consumer psychology handout - mapyourshow.com
TRANSCRIPT
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Consumer Psychology: Their Perspectives on Pricing, FOMO, Micromarketing and More!
Dr. Bridget K. Behe, Ph.D., Professor
Department of Horticulture
Michigan State University
Consumers have a lot on their minds (often not our stuff).
Coffee:
If coffee was coffee (commodity) then customers would maximize their utility by getting the cheapest cup they could make.
Consider consumers’ perspectives
Which plant is the best quality?
Behe, B.K., P.T. Huddleston, and L. Sage. 2016. Age Cohort Influences Brand Recognition, Awareness, and Likelihood to Buy Vegetable and Herb Transplants. HortScience, 51(2):145-151.
Branding matters: Perceived plant quality
60.1
28.1
11.8
0
10
20
30
40
50
60
70
Equal NE Branded NE Generic
Percent responding with highest quality
Chi‐square = 104.1458, df= 2, p < 0.001
Behe, B.K., P.T. Huddleston, and L. Sage. 2016. Age Cohort Influences Brand Recognition, Awareness, and Likelihood to Buy Vegetable and Herb Transplants. HortScience, 51(2):145-151.
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2015 Consumer Study of Neonic Use Perceptions
Getter, Kristin, Bridget Behe and Heidi Wollaeger. 2016. Comparative Consumer Perceptions on Eco-friendly and Insect Management Practices on Floriculture Crops. HortTechnology 26(1):46-53.
Traditional Bee friendly or Protecting Pollinators up to a $1 premium.
Bee friendly or Protecting Pollinators worth up to a $0.25 more than recycled water or sustainable media
Low prices preferred to higher prices
Traditional least preferred, bee-friendly most preferred
Getter, Kristin, Bridget Behe and Heidi Wollaeger. 2016. Comparative Consumer Perceptions on Eco-friendly and Insect Management Practices on Floriculture Crops. HortTechnology 26(1):46-53.
Factors Important to Plant Purchase
“In thinking about your choices to buy flowering plants, how important are each of these to your purchase decision?” 1=Not at all important, 7=Very important
Not at all important
Very important
1 2 3 4 5 6 7
The flowering plant has very
little plant damage
The flowering plants have no insects on them
The flowering plant has no
pesticide residue on or in
the leaves
5.6
5.3
5.1
The plant was produced using bee-
friendly practices
4.4
No neonics were used during production of the plant
4.0
Getter, Kristin, Bridget Behe and Heidi Wollaeger. 2016. Comparative Consumer Perceptions on Eco-friendly and Insect Management Practices on Floriculture Crops. HortTechnology 26(1):46-53.
“In thinking about how greenhouse growers produce flowering plants and your potential enjoyment of such plants, indicate your agreement or disagreement to the following statements:” 1=Strongly Disagree, 7=Strongly Agree
Not at all important
Very important
1 2 3 4 5 6 7
I do not want any pesticide residues on
landscape plants
I would tolerate some pesticide
residue on flowering plants if the pesticides
controlled invasive pests (like Japanese
Beetle)
5.44.9
All pesticides are harmful
4.4
Factors Important to Plant Purchase
Getter, Kristin, Bridget Behe and Heidi Wollaeger. 2016. Comparative Consumer Perceptions on Eco-friendly and Insect Management Practices on Floriculture Crops. HortTechnology 26(1):46-53.
So What do Consumers Really Want?
• #1 Very little plant damage
• #2 No insects on them
• #3 No pesticide residue
U.S. Consumer Perceptions of Uses and Contents of Recycled
and Reclaimed Water
Nikki McClaran, Bridget Behe, Patricia Huddleston,
Charles R. Hall, R. Thomas Fernandez
Michigan State University & Texas A&M University
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What is in water (percent who agreed)?Found in water Reclaimed Recycled p value Sig?
Chlorine 44.4 43.6 0.408 No
Disinfectant 26.5 24.4 0.210 No
Dyes 20.1 a 14.6 b 0.006 Yes
Harmful bacteria 36.3 31.9 0.052 No
Harmful chemicals 34.2 a 26.6 b 0.010 Yes
Heavy metals 27.6 a 22.7 b 0.024 Yes
Helpful bacteria 15.5 14.4 0.327 No
Human waste 31.8 a 26.5 b 0.022 Yes
Herbicides 33.8 a 26.1 b 0.002 Yes
Insecticides 29.2 a 24.1 b 0.023 Yes
Minerals 30.8 34.2 0.107 NoP value from Chi-square test; Bonferroni method used to adjust p values (significant at p ≤ 0.05).
McClaren, N., B. Behe, P. Huddleston, and R. Fernandez. 2020. Recycled or reclaimed? The effect of terminology on water reuse perceptions. J. Environmental Psychology. 261
What is in water (percent who agreed)?Found in water Reclaimed Recycled p value
Nothing harmful 12.3 b 18.4 a 0.002
Plant nutrients 17.1 15.5 0.254
Pathogens 22.4 19.7 0.126
Sanitizers 22.4 23.1 0.408
Vitamins 10.6 10.0 0.398
Hormones 18.6 b 14.6 a 0.031
Prescription drugs 17.9 b 15.2 a 0.018
Pesticides 33.2 a 25.7 b 0.002
Salts 29.7 28.7 0.369
Animal waste 29.4 a 23.5 b 0.010
Composted plants 17.2 14.1 0.074
Composted animal waste 24.3 a 17.3 b 0.001P value from Chi-square test; Bonferroni method used to adjust p values (significant at p ≤ 0.05).
McClaren, N., B. Behe, P. Huddleston, and R. Fernandez. 2020. Recycled or reclaimed? The effect of terminology on water reuse perceptions. J. Environmental Psychology. 261
Words (semantics) matter
Consumers may not know, but they have an opinion.
Consider (even test) words before making a decision about what to put in communication materials.
PriceOutlay customers make to obtain a
desired product or service.
Price is an indication that something has value to both buyer and seller.
Customers have different perspectives. Not everyone thinks like you.
If you wouldn’t pay that much for something, it doesn’t mean someone else won’t pay that price.
What is value?What you get for what you pay.
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Value, like beauty, is in the eye of the beholder.
We just need to use their lens sometimes.
Five ways we “assign” value.
1. Functional value2. Epistemic value3. Conditional value4. Social value5. Emotional value
Sheth, Newman, and Gross (1991) Theory of Consumption Values
Elements of perceived value
1. Functional value
features, functions, attributes, or characteristics (how much sun? how tall? how floriferous?)
performance (how good is it at attracting pollinators?)
outcomes (environmental benefits: more pollinators)
How much is someone willing to pay?
Capacity is set (240 bottles)
“Normal” Revenue at $1 = $240
Demand rises with the temperature. Link temperature with price?
Revenue at 70F ($1) = $240
Revenue at 75F ($2) = $480
Revenue at 80F ($3) = $720
Revenue at 90F ($3.50) = $840
Elements of perceived value
2. Epistemic value
Novelty
Sensory value (fragrance, flavor)
Epistemic ValueNew or novel
cultivars often are in high demand.
Why? Innovators are few in number but willing to pay a higher price.
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Elements of perceived value3. Conditional value
symbolism or meaning relating to socio-cultural events and traditions
Elements of perceived value4. Emotional value
Does the customer get joy or a positive feeling from buying or having/owning or eating the product?
Elements of perceived value
5. Social value When the consumer buys the product, it can help them
enhance their perception in the eyes of others (FOMO is real. My friends are posting on Instagram!)
So many industries feature our products in their advertisements, giving us more exposure as an “in” thing to do or have.
Repeated exposure by other industries keeps us on/in customers’ minds.
Source: Wall Street Journal, November 16, 2020.
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Source: Wall Street Journal 12/2/2020
Spending for B2C online advertisements now exceeds other media
Online activities
78.1%
49.5%
34.9%
32.1%
29.4%
27.1%
14.4%
14.1%
10.3%
3%
1.8%
1.2%
7.7%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Snapchat
TikTok
Nextdoor
Houseparty
Citizen
Other
Don't use
Share of respondents
Note(s): United States; March 31, 2020; 18 years and older; currently useSource(s): eMarketer; Business Insider; ID 111299512
Social media platforms used by adults in the United States during the coronavirus outbreak as of March 2020Social media used by U.S. adults during COVID-19 pandemic 2020
How much are they willing to pay?
Source: Chris Beytes, Acres Online, June 26, 2020
FOMO or Fear of Missing Out
Anxiety or unease about others having fun without you.
Real, especially for many active social media users.
Desire to have what others appear to have.
FOMO and Instagram Use
Neumann, D., P.T. Huddleston, and B.K. Behe. 2021. Fear of Missing Out and Social Media Use: Differential Effects of Priming on Attitudes Towards Product. New Media and Society. (IF=5.740) https://doi.org/10.1177/14614448211011834
The more active the participant was on Instagram, the more FOMO they experienced.
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Where is the value?
Why do we communicate to customers that all of the value of the product lies below the soil/media line?
Focus on features: technical aspects of the plant or its characteristics (functional value alone)
Focus on benefits: what those features mean to the consumer (other value dimensions)
Plant
Price
Plant,Feature, Benefit
Sign Position: L, M, RPrice Location: T, M, B
Features facilitate purchases, especially at higher price points
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1
2
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Low Moderate High
Purc
hase
Inte
ntio
n
Price point for digitally identical plants
Price only Feature Benefit
Information provided on sign
Zhu, Z., B. Behe, P. Huddleston, and L. Sage. 2017. How do Pricing and the Representation of Price Affect Consumer Evaluation of Nursery Products? A Conjoint Analysis. International Food and Agribusiness Management Review. 20(4):477‐491. DOI: 10.22434/IFAMR2017.0003
This is a good sign!
Benefit
Benefit
Benefit
“We’re all in the same stormbut not in the same boat!”
It’s been said of the pandemic,
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Source: Wall Street Journal, June 1, 2021
Price increase study
Recruited 3 reputable independent garden centers in 2012.
Used both branded (test plants) and non-branded plants (control plants).
Prices adjusted over three weeks during the spring season.
Week 1: test plants were priced 10% less compared to control plants.
Week 2: test plant priced were the same as control plants.
Week 3: test plants were priced 10% more compared to control plants.
The prices of the unbranded or control plants were held constant during this period in order to serve as a comparison.
Branded plants were representative of a differentiated product.
Source: Marco Palma, Bridget Behe, and Charlie Hall. Low Prices Do Not Sell More Plants. Today’s Garden Center, August, 2012.
Total revenue generated by the garden centers in the study during the time period (raising prices by 10%) was 2.3% higher, despite selling 8.27% fewer units.
Sell fewer units and generate more profit? Work smarter not harder.
Conversely, we calculated that if prices had been lowered by 10% for the test plants over the same time periods, actual total revenue would have decreased 27%.
What happened when we increased price?
Source: Marco Palma, Bridget Behe, and Charlie Hall. Low Prices Do Not Sell More Plants. Today’s Garden Center, August, 2012.
Consumer responses to price increases Consumer responses to price increases
Units x dollars(units x profits)
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Plant Consider a value priced menu option for several popular plant categories.
What’s it worth?
Make comparisons difficult.
Can you raise prices?
Try raising prices on a few products (experiment).
Raise them on products that are not easily compared.
Experiment and identify how many customers pushed back and also calculate profits.
Develop a value‐priced menu.
Consumers aren’t rational.
Most of our research shows that consumers make product choices based primarily (and mostly) by what the product is.
Lower prices are almost always (none in my studies) preferred to higher prices. The segment that makes product choices primarily on price is less than 25%.
Semantics matter. It matters not what they know (fact) only what they think. Meet them there. Tell them the truth. Back it with evidence.
Perceptions matter. Understand what they perceive. Then you can be the rational one.
Consumer Psychology: Their Perspectives on Pricing, FOMO, Micromarketing and More!
Dr. Bridget K. Behe, Ph.D., Professor
Department of Horticulture
Michigan State University
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