Essay

Topics: Automotive industry, Car manufacturers, Formula One Pages: 12 (456 words) Published: February 28, 2014
Consumer Behaviour BHO2434



Thus far…
◦ We considered cognitivist theories, their limitations
◦ We considered behavioural learning and habit
theories
◦ This lecture
 We briefly consider empirical evidence to support
behaviourist theories

Week 7: Empirical evidence that supports
behaviourist theories
East, Wright & Vanhuele (2009)

BH02434 Week 7



Big brands get
more customers
more of the time
(DJ effect)
◦ Pepsi is in more
places and is more
salient than Virgin
Cola
 It gets bought more
often by more people!

BH02434 Week 7





Consumers have repertoires
Some brands have more customers
Those customers who use two (or more)
brands, will split their ‘loyalties’
◦ But as bigger brands are in more places, the
probability is the big brand will be bought more
often

BH02434 Week 7



Generalisable empirical research suggests
there are other theories that better explain
consumer behaviour:
1. There are two types of market structure
2. Aggregately, consumers tend to behave
predictably
3. Consumer attitudes towards brands they use
are largely similar

BH02434 Week 7

BH02434 Week 7

1

Consumer Behaviour BHO2434



There are two types of market structure:

a.

◦ Subscription
 You subscribe to a brand for a period of time
 Aggregately, brand switching can be predicted
 E.g. banks, insurance, ISPs, telephone

b.

Brand switching patterns in subscription
markets
Duplication of purchase patterns in
repertoire markets

◦ Repertoire
 You cycle through a small number of brands on an ‘asif’ random basis  Aggregately, brand sharing can be predicted
 FMCGs, etc

BH02434 Week 7

BH02434 Week 7



The following slides provide selected brands
from the UK Automotive market
◦ First we will consider common beliefs about the way
markets work
◦ Then we look at loyalty to each brand
 Using industry data of the automotive market in UK
and France
 The Dirichlet theory predicts the ‘churn’ rate
 And finally consider patterns in brand switching

BH02434 Week 7

Thought time


Consider the following statements about
subscription markets. Do you consider
them true? Do you think most marketers
would consider them true?

Statement 1


*

BH02434 Week 7

“Consumers will be more loyal to prestige
brands like Mercedes and BMW than Ford
or the local GM brand*”

Vauxhall in UK, Opel in Europe, Chevrolet in US/Canada and Holden in Australia

BH02434 Week 7

2

Consumer Behaviour BHO2434

1986-9

Penetration %

Repeat rate
O

1986-9

Penetration %

Repeat rate

T

O

Ford

27

Ford

27

GM

15

GM

15

58

Renault

4

Renault

4

48

Peugeot

5

Peugeot

5

43

BMW

2

BMW

2

52

Mercedes Benz

1

Mercedes Benz

1

61

Average

9

Average

9

T

64

55

T = 50%+0.5×Penetration?
BH02434 Week 7

1986-9

Penetration %

BH02434 Week 7

Repeat rate
O

1986-9

Penetration %

Repeat rate

T

O

T

Ford

27

64

63

Renault

31

64

66

GM

15

58

57

Peugeot

23

60

62

Renault

4

48

52

Ford

7

55

54

Peugeot

5

43

52

GM

5

53

53

BMW

2

52

51

BMW

1

46

51

Mercedes Benz

1

61

51

Mercedes Benz

1

70

51

Average

9

55

54
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