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Consumer BehaviorFall 2010

Week 1

Dr. Liat Hadar

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Class Materials

� Course lectures

� Reading materials

� Chapters from Dan Ariely’s book “Predictably Irrational”.

� 3 Journal articles (available on the course website)

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Requirements and Grading

Midterm (30%)

Exam (70%)

_________________________________

Total (100%)

Optional:

Midterm (30%)

Exam (70 - X%)

Participation in experiments (X%, up to 10%)

_________________________________________

Total (100%)3

Midterm: 30%

� Closed materials

� Based on lecture, discussion, and course reading materials

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3

Exam: 70%

� Closed materials

� Based on lecture, discussion, and course reading materials

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Administration

� lhadar@idc.ac.il

� Office hours: By appointment

� Doors close 10 minutes after class starts

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Introduction

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Why Study the Psychology of Consumer

Behavior?

� Understand how consumers make decisions

� Understand how to influence consumers’ behavior and

decisions

� Improve your own decisions

� A few examples:

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5

Real Estate Examples

� Imagine that a potential buyer is about to see your house this

evening. What would you do to increase his or her interest?

� Danny lives at 80 Washington St. Ben lives at 30 Federal Av.

� Who is more likely to receive higher bids on his house?

� Dana suggests that her parents set a minimal price of

$248,307 on their house. Her sister, Anna, suggests that the

minimal price is set to $250,000.

� Which is expected to yield higher offers?

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Marlboro Ads

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Course Topics

� Affect and Cognition

� Motivation

� Perception

� Attitudes

� Conducting experimental research

� Decision-making

� Learning

� Environment and culture

� Consumer behavior and marketing strategy

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Consumer Behavior: Big Business

� The average American consumes about 280 mg of caffeine

each day, or three eight-ounce cups of coffee.

� Americans currently drink nearly 35 billion glasses, or seven

gallons per person, of iced tea every year.

� Beer accounts for nearly 87% of all alcohol beverages

consumed in the U.S.

� The average American drinks approximately 23 gallons of beer every

year.

� 55.1% of all beer drinkers are college educated, while 38.9% are high

school dropouts.

� 12% of grocery products become “cabinet castaways”

� Most typical branded castaway: Tabasco Sauce.

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Consumer Behavior Matters

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Getting Close to the Consumer

� “Excellent” companies are close to the consumer.

� Strategy must be informed by what consumers are

doing/seeking

� Revlon: “In the factory we make cosmetics. In the store we sell hope.”

� Brand-name vs. Private-label

� Importance of creativity or “marketing imagination”

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8

The Evolving Philosophy of Marketing

� Production Concept

� Product Concept

� Selling Concept

� Marketing Concept

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Contrasting the Approaches

Selling Concept Marketing Concept

Orientation Internal,

Product-focused

External,

Customer-focused

Goal Profit through volume

Profit through

customer satisfaction

Means Selling Determine needs/wants and deliver more effectively than

competition

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Implications of Shift in Orientation

� Focus on more than just one transaction

(relationship marketing, branding, etc)

� Focus on consumer research

� Focus on competitive advantage

� Focus on BENEFITS to your customers delivered through

product features.

Move to Outward Focus

Products & Processes

Customers & Competitors

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Framework for Consumer Analysis

� Elements

� Affect and cognition

� Behavior

� Environment

� Marketing strategy (part of environment)

� Reciprocal determinism

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“The Consumer Wheel”

Consumer

Environment

Marketing

Strategy

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Affect and Cognition

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Types of Affective Response

Affective Type

Response

Physiological

Arousal Level

Feeling Intensity

or Strength

Examples of

Positive, Negative Affect

Emotions High arousal Stronger Joy, love

Fear, guilt, anger

Specific feelings Warmth, appreciation,

satisfaction

Disgust, sadness

Moods Alert, relaxed, calm

Blue, listless, bored

Evaluations Lower arousal Weaker Like, good, favorable

Dislike, bad, unfavorable

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The Somatic Component of Affect

� Physiological arousal

� GSR

� EEG

� Blood pressure

� Pupillometry

� Facial expressions

� Paul Ekman’s Work

� Universal Emotions

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Six Basic Emotions

DisgustFearAnger

SadnessJoySurprise23

The Somatic Component of Affect

� Physiological arousal

� GSR

� EEG

� Blood pressure

� Pupillometry

� Facial expressions

� Paul Ekman’s Work

� Universal Emotions

� Facial feedback hypothesis

� Smiling and Success

� Smiling and advertisement

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Smiling and Advertising

(Labroo & Patrick, 2009)

�☺ �

Abstract: “Invest in your future health”

Abstract Concrete Abstract Concrete Abstract Concrete

Concrete: “Ensure your health today”

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Smiling and Advertising

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1

2

3

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Positive Netural Negative

Pu

rch

ase

Inte

nti

on

Abstract ad

Concrete ad

(Labroo & Patrick, 2009)26

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Affect

� Affective system primarily

reactive

� Responses immediate and

automatic

� Not under voluntary control

� Responds to virtually any

type of stimulus (e.g.,

physical, social)

• Example: How do you feel

about:

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Cognition

� Mental processes include understanding, judging, planning,

deciding, thinking

� Cognitive responses:

� Knowledge

� Meanings

� Beliefs

� McDonald’s is a fast food restaurants

�

� McDonald’s has a diversified menu

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Cognition

� Cognitive activities are localized in brain

� Specialization of function

� e.g., hemispheric lateralization

� Much cognitive activity not conscious

� Stroop effect (Stroop, 1935)

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Stroop Effect

Please name the ink color of the following words:

xxxxxxxxxxxxBlueRedYellowBlueRedBlueYellow

Reading is an automatic, unconscious, process

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Next Week

� Affect-Cognition Interaction

� Thinking: Memory & Knowledge Structures

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