Applications of Psy to Marketing - From Two-system Perspective

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Information about Applications of Psy to Marketing - From Two-system Perspective

Published on March 15, 2014

Author: markng


Applications of Psychology to Marketing 1 Mark Ng 2014

Focus of this course How to do marketing from a psychological perspective?

How psychology relate to marketing? • Do you think consumers are rational?

Traditional views about consumers • Consumers are rational decision makers • Their decision making process would be affected by different factors – Psychological factors – Personal factors – Social factors – Cultural factors

Today’s class Reading: Kahneman, D.(2012). Ch.1 Barden, P. (2013). Decoded Ch. 5, 6

Two system perspective System 1 Autopilot Implicit System 2 Pilot Explicit Input Decision

Characteristics of two systems System 1 System 2 Perception and Intuition Reflection Action Fast Parallel Automatic Effortless Associative Slow-learning Thinking Slow Serial Controlled Effortful Rule-governed Flexible

Evidence of two systems: • Stroop tests – Automation vs Manual

• Experience of autopilot

Auto pilot Sense and Autopilot Pilot Skin Ear Eye Tongue Nose

Two systems in conflict

Pepsi Challenge (1980s) • Why Pepsi prevails in test, but Coke takes the market?

Coca Cola = Santa Claus?

Learning System 1 Auto pilot • Associative learning – Classical and operant conditioning – Imitation System 2 Pilot • Cognitive learning – Information processing – Social cognitive learning

Formation of associated network • System 1: all sort of sensory information linked to the brand

Associated meanings types • Common examples: Brand-specific – claims Ad-specific – ad execution, message Brand identification – logos, trade dress Product category – occasion Evaluative reactions – positive/negative emotions

Product and Psychology • How consumer make their choice? • Why new product fails? • Why you pay more for brands? • Issues of changing package design

How consumers make their choices? How you choose among them?

Traditional views • Motivation – needs and wants? • Multi-attribute model? • I like it, so I buy it?

However… • We have different needs and wants… • We are not so rational all the time • We like many things, but we may not buy them (Berns & Moore, 2012)

New perspective: Goal Value Perspective • Reward centre of our brain predicts purchase (Berns & Moore, 2012; Knutson et al., 2007) • Activation of reward centre (OFC Ventral Striatum)  Future sales

Goal value perspective • Reward center determine willingness to pay • The more relevant a product to an active goal, the higher the expected reward and willing to pay – Products and brands offer high goal value  consumers have a high willingness to pay when they fit their goal

• Implications on STP: – The consumer goal, not the customer or the category, is the fundamental unit to define the market – E.g. what are the goals for drinking coffee?

– Positioning • Goal-based category = define competition and position – Coffee: Competitors for recharge vs Competitors for relax • Product with good positioning = products clearly offer high goal values in a particular category – When I think about drinking a coffee for relaxation, I would go to…. • Which goal activate the brand? – By purchasing this product, out customers want to be, have, do….

• Summary: – People choose products and brands relevant to their achievements of goals – Goals are basic unit of understanding consumer purchase – Goals can be activated and pursued on autopilot

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