COMM6026 Lecture 3 - consumer psychology

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Marketing Public Relations: Principles and Practice (2012/01)

Lecture 3

Consumer Psychology

Developed and Presented by

Roy Ying, Msc., B.Comm.

Note: Pictures used in this power point file

is for academic Purpose only

DA010 - Professional Diploma in Public Relations - COMM6026EP

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THE PSYCHOLOGY OF

MARKETING• The psychology of how consumers think, feel,

reason, and select between different alternatives (e.g., brands, products, and retailers);

• The psychology of how the consumer is influenced by his or her environment (e.g., culture, family, signs, media);

• The behavior of consumers while shopping or making other marketing decisions;

• How marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer.

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Definition

Consumer Behavior

• The study of individuals, groups, or organizations, and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs, and the impacts that these processes have on the consumer and society.

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Let’s look at an example

• How marketers use consumer psychology to increase sales…..

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How marketers use research?

• Again, it boils down to the 4 Ps:

– Product development

– Pricing strategy

– (Place) Distribution network, channels,

packaging and product display

– Promotional mix, image communications and

sales activities

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Research Tool - Surveys

• Surveys are useful for getting a great deal of specific information.

• Surveys can contain open-ended questions (e.g., “In which city and state were you born? ____________”) or closed-ended, where the respondent is asked to select answers from a brief list (e.g., “__Male ___ Female.”)

• Open ended questions have the advantage that the respondent is not limited to the options listed, and that the respondent is not being influenced by seeing a list of responses. However, open-ended questions are often skipped by respondents, and coding them can be quite a challenge.

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Research Tool - Surveys

• Surveys come in several different forms. Mail surveys are relatively inexpensive, but response rates are typically quite low.

• Phone-surveys get somewhat higher response rates, but not many questions can be asked because many answer options have to be repeated and few people are willing to stay on the phone for more than five minutes.

• Mall intercepts are a convenient way to reach consumers, but respondents may be reluctant to discuss anything sensitive face-to-face with an interviewer.

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Online Surveys - Benefits

• The use of “conditional branching” whichallows the computer to skip directly to the appropriate question.

• With the right database, it can be inexpensive with potential scale across different countries.

• It captures the respondent’s submission page visit log including timing and location.

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Online Surveys - Drawbacks

• Data quality is always under scrutiny.

• It’sImpossible to get respondents to read the questions carefully.

• The emergence of affiliate marketing generated additional unqualified data.

• It cannot be too long so there is a limit to the amount of data can be captured.

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Focus group

• Let’s see another example

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Research Tool – Focus Group

• Focus groups are useful when the marketer wants to launch a new product or modify an existing one.

• A focus group usually involves having some 8-12 people come together in a room to discuss their consumption preferences and experiences.

• The group is usually led by a moderator, who will start out talking broadly about topics related broadly to the product without mentioning the product itself.

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• By not mentioning the product up front, we avoid biasing the participants into thinking only in terms of the specific product brought out.

• Thus, instead of having consumers think primarily in terms of what might be good or bad about the product, we can ask them to discuss more broadly the ultimate benefits they really seek.

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• Represent small sample sizes. Because of the cost of running focus groups, only a few groups can be run. Focus groups cannot give us a good idea of: – What proportion of the population is likely to buy the

product.

– What price consumers are willing to pay.

– The groups are inherently social. This means that: • Consumers will often say things that may make them look

good even if that is not true.

• Consumers may be reluctant to speak about embarrassing issues.

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Research Tool – Interviews

• Personal interviews involve in-depth questioning

of an individual about his or her interest in or

experiences with a product.

• The benefit here is that we can get really into

some depth (when the respondent says

something interesting, we can ask him or her to

elaborate), but this method of research is costly

and can be extremely vulnerable to interviewer

bias.

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Research Tool – Observation

• Or just watching how consumers do their shopping…

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Research Tool – Scanner Data

• Most retail outlets use scanner or even RFID sales / inventory system. Some shopping malls even require tenants to report sales figure on a daily basis.

• It is a very powerful tool as it measures the consumer’s actual purchasing pattern.

• The trouble is that these data are often proprietary 3rd party private information that marketers have no access to.

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Class Discussion

• In a focus group, please generate insights from participants on how McDonald’s can improve their menu.

• Answers should include demographics of your group, frequency of fast food consumption and at least 5 improvement suggestions on the menu.

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Application

• Marketing strategy

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Application

• Public Policy decisions

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Application

• Predicting trend

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Class Discussion

• Suppose you were to resurrect the good old Pepsi challenge…

– Where would you pick your participants?

– How would you promote this?

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Factors in consumer decision

• Culture

• Group Influences

• Perception

• Learning and memories

• Attitude

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Culture

• Definition: the complex whole which includes knowledge, belief, art, morals, custom, and any other capabilities and habits acquired by any person as a member of society.

• Culture is part of the external influences that impact the consumer.

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Cultural Characteristics

1. Culture is comprehensive. This means that all parts must fit together in some logical fashion.

2. Culture is learned rather than being something we are born with.

3. Culture is manifested within boundaries of acceptable behavior.

4. Conscious awareness of cultural standards is limited.

5. Cultures fall somewhere on a continuum between static and dynamic depending on how quickly they accept change.

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Examples

• In many parts of the world, the right hand is for eating, drinking, and accepting anything. The left hand is used only for bodily functions and is “unclean”.

• Evening social events usually start late (9 or 10pm) in South America.

• Thais and Malaysians do not want to be touched on their heads.

• In Arab world, Islam dominates every part of life. Wives are not introduced and do not shake hands.

• Cows are sacred animals to Hindus….same goes for no pork for Arabs.

• Don’t give flowers to Africans as gifts - this means condolences.

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Group Influences

• Reference groups come with various degrees of influence.

• Primary reference groups come with a great deal of influence—e.g., members of a fraternity/sorority.

• Secondary reference groups tend to have somewhat less influence—e.g., members of a boating club that one encounters only during week-ends are likely to have their influence limited to consumption during that time period.

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Perception

• Our perception is an approximation of reality.

• Factors in perception

– Exposure

– Stimuli

– Attention

– Interpretation

– Relevance

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Learning and memories

• Learning involves "a change in the content or organization of long term memory and/or behavior." The first part of the definition focuses on what we know (and can thus put to use) while the second focuses on concrete behavior.

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Operant conditioning

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Positive / Punishment

• In positive reinforcement, an individual does

something and is rewarded. He or she is then

more likely to repeat the behavior.

• Punishment is the opposite. You eat what looks

like a piece of candy (behavior), only to discover

that it is a piece of soap with a foul taste

(consequences), and subsequently you are less

likely to eat anything that looks remotely like that

thing ever again (changed behavior).

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Schedules of reinforcement

Examples:• Fixed interval: The consumer is given a free dessert on

every Tuesday when he or she eats in a particular restaurant.

• Fixed ratio: Behavior is rewarded (or punished) on every nth occasion that it is performed. (E.g., every tenth time a frequent shopper card is presented, a free product is provided).

• Variable ratio: Every time an action is performed, there is a certain percentage chance that a reward will be given. For example, every time the consumer enters the store, he or she is given a lottery ticket with a 10% chance of winning.

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Attitude

• Consumer attitudes are a composite of a consumer’s (1) beliefs about, (2) feelings about, (3) and behavioral intentions toward some object

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Attitude

• Changing attitudes is generally very difficult, particularly when consumers suspect that the marketer has a self-serving agenda in bringing about this change (e.g., to get the consumer to buy more or to switch brands).

• But we can try changing other elements in the consumer’s attitude

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Attitude Changing strategies

• One strategy uses the approach of classical conditioning try to “pair” the product with a liked stimulus.

DO YOU LIKE THE

INSURANCE, OR THE

SNOOPY?

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• How to change buying behavior?

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• Which message is clearer?

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• Changing behavior

– Offer discount

– Temporary exhibit space

– Promotional activities

– Limited edition souvenirs

• Not a sustainable solution as these are short term measures.

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• Changing existing believes

– Although attempting to change beliefs is the

obvious way to attempt attitude change,

particularly when consumers hold unfavorable

or inaccurate ones, this is often difficult to

achieve because consumers tend to

resist. So don’t bother.

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• Change the importance of beliefs.

– It may be possible to strengthen beliefs that

favor us--e.g., a vitamin supplement

manufacturer may advertise that it is

extremely important for women to replace iron

lost through menstruation. Most consumers

already agree with this, but the belief can be

made stronger.

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• Advertisements use this all the time.

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• Add beliefs.

– Consumers are less likely to resist the

addition of beliefs so long as they do not

conflict with existing beliefs. Thus, the beef

industry has added beliefs that beef (1) is

convenient and (2) can be used to make a

number of creative dishes. Vitamin

manufacturers attempt to add the belief that

stress causes vitamin depletion, which

sounds quite plausible to most people.

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• Advertisers are good at creating ways for consumers to use their products.

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• Change ideal.

– It usually difficult, and very risky, to attempt

to change ideals, and only few firms

succeed. For example, green used to be a

unfavourable colour for cars, but with the

introduction of hybrid cars and electric cars,

green is now becoming more popular.

COMM6026 Lecture 3 - consumer psychology

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Transcript of COMM6026 Lecture 3 - consumer psychology