Consumer Behavior – Notes
Lecture 1 – Introduction & study of consumer behavior irrationality
Understanding how consumers react to marketing communication.
What is consumer behavior?
“Processes that are involved in the selecting, buying, using or disposing of products, services
and ideas and experiences to satisfy needs and wants”
1. Obtaining products and services
2. Consuming products and services
3. Disposing of products and services
We are always consuming.
We are sometimes planning future consumption.
We are sometimes enjoying the memory of past consumption.
You can also consume ideas to satify needs and wants (being vegan, and acting on it) (being
an adrenaline junkie, therefore jumping out of a plane)
1
,What are the factors guiding consumer decisions (study of consumer behavior):
- Consumer Factors (age, gender, cultures, attitudes, environments, group influences,
motivations, Identities overall)
- Marketing Factors (brand names, WOM, Advertising, 4P’s, stores, atmospherics)
→ Leading to: Obtaining, Consuming, Disposing
→ Leading to Consumer Responses (how does it make you feel): Affection, Cognition,
Behavior (ABC)
Why study Consumer Behavior?
Problem with understanding:
- We think we are able to understand others, but we tend to fall for False consensus
effect (overestimate ones beliefs are the same as others)
- We are biased and see things only from our own perspective, we cannot .. with
others point of view
Problem with predicting:
- You often don’t know, you cannot predict
- We predict by what we would do (affective forecasting)
- We often don’t know what we like in other situations (visceral influences) We act
different in situations than we predict (affective forecasting)
2
,Intuition Trap: Problems with common sense
Preferences are not representatives. Our intuition often is wrong because we approach
things by a common sense point of view. People tend to overestimate the extent to which
their beliefs or opinions are typical for others.
Projection bias: the idea that people project their own attitudes and beliefs onto others
Confirmation bias: tend to look for information that confirms on our existing beliefs, we
want to avoid cognitive dissonance.
Overconfidence
Intuitive biases like: vividness, easiness of process, availability bias, Affection heuristics
Consumer Behavior and Public policy
Governments want to regulate behavior → how to do so?
Assumption: if people know how bad something is they will stop.
→ this is false
Change behavior: Social Marketing
- Encourage/Discourage activities
- Effect of advertising on society
How to study consumer behavior
→ best to combine methods
- No single best method, depends on the research question
→ be aware of intuition trap
→ understand the nature of relationship (causal or correlational)
→ Consumer research is a social science (reducing uncertainty rather than establishing
certainty)
3
, Irrationality
Why are surveys and interviews limited (not the best options)
Normal economics assumption about the consumers: wise consumers and they act rational.
But of course they are not, consumers are not always rational.
Anchoring bias, people are influenced by the way information is presented.
Lecture 3 – Experimental Research (B), Factorial Design
(finishing Lecture 2)
Etkin 2016: External rewards can crowd out intrinsic motivation (when external gets too
high).
Measurement can have the same effects as external rewards. (feedback output)
Impact of measurement:
- Difference in performance: people will exercise more when measured
- Enjoyment: Measurement can reduce how positive people perceive doing specific
exercise
Hypothesis essentials:
- Predict a relationship between variables
- Be testable
- Be justifiable (based on theory)
Testing our hypothesis: experimental research
Note on use of surveys in research:
Survey answers may be incorrect because,
- People don’t know the causes of own behavior
- Memories are inaccurate
- People are not able to predict future behavior (visceral influences)
- People sometimes will not tell what they know because
o Social desirability bias
o Privacy
o Demand characteristics: sometimes the aim of the researchers can drive
output of people (answering in desired way)
→ because of these limitations, experimental research is the best way to find out what
people really think/do
4 basic elements of an experimental study
- Manipulation
- Measurement
- Comparison
- Control
4
Lecture 1 – Introduction & study of consumer behavior irrationality
Understanding how consumers react to marketing communication.
What is consumer behavior?
“Processes that are involved in the selecting, buying, using or disposing of products, services
and ideas and experiences to satisfy needs and wants”
1. Obtaining products and services
2. Consuming products and services
3. Disposing of products and services
We are always consuming.
We are sometimes planning future consumption.
We are sometimes enjoying the memory of past consumption.
You can also consume ideas to satify needs and wants (being vegan, and acting on it) (being
an adrenaline junkie, therefore jumping out of a plane)
1
,What are the factors guiding consumer decisions (study of consumer behavior):
- Consumer Factors (age, gender, cultures, attitudes, environments, group influences,
motivations, Identities overall)
- Marketing Factors (brand names, WOM, Advertising, 4P’s, stores, atmospherics)
→ Leading to: Obtaining, Consuming, Disposing
→ Leading to Consumer Responses (how does it make you feel): Affection, Cognition,
Behavior (ABC)
Why study Consumer Behavior?
Problem with understanding:
- We think we are able to understand others, but we tend to fall for False consensus
effect (overestimate ones beliefs are the same as others)
- We are biased and see things only from our own perspective, we cannot .. with
others point of view
Problem with predicting:
- You often don’t know, you cannot predict
- We predict by what we would do (affective forecasting)
- We often don’t know what we like in other situations (visceral influences) We act
different in situations than we predict (affective forecasting)
2
,Intuition Trap: Problems with common sense
Preferences are not representatives. Our intuition often is wrong because we approach
things by a common sense point of view. People tend to overestimate the extent to which
their beliefs or opinions are typical for others.
Projection bias: the idea that people project their own attitudes and beliefs onto others
Confirmation bias: tend to look for information that confirms on our existing beliefs, we
want to avoid cognitive dissonance.
Overconfidence
Intuitive biases like: vividness, easiness of process, availability bias, Affection heuristics
Consumer Behavior and Public policy
Governments want to regulate behavior → how to do so?
Assumption: if people know how bad something is they will stop.
→ this is false
Change behavior: Social Marketing
- Encourage/Discourage activities
- Effect of advertising on society
How to study consumer behavior
→ best to combine methods
- No single best method, depends on the research question
→ be aware of intuition trap
→ understand the nature of relationship (causal or correlational)
→ Consumer research is a social science (reducing uncertainty rather than establishing
certainty)
3
, Irrationality
Why are surveys and interviews limited (not the best options)
Normal economics assumption about the consumers: wise consumers and they act rational.
But of course they are not, consumers are not always rational.
Anchoring bias, people are influenced by the way information is presented.
Lecture 3 – Experimental Research (B), Factorial Design
(finishing Lecture 2)
Etkin 2016: External rewards can crowd out intrinsic motivation (when external gets too
high).
Measurement can have the same effects as external rewards. (feedback output)
Impact of measurement:
- Difference in performance: people will exercise more when measured
- Enjoyment: Measurement can reduce how positive people perceive doing specific
exercise
Hypothesis essentials:
- Predict a relationship between variables
- Be testable
- Be justifiable (based on theory)
Testing our hypothesis: experimental research
Note on use of surveys in research:
Survey answers may be incorrect because,
- People don’t know the causes of own behavior
- Memories are inaccurate
- People are not able to predict future behavior (visceral influences)
- People sometimes will not tell what they know because
o Social desirability bias
o Privacy
o Demand characteristics: sometimes the aim of the researchers can drive
output of people (answering in desired way)
→ because of these limitations, experimental research is the best way to find out what
people really think/do
4 basic elements of an experimental study
- Manipulation
- Measurement
- Comparison
- Control
4
