To Understand What Consumer Behaviour Is and the Different Types of Consumers. To Understand the Relationship Between Consumer Behaviour and the Marketing Concept, the Societal Marketing Concept, as Well as Segmentation, Targeting, and Positioning. To Understand the Relationship Between Consumer Behaviour and Customer Value, Satisfaction, Trust, and Retention. To Understand How New Technologies Are Enabling Marketers to Better Satisfy the Needs and Wants of Consumers To Understand How Marketers Are Increasingly Able to Reach Consumers Wherever Consumers Wish to Be Reached. To Understand How the World’s Economic Condition Is Leading to Consumption Instability and Change. To Understand the Makeup and Composition of a Model of Consumer Behaviour.
Consumer Behaviour includes all the decisions a consumer makes when spending their time and money. The what, why, when, where, and how of consumer purchases are examined in consumer behavior. It is not just individuals, but households, families, and groups that influence the decisions we make. This web link takes you to Google’s shopping site which is still in BETA test mode. Google used to have a shopping portal, Froogle, which is no longer active. There are many online sites which influence us as consumers either in the information gathering, decision making, or final purchasing part of our decisions.
The personal consumer is sometimes called the end user or ultimate consumer. This is you when you go to Best Buy to purchase a new television for your home. The organizational consumer is buying for the organization or to re-sell to the personal consumer. Although both types of consumer entities are important, we will be focusing on the personal consumer throughout these presentations.
Consumers interact with products and other aspects of the marketing system but for marketers to best meet consumer needs, they need to be able to understand their behavior and categorize them into useful segments.
For some purposes, marketers find it useful to categorize consumers in terms of age, gender, income, and occupation. These are descriptive characteristics of a population, or demographics . In other cases, marketers would rather know something about in terests in clothing or music, and other information that falls under the category of psychographics. The conversations we have with others transmit a lot of product information, as well as recommendations to use or avoid particular brands. The use of market segmentation strategies means targeting a brand only to specific groups of consumers rather than to everybody—even if it means that other consumers who don’t belong to this target market aren’t attracted to that product. Brands often have clearly defined images, or “personalities,” created by advertising, packaging, branding, and other marketing strategies. The choice of a favorite Web site is very much a lifestyle statement: It says a lot about a person’s interests, as well as something about the type of person she would like to be. People often choose a product because they like its image or because they feel its “personality” somehow corresponds to their own. People often buy products not for what they do but for what they mean. The roles products play in our lives extend well beyond the tasks they perform.
In the early stages of development, researchers referred to the field as buyer behavior. Marketers now recognize that consumer behavior is an ongoing process, not merely what happens at one point in the transaction cycle. We call the transaction of value between two or more an exchange. It’s an integral part of marketing but consumer behavior recognizes that the entire consumption process is relevant for marketers. Figure 1.1 in the text illustrates these issues.
We call the person who identifies a need or desire, makes a purchase, and then disposes of the product as a consumer. The purchaser or user might be the same person, or not. You can see in the slide that there are three key stages: 1) prepurchase, 2) purchase, and 3) postpurchase. Marketers need an understanding of all three stages.
Marketers must understand the various consumer segments they are targeting in order to meet the segment’s needs. In the ad shown, the woman is fed up with bad financial news. Bianco adjusted its message strategy to address the concerns of its audience. Many dimensions are relevant for understanding consumer needs and wants. Usage, whether heavy or light, can help to focus marketer’s energies. In addition there are many demographic variables that can help in understanding groups of consumers.
Demographics are statistics that measure observable aspects of a population. Some of the most common demographic measures are age, gender, family structure, social class, race or ethnicity, and geography. Even lifestyles can be useful to marketers in that consumers may share demographic characteristics but have very different lifestyles. Marketers try to understand their customers and develop lifelong relationships. Marketers who follow this approach are said to follow the philosophy of relationship marketing. They may also utilize database marketing in order to track the buying habits of consumers.
People who belong to the same social class are approximately equal in terms of their incomes and social standing in the community. This bank boastfully targets rednecks.
Many people don’t realize the extent to which marketers influence popular culture. Whether we are talking about music, movies, sports, or entertainment, these forms of popular culture both influence and are influenced by marketing.
We find that consumers may develop relationships with brands over time. The slide lists some of the types of relationships we may see between consumers and their brands. Self-concept attachment means that the product helps to establish the user’s identity. This was one of our early points in this chapter. Nostalgic attachment means the product serves as a link to the consumer’s past. Interdependence means that the product is a part of the user’s daily routine. Love means that the product elicits emotional bonds of warmth, passion, or other strong emotion.
The marketing concept was developed over time through two other important business orientations called the production and the sales orientation . They will be discussed in more detail on the following slides.
Rather than focus on what can be manufactured, the focus shifts with the marketing concept to what consumers prefer. It became a time to put the customer first and to understand their needs and wants. With this information, marketers can deliver satisfaction to their target markets. We are remaining focused on the marketing concept today as marketers become more sophisticated in understanding the consumer and in delivering products that meet their needs.
The societal marketing concept was developed from the marketing concept. Marketers and consumers are increasingly taking stock of what is good for themselves, their family, their country, and the planet. Marketing looks for opportunities to provide products and services to help consumers reach their goals while also making profitable decisions for their companies. The image in this slide of a Siemens ad suggests the company is committed to developing products that are safe for customers and the environment. This web link will take you to the “Cause Marketing Planner” assembled by promomagazine.com. It is rich with information about not-for-profit organizations for cause marketing campaigns.
All companies must continually conduct research to understand the needs and priorities of their market segments. This web link will take you to the Association for Consumer Research, whose goal it is to advance consumer research and facilitate the exchange of scholarly information among members of academia, industry, and governments worldwide.
Consumer needs are shaped by the environment, culture, education, and life experiences. Marketers perform segmentation by looking for groups with common needs. Segmentation can be based on consumers’ demographics, product usage, geography, lifestyle, and many other characteristics and needs.
When a marketer chooses the segments that they will pursue, they have chosen a target market . Selection of the correct target market is critical to success of the product since the marketer has assumed that this group of consumers has a similar need with respect to their product or service.
Positioning is how the consumer thinks about your product versus the competitor’s product. Does yours have a sleeker design, or is it faster or more compact? The positioning is ultimately in the mind of the consumer but the marketer helps form the positioning through effective advertising and communication. Strong positioning differentiates your product from the competition and clearly tells the consumer how it will fulfill their needs better than other products on the market.
The marketing mix is one of the most important concepts in marketing. It thoroughly describes the product and the tools the company offers to consumers. The product includes the name, design, and features. The price includes the list price, discounts, and payment methods. Place is how a company will distribute their product and promotion is how they will let customers know about the product and its benefits.
The goal of all marketers is to build and maintain successful relationships with their consumers. This occurs by offering a product which has benefits that the consumer values . In addition, they see the value of those benefits as exceeding the cost of the product – the cost in terms of money, time, and opportunity costs. If a product delivers value, the company is likely to have a high level of customer satisfaction . They will trust the marketer and continue to purchase the product. In addition, they will tell others about the product and speak highly of it when asked or when reviewing the product online. A company with strong customer relationships will be able to achieve a high level of customer retention – their customers will not defect to the competitor or stop using their product. They will retain these customer over time and will be more profitable due to these valuable loyal customers.
It is best to think of value as the consumers’ perception of what they gained vs. what they gave up to purchase a product or use a service. Marketers are developing value propositions which are statements of the value their product offers to consumers. If the value propositions are clear and applicable to the consumer, they will understand the strength of the product benefits.
They create bundled meals and dollar menus to create value for price-conscious consumers. In addition, they create value to the health-conscious consumer by offering salads, fruit, and healthy options for Happy Meals. They communicate this value through television ads, in-store signage, and their website.
It is important to understand the role of customer expectations in customer satisfaction. If you fall below the consumer's expectations, then the consumer is not satisfied, but if you exceed expectations then you can create “customer delight.” When customers are highly satisfied, they can become loyalists who continue to purchase or apostles , who provide very positive word-of-mouth. When customers are disappointed, they can become defectors and move to the competition or terrorists , who spread negative word-of-mouth. Some dissatisfied customers become hostages and stay with the company but are very unhappy. Mercenaries are satisfied but are not really considered loyal and will move from company to company.
Customer trust is closely related to customer satisfaction. Trust in a company helps build loyalty. Consumer trust differs based on the media and the source of the message. This is seen in advertising where customers trust word-of-mouth much more than marketing messages that are from the marketer.
Customer retention is an important strategy to all marketers. The goal is to make customers stay with your company and generate positive word of mouth about your service and products. The Internet and cell phones have helped marketers maintain closer relations with their consumers and have opened easier channels for the customer to contact the company if they have questions, problems, or suggestions.
These are the top 10 out of the 20 companies listed in Table 1.2 in the text. These companies have achieved a high level of trust with their customers if they are on this list.
You are probably familiar with segmentation based on demographics, such as age and gender. Another common segmentation scheme used by marketers is to segment customers by their profitability to the firm. With this method, marketers can offer higher-level services to their platinum customers who are more valuable to the marketer, more likely to try new offerings, and are often not price sensitive.
This is a portion of Table 1.3 from the text, which highlights the difference between the traditional marketing concept versus value-and-retention-focused marketing . The full details of this comparison can be found in the textbook.
The impact of digital technologies is tremendous. Not only has the computer changed the way companies transact with customers, but there are changes from cell phones, smart phones, and cable television. Think of how you see marketing messages if you are watching a movie through on-demand or playing an online video game. Marketers can now transact in a one-to-one relationship with customers – offering product, prices, and messages that are tailored for that consumer. By gathering data on the consumer, the marketer has more information to tailor these offers and communication messages. The consumer has more power because they have more information on competing products, prices, and reviews on product performance. This gives them more choices and more bargaining power with the marketer.
We all know how important our cell phones are to our daily functioning. We have already seen penetration of devices with better applications and screens through the iPhone and BlackBerry products. This will continue to grow in the near future and marketers’ challenge is to determine how to best use these devices to reach consumers. This web link takes you to a great site called “Marketing Charts.” It has data on all sorts of marketing-related information, including interactive and mobile phone use.
Access to the Internet is incredibly influential for consumer behavior. It changes who you may interact with, the information you can find, the choices you see as available, and the time and energy you spend dealing with various decisions. The Internet has made it possible for businesses to use an additional channel of distribution (B2C e-commerce) but it’s also made possible C2C e-commerce, in the form of outlets like Etsy.com. You are likely at the forefront of the impact of the Web on consumer behavior because you are a digital native. Digital natives grew up in a wired world. The Web hasn’t just changed consumer behavior by shifting our options in terms of channels of distribution. It’s also made possible a whole new form of media known as social media.
Social media have created what is known as the horizontal revolution. Because of the interconnectivity and the ability for consumers to participate actively in communities across the Web, social media have shifted the balance of power between consumers and marketers. Some of the most important developments for understanding consumer behavior are the growth of user-generated content and our ability to communicate both asynchronously and synchronously. Social media are made possible by something known as Web 2.0, the technological development of the Internet.
How do you participate in social media? Can you think of any instances in which social media influenced a purchase decision you made?
This model will guide your studies of consumer behavior. The input stage includes sources of information to the consumer – how they learn and are influenced by the marketer and their environment. The process stage ties to the decision-making process the consumer undergoes when considering a purchase. It moves from the inputs to the psychological factors involved in recognizing a need, searching for information, and evaluating alternatives. The output stage involves the actual purchase and the post-purchase evaluation. This post-purchase evaluation ties to the satisfaction topics discussed earlier in this presentation and the importance of customer loyalty to marketing’s profitability.
In business, conflicts often arise between the goal to succeed and the desire to maximize well-being of consumers by providing them with safe and effective products. Sometimes consumers expect too much of companies. Thus, thinking about marketing ethics means considering how businesses may manipulate consumers as well as how consumers may manipulate businesses.
It can be difficult to avoid ethical conflicts because our thoughts of what is right and wrong vary among people, organizations, and cultures. These cultural differences certainly influence whether business practices such as bribery are acceptable. Bribing foreigners to gain business has been against the law in the United States since 1977, under the Foreign Corrupt Practices Act. The Organization for Economic Cooperation and Development (OECD), to which most industrialized countries belong, also outlaws bribery. Still, these practices are common in many countries.
Marketing is commonly criticized as trying to convince consumers that they need something when they really don’t. This is an ethical issue. Marketers respond to this question by pointing out that the need already exists in the consumer, but marketers recommend ways to satisfy the need.
Yes, we can say that advertising and marketing are necessary because consumers may not know that solutions to problems exist without the information provided by advertising and marketing. This is the view of the economics of information perspective. It points out that there is an economic cost to searching for information. Advertising helps consumers by reducing search time.
The failure rate for new products ranges from 40 to 80%. Although people may think that advertisers use magic to sell products, marketers are only successful when they promote good products.
We call a set of beliefs that guide our understanding of the world a paradigm. Some belief consumer behavior is in the midst of a paradigm shift, which occurs when a competing paradigm challenges the dominant set of assumptions. The basic set of assumptions underlying the dominant paradigm is positivism or modernism. It emphasizes that human reason is supreme and there is a single, objective truth that science can discover. The newer paradigm of interpretivism (or postmodernism) questions these assumptions. This perspective argues that societal beliefs deny the complex social and cultural world in which we really live.
Table 1.3 summarizes the major differences between these two perspectives on consumer research. To understand how an interpretive framework helps us to understand marketing communications, let’s refer to an analysis of one of the best-known and longest-running (1959–1978) advertising campaigns of all time: the work the advertising agency Doyle Dane Bernbach (DDB) did for the Volkswagen Beetle. This campaign, was widely noted for its self-mocking wit. It found many ways to turn the Beetle’s homeliness, small size, and lack of power into positive attributes at a time when most car ads were emphasizing just the opposite. An interpretative analysis of these messages linked the image DDB created for the humble car to other examples of what scholars of comedy call the “Little Man” pattern. This is a type of comedic character who is related to a clown or a trickster, a social outcast who is able to poke holes in the stuffiness and rigidity of bureaucracy and conformity.
Not all consumers are alike – different customers have different needs. By segmenting the market and choosing target markets, companies can differentiate their products to provide the benefits that the segments desire. Once a marketer has identified their segment, they can choose media that is targeted to that segment for their advertising.
Positioning is the unifying element of each marketing mix. Product, place, price, and promotional strategies must work to state the product or service’s ability to deliver benefits to the consumer. Positioning is discussed in more detail in Chapter 6, but it is important to think about the concept as it is closely tied to the choice of a target market.
There are five criteria for effective targeting, as shown on the slide. First of all, the target must be identifiable. This means that the marketer must be able to see or find the characteristic they have chosen for segmentation. The segment must also be sizeable . It must be large enough to be profitable to the marketer. A stable segment means that the consumers are not “fickle” and likely to change very quickly. A group of consumers must be accessible to be targeted. The marketer must be able to reach that market in an affordable way. Finally, the target must be congruent with the company’s objectives and resources.
This two-by-two matrix is important for understanding types of segmentation schemes. It is possible to break segmentation into two broad groups – those that are based on the consumers themselves and those that are based on the consumers’ interaction or potential interaction with the product and are therefore consumption based. Within each of these two larger types of schemes, segmentation variables can be considered to be based on facts or what is absolutely known and measureable about the consumer versus cognitions, which are abstract and can be determined only through more complex questioning.
Demographics are the core of almost all segmentation because they are easy and logical. In addition, they are a cost-effective way to reach segments and demographic shifts are easier to identify than other types of shifts. When researching segmentation and media exposure, a consumer researcher will learn that media exposure is often directly related to demographics. Age segmentation includes segments such as the baby boomers and generations X and Y. Family life-cycle is based on the premise that many families pass through similar phases in their lives and share major life events such as moving, marriage, birth of a child, and retirement. Income, education, and occupation tend to tie together and lead to segmentation based on social class.
Geodemographic segmentation is a popular use of geography in targeting. People who live close to one another are likely to be similar in tastes, incomes, lifestyles and consumption. They might eat similar foods, like the same movies, and take the same types of vacations. This web link is to Claritas’ Prizm classifications. If you enter your zip code, you can find out which Prizm clusters are in your area.
This is one of four PRIZM segments that are shown in the text. The other two are the New Empty Nests, The Boomtown Singles, and Bedrock America. Each one is described by where they live, their income, their lifestyle traits, and characteristics.
Personality traits help us identify what segments are valuable to marketers. For instance, if an innovator also classifies themselves high on an “exhibition” personality trait, it means they want to be the center of a group and might be important as these are the type of innovators to spread word-of-mouth messages regarding new products and services.
Demographics will tell us the consumer’s ability to buy them and will work for segmentation of basic products, but psychographics or lifestyles are based on consumer’s values. These shared values, interests, activities, opinions, and interests are an effective way to explain buyers’ purchase decisions.
These are two of the four views presented in the book in Table 3.6. In this segmentation by lifestyle, you will have two individuals with similar demographics who share a very different view of this stage of the family life-cycle.
VALS is the most popular segmentation system that combines lifestyles and values. You can see how it is related to Maslow’s hierarchy of needs and the concept of social character. The system looks at three primary motivations and then the resources that individuals might have to draw upon. The lower resource consumer is at the bottom and labeled survivors while the highest resource consumer is often the innovator. We will talk about innovators in later chapters who are similar to this innovator. This web link will take you to the VALS website so you can see where you are classified. If you are a full-time student, run the survey twice – once with your own salary and once with your parents’.
An American might identify with common American cultural values, such as fitness and health but also with sub-cultural values if they are Hispanic or Asian Americans. In this global world, marketers must often think cross-culturally, including many countries and more global marketing segmentation. A consumer may be cross-cultural if they were born in one country and are now living in another.
Consumption-specific bases include facts about actual consumption behavior and cognitions consumers have about products and services in the form of attitudes and preferences.
Usage rate is often based on whether a group of consumers are heavy, medium, light, or nonusers of a product. Many marketers target the heavy consumers since they are often the most loyal and account for the largest portion of sales. A company with a strong growth objective might target the other usage segments to fuel their growth in the marketplace. Furthermore, a marketer might target those who are unaware of their product in order to start the process that could lead to purchase. Level of involvement is discussed in future slides when we reach Chapter seven.
Usage rate or amount is important to some marketers, but it might also be worth considering WHEN a given product is used. This is the basis for a usage-situation segmentation opportunity. People might consume certain products for special events, certain days of the week, or certain times during the year. Think of the rise of sales in chocolate and flowers for Valentine’s Day.
In many ways, segmentation is tied to the benefits that a group desires from your product or service. Knowing these benefits is important for positioning your product in the minds of the consumer. Consumers are constantly weighing the benefits of different types of media and noticing that digital media might be preferred in immediacy and accessibility but that traditional media often provides more depth and details.
Brand loyalty includes the behavior to the brand – how often somebody purchases the brand, in addition to the attitude or feeling the consumer has to a brand. Many companies have frequency award or loyalty programs where loyal customers receive rewards and benefits for purchasing often. Customer relationships are very complex and differ based on commitment by the customers, their sense of loyalty, their expectations of specialty treatment, their confidence in the company, and how they are treated by staff and employees from the company.
Micro-targeted began in 2004 and is growing field within marketing. It is growing due to the marketer’s ability to use complex databases and personalized media including email and mobile phones. Micro-targeting focuses on delivering a personalized advertising message to the user whether they are at work, at home, or on-the-go.
Acxiom is a major company involved in profiling customers and providing marketers with data. Like VALS and PRIZM, they have created segments or clusters for marketers. This table shows three sample clusters, including shooting stars, tots & toys, and Mid Americana.
Concentrated marketing usually involves only one segment, whereas a differentiated marketing strategy is targeting several segments with individual marketing mixes. Differentiated marketing is usually used by financially strong companies that are well established in their market sector. Countersegmentation involves combining existing segments for a company to become more efficient and profitable.
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). 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.
Motivation is produced by a state of tension, by having a need which is unfulfilled. Consumers want to fulfill these needs and reduce the state of tension. For example, when you are very hungry, you are extremely motivated to find food. Perhaps when you need a new pair of pants, you are a bit less motivated to fulfill this need as compared to your need for food. In the case of needing pants, it is important for marketers to help increase your motivation and/or specify your need for their products - perhaps Diesel Jeans.
This model highlights the motivation process. We can see that the “drive” toward behavior will often end in the fulfillment of the need. The processes and effects of previous learning tie strongly into choices made when the behavior is defined.
A 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 Basil longs for a juicy steak). 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. 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. We can satisfy a basic need in any number of ways, and the specific path a person chooses is influenced both by her unique set of experiences and by the values his or her culture instills. These personal and cultural factors combine to create a want, which is one manifestation of a need.
The degree to which a person will expend energy to reach one goal as opposed to another reflects his or her motivation to attain that goal. Drive theory focuses on biological needs that produce unpleasant states of arousal (e.g., your stomach grumbles during a morning class). The arousal this tension causes motivates us to reduce it. Some researchers feel this need to reduce arousal is a basic mechanism that governs much of our behavior. In a marketing context, tension refers to the unpleasant state that exists if a person’s consumption needs are not fulfilled. A person may be grumpy if he hasn’t eaten, or he may be dejected or angry if he cannot afford that new car he wants. This state activates goal-oriented behavior, which attempts to reduce or eliminate this unpleasant state and return to a balanced one we call homeostasis. Expectancy theory suggests that expectations we will achieve desirable outcomes—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.
We are born with a need for certain elements necessary to maintain life such as food, water, air, and shelter. These are biogenic needs . We have many other needs, however, that are not innate. We acquire psychogenic needs as we become members of a specific culture. These include the needs for status, power, and affiliation. Psychogenic needs reflect the priorities of a culture, and their effect on behavior will vary from environment to environment. We also can be motivated to satisfy either utilitarian or hedonic needs. 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.
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 as we saw in the previous chapter’s discussion of negative reinforcement, sometimes we’re also motivated to avoid a negative outcome rather than achieve a positive outcome.
A person has an approach–approach conflict when she must choose between two desirable alternatives. 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 we eliminate unpleasant tension. Dissonance occurs when a consumer must choose between two products, both of which possess good and bad qualities. When he chooses one product and not the other, the person gets the bad qualities of the product he buys and loses out on the good qualities of the one he didn’t buy. This loss creates an unpleasant, dissonant state 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”). A marketer can bundle several benefits together to resolve an approach–approach conflict.
Need for achievement refers to the desire to accomplish something. Sometimes people will express a need for achievement with premium products that express success. Need for affiliation is the desire to be with other people. Products that express emotion and aid in group activities are relevant. Need for power is the need to control one’s environment. Products that allow us to feel mastery over our surroundings and situation meet this need. Need for uniqueness is the need to assert one’s individual identity. Products that pledge to illustrate our distinct qualities meet this need.
The example of the need for food compared to a new pair of jeans can be further described by understanding types of needs. The need for food is more of an innate need and is considered a primary need. The need for a pair of jeans would be considered acquired. The need for clothing could be considered primary, but the need specifically for a pair of jeans is acquired, especially when they are a certain brand or designer jean. Needs may have a positive or negative direction. There are in fact some products we are NOT drawn to. For example, when people shop for funeral services, this is not something they are usually drawn to but rather must pursue and purchase.
Continuing with our example of jeans, we can understand the types of goals that exist. When a consumer states they want a pair of jeans, they have stated a generic goal . When they announce they really want a pair of Calvin Klein jeans, then they have stated product-specific goals.
Consumers have many possible goals when making decisions. They are strongly influenced by their experiences, personality, and others’ opinions and input. When choosing goals, they have to keep in mind what is socially acceptable and what they can physically attain. Think of a recent decision you might have made to go on a vacation. How was it influenced by personal experiences, the accessibility of the goal, and the social environment?
We learned in an earlier slide that needs can be positive or negative. The same is true for goals which can be positive or negative. A positive goal would include joining a gym to get strong and train for an upcoming race. Another person, with a negative goal, might join the gym to avoid health problems that will certainly exist if they do not exercise regularly. Which are you?
The value of bloggers to marketers is undeniable – they post their experiences and exposures to brands online where many other users or potential users can hear more about the brands. Marketers must understand the motivations, needs, and goals of bloggers to effectively target them. In the research results in Table 4.1, respondents answered on a 7-point Likert scale ranging from “strongly agree” to “strongly disagree.”
There has been extensive research regarding rational versus emotional motives during purchase. Their existence has been tied to how consumers view marketing variables, including advertisements and pricing adjustments. Furthermore, it must be realized that the definition of emotional vs. rational motivation differs significantly from one consumer to another and in different situations.
Motivation is highly dynamic and constantly changes in response to life experiences. Motivations change as we age, interact with others, change careers, acquire wealth, become ill, marry or divorce, or pursue education. Humans constantly have needs . This is due in part to the fact that our needs are never fully satisfied, or once satisfied, reappear. Hunger is a good example of a need that is often not satisfied and reappears. As humans, we also develop new needs as we satisfy existing needs. The hierarch of effects model shows how we meet our lower-level needs first and then move up the hierarchy. Finally, our needs are based on the goals that we set for ourselves. If one sets a goal to enter politics, they may feel they need a law degree. However, if they are unsuccessful in getting accepted at law school, their needs may change and they may want to pursue a few years of work experience first and need to find a job.
It is very common that a consumer can not attain a goal. This may be due to a lack of money, ability, desire, or accessibility. In this instance, the consumer often substitutes a different goal to reduce the tension created from the existence of this need. In time, this substitute goal might replace the initial goal. For instance, if a consumer wanted a certain cable television service, but it was not available in their area, they might choose a satellite television provider. Over time, they may be very satisfied with this choice and feel that they actually prefer the satellite service over the cable television service.
Failure to achieve a goal and the frustration that follows has been experienced by everyone at some time or another. Marketers must realize what consumers’ responses might be and how they can address these responses. Online education exists for those who are too far or do not have the structured time to attend college. The table on the next slide represents several defense mechanisms that consumers might exhibit when they are frustrated about not meeting a goal. The understanding of these defense mechanisms will help provide many opportunities to craft advertising messages to reach the emotional side of the consumers.
Defense mechanisms are used when people cannot cope with frustration. They are often developed to protect one’s ego from feelings of failure when goals are not achieved. Perhaps you can identify a time when you used a defense mechanism when reacting to a difficult situation.
A consumer has a variety of needs but only some of them are aroused at any given time and given top-of-mind priority. Motives become aroused by the consumer’s psychological condition (they get hungry), their emotional state (frustrated), cognitive processes (they read an ad that made them think about their needs), or by events occurring in their general surroundings (the weather becomes cold).
There are two opposing philosophies that deal with the arousal of human motives. The behaviorists see motivation as a mechanical process that results from a stimulus – something prompts the behavior and people behave or react. On the other hand, the cognitive school believes that all behavior is directed toward a fulfilling of goals – consumers think through their motives.
Researchers are interested in developing a complete list of human needs. Although basic biological needs are easily understood and agreed upon, it is the psychological and psychosocial needs that differ from researcher to researcher. Murray and Maslow have both developed lists of needs and Maslow orders them within a hierarchy from lower-level to higher-level needs. Somewhat related to Maslow’s theory is the belief in a trio of basic needs including power, affiliation, and achievement. Consider the needs outlined on the following slides to better understand which needs this product would meet for a consumer in New York.
This slide and the next provide a list of Murray’s psychogenic needs. He believed that everyone has the same basic set of needs but that individuals differ in their priority of those needs. His needs include many motives that are important when studying consumer behavior, including acquisition, achievement, recognition, and exhibition.
Dr. Abraham Maslow is well known for his hierarchy of needs. The web link on this page will bring you to www.maslow.com which reports on other publications by Dr. Maslow. The hierarchy presents five basic levels of human needs which rank in order of importance from lower-level needs to higher-level needs. The theory says that consumers will fill lower-level needs before the higher-level needs – they will eat before they enroll in a Master’s program.
This exhibit illustrates Maslow’s Hierarchy of Needs. The hierarchy includes five levels: 1) physiological, 2) safety, 3) belongingness, 4) ego needs, and 5) self-actualization. Marketers’ application of this hierarchy has been somewhat simplistic, especially as the same product or activity can gratify different needs. For example, one study found that gardening could satisfy needs at every level of the hierarchy: • Physiological—“I like to work in the soil.” • Safety—“I feel safe in the garden.” • Social—“I can share my produce with others.” • Esteem—“I can create something of beauty.” • Self-actualization—“My garden gives me a sense of peace.”
Some psychologists believe that this trio of needs exists for most consumers and that marketers can find a tie to motivation. Power refers to the individual’s desire to control other people and objects – it is tied to a type of ego needs. Affiliation is similar to Maslow’s social need and suggests that behavior is influenced by the desire for social ties. Finally, the need for achievement , like the other needs, will vary from individual to individual.
Figure 4.3 shows that different factors may create involvement. These factors can be something about the person, something about the object, or something about the situation.
A person’s degree of involvement is a continuum that ranges from absolute lack of interest in a marketing stimulus at one end to obsession at the other end. Inertia is consumption at the low end. When consumers are truly involved with something, they enter a flow state. Flow is an optimal experience with several qualities such as a sense of playfulness, a feeling of being in control, concentration and highly focused attention, a mental enjoyment of the activity for its own sake, and a distorted sense of time.
Table 4.1 shows a scale for measuring involvement. Measuring involvement is important for many marketing applications.
Not all consumer decision-making situations are the same and marketers generally put them into these three groups. At one extreme is extensive problem solving which usually involves a lot of information, whereas routinized response behavior usually requires little or no information. Limited problem solving lies in the middle of these two extremes where new information is often added and a criterion for evaluation is formed. Consumers tend to have little experience with the product category when engaging in extensive problem solving as opposed to being very familiar with a routinized purchase.
There are four types of models which explain why consumers act the way they do. In an economic view, there is perfect competition and the consumer makes rational decisions. They are aware of all choices, can rank their benefits, and can choose the best alternative. Unfortunately for many, the perfect consumer does not exist. On the other extreme is the passive view, in which the consumer is passive to the marketer in making their decisions. Here the consumer plays no role as they would in a cognitive view where the consumer is a thinking problem solver. We have discussed emotions and they are at the center of the emotional model of consumer decision making.
An overview of consumer decision making shows three main sections. The first includes all the external influences on a consumer. This includes sociocultural factors as discussed in previous chapters, as well as the marketer’s efforts. The second section includes the individual’s consumer decision making , which occurs in the three stages of need recognition, prepurchase search, and evaluation of alternatives. This process is guided by psychological factors and the consumer’s experiences. The third major section includes the actual purchase and how the consumer feels and what they think after they purchase the product. This web link brings you to Microsoft’s search engine Bing. How is it better than other search engines in helping consumers through this process?
A consumer usually realizes they have a need when they have a problem . Maybe they are hungry or are having friends over for dinner on Saturday night so they seek out choices in food.
Once the consumer has decided they have a need, they search through their mind for information on the product or service. After this, they may use the Internet, contact friends, or go to retail locations to learn more about a product. Some consumers will search for information for a long time, whereas others will make the search as short as possible. The time of the search can be related to the complexity and price of the product, the situation, experience with the product, or the social acceptability tied to the product.
When looking at the choices available and how they rate, the consumers will blend the list of brands they have acquired with the list of criteria that they have decided is important. The specific brands that the consumer considers is called the evoked or consideration set. A diagram of this set is shown on the following slide.
The evoked set is the group of acceptable brands that the consumer has found through internal and external search. Unknown brands cannot be in this set since they are unknown. Decision making is very hard for intangible services. This web link helps consumers who are trying to find a doctor – a difficult service to evaluate.
Consumers will establish criteria which are important to evaluate brands. These are usually product attributes such as auto focus, flash, image stabilization, lens type, size and weight for a new digital camera.
These rules are also referred to as heuristics, decision strategies, and information-processing strategies. They are the procedures that a consumer uses to make their brand choices. If they are compensatory , the consumer will evaluate each attribute and add them up for the brand. The belief is that the consumer will choose the brand with the highest rating. In a noncompensatory decision, the consumer does not balance positive attributes against negative, but every attribute must reach a minimum level or it will be disqualified. In a conjunctive rule, the consumer will establish a minimally acceptable cutoff point for each attribute evaluated. Brands that fall below the cutoff point on any one attribute are eliminated from further consideration. In a disjunctive rule, the consumer will establish a minimally acceptable cutoff point for each relevant product attribute. In a lexicographic rule, a consumer will first rank product attributes in terms of importance, then compare brands in terms of the attribute considered most important.
This table helps explain some of the decision rules and the statements a consumer would make when basing a decision on the rule.
It may be shocking to hear that 20 percent of Americans do not possess the language and math skills required from a typical retail environment. In fact, illiterate consumers make decisions in different ways as seen on the figure on the following slide. They tend to base their decisions on less information and use more basic processing tactics.
This figure presents the decision process for an illiterate consumer. They tend to use a different variety of cognitive and emotional tactics as well as decision heuristics.
Many consumers will no longer make a decision without going online. In addition, many consumers will purchase products to maintain a lifestyle they have chosen. For many, purchase decisions are related to healthy lifestyles, luxury living, or simplifying their lives.
In some situations, the consumer does not have all the information they need to make their decision. Some consumers will move ahead by ignoring the missing information, changing their strategy or inferring the missing information. Others will wait until they can find the missing information in the hopes of making a more thorough and sound decision.
Consumers can apply their decision rules to similar or dissimilar alternatives. They may decide between a vacation and a new car. They will use decision rules focused on these alternatives and may include attributes such as fun, excited, necessary. In either case, this is just the first decision in a series of decisions. If they pick the vacation, they would have decisions on where to visit, who to bring, where to stay, and what airline to fly. Marketers must be aware of these decision rules so they can send the right messages through the correct channels at the best time to reach the consumer.
There are three types of purchases consumers make – trial, repeat, and long-term commitment. Trial includes the first time a consumer buys a product when there is potential for repeat purchases. This is their attempt to evaluate the product to see if they really like it. If so, there will be repeat purchases over time. Products which are rarely purchased and kept for a long time are different then those trial-and-repeat purchases. These long-term commitment products include cars, appliances, and housing. In either situation, the consumer will always have postpurchase evaluation, which is further explained on the following slide.
The performance of a product will meet, exceed, or not meet expectations that the consumer had for the product when they purchased. Consumers and marketers prefer to reduce cognitive dissonance, which is the feeling a consumer has that they made the wrong choice.
The definition of gifting or gift giving or gift exchange is very broad and involves gifts given voluntarily as well as through obligation. Gifts represent about 10 percent of all retail purchases in North America so are an important part of the economy.
People often purchase a gift for themselves. This self-gifting behavior or intrapersonal gifts are very common and are often due to a variety of circumstances as provided in this slide.
Here are the five major gifting relationships with their definitions and an example of each.
Consumers purchase and own things and experiences for a variety of reasons. Many people collect as a hobby and we have many possessions which are much more important to us than the price for which they could be sold. Products help us remember the past and view the future. This web link brings you to eBay. What is the most unlikely possession you can imagine people collecting? You will likely find it here.
This is a model of consumption that reflects what has been discussed throughout this chapter and through the entire series of PowerPoints that accompany this textbook.
Relationship marketing is important to all firms. Trust between the firm and its consumers will lead to strong and long-lasting relationships. It is usually much more economical for a company to retain an existing customer than to recruit a new customer.
This figure presents many factors that can account for success in a relationship marketing program.
To understand culture , just think of the difference between two societies. How do they think, believe, and act differently? Even though many believe culture is becoming less distinct from country to country, I am sure you can identify differences in values and behaviors.
This theoretical model of culture’s influence on behavior gives us a sense of how culture combines with personality traits to build our beliefs and values. This forms our attitudes, which combine with social norms to determine how we intend to behave, and consequently do behave, in given situations.
We often don’t think about the influence that culture has on behavior. Sometimes things just seem like the “right thing to do.” The statement in this slide helps sum up culture as a lens with which people see the world.
Researches have developed this matrix for ages 14-24. The segments are as follows: The in-crowd is all about privilege and reinforcement Pop mavericks spread word of mouth rapidly and like individuality Networked intelligentsia are the hub of online social networks and are creative Thrill renegades are all about infamy, adrenaline, and anarchy
What kinds of needs does culture help satisfy? It helps us decide where to eat, when to eat, and what to eat. It helps us know which products we simply must have, like a cell phone, and what products are a luxury, like a private plane.
We learn about our own culture from the time we are small children. Through both informal and formal learning, we learn how to behave and the difference between right and wrong. The learning of our own culture usually happens slowly over time. Quite often, when someone moves, they must learn a new culture. This process of acculturation can be very difficult and will differ based on age, interest in the culture, and desire to become part of the new society. This web link gives you information on doing business in Japan and some cultural issues, including etiquette and manners.
There is a strong symbolic nature to human language. We use symbols to communicate with each other and marketers will use symbols to communicate to their customers.
You can probably think of many rituals in which you have been involved – birthday parties, weddings, graduations, or religious rites of passage. Many of these rituals involved artifacts, objects that are important to the day. Some rituals might even be informal, like poker night. Are there certain artifacts that students absolutely must have? Food, perhaps, music or objects.
Table 11.2 presents some rituals and artifacts. These might be some of the same rituals you identified in the previous discussion question.
A culture can not just exist within one person. There must be a large group which is involved, a significant portion of society. We will discuss subcultures in the next chapter, which are smaller subcultural groups that exist within larger cultures.
Here is an example of a ritual that someone might undergo every day. Notice how it includes certain products with which the consumer is often resistant to change.
It is important for marketers to realize that culture is changing. The products that fulfill needs, what is cool and in style, are constantly changing. Large cultural shifts may occur due to events that affect society. Certain cultures would like to change. For example, this is a link to changing the drinking culture at colleges.
Measurement techniques are used to track values and social trends for government and business. Each one will be looked at individually on the following slides.
Researchers can look at magazines, websites, television commercials, and even blogs to see what changes might be occurring and what values are important.
When looking at American culture, what are the core values that reflect society? To be included on the list on the following page, the core values have to meet these three criteria. They have to be pervasive , where a significant portion of the population accepts this value. They have to be enduring , lasting for a significant period of time, and they must be consumer related , in that they help us understand consumption.
These eleven values can be considered the “building blocks” of American culture. Take a minute to think about each one. There is probably a good chance that you can picture an advertisement that appeals to each of these values. Most of these values are clearly stated and should be easily understandable. The ones that might need some description are progress and external conformity . Progress relates to the fact that people and the society can improve themselves. It is closely tied to the related values of achievement, success, efficiency, and practicality. External conformity relates to the fact that although consumers like freedom of choice and individualism, they all accept the reality of conformity.
What American Core Values do these ads represent?
A person’s set of values plays a very important role in consumption activities. Consumers purchase many products and services because they believe that these products will help to attain a value-related goal. Two people can believe in the same behaviors but their underlying belief systems may be quite different. The extent to which people share a belief system is a function of individual, social, and cultural forces.
It is usually possible to identify a general set of core values that unique define a culture. Core values such as freedom, youthfulness, achievement, materialism, and activity characterize American culture. How do we determine what a culture values? We term the process of learning the beliefs and behaviors endorsed by one’s own culture enculturation. In contrast, we call the process of learning the value system and behaviors of another culture acculturation. Socialization agents, including parents, friends, and teachers, impart these beliefs to us. Even the media help us to learn about a culture’s priorities.
One of the most widely used measures of cross-cultural values is an instrument developed by Geert Hofstede. This measure scores a country in terms of its standing on five dimensions so that users can compare and contrast values: • Power Distance is the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally. • Individualism is the degree to which individuals are integrated into groups. • Masculinity is the distribution of roles between the genders. • Uncertainty Avoidance is a society’s tolerance for uncertainty and ambiguity. • Long-Term Orientation is values associated with Long-Term Orientation are thrift and perseverance. Values associated with Short-Term Orientation are respect for tradition, fulfilling social obligations, and protecting one’s “face.”
The Rokeach Value Survey includes a set of instrumental and terminal values. It was developed by Milton Rokeach to explain the value states that apply to different cultures. The terminal values are desired end states. The instrumental values are actions we need to take to achieve these terminal values. Table 4.2 lists these two sets of values. (Note: Table 4.2 shown on this slide is an abbreviated list of instrumental and terminal values.).
The LOV scale isolates values with more direct marketing applications. The instrument identifies nine consumer segments based on the values members endorse and relates each value to differences in consumption behaviors.
Another research approach that incorporates values is the means-end chain model. This approach assumes that people link very specific product attributes to terminal values. We choose among alternative means to attain some end state we value. Thus we value products to the extent that they provide the means to some end we desire. A technique researchers call laddering uncovers consumers’ associations between specific attributes and these general consequences.
Figure 4.4 shows three different hierarchical value maps from a study of consumers’ perceptions of cooking oils in three European countries. England and Denmark are shown in the slide.
The United States is truly a melting pot. Our affiliations with ethnic groups contribute to much of our behavior as consumers.
Our group memberships within our society-at-large help to define us. A subculture is a group whose members share beliefs and common experiences that set them apart from others. We all belong to many subcultures, depending on our age, race, ethnic background, and place of residence. People who are part of a microculture freely identify with a lifestyle or aesthetic preference. Microcultures exhibit their own unique set of norms, vocabulary, and product insignias. Microcultures can even gel around fictional characters and events and play a role in defining the extended self.
Ethnicity matters when it comes to marketing, whether in a single country or for brands operating globally. For instance, McDonald’s has tailored its menu in different parts of the US and the world to meet the needs of ethnic subcultures.
An important subcultural difference is how abstract or literal a group is. Sociologists make a distinction between high-context cultures and low-context cultures. In a high-context culture, group members are tightly knit and they infer meanings that go beyond the spoken word. Symbols and gestures are used instead of words to carry the weight of the message. In contrast, people in a low-context culture are more literal. Compared to Anglos, many minority cultures are high-context and have strong oral traditions. This means that consumers are more sensitive to nuances in advertising.
Targeting using such characteristics can be challenging. It’s not always easy to define members of a distinct group and in our society, many people are members of multiple groups. Products that companies market for one ethnic group sometimes gain appeal with others outside the subculture. This is known as deethnicization. There are many food products that are examples of deethnicization, such as bagels.
Acculturation is the process of movement and adaptation to one country’s cultural environment by a person from another country. Acculturation agents are the influences in our environment which affect the process of transitioning from one culture to another that contains components of both the old and new culture. These agents are family and friends, as well as organizations like churches, and even the media. The agents may be from the culture of origin or from the culture of immigration.
African Americans represent a significant racial subculture, making up about 12.3% of the U.S. population in the last census. Although African Americans differ in some important ways, they may not be very different from white consumers. With a few exceptions, both groups have the same overall spending patterns. They allocate about two-thirds of their incomes to housing, transportation, and food.
Hispanic is an umbrella term that describes people of many different backgrounds. About 60% are from Mexico with the next largest group (from Puerto Rico) making up less than 10%. The phrase, Hispanic, also captures Central Americans, Dominicans, South Americans, and Cubans. The segment is relatively easy to find with more than 50% living in the major metropolitan areas of Los Angeles, New York, Miami, San Antonio, San Francisco, and Chicago. However, among many Hispanics, there is a relatively low level of acculturation.
As this slide shows, Hispanic Americans differ substantially from Anglo consumers.
This slide reveals many of the distinguishing characteristics of Asian Americans. This group has a great deal of marketing potential but it is also difficult to target. This is because it is made up of many culturally diverse subgroups that use different languages and dialects. The term Asian refers to 20 ethnic groups.
Religious subcultures have an impact on consumer variables such as personality, attitudes toward sexuality, birthrates and household formation, income, and political attitudes. Church leaders may encourage or discourage consumption of some products. Even churches themselves are being marketed. For instance, megachurches actively market themselves to individuals who are born again and/or seeking a different sense of worship. Importantly, muslims will be more than 25% of the Earth’s population by 2030. Marketing to muslims will require a special attentiveness to religious influences.
Although there is a general consensus on how analysts describe age cohorts, the exact labels and cutoff dates do vary. These are some approximations for the primary categories. The Interbellum generation describes those who are born at the beginning of the 20th century. The Silent Generation describes those who were born between the two World Wars. The War Baby Generation was born during World War II. The Baby Boom Generation was born between 1946 and 1964. Generation X was born between 1965 and 1985. Generation Y was born between 1986 and 2002. Generation Z was born 2003 and later.
Because consumers within an age group confront crucial life changes at roughly the same time, the values and symbolism marketers use to appeal to them can evoke powerful feelings of nostalgia. The table shown in the slide is a scale researchers use to measure the impact of nostalgia on individual consumers.
In 1956, the label teenage entered the generational American vocabulary with Frankie Lymon and the Teenagers became the first pop group to identify themselves with this new subculture. Throughout most of history, a person simply shifted from child to adult without the ritual we have today. The youth market globally is massive. It represents about $100 billion in spending power and much of this money goes to feel-good products like cosmetics and fast food.
Teenagers in every culture grapple with fundamental developmental issues when they transition from childhood to adult. Throughout history young people have coped with insecurity, parental authority, and peer pressure. The Saatchi & Saatchi advertising agency identified four basic conflicts common to all teens. These are listed on the slide and described here. Autonomy versus belonging means that teens want to acquire independence so they try to break away from their families. But at the same time, they want to attach themselves to a support structure. Rebellion versus conformity grasps that teens need to rebel against social standards of appearance and behavior but they need to fit in and be accepted by others. Idealism versus pragmatism means that they tend to view adults as hypocrites whereas they see themselves as sincere. Narcissism versus intimacy means that they tend to obsess about their appearance and needs. However, they also feel the desire to connect with each other.
Generation Y also goes by the labels of Millennials and Echo Boomers. They were born between 1984 and 2002. They may grow up in nontraditional families. Members of Gen Y are jugglers who value being footloose and connected to their “peeps.” Saatchi & Saatchi label this new kind of lifestyle ‘connexity.’ These Millennials are the first generation to grow up with computers at home. They are multitaskers. They truly are digital natives. They use texting and video and create user-generated content.
Modern teens are savvy and marketers must tread lightly when talking to them. The message must be authentic and not condescending. These are the four rules for marketers to abide by when engaging teens.
Tweens are not quite teens but not still kids. They are in-between. They exhibit patterns of behavior from both age groups. Victoria Secret’s Pink lingerie targets tween girls.
College students are hard to reach by conventional media but they can be reached where they live and play.
Generation X got a bad reputation unfairly. Originally they were called slackers and baby busters, but since they’ve grown up, they have been responsible for many culture-changing products like Google, YouTube, and Amazon.
The baby boomer cohort consists of people whose parents established families following the end of World War II and during the 1950s when the peacetime economy was strong and stable. In addition to the direct demand for products and services this group creates, these consumers have also fostered a new baby boom of their own to keep marketers busy in the future. Because it wasn’t as big as the first, we call it a baby boomlet.
Perceived age is how old a person feels and is a better yardstick of age than how old a person is biologically. Researchers measure age by feel-age (how old one feels) and look-age (how old a person looks). Marketers may need to emphasize product benefits rather than age-appropriateness in marketing campaigns for older adults because the older we get, the younger we feel relative to our actual age.
It is important for marketers to understand the psyche of older people. Researchers point to a set of key values relevant to mature consumers. These include autonomy, connectedness, and altruism.
Most marketers agree that it is important to be a global marketer in order to survive in the market. But they also realize there are serious challenges in global marketing. Most governments are working to help the movement of goods and services by creating changes in their government. Consider the European Union’s effort to form a single market and the establishment of NAFTA, which aids the U.S., Canada, and Mexico in trade relations. These are two strong examples of the government’s role in expanding business. This web link takes you to an English-language homepage of the European Union’s website. In addition to changes in these large countries, marketers must realize that about 85% of the world’s population live in what are classified as emerging markets and include Brazil, Russia, India, and China to name a few. These countries, like the rest of the world, are being exposed to cultures from other countries and have increased interest in global products.
According to BusinessWeek, Coca-Cola is the most valuable brand in the world with a brand value of almost $67 billion. This web link goes to the Coca-Cola homepage. As with many global brands, the first question you see when you enter the web site is “Which country are you from?”
Consumers will differ in their perceived image of a product based on the country of origin (COO) . COO often makes it easier for a consumer to make a decision. For example, it might be easier to pick a wine if you just choose a French wine because you know France is known for its wine. Research has shown a tie between NFC (need for cognition) and country of origin assessment.
There are some groups of consumers which can be labeled high-animosity consumers when considering country of origin. The Chinese are reacting to their occupation in WWII by Japan, the Jewish consumers to the Holocaust, and some New Zealand and Australian consumers to France’s nuclear tests in the South Pacific.
A Mexican study decomposed COO into these three entities. Origin is now further broken into where the product was designed, assembled, and/or where the raw materials are produced. The results of the study showed differences between Mexicans and Americans and differences in age in their country-of-origin effects. On the next slide, you can see a model of COD and COM.
In this model, we can see the impact of COD and COM on the perception of branded products. You can see the impact of COD and COM on perceived product quality.
Cross-cultural consumer analysis , the similarity and differences between consumers in several nations, is important when deciding whether or not to enter a foreign market. The analysis carefully considers the psychological, social, and cultural similarities and differences among people.
The more similar two nations, the more likely the marketer can use similar marketing strategies. As a basis of similarity, marketers often look to see if a country is more collective in its culture vs. individualistic. This is really the difference between a “we” culture and an “I” culture. In a few slides, you can see detailed differences between a Chinese and an American consumer.
We can see some of the traits that are examined are values, faith, and attitude to authority.
The middle class will grow globally with the largest growth coming from China and India. This creates significant opportunity to marketers who provide products and services for this middle class. In some countries, the middle class is very large. South Korea is considered to have more than 90 percent of its population as middle class.
The interesting thing about the teen market is the similarities teens share even when they live in vastly different countries. Marketers realize that teens in most countries value their cell phone and online sources.
We have learned in previous chapters that when someone moves to a new country, they go through an acculturation process where they learn the customs, rituals, and attitudes. Marketers must put themselves through an acculturation process before trying to market to a new country. If they don’t truly understand the values, beliefs, and customs of the society, they cannot really market products effectively.
Cross-cultural analysis is very difficult for many reasons. This chart gives some examples of the basic issues that multinational marketers must consider when planning cross-cultural research.
Some marketers will argue that since people are becoming more alike in so many countries, that one marketing strategy, with some small adjustments in language, are cost effective and a better idea. Other marketers believe there are national borders and that marketing strategies must stay local. This slide lists several issues which will be explored in more detail on the following slides.
World brands are often created with very high-end products targeted to an affluent market. But beyond this, other marketers, including P&G, have moved to a world brand for a small percent of their product portfolio.
Here is a model of cross-border diffusion of popular culture. Some interesting parts of this model include promotion and distribution and the central role of the early adopter.
Research tells us that global brands are indeed viewed differently than local brands. Because a brand is global, consumers worldwide must believe in it so it must be of good quality. The global myth characteristic is related to how consumers feel about themselves. The global brands make them feel like a citizen of the world, whereas a local brand gives them less power and identity. Finally, global brands tend to show more social responsibility than local brands. In part because of their sales revenue and their investment in many countries, they are viewed as more socially responsible.
At first, one would think the power of a global brand would enable it to be more successful with brand extensions. This does not turn out to be true because people are not holistic in their thinking – they do not take the overall brand name and apply it to any product group – it remains specific for the product category in which it built its reputation.
Some marketers do not want a common message, positioning, and product offering throughout the world. Some, including McDonald’s, Levi’s, and Reebok, prefer to use multi-local strategies. They create different brand images for their products for different countries. The best approach is often to combine an overall global strategy with local executions which match the cultural differences of the target countries. This gives the power of a world brand combined with local marketing strategies to adapt to the different cultures. This web link will take you to a Japanese McDonald's menu which Google will translate for you. Notice how many of the products are available in other countries yet a few are unique to Japanese tastes.
Many frameworks have been created to help marketers decide whether they should focus on global, local, or mixed strategies. The framework on the following slide will guide you through some of this decision making.
The two main areas a marketer must consider in localized marketing strategies are their product and communications strategy. Can they sell the same product in each country or do local differences require a localized product? Food products often need to be localized as countries differ in their response to such flavors as spiciness, saltiness, sweetness, and use of ingredients. Product standardization works well on technical products. The localization of the message is a decision that is distinct from that of the product. It will depend heavily on language issues and differences in involvement level of the product.
This is the best way of looking at global marketing, by examining psychographic groups. For example, the percent of the U.S. female population that works outside the home is the same as the percent of the Japanese female population. But when we look at the psychographics of these groups, we find that they have very different consumer behavior and attitudes to certain products.
After extensive research of 35,000 customers in 35 countries, researchers created these six global value groups or segments. The strivers are ambitious and materialistic, the devouts responsible and respectful, the altruists unselfish in their concern for others, the intimates focus on social relationships, the fun seekers are young in age and outlook and value a good time, and the creatives seek knowledge and have interests in books and new media.
One survey revealed that 8 in 10 consumers said they believe it’s important to buy green brands and products from green companies. Analysts call this new value conscientious consumerism. A sizeable number of people are interested in being more green. Marketers point to a segment called LOHAS – an acronym for lifestyles of health and sustainability.
The carbon footprint measures, in units of carbon dioxide, the impact human activities have on the environment in terms of the amount of greenhouse gases they produce. The average American is responsible for 9.44 tons of CO2 per year! As the figure shows, a carbon footprint comes from the sum of two parts, the direct , or primary, footprint and the indirect , or secondary, footprint: 1) The primary footprint is a measure of our direct emissions of CO2 from the burning of fossil fuels, including domestic energy consumption and transportation (e.g., cars and planes). 2 The secondary footprint is a measure of the indirect CO2 emissions from the whole life cycle of products we use, from their manufacture to their eventual breakdown.
Our possessions play a central role in our lives and our desire to accumulate them shapes our value systems. A value that’s related to materialism is cosmopolitanism. Researchers define a cosmopolitan as someone who tries to be open to the world and who strives for diverse experiences.
Enu consumer behaviour 260812
Go Global !Global Economic Environment :Consumer Behaviour andCulture By Stephen Ong Edinburgh Napier University Business School firstname.lastname@example.org Visiting Professor, College of Management, Shenzhen University 26 August 2012
Agenda1. Consumer Behaviour & Motivation2. Consumer Decision Making Process3. Culture & Subcultures4. Global Consumers
Learning Objectives To explain the significance of marketing communications in relation to consumer behaviour To identify and explain the personal factors and external factors that influence consumer behaviour To explain the decision- making process and how marketeers can influence buyer behaviour To understand the implications of culture on global marketing
What is Consumer Behaviour?Consumer behaviour: the study of the processes involved when individuals or groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy needs and desires.
To WhichSegment ofConsumers WillThis Ad Appeal? A Segment ofConsumers Who areEnvironmentally Concerned Chapter One Slide 4
Consumer BehaviourThe behaviour that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs. Chapter One Slide
Consumers Consumers use products to help them define their identities
Consumer Identity as an Aid toMarketers Consumers segmented by demographics and psychographics Consumers understood in part based on their consumption communities and reference groups Brands target consumers using market segmentation strategies Consumers may choose brands that match with their own identities 1-9
Consumer Behaviour Consumer behaviour is a process.
The Marketing ConceptEmbracing the MarketingConcept Consumer Research The process and tools used to study consumer behavior Segmentation Market Targeting Positioning
The Marketing ConceptImplementing theMarketing Concept Consumer Research Process of dividing the market into subsets of consumers Segmentation with common needs or Market Targeting characteristics Positioning Chapter One Slide
The Marketing ConceptImplementing theMarketing Concept Consumer Research Segmentation The selection of one or more of the segments identified to Market Targeting pursue Positioning
The Marketing ConceptImplementing theMarketing Concept Developing a distinct image for the product in the mind of the consumer Successful positioning • Consumer Research includes: • Segmentation Communicating the benefits of the • Market Targeting product • Positioning Communicating a unique selling proposition
Customer Value, Satisfaction,Trust, and Retention
Successful RelationshipsValue, Satisfaction,Trust, and Retention Defined as the ratio between the customer’s perceived benefits and the resources used to obtain those benefits Customer Value Perceived value is relative and subjective Customer Satisfaction Developing a value proposition is critical Customer Trust Customer Retention
Discussion QuestionsHow does McDonald’s create value for the consumer?How do they communicate this value?
Successful RelationshipsValue, Satisfaction,Trust, and Retention The individuals perception of the performance of the product or service in relation to his or her expectations. Customer Value Customer groups based on loyalty Customer include loyalists, apostles, Satisfaction defectors, terrorists, hostages, and mercenaries Customer Trust Customer Retention
Successful RelationshipsValue, Satisfaction,Trust, and Retention • Establishing and maintaining trust is essential. • Trust is the • • Customer Value Customer foundation for Satisfaction maintaining a long- • Customer Trust • Customer Retention standing relationship with customers.
Successful Relationships The objective of providing value is to retain highly satisfied customers.Value, Satisfaction, Loyal customers are keyTrust, and Retention They buy more products They are less price sensitive Servicing them is Customer Value Customer Satisfaction cheaper Customer Trust They spread positive Customer Retention word of mouth
Top 10 Ranked U.S. Companies in Terms ofConsumers’ Trust and Respect of Privacy Top 10 Companies • American Express • eBay • IBM • Amazon • Johnson & Johnson • Hewlett-Packard • U.S. Postal Service • Procter and Gamble • Apple • Nationwide
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
THE TRADITIONAL VALUE- AND RETENTION- MARKETING CONCEPT FOCUSED MARKETINGMake only what you can sell instead Use technology that enablesof trying to sell what you make. customers to customize what you make.Do not focus on the product; focus on Focus on the product’s perceivedthe need that it satisfies. value, as well as the need that it satisfies.Market products and services that Utilize an understanding of customermatch customers’ needs better than needs to develop offerings thatcompetitors’ offerings. customers perceive as more valuable than competitors’ offerings.Research consumer needs and Research the levels of profitcharacteristics. associated with various consumer needs and characteristics.Understand the purchase behavior Understand consumer behavior inprocess and the influences on relation to the company’s product.consumer behavior.Realize that each customer Make each customer transaction parttransaction is a discrete sale. of an ongoing relationship with the customer.
The Mobile Consumer Penetration of Internet Usage Among Mobile Subscribers in 16 Countries - FIGURE 1.3• Wireless Media Messages will expand as: – Flat-rate data traffic increases – Screen image quality is enhanced – Consumer-user experiences with web applications improve
Consumer and the InternetThe Web is changing consumer behaviour.
Social Media 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. 1-37
For Reflection Did you know If you were paid $1 for every time an article was posted on Wikipedia, you’d earn $156.23/hour? 80% of companies use LinkedIn as their primary recruiting tool? More than 1.5 billion pieces of content are shared on Facebook daily?
A Simple Model of Consumer Decision Making -Figure 1.4
Consumer Beliefs and ActionsOur beliefs and actions as consumers strongly connect to other issues in our lives.
Marketing Ethics and Public Policy Business ethics are rules of conduct that guide actions in the marketplace There are cultural differences in what is considered ethical. 1-42
Do Marketers Create Artificial Needs? Objective of marketing: create awareness that needs exist, not to create needs versus Want: one way that Need: a basic society has taught us biological motive that the need can be satisfied 1-43
Are Advertising & Marketing Necessary?Does advertising foster materialism?Products are designed to meet existing needs;Advertising only helps to communicate their availability 1-44
Do Marketers Promise Miracles?Advertisers simply do not know enough about people to manipulate them
Perspectives on Consumer Behaviour There are two major perspectives on consumer behavior: Positivist approach Interpretivist approach 1-46
Table 1.3Positivist versus Interpretivist ApproachesAssumptions Positivist Approach Interpretivist ApproachNature of reality Objective, tangible Socially constructed Single MultipleGoal Prediction UnderstandingKnowledge Time free Time-boundgenerated Context-independent Contest dependentView of Existence of real causes Multiple, simultaneouscausality shaping eventsResearch Separation between Interactive, cooperativerelationship researcher and subject with researcher being part of phenomenon under study
What Kind of ConsumerDoes This Ad Target? This Ad Targets Runners Who Are Physically Active People and Also Relish the Outdoors.
Why Segmentation is Necessary Consumer needs differs Differentiation helps products compete Segmentation helps identify media
Positioning The value proposition, expressed through promotion, stating the product’s or service’s capacity to deliver specific benefits.
Consumption-Specific SegmentationUsage-Behaviour Usage rate Awareness status Level of involvement
Consumption-Specific Segmentation Usage-Behavior Usage-situation segmentation Segmenting on the basis of special occasions or situations Example : When I’m away on business, I try to stay at a suites hotel.
Which Consumption-Related Segmentation Is Featured in This Ad?This is anExample of aSituationalSpecial UsageSegmentation.
Benefits SegmentationBenefits sought represent consumer needsImportant for positioningBenefits of media Chapter Three Slide 28
Benefits Visiting Tourists Seek in NationalPark Segment Description Environmentalists Interested in an unpolluted, un-spoilt natural environment and in conservation. Not interested in socializing, entertainment, or sports. Desire authenticity and less man-made structures and vehicles in the park. Want-it-all Value socializing and entertainment more than Tourists conservation. Interested in more activities and opportunities for meeting other tourists. Do not mind the “urbanization” of some park sections. Independent Looking for calm and unpolluted environment, Tourists exploring the park by themselves, and staying at a comfortable place to relax. Influenced by word of mouth in choosing travel destinations.
Brand Loyalty and Relationships• Brand loyalty includes: – Behaviour – Attitude• Frequency award programs are popular• Customer relationships can be active or passive• Retail customers seek: – Personal connections vs. functional features• Banking customers seek: – Special treatment – Confidence benefits – Social benefits
ImplementingSegmentationStrategiesMicro- and behavioural targeting Personalized advertising messages Narrowcasting Email Mobile Use of many data sources
Consumer Motivation It is important for marketers to recognize that products can satisfy a range of consumer needs.
Motivation as a Psychological Force• Motivation is the driving force within individuals that impels them to action.• Needs are the essence of the marketing concept. Marketers do not create needs but can make consumers aware of needs.
Model of the Motivation Process75 Chapter Four Slide
Needs and Motivation Needs may be utilitarian or hedonic The desired end state is the goal The degree of arousal is drive Personal and cultural factors combine to create a want – one manifestation of a need Motivation is described in terms of strength and direction
Motivational Strength Motivational strength: degree of willingness to expend energy to reach a goal Drive theory: biological needs that produce unpleasant states of arousal (e.g., hunger) Expectancy theory: behaviour is pulled by expectations of achieving desirable outcomes
What Do We Need? Biogenic Needs Psychogenic Needs Utilitarian Needs Hedonic Needs
Motivational Conflicts Goal valence (value): consumer will: Approach positive goal Avoid negative goal Example: Partnership for a Drug-Free America communicates negative consequences of drug addiction for those tempted to start
Types of Motivational Conflicts • Two desirable alternatives • Cognitive dissonance • Positive & negative aspects of desired product • Guilt of desire occurs • Facing a choice with two undesirable alternatives
Specific Needs and Buying Behavior NEED FOR ACHIEVEMENT NEED FOR AFFILIATION Value personal Want to be with other people accomplishment Focus on products that are Place a premium on products used in groups (alcoholic that signify success (luxury beverages, sports bars) brands, technology products) NEED FOR POWER NEED FOR UNIQUENESS Control one’s environment Assert one’s individual identity Focus on products that allow them to have mastery over Enjoy products that focus on surroundings (muscle cars, their unique character loud boom-boxes) (perfumes, clothing)
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
How Does this AdAppeal toOne’s Goals? It Appeals to Several Physical Appearance-related 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
Blogger’s Motivation - Table 4.1Construct ItemsBlogging for I use my blog to free my mind when I am moody.self-expressing I express myself by writing in my blog. My blog is the place where I express what I feel.Blogging for I use my blog as my diary to document my life.life By writing text and posting video/audio files, I keep adocumenting record of my life.Blogging for I’m willing to comment on what other bloggers say.commenting I’d like to respond to other blogs that I read (no matter if I know of the blogger or not). I’d like to receive people’s comments on what I post on my blog.Blogging for Blogging helps me to make more like-minded friends.forum In my blogroll I have friends with whom I can share things.participating By blogging I interact with a set of blogs that have contents similar to what I put in my blog.Blogging for Blogging helps me extract information behind events thatinformation interest me.seeking 87 Blogging helps me explore more information about products and/or services. To me it is convenient to search for information by Chapter Four Slide
Rational versus EmotionalMotives 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 Dynamics 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 Chapter Four Slide
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 Chapter Four Slide
Frustration Failure to achieve a goal may result in frustration. Some adapt; others adopt defense mechanisms to protect their ego. Chapter Four Slide
Defense Mechanisms- Table 4.2 (excerpt)Construct ItemsAggression In response to frustration, individuals may resort to aggressive behavior in attempting to protect their self-esteem. The tennis pro who slams his tennis racket to the ground when disappointed with his game or the baseball player who physically intimidates an umpire for his call are examples of such conduct. So are consumer boycotts of companies or stores.Rationaliza People sometimes resolve frustration by inventingtion plausible reasons for being unable to attain their goals (e.g., not having enough time to practice) or deciding that the goal is not really worth pursuing (e.g., how important is it to achieve a high bowling 92 score?).Regression An individual may react to a frustrating situation with Chapter Four childish or Slide
How Does This AdArouse One’s Needs? The Ad Is Designed to Arouse One’s Yearning for an Adventurous Vacation by Appealing to the Sense of Touch Chapter Four 94 Slide
Philosophies Concerned with Arousal of Motives Behaviourist School Behaviour is response to stimulus Elements of conscious thoughts are to be ignored Consumer does not act, but reacts Cognitive School Behaviour is directed at goal achievement Needs and past experiences are reasoned, categorized, and transformed into attitudes and beliefs
Types and Systems of NeedsHenry Murray’s 28 psychogenic needsAbraham Maslow’s hierarchy of needsA trio of needs Chapter Four Slide
A Trio of NeedsPower individual’s desire to control environmentAffiliation need for friendship, acceptance, and belongingAchievement need for personal accomplishment closely related to egoistic and self- actualization needs 104
To Which of the Trioof Needs Does This Ad Appeal? The Affiliation Needs Of Young, Environmentally Concerned Adults Chapter Four 105 Slide
To Which of the Trio of Needs Does This Ad Appeal?Power And Achievement Needs Chapter Four 106 Slide
Consumer Involvement Involvement: perceived relevance of an object based on one’s needs, values, and interests We get attached to products: “All in One” restaurant tattoo on consumer’s head Lucky magazine for women who obsess over shopping A man tried to marry his car when his fiancée dumped him
Levels of Involvement: From Inertia to Passion Inertia is consumption at the low end of involvement; decisions made out of habit (lack of motivation) Flow state occurs when consumers are truly involved Sense of control Concentration Mental enjoyment Distorted sense of time
Table 4.1 Measuring Involvement To me (object to be judged) is: 1. important _:_:_:_:_:_:_ unimportant 2. boring _:_:_:_:_:_:_ interesting 3. relevant _:_:_:_:_:_:_ irrelevant 4. exciting _:_:_:_:_:_:_ unexciting 5. means nothing _:_:_:_:_:_:_ means a lot 6. appealing _:_:_:_:_:_:_ unappealing 7. fascinating _:_:_:_:_:_:_ mundane 8. worthless _:_:_:_:_:_:_ valuable 9. involving _:_:_:_:_:_:_ uninvolving 10. not needed _:_:_:_:_:_:_ needed
Purchase Situation Involvement Purchase situation involvement: differences that occur when buying the same object for different contexts. Example: wedding gift For boss: purchase expensive vase to show that you want to impress boss For cousin you don’t like: purchase inexpensive vase to show you’re indifferent
Consumer Decision Making Extensive Problem Solving A lot of information needed Must establish a set of criteria for evaluation Limited Problem Solving Criteria for evaluation established Fine tuning with additional information Routinized Response Behavior Usually review what they already know
What Would a Pet Owner Need to Know in Order to Make a Decision About Buying Pet Insurance?Do I Need It? How Do IGet More Information?
Models of Consumers: Four Viewsof Consumer Decision Making An Economic View A Passive View A Cognitive View An Emotional View Chapter Fifteen Slide
Process - Need Recognition Usually occurs when consumer has a “problem” Need recognition styles Actual state Desired state
Prepurchase Search Begins with internal search and then moves to external search The impact of the Internet There are many factors that increase search Product factor Situational factors Social acceptability Consumer factors
Evaluation of Alternatives Evoked set Criteria used for evaluating brands Consumer decision rules Decisions by functionally illiterate population Going online for decision-making assistance Lifestyles as a consumer decision strategy Incomplete information Applying decision rules Series of decisions Decision rules and marketing strategy
Issues in Alternative Evaluation• Evoked Set• Criteria used for evaluating brands• Consumer decision rules and their application• Decisions by functionally illiterate population• Going online for decision-making assistance• Lifestyles as a consumer decision strategy• Incomplete information• Applying Decision Rules• Series of decisions• Decision rules and marketing strategy Chapter Fifteen Slide
Consumer Decision Rules• Compensatory – evaluates each brand in terms of each relevant attribute and then selects the brand with the highest weighted score.• Noncompensatory – positive evaluation of a brand attribute does not compensate for a negative evaluation of the same brand on some other attribute – Conjunctive, disjunctive, or lexicographic Chapter Fifteen Slide
Hypothetical Use of Decision RulesDecision Rule Mental StatementCompensatory I selected the netbook that came out bestrule when I balanced the good ratings against the bad ratingsConjunctive rule I selected the netbook that had no bad featuresDisjunctive rule I picked the netbook that excelled in at least one attributeLexicographic rule I looked at the feature that was most important to me and chose the netbook that ranked highest on that attributeAffect referral I bought the brand with the highest overallrule rating Chapter Fifteen 122 Slide
Issues in Alternative Evaluation• Evoked Set• Criteria used for evaluating brands• Consumer decision rules and their application• Decisions by functionally illiterate population• Going online for decision-making assistance• Lifestyles as a consumer decision strategy• Incomplete information• Applying Decision Rules• Series of decisions• Decision rules and marketing strategy
The Decision Process forFunctionally Illiterate Consumers
Issues in Alternative Evaluation• Evoked Set• Criteria used for evaluating brands• Consumer decision rules and their application• Decisions by functionally illiterate population• Going online for decision-making assistance• Lifestyles as a consumer decision strategy• Incomplete information• Applying Decision Rules• Series of decisions• Decision rules and marketing strategy
Coping with Missing Information Delay decision until missing information is obtained Ignore missing information and use available information Change the decision strategy to one that better accommodates for the missing information Infer the missing information Chapter Fifteen Slide
Issues in Alternative Evaluation• Evoked set• Criteria used for evaluating brands• Consumer decision rules and their application• Decisions by functionally illiterate population• Going online for decision making assistance• Lifestyles as a consumer decision strategy• Incomplete information• Applying Decision Rules• Series of decisions• Decision rules and marketing strategy
Postpurchase Evaluation Actual Performance Matches Expectations Neutral Feeling Actual Performance Exceeds Expectations Positive Disconfirmation of Expectations Performance Is Below Expectations Negative Disconfirmation of Expectations Chapter Fifteen Slide
Gifting BehaviorGifting is an act of symboliccommunication, with explicit andimplicit meanings ranging fromcongratulations and love, toregret, obligation, anddominance. Chapter Fifteen Slide
Reported Circumstances and Motivations forSelf-Gift Behavior CIRCUMSTANCES MOTIVATIONS Personal accomplishment To reward oneself Feeling down To be nice to oneself Holiday To cheer up oneself Feeling stressed To fulfill a need Have some extra money To celebrate Need To relieve stress Had not bought for self in a while To maintain a good feeling Attainment of a desired goal To provide an incentive toward a goal Others Others
Gifting RelationshipsGIFTING DEFINITION EXAMPLERELATIONSHIPIntergroup A group giving a gift A Christmas gift from one family to to another group another familyIntercategory An individual giving a A group of friends chips in to buy a gift to a group or a new mother a baby gift group giving a gift to an individualIntragroup A group giving a gift A family buys a VCR for itself as a to itself or its Christmas gift membersInterpersonal An individual giving a Valentine’s Day chocolates presented gift to another from a boyfriend to a girlfriend individualIntrapersonal Self-gift A woman buys herself jewelry to cheer herself up
Consuming and Possessing Consumers find pleasure in possessing, collecting, or consuming Products have special meanings and memories 133
Marketing aimed at creating strong, lasting relationships with a core group of customers by makingRelationship them feel good about Marketing the company and by giving them some kind of personal connection with the business.
Culture Satisfies NeedsFood and ClothingNeeds vs. Luxury Chapter Eleven 142 Slide
In Terms of “Culture,” Do You Consider ThisProduct to Be a “Good Morning” Beverage?Why or Why Not? Many Will Say “NO” Due to Lack ofNutritional Value and Competing Products (Coffee). 143
Culture Is LearnedIssues Enculturation Enculturation and The learning of one’s own acculturation culture Language and symbols Acculturation Ritual The learning of a new or foreign culture Sharing of culture
Culture Is LearnedIssues Without a common language ,shared meaning could not exist Marketers must choose appropriate symbols in advertising Enculturation and Marketers can use “known” acculturation symbols for associations Language and symbols Ritual Sharing of culture
How Does a Symbol Conveythe Product’s AdvertisedBenefits? They Provide Additional Meaning to the Ad. Chapter Eleven Slide
Culture Is Learned Issues A ritual is a type of symbolic activity consisting of a series of steps Rituals extend over the human life Enculturation and cycle acculturation Marketers realize that rituals often Language and symbols involve products (artifacts) Ritual Sharing of culture 147Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Eleven Slide
Selected Rituals and Associated Artifacts SELECTED RITUALS TYPICAL ARTIFACTS Wedding White gown (something old, something new, something borrowed, something blue) Birth of child U.S. Savings Bond, silver baby spoon Birthday Card, present, cake with candles 50th Wedding anniversary Catered party, card and gift, display of photos of the couple’s life together Graduation Pen, U.S. Savings Bond, card, wristwatch Valentine’s Day Candy, card, flowers New Year’s Eve Champagne, party, fancy dress
Culture Is LearnedIssues To be a cultural characteristic, a Enculturation and belief, value, or practice must be acculturation shared by a significant portion of the society Language and symbols Culture is transferred through Ritual family, schools, houses of Sharing of Culture worship, and media Chapter Eleven Slide
Facial Beauty Ritual of a Young TVAdvertising Sales Representative1. I pull my hair back with a headband.2. I take all of my makeup off with L’Oreal eye makeup remover.3. Next, I use a Q-tip with some moisturizer around my eyes to make sure all eye makeup is removed.4. I wash my face with Noxzema facial wash.5. I apply Clinique Dramatically Different Lotion to my face, neck, and throat.6. If I have a blemish, I apply Clearasil Treatment to the area to dry it out.6. Twice weekly (or as necessary) I use Aapri Facial Scrub to remove dry and dead skin.7. Once a week, I apply Clinique Clarifying Lotion 2 with a cotton ball to my face and throat to remove deep-down dirt and oils.8. Once every three months, I get a professional salon facial to deep-clean my pores. Chapter Eleven Slide
Culture is Dynamic Evolves because it fills needs Certain factors change culture Technology Population shifts Resource shortages Wars Changing values Customs from other countries 151
The Measurement of Culture Content Analysis Consumer Fieldwork Value Measurement Instruments Chapter Eleven Slide
A method for systematically analyzing the content of verbal and/or pictorialContent communication. TheAnalysis method is frequently used to determine prevailing social values of a society. Chapter Eleven Slide
Which Cultural Value IsPortrayed, and How So? Progress – The Fridge has Superior Design Chapter Eleven Slide
Which CulturalValue Fitness andIs This Ad Health –Stressing, andHow So? Low Calorie
American Core ValuesCriteria for Value SelectionThe value must be pervasive.The value must be enduring.The value must be consumer- related. Chapter Eleven Slide
Consumer Values Value: a belief that some condition is preferable to its opposite Example: looking younger is preferable to looking older Products/services = help in attaining value-related goal We seek others that share our values/ beliefs Thus, we tend to be exposed to information that supports our beliefs
Core Values Core values: values shared within a culture Enculturation: learning the beliefs and values of one’s own culture Acculturation: learning the value system and behaviors of another culture
Hofstede’s Cultural Dimensions Power distance Individualism Masculinity Uncertainty avoidance Long-term orientation
Table 4.2 Terminal and InstrumentalValues (Milton Rokeach) Instrumental Value Terminal Value Ambitious A comfortable life Capable A sense of accomplishment Self-controlled Wisdom
List of Values (LOV) Identifies nine consumer segments based on values they endorse; and Relates each value to differences in consumption behaviors Example: those who endorse sense of belonging read Reader’s Digest and TV Guide drink and entertain more, and prefer group activities
Means-End Chain Model Very specific product attributes are linked at levels of increasing abstraction to terminal values Alternative means to attain valued end states Laddering technique uncovers consumers’ associations between specific attributes and general consequences
SubculturesOur identification with microcultures that reflect a shared interest in some organization or activity influences what we buy.
Subcultures, Microcultures,and Consumer Identity Consumers’ lifestyles are affected by group membership within the society-at-large Subcultures of age, race/ethnicity, place of residence Microcultures share a strong identification with an activity or art form Have own unique set of norms, vocabulary, and product insignias
Ethnic and Racial Subcultures An ethnic subculture is a self-perpetuating group of consumers who share common cultural or genetic ties where both its members and others recognize it as a distinct category. In countries like Japan, ethnicity is synonymous with the dominant culture because most citizens claim the same cultural ties.
The Context of Culture High-Context Low-Context
Is Ethnicity a Moving Target? Defining/targeting an ethnic group is not always so easy (“melting pot” society) Deethnicization occurs when a product we associate with a specific ethnic group detaches itself from its roots and appeals to other groups as well
What is Acculturation? Acculturation occurs, at least in part, with the influence of acculturation agents Family Friends Church organizations Media
The Progressive Learning Model Assumes that people gradually learn a new culture as they increasingly come into contact with it When people acculturate they will blend their original culture and the new one Consumers who retain much of their original ethnic identity differ from those who assimilate
African Americans Overall spending patterns of blacks and whites are roughly similar Household income and educational levels rising for African Americans Differences in consumption behaviors subtle but important
Hispanic Americans “Hispanic” = many different backgrounds Hispanics are: Brand loyal Highly concentrated geographically by country of origin (easy to reach)
Distinguishing Characteristics ofthe Hispanic Market Looking for spirituality, stronger family ties, and more color in their lives Large family size of Hispanic market Spend more on groceries Shopping is a family affair Regard clothing children well as matter of pride Convenience/saving time is not important to Hispanic homemaker
Asian Americans Most affluent, best educated Most brand-conscious but least brand loyal Made up of culturally diverse subgroups that speak many different languages/dialects
Religion and Consumption Organized religion and product choices Born-again consumers Islamic marketing
Generational Categories The Interbellum Generation The Silent Generation The War Baby Generation The Baby Boom Generation Generation X Generation Y Generation Z
Nostalgia ScaleScale ItemsThey don’t make ‘em like they used to.Things used to be better in the good old days.Products are getting shoddier and shoddier.Technological change will ensure a brighter future (reverse coded).History involves a steady improvement in human welfare (reverse coded).We are experiencing a decline in the quality of life.Steady growth in GNP has brought increased human happiness (reverse coded).Modern business constantly builds a better tomorrow (reverse coded).
The Youth Market “Teenage” first used to describe youth generation in 1950s Youth market often represents rebellion $100 billion in spending power
Teen Values, Conflicts, andDesires Four basic conflicts common among all teens: Autonomy versus belonging Rebellion versus conformity Idealism versus pragmatism Narcissism versus intimacy
Getting to Know Gen Y “Echo Boomers” = “millennials” = Gen Yers Make up one-third of U.S. population Spend $170 billion a year First to grow up with computers in their homes, in a 500-channel TV universe
Rules of Engagement Rule #1: Don’t talk down Rule #2: Don’t try to be what you’re not Rule #3: Entertain them. Make it interactive and keep the sell short Rule #4: Show that you know what they’re going through but keep it light
Tweens Children ages 8 to 14 Spend $14 billion a year on clothes, CDs, movies (“feel- good” products) Exhibit characteristics of both children and adolescents Victoria Secret’s Pink lingerie line for younger girls (“Team Pink”)
Big (Wo)Man on Campus College market is attractive Many students have extra cash/free time Undeveloped brand loyalty College students are hard to reach via conventional media Online advertising is very effective Sampler boxes Wall media Spring break beach promotions
Baby Busters: “Generation X” Consumers born between 1966 and 1976 Today’s Gen Xer is both values-oriented and value-oriented Desire stable families, save portion of income, and view home as expression of individuality
Baby Boomers Consumers born between 1946 and 1965 Active and physically fit Currently in peak earning years Food, apparel, and retirement programs “Midlife crisis” products 13-187
Perceived Age: You’re Only as Old as You Feel Age is more a state of mind than of body Perceived age: how old a person feels as opposed to his or her chronological age “Feel-age” “Look-age” The older we get, the younger we feel relative to actual age
Values of Older Adults Autonomy: want to be self-sufficient Connectedness: value bonds with friends and family Altruism: want to give something back to the world 13-189
The Imperative to Be Multinational• Global Trade Agreements – EU – NAFTA• Winning Emerging Markets• Acquiring Exposure to Other Cultures• Country-of-origin Effects
Under WhatCircumstances WouldThis English-Language Ad AttractAffluent Consumersfrom LargelyNon-EnglishSpeaking Countries? If They Frequently Visit the United States and Regularly Read American Upscale Magazines
The Best Global Brands 1. Coca-Cola 2. IBM 3. Microsoft 4. GE 5. Nokia 6. Toyota 7. Intel 8. McDonald’s 9. Disney 10.Google
Country of Origin Effects: Positive Many consumers may take into consideration the country of origin of a product. Country-of-origin commonly: France = wine, fashion, perfume Italy = pasta, designer clothing, furniture, shoes, and sports cars Japan = cameras and consumer electronics Germany = cars, tools, and machinery
Country of Origin Effects: Negative Some consumers have animosity toward a country People’s Republic of China has some animosity to Japan Jewish consumers avoid German products New Zealand and Australian consumers boycott French products
Other Country-of-Origin EffectsMexican study uncovered: Country-of-design (COD) Country-of-assembly (COA) Country-of-parts (COP)
Conceptual Model of COD and COM 196 Chapter Thirteen 196 Slide
The effort to determine to whatCross-Cultural extent the Consumer consumers of two Analysis or more nations are similar or different.
Cross-Cultural Consumer Analysis Issues Similarities and differences among people The greater the similarity between nations, the more The growing global middle feasible to use relatively similar class marketing strategies The global teen market Marketers often speak to the Acculturation same “types” of consumers globally
Comparisons of Chinese andAmerican Cultural Traits Chinese Cultural Traits American Cultural Traits Centered on Confucian Individual centered doctrine Emphasis on self-reliance Submissive to authority Primary faith in Ancestor worship rationalism Values a person’s duty to Values individual family and state personality
Cross-Cultural Consumer AnalysisIssues Similarities and differences among people The growing global middle Growing in Asia, South class America, and Eastern Europe The global teen market Marketers should focus on these markets Acculturation
Cross-Cultural Consumer Analysis Issues There has been growth in an affluent global teenage and young adult market. Similarities and differences among people They appear to have The growing global middle similar interests, class desires, and The global teen market consumption behavior Acculturation no matter where they live. Chapter Thirteen Slide
Cross-Cultural Consumer Analysis Issues Similarities and differences among people Marketers must learn The growing global middle everything that is relevant class about the usage of their The global teen market product and product Acculturation categories in foreign countries
Research Issues in Cross-Cultural AnalysisFACTORS EXAMPLESDifferences in language and Words or concepts may notmeaning mean the same in two different countries.Differences in market The income, social class, age,segmentation opportunities and sex of target customers may differ dramatically in two different countries.Differences in consumption Two countries may differpatterns substantially in the level of consumption or use of products or services.Differences in the perceived Two nations may use orbenefits of products and services consume the same product in Copyright 2010 Pearson Education, 203 Inc. Publishing as Prentice Hall very different ways. Chapter Thirteen Slide
Table (continued)FACTORS EXAMPLESDifferences in the criteria for The benefits sought from aevaluating products and services service may differ from country to country.Differences in economic and The “style” of family decisionsocial conditions and family making may vary significantlystructure from country to country.Differences in marketing The types and quality of retailresearch and conditions outlets and direct-mail lists may vary greatly among countries.Differences in marketing The availability of professionalresearch possibilities consumer researchers may vary considerably from countryEducation, Copyright 2010 Pearson to 204 country. Inc. Publishing as Prentice Hall Chapter Thirteen Slide
Alternative Multinational Strategies:Global Versus Local Favouring a World Brand Are Global Brands Different? Multinational Reactions to Brand Extensions Adaptive Global Marketing Frameworks for Assessing Multinational Strategies 205
Products that are manufactured, packaged, andWorld positioned the sameBrands way regardless of the country in which they are sold.
Are Global Brands Different?According to a survey – yesGlobal brands have: Quality signal Global myth Social responsibility
Multinational Reactions toBrand ExtensionsA global brand does not always have success with brand extensionsExample Coke brand extension – Coke popcorn • Eastern culture saw fit and accepted the brand extension • Western culture did not see fit
Adaptive Global Marketing Adaptation of advertising message to specific values of particular cultures McDonald’s uses localization Example Ronald McDonald is Donald McDonald in Japan Japanese menu includes corn soup and green tea milkshakes Often best to combine global and local marketing strategies
Framework for AssessingMultinational StrategiesGlobalLocalMixed
A Framework for Alternative Global MarketingStrategies COMMUNICATON STRATEGY STANDARDIZED LOCALIZEDPRODUCT COMMUNICATIONS COMMUNICATIONSSTRATEGYSTANDARDIZED Global strategy: Mixed Strategy:PRODUCT Uniform Product/ Uniform Uniform Product/ Customized Message MessageLOCALIZED Mixed strategy: Local Strategy:PRODUCT Customized Product/ Uniform Customized Product/ Message Customized Message
Cross-Cultural Psychographic SegmentationThe only ultimate truth possible is that humans are both deeply the same and obviously different.
Conscientious Consumerism Conscientious consumerism is a focus on personal health merging with a growing interest in global health LOHAS (lifestyles of health and sustainability) Worry about the environment Want products to be produced in a sustainable way 4-215
Materialism Materialism: the importance people attach to worldly possessions “The good life”...“He who dies with the most toys, wins” Materialists: value possessions for their own status and appearance Non-materialists: value possessions that connect them to other people or provide them with pleasure in using them
Casestudy : SAB-MILLER1. Read and prepare the Casestudy on SAB MILLER (Johnson, Whittington & Scholes (2011)) for discussion and presentation next week.2. Identify and evaluate the global marketing challenges facing SAB MILLER by conducting External Environment, Industry, Competitor analysis, SWOT, global Marketing Mix strategies and Gap Analysis.
Core Reading Juleff, L, Chalmers, A.. and Harte, P. (2008) Business Economics in a Global Environment, Napier University Edinburgh Keegan, W.J. and Green, M.C. (2013) Global Marketing, 7th edition, Pearson Solomon, M. (2013) Consumer Behaviour, 10th Edition, Pearson Schiffman, L. and Kanuk,L. (2010) Consumer Behaviour, 10th Edition, Pearson