Consumer Behavior

SHOPPING
Muhamad Irfan Agia, S.Psi., M.Sc
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Introduction

LEIDEN
UNIVERSITY BEHAVIOR
+ SCIENCE LEAD
SMALL BUSINESS GRADUATE REA GROUP ASIA

2014 2016 2018

2011 2015 2017 2020

PSYCHOLOGY GRADUATE CONSUMER CONSUMER
STUDENT + INSIGHT INSIGHT LEAD
(UNPAD) SCHOLARSHIP GARUDAFOOD LINKAJA
Introduction

“Millennial as a
Property Buyer”

“Cash vs Cashless
Society”

“Impulsive Buying
Behavior”

“Payday Effect”
 Understanding Learning Consumer Applying Psychology Consumer Behavior
Consumer Behavior Behavior Research in Business during COVID-19
Understanding
Consumer Behavior
 6

Functional Social Stocking

Entrepreneur Slides
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Consumer behavior is the study of how consumers

make decisions about what they need, want and how
do they buy, use, and dispose of goods.

Entrepreneur Slides
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Brand Promise

Consumer
Centric
Business

Consumer Insight Product Offered

Entrepreneur Slides
Best Practice Example:

BRAND COMMUNICATION IDEA

BRAND
PURPOSE/POV
JUST DO IT
UNLEASH THE ATHLETE
IN ALL OF US

PEOPLE WE SERVE

IF YOU HAVE A BODY, H

TH U
M
U YOU’RE AN ATHELETE… THERE’S A
TR A
N
CT SO ANYONE COMPETITIVE TR
U SPARK & DRIVE TO U
O
D INNOVATION FOR WITH A BODY TH
PR IMPROVE & SUCCEED
THE INSPIRATION, IN ALL OF US, BUT SELF-
MOTIVATION, & DOUBT TENDS TO PUT LIMITS
PERFORMANCE OF ON WHAT WE CAN ACHIEVE.
GREATNESS.
 10

Product - Centric Consumer - Centric

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A yawning gap between:

Customer Intent and Actual behavior

Most market research is based

on what people say, not what
they do or behave. While
human mostly not rational

Entrepreneur Slides
 Asian Diseases Experiment

Imagine that we are preparing for the

outbreak of an unusual Asian disease,which
is expected to kill 600 people.

Two alternative programs to combat the

disease have been proposed.

Which one you will choose?

 Asian Diseases Experiment

Program A : 200 people will saved Program C : 400 people will die

Program B : There is 1/3 Program D : There is 1/3

probability that 600 people will probability that nobody will die
be saved and 2/3 probability that and 2/3 probability that 600
no one will be saved people will die

Program Choice Program Choice

Program A : 72% Program C : 22%

Program B : 28% Program D : 78%
Human is not always Rational

Kahneman and Tversky (1981) demonstrated

systematic reversals of preference when the
same problem is presented in different ways

When the programs were presented in terms of

lives saved, participants chose the secure
program, A (= C) (Risk Averse)

When the programs were presented in terms of

expected deaths, participants chose the gamble
D (= B) (Risk Seeking)

Daniel Kahneman
The More the Merrier?

Rational Theory: Psychology Theory:

More freedom of choice is always better More freedom of choice involves more
because it allows decision makers to maximize cognitive, emotional, time (also important
utility by finding the best match between for the quality of decisions), and money.
preferences and available alternatives.
Choice Overload – Decision Paralysis

“Too many choices can

lead to poor decision
making and inaction.”
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Entrepreneur Slides
Nudge – The art of designing context to change behavior

“It’s often more effective to change environment,

instead of human cognition”
 Behavior Change Strategy Design

Creating a new Behavior Create and Maintaining Habit

1. Trigger 2. Action

B = M. A. T
Behavior can be created when Consumer has:

Motivation – Pleasure/Pain , Hope/Fear, Acceptance/Rejection

Ability – Time, Effort, Resources

Trigger – Brand presence, Offer, Relevant Use Case 4. 3.

Investment Reward

Once we successful in transforming a New Behavior, we need to make

sure our product is Habit-Forming
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Now We Know

• What consumer say and what consumer behave is

not always the same thing
• Consumer not always make decision based on
rational argument
• Behavior = Motivation x Ability x Trigger
• Mind the context, most of the time Consumer react to
their environment

Entrepreneur Slides
 Consumer Behavior
Research

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 24
Frequently Asked Question to Consumer Researcher

1. “Do we need to do survei first or interview first?”

2. “Can we just ask consumer directly whether they want to buy
our product or not?”
3. “My business just getting started and have limited budget,
what kind of research I should conduct?”
4. “How can you possibly understand our audience of thousands
by speaking with just 5, or even 25, people?”

Entrepreneur Slides
 Qualitative Research Quantitative Research
Study Purpose Provide Insight about ideas Describe target market
Exploratory Research before Results for strategic
Quantitative study marketing decisions

Types of Questions Open-ended Close-Ended

Unstructured Attitude Scales
Data Collection In-Depth Interviews Survey
Methods
Focus Groups Experimentation
Ethnographic Observation
Starting Point Explore and Discover research Define hypothesis that must
ideas and hypothesis be proved or disproved
Scale of Research field Very small, specific facts about Large environment or context
clearly defined situations and try to finding patterns
Analysis Inductive (by the researchers) Deductive (by statistical
method)
Example: Segmentation for Cashless Persona
Qualitative: Capturing Ideas and Thoughts
Quantitative: Scaling Up
Consumer Persona Output Example
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Why NPS is popular

• It’s a single number that appears to be linked to some significant KPIs.

• It’s also easy to measure and produces a statistic that changes easily over
time.

What should we consider

• The NPS question asks a respondent to rate the likelihood of a hypothetical future
• But strong, reliable survey questions ask respondents about their past behaviors,
which tend to be much more predictive than forward-looking hypotheticals

Entrepreneur Slides
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Entrepreneur Slides
Audience Research

• Learn who is already buying from you

(age, location, language, income, buying behavior, interests and

activities, and life stage)

• Dig into Social Analytics

(google analytics, Instagram audience insight)

• Competitor Analysis

(secondary data, observation)

• Examine Pain Points

(social media listening, observing comment sentiments)

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Research with a Small Sample (Qualitative)

A usability test typically involves a small number of participants (5 has become the
industry standard). This is because 5 participants gives us an 85% chance of finding a
problem that affects 1 in 3 users. – Nielsen Norman Group

Entrepreneur Slides
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Tips for conducting consumer behavior research

• Make sure you clearly stated the Research Objective before

designing Research methods
• Always Involve your Stakeholder
• Frame a research question which allow consumers to elaborate
more and more contextual
• Equip yourself with Business Acumen and Landscape to make your
insight sharp and relevant

Entrepreneur Slides
PEOPLE MAKE INVESTING SEEM MORE
DIFFICULT THAN IT SHOULD

Applying Psychology
In the Business
The Psychology of Influence

Influence is Power

Psychology
principles behind
what influence
people to say “Yes”
Commitment & Consistency

Psychology: People want their beliefs

to be consistent with their values.

We do that because we all feel an

innate social pressure to be
consistent, something known as
normative social influence.

Marketing: Make People state their

view / commitment in Public or Social
media
Authority

Psychology: We believe in things that

are recommended or told by someone
expert / we respect.

Authority only influences when the

target believes in the power and
authenticity of that authority. The
stronger the authority association, the
more powerful the impact

Marketing: Include elements of the

Authority to influence consumer (figure,
clothes, titles, etc)
Social Proof

Psychology: “People interested in

something because others are.”

People doing what they observe

other people doing

Marketing: Influence people by

showing what others think and
doing related to your product
Reciprocity

Psychology: We feel obliged to give

back to people who have given to us

Marketing: Giving out something in

free, making the customer feel
special, helping the customers,
building relationships with them
makes them feel indebted towards
you, and they would be more likely
to return the favour
Liking

Psychology: "People do business with

people they know, like and trust.”

Physical attractiveness (we like good-

looking people)

Familiarity (we trust people we know)

Similarity (we like people like us)

Compliments (we like people who say

nice things about us)
Scarcity

Psychology: We place more value on

things we believe to be rare, and lower
value to things which can be easily
accessed

Marketing: Offer a limited and rare offer

of our product. Consumer hate to miss
out, and that fear is a powerful motivator
to encourage us to act quickly.
Decoy Effect

“Consumers tend to change their

preference between two options
when a third, less attractive option
is presented.”

One price point is intentionally

included to entice you to choose the
most expensive option
Decoy Effect

This time, most of the consumers

chose the large bucket because they
saw value in more popcorn for only
$0.5.

The medium bucket was

asymmetrically dominated by the
large bucket. The decoy effect
encouraged the consumers to go for
the expensive option.
Anchoring

“People base decisions on the first

piece of information they receive”

For marketers, anchoring is

important especially if there is a sale

Clearly state the initial price of the

product ("setting" the anchor), and
display the sale price right next to it
Visual Cueing

“Subconsciously people will follow

where other look at”

Visual cueing can be used to direct

attention to text or other elements

We can use the model’s gaze to

highlight the discount being offered
in the exit overlay
Visual Cueing
Hick’s Law

“Too many choices might take the

user a long time to choose”

Try to simplify these things out,

most people tend to cluster similar
pieces of information together

Try not to make overwhelming users

by highlighting the recommended
options
Cocktail Party Effect

“One of the ways our brains determine

what is worthy of conscious attention is
personal relevance”

Personalisation is one way to grab

attention. Now it’s easier for marketers to
do that since consumers leave data
online

Make sure we make the communication

and experience as personalized as
possible
Pratfall Effect
A B

“You become more appealing after

you admit a weakness or you
exhibit a flaw.”
66%
In marketing, this applies because
one of the biggest issues we face is
that people don’t trust brands.

Once you’ve admitted a flaw, you’re

demonstrating your honesty and
the rest of your claims suddenly
become more believable.
Consumer Behavior
During COVID-19
Starting with Panic Buying, Why we did it?

Survival Key Insight

Instinct
When we lose
Fear & Anxiety our sense of
prompt us to control, we try
react fast and and do things to
anticipate compensate
danger and achieve
control again.
Losing Sense of Panic happens
Control when that We start buying
Invisible Enemy more rational things to help
Uncertainty part of your you solve the
Inconsistent brain [the problems that
Messaging No guidance or frontal cortex] caused you to
existing coping gets overrun by lose control in
mechanism emotion the first place
Indonesian Consumers in the “acceptance” stage

Source: KANTAR Report

Indonesian Consumer Lifestyle Changes: Out of Home Mobility

Source: Google National Mobility Index

Indonesian consumer is Positive-Realist

Source: KANTAR Report

New opportunities emerging in this COVID period

Source: KANTAR Report

Opportunities: Sustainable Packaging

Source: McKinsey Report

Opportunities: Provide Value for Money Product and Perception

Source: McKinsey Report

Opportunities: Omni-Channel, Data, and Contactless Payment

Source: McKinsey Report

Source: McKinsey Report
Summary

• Indonesian Consumers are Adjusting – Adopting – Aligning – With the acceptance of New Normal, people will
move towards more long term alignment, find new ways to manage and take control back of their life
• Indonesian Consumers are Positive-Realist – Confidence level and optimism on economy is still high while
Indonesian consumers already ‘accepting’ and ‘forecasting’ realistically. It means they will stay spend a lot but
more conscious
• Indonesian Consumers are more Conscious and Ethical Spender – This COVID-19 makes Indonesian
consumers more open to new product and experiences with an environmental friendly and sustainable approach
• Omnichannel and Digital Maturity – A strong online presence, digital loyalty programs, and Brand Experience in
offline are key for Consumer Engagement
• Update Operating Procedures – Create a re-opening playbook, SOP for safe environment, and make it attractive
• Collaboration with other Brands – Cooperation and Partnership are key themes during this pandemic.
Proactively create links and reach out other brand or partner to do a shared-value program
• Be a Positive-Realist Brand also – Develop campaigns and activations that celebrate enthusiasm, optimism, and
milestones of the second part of 2020. But still use a cautious and safety approach
• Focus on Long-Term Sustainability – Manage expectations, Prioritize Budget, and Leave Room for Maneuvering
In a Crisis There is always an Opportunity

Chinese word for Crisis contains two elements

Danger & Opportunity
No matter the difficulty of the circumstances, no
matter how dangerous the situation,
at the heart of each crisis lies a tremendous opportunity
Further Readings
 Thank You and Let’s Connect

: Irfan Agia : muhamad_i_agia@linkaja.id