Certified Marketing Analyst

Module 2: Consumer Behavior

1. Consumer Behavior as a Process

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering,

and exchanging offerings that have value for customers, clients, partners, and society. Consumer

behavior is the study of consumers’ actions during searching for, purchasing, using, evaluating,

and disposing of products and services that they expect will satisfy their needs. The core of

marketing is identifying unfilled needs and delivering products and services that satisfy these

needs. Consumer behavior explains how individuals make decisions to spend their available

resources (i.e., time, money, effort) on goods that marketers offer for sale. The study of consumer

behavior describes what products and brands consumers buy, why they buy them, when they buy

them, where they buy them, how often they buy them, how often they use them, how they evaluate

them after the purchase, and whether or not they buy them repeatedly. For example, people buy

cars because they need personal transportation. However, the types of cars people buy are

determined not by needs alone, but also by how cars express their owners’ characteristics.

Therefore, car marketers differentiate their products by how specific car brands and models appeal

to buyers’ psychology.

In its early stages of development, researchers referred to the field as buyer behavior; this reflected

the emphasis at that time (1960s and 1970s) on the interaction between consumers and producers

at the time of purchase. Most marketers now recognize that consumer behavior is in fact an

ongoing process, not merely what happens at the moment a consumer hands over money or a credit

card and in turn receives some good or service.

The exchange, a transaction in which two or more organizations or people give and receive

something of value, is an integral part of marketing. Although exchange theory remains an

important part of consumer behavior, the expanded view emphasizes the entire consumption

process, which includes the issues that influence the consumer before, during, and after a purchase.

Meanwhile, a consumer is a person who identifies a need or desire, makes a purchase, and then

disposes of the product during the three stages of the consumption process. In many cases,

however, different people play a role in this sequence of events. The purchaser and user of a

product might not be the same person, as when a parent picks out clothes for a teenager (and makes

selections that can result in “fashion suicide” in the view of the teen). In other cases, another person

may act as an influencer when he or she recommends certain products without actually buying or

using them. A friend’s grimace when you try on that new pair of pants may be more influential

than anything your mother might say. Finally, consumers may take the form of organizations or

groups. One or several persons may select products that many will use, as when a purchasing agent

orders a company’s office supplies. In other organizational situations, a large group of people may

make purchase decisions: for example, company accountants, designers, engineers, sales

personnel, and others—all of whom will have a say in the various stages of the consumption

process. Figure 1.1. depicts some of the issues that we address during each stage of the

consumption process.

Figure 1.1. Stages in Consumption Process

1.1. Consumers’ Impact on Marketing Strategy

Why should managers, advertisers, and other marketing professionals bother to learn about

consumer behavior? Simply, it’s good business. The basic marketing concept that you (hopefully)

remember from your basic Marketing class states that organizations exist to satisfy needs.

Marketers can satisfy these needs only to the extent that they understand the people or

organizations that will use the products and services they sell. That’s why we study consumer

behavior. Our society is evolving from a mass culture in which many consumers share the same

preferences to a diverse one in which we each have almost an infinite number of choices—just

think about how many shades of lipstick or necktie patterns compete for your attention. This

change makes it more important than ever to identify distinct market segments and to develop

specialized messages and products for those groups.

In this regard, demographics is widely used to understand groups of consumers, since it provides

statistics that measure observable aspects of a population, such as birth rate, age distribution, and

income. The U.S. Census Bureau is a major source of demographic data on U.S. families, but many

private firms gather additional data on specific population groups as well. The changes and trends

that demographic studies reveal are of great interest to marketers because they can use the data to

locate and predict the size of markets for many products, ranging from home mortgages to brooms

and can openers.

• Age: Consumers of different age groups obviously have different needs and wants.

Although people who belong to the same age group differ in many other ways, they do tend

to share a set of values and common cultural experiences that they carry throughout life. In

some cases, marketers initially develop a product to attract one age group and then try to

broaden its appeal later on.

• Gender: We start to make gender distinctions at an early age, even diapers come in pink

versions for girls and blue for boys. Many products, from fragrances to footwear, target

either men or women. The popular sunglass and athletic apparel brand Oakley now makes

a concerted effort to boost the paltry 10 percent of its’ revenue from women’s products.

The new “Made for More” campaign offers a revitalized line of workout gear; it actually

asks women to sign an agreement that they will wear the clothing specifically for exercising

rather than just running errands after Oakley learned that a majority of women agree that

exercise and fitness are important to them

• Family Structure: A person’s family and marital status is yet another important

demographic variable because this has a huge effect on consumers’ spending priorities.

Not surprisingly, young bachelors and newlyweds are the most likely to exercise; go to

bars, concerts, and movies; and consume alcohol. Families with young children are big

purchasers of health foods and fruit juices, whereas single-parent households and those

with older children buy more junk food. Older couples and bachelors are most likely to use

home maintenance services.

• Social Class and Income: People who belong to the same social class are approximately

equal in terms of income and social standing in the community. They work in roughly

similar occupations, and they tend to have similar tastes in music, clothing, leisure

activities, and art. They also tend to socialize with one another, and they share many ideas

and values regarding the way they should live. The distribution of wealth is of great interest

to marketers because it determines which groups have the greatest buying power and

market potential.

• Race and Ethnicity: African Americans, Hispanic Americans, and Asian Americans are

the three fastest growing ethnic groups in the United States. As our society becomes

increasingly multicultural, new opportunities develop to deliver specialized products to

racial and ethnic groups and to introduce other groups to these offerings. McDonald’s

regards ethnic consumers as trendsetters. The restaurant chain often assesses their reactions

to new menu items or advertisements before it rolls them out to the Caucasian market. For

example, the fruit combinations in McDonald’s smoothies are based on preferences the

company’s researchers discovered in ethnic communities.

• Geography: Many national marketers tailor their offerings to appeal to consumers who

live in different parts of the country. Some southerners are fond of a “good ol’ boy” image

that leaves others scratching their heads. Although many northerners regard the name

“Bubba” as a negative term, businesses in Dixie proudly flaunt the name. Bubba Co. is a

Charleston based firm that licenses products such as Bubba-Q-Sauce. In Florida,

restaurants, sports bars, nightclubs, and a limousine firm all proudly bear the name Bubba.

• Lifestyles: Consumers also have different lifestyles, even if they share other demographic

characteristics such as gender or age. The way we feel about ourselves, the things we value,

the things we like to do in our spare time, all of these factors help to determine which

products will push our buttons or even those that make us feel better. Procter & Gamble

developed its heartburn medicine Prilosec OTC with an ideal customer in mind based on a

lifestyle analysis. Her name is Joanne, and she’s a mother older than age 35 who’s more

likely to get heartburn from a cup of coffee than from an overdose of pizza and beer. A

P&G executive observed, “We know Joanne. We know what she feels. We know what she

eats. We know what else she likes to buy in the store”.

1.2. Segmenting by Behavior: relationships and “Big Data”

Marketers carefully define customer segments and listen to people in their markets as never before.

Many of them now realize that a key to success is building relationships between brands and

customers that will last a lifetime. Marketers who subscribe to this philosophy of relationship

marketing interact with customers on a regular basis and give them solid reasons to maintain a

bond with the company over time. A focus on relationships is even more vital, especially during

the nasty economic conditions we’ve recently experienced; when times are tough, people tend to

rely on their good friends for support. Database marketing tracks specific consumers’ buying

habits closely and crafts products and messages tailored precisely to people’s wants and needs

based on this information.

Walmart stores massive amounts of information on the 100 million people who visit its stores each

week, and the company uses these data to fine-tune its offerings. For example, when the company

analyzed how shoppers’ buying patterns react when forecasters predict a major hurricane, it

discovered that people do a lot more than simply stock up on flashlights. Sales of strawberry Pop-

Tarts increase by about 700 percent, and the top-selling product of all is beer. Based on these

insights, Walmart loads its trucks with toaster pastries and six-packs to stock local stores when a

big storm approaches.

At this very moment, we all generate massive amounts of information that holds tremendous value

for marketers. You may not see it, but we are practically buried by data that comes from many

sources—sensors that collect climate information, the comments you and your friends make to

your favorite social media sites, the credit card transactions we authorize, and even the GPS signals

in our smartphones that let organizations know where most of us are pretty much anytime day or

night. This incredible amount of information has created a new field that causes tremendous

excitement among marketing analysts (and other math geeks). The collection and analysis of

extremely large datasets is called Big Data, and you’ll be hearing a lot more about it in the next

few years. Hint: If you have aptitude or interest in quantitative topics, this will be a desirable career

path for you. In a single day, consumers create 2.5 quintillion bytes of data (or 2.5 exabytes). New

data pops up so quickly that this number doubles about every 40 months—and 90 percent of the

data in the world today was created in the last 2 years alone. In addition to the huge volume of

information marketers now have to play with, its velocity (speed) also enables companies to make

decisions in real time that used to take months or years.

For example, one group of researchers used the GPS phone signals that were coming from Macy’s

parking lots on Black Friday to estimate whether the department store was going to meet or exceed

its sales projections for the biggest shopping day of the year—before the stores even reported their

sales. This kind of intelligence allows financial analysts and marketing managers to move quickly

as they buy and sell stocks or make merchandising decisions.

It’s safe to say this data explosion will profoundly change the way we think about consumer

behavior. Companies, nonprofits, political parties, and even governments now have the ability to

sift through massive quantities of information that enables them to make precise predictions about

what products we will buy, what charities we will donate to, what candidates we will vote for, and

what levers they need to push to make this even more likely to happen. Walmart alone collects

more than 2.5 petabytes of data every hour from its customer transactions (the equivalent of about

20 million filing cabinets’ worth of text). Here are a few varied examples that illustrate how Big

Data influences what we know and do:

• When they monitor blips in Google queries for words like flu and fever, epidemiologists

at the Centers for Disease Control can identify specific areas of the United States that have

been hit by flu outbreaks even before the local authorities notice a rise in hospital

admissions.

• Analysts for city police departments use massive amounts of crime data to identify “hot

zones,” where an abnormal amount of crimes occur. This intelligence enables them to

assign and reassign law enforcement agents exactly where they need them.

• Although the Republicans outspent the Democrats during the 2012 presidential campaign,

many attribute President Barack Obama’s reelection to his campaign’s masterful use of

Big Data. The Democratic campaign systematically used huge datasets to help it decide

exactly which voters needed an extra “nudge” to go to the polls and pull the lever for

Obama. In subsequent elections the Republicans figured out how important it is to play

catch-up and adopt their own Big Data strategies.

1.3. Marketing’s Impact on Consumers: Popular Is Marketing Is Popular Culture

Marketing stimuli surround us as advertisements, stores, and products compete for our attention

and our dollars. Marketers filter much of what we learn about the world, whether through the

affluence they depict in glamorous magazines, the roles actors play in commercials, or maybe the

energy drink a rock star just “happens” to hold during a photo shoot. Ads show us how we should

act with regard to recycling, alcohol consumption, the types of houses and cars we might wish to

own, and even how to evaluate others based on the products they buy or don’t buy. In many ways

we are also at the mercy of marketers, because we rely on them to sell us products that are safe

and that perform as promised, to tell us the truth about what they sell, and to price and distribute

these products fairly.

Popular culture: the music, movies, sports, books, celebrities, and other forms of entertainment

that the mass market produces and consumes—is both a product of and an inspiration for

marketers. It also affects our lives in more far-reaching ways, ranging from how we acknowledge

cultural events such as marriage, death, or holidays to how we view social issues such as climate

change, gambling, and addictions. Whether it’s the World Cup, Christmas shopping, national

health care, newspaper recycling, body piercing, vaping, tweeting, or online video games,

marketers play a significant role in our view of the world and how we live in it.

This cultural impact is hard to overlook, although many people do not seem to realize how much

marketers influence their preferences for movie and musical heroes; the latest fashions in clothing,

food, and decorating choices; and even the physical features that they find attractive or ugly in

men and women. For example, consider the product icons that companies use to create an identity

for their products. Many imaginary creatures and personalities, from the Pillsbury Doughboy to

the Jolly Green Giant, at one time or another have been central figures in popular culture. In fact,

it is likely that more consumers could recognize such characters than could identify past presidents,

business leaders, or artists. Although these figures never really existed, many of us feel as if we

“know” them, and they certainly are effective spokes-characters for the products they represent.

The sociological perspective of role theory takes the view that much of consumer behavior

resembles actions in a play. We as consumers seek the lines, props, and costumes necessary to put

on a good performance. Because people act out many different roles, they sometimes alter their

consumption decisions depending on the particular “play” they are in at the time. The criteria they

use to evaluate products and services in one of their roles may be quite different from those they

use in other roles. That’s why it’s important for marketers to provide each of us “actors” with the

props we need to play all of our varied roles; these might include “up-and-coming executive,”

“geek,” “hipster,” or “big man on campus.”

As we have seen, one trademark of marketing strategies today is that many organizations try very

hard to build relationships with customers. The nature of these relationships can vary, but these

bonds help us to understand some of the possible meanings products have for us. Furthermore,

researchers find that, like friendships and love affairs with other people, our relationships with

brands evolve over time. Some resemble deep friendships, whereas others are more like exciting

but short-lived flings. Here are some of the types of relationships a person might have with a

product:

• Self-concept attachment: The product helps to establish the user’s identity.

• Nostalgic attachment: The product serves as a link with a past self.

• Interdependence: The product is a part of the user’s daily routine.

• Love: The product elicits emotional bonds of warmth, passion, or other strong emotion.

1.4. What Does It Mean to Consume?

One of the fundamental premises of the modern field of consumer behavior is: People often buy

products not for what they do, but for what they mean. This principle does not imply that a

product’s basic function is unimportant, but rather that the roles products play in our lives extend

well beyond the tasks they perform. The deeper meanings of a product may help it to stand out

from other similar goods and services. All things being equal, we choose the brand that has an

image (or even a personality) consistent with our underlying needs.

For example, although most people probably couldn’t run faster or jump higher if they wear Nikes

instead of Reeboks, many die-hard loyalists swear by their favorite brand. People choose between

these archrivals (or other competitors) largely because of their brand images, meanings that have

been carefully crafted with the help of legions of rock stars, athletes, slickly produced

commercials, and many millions of dollars. So, when you buy a Nike “swoosh,” you are doing

more than choosing shoes to wear to the mall; you also make a lifestyle statement about the type

of person you are or wish you were. For a relatively simple item made of leather and laces, that’s

quite a feat!

1.5. Living in a Social (Media) Life

The Internet provides an easy way for consumers around the world to exchange information about

their experiences with products, services, music, restaurants, and movies. The popularity of chat

rooms where consumers can go to discuss various topics with like-minded “Netizens” around the

world grows every day, as do immersive virtual worlds. Today, the Internet is the backbone of our

society. Widespread access to devices such as personal computers, digital video and audio

recorders, webcams, and smartphones ensures that consumers of practically any age who live in

virtually any part of the world can create and share content. But information doesn’t just flow from

big companies or governments down to the people; today each of us can communicate with huge

numbers of people by a click on a keypad, so information flows across people as well.

Social media are the online means of communication, conveyance, collaboration, and cultivation

among interconnected and interdependent networks of people, communities, and organizations

enhanced by technological capabilities and mobility. The Internet and its related technologies that

gave birth to Web 2.0 make what we know today as social media possible and prevalent. Every

day the influence of social media expands as more people join online communities. People aren’t

just joining social communities, they are contributing too. Users upload 72 hours of video to

YouTube every minute. In just 30 days on YouTube, more video is broadcast than in the past 60

years on the CBS, NBC, and ABC broadcasting networks combined. This indicates that social

media platforms enable a culture of participation; the ability to freely interact with other people,

companies, and organizations; open access to venues that allow users to share content from simple

comments to reviews, ratings, photos, stories, and more; and the power to build on the content of

others from your own unique point of view.

1.6. Consumer Decision Making

The process of consumer decision-making, featured in Figure 1.2, includes the input, process, and

output stages of decision-making. Such process explain the further detail on stages of consumption

process, as depicted on Figure 1.1.

• The input stage of consumer decision-making includes two influencing factors: the firm’s

marketing efforts (i.e., the product, its price and promotion, and where it is sold) and

sociocultural influences (i.e., family, friends, neighbors, social class, and cultural and

subcultural entities). This stage also includes the methods by which information from firms

and sociocultural sources is transmitted to consumers.

• The process stage focuses on how consumers make decisions. The psychological factors

(i.e., motivation, perception, learning, personality, and attitudes) affect how the external

inputs from the input stage influence the consumer’s recognition of a need, pre-purchase

search for information, and evaluation of alternatives. The experience gained through

evaluation of alternatives, in turn, becomes a part of the consumer’s psychological factors

through the process of learning.

• The output stage consists of two post-decision activities: purchase behavior and post-

purchase evaluation.

Figure 2.2. Consumers’ Decision Making Model

2. Internal Influences on Consumer Behavior

In this section, we focus on the internal dynamics of consumers. Although “no man is an island,”

each of us are to some degree “self-contained” in terms of receiving information about the outside

world. We are constantly confronted by advertising messages, products, and other people, not to

mention our own thoughts about ourselves, that affect how we make sense of the world and of

course what we choose to buy. Each section looks at some aspect that may be “invisible” to others

but is important to understand how consumers make choices.

2.1. Perception

We may see a billboard, hear a jingle, feel the softness of a cashmere sweater, taste a new flavor

of ice cream, or smell a leather jacket. These inputs are the raw Sensation refers to the immediate

response of our sensory receptors (eyes, ears, nose, mouth, fingers, skin) to basic stimuli such as

light, color, sound, odor, and texture. Whereas perception is the process by which people select,

organize, and interpret these sensations. The study of perception, then, focuses on what we add to

these raw sensations to give them meaning. Our brains receive external stimuli, or sensory inputs,

on a number of channels. data that begin the perceptual process. Sensory data from the external

environment (e.g., hearing a tune on the radio) can generate internal sensory experiences; a song

might trigger a young man’s memory of his first dance and bring to mind the smell of his date’s

perfume or the feel of her hair on his cheek.

Marketers’ messages are more effective when they appeal to several senses. For example, in a

recent study one group read ad copy for potato chips that only mentioned the taste, whereas another

group’s ad copy emphasized the product’s smell and texture, in addition to its taste. The

participants in the second group came away thinking the chips would taste better than did those

whose ad message only focused on taste. Each product’s unique sensory qualities help it to stand

out from the competition, especially if the brand creates a unique association with the sensation.

Like computers, we undergo stages of information processing in which we input and store stimuli.

Unlike computers, though, we do not passively process whatever information happens to be

present. In the first place, we notice only a small number of the stimuli in our environment, simply

because there are so many different ones out there vying for our attention. Of those we do notice,

we attend to an even smaller number, and we might not process the stimuli that do enter

consciousness objectively. Each individual interprets the meaning of a stimulus in a manner

consistent with his or her own unique biases, needs, and experiences. Figure 2.1. depicts the

overview of perceptual process.

Figure 2.1. Overview of Perceptual Process

2.1.1. The Stages of Perception: First Stage, Exposure

Exposure occurs when a stimulus comes within the range of someone’s sensory receptors.

Consumers concentrate on some stimuli, are unaware of others, and even go out of their way to

ignore some messages. We notice stimuli that come within range for even a short time—if we so

choose. However, getting a message noticed in such a short time (or even in a longer one) is no

mean feat. Before we consider what else people may choose not to perceive, let’s consider what

they are capable of perceiving. By this we mean that stimuli may be above or below a person’s

sensory threshold which is the point at which it is strong enough to make a conscious impact in

his or her awareness. Some of us pick up sensory information that others, whose sensory channels

have diminished because of disability or age, cannot. The science of psychophysics focuses on

how people integrate the physical environment into their personal, subjective worlds. Thus, there

are three thresholds that might influence a stimuli’s level of exposure towards consumers:

• Absolute threshold refers to the minimum amount of stimulation a person can detect on a

given sensory channel. The absolute threshold is an important consideration when we

design marketing stimuli. A highway billboard might have the most entertaining copy ever

written, but this genius is wasted if the print is too small for passing motorists to see it.

• In contrast, the differential threshold refers to the ability of a sensory system to detect

changes in or differences between two stimuli.

• The minimum difference we can detect between two stimuli is the just noticeable

difference (j.n.d.).

The dual issues of if and when consumers will notice a difference between two stimuli is relevant

to many marketing situations. Sometimes a marketer may want to ensure that consumers notice a

change, such as when a retailer offers merchandise at a discount. In other situations, the marketer

may want to downplay the fact that it has made a change, such as when a store raises a price or a

manufacturer reduces the size of a package. When a brand tries to modernize its logo, it has to

walk a fine line because consumers tend to get tired of old-fashioned designs but they still want to

be able to identify the familiar product. Figure 2.2 shows the evolution of the Pepsi label over time.

Figure 2.2. The evolution of Pepsi Label

A consumer’s ability to detect a difference between two stimuli is relative. A whispered

conversation that might be unintelligible on a noisy street can suddenly become public and

embarrassingly loud in a quiet library. It is the relative difference between the decibel level of the

conversation and its surroundings, rather than the absolute loudness of the conversation itself, that

determines whether the stimulus will register.

In the 19th century, a psychophysicist named Ernst Weber found that the amount of change

required for the perceiver to notice a change systematically relates to the intensity of the original

stimulus. The stronger the initial stimulus, the greater a change must be for us to notice it. This

relationship is Weber’s Law. Consider how Weber’s Law works for a product when it goes on

sale. If a retailer believes that a markdown should be at least 20 percent for the reduction to make

an impact on shoppers, it should cut the price on a pair of socks that retails for $10 to $8 (a $2

discount) for shoppers to realize a difference. However, a sports coat that sells for $100 would not

benefit from a $2 discount; the retailer would have to mark it down $20 to achieve the same impact.

Most marketers want to create messages above consumers’ thresholds so people will notice them.

Ironically, a good number of consumers instead believe that marketers design many advertising

messages so they will be perceived unconsciously, or below the threshold of recognition. Another

word for threshold is limen, and we term stimuli that fall below the limen subliminal. Subliminal

perception refers to a stimulus below the level of the consumer’s awareness. Marketers

supposedly send subliminal messages on both visual and aural channels. Embeds are tiny figures

they insert into magazine advertising via high-speed photography or airbrushing. These hidden

images, usually of a sexual nature, supposedly exert strong but unconscious influences on innocent

readers.

Some limited evidence hints at the possibility that embeds can alter the moods of men when they’re

exposed to sexually suggestive subliminal images, but the effect (if any) is subtle—and may even

work in the opposite direction if this creates negative feelings among viewers. To date, the only

real impact of this interest in hidden messages is to sell more copies of “exposés” written by a few

authors and to make some consumers (and students taking a consumer behavior class) look a bit

more closely at print ads, perhaps seeing whatever their imaginations lead them to see. Some

research by clinical psychologists suggests that subliminal messages can influence people under

specific conditions, though it is doubtful that these techniques would be of much use in most

marketing contexts.

2.1.2. The Stages of Perception: Second Stage, Attention

Attention refers to the extent to which processing activity is devoted to a particular stimulus. As

you know from sitting through both interesting and “less interesting” lectures, this allocation can

vary depending on both the characteristics of the stimulus (i.e., the lecture itself) and the recipient

(i.e., your mental state at the time). Although we live in an “information society,” we can have too

much of a good thing. Consumers often live in a state of sensory overload; we are exposed to far

more information than we can process. In our society, much of this bombardment comes from

commercial sources, and the competition for our attention steadily increases. The average adult is

exposed to about 3,500 pieces of advertising information every single day, up from about 560 per

day 30 years ago.

Perceptual vigilance means we are more likely to be aware of stimuli that relate to our current

needs. The flip side of perceptual vigilance is perceptual defense. This means that we tend to see

what we want to see, and we don’t see what we don’t want to see. If a stimulus threatens us in

some way, we may not process it, or we may distort its meaning so that it’s more acceptable. Still

another factor is adaptation, which is the degree to which consumers continue to notice a stimulus

over time. The process of adaptation occurs when we no longer pay attention to a stimulus because

it is so familiar. A consumer can “habituate” and require increasingly stronger “doses” of a

stimulus to notice it. A commuter who is en route to work might read a billboard message when

the board is first installed, but after a few days it simply becomes part of the passing scenery.

Several factors can lead to adaptation:

• Intensity: Less-intense stimuli (e.g., soft sounds or dim colors) habituate because they have

less sensory impact.

• Discrimination: Simple stimuli habituate because they do not require attention to detail.

• Exposure: Frequently encountered stimuli habituate as the rate of exposure increases.

• Relevance: Stimuli that are irrelevant or unimportant habituate because they fail to attract

attention.

In addition to the receiver’s mind-set, characteristics of the stimulus itself play an important role

to determine what we notice and what we ignore. This forms consumers’ stimulus selection

factors. Marketers need to understand these factors so they can create messages and packages that

will have a better chance to cut through the clutter. For example, when researchers used infrared

eye-tracking equipment to measure what ads consumers look at, they found that visually complex

ads are more likely to capture attention. In general, we are more likely to notice stimuli that differ

from others around them (remember Weber’s Law). A message creates contrast in several ways:

• Size: The size of the stimulus itself in contrast to the competition helps to determine if it

will command attention. Readership of a magazine ad increases in proportion to the size of

the ad.70

• Color: As we’ve seen, color is a powerful way to draw attention to a product or to give it

a distinct identity. Black & Decker developed a line of tools it called DeWalt to target the

residential construction industry. The company colored the new line yellow instead of

black; this made the equipment stand out against other “dull” tools.

• Position: Not surprisingly, we stand a better chance of noticing stimuli that are in places

we’re more likely to look. That’s why the competition is so heated among suppliers to have

their products displayed in stores at eye level. In magazines, ads that are placed toward the

front of the issue, preferably on the right-hand side, also win out in the race for readers’

attention.

• Novelty: Stimuli that appear in unexpected ways or places tend to grab our attention.

Packages that “stand out” visually on store shelves have an advantage, especially when the

consumer doesn’t have a strong preference for brands in the category and he or she needs

to make rapid decisions. One solution is to put ads in unconventional places, where there

will be less competition for attention. These places include the backs of shopping carts,

walls of tunnels, floors of sports stadiums, and yes, even public restrooms.

2.1.3. The Stages of Perception: Third Stage, Interpretation

Interpretation refers to the meanings we assign to sensory stimuli. Just as people differ in terms of

the stimuli that they perceive, the meanings we assign to these stimuli vary as well. Many of these

meanings depend on our socialization within a society: Even sensory perception is culturally

specific. Language differences drive some of these contrasts, which explain that two people can

see or hear the same event, but their interpretation of it can be as different as night and day,

depending on what they had expected the stimulus to be. In one study, kids ages 3 to 5 who ate

McDonald’s French fries served in a McDonald’s bag overwhelmingly thought they tasted better

than those who ate the same fries out of a plain white bag. Even carrots tasted better when they

came out of a McDonald’s bag; more than half the kids preferred them to the same carrots served

in a plain package.

The meaning we assign to a stimulus depends on the schema, or set of beliefs, to which we assign

it. This in turn leads us to compare the stimulus to other similar ones we encountered in the past.

Identifying and evoking the correct schema is crucial to many marketing decisions because this

determines what criteria consumers will use to evaluate the product, package, or message. For

example, when a college cafeteria gave menu items descriptive labels (e.g., Red Beans with Rice

versus Traditional Cajun Red Beans with Rice, Chocolate Pudding versus Satin Chocolate

Pudding) so that diners had more information about each option so they could more easily

categorize it, sales increased by more than 25 percent.

The stimuli we perceive are often ambiguous. It’s up to us to determine the meaning based on our

past experiences, expectations, and needs. Our brains tend to relate incoming sensations to others

already in memory, based on some fundamental organizational principles. These principles derive

from Gestalt psychology, a school of thought based upon the notion that people interpret meaning

from the totality of a set of stimuli rather than from any individual stimulus. The German word

Gestalt roughly means whole, pattern, or configuration, and we summarize this term as “the whole

is greater than the sum of its parts.” A piecemeal perspective that analyzes each component of the

stimulus separately can’t capture the total effect. The Gestalt perspective provides several

principles that relate to the way our brains organize stimuli:

• The closure principle states that people tend to perceive an incomplete picture as

complete. That is, we tend to fill in the blanks based on our prior experience. This principle

explains why most of us have no trouble reading a neon sign even if several of its letters

are burned out. The principle of closure is also at work when we hear only part of a jingle

or theme. Marketing strategies that use the closure principle encourage audience

participation, which increases the chance that people will attend to the message.

• The similarity principle tells us that consumers tend to group together objects that share

similar physical characteristics.

• The figure-ground principle states that one part of a stimulus will dominate (the figure),

and other parts recede into the background (the ground). This concept is easy to understand

if one thinks literally of a photograph with a clear and sharply focused object (the figure)

in the center. The figure is dominant, and the eye goes straight to it. The parts of the

configuration a person will perceive as figure or ground can vary depending on the

individual consumer, as well as other factors. Similarly, marketing messages that use the

figure-ground principle can make a stimulus the focal point of the message or merely the

context that surrounds the focus.

2.2. Motivation and Affect

To understand motivation is to understand why consumers do what they do. Why do some people

choose to bungee-jump off a bridge or compete on reality shows, whereas others spend their leisure

time playing chess or gardening? Whether it is to quench a thirst, kill boredom, or attain some deep

spiritual experience, we do everything for a reason, even if we can’t articulate what that reason is.

Motivation refers to the processes that lead people to behave as they do. It occurs when a need is

aroused that the consumer wishes to satisfy. The need creates a state of tension that drives the

consumer to attempt to reduce or eliminate it. This need may be utilitarian (i.e., a desire to achieve

some functional or practical benefit, as when a person loads up on green vegetables for nutritional

reasons) or it may be hedonic (i.e., an experiential need, involving emotional responses or fantasies

as when a person feels “righteous” by eating kale). The desired end state is the consumer’s goal.

Marketers try to create products and services to provide the desired benefits and help the consumer

to reduce this tension.

2.2.1. Motivational Strength and Direction

Whether the need is utilitarian or hedonic, the magnitude of the tension it creates determines the

urgency the consumer feels to reduce it. We call this degree of arousal a drive. The following are

some of the approaches that are used to explain consumers’ motivational strength.

• Drive theory: focuses on biological needs that produce unpleasant states of arousal (e.g.,

your stomach grumbles during a morning class). The arousal of this tension motivates us

to reduce it and return to a balanced state called homeostasis. Some researchers believe

that this need to reduce arousal is a basic mechanism that governs much of our behavior.

Indeed there is research evidence for the effectiveness of so-called retail therapy;

apparently the act of shopping restores a sense of personal control over one’s environment

and as a result can alleviate feelings of sadness.

• Expectancy theory suggests that expectations of achieving desirable outcomes come from

positive incentives, rather than being pushed from within motivate our behavior. We

choose one product over another because we expect this choice to have more positive

consequences for us. Thus, expectancy theory focus on cognitive factors rather than

biological ones to understand what motivates behavior

Motives have direction as well as strength. They are goal-oriented in that they drive us to satisfy a

specific need. We can reach most goals by a number of routes, and the objective of a company is

to convince consumers that the alternative it offers provides the best chance to attain the goal. For

example, a consumer who decides that she needs a pair of jeans to help her reach her goal of being

admired by others can choose among Levi’s, Wranglers, and many other alternatives, each of

which promises to deliver certain benefits.

Needs versus Wants: a need reflects a basic goal such as keeping yourself nourished or protected

from the elements. In contrast a want is a specific pathway to achieving this objective that depends

a lot on our unique personalities, cultural upbringing, and our observations about how others we

know satisfy the same need. When we focus on a utilitarian need, we emphasize the objective,

tangible attributes of products, such as miles per gallon in a car; the amount of fat, calories, and

protein in a cheeseburger; or the durability of a pair of blue jeans. Hedonic needs are subjective

and experiential; here we might look to a product to meet our needs for excitement, self-

confidence, or fantasy—perhaps to escape the mundane or routine aspects of life. Many items

satisfy our hedonic needs, such as luxury brands when they offer the promise of pleasure to the

user.

Of course, we can also be motivated to purchase a product because it provides both types of

benefits. For example, a woman (perhaps a politically incorrect one) might buy a mink coat

because of the luxurious image it portrays and because it also happens to keep her warm through

the long, cold winter. Indeed, recent research on novel consumption experiences indicates that

even when we choose to do unusual things, we may do so because we have a productivity

orientation. This refers to a continual striving to use time constructively: Trying new things is a

way to experience the goals we want to achieve before we move on to others.

2.2.2. Motivational Conflicts

A goal has valence, which means that it can be positive or negative. We direct our behavior toward

goals we value positively; we are motivated to approach the goal and to seek out products that will

help us to reach it. However, sometimes we’re also motivated to avoid a negative outcome rather

than achieve a positive outcome. We structure purchases or consumption activities to reduce the

chances that we will experience a nasty result. For example, many consumers work hard to avoid

rejection by their peers (an avoidance goal). They stay away from products that they associate with

social disapproval. Products such as deodorants and mouthwash frequently rely on consumers’

negative motivation when ads depict the onerous social consequences of underarm odor or bad

breath. Because a purchase decision can involve more than one source of motivation, consumers

often find themselves in situations in which different motives, both positive and negative, conflict

with one another. Marketers attempt to satisfy consumers’ needs by providing possible solutions

to these dilemmas. Figure 2.3. depicts the types of consumers’ motivational conflicts.

Figure 2.3. Motivational Conflicts

• Approach–Approach conflict when he or she must choose between two desirable

alternatives. A student might be torn between going home for the holidays and going on a

skiing trip with friends. Or, he or she might have to choose between two. The theory of

cognitive dissonance is based on the premise that people have a need for order and

consistency in their lives and that a state of dissonance (tension) exists when beliefs or

behaviors conflict with one another. We resolve the conflict that arises when we choose

between two alternatives through a process of cognitive dissonance reduction, where we

look for a way to reduce this inconsistency (or dissonance) and thus eliminate unpleasant

tension. Post-decision dissonance occurs when a consumer must choose between two

products, both of which possess good and bad qualities. When he or she chooses one

product and not the other, the person gets the bad qualities of the product he or she buys

and loses out on the good qualities of the one he or she didn’t buy. This loss creates an

unpleasant, dissonant state that he wants to reduce. We tend to convince ourselves, after

the fact, that the choice we made was the smart one as we find additional reasons to support

the alternative we did choose—perhaps when we discover flaws with the option we did not

choose (sometimes we call this rationalization).

• An approach–avoidance conflict occurs when we desire a goal but wish to avoid it at the

same time. Many of the products and services we desire have negative consequences

attached to them as well as positive ones. We may feel guilty or ostentatious when we buy

a luxury product such as a fur coat. Some solutions to these conflicts include the

proliferation of fake furs, which eliminate guilt about harming animals to make a fashion

statement, and the success of diet programs like Weight Watchers that promise good food

without the calories.

• Avoidance-Avoidance conflict occurs when we face a choice with two undesirable

alternatives: for instance, the option of either spending more money on an old car or buying

a new one. Marketers frequently address an avoidance–avoidance conflict with messages

that stress the unforeseen benefits of choosing one option (e.g., when they emphasize

special credit plans to ease the pain of car payments).

2.3. Affect

Affect describes the experience of emotionally laden states, but the nature of these experiences

ranges from evaluations, to moods, to full-blown emotions. Evaluations are valenced (i.e., positive

or negative) reactions to events and objects that are not accompanied by high levels of

physiological arousal. For example, when a consumers evaluates a movie as being positive or

negative, this usually involves some degree of affect accompanied by low levels of arousal. Moods

involve temporary positive or negative affective states accompanied by moderate levels of arousal.

Moods tends to be diffuse and not necessarily linked to a particular event (e.g. you might have just

“woken up on the wrong side of the bed this morning”). Emotions such as happiness, anger, and

fear tend to be more intense and often relate to a specific triggering event such as receiving an

awesome gift.

Marketers find many uses for affective states. They often try to link a product or service with a

positive mood or emotion. On other occasions marketing communications may deliberately evoke

negative affect, such as regret if you forget to play the lottery. Perhaps a more productive way to

harness the power of negative affect is to expose the consumer to a distressing image and then

provide a way to improve it. For example, a nonprofit organization might run an ad showing a

starving child when it solicits donations. Helping others as a way to resolve one’s own negative

moods is known as negative state relief. On other occasions marketing communications may

deliberately evoke negative affect, such as regret if you forget to play the lottery. Perhaps a more

productive way to harness the power of negative affect is to expose the consumer to a distressing

image and then provide a way to improve it. For example, a nonprofit organization might run an

ad showing a starving child when it solicits donations. Helping others as a way to resolve one’s

own negative moods is known as negative state relief.

Another study attests to the interplay between our emotions and how we access information in our

minds that allows us to make smarter decisions. These researchers reported evidence for what they

call an emotional oracle effect: People who trusted their feelings were able to predict future events

better than those who did not; this occurred for a range of situations including the presidential

election, the winner of American Idol, movie box office success, and the stock market. The likely

reason is that those with more confidence were better able to access information they had learned

that could help them make an informed forecast.

We’ve already seen that cognitive dissonance occurs when our various feelings, beliefs, or

behaviors don’t line up, and we may be motivated to alter one or more of these to restore

consistency. Mood congruency refers to the idea that our judgments tend to be shaped by our

moods. For example, consumers judge the same products more positively when they are in a

positive as opposed to a negative mood. This is why advertisers attempt to place their ads after

humorous TV programming or create uplifting ad messages that put viewers in a good mood.

Similarly, retailers work hard to make shoppers happy by playing “up” background music and

encouraging staff to be friendly.

2.3.1. Positive Affect

Our feelings also can serve as a source of information when we weigh the pros and cons of a

decision. Put simply, the fact that the prospect of owning a specific brand will make a person feel

good can give it a competitive advantage—even if the brand is similar on a functional level to

other competing brands. That helps to explain why many of us will willingly pay a premium for a

product that on the surface seems to do the same thing as a less expensive alternative—whether in

the case of the hottest new Apple iPhone, a Justice shirt, or even a pricey university.

Happiness is a mental state of well-being characterized by positive emotions. What makes us

happy? Although many of us believe owning more shiny material goods is the key to happiness,

research says otherwise. Several studies have reported that a greater emphasis on acquiring things

actually links to lower levels of happiness. Indeed some recent evidence suggests we are “wired”

to engage in material accumulation, which is what researchers term the instinct to earn more than

we can possibly consume, even when this imbalance makes us unhappy. In addition, the drivers

of happiness also seem to vary throughout the life span. Younger people are more likely to

associate happiness with excitement, whereas older people are more likely to associate this state

with feelings of calm and peacefulness

2.3.2. Negative Affect

Although we may assume that marketers want to make us happy all the time, that’s hardly the case.

Marketing messages can make us sad, angry or even depressed.

• Disgust: Many researchers believe that the primitive emotion of disgust evolved to protect

us from contamination; we learned over the years to avoid putrid meat and other foul

substances linked to pathogens. As a result, even the slight odor of something nasty elicits

a universal reaction—the wrinkling of the nose, curling of the upper lips, and protrusion of

the tongue. Wrinkling the nose has been shown to prevent pathogens from entering through

the nasal cavity, and sticking out the tongue aids in the expulsion of tainted food and is a

common precursor to vomiting.

• Envy is a negative emotion associated with the desire to reduce the gap between oneself

and someone who is superior on some dimension. Researchers distinguish between two

types of envy: Benign envy occurs when we believe the other person actually deserves a

coveted brand (like an iPhone). Under these circumstances the person may be willing to

pay more to obtain the same item. Malicious envy occurs when the consumer believes the

other person does not deserve his or her superior position. In this case the consumer may

not desire the product the other person owns, but he or she may be willing to pay more for

a different brand in the same category (like a Samsung Galaxy) to set them apart from the

other person.

• Guilt is “an individual’s unpleasant emotional state associated with possible objections to

his or her actions, inaction, circumstances, or intentions.” Marketers may try to invoke a

feeling of guilt when they want consumers to engage in prosocial behaviors like giving to

charities. These “guilt appeals” can be particularly effective when others are present

because this approach activates a sense of social responsibility. However, extreme guilt

appeals can backfire so often a more subtle approach is preferable.

• Embarrassment is an emotion driven by a concern for what others think about us. To be

embarrassed, we must be aware of, and care about, the audience that evaluates us. This

reaction also pops up in the consumer environment when we purchase socially sensitive

products such as condoms, adult diapers, tampons, or hair-lice shampoo. In these situations

consumers get creative as they try to reduce embarrassment; they might try to hide a

sensitive product among others in a shopping basket or choose a cashier who looks “more

friendly” when they check out.

2.4. Personality

Personality refers to a person’s unique psychological makeup and how it consistently influences

the way a person responds to his or her environment. Do all people have personalities? Actually,

even though the answer seems like a no-brainer, some psychologists argue that the concept of

personality may not be valid. Many studies find that people do not seem to exhibit stable

personalities. Because people don’t necessarily behave the same way in all situations, they argue

that this is merely a convenient way to categorize people. Intuitively, this argument is a bit hard to

accept, because we tend to see others in a limited range of situations, and so they do appear to act

consistently. However, we each know that we ourselves are not all that consistent; we may be wild

and crazy at times and serious and responsible at others. Although certainly not all psychologists

have abandoned the idea of personality, many now recognize that a person’s underlying

characteristics are but one part of the puzzle, and situational factors often play a large role in

determining behavior. Although we may undergo dramatic changes as we grow up, in adulthood

measures of personality stay relatively stable.

Personality traits, which is defined as the identifiable characteristics that define a person. What are

some crucial personality traits? Consumer researchers have looked at many to establish linkages

to product choice, such as “need for uniqueness,” “introversion/ extroversion” (whether people are

shy or outgoing), and “attention to social comparison information.” Some research evidence

suggests that ad messages that match how a person thinks about himself or herself are more

persuasive. Another trait relevant to consumer behavior is frugality. Frugal people deny short term

purchasing whims; they choose instead to resourcefully use what they already own. For example,

this personality type tends to favor cost-saving measures such as timing showers and bringing

leftovers from home to have for lunch at work. Obviously, during tough economic times many

people reveal their “inner frugalista” as they search for ways to save money.

The most widely recognized approach to measuring personality traits is the so-called Big Five

(also known as the Neo-Personality Inventory). This is a set of five dimensions that form the basis

of personality: openness to experience, conscientiousness, extroversion, agreeableness, and

neuroticism. Figure 2.4. describes theses dimensions.

Figure 2.4. Big Five Personality Dimensions

2.4.1. Brand Personality

A brand personality is the set of traits people attribute to a product as if it were a person. It’s

increasingly common for marketers to think carefully about brand personality as they embrace the

communications approach known as brand storytelling. This perspective emphasizes the

importance of giving a product a rich background to involve customers in its history or experience.

Brand storytelling is based on the tradition of reader response theory, which is a widely accepted

perspective in literature that focuses on the role of the reader in interpreting a story rather than just

relying upon the author’s version. This approach recognizes that the consumer does not just want

to listen to a manufactured set of details, but he or she wants to participate in the story by “filling

in the blanks.” One popular genre of brand storytelling is what a set of researchers described as an

underdog brand biography. This includes details about a brand’s humble origins and how it defied

the odds to succeed. Such a story resonates with consumers because they can identify with these

struggles. Thus, Google, HP, and Apple like to talk about the garages in which they started.

In a sense, a brand personality is a statement about the brand’s market position. Understanding this

is crucial to marketing strategy, especially if consumers don’t see the brand the way its makers

intend them to and they must attempt to reposition the product. Forging a successful brand

personality often is key to building brand loyalty, but it’s not as easy to accomplish as it might

appear. One reason is that many consumers (particularly younger ones) have a sensitive “non-

sense detector” that alerts them when a brand doesn’t live up to its claims or is somehow

inauthentic. When this happens, the strategy may backfire as consumers rebel. They may create

Web sites to attack the brand or post. So, how do people think about brands? We use some

personality dimensions to compare and contrast the perceived characteristics of brands in various

product categories, including these:

• Old-fashioned, wholesome, traditional

• Surprising, lively, “with it”

• Serious, intelligent, efficient

• Glamorous, romantic, sexy

• Rugged, outdoorsy, tough, athletic

2.5. Lifestyles and Consumer Identity

In traditional societies, class, caste, village, or family largely dictate a person’s consumption

options. In a modern consumer society, however, each of us is free (at least within our budgets) to

select the set of products, services, and activities that define our self and, in turn, create a social

identity we communicate to others. Lifestyle defines a pattern of consumption that reflects a

person’s choices of how to spend his or her time and money. These choices play a key role in

defining consumer identity. Whether Tuners, Dead Heads, or skinheads, each lifestyle subculture

exhibits its own unique set of norms, vocabulary, and product insignias. These subcultures often

form around fictional characters and events, and they help to define the extended self.

A lifestyle marketing perspective recognizes that people sort themselves into groups on the basis

of the things they like to do, how they like to spend their leisure time, and how they choose to

spend their disposable income. The growing number of niche magazines and Web sites that cater

to specialized interests reflects the spectrum of choices available to us in today’s society. The

downside of this is obvious to the newspaper industry; several major papers have already had to

shut down their print editions because people consume most of their information online. A lifestyle

is much more than how we allocate our discretionary income. It is a statement about who one is in

society and who one is not. Group identities, whether of hobbyists, athletes, or drug users, gel

around distinctive consumption choices.

Social scientists use a number of terms to describe such self-definitions in addition to lifestyle,

including taste public, consumer group, symbolic community, and status culture. A goal of lifestyle

marketing is to allow consumers to pursue their chosen ways to enjoy their lives and express their

social identities. For this reason, a key aspect of this strategy is to focus on people who use products

in desirable social settings. The desire to associate a product with a social situation is a long-

standing one for advertisers, whether they include the product in a round of golf, a family barbecue,

or a night at a glamorous club surrounded by the hip-hop elite. Thus, people, products, and settings

combine to express a consumption style. Figure 2.5. depicts the consumption styles.

Figure 2.5. Consumption Style

2.5.1. Product Complementarity and Co-Branding Strategies

It can be more useful to identify patterns of consumption than knowing about individual purchases

when organizations craft a lifestyle marketing strategy. An important part of lifestyle marketing is

to identify the set of products and services that consumers associate with a specific lifestyle. In

fact, research evidence suggests that even a relatively unattractive product becomes more

appealing when consumers link it with other products that they do like. Furthermore, when people

consume multiple products that are labeled with the same brand they actually like them more: They

believe that these items were deliberately developed to go together.

The meshing of objects from many different categories to express a single lifestyle idea is at the

heart of many consumption decisions, including coordinating an outfit for a big date (shoes,

garments, fragrance, etc.), decorating a room (tables, carpet, wallpaper, etc.), and designing a

restaurant (menu, ambience, waitperson uniforms, etc.). Many people today evaluate products not

just in terms of function but also in terms of how well their design coordinates with other objects

and furnishings. Marketers who understand these cross-category relationships may pursue co-

branding strategies where they team up with other companies to promote two or more items.

Therefore, product complementarity occurs when the symbolic meanings of different products

relate to one another.

3. Consumers in Their Social and Cultural Settings

This section focuses on the external factors that influence our identities as consumers and the

decisions we make. First, we discuss an overview of group processes and the role that social media

plays in consumer decision making. Next, we focus on the ways our income and social status

relative to others helps to define who we are, followed by discussion on the subcultures that help

to determine how we buy and consume. Finally, we dive into broad yet powerful cultural

influences on consumer behavior.

3.1. Groups and Social Media

We belong to groups, try to please others, and look to others’ behavior for clues about what we

should do in public settings. In fact, our desire to “fit in” or to identify with desirable individuals

or groups is the primary motivation for many of our consumption behaviors. We may go to great

lengths to please the members of a group whose acceptance we covet. Social identity theory argues

that each of us has several “selves” that relate to groups. These linkages are so important that we

think of ourselves not just as “I,” but also as “we.” In addition, we favor others that we feel share

the same identity—even if that identity is superficial and virtually meaningless. In numerous

experiments that employ the minimal group paradigm, researchers show that even when they

arbitrarily assign subjects to one group or another, people favor those who wind up in the same

group.

Why are groups so persuasive? The answer lies in the potential power they wield over us. Social

power describes “the capacity to alter the actions of others.” To the degree to which you are able

to make someone else do something, regardless of whether that person does it willingly, you have

power over that person. The following classification of power bases helps us to distinguish among

the reasons a person exerts power over another, the degree to which the influence is voluntary, and

whether this influence will continue to have an effect even when the source of the power isn’t

around.

• Referent power: If a person admires the qualities of a person or a group, he tries to copy

the referent’s behaviors (e.g., choice of clothing, cars, leisure activities). Prominent people

in all walks of life affect our consumption behaviors by virtue of product endorsements

(e.g., Lady Gaga for Polaroid), distinctive fashion statements (e.g., Kim Kardashian’s

displays of high-end designer clothing), or championing causes (e.g., Brad Pitt for

UNICEF). Referent power is important to many marketing strategies because consumers

voluntarily modify what they do and buy to identify with a referent.

• Information power: A person possesses information power simply because he or she

knows something others would like to know. Editors of trade publications such as

Women’s Wear Daily often possess tremendous power because of their ability to compile

and disseminate information that can make or break individual designers or companies.

People with information power are able to influence consumer opinion by virtue of their

access to the knowledge that provides some kind of competitive advantage.

• Legitimate power: Sometimes we grant power by virtue of social agreements, such as the

authority we give to police officers, soldiers, and yes, even professors. The legitimate

power a uniform confers wields authority in consumer contexts, including teaching

hospitals where medical students don white coats to enhance their standing with patients.

Marketers “borrow” this form of power to influence consumers. For example, an ad that

shows a model who wears a white doctor’s coat adds an aura of legitimacy or authority to

the presentation of the product (“I’m not a doctor, but I play one on TV”).

• Expert power: U.S. Robotics signed up British physicist Stephen Hawking to endorse its

modems. A company executive commented, “We wanted to generate trust. So we found

visionaries who use U.S. Robotics technology, and we let them tell the consumer how it

makes their lives more productive.” Hawking, who has Lou Gehrig’s disease and speaks

via a synthesizer, said in one TV spot, “My body may be stuck in this chair, but with the

Internet my mind can go to the end of the universe.”11 Hawking’s expert power derives

from the knowledge he possesses about a content area. This helps to explain the weight

many of us assign to professional critics’ reviews of restaurants, books, movies, and cars—

even though, with the advent of blogs and open source references such as Wikipedia, it’s

getting a lot harder to tell just who is really an expert.

• Reward power: A person or group with the means to provide positive reinforcement has

reward power. The reward may be the tangible kind, such as the contestants on Survivor

experience when their comrades vote them off the island. Or it can be more intangible,

such as the gushing feedback the judges on The Voice deliver to contestants.

• Coercive power: We exert coercive power when we influence someone because of social

or physical intimidation. A threat is often effective in the short term, but it doesn’t tend to

stick because we revert to our original behavior as soon as the bully leaves the scene.

Fortunately, marketers rarely try to use this type of power (unless you count those annoying

calls from telemarketers!). However, we can see elements of this power base in the fear

appeals, as well as in intimidating salespeople who try to succeed with a “hard sell”.

3.1.1. Reference Groups

A reference group is an actual or imaginary individual or group that significantly influences an

individual’s evaluations, aspirations, or behavior. Although two or more people normally form a

group, we often use the term reference group a bit more loosely to describe any external influence

that provides social cues. The referent may be a cultural figure that has an impact on many people

(e.g., the Pope) or a person or group whose influence operates only in the consumer’s immediate

environment (e.g., the “popular” kids in high school). Reference groups that affect consumption

can include parents, fellow motorcycle enthusiasts, the Tea Party, or even the Chicago Bears, the

Dave Matthews Band, or Spike Lee.

A membership reference group consists of people we actually know. In contrast although we don’t

know those in an aspirational reference group, we admire them anyway. These people are likely

to be successful businesspeople, athletes, performers, or anyone else who rocks our world. Not

surprisingly, many marketing communications that specifically adopt a reference group appeal

concentrate on highly visible celebrities; they link these people to brands so that the products they

use or endorse also take on this aspirational quality. Reference groups impact our buying decisions

both positively and negatively. In most cases, we model our behavior to be in line with what we

think the group expects us to do. Sometimes, however, we also deliberately do the opposite if we

want to distance ourselves from avoidance groups.

Your motivation to distance yourself from a negative reference group can be as powerful or more

powerful than your desire to please a positive group. That’s why advertisements occasionally show

an undesirable person who uses a competitor’s product. This kind of execution subtly makes the

point that you can avoid winding up like that kind of person if you just stay away from the products

he buys.

3.1.2. Social Media Revolution

Social media changes the way we learn about and select products. Sometimes people define social

media in terms of hardware (like Samsung smartphones) or software (like Snapchat), but really

it’s first and foremost about online community: The collective participation of members who

together build and maintain a site. Indeed, many of us become so enmeshed in our social networks

that we feel the need to check them constantly to be sure we stay on top of what our (online) friends

are up to 24/7. Some refer to this compulsion as fear of missing out (FOMO).

Certainly there are advantages to always feeling connected, but perhaps the downside is a vague

feeling of regret or inadequacy that lurks in the background in case we chose not to be somewhere,

or even worse, that we weren’t invited in the first place. Whether we feel left out or not, it seems

clear that our passion for social media exerts a big impact on our emotions and experiences during

the course of a typical day. Indeed, one study even found that people on Twitter tend to follow

others who share their mood: People who are happy tend to retweet or reply to others who are

happy, whereas those who are sad or lonely tend to do the same with others who also post negative

sentiments.

3.1.3. Digital Word of Mouth

Viral marketing occurs when an organization motivates visitors to forward online content to their

friends; the message quickly spreads much like a cold virus moves among residents of a dorm.

There’s no doubt many of us love to share the news with others; news about new styles, new music,

and especially new stuff that we’ve bought. Of course we do this in the form of online reviews in

forums like Yelp or TripAdvisor. However the urge to share even creates new genres of

communication such as haul videos that feature a proud fashionista describing clothing items she

just bought, and unboxing videos that illustrate in painstaking detail exactly how to remove

electronics products from their boxes and assemble them for use.

Opinion leaders are people who are more influential than most when they recommend purchases

to others. In online groups, opinion leaders sometimes are called power users. They have a strong

communications network that gives them the ability to affect purchase decisions for a number of

other consumers, directly and indirectly. Much like their offline counterparts, power users are

active participants at work and in their communities. Their social networks are large and well

developed. Others trust them and find them to be credible sources of information about one or

more specific topics. They tend to have a natural sense of intellectual curiosity, which may lead

them to new sources of information.

3.2. Income and Social Class

Consumer demand for goods and services depends on both our ability and our willingness to buy.

Although demand for necessities tends to be stable over time, we postpone or eliminate other

expenditures if we don’t feel that now is a good time to spend money. Discretionary income is the

money available to a household over and above what it requires to have a comfortable standard of

living. As the population ages and income levels rise, the way a typical U.S. household spends its

money changes. The most noticeable shift is to allocate a much larger share of a budget to shelter

and transportation and less to food and apparel. Money has complex psychological meanings; we

equate it with success or failure, social acceptability, security, love, and freedom.

Our expectations about the future affect our current spending, and these individual decisions add

up to affect a society’s economic well-being. Consumers’ beliefs about what the future holds are

an indicator of consumer confidence. This measure reflects how optimistic or pessimistic people

are about the future health of the economy and how they predict they’ll fare down the road. These

beliefs are important because they influence how much money people pump into the economy

when they make discretionary purchases. When people are somewhat pessimistic about their

prospects and about the state of the economy, as they are now, they tend to cut back on what they

spend and take on less debt. When consumers feel optimistic about the future, they reduce the

amount they save, they take on more debt, and they splurge on discretionary items. A range of

factors influence the overall savings rate including individual consumers’ pessimism or optimism

about their personal circumstances.

Today one of the biggest issues we hear about is income inequality, that is, the extent to which

resources are distributed unevenly within a population. One consequence of rising inequality is

that more consumers worry about “falling behind” if a breadwinner loses his or her job or if the

family can no longer afford the cost of housing, transportation, and other necessities. Social

mobility refers to the “passage of individuals from one social class to another.” Horizontal

mobility occurs when a person moves from one position to another that’s roughly equivalent in

social status; for instance, a nurse becomes an elementary school teacher. Downward mobility is,

of course, movement none of us wants, but unfortunately we observe this pattern fairly often, as

farmers and other displaced workers go on welfare rolls or join the ranks of the homeless.

3.2.1. Targeting the top of the pyramid: High-Income Consumers

Many marketers try to target affluent, upscale markets. This often makes sense, because these

consumers obviously have the resources to spend on costly products that command higher profit

margins. However, it is a mistake to assume that we should place everyone with a high income

into the same market segment. As we noted previously, social class involves more than absolute

income. It is also a way of life, and several factors—including where they got their money, how

they got it, and how long they have had it—significantly affect wealthy people’s interests and

spending priorities. High-income consumers are divided into three different groups based on their

attitude toward luxury:

• Luxury is functional: These consumers use their money to buy things that will last and

have enduring value. They conduct extensive pre-purchase research and make logical

decisions rather than emotional or impulsive choices.

• Luxury is a reward: These consumers tend to be younger than the first group but older

than the third group. They use luxury goods to say, “I’ve made it.” The desire to be

successful and to demonstrate their success to others motivates these consumers to

purchase conspicuous luxury items, such as high-end automobiles and homes in exclusive

communities.

• Luxury is indulgence: This group is the smallest of the three and tends to include younger

consumers and slightly more males than the other two groups. To these consumers, the

purpose of owning luxury is to be extremely lavish and self-indulgent. This group is willing

to pay a premium for goods that express their individuality and make others take notice.

They have a more emotional approach to luxury spending and are more likely than the

other two groups to make impulse purchases.