Lecture 11 Slides_Presentation

Lecture 11 Slides_Presentation - PSYCHOLOGY, CONSUMER...

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Unformatted text preview: PSYCHOLOGY, CONSUMER BEHAVIOR, AND MARKETING Messing with peoples' minds for fun and profit AEM 414 Professor Schulze Lecture 11 Regulatory Focus The experiment examined regulatory focus. In the lab, half of the students in each lab got a maze with cheese outside to induce a promotion focus. And half the students in each lab got a maze with an owl circling overhead to induce a prevention focus. Professor Schulze Lecture 11 AEM 414 Promotion: maze or alternatively a word search could have been used AEM 414 Professor Schulze Lecture 11 Prevention: maze or alternatively a word search could have been used AEM 414 Professor Schulze Lecture 11 Regulatory Focus Research has shown that subjects shown the owl are put into a prevention mood while those shown the cheese are put in a promotion mood. Promotion may tend to encourage buying while prevention may encourage holding on to cash (Meg Meloy). AEM 414 Professor Schulze Lecture 11 Usual Results: Promotion/Prevention Mean Bid for Pens Cheese 0.94 Owl 0.75 AEM 414 Professor Schulze Lecture 11 Usual Results on Regulatory Focus (promotions vs. prevention): Promotion/Prevention Results (Show Demand curves for Prevention and Promotion treatments.) $4 Cheese $3 Owl Percent WTP Bid $2 $1 $0 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Bid AEM 414 Professor Schulze Lecture 11 Your Results on Regulatory Focus (promotion-cheese vs. prevention-owl): Cheese Owl AEM 414 Average Bid 9am 12pm 1pm total $0.31 $27.00 $0.00 $1.41 $0.83 $0.00 $0.48 $1.67 Bizarre bids means the auction failed In competitive auction, although the best strategy is to reveal value if you are uncertain about others values, sometimes people want to gurantee they will win. Thus, they just put in a very high bid assuming the price will be lower. Can backfire if many bidders try this. Solution is the BDM However, the real problem may have been your regulatory focus was immovably prevention because of the very bad economy today--Cheese/Owl statistically the same. Lecture 11 Professor Schulze Priming: The intent questions designed to stimulate buying through an unconscious process of priming has been tested by Eric Johnson. This research has shown that when subjects are unaware that they have been asked a question such as "Are you planning on buying a new car next year," they are much more likely to buy a car! This is a very famous study of automobile purchase intent. AEM 414 Professor Schulze Lecture 11 Conclusion From The Lab The bad news is that it is very possible to mess with people's minds. The good news is that psychologists can get jobs working on Madison Avenue! AEM 414 Professor Schulze Lecture 11 Other Important Lessons Framing of gains and losses using loss aversion is very important. Try to frame not buying your product as a loss! On sale today only. If you do not buy today you will pay more tomorrow and suffer the loss of paying more money and feel stupid. Firms are always having "sales" to promote increased sales. Professor Schulze Lecture 11 AEM 414 Other Seller Advantages Hyperbolic discounting and impatience can also work to the seller's advantage. Buying today and paying tomorrow (credit card purchases) may be fueling the current consumption boom. A treatment not used in your lab that I was tempted to employ was to display a Visa symbol on half of the bidding forms and not on the other half. Just seeing the symbol has been shown to cause a dramatic increase in spending by consumers! Note that merchants ALWAYS display the Visa/Mastercard symbol in their stores. Professor Schulze Lecture 11 AEM 414 Cognitive Approaches to Persuasion People make relative or comparative judgments Consider auto adds that promote new features like satellite navigation systems--your car does not have one--oops, loss aversion. Gotta get that new car! Consider an add that makes a direct comparison between a Subaru and a BMW: AEM 414 Professor Schulze Lecture 11 Subaru Versus BMW AEM 414 Professor Schulze Lecture 11 Surprise? People were surprised that the Subaru has higher performance? Surprise makes people interested and think harder (Hastie). AEM 414 Professor Schulze Lecture 11 ...
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This note was uploaded on 02/20/2009 for the course AEM 4140 taught by Professor Schulze,w. during the Fall '08 term at Cornell University (Engineering School).

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