Chapter 1 Consumer Behavior The behavior that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs. Personal Consumer The individual who buys goods and services for his or her own use, for household use, for the use of a family member, or for a friend. Organizational Consumer A business, government agency, or other institution (profit or nonprofit) that buys the goods, services, and/or equipment necessary for the organization to function.

Development of the Marketing Concept 1. The Production Concept • Assumes that consumers are interested primarily in product availability at low prices • Marketing objectives: – Cheap, efficient production – Intensive distribution – Market expansion

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

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

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

The Marketing Concept Implementing the Marketing Concept Consumer Research The process and tools used to study consumer behavior Two perspectives: o Positivist approach o Interpretivist approach

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

Targeting The selection of one or more of the segments to pursue

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

The Marketing Mix • Product • Price • Place • Promotion

Successful Relationships Customer Value Defined as the ratio between the customer’s perceived benefits and the resources used to obtain those benefits Perceived value is relative and subjective Developing a value proposition is critical Customer Satisfaction The individual's perception of the performance of the product or service in relation to his or her expectations. Customers identified based on loyalty include loyalists, apostles, defectors, terrorists, hostages, and mercenaries

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

Customer Profitability-Focused Marketing • Tracks costs and revenues of individual consumers • Categorizes them into tiers based on consumption behavior • A customer pyramid groups customers into four tiers

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

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

Consumer Behavior Is Interdisciplinary Psychology Sociology Social psychology Anthropology Economics

A Simplified Model of Consumer Decision Making

Chapter 3 Market Segmentation The process of dividing a potential market into distinct subsets of consumers and selecting one or more segments as a target market to be reached with a distinct marketing mix.

Three Phases of Marketing Strategy Segmentation Studies • Discover the needs and wants of groups of consumers to develop specialized products to satisfy group needs • Used to identify the most appropriate media for advertising

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

• Demographic • Age • Sex • Marital Status • Income, Education, and Occupation

• Psychological • Motivations • Personality • Perceptions • Learning • Attitudes

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

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

Use-Related Segmentation o Rate of Usage Heavy vs. Light o Awareness Status Aware vs. Unaware o Brand Loyalty Brand Loyal vs. Brand Switchers Usage-Situation Segmentation Segmenting on the basis of special occasions or situations Example Statements: o Whenever our daughter Jamie gets a raise, we always take her out to dinner. o When I’m away on business, I try to stay at a suites hotel. o I always buy my wife flowers on Valentine’s Day.

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

Criteria for Effective Targeting of Market Segments • Identification • Sufficiency • Stability • Accessibility

Implementing Segmentation Strategies • Concentrated Marketing – One segment • Differentiated – Several segments with individual marketing mixes

Chapter 4 Needs and Motivation • Needs are the essence of the marketing concept. Marketers do not create needs but can make consumers aware of needs. • Motivation is the driving force within individuals that impels them to action.

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

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

The Selection of Goals • The goals selected by an individual depend on their: – Personal experiences – Physical capacity – Prevailing cultural norms and values – Goal’s accessibility in the physical and social environment

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

The Dynamic Nature of Motivation • Needs are never fully satisfied • New needs emerge as old needs are satisfied • People who achieve their goals set new and higher goals for themselves

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

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

Defense Mechanism • Methods by which people mentally redefine frustrating situations to protect their self-images and their self-esteem

Arousal of Motives • Physiological arousal • Emotional arousal • Cognitive arousal • Environmental arousal

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

A Trio of Needs • Power – individual’s desire to control environment • Affiliation – need for friendship, acceptance, and belonging • Achievement – need for personal accomplishment – closely related to egoistic and self-actualization needs

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

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

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

Chapter 5 What Is Personality • The inner psychological characteristics that both determine and reflect how a person responds to his or her environment

The Nature of Personality • Personality reflects individual differences • Personality is consistent and enduring • Personality can change

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

Freudian Theory • Id – Warehouse of primitive or instinctual needs for which individual seeks immediate satisfaction • Superego – Individual’s internal expression of society’s moral and ethical codes of conduct • Ego – Individual’s conscious control that balances the demands of the id and superego

Freudian Theory and “Product Personality” • Consumer researchers using Freud’s personality theory see consumer purchases as a reflection and extension of the consumer’s own personality

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

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

• Consumer Innovators And Non innovators

Innovativeness • The degree to which consumers are receptive to new products, new services, or new practices

Dogmatism • A personality trait that reflects the degree of rigidity a person displays toward the unfamiliar and toward information that is contrary to his or her own established beliefs

Social character • Ranges on a continuum for inner-directedness to other-directedness • Inner-directedness – rely on own values when evaluating products – Innovators • Other-directedness – look to others – less likely to be innovators

Need for uniqueness • Consumers who avoid appearing to conform to expectations or standards of others

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

Variety-novelty seeking • Measures a consumer’s degree of variety seeking

• Examples include: – Exploratory Purchase Behavior – Use Innovativeness – Vicarious Exploration

Cognitive Personality Factors • Need for cognition (NC) – A person’s craving for enjoyment of thinking

– Individual with high NC more likely to respond to ads rich in product information • Visualizers versus verbalizers – A person’s preference for information presented visually or verbally

– Verbalizers prefer written information over graphics and images.

Consumer materialism

o The extent to which a person is considered “materialistic”

Fixated consumption behavior

o Consumers fixated on certain products or categories of products

Compulsive consumption behavior

o “Addicted” or “out-of-control” consumers

Consumer Ethnocentrism

• Ethnocentric consumers feel it is wrong to purchase foreign-made products • They can be targeted by stressing nationalistic themes

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

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

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

Issues Related to Self and Self-Image • One or multiple selves • A single consumer will act differently in different situations or with different people • We have a variety of social roles • Marketers can target products to a particular “self”

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

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

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

Chapter 9 The Communications Process • The Message Initiator (the Source) • The Sender • The Receiver • The Medium • The Message • The Target Audience (the Receivers) • Feedback - the Receiver’s Response

The Message Initiator (source)

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

• Credibility of Formal Sources • Neutral sources have the greatest credibility • Source credibility judged on past performance, reputation, service, quality, spokesperson image, retailers, social responsibility • Institutional advertising used to promote favorable company image

• Credibility of Spokespersons and Endorsers • Effectiveness related to: – The message – Synergy between endorser and type of product – Demographic characteristics of endorser – Corporate credibility – Endorsement wording

• Message Credibility • Credibility of retailers • Reputation of the medium that carries the ad • Consumer’s previous experience with product • Sleeper Effect • The idea that both positive and negative credibility effects tend to disappear after a period of time.

The Target Audience (receivers) Personal characteristics and comprehension Involvement and congruency Mood Barriers to communication Selective exposure to messages Psychological noise

Feedback should be gathered: Promptly | Accurately Advertising Effectiveness Research • Media and message exposure measures – How many consumers received the message – Which consumers received the message • Message Attention and Interpretation – Physiological measures

– Theater tests

– Readership surveys

– Attitudinal measures • Message Recall Measures – Day after recall

Designing Persuasive Communications • Communications strategy – Must include objectives

– Includes cognitive models

– Newer models include perception, experience, and memory • Target Audience – Segmentation is key • Media Strategy – Consumer profile

– Audience profiles • Message Strategy – Involvement theory • Central and peripheral routes

Message Structure and Presentation • Resonance • Wordplay • Used to create a double meaning when used with a relevant picture

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

• Comparative advertising • Marketer claims product superiority over another brand • Useful for positioning

• Order effects • Primacy • Recency • Order of benefits • Brand name

• Repetition • Important for learning

Chapter 11 Social Class The division of members of a society into a hierarchy of distinct status classes, so that members of each class have either higher or lower status than members of other classes.

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

Social Class Is Hierarchal • Status is frequently thought of as the relative rankings of members of each social class

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

Index of Status Characteristics (ISC) A composite measure of social class that combines occupation, source of income (not amount), house type/dwelling area into a single weighted index of social class standing.

Socioeconomic Status Score (SES) A multivariable social class measure used by the United States Bureau of the Census that combines occupational status, family income, and educational attainment into a single measure of social class standing.

Geodemographic Clusters A composite segmentation strategy that uses both geographic variables (zip codes, neighborhoods) and demographic variables (e.g., income, occupation) to identify target markets. PRIZM (Potential Rating Index by Zip Market) A composite index of geographic and socioeconomic factors expressed in residential zip code neighborhoods from which geodemographic consumer segments are formed.

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

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

The Working Class These consumers tend to be more brand loyal than wealthier consumers

The Techno Class • Having competency with technology • Those without are referred to as “technologically underclassed” • Parents are seeking computer exposure for their children • Geeks now viewed as friendly and fun

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

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

Culture Is Learned Issues • Enculturation and acculturation • Enculturation • The learning of one’s own culture • Acculturation • The learning of a new or foreign culture

• Language and symbols • Without a common language shared meaning could not exist • Marketers must choose appropriate symbols in advertising • Marketers can use “known” symbols for associations • Ritual • A ritual is a type of symbolic activity consisting of a series of steps • Rituals extend over the human life cycle • Marketers realize that rituals often involve products (artifacts) • Sharing of culture • To be a cultural characteristic, a belief, value, or practice must be shared by a significant portion of the society

• Culture is transferred through family, schools, houses of worship, and media

The Measurement of Culture • Content Analysis • A method for systematically analyzing the content of verbal and/or pictorial communication. The method is frequently used to determine prevailing social values of a society. • Field Observation • A cultural measurement technique that takes place within a natural environment that focuses on observing behavior (sometimes without the subjects’ awareness).

• Characteristics of Field Observation • Takes place within a natural environment • Performed sometimes without the subject’s awareness • Focuses on observation of behavior

• Participant-Observers

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

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

Criteria for Value Selection • The value must be pervasive. • The value must be enduring. • The value must be consumer-related.

Chapter 15 Opinion Leadership The process by which one person (the opinion leader) informally influences the consumption actions or attitudes of others who may be opinion seekers or opinion recipients.

Dynamics of the Opinion Leadership Process • Credibility • Positive and Negative Product Information • Information and Advice • Opinion Leadership Is Category-Specific • Opinion Leadership Is a Two-way Street

Issues • The Needs of Opinion Leaders • Self-involvement • Social involvement • Product involvement • Message involvement

• The Needs of Opinion Receivers • New product or new usage information • Reduction of perceived risk • Reduction of search time • Receiving the approval of the opinion leader

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

• Surrogate Buyers versus Opinion Leaders • Surrogate buyers may replace opinion leaders

• An example is a wardrobe consultant who helps in the purchase of business clothes

Measurement of Opinion Leadership • Self-Designating Method • Sociometric Method • Key Informant Method • Objective Method

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

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

• Multistep Flow – A revision of the traditional two-step theory that shows multiple communication flows

Issues in Opinion Leadership and Marketing Strategy • Advertisements Stimulating Opinion Leadership • Word of Mouth May Be Uncontrollable

Marketers Seek to Take Control of the Opinion Leadership Process • Creating products with built-in buzz potential • Strategy designed to stimulate buzz • Viral marketing • Weblogs

Diffusion Process The process by which the acceptance of an innovation is spread by communication to members of social system over a period of time. Elements of the Diffusion Process • The Innovation • The Channels of Communication • The Social System • Time

Product Characteristics That Influence Diffusion • Relative Advantage • Compatibility • Complexity • Trialability • Observability

Time and Diffusion • Purchase Time • Adopter Categories • Rate of Adoption

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

Defining Innovations • Firm-oriented definitions – Product is “new” to the company • Product-oriented definitions – Continuous – Dynamically continuous – Discontinuous • Market-oriented definitions – Based on consumer exposure • Consumer-oriented definitions – Consumer judges it as “new”

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

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