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00:00:00 – 00:08:29
The video delves into the psychological concepts of selective attention, selective distortion, and selective retention, and their impact on consumer behavior. These concepts are part of the perception stage in the information processing process, where stimuli from the environment are received through the five senses. Selective attention is illustrated using the "Invisible Gorilla" experiment, which demonstrates how consumers focus on certain stimuli while ignoring others. Selective distortion is exemplified by a 1970s Pepsi vs. Coca-Cola blind taste test, highlighting how consumers' biases affect their interpretation of information. Selective retention is linked to the Pareto Principle, which suggests that 80% of a company's revenue comes from 20% of its customers. This principle informs marketing strategies such as Loyalty Rewards programs, which aim to retain and reward top customers, thereby enhancing business effectiveness and customer retention.
00:00:00
In this part of the video, the professor begins by explaining the concepts of selective attention, selective distortion, and selective retention. These processes occur during the perception stage of the information processing process, where consumers receive stimuli from the external environment through their five senses—sight, hearing, smell, taste, and touch. The professor highlights that consumers do not respond to all external stimuli accurately but instead selectively choose, interpret, and retain information based on their perspectives. This selective processing results in different responses among consumers to the same stimuli. Selective attention involves focusing only on certain stimuli of interest, which is exemplified by the famous “Invisible Gorilla” experiment conducted by Harvard University’s psychology department.
00:03:00
In this part of the video, the focus is on how selective attention, selective distortion, and selective retention affect consumer behavior. During a basketball game experiment, students counting the number of passes by a team in white uniforms often failed to notice a student dressed as a gorilla, illustrating selective attention. The concept of selective distortion is explained through a 1970s example where a blind taste test showed that many people preferred Pepsi over Coca-Cola, contrary to their biases towards well-known brands. This selective interpretation is also related to the halo effect. Lastly, selective retention is discussed, emphasizing that consumers remember information that aligns with their pre-existing beliefs or familiar concepts, illustrated by the Pareto Principle, which suggests that 80% of a company’s revenue typically comes from 20% of its customers.
00:06:00
In this part of the video, the concept of the Pareto principle is explained in the context of customer retention and marketing strategies. The principle suggests that a company’s top 20% of customers generate 80% of the sales. This insight leads to the strategy of selective retention, where businesses focus their marketing efforts on their most lucrative customers using methods such as Loyalty Rewards programs. These programs aim to retain top customers and convert regular customers into repeat buyers, as retaining existing customers is more cost-effective than attracting new ones. Consequently, applying the Pareto principle and related theories enhances the effectiveness of marketing plans.