Food Marketing and Consumer Behaviour 2023-2024 PDF

Food marketing and consumer behaviour Academic year 2023-2024 Prof. dr. ir. Wim Verbeke Prof. dr. Christine Yung Hung ir. Fien Minnens Department of Agricultural Economics [email protected]; [email protected]; [email protected] Food marketing and consumer behaviour - Chapter 4 1 How can...

Food marketing and consumer behaviour Academic year 2023-2024 Prof. dr. ir. Wim Verbeke Prof. dr. Christine Yung Hung ir. Fien Minnens Department of Agricultural Economics [email protected]; [email protected]; [email protected] Food marketing and consumer behaviour - Chapter 4 1 How can we influence consumers’ food choice? Applications Type of strategies Public policies Commercial 1) Restrictions 2) Monetary incentives (Carrots and Sticks) 3) Information and Persuasion 4) Nudging Adapted from Soman (2018) How can we influence consumers’ food choice? Applications Type of strategies Public policies Commercial 1) Restrictions Bans and regulated supply (e.g. trans-fat ban) Product (un)availability 2) Monetary incentives (Carrots and Sticks) Subsidies and taxes (e.g. fat tax) Discounts and promotions 3) Information and Persuasion Disclosures (e.g. food labelling) Advertising 4) Nudging Choice architecture (e.g. default) Choice architecture (e.g. portion size) Adapted from Soman (2018) Nudging Dictionary: “To seek the attention of by a push of the elbow; to prod lightly; urge into action.” (Merriam-webster) Thaler and Sunstein: “…alters people’s behaviour in a predictable way without forbidding any options or significantly changing their economic consequences. To count as a mere nudge, the intervention must be easy and cheap to avoid.” Nudging example 1 S M L Nudging example 1 XS S M L Nudging example 1 XS S M Nudging example 1 “Labels are important because they influence size perceptions, preferences and actual consumption.” Chandon, P. (2013). How package design and packaged-based marketing claims lead to overeating. Applied Economic Perspectives and Policy, 35(1), 7-31. S M L Nudging example 1 – Theory behind The compromise effect (or extremeness aversion) Options tend to get chosen more often when they are the compromise option in a choice set / intermediate (or middle) options in a choice set S M L Carroll, R., & Vallen, B. (2014). Compromise and attraction effects in food choice. International journal of consumer studies, 38(6), 636-641. Nudging example 2 “Introduction of smaller portion sizes of hot meals in worksite cafeterias in addition to the existing size stimulated a moderate number of consumers to replace their large meals by a small meal”, so does consumption. Vermeer, W. M., Steenhuis, I. H., & Poelman, M. P. (2014). Small, medium, large or supersize? The development and evaluation of interventions targeted at portion size. International Journal of Obesity, 38(S1), S13. Nudging example 2 – Theory behind Default • A no-action default is usually the outcome when an individual fails to make a decision • Default settings strongly steer choices even when better alternatives are available  portion sizes that are in line with the nutritional guidelines should become the default Vermeer, W. M., Steenhuis, I. H., & Poelman, M. P. (2014). Small, medium, large or supersize? The development and evaluation of interventions targeted at portion size. International Journal of Obesity, 38(S1), S13. Nudging example 3 People consume less when they are in smaller separate packages ≠ 500g Soman, D., Xu, J., & Cheema, A. (2010). Decision points: A theory emerges. Rotman Magazine, 64-68. + 500g Nudging example 3– Theory behind Decision points • The times a recurring decision is faced • Triggering off a cognitive process and a deliberative mode • An active decision – “should I open the next bag and continue consumption”? Decision point ≠ Soman, D., Xu, J., & Cheema, A. (2010). Decision points: A theory emerges. Rotman Magazine, 64-68. + Why? Because humans can be… • influenced by the context • unwilling to spend cognitive effort • irrational • imperfect information processors • emotional • short-sighted and myopic • inconsistent / with intention – behaviour gap Adapted from Thaler and Sunstein (2008) Other behavioural theories Apart from the compromise effect, defaults, decision points that you have seen in the examples, there are ample phenomena or principles that a ‘choice architect’ can use to influence food choices … Few more examples: • Choice overload / Overchoice • Construal levels • Goal visibility • Sunk cost effect • Payment depreciation Other behavioural theories Apart from the compromise effect, defaults, decision points that you have seen in the examples, there are ample phenomena or principles that a ‘choice architect’ can use to influence food choices … Few more examples: • Choice overload / Overchoice • Construal levels • Goal visibility • Sunk cost effect • Payment depreciation Choice overload / Overchoice The presence of too many choices for a particular decision, making it difficult to evaluate and decide (costly cognitive process) Choice overload / Overchoice The presence of too many choices for a particular decision, making it difficult to evaluate and decide (costly cognitive process) Example: A table with 24 varieties of gourmet jam was displayed in a store. Those who sampled the jams received a coupon for $1 off for any jam. On another day, a similar table with only 6 varieties of the jam were on display. The large display attracted more interest than the small one, but when it came to purchase, people who saw the large display were much less likely to buy as people who saw the small display. Schwartz, B. (2004, January). The paradox of choice: Why more is less. New York: Ecco. Other behavioural theories Apart from the compromise effect, defaults, decision points that you have seen in the examples, there are ample phenomena or principles that a ‘choice architect’ can use to influence food choices … Few more examples: • Choice overload / Overchoice • Construal levels • Goal visibility • Sunk cost effect • Payment depreciation Construal levels Events in the far future, people think in terms of their higher level benefits. When the same event is to happen now, it is viewed in terms of concrete details and efforts involved, resulting in a diminished attractiveness of the event as it comes closer in time. Construal levels Events in the far future, people think in terms of their higher level benefits. When the same event is to happen now, it is viewed in terms of concrete details and efforts involved, resulting in a diminished attractiveness of the event as it comes closer in time. Example: Christine was intrigued by the possibility of body-building and enrolled for a personal dieting and fitness programme that would happen in two months. When two months have passed, the inconvenience of commuting and giving up on her favourite snacks and leisure activities seemed too much, and she decided to cancel it. Trope, Y., & Liberman, N. (2003). Temporal construal. Psychological Review, 110(3), 403–421. Other behavioural theories Apart from the compromise effect, defaults, decision points that you have seen in the examples, there are ample phenomena or principles that a ‘choice architect’ can use to influence food choices … Few more examples: • Choice overload / Overchoice • Construal levels • Goal visibility • Sunk cost effect • Payment depreciation Goal visibility When people are working on a goal-oriented task, they work harder towards accomplishing the goal when it is in sight. Reminding people of their goal or making the goal more salient or visual increases motivation. Goal visibility When people are working on a goal-oriented task, they work harder towards accomplishing the goal when it is in sight. Reminding people of their goal or making the goal more salient or visual increases motivation. Example: Christine went grocery shopping with a goal in mind that she would like to have a healthy dinner. Being distracted in the junk food lane that everything look delicious, her motivation decreased. Before checking out, there was a ‘healthy meal’ corner that displayed and contain what she could just pick for a healthy dinner, she was reminded of her health goal and managed to achieve it. Cheema, A., & Bagchi, R. (2011). The Effect of Goal Visualization on Goal Pursuit : Implications for Individuals and Managers. Journal of Marketing, 75(2), 109–123. Other behavioural theories Apart from the compromise effect, defaults, decision points that you have seen in the examples, there are ample phenomena or principles that a ‘choice architect’ can use to influence food choices … Few more examples: • Choice overload / Overchoice • Construal levels • Goal visibility • Sunk cost effect • Payment depreciation Sunk cost effect People who have prepaid for a consumption opportunity are driven to consume so that they can satisfactorily close their mental account without a loss, even it involves a higher or extra cost. Sunk cost effect People who have prepaid for a consumption opportunity are driven to consume so that they can satisfactorily close their mental account without a loss, even it involves a higher or extra cost. Example: Christine had purchased a €150 voucher for an 8-course dinner at a 5-star hotel, which had to be redeemed last Friday. However there was a strike that thoroughly disrupted all public transports. She would have to take a taxi and it would cost €200, she decided to bear the high cost and take a taxi, in order to use the prepaid voucher for the meal. Thaler, R. H. (1999). Mental accounting matters. Journal of Behavioral Decision Making, 12(3), 183–206. Other behavioural theories Apart from the compromise effect, defaults, decision points that you have seen in the examples, there are ample phenomena or principles that a ‘choice architect’ can use to influence food choices … Few more examples: • Choice overload / Overchoice • Construal levels • Goal visibility • Sunk cost effect • Payment depreciation Payment depreciation The value of the past payment decreases as time passes. As a result, the strength of the sunk cost effect (a pressure to consume events that have been prepaid for) decreases with time. Payment depreciation The value of the past payment decreases as time passes. As a result, the strength of the sunk cost effect (a pressure to consume events that have been prepaid for) decreases with time. Example: Christine had made an annual membership payment for a supermarket 15km away where members can have free drinks and snacks, and a 5% off discount on any purchase. The membership payment only pays off with at least five visits per month with her usual purchase. Yet, her frequency of visit gradually declined. The other year, she makes monthly payments and her visit frequency was more stable as a function of time. Gourville, J. T., & Soman, D. (1998). Payment depreciation: The behavioral effects of temporally separating payments from consumption. Journal of Consumer Research, 25(2), 160–174. Accounting the behavioural phenomena, how do we develop nudges? Ly, K., Mazar, N., Zhao, M., & Soman, D. (2013). A practitioner's guide to nudging How do we develop nudges? Step 1 1. The properties of the decision • incentives and motivations • attention to the decision receives • choices presented to the individual (current default?) 2. Information sources 3. Features of the individual’s mindset (emotions?) 4. Environmental and social factors (peer pressure?) Ly, K., Mazar, N., Zhao, M., & Soman, D. (2013). A practitioner's guide to nudging How do we develop nudges? Step 2 Identify the bottlenecks and the solutions Answering these questions may help: 1. Aware of what need to be done but are unable to accomplish it? activation needed? 2. Self-motivated enough to nudge themselves? 3. Increased cognition needed? or cognitive overload? 4. Competing action? or inertia? Ly, K., Mazar, N., Zhao, M., & Soman, D. (2013). A practitioner's guide to nudging How do we develop nudges? Step 3 Depending on the type of nudges identified: 1. Implement automatic enrolment process 2. Offer or change the default option 3. Modify or change available choices 4. Simplify the required decision-making process 5. Use technology to reduce the cost Ly, K., Mazar, N., Zhao, M., & Soman, D. (2013). A practitioner's guide to nudging How do we develop nudges? Step 4 Prioritizing based on: 1. Choose nudges that resolve bottlenecks that are further upstream in the decision-making process. 2. Relative reach 3. Segmentation based on behavioural preferences 4. Long-term effectiveness of the nudge and development of new, more beneficial habits. Ly, K., Mazar, N., Zhao, M., & Soman, D. (2013). A practitioner's guide to nudging So does nudging really work? There is mixed evidence, e.g. Wilson et al. (2016): • Most studies showed low levels of evidence and received poor or average quality ratings. • ‘Priming’ and ‘salience’ nudges have mixed efficacy, but a combination seems to influence healthier choices. Osman et al. (2018): • None of the nudging techniques used have scientific proven effectiveness Hummel & Maedche (2019): • Defaults are most effective while precommitment strategies are least effective Hummel & Maedche, A. (2019). How effective is nudging? A quantitative review on the effect sizes and limits of empirical nudging studies. Journal of Behavioral and Experimental Economics, 80, 47-58. Osman, M., Radford, S., Lin, Y., Gold, N., Nelson, W., & Löfstedt, R. (2018). Learning lessons: how to practice nudging around the world. Journal of Risk Research, 1-9. Wilson, A. L., Buckley, E., Buckley, J. D., & Bogomolova, S. (2016). Nudging healthier food and beverage choices through salience and priming. Evidence from a systematic review. Food Quality and Preference, 51, 47-64. Nudging to influence consumers’ behaviour “…make it easy for people to go their own way” Thaler and Sunstein (2008)