Consumer Learning

Dr. Manish Agarwal

CONSUMER KNOWLEDGE, LEARNING, AND UNDERSTANDING

Learning--what is it?
Operant conditioning Classical conditioning Brand loyalty
One form of learning...

Perception
Characteristics of the senses Accuracy Ability to detect change Attention

Most useful for vicarious learning!

Consumer Learning Process

Learning occurs intentionally (problem solving process) as well as un-intentionally. learning and memory theories are useful in understanding that how consumers wants and motives are acquired and how their tastes are developed, how frequently we are going to repeat our advertising , how visuals ,symbols ,sounds and other techniques can facilitates in regarding promotion.

Learning
Can be defined as relatively permanent change on behavior occurring as a result of experience. (experience may be of purchase and consumption)

Types of learned behaviors 1. Physical behavior

We learn many physical behaviors to respond to a situation e.g. learn to walk , talk , interact with others, Consumers learn certain physical activity through the process of modeling, in which they mimic the behavior of other individual such as celebrities.

2. Symbolic Learning and problem Solving

Traffic signs , McDonald's Golden arches, slogans etc. and also the cognitive process.

3. Affective Learning
Human learn to value certain elements of their environment and dislike others. As a result they develop certain favorable and unfavorable attitudes towards some product which depends upon their wants needs and goals .

4 Elements of learning
Motives
Motives arouse individuals and as a result they respond. This arousal function is essential because it activates the energy needed to engage in learning activity. By achieving the goal ,the arousal reduces, but have a greater tendency to occur again, that is why marketers put their product in a way that when relevant consumer motive arouse their products are their to satisfy the need. This result that consumer will learn a connection b/w the product and motive .

Cues
Capable of providing direction i.e. it influences the manner in which respond to motive.
Its the opportunity to try or use the product. Marketers should be careful to provide theright environment (e.g., dont put prestigiousproduct in low level store

e.g. hungry man is guided by restaurant signs or aroma of food.

Response
Mental or physical activity in reaction to a stimulus satiation.

Reinforcement
Anything that follows the response and increase the tendency of response to reoccur in a similar situation.

Two theories of understanding learning

Behavioral learning theory. Based on the fact that learning occurs through the connection b/w an external stimuli and response (S-R). Cognitive learning theory. Based on the fact that learning is more complex and involved certain mental psychological processes those are motivation, perception, attitude ,and integration processes.

CLASSICAL AND INSTRUMENTAL (OPERANT) CONDITIONING

Consumers (often unconsciously) link objects to past experience Consequences of behavior tend to influence subsequent behavior

Another Typology
High Involvement

Learning Low Involvement

Classical Conditioning
Pavlovs dogs Objects (stimuli) associated with a response may bring about the response Credit card studies Stimuli and responses

Classical Conditioning
US
(Unconditioned stimulus)

---->

UR
(Unconditioned response)

US + CS
(Conditioned stimulus)

-----> UR

CS
E.g.: SUGAR SUGAR + Cola Taste Cola taste

------> CR
(Conditioned response)

(CS alone is now able to bring CR)

NOTE: UR and CR represent the same behavior, but causes differ

-------> insulin release -------> insulin release -------> insulin release

 Unconditional stimuli

unconditional response

Food

salivation

Conditional stimuli

conditional response

Bell

salivation

 Unconditional stimuli Family gathering/ Outdoor Activity

Unconditional Response Fun and Enjoyment Conditional Response Fun and Enjoyment

Conditional Stimuli

Lipton tea

Considerations while applying the theory

1. Contiguity : unconditional and conditional stimuli must be close enough in time and space 2. Repetition: the more often the unconditional and conditional stumble occur together the stronger the association

We now associate this product with strength.

Consumer Examples
Advertising: pairing product with images of desired affect Product: Evoke image of object associated with positive affect
(e.g., Hindustan lever; Coke Bottle)

Making Classical Conditioning Work

Appropriate symbols (for the population in question) to elicit emotion NOTE: Test stimuli for desired effect! Repetition

Strategic Applications of Classical Conditioning

Basic Concepts
Repetition Stimulus generalization Stimulus discrimination Increases the association between the conditioned and unconditioned stimulus Slows the pace of forgetting Advertising wearout is a problem

Strategic Applications of Classical Conditioning

Basic Concepts
Repetition Stimulus generalization Stimulus discrimination Having the same response to slightly different stimuli Helps me-too products to succeed Useful in product extensions

Discussion Question Stimulus Generalization

How does CVS Pharmacy use stimulus generalization for their private brands? Do you think it is effective? Should this be allowable?

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Copyright 2007 by Prentice Hall

Strategic Applications of Classical Conditioning

Basic Concepts
Repetition Stimulus generalization Stimulus discrimination Selection of a specific stimulus from similar stimuli This discrimination is the basis of positioning which looks for unique ways to fill needs

Applications of stimulus generalization

Marketing strategies based on stimulus generalization include:

Family branding - where a variety of products capitalize on the reputation of a company name.
Product line extensions - where related products are added to an established brand. Licensing - where well known names are rented by others. Look alike packaging.

Applications of stimulus discrimination

Marketing strategies based on stimulus discrimination include:

Communicating a products distinctiveness from the competition (an important part of positioning). It enables consumers to differentiate the brand from others in the market place.
Promoting the unique attributes of a brand.

1. Conditioned Fear & Anxiety - many phobias that people experience are the results of conditioning. For Example - "fear of bridges" - fear of bridges can develop from many different Sources. For example, while a child rides in a car over a dilapidated bridge, his father makes jokes about the bridge collapsing and all of them falling into the river below. The father finds this funny and so decides to do it whenever they Cross the bridge. Years later, the child has grown up and now is afraid to drive over any bridge. In this case, the fear of one bridge generalized to all bridges which now evoke fear.

2. Advertising - modern advertising strategies evolved from use of conditioning. The approach is to link an attractive US with a CS (the product being sold) so the consumer will feel positively toward the product just like they do with the US. US --> CS --> CR/UR attractive person --> car --> pleasant emotional response

INSTRUMENTAL (OPERANT) CONDITIONING

REINFORCEMENT

LIKELIHOOD OF BEHAVIOR

BEHAVIOR

NOT the same thing!

NEGATIVE REINFORCEMENT

PUNISHMENT

LIKELIHOOD OF BEHAVIOR

Reinforcement: An Example
You eat a cake (behavior) ----> good taste (reward) ----> more likely to eat cake on another occasion

Negative Reinforcement
(not the same as punishment!) Aversive stimulus exists Behavior ----> termination of aversive stimulus ----> repetition of behavior during aversive stimulus

Negative Reinforcement: An Example

Headache (aversive stimulus)
Aspirin (behavior) ---> Headache cessation ----> Likely to consume aspirin during future headaches

PUNISHMENT
Behavior ----> Negative consequences

-----> Behavior less likely to be repeated when punishment is anticipated (mostly)

Punishment: Examples
Parking meters Gas taxes Fees for non-ATM banking transactions Over-base rate utility charges

More Punishment Examples

Voidance of warranty if product is serviced by competitor Social ostracism for failure to wear deodorant

A Model of Instrumental Conditioning Figure 7-10

Examples of Instrumental Conditioning

Marketers use this learning mechanism most effectively by making the product its own intrinsic reward
Coupons Rebates Frequent flier programs

Instrumental Conditioning and Marketing

Customer Satisfaction (Reinforcement) Reinforcement Schedules Shaping

Schedules of Reinforcement
Fixed interval : After dinner everytime dessert serve free of cost. Fixed ratio : After every nth time the product or service purchased. Variable ratio : on random basis may be based on quantum of purchase.

Shaping: Possible Examples

Introduction of fruit flavored soft drinks in Indonesia prior to Coca Cola New products given premium shelf space in the beginning Premium given with purchase of new product In-store demonstrations of new products
Note that marketers power tends to be limited

Observational Learning

A process by which individuals observe how others behave in response to certain stimuli and reinforcements. Also known as modeling or vicarious learning.

The consumer observes a positive response by two teens.

Copyright 2007 by Prentice Hall

Modeling
We learn by observing others Four classes of people likely to be imitated by others:
Persons superior in age-grade hierarchy Persons superior in social status Persons superior in intelligence ranking system Superior technicians in any field

Components of observational learning

Taking advantage of instrumental and cognitive conditioning principles Principles of instrumental conditioning are at work when a consumer is rewarded or punished for a product decision. Rewards can include thanking the consumer for the purchase, rebates, discounts, loyalty points, etc.

Consumers ability to learn by observing how the behaviour of others is reinforced (cognitive learning) makes the marketers role easier. Marketers can show what happens to desirable models who use their products.

Cognitive learning

Cognitive learning occurs as a result of internal mental processes. For example, observational learning takes place when a consumer performing a behaviour as a result of seeing someone else performing it and being rewarded for it.

This perspective views people as problem solvers who actively use information from the world around them to master their environment.

The role of learning in memory

Memory involves the process of acquiring information and storing it over time so that it will be available when needed.

The memory process

Relationships among memory systems

Turning STM into LTM

Rehearsalrepetition of information
By consumer (e.g., phone number) By advertisement

Elaborative activitiesthinking of the object to strengthen its association with other nodes and maintenance Extinction from long term memory
E.g., old phone numbers; how to use an old computer program; loss language skills

Scripts: The Way to Do Things

Procedure for doing various things learned over time E.g., restaurant script:
make reservation travel to restaurant await seating order drinks study menu order have dessert and/or coffee pay check and leave tip

Factors affecting memory retrieval Retrieval is the process where information is accessed from long-term memory. There are a number of factors that can affect memory retrieval: Physiological Situational. Viewing environment.

Mood congruence.
Familiarity. Salience.(Distinctiveness)

Products as memory markers

Products and advertisements can act as powerful retrieval cues.

They are used by consumers to retrieve memories about past experiences and are often valued for their ability to do this. Marketing strategies are often used to evoke nostalgia.

Measuring memory in marketing

Memory for product information can be measured through recognition and recall techniques.

Consumers are more likely to recognise an advertisement if it is presented to them than to recall one without being given any cues.

Brand Loyalty vs. Habit

Habit: consumer picks product without much thought; may be due to convenience Loyalty: consumer actively seeks out product

Loyalty...
Multibrand loyalty How strong?

...or lack of it.

Developing Brand Loyalty: Tricks and Traps

Product quality ---> satisfaction Sales promotions Stealing loyal consumers away from others--is it worth it? Price
value exclusiveness

Positioning and Repositioning

Working with existing perceptions Research to identify perception and associations of productsPerceptual Maps Repositioning
Very difficultmay be more cost effective to develop a new brand

Brand Equity
Refers to the value inherent in a well-known brand name Value stems from consumers perception of brand superiority Brand equity reflects learned brand loyalty Brand loyalty and brand equity lead to increased market share and greater profits

Copyright 2007 by Prentice Hall

Brand Equity and Leverage

Consumer associations with product are valuable Brand leverage (brand extensions, brand family, umbrella branding) Use of appropriate associations May involve brand style rather than product similarity Concept testing is important

The Perceptual Process Among the Customer Roles

PROCESS
PERCEPTION PROCESS

USER
Usage experience biased by prior expectations based on brand name, price, or consumption situation. New and improved products must cross the JND barrier. Distance to destinations, wait in service settings, etc., are assimilated or contrasted.

PAYER
The price-value perception depends on brand-name and store contexts.

BUYER
Perceptions of alternative brands biased by price, brand name, store, etc. Store distance perceptions are often biased. Package size reductions below JND are not noticed. Store distances and customer service variations may be assimilated or contrasted.

General Process

Just noticeable difference (JND ) Assimilation and contrast

Price variations below JND are not noticed. Price discrepancies from expected levels may be assimilated (acceptable) or contrasted (not acceptable).

The Learning Process Among the Customer Roles

PROCESS
LEARNING PROCESS

USER
User learns about the use of products and services by reading about them.
Food preferences are acquired in early childhood. Users adopt new products and services if they find them beneficial. Users model their clothing and car choices after people they admire.

PAYER
Payer learns about used-car prices from the NADA usedcar price book.
Perceived fairness of price levels is classically conditioned. Payers buy cheap at first, then experience shoddy performance and learn to invest more. Budgeting decisions mirror those of admired companies. Payers learn norms for tipping by observing others.

BUYER
Buyers learn about new stores by word of mouth and about brand ratings from Consumer Reports.
Buyers are conditioned through continued patronage of the same vendors. Buyers learn they can get better terms by changing vendors. Buyers may switch preferences to stores and vendors that are trendy. Purchasers adopt purchase procedure innovations (e.g., buying through the Internet). 58

Cognitive Learning

Classical conditioning

Instrumental conditioning

Modeling

Adoption of innovation

Users adopt product and Payers adopt financing service feature innovations. innovations (e.g, leasing, debit cards). Copyright 1999 by Thomas Southwestern. All rights reserved.