Consumer and economic psychology
Lecture 1
What is consumer psychology?
Early consumer psychology emerged from interest in advertising.
From the mid- 1800s, establishment of advertising industry in the US, promote and market to
people = beginning of consumer psychology.
Two schools of thought:
1. Consumers are rational decision-makers: consumers will pay careful attention to
promotional messages before making product choices
› The job of advertising is to inform consumers about what products are available
› Consumers are sceptical and will make the best decision for them regardless of how
the product is marketed.
› Aligns with classic economic theory – people are self- interested and make rational
decisions to maximise their own gain
2. Consumers are irrational
› Consumers can be manipulated and persuaded to buy things (no sensible decisions)
› They do not always make the best economic decisions
› Aligns with psychology and the study of emotion, motivation, attitudes as well as
behavioural theory on reinforcement with brand loyalty
Two ways of research in consumer psychology/advertising
● Mentalism in advertising research
› Early theorising and research on advertising focused on how to attract and retain the
consumer’s attention
- Ideas such as the primacy and recency effect
- Use of images in advertising
- Size of text, and signs
- How to appeal to consumers’ interests and emotions
› A lot of early work was not well researched and some people working in this field left
academia to open advertising agencies! Not academic, but randomly.
› Method = mentalistic (interest piction and self-report = what have you noticed);
introspection; self-report
● Behaviourism in advertising research
› The mentalistic approach was challenged by behaviourists who thought:
- Research should focus on whether consumers actually purchase the
product, not whether the ad attracted their attention
- Consumer behaviour should be understood using the behavioural concept of
the three-term contingency: antecedent- (what happens first) behaviour (buy)-
consequence (like to buy again?) without reference to attitudes, intentions, etc.
, - So, what stimuli/conditions lead to people buying products and how do
outcomes of purchases affect whether they buy them again.
› Method = observing behaviour (what people do in certain situations); experimental
(manipulate behaviour) or observational
Consumer Psychology Division
1959: Division of Consumer Psychology within the American Psychological Association (APA)
established = first recognition that it was a real brand of psychology that deserve an own
devision. Today, over 600 members. A dedicated Journal – Journal of Consumer Psychology
Today’s reading: Pham (2013)
What he believes people have concentrated on, provides a critique of current consumer
psychology. A nice summary of what consumer psychology is doing well at, and what it might
focus more on in the future. He talks mainly about research in consumer psychology.
Firstly, what is the scope of behaviour covered by consumer psychology (or that ought to be
covered). Most focus on acquisition stage. All of the main research focuses on this.
What else should be researched?
› Businesses should be interested in what people want and need (the desire phase)
› Businesses and policy makers are interested in the use and consumption phase;
psychologists are also interested in this phase:
- Materialism and its effect on human well-being
- Effects of over-consumption on the person and/or environment
- Addictive consumption: smoking, drug-taking, gambling
More research needed on:
- Desire e.g., How do marketers manufacture “needs” out of thin air? (not know
refrigerator)
- Acquisition e.g., Different ways to acquire products = sharing, renting, gifting, stealing
Most is focused on purchasing behaviour
,- Use/consumption e.g., Understanding how products and services are used and how to
optimize the products
- Disposal/divestment e.g., Recycling, hoarding - what happens when we finish them
Pham also criticises the scope of the consumer behaviour theory. You can think of it as
belonging to one of the layers. Middle part focus primarily = mechanical core: information
processing part of consumer experience. Affective layer = emotions. Motivational ground = what
do we want, motivate to make choices they identify with. These first three are about persons as
individuals. Next are influenced by social relations: social and relational context and cultural
background.
Research methods of consumer psychology
Pham states that consumer psychology has been dominated by two research pathways:
● Deductive: Theory driven = top-down
Start with a theory then gather data to test the theory
Pham states that this has been the dominant approach in consumer psychology.
● Inductive: Data driven = bottom-up, do more of this, what happens with consumers
Start with interesting phenomenon or observation and study it in order to derive a theory.
Might result in research that is more directly relevant to consumer behaviour.
He also argues for two more research paths (Pham):
● The descriptive path: simply describing what consumers do; often through observation.
, Watch their path in the supermarket and how they use it.
● Field-theory validation path: using our expertise as researchers to test theories emanating
from the marketing industry. There are people in the field that can be helped by researchers
to develop. E.g., the “butt-brush”phenomenon (Martin, 2012 = if someone walks behind you
and brushes you your shopping behaviour is disrupted and you will act differently).
Two more problems:
● Over-generalisation of results:
Once a result has been published, it is accepted as “fact”. E.g., the jam-in-supermarket
choice study - don’t give to many choices, but it was one study that can’t be replicated and
has been falsified = they only had one brand and removed popular brands.
Need more replication of results under different conditions to ensure they are robust and
generalisable
● “Convenient” research:
Has been common to use American University students as participants (not just in consumer
psychology, but generally). Are these people really representative of people generally?
Also a reliance on convenient methods – e.g., imagining scenarios, or self-report research.
Do these really tell us about what people will do in the real situation?
What methods might we use other than survey/questionnaire or imagined scenarios?
● Descriptive Methods
› Descriptive research involves observing and measuring what people do – with or
without manipulating variables (decide what they are and can just watch and see what
happens)
› One example is observational research – sometimes called “ethnography”
Can reveal what people need (see what problems they experience and what can help)
and how they react to products. (make the use easier)
Can be helpful in designing products that are easier to use.
● Observational method
› Early observational research in consumer psychology meant watching consumers in
their “natural environment” and recording what they do
Can be quantitative (e.g., counting purchases of shoppers) or
Qualitative (e.g., describing how people interact with a product)
› Today, almost every purchase we make is recorded digitally, and captured on CCTV,
so the scope for analysing consumer data is almost limitless.
Ethical concerns? Used CCTV footage supplied by police to observe the behaviour of
people selling drugs in Newark, New Jersey. The images were published in the article a bit
anonymized but still specific characteristics.
● Focus-group research
Used in advertising research to assess the possible effect of a new product or marketing
campaign - talk about the product themselves
› Advantages:
Interaction of potential consumers might mimic real-world reactions = more real-life
Participants drive the discussion = rich information