Marketing Meets Finance in Senior Honors Thesis

Tue., Jun 19, 2007
“My senior honors thesis demonstrated that marketing has an important role to play in the sale of financial products,” observes graduating finance major Maura Connors ’07. “Companies that sell different financial products need to understand their customers and carefully segment their markets.” For her thesis, the Isenberg School senior examined investment choices and personal characteristics of 63 respondents. Their principal investment choice involved investing in socially responsible versus traditional funds.

Drawing on previous research and advice from her two thesis advisors—marketing professors Easwar Iyer and William Diamond—Connors created a web platform from which she administered an experiment and an accompanying questionnaire. In the experiment, subjects were told that they had $1,000 or $10,000 to invest either on their own behalf or on behalf of a close relative. Their investment choices consisted of four funds—two designated as socially responsible and two as traditional. The subjects could click on links that gave them additional information such as the companies in which the fund invested and the rate of return. After making their investment choices, the subjects answered questions involving their confidence and risk profiles as investors, their attitudes toward environmental issues and corporate social responsibility, their materialistic and religious values, and other personal attributes.

Connors’ statistical analysis of the data revealed that most of her respondents were relatively conservative risk takers who expected their investments to exceed a minimum expected rate of return. At the same time, most respondents viewed the “environment” as an important issue, advocated corporate social responsibility, and embraced materialistic values only moderately. Most also insisted that their religious beliefs played no role in their investment decisions. The traditional income-oriented fund attracted the most money from the respondents. Intriguingly, a higher percentage of respondents investing on their own behalf chose the traditional funds, while a higher percentage of respondents investing for a close relative chose the socially responsible funds.

“My study shed additional light on the individual investment values of my respondents,” continues Connors, who joined State Street Corporation in Boston after graduation. “I learned that a socially responsible fund that would appeal most to a socially responsible investor should focus on being environmentally and socially conscious. It should target investors with relatively low materialistic values but at the same time yield relatively competitive annual returns, since profitability will always figure as a significant criterion in any investment decision.”