Ragheb Leisure Motivation Scale that defines four motives as determinants of satisfaction gained from leisure activities. The first motivation is intellectual stimulation, for example learning or discovering new things such as new cultures. Secondly, the scale builds on social reasons such as to build

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2.4 Evolving media use and consumer characteristics Demographic and psychographic characteristics relate to using new media, for work and for play. For example people use the web at work and at home to seek product information, and they buy online for convenience and to save time (Bellman, Lohse, & Johnson, 1999;

Fallows, 2006). They also use the web for fun. Almost one in three Internet users, mainly young males, regularly goes online for leisure (Fallows, 2006). Whereas about half of Australian Internet users go online for work or education, 98 percent of Australian Internet users have personal and private reasons to surf the web, such as e-mail and online shopping (Pink, 2008). Of all online activities, leisurely surfing the web ranks fourth, behind e-mail, using search-engines and reading news (Fallows, 2006). The Internet offers information, communication and leisure (Flanagin & Metzger, 2001) and today, half of the time consumers spend with media is spent on the Internet (IDC, 2008).

Furthermore media facilitate social interaction. Within a household, families view and discuss content, or play computer games together (Mandryk, Inkpen, & Calvert, 2006; Morrison & Krugman, 2001). Outside the home, interactions with external partners mainly take place through the Internet, such as e-mail or online gaming (Morrison & Krugman, 2001).

Another ICT-mediated leisure activity increasing in popularity, particularly with youth, is playing video games on consoles such as the Sony PSP or Nintendo DS (GfK Gruppe, 2006b). For now, the popular Apple iPod is mainly for leisurely listening to music; just 12% of the respondents in an August 2006 survey watched videos on mobile devices or downloaded podcasts (Madden, 2006). Yet as with other new media (Fidler, 1997), the iPod’s popularity may increase markedly, other media may change in response to the iPod and the iPod may evolve.

Movies and books illustrate the evolution of technology and leisure, and demographic relationships with the evolution. A study of cinema consumers found moviegoers were young 5 and education related positively to the preference for cinema, whereas family responsibilities related negatively with this preference (Fernández Blanco, Prieto-Rodríguez, & OreaSánchez, 2004). TV and video were no substitute for cinema fans, but seemed a good alternative for non-enthusiasts. Similarly, a leading global market research company, GfK Gruppe, found audio books do not replace printed books, but rather act as an additional medium for book consumers (GfK Gruppe, 2007). Reading traditional printed books was a favourite leisure activity for old age groups, but young consumers tended to favour ICTmediated leisure. Youth downloaded music and videos to their PCs and mobile phones (GfK Gruppe, 2006a).

As media become entertainment oriented, usage patterns change. Some users prefer advanced media technologies, such as enhanced programming options, to traditional media. Using these advanced media technologies with the appropriate hardware, for example large flat-screen TVs, results in high consumption because of high enjoyment (Morrison & Krugman, 2001).

Other consumers substitute traditional media with new media, for example reading newspapers on the web (Morrison & Krugman, 2001).

In general, youth prefer ICT media, while adults favour traditional media. Youth tend to prefer activities with their peers, particularly hedonic ones such as shopping and using mobile phones (Aoki & Downes, 2003; Lachane, Beaudoin, & Robitaille, 2003). Moreover, compared with elderly consumers, youth are susceptible to peer pressure (Nelson & Mcleod, 2005; Park & Lennon, 2006). As the movie example shows, enthusiasts prefer a particular medium – the cinema. The average consumer, however, uses several media and may ignore the advantages of a particular medium. Different patterns of leisure consumption, such as average versus enthusiastic users, may relate to customer satisfaction and loyalty with a particular medium.

2.5 Strategies across the customer lifecycle

To investigate relationships among customer behaviour and CLV, companies consider three strategies – acquisition, retention and re-acquisition – across the customer life cycle, from first contact until a customer quits the relationship. For example, customer acquisition relates to customer retention (Blattberg, Thomas, & Getz, 2001; Thomas, 2001). Promotionally acquired customers driven by special offers may have low interest in long-term relationships

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