psychological influences on consumer behaviour ppt

1. Module 3
PSYCHOLOGICAL INFLUENCES
ON CONSUMER BEHAVIOR
LEARNING
ATTITUDE

2. 3 - 2
Consumer Learning
• The Elements of Consumer Learning
• Behavioral Learning Theories
• Cognitive Learning Theory
• Measures of Consumer Learning

3. 3 - 3
Consumer Learning
• Learning is defined as a relatively permanent
change in the behavior that occurs as a result of
experience of self or others.
• There occurs an enhancement of knowledge,
skills and expertise which are relatively
permanent.
• Consumer learning is defined as a process by
which people gather and interpret information
about products and services and use this
information/knowledge in buying patterns and
consumption behavior.

4. 3 - 4
Learning
• The process by which individuals acquire the
purchase and consumption knowledge and
experience that they apply to future related
behavior
• Marketers must teach consumers:
– where to buy
– how to use
– how to maintain
– how to dispose of products

5. 3 - 5
Elements of Learning Theories
• Motivation - When a consumer is faced with a
need/want situation, there occurs an urge within him to
act towards fulfillment of the need/want through the
problem solving/decision making process.
• Cues - A cue may be defined as a stimulus that gives
strength and direction to the motives
• Response - The behavior of a person constitutes the
response; i.e. how a person reacts to a drive or a
stimulus, reflects a response.
• Reinforcement - An action always has a reaction; based
on the reaction, the behavior gets reinforced.

6. 3 - 6
Nature & Characteristics of Learning
• Learning involves a change in behavior
• The change in behavior occurs because of
experience, there has to be some kind of an
experience for learning to occur.
• Learning is a cognitive process and can only be
inferred through our actions and behavior.
• Learning is a continuous process.
• Learning may be specific/intentional, ongoing
and incidental.

7. 3 - 7
Learning Theories
• Behavioral Theories
– Based on observable
behaviors
(responses) that
occur as the result of
exposure to stimuli
• Cognitive Theories
– Learning based on
mental information
processing
– Often in response to
problem solving

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Behavioral Learning Theories
• Classical Conditioning
• Instrumental Conditioning

9. 3 - 9
Classical
Conditioning
A behavioral learning
theory according to
which a stimulus is
paired with another
stimulus that elicits a
known response that
serves to produce the
same response when
used alone.

10. 3 - 10
Models of Classical Conditioning

11. 3 - 11

12. 3 - 12
Strategic Applications of
Classical Conditioning
• Repetition
• Stimulus
generalization
• Stimulus
discrimination
• Increases the
association between
the conditioned and
unconditioned
stimulus
• Slows the pace of
forgetting
• Advertising wearout
is a problem
Basic Concepts

13. 3 - 13
Strategic Applications of
Classical Conditioning
• Repetition
• Stimulus
generalization
• Stimulus
discrimination
• Having the same
response to slightly
different stimuli
• Helps “me-too”
products to succeed
• Useful in product
extensions
Basic Concepts

14. 3 - 14
Strategic Applications of
Classical Conditioning
• Repetition
• Stimulus
generalization
• Stimulus
discrimination
• Selection of a
specific stimulus
from similar stimuli
• This discrimination
is the basis of
positioning which
looks for unique
ways to fill needs
Basic Concepts

15. 3 - 15
Instrumental
(Operant)
Conditioning
– BF Skinner
A behavioral theory of
learning based on a
trial-and-error process,
with habits forced as
the result of positive
experiences
(reinforcement)
resulting from certain
responses or behaviors

16. 3 - 16
Types of Reinforcement
• Primary (unconditioned reinforcer) – Basic
needs
• Secondary (conditioned)
• Positive
• Negative
• Forgetting
• Extinction

17. 3 - 17
A Model of Instrumental Conditioning

18. 3 - 18
Instrumental Conditioning and Marketing
Customer Satisfaction (Reinforcement)
Reinforcement Schedules - Precise rules that are used to
present (or to remove) reinforcers (or punishers) following
a specified operant behavior
• These rules are defined in terms of the time and/or the
number of responses required in order to present (or to
remove) a reinforcer (or a punisher).
• Different schedules schedules of reinforcement produce
distinctive effects on operant behavior.
Shaping - Shaping is using a series of successive
reinforcement steps on a subject to get the subject
progressively closer and closer to exhibiting a target
behavior.
Massed versus Distributed Learning

19. 3 - 19
Cognitive
Learning
Theory
Holds that the kind
of learning most
characteristic of
human beings is
problem solving,
which enables
individuals to gain
some control over
their environment.

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Information Processing
• Relates to cognitive ability and the
complexity of the information
• Individuals differ in imagery – their
ability to form mental images which
influences recall

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Information Processing and Memory Stores
Atkinson-Shiffrin model of memory

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Information Processing
• Movement from short-term to long-term
storage depends on
– Rehearsal
– Encoding

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Retention
• Information is stored in long-term
memory
– Episodically: by the order in which it is
acquired
– Semantically: according to significant
concepts
• Total package of associations is called
a schema

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Elaboration Likelihood Model
• Based on split-brain theory & the
degree of relevance a person attaches
• Central route to persuasion
– For high involvement purchases
– Requires cognitive processing
• Peripheral route to persuasion
– Low involvement
– Consumer less motivated to think
– Learning through repetition, visual cues,
and holistic perception

25. Consumer Attitude

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Consumer Attitude
• What Are Attitudes?
• Structural Models of Attitudes

27. 3 - 27
Attitude
A learned
pre-disposition to
behave in a
consistently
favorable or
unfavorable manner
with respect to a
given object.

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What Are Attitudes?
• The attitude “object”
• Attitudes are a learned predisposition
• Attitudes have consistency
• Attitudes occur within a situation

29. 3 - 29
This attempts to
change the
attitude toward
calcium in a soft
drink situation.

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Structural Models of Attitudes
• Tri-component Attitude Model

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Cognition
A Simple Representation of the
Tri-component Attitude Model

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The Tricomponent Model
• Cognitive
• Affective
• Conative
The knowledge and
perceptions that
are acquired by a
combination of
direct experience
with the attitude
object and related
information from
various sources
Components

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The Tricomponent Model
• Cognitive
• Affective
• Conative
A consumer’s
emotions or
feelings about a
particular product
or brand
Components
Starbucks Coffee

34. 3 - 34
The Tricomponent Model
• Cognitive
• Affective
• Conative
The likelihood or
tendency that an
individual will
undertake a specific
action or behave in a
particular way with
regard to the attitude
object
Components

35. 3 - 35
Managing Total Customer Experience
o “A company’s first step toward managing the total
customer experience is recognizing the clues it is
sending to customers
o Anything that can be perceived or sensed – or
recognized by its absence -- is an experience clue
o Restaurants that put photographs of movie stars on their
walls
o Retailers that hang motorcycles from their ceilings
o Thus the product or service for sale gives off one set of
clues, the physical setting offers more clues, and the
employees -- through their gestures, comments, dress
and tones of voice -- still more clues
o Each clue carries a message, suggesting something to
the customer

36. 3 - 36
Clues are : Functioning & Emotions
Four technological developments that support
customer centricity in Insurance Industry
Cyber insurance, IoT, Connected insurance and
Customer Communication Management

37. 3 - 37
Boost your Marketing ROI with Experimental Design
Experimental design
An approach to organize data and run statistical tests on it to
identify cause-and-effect relationships between inputs and
outcomes.
Consultants Eric Almquist and Gordon Wyner explain that
although marketing has always been a creative endeavor,
adopting a scientific approach to it may actually make it
easier--and more cost effective--for companies to target the
right customers
By using mathematical formulas to select and test a subset
of combinations of variables, marketers can model hundreds
or even thousands of marketing messages accurately and
efficiently--and they can adjust their messages accordingly

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Marketing Actions can Modulate Neural
Representations of Experienced Pleasure
Marketing actions, such as changes in the price of a product,
can affect neural representations of experienced
pleasantness.
Hypothesis was tested by scanning human subjects using
functional MRI while they tasted wines that, contrary to
reality, they believed to be different and sold at different
prices.
Results show that increasing the price of a wine increases
subjective reports of flavor pleasantness as well as blood-
oxygen-level-dependent activity in medial orbitofrontal cortex,
an area that is widely thought to encode for experienced
pleasantness during experiential tasks.

39. 3 - 39
A basic assumption in economics is that the experienced
pleasantness (EP) from consuming a good depends only on
its intrinsic properties and on the state of the individual.
Eg: Thus, the pleasure derived from consuming a soda
should depend only on the molecular composition of the drink
and the level of thirst of the individual.
In opposition to this view, a sizable number of marketing
actions attempt to influence EP by changing properties of
commodities, such as prices, that are unrelated to their
intrinsic qualities or to the consumer's state. This type of
influence is valuable for companies, because EP serves as a
learning signal that is used by the brain to guide future
choices.

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Stealth Marketing: How to Reach
Customers Surreptitiously
Stealth marketing attempts to catch people at their most
vulnerable by identifying the weak spot in their defensive
shields
Stealth marketing attempts to present a new product or
service by cleverly creating and spreading “buzz” in an
obtuse or surreptitious manner
Types of Stealth marketing techniques:
1. Viral marketing – Steve Jurvetson 1996
Dr. Pepper deployed weblogs to spark chatter on the Internet
for its new product.

41. 3 - 41
2. Brand pushers
Sony Ericsson Mobile Communication. In April 2002, the
company began a stealth marketing campaign to launch its
combination cell phone and digital camera – T68i cell phone
3. Celebrity marketing
Unbeknownst to viewers, some celebrities are hired by large
pharmaceutical companies to discuss their medical ailments
and mention specific drugs while they are casually chatting
with a talk-show host on the air without disclosing these
financial arrangements.
In March 2002, when Lauren Bacall was interviewed by Matt
Lauer, the co-host of the Today show, she mentioned that
one of her friends is partially blind due to an eye disease
called macular degeneration. Ms. Bacall referred to a new
drug, Visudyne, which is intended to treat the ailment

42. 3 - 42
Stealthy celebrity endorsements allow pharmaceutical
companies to bypass FDA requirements that stipulate that all
drug advertising messages should include cautions about a
medication and spell out the anticipated side effects.
4. Bait-and-tease marketing
5. Marketing in video games
Video game makers have long featured real brands and logos
in sports games, such as car racing, to make their virtual world
more authentic and realistic
Electronic Arts, one of the world’s biggest producers of video
games, paid millions of dollars to the National Football League
for its “Madden Football” game series
In September 2002, Electronic Arts signed contracts to receive
more than $2 million for including McDonald’s and Intel in its
games

43. 3 - 43
6. Marketing in pop and rap music
Four Seasons and the Supremes recorded advertising jingles
for Coca-Cola in the mid-1960s. Likewise, in 1986, Run
D.M.C. was paid $1.5 million by Adidas after the fact to use
the group’s “My Adidas” song in promotions

44. 3 - 44
Hindsight Bias and Strategic Choice: Some
Problems in Learning from Experience
• Hindsight bias is a psychological phenomenon in which
one becomes convinced they accurately predicted an
event before it occurred.
• It causes overconfidence in one's ability to predict other
future events and may lead to unnecessary risks.
• Hindsight bias can negatively affect decision-making.
• In investing, hindsight bias may manifest as a sense of
frustration or regret at not having acted in advance of an
event that moves the market.

45. 3 - 45
Central and Peripheral Routes to Advertising
Effectiveness: The Moderating Role of Involvement
Central route to persuasion is a persuasion strategy that
relies on facts and details to convince someone
Peripheral route to persuasion occurs when the listener
decides whether to agree with the message based on other
cues besides the strength of the arguments or ideas in the
message
Eg: Peripheral route to persuasion would be when someone
agrees with a speaker because the speaker is attractive and
brought pizza to the presentation

46. 3 - 46
Impact of culture on consumer behaviour
• For instance, number four is considered unlucky in Japan,
which is why most of the items sold in the country are sold
in a group of five.
• The rise of K-culture and changing consumer behaviour in
Bangladesh
• Does sweater weather (seasons) impact consumer
behaviour?
• How does Culture Influence Brand Safety & What Brands
Can Do?
• Evolution of festival marketing: An outcome of changing
consumer behaviour & growing digital market

47. 3 - 47
Cross-cultural consumer analysis
Cross-cultural consumer analysis is defined as the
effort to determine to what extent the consumers of
two or more nations are similar or different.
The greater the similarity between nations, the
more feasible it is to use relatively similar strategies
in each nation. If they differ in many aspects, then a
highly individualized marketing strategy is indicated.