Understanding Consumers

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Understanding Consumers

• Session 2
• (lecture then DeBeers Case)
• Previous session Importance of understanding CB
• (New Coke case)

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Information Processing Model of CB
Individual Consumer Personality (intro/extro)
Environmental Characteristics Culture (color)
Interpretation
Attitudes Like/Dislike
Selection
Choice
information
beliefs
Stimuli
Memory/Prior Knowledge
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Throughout the course, we will be illustrating
this model with particular reference to
advertising
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Assume you are exposed to this magazine ad
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Information Processing Model of CB
Individual Consumer Personality/Demogs
Environmental Characteristics Culture
Interpretation/Perception
Attitudes Like/Dislike
Selection/ Elimination
Choice
information
beliefs
Stimuli
Memory/Prior Knowledge
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Information Processing at Work

• Select certain stimuli which stand out in the ad
• Plane
• Brand names Forbes, Economist
• Interpret advertiser is trying to compare the
  brands
• (you know Economy class is cheaper Business is
  more expensive First class is most expensive
  MEMORY)
• Belief Forbes is for the most up-market
  passengers
• Attitude Favorable attitude towards Forbes
• May buy the magazine (Choice)
• Individual differences Expensive good?
• Environment comparative ad good?

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So thats our model of Information Processing.
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Course layout follows from model

• First day
• Introduction
• Selection and Interpretation (Collectively
  Perception)
• Second day
• Memory
• Attitudes
• Third day
• Communications (putting it all together)
• Choice and Post-choice
• Fourth day
• Individual characteristics (Personality/Lifestyle)
  
• Environmental characteristics (Culture etc.)

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First Stage Selection/Elimination

• There are millions of stimuli surrounding us
• So we have to select some stimuli and eliminate
  others
• Selection Ways of Eliminating stimuli (and
  therefore selecting just a few)
• So Selection Elimination

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2 Mechanisms for Selection/Elimination

• First, selective exposure
• Deliberately avoiding exposure to certain stimuli
• Like advertising!... Annoying, intrusive
• Zapping ads
• How can advertisers get around this problem?

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How do advertisers get around this?

• Ad repetition
• Spread ads in different channels
• Important material in the beginning
• First or last ad within segment
• Another technique product placement
• James Bond Golden Eye (1995)
• What car did Bond drive?
• Trivia what was his old car??
• Shown for only 90 sec sales booked for 1 year
  in advance after movie release (free placement!)
• Other products also featured

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The second selection mechanism

• Selective exposure is one mechanism for selection
• There is another, critical selection mechanism
• An example

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Example.

• Imagine that we're standing in a crowded room
  while friends and acquaintances are socializing
  all around us. The sounds of conversations,
  laughter, glasses clinking, and music are loud
  and confusing. We are attempting to carry on a
  reasonable conversation in our little circle but
  are having trouble hearing the others speak. All
  of a sudden, from across the room, we hear our
  name mentioned. Immediately, we now find it
  easier to screen out other stimuli, pick out the
  discussion of interest.
• Why does this happen?
• Note exposed to all stimuli, but?

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The Second Selection Mechanism

• ATTENTION
• Even if we are exposed to a stimulus, it wont
  have any effect (wont be processed further)
  unless we pay some attention to it
• Note Attention is selective
• We attend to stimuli that we find
  interesting/relevant (our own name)
• we tune out stimuli that we find
  boring/irrelevant (other stuff)

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Attention to Advertising??

• How about advertising? What do most people do
  pay attention to ads, or tune out?

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So Advertisers have to come up with ways of
getting consumers to pay attention

• Like with selective exposure consumers screen
  out!
• Advertisers want to make them screen in

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Involuntary attention-getting techniques

• Contrast.
• Big difference between two adjacent stimuli
• Novelty
• Color
• Size
• Humor
• Sex
• Which techniques used in these ads?

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Ad for Dryel Dry-cleaning agent
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To sum up

• First stage of information processing
  selection/elimination mechanisms
• Attention is key mechanism
• Marketing Stimuli are usually eliminated, so
  marketers have to sneak in past our attention
  blocks
• If stimuli does get selected, then next stage of
  information processing
• Drawing meaning out of the selected sensations
  that pass through

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QUESTIONS??

• Before we go on introductory details of group
  project

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Admin stuffGroup Project

• Firm Audit Surveying a company (owner/manager)
  and its customers
• What principles of consumer behavior currently
  being used?
• Based on your expertise, what can you recommend
  for greater profitability?
• Best to choose a company that is facing a
  problem/doing less well than before
• Two parts to survey

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Admin stuffGroup Project

• Company Survey
• In-depth interview with manager(s) at your client
  company
• Key problems facing the firm in particular,
  consumer-related issues
• Managements view of consumer perceptions
• Managers opinion of how to tackle these issues
• Consumer survey
• Questionnaire focusing on consumers
  beliefs/awareness/attitudes towards the firm
• Sample size around 40 (gt 20 ok)

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Admin stuffGroup Project

• Recommendations based on
• Data analysis
• Consumer behavior theory
• KEY PART OF RECCOS ADVERTISING CAMPAIGN
• Explain
• Why current tactics may not be working great
• Why your suggested tactics may bring an
  improvement
• More details as we go along especially next
  class
• Read course outline as well
• Choose your client company/brand BEFORE the next
  class

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Admin stuffGroup Project

• Presentation Last class session
• Report 10 double-spaced pages
• Due one week after last class

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Back to lecture Caselets
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Explain
A famous Harvard professor of decision sciences
was once retained by a retailer to suggest ways
to improve sales efficiency in its store. When he
arrived, he became especially concerned with the
women's blouse subdepartment in the "bargain
basement." This area seemed to be extremely
inefficient. Blouses were strewn about in a
jumble and shoppers wasted many minutes
attempting to find their correct size. Upon
mentioning this to the management, the professor
was invited to return the next morning to observe
the entire process from scratch. He noted that
prior to the store opening hour, employees neatly
arranged also the blouses by size. Then, however,
they threw them on the encounter and thoroughly
mixed them up! For some reason, this technique
seemed to increase total sales of the blouses.
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Explain
Many years ago, Procter Gamble introduced Cheer
as a new product that was "good for tough-job
washing." Consumers apparently perceived it to be
just another detergent, however, and it was not
particularly successful. Then PG changed its
color, made it into a blue powder, and continued
its promotion as a "tough" detergent. Cheer
became a major national success.
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Explain
Some years ago, one of my students was working
for BCG. At the time, BCG was consulting for a
wine brand in mainland China. Product sales had
dipped in recent times. Conventional wisdom
dictates that when demand is low, you reduce
price in order to increase demand and sales. We
chatted about this, and figured that instead of
following conventional economic theory, it might
be a good idea to increase price. BCG
recommended this approach to the client (ok, it
may not have been just because of my input!!).
Wine sales picked up very soon afterwards.
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Whats the common theme?
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Information Processing Model of CB
Individual Consumer Personality/Demogs
Environmental Characteristics Culture
Interpretation/Perception
Attitudes Like/Dislike
Selection Exposure/ attention
Choice
information
beliefs
Stimuli
Memory/Prior Knowledge
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Interpretation (Perception)

• Interpretation next stage
• after selection
• Reaching subjective conclusions based on the
  information
• i.e., forming beliefs
• The key process that we use for interpretation
• Inferencing

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Inference Forming Beliefs Through Simple
Association

• Some concepts are naturally associated together
  in consumers minds
• Example high price quality/status
• Marketers create inferences about brand image by
  using these associations
• Color of product or package
• Blue ?? (detergent)
• Green ?? (toothpaste)
• Article Reading Drink and Detergent (colorless
  vs. yellow)
• Other examples of brand inferences

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Inference Forming Beliefs Through Simple
Association

• Brand name
• Alphanumeric (Mazda RX7)
• Country of origin (where the product is made
  often has associations)
• Clothing which country status associations?
• Brand extensions also use inferencing principles
• Apple what associations?
• Virgin Vines just unscrew it, lets do it
• What image? Will it work?

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Another common way of creating brand inferences

• Compare with something that you are not (your
  opposite).

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Ad for Economist
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Ad for Guinness beer
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Note Be careful to avoid bad inferences/associati
ons!

• Michael Jackson-Pepsi (young generation?)

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Concludes our discussion of 2nd Stage of
Processing

• Perception
• Inferencing Processes

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Summing up

• Information Processing Creating subjective
  meaning from random stimuli
• First 2 stages
• Selection
• Exposure, Attention
• Perception
• Inferencing
• A final important note regarding perception

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Flip side of Perception Positioning

• Positioning simply means creating a
  perception/belief about the brand
• E.g., Marlboro cowboy creates a certain
  perception
• 1 advertising icon of 20th century (Advertising
  Age)
• Deliberately done as part of positioning strategy

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Flip side of Perception Positioning

• Positioning simply means creating a
  perception/belief about the brand
• So the two concepts are strongly linked
• A quick discussion of positioning

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Positioning Create a Perception

• Two aspects of successful positioning
• The belief/perception you create must be about an
  attribute that matters
• Coke and taste
• You should be perceived differently from
  competition!
• Pepsi vs. Coke
• Apple vs. IBM
• Marlboro cigarettes very masculine so how
  should a new brand position itself?
• Cars again, helps to have a distinctive
  position
• Which brand has the cute car position?
• Which brand has the safe car position?
• Trout and Ries Classic Positioning The
  Battle for your Mind (2001 anniversary edition)

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Questions??

• BREAK
• And then De Beers Case.

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Case De Beers DiamondsPerception and Positioning

• Qn 1 Evaluate De Beers positioning and general
  marketing strategy in the West.
• Qn 2 Going global how will the western
  positioning work in Asia (with particular
  reference to China)?
• Qn 3 Evaluate De Beers current positioning
  strategy in China
• Qn 4 Recommendations for what De Beers can do
  differently in China
• Different positioning strategies? Pros and cons
• Break out rooms 1 page of bulletpoints
• 1 question per group
• 1, 2, 3, 4. 1, 2, 3
• Some set-up questions before that

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General Takeaway for Consumer Behavior

• Consumer Perceptions are very important!
• The objective product (diamonds) may not really
  have value but people can perceive it as having
  value. This is where your positioning strategy
  comes in.
• Positioning make consumers perceive the product
  in a certain way (e.g., gift of love)
• Positioning strategies have to be designed with
  regard to what perceptions will sell.
• E.g., romantic love is important in West
• Not so much in East Success/harmony/prosperity
  much more important
• So position accordingly (and be ready to change
  positioning once values change)

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And thats all for today!

• For next week

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Please rememberFor Next Week

• Form groups of 5-6 and email me the group list
  before class
• Hand in an index card with personal details
  (including photograph)
• Make sure each group has picked a client
  company/brand before next class for your
  project!!
• Lecture notes from today will be up on course
  website next week

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Next Saturday

• Attitudes and Persuasion
• Chapters 6 and 7 from Hoyer and MacInnis
• Memory
• Textbook chapter 8
• Cases Will be handed out in-class
• Not included in course packet!!

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HAVE A GREAT SUNDAY!!