Online Consumer Psychology

1. Online Consumer Psychology • Hood, K., & Schumann, D. (2007). The Process and Consequences of Cognitive Filtering of Internet Content: Handling the Glut of Internet Advertising. In D. Schumann & E. Thorson (Eds.), Internet advertising: Theory and Research (pp. 185-202): Lawrence Erlbaum Associates. • Henry, P. (2005). Is the Internet Empowering Consumers to Make Better Decisions, or Strengthening Marketers' Potential to Persuade? . In C. Haugtvedt, K. Machleit & R. Yalch (Eds.), Online consumer psychology: understanding and influencing consumer behavior in the virtual world (pp. 345-360): Lawrence Erlbaum Associates. • Thursday, 01-July-2010 • Kilen 2.75, CBS, Frederiksberg, Denmark • DØK HU2D - Internet Marketing: Lecture 06 • Course Webpage: http://www.itu.dk/people/rkva/2010-Summer-IM/ • Facebook Group: http://www.facebook.com/group.php?gid=133258548012 • Etherpad: http://ietherpad.com/d5mBZdMDe6

2. The Internet Revolution Traditional Media Newspapers Radio Television SMEs and MNCs Virtual Storefronts Brand Comparisons Travel and Tourism Government Education Libraries

3. Human Information Processing-1Hood, K., & Schumann, D. (2007). The Process and Consequences of Cognitive Filtering of Internet Content: Handling the Glut of Internet Advertising. In D. Schumann & E. Thorson (Eds.), Internet advertising: Theory and Research (pp. 185-202): Lawrence Erlbaum Associates. Sometimes there can even be too much of a good thing Limited Cognitive Capacity Information Overload Clutter Effects Sensation, Perception, Attention, Cognition, Action

4. Human Information Processing-2 Contextual Cuing Situations influence perception Task demands influence attention Knowledge, skills and abilities influence cognition and action Internet Search Process Circuitous Process Decision Heuristics

5. Cognitive Filtering Learning in and of itself is selective (Broadbent) Cognitive filtering is a coping mechanism Internet Search: Two Primary Goal States Information-seeking goal state Desired Experiential State Moderators of Cognitive Filtering Individual Differences Situational Influences

6. Consequences of Cognitive Filtering Restriction of exposure to diversity Intergroup-bias First-order effects (confirmation bias) Second-order effects (inaccuracies) Third-order affects (restricted action)

7. Implications of Cognitive Filtering Accurate targeting of an online consumer’s “in-group” online spaces Online market segmentation Online communities

8. In-class exercise Change Blindness

9. Online Consumer Decision-MakingHenry, P. (2005). Is the Internet Empowering Consumers to Make Better Decisions, or Strengthening Marketers' Potential to Persuade? . In C. Haugtvedt, K. Machleit & R. Yalch (Eds.), Online consumer psychology: understanding and influencing consumer behavior in the virtual world (pp. 345-360): Lawrence Erlbaum Associates. Two Themes: Is the Internet Empowering Consumers’ Decision-Making? Strengthening Marketers’ Persuasion Potential?

10. Henry’s Central Claim “Despite the impact of innovation on media alternatives, we must realize that we are faced with human characteristics that remain constant over time.” (p. 346)

11. Henry’s Four Skepticisms Enhanced Decision Capability Search Patterns New Decision Strategies Consumer Empowerment

12. Human Information Processing Information Overload “Single-Feature Responding” From “product orientation” to “marketing orientation” Online Heath information example Constraining Factors Limits to Human Information Processing Limited Time Expanded Information More Cognitive Effort Increased Choice but decreased perception of power

13. Human Decision-Making Information presentation and communication requirements Financial Decisions Kahneman & Tversky’s Prospect Theory Decision-Making Heuristics Habitual Repurchase Most well-known brand Price as proxy for quality Third party opinions (experts, friends, trusted others) “Short-cuts have utility” (p. 354)

14. Human Cognitive Variability Different Cognitive Characteristics Knowledge Skills Abilities “Access is only empowering if one has these prerequisite skills” (p. 354) Visual vs. Textual

15. Technology Cycles Increased Time Pressure Expanded Access to Information Greater Range of Choice Human Cognitive Limitations Technology cycles that results in the default shortcut to reliance on expert opinion

16. Henry’s Claim If this approximates reality, then the Internet will not change the basic decision strategies, nor it will lead to substantial knowledge enhancement.” (p. 356, emphasis mine)

17. Recommendations Understanding of Consumers’ Decision-Making Processes Involvement with the category Identification of current information-search patterns Alternative evaluation criteria Duration of the decision process

18. Three Approaches to Decision-Making Insights Expert questioning Form a panel of prospective customers Facilitate expert questioning sessions Guided Recall Category need identification Subsequent product purchase processes and outcomes 3. Triadic sorting Sets of three product alternatives Select one that is most different than the other two