Class notes
All lectures including speaker notes of Consumer behavior
- Course
- Institution
All the lectures and notes of both the lecturer and myself for the course consumer behavior.
[Show more]
Seller
Follow
sofiepolman
Reviews received
Content preview
CB 2.5 by SJPLecture 1: Introduction On The Study Of Consumer Behavior
What is consumer behavior?
Processes involved in selecting, buying, using, or disposing of products, services, ideas and experiences to satisfy
needs and wants.
Obtaining of a product: deciding to buy a product, deciding between brands, where to buy, how to pay, how
to transport
Consuming of a product: how you use a product, how you store a product, who uses the product, how much
you consume, how a product compares with expectations
Disposing of a product: how you get rid of remaining product, how much you throw away after use, reselling
products, how you recycle products
This is influenced by both consumer factors and marketing factors.
Consumer (individual/group/organization) is influences by affect, cognition, and behavior, which are all interrelated.
Why study consumer behavior?
To understand consumers
o What do they need?
o How do they decide?
o What makes them happy?
Predict their reaction to marketing strategies
o Changes to your product or service
o Price changes
o Change positioning
Not everyone is like you (false consensus)! Often you don’t know what you would do (affective forecasting), why do
you what you do (we just do it and justify, we don’t really think about it upfront).
Example: day-care center case
Children should be picked up at 18:00, but parents are often late. Solutions are fines (but this also may encourage
this behavior, because they won’t feel guilty anymore – extra service so opposite behavior).
our intuition is often wrong!
The intuition trap: problems with common sense.
Conformation bias: we are resistant to changing our prior beliefs.
We focus on conforming instances – we have a tendency to get a conformation to see what we want to see.
Your preferences are not representative for society.
o Projection bias/false consensus
Limited theories
Make decisions based on few observations
Infer causality from correlation
Overconfidence
Intuitive ideas are easy, more vivid, appealing, well-remembered. Scientific stories are complex, careful and
situational. This is called educated intuition
Why study consumer behavior: marketing organizations
To know how to influence consumers – firm consumers
To know what consumers want – consumers firm
It is not just anymore about delivering what consumers want, it is about what they care about and how they provide
that.
, CB 2.5 by SJP
Getting a Spotify paid account gets rid of the annoying ads, paying a higher fee on Netflix allows for more screens
watching the same time solves annoyance
Do consumers know what they really want? Most of the time, no shuffle function for music.
Public policy makers assume that if people only know how bad something is, they will not do it. However, people are
still smoking, so this is also an assumption policy makers make, which is thus not correct.
Why study consumer behavior: public policy
Regulate behavior: public policy
How will consumers react to regulations?
o Cigarette warning labels
How will consumers react to market changes?
o Recession, tax cuts, changes in mortgage subsidies
Assumption: if people only know how bad something is, they will not do it this is wrong!
If you want to change behavior, social marketing is needed
To encourage/discourage activities
The effect of advertising on society
Recap
What is consumer behavior? Obtaining, consuming, and disposing products and services. this is influenced by
personal and external factors (effect on affect, cognition, and behavior)
Why study consumer behavior? For marketers, to understand and predict the behavior of the consumer (to be able
to influence this). For public policy, to regulate and encourage behavior.
This is not easy! As consumers often act irrational
How to study consumer behavior?
Methods for studying consumer behavior
Interviews & Surveys
o Interviews (qualitative)
Depth Interviews
Focus Groups
o Surveys (quantitative)
Mall Intercepts
Telephone Surveys
Mail Questionnaires
Internet Surveys
Longitudinal Survey Studies
Experimental Research
Consumer research
1. Beware of Common Sense: Intuition trap
2. Understand the Nature of the Relationship: is it Causal or Correlational?
3. Consumer Research is a Social Science - Reducing uncertainty rather than establishing certainty
Therefore, it is best to combine methods.
Lecture 2: Irrationality; Research strategies; Correlational research; Research validity
Irrationality
The “wise” consumer assumption
Preferences are clear and accessible in consumer’s minds
Consumers make trade offs between quality and price
Each product is judged on its metric alone – on how it delivers
, CB 2.5 by SJP
Willingness to pau is the result of evaluating the object we are interested in – we only pay for something
that is worth it
Market research instruments accurately tells us what consumers really prefer and how much they would pay
Preference reversal
We don’t only look at the size of the cup, but also if there is more in the cup
(which is the case in L). With L, the cup is fuller, so if you see them separately you
think you will get more than you pay for.
Value seems arbitrary
Participants were asked to write the last two digits of their social security number, and then bid for a variety of
items. The higher the two numbers, the more they were bidding on the products
Value is not always fixed and it’s not always about what you get, so the wise consumer assumption is not correct.
Value seems arbitrary
If there are three options, people often go for the middle option as a compromise – it depends on the set of
alternatives.
Compromise effect: the share of a product increases when it is the intermediate option but decreases when it is an
extreme option.
The ownership of products also determines how much you want to pay
Sellers: “imagine that this cup is yours. How much would somebody have to pay to buy it from you?”
Buyers: “imagine you want to buy this cup. How much would you be willing to pay for it?”
Endowment effect: owners assign greater value to a product than non-owners
if you sell something, you want to get more from it than you would pay to buy it.
This all shows the reality about consumers
Preferences are typically constructed, not revealed
Every evaluation is relative “reference dependence”
People don’t know what they want until they see it in context “context dependence”
Preferences change depending on how the alternatives are presented to them “descriptive dependence”
you can challenge the rationality in economics
People take into account the pleasure they obtain from consuming something just because they should
do something doesn’t mean they will actually do it
Price they pay for it
Consumers want “value for money”
Setting prices
Hershey’s kiss vs more fancy Lindor truffle
1 cent vs 16 cent 75% choose the truffle
Free vs 15 cent 69% choose the “free” Hershey’s
If something is for free, they want to have it
Large assortments & wide product selection – Choice overload
Although the provision of the extensive choices may sometimes still be seen as initially desirable, it may
also prove unexpectedly demotivating in the end creates a choice overload
6 jams vs 24 jams: 60% stopped at the 24 jam booth, and 3% bought jam. 40% stopped at the 6 jam booth,
30% bought jam.
People are less likely to buy if there are more options
Freedom of choice: the more choice the better. But, it is harder too choose if you have more choice.
, CB 2.5 by SJP
Why choice makes people miserable
Regret and anticipated regret
Opportunity costs: the value of the next best choice that one gives up when making a decision
Escalation of expectations
Standard economic model
How do economists think about consumers (implicit assumptions)
People are rational
People are fully aware of all the options they have
Always choose the option they like best
Assumptions (which are wrong)
Full external knowledge (consumers act with full information) – easy to influence
Full internal knowledge (consumers know their preferences) – more of a problem because harder to
influence
Maximize utility (consumers choose best option available)
Research strategies; Correlational research; Research validity
Research goals
Research strategies refer to the general approach and goals of a research study
Strategies
Descriptive
Correlational
Experimental: cause and affect
Quasi-experimental: you can’t control everything, also cause and effect
Nonexperimental: 2 groups
Descriptive research strategy
Describes individual variables
Obtains a snapshot (of specific characteristics of a specific group of individuals
Data is usually in the form of averages or percentages
about summarizing facts and figures
>> Think about opinion polls, facts and figures in newspapers
>> U.S. Census: Goal is to describe accurately and precisely several characteristics of the U.S. population, including
race/ethnicity, age, sex, household size, income, etc.
Relationships between variables
Most research examines the relationship between variables
o Changes in one variable are accompanied by changes in another variable
Relationships between variables may be
Linear
Curvilinear
Positive
Negative
Correlational research
Measures two variables for each individual
Relationship between advertising and sales
Causation versus correlation
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller sofiepolman. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $9.16. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
66579 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now