Hoorcollege 1 – Introduction
03/02/2020
Omdat we allemaal consumers zijn, is het makkelijk om:
- Understand consumers
• What do they need?
• How do they decide?
• What makes them happy?
- Predict their reaction to marketing strategies
• Changes to your product or service
• Price changes
• Change positioning
But:
- Not everyone is like you (false consensus: we tend to think everyone is)
- You often don’t know
• What you would do (affective forecasting)
• Why you do what you do
What is consumer behaviour?
Processes involved in selecting, buying, using or disposing of products, services, ideas and
experiences to satisfy needs and wants (Solomon).
THUS:
1. Obtaining products & services
2. Consuming products & services
3. Disposing of products & services
influences the above
,Why study consumer behaviour?
To understand consumers also means that you
can protect them better (eat healthy, no
smoking, etc.). Not only getting a better
position, also to protect.
To know how to influence consumers:
Firm → consumer
To know what consumers want:
Consumer → firm
Simply deliver what consumers want? Find out what they care about and provide that?
Consumers often don’t know what they want and want companies to come up with
something.
Public policy:
- Regulate behaviour: Public Policy (cigarette packages)
• How will consumers react to regulations?
• If they process the information, smokers understand and act in line with the
message.
• Doesn’t work as smokers already know that it’s bad.
- How will consumer react to market changes?
• Recession, tax cuts, changes in mortgage subsidies.
• May lead to expenditure changes.
- Change behaviour: Social Marketing
• Encourage/Discourage activities.
• Effect of advertising on society.
How to study consumer behaviour?
Day-care centre case
Children were supposed to be picked up at 6pm, but parents were often late.
Solution: install a fine → doesn’t work. Due to the fine, people felt like it was okay to pick
them up later because they paid for it.
,Intuition trap: problems with common sense:
- Often wrong (we are even bad in predicting our partner’s choices).
- Confirmation bias:
• We are resistant to changing our prior beliefs.
• We focus on confirming instances.
- Your preferences are not representative:
• Projection bias / False consensus.
- Limited theories
- Decisions based on few observations
- Infer causality from correlation
- Overconfidence
Intuition trap:
- Intuitive ideas are: easy, more vivid, appealing, well-remembered.
- Scientific stories are: complex, careful, situational.
Consumer research:
1. Beware of common sense: Intuition trap.
2. Understand the nature of the relationship: causal or correlational?
3. Consumer research is a social science: reducing uncertainty rather than establishing
certainty.
→ Best to combine methods.
, Lecture 2 – Irrationality, Research
05/02/2020
Irrationality
The wise consumer assumption:
- Preferences are clear and accessible in consumers’ minds.
- Consumers make trade-offs between quality and price.
- Each product is judged on its merits alone.
- Willingness to pay is the result of evaluating the object we are interested in.
- Market research instruments accurately tell us what consumers really prefer and
how much they would pay.
Not true.
Compromise effect: The share of a product increases when it is the intermediate option but
decreases when it is an extreme option.
Endowment effect:
- Sellers: “Imagine that this cup is yours. How much
would somebody have to pay to buy it from you?”
- Buyers: “Imagine you want to buy this cup. How
much would you be willing to pay for it?”
Owners assign a greater value than to a product than
non-owners.
Reality about consumers:
Preferences are typically constructed, not revealed.
- Reference Dependence: Every evaluation is relative (“what are the last two numbers
of your phone number? How much would you pay for this product?”).
- Context Dependence: People don’t know what they want until they see it in context
(coffee example).
- Description Dependence: Preferences change depending on how the alternatives are
presented to them (endowment effect).
03/02/2020
Omdat we allemaal consumers zijn, is het makkelijk om:
- Understand consumers
• What do they need?
• How do they decide?
• What makes them happy?
- Predict their reaction to marketing strategies
• Changes to your product or service
• Price changes
• Change positioning
But:
- Not everyone is like you (false consensus: we tend to think everyone is)
- You often don’t know
• What you would do (affective forecasting)
• Why you do what you do
What is consumer behaviour?
Processes involved in selecting, buying, using or disposing of products, services, ideas and
experiences to satisfy needs and wants (Solomon).
THUS:
1. Obtaining products & services
2. Consuming products & services
3. Disposing of products & services
influences the above
,Why study consumer behaviour?
To understand consumers also means that you
can protect them better (eat healthy, no
smoking, etc.). Not only getting a better
position, also to protect.
To know how to influence consumers:
Firm → consumer
To know what consumers want:
Consumer → firm
Simply deliver what consumers want? Find out what they care about and provide that?
Consumers often don’t know what they want and want companies to come up with
something.
Public policy:
- Regulate behaviour: Public Policy (cigarette packages)
• How will consumers react to regulations?
• If they process the information, smokers understand and act in line with the
message.
• Doesn’t work as smokers already know that it’s bad.
- How will consumer react to market changes?
• Recession, tax cuts, changes in mortgage subsidies.
• May lead to expenditure changes.
- Change behaviour: Social Marketing
• Encourage/Discourage activities.
• Effect of advertising on society.
How to study consumer behaviour?
Day-care centre case
Children were supposed to be picked up at 6pm, but parents were often late.
Solution: install a fine → doesn’t work. Due to the fine, people felt like it was okay to pick
them up later because they paid for it.
,Intuition trap: problems with common sense:
- Often wrong (we are even bad in predicting our partner’s choices).
- Confirmation bias:
• We are resistant to changing our prior beliefs.
• We focus on confirming instances.
- Your preferences are not representative:
• Projection bias / False consensus.
- Limited theories
- Decisions based on few observations
- Infer causality from correlation
- Overconfidence
Intuition trap:
- Intuitive ideas are: easy, more vivid, appealing, well-remembered.
- Scientific stories are: complex, careful, situational.
Consumer research:
1. Beware of common sense: Intuition trap.
2. Understand the nature of the relationship: causal or correlational?
3. Consumer research is a social science: reducing uncertainty rather than establishing
certainty.
→ Best to combine methods.
, Lecture 2 – Irrationality, Research
05/02/2020
Irrationality
The wise consumer assumption:
- Preferences are clear and accessible in consumers’ minds.
- Consumers make trade-offs between quality and price.
- Each product is judged on its merits alone.
- Willingness to pay is the result of evaluating the object we are interested in.
- Market research instruments accurately tell us what consumers really prefer and
how much they would pay.
Not true.
Compromise effect: The share of a product increases when it is the intermediate option but
decreases when it is an extreme option.
Endowment effect:
- Sellers: “Imagine that this cup is yours. How much
would somebody have to pay to buy it from you?”
- Buyers: “Imagine you want to buy this cup. How
much would you be willing to pay for it?”
Owners assign a greater value than to a product than
non-owners.
Reality about consumers:
Preferences are typically constructed, not revealed.
- Reference Dependence: Every evaluation is relative (“what are the last two numbers
of your phone number? How much would you pay for this product?”).
- Context Dependence: People don’t know what they want until they see it in context
(coffee example).
- Description Dependence: Preferences change depending on how the alternatives are
presented to them (endowment effect).
