Chapter 1

Consumer Behavior Personal Consumer

The behavior that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs. The individual who buys goods and services for his or her own use, for household use, for the use of a family member, or for a friend.

Organizational Consumer

A business, government agency, or other institution (profit or nonprofit) that buys the goods, services, and/or equipment necessary for the organization to function.

Development of the Marketing Concept 1. The Production Concept

Assumes that consumers are interested primarily in product availability at low prices Marketing objectives: Cheap, efficient production Intensive distribution Market expansion

2. The Product Concept

Assumes that consumers will buy the product that offers them the highest quality, the best performance, and the most features Marketing objectives: o Quality improvement o Addition of features Tendency toward Marketing Myopia

3. The Selling Concept

Assumes that consumers are unlikely to buy a product unless they are aggressively persuaded to do so Marketing objectives: Sell, sell, sell Lack of concern for customer needs and satisfaction

4. The Marketing Concept

Assumes that to be successful, a company must determine the needs and wants of specific target markets and deliver the desired satisfactions better than the competition Marketing objectives: o Make what you can sell o Focus on buyers needs

The Marketing Concept Implementing the Marketing Concept Consumer Research

The process and tools used to study consumer behavior Two perspectives: o Positivist approach o Interpretivist approach

Segmentation Targeting

Process of dividing the market into subsets of consumers with common needs or characteristics

The selection of one or more of the segments to pursue

 Positioning

Developing a distinct image for the product in the mind of the consumer Successful positioning includes: o Communicating the benefits of the product o Communicating a unique selling proposition

The Marketing Mix

Product Price Place Promotion

Successful Relationships
Customer Value
Defined as the ratio between the customers perceived benefits and the resources used to obtain those benefits Perceived value is relative and subjective Developing a value proposition is critical

Customer Satisfaction

The individual's perception of the performance of the product or service in relation to his or her expectations. Customers identified based on loyalty include loyalists, apostles, defectors, terrorists, hostages, and mercenaries

Customer Retention

The objective of providing value is to retain highly satisfied customers. Loyal customers are key o They buy more products o They are less price sensitive o They pay less attention to competitors advertising o Servicing them is cheaper o They spread positive word of mouth

Customer Profitability-Focused Marketing

Tracks costs and revenues of individual consumers Categorizes them into tiers based on consumption behavior A customer pyramid groups customers into four tiers

Impact of Digital Technologies

Consumers have more power and access to information Marketers can gather more information about consumers The exchange between marketer and customers is interactive and instantaneous and goes beyond the PC. Marketers must offer more products and services

Societal Marketing Concept

Marketers adhere to principles of social responsibility in the marketing of their goods and services; that is, they must endeavor to satisfy the needs and wants of their target markets in ways that preserve and enhance the well-being of consumers and society as a whole.

Consumer Behavior Is Interdisciplinary

Psychology Sociology Social psychology Anthropology Economics

A Simplified Model of Consumer Decision Making

Chapter 3 Market Segmentation

The process of dividing a potential market into distinct subsets of consumers and selecting one or more segments as a target market to be reached with a distinct marketing mix.

Three Phases of Marketing Strategy Segmentation Studies Bases for Segmentation

Discover the needs and wants of groups of consumers to develop specialized products to satisfy group needs Used to identify the most appropriate media for advertising

Geographic

The division of a total potential market into smaller subgroups on the basis of geographic variables (e.g., region, state, or city)

Demographic

Age Sex Marital Status Income, Education, and Occupation

 Psychological
Motivations Personality Perceptions Learning Attitudes

Psychographic Sociocultural

Also known as Lifestyle Analysis Psychographic variables include attitudes, interests, and opinions (AIOs)

Family Life Cycle Social Class Culture, Subculture, and Cross-Culture

Use-Related Segmentation
o Rate of Usage Heavy vs. Light o Awareness Status Aware vs. Unaware o Brand Loyalty Brand Loyal vs. Brand Switchers

Usage-Situation Segmentation

Segmenting on the basis of special occasions or situations Example Statements: o Whenever our daughter Jamie gets a raise, we always take her out to dinner. o When Im away on business, I try to stay at a suites hotel. o I always buy my wife flowers on Valentines Day.

Benefit Segmentation Segmenting on the basis of the most important and meaningful benefit Hybrid Segmentation Approaches
Psychographic-Demographic Profiles Geodemographic Segmentation SRI Consultings VALS

Criteria for Effective Targeting of Market Segments

Identification Sufficiency Stability Accessibility

Implementing Segmentation Strategies

Concentrated Marketing One segment Differentiated Several segments with individual marketing mixes

Chapter 4 Needs and Motivation

Needs are the essence of the marketing concept. Marketers do not create needs but can make consumers aware of needs. Motivation is the driving force within individuals that impels them to action.

Types of Needs

Innate Needs Physiological (or biogenic) needs that are considered primary needs or motives Acquired Needs Learned in response to our culture or environment. Are generally psychological and considered secondary needs

Goals

The sought-after results of motivated behavior Generic goals are general categories of goals that consumers see as a way to fulfill their needs Product-specific goals are specifically branded products or services that consumers select as their goals

The Selection of Goals

The goals selected by an individual depend on their: Personal experiences Physical capacity Prevailing cultural norms and values Goals accessibility in the physical and social environment

Rational versus Emotional Motives

Rationality implies that consumers select goals based on totally objective criteria such as size, weight, price, or miles per gallon Emotional motives imply the selection of goals according to personal or subjective criteria

The Dynamic Nature of Motivation

Needs are never fully satisfied New needs emerge as old needs are satisfied People who achieve their goals set new and higher goals for themselves

Substitute Goals

Are used when a consumer cannot attain a specific goal he/she anticipates will satisfy a need The substitute goal will dispel tension Substitute goals may actually replace the primary goal over time

Frustration

Failure to achieve a goal may result in frustration. Some adapt; others adopt defense mechanisms to protect their ego.

Defense Mechanism Arousal of Motives

Physiological arousal Emotional arousal Cognitive arousal Environmental arousal

Methods by which people mentally redefine frustrating situations to protect their self-images and their selfesteem

Philosophies Concerned with Arousal of Motives

Behaviorist School Behavior is response to stimulus Elements of conscious thoughts are to be ignored Consumer does not act, but reacts Cognitive School Behavior is directed at goal achievement Needs and past experiences are reasoned, categorized, and transformed into attitudes and beliefs

A Trio of Needs

Power individuals desire to control environment Affiliation need for friendship, acceptance, and belonging Achievement need for personal accomplishment closely related to egoistic and self-actualization needs

Measurement of Motives

Researchers rely on a combination of techniques Combination of behavioral, subjective, and qualitative data Construction of a measurement scale can be complex

Motivational Research

Qualitative research designed to uncover consumers subconscious or hidden motivations Attempts to discover underlying feelings, attitudes, and emotions

Qualitative Motivational Research

Metaphor analysis Storytelling Word association and sentence completion Thematic apperception test Drawing pictures and photo-sorts

Chapter 5 What Is Personality

The inner psychological characteristics that both determine and reflect how a person responds to his or her environment

The Nature of Personality

Personality reflects individual differences Personality is consistent and enduring Personality can change

Theories of Personality

Freudian theory Unconscious needs or drives are at the heart of human motivation Neo-Freudian personality theory Social relationships are fundamental to the formation and development of personality Trait theory Quantitative approach to personality as a set of psychological traits

Freudian Theory

Id Warehouse of primitive or instinctual needs for which individual seeks immediate satisfaction Superego Individuals internal expression of societys moral and ethical codes of conduct Ego Individuals conscious control that balances the demands of the id and superego

Freudian Theory and Product Personality Neo-Freudian Personality Theory

Consumer researchers using Freuds personality theory see consumer purchases as a reflection and extension of the consumers own personality

We seek goals to overcome feelings of inferiority We continually attempt to establish relationships with others to reduce tensions Karen Horney was interested in child-parent relationships and desires to conquer feelings of anxiety. Proposed three personality groups Compliant move toward others, they desire to be loved, wanted, and appreciated Aggressive move against others Detached move away from others

Trait Theory

Personality theory with a focus on psychological characteristics Trait - any distinguishing, relatively enduring way in which one individual differs from another Personality is linked to how consumers make their choices or to consumption of a broad product category not a specific brand Consumer

Innovators And Non innovators

Innovativeness Dogmatism

The degree to which consumers are receptive to new products, new services, or new practices A personality trait that reflects the degree of rigidity a person displays toward the unfamiliar and toward information that is contrary to his or her own established beliefs

Social character Ranges on a continuum for inner-directedness to other-directedness Inner-directedness rely on own values when evaluating products Innovators Other-directedness look to others less likely to be innovators Need for uniqueness
Consumers who avoid appearing to conform to expectations or standards of others

Optimum stimulation level

A personality trait that measures the level or amount of novelty or complexity that individuals seek in their personal experiences High OSL consumers tend to accept risky and novel products more readily than low OSL consumers.

Variety-novelty seeking
Measures a consumers degree of variety seeking

Examples include: Exploratory Purchase Behavior Use Innovativeness Vicarious Exploration

Cognitive Personality Factors

Need for cognition (NC) A persons craving for enjoyment of thinking

Individual with high NC more likely to respond to ads rich in product information Visualizers versus verbalizers A persons preference for information presented visually or verbally

 Verbalizers prefer written information over graphics and images. Consumer materialism o The extent to which a person is considered materialistic Fixated consumption behavior o Consumers fixated on certain products or categories of products Compulsive consumption behavior o Addicted or out-of-control consumers Consumer Ethnocentrism Ethnocentric consumers feel it is wrong to purchase foreign-made products They can be targeted by stressing nationalistic themes

Brand Personality

Personality-like traits associated with brands Examples Purdue and freshness Nike and athlete BMW is performance driven Levis 501 jeans are dependable and rugged Brand personality which is strong and favorable will strengthen a brand but not necessarily demand a price premium

Product Personality Issues

Gender Often used for brand personalities Some product perceived as masculine (coffee and toothpaste) while others as feminine (bath soap and shampoo) Geography Actual locations like Philadelphia cream cheese and Arizona iced tea Fictitious names also used such as Hidden Valley and Bear Creek Color Color combinations in packaging and products denotes personality

Self and Self-Image

Consumers have a variety of enduring images of themselves These images are associated with personality in that individuals consumption relates to self-image

Issues Related to Self and Self-Image One or multiple selves

A single consumer will act differently in different situations or with different people We have a variety of social roles Marketers can target products to a particular self

Makeup of the self-image

Contains traits, skills, habits, possessions, relationships and way of behavior Developed through background, experience, and interaction with others Consumers select products congruent with this image

Extended self

Possessions can extend self in a number of ways: Actually Symbolically Conferring status or rank Bestowing feelings of immortality Endowing with magical powers

Altering the self- image

Consumers use self-altering products to express individualism by Creating new self Maintaining the existing self Extending the self Conforming

Chapter 9 The Communications Process

The Message Initiator (the Source) The Sender The Receiver The Medium The Message The Target Audience (the Receivers) Feedback - the Receivers Response

The Message Initiator (source)

Issues with Credibility Credibility of Informal Sources
Includes word of mouth These sources also called opinion leaders Informal sources may not always be credible

Credibility of Formal Sources Neutral sources have the greatest credibility Source credibility judged on past performance, reputation, service, quality, spokesperson image, retailers, social responsibility Institutional advertising used to promote favorable company image Credibility of Spokespersons and Endorsers
Effectiveness related to: The message Synergy between endorser and type of product Demographic characteristics of endorser Corporate credibility Endorsement wording

Message Credibility

Credibility of retailers Reputation of the medium that carries the ad Consumers previous experience with product

Sleeper Effect
The idea that both positive and negative credibility effects tend to disappear after a period of time.

The Target Audience (receivers)

Personal characteristics and comprehension Involvement and congruency Mood Barriers to communication Selective exposure to messages Psychological noise

Feedback should be gathered: Promptly | Accurately Advertising Effectiveness Research Media and message exposure measures How many consumers received the message Which consumers received the message Message Attention and Interpretation Physiological measures Theater tests Readership surveys Attitudinal measures Message Recall Measures Day after recall

Designing Persuasive Communications

Communications strategy Must include objectives Includes cognitive models Newer models include perception, experience, and memory Target Audience Segmentation is key Media Strategy Consumer profile Audience profiles Message Strategy Involvement theory Central and peripheral routes

Message Structure and Presentation Resonance Message framing

Positive framing Negative framing One-sided vs. two-sided

Wordplay Used to create a double meaning when used with a relevant picture

Comparative advertising Order effects

Primacy Recency Order of benefits Brand name

Marketer claims product superiority over another brand Useful for positioning

Repetition

Important for learning

Chapter 11 Social Class

The division of members of a society into a hierarchy of distinct status classes, so that members of each class have either higher or lower status than members of other classes.

Status Consumption

Consumers endeavor to increase their social standing through consumption Very important for luxury goods Is different from conspicuous consumption

Social Class Is Hierarchal

Status is frequently thought of as the relative rankings of members of each social class

Social Class Measurement

Subjective Measures individuals are asked to estimate their own social-class positions Reputational Measures informants make judgments concerning the social-class membership of others within the community Objective Measures individuals answer specific socioeconomic questions and then are categorized according to answers

Index of Status Characteristics (ISC) Socioeconomic Status Score (SES)

A composite measure of social class that combines occupation, source of income (not amount), house type/dwelling area into a single weighted index of social class standing. A multivariable social class measure used by the United States Bureau of the Census that combines occupational status, family income, and educational attainment into a single measure of social class standing.

Geodemographic Clusters

A composite segmentation strategy that uses both geographic variables (zip codes, neighborhoods) and demographic variables (e.g., income, occupation) to identify target markets.

PRIZM (Potential Rating Index by Zip Market)

A composite index of geographic and socioeconomic factors expressed in residential zip code neighborhoods from which geodemographic consumer segments are formed.

The Affluent Consumer

Especially attractive target to marketers Growing number of households can be classified as mass affluent with incomes of at least $75,000 Some researchers are defining affluent to include lifestyle and psychographic factors in addition to income Have different medial habits than the general population

The Middle Class

There is evidence that the middle class is slowly disappearing in the U.S. Growth of middle class in some Asian and Eastern European countries Many companies offering luxury to the masses with near-luxury models and goods

The Working Class The Techno Class

These consumers tend to be more brand loyal than wealthier consumers Having competency with technology Those without are referred to as technologically underclassed Parents are seeking computer exposure for their children Geeks now viewed as friendly and fun

Consumer Behavior and Social Class

Clothing, Fashion, and Shopping The Pursuit of Leisure Saving, Spending, and Credit Social Class and Communication

Culture

The sum total of learned beliefs, values, and customs that serve to regulate the consumer behavior of members of a particular society.

Culture Is Learned Issues

Enculturation and acculturation Enculturation The learning of ones own culture Acculturation The learning of a new or foreign culture

 Language and symbols

Without a common language shared meaning could not exist Marketers must choose appropriate symbols in advertising Marketers can use known symbols for associations

Ritual

A ritual is a type of symbolic activity consisting of a series of steps Rituals extend over the human life cycle Marketers realize that rituals often involve products (artifacts)

Sharing of culture
To be a cultural characteristic, a belief, value, or practice must be shared by a significant portion of the society Culture is transferred through family, schools, houses of worship, and media

The Measurement of Culture

Content Analysis
A method for systematically analyzing the content of verbal and/or pictorial communication. The method is frequently used to determine prevailing social values of a society.

Field Observation

A cultural measurement technique that takes place within a natural environment that focuses on observing behavior (sometimes without the subjects awareness). Characteristics of Field Observation Takes place within a natural environment Performed sometimes without the subjects awareness Focuses on observation of behavior

Participant-Observers
Researchers who participate in the environment that they are studying without notifying those who are being observed.

Value Measurement Survey Instruments

Rokeach Value Survey (RVS) A self-administered inventory consisting of eighteen terminal values (i.e., personal goals) and eighteen instrumental values (i.e., ways of reaching personal goals) List of Values (LOV) A value measurement instrument that asks consumers to identify their two most important values from a nine-value list that is based on the terminal values of the Rokeach Value Survey Values and Lifestyles (VALS) A value measurement based on two categories: self-definition and resources

Criteria for Value Selection

The value must be pervasive. The value must be enduring. The value must be consumer-related.

Chapter 15 Opinion Leadership

The process by which one person (the opinion leader) informally influences the consumption actions or attitudes of others who may be opinion seekers or opinion recipients.

Dynamics of the Opinion Leadership Process

Credibility Positive and Negative Product Information Information and Advice Opinion Leadership Is Category-Specific Opinion Leadership Is a Two-way Street

Issues

The Needs of Opinion Leaders

Self-involvement Social involvement Product involvement Message involvement

The Needs of Opinion Receivers

New product or new usage information Reduction of perceived risk Reduction of search time Receiving the approval of the opinion leader

Purchase Pals

Actually accompany consumers on shopping trips Used 25 percent of the time for purchases of electronic equipment

Surrogate Buyers versus Opinion Leaders

Surrogate buyers may replace opinion leaders An example is a wardrobe consultant who helps in the purchase of business clothes

Measurement of Opinion Leadership

Self-Designating Method Sociometric Method Key Informant Method Objective Method

Market Maven
Individuals whose influence stems from a general knowledge or market expertise that leads to an early awareness of new products and services.

The Interpersonal Flow of Communication

Two-Step Flow
A communication model that portrays opinion leaders as direct receivers of information from mass media sources who, in turn, interpret and transmit this information

Multistep Flow

A revision of the traditional two-step theory that shows multiple communication flows

Issues in Opinion Leadership and Marketing Strategy

Advertisements Stimulating Opinion Leadership Word of Mouth May Be Uncontrollable Creating products with built-in buzz potential Strategy designed to stimulate buzz Viral marketing Weblogs

Marketers Seek to Take Control of the Opinion Leadership Process

Diffusion Process

The process by which the acceptance of an innovation is spread by communication to members of social system over a period of time.

Elements of the Diffusion Process

The Innovation The Channels of Communication The Social System Time

Product Characteristics That Influence Diffusion

Relative Advantage Compatibility Complexity Trialability Observability

Time and Diffusion

Purchase Time Adopter Categories Rate of Adoption

Adoption Process

The stages through which an individual consumer passes in arriving at a decision to try (or not to try), to continue using (or discontinue using) a new product.

Defining Innovations

Firm-oriented definitions Product is new to the company Product-oriented definitions Continuous Dynamically continuous Discontinuous Market-oriented definitions Based on consumer exposure Consumer-oriented definitions Consumer judges it as new

Adopter Categories

A sequence of categories that describes how early (or late) a consumer adopts a new product in relation to other adopters.

Issues in Profiling Consumer Innovators

Defining the Consumer Innovator Interest in the Product Category The Innovator Is an Opinion Leader Personality Traits Media Habits Social Characteristics Demographic Characteristics Are There Generalized Consumer Innovators?