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CEP lecture 1
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Complete transcript of lecture 1 Consumer and economic psychology
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Consumer and Economic Psychology Lecture 1 15-11-18Eerst introductie slides.
Lecture of today.
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Letterlijk slide opgelezen.
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Where did consumer psychology start from? The big start of consumer psychology came from advertising. In
industrial revolution time we had a lot of factories being build, we had a lot more production of products and
consumer items coming onto the market, more than even before. Prior to that, people traded with each other
and had a much more ‘only use what you need’ kind of society. But once they had all these factories, they were
able to produce lots and lots of products and people started to realize that they needed to promote those
products and market them to people. So this led to the establishment of the advertising industry in the US. That
was really the frst beginnings of consumer psychology. There were starting to develop advertising and
advertising agency. There were 2 broad schools of thought. Number one came frst and the other followed
shortly afterwards. First school was consumers are rational decision-makers. Consumers make suitable
decisions about products. Soon after that, the second school emerged: consumers are irrational, they make
irrational decisions.
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The rational consumer. People are looking at what they have to buy, they are looking at promotional messages,
they weigh up the options before they make product choices. People that think that people are rational in the
decision making about products, they think that the job of advertising is just to tell people about the product. To
inform people about what products are available. What they do well, what they do better than somebody else’s
product. Then consumers will make the best choice for them. The idea is that consumers are sceptical. They
make the best decision for them and it doesn’t matter how you market the product. Consumers will see through
that and they will make the best decision. This idea of the rational consumer aligns with classic economic theory
and neo-classic economic theory as well. People are self-interested and people will make rational decisions
because they want to maximize their own gain. That’s where this thought process comes from.
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The other school of thought is: consumers are not rational, they’re non-rational. In terms of advertising strategy,
if you think that people are not always making the best decisions and they are not making rational decisions,
then you as advertiser can manipulate people to buy them what you want them to buy, manipulate them to buy
your product. So this idea that people can be persuaded about things, that people don’t always make suitable
decisions aligns with psychology. Idea is that we can be afected by emotions, motivations, attitudes, values and
things like that. And with behavioral theory on reinforcement. When there are past successes, when we’ve
bought something and that went very well we might become very loyal to that brand and keep buying that
brand, so it reinforces people’s purchasing decisions.
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These ideas align with 2 ways of thinking about doing research in consumer psychology, particular advertising
research. This is quite early on in the feld as well. Job of advertising is to just tell people about the product and
that aligns with idea of mentalism in advertising research. These theories and this research in advertising
focused on how do we attract people’s attention. We’ve got a product and all we need to do is tell people about
it and they will be persuaded to buy it because it’s the best decision for them. We need to attract the
consumer’s attention and this was what kind of this research was about. They looked at things like the primacy
and the recency efect. Primacy efect: remember frst thing you saw. Recency efect: remember last thing you
saw. How do I use that in an advertisement? They were looking at things like how big should the images be in
order to attract people’s attention. If I make it bigger, they’re likely to see it more, will attract their attention.
How big should the text and signs and things like that be? And how to appeal to consumers’ interests and
emotions. This was a lot of early work that was done. How do we attract people’s attention and how do we keep
their attention. But it was not very well researched. It wasn’t really an academic kind of pursuit. It was random
and ad hoc. A lot of those people who were working in that feld left research/academia behind them and began
to work in advertising agencies with lots of money in them. The sorts of methods people use in those mentalistic
beginnings was: mentalistic, which is about introspection and about self-report. Mentalism is about asking
people: when you need to buy a product, what attracts your attention, what do you notice? Asking people what
they thought and self-report.
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Idea that consumers are irrational aligns with behaviourism. A little bit later on, after this mentalism thing we
had a bit more behaviourism in advertising research. Behaviorists came along in the 1950s. Those people
challenged mentalistic ways of doing research. They thought that the research in any area, in particular
consumer psychology, should focus on whether the person actually bought the product. So it’s not enough to
know whether the ad attracted their attention, we need to know if people bought that product as well. They
thought that consumer behavior should be understood by behavioral idea of three-term contingency:
antecendent-behavior-consequence, without reference to attitudes, intentions etc. Whatever you do, there’s
always an antecedent, so what happens frst. That’s probably the advertisement. Then there’s the behavior, so
did you buy the product. And then there’s a consequence: did that work out well for you, are you happy to buy
that product again? You should look at those 3 elements of behavioral processes and not refer to attitudes and
intentions. So, obviously the methods by this kind of school of thought are about observing behavior, what
people do in particular situations, it might be experimental (when you manipulate something and see whether it
afects behavior or you might just be observing what they do in the natural environment without manipulation.
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In 1959 we had the division of consumer psychology within the American Psychological Association (APA . That
was frst real recognition that this was a part of psychology and that they deserved their own division. Now
there are over 600 members of this association. They have their own journal. And so consumer psychology is a
really big feld within psychology.
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Slide voorgelezen.
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Scope of (consumer behavior that is covered or should be covered by consumer psychology according to Pham.
He presents this fow-chart. Nice way of visualizing the steps in purchasing behavior, or in consumer behavior
itself. In any kind of consumer experience we have these steps. First of all there’s a desire. This might be that
you need or want something. There’s something absent in your life that you need to attain to make things
better. Or you are interested in something. You recognize that there’s a need for a product. Next, acquisition
where you go in purchasing something. Pham says this is what is too much focused on in consumer psychology,
on acquisition stage. Then you got the use/consumption stage; how people use the product and interact with it.
And then disposal/divestment stage. How do they get rid of it? Do they recycle it or throw it away? Do they take
it to the second hand shop? Most of research is focused on acquisition according to Pham.
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What else needs to be researched in this area. Pham said that businesses should be very interested in what
people need and what they want (the desire phase . If you are trying to develop products that people are going
to buy, you need to try a distinct need/a gap in the market. He says that businesses and also policy makers are
interested in the use and consumption phase, in how people use and consume things. And that psychologists
should also be interested in this phase as well. So, some psychological concepts we might be interested in are:
materialism (what does it mean to be materialistic and what efect does that have on our well-being as human
beings , the efects of over-consumption (we’re in this environment where people buy lots of products they
don’t need and what efect does that have on us and the environment as well and addictive consumption (why
do people become addicted to smoking or drugs or gambling .
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Pham: more research needed in each of 4 areas. He breaks it down and says what kind of research could be
done.
> More research on the design phase: How do marketers make people need something that they didn’t need
before? When the frst refrigerator was invented in New Zealand, people found it a selfsh invention. If you have
got food left over you should give it to your family and neighbours. So, there was no need for a refrigerator
before, but no one could do without one today. We could do more research on that area of consumption.
> We should do more research on acquisition phase in terms of how we acquire things. Most of research has
been focused on purchasing behavior: going to the shop and buying something when we talk about acquiring,
but there are much more ways to acquire something like sharing (car-share initiatives , renting, gifting, stealing
is part of the consumer experience as well.
> More research on use/consumption phase: understanding how products and services are used and how to
optimize those products so that they meet the needs of their clients.
> More research on disposal/divestment by looking at what happens with those products when we fnish with
them, how can we recycle products and we can look at hoarding, which is detrimental to well-being.
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Pham also criticices consumer behavior theory. You can think of consumer psychology theories as sort of
belonging in one of these layers, which is supposed to be like an eye. He would say that the middle of the eye,
the black part in the center, is the mechanical core. This is information-processing path of a consumer
experience. It’s how do you get people’s attention phase, how do you experience products, how do people learn
and remember about things. How do people make choices. He says that a lot of research and theory has been
focused on the mechanical core, very narrow scope. But he says if you move outwards from there, there are
other interesting processes. The next layer is the afective layer: feelings, moods, emotions, how does that
afect consumer behavior and how we purchase things. Around that is the motivational ground: what do we
need, what do we want, how do we motivate people to use their values to make choices or things they identify
with and also self-control. Mechanical core, afective layer and motivational ground are about the individual
person. If you keep moving to the outside, we are not only infuenced by ourselves when we buy things, we are
infuenced by a larger and wider community. Next round is the socialrrelational context. We have friends and
family around us. How do they infuence our consumer behavior? The last one is the cultural background. Is
hardly being studied at all but we all live in a particular country that has all kind of diferent things associated
with it. In the Netherlands we have a lot of products that attain to Dutch values. So we need to look at the
culture as well.
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Pham says, in terms of research methods how consumer psychology has been studied, he would say that is has
been dominated by 2 kind of research pathways. The frst one is a deductive pathway, top-down approach, a
theory driven pathway. These approaches are by the way not unique to consumer psychology. They are used
across disciplines. The deductive approach is where you start with a theory, with things and how they work and
why they work that way and then you gather data to test the theory. This is a top down approach. Pham says
that’s the dominant approach that has been used in consumer psychology so far. There is another pathway that
has been useed and that is the inductive approach, the data driven approach, bottom up approach. You start
with some observation of behavior or phenomenon and it’s happening in the world, you study it in order to
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