Consumer Behavior
Overview of lectures
Lecture 1:
1. The study of consumer behaviour
2. overview of consumer decision making
Case 1
Lecture 2:
3. consumer choice evaluation and choice
4. risk and consumer decision making
Lecture 3:
5. Nudging
6. Shopping behavior
Case 2
Lecture 4:
7. Perception and attention
Case 3
Lecture 5:
8. Persuasion
Case 4
Lecture 6:
9. Affect and motivation
10. The role of learning and memory
Lecture 7: Guest lecture
Lecture 8:
11. Automatic information processing
12. Social influence
1
, Lecture 1:
1. Study of Consumer Behavior
= As a marketeer you need to think about how a consumer makes decisions, thinks in order to
determine the place, price, product, placement
(making tactical decisions on the 4 Ps as a manager)
IN THE MARKETING MANAGER’S SHOES
Most concepts in this course will have some lessons for marketing managers.
Often these applications are implicit in the explanations of the concepts and models in the chapter
1. What is CONSUMER BEHAVIOR ?
CONSUMER BEHAVIOR DEFINED
• Consumer activities associated with the purchase, use, and disposal of goods and services.
• Consumers’ emotional, mental, and behavioral responses to marketing activities.
Everything around consumption is involved in the study of consumer behavior, i.e. everything before
and after the purchase also counts.
For example: people deciding what to buy in supermarkets, people disposing their used products,
people thinking about products…
INDIVIDUAL vs. ORGANIZATIONAL
• Individual consumers purchase goods and services to:
o Satisfy their own personal needs and wants.
o Satisfy the needs and wants of other individuals.
→ Focus of the course
• Organizational consumers purchase goods and services to:
o Produce other goods or services.
o Resell goods and services.
o Help manage their organizations.
2
,CONSUMER ACTIVITIES
Purchase activities
• Gathering and evaluating information
• Purchase/transaction method
• Additional services (e.g., warranties)
Use activities
• Where? on premise vs. off premise
• When? immediate vs. delayed consumption
• How? complete vs. partial consumption
Disposal activities
• Recycling (e.g., biodegradable waste)
• Reuse (e.g., charity)
• Resale (e.g., eBay)
CONSUMER RESPONSES
Affective responses
Differ in terms of
1. Time
2. intensity
3. object directiveness (triggered by something?)
Emotions
1. short time, come and go
2. can be very intense
3. directed to specific things, persons
o (e.g., lust, anger)
Feelings
1. Medium lasting
2. Medium intense
3. directed to specific things, persons
o (e.g., joy, sadness)
Moods
1. Long lasting
2. Least intense
3. Not directed to something specific
o (e.g., serenity, pensiveness)
3
,Video: advertisement condoms, kid gets angry in store because he wants candy → emotions
Cognitive responses
• Beliefs: non-evaluative
o I believe that Eastpak backpacks are durable
o = A certain characteristic you think an object has
• Opinions: advanced propositions
o Durability is a good thing
o = How you evaluate a certain characteristic
• Attitudes: evaluative
o I believe that eastpak backpacks are good backpacks
o = Evaluation of product
• Intentions: inclinations
o I am going to buy a eastpak backpack, go to dealer, going to search something up
o = Plan to do something
Exercise
• Porsches are fast cars → belief
• ‘Safety’ is the most important property of a car → opinion
• Popcorn has a strange texture → belief
• I am going to stuff myself with Oreo’s tonight → intention
• Volvo’s are good cars → attitude
Behavioral responses
• Inquiring (asking for product information)
• Trying
• Buying
• Recommending (talking to other people about products)
4
, 2. Why study CONSUMER BEHAVIOR?
= To improve business performance
Psychology: How do customers decide?
Business: How do companies persuade?
4 Ps 4 Cs
Product Core benefit/Customer value
Price Cost for the customer
Place Convenience for the customer
Promotion Communication with the customer
1. PRICE
MAKING PRICING DECISIONS
• What Price Should Be Charged?
• How Sensitive Are Consumers to Price and Price Changes?
• When Should Certain Price Tactics Be Used?
Why would consumers be more interested in paying the price on the right?
= Price precision effect
On a stand-alone basis, precise prices are perceived to be smaller than round prices, since precise
prices are more common for smaller magnitudes
Why do we often see products being labeled with 9-ending prices?
= 9-endings
Consumers underestimate prices ending in 9, as consumers process prices from left to right.
What is wrong with “Pay only insurances for the kilometres you drive”
= Flat rate bias
Consumers often prefer a flat fee over a pay-per-use scheme, even if it is more expensive.
1. Displeasure associated with metering, seeing things increasing (taxi-meter effect)
2. Desire to insure against variation (insurance effect)
3. Overestimation of actual usage (overestimation effect)
5
, Are people aware of prices?
Question asked after a customer placed an item in a supermarket cart:
“Off the top of your head, without checking, what is the price of the {product name} you just chose?”
21% did not offer an estimate
44% unable to estimate within 5% of the price
50% not aware that a discounted product was on sale
→ people have little knowledge about price
use reference price to indicate a “good” price
“original price is …”
“regularly priced at …”
“compare elsewhere at …”
“manufacturer’s suggested list price is …”
Advertised reference prices increase consumers’ internal reference price
Advertisement: Condom 2$ vs baby trolley 300$
Good value against a reference price
What do people infer from price information?
Advertisement: Volkswagen
Question: Which one would you buy? Cheaper or more expensive parachute, lifejacket…
→ signalling quality
Consumers believe that they get what they pay for
= They hold price-quality beliefs
Placebo effect
Medical: The placebo effect is when a person's physical or mental health appears to improve after
taking a placebo or 'dummy' treatment.
Also possible in Marketing
1. Research: Expensive pills reduce pain more effectively
2. Research: Expensive wine taste better
3. Research: People were able to perform better in word tests with a more expensive energy
drink
2. PRODUCT
DEVELOPING PRODUCTS OR SERVICES
• What Ideas Do Consumers Have for New Products?
• What Attributes Can Be Added to or Changed in an Existing Offering?
• What Should Our Offering Be Called?
6
Overview of lectures
Lecture 1:
1. The study of consumer behaviour
2. overview of consumer decision making
Case 1
Lecture 2:
3. consumer choice evaluation and choice
4. risk and consumer decision making
Lecture 3:
5. Nudging
6. Shopping behavior
Case 2
Lecture 4:
7. Perception and attention
Case 3
Lecture 5:
8. Persuasion
Case 4
Lecture 6:
9. Affect and motivation
10. The role of learning and memory
Lecture 7: Guest lecture
Lecture 8:
11. Automatic information processing
12. Social influence
1
, Lecture 1:
1. Study of Consumer Behavior
= As a marketeer you need to think about how a consumer makes decisions, thinks in order to
determine the place, price, product, placement
(making tactical decisions on the 4 Ps as a manager)
IN THE MARKETING MANAGER’S SHOES
Most concepts in this course will have some lessons for marketing managers.
Often these applications are implicit in the explanations of the concepts and models in the chapter
1. What is CONSUMER BEHAVIOR ?
CONSUMER BEHAVIOR DEFINED
• Consumer activities associated with the purchase, use, and disposal of goods and services.
• Consumers’ emotional, mental, and behavioral responses to marketing activities.
Everything around consumption is involved in the study of consumer behavior, i.e. everything before
and after the purchase also counts.
For example: people deciding what to buy in supermarkets, people disposing their used products,
people thinking about products…
INDIVIDUAL vs. ORGANIZATIONAL
• Individual consumers purchase goods and services to:
o Satisfy their own personal needs and wants.
o Satisfy the needs and wants of other individuals.
→ Focus of the course
• Organizational consumers purchase goods and services to:
o Produce other goods or services.
o Resell goods and services.
o Help manage their organizations.
2
,CONSUMER ACTIVITIES
Purchase activities
• Gathering and evaluating information
• Purchase/transaction method
• Additional services (e.g., warranties)
Use activities
• Where? on premise vs. off premise
• When? immediate vs. delayed consumption
• How? complete vs. partial consumption
Disposal activities
• Recycling (e.g., biodegradable waste)
• Reuse (e.g., charity)
• Resale (e.g., eBay)
CONSUMER RESPONSES
Affective responses
Differ in terms of
1. Time
2. intensity
3. object directiveness (triggered by something?)
Emotions
1. short time, come and go
2. can be very intense
3. directed to specific things, persons
o (e.g., lust, anger)
Feelings
1. Medium lasting
2. Medium intense
3. directed to specific things, persons
o (e.g., joy, sadness)
Moods
1. Long lasting
2. Least intense
3. Not directed to something specific
o (e.g., serenity, pensiveness)
3
,Video: advertisement condoms, kid gets angry in store because he wants candy → emotions
Cognitive responses
• Beliefs: non-evaluative
o I believe that Eastpak backpacks are durable
o = A certain characteristic you think an object has
• Opinions: advanced propositions
o Durability is a good thing
o = How you evaluate a certain characteristic
• Attitudes: evaluative
o I believe that eastpak backpacks are good backpacks
o = Evaluation of product
• Intentions: inclinations
o I am going to buy a eastpak backpack, go to dealer, going to search something up
o = Plan to do something
Exercise
• Porsches are fast cars → belief
• ‘Safety’ is the most important property of a car → opinion
• Popcorn has a strange texture → belief
• I am going to stuff myself with Oreo’s tonight → intention
• Volvo’s are good cars → attitude
Behavioral responses
• Inquiring (asking for product information)
• Trying
• Buying
• Recommending (talking to other people about products)
4
, 2. Why study CONSUMER BEHAVIOR?
= To improve business performance
Psychology: How do customers decide?
Business: How do companies persuade?
4 Ps 4 Cs
Product Core benefit/Customer value
Price Cost for the customer
Place Convenience for the customer
Promotion Communication with the customer
1. PRICE
MAKING PRICING DECISIONS
• What Price Should Be Charged?
• How Sensitive Are Consumers to Price and Price Changes?
• When Should Certain Price Tactics Be Used?
Why would consumers be more interested in paying the price on the right?
= Price precision effect
On a stand-alone basis, precise prices are perceived to be smaller than round prices, since precise
prices are more common for smaller magnitudes
Why do we often see products being labeled with 9-ending prices?
= 9-endings
Consumers underestimate prices ending in 9, as consumers process prices from left to right.
What is wrong with “Pay only insurances for the kilometres you drive”
= Flat rate bias
Consumers often prefer a flat fee over a pay-per-use scheme, even if it is more expensive.
1. Displeasure associated with metering, seeing things increasing (taxi-meter effect)
2. Desire to insure against variation (insurance effect)
3. Overestimation of actual usage (overestimation effect)
5
, Are people aware of prices?
Question asked after a customer placed an item in a supermarket cart:
“Off the top of your head, without checking, what is the price of the {product name} you just chose?”
21% did not offer an estimate
44% unable to estimate within 5% of the price
50% not aware that a discounted product was on sale
→ people have little knowledge about price
use reference price to indicate a “good” price
“original price is …”
“regularly priced at …”
“compare elsewhere at …”
“manufacturer’s suggested list price is …”
Advertised reference prices increase consumers’ internal reference price
Advertisement: Condom 2$ vs baby trolley 300$
Good value against a reference price
What do people infer from price information?
Advertisement: Volkswagen
Question: Which one would you buy? Cheaper or more expensive parachute, lifejacket…
→ signalling quality
Consumers believe that they get what they pay for
= They hold price-quality beliefs
Placebo effect
Medical: The placebo effect is when a person's physical or mental health appears to improve after
taking a placebo or 'dummy' treatment.
Also possible in Marketing
1. Research: Expensive pills reduce pain more effectively
2. Research: Expensive wine taste better
3. Research: People were able to perform better in word tests with a more expensive energy
drink
2. PRODUCT
DEVELOPING PRODUCTS OR SERVICES
• What Ideas Do Consumers Have for New Products?
• What Attributes Can Be Added to or Changed in an Existing Offering?
• What Should Our Offering Be Called?
6
