1/5/20

Consumer Behavior
Professor Wendy Liu
MGT 477 Winter 2020
FT MBA and Flex MBA
UCSD Rady School of Management

Session 1

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About the Professor

§ Stanford, UCLA, UCSD

§ Specialization
§ Economic information processing and
decisions
§ Social influence and emotions
§ Branding

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Class Support

§ My office: 3W115
§ Email me: wendy.liu@rady
§ Office Hours: by appointment
§ TA: Ariel Fridman
ariel.fridman@rady.ucsd.edu

§ Slides provided in each class

Course Objective

§ Framework of Customer Insight

§ Learn critical frameworks and concepts
§ Unpack problems
§ Gain insights from social science
§ Use behavioral marketing research methods
§ Inform marketing strategy and tactics
§ Complement to Marketing Research and Data
Analytics courses

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Class Structure

§ Overview
§ Macro behavior (sessions 1-4)
§ Micro behavior (sessions 5-9)
§ Summary

Levels of Customer Understanding

Macro
Anthropology § Cultures
History
§ Subcultures
Sociology § Demographics
§ Psychographics
§ Need-based segmentation
Psychology § Individuals
§ Actions, behaviors
Neuroscience § Brain Functions
§ Neurons
Micro

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Course Syllabus

§ Matt Penfield (Session 7)

§ VP of Customer Insight @ Zynga
§ Tuesday 2/18: 6:30pm - 8:30pm
Guest Lectures § FT: no class Wednesday PM

§ Michael Diamond (Session 8)

§ SVP & General Manager @ Mitek (B2B)
§ Tuesday 2/25: 6:30pm - 8:30pm
§ FT: no class Wednesday PM

§ Unfortunately, no taping is allowed per

guest request

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Focusing on
Customer Insight

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Calyx
&
Corolla

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SWOT Analysis

§ Strengths

§ Weaknesses

§ Opportunities

§ Threats

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If you were an investor…

§ How good an opportunity is Calyx?

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If you were a management

consultant…

§ What would you advise Calyx to do?

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SWOT Analysis
(Customer-Insight Perspective)

§ Strengths

§ Weaknesses

§ Opportunities

§ Threats

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What do people look for in

flowers?

§ Is this a good question to ask?

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What are better questions?

§ When do people buy flowers?

§ What happens when they buy flowers?
§ Behavioral questions are highly
contextualized

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What should the company

do?

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What happened next?

§ In 1994, 1995, Calyx & Corolla

received large VC funding

§ Ran TV ads in large-scale efforts for

growth

§ Brand today:
§ Brand suffers from low customer
retention and declining sales
§ Sold multiple times over the last 30
years
§ Latest owner (2015) aims to focus
on customer retention

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Key Take-Aways

§ A general business perspective vs. a deep

marketing perspective

§ Business decisions involve multiple

perspectives (e.g., operations, finance,
marketing)
§ It can be difficult to “frame switch”
from the starting perspective
§ Be sure to “frame switch” to give
sufficient depth to each perspective

§ Be highly contextualized for deeper

customer insight

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Framework
for
Customer
Insights

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Levels of Customer Understanding

Macro
Anthropology § Cultures
History
§ Subcultures
Sociology § Demographics
§ Psychographics
§ Need-based segmentation
Psychology § Individuals
§ Actions, behaviors
Neuroscience § Brain Functions
§ Neurons
Micro

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Macro Insights

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Levels of Customer Understanding

Macro
Anthropology § Cultures
History
§ Subcultures
Sociology § Demographics
§ Psychographics
§ Need-based segmentation
Psychology § Individuals
§ Actions, behaviors
Neuroscience § Brain Functions
§ Neurons
Micro

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Cultures

§ What is culture?
§ Culture is the characteristics and
knowledge of a particular group of
people, defined by everything from
language, religion, cuisine, social habits,
music and arts.

§ How deep is culture?

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The Iceberg Model of Culture

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How to be a good
anthropologist of cultures?

§ Clean slate
§ Slow down
§ Attention to details
§ (Appropriate) generalization and
interpretation

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Meanings

§ Wade Davis: The Worldwide Web of Belief

and Ritual

§ http://www.ted.com/talks/wade_davis_on_
the_worldwide_web_of_belief_and_ritual

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Values, Knowledge,
Practices, Habits

§ Jiro Dreams of Sushi

§ What are some key knowledge, values,
practices and habits in Japan as seen in
this video?

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Knowledge, Values,
Practices, Habits

§ P&G in Japan

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P&G in Japan

§ Global expansion to Western Europe

1930’s to 1980’s met with success

§ Entering Japan in 1972

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P&G in Japan

§ Entering Japan in 1972

§ Deregulation of foreign entry
§ 2 months of marketing research in 1968
revealed
§ 15% growth in detergent purchase
§ High standards for personal cleanliness
and order
“Cleanliness = Godliness”
§ Washed laundry twice per day
§ Consumed twice the amount of
cleaning supplies as the US household

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Entry Strategy

§ Typical strategy: Use a local joint venture

for production, introduction to distribution

§ Which brand to introduce?

§ In Japan people typically use cold or
tepid wash
§ All-temperature detergent: Cheer

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Entry Strategy

§ Introduced other products to leverage

distribution
§ Market research revealed only one
promising category
§ Pampers disposable diapers

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Early Success

§ Pampers
§ Free samples, TV Blitz
§ High premium pricing
§ Increased adoption of disposable
diapers from 2% to 10%
§ Built a local production plant in Akashi

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Big Troubles

§ Pampers met the quality standards for

the US, but not in Japan

§ Protests and boycotts for occasional

failures

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Behavioral Insight

§ Japanese mothers changed diapers more

frequently (14 times/day!)

§ What does this imply for the product?

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Smart Local Competition

§ 1981: Competitor Uni-Charm introduced

Moony at a 40% premium and gained
23% share in one year
§ Slimmer, fitted, less load

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Reassess

§ After 12 years, P&G Japan was in debt,

with Cheer and Pampers trailing local
competitors

§ Would take more than a year to retool the

Akashi plant

§ Decision
§ “Compete with them in their own
backyard, for you will eventually compete
with them at home…we cannot afford to
be anything but successful there.”
Ed Artzt, then head of P&G
International, later to become CEO

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“The Great Flying Leap”

§ Pampers was upgraded 4 times in 3 years

§ The Akashi plant lead global R&D for
diapers

§ Pampers became world’s thinnest

disposable diaper

§ Share rose from 10% to 27% in 9 years,

regained #1 in Japan

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Lessons from Japan

§ Products not tailored to local culture leave

room for competition

§ Utilize strength of a culture for global

competitiveness

§ Japan produced several of P&G’s CEO’s

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Today’s Summary

§ Understanding cultures: knowledge,

values, practices and habits

§ Consumer products need to tightly cater

to knowledge, values and practices in
local culture

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Group Assignment:
”A Good Life” in 3 Cultures

§ Form groups of 3-5 people, email Ariel your group membership today
§ Ariel will assign you (randomly) one of three books to read:

§ China: The Path

§ Read Page xiii (foreword) to Page 86. Go fast through the foreword
and preface, focus on Confucius and Mencius chapters
§ Denmark: The Little Book of Hygge
§ Read Page vi (intro) to Page 88. Go fast on the intro, focus on the
chapters (page 1-88)
§ India: Embrace the Chaos
§ Read Page 1-86. Go fast on the intro, focus on the chapters (page
11-86)

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Group Assignment:
”A Good Life” in 3 Cultures

§ Based on the book (your best inference from the book), create a
5-7 minute presentation addressing all of the below:

1. What knowledge do people in this culture have about “a good

life”?

2. Values: How important are different things to “a good life” in

this culture (name 3 most important things and 3 less
important things)?

3. What are some practices and habits people have to pursue “a

good life” in this culture?

4. Imagine you are a new brand of mattress in the US (for

concreteness, think “Casper”). You are considering entering
this foreign market. Design an ad campaign strategy for this
market.

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Group Assignment:
Comparing 3 Cultures

§ Due Week 3 in class

§ Give your 5-7 presentation in class as a group
§ No need to submit the slides

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Next Session

§ Demographic segmentation
§ Prepare case: Eileen Fisher
§ Who are Eileen Fisher’s existing
customers (at the time of the case)?
§ What should be Eileen Fisher’s
segmentation, targeting and positioning
strategy going forward?

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The End

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