Samenvatting Consumer
Behaviour
Lecture 1: Introduction
We will study consumer behaviour through scientific and economic articles, and
trough literature (less peer review!).
What is marketing?
According to critics:
o Marketing is fluff
o Marketing is manipulative
o Marketing is wasteful
According to your professor:
o Marketing is not rocket science
(deterministic)
There is a correlation between quality of the decision process
and the quality of the output
o Marketing is behavioral science (probabilistic)
About human behavior
(more uncertainty), if you follow a good process, probability of
a good outcome is higher but not guaranteed
A lot of failures not necessarily because of bad process, a lot
of luck involved. You want to increase probabilities!
Difficult
Marketing
Marketing is the activity, set of institutions, and processes for creating,
communicating, delivering and exchanging offerings that have value for
customers, clients, partners, and society at large. (AMA)
Creating value for consumers and firms, is more than just making a good
product
A social, behavioral science
Two visions:
Value follows from making good products
Broader: value follows from not only the product, but also everything that
surrounds it
Ralph Emerson: “Build a better mousetrap, and the world will beat a path to
your door.”
When you create a better product, the consumers will come to you
Product is driving the value
So just create good products
,Today brands are less important, since the rise of availability of information give a
good idea of the quality of products, so the quality of products is more important.
Correlation of quality and online user ratings: Britax seat
Two seats: expensive vs. cheaper alternative
Expensive seat: in store you got told it is a good seat
10 years ago: Information limited to: brand name, price, and sale people’s
telling’s
Now: you can check reviews: Should you buy this seat? (Fake review!)
o Textual review:
o Very influential review and this is the ‘best info’
o It is very emotional and vivid
But this does not give you valid info: you want to do a RCT (= Randomized
Control Trial)
What is the correlation between reviews and the quality of a product?
Based on facts can we discriminate a good seat from a bad seat?
o No, not proven that other seats wouldn’t have protected the child
To determine quality we want to simulate crashes and compare the
different products
o Check products from neutral companies, objective testers (Ex.
Consumerreports.org)
How often will you find that the product with the higher user ratings performs
better in standardized tests of product quality (as done by testing agencies like
Consumer Reports)?
= Is there a correlation between a higher star rating and higher
quality/performance of the product?
So if the chances are higher that a higher rated product has a higher
quality, there is a higher correlation. (Ex. 65% chance = correlation of
0.45)
o Results: Correlation (Star, Performance) = 0.15
o User rating gives some information but not a lot
o Price/quality correlation is higher: 0.3
Conclusion: If you take two products and the difference in star rating is smaller
than 0.4 (Ex. 4.6 vs. 4.5): the likelihood that higher rated product does better is
50% (= coinflip!)
Only larger differences have a bigger likelihood of being better products
Perceptions of a product are more important, for example trough celebrity
endorsement (Ex. Using Jennifer Aniston in ads for skincare)
o User ratings reflect the promotion of the product
Wine experiment (Plassman)
Five glasses of wine, two are the same type of wine twice.
, Without the price: people are not fooled by the fact that the wine is in
different glasses, they are able to express their likings and see that some
wines are alike
Informed about price: people’s liking is almost a perfect match with the
price of the wine.
o The perceived value is more driven by price than the quality of the
product
o This is not superficial, the perceived value is really different, this is
because value is created in your brain
o Active regions in the brain are registering a better experience by
price differentiation
Ice cream experiment
The product here is ice cream, but here the packaging
influences the value and even creates it. Is this deception or
is true value created?
Two bowls:
8 oz but in a bigger package: looks like less ice
cream, more empty
5 oz but in a smaller package: looks like more
ice cream, filled over the top
People pay more for less ice cream in smaller package
Packaging has a high influence on the perceived value of the product
50 songs experiment (Dodds and Watts)
People listened to 50 new songs, and no-one knows the artist. Which songs are
listened to more/more popular?
, Independent market A and B: People have no interaction with each other
Social market A and B: People can observe from each other how much
songs are listened to
o Social Influence
In which type of market will correlation (rank market A, rank market B) be
higher? Independent or social?
Independent market, because it is only dependent on songs. The correlation
between the independent groups A and B is greater than the correlation between
the two social groups, this is because there is no social interaction, the liking of
the song is not influenced by other people and their liking in the independent
groups. (In the social market, ranking is influenced by what other people listen to,
and both are random)
In which market are the hits that are listened to more popular? Independent or
social?
Social market, because of a bigger hurdle effect. Hits will be more popular in the
social market, because people hype each other up, because when people are new
to the platform, they see what others have been listened to the most and start
there.
Value = F(marketing mix)
Value is a function of the four P’s
o Product, Promotion, Price & Place
It is important to understand the psychology of consumers
Product is not the most important factor!
Two sides of customer value
Value OF Consumers
= The value you extract from your customers to
your firm
Value TO Consumers
= The value you create as a business, for your
consumers
