Topic 3 - Consumer Learning, Habit and Brand Loyalty CONSUMER LEARNING, HABIT AND BRAND LOYALTY CONSUMET LEARNING

Consumers learn from past experience, and their future behavior is conditioned by such learning. Learning can be defined as a change in behaviours occurring as a result of past experience. As consumers gain experience in purchasing and consuming products, they learn not only what brands they like and do not like, but also the features they like most in particular brands. Example: Athlete B choosing to buy Reebok running shoes due to comfort and best support. Continued satisfaction with the brand leads this athlete to continue to buy a Reebok running shoe every time he needs a new athlete’s shoe. Thus, continued satisfaction reinforces past experience and increase the probability that the consumer will buy the same brand the next time. Two Schools of Thoughts (The Cognitive and Behaviourist) Figure 3.1 Types of Leaning Theories

Source: Assael (2005) Types of Learning Theories

Behaviorist – Concerned with observing changes in an individual’s response as a result of exposure to stimuli. Behaviorist psychologists have developed two types of learning theories; Classical Conditioning and Instrumental Conditioning. Classical Conditioning – views behavior as the result of a close association (contiguity) between primary stimuli (social success) and a secondary stimulus (a brand of tooth paste, soap or deodorant. Instrumental Conditioning – views behavior as a function of the consumer’s assessment of the degree to which purchase behavior leads to satisfaction. Satisfaction leads to reinforcement and to an increase in the probability of repurchase. Cognitive School of Thoughts – Views learning as problem solving and focuses on changes in the consumer’s psychological set (the consumer’s attitude and desired benefits) as a result of learning. Cognitive more closely describes learning within a framework of complex decision making. This concept is relevant to habits because complex decision making may lead to routinized purchases when the consumer is satisfied with the brand and repurchases it over a period of time. CLASSICAL CONDITIONING

In classical conditional, a secondary stimulus is paired with a primary stimulus that already elicits a particular response. As a result of this pairing, an association is formed. Eventually, the secondary stimulus will elicit the same reaction as the primary stimulus. An effective advertisement campaign may link a product to a stimulus that evokes a positive feeling. Example: In Papua New Guinea we have EMTV advertising the Cowboy on a farm, strong, masculine riding a horse and driving a tractor. After a hard day out on the farm, he comes home and enjoys his favourite Highway Beef biscuits. The cowboy is the primary or unconditioned stimulus. The positive feeling that the cowboy evokes (strength, masculinity) is the unconditioned response. From this EMTV advertisement, consumers associate High Beef biscuits with the cowboy through; Repetitive advertising and; 2. Contiguity between the unconditioned and conditioned stimulus (Cowboy linked to Highway Beef biscuit). The biscuit then becomes a secondary or conditioned stimulus because it evokes the same positive feeling as does the cowboy. The Highway Beef biscuits when purchase is the conditioned response. Classical Conditioning can be applied to marketing in an effort to associate a product with a positive stimulus. Example: Sport advertisement. A product continuously advertised during sporting events. The excitement during the sporting events may lead to people buying that particular brand etc. 1.

Figure 3.2 Classical Conditioning

Emphasis: Association through repetition and contiguity Source: Adopted from Kenneth E. Runyon and David W Steward (1987) Macmillan College Publishing Inc.

The association between the conditioned stimulus and the unconditioned stimulus is represented as a dotted line because it is a learned association. The association between conditioned stimulus and conditioned response is also learned. The two key concepts are repetition and contiguity. To establish a conditioned response, the conditioned stimulus must be frequently repeated in close contiguity to the unconditioned stimulus. The association between conditioned stimulus and conditioned response is also learned. Associative Learning When consumers establish a link between an unconditioned and a conditioned stimulus, they are engaging in learning through association. A good example is the Pavlov’s experiments: Pavlov reasoned that because his dogs salivated (unconditioned response)at the sight of food (unconditioned stimulus), a neutral stimulus such as a bell could also cause the dog to salivate if it was closely associated with the unconditionedstimulus (food). To test his theory, Pavlov rang a bell when presenting food to the dogs. After a number of trials, the dogs learned the connection between bell and food, they salivated(conditioned response). Associate learning should be developed carefully because marketers are trying to show an association between the unconditioned and condition stimulus and show the relationship towards a customer’s need.

Instrumental Conditioning Instrumental Conditioning also requires the development of a link between a stimulus and response. Learning occurs because the same act is repeatedly rewarded or reinforced. Example; Pavlov experiments with the dogs.

Emphasis: Reinforcement; dependence of outcome on learner’s action Cognitive Learning Theory Goal

Purposive Behaviour

Insight

Goal Achievement

Emphasis: Problem Solving; Understanding relationships Associative Learning: When consumers establish a link between an unconditioned and a conditioned stimulus, they are engaging in learning through association. Contiguity (Proximity, contact) must be coupled with relevance or need recognition if consumers are to establish a strong connection between an unconditioned and conditioned stimulus. A study carried out by Janiszewski and Warlop found that consumers considered the link between an unconditioned and conditioned stimulus informative and that such a link often leads to the search for additional information. Strategic Applications of Classical Conditioning During the 1950s, advertisers accepted classical conditional concepts of repetition and contiguity on a more widespread basis. Advertisers use jingles and themes frequently in radio commercial. The advent of television brought about a new dimension to advertising by providing more variability through video component. In addition, a more consumer-oriented approach to advertising resulted in greater variation as advertisements were directed to a particular consumer segment. Mass advertising based on a single repeated theme was not a viable strategy resulting in advertisers now rarely attempt using advertising through repetition. The shift in advertising emphasis away from classical conditioning also implied a shift toward principles of cognitive (knowing, perceiving or conceiving) learning. Criteria for Advertising effectiveness; Sifted from Measure of Recall – Whether basic brand association have been established to;

Measure of attitude change – Change in brand beliefs, preferences etc are also a criteria used to measure advertisement effectiveness. (Consumer’s psychological set) INSTRUMENTAL CONDITIONING

Instrumental conditioning also requires the development of link between stimulus and response. However, the individual determines the response that provides the greatest satisfaction. That is, no previous stimulus-response connection is required; response is within the conscious control of the individual. Example 1: Pavlov’s dogs. If Pavlov had provided his dogs with two levers instead of one, one when pushed would provide food and the other when pushed would provide a shock, which one would you think he would learn quickly to push? The lever for food and the dog would try his best to avoid the one that shock him. (Degree of satisfaction and dissatisfaction) Example 2: Anti smoking commercials (instrumental conditioning) linking smoking to short-life span. Reinforcement Continuous reinforcement (repeated satisfaction) resulting from a product usage increases the probability that the consumer will repurchase. Initially, the consumer undergoes a decision process but with continuous reinforcement, the probability of buying the same brand increases until the consumer establishes a habit and buying is routinized. Formation of habit is reinforcement of past purchase behavior. Extinction and Forgetting If a consumer is no longer satisfied with the product, a process of extinction, that is the elimination of the link between stimulus and expected reward – takes place. Extinctions lead to a rapid decrease in the probability that the consumer will repurchase the same brand. Forgetting defers from extinction. Forgetting occurs when the stimulus is no longer repeated or perceived. If a product is not used or if its advertising is discontinued, consumers may forget that product. COGNITIVE LEARNING

Cognitive psychology views learning as a problem-solving process rather than the development of connections between stimulus and response. Cognitive learning for consumers is a process of perceiving stimuli, associating stimuli to needs, evaluating alternative brands, and assessing whether products meet expectation. Habit Habit can be defined as repetitive behavior; that is a routinized response resulting in a limitation or absence of; (1) Information seeking and (2) Evaluation of alternative choices.

H. Assael (2005) Learning leads to habitual purchasing behaviour if the consumer is satisfied with the brand over time. After repetitive purchases, the consumer will buy the brand again with little information seeking or brand evaluation. Such an absence of cognitive activity can also be described as routinized decision making to distinguish it from the more extensive information processing in complex decision making. Information processing in such case is limited or nonexistent. A Model of Habitual Purchasing Behaviour

FUNCTIONS OF HABIT

Purchasing by habit provides two important benefits to the consumers; (1) Reduces risks and (2) It facilitates decision making. Habit versus Complex Decision Making Complex decision making and habit (routinized decision making) are two extremes of a continuum. Habit – Consumers purchase frequently those product bought by habit. The changes of buying again increases and changes of repurchase are there. Complex Decision Making – Extensive information processing; Expensive products; highly price products etc.

Characteristics of Complex Decision Making versus Habit Habit (Routinized Decision Making) Little or no information processing Frequently purchased products Lower-priced products Low-level of consumer involvement Non-compensatory decision rules

Complex Decision Making Extensive information processing Infrequently purchased products Higher-priced products High level of consumer involvement Compensatory decision rules

Strategic Implications Extensive distribution Selective distribution Few service requirements Service often required Personal selling unimportant Personal selling important Sales promotions important Sales promotions unimportant Advertising used for reminder effect Advertising used to provide information Greater price sensitivity Less price sensitivity Source: Adapted from Consumer Behavior by Assael (2005)

STRATEGIC IMPLICATIONS OF HABIT VERSUS COMPLEX DECISION MAKING

It is important for marketing managers to identify the position of a brand on the continuum from habit to complex decision making. Distribution – Widespread distribution is important for habitual consumers. By seeing the products, it reminds them to purchase and there tends to be a high turnover in sales. Product – Complex decision making process are primarily for appliances and durable products that are highly technical and more complex in nature. Advertising and In-Store Promotion – Advertising is used as a reminder and differs according to product’s position on the decision making process. Repetitive advertising is also important as it reminds consumers of product availability and for consumers to purchase. In-Store Promotions are also important and more effective for low-involvement products because consumers often make the purchase decision once they are in the store. Pricing – Pricing policies are also likely to differ. When consumers purchase brands by habit, frequently the only way a competitor can get brand loyalty is to introduce a price deal or special sale. INDUCING A SWITCH FROM HABIT TO DECISION MAKING

Many consumers are more likely to purchase market leading products. Consumers tend to do this to avoid risks and avoid information search. A leading products is perceived to be safe and less risky, thus the purchase becomes routinized. Marketers who want their brands to challenge the leading brand must induce consumers who buy by habit to consider other brand.

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Create awareness for alternatives to leading brand Advertise new features Change consumer’s priorities by introducing a feature that may appeal to consumers Encourage consumers to use product as a substitute Use free product samples, coupons or price specials Introduce line extensions

Brand Loyalty - A close link exist among learning, habit and brand loyalty. Brand loyalty represents a favourable attitude towards a brand resulting in consistent purchase of the brand over time. Through learning, consumers learn that a particular brand satisfy their need. Two approaches to the study of brand loyalty are; (1) Instrumental Conditioning Approach – Consistent purchasing of one brand over time, an indication of brand loyalty and (2) Cognitive theories – Given a particular situation such low price, a family may continue to purchase a particular brand. When there is an increase in price the family may move onto another brand. Here the family is not loyal to any particular brand. The stimulus and link is not strong. Behavioural Approach to Brand Loyalty - Marketers are now looking at electronically recorded purchase to get information on which products/brands are being sort after. This type of information does not tell marketers why consumers go for a certain brand. Cognitive Approach to Brand Loyalty – When looking at the cognitive approach to brand loyalty, marketers are also looking at both attitude and behaviour as this can provide additional information to brand loyalty. THE BRAND LOYAL CONSUMER

Researchers have tried to define the characteristics of a Brand –Loyal consumer and have found that there are no general brand-loyal consumers however there are some generalization such as;    

Brand-loyal consumers tends to be more self-confident in his or her choice Brand-loyal consumers are more likely to perceive a higher level of risk in the purchase Brand-loyal consumer is more likely to be store loyal Minority group consumers tend to be more brand loyal

BRAND LOYALTY AND PRODUCT INVOLVEMENT

A study by J. Walter Thompson (a large advertising agency) found that brand loyalty is highest when consumers are personally involved with the brand and find the purchase risky. The brand is the source of self-identification and example of such brands can be found in products such as cosmetics, automobiles, cigarettes etc.). Cognitive definition here is Commitment and Involvement.

Inertia – Is the repeat purchasing of a brand without commitment. Here you will note that consumers purchase product due to familiarity with the product - represents a habitual purchasing with low level involvement. Consumer Loyalty, Consumer Equity, and Micromarketing Micromarketing is a strategy where marketers look at ways in developing consumer loyalty before, and after the purchase. Example; before any purchase takes place, marketers offers consumers options of customizing the product according to their specific needs or requirement. This type of strategy can be found through customized information on the web and/or when consumers are personally involved such as dress making and hair styling etc. After the purchase, marketers seek to maintain the interest in the product by the consumers through building relationship thus the term relationship marketing has come about. The success of relationship marketing means consumer loyalty can be translated into consumer equity. Consumer Equity – refers to a long-term commitment to the brand/product and the company based on interactive relationship. Given the importance of building customer relationship and consumer equity, Micromarketing has resulted in recent years in the development of customized strategies. STORE LOYALTY AND STORE LOYAL CONSUMERS

Store Loyalty – Similar to brand loyalty, you will also find consumers that are loyal to stores and in some instances their loyalty to stores are stronger than any particular brand. Store loyalty may in some cases linked to self-image of the consumer or it may reflect inertia. Store-loyal Consumers – Brand loyal consumers may also be store loyal consumer for a variety of reasons. Some of the reasons why consumers remain loyal to a particular store are as follows;  Location factors – the store is easily reached by the consumer  Time factor – Consumers know the store lay-out and easy access to products and services  Risk factor – Familiarity with the store environment and product offered. IMPLICATIONS FOR BRANDLOYALTY AND STORE LOYALTY  Consumers may not be aware of brand and price alternatives. 

Consumers may have low knowledge of what is being offered in other stores thereby quality and service may be missing.  Consumers are missing out on alternative choices For More information, please read chapter 3 Consumer Behavior A Strategic Approach, Henry Assail (2005) Source: Consumer Behavior A Strategic Approach. H. Assael (2005) For More information, please read chapter 3 Consumer Behavior A Strategic Approach, Henry Assail (2005) Biztantra