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Consumer Behaviour

Introduction

Consumption is a part of almost every facet of our lives. This is true whether we havea lot of money or very little. In some cases the prevalence of consumption is such thatwe are often unaware of its importance in shaping our lives

The study of people of as consumers

The main focus so far has been markets looking to increase sales. They would want toknow how social and behavioural sciences could be utilised to find specific causes ofconsumption and what makes consumers choose one brand over another, as well ashow consumption would react to improvements in a product or brand.

The focus upon predicting what the consumer will do under certain specifiedconditions is known as the positivist approach. The positivist approach takes thetraditional form of scientific research it focuses upon the following points:

1. All behaviour has objectively identifiable causes and effect that can be studiedand measured.

2. When faced with a problem people process all the relevant information availableto deal with it.

3. After processing this information people make rational decision about the bestchoice.

As with all social sciences studies there are limitations leaving a large amount ofhuman behaviour unaccounted for.

Reductionist Approach

Because consumption is such a universal activity and is very frequent, there is atemptation to see all human activity in consumer terms, and to view all consumeractivity with a positivist lens.

Meaning a relationship as described in terms of the provision e.g. a doctor providing aservice and his patient being the client.

What is missing is the psychological content of the relationship e.g. why the doctorcares so much – why the teacher does the extra hours at work etc.

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Interpretivist Approach This combines the positivist and reductionist approach.

1. Cause and effect can’t be isolated as there is no single objective reality that canbe agreed upon.

2. Reality is an individual’s subjective experience of it each consumer experience isunique

3. People are not simply, or always rational information processors or decisionmakers because this view takes no account of the individual emotional life(fantasy, fun etc)

Consumer, Buyers and Customers

People do not always buy goods or services for their own use. E.g. a mother shoppingin the supermarket for her family, she will be influenced to some extent by what herfamily like to eat. She will probably buy things for them that she herself will notconsume. She is also subject to some point of sale influences as individuals buyingthemselves e.g. packaging, price quality, packaging etc. So it is important to know whobuys the product as well as who consumes it (for sellers).

A consumers is a more general term e.g. people buying groceries rather than forpeople shopping for a specific item in a specific shop.

Consumer Behaviour

Involves the buyers or customers of products, as well as the people who actually usethem. It deals with the buying decision itself and far beyond. Its extends from:

How do we know what we want to what do we do with something we no longer want?

How do we get into a product?

How do we assess alternatives?

Why do people choose or not choose product?

How do we decide on value for money?

How much risk do we take with what products?

Who influences our buying decision and our use of the product?

How can brand loyalties form and can they be changed?

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The typical definition of consumer behaviour that people engage in when selecting,purchasing, using, disposing of products and services so as to satisfy their needs anddesires.

The consumer environment and the consuming society

The ever increasing consumption is considered good for our prosperity. A fall in salesis taken as bad news. We are bombarded by hundreds of advertisements every dayencouraging us to buy.

We are bombarded by hundred of advertisements every day encouraging us to buymore. The most important feature of the consumer environment therefore is theuniversal and all encompassing value that buying is not just a necessary activity but anattractive and highly approved way of behaving; a good in itself. If consumingproduces an ever higher standard of living for more and more people what couldpossibly be wrong with it?

What about the earth’s resources? Is there enough for more and more consumption?

Is it a morally just way of arguing the world’s resources, why should the rich get morefood or manufactured goods than the poor?

The consumer and the market place

Trade is an integral part of human behaviour and has been since the beginning of time.

“Exchange between producer and consumer for neutral benefit”

Originally a barter systems, then precious metal coins were introduced, then as tradegrows paper notes were introduced, and then plastic cards followed.

Markets and Marketing

Production orientation Demand exceeds supply. Consumers are forced to buy whatthere is rather than what they want. E.g. Ford any colour as long as it’s black.

Marketing concept The producer identifies the needs, wants and preferences of theconsumer and then satisfies them better than the consumer would. Supply exceedsdemand.

Summary

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Consumer behaviour is an integral part of our daily lives. The psychological and socialprocess involved in the buying and consuming goods and services.

The objective, positivist approach to studying cause and effect in consumer behaviourwill be combined with the interpretivist emphasis on trying to understand, theemotional, non rational aspects of the process.

The environment which the consumer operates in including the nature of the marketplace for goods and services also needs to be considered. Finally the change from aproduction orientation to a marketing concept has been instrumental in fostering thestudy of consumer behaviour recent decades.

Market Segmentation

The development of the marketing concept provides a focus for a changing producerorientation from one of unthinking control and dominance of the producer –consumerrelationship to one of greater sophistication.

Market segmentation is generally regarded as the essence of the marketing concept.Products like GM Cars (e.g. the 3 stages of an automobiles life journey) need to bepositioned in a product market positioning are closely aligned with segmentation.

The position of a product reflects how consumers perceive it. The perceived benefitsof the product to the end user will be used as a key part of the promotional strategy.This implies the marketer will first segment the market and identify to the preferredtarget. Attempting to position without segmentation will be pointless.

Computers can be enhanced or are now advanced enough to enable marketers togenerate lists of individuals in their target market segment and send thempersonalised communication based on their demographics information. This processis called the “Segmentation of One” this actually represents a return to the relationshipbetween producer and consumer before the advent of mass production and massmarketing.

For a segmentation to work there must be a number of constitutions to consider:

Identity - how identifiable and distinguishable from other consumers is a prospectivesegment and how easy is it to obtain the necessary information on such people?

Access - how easy is it to reach people in this segment with the marketingcommunications?

Size – does the number of the people in the segment and their purchasing powerjustify the cost of marketing to them?

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Types of segmentation

Geographic Segmentation - Operates that people living in a given location havesimilar needs, wants and preferences that differ from people living in another location.There are limits e.g. Everyone drinks coke and due to the internet and satellitecommunication geographic boundaries are now obsolete.

Micromarketing – Is whereby different regions have different tastes. E.g. Campbellssoup in the US or spicer food in California.

Climatic variations – will also be applicable to geographic segmentation. E.g. there isgreater demand for swimming pools in Florida than in Glasgow. In the UK water issofter in Scotland than in England, this has implications for soap, shampoo, etcmarketing water softness.

From a consumer point of view most buying behaviour is local, e-commerce and mailorder being the exceptions.

Localised consumer behaviour is often expressed through the presence of significantlylarge cultures or sub cultural group that is different from the main stream e.g. thespicer nachos in California – due to larger Hispanic people there. Sometimes a localculture maybe marketed more widely like Jewish bagel or Indian food from Birmingham.

Some locations just have “oddities” e.g. more sweets eaten per capita in Scotland thanEngland, more Irn Bru etc. Obviously useful to know form a marketing point of view.Advertising to e.g. a geographic sector can be a more cost effective way of reaching atarget market.

Store specific marketing should also be considered, this takes place in stores.

Demographic segmentation – deals with way of categorising statistically the people inthe total national population e.g. age, sex, income, education, occupation, social class,family, size, race and religion. These are essentially the different ways of viewing thesame consumer. Different aspects to our identity will be relevant at different timese.g. baby food.

Trends that influence most of the industrialised world

- The aging population - the grey pound

- Baby boom generation are now middle aged

- The proportion of young people in the population 15-20 is declining

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- Household sizes have declined – 1 person household

- Woman have fewer children and when they do they do it later life

Types of demographic segmentation

Age: People of the same age usually have the same needs, wants and interests, peoplehowever perceive themselves from being a different age than they are.

Sex: Some barriers are changing here as society changes e.g. diy kits to girls. Womenstill the main buyers of baby products. Men may buy underwear for women onoccasion.

Socio-economic status (SES): Made up of education, income and occupation. Incomeis usually considered to be the most important SES variable because it is so easilymeasured.

Geo-demographic segmentation: Dividing up markets according to neighbourhoode.g. London, a different range of products will appeal to people in Millwall than St.Johns Wood.

PRIZM in the US divides people or households in up to 40 categories. It establishes SESrating for each neighbourhood e.g. “blue blood estate” where the most affluentAmerican families live to “Public Assistance” inner City. Along the way rural and othersuburban.

ACORN is another similar thing in the UK.

Psychological Lifestyle segmentation (Consumer Profiles)

Divides consumers into segments based on activities, interests, and opinions. TheAmerican market is divided into 10 categories. Creating broadly defined categories e.g.“Thelma” traditional church goer – Eleanor “socialite” with associated habits andspending patterns.

All life styles/psychological systems are open to criticism; mainly not everyone fallsinto ten categories.

Needless to say studies can be good starts to segmentation- there could be tweakingon a per product basis. Lifestyle, psychographic, psychological, segmentation useconsumer profiles.

Segmentation by usage

This form of segmentation is based on information about volume and frequency ofpurchase for a given product.

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It uses Electronic Point of Sale (EPOS) systems to gather information. The market isdivided into users and non users e.g. McDonalds. The 80-20 rule is in effect for mostproducts. Time and timing is also an important factor e.g. students, offered incentivesto open bank accounts as the back knows they will need mortgages etc later down theline.

Benefit segmentation

Based on knowledge of the benefits that consumer seeks from a product. Customisinga product by a producer as far as possible is the ultimate aim of Benefit segmentation.Or customise belt buckles in London.

Summary

Market segmentation begins when producers realise they could no longer sell whateverthey produced but had to begin competing for business. The best market condition forsuccessful segmentation seems to be based on:

Identifability

Accessibility

Size

Five forms of segmentation were identified:

- Geographic

- Demographic

- Psychological

- Segmentation as a benefit

- Segmentation by use

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A lot of work has been done on psychological segmentation producing variousattempts at classifying consumers according to personality factors.

There are constantly new products coming onto the market – the exact number isunquantifiable. Estimated failure rates of these new products is also large 80% - 90%.

How new products and innovations are marketed and how consumers respond to them.

Developing New Products

There are more failures than success (+75%) and even the biggest and most successfulcompanies have them. For example Sony Betamax, Ford Edsel, these companies werelarge enough and had enough profitable lines in existence to absorb losses, but manysmaller companies would go bankrupt.

Pressures that lead companies to the development of new products

Declining birth rate in the industrialised world – new products have to be sold moreand more therefore to existing customers.

Technological Innovation – in all areas of goods and services that companies have tobe aware and adapt to them.

Pressure of organisation - changes is renewal innovation isn’t a luxury it’s universalnecessity.

Total product concept

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Theodore Levitt see a product as being a combination of various attributes thatincrease in complexity through four levels.

1. Generic product

The substantive context (the car, the shoes, the hamburger, life insurance) thatforms the core of the product that reaches the market.

2. Expected product

The generic attributes plus the buyers minimal expectation of it (price,packaging, delivery and so on).

3. Augmented product

The generic attribute plus the attributes that differentiate the product from itscompetitor e.g. free gift, features etc.

4. Potential product

Generic, expected and augmented attributes plus and plus is where the newproducts and innovations come in. So the potential product is what is possiblebut not yet attained.

Successful innovation

The most potent secret lies in changing some aspect however small, of the way societyis organised, which results in satisfying a demand that consumers were perhapsunaware that they had. The supermarket is a good example of this, it changed the waypeople shopped, ate and travelled. A single outlet out of town, that could supply allof the consumer’s food. This made shopping become a major weekly exercise for manyhouseholds rather than a daily routine, people had to buy food that would last all week,hence the rise of frozen food, and hence freezers to keep them in and microwaveovens to defrost them.

Successful innovation also requires the creation of a relationship with the consumer,this again changes the way society is organised, consumers and producers are on thesame side as each other with common rather than opposing interests. This allowsproducers to fulfil (and target specific needs of the consumer).

Kaizen

Meaning continuous improvement, big leaps are more satisfying than smallincremental changes. Yet it is notoriously slow and difficult to make money from a

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great innovation. It is small innovation targeted directly at someone’s need thatproduces the quick and generous payback.

Product Life Cycle

Intro stage, slow sales, new comers taking up the product, followed by growthwhereby more sales take place and profits are made in the market, then the maturitystage and decline as the product is phased out and a replacement – should come in.

It is claimed products have a life time of profitability. The very market success thatmakes something profitable guarantees its being a target for competition and ofcourse the greater profitability the greater the competition.

Some products come obsolete through advancing technology others throughdramatically decreased markets and other may find a new niche market – nylonstockings. Some products seem to have an indefinite space – e.g. mars bars. It is alsovery hard to know what phase of the PLC you are in unless PLC.

The effects of personal influence

The influence of personal factors on the process of innovation is the important fortheir effects on both the producer and the consumer.

Product Champion Can be difficult to work with because they are unusual to thecorporate world. Tom Peters these characteristics as: Energy, Passion, idealism,pragmatism, impatience, doesn’t recognise barriers, love / hate relationship withcolleagues.

The product champion may be the head of the company so would break rules, or benon traditional in their approach.

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Opinion Leaders As consumers they are not always innovators but are more open tonew ideas. They range from 10% to 25% of the population. They tend to be moreout-going and knowledgeable about the product in question and are very importantfor word of mouth communication about the product. Advertisers take advantage ofthis and use celebrities to promote products.

Diffusion of New Products and Innovations

“The process by which innovation is communicated through channels over time amongthe members of social systems”

It is therefore a macro or group process as companies with micro or individual processof adoption of new products and innovations.

Three main innovations have been identified

Continuous modification to existing products, new models and flavours to existingproducts, new models and flavours.

Dynamically Continuous Requires more change in consumer behaviour. Can be themodification of an existing product or the creation of a new foods, music formats etc.

Discontinuous Require a new form of consumer behaviour the rarest but with thegreatest social impact e.g. facebook

Five product characteristics which determine consumer responses:

Relative advantage To what extent does the improvement represent an improvementto existing products, this improvement is in the perception of the consumer.

Compatibility How well the issue deals with the consumers existing values, attitudes,intent and behaviour e.g. new Bacon products in the Middle East isn’t a winner but nonbooze beverages maybe.

Complexity The perceived difficulty in using a product

Trail ability Is it possible to try out or sample on a limited basis. Some products canbe tried others can’t.

Observability How easily the benefits of the product can be observed orcommunication to the consumer.

The Adoption of New Products and Innovations

Different generations grow up with different innovations

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Some innovations like the telephone, car, and radio have become taking for granted byseveral generations that grew up with them.

Some innovations are user friendly, so even a generation that did not grow up withthem will adopt them rapidly.

Some innovations may achieve an appreciable penetration of the market because of theperceived usefulness while only being friendly for a tradition of buyer while only beingfriendly for a traditional buyer usually the youngest VCR/ home pc.

No innovation will be adopted by everyone.

Typical adoption of new products

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Summary

Thousands of new products are marketed every year most of them fail. This isbecause of declining birth rates in the developed world, shortening lead times on theprofitability of new products and intensified global competition, innovation is nowregarded as a crucial function of all organisations. Levitt, total product concept is auseful model for marketers in thinking about the benefits of the product they areintroducing.

Successful innovations seem to imply some form for reacting to social change in thelife of the consumer or in the relationship between the consumer and producer orproducts.

New products go through a five stage life cycle from its introduction to its inevitabledecline, by the later stages replacement products should rationally be in the process ofdevelopment – this doesn’t always occur.

Personal influence is often extended on the introduction of successful products both inthe form of product champions within the producers and opinion leaders amongconsumers.

Diffusion of new products may be accomplished by three forms of innovation:Continuous, dynamically continuous and discontinuous. The adoption of new productsis never totally immediate, but often longer this produces anticipate being profitable.Large profit can still be made from small number of users.

Perception

Introduction: Can we Trust our senses

There is no such thing as objective reality e.g. glass half full / half empty. We eachperceive the world differently and we have to construct our own reality out of it.

The first point we have with our physical environment is through our senses. Ourbrains processes information with the sensory messages it receives. Consumers arebombarded with vast amounts of information.

Using our senses

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Information about the environment is conveyed to the brain from eyes, eats and otherorgans. Within the five sets of senses (Vision, Hearing, Touch, Taste, Smell) there arethen sub sense’s e.g. taste 4 different types. Also bodily movement and balance.

It is the range and co-ordination of the human senses together with the sensitivity,that provide us with a unique quality and quantity of information about theenvironment.

Vision – we tend to take our vision for granted. Package designers are aware thatpeople loose their vision by their 40’s so make suitable package so that it is noticed.

Hearing – “in store background music” when slow music was played people wouldwalk slowly and sales increased by 38%. In fast food restaurants – music is fasterso people get out quicker so seating can be utilised.

Hidden Power of Smell

The sense of smell and taste, which we normally think of as being quite different areactually very closely related. If we didn’t have a sense of smell food would taste verydifferently.

The tip of the tongue has taste buds which are sensitive to salt and sweet, the sidesare more sensitive to sour and the back to bitter.

Manufacturers of food, use salt and sugar to provide sensations to the tongue (e.g. fastfood).

More subtle food like Indian etc rely on more spices etc.

Perfumes are of course lead by smell. Like most things perfumes are gender based,with women’s products being heavily floral and men’s products tending to be more,woody and tobacco and leather and other more masculine associated smells.

Women are more sensitive to scent they tend to buy men’s products for them.

Scent can not be seen, so sometimes product attributes are put to another factor otherthan smell, even though the smell is the driving force behind purchases.

Multi – Sensual Marketing

We are used to associating consumer environment with specific senses, like asupermarket vision or a perfume counter with smell. However, clever marketing willmake use of a wide as range of sensory stimulation as possible.

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e.g. a book shop would have music, well laid out shelf space, soft carpeting and acoffee shop with pleasant appetising smells….

Common properties of Senses

Thresholds of awareness

Before we can become aware of any stimulation from the environment, a stimulus hasto be strong enough for our sense receptors to pick it up. Below a certain level ofintensity, we will not pick it up.

This threshold is known as absolute threshold because it marks the differencebetween sensing and not sensing. Different people have different thresholds. A person’s ability to sense a certain stimulus may also vary depending on his or herpsychological or physiological condition at the time; e.g. drunk / sober, excited ordepressed.

Manufactures want their new products or redesigned existing products to beimmediately noticeable in the consumer’s environment. Research may therefore bedone to determine where the consumer’s absolute threshold might be in thisenvironment in terms of shape, size, colour and so on.

There is a sensory threshold that operates between two stimuli. The minimum amountof difference that you can detect is call the just noticeable difference (jnd). Once youhave detected a jnd between one stimulus and another you have crossed the differencebetween them.

A one pound increase in the cost of a house is not a jnd, whereas a one pound increaseis a jnd.

The manipulation of the consumer’s difference threshold is also a commonly usedtechnique of marketing.

A new product that claims to last longer the opposition (must be noticeably so)

Sometimes products (candy bar) decrease in size to keep there price the same.

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The other relevant variable of quality is also subject to the same manipulationthrough the jnd, maybe more sensitive than either price or quantity, except atthe cheap end of the market.

Knowing where to pitch a sales discount for maximum effect is anothermarketing use of jnd that cuts across all retails sectors.

Sensory Adaptation

People in fish markets get used to the smell. If the stimulus is constant and familiarthe sense organs become insensitive to it and stop sending information about it toyour brain.

There is a limit to sensory adaptation of course – if your watch strap is so tight it causediscomfort, you will not be able to adapt to it, you will change your environment byloosening the strap. If your tooth paste changes changed ingredients you couldchange it if you wanted.

We also adapt to advertising both generally and specifically. That is why advertisers goto such lengths to be noticed among all the other adverts. This is why advertisingcompanies change so frequently.

Perception: Processing Sensory Information

The sense organ provide our brains with steady flows of information about ourenvironment and the brains’ task is then to take this raw material and use it to help usmake sense of the environment through the process of perception. The brain does itso smoothly, we are not aware it is happening.

The raw material provided by our sensory apparatus is thus a very importantcomponent of the perception, but it is not the only one. We see, hear and feel thingsthat are quite unlearned if we relied upon these we’d be helpless. We learn to interpretand order these sensations in such a way that the environment becomes secure andpredictable.

Focusing and Attention

Our consumer environment is only part of our total psychological environment. Even so,it has been calculated that most of us are bombarded with many hundreds ofadvertisements, every day. If it appears as few of the stimuli that impinge on us atany given time of any immediate importance, we filter out the ones which areimportant, by paying attention to them and we ignore the rest.

We focus on whatever stimuli are most important in the environment at any one time.E.g. ignoring the hum of the air conditioner but focus when it stops.

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By attending to certain sensory stimuli and not to others we give them access to oursensory memory – the first stage of memory process – and they can then move fromthere to short term and long term memory.

Underlying this series of psychological process is corresponding physiological process.Thus, when one channel of communication between sense organ and the brain isoccupied and has our full attention, the other physiological pathway to the brain andapparently blocked so that we do not become confused and overwhelmed by the othersensory messages. We follow the same process of focusing for instance when we goshopping.

Selective Perception and Distortion

In order to make sense of the sensations our perceptions have to be selective. How, tomake a selection? How to perceive something and to give it our attention?

But, attention can continually shift. What determines which stimuli will capture ourattention? Psychologists refer to external and internal factor in trying to understandattention getting and selective perception.

External Factors

E.g. the air conditioner we only notice when it changed, it captured our sense. It is thestimulus provided by change in the environment that is most important. The changecan take many forms, contrast between sound and silence, is one of them a tall personin the street rather than on the basketball street.

Movement in the environment is another important kind of change. People areresponsive to visual movement, quite automatically.

Sheer repetition of a stimulus is also an effective way of getting our attention, aparticularly important phenomena in advertising. In what psychologist call a moreexposure effect it has been found, that repetition gains our attention, it encourages usto have a slight more positive attitude to stimulus in question.

It follows from this that the more familiar we are with a products brand name, otherthings being equal, the more highly we will regard it. And, buy it. Although this isn’t alaw it does appear the most highly advertised products sell best.

Size can also be an important external factor. This is why newspapers and magazinesgrade the importance of their headline by size of the type used, the more importantthe message.

Intensity of a stimulus is also used to catch our attention. Bright colours, loud soundsare routinely used at public events, whether commercial or whatever. Commercialsflood us with sounds and colour.

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Internal Factors

Different people react to the same sensations in different ways. People have differentinterest and of course different sexes or sexual orientation and will have differingreactions. People’s emotional and physical states will change and if this does nothappen to feel the same way at the same time, then they may well have differentreactions.

The most important factor in perception is what people expect to see in each situation.People distort their perceptions to fit what they expect to see – perceptual distortions.

Organising Perceptual cues

The brain is very ingenious and creative in the way it organises the smallest sensoryclues from the environment to present us with meaningful pictures that we can operatewith. Sometimes as is the case with the perceptual distortions that picture does notconfirm with objective reality.

Illusions - Internal factors can lead us to perceive things differently from the way theyreally are, but so can external factors. Each person brings a different unique group ofinternal factors to a perceptual situation; the external factors for everyone else are thesame.

Figure and ground – The most basic of the illusion argument is how we perceivethings against the background; e.g. we need a background before we can pick out anobject in the environment. (E.g. the photo two faces/vase)

Contours – In advertising this is important e.g. the brand name shouldn’t be a part ofthe forgettable background. Sometimes the music for an advert is remembered notthe background – Sometimes people can’t tell what is being advertised or by who.

Grouping – People tend to pair things into patterns the wearing of uniforms is acommon form of grouping the similar and identifying the dissimilar as applied topeople. People react to a uniform rather than the person – same with “city folk” and soon.

Closure – Despite the fact that things are incomplete e.g. a word or pictures, peoplewill close them e.g. a picture with holes.

The Zeigornik effect people who worked on a variety of tasks remember the ones thatthey didn’t complete... rather than the ones they did.

Gestalt psychology – What we perceive is more than the sum of the sensory stimulithat impinge on us from the environment. We perceive “gestalt” for or configuration,each gestalt has more meaning to the perceivers than just its sensory properties of

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size, colour, or weight – something may have meaning far beyond its physicalproperties. We search for patterns to make sense of the parts.

Perceptual Constancy - While the sensations we receive from the environment areever changing, our perceptions of things remain constant. E.g. you see a cup in frontof you as an elliptical object, but you know it is round.

How so? What we see is not always what we perceive, not just in visual illusions but inour everyday perceptions – we have to learn the meaning of what we see. E.g. blacksnow at night is really white.

Depths and Distance – Helps us translate two dimensional information into threedimensions.

Movement – Some of the movement we perceive, like a bird fly past the window, canbe explained as visual stimuli moving across our visual field and stimulating differentparts for the eye.

Much of the movement we see is illusionary, a film consists of a series of still photos –its done so fast we perceive movement on the screen.

Phi Phenomenon moving neon or other light quickly looks like movement – which getsour attention as we “notice” movement.

Subliminal Perception

Vicary put subliminal messages into films, but this was below people’s absolutethreshold so they made little effect. He increased the frequency and sales were said toincrease. This method was attempted to be studied further but to no avail.

Humans are capable of subliminal perception; we can perceive small stimuli that wecan not see or hear we may notice them but not register awareness.

Products Images, Self-Image and Consumer Behaviour

People have an image of themselves including a view of themselves as a consumer – webuy appropriately to fit this image.

Perceived Risk As consumers we make a steady stream of buying decisions – theoutcome may be quiet uncertain. If we are consciously aware of this uncertainty we areperceiving risk.

1. Performance

2. Financial

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3. Physical

4. Time

5. Social

6. Psychological

There are several types of situation that will influence our feelings of uncertainty aboutrisky outcomes. Uncertainty about purchase goals is the car for communicating orthe occasional trip. Uncertainty about best alternative choice – what is the best for acertain look and uncertainty about making or not making a purchase, will theconsequences be satisfactory?

Coping with Risk

Information gathering

Relying on brand loyalty

Some official seal of approval

The image of major or brand

Image of the store

Summary

Perception involves the construction of reality by the brain with the information itreceives from senses. All senses, but especially the dominant modes of vision, andhearing are used by marketers and advertisers in selling products. All senses havecommon properties, notably threshold of awareness between sensing and not sensinga given stimulus (absolute threshold) and distinguishing between two different stimuli(differential threshold) and adaptation to a given level of sensory stimulation.

The processing of sensory information, which is the basis for perception, normallyworks so efficiently that we are unaware of it. At the same time there are situations,involving both internal or personal factors and external environmental factors, in whichthe brain is subject to illusions and perceptual distortion. The existence and possibleeffects of the subliminal has been a matter of debate in consumer behaviour. Theperception of product that consumers have is an important reality for markets to dealwith. It is bound up with consumers self image. Finally a perception of risk in makinga purchase may apply to a given consumer. Marketers need to be aware of thispossibility so they can help the potential purchaser minimise this perceived risk.

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Personality

How does personality affect what we buy?

What is meant by personality?

The term personality is commonly used in both psychologically and everyday speech.

Psychologist interested in this subject want to know what makes someone a uniqueperson. What are the characteristics, way in which he behaves? What is the overallpattern of how he relates to other people and how they react to him?

In everyday speech we talk about someone being tough, aggressive or being nice etc.These patterns are categories of behaviour, as defined by society, that we havelearned to recognise from our previous experience with people. Where the differencelies is other people do not try to assess the uniqueness of an individual at the sametime, they place them in categories that emphasise his sameness.

Both psychologist and layman use the term personality to make sense of an individual’s behaviour. It is only an individual’s behaviour after all that we have to go on. All wecan do is observe that behaviour and infer what inner process motivated them to do it.This is just as true for psychologist as any one else. The psychologist makes histheory or personality explicit while that of the layman usually remains implicit and notconsciously thought about.

Formal Theories of Personality

There are many formal theories of personality.

Psychology defines the term personality:

“The sum total of all the factors that make an individual a human being both individualand human; thinking, feeling and behaving … and the particular characteristic patternof these elements that makes every human being unique.”

No theory can fully explain personality – humans are too complex

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Freudian Psychoanalysis

Freud thought of human personality as being in three parts. The Id, the ego and thesuperego.

Id The id is composed of the powerful drives, raw impulses of sex and aggression thatdemand to be satisfied immediately. We are not usually aware of the id, it isunconscious (e.g. pleasure).

Ego We are aware of our ego. It is the rational conscious, thinking part of ourpersonality. Our self image would be contained within the Freud’s image of the ego.The ego gets its working energy from the id, but when the id impulses are too strong itrepresses them and defend itself from knowing about them.

Superego Like the id it is usually unconscious so that we are unaware of its workings.It is the part of our personality that we are unaware of its workings. It is the part ofour personality that deals with the right and wrong, with the morality, with the correctand proper way to behave, feel and think. The superego can be just as powerful asthe id in its demands on the ego that we behave the way we should –or take theconsequences of feeling guilty.

These three aspects constantly interact with each other as we move through life.Frequently they are in conflict. The conflict appears in the ego as the conscious feelingwhose source we are unaware of because both id and the superego, with theirconflicting demands, remain unconscious.

Freud referred to the personality as an iceberg

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Freud believed that the first three years of a person’s life were absolutely crucial inshaping the adult personality. Repression is not simply a passive business of workingto know certain things. On the contrary it is an active process that takes up hugeamount of psychic energy to hold things down in the unconscious. Freud reinforcesthis as dynamic unconscious and psychological process involved in referred to aspsychodynamics.

This means that the most powerful causes of human behaviour are unconscious andunavailable to external observation, was a powerful one that attracted an importantfollowing around the world.

Freud’s development stages

Oral stages To a young baby, the mouth is the most important source of gratificationand physical stimulation for the first couple of years. Infants first learn about theworld via their mouth, a lack of satisfaction in sufficient doses can produce a hostilesadistic kind of personality. On the other hand too much gratification can lead to toomuch improvement depending on others.

Anal stages At the age of around two infants obtain control of their anus muscles.This control leads to gratification and dealing with the authority figures of parentscontrolling the training. Too much strictness during this period can lead to peoplebeing “anal” obsessively clean, controlled and ordered. Laxity leads to disorder andmessiness.

Phallic At around 4 years of age, a child enters a phallic stage of development, wherethe gratification is associated from the sensuous pleasure from the genitals, includingmasturbation and fantasy.

The Oedipus complex is represented after c. 5 years old it remains a crucial part ofpersonality for a life and plays a large part in determine someone’s attitudes, not onlytowards the opposite sex, but towards people in a position of authority.

Application of Freudian theories to Consumer Behaviour and Marketing

Given the emphasis on the unconscious nature of many of the causes of our behaviour– this is important to marketing. The consumer is often unaware of needs that aproduct may be satisfying beyond the most immediate and obvious ones.

e.g. expensive jeans – we just “need” to be clothed but people want what is perceivedas the best, or everyone of their peer group wears them. This might be to do withacting out fantasies or aimed at the pleasure principal of the id.

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Richard Dichter Founder of the institute for motivational research. Dichter firstproposed that having a convertible car is the same as having a mistress. Modernadvertising places heavy emphasis on wish fulfilment, fantasy, aggression andaffiliation with others.

A frequently used technique is that marketers adopt is the appeal of consumerlifestyle rather than the product itself.

Markets use personality test when they come up with advertising campaigns. Threelisted below are based on Freudian theory.

Personality Test – getting behind the public face that individuals present to the worldand obtain a picture what they are like – the inner life, that may not be aware of.

MMPI (Minnesota Multi phase Personality Inventory)

This has 559 questions where the testee answers true or false or cannot say. Is goodfor revealing patterns of behaviour and attitudes.

TAT (Thematic Appreciation Test)

Requires the subject to project onto some vaguely defined picture of what is on theirmind. of 20 black and white pictures. The pictures act like a screen on which thetrustee inner life is projected.

Rorchach Ink Blot Test

Ten pictures of ink blots are used in colour and five in black and white. Subjects areasked what they see in the ink blot. What it reminds them off. There are no correctanswers.

Neo Freudian Psychoanalysis

Some of Freuds followers tended to de-emphasis the importance of id in favour ofmore ego related social factors. E.g Freud gives too much weight to biological driverswhich are tied up in the id and ignores the social interactions in the world we live in.

Neo-Freudian’s believe interpersonal relationships especially those between parent andchild form the individual personality.

Karen Horney produced a model of human behaviour that has been used in researchby consumer psychologist. The CAD Model.

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The compliant orientation includes people who move toward others. They aredependent on other people for love, affection and approval.

The aggressive includes people who tend to move against others. They have a need forpower and the ability to manipulate others.

The detached orientation includes people who move away from others. They stressthe need for independence and self reliance and avoid developing emotional bonds,which can create obligations.

A CAD scale has been derived to measure the orientation of individuals as consumers.Compliant people prefer recognised brands; detached people are less interested inbeing consumers.

Self Theory

Centred on the work of Carl Rogers, from the school of human psychology. Rogerstake an optimistic view of the existence and creativity and potential for growth withinevery human. However, this potential that people have often remains unfulfilled.Rogers argues due to the oppressive effects of family, school and all other socialinstitutions that shape the lives of individuals.

By searching for their inner life can free themselves from the conformity of institutionsand the dogma of authority.

Rogers stresses the importance of the conscious self image – in this theory he is notinterested in the workings of the unconscious. To the extent that a person ismaladjusted in his behaviour his self image is out of touch with reality.

The origin of the concept of self

The concept of self which Freud would consider to be a part of the ego is widely usedby personality theorists as the basic building block of personality. As such it isimportant that the origins of self is understood.

A sense of who we are develops through the process of interacting with other people.From birth people respond to behaviour and in turn enact responses. Individualsreceive feedback on themselves. The basis of self image is physical – a body image andit will largely remain so throughout life.

At first infants have difficulty knowing where they end and the external environmentbegins. They slowly develop control and understanding of their body, they then canstart exploring their environment.

With broadening of child’s horizon that comes with development of language therealso appears a more detailed self image. Young children have no alternative but tobelieve that they are what their parents tell them they are. If the message from the

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parents is that they are unlovable then that is the judgement they will make ofthemselves. We should not then be surprised to find that they then start to behave inan unlovable fashion. By the end of adolescence the outlines of our self concept havebeen set and crucial question of our self image whether or not we like ourselves andhave low or high self esteem has been answered.

In one sense, though our self concept is a never completely formed or finalised and ourself esteem can be raised or lowered to some extent by social factors. E.g. like beingtreated as popular or attractive, you will feel it and then act as such.

Marketing and the concept of self

The concept of self has long been on interest to marketers because of its subjectiveelement.

Actual Self Image– How we actually see ourselves

Ideal Self Image – How we would like to see ourselves

Social Self Image – How we think others see us

Ideal social self image – How we would like others to see us.

Advertisers try to appeal to the different self images for different products. It isespecially important when people are trying to change an actually physical self imageinto an ideal one.

Trait Theory

Raymond Cattell stated that we all have different traits (characteristics) that are sharedbut we all differ on the strengths of various traits. Cattell came up with 16 factors onwhich he based personality profiles. 16 pf it is widely used in job selection andvocational guidance. Catell suggests that there are three important sources ofpersonality data: Life data, self report, questionnaire data and objective data frompersonality tests.

Brand personality

A more modest and attainable use of personality factors in marketing and inunderstanding consumer behaviour, lies in the development of a brand personality. Away of changing the image of a brand by giving it personal associations, as though itwere an individual; the brand would be described as, feminine, masculine, rugged etc.

An important part of brand personality is colour. Some colours are associated withcertain characteristics e.g. white in a Western Nation is associated with purity andcleanliness – gold means wealth and royalty.

Summary

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Personality factors are of great importance to consumer behaviour. Professionalpsychologist and laymen use the term personality to make sense of someone’scharacteristics behaviour. Of the most influential is psychoanalysis – both Freudian andNon Freudian. Self theory and trait theory is also note worthy in increasing ourunderstanding of consumer behaviour. Brand personality is another off shoot.

Learning , Memory and Thinking

How do we learn A great deal of animal behaviour is programmed, or instinctive, butthe higher up the animal kingdom you go, the less important does the instinct become.Humans have virtually no instincts at all. What they have is the capacity to learn, thusgiving humans the advantage to adapt to situations.

In the process of being socialised children must learn the approved ways of walking,talking, eating, excreting and thinking. They also learn to make sense of life in thefashion approved by a particular society; whom to like and whom to dislike, how todecipher the mass media, how to deal with advertising and how to make buyingdecisions. All consumer behaviour therefore is learned behaviour.

What is learning? Learning is the relatively permanent process by which changes inbehaviour, knowledge or attitudes occur as a result of prior experiences.

Relatively permanent An outcome that is not due to the effects of temporary situations,like drugs or alcohol or being tired any of which can affect the way people act for alimit period of time. The other key terms are behaviour and knowledge. This isreferring to two schools of study: Behaviourist and Cognitive.

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The behaviourist Approach

Behaviour is described as:

Psychology as the behaviourist views it is a purely objective branch of a natural science.It’s theoretical goal is the prediction and control of behaviour.

Watson did not believe in the existence of the unconscious mind. He did not believe inthe existence of the conscious mind either, or any other kind of mind. There wasnothing to study other than someone’s observable physical behaviour. “ What you seeis what you get “

Pavlov and Classical conditioning

Identified that the working of a process was clearly psychological.

Watson took Pavlov work and incorporated it into theory of Behaviour. Here was a clearand objective way of understanding why a given stimulus produced a given responsewithout the recourse to talk of mental processes of the mind.

Moreover it should be possible, using the conditioning method to change someone’sbehaviour in a desired direction.

Consumer Application of Classical Conditioning

Behaviourist point out that quite a lot of human behaviour can also be explained bysimple conditioning. The basic link in classical conditioning between the conditionedstimulus and unconditioned stimulus is at the heart of a great deal of our consumersociety.

The goal is associate a product (CS) with a particular image (US) that is thought to beattractive to the potential customer. E.g. insurance being the product and associating itwith beach... which is attractive to the consumer.

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A laboratory study has shown how people can be conditioned by music in anadvertisement to choose one colour over another.

Stimulus generalisation Dogs would salivate not only to the usual sound, but to otherstimulations buzz, bells etc. The animals were generalising from particular stimulusthey had been conditioned with to a wider range of stimuli that sounded like it. Brandextension is an example of this in marketing e.g. a positive response to one brandleads to a positive unconditional response to others.

Stimulus discrimination is the opposite effect. Pavlov demonstrates that a dog can beconditioned not to generalise to any other stimulus. Animals could be trained todiscriminate its original conditional stimulus from any other conditional stimulus. Herewarded the animal with food if it salivated to one sound and did not reward it forresponding to any other sound e.g. brand loyalty etc.

Skinner and Operant Conditioning

Without waiting for a push from the outside, an animal will often begin to explore itssurroundings to operate on its environment. This is Operant Behaviour (BF Skinner) itis also called instrumental conditioning taking the Pavlov works a step further e.g. arat is left to find something that rewards it (food) once discovered by accident the ratwants to get rewarded again, after several occasions. The rat associates the barpressing with the food, operant behaviour positively reinforces behaviour with theappearance of food. When food is withdrawn, the rat stopped finding the bar. This isnot the same as punishment, just dissuading.

Skinner also demonstrates that the avoidance of pain is at least as important inreinforcing operant behaviour as the gaining of reward. Skinner set up an electricshock so by accident the rat got shocked. It quickly learned not to this is aversiveconditioning and its results from a schedule of negative reinforcement. This is not thesame as punishment. Punishment is only useful as a discouragement.

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Positive reinforcement – press the bar and get a reward.

Extinction reinforcement – remove the bar to stop behaviour.

Negative reinforcement – press the bar to avoid pain.

Punishment – giving pain after an undesirable action.

Consumer Application of operant conditioning

It is important at all cost that the consumer is not punished (get a bad product) after apurchase. There is no cheaper form of positive reinforcement than saying thank you orfollowing up with a thank you note.

The cognitive approach

Learning is the relatively permanent process by which changes in behaviour knowledge,feeling or attitude occur as a result of prior experience”

The problem is one cannot “see” someone’s knowledge, attitudes or feelings, all youcan do is see what they do and infer from their behaviour what they think or feel.

Until one tells – or buys a product – you cannot tell what their opinion doesn’t exists.

Cognitive learning is essentially the relationship between means and end.

Insight learning Trail and error learning is a slow and laborious process. People, aswell as animals, learn by this means but humans learning is due to insight, where theunderstanding of a situation or the solution to a problem seems to occur quitesuddenly and without any careful step by step process of learning.

The cognitive approach was founded by Wolfgang Kohler emphasising the importanceof knowledge and insight.

The greatest advantage of an insight solution is that unlike trial and error learning, itcan be applied to new situations. No specific skill or set of movement is learned, butan understanding of a relationship of a means and an end is gained. There is a linkbetween the psychology of perception and perception of learning, the concept ofmeaning.

Just as the way we process environmental stimuli is crucial to our perception, the waywe process information is crucial to our learning. There is a link between thepsychology of perception and psychology of learning; the concept of memory.

Information Processing and the concept of memory

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Whatever we learned would be of no use to us unless we had some way of storing it,ready to retrieve it when needed. This procedure is often referred to as informationprocessing. When we learn something the brain engages in various activities thatprobably result in some kind of physical traces. Then we store this information andexperience in our memory.

Whatever can be retrieved is remembered and whatever can’t is forgettable.

People can recognise more advertisements as well as recalling them. It is importantfor the marketer to decide whether to aim for recognition or recall in planning amarketing campaign. Recognition will be a much cheaper option.

The process of committing something to memory seems to involve 3 distinct stages asoutlined below:

The advertisers problem is not getting a product image into the memory system, butkeeping it there.

Sense memory last less than 1 second e.g. glancing at a phone number, the secondstage lasts for slightly longer up to 30 seconds – long enough to decide if theinformation is worth keeping. As most information is not worth keeping, it is notencoded it is discarded – forgotten.

Some information in the second stage is important so is transformed to the third stage.

This is called long term memory and in order to get there the information has to beprocessed while being held in short term memory. New information is constantly

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passing from sensory memory into short term memory and as it does it passes out theinformation already there. Info that is earmarked for long term memory is rehearsed orrepeated to ensure it is kept. It is encoded and placed along side similar information.

Information in long term memory is not static it is dynamic: In a constant state ofre-organised, conscious or unconscious.

Why do we forget? It may be the stimulus we are given is not sufficient for us toretrieve the meaning or it may be that we do not want to remember.

Making learning meaningful

The below are almost all applied to advertising:

Repetition The most obvious and most immediate technique for learning something issimply to repeat or rehearse – the information. This is how powerful is passed fromshort term to long term memory storage. Radio and TV commercials make use of this.

This is by and large and effective method when there is little competition but maycancel each other out when there is a lot of completion.

Visual “One picture is worth a thousand words” this seems to have validity inadvertising. This why symbols are used to represent brands making brand nameseasily learned if they come with visual representation.

Self referencing The act of relating information to one’s own life, this is triggering keypoints in one’s self, playing one individuals self image. The trigger is pulled by usingthe word “you” and referring to previous consumer experiences.

Mnemonics Breaking information down into groups and associating each group ofinformation to be a trigger. Like public speakers in Greece – orators e.g. phone numberareas, code extension etc.

Meaningfulness We learn things by linking them to things that we already know. Weorganise our memories into packages and call them schemas, tapping into thoseschemas is the goal of every marketer.

Modelling

Claimed by both the behaviourist and cognitive camps. Referring to modelling orobservational learning, people observe the behaviour of others and use them asmodels for their own behaviour.

Children learn from parents and older siblings and peers. They can learn the behaviourwithout experiencing it. Meaning this is a social, observation and vicarious way oflearning.

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Summary

Learning is a key psychological process that has been intensively studied for manyyears. There are two main approaches to this research, representing two major schoolsof thought. Behaviourist and cognitive approaches.

The behaviourist approach is based on the link between stimulus and response anddeals solely with behaviour rather than thoughts or feelings. Its key technique forinfluencing behavioural responses is that of conditioning. The two major forms areclassical (Pavlovan) and Operant.

The cognitive approach deals the mental processors such as memory, informationprocessing and thinking in general and is concerned with insight as a form of learningrather than trial and error of the behaviourist approach.

The search for meaning in what we learn is a crucial part of cognitive approach.Tapping into this search and directing it in a chosen direction is the ultimate objectiveof marketers and advertisers. Modelling – learning form other people is an importantaspect of everyday life from earliest childhood and why that is widely used to sell manyproducts.

Motivation

Why do people buy what they buy? Asking why gets us to the heart of motivation.

What is meant by motivation?

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Motivation, why do people do things? Two broadly accepted ways to make sense ofpeople’s motivation.

Theory X

People are inherently lazy so they must be motivated by external incentives.

They will pursue their own goals, which run the counter to those of theorganisation, so they need extra to keep them in line.

They are quite irrational and incapable of self discipline of self control.

The rate individuals, who are rational, controlled and self motivated willtherefore have to manage others.

Theory Y

People seek meaning and a sense of accomplishment and to exercise autonomyand be independent in their work.

As they are basically controlled and self motivated they will find externalcontrols and incentives demeaning.

If they are only given the chance to do so they will come to regard theorganisations goals as their own.

These different beliefs will lead to a different ways of managing staff

Defining Motivation

It is elusive to define

A general term for any part of the hypothetical psychological process which involvesthe experiencing of needs and drives and the behaviour that leads to the goal whichsatisfies them.

Buying Behaviour = Ability + Opportunity + Motivation

BB = F (A,O,M)

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The fulfilment of needs

Several major theories of motivation, the best known being those that deal with thefulfilment of needs. Needs are often divided into primary biological or physiologicalneeds like food, drink and shelter secondary needs like love or power.

Primary needs must be satisfied before secondary needs, simply because of theoverriding importance of survival: An artist starving will not produce much art.

We need food and drink to survive, we can live without power.

Maslow hierarchy of needs

People strive fulfil their needs, first at most basic physiological level necessary forsurvival. When their needs are fulfilled they are no longer motivated by them butother needs will always take their place, which are motivating as people reach selfactualisation, they seek to express personality characteristics like independence andautonomy to strengthen and deepen personal relationships and to maintain a sense of

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humour and a balanced view of life.

The more self actualised people become the more they want to become. This is amotivation with its own inner dynamic.

Consumer applications of Maslow hierarchy of needs

Maslow suggested that people were influenced by higher order needs even when alltheir lower order needs had not been entirely satisfied. It was an though on averageour physiological needs were satisfied 80% of the time and so on through the hierarchyto having our need self actualisation satisfied say 10% of the time.

What this implies for marketers is that virtually everyone is in the market at some levelfor the whole range of need satisfaction and that people may quite consciously tradeoff some areas to spend more on others. So people may decide to spend money oncertain items that fulfil “housing” needs rather than focusing on education or mayspend little on housing to free up money for education to fulfil self actualisation needs.

Marketers like Maslow as its easy to work with:

Physiological - Housing, food, drink, clothing.

Safety – Insurance, burglar alarms, fire alarms, car with bags.

Self Esteem – High street brands.

Social – greeting cards, facebook, group holidays, team sports.

Self actualisation – Educational services, skills, experiences.

It has been more recently suggested that Maslow framework is a useful way ofidentifying emotional triggers in consumers, so that marketers can go beyond specificproduct benefits and appeal to the physiological needs may be trying to satisfy e.g.physiological segmentation.

Perception is also a key consideration to both consumers and marketers of a productsimage. Our image of a product is bound up with self image and what we considerapproach for ourselves.

The motivational Mix

Multiple motives e.g. shopping, people don’t just go shopping to shop. They mayinclude:

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Shopping gets you out of the house – breaks up the routine

Form of entertainment – window shopping is free

Shopping allows social interaction

Makes people feel important and needed as the household provider

Larging it over shopping assistance makes people feel important/powerful

Hunting – bargaining skills

Approach and avoidance

Lewin (1930’s) suggested that motivational pressures can either be positive or negativeindirection ; that we may feel pressure to move psychologically towards a goal objector away from it avoidance. Conflict can arise in three types of situation where themotive strength are about equal.

Approach – Approach A common approach for deciding between alternatives, both ofwhich are desirable. Two good holidays.

Avoidance – Avoidance Conflict the opposite of the above. The consumer has todecide between two equally undesirable alternatives. By nature people are tempted toput of making a decision, because whatever happens will be unpleasant.

Approach – Avoidance conflict The conflict between positive and negative, usually ofa single product. The usual being the price of a desirable items is just about affordablebut no more. So the positive aspect of owning sometimes is offset by the negative ofthe cost.

The force of inertia Unless we are actively seeking certain products we will follow ourestablished buying habits which like any other habits will have been learned over aperiod of time become part of our life. Changing habits can be tough – so overcomingthe forces of inertia requires a great effort.

Involvement

Herbert Krugman first suggested this concept in the 1960’s. The relationship that aconsumer has with a product, as it refers to the personal importance that a givenproduct in a particular individual has. What does it do for the needs and values that arebehavioural expressions of his self image?

The greater the involvement of the individual with the product and its perceivedbenefits, the more motivated he is to buy it. It is therefore crucially important torealise that in following discussion of involvement, it is the way the individualconsumer makes sense of the product and the situation and so on which is key.

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Antecedents of involvement

These are the factors that precede involvement and determine that degree of it.

Person: This set of factors is concerned most definitely with the consumers self imageand the needs, drives, values interest, wishes and fantasises that can be translated intobuying behaviour. Some people have close relationships with their cars, notice and careabout cars in general than people who do not.

Product: People react to the same product in different ways. Therefore it is theconsumer’s perception of the product interacting with the personal factors that affectthe level of involvement. As the level of involvement increases, the greater differentialthe consumer perceives between products. E.g. Whiskey tasting “perceiveddifferentiation” the less generic, the more specific a product is, the more scope theconsumer has to develop a relationship with it.

Situation: Involvement can also be influenced by the situation a product is beingpurchased. E.g. buying a gift rather than for one’s own use. What also would factor inhere is how we want the recipient of that gift to perceive us.

Properties of involvement: Refering to the feelings that consume experience and thebehaviour exhibited when their involvement is aroused. Consumers who are highlyinvolved will take a great time and effort in making a purchase decision. They will seekout information on different brands and models etc. They will pay attention toadvertising.

They will process information thoroughly and critically and they will be swayed moreby the context of the argument than the style. Actively engaged.

People with low involvement who are more passive recipients of information. TV is apassive medium which requires low level of involvement. Print advertising requirescloser attention, more effort is processing content and therefore higher involvement.

Outcome of involvement

The outcome of involvement will depend on the two preceding factors.

- The passive consumer who allow TV and other advertising to wash over themwithout registering. Brand names are not implemented – and consumers willremain uninvolved even after a repeated exposure.

- A heavily advertised brand may be enough to get a low involvement consumersto buy a product and may enable them to develop a relationship with the brand– this wont stop them buying other products though.

Specific needs each of the below needs is considered to be of a particularimportance in our society. Achievement affiliation and power.

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The need for achievement

Henry Murray noted the need for achievement as one of the twenty needs motivatingbehaviour. Murray developed the Thematic Appreciation Theory (TAT). DaveMcClelland used the TAT to concentrate on the need for achievement he labelled thisthe n arc.

People on the n arc have a preference for particular situations where:

- The degree or risk involved in is neither high nor low – moderate

- Feedback on their performance is required

- Individual responsibility is acknowledged

Moderately risk task would provide a reasonable probability of success for people highon the n arch, whereas low risk situation would be unchallenging failure on the otherhand would hurt their self esteem.

A sense of personal accomplishment is crucial to people with high n arch and thiswould place them in the self esteem of self actualisation categories in Maslowshierarchy.

Need for affiliation

This would be placed lower than the need for achievement in Maslows hierarchy, in thecategory “social needs” this need is characterised by the importance to the individualof love and the acceptance and feeling of belonging to groups, like family, peers,sports teams and so on. Teenagers would be an obvious target – struggling toestablish an identity of their own. Coke and Pepsi appeal to this need.

Need for Power

People who are trying to control as much of their lives as possible, so this wouldappear on the bottom – Power/Safety.

Successful managers might be high on the need for power and low on the need foraffiliation.

Unconscious Motivation: There are times when we literally do not know why we didsomething.

Motivational Research: Restricted to the workings of the unconscious consumermotivation.

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Creating needs: “Can needs be created?”

There is no evidence that anyone can create needs. Marketers and advertisers can tryto stimulate an existing need or channel to a certain product or brand – results arequite unpredictable.

Semiotics the meaning that signs and symbols have for people both consciously andunconsciously. We are not usually aware of it we live in a world of signs. Research hasfocused on small scale and concrete symbols partially animals like penguins, diet cokeetc.

Because symbolism is by its very nature non verbal it makes psychologicalinterpretation – which is never easy. We can only make an educated guess it if anything– symbol means to an individual consumer. “Sometimes a cigar is really just a cigar”Freud.

Dichter was asked to investigate the declings value of prune sales. People like them(taste) but they were put off by the symbol. Associated with old age – they areassociated with associated with health problems, low prestige and parental discipline.

Summary

Motivation ramifies though out the study of consumer behaviour appearing indiscussions of leaving personality, market segmentation and attitudes. It is primarilyconcerned with links between cause and effect observed in behaviour. Maslow dealswith individual needs and fulfilment. Other needs such as power, achievement andaffiliation are of particular interest to researchers.

Maslow

Physiological, safety, social, self esteem, self actualisation

Specific

Power, affiliation, achievement

The degree of psychological involvement a consumer has with a given product isthought to be crucial to understanding has motivation towards actual buying it.

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As much of our motivation is unconscious the symbolic interpretation of consumersresponses to products has an important place in this field as does the more socialinterpretation of products as symbols represented by the study of symbols.

Family Influences

How does our upbringing affect us as consumers?

Margaret Thatcher: Our beliefs are fashioned in the family when we are growing upand our experience of it affects us for the rest of our lives.

What happens in families seems to be of great interest to everyone, e.g. soap operasetc.

When we try to isolate particular behaviour like buying and consuming specificproducts and asks what affects family relationship have one them.

Family a group of two or more like people living together who may be related by blood,marriage or even adoption. Families may also be nuclear consisting of a husband,wife and children (McTypical). They may also be extended over time to includegrandparents, or psychological being cousins and more distant members.

The family one is born into is known as the family of origin (or orientation). The familyone helps create by reproduction is the family of procreation.

Because the family is also a social group indeed the prototypical social group in anysociety – there are two other defining terms that should be monitored. Primary Groupand reference group.

Every family is a primary group because of the face to face interaction that takes placeon a regular basis. Families can also be reference groups up to a point as long asmembers refer to family values and ways of behaving as a guide to their decisions andactions.

What constitutes a family has great importance to the marketer. That is apart from theeffects that our family of origin has on our individual consumer behaviour, the familyas a buying organisation exercises enormous economic influence.

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This is why markets have a vested interest in understanding and supporting theconcept of family. E.g. Christmas season – prime time for consumption.

Changes in family

In western societies the extend family is quiet rare. It is also rare for the man to be thesole bread winner, the rate of divorce has also increased.

The extended family in other areas of the world are very important it also exists withinethic subcultures. In the west young people left the homes in search of higher livingstandards. Many more women are now in the world place too.

Household

Refers to all the people whether related to each other or not when they occupy thesame unit of housing, where people live rather than whom, thus making it a moreinclusive term than family covering nearly all of the population. Soldiers, monks,prisons etc – those who reside in institution are not part of a household everyone elseis.

There is of course overlap and those living alone are also considered a household.

Socialisation

The process whereby an individual becomes a social being. Although a life longprocess it is considered important in childhood, when society is represented by a childparents, as well as the rest of their family.

Socialisation is therefore the way in which a child becomes a functioning member ofsociety. Socialisation is a two way process. People influence their social behaviour andfrom birth onwards are influenced artificially to enable us to study each more closely,but in real life they are closely interwoven.

Childhood

Some newborns are more active than others. This means that people will react to themdifferently and have different expectations of future behaviour. The infant in turn willreact to their reaction and the process of socialisation and constructive of personalityhave begun. Children and parents can manipulate each others behaviour.

The effects of institutions

We all live our lives among groups of people. Some groups are more important to usthan others in our socialisation.

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Family – Most children live their lives with their family before they go to school. Freudand others argue that a child’s experience are crucial in determining his adultspersonality. Parents are all powerful, no matter how benign. They know all the answers– so their way of dealing with the world becomes the child’s way of dealing with theworld.

As they grow up children, can then put their parents the wider social perspective.

In a psychological sense children’s parents remain with them in some form for the restof their lives for they will have internalised what they have learned from the them. Onething is they would have learned what being a consumer means. So emotionallyimportant ones like food consumption – people may retain for the rest of their lives theeating habits and preferences they learned at the family dinner table or the family tvset!

School - Children become part of the world and must deal with it alone. Childrenlearn how to behave in an extremely complex society and maintain and develop theirown individually. As children go through school, their peers will become moreimportant in influencing them than their parents.

e.g. dressing, dealing with authority, trying to fit in yet remain individual.

Nation State - Once a person has become an adult – socially, they are recognised assuch by the state. The age varies and it should be noted that a persons perceived ageis different from their real age.

The nation state is the most important single fact about the way people are divided inthe planet. National government is the only source of legitimate power in a country.Controlling the police and Army. It has the ability to raise tax and pass law.

Different nation states produce different types of social being people are taxed, vote,drive and fight under similar but different system of values. The values in turn arerelated in different educational systems and family patterns.

The institutions of the family, school and nation state are all linked together, of courseand normally share that same values and reinforce the same kinds of behaviour.

Consumer Socialisation

Parents do not give specific training in the training in this area, they act as role models.Co-shopping usually is a mother child thing and is a very useful way to spend timetogether in today’s busy world (tow birds with one stone) on such trips children learnabout budgeting, choosing between products, brands and quality. Co-shopping onceagain is a two way process. Teenagers may be more trends aware and assist theirparents in decision making. E.g. environment movements etc. Then adults can dosimilar things for their older parents.

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Family decision buying

When dealing with the buying decision of a family, the problem (of finding specificdecision causes) is more complex. There is usually more than one person making thedecisions or influencing the person who makes it.

Family Roles

The instrumental role is one of providing material support and leadership and isusually by the father – Mr Mctypical.

Whereas Mrs McTypical is expected to perform the expressive role of giving emotionalsupport and aesthetic expression.

There are many specific roles to be player in the course of a family purchasing decision.The following are the most frequently used:

Initiator – the person who 1st decides there’s a need or raises the idea to buysomething.

Influencer – An opinion leader who provides information and persuades the familyabout what to buy.

Decider – A family member with the authority to make the buying decision himself.

Buyer – the person who makes the purchase.

Use – the consumer

Gatekeeper – Letting crucial information through the gate or net. e.g. mentioning aconcert to a teenage or buying fat free dessert.

The role the family members adopt may depend on which spouse is dominant andfor what product.

1. The husband / wife may be dominant.

2. The partners may be autonomic – an equal number of joint decision made byeach

3. Syndicate – decision made jointly

Resolving Conflicts

Any group of two or more people are bound to have disagreements there are four mainstrategies that families will use:

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Coercion Invariably used by the husband, by expertise, authority and threats

Persuasion reasoned argument, presented in a reasonable manner.

Bargaining “give and take” making concessions/bribery

Manipulation Purely psychological strategy that is used by any family member, sulkingsilence, etc etc.

Changing Roles

Families go to great lengths to avoid open contact, especially with important decision.

People may not be aware of their partners preferences until the process begins. So it isit therefore difficult to bring any of the above strategies into play, more a case ofmuddling through.

With greater sexual equality decisions are becoming less husband and wife specific,with more discussions and negotiation taking place. Although attitudes change inbehaviour usually lags behind.

Life cycle effects

A convenient and often used way of summarising family effects on consumerbehaviour is the family life cycle. This is an external view form a sociological viewpoint.

Bachelor - unmarried under 35 low income bit few financial burdens to bear. Lots ofdisposable income. Buys gadgets, cars etc.

Newly married – “honeymoon stage” relatively good financial health two full timeincome and no children. Costs, mount in terms of spending on setting up new homeetc. Appliances, kitchenware etc.

Full nest - First children and marks the end of the honeymoon period. Major changesin consumer behaviour. Moms stop working, drop in income with expensive new arrival.Spending curtailed “junk food restaurants” instead of real ones – debt levels high.

Full nest II - youngest at least 6. Mother may return to work, husband earning more.Food is a heavy expense childerns interested and education takes up income.

Full nest III Progression of previous stage – kids now in their teens.

Empty nest - Children leave home, parents still working at the peak of their incomes.Items more luxurious, in terms of travel, recreation and gifts.

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Children could possibly return home

Empty nest II - Now retired – children left home maybe down size, likely to buymedical products.

Solitary survivor – Spouse dies, still in the world of paid employment in same marketas retired couple.

Retired Solitary survivor – As empty nest II – insecure and lonely.

Non family household

Single people are on the rise. They tend to be insecure and worried about how theypresent themselves to the public, could be pre-married, divorced etc..

Summary

Families provide the emotional environment in which we are reared, however nurturingor dysfunctional that they maybe. Usually the family experience occurs within ahousehold of people sharing the same accommodation. The family is the first majorsocial institution to socialise its members, followed by school and the nation state.

Socialisation is the process that is brought to bear on individuals with the aim ofbringing out the social nature of their personality and providing them with knowledgeof the appropriate behaviour expected in a given situation.

Family buying is a complex and difficult process. Different members of the family havetaken particular roles in this process that seems to be changing. Conflict maybeinvolved and families have evolved ways of resolving. Following the family life cycle is auseful way of analysing effects of family life on consumer behaviour.

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Social and developmental influences

How does our psychological development affect our consumer behaviour?

Families look at the way humans are “socialised” as opposed to the individuals webecome. Part of the process of being in a family is learning how to be a consumer byco-shopping with parents and by acting as role models.

Socialisation will be examined, individual development, both mental and emotional, inchildren and adolescents and how that development is affect by the various socialinfluences that children come into contract we as they grow up.

Maturation process, the development of the economic mind and the psychology ofmoney.

Socialisation and individual development

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All individuals develop psychologically as part of a growing up. Though in differentways, and at different times – they are all open to influences form their external socialenvironment as well as their family. This is not something that can be shielded against.It is important because it interacts with the individual process of development, andinevitably makes it more complex.

Maturation

Psychologically described as:

“the process of growth and development which are common to all members of speciesand appear regardless of individual heredity or environment”

It is through this type of process people are able to walk, talk and think regardless ofwho their parents are or where they live or how much money they have.

Abilities due to maturation will therefore appear in the growing child, according to aninborn biological timetable. Parental encouragement will only be useful once thechilds’ brain is ready to fulfil the function, walk, talk etc. The child will be ready whenit’s ready.

Stages of development There is a maturational process that every child has to gothrough in order to acquire adult mental abilities. As the brain grows and develops the

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child is able to think and reason with ever increasing complexity.

Jean Piaget identified four different stages in the childs progress.

“a development process taking place in a series of non arbitrary, sequential andprogressive steps, each of which subsumes each proceeding steps”

In order to have adult thought processes every child will achieve the same sets ofmental abilities in the same order and at roughly the same age. Every new stage ofdevelopment will not only included all previous learning, but will also transform it, sothat the same world will be understood differently. This was Piagets contribution topsychology.

Piaget identified four stages by the use of systematic experimentation he was able todemonstrate that children perceive things in a different way to adults.

The process of development from child to adult is no ta gradual increase of knowledge,but rather a progressions.

Sensory Motor stage (birth years to two years)

Language and symbols only play a small part in the development.

Concerned with discovering their own bodies and their growing power to act in theirenvironment.

Object constancy – objects are removed from the childs field of vision, they no longercease to exist for them as they had before. Objects are separate in their existence –they can “hold the image”

Preoperational stage (2-7)

The acquisition of language and the use of symbols characterise this stage ofdevelopment.

Word, names of things are magical, they believe the name is part of the object, itcouldn’t exist without a name. A child could become upset if someone called them a“bad name”.

Child does not yet understand the principle of conversation

Concrete operation stages (7-11)

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Child can understand conversation and can classify people in more than one category(e.g. uncle Lee, can also be brother to Brendan now).

Begin to grasp the physical properties of things, their quality, numbers, weight andvolume remain the same even if appears change. – e.g. water in a small glass, sameamount in a large glass.

They are in a position to know what the world is really like even when it does not agreewith their perceptions of it. At this point they are capable of absolute thinking.

Formal Operations stage (11+)

The ability to form concepts and to think abstractly is the final achievement in children’s intellectual development and these appear some time after 11.

Logical reason is an accomplished at this stage. Children are no longer dependent onphysical objects that can see and manipulate. They can now work things out in theirheads, by late teens, they are cognitively adults.

Assimilation and Accommodation

As maturation unfolds children are trying to adapt to more and more complex worldpresenting them with new information all the time. There are two parts to this process.

One is assimilation whereby information in the world is assimilated into their cognitivesystem.

The other part comes into play when children’s thinking is not sufficiently complex tolet them makes sense of some information. They are forced to re-organise theircognitive system to include the new situation. This is accommodation.

When a particular crucial accommodation is achieved they can move onto the nextstage of development.

From egocentric to reciprocal

During the earlier stages of development the world of children centres on themselves.They know how the world looks to them buy cannot visualise how it would look toother people. This view is egocentric (Piaget) as the child develops they acquire theability to decentre from themselves and put themselves in someone else’s place.Learning to play by fixed rules etc.

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Reciprocity cognitive achievement that forms the psychological basis for adult’s socialbehaviour is all organised human societies. This allows us to deal with concepts likeequity, impartiality, justice, fairness concepts that have a bearing on our economic lifeand roles as consumers as well as citizens.

Differences make more sense than similarities

Children can understand the differences between things more easily than they canunderstand the similarities. This ability to see similarities as well as differences isoften a difficult intellectual for adults as well. It is suggested that it may require morecognitive complexity than is needed to identify differences along. Easier to teachdifferences, than similarities.

Similarities have to be sought out and even when the child is intellectually capable ofhandling such concepts there is little reward in doing so.

Language and culture

Language is linked to symbols that are embedded within cultures. So one set ofsymbols would be learned for Estonian and another with Japanese.

A language reflects the things that are important to the people who speak it. Time forinstance is of great importance to English and German speakers. Some languages –African language of Schambala in which there is only “today” and “not today”. Thiswould ruin a Germans day – the entirely culturally different concepts.

This the thoughts and culture that is reflected in a language is also shaped by the useof that language.

The manipulation of language by marketers is a pervasive feature of our consumerenvironment that we have to be socialised not only to accept it but not even notice it.

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Development of economic concepts

As with the case of general cognitive or mental development the development ofunderstanding about a specific concept also comes with fairly clear stages.

Economic concepts like price, wages, PnL, investment, savings, credit and so on needto be learned, unlike Piaget’s stages who suggested the development stages heexplored are move biological. For Children growing up in Communist countries termslike profit, credit etc etc have virtually no meaning. Children with exposure to suchfunctions will tend to have a better understanding than those who do not.

Economic concepts rely on interaction rather than “cognitive maturation”. Researchershave come up with a broad three phase model that can only loosely be applied toparticular ages:

Phase I : Pre-economic Children in it do not by themselves understand the key rolemoney plays in economic exchange, they may have some experience in dealing withmoney.

Phase II: Micro-economic The child then understands the concept of economicexchange, like buying and selling on individual level but not on a societal level.

Phase III: Macro-economic Children understand most though not all form of economicexchanges and the networks and institutions, like banks which link them.

External influence on consumer socialisation

As well as family as discussed in the last chapter external influences include:

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Parents Mother-child influence is of specific consumer importance. It is unlikely thatmore educated mothers are better able to help their children understand the economicconcepts surrounding consumerism.

Have an allowance seems to help children develop economic and consumerunderstanding at an earlier stage. Middle class children tend to receive less allowancethan working class children but they tend to save more of it. Which is probablycarried onto adult life e.g. target credit cards to the working classes.

School three ways in which schools contribute to consumer socialisation:

Peers: Opinions are more important than parent. It is crucial to play the right games,right toys, wear the right clothes etc.

Teachers: Are not trusted any more than parents.

Courses: like economics and business will help however most schools do not teachconsumer behaviour.

Social needs

A social norm is the behaviour of people in a society and that which is considerednormal. By studying norms it allows us to predict the behaviour of others with a highdegree of accuracy. Such prediction is necessary for societies to exist e.g. driving onleft in the UK.

Social norms are reflected in a similar fashion in the consumer socialisation of societychildren. Different countries emphasis different familiarities of understanding ofdifferent concepts e.g. Kenyan children have a better understanding of trade due tobarter in their society.

Marketing and advertising

In some countries direct advertising to children is forbidden. In America children see c.20,000 commercials a year.

Summary

We all go through similar stages of development in our understanding of the world andhuman behaviour.

The nature of this is affected by language and the culture we are born into. This holdstrue for consumer as well as other types of behaviour.

So the development of economic concepts have both universal development aspects tothem and a specific aspect depending on the social environment the child is raised in.

The most important influences: Parents, school, social norms and specific advertising.

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The influence of small groups

What are the effects of group pressure on the individual consumer?

The family is the first experience we have of groups and forms the psychologicalpro-type for our dealings with the group.

It is of psychological importance and cannot be over estimated. In terms of consumerbehaviour it’s influences are more general than specific. We need to examine othergroups too when examining the consumer action of adults.

A group is a concept that can be applied to entities as diverse as a couple ofroommates and a world wide religion. Both of which have an effect on consumerbehaviour and can only be surrounded by a definition not encompassed:

“Two or more people who regard themselves as a collectively and interact with eachother while sharing the same norms”

Types of group

Primary group are small groups of face to face groups. That are small enough all themembers can sit around a table and see each other directly 4-8 members. Most peoplebelong to several of these groups at a time e.g. family, coffee club etc.

Secondary group membership is too large to be considered a small group. 20+. Whatgroups of this size might do if they are sufficiently close knit & split up into two orthree primary groups. If someone does not know all the members and does notinteract with them, then the group is of secondary importance.

This group may be a transnational company, a professional association or even areligion and might have a serious influence on the individual’s sense of identity not theless. E.g. CIMA – you can advertise to them re new calculators, church news, politicalgroup etc.

Formal and informal group

These groups vary in the degree of structure and organisation. A group withmembership etc is a formal group and a group of friends who meet for lunch isinformal. As with primary or secondary groups there is absolute cut off – plenty ofgrey areas , ad hoc groups are probably most common.

E,g. It gets together for a purpose – to stop motorway being built or do this do that –then dispands.

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Membership and reference groups

A group that someone belongs to or would qualify for member ship in. As a child youcan have no choice of your groups you’re born into them – social class language orreligion.

Adults are however have a choice, e.g. membership of a chartered this or charteredthat. Even for adults then may not be a real choice if you want to be a lawyer you haveto join certain formal groups.

Children for example – by the age of two learn they are boys or girls and may/ or maynot conform to that, girls dependent conformist, boys rugged and independent

Marketers are aware of this, they are also aware that women are now rugged andindependence with money to spend.

In comparison to a membership group is a reference group. Which is a group withwhich people identify and whose norms and values, judgements and behaviour theyfollow (refer to) whether they are actually accepted to this group or not.

For example lighter skinned black people trying to be “whiter” due to the negativeimage of actual blacks. The way to express this is by the products they use. So theirmembership group is black, but their reference group was white.

Reference groups are also known as aspirational or symbolic groups becauseindividuals aspire to leave their membership group and can be accepted by theirreference group or identify who symbolism values or behaviour they admire.

Properties of group life

It is important to understand they way people behave in groups and the effects ofgroup influence.

Unintended group influences Couples tend to have similar patterns of consumption toeach other, pattern which are systematically different from couples who meet indifferent kinds of neighbourhood (this assumes that the couple are from the sameneighbourhood, so no social climbing / declining). This is an extension of geographicsegmentation.

Word of mouth and opinion leadership

Friendship patterns are important to consumer behaviour as ones friends are thesource of advice and word of mouth referrals.

Opinion leaders, leadership is situational depending on:

- It is usually specific to a particular product or category

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- It is a relationship between at least 2 people where the influence goes both ways

Opinion leads are sometimes known as market mavens (expert)

Conditions necessary for someone to exert consumer influence.

- On going personal relationship

- The other person is an expert in their field

- You do not personally have the information to evaluate the product

- You do not trust the vendor sales pitch

e.g. Ed Peck consulting on PC’s.

Group norms and the power of conformity

As adults group norms have become internalised that we are not conscious of them. Itis only when we go against the norm we realise how powerful the norm is.

Conforming is the norm

Soloman Asch – line experiment, lines of different lengths – groups of people saw linesof different lengths, upon discussion they agreed lines with the same length or a“opinion leader” influenced the others on line lengths.

People shift judgement due to norms – and conformity is the overriding norm.

Cruchfield – followed on from Asch 80% of people conformed.

Conformity and consumer norms

- Most of us feel uncomfortable if our buying behaviour is out of step with others.

- People who do not mind such conformity are likely to be opinion leaders.

- It might just take the support of one person to make conformity resistible.

- Most of us accept only silly opinions if they are the norm e.g. Bermuda shorts,donkies from spain etc.

In western societies how do we reconcile the prevailing ideology of individualconsumer choice with the reality of enormous conformity pressure?

Since Ford and the advent of mass production, with its highly profitable economies ofscale, it has been in the producer’s interest for all consumers to want - or at leastaccept the same product, to maintain the fiction of free choice.

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Where there is no real competition on product provisions it is difficult to know howconformists, as opposed to manipulated consumers really are. Consider the differencebetween the car industry and the home entertainment industry.

The cars we drive today are recognisably the same product that came of the Henry Fordassembly line in 1912. In the meantime there is wire, plastic less steal, but they arecontrolled, powered and used in the same way.

Home entertainment industry, 1913 the best people could hope for was a piano, nowpeople enjoy a plethora of multi media & web based applications.

Why? Producer cartels were not able to get such a lock on the manufacturing processand the Japanese entered the market quite early.

Indeed when Japanese cars sales began to take over the Detroit companies in the 1980’s, only then did competition take place.

Power

Another way in which group life may affect the consumer’s behaviour of individual isthrough their perception of power the group to influence them.

Reward power the ability of the group to give people something they value. Eithermaterial or psychological – form of acceptance or recognition for certain behaviour,increased status, bono etc.

Coercive power The opposite of reward power. It is the ability to punish or withholdreward from the individual. E.g. having to wear certain clothes or be punished by lackof acceptance. Interesting to observe in the work place.

Legitimate members perception that their group has a right to influence them asconsumers would be considered cognitive power in action, e.g. parents, government,health care and doctors etc.

Expert power based on the possession of knowledge or skills that the individualconsumer values. Opinion leaders, is obvious but virtually everyday someone performsthis function at one time or another.

Referent power the emotional identification that the individual has with a particulargroup or with some prominent person who represents the group to the individual. Thecloser the identification the more influential is the referent power. E.g. showbiz, celebsrelated to a product.

Reference groups and consumer behaviour

Where someone’s reference group is not their membership group.

Conformity pressure and specific influences

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Asch is the classic study in this field. The group was naive to the subject matter – sofelt pressure to conform. The same for Crutchfield study of social and politicalopinions as well as arithmetical problems.

Direct influences of conforming pressure can be identified in actual buying situationswhere members of the group know each other and the need for social approval isparticularly powerful.

Indirect influence

Milligram studied conformity to the norm of obedience where our behaviour is stronglyinfluenced by reference group that is not physically present. We are very concernedabout what other people think, who we feel important to us. E.g. a husband/wifescenario in a purchase decision.

Variability of products

How exclusive the product is and how it is used. “luxury necessity” and“public-private” e.g. using a sail boat – a luxury good in public, or a private necessity afridge.

- Public necessity: A suit (something most people wear) reference group will beweak, but because the brand will be subject influence, e.g. the perception itcarried.

- Public Luxuries: Reference group will be strongest in the sector because theproduct is visible and relatively exclusive e.g. golf clubs. This influence will beexternal to a particular product than a brand.

- Private necessities: reference group at its weakest. Not many people care abouta mattress. Group influences should be minimal.

Differences in consumer susceptibility

Group factors

1970’s study found students tended to be more susceptible group than housewives forexample students have more contact time with their reference group and their peersare important to them.

Students are less specialised, experienced consumers than housewives.

The more an individual feels that the belong to a group the great the influence onthem

Individual factors

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Those individuals who were more resilient to conformity pressure were people whowere generally self confident and high in self esteem. They are confident to go againstgroup norms they had the self esteem and confidence, to discuss and press theiropinions. Such people are likely to be innovators. Marketers might enlist their help.

Summary

We live our lives in groups, an understanding of the interactions between individualsand the group they belong to is crucial to an understanding of consumer behaviour.This is particularly true of small primary groups where the psychological dynamicinvolved have been studied.

Secondary groups are of great importance as an individual’s reference group andmembership groups. Patterns of interaction between people are a key feature of grouplife. Word of mouth is a key element in the buying decision especially when opinionleaders are involved.

The most important aspect of group life is the pressure on the individual to confirm tothe groups expectation. The effect of it on many forms of purchase decisions isimmediately evident in our lives.

Consumer aspiration, identified by their buying behaviour is seen as members of aparticularly valued reference group.

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Influence of Social Class

Concept of social class, how it is measured

The importance of status symbol in consumption

Effects of social class on consumer behaviour

How does the social class affect what we buy?

College professors and used care salesman may make the same amounts of money,but they will spend it different ways.

One way of segmenting is by socio economic status, which is determined by educationand occupation as well as income.

Social stratification

Class comes from “classsis” which was used by Romans to classify the population bywealth and administration.

Social stratification has been around long before the romans, dividing society into rankordered classes.

Every country in the world has a socially stratified society. It implies the existence of ahierarchy between strata. Social strata therefore imply the existence of a fundamentalinequality in the way the reasons of a society are distributed.

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Social stratification also implies that people in each stratum will tend to interact largelywith people in the same stratum. The same neighbourhood and friends etc.

Social statues and symbols

In any hierarchical system, where different levels over rank ordered, a person’s statusdepends on his or her own rank.

Different societies ascribe the same group’s different degrees of social status and indifferent ways. As society changes social status may change accordingly for exampleUSSR, socialist, government etc in Russia business people UK, big brother contestants.

Status and class are often used interchangeably in practice. What usually catches theeye are the symbols that denote someone’s status in society and the class he or she isplaced. People buy products because of what they stand for as well as practical uses.The symbolic use of products is the most visible way in which people claim that statusthemselves.

This is known as conspicuous consumption at its most visible where people are layingclaim to membership in the highest social class.

Only lower class people carry cash – middle class use plastic the card “saying moreabout you than cash could’ The Queen uses neither.

Status symbols are very potent forces in organisational life; it is a cheap way fororganisations to reward their staff.

So when “flat” Japanese organisation started working in the west, there was dismaythat status symbols were lost. If everyone has a Rolls and a rolex – the status symbol isrendered pointless.

Exclusiveness

Of a status symbol is the attraction. A symbol is only a symbol – it stands forsomething else.

Psychologically it represents being respected by other people. Money buys products orthey can donate it to charity all lead to respect.

Success of a product or service as symbol:

Exclusivity, only a few people should be eligible

It should be relatively expensive

It should be of good quality

Limited supply

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Honoured and respected by others.

May endure for a long time, but firm changes the meanings of certain symbols.

Life chances and Lifestyle

The primary group membership which people have is of family they are born into. Thesocial status of the family is therefore the social statues that the individual will have.

These individuals may become socially mobile and move into different stratum ofsociety. Families at different levels of the social hierarchy afford their membersdifferent life chances for their future in society.

A person’s level of education, occupation and income depends more than anything elseon the social statues of the family he was born into.

The lower the social class, the higher the chance of leading an unhealthy life and dyingyoung, getting a job and keeping a job will be harder. The life chances of an individualwill therefore have a powerful bearing on his or her life style.

People are or can be class conscious, subjective awareness have of whom might beobjectively placed in a certain class because of SES or lifestyle.

Measuring social class

Objective methods education, income, occupation, additionally marketers addgeo-demographic measures too.

Single variable index only one SES criteria occupation is normally taken

Multi variable index may take severable to attempt to come up with a more roundview.

Subjective view

Getting people to rank themselves in class hierarchy, in the US people tend to describethemselves as middle class – so it tends to cause a bulge in the middle

Reputation method

People asked to rate each other on the social class hierarchy. This method is limited tosmall communities where everyone knows each others life style fairly accurately, thismethod is less practical.

Interpretive method

Involves researchers interpreting the written and visual aspects of products of societyfor clues about its attitude and norms regarding social class behaviour. So this wouldinvolve written and non written social commentary. Not really quantifiable.

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Social Class categories

How many classes are there?

Researchers can divide the population in many different ways from two to nine classes.

Upper - upper upper, upper middle, upper lower.

Middle – upper middle, middle middle, lower middle

Lower - upper lower, middle lower, lower lower

Even this broad ranging variation conceals the variations of SES factors within eachlevel.

American Classification

Richard Coleman derived his computerised statues index CSI:

Upper-Upper 3%

Lower-Upper 1.12%

Upper-Middle 12.5%

Middle 32%

Working 38%

Lower 9%

Lower-Lower 7%

Middle and working class represent c. 70% of the total population, These are referredto as “middle American” what this group likes, set the agenda for producers, marketers,and advertisers as well as social, economic and political decision makers.

British classification

a. Upper middle (leadhouse hold, senior position in a business)

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b. Middle (middle manager)

c. Lower middle (small tradesman, white collar, junior manager)

d. Skilled working (blue collar workers)

e. Unskilled working (working as labourers etc)

f. Lower (casual employment, no employment)

Changing social class

is the categorisation of people into social class undergoing change?

to what extent can individuals change their class?

Social classification needs to be updates periodically as social economic and politicalchanges occur in a society. People’s life style and therefore consumption patterns arestill greatly affected by their lifestyle status.

Look at the Blair years, how has this affected social mobility, “New Labour”

Individual social mobility – western countries pride themselves in “upward socialmobility” The expansion of the American middle class supports this. However, in acapitalist system there is a good deal of downward moves.

Marketing and consumer behaviour

There is the temptation for marketers to target people in the higher social classes, inper capita terms consumers in these classes have higher disposable incomes.However, the working classes are clearly and enormous and will be a large targetmarket (the first up-takers of Sky TV).

In any society there is only a relatively small proportion of the population that canafford to live in rich luxurious life. But many more aspire to it or enjoy partaking of iton a regular basis, for a treat or celebration.

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Marketing terms people are encouraged to live toward a life style – e.g. luxury soap etc.

Summary

Social class is used interchangeably with socio economic status a standard or marketsegmentation.

Social class includes factors of status and symbols of status which people respond toas individuals.

There are various measures by which social class is measured and people are assignedto different categories, and these may vary from country to country. Thecategorisation process changes over time as methods become more refined.

Individuals may move between social classes over time, socially and psychologically –as individuals redefine themselves. This categorisation and redefinition of categoriesaffects the way products may be marketed to consumers and may take themselves intoor out of a market for a given product.

Cultural influences

Culture is usually defined as share beliefs, values, attitudes and expectations aboutappropriate ways to behave.

The most obvious differences are language, dress, food and history

Everyone is a nation state is socialised into the national culture – a process calledenculturation – regardless of the sub culture they belong to.

When we move to different countries we must adapt to their culture a process calledacculturation.

Culture is something we learn as we grow up.

Similarities across culture

All cultures share universals such as:

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Every culture has to grapple the same universal questions; it is just the answers thatare different.

Culture is something we learn as we grow up.

Differences across culture

Language speaking the same language is no guarantee against differences in nationalculture e.g. scousers. The communication gap becomes quite wide in the samelanguage come from different cultures. It becomes more pronounced between twodifferent languages.

Non verbal communication style of clothing, facial expression, and body language.

Cultural values

The context of communication is often referred to as cultural values. Predictability ofthe behaviour of a culture is crucial to marketing strategies.

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The difference in cultural values can lead to business failures. In the USA householdsitems are convenient disposable items. In Europe it is consumer durable (e.g. washingmachine). This does not fit with American values – they will not understand why it ismore expensive etc etc. Going back to the image of self Germans may have moreconcerns with it than Americans, e.g. they spend more money on it, it is thereforemore important and therefore more of a reflection of themselves than what anAmerican would say

Ideals

Are usually not attainted in practice, they represent an ideal state of mind.

Actualities represent more everyday lives that people actually lead.

Differences in cultural values

The cultural values of two countries are clearly evident in the way their childrenperceive the social world.

Subcultures

Ethnicity has two components, national origin and race as well as religion. In terms ofproducts, Hispanics have different food tastes to Anglo Saxons as do British Asiansfrom Anglo Saxons.

Race, black people spend more on symbolic spending luxury items e.g. “I’ve made it”rather than delayed gratification. Religion e.g. don’t try and sell booze and bacon toMuslims.

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Changes in culture

Always in the process of change – e.g. England a land of migrants through time.

One important method used to track this is called “content analysis” - a snap shot ofculture.

Summary

Culture is important in understanding consumer behaviour. Similarities betweenculture are difficult to see but they cover a while range of human behaviour.

There is a trend towards convergence of culture due to the impact of globalisation andglobal communication, this trend this to deviate towards to the USA, e.g. “CocaColonisation” power of informal empires via products and envy.

Difference between cultures are still apparent, however, more so than similarities.There are verbal and non verbal communications this can lead to pitfalls in marketing,lack of cultural understanding and sensitivity can cause problems. For example usingwords that aren’t suitable in advertising logos.

The influence of subculture within main stream culture has to be dealt with, thispresents opportunities and threats, and this must also be considered against abackground of on going cultural change in the world.

Attitudes

Attitude a stable long lasting learned predisposition to respond to certain things in acertain way. The concept has cognitive (belief) an affective (feeling) and conative(action) aspect.

Stable – once formed will keep that form

Long lasting – stable over many years

Learned – we are not born with an attitude

Predisposition to respond – links to actual behaviour

In a certain way – emphasize consistency

Attitude components

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A measure of any single one the three components could be very misleading. Evenintentions may not indicate buying behaviour.

Forming attitudes - no one is born with a particular attitude

1. classical conditioning

2. Stimulus generalisation

3. Stimulus discrimination

4. Operant conditioning or reinforcement

5. Cognitive learning

Source of attitude

Family

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Peers

Direct experience – the greatest former of attitudes

Theories of attitudes

Single attributable model – measures of the components attitude.

Multi attribution model:

Behaviour intentions model

Adds a measure of intention to the model the model can also be amended to allow forthe attitudes of significant others called Subjective norms. Fishbiens Model – nothelpful in explaining odd behaviour e.g. going out for bread and coming back with aload of smutty magazines.

Changing attributes

Three main forms

1. Mere exposure

2. Persuasive communication

3. Cognitive dissonance

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Usually market leaders are most interested in strengthening attitudes than in changingthem. Competition will have to gain from changing attitudes. (e.g. swatch vs. digital)

Strategies

Low consumer involvement - use an advertising blitz to condition

Increasing involvement - try to associate the products with a cause or issue

Involvement – use the multi attribution model

Involvement and the multi attribution model

Change belief (bi) involves changing the consumer beliefs about the benefits thatwould result from purchasing the product. Anything that claims to last the longest bethe most reliable or gives best value for money, would use this technique.

Changing evaluations (ei) changing the way a consumer evaluates a product. E.g. a tinof beans, traditionally viewed as cheap foods, get people to think they are trendy andhip and / or healthy.

Changing beliefs and evaluations (bi ei) removing or adding attributes can changethe combination of beliefs and evaluations for example adding fibre to bread orremoving caffeine from coffee.

Cognitive dissonance studies show that if the appropriate behaviour comes first themmore than likely the attitude change will follow.

Behaviour is more resistant to change than attitude.

Summary

An individual attitude can be divided up into three components, cognitive (beliefs),affective (feelings) and conative (actions). It is important to note that all attitudes arelearned, in the various ways that people are capable of learning and we are thereforeopen to change.

The source of our attitudes towards a specific product maybe our family, our friends,or our own direct experience. The study of the attitude involved in making consumerdecisions has led to the development of mulit-attribute models of attitudes. Some ofthese models attempt to quantity likely buying intentions.

The psychological process that lead to the formation of attitudes is also very influentialin any change which occurs in them through other processes may be involved.

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Leading companies in any market are primarily concerned in strengthening consumerattitudes towards their products; it is their competitors who are most interested inchanging those attitudes. There are various strategies for changing consumerattitudes depending on how much involvement the consumer has in making aparticular decision that is how important it is to the consumer to differentiate betweenthe products on offer.

Relationships between attitudes and behaviour, it appears that while a change inattitude can lead to a change in buying behaviour, the reverse is also true; a change inbuying behaviour can lead to a change in attitude about a product. The key factorappears to be the amount of consumer involvement in making the decision. Withhigh involvement attitude can change behaviour, but low involvement behaviourcan change attitude.

Communication and persuasion

How advertising affects consumers

An analysis of the communication process

How we deal with advertising communication

Cultural effects on advertising communication

How does advertising affect our behaviour?

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The most obvious form of persuasive communication is advertising. It’s primarypurpose is to persuade people to form or increase, positive attitudes or intentionstowards a particular product.

We need to understand how we process advertising in order to understand thepersuasive elements.

The importance of advertising

Universal and persuasive, more and more local outlets being used - now the internetwhich can get us via blackberry etc.

Average American exposed to in excess of 100,000 per annum some people attitudestowards advertising is one of fear and suspicion. Some think they can see “through it”sophisticated consumers that we believe we are.

The process of communication

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This is the general model for the communication process, but it can be applied toadvertising.

The sender initiates the process by transmitting a message about its product. Themessage can be encoded verbally or non verbally or in a combination of the two, if themedium allows.

The intended recipient is in a target market audience that is selected for this product.The receiver then decodes in a way that makes sense to him.

The goal is for the receiver to perceive that precise message that he or she encodedand it influences the receiver attitude and/ or behaviour in a positive direction.

There of course are many pitfalls on the way to doing that. Communication issues orlanguage barriers, cultural relative / sensitive issues.

The source (sender) two important factors that determine the persuadability of thecommunicator who is the source of communication aimed at “changing peoples”attitudes, credibility and attractiveness.

Credibility

The communicator should be perceived and an expert and trustworthy. Arguingagainst one’s interest is especially effective.

Fast smooth – talkers seem to be more positively perceived than slow hesitant talkers.

Sleep effect – a not so credible spokesperson gives a message after a time the senderis forgotten and the message is remembered. (message more important than thedeliver)

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Attractiveness

If the above is true, why does Roger Feder advertise shaving products?

Using celebrities, it is said this technique works only up to a point on a trivial issue.

“attractiveness” draws consumers to a product. Sometimes of course there can be aproblem e.g. tiger woods after he nailed all those birds.

The communication (message)

Several key questions are considered in evaluating the effectiveness of the message:

Reason or emotion modern research looks more into the effects of different level ofemotion rather than the distinction between the two. It seems to be the combinationof high emotional arousal plus specific institutions on what to do that is most effective.

e.g. drink and drive advertisers – what levels of emotion and reason to playing on.

More people have fear the more likely you can influence people by communication.Emotion and instructions.

Image of statistics

A picture or image is more effective than words.

One sided or two sided argument for uninformed people or people that share thesame opinion one sided argument approach is more effective. For well informed peopleor for people that don’t share the same opinion the two sided approach is moreeffective.

Size of attitude discrepancy It is much easier to charge the attitude of the targetaudience when there is only a small discrepancy. E.g. the further away the target arefrom the message the harder it will be to persuade them

The audience

The final set of factors will deal with the concerns of the audience. Pre-existingattitude of an audience and the extent to which they are informed about the relevantissue can affect the persuasiveness of a given message.

Self esteem it seems that people with low self esteem are much more susceptible topersuasion. Miligan and Asch conformity studies, people with low self esteem aremore susceptible to the implicit influence attempts.

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Prior experience generally we may be perusable when a belief we take for granted isquestioned. We are unused to defending this belief and lack the time to marshal thearguments in its favour.

One way of defending against such an attempt of persuasion is to be inoculatedagainst it by prior mild form of argument.

Forewarning people is another way as it gives people time to muster their thoughts.

Public commitment

When people make public commitment that differ from group norms rather thanprivate commitment they are more likely to change their behaviour.

Family would be a good way of attempting to amend group behaviour. E.g. Lewinconvinced housewives to buy offal. They committed publicly to eating / trying newrecipes. (as part of the US War effort in WWII).

Mood

What type of mood is the consumer in when exposed to the advertisement, and howthis mood will affect the response.

Context and Content should be upbeat and happy.

Feedback and evaluation

Elaborate and likelihood model (ELM)

Suggest there are two different ways to persuade consumers via communication. Thecentral role when the consumers involvement and motivation to assess the product arehigh and vice versa for the peripheral role.

Attitudes towards the advertisement if people dislike the advertisement itself it mighttransfer onto the product.

Feedback

When salesmen talk to consumers in person it is two way. Very expensive to operate,the internet and other digital communication methods make this one to one interactionmuch cheaper.

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Cultural factors in advertising

Different cultures have different values regarding commerce and consumption, as dosub cultures within main cultures.

The most important cultural aspect of advertising are: humour and sex

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Not everyone has the same humour.

Summary

Advertising is a long established and pervasive aspect of most societies. Its influenceon consumer society is great but sometimes in ways that are not understood.

Fear that will be mind controlled is generally unfounded.

Source is linked with the intended audience via a particular communication and thereare important psychological findings which illuminate each part of the process.

-Role of the consumer in dealing with the communication

- We are not passive recipients of advertising

-We evaluate the communication aimed at us.

Part of the response is a form of feedback to the communicator that transforms a oneway process into an ongoing two way process. This sort of dialogue.

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Approaching a decision

Prevalence of decision making

Methods people use to make decisions

The nature of the decision making process

Stages in the process

Marketing implication

How people make decisions

Our whole lives are the sum of all the decisions we make. Some decisions are largerthan others e.g. where to live and who with, where as others are small, what movie?What soft drink to have.

Financial and psychological investment is much greater in a large decision, as are thepotential rewards of making a good decision and the penalties or making a bad one.

Commonality: More than one possibility to choose from

The outcome is not known hence the difficulty in making a choice!

We generally operate our lives with some uncertainty about the future. Evaluating theprobabilities of different outcomes is the hard part, more so than the decision “trees

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through the woods” scenario. We are constantly making decisions we rarely realisewhen we are face with decision – so it is taken for granted.

Rationality

Very rarely do we make a rational decision. Most decisions are made in a state ofincomplete information, often we are not even trying to find the best solution, just asatisficing solution.

Psychologically

We make objective, dispassionate choices that are not influenced by prejudice orirrational influences.

Economically

We find out all the information there is on each of the alternatives, asses theadvantages and disadvantages of the each then choose the best on the basis of a costbenefit analysis.

Very occasionally we do make decisions like this, but we do not recognise we are doingit. But, the rest of the time we don’t – we live in a real world “interpretivist”

- Most decisions are made on incomplete information e.g. finding a partner, gettingtogether is the best decision at the time.

- Much of the time our behaviour not thought about, it is influenced by what we havelearned when young or by unconscious behaviour, we do not know about.

Often we try to find the best possible alternative; what we are looking for is the goodenough alternative - satisficing.

How do we go about making decisions in the absence of complete rationality?Heuristics

We are all cognitive misers, meaning we try to make sense out of the situation we arein, in the simplest possible way with the least amount of rational mental (cognitive)processing. There is too much information to take in and it would take too long toabsorb.

Three forms of Heuristics

Representative Heuristic we pick out something familiar in the new situation andequate it with something we already know. Judging quality on the basis of price forexample, luxury goods from brands we know are more expressive than the

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competition, so when faced with the decision about buying a product we will often usethe price as the representative. This is known as the “Halo Effect”

Characteristic for choosing between alternative; an expensive bunch of flowers forsomeone we love – something cheap for someone we don’t like.

Attitude Heuristic start with liking or disliking a product then believe what we wantabout it to be true.

The availability heuristic The more available relevant information is the more likelywe think the even to occur, This relevant data comes from our memory, we trust thevalidity of hindsight, we can convince ourselves the results were inevitable, but indeed,we knew that it would happen all along.

The consumer decision making process

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Stage 1 : recognising a problem

The consumer perceives a need something is missing from their lives. This perceptiontriggers the beginning of the process. The consumer’s problem is the gap betweentheir actual state and desired state, so by using the model and consuming agood/service they can close the gap.

Just because they recognise a problem it doesn’t mean they will act upon it. Theymight not think the problem is important enough. They might not be able to satisfy theneed.

There are five causes that lead people to act upon the recognition of a problem.

Changing circumstances

Finances needs and wants. Finances can be negative or positive. Increase may lead tomore consumption or goods that weren’t considered before, decrease leads tospending decrease.

Needs activated by the passage of time, life style effect location, e.g. having a baby,buying baby products etc.

Wants not necessities often linked to life style. Physiological maturity, increaseopportunities, fashions, peer group norms etc.

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Depleted Stock

What we have runs out e.g. milk or stamps.

Dissatisfaction with current stock

Even if our stock has not depleted enough to replace we may often be dissatisfied withits ability to fulfil its function. Clothes being obvious, could be caused by social norms.–e.g. out of date

Marketing influences

Persuading the customer how their “gap” will be closed by a particular product.

Product add on

Buying one product will alter activated the problem recognition of the need foradd-ons. E.g. first time buyers will want new furniture, for their new home.

Stage II: Searching for information

Once a problem or need has been recognised and the consumer is willing and able toact on it, the second stage in the decision making process is searching for information.This isn’t the rational straightforward process it looks like.

Decisions are more difficult when there is more information and brands to consider.Because of our tendency towards cognitive miserliness, we may perhaps curtail oursearch at the earliest opportunity rather than carry it through its natural logicalconclusion.

1. Internal search: Undirected / unlinked learning or incidental learning. We learnthe names of all the stores on our way to work. Directed – deliberately try toretrieve relevant information.

2. External search: Most important source of information is other people. If youwant to be more through, you will read up or consult a specialist. Manyconsumers do very little external searches even on a house or car purchase.Searches might be quite limited before being terminated for FMCG search timeis very short.

Structural factors to be considered when discussing search:

Increase search Social pressure, high costs, shopping is convenient easy to obtain,clear differences in price/quality.

Decrease search Time pressure product can be easily exchanged, low costs, difficultshopping conditions, influential sales man.

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Individual factors that lead to increased information search

High involvement in decisions, the ability to assess, confidences and enjoyment inlearning, high SES, enjoyment in shopping, high perceived benefits, affects theconsumer image of self.

Individual factors that lead to Low search

Low involvement, brand loyalty, difficult in copying with info / sales person, dislikesshopping has past experience.

Risk factor

“Perceiving Risk” about the consequences of the decision we made. Risk shouldalways be qualified, therefore by the adjective perceived because it is alwayssubjective and may bear little relation to any assessment of objective reality or tosomeone’s sales risk.

Brand loyalty is the most popular strategy for coping with risk. It enables us toavoid a decision. A related way of dealing with risk is to build up a set of basicbeliefs or stereotypes:

All brands are more or less the same

Local stores give the best services

More sales people – more expensive

More advertising – better product.

These are obviously generalisations.

Stage III: Evaluating Alternatives

Having recognised the probe of need and search for information about possiblealternatives the consumer arrives at stage three, whereby the alternatives areevaluated.

Criteria of evaluation this will vary from product to product. Brand names andprice are some fo the criteria considered.

Arriving at alternatives: the alternatives chose are known as an evoked set, whenassessing we usually have a cut off point.

Choosing a decision rule:

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Compensatory decision rule: offsetting weak attributes with strong attributes.The chooser then sums up the plusses and the minuses and chooses the productwith the highest score.

Non compensatory decision rule:

Conjunctive: if the alternative achieves a minimum acceptable standard on eachattribute

Disjunctive: if the alternative achieves a minimum threshold it is acceptable

Lexicographic: order of importance

Eliminator: Establish a minimum criteria and eliminate those not meeting it.

Marketing implications

Knowing the decision rules used by consumers of and the given pitfuls.

The cues that the consumer uses in assessing alternatives.

The presentation of the appropriate information to the consumer

Cues used to create a coherent image of the product, the most important cue ispersonal referral, and advertising is least.

Presentation o consumer information

There is a fine balancing act between putting too much information and not enoughon packages. On one hand you want to the information to be big enough to readand inform the consumer by you do not want to overwhelm him with information.Different consumers, seek different information.

Summary

Decision making is an integral and on going part of our daily lives, so we are notusually aware of how we go about doing it.

We would like to think we make reasoned and informed decisions based onadequate information that is probably the exception rather than the rule.

Most decisions are solved by using heuristics, an informal rule of thumb.Representative, attitude and availability.

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The process of buying is a five stage process, recognising a pattern, searching forinformation and evaluating alternatives.

The decision and it’s consequences

The process of making a buying decision

The differences between in store and at home buying behaviour

How we deal with consequences of a buying decision

Stage IV: Of the consumer decision making process

This is what the consumer experiences at the point of the sale wherever and wheneverthis maybe. In store or at home.

In Store Purchasing

Why do people go shopping? It isn’t just because they need to buy things Americansspend more time in the mall than anywhere else other than work or home. A similarfigure is true of other industrialised countries. Why else go shopping?

-Breaks up the routine, get you out of the house

-Meet friends, exercise, e.g. a work around the shops

-“Free” entertainment, sights, sounds, smells, e.g. events in people going to themarket for the sake of it.

-Sense of being important, even powerful

-Hunting and bargaining skills (primal urges)

-See what girls/boys are doing out – especially for teenagers, the mall is part of thecourting ritual.

It could even be that the buying process may even be a end in itself for many people,providing a psychological gratification that is quite removed from the process ofconsumption e.g. people may buy merely in order to shop.

How do people choose a shop?

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Of course there are many people who don’t like shopping. The US 15%-25% ofconsumers are “anti-shoppers” for example couples with children would fall into thiscategory, they might find shopping stressful, as their time is pushed as it is.

Shopping is however hard to avoid, even with the internet. Evidence seems tosuggest that a decision about where to shop is very similar about which product orbrand to buy.

As with brand and product choice many of these decisions will be made using the leastpossible effort “go to the nearest supermarket” it becomes part of the routine.

Eager or keen shoppers will be open to persuasion about their shopping venue (+50%)the anti shopper will generally do whatever is easiest and once they are in a routinethey will likely not break up.

Location All things being equal people will use the store closest to home. The moreadventurous will go outside their area to explore, they perceived as “up-market” bytheir home crowd. Plastic Malls vs. The more homely organic stores e.g. in Londonpeople being encouraged to ‘shop local’ ‘buy local’ deli, groceries, Notting Hill crowd.

Layout People will match their self image to shops they feel appropriate to them.Lesser known outlets and judged by their external and internal layout and overallphysical impressions they present. Ambience of a place has a large effect.

Music in store has been used and studied for years now people spend less timeshopping, but the same amount of money when faster music is playing, slower whenthe music, they spend more time in the store but less time spending money.

Merchandising the products that the store carries have an effect on who shops there.The pattern of product specialisation becomes increasingly blurred , price andconvenience become more important factors e.g. everything under one roof.

Service sales people are important to shoppers. Other services are the acceptances ofcredit card, gift wrapping, some who knows your habits, short check out lines all thethings that will encourage you to come back.

Buying behaviour Having chosen a shop, the consumer will start to buy things, whatfactors influence his or her buying behaviour of the point of sale; this is where theconsumer and producer of goods come together.

Merchandising time and planning are the two most important aspects e.g. the timepeople take to make a decision and the planning that goes with it.

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Supermarket study

The range of time take varied from less than a second to five minutes – seconds weuse is the general rule.

Differences between products those that need label reading and those that don’t oneswith labels look longer.

Only a minority of shoppers plan to buy a product prior to entering a retail outlet +50%of purchases are unplanned.

These unplanned decisions are of great interest and are not just impulse purchases.Sales promotion or the promotion its self trigger the consumer memory and enablethem to recall they need X or Y.

This doesn’t mean there isn’t impulse purchasing to entice:

A spontaneous urge to purchase something soon

An intense motivation to override other considerations

Feeling of excitement

A disregard for harmful purchases

Shelf level is important as are point of sale promotions, locations of displays areimportant.

Price a frequent method used to encourage the purchase is “multi-pricing” where adiscount is given for buying more than one item. Another is discount coupon and astraight reduction in price might be offered for a limited period.

The idea of getting a good deal is attractive to consumers it encourages bargaining,hunting skills, a psychological benefit of shopping.

The idea/ perception of a good deal that is important

At home purchasing

Internet, door to door, mail order, party planning e.g. Anne Summers, sex aides.

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All these methods give marketers the advantages of perceive market segmentation ifthey know who they are targeting ‘Segmentation of one’

Shopping at home doesn’t have the important social/psychological benefits. Howeversome products, home shopping is easier e.g. porn or purchases where it is convenientto go out and get e.g. a fridge. Or buying something embarrassing.

Stage V: Consequences of the decision

Post purchase processes

What is important here is the evaluation of a emotion. Did the consumer enjoy theproduct as much as they thought they were going to. Positive or negativedisconfirmation

Consumer satisfaction/dissatisfaction (CS/D)

An evaluation after consuming that the good does meet expectations.

Expectations makes the issue more complicated. It makes an evaluation of an emotion.It is this comparison between what we expect and what we experience that isimportant.

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You could enjoy something but not as much as you expected. This needs todissatisfaction. Dissatisfaction/negative disconfirmation greater than expected –satisfied.

How much satisfaction / dissatisfaction is a consumer’s buying behaviour is crucial tothe marketer. It’s a judgement call than a scientific one.

Dealing with dissatisfaction

It’s difficult for a marketer to make a dissatisfied customer to make a subsequentpurchase. They are more than twice as likely to tell other people about thedissatisfaction as being satisfied.

Because of the cognitive dissonance, customers routinely convince themselves thatthey have made the right choice, faith in their abilities as a shopper is something theydon’t want to loose – given we consume every day.

After a bad decision, the consumer can admit they made a mistake or convincethemselves it was a good choice. There are limits to this of course, e.g. a faulty car,when the purchase is important to us cognitive dissonance will be at its height.

Advertisements and branding will reinforce the view that the decision we made was thecorrect one. Most consumers are more likely to complain to friends rather than theseller. This will lead higher customer involvement.

What matters most is expectations

If the purchase was good but not as good as we expect we are let down by havingexperienced negative disconfirmation we can also experience positive confirmation.

Summary

Stage 4 of the consumer buying process is the actual purchase, which is either in storeor at home. These are very different kinds of location in which to make buyingdecisions. Much of the attraction of in store for many people is social andpsychological, in some regards people are shoppers just to fulfil these.

Location, layout, pricing and merchandising are all important to the consumer andshould be considered. At home shopping serves different needs.

The final stage of the decision making deals with the post purchase process which arethe psychological consequences for the consumer which are inherent in making a

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decision. Consumers are set to reduce the cognitive dissonance which is involved inmaking a decision and the closer the decision between competing alternatives thegreater the dissonance involved – justifying / conning themselves they made the rightdecision.

Consumer Awareness

The usage of the term consumer

The history of the consumer movement

Modern American consumerism

Images of the consumer

Unpacking of the word “consumer”, how the awareness of people as consumer arose?

The consumer has been pictured in many different guises as having different kinds ofrelationship to producers and the rest of society – some of these mutuallycontradictory.

Consumer as the chooser

Most prevalent image of consumer, key value of capitalist consumer orientated societythat having a choice of goods and services is, in itself a good thing. More choice, morebusiness for the economy and better as a whole for society in general, the consumer’srole is crucial. Keep choosing between the alternatives presented to them.

The consumer as the communicator

Use the act of buying and consumption to communicate non-verbally with others andthemselves expressing one’s feelings social status and lifestyle. Products areconsumed have meaning over and above fulfilment of an immediate need.

Consumer as explorer

Shopping as an act of exploring, but in a user friendly environment designed toreassure and comfort while it stimulates. Hunting for bargains has moved on, we nowshop in malls and the like instead of markets and bazzars.

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Consumer as identity seeker

‘Identity’ is a central concept in behavioural sciences. Defining who one is and whatone values by the goods or services one buys, consumers give as gifts is widelyregarded as one of the most important activities.

Consumer as a hedonist

Enjoying pleasure – especially physical pleasure, without feeling guilty about doing so,without feeling guilty, it is therefore the antithesis of the protestant work ethic, whichemphasises instead the primacy of work and earning and sacrifice as the way tofulfilment.

This work ethic drives the production of goods and services in capitalist societies andprovide the ideology within which people are encourage to make sense of theinherently mind numbing, soul destroying exhausting and stressful jobs we do.

Yet society through its marketing and advertising also encourages people to be eagerand guilt free pleasure of seeking, consumers as ever increasing consumption is goodfor producers to maintain a prosperous economy.

Consumers as victims

Not a role people want to be. But, it is argued that consumers are manipulated andexploited. Being overcharged by price cartels, badly made products which aredangerous, poorly tested drugs etc.

Consumer as a rebel

Consumer makes a critical statement about the values of the consumer society. Theycan adopt this role at anytime. Young people tend to do this, via fashion, music etc.These rebellions can then become mainstream.

Consumer as an activist

Consciously and actively promote the interest of consumer groups in relation toproducers and to society as whole.

Consumer as a citizens

This is a political concept, someone linked into a community and a nation – state byweb rights that he or she can claim – freedom of speech etc.

The consumer arises from economic actively in a society and in particular that themarket place in which producers sell their goods and services without references to awider social grouping than their household.

The history of the consumer movement

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Consumerism is not new, it’s referred to in the bible, the romans “caveat emplor” -buyer beware, which became the dominant view in Western society.

Cards have traditionally been stacked against the consumer. Advocates of consumerinterest are seen as radical, who wanted to upset the state and go against the vestedinterest that it benefitted.

The Co-operative movement

Set up in Northern England in response by industrial workers to the effects of a localcapitalist merchant.

After the individual revaluation the work place went through dramatic changes. In theUK small workplace run by a craftsman and his family, this was replaced by factorieswhich were owned by entrepreneurs, which contained hundreds of people crammedinto factories with machines “dark satanic mills” described by Blake.

Evidence that new technology of work was of secondary importance to a change in thepsychological relationship between employers and employees, e.g. not that it helpedthe workers, life, it make the process more efficient and people got cheaper and moregoods.

The factory enabled employers to control the working lives of employees as much aspossible (Bentham, Panpotican). Bureaucracy via impersonal forms of regulation,clocking on, informal monitoring of each other’s work etc.

Children worked in those factories under terrible conditions, in these Dickensian times.The co-operative movement was attempt by workers to take back control of their lives,basing this on a new understanding if their position in the economy.

Not only did their labour produce the goods that went out of the factories into themarket, but they themselves were also consumers. So by co-operating, the consumercould precedence over the people who owned the means of production and operationalthem solely on the basis of self interest.

The movement operated a single shop co-op in Rochdale. Looking to find a mediumway, it obviously found it have to compete against profit seekers.

American consumerism

Prior to WWII, there were some organisation that looked after consumer interest.Upton Sinclair looking at work in Chicago stockyards, his work “The Jungle” wasintended to attack the profit orientated capitalist system and bettering the lot ofAmerican workers. The American audience didn’t seem too impressed with his work,regarding workers, they were more concerned with food safety laws.

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Capitalist and the system are highly regarded in the US but championing value formoney etc were. Seiltasm – is a consumer movement group in Japan.

Fordism – the new Fordist deal

Ford marked the culmination of trends towards mass production in 1913. The systembased on the reverse of an abattoir.

To get people to work, he paid them twice as much as competitors. In return hedemanded devotion to the job and a personal relationship with the firm. High wagesencouraged commitment and it encouraged the consumption of goods, “if you cutwages, you cut customers” work hard, shut up, enjoy a good standard of living.

After World War 2

Kennedy , 1962 the consumer Bill or rights

Right to safety protection against products hazardous to health and life

Right to be informed production against misleading, fraudulent, deceitful ormisleading information, in advertising or elsewhere

Right to choose being the assurance of reasonable access, where possible to a varietyof products of competitive prices, or the government regulation to assure satisfactoryquality and service at fair prices.

Right to be heard the right of redress.

Ways of protecting consumers: Prevention, restoration and punishment

Other consumers rights

Each of Kennedy rights is vital to the consumer now as when it was originally incepted.Most expect would add the right to a clean environment and the right to privacyconsumers should have the before they have a right to:

Safety

Be informed

Choose

Be heard

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A clean environment

Privacy

Summary

Nine consumer images may be considered important as a contribution towardsunderstanding consumer behaviour.

Advocacy on behalf of the consumer or consumerism has a long history going back tothe 19th century. It is essentially attempted to redress the enormous imbalance ofpower between producers and consumers, allowing customers to take back somecontrol of their lives. But, even producers as contemptuous of the consumer as HenryFord recognised that some financial power for consumers, in the form of high wages,was in the best interest of producers. In the Fordist vision mass consumption lead tomass production, which in turn lead to more mass production.

This dynamic only worked if people had the money to buy the products they weremaking themselves. This lead to consumer/worker rights, the reality of the rights isanother matter.

The Future Consumer

The ProducerCustomer Responsiveness – A trend that began in the 70’s and that will continue intothe future. Began in Japan with MBWA – Management by walking around and Kaizen –continuous improvement.

Lean-Production - Trying to marry Mass production with Individual customizing.

Business Ethics1. Codes of Ethics2. Changes in the board of directors – inclusion of external appointees.3. Social Marketing being socially responsible as well as making a profit.Employees will only follow these ethics if senior management does and sets theexample.

The Market PlacePolitical changes – changes o government can have effects on the enforcement ofregulation and on the amount of regulation. Reagan and Thatcher were very much forself-regulation.Regulatory agencies would include:

Federal Trade CommissionFood and Drug AdministrationFCCSECEU and transnational laws protecting consumer and ensuringgood working conditions, NAFTA also, protecting societal

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benefits, e.g. Canada allows only limited of media to be ownedby US firms.

Shopping Trends and Buyer BehaviorIdentification of new needs that are really wants rather than necessities.For most people choice means brand choice.Own Brand or private label growth.

The ConsumerDirect Action against the Producer

1. Boycotts2. Organized Complaints3. Legal Action

Alternative Lifestyles1. Green consumerism – There are limits. People will buy unleaded gas but not

give up their car.2. Ethical investment3. Exchange economy – Informal Economy. Black economy.Grey economy – unpaid – LETS (local exchange trading system)