Lesson 5 Videos Flashcards
Consumption
Consumers’ usage of the acquired product
Understanding consumption is complex.
Consumption Behaviors Involve…
Knowing how many and which consumers fall into the user and nonuser categories.
Size of user market is one indicator of market attractiveness.
Size of nonuser group speaks to future growth opportunities.
What dimensions are consumption behaviors characterized along?
Entire Population:
-Non Users
- Users:
- -When is it consumed?
- —Proximity to purchase/Time of Day
- -Where is it consumed?
- —Situation A vs Situation B
- -How is it consumed?
- —Usage 1 vs Usage 2
- -How much is consumed?
- —Heavy Users/Moderate Users/Light Users
When does Consumption Occur?
How much time passes between purchase and consumption?
What time of day is product used?
When in the year or during which season is product consumed?
“Wine. What are you saving it for?”
“Orange Juice. It isn’t just for breakfast anymore”
Where Does Consumption Occur?
The situation in which consumption occurs can affect product choice -
e.g., domestic vs imported beers sales for in-home versus on-premise consumption
How Is the Product Consumed?
How is the product prepared?
Is it consumed alone or with other products?
Is it used as intended or have consumers invented a new use?
How Much Is Consumed?
Consumers may be similar in what they consume, but different in how much they consume.
“Use Innovativeness” (eg: Bounce Beyond the Dryer)
The idea that consumers can use a product they bought for one purpose to serve another purpose as well. (“Life Hacks”)
Usage volume segmentation
Dividing consumers into segments based on amount of consumption (heavy, moderate, and light users).
In the US 16% of consumers account for 88% of all wine consumption.
Firms can encourage consumption or change amount consumed.
Basic Strategies for Increasing the Amount of Consumption
- Enhance the frequency of consumption.
(“Murphy’s Once A Week”, “Got Milk”, etc.). - Enhance the amount consumed per consumption
occasion. (Toothpaste, shampoo, etc.).
The Influence of Package Size
Larger packages increase the usage of cooking oil, spaghetti, M&Ms. etc.
Consumption Experiences (Positive Reinforcement)
Purchase Need -> Product Purchase -> Product Consumption -> Receiving Positive Outcomes = Positive Reinforcement
(cycle restarts)
Consumption Experiences (Negative Reinforcement)
Purchase Need -> Product Purchase -> Product Consumption -> Avoiding Negative Outcomes = Negative Reinforcement
(cycle restarts)
ex: Advil for reducing pain
What about products that can give both Positive and Negative Reinforcement?
ex: Air freshner
Consumption Rituals
A type of expressive, symbolic activity constructed of multiple behaviors that occur in a fixed, episodic sequence, and that tend to be repeated over time.
Holiday rituals (gift giving, parties), NFL gameday rituals, etc.
Positive reinforcement
when consumer receives positive outcome from product usage.
Negative reinforcement
when consumption helps person avoid negative outcome.
Punishment
when consumption leads to negative outcome.
Consumption Experiences (Punishment)
Purchase Need -> Product Purchase -> Product Consumption -> Receiving Negative Outcomes = Punishment
Beyond the consumption experience, consumers’ interpretation can be affected by…
…their expectations of the experience and their mood at the time of consumption.
Classic marketing study with beer brands
The expectation created by the brand label was powerful enough to alter consumer’s interpretation of what their taste buds were telling them.
Consumption Norms
informal rules that govern our consumption behavior (eg: corsage on a prom, hot dog at baseball game, suit & tie, etc.)
Multichannel Shoppers
(most people) customers that shop online, shop in store, shop on phone, etc.
Omnichannel Shoppers
Multichannel Shoppers that take it one step further—> shoppers that are shopping simultaneously in both channels
[ex: shopping in Best Buy (brick and mortar) while on Amazon (phone)]
Ethnography
Involves describing and understanding consumer behavior by interviewing and observing consumers in real-world situations.
P&G launched its $1 Billion Swiffer mop business by using this technique.
Shadowing, Behavioral Mapping, Consumer Journey, Extreme User Interviews, Storytelling, Unfocus Groups, etc.
Evaluations also occur following…
…consumption.
Consumers experience satisfaction or dissatisfaction.
Ethnographic research originates from…
…anthropology
What research method is used with Ethnographic research?
A qualitative research method
How do researchers perform Ethnographic research?
Researchers immerse themselves in the everyday environment, real-life settings, lives, culture, or situation of their study
What is the goal of Ethnographic research?
To understand subject’s point of view in great depth and detail
What does the traditional approach of Ethnographic research involve?
Uses 1:1 observations, cameras, notepads, etc
Digital ethnographic studies can use…
…social media and online blogs
When is Ethnographic research beneficial?
When trying to understand complexities or idiosyncrasies of an environment with first-hand experience.
Evaluation of choice alternatives is a major part of…
Pre-Purchase phase of decision making …. but vital evaluations also occur following consumption.
Consumers experience satisfaction or dissatisfaction.
J.D. Power is synonymous with measurement of satisfaction in the world of marketing.
The J.D. Power award is often used by firms in advertising.
Customer Churn
The percentage of customers that stopped using your company’s product or service during a certain time frame.
How do you calculate Customer Churn?
By dividing the number of customers you lost during that time period – say a quarter - by the number of customers you had at the beginning of that time period.
For example, if you start your quarter with 400 customers and end with 380, your churn rate is 5% because you lost 5% of your customers.
How do we measure the Brand Intimacy Quotient?
First, we examine the users of the brand.
Next, we gauge the emotional connection with the brand by looking at factors such as: Indulgence, Fulfillment, Identity, Nostalgia, Ritual, Enhancement, and the characteristics of their bond and the degree of intimacy (sharing, bonding, fusing) to arrive at Brand Intimacy Quotient
Positive post-consumption evaluations are essential for retaining customers because…
…the likelihood that customers will remain loyal depends on their level of satisfaction.
However, customer satisfaction does not guarantee loyalty.
T/F
Cheaper to retain a customer than recruit a new one.
True
Xerox corp. found that customers “totally satisfied” were __ times more likely to repurchase than “satisfied” customers.
6
Many businesses are striving for “customer _____” rather than “customer _____.” (Xerox, Enterprise Rent-A-Car, etc. )
delight, satisfaction
Customer Satisfaction often shapes…
Word-of-Mouth & Word-of-Mouse Communication
Consumers often communicate with others about…
…their consumption experiences.
The extent to which a customer would recommend a product is…
…a better indicator of satisfaction than even repeat buying.
T/F
Word of Mouth is more powerful than advertising.
True
T/F
Word of Mouse is a 1000 times more dangerous and more powerful than Word of Mouth.
True
Why? Because Word of Mouse refers to today’s society when things go viral on social media.
The Top Ten results of an examination by the ‘Consumer Federation of America’ and the ‘National Association of Consumer Agency Administrators’ of consumer complaints.
- Home improvements
- Automobile sales of new and used cars
- Automobile repairs
- Credit
- Telecommunications
- Collections and billing practices
- Identity Theft and deceptive practices
- Internet-related issues
- Major purchases of household goods
- Telemarketing and advertising sales practices
Customer satisfaction is _____ related to price sensitivity.
inversely
Shown as a downward sloping line/curve
As customers become less satisfied with the product, a company is…
…less able to increase its price or have competitors lower their prices without losing customers.
Biggest Threats to Customer Satisfaction
- Inability to speak to a live person about a problem or need.
- Poorly trained employees/staff
- Poor quality products and services
- Certain products and services are not always available
- Lack of individual attention
- Don’t Know/Refused
What Increases Consumers’ Satisfaction
- Ability to customize a particular product or a service according to your own preferences
- Having a more personalized experience with companies you do business with
- Getting rewards and discounts in exchange for participating in customer loyalty or preferred customer programs
- Being able to communicate with companies online
- Online shopping
- Participating in customer surveys
Forbes Top 10 Consumer Complaints
- Household goods: Misrepresentations, failure to deliver
- Real Estate: Tiemshares sales an resales, real estate fraud
- Fraud
- Internet Sales and Landlord/Tenant Problems
- Services (Misrepresentations, failure to perform)
- Utilities (billing disputes with phone, cable, satellite, etc.)
- Retail (false advertising and other deceptive practices)
- Home Improvement/Construction (shoddy work, failure to start/complete)
- Credit/Debt
- Auto Complaints
Net Promoter Score
A number from -100 from 100.
Scores higher than 0 are typically considered to be acceptable and scores above 50 are considered to be excellent.
Theindustry averageforConsumer Brands/Electronicsis 45.
How to find your Net Promoter Score
NPS = Percent of Promoters (9’s and 10’s) - Percent of Detractors (0–6)
NPS Scale: 0–6
Detractors
NPS Scale: 7 & 8
Passives
NPS Scale: 9 & 10
Promoters
Background of The Case of ‘United Breaks Guitars’
In 2008, a singer/songwriter named Dave Carroll took a flight from Halifax, Nova Scotia to Omaha, Nebraska, with a layover at Chicago’s O’Hare airport.
During the layover, he heard a fellow passenger exclaim that the baggage handlers on the tarmac were throwing guitars. Later Dave indeed discovered that his $3,500 Taylor guitar’s neck had been broken.
Dave tried for 9 months to get a claim processed with United Airlines which informed him that he was ineligible for compensation because he had failed to make the claim within its stipulated “standard 24-hour timeframe”.
Efforts have been made through phone calls and emails by Dave to suggest that United give him $1,200 in flight vouchers to cover the cost of repairing the guitar. However, United held firm on “No”.
What happened after United wouldn’t give Dave flight vouchers?
Dave posted the video “United Breaks Guitars” on YouTube on July 6, 2009. It quickly amassed 150,000 views within one day, prompting United to contact Carroll saying it hoped to right the wrong - but Dave refused it.
“United Breaks Guitars: Song 2” was released on YouTube on August 17, 2009.
“United Breaks Guitars: Song 3” was released in March 2010.
Newspapers and news broadcast media across North America were doing stories about the song
Dave Carroll did over 200 interviews in the first few months.
“United Breaks Guitars” became part of a trilogy
The BBC reported that United’s stock price dropped by 10% within three to four weeks of the release of the video – a decrease in valuation of $180 million.
