Consumer Behavior Final Flashcards
Cognitive Dissonance
Desire for consistency between attitudes and behavior
- Inconsistency = Discomfort
- Motivated to reduce discomfort
Elaboration Likelihood Model: Central Route
Requires high motivation, ability, and opportunity
More likely for high-involvement consumers
Relevant information matters
◦ Facts, Evidence
◦ Logic, Reasoning
◦ Examples
Elaboration Likelihood Model: Peripheral Route
Requires less motivation, ability, or opportunity
More likely for low-involvement consumers
Easy-to-process information matters
◦ Message length, number of features
◦ Positive emotions
◦ Attractive / likeable source
Heider’s Balance Theory
People dislike unbalanced attitudes and will work to balance them.
To be balanced, there needs to be three positives, or two negatives and one positive
Swagger Wagon
Rap song by Toyota that was meant to depict minivans as cool and interesting
Who was deemed the father of modern advertising?
“We nominate Pavlov as the father of modern advertising… He took a
neutral object and, by associating it with a meaningful object… he gave
it added value. That is what we try to do in modern advertising.”
What is classical conditioning useful for?
- Linking products to desired responses
- Inducing general emotional responses
Three types of operant conditioning
Positive reinforcement: when consumer engages in behavior,
something good happens (e.g., loyalty programs).
Negative reinforcement: when consumer engages in behavior,
something bad stops happening (e.g., annoying sound inside car
stops when seatbelt is fastened).
§Punishment: when consumer engages in behavior, something bad
happens (e.g., eat expired food, get sick).
Operant Conditioning
Altering the probability of behavior by changing the consequences of the behavior
Vicarious Learning
When consumers watch the actions of
others and note the reinforcements they receive for their
behaviors
Attitude
An attitude is an overall evaluation that expresses how much we
like or dislike an issue, person, or object
5 characteristics of attitude
Favorability
Confidence
Resistance
Accessibility
Persistence
Implicit knowledge
Cognitive associations a consumer holds
between 2 constructs that exist outside his/her conscious
awareness
Subliminal Advertising Study - Vicary, 1957
- James Vicary’s study in New Jersey movie theater in 1957
- 2 messages flashed during playing of film: “Drink Coca-Cola” and “Hungry?
Eat Popcorn”
◦ Flash every five seconds
◦ Duration of flashes: 1/3000th of a second - Dramatic results were reported:
◦ 18.1% increase in Coca-Cola sales
◦ 57.8% jump in popcorn purchases
ALL FAKE RESULTS
Priming
Priming- Simply thinking about a concept activates related concepts in memory
Influences subsequent attitudes and behavior
Implicit Association Test (IAT)
Implicit attitudes can exist and be measured
Defines attitudes as the association between attitude object and good/bad
IAT Process
- 2 attitude objects are pitted against each other: AO1 and AO2
- Measure reaction times (in ms) to see how quickly people can pair AO1 with good versus bad words, versus AO2 with good versus bad words
- If quicker to pair AO1 with good items and AO2 with bad items, then implicit preference for AO1
When is IAT useful?
- If the consumer has no introspective access to their attitude toward a brand
- If consumer prefers not to report or admit to their attitude
toward brand
Attitudes are more likely to predict
behavior when…
◦ Consumers think deliberatively/ explain reasons for their attitude
◦ They are more accessible
◦ When they are specific
Prospect Theory
People see the world in terms of changes from reference points, where the marginal pain of losing is worse than the marginal pleasure of gaining
Replication Crisis
Many psychological studies have been found to be difficult to
replicate due to:
- bad methods
- fraud
- p-hacking
P-value
In statistics, the p-value is the probability of obtaining results as extreme as the
observed results of a statistical hypothesis test, assuming that the null hypothesis is
correct.
A smaller p-value means that there is stronger evidence in favor of the alternative hypothesis; p < .05 statistical significant
How to avoid p-hacking
- Decide your statistical parameters early, and report any changes.
- Decide when to stop collecting data and what composes an outlier
beforehand.
Decision-Making Process
1) Problem recognition:
Perceiving need
2) Information search:
Seeking value
3) Alternative evaluation:
Assessing value
4) Purchase decision:
Buying value and heuristics
5) Post-purchase behavior:
Value in consumption
Decision-Making Models
Compensatory
1. Additive
2. Weighted Additive
3. Additive Difference
Non-compensatory
1. Conjunctive
2. Disjunctive
3. Lexicographic
4. Elimination by Aspect
Weighted-additive multi-attribute model
Attitude toward brand b = sum of (importance of attribute * the
consumer’s subjective assessment
of the quality of b)
Ab = sum(Ii * Bi)
Additive Difference Model
Consumers sometimes make choices by making a series of pairwise comparisons, as in a tournament
These comparisons can weighted (i.e., different importance weights are assigned to different attributes) or unweighted
Unweighted: iPad vs Samsung
Screen 0 - 2 = -2
Price 2 - 2 = 0
Ram -1 - 2 = -3
Total = -5, Samsung (on right) wins
Determining weights in additive difference model
Conjoint analysis: Infer importance by observing how peoples’ preferences
for products change as attribute values are changed
Courtyard Marriott Conjoint Example
Designed for business travelers. Determined building shape, number of rooms, pool shape, and landscaping based on conjoint analysis. didn’t listen to pool suggestions though.
Stages of consideration and when to use different decision making models
- Initial Consideration Set
Use: Non-Compensatory - Reduced Consideration Set
Use: Non-Compensatory and/or
Compensatory - Choice
*essentially cannot use compensatory on large sets of data
Non-compensatory rules that compare across brands
- Conjunctive
- Disjunctive
- Lexicographic
- Elimination by Aspect
Conjunctive Rule
- Options are eliminated if they are not above some threshold on ALL of a set of important attributes;
Sometime called a “satisficing rule”—an option doesn’t have to be the best on any or all attributes—just above threshold on all
“Get rid of the bad ones”
Disjunctive Rule
- Similar to conjunctive
- Consumer sets acceptable levels for the cutoffs—levels that are more desirable
- Choose options that meet acceptable levels for many attributes
- “Find the good ones”
Example: evaluate whether each brand scores 3 or higher on all
ALL attributes to be the most liked option; circle options that score 3 or
higher on all attributes
Lexicographic Rule
Choosing the option that is the best on the most important attribute
Elimination by Aspect Rule
Similar to lexicographic but incorporates the notion of an acceptable cutoff
*example: no category can have a score lower than 3. go in order of importance with this in mind then have one left
Anchoring
When asked to form an inference about an uncertain quantity, we start with an initial impression and update
*can be arbitrary
Anchoring Example: Gandhi
Two groups asked the same second question about how long Gandhi lived, but their first question varied. Group 1 was asked if he lived past 140, while Group 2 was asked if he lived past age 9.
Group 1 average aged lived guess: 67
Group 2 average: 50
Decoy Effect
Consumers will have a specific change in preferences between two options when presented with a 3rd option that is asymmetrically dominated.
*Economist example for print only vs. print and web
Compromise Effect
More people choose option B in the 3-option set than in the 2-option set
*TV example. Most expensive one is too “expensive or high quality” while lowest quality one is too cheap. Compromise on the middle option.
What other factors influence our
decisions?
- Default Effect
- Framing Effects
- Endowment Effect
- Mental Accounting
Default Bias
Default: a preselected option adopted when no alternative is specified by the user or program
Takes advantage of laziness and implied recommendation
”Standard” Default is you are not an organ donor unless you register to
be one. By making the default be an organ donor, it greatly increases organ donor rates.
Framing Effects
Labeling ground beef as “75% lean” or “25% fat”.
Taste Rating: 5.33 to 3.66
Quality Rating: 5.15 to 2.83
Leanness Rating: 4.49 to 2.96
Mental Accounting
how we categorize our money
influences our choices
we put money aside for certain purposes and it is often not rational when plans shift.
Endowment Effect
We value something more when we own it. Study of the college class with the Cornell mugs.
Endowment Effect Examples in Marketing
- Free Month of HBO or other subscription
- ## Buick 24 hours of Happiness Test Drive
How does low effort decision making
differ from high effort decision
making?
Limited resources and mental shortcuts:
- We have limited cognitive resources and we deploy them selectively
- This leads to the use of heuristics
Heuristic
a decision shortcut or “rule of thumb”
When are we most likely to use heuristics?
- Low involvement decisions
- Low Motivation
- When cognitive resources are constrained (time/pressure)
What are four Purchase Point Heuristics
- Brand Loyalty
- Brand Familiarity
- Scarcity = desirability
- High Price = Quality
Base rate neglect
Tendency to base judgments on events that are easy to recall
rather than base rate information
*Base rate information: how often an event really occurs
Availability Heuristic
Frequency or likelihood
= How quickly examples come to mind
Marketing Ideas with the Availability Heuristic
- Provide positive and vivid product-related experiences
◦ Example: consumer testimonials - Encourage consumers to imagine positive product experiences
- Stimulate positive word-of-mouth
Representativeness Heuristic
Making predictions based on perceived similarities between a specific target and a general category
How can companies take advantage of the representativeness heuristic?
Private label brands can appear representative of national brands with similar packaging
Customer Satisfaction Facts
- Takes 12 positive experiences to outweigh 1 negative experience (on average)
- Customer satisfaction is a good predictor of customer behavior
How Does Post-Purchase Satisfaction Affect Consumer
Behavior?
Consumer Satisfaction
◦ Repeat Purchase
◦ Positive Word-of-Mouth
Consumer Dissatisfaction
◦ Switching Behavior
◦ Negative Word-of- Mouth
◦ Complaints
◦ Returns
Expectancy Disconfirmation
Some define satisfaction in terms of expectancies: “An evaluation rendered that the consumption experience is at least as good as it was supposed to be.”
Attribution Theory
- Explanations of causes of (unfavorable) outcomes affect
satisfaction/dissatisfaction - FAE
- Dissatisfaction with the firm increases when consumers attribute product
failure to factors under the firm’s control
Ways to Measure Consumer Satisfaction
- Likert Scale
- Net Promoter Score
On a 0-10 scale, how likely is it that you would recommend us to a friend or colleague? What is the primary reason for your score?
Promoters: people who respond with a 9 or 10
Passives: people who respond with 7 or 8
Detractors: ratings less than 6
% of Promoters - % of Detractors = NPS
Developing the loyalty loop
Goal: develop a deep commitment by consumers toward a brand so that with each trigger there is an automated decision to repeat-buy
*Theories of loyalty often draw on metaphors:
◦ Economic exchange
◦ Human relationships
The Economic Metaphor: Social Exchange Theory
People evaluate a transaction according to the rewards and
costs
Economic Model: Subtract costs from rewards.
◦ Compare to expectations
People seek out reliable partners where the exchange is equitable
Key: Fairness
How to induce loyalty when there is no “love”?
- Discounts
◦ Supermarkets - Punch Cards
◦ Coffee shops, Carwashes - Cumulative Points
◦ Airline FF, Hilton HHonors - Targeted Offers
◦ CVS
Sit-up Example
Charles and David typically do 25 sit-ups.
Charles sets a goal of 30 sit-ups.
◦ He finds himself very tired after 28 sit-ups and, at most, has the energy for 1 more.
David sets a goal of 40 sit-ups.
◦ He finds himself very tired after 28 sit-ups and, at most, has the energy for 1 more.
Charles will work harder to achieve his goal.
Car Wash Study
- 300 loyalty cards distributed
- All required 8 purchases to get a free wash
- One started with 8 empty slots
- The second started with two of ten slots filled
Redemption rate within next 3 months was 19% vs. 34%
*achieved the reward in almost half the time
*Giving people a “head start” helps
Four types of customers
- Strangers
- Butterflies
- Barnacles
- True Friends
Strangers
Low loyalty and Low profitability
Butterflies
Low Loyalty but High Profitability
Barnacles
High Loyalty but Low Profitability
True Friends
High Loyalty and High Profitability
Informational Influence
We change our attitudes and behavior because of information gained from others
◦ This is one type of conformity: the act of changing your behavior in order to be more similar to those around you and what they are doing.
Normative Influence
We act in ways that are consistent with group norms because of the implicit reward and punishments controlled by the group
Asch Study
Identify which line is longer (100% accuracy when lines judged
privately):
*A is obviously longer
‘Subject’ 1: identifies B
‘Subject’ 2: identifies B
Question: What percentage of people then identify B as longer?
Reference Groups
Associative
◦ Groups to which we currently belong
Aspirational
◦ Groups we admire and desire to be like
Dissociative
◦ Groups we do not want to emulate
The Spotlight Effect
Others have a big effect because we (wrongly) believe that they really notice us and care
What features lead to more views on a video?
- Surprises
- Emotionality
- Simplicity
- Credibility
- Story arcs
What makes videos more likely to be shared?
Content and ideas that are shared also tend to have:
- Triggers
◦ Things that spark the urge to share - Active emotionality
◦ Evoke emotions that trigger urges to take action - Social capital
◦ We share what makes us look good or cool
*Hump day video being shared on Wednesdays
Model of Consumer Behavior
- 4 Ps: Product, Price,
Place, Promotion - MARKETING
- BLACK BOX OF THE
CONSUMER - RESPONSE
The Customer Journey
- Initial Consideration Set
- Active Evaluation;
Information Gathering, Shopping - Moment of Purchase
- Post-Purchase Experience
Loyalty Loop:
3. Moment of Purchase
4. Post-Purchase Experience
5. Trigger
6. Re-Purchase
American Marketing Association: Ethical Principles
Do no harm. This means consciously avoiding harmful actions or omissions by embodying high ethical
standards and adhering to all applicable laws and regulations in the choices we make.
Foster trust in the marketing system. Avoid deception in product design, pricing, communication, and delivery of distribution.
Embrace ethical values. Affirm these core values: honesty, responsibility, fairness, respect,
transparency and citizenship.
Marketing ethics and laws timeline
Early 1900s: very few consumer protections
1930s: perfectly fine to imply cigarettes are doctor-endorsed
1960s: Consumer Bill of Rights was passed
Consumer rights expanded in 1980s
Consumer Bill of Rights
Includes the buyer’s rights:
◦ To safety
◦ To choose
◦ To be informed
◦ To be heard
Sellers’ Rights
- To introduce products of
different styles and sizes,
provided they are not
hazardous - To set its own prices,
provided no discrimination occurs - To spend to promote the
product - To use any product
message, provided it is
not misleading - To use buying incentives
Consumers’ Rights
- To choose
- To be informed
- To safety
- To be heard
- To redress
- To consumer education
- To participate in marketplace
decision-making - To have access to basic services
- To a sustainable environment
What’s “ethical” is usually ill-defined
Is it “fair” to exaggerate the appeal of food in ads?
Is it “fair” to use decoy pricing to manipulate customers?
etc.
