Samenvatting - Consumer behaviour

Consumer behaviour

1 Introduction ......................................................................................................................... 2

2 Managerial thinking traps ...................................................................................................... 6

3 A brief history of decision theory ........................................................................................... 9
3.1 Normative theory ................................................................................................................ 9

4 Why consumers don‘t buy....................................................................................................13
4.1 Scientology theory ............................................................................................................ 13

5 Choice architecture .............................................................................................................17

6 Customer-based brand equity ..............................................................................................19
6.1 Brand awareness .............................................................................................................. 20
6.2 Brand image ..................................................................................................................... 20
6.3 Brand relationship spectrum ............................................................................................. 22
6.3.1 Gastspreker WHYFIVE ................................................................................................... 24

7 Advertising psychology and analytics ...................................................................................26
7.1 Analytics .......................................................................................................................... 26
7.2 Psychology ....................................................................................................................... 30

8 Customer satisfaction and retention ....................................................................................32




1

,1 Introduction




I am the company, the other students in the room are my competitors and the customer
is the prof. The overlap of the customer and company is my points of di:erence. The
overlap of competitor and customer is their points of di:erence. Overlap of 3 of the circles
is our points of parity.

When you don’t have information about your customers it’s di:icult to make a statement
that intrigues your customers.

There are 3 stereotypes about marketing:
- Marketing is flu2
- Marketing is wasteful
- Marketing is manipulative

In fact marketing is:
- Not rocket science because there’s not 1 solution or right formula to do good
marketing. It depends on the situation. There’s not one framework you can use to
be better than the others.
- Behavioural science says that you can have great outcomes that are possibly not
coming from a great process. There can be lots of (bad) luck in marketing.




2

,Marketing is all about creating value and communication. This can be achieved for
instance by making tailor made products. In 1 definition is marketing the activity, set of
institutions, delivering and exchanging o:erings that have value for customers, clients,
partners and society at large.

Ralph Waldo Emerson said “if a man has good corn, or word, or boards, or pigs, to sell,
or can make better chairs or knives, crucibles or church organs, than anybody else, you
will find a broad hard-beaten road to his house, though it be in the woods”. This has been
translated to “build a better mousetrap and the world will beat a path to your door”.

This means that if you have good products (clients really need it), you don’t need
advertisement, communication… A good product sells itself

Participants of the winetest don’t know that
glass 1 and 2 are the same and that glass 3
and 4 are the same. This is a randomized
control trial (to have control about the
causality). We also call it A/B-testing. The
first group did not get any information about
price (independent variable) and the second
group did get this information. The research
is about finding out if price influences the
likeability of each wine. The price is extrinsic to the product and comes above the taste of
wine.

We also saw a second example about ice
cream. One vendor sold his ice cream like the
picture on the left and one like the picture on
the right. In this experiment they wanted to
know the di:erence in money they want to pay
for the 2 di:erent cups of ice cream. The size
of the cup influences the price they want to
pay for the ice cream. Value of an item comes
together with the 4 p’s: product, price, place,
promotion.



3

, There are 3 possible
results. If you want to
maximize the value to the
firm you choose the x-axis
as value to the customer
and y-axis as value of the
customer (how much
profit do they give for the
firm). Customers need to
be delighted to be
profitable for the firm. In a monopoly (or other situations where there are only a few
players) it doesn’t matter if you score good/bad as a firm because they choose you given
there are no other options (eg. NMBS).

The satisfaction and profit depend on the amount of
competitors and the switching costs.




You can find the value of customers by knowing how much
money you spend on them as a firm. You also need to know
how much a customer spends to answer this question. The
value to a customer can be easily measured by a
questionnaire by example. You can measure the value of
customers in di:erent ways:
- Customer acquisition cost = the total cost to
acquire customers / the number of new customers
acquired.
- Retention rate = % of customers from the previous period that are still active in
the current period.
- Customer margin = the revenue generated by customers - the cost to serve.
- Customer lifetime value = aggregate profit a customer brings to a firm over the
entire duration of the relationship between the customer and the firm.

Here we can see the model for marketing.




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