Ethics

Rules of conduct that guide actions in the marketplace

Consumer
A person who identifies a need or desire, makes a
purchase, and/or disposes of the product

Segmentation
Identifying similarities and differences in potential
consumers

Primary Data
Data collected specifically for current purpose, could be
internal or external

Secondary Data
Collected for some other purpose, External (census, Gallop
poll, etc.), Internal (company records, data)

Types of Primary Data

Experiments, Test Markets, Focus Groups, Observation
Studies, Interviews

Literature Review
A comprehensive examination of any available information
that is related to your research topic

Independent Variable
A characteristic that influences or explains the dependent
variable either in a positive or negative way, ex.
demographics often explain attitudes, opinions, behaviors

Dependent Variable
The variable that you are trying to understand or predict,
ex. satisfaction, loyalty, sales, shopping frequency

Random Assignment
Assigning subjects to different treatments

Experimental Controls
A population or set of objects that is statistically similar to
the set being tested, on which no changes are
implemented

Control Group

No treatment is given to this group, doesn't receive the

factor under study

Treatment Group
Receives the factor under study

Confounds
Can adversely affect the relationship between independent
variable and dependent variable. May cause the researcher
to analyze the results incorrectly.

Focus Group
A form of in-depth interview involving 6 to 12 consumers
led by moderator who asks participants to discuss a
product, concept, or other marketing stimulus

Interview
a formal interview process in which a well-trained
interviewer asks subject set of semi-structured questions in
face-to-face setting

Observation Research
A technique in which researchers observe how consumers
behave in real world surroundings

Ethnography
researcher observes society from the point of view of the
subject

Test Markets
Studies the effectiveness of one or more elements of the
marketing mix evaluating sales of the product (ex. a
specific city)

Hypothesis
an empirically testable statement of a relationship
developed to explain phenomena, often based on theory.

Non-directional hypothesis
Significant differences exist between variables

Negative Directional hypothesis

Ex. Students with high GPAs consume less alcohol than
students with lower GPAs, Individuals with higher

technology discomfort are less likely to adopt new

technological innovations - high to low

Positive Directional hypothesis

ex. More effective study habits are related to a higher GPA.
As amount of alcohol consumed during Gasparilla
increases, so does the likelihood of being arrested - goes
up together

How do companies acquire data?

Golbeck - personal information we put on social networking
sites, users are the product. Predictive Analysis based on
products we buy in store.

Conditions for proving causality

Pregnant teenage girl- watch product purchases closely, do
not offend customers by sending coupons for only baby
products

Exposure
The process by which the consumer comes in to physical
contact with a stimulus - we have the possibility of noticing
the information

Ways to influence exposure

Positioning within a medium, Product distribution and shelf
placement, selective exposure

Attention
The extent to which processing activity is devoted to a
particular stimulus

Attention vs. Exposure

Exposure - we have the possibility of noticing the
information, Attention - the information has been recorded
in some way, you notice the information

How to get attention

Prominence (size)
Color
Position
Novelty (surprising, unexpected)
Loud

Native advertising

form of online advertising that matches the form and

function of the platform on which it appears

Perception
Process by which sensations are selected, organized, and
interpreted. Process of developing an interpretation of a
stimulus

Constructive Nature
people construct interpretations on the fly based on the
actual stimulus or event and prior expectations

What kinds of marketing changes can influence

perception?
Vodka - there is no difference in flavor, but when it is
labeled "premium", people will pay more. Perceived
difference is what matters

Perceptual Thresholds
Can we tell the difference if the product size becomes
smaller or ingredients change?

How do beliefs influence perception?

Origins matter - people are snobs

define Recognition
the extent to which consumers say they are familiar with
an ad the researcher shows them

define Recall
the process of retrieving information from memory

Sensory Memory
Information that comes in through our senses, Information
is stored in it's sensory form, very short-lived, 1/4-2
seconds. If not processed, we lose it.

Echoic Memory
Very brief memory for things that we hear

Iconic Memory
Very brief memory for things that we see

Short-Term Memory

Portion of memory where incoming information is encoded

and interpreted, limited capacity, short-lived duration, info
can be held for 18-30 seconds.

Working Memory
Short-term memory

Long-Term Memory
Permanently stored knowledge, very large storage
capacity, Information is never lost but sometimes can't be
found. ex. Autobiographical (episodic) memory, semantic
memory

Episodic Memory
experienced events

Declarative Memory
Facts, Knowledge

Procedural Memory
Skills, Motor/Cognitive

Dispositions
Conditioning

How big is your short-term memory?

Miller's magic number 7 +/- 2

Neural Networks
organized systems of related information in our memory

Retrieval
process whereby we recover information from long-term
memory

Implications for Marketers

People may not remember their products, but sometimes
memories decay or get replaced through interference

Simple vs. Complex message

People remember simple messages or very interactive,
creative advertisements

Loftus Video

Studied crime scenes - We remember things that didn't

happen. Memory is constructive, reconstructive.

Constructive nature of memory

Memory updates, Accentuate/Eliminate things, add things,
all done consistent with existing ideas

Misinformation
false or inaccurate information esp. that which is
deliberately intended to deceive

Nodes and Links

Concepts, feeling, and events are stored in nodes.
Associative links of varying strengths connect nodes.

Forgetting - decay
the structural changes that learning produces in the brain
simply goes away

Forgetting - interference
As we learn additional information, it displaces the earlier
information

State Dependent Retrieval

we are better able to access information if our internal
state is the same at the time of recall as when we learned
the information

Recall
"Essay Test" reconstruct from memory with no cues, if you
really know the subject, greater degree of
encoding/understanding

Cued Recall
"fill in the blanks" reconstruct from cues, hints

Recognition
"Multiple choice test" Identify stimulus we have seen
before, more difficult

Retrieval Wizards
can remember small details from any point in their life

Kahneman Video

"Behavior Economics" - what people should do vs. what

they do, remembering self: long term, recall - marketers
care what decisions people make, Experiencing self sensory, short term memory

Habituation
if too familiar, lose attention getting ability

Recirculation
remember it because you encounter it a lot. 6X - rule of
thumb for remembering. Familiarity = Likeability.

Elaboration
information can be transferred into long-term memory if it
is processed at deeper levels

How can marketers improve memory?

Simple Message
Repetition
Rehearsal
Elaboration
Use imagery

Sleeper Effect
Source decays faster than message, forget source,
message remains.
consumer
person who identifies a need or desire, makes a purchase,
then disposes of the product

consumer behavior
study of processes involved with individuals or groups who
select, purchase, or use products, services and ideas to
satisfy needs and desires

primary data
specifically for a current purpose, internal/external
-ex: experiments, test markets, focus groups

secondary data
collected for some other purpose.
-external (census, Gallup)
-internal (company records, data)
**takes less time and in cheaper!

types of primary date (3)

-experiments (lab studies)

-quasi-experiments (test markets)
-non-experimental (focus groups, observations)

experiments
-control vs. treatment group (eBay study)
-effect of independent on dependent variables

confound variable
something else different between situation besides
independent variable, a 3rd factor

quasi-experiments
-test markets
-studies effectiveness of one or more elements of the
marketing mix evaluation sales of the product in the
market
-crystal Pepsi
-most accurate method for future sales
-tends to be expensive

non-experimental data
-focus groups
-in depth interviewing involving 6 to 12 consumers led by a
moderator who asks participants to discuss a product,
concepts, or other stimuli

observational research
where researches observe how consumers behave in realworld surroundings
-ex: febreeze
-reduced ability to draw generalized conclusions

correlation
relationship between two variables

causation
one variable producing an effect in another variable

factors necessary for causation (3)

-correlation (storks & babies in same house)
-temporal antecedence (storks --> babies)
-no third factor driving both

4 P's of consumer behavior research

how does a company design...

-products
-promotions
-prices
-place (distribution)
to satisfy the customers wants and needs

Sensory stimuli (5)

-sights (eyes)
-sounds (ears)
-smells (nose)
-taste (mouth)
-textures (skin)

exposure
process where consumers come into contact with a
stimulus
-the possibility of noticing the information
**when a stimulus comes in range of someones sensory
receptors
(we can choose not to be exposed to some marketing
messages)

influence exposure
positioning within a medium
-back cover of a magazine
-beginning/end of commercial break
-location within a store

selective exposure
marketers control when consumers encounter the brand
-ex: Gucci only sell/advertise in certain places

attention
extent to which processing activity is devoted to a
particular stimulus
-the information is recorded in some way, you notice
-competition for our attention
-breaking through the clutter
-ex: basketball, white shirts, gorilla & Simons door video

stimulus selection factors (5)

-prominence (size)
-color
-position

-novelty (surprising, unexpected)

-loud

marketing implications (4)

-make stimuli personally relevant
-make stimuli pleasant (music, humor)
-make stimuli surprising/novel
-make stimuli easy to process

habituation
if too familiar, you loose attention-getting ability.
-ex: over-played commercials, ambulances passing by

native advertising
online advertising method where true advertiser tried to
gain attention by providing content familiar to the user
-match the form and function of the user experience

perception
multi-sensory perception
-process by which sensations are selected, organized and
interpreted
-deciding what a stimulus means

Happy Money
buy experiences
-material things provide less happiness than experimental
purchases (trips, concerts)
make it a treat
-limiting access to the things we like best. when we look
forward to it we tend to appreciate it more
buy time
-how will your purchase change the way you use your time
pay now, consume later
-by paying up front and delaying consumption (usually in
cash) you can buy more happiness. (vs. using a credit card)
invest in others
-spending money on others provides a bigger happiness
than spending money on yourself (warren buffet, Clinton)

absolute threshold

stimuli must be at a level that we can detect them

-ex: billboard text

testing our thresholds

downsizing
-Kraft macaroni
ingredient changes
-McLean (McDonalds burger)

types of memory (3)

-sensory memory
-short term memory
-long term memory

sensory memory
infer that comes in through our senses
-echoic memory (things we hear)
-iconic memory (things we see)
-very short lived, 0.25-2 sec.
-if not processed, we lose it

short-term memory (STM)

portion of memory where incoming info is encoded and
interpreted
-working memory
-limited capacity
-short lived: 18-30 seconds
-miller's magic number: 7 +/- 2 piece of information

primacy effect
in short term memory
-able to remember the beginning or first piece of a
sequence

recency effect
in short term memory
-able to remember the last piece or end of a sequence

how to improve STM

-rehearsal
-chunking
-dual encoding
-reducing interference
-state dependent learning

patient HM

could have successful motor memory, but could not

develop meaningful long term memories

hippocampus
converts short term memories to long term memories

long term memory (LTM)

permanently stored knowledge
-autobiographical (episodic) memory
-semantic memory
-large storage capacity
-info isn't lost, but sometimes cannot be found

types of LTM
explicit
-episodic (experienced events)
-declarative/semantic (facts, knowledge)
implicit
-procedural (skills, motor/cognitive)
-dispositions (conditioning: classical & operant)

ways to improve LTM

recirculation
-remembering things from encountering them a lot (around
6 times)
elaboration
-info can be transferred into LTM if it is processed at deeper
levels (Ikea, Geico)

neural (associative/semantic) network model

-large spider web
-concepts, feelings and events are stored in nodes
-associative links connect nodes
-stronger links are easier to retrieve
**created through experience and knowledge

memory is like a forest

the more you follow the same path, the easier it is to get
there.
**same goes with nodes and memory

Nudge Fallacies
anchoring
-relying too heavily on one trait or piece of information

availability heuristic
-when people predict the frequency of an event based on
how easy an example can come to mind
representative heuristic
-when people judge something based on resemblance of
data
status quo bias
-doing something because it is the norm
herd mentality
-influenced by actions of others

libertarian paternalism
people should be free to do what they want/like, and to opt
out of undesirable arrangements
-it is legitimate for choice architects to try and influence
peoples behavior in order to influence their life in a positive
way

choice architects
way in which decisions may be influenced by how choices
are presented
-ex: dr. prescribing alternate treatments

homo economicus
view of humans such as, each of us think and choose
unfailingly well -- way normal economists think

homo sapiens
make predicable mistakes because of the way humans are
influenced by their social interactions -- way nudge thinks

sleeper effect
source for message decays much faster than message
itself

how is the memory constructive?

-accentuate some things (after persons death)
-eliminate some things (after a breakup)
-addition of some things (court testimony's)
**all done with consistent existing ideas and schemas

retrieving info: recall

"essay test"
-reconstruct from memory with no cues

retrieving info: cued recall

"fill in the blanks"
-reconstruct from cues

retrieving info: recognition

"multiple choice test"
-identify stimulus we have seen before

retrieval failures
forgetting
-decay: the weakening of nodes or links over time
-interference: causes us not to remember which features
goes with which brand or concept due to semantic
networks being too closely aligned

how in retrieval enhanced?

redundant cues
-memory in enhanced when the info items go together
naturally
retrieval cues
-stimulus that facilitates a nodes activation of memory
(brand name, or symbol)
3 types of primary data
Experiment, quasi experiment, non experimental

Experiment
Lab studies. control vs treatment group.

Quasi experiments
Test markets. most accurate, expensive and exposes to
competition. (crystal Pepsi)

Non experimental
Focus group. In depth group interview with 6-12 people.

Confound variable
3rd variable, something wasn't set up correctly. (Blue
background on target ad. Randomization reduces this)

Correlation
relationship between two variables

Causation
one variable producing an effect in another variable

3 factors necessary for causation

correlation - storks and babies in same house
temporal antecedence - storks -> babies
no third factor driving both - houses with pregnant women,
warmer and cause storks to come to house

Spurious correlation
artificial/fake, not really related

Exposure
consumers come in physical contact with a stimulus.
POSSIBILITY of noticing the information

Attention - 3 types
selective - hearing your name across the room at a party
divided - talk on phone and doing dishes
limited - turn down radio when looking for address

Multi sensory perception

rubber hand illusion

Absolute threshold
stimuli must be at such a level that we can detect them

Differential threshold
noticing difference or change in stimuli

Process of memory
Sensory, short term, long term

Sensory memory
information that comes in through our senses, very short
lived 1-2 seconds

Short term memory

encoded and interpreted, limited capacity, short lived 1830 seconds

Long term memory

Permanently stored, very large capacity

Primacy
Remembering the beginning

Recency
remembering the end

Millers Magic Number

Short term memory we can remember 7 items, give or take
2

Patient HM
Remembered everything before surgery. No long term after
surgery. Hippocampus removed, connecting long and short
term memory.

Nodes and links

Nodes are pieces of information; links connect them
together. Spreading activation are links and nodes
spreading and connecting.

Recall
Essay test, reconstruct memory with no cues

Cued recall
Fill in the blanks, reconstruct from some cues

Recognition
Multiple choice, identify stimulus we have seen before

Happy money 5 principles

buy experiences, make it a treat, buy time, pay now
consume later, invest in others

NUDGES
Incentives, understand mapping, defaults, give feedback,
expect error, structure complex errors