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Consumer Behavior

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Chapter 1: Introduction

1. What is consumer behavior? Activities people undertake when:

­ Obtaining o How you decide you want to buy o Other products you consider buying o Where you buy o How you pay for product o How you transport product home

­ Consuming o How you use the product o How you store the product in your home o Who uses the product o How much you consume o How product compares with expectations

­ Disposing of products and services (give it away to goodwill, sell it on eBay, …) o How you get rid of remaining product o How much you throw away after use o If you resell items yourself or through a consignment store o How you recycle products

Consumer market = all the individuals and households who buy for personal consumption Consumer buyer behavior = Buying behavior of final consumers It’s all about perception (waarnemen), how people perceive brands. It’s not just about buying, it’s the whole package of behavior (how consumers use the products, they find innovative ways to use products themselves). Interdisciplinary science

­ Micro-economics o Consumer theory: choice theory

­ Psychology o The decision process o The learning process o Attitudes and motivation

­ Sociology o Groups o Culture

­ Social psychology o Cognitive and heuristic bias

Difference between consumer and shopper A consumer is broader than only a shopper. Sometimes they are the same, but they have different needs. A shopper is just a role in some occasions.

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Consumers’ buying roles:­ Initiator: initiates idea ­ Influencer: influences ­ Decider: ultimate buying decision ­ Buyer: actual purchase

­ Payer: pays ­ User: consumes ­ Gatekeeper: controls access

Sometimes all these people are the same at the same time. Example of Cat food: Wiskas says that if a cat could choose his own food, he would choose Wiskas, so you have to buy Wiskas because your cat cannot shop. Consumer needs: requirements that I need fulfilled by the products I buy for me & my family

­ E.g. healthy, durable, filling, tasty Shopper needs: requirements that I need fulfilled as part of the shopping process

­ E.g. variety, value, convenience, experience Organizational influences: Marketing mix

E.g. Marketing influences while buying yoghurt: placement on the shelve, packaging, price, quality, quantity, promotions/discounts/ extras

Consumer influences But what can the consumer do while for example buying wine: personal taste, occasion (impress a girl or just get drunk), consumers’ knowledge of wine Buyer:

­ Cultural: culture, subculture, social class ­ Social: reference groups, family, social roles, status ­ Personal: age, life-cycle stage, occupation, economic situation, lifestyle, personality, self-

concept ­ Psychological: motivation, perception, learning, beliefs, attitudes, feelings

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2. Why study consumer behavior? What is marketing about? Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.

­ Create value to a certain target ­ What does the consumer wants and what does he values?

What is the best-selling tactic? Now: make a product that is going to sell itself, no longer about what can we make and how do we sell it, but what do people want

“Marketing is not about you. It is about your customers. It is not about how great your business is. It is about the needs your customers have.” “There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” (Sam Walton from Walmart) Why study consumer behavior? BOTTOM LINE: To ensure that products/service meet consumer needs Also… improve marketing strategies by understanding

The psychology of how consumers think, feel, reason, and select between different alternatives (e.g., brands, products, and retailers);

The psychology of how the consumer is influenced by his or her environment (e.g., culture, family, signs, media);

The behavior of consumers while shopping or making other marketing decisions; Limitations in consumer knowledge or information processing abilities that influence decisions

and marketing outcome; How consumer motivation and decision strategies differ between products that differ in their

level of importance or interest that they entail for the consumer; How marketers can adapt and improve their marketing campaigns and marketing strategies

to more effectively reach the consumer. …

For example, by understanding that consumers are more receptive to food advertising when they are hungry, we learn to schedule snack advertisements late in the afternoon. By understanding that new products are usually initially adopted by a few consumers and only spread later, and then only gradually, to the rest of the population, we learn that

(1) companies that introduce new products must be well financed so that they can stay afloat until their products become a commercial success

(2) it is important to please initial customers, since they will in turn influence many subsequent customers’ brand choices.

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How can I influence the people? Frederik the Great of Prussia, known for bringing the “potato” to his people. The potato doesn’t look very good, so people don’t want to eat it. Frederik found a solution. He said that the potato was only available for him and he protected the field with soldiers around. He makes the potato a royal vegetable and by saying that other people can’t have it, they just wants it more. What is Value? Customer value = the consumer’s assessment of the product’s overall capacity to satisfy his or her needs

­ Verschil tussen waarde verkregen door bezit of gebruik van het product en de kost (kostprijs, moeite) om het te verkrijgen

­ Niet altijd objectief There are two types of value, the economists see it as utility but in the marketing it is a lot more. “Marketing: the science of knowing what economists are wrong about”.

Utilitarian value: Helps to accomplish some task

Hedonic value: Immediate gratification, experience and emotions!

E.g. Fast Food: o Utilitarian value: cheap, fast, convenient, you survive because you eat o Hedonic value: taste, free toy in the Happy Meal, a playground for children

E.g. Riding a Ferrari o Utilitarian value: transportation o Hedonic value: prestige, comfort, the feeling you get, the noise, “getting the girl”

Value is not the same as quality. Consistent quality is important, but it doesn’t have to be the best to be a value. Value disciplines

Operational excellence:

Uw onderneming levert betrouwbare producten en diensten tegen concurrerende prijzen met zo weinig mogelijk ongemak voor de klant. Dit wordt gerealiseerd door het optimaliseren van bedrijfsprocessen, het reduceren van transactiekosten en het minimaliseren van de overhead.

Lower cost and a decent product (e.g. Walmart)

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Product leadership:

Uw onderneming innoveert voortdurend op basis van creativiteit en brengt regelmatig nieuwe innovatieve producten en diensten op de markt. Daarbij gaat het om flexibele productie, focus op het innoverend vermogen van de organisatie en het verkorten van productietijden en time-to-market.

Customer intimacy:

Uw onderneming richt zich op het voortdurend aanpassen van het aanbod aan de wensen van de individuele klant. Belangrijk bij deze strategie is het voortdurend investeren in klantenbinding (customer loyalty), het sturen op klantwaarde (customer lifetime value) en doen van een gedifferentieerd aanbod op maat (mass customization).

Being the best for your target of customers Bedrijven die operational excellence als concurrentiestrategie hanteren gaan uit van de beste prijs/kwaliteit verhouding. Deze organisaties bieden klanten met name lage prijzen, betrouwbaarheid en gemak. Zo’n organisatie zorgt er voor dat de uitvoering van productie-, distributie- en serviceprocessen gesmeerd loopt om zo de laagste prijs te kunnen garanderen. Hierbij ligt de focus op de korte, efficiënte lijnen met klanten. Grönroos (1994) spreekt in dit verband over een transactiegerichte strategie en Porter (1980) over een lage kostenstrategie. CRM sluit qua uitgangspunten het minste aan op operational excellence. Aan de ene kant is de klant vaak niet geïnteresseerd om een langdurige relatie met het bedrijf aan te knopen. Hij of zij is immers vooral geïnteresseerd in aanbieders met de laagste prijs (‘economy buyers’). Aan de andere kant werkt relatiemarketing en het ontwikkelen van klantloyaliteit kostenverhogend waardoor het doel (‘de laagste prijs’) in gevaar komt. Bedrijven als Aldi, EasyJet en Tango zijn succesvol omdat zij hun strategie van operational excellence (lage kosten en lage prijzen) consequent doorvoeren. Bij product leadership is een organisatie erop gebrand om hun klanten de beste, state-of-the-art producten en diensten aan te bieden. De pijlers van deze strategie zijn: uitvinden en innovatie, productontwikkeling en marktexploitatie. Om dit te kunnen realiseren is met name informatie-uitwisseling met klanten en ‘targeting’ van klanten belangrijk. CRM sluit in beperkte mate aan op product leadership. CRM wordt hierbij vooral ingezet als marketinginstrument. Porter (1980) schrijft in dit verband over een focusstrategie gericht op het innoverend vermogen van de onderneming. 3M is een goed voorbeeld van een bedrijf met een product leadership-strategie. 3M (bedenker van de gele post-it memo’s) heeft als doel om ieder jaar minimaal 30 procent van haar jaaromzet te halen uit producten die maximaal twee a drie jaar op de markt zijn. Deze doelstelling dwingt het bedrijf tot een hoge mate van innovatie. Bij customer intimacy is de organisatie erop gebrand om een langdurige en hechte relatie met zijn klanten te ontwikkelen. Hierdoor kan optimaal voorzien worden in de behoeften van deze klanten. De organisatie zorgt er voor dat haar klanten precies krijgen wat ze willen. Producten, diensten en service op maat zijn belangrijke pijlers van deze strategie. Grönroos (1994) noemt dit de relatiegerichte strategie. Porter (1980) heeft het over een differentiatiestrategie gericht op het vergroten van klantentrouw. CRM sluit qua uitgangspunten naadloos aan op customer intimacy. CRM is customer intimacy!

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3. How to study consumer behavior? Marketing research Qualitative vs. quantitative research

Qualitative (interpretive) research:

Case analysis

In-depth interviews, focus group interviews, observations

Researcher dependent!

Can be difficult to interpret

Phenomenology: Interpretation of the lived experience (interviews, …)

Ethnography: Analysing artefacts (e.g., trash, fridge, …)

Netnography: Online cultures and communities

Quantitative research:

Numerical measurement & analyses

Statistical models

Tracking consumer purchases

Surveys

Testing hypotheses

Increasing focus on “Big data”

But what about privacy? Our generation cares less about what Google does with our data. Neuromarketing is also the new thing. It’s the use of neuro-technology to improve marketing decision making.

4. The changing consumer

Internationalization

Changing households o Young people stay longer with their parents o Women are higher educated

More mobile phones and tablets o If you look at a photo of the Pope’s inauguration in 2005, nobody is taking a picture.

But in 2013, everybody is taking a picture with their phone or tablet. And in 2016, everybody needs on the picture themselves (selfies)!

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Marketing to 4 generations Baby Boomers (Born between 1946 and 1964): Boomers are the first generation to actively declare a higher priority for work over personal life. They generally distrust authority and large systems. Their values were shaped primarily by a rise in civil rights activism, Viet Nam, and inflation. Because of the fall of the dot.com marketplace, retirement savings of Baby Boomers were decimated and many now find themselves having to work longer than they had planned. A recent AARP survey of 2,001 people born in this era revealed that 63% plan to work at least part-time in retirement, while 5% said that they never plan to retire, some because they like working, others because they need the money to replace lost retirement savings. Generation Xers (Born between 1965 and 1980): They naturally question authority figures and are responsible for creating the work/life balance concept. Born in a time of declining population growth, this generation of workers possesses strong technical skills and is more independent than the prior generations. They are super ambitious, and want it all: Carreer, being perfect parent, sports, … (Burn-outs!) Generation Ys or Millennials (born between 1980 and 1995): This group is the first global-centric generation, having come of age during the rapid growth of the Internet and an increase in global terrorism. They are among the most resilient in navigating change while deepening their appreciation for diversity and inclusion. Switchers (cfr. education system). They have grown up at a time where parents programmed much of their lives with sports, music, and recreational activities to keep them occupied while their Boomer parents focused on work. Have no patience. Very flexible and change a lot Generation Z (born after 1995): First real digital natives. Gen Z kids will grow up with a highly sophisticated media and computer environment and will be more Internet savvy and expert than their Gen Y forerunners. Creative!!! While we don’t know much about Gen Z yet… We know a lot about the environment they are growing up in. This highly diverse environment will make the grade schools of the next generation the most diverse ever. Digital native, they don’t know a time without internet Digital transformation

At 2020, every person has approximately 7 devices connected, so not only your smartphone, but also your fridge,…

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DISfluency (= low fluency) Disfluency and reasoning:

More time reading and thinking with another letter type!

The Cognitive Reflection Test: o “When you add the cost of a bat and a ball together the sum of those two is worth

$1.10, and the bat costs a dollar more than the ball, how much does the ball cost?” o “When you add the cost of a bat and a ball together the sum of those two is worth $1.10, and the bat costs a dollar more than the ball, how much

does the ball cost?”

Difficult font disfluent infer the task is difficult exert more effort, think more deeply fewer errors

Disfluency and risk perception:

ostensible food additives were rated as more harmful when their names were difficult to pronounce (Hnegripitrom) than when they were easy to pronounce (Magnalroxate)

amusement-park rides were rated as more likely to make one sick (an undesirable risk) and more exciting and adventurous (a desirable risk) when their names were difficult (vs. easy) to pronounce

Not always the case that fluency either has to be good or bad:

Boundary conditions (moderators)

Everyday vs. Special occasion products

Its first name reveals its place of origin: Monterey, California. … simple, straightforward, all-American. A mild, semi-soft cheese with a pleasing saltiness…

Its first name reveals its place of origin: Monterey, California. … simple,

straightforward, all-American. A mild, semi-soft cheese with a pleasing

saltiness…

A decadent delight as an appetizer or dessert, you'll find this smooth operator pairs nicely with dessert wines and appreciates a delicately effervescent white.

A decadent delight as an appetizer or dessert, you'll find this smooth operator

pairs nicely with dessert wines and appreciates a delicately effervescent white.

o lower fluency perception of lower frequency scarcity more desirable (exclusive) product

o if the everyday product has an easily label, people will like it more. But with the special occasion, people like it more special!

3. Affect Mood effects Mood-congruent recall and judgment (spillover effects):

positive mood recall positive events, positive evaluation

negative mood recall negative events, negative evaluation

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Affect-as-information People rely on their current feelings, use them as a source of information.

Indirect effects on judgment via info-processing strategy

Affect as a cue for the current state of the environment Negative and positive affect:

Negative affect = threat to achieving desired goals situation calls for careful (systematic) processing

Positive affect = safe, ok business as usual, heuristic processing

Implications for persuasion:

Messages processed more deeply (central vs. peripheral cues, strong vs. weak arguments) in a negative mood

Mood management

People motivated to maintain their positive mood and improve their negative mood

Hedonic contingency hypothesis: o When sad: Many activities could make us feel better o When happy: Risk that we could spoil our positive mood

Higher stakes for selecting one’s activities carefully when happy Hedonic consequences of behavior more important

Implications for persuasion:

Happy mood deeper processing of an uplifting message, but shallower processing of a depressing message

Mood vs. emotions

Mood states: positive vs. negative (only valence)

But valence is not all! o Emotions of the same valence may have different effects!

involve different appraisals of a situation (what is going on?) trigger different behavioral responses (what should I do?)

Emotions:

6 cognitive dimensions of emotions: o certainty, pleasantness, attentional activity, control, anticipated effort, and

responsibility

E.g., anger is associated with: o other-responsibility for negative events o individual control o a sense of certainty about what happened

Carry-over effects of emotions: o E.g. Anger triggered in one situation automatically elicits a motive to blame individuals

in unrelated situations. o Angry people tend to perceive unrelated situations as low-risk, whereas fearful people

tend to perceive high risk.

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Emotions and (un)certainty:

Uncertainty = triggers effortful cognitive processing (goal: to feel safe, to understand, to predict, etc.)

Certainty independent of valence: o anger, contentment, disgust – certainty o fear, worry, surprise – uncertainty

Processing persuasive messages: o High certainty rely more on peripheral cues (e.g., source expertise); persuaded by

weak arguments

4. Embodiment Embodiment = an effect where the body, its sensorimotor state, its morphology, or its mental

representation play an instrumental role in information-processing and judgment

OBSERVING (or even reading about) others’ actions activates the brain areas involved in PERFORMING the actions (sensorimotor simulation).

Body sensations, positions, or actions may:

Directly induce a certain state, feeling, or processing style

Change what type of information comes to mind (content) i.e., “body priming” Arm muscle contraction

Arm muscle contraction influences evaluation of novel stimuli

Associations: o Flexion – APPROACH o Extension – AVOIDANCE

Arm flexion enhanced liking of Chinese ideographs

Arm extension – reduced liking

Bidirectional relationship Also from conceptual physical

Experiments – manipulated moral disgust: o watching a film portraying incest o writing about cheating or theft o listening to a report about fraud and manipulation

Participants drank less water and chocolate milk

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Verticality People understand the abstract concepts of rationality and emotion using the concrete concept of the vertical dimension UP – DOWN (head – heart)

an implicit association between verticality and rationality/emotion

stimuli perceived as having a more rational meaning when presented high rather than low on a screen

stimuli evaluated more favorably when their spatial placement matches their rational/emotional connotations

E.g., News website structure preferences

Science news (rational) preferred when placed high on website

Entertainment news (emotional) preferred when placed lower E.g., Political slogans position voting behavior

Rational appeal: “Intelligence in serving the community” (up)

Emotional appeal: “Passion in serving the community” (down)

The word “hope” is on the bottom, so it reflects emotions.

Brand name articulation Articulation uses the same muscles (lips and tongue) as ingestion and expectoration

inward BODIKA, IBUSEK, UMALAKO outward KODIBA, IKUTEM, UKANAMO

Ingestion = positive associations (food intake) Expectoration = negative associations (vomiting, coughing)

Products with inward brand names: Higher liking, purchase intention, willingness to pay (4-13%) Popcorn in the cinema Mere exposure effects in advertising:

Repeated exposure fluency positive brand attitude

Mere exposure for words (e.g., brand names) relies on subvocal pronunciation and rehearsal

Eating or chewing something oral-motor interference

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Experiment:

Commercials for novel brands were shown in the cinema

Participants ate popcorn, chewed gum, or 1 sugar cube (control)

Brand choice and brand attitudes assessed one week later o If you are chewing something, you can’t pronounce the brand name (not even in your

mind!). People can’t engage, so the commercials don’t have an effect.

Embodiment experiments

Holding a heavy clipboard made people rate a topic as more important, a job candidate as more serious, and allocate more money to support various social actions

Touching rough (vs. smooth) objects made social interactions appear more difficult

Touching hard (vs. soft) objects increased perceptions of rigidity in others

Sitting in hard (vs. soft) chairs increased one’s own rigidity in negotiations Temperature and light Temperature premium effect: warm temperatures increase individuals' valuation of products

→ physical warmth emotional warmth positive reactions enhanced product valuation Ambient brightness makes people feel warmer, increasing:

sensation-seeking (like more spicy foods)

perception of aggression and sexiness (“hotness”) in others

consumption (e.g., drink more of a liked drink) → Light heat HOT emotional system more extreme affective reactions

5. Sensory marketing (not on the exam!) Inspired be research on sensation, perception, and embodied cognition and emotion. “Sensory marketing” = “marketing that engages the consumers' senses and affects their perception,

judgment and behavior.”

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Can be used to create subconscious triggers: Sensory information gets associated with the product or its specific attributes.

Touch (haptics):

If a waitress touches a customer, her tip increases

library service is considered to be better when students checking out books are touched

if touched by the requester, a person is more willing to taste a new snack in the supermarket “the law of contagion” ( disgust):

Products touching products (e.g., supermarket shelves)

Products touching people (e.g., clothes in fitting rooms) Smell (olfaction):

Physical and neural proximity between olfaction and memory

Humans can distinguish and recognize up to 10,000 different scent combinations, even long after initial exposure

Product scent:

Increases memory for product attributes Ambient scent:

Increases brand recall and recognition

Increases variety-seeking Sound (audition):

The sound the food makes when eaten influences taste and quality perceptions (e.g., chips, celery, crackers)

Music in advertising affects mood and involvement

Ambient music (in a store) affects mood, perception of time spent, shopping pace, and actual spending

Vision:

E.g., product depictions in an ad may facilitate or hamper mental simulation, affecting purchase intentions

Taste:

Unlike smell, we cannot distinguish tastes very well

Taste perception easily influenced by external cues, e.g.: o fruit juice color o brand names, descriptive labels o perceived healthiness

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Taste is a composite of all senses: When the verbal ad copy focuses on all senses (vs. taste alone), perceived taste is enhanced

“Stimulate Your Senses” (vs. “Long Lasting Flavor”) Multisensory congruence Multi-sensory = interactions across various sensory modalities

→ E.g., smell and touch, touch and sound, vision and taste

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Exam

No handbook, just slides and notes. Two assignments:

Assignment 1: paper and presentation (20%)

Assignment 2: written report (15%) Written exam (65%) with multiple choice (gis correction!) and open questions, dictionary allowed! Examples of exam questions: 1. Which of the following theories or principles is NOT a social heuristic?

a. Consensus b. Representativeness c. Authority d. Reciprocity

2. Which of the following statements is TRUE?

a. The Elaboration Likelihood Model and the Heuristic-Systematic Processing Model are synonyms.

b. According to the Foot Cone Belding matrix, consumers will follow a pattern of “feel – think – do” when buying a high involvement feel product like a vacation or jewellery.

c. Social judgment theory predicts that “contrast” will occur when an advertisement falls outside of people’s “latitude of rejection” from their initial position.

d. More exposure implies that a stimulus is evaluated as more negative with increasing repetition when a consumer does not actively remember seeing the stimulus before.

3. Which of the following elements is NOT part of the Theory of Planned Behavior (Fishbein & Ajzen)?

a. Advertising b. Beliefs c. Subjective norm d. Evaluations

4. Which of the following statements is FALSE?

a. Galvanic skin response measures skin conductance, and is one way that marketers can measure for example how much fear is elicited by a fear appeal.

b. When you measure emotional response with a semantic differential scale, you consider positive and negative emotions to be mutually exclusive (i.e., one cannot both be happy and sad at the same time).

c. Emotions “speak” to our “system 1” rather than “system 2”. d. Emotions and cognition are unrelated.

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5. Which of the following statements is TRUE?

a. IAT stands for “Instructive Association Test”, and is a way to implicitly measure attitudes. b. Consumers’ comprehension of a message will (among other things) depend upon their prior

knowledge on the topic. c. Situational involvement and enduring involvement can never co-occur. d. The Extended Parallel Processing Model is a model that explains how consumers’ mood can

affect their processing of a marketing communication message. Question 1: Describe the Elaboration Likelihood Model, and how it can explain persuasion. Two routes to persuasion:

1. Central route: effortful processing (quality) 2. Peripheral route: peripheral processing based on heuristic cues

The routes are determined by two factors: motivation, ability Question 2: Provide a definition/description of “heuristic cue”. It’s a shortcut that we use to process information (e.g. a dentist is an expert, so what he says is more loyal). Question 3: Based on the Elaboration Likelihood Model, describe how a salesperson for a car and laundry detergent would have to approach their target audience in a different way. Car is high involvement, so people will follow the central route, focus on argument/quality Arguments: safety, gas consumption, … Laundry detergent: low involvement, arguments not so important Cues that influence the buyer: the more is better (quantity), expert authority (guy with a white coat), similarity, …