Class #1) Rishtee K Batra
Articles -
1) Consuming Rituals of the Suburban Tribe
Ethnography - Qualitative research design aimed at explaining cultural phenomenon
Observational Research - Use of marketing techniques like written questionnaires and focus groups in favor of watching how consumers use products in their native habitats - that is, their own homes.
There are things that you just can't learn from questionnaires. What consumers say and remember and what they actually do are often two totally different things. Anthropology research generates "reality based product differentiation". Through extended in-house contact, the company's field researchers also get their subjects to reveal the personal motive behind their use of various products.
Consumers memories are notoriously unreliable, for one thing. Even worse, focus group subjects often sugarcoat their experience out of a desire to please.
Can Brain Scans Predict Music Sales ?
Neuroeconomis - field that seeks to explain human decision making, the ability to process multiple alternatives and to chose an optimal course of action. It studies how economic behavior can share our understanding of the brain.
Neuronarketing - Studies consumers sensorimotor, cognitive and affective response to marketing stimuli. Reserachers use technology such as fMRI to measure activity in specific part of the brain response and sensors to measure change in one's psychological state also known as biometrics (heart rate, respiratory rate etc) to learn why consumers make the decision they do, and what part of their brain is telling them to do it.
Brain Scan data predicted commercial success better than the subject's likeability ratings, which did not correlate with the sales. Showing the brain activity in a small group of people can predict the buying behavior of a much larger group of people is a novel and provocative finding.
Boost your marketing ROI with experimental design
Vast majority of marketing messages fail to hit their targets. Obviously it would be valuable for companies to be able to anticipate which stimulus would prompt a response since even a small improvement in the browse-to-buy conversion rate can have a big impact on the profitability. But it is very difficult to isolate what drives consumer behavior, largely because there are so many possible combinations of stimuli. Experimental design, which quantifies the effects of independent stimuli on behavior responses, can help marketers how the various components of a marketing campaign influence consumer behavior. This approach is much more precise and cost effective than traditional market testing. ED reveals whether variables caused a certain behavior as opposed to simply being correlated with the behavior.
Disruptions: Data without context tells a misleading story
Ex1 - Google story of tracking people with influenza. Algorithm was looking only at the number, not at the context of the search results. The people and companies that interpret the data may fail to apply background and outside conditions to the members they capture.
Ex2- Elevator and stairs in college experiment.
Focus Groups that Looks like play groups
Responses can be influenced by marketer's presence, and one person may dominate the whole group. Traditional focus groups can still be useful in certain situations like generating ideas in the early stage of a product's life. They are not good, however, when it comes to testing products or concepts.
Rama Bijapurkar: The whole six yards
India is becoming an even more atomised society, and one in which each sub-group is continuously mutating in different directions. Sometimes you see a mosaic of tradition and modernity, sometimes a rapidly Westernising society that has lost its cultural moorings and sometimes it looks like it is returning to its roots with a vengeance. That’s what makes the new India harder to comprehend than the old one. Market watchers would like to believe that this is the new Indian mainstream but that is naïve and wishful thinking. All of these different, often colliding, societies and cultures are sometimes not so comfortably held together. The most noticeable and remarkable common trait that has emerged in the last two decades is the ceaseless striving of men and women to improve their quality of living and that of their children. We have gone from being a contented society to a restless one, trying to grab every opportunity to improve our lives, and willing to work hard for it. Another trait common to all societies inside the crucible is the new assertiveness and social progress being made by women. The mental model for India is not of one big society and culture and many fringe subcultures or tribes within; rather it is of many societies and cultures in one big crucible, with many similar and vastly dissimilar traits. That is what India has always been through the ages.
Class
Articles -
1) Consuming Rituals of the Suburban Tribe
Ethnography - Qualitative research design aimed at explaining cultural phenomenon
Observational Research - Use of marketing techniques like written questionnaires and focus groups in favor of watching how consumers use products in their native habitats - that is, their own homes.
There are things that you just can't learn from questionnaires. What consumers say and remember and what they actually do are often two totally different things. Anthropology research generates "reality based product differentiation". Through extended in-house contact, the company's field researchers also get their subjects to reveal the personal motive behind their use of various products.
Consumers memories are notoriously unreliable, for one thing. Even worse, focus group subjects often sugarcoat their experience out of a desire to please.
Can Brain Scans Predict Music Sales ?
Neuroeconomis - field that seeks to explain human decision making, the ability to process multiple alternatives and to chose an optimal course of action. It studies how economic behavior can share our understanding of the brain.
Neuronarketing - Studies consumers sensorimotor, cognitive and affective response to marketing stimuli. Reserachers use technology such as fMRI to measure activity in specific part of the brain response and sensors to measure change in one's psychological state also known as biometrics (heart rate, respiratory rate etc) to learn why consumers make the decision they do, and what part of their brain is telling them to do it.
Brain Scan data predicted commercial success better than the subject's likeability ratings, which did not correlate with the sales. Showing the brain activity in a small group of people can predict the buying behavior of a much larger group of people is a novel and provocative finding.
Boost your marketing ROI with experimental design
Vast majority of marketing messages fail to hit their targets. Obviously it would be valuable for companies to be able to anticipate which stimulus would prompt a response since even a small improvement in the browse-to-buy conversion rate can have a big impact on the profitability. But it is very difficult to isolate what drives consumer behavior, largely because there are so many possible combinations of stimuli. Experimental design, which quantifies the effects of independent stimuli on behavior responses, can help marketers how the various components of a marketing campaign influence consumer behavior. This approach is much more precise and cost effective than traditional market testing. ED reveals whether variables caused a certain behavior as opposed to simply being correlated with the behavior.
Disruptions: Data without context tells a misleading story
Ex1 - Google story of tracking people with influenza. Algorithm was looking only at the number, not at the context of the search results. The people and companies that interpret the data may fail to apply background and outside conditions to the members they capture.
Ex2- Elevator and stairs in college experiment.
Focus Groups that Looks like play groups
Responses can be influenced by marketer's presence, and one person may dominate the whole group. Traditional focus groups can still be useful in certain situations like generating ideas in the early stage of a product's life. They are not good, however, when it comes to testing products or concepts.
Rama Bijapurkar: The whole six yards
India is becoming an even more atomised society, and one in which each sub-group is continuously mutating in different directions. Sometimes you see a mosaic of tradition and modernity, sometimes a rapidly Westernising society that has lost its cultural moorings and sometimes it looks like it is returning to its roots with a vengeance. That’s what makes the new India harder to comprehend than the old one. Market watchers would like to believe that this is the new Indian mainstream but that is naïve and wishful thinking. All of these different, often colliding, societies and cultures are sometimes not so comfortably held together. The most noticeable and remarkable common trait that has emerged in the last two decades is the ceaseless striving of men and women to improve their quality of living and that of their children. We have gone from being a contented society to a restless one, trying to grab every opportunity to improve our lives, and willing to work hard for it. Another trait common to all societies inside the crucible is the new assertiveness and social progress being made by women. The mental model for India is not of one big society and culture and many fringe subcultures or tribes within; rather it is of many societies and cultures in one big crucible, with many similar and vastly dissimilar traits. That is what India has always been through the ages.
Class
Understanding of what products consumers like or dislike isn't enough, but why they like or dislike it. It’s important to understand consumer behavior so we can design successful marketing
tactics. Intuition is not always right so how do we study consumers ? Data mining, observation, Neuroscience, focus groups, ethnography, experiments and Surveys.
Neuroscience -
Benefits of neuromarketing?
Hard to “fake it.”
People may have a hard time or are unable to articulate preferences (below threshold of consciousness)
Downside ?
Expensive
Time consuming
Even if interested but may not convert into purchasing. Ex- acceptance by opposite sex etc.
All others have similar benefits and downsides.
So - Triangulation: The application of more than one research method to study the same phenomenon
The Consumer decision making process -
Class #4
Articles
Pricing and the Psychology of Consumption
Not only demand nut consumption is also important.
Bill - annual payment of $600 and Mary $50/month for gym subscription. Mary is much more likely to exercise at the gym bc she will be steadily reminded of the cost of her membership also she will be far more likely to renew her membership when the year is over. Companies sought to mask the cost of their goods and services in order to boost sales. But people are more likely to consume a product when they are aware of its cost-when they feel "out of pocket". Masking will decrease the likelihood that the buyer will actually use it, and a customer who dosen't use a product is unlikely to buy that product again.
The Psychology of consumption -
Higher consumption means higher sales. Ex- health care, magazines, movie theaters etc.
Costs drive consumption. - This is called as the sunk cost effect: Consumers feel compelled to use products they've paid for to avoid feeling that they've wasted their money. The consumers routinely consider sunk cost when deciding future course of action.
Prices drives perception of cost: People are better able to remember the cost of product if they pay with cash than if they pay with credit cards. They feel more pressure to consume products if they paid with cash than with CC.
Because pricing has such a powerful effect on the consumption, managers must make a careful decisions and how to charge for goods and services.
Timing - The timing of payment is important because it influences the club's retention of customers. Payments that occur at or near the time of consumption increases attention to a product's cost, boosting the likelihood of consumption. Ex - Gym Annual / Monthly subscription
Price Bundling - It is far easier to identify and account for the cost of an individual product in an unbundled transaction than within a bundled transaction. The one-to-one relationship between price and benefits in an unbundled transaction makes the cost of that item obvious, creating a strong sunk-cost effect and a high likelihood of consumption.
How to do ?
Practice yield management - Manage cost by staffing according to actual as opposed to paid, demand. Increase revenue by overselling.
Stagger payments to smooth consumption - Stagger billing cycle so that demand in smoothened over time.
Time payment to maximize consumption -
Psychological link payments to benefits - Highlight the prices of individual items in the bundle after the payment has been made so that cost of each item becomes clear and nothing appears to be free.
Reduce Consumption - For scarce resource
Customer Behavior Aspects of Pricing
Reference Pricing : Anchoring :
Ex- Wine Menu
Hotel rooms
Retailers also have to be aware of changing their customer's reference price for an item during promotions or when practicing dynamic pricing. If the customer enters a particular store for the first time and notice the price of milk significantly higher than what they used to paying (above their reference price) they will form an impression of the entire store as being a high-cost location (hottest topic is deciding which items and categories consumers have a more knowledgable understanding of market price).
The main implication of reference prices to pricing is that when a firm decides to offer a temporary price promotion, care must be taken to ensure that the promotional price does not change the consumers reference point for product.
PROSPECT THEORY: (the asymmetric and non linear treatment of gains and losses)
Changes in the utility are asymmetric between gains and losses - losses are experienced as more intensely than gains.
2 general rules of thumb :
1) offer discount rather than charge a premium whenever possible (asymmetry bw gains and losses, thus better to start with higher base price and offer discount than vice versa)
2) small discounts have disproportionate effects, larger discounts proportionately less effect. (firms can delight their customers with even small discounts, but they should expect diminishing returns from the value their customer perceive as discount increases)
Perceived fairness of pricing (interpersonal comparisons, entitlement and achievability)
Buyer Regret - item marked down that you purchased
Interpersonal Comparisons - someone purchased the same item for lower price.
Ex- Airlines ticket vs Cruise liner tickets
Customers believe that they are entitled to a reasonable price and that firms are entitled to a reasonable profits. The implication -
1) rising price to recoup costs is usually viewed as fair, while raising prices just to increase profits is viewed as unfair
2) it generally helps to provide reasons when implementing price change.
Consumers tend to view differentiable pricing bw customers more favorably when they feel that the lower price is at least theoretically achievable by them (Airline ticket)
Thus generally better to design promotions such that they can be achieved by everyone, even if some segment will self-select not to meet the requirement for lower price.
Class #6
http://www.nytimes.com/2007/04/15/magazine/15wwlnidealab.t.html?pagewanted=all&_r=0
The common-sense view, however, makes a big assumption: that when people make decisions about what they like, they do so independently of one another. But people almost never make decisions independently — in part because the world abounds with so many choices that we have little hope of ever finding what we want on our own; in part because we are never really sure what we want anyway; and in part because what we often want is not so much to experience the “best” of everything as it is to experience the same things as other people and thereby also experience the benefits of sharing.
“Cumulative advantage,” or the “rich get richer” effect means that if one object happens to be slightly more popular than another at just the right point, it will tend to become more popular still. As a result, even tiny, random fluctuations can blow up, generating potentially enormous long-run differences among even indistinguishable competitors — a phenomenon that is similar in some ways to the famous “butterfly effect” from chaos theory.
Because the long-run success of a song depends so sensitively on the decisions of a few early-arriving individuals, whose choices are subsequently amplified and eventually locked in by the cumulative-advantage process, and because the particular individuals who play this important role are chosen randomly and may make different decisions from one moment to the next, the resulting unpredictability is inherent to the nature of the market
http://www.theatlantic.com/magazine/archive/2008/07/inconspicuous-consumption/306845/
