Lecture 4 Consumer Behavior

Lecture 4 Consumer Behavior - ConsumerBehavior October1,6

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Consumer Behavior October 1, 6
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The study of Consumer Behavior is the interplay of: (a) Why consumers buy – the reasons for buying – e.g., economic  reasons (Brand X is the cheapest, or Brand X provides the best  value) or emotional reasons (Brand X makes me feel special) (b)  How they buy – the decision making process – e.g., systematic  (Brand X’s quality justifies its higher price) or heuristic (I use  Brand X because my best friend uses Brand X)  
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Economic versus Emotional reasons
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Single versus multiple (two) attribute  processing
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Our understanding of Consumer Behavior comes (primarily) from the  combination of Psychology and Economics (Behavioral Economics,  or Economic Psychology) For example, from Psychology: a) Perception (how we gather and interpret information) b) Learning (how our experience affects what we do)  c) Attitudes (how we develop our “point of view” for a product)
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Extending a well known brand name from one category (boxing gloves) to  another category (cologne).  The associations between the brand name  and the parent category should transfer to the new category as well. Applications:  Our selective perception  of Everlast
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Applications:  Movie sequels as positive reinforcement
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“Need for entertainment” drive  A movie will satisfy the drive (cue)  The Bourne Identity  Like it very much (Response)  See the sequel  Positive reinforcement
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Forming attitudes:  Multi-attribute models Example: Suppose that John has a choice between taking skydiving lessons and SAT  preparatory courses during summer.   The next few slides is an “as if” representation of how John makes this  decision (i.e., a model of John’s evaluation of his choices)
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Stage 1:  John compares the two alternatives  on the following attributes   that are important to him,  (a) how much “fun” they are,  (b) whether they will help him get into a good college, and  (c) how affordable they are
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Stage 2:  John decides that not all attributes are equally important to him. 
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Lecture 4 Consumer Behavior - ConsumerBehavior October1,6

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