session 8-9 slides

8/12/2019 Session 8-9 Slides

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Sales Promotion trap

Our Firm

Cut Back Promotions

Maintain Promotions

Higher Profitabilityfor all

Mkt Share goes toall other firms

Mkt Share goes toour firm

Mkt Share staysconstant; profits low

Advanced Consumer BehaviourTheories

Operant conditioning & Behavioural Learning

Behaviour Modification

Response leads to stimulus


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Components of BL

Shaping

Extinction

Reinforcement schedules

Immediate vs delayed reinforcement

Primary vs secondary reinforcement

Shaping

Shaping is an essential process inderiving new and complex behavior

A behavior cannot be rewardedunless it first occurs; a stimulus canonly reinforce acts that alreadyoccur.

Shaping

Approximation Sequence

Induce ProductTrial

Induce Purchasewith little financial

Induce Purchasewith moderate

Induce Purchasewith full

obligation financial obligation nancaobligation

Shaping Procedure

Free Samples;Large Discount

Coupon

Discount couponenables purchase

at low cost;Small discount

Small discountcoupon enables

purchase atmoderate cost

Purchase w/ocoupon

assistance

coupon attached

Reinforcement Applied

ProductPerformance;

Coupon

ProductPerformance;

Coupon

ProductPerformance

ProductPerformance

Shaping

Shaping is an essential process in deriving new andcomplex behavior

A behavior cannot be rewarded unless it first occurs; as mu us can on y re n orce ac s a a rea y occur.

New, complex behaviors rarely occur by chance innature.

If the only behavior to be rewarded were the finalcomplex sought behavior, one would probably have towait a long time for this to occur by chance.

Instead, one can reward simpler existing behaviors;,

rewarded.

Thus, the shaping process occurs by a method ofsuccessive approximations.


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Reinforcement Schedules and Locus of Power

Continuous vs intermittent reinforcementschedules

.

Theory suggests that in the absence of power,intermittent rewards reinforce behaviour

Absence of power (no competition) may not always bethe case so promotions tend to be continuous or theconsumer will switch.

This depends on the Level of control dictated by

Immediate vs Delayed reinforcers

A delayed reinforcement is lesseffective than immediate reinforcement

Delayed reinforcement inhibits learningand will lead to lower probability of afuture occurrence

e.g. proof of purchase coupons for aremium vs in- acka e remium

Primary vs Secondary reinforcers

Primary reinforcers, have intrinsicutility (the product)

Secondary reinforcers (tokens,

coupons, trading stamps) have no suchutility and must be converted.

Framework of Behavioural Learning theory

Primary Secondary

Greaterreinforcement

Lesserreinforcement

reinforcers reinforcers

Immediatereinforcement

Immediateprimary (A)

ImmediateSecondary(B)

Delayed Delayed Delayed

Greaterreinforcement

reinforcement Primary (C) Secondary(D)Lesser

reinforcement

Noreinforcement(E)

ABDE & ACDE rather than single reinforcer


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Key insights from Behavioral Learning Theory

Motivation and meeting needs Basics are still important, reinforcers cannot be

effective without meeting needs

Controlling the environment and consistentapplication Difficult to build lab environment in marketplace

so important to utilise controllable parts

Shaping thru successive approximations Assist consumers to make the decision such that

any decision is a smaller incremental decisionfrom previous one

The use of promotional tools. There may be a tendency to overuse these tools

Rules to ensure no extinction

Do not make the promotion toorewarding i.e. too high a monetaryvalue

Be sure the promoted brand hasenough intrinsic utility so as not to beovershadowed by the promotion

Theory Type of Promotion Type of Sales Effect

Classical conditioning Premiums, featureadvertising displays

Brand switching, repeatpurchases

Applicability for Consumer Behaviour theories

, ,premiums, rebates

,acceleration timing

Object perception Premiums, price cuts,

coupons, rebates

Brand switching

Self perception Premiums, price cuts,coupons, rebates

Repeat purchasing

Perceived risk Samples, premiums,price cuts, coupons,rebates

Brand switching

Price perception Price cuts, coupons Brand switching, repeatpurchasing

Consumer decision-making process

All promotions Brand switching, repeatpurchasing, purchaseacceleration, primary demand

Prospect theory and

mental accounting

Price cuts, premiums Brand switching

Consumer Promotions


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Consumer promotion tools Influencing Brand Purchases

On a scale of 1 to 10, the following are the top five

influences on the brand purchased by a consumer.

Sampling 7.78

Word-of-mouth 7.18

Coupons 5.91

Advertising 5.61

.

Source: The Second Annual Survey of Consumer Preferences for Product

Sampling, Santella & Associates (Http://www.santella.com/marketing.htm).

Why Use Consumer Promotions?

Promotions

Accomplish goals that advertising by itselfcannot

Induce consumers to buy now rather thanlater

Encourage the buying of one brand rather

Encourage consumers to buy more andmore frequently

Brand Management Objectives

Brand Management

Is directed at influencing consumerbehavior rather than initiating trade orsales-force action

Objectives are:

Generating purchase trial and retrial

Encouraging repeat purchases

Reinforcing brand images


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Consumer Rewards

Utilitarian (Functional) Benefits ofRewards

Obtaining monetary savings (e.g., when usingcoupons)

Reducing search and decision costs (e.g., byavailing of a promotional offer, consumers donot have to think about other alternatives)

O taining improve pro uct qua ity ma epossible by a price reduction that allowsconsumers to buy superior brands they mightnot otherwise purchase.

Consumer Rewards (contd)

Hedonic Benefits of Rewards

Accom lishin a sense of bein a wiseshopper when taking advantage of salespromotions

Achieving a need for stimulation andvariety when trying a brand that might notbe purchased if it were not for an

attractive promotion

Obtaining entertainment value when, forexample, the consumer competes in apromotional contest or participates in asweepstakes

Consumer Rewards (contd)

Other Rewards

Consumer promotions perform aninformational function by influencingconsumer beliefs about a brand

Timing of Rewards

An immediate rewarddelivers monetarysavings or some other form of benefit as soonas the consumer performs a marketer-specified behavior

Delayed rewards are those that follow thedesired behavior by a period of days, weeks,

or even longer

session 8-9 slides

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