The Candy Study:
The effect of current emotions on predicted preferences
"Eat" Group
"Wait" Group
Open Bag
Answer Questions
Answer Questions
Open Bag
Imagine that you have been set up on a date with
someone who you consider to be very attractive.
You can meet this person either for lunch this
coming Friday, or for dinner and a movie on
Friday evening a week later. Which would you
prefer?
70%
%
preferring
the quick lunch
60%
50%
40%
30%
20%
10%
0%
Opened
Unopened
Suppose that you have completed some consulting work
and were told that you would receive “about $3000” and
that you would be paid “sometime in November.” You
get a phone call this week, and the manager of the
company informs you that you will receive $3800 on
February 5th. All things considered, do you regard this
as good news or bad news?
60%
50%
"bad news"
40%
30%
20%
10%
0%
Opened
Unopened
Suppose you were involved in plane crash and were stuck in remote
mountains for a week with other survivors who you did not previously
know. You are uncertain when or if you will be rescued.
What is the likelihood that you would steal food from the other survivors?
0——1——2——3——4——5——6——7——8——9——10
Definitely would not
Definitely would
Likelihood
of stealing
food
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
Opened
Unopened
Suppose that in exchange for completing a 45 minute survey for
Amazon.com, you could receive your choice of one the four books
listed below. If you choose to complete and return the mail survey,
the book will be shipped to you within 2 weeks of the time that
Amazon receives your survey.
What is the most you would be willing to pay for overnight
delivery, rather than waiting 4 weeks?
$7.00
Willingness
to pay
for overnight
delivery
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00
opened
unopened
Likert Scale
I wish there were more “case study” lectures and fewer “concepts” lectures. [0.0]
Strongly
Disagree
�
Disagree
�
Neither agree
nor disagree
�
Agree
�
Strongly
Agree
�
Professor Frederick talks too slowly [-1.24]
Strongly
Disagree
�
Disagree
�
Neither agree
nor disagree
�
Agree
�
Strongly
Agree
�
Professor Frederick talks too quietly [-1.14]
Strongly
Disagree
�
Disagree
�
Neither agree
nor disagree
�
Agree
�
Strongly
Agree
�
Likert Scale
I do not get to participate as much as I would like to.
Strongly
Disagree
Disagree
�
Neither agree
nor disagree
�
Agree
�
[-0.17]
Strongly
Agree
�
There is too much reading for this course. [-0.29]
Strongly
Disagree
�
Disagree
�
Neither agree
nor disagree
�
Agree
�
Strongly
Agree
�
Professor Frederick does not allow enough class discussion. [-1.14]
Strongly
Disagree
�
�
Disagree
�
�
Neither agree
nor disagree
�
�
Agree
�
�
Strongly
Agree
�
�
Likert Scale
I wish there were more “case study” lectures and fewer “concepts” lectures. [-0.3]
Strongly
Disagree
�
Disagree
�
Neither agree
nor disagree
�
Agree
�
Strongly
Agree
�
Professor Frederick talks too slowly [-1.25]
Strongly
Disagree
�
Disagree
�
Neither agree
nor disagree
�
Agree
�
Strongly
Agree
�
Professor Frederick talks too quietly [-0.2]
Strongly
Disagree
�
Disagree
�
Neither agree
nor disagree
�
Agree
�
Strongly
Agree
�
Likert Scale
I do not get to participate as much as I would like to.
Strongly
Disagree
Disagree
�
Neither agree
nor disagree
�
Agree
�
[-0.5]
Strongly
Agree
�
There is too much reading for this course. [-0.3]
Strongly
Disagree
�
Disagree
�
Neither agree
nor disagree
�
Agree
�
Strongly
Agree
�
Professor Frederick does not allow enough class discussion. [-0.8]
Strongly
Disagree
�
�
Disagree
�
�
Neither agree
nor disagree
�
�
Agree
�
�
Strongly
Agree
�
�
Semantic Differential 2002 812
For each line below, think about 15.812, and then place an “X” somewhere
between the two adjectives.
*
X
Quantitative _____ _____ _____ _____ _____ _____ _____ Qualitative
X
*
Breadth
_____ _____ _____ _____ _____ _____ _____ Depth
Practical
_____ _____ _____ _____ _____ _____ _____ Theoretical
X*
* X
Structured _____ _____ _____ _____ _____ _____ _____ Free - Form
�
�
�
�
Semantic Differential 2002 814
For each line below, think about 15.812, and then place an “X” somewhere
between the two adjectives.
*
X
Quantitative _____ _____ _____ _____ _____ _____ _____ Qualitative
X
*
Breadth
_____ _____ _____ _____ _____ _____ _____ Depth
Practical
_____ _____ _____ _____ _____ _____ _____ Theoretical
Structured
�
_____ _____ _____ _____ _____ _____ _____ Free - Form
�
�
�
X*
*
X
Mean Rank
10
9
8
7
6
5
4
3
2
1
Sachets
Consumer Needs
Segmentation
Calyx & Corolla
Brand Equity
Black & Decker
Conjoint
Intuit
Top 10 things you dislike about this class
ÿ
ÿ
ÿ
ÿ
ÿ
ÿ
Sloan Space not updated on a regular basis
"Technical difficulties"
Fast speech by Prof. Frederick
Various topics not covered in sufficient depth
Lack of quantitative work
I don’t know who I am working with for the
final project – too disorganized.
ÿ I don’t really like group projects
ÿ Bringing the name board is a pain
ÿ Would like to learn more about the psychology
involved behind market decisions
Top 10 things you dislike about this class
ÿ
ÿ
ÿ
ÿ
TA should pick better candy with the class' money
Course reader is too expensive
The class is at lunch time
It’s really far away from the class I have right
before it.
ÿ The class before this one leaves this room stuffy.
ÿ Chairs are too close together, I bump my knees
getting in and out.
ÿ Jalapeno jellybeans!
Worst Lecture
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
Sachets
Consumer Needs
Segmentation
Calyx & Corolla
Brand Equity
Black & Decker
Conjoint
Intuit
Best Lecture
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
Sachets
Consumer Needs
Segmentation
Calyx & Corolla
Brand Equity
Black & Decker
Conjoint
Intuit
things you dislike about this class
ÿ
ÿ
ÿ
ÿ
TA should pick better candy with the class' money
Course reader is too expensive
The class is at lunch time
It’s really far away from the class I have right
before it.
ÿ The class before this one leaves this room stuffy.
ÿ Chairs are too close together, I bump my knees
getting in and out.
Top 3 things you dislike about this class
ÿ More discussion of High tech products!
ÿ No overviews & takeaways!
ÿ Professor speaks too quickly!
Outline of today's lecture
•
•
•
•
Market Size vs. Market Share
Estimate total annual demand for plastic diapers
"Hierarchy of Effects" model
3 methods for forecasting demand
– historical trends
– surveys
– test markets
Market size vs.Market share
your
product(s)
substitutes
for your
product
Proton-Pump Inhibitors
Nexium
Prilosec
Prilosec
Prevacid
1997
2002
Promoting Primary Demand (market size) or Selective Demand (market share)
• in 1907, an advertising executive for Campbell's Pork and
Beans found that 94% of housewives cooked their own
beans from scratch.
• Campbell's had 36% market share. 7 competitors
collectively had 64% market share.
• In blind taste test, Campbell's got the highest ratings of all
the brands
• Should Campbells run an ad that focuses on the time
saving of using canned beans, or should it focus on the
fact that it has a better product than its competitors?
Demand = ƒ (x,y,z,…)
Economy
Product
Price
Consumer
Needs
Promotion
Place
Competition
Different levels of demand forecasts
geographic
level
world
region
person
industry
product
level
company
category
line
item
short
medium
time level
long
What is the potential annual demand
for plastic diapers?
•
•
•
•
•
4 million babies delivered each year in U.S.
Babies defecate about 10 times per day at birth
Children defecate about 4 times per day at age 3
Few kids are toilet trained before age 2
But almost all are toilet trained by age 3
# of "accidents" / day
Computing total diaper demand
Demand = 10 – 2*age
10
4
Birth
1
2
Age
3
Hierarchy-of-Effects Model
UNAWARE
p1= ƒ(x,y,z, …)
AWARE
p2= ƒ(x,y,z, …)
TRIAL
p3= ƒ(x,y,z, …)
REPEAT
3 bases of demand forecasts:
• What people have done
– extrapolation (time series analysis)
– statistical demand analysis
• What people say they will do
– surveys
• What people actually do
– laboratory markets
– test markets
Trend Analysis
sales
sales
time
t*
time
t*
Statistical Demand Analysis
# cans of soda = -140 + 6X – .002Y
What people say they will do
____ I definitely would not buy
____ I might buy
____ I definitely would buy
100
actual %
purchasing
0
definitely
not
might
definitely
will
Simulated markets
Laboratory market:
• respondents given $20
• complete initial survey (perceptions & preference)
• shown advertising for competing brands & new brand
• enter simulated retail store with, say, deodorants
• spend any amount of money from $0 to $20
• samples given to those who do not buy new product
• "purchasers" vs. "free samples" recorded
• follow-up telephone interview
Test markets
Actual test market:
• Product is actually "launched" in a limited way
• What types of cities are chosen?
• What is the benefit of a test market?
• For what types of goods are test markets not feasible?
• What are drawbacks to test marketing?
Key Points or "Take Aways"
• Company can grow by expanding market size or
stealing market share
• Size of the potential market depends on how broadly
one thinks about the product (Are coffee and beer
substitutes?)
• Often useful to decompose forecasts
– unawarefi aware
– aware fi trial
– trial fi repurchase
• 3 methods of demand forecasts
– historical trends (dangers of extrapolation)
– surveys (dangers of trusting reports; answers "labile")
– test markets (dangers of competitors fiddling & stealing)
Semantic Differential 2001
For each line below, think about 15.812, and then place an “X” somewhere
between the two adjectives.
*
X
Quantitative _____ _____ _____ _____ _____ _____ _____ Qualitative
X
*
Breadth
_____ _____ _____ _____ _____ _____ _____ Depth
Practical
_____ _____ _____ _____ _____ _____ _____ Theoretical
Structured
_____ _____ _____ _____ _____ _____ _____ Free - Form
X *
X*
�
�
�
�
�
�
�
�
�
�
Rating Scale
Overall, 15.812 is:
(1)
-5
-4
-3
-2
-1
0
1
2
3
4
5
|----------|----------|----------|----------|----------|----------|----------|----------|----------|----------|
Horrible
Terrific
8.3
Compared to my other courses, 15.812 is:
(9)
2
3
4
5
-5
-4
-3
-2
-1
0
1
|----------|----------|----------|----------|----------|----------|----------|----------|----------|----------|
Horrible
8.6
Terrific
The First Home Video System
- All for a modest $30,000!
- Installation included a
"free" visit by an Ampex
service engineer to set up
the 900 lb system.
Ampex VR-1500
in the 1963 Neiman Marcus Christmas catalog