1th presentation Flashcards
Neo-classical Economics
Preferences are: discovered transitive time-consistent No capacity constraints
Rational Agent Model
Given the right information, people will maximize—always choose the product that best matches their (stable) preferences
CB helps firms learn to…
…efficiently communicate information to facilitate consumer choice and to facilitate preference discovery
Behavioral Decision Theory
Preferences are
constructed
not necessarily transitive
can be time-inconsistent
Information processing is constrained
Bounded rationality
People will satisfice—choose products beyond a sufficient threshold, are inconsistent, ineffective, and often require help making choices
CB helps firms learn…
…what consumers want, how consumers think, and how to shape consumer choice
Segmentation
The 4 basic types of market segmentation are:
- Demographic
- Psychographic
- Geographic
- Behavioral
Heuristics
A heuristic is a mental shortcut that allows people to solve problems and make judgments quickly and efficiently. These rule-of-thumb strategies shorten decision-making time and allow people to function without constantly stopping to think about their next course of action.
A consumer is…
a person who identifies a need or desire, makes a purchase, and then disposes of the product.
Perception
translates raw stimuli into meanings
Perception
Perception - The process by which an individual selects, organizes, and interprets stimuli into a meaningful and coherent picture of the world
Elements of Perception
Elements of Perception: Sensation Absolute threshold Differential threshold Subliminal perception
Perceptual map –
Perceptual map – marketing tool to evaluate the relative position of compatitive brands along relevant dimensions
Hierarchy of senses
Hierarchy of senses: Vision (the most objective) Audition Touch Smell Taste (the least objective)
Sensation
Sensation is the immediate and direct response of the sensory organs to stimuli
A stimulus is..
A stimulus is any unit of input to any of the senses.
Marketing stimuli:
advertisements
price promotions
product change
….Sensory Marketing!
Slow music…
Slow music makes people take their time and spend more money.
Loud music..
Loud music makes them move through the store quickly without affecting sales.
Classical music…
Classical music leads people to buy more expensive merchandise.
Smell/Olfactory
“Of all the five senses, smell is the one that creates the most powerful impression in your brain. A particular scent can trigger memories from a long time ago. (…) Smells creates memories and appeal directly to feelings.” (Wenham 2010)
Taste/Gustatory
Taste is dependent to other senses: “Every single taste (…) is a combination of all our five Senses” (Krishna 2012 p. 342)
Absolute threshold
Absolute threshold is the lowest level at which an individual can experience a sensation.
Differential Threshold - JND
Differential Threshold (Just Noticeable Difference – JND) - Minimal difference that can be detected between two similar stimuli
Weber’s law
The JND between two stimuli is not an absolute amount but an amount relative to the intensity of the first stimulus
The stronger the initial stimulus (e.g., size, weight, price, design), the greater the additional intensity needed for the second stimulus to be perceived as different.
Marketing Applications of the JND
Marketers need to determine the relevant JND for their products
so that negative changes are not readily apparent to the public
so that product improvements are very apparent to consumers
Exposure
Exposure
Possibility of noticing the information
Attention
Attention
the information has been recorded in some way (it has been noticed)
Attention:Key concepts
Attention is limited.
Attention is selective.
Selection Depends Upon:
Nature of the stimulus
Expectations
Motives
Nature of the stimulus
Includes the product’s physical attributes, package design, brand name, advertising and more…
Expectations
Based on familiarity, previous experience or expectations.
Motives
Needs or wants for a product or service.
How Attention Works: 2 States of Attention
Location State (Where?)
Identification state (What?)
Location State (Where?):
Saliency Map (Treisman et al 1980, Wolfe et al 1994) Systematic Search (Monk 1984, Ponsoda et al 1995)
Identification state (What?):
Gather more information of selected object: e.g., reading, holding, etc.
Saliency map
Salient locations/objects capture attention involuntarily and instantaneously, e.g.:
salient color
unique orientation
Which Stimulus is Salient?
Novelty:
Stimuli that appear in unexpected ways or places tend to grab our attention
How we can help Systematic Search
Position:
Stimuli that are present in places we’re more likely to look stand a better chance of being noticed
Interpretation
Interpretation refers to the meaning we assign to sensory stimuli, which is based on a schema
Closure principle
People tend to perceive an incomplete picture as a complete and meaningful whole
