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Customers have different perceptions for different business operations, types of products and services that a company offers. These perceptions influence the judgments made by consumers on the firm and the line products it deals with. Consumers make these judgments depending on the warmth or competence of the firms in question. Firms could either be classified as non- profit or profit-making institution. Customers’ perception on a firm’s products influences their decisions on whether to buy a product or not. They view non profit firms as being warmer than profit-making ones, though incompetent. Customers prefer buying products from competent profit-making firms rather than their incompetent non-profit counter parts. Incase a firm has high levels of competence and warmth; it is likely to earn a large share of the market.
Consumers’ stereotype influences perception on the nonprofit and for-profit firms. It plays a crucial role in predicting essential market place behavior such as likelihood to visit a Web site, readiness and willingness to purchase a firm’s product.
Understanding warmth and competence
There are many definitions of these phrases, but I found the following definition to be most appropriate. Grandey et al. 2005 states that Warmth can be defined as the action of being generous, kind, honest, sincere, helpful, trustworthy, and thoughtful. Competence refers to the act of being confident, effective, intelligent, capable, skillful, and competitive. Stereotype means shorthand, blanket judgment containing evaluative components. Stereotypes have also ranked the two words in the same way and have given the same perception on them.
Social judgment on firms: Consumers perceive that firms’ products have human-like qualities. More so, firms have a reputation which they acquire after some time. Analysts use it in making a general evaluation of a firm’s performance over a period of time. The firm’s reputation depends on its warmth and the competence. A firm with a high degree of competence, the one that treats it’s customers with courtesy, offers after sales services and makes follow ups once a customer purchases it product is to be reputable. Customers get motivation towards shopping from a firm which posses such attributes.
Differences in perceptions of various firms, non profits or for-profits, depend also on work practices within each type of firm. Profit-making employees are often rewarded because they have shown competence and managerial effectiveness, whereas employees in nonprofits are rewarded because they have shown commitment towards the achievement of the organizational goals. Much emphasis is put on competence, in the profit-making organization, and warmth, in the non profit organizations. Each dimension is fundamental to the consumers based on the line of products he/she is interested. For instance, a person seeking health care trusts the non-profits more than the for-profits. On the other hand, a consumer seeking to purchase the best modern dress will go for the for-profits rather than the non-profits. This is because they will be looking for something quality; the consumer does not mind spending more to get something that they feel suits them.
Consequences of using warmth and competence dimension as the basis for judging firms.
There is a likelihood of consumers showing greater willingness to buy products from for-profits rather than non-profits since they are believed to be competent, thus produce high quality products. The non-profits can boost their sales simply by boosting their perceived incompetence. They can also employ credibility cues, which mean that, perceptions made by consumers on different companies can be changed.