Welcome to Mark529

 Professor: Jaideep Sengupta

 PhD: UCLA
 MBA; BTech (Electrical Engg)

 Teaching in the MBA program the last few years (including

Shenzhen)
 Taught executives in UCLA, HK (Kellogg-HKUST EMBA)

 Telephone: 852-2358-7718
 Email: mkjaisen@ust.hk

 Course packet available with MBA office

Today…Session 1
 Administrative details
 Case discussion: New Coke
 A Model of Consumer Behavior
Admin Stuff… What is this
course about?
 Understanding Consumers’ Behavior

 Definition of Consumer Behavior

 Those activities directly involved in obtaining, consuming,
and disposing of products and services, with special
emphasis on the mental processes that precede and follow
these actions

 Mental processes important

 E.g., not just what brand/ad we like or dislike, but why we like or dislike
it…
 Some illustrative examples which highlight the importance of
understanding mental processes…
Example 1….
 Real estate agents in Vancouver,
Canada are able to command higher
prices for house numbers which contain
the number “8”, and lower prices for
number “4”

 Why?
Example 2
 During periods when consumers are not
shopping much (e.g., bad economy), store
managers often play slow music within stores

 During busy periods (e.g., holiday season),

fast music is played

 Why?
Example 3….
 In the US, the Marlboro cowboy is
usually shown alone

 Ad….
Example 3….
 In Japan, the Marlboro cowboy is
usually shown as part of a group…

 Ad….
WHY??
Solution….
 Culture has an influence on consumer
behavior

 US culture = importance of individual; not

true in Asia

 Japanese consumers think a single cowboy

looks “lonely” and “poor”
 Just an ordinary worker on a farm
In general, important to
understand consumer
psychology to design
successful marketing tactics

And that is what this course is all

about…
 Course Description…
 Marketing applications stressed; but

 Focus is on understanding the consumer’s psychology

 Note: all marketing courses mouth the cliché about “customer is
king”, but very few courses actually follow that focus!

 This course corrects that bias

 Advertising the key tool used to explain many of the concepts

 Advertising is the managerial tool that works off an understanding of
consumer psychology
 Also, advertising model very similar to consumer behavior model
Admin Stuff…Teaching Style
 Classes = lecture + case
 During Lecture:
 I sometimes speak fast: Stop me!!
 Questions VERY welcome during the lecture. Again, just stop
me and ask!
 If one of you asks a question, others should also feel free to
add their comments

 For cases:
 Break out rooms (in groups); discuss and provide a 1 page
written answer
 25-30 minutes
 Then general discussion
Admin Stuff…Textbook
 Consumer Behavior (4th edition); Hoyer and
MacInnis

 Chapter readings specified; please read before

class (quick skim will suffice)

 Book is a complement to the class lecture and

discussion (not a substitute)

 Will find book useful for group project

Admin Stuff…Group formation
 Several aspects of the course involve group
work
 Project
 Case discussion
 In-class assignments

 Form your own groups of 5-6 today!

 Please email me list next week (names, ID, email,
group contact person)
 Contact me if not part of group; will randomly assign
Admin Stuff…Grading Criteria
 Class Participation 50%
 Group Project Report 40%
 Will describe later today
 Project Presentation 10%
Admin Stuff…Class Participation
 Quality, not quantity!
 Insightful comments will receive greater credit

 In next class, please give me an index card

with following details
 Photograph
 Name
 Email address
 Contact phone number
 Short statement describing work experience
Admin stuff…Class Guidelines
 Please arrive on time: participation points!!
 5 minutes leeway

 Lecture handout on webpage AFTER class

 Any questions before we go to case?

Case: “Introducing New Coke”

The importance of understanding your

consumers…

FORM GROUPS OF 4-5 (DOESN’T HAVE TO

BE THE FINAL GROUPS!!)
Case: Introducing New
Coke…(FORM GROUPS)
1. What factors led to Coca-Cola’s huge initial popularity?

2. What was Pepsi’s strategy?

3. Coca-Cola responded with New Coke: what happened
as a result? (summarize facts from case)
4. How did Coca-Cola end up making such a big mistake?
5. What would you have done?

 Discuss in break-out rooms in groups; 1 page of

bullet-points TOTAL (write your names also)
 1 qn per group (and all groups think about qn 5)
Big Take-away
 Marketing cannot be driven only by the product, or the
competition, or the channel

 Marketing is about understanding the consumer’s side:

 why they like/dislike something
 Coke was popular, but management did not understand why! Not the
taste…
 More (recent) scientific evidence (not taste, but brand name)
…

 In other words, important to understand Consumer

Behavior!
End of case discussion…
Session 1… Introduction to
Consumer Behavior
 Definition (what goes on in consumer’s
mind…)
 Importance: why is CB important?
 Consumer Behavior (CB) dictates Marketing
Tactics
 Lack of knowledge of CB = big mistakes!
 New Coke
 Marlboro ad in Japan
 Knowledge of CB = Successful Marketing tactics
 Pepsi…
Next Session…
 Model of CB + course layout

 Lecture: Perception

 Case: DeBeers

 Lunch!!