Summary Slides Consumer and Economic Psychology

Femke van Rijn
January 2020
Consumer and Economic Psychology

Lecture 1

Early consumer psychology emerged from interest in advertising.
- Industrial revolution: more fabrics, more products, need for advertising
- Mid 1800’s: establishment of advertising industry in the US
Two schools of thought:
- Consumers are rational decision makers
o If you’ll tell them about products, they’ll make the best choice
- Consumers are irrational

The rational consumer:
- 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 skeptical 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 maximize their own gain
o Economy is self-regulating, the invisible hand
- Early theories and research on advertising focused on attracting and retaining the
consumer’s attention
o Assumption that they make the best choice, and the job of advertising is to make
them aware of your product
- Method:
o Mentalistic/introspection: thinking about what might work
o Self-report: asking people what attracts their attention

The non-rational consumer:
- Consumers can be manipulated and persuaded to buy things
- They do not always make the best economic decisions
- Aligns with psychology and the study of emotion, motivation and reinforcement
(behaviorism)
- Research should focus on whether consumers actually purchase the product, not whether
the advertisement attracted their attention
o People may notice ads but still not buy the product
- Which stimuli, conditions and strategies lead to people buying products? And how do
outcomes of purchases affect whether they’ll buy again?
- Antecedent (seeing the ad) -> behavior (buying) -> consequence (likely to buy again)
- Method: observing behavior
o Experimental
o Observational



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,1959: Division of Consumer Psychology within the American Psychological Association established
- Journal of Consumer Psychology

Pham – The Seven Sins of Consumer Psychology
- Critique of current consumer psychology and a summary of what is going well and what
needs more focus
- The scope of consumer behavior:




o Consumer experience starts with a desire (wanting a product), the acquisition of it,
the use/consumption and the disposal.
o Pham would like to see more research on the other many ways to require products
besides buying (sharing/renting/gifting/stealing), how marketers manufacture needs
out of thin air, how people actually use the products, the effects of overconsumption
and recycling, hoarding and circular economies




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, o Consumer Behavior Theory: an eye with different lenses
 Mechanical core -> affective layer -> motivational ground -> social and
relational context -> cultural background
 The inner 3 are individual
 But we shouldn’t have individual theories, explain with multiple theories
- Consumer psychology has ben dominated by two research paths:
o Deductive/theory driven/top-down: starting with a theory and then gathering data
to test the theory, most dominant but not always realistic
o Inductive/data driven/bottom-up: starting with an interesting
phenomenon/observation and studying it in order to derive a theory, might result in
research that is more directly relevant to consumer behavior
- Pham argues for two more research paths:
o The descriptive path
 Simply describing what consumers do, often through observation
 No intention of making a theory
 Can reveal what people need and how they react to products
 Can be helpful in designing products that are easier to use
 Early observational research meant watching consumers in their natural
environment and recording what they do
 Quantitative (counting)
 Qualitative (describing how they interact)
 Ethical implications of the observational method: almost every purchase we
make is recorded digitally, the scope for analyzing consumer data is almost
limitless
o The field-theory validation path
 Researchers usually test their own theories, but may not be good at
identifying what is important
 People working in the industry know what’s important and can generate
naïve theories, but do not have the skills to tests them
 Use the expertise of researchers to test theories that the marketing industry
came up with
- Two more problems:
o Overgeneralization of results = once a result has been published, it is accepted as a
fact and we tend to overstate its replicability and generalizability
 We need more replication of results under different conditions to ensure
they are robust and generalizable
 The specific conditions in a study might have made it work, and people tend
to overgeneralize it to other conditions
o Convenient research = we focus on samples that are convenient, but not
representative
 Using American University students or MTurk
 Also a reliance on convenient methods, like imagining scenarios or self-
report research, but they might not tell us about what people would do in
the real situation




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