Week 01

Week 01

Consumer Behavior · Davood Wadi, PhD

Introduction to Consumer Behavior

People do not buy products. They buy solutions to feelings, problems, and social needs.

A sketched till receipt: the line for a product is struck through, and the lines bought are feelings, problems and social needs, each ticked.ReceiptPRODUCTFEELINGSPROBLEMSSOCIAL NEEDSSOLUTIONS3

The Tip of the Iceberg

Most people think consumer behavior is just shopping.

A sketched iceberg in pale water. Above the waterline, a small tip marked just shopping, one second at the register. Below it, a far larger mass: before the sale, noticing problems, searching options and asking friends; after the sale, using the item, feeling happy or regretful and telling others. A bracket down the whole iceberg reads consumer behavior.JUST SHOPPINGone second at the registerBEFOREnoticing problemssearching optionsasking friendsAFTERuse the itemfeel happy or regretfultell othersCONSUMER BEHAVIOR

The purchase at the register is only one second in a long chain.

A sketched chain of links running off both edges; one link in the middle is washed teal, under the words the register and one second.THE REGISTERONE SECOND

Before

People spend weeks noticing problems, searching options, and asking friends.

After

After the sale, they use the item, feel happy or regretful, and tell others.

Consumer behavior studies the whole chain: before, during, and after the sale.

The Three Stages of Consumption

Consumption happens in three distinct stages.

Three sketched stages in a loop: Stage 1 Prepurchase (a magnifying glass), Stage 2 Purchase (a shopping bag), Stage 3 Postpurchase (a star rating). An arrow from Postpurchase curves back to Prepurchase, marked repeat purchases.STAGE 1PrepurchaseSTAGE 2PurchaseSTAGE 3PostpurchaseREPEAT PURCHASES

  1. Stage 1 is Prepurchase.

    The consumer identifies a need and searches for information.

    The marketer studies how consumer attitudes form.

  2. Stage 2 is Purchase.

    The consumer experiences the store, website, and checkout.

    The marketer focuses on packaging, convenience, and store atmosphere.

  3. Stage 3 is Postpurchase.

    The consumer uses the product and judges its quality.

    The marketer monitors satisfaction, returns, and repeat purchases.

Exercise · Sort into groups

Each moment below belongs to one stage of consumption. Sort them into Prepurchase, Purchase and Postpurchase.

        Tap a card, then tap the group it belongs to.

        Consumers Versus Customers

        In common speech, people use consumer and customer to mean the same thing.

        A customer buys the product.

        A consumer uses the product.

        A parent in a camel coat pays with a card for a jar of baby food: the customer, who buys it and weighs price and nutrition. A baby in a wooden high chair reaches a spoon into the bowl: the consumer, who uses it and cares about taste and texture.BUYSUSESCUSTOMERprice · nutritionCONSUMERtaste · texture

        A parent buys baby food at the grocery store. The parent is the customer. The baby is the consumer.

        Marketers must satisfy both people.

        The parent cares about price and nutrition.

        The baby cares about taste and texture.

        Why Consumers Are Not Calculators

        Old economics assumed buyers were perfectly rational.

        This model assumed buyers compare all choices, calculate costs, and pick the best option.

        The old model: a buyer in a dark suit walks a path along every one of twelve products on a three-plank shelf, a dot at each, and takes the single best one, washed teal with a star.COMPARE ALL · CALCULATE · PICK THE BESTevery option, every cost

        Real people have limited time and energy. They use mental shortcuts instead.

        Real people: the same shelf of twelve products, mostly faded. A shopper in a camel coat, short of time (a clock) and energy (a nearly empty battery), takes one short curved shortcut straight to a single product, washed teal.LIMITED TIME · LIMITED ENERGYa mental shortcut

        Real decisions depend on mood, habits, brand loyalty, and social pressure.

        Four forces, each a hand-drawn arrow converging on one shopper thinking with a hand to the chin: mood (a round face with a wavering mouth), habits (a looping arrow), brand loyalty (a heart) and social pressure (three people watching).MOODHABITSBRAND LOYALTYSOCIAL PRESSURE

        Marketers who treat consumers as cold calculators make bad predictions.

        A sketched pocket calculator in a camel case, its pale glass display reading ERROR.ERROR
        Exercise · Sort into groups

        Which of these shoppers fits the old economic model, and which behaves like a real person? Sort them into the two groups.

            Tap a card, then tap the group it belongs to.

            Needs Versus Wants

            Need

            A need is a basic biological or psychological requirement.

            Examples include thirst, hunger, shelter, and belonging. Needs exist before marketing.

            Want

            A want is a specific way to satisfy that need.

            Culture and personality shape wants.

            A thirsty person in Montreal wants cold tap water or a soda. A thirsty person in another country might want hot tea.

            Needs on the left as four hand-drawn pills: thirst, highlighted, then hunger, shelter and belonging. Thirst branches into two wants: in Montreal, a glass of cold water with ice or a soda can; in another country, a steaming cup of hot tea.NEEDSexist before marketingWANTSshaped by culture and personalityTHIRSTHUNGERSHELTERBELONGINGMONTREALANOTHER COUNTRY

            Marketers do not create basic needs.

            Marketers create attractive wants to satisfy existing needs.

            The Many Roles One Person Plays

            One purchase often involves several distinct roles.

            1. The initiator identifies the problem first.

              The shopper, hand to chin, with a speech bubble holding an exclamation mark: noticing the problem first.

            2. The influencer gives advice and sways the choice.

              The shopper speaking to a second person, a speech bubble of three dots between them.

            3. The buyer pays for the goods.

              The shopper holding out a payment card.

            4. The user consumes or handles the product.

              The shopper drinking from a mug, using the product.

            In a household buying a family car, children influence the choice, but parents buy the vehicle.

            A household buying a family car, washed teal. On the left two parents, one holding out a payment card: parents buy. On the right two children, speech bubbles raised with a heart and an exclamation mark, an arrow from them to the car: children influence.PARENTS BUYCHILDREN INFLUENCE

            The AI Agent as a Surrogate Consumer

            A surrogate consumer is an agent who makes buying decisions on behalf of another person.

            Personal shoppers, travel agents, and wedding planners have long played this role.

            Today, consumers can also delegate this role to AI agents.

            1. The consumer states a goal, such as “find running shoes under $120.”

            2. The AI agent searches for options, compares them, and can complete the purchase.

            3. The consumer still uses the product and judges its quality after the sale.

            Three sketched panels. Left: the shopper holds a phone showing the AI sparkle and says, in a speech bubble with a running shoe, under $120. Middle: the AI agent phone beside three running shoes, a magnifying glass over them, the middle pair in teal chosen and a payment card beside it. Right: the shopper in the teal running shoes holds one up to look at it, with a star rating above.UNDER $120

            In the language of roles, the AI agent can act as the influencer and the buyer. The consumer remains the user.

            Marketers now inform two audiences: the consumer and the AI agent that shops for the consumer.

            Exercise · Sort into groups

            A student asks an AI agent to buy her hiking boots. Who does each step: the consumer or the AI agent? Sort them into the two groups.

                Tap a card, then tap the group it belongs to.

                Market Segmentation: Who Are We Talking To?

                You cannot appeal to everyone with the same message.

                A megaphone sends the same camel-coloured message to a mixed crowd of twenty people in four different looks. Only the people in camel coats turn toward it and wave; the others, in dark suits, pale dresses and earth coats, face away.SAMEMESSAGEEVERYONE

                Market segmentation divides a big market into smaller groups with shared traits.

                The same twenty people sorted into four smaller groups, each loosely ringed in ink: camel coats, dark suits, pale dresses and earth coats.SMALLER GROUPS · SHARED TRAITS

                1. Demographics group people by age, gender, income, and education.

                2. Geographics group people by location, city size, and climate.

                3. Psychographics group people by lifestyle, values, and personality.

                4. Behavioral segments group people by how often they buy and how they use the item.

                A sketched temple front labelled market segmentation, held up by four pillars: demographics (a child, an adult and an older person), geographics (a map pin), psychographics (a heart), behavioral (a shopping cart with a repeat arrow).MARKET SEGMENTATIONDEMOGRAPHICSGEOGRAPHICSPSYCHOGRAPHICSBEHAVIORAL
                Exercise · Match up

                Match each segmentation base with the company that is using it.

                Segmentation base

                What the company does

                Tap a term, then the example it goes with.

                The Ethical Border: Helping Versus Manipulating

                Understanding consumers gives firms great power over everyday choices.

                1. Helping

                  Ethical marketing informs buyers and delivers genuine value.

                  A seller in a leather jacket hands the shopper a camel box; both hold it, and its paper label plainly shows an information mark.

                2. Manipulating

                  Manipulative marketing takes unfair advantage of human cognitive weaknesses.

                  A marionette: a wooden control bar hangs above the shopper, with thin strings pulling up both hands and the head.

                1. Dark patterns are deceptive website designs that trick shoppers into signing up or spending more.

                  A sketched website pop-up: a huge camel button reading yes, sign me up; a countdown timer; a box to send offers already ticked in teal; and a tiny, faint no thanks link.Wait! Don’t miss outENDS IN 00:59YES, SIGN ME UPSend me offers every dayno thanks, I don’t like saving money

                2. Dark patterns can also target the AI agents that shop for consumers. A store can make key details, such as the unit price, hard for an agent to find. The agent may then choose a worse option for the consumer.

                  The AI agent phone points to a small cereal box in teal priced $4.00 rather than a large box priced $6.00. On each shelf label the unit price is faint and hard to read: $1.67 per 100 g for the small box, $0.80 per 100 g for the large one.$4.00$1.67 / 100 G$6.00$0.80 / 100 G

                3. Regulators and consumers increasingly punish companies that rely on trickery.

                  A wooden judge's gavel coming down on its block, marked regulators, and a paper review card with one star out of five, marked consumers.REGULATORSCONSUMERS

                Discussion: Your Last Regretful Purchase

                Discussion: Think of an item you bought recently that you now regret buying. Which stage of consumption failed you? Did you buy it for a need or an impulsive want?

                The three stages of consumption, Prepurchase (a magnifier), Purchase (a bag) and Postpurchase (a star rating), each in a round medallion marked with a question mark; beside them a wooden balance scale weighing need against impulsive want, a question mark above it.?PREPURCHASE?PURCHASE?POSTPURCHASE?NEEDIMPULSIVE WANT