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Chapter 1- Introduction- Consumer Behaviour

What is Consumer Behaviour?

The acquisition, consumption and disposition of goods, services, time and ideas by

(human) decision making units (over time)

Involves:

o Products/goods

o Services

o Activities

o People

o Ideas

Dynamic process (occur over time in a dynamic order)

Can involve many people

Involves consumers’ feelings

Consumer behaviour reflects the totality of decisions about the

consumption of an offering by decision making units over time

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Consumer Behaviour as a Field of Study

As a marketer you need to:

Understand- The market; needs and wants of consumers

Predict- Trends in the market

Influence- Consumer purchasing behaviour

Model of Consumer Behaviour

What influences consumer behaviour?

o Psychological core

o Process of making decisions

o Consumer’s culture

o Consumer behaviour outcomes and issues

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A Consumer’s Psychological Core

Motivation, ability and opportunity (MAO)

Exposure, attention and perception

Memory and knowledge

Forming and changing attitudes

The Decision Making Process

Problem recognition (unfulfilled need, e.g. need for a vacation) and search for

information

Judgments and decisions

Post decision evaluations

Consumer’s Culture

Consumer diversity

Social class and household

Values, personality and lifestyles

Reference groups and other social influences

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Consumer Behaviour Outcomes

Symbolize who we are- external signs used to express our identity

Diffuse through a market- Influence other’s decision making

Ethics and social responsibility

Chapter 2: The Psychological Core I: Motivation Ability and Opportunity

What is Motivation?

Motivation is defined as "an inner state of arousal” that provides energy needed to

achieve a goal

Motivated consumers are energised, ready, and willing to engage in a goal relevant

activity

Physiologically, psychologically or environmentally driven

The Effects (Outcomes) of Motivation

High effort behaviour (behaviour that takes considerable effort)

High Information processing and decision making (more likely to pay careful

attention to the information provided before making a decision)

Motivated reasoning (Processing information in a way that allows consumers to

reach the conclusion that they want to reach)

Felt involvement: psychological experience of the motivated consumer

Enduring Involvement (Long term interest in an offering)vs Situational

Involvement (Short term interest)- e.g. supporting an NBA team for the whole

season or just the playoffs.

Cognitive Involvement (Interest in thinking about and learning information pertinent

to an offering, activity or decisions) vs Affective Involvement (Interest in expending

emotional energy and evoking deep feelings about an offering, activity or decision)

Drivers of Consumer Motivation

o Personal Relevance: The extent to which it has a direct bearing on &

significant implications. Personal Relevance for your life

o Consistency with Self-Concept: Our mental view of who we are, your view

of yourself & the way you think others view you

o Values: Beliefs about what is right, important, or good

o Needs: An internal state of tension caused by disequilibrium from our

ideal/desired physical or psychological state

o Goals: Outcomes that we would like to achieve

o Perceived Risk: The extent to which the consumer is uncertain about the

consequences. Perceived Risk of an action (e.g. buying, using, disposing of

an offering)

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o Inconsistency with Attitudes: The extent to which new information is

consistent with previously acquired knowledge or attitudes.

Needs

A need is an internal state of tension caused by disequilibrium from an ideal or

desired state

Maslow’s Hierarchy of Needs: Product Examples

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Characteristics of Needs

Dynamic (Never fully satisfied; satisfaction is only temporary. E.g. hunger)

Hierarchical

Can be internally or externally aroused

Can conflict:

Resolve the conflict- new marketing opportunities

o Approach-approach situational conflict:

Choice between 2 attractive alternatives

o Approach-avoidance situational conflict:

Positive and negative consequences

o Avoidance-avoidance situational conflict:

Choice between 2 undesirable alternatives

Uncovering Consumer’s Needs

Goals

o A goal is a particular end state (outcome) that we would like to achieve

o Regulatory focus:

Promotion focused or prevention focused

Match (+)

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Perceived Risk

The extent to which the consumer is uncertain about the personal consequences of

buying, using or disposing of an offering. Types of perceived risk include:

o Performance- Possibility that the offering performs worse than expected

o Financial- Extent to which buying and using the product may cause financial

harm

o Physical- Extent to which a product may harm one’s safety

o Social- Extent to which a product may damage someone’s social standing

o Psychological- How a product may cause negative emotions

o Time risk- Loss of time associated with a product

Circumstances Causing Increased Perceived Risk

Lack of information

New/not enough experience

High price

Technologically complex

Brands differ substantially

Inconsistency with Attitudes

Consumers tend to be motivated to process messages

Moderately inconsistent with our knowledge or attitudes

Moderately threatening and uncomfortable

Consumers tend to be less motivated to process messages

o Highly inconsistent with our knowledge or attitudes

o They simply reject it

Consumer Ability

Ability is defined as the extent to which consumers have the necessary resources to make

an outcome happen.

Factors that affect our ability to process information:

o Financial resources

o Cognitive resources (e.g. intelligence and experience)- “Attributes for experts,

benefits for novices”

o Emotional resources

o Physical resources

o Social and cultural resources

o Education and age

Consumer Opportunity

Can be influenced by:

Time:

o Opportunities (fast food, ready to use products)

o High time pressure -> less information processed

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Distraction:

o More on information processing, less on emotions

Amount, Complexity, Repetition and Control of Information:

o How-to-videos

o Visualizations

Enhancing Consumer’s Opportunity to Process Information

Repeat marketing communications

Simplify messages

Reduce distractions/ time pressures

Reduce purchasing/ using/learning time

Provide more information channels

Case Study: Allianz- The Ahh Moments

Challenges

o Product- Insurance

o No one really wants to buy it, but everyone knows they need it

o Engagement is infrequent

o The market

1. Tough competition

2. Low barrier to entry

3. Highly advertising driven

o The brand- Allianz

a) Not yet a market leading brand (3rd or 4th)

b) Not an Australian brand like NRMA or AAMI

Objectives

o Sales- Increase 1q business sales by 15%

o Quotes- Generate an increase of 28% in quotes carried out

o Ad recall- Achieve normative scores of ad recall at 38%

o Unaided brand awareness- Achieve normative level of 30%

o Marketing efficiency- Reduce the overall CPA by 7%

o Sustain brand awareness above 45%

Some Thoughts from Marketers

- Consumer research shows:

People couldn’t pronounce Allianz

The brand is high quality, safe and secure (+)

The brand is also premium, clinical and inaccessible (-)

- Need to motivate consumers:

o Low motivation associated with insurance products

o Advertising driven

- Brand operates across all insurance segments:

o Stretch from retail to high end corporate- purely price based campaigns not

an option

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- Three objectives:

o Help consumers to remember and correctly pronounce the brand name

o Make Allianz more familiar and Australian

o Move brand perception to accessible mid-market, rather than premium

The main idea of this campaign was to tie the brand name to the exclamation people make

when something goes wrong. Ahh…!! When it comes to insurance, just say 'Ahh-llianz'.

Reasons why this would work include:

o Relatable, funny idea

o Unique to Allianz. No other insurer could own it

- Marketing Communications:

o Television: Showing multiple vignettes of everyday Australians having an

Ahhh moment.

o Radio: Reinforcing the aural link of Ahh Ahh-llianz

o YouTube: Be ok button videos

- Outcomes

Sales: Exceeded plan by 25.8%, an increase of 45%YOY

Quotes: Exceeded plan by 23.9% , an increase of 58% YOY

Ad Recall: Achieved 59% against the norm of 38% for ad recognition

Brand Link: Achieved 62% compared to the norm of 52%

The marginal return on investment was $12.78

- Lessons Learned:

o > Competitive markets with low consumer motivation

− is about strong front-of-mind awareness

− requires a robust branding device that facilitates consistent recall

− requires careful tracking of research insights and monitoring consumer

reactions to the campaign.

o > Campaigns need correct brand attribution

− link the creative idea to the brand so they are inseparable

− do so in an entertaining and engaging way.

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Lecture 2

Chapter 3: From Exposure to Comprehension

- Exposure reflects the process by which the consumer comes into contact with a

stimulus.

- Marketer (promote)

o Position of an ad (e.g. back cover of a magazine, first and last ad during a

commercial break)

o Product distribution- Extensive

o Shelf placement- Eye level

- Consumer (reject)

o Blocking pop-up ads

o Zipping through recorded commercials

o Zapping/channel surfing during commercials

o Attention reflects how much mental activity consumers devote to a stimulus.

A certain amount of attention is necessary for information to be perceived –

for it to activate our senses.

Characteristics of attention:

o Selective

o Capable of being divided

o Limited

Measuring Visual Attention

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Enhancing Consumer Attention by Making Stimuli

o Personally relevant:

o Appeal to consumers’ needs/values/emotions/goals

o “Typical consumers” (e.g. 9/10 consumers suffer dandruff)

o Use “mini-stories” to attract attention (E.g.: Allianz consumer stories)

o Pleasant:

o Attractive models

o Using music

o Using humour

o Surprising:

o Using novelty

o Using unexpectedness

o Using a puzzle

o Easy to process (e.g. a video):

Improve the prominence (causes it to stand out) of the stimuli (e.g.

size/colour/volume)

Using concrete stimuli- The extent to which a stimuli can be imagined- Stimuli are

easier to process if they are concrete as opposed to abstract

Using contrasting stimuli- Contrast captures attention, e.g. colour newspaper

Think about competing information

We may be exposed to stimuli, it may grab our attention but how do we perceive it?

o Perception: The process by which incoming stimuli activate our sensory receptors:

eyes, ears, taste buds, skin, & so on.

o Size and Shape:

o Eye-catching shapes contains more

o Lettering:

o Logo, symbol, texts

o Colours:

o Warm colours

o Cool colours

o Sonic identity:

Use sounds to support a brand’s image

Perceiving Through Smell

o Smell and physiological response moods

E.g. what you feel after smelling a freshly baked cake

o Smell and the influence on liking and buying

Freshly baked bread attracts consumers

Firms may strategically use smell, M&M

When do we Perceive Stimuli?

Absolute thresholds- Minimal level of stimulus intensity needed to detect a stimulus

Differential thresholds- Intensity difference needed between two stimuli before they

are perceived to be different

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How do Consumers Perceive a Stimulus?

Perceptual organization- Process by which stimuli are organized into meaningful

units

Figure and ground- The principle that people interpret stimuli in the context of a

background.

Closure- The principle that individuals have a need to organize perceptions so that

they form a meaningful whole.

Grouping- The tendency to group stimuli to form a unified picture or impression

Bias for the whole- The tendency to perceive more value in a whole than in the

combined parts that makeup a whole.

Chapter 4: Memory and Knowledge

What is Memory?

Consumer Memory is a vast personal storehouse of knowledge about products,

services, shopping excursions, and consumption experiences.

Sensory Memory: Store sensory experiences temporarily as they are produced

o Operates automatically

o In its actual sensory form (e.g. how something feels)

o Last from a quarter of a second to several seconds

o Information may enter our ‘short-term memory’

o If not analysed further, information will be lost

o Echoic memory/ Iconic memory (memory for sounds)

o Short Term Memory: is the portion of memory where we encode or interpret

incoming information in light of existing knowledge.

o Most of our information processing takes place here

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o Can take one of several forms of information; Words, pictures, smell, feel,

taste

o Characteristics of STM:

o Limited capacity

o Limited time

Marketing Implications of Short Term Memory

Imagery can affect how much information we can process

Imagery may affect how satisfied we are with a product or consumption experience.

Long Term Memory

That part of memory where information is permanently stored for later use.

Two major types:

Autobiographical (episodic) Memory (Knowledge we have about ourselves and

our past personal experiences

Semantic Memory (General knowledge about an entity, detached from specific

episodes)

How Memory is enhanced

o STM LTM

o Chunking: A chunk is a group of items processed as a unit- E.g.: knowing

your phone number in certain blocks- 0422/572/047

o Using acronyms to simplify names (e.g. KFC)

o Rehearsal: Actively reviewing material- Jingles, slogans, etc

o Recirculation: Simple repetition without active rehearsal; e.g. repetition of

marketing communications

o Elaboration: Information being processed at deeper levels; e.g. using

consumer curiosity movie trailers

o Elaboration> Rehearsal> Recirculation

Knowledge

Reflects the set of things we have learned from the past

The information are linked to/associated with a concept

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A brand image is a subset of salient and feeling related associations stored in a

brand schema- A specific schema

Not all associations, only the most salient

Make the brand different from others in the category

Schemas and Brand Personality

Schemas can reflect the brand’s personality

Brand’s personality: the way the consumer would describe the brand if it were a

person.

Knowledge Structure

Schemas reflect what we know

We need a way of organising our knowledge; objects divided into taxonomic

categories

A taxonomic category: how consumers classify a group of objects in memory in an

orderly, often hierarchical way, based on their similarity to one another.

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Taxonomic Category Structure

Retrieval Failures

Decay: The weakening of memory strength over time

Interference: When the strength of a memory deteriorates over time because of

competing memories

Primacy and Recency Effects: The tendency to show greater memory for

information that comes first or last in a sequence (e.g. commercial break)

How Retrieval is enhanced

Enhance memory first: Chunking, rehearsal and similar factors

However 4 additional factors also affect retrieval:

o The stimulus itself

o What it is linked to- Retrieval cue

o The way it is processed (e.g. imagery in consumer mind)

o The characteristics of consumers

Characteristics of the Stimulus

Salience:

o E.g., big, bright, complex, moving, or prominent in its environment.

Prototypical or pioneer brands: We are better able to recognize prototypical

brands