Essay

Consumer Behaviour BHO2434

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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

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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

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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

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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

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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

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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