1 Intro and Consumer Segmentation Flashcards
CH1
Economic psychology
-the science of economic mental life and
behavior
-to provide economics with a realistic and insightful understanding of human rationality in the economic domain
Ch1
Defining characteristics of economic psychology
-The science of economic mental life and
behaviour
-A branch of applied psychology (both theory and application = central)
-The study of ‘how individuals affect the
economy and how the economy affects
individuals’ (Lea, Tarpy, & Webley, 1987, p. 2)
-An interdisciplinary field of study
Ch1
History
from Adam Smith to George Katona
-Adam Smith: The theory of Moral Sentiments = starting point of economic psych, concept of self-love
-Jeremy Bentham: utility = permanent hedonistic pursuit of pleasure and avoidance of pain
-Stuart Mill: homo economics = a rational individual who makes rational decisions
that maximize utility, is self-interested, capable of learning from experience, and with stable, consistent preferences
-Karl Menger: Austrian Psychological School, or the Marginalist School,
emphasized the importance of subjective elements in the economy.
-1881: Economic psychology as a discipline
-1902, Tarde: Birth of the Discipline
-1916: Association of Economic Psychology
-1950s, George Katona: modern economic psychology
-1952, Katona: Index of Consumer Sentiment (ICS), assesses people´s economic expectations
CH1
Herbert Simon and
Economic Decision-Making
Herbert Simon
-CRITICIZED the behavioral assumptions of mainstream economic theory (homo economicus), because they were only assumptions
-found that business people did not seek to maximize their profits, as would be
expected from standard economic theory
-Instead: ‘satisficing’ =
refer to simple decision rules, or heuristics, in which aspiration levels, rather than the goal of maximization, play a major role
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Behavioral Economics and Economic Psychology
-Behavioral economics = branch of economics that uses psychological concepts and theories to better
understand economic behavior
-research showing that economic behavior can violate homo economicus’s (expected) utility maximization principle because people’s evaluation of the same good can
vary, depending on whether they own it or not
= ENDOWMENT EFFECT
of prospect theory’s value function
(1) economic outcomes are evaluated as gains or losses relative to a reference point,
(2) people are loss-averse
Ch1
Similarities and Differences between behavioral economics and economic psychology
SIMILARITIES
1. both acknowledge many of the same historical roots, founding father: Herbert Simon
2. both disciplines
are essentially empirical sciences, placing a premium on the validity of theories tested against behavioral evidence
3. both are applied sciences motivated to develop
effective support for individuals and society in the economic domain
DIFFERENCES
-their main differences
concern their ontological and epistemological assumptions and the research
ethics of their parent discipline
Ch1
Economic mental representations
- money not only a tool
-psychologically money is
not completely interchangeable, since the way people use money depends on how
they mentally categorize it - materialism: negatively correlated with subjective well-being, defined as
both a reflective judgment on satisfaction with one’s life and the balance of positive
and negative emotions one experiences
Ch1
Review Questions
1.What role has the notion ‘homo economicus’ had in the development of economic psychology?
2. Why are mental representations important in understanding economic behaviour?
3. Consider how a person’s time perspective might be both a cause and a consequence of
personal financial decisions.
4. Discuss the insights into economic behaviour arising from a life-span developmental
perspective.
Ch2
Consumer Psychology
- why and how individuals and groups engage in consumer activities, as well as how they are affected by them
- cognitive processes and behavior involved when people purchase and use products and services
- interdisciplinary
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How consumption affects people´s life
-consumer activities can impact people’s identities and how individuals convey their social status through the use of certain products and services
-how men and women choose to ‘groom’ themselves
-not a straightforward
relationship between aggressive children and television violence
-how children are affected by mainstream media
Ch2
Wilhelm Wundt
Wilhelm Wundt, 1879
1. experimental psychology laboratory in Leipzig
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Importance of material possessions
William James´s
“The Principles of Psychology”
-> individuals’ self-concept would partially be dependent upon owning
the right kind of possessions.
Ch2
Academics become interested in advertising
Harlow Gale: founder of the psychology of advertising
- consumers were non-rational individuals who were easily influenced
- Walter Dill Scott: sentimentality, emotions and sympathy all made consumers more open to suggestions made by advertisers
CH2
The invention of the assembly line
-1913, Henry Ford: assembly line
-1914, Starch: “Advertising: Its Principles, Practice and
Technique”, emphasized the links between attention
and response
-1916, Henry Foster Adam: “Advertising and its Mental Laws”, empirical results
Ch2
John B. Watson
-founder of behaviorism
-the first prominent psychologist to apply psychological methods to advertising
-using the systematic application of the principles
of classical conditioning -> to create any kind of human
being that he wished to (not everybody is convinced of his way of advertising)
Ch7
Market segments
help identify groups in the
population where environmental communication will have the largest effect
Ch7
Moscardo, Pearce, Morrison and
The typology of segmentation approaches
Moscardo, Pearce, Morrison
-typology of segmentation
approaches
-group them into a priori and a posterior approaches, depending on whether available registry data is used or personal data needs to be collected to conduct the segmentation
-Examples a priori approaches: geographical segmentation and demographic
segmentation;
-Examples a posterior approaches: behavioural or psychometric segmentation
-Self-regulation model of behavior change: segments target groups according
to their stage of behavioral change, which can have implications for
the communication interventions assigned to them.
Ch7
Demographic segmentation approaches
-use information, such as gender, age, income,
level of education, disabilities, and mobility, to classify target groups
into more homogenous segments
+ data is easily accesible
-not enough by it´s own, needs to be supplemented with psychometrical approaches to give a richer picture of consumer segments
Ch7
Geographic segmentation approaches
-groups the population according to where people reside
-The level of analysis
can be countries, regions, cities, neighbourhoods, different climate zones
-underlying assumption is that people who live in close proximity have common
experiences and demographical features
-geographic data + demographic data = geodemograhpic analysis
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Behavioral segmentation analysis
-information about people’s
purchase behaviour or product use is utilised to segment the target population
-common approach: analyse what people spend their
money or time on and then form clusters of people with similar patterns
regarding behavioural dimensions
Ch7
Sinha
Different types of shoppers
six shopper types:
(1) choice optimisers (individualistic, brand conscious, ask for info, involved in purchase, quality and variety)
(2) economisers (bargains, discounts, conscious of budget and price)
(3) premeditated shoppers (large quantities, in a hurry, had list, made up their minds before)
(4) recreational shoppers (pleasant experience, expressive of their emotional reactions, impulsive)
(5) low-information seekers (familiar with store)
(6) support-seeking shoppers (uncomfortable, asked for help, indecisive)
Ch7
Psychometrical segmentation approaches
-segmentation groups people based on their profiles on psychological variables such as attitudes, values, and personality.
-basic idea = psychological variables have been shown
to determine behavior
Examples of psychometrical consumer segmentation: 1. Value-based 2. Personality-based 3. Lifestyle-based (overlap)
Ch7
“Green customers”
their psychological profiles:
altruism, political orientation, individualism, collectivism, security
orientation, and fun/engagement orientation have been linked to green
consumerism, but also perceived consumer effectiveness
Ch7
Value-based segmentation
and Schwartz
-people are divided based on their basic value orientations
Schwartz´s basic value dimension (Harmony, embeddedness, hierarchy, mastery, affective autonomy, intellectual autonomy, egalitarianism)
-The seven basic values
can be further reduced to two underlying dimensions (a) self-enhancement versus self-transcendence
(b) openness to change versus conservation
Ch7
Value-based segmentation
and Inglehart
Inglehart’s work
-based on the
world-value survey and groups value orientations in cultures along two
dimensions:
(a) tradition versus secular-rational
(b) survival versus
self-expression
-one-dimensional version with materialism versus post-materialism is also used
-Materialistic cultures are more traditional
and more oriented towards survival, whereas post-materialistic
cultures are rooted in secular-rationalist worldviews and self-expression values.
Ch7
Value-based segmentation
and Sinus milieus
-Based on value orientations, attitudes,
lifestyle, and demographic data, ten distinct segments (milieus) of the German adult population were formed:
the traditional
milieu, the established conservative milieu, the precarious milieu, the
new middle class milieu, the socio-ecological milieu, the liberal intellectual
milieu, the escapist milieu, the adaptive pragmatist milieu, the
high achiever milieu, and the movers and shakers milieu
-further arranged in a two-dimensional space: social status and basic value orientation with three categories (traditional values,
such as order and duty; modernisation including individualisation, selffulfilment,
and hedonism; reorientation including multiple options,
experimenting and living with paradoxes)
-different milieus have strongly different likelihoods
of investing in renewable household heating (different milieus -> different values and behaviors)
Ch7
Value-based segmentation
and cars
6 clusters for car users:
- car addicts and die-hard drivers
- malcontented motorists and apiring environmentalists
- non-car users by (no) choice
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Personality-based segmentation
-the most widely used personality trait categorizations is known as the “big five”, a five-dimensional system of basic
personality factors
-five dimensions:
neuroticism, extraversion, openness to experiences, agreeableness,
and conscientiousness
-especially openness to experience and agreeableness, but also
conscientiousness = predictors of pro-environmental
behavior
Ch7
Lifestyle-based segmentation
“Lifestyle segmentation
research measures people’s activities in terms of
(1) how they spend their
time;
(2) their interests, what they place importance on in their immediate surroundings;
(3) their opinions in terms of their view of themselves
and the world around them; (4) some basic characteristics such
as their stage in life cycle, income, education and where they live”
-covers demographic and geographic information, and also behavioural
preferences and values, and world views
-four distinct consumer
types:
(1) rational consumers, (2) adventurous consumers,
(3) careless consumers,
(4) conservative uninvolved consumers
Ch7 Mobility behavior (by Lanzendorf)
mobility-style categorization: FAMOS MULTIS CARCULTS STROLLERS QUICKFITS DOMOS SELFCULTS -> links travel patterns to leisure activities
Ch7
The stage models of behaviour change as segmentation tool
This stage model is also relevant for consumer segmentation because it provides a new angle on attempts to tailor environmental communication activities along the lines of consumer
segments
- 4 distinct stages: predecisional, preactional, actional, and postactional
-Bamberg: A measurement instrument to detect an individual´s stage of change
