* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download mm-i-iv-customer-analysis
Market penetration wikipedia , lookup
Viral marketing wikipedia , lookup
Social commerce wikipedia , lookup
Marketing communications wikipedia , lookup
Elaboration likelihood model wikipedia , lookup
Market segmentation wikipedia , lookup
Product placement wikipedia , lookup
Digital marketing wikipedia , lookup
Brand equity wikipedia , lookup
Planned obsolescence wikipedia , lookup
Brand awareness wikipedia , lookup
Online shopping wikipedia , lookup
Brand ambassador wikipedia , lookup
Targeted advertising wikipedia , lookup
Integrated marketing communications wikipedia , lookup
Social media marketing wikipedia , lookup
Direct marketing wikipedia , lookup
Multicultural marketing wikipedia , lookup
Target audience wikipedia , lookup
Marketing strategy wikipedia , lookup
Food marketing wikipedia , lookup
Visual merchandising wikipedia , lookup
Personal branding wikipedia , lookup
Target market wikipedia , lookup
Supermarket wikipedia , lookup
Global marketing wikipedia , lookup
Emotional branding wikipedia , lookup
Advertising campaign wikipedia , lookup
Brand loyalty wikipedia , lookup
Segmenting-targeting-positioning wikipedia , lookup
Green marketing wikipedia , lookup
Youth marketing wikipedia , lookup
Product planning wikipedia , lookup
Marketing channel wikipedia , lookup
Neuromarketing wikipedia , lookup
Marketing aims at meeting and satisfying target customers’ needs and wants better than competitors .Marketers look for emerging customer trends that suggest new marketing opportunities. Eg, the emergence of the mobile phone, especially with teens and young adults, has marketers re – thinking their practices The study of consumer behaviour enables marketers to understand and predict consumer behaviour in the marketplace. It is concerned not only with what consumers buy but also with why, when, where, how, and how often they buy it. Consumer Research is the methodology used to study consumer behaviour and takes place at every phase of the consumption process before, during and after the purchase. The Rise of Consumer Democracy . Marketing In India passed through 3 distinct phases : 1. Previous to independence – Business operated in a subsistent economy. Imperial government controlled output and there was very little purchasing power. Seller’s market, product orientation. Consumers had little choice, branded products were a rarity. 2. The second phase – immediately after independence was socialistic and the public sector dominated the ownership of large enterprises, characterized by rationing and the quota system, limited production. The Seller was dominant, protected by government and limited competition. The great Indian middle class - education and salaried income - supported by land holdings, was on the rise. Urban markets consolidated and grew. Distribution channels strengthened. The Great rural urban divide emerged, with poor rural infrastructure in terms of transport and communication plus irregular savings and occupation pattern. Radical changes happened in the Indian urban market. Large middle class with constant and regular income, adequate savings, support from agricultural income and benefits of the welfare state, increased the consumption level and demand for various products. The strength of this market increased from consumer’s knowledge of his rights and the redressal mechanism ( Consumer Protection Act of 1985 )introduced by government, use of mass media in advertising and marketing and strengthening of trade intermediaries. Various brands and products had social status connotation and a pseudo consumption culture emerged in the Indian market 3. The third phase was ushered in during the early nineties thanks to liberalization. Public sector role was restricted to operations in a few sectors and the market opened up to private and multinational players. Abolition of the MRTP Act allowed firms to grow unhampered. M & As helped in the emergence of large conglomerates. Foreign equity participation was also allowed and joint ventures proliferated. Large multinationals like HL, P & G, LG Electronics, Ford , Mitsubishi, Honda and Samsung entered with better technology and more financial muscle. Domestic and foreign financial institutions gave support to industry through the long term debt as well as equity route. The customer benefited as market power and survival of companies became directly linked to efficiency, quality and the Value proposition. Indian industry responded positively through offering better products and services. As urban markets became stagnant, marketers bridged the gap between urban and rural, rich and poor, by offering products and services at all price points. Distribution channels were strengthened , concepts like supply chain management and Just in time technology came to the fore. Wide access and products available for all pockets happened. Shorter manufacturing cycles, products conforming to global standards emerged with options offered to a variety of consumers through instalment schemes from banks and other financial institutions. Consumers started spending money on acquiring products and services for comfortable living and hedonism grew in society. This spending orientation of a very aware consumer gave birth to a burgeoning service sector. The digital and telecom revolutions accelerated the process exponentially. The Indian consumer today is voter, judge and jury of what marketers produce. However, the divide between the rich and poor is increasing and a large section of society is away from these developments. This implies the requirement of a developmental orientation from marketers for penetration into these untapped bottom of the pyramid markets. However, initiatives like HUL’s Project Bharat and Project Shakti, ITC’s e- choupal and are all indicators of marketers recognizing the necessity for deeper penetration into rural markets. In 1998 HuL’s personal products unit initiated Project Bharat, the first and largest rural home-tohome operation to have ever been prepared by any company. The project covered 13 million rural households by the end of 1999. During the course of operation, HuL had vans visiting villages across the country distributing sample packs comprising a low-unit-price pack each of shampoo, talcum powder, toothpaste and skin cream priced at Rs. 15. This was to create awareness of the company’s product categories and of the affordability of the products. A business concept embedded with social goals, e-Choupal was designed to empower farmers and triggers a virtuous cycle of higher productivity, higher incomes, enlarged capacity for farmer risk management, and thereby larger investments to enable higher quality and productivity. ITC e-Choupal is an innovative market-led business model designed to enhance the competitiveness of Indian agriculture. e-Choupal leverages the power of Information and Digital Technology and the internet to empower small and marginal farmers with a host of services related to know how, best practices, timely and relevant weather information, transparent discovery of prices and much more. e-Choupals not only connect farmers with markets but also allow for a virtual integration of the supply chain and create significant efficiencies in the traditional system. These interventions have helped transform village communities into vibrant economic organisations, by enhancing incomes and cocreating markets. ITC’s e-Choupals serve 40,000 villages and 4 million farmers, making it the world’s largest rural digital infrastructure created by a private enterprise. Cultural Factors Social Factors Personal Factors Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-19 Culture, subculture and social class are particularly important influences on consumer buying behaviour. Culture is the fundamental determinant of a person’s wants and behaviors acquired through socialization processes with family and other key institutions. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-21 The growing child acquires a set of values, perceptions, preferences, and behaviours through his or her family and other key institutions. Eg a child growing up in a traditional middle class Indian family imbibes the following values: Respect and care for elders, honesty and integrity, hard work, achievement and success, humanitarianism and sacrifice. Each culture consists of smaller sub-cultures that provide more specific identification and socialization for their members. Nationalities Religions Racial groups Geographic regions Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-24 When subcultures become large and affluent companies design specialized marketing programmes to serve them. Multicultural marketing programmes were the result of marketing research which revealed that different ethnic and demographic niches did not always respond favourably to mass market advertising. All human societies exhibit social stratification, eg. a caste system where members of different castes are reared for certain roles and cannot change their caste membership. OR Social classes, relatively homogeneous and enduring divisions in a society, which are hierarchically ordered. Members share similar values, interests and behaviour. Upper uppers Lower uppers Upper middles Middle class Working class Upper lowers Lower lowers Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-27 Based on SEC ( Socio- economic classification) combination of education and occupation of the chief wage earner into 8 broad categories : A1, A2, B1, B2, C, D, E1 and E2. ( A1 has the highest purchase potential and E2 the lowest) The occupation of the chief wage earner and the type of house is used to classify into 4 broad categories from R1 to R4 in descending order of purchase potential Within a class, people tend to behave alike Social class conveys perceptions of inferior or superior position Class may be indicated by a cluster of variables (occupation, income, wealth) Class designation is mobile over time Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-30 Different social classes have different brand and product preferences in: Clothing, home furnishings, leisure actives and automobiles. Also in media preferences, - with upper class customers preferring magazines and books and lower class consumers preferring television. Even within a media category such as TV upper class consumers prefer news and drama and lower class consumers prefer soap operas and sports programmes. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-32 Reference groups Family Social roles Statuses Membership groups Primary groups Secondary groups Aspirational groups Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-33 Dissociative groups A person’s reference groups are all the groups that have a direct ( face – to - face ) influence on their attitudes and behaviour. Groups that have a direct influence are called membership groups. Some of these are primary groups with whom there is frequent and informal interaction such as family, friends, neighbours and co –workers. Others are secondary groups such as religious, professional and trade – union groups which are less frequently met and with whom interaction is more formal. 1. They expose an individual to new behaviours and lifestyles. 2.They influence attitudes and self-concept. 3. They create pressures for conformity that may affect products and brand choices. People are also influenced by groups to which they do not belong. Aspirational groups are those to whom a person hopes to belong to. Dissociative groups are those whose values or behaviours an individual rejects. Where reference groups influence is strong, marketers must determine how to reach and influence the group’s opinion leaders. An opinion leader is the person who offers informal advice or information about a specific product or product category, such as which of several brands is best or how a particular product may be used. Opinion leaders are often highly confident, socially active, and involved with the category. Marketers try to reach opinion leaders by identifying their demographic and psychographic characteristics, identifying the media they read, and directing messages at them. Brand Ambassadors and endorsers of products are are an example of this. The family is the most important consumer buying organization in society, and family members constitute the most influential primary reference group. Family of Orientation Family of Procreation Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-40 Family of orientation consists of parents and siblings. From parents a child acquires an orientation towards religion, politics, and economics, and a sense of personal ambition, self – worth and love. This influence can be long lasting, especially where parents live with grown children. A more direct influence on everyday buying behaviour is the family of procreation, namely one’s spouse and children In traditional joint families the influence of grandparents on major purchase decisions and to some extent on the lifestyles of the younger generations is till intact, though diminishing. Western researchers have focused largely on husband, wife and child dominance. With millions of kids under 17, online marketers have jumped on line offering freebies in exchange for personal information. What degree of status is associated with various occupational roles? Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-43 We can define a person’s position in each group to which he belongs in terms of group and status A role consists of the activities a person is expected to perform. Each role carries a status People choose products that reflect and communicate their role and actual or desired status in society. Marketers need to be aware of the status – symbol potential of products and brands. A buyer’s decisions are also influenced by personal characteristics including : Buyer’s age and stage in the life cycle Occupation and economic circumstances Personality and self – concept Lifestyle and values Many of these characteristics have a very direct impact upon consumer behaviour. Age Selfconcept Life cycle stage Lifestyle Occupation Values Wealth Personality Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-46 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-47 People buy different goods and services at different times in their lives. Taste in food, clothes, furniture and recreation is age related. Consumption is shaped by the family life cycle. Delayed marriages, children going abroad, working couples, acquiring automobiles and houses in early stages of their career result in different opportunities for marketers at different stages in the consumer life cycle. Marketers need to consider critical life events or transitions as these give rise to new needs. •Occupation influences consumption patterns. Clothes, shoes.travel etc are different for different economic groups. •Product choice is greatly affected by economic circumstances ; spendable income, savings and assets, debts, borrowing power, attitudes towards spending and saving. •Luxury goods makers such as Gucci, Prada, and Burberry are badly hit by economic downturns. Recessions cause marketers to redesign, reposition and re -price their products or focus on discount brands offering value to consumers. Personality implies a set of distinguishing human psychological traits that lead to relatively consistent and enduring responses to environmental stimuli. Each person has personality characteristics that influence his or her buying behaviour. Personality can, therefore, be a useful variable in analyzing brand choices. It is theorized that brands have personalities and consumers are likely to choose brands whose personalities match their own. Brand personality is the specific mix of human traits that we can attribute to a particular brand. Jennifer Aaker ( Stanford U)has classified brand personalities into 5 traits : Sincerity Excitement Competence Sophistication Ruggedness However, different countries turn up different attributes and Aaaker’s classification can by no means be considered Universal. Sincerity Excitement Competence Sophistication Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-52 Ruggedness Aaaker’s analysis showed a number of well known brands strong on one particular trait Eg: Levi : ruggedness MTV: excitement CNN: competence Campbell : sincerity However, a brand personality may have several attributes : Eg Levi’s suggests a personality that is youthful, rebellious, authentic and American. In general consumers choose brands that have a brand personality consistent with their own actual self – concept ( how we view ourselves). More true for publicly consumed products than for privately used ones. However, “self – monitors” – that is sensitive to how others see them- are more likely to choose brands whose personalities fit the consumption situation. Different situations/different people can evoke multiple aspects of themselves. People from the same subculture, social class and occupation may lead quite different lifestyles. A lifestyle is a person’s pattern of living in the world as expressed in activities, interests and opinions. It portrays the whole person interacting with his environment. Marketers search for relationships between their products and lifestyle groups. Customers who worry about the environment, want products to be produced in a sustainable way and spend money to advance their personal health development and potential have been named LOHAS ( Lifestyles of Health and Sustainability) Sustainable Economy Healthy Lifestyles Ecological Lifestyles Alternative Health Care Personal Development Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-56 Organic Foods Energy efficient appliances and solar panels Alternate medicines Yoga tapes ecotourism Multi-tasking Time-starved Money-constrained Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-58 Lifestyles are shaped partly by whether consumers are money constrained ( Lowercost products and services eg Walmart/Big Bazaar or time constrained ( Convenient products and services). Consumer decisions are also influenced by core Values, the belief systems that underlie attitudes and behaviours. Values , Attitudes and Lifestyles Evolution of VALS The original VALS system was built by consumer futurist Arnold Mitchell. Mitchell created VALS to explain changing U.S. values and lifestyles in the 1970s. VALS was formally inaugurated as an SRI International product in 1978 and was cited by Advertising Age as "one of the ten top market research breakthroughs of the 1980s.“ In 1989, VALS was redefined to maximize its ability to predict consumer behavior. A team of experts from SRI International, Stanford University, and the University of California, Berkeley, determined that consumers should be segmented on the basis of enduring personality traits rather than social values that change over time. By using psychology to analyze and predict consumer preferences and choices, the current VALS system creates an explicit link between personality traits and purchase behavior. The current VALS system is described in depth in The VALS Segments VALS segments Description VALS™ places U.S. adult consumers into one of eight segments based on their responses to the VALS questionnaire. The main dimensions of the segmentation framework are primary motivation (the horizontal dimension) and resources (the vertical dimension). VALS segments VALS types description Innovators (formerly Actualizers) Innovators are successful, sophisticated, take-charge people with high self-esteem. Because they have such abundant resources, they exhibit all three primary motivations in varying degrees. They are change leaders and are the most receptive to new ideas and technologies. Innovators are very active consumers, and their purchases reflect cultivated tastes for upscale, niche products and services. Image is important to Innovators, not as evidence of status or power but as an expression of their taste, independence, and personality. Innovators are among the established and emerging leaders in business and government, yet they continue to seek challenges. Their lives are characterized by variety. Their possessions and recreation reflect a cultivated taste for the finer things in life. VALS segments VALS types description Thinkers (formerly Fulfilleds) Thinkers are motivated by ideals. They are mature, satisfied, comfortable , and reflective people who value order, knowledge, and responsibility. They tend to be well educated and actively seek out information in the decision-making process. They are well-informed about world and national events and are alert to opportunities to broaden their knowledge. Thinkers have a moderate respect for the status quo institutions of authority and social decorum, but are open to consider new ideas. Although their incomes allow them many choices, Thinkers are conservative, practical consumers; they look for durability, functionality, and value in the products they buy. VALS segments VALS types description Achievers Motivated by the desire for achievement, Achievers have goal-oriented lifestyles and a deep commitment to career and family. Their social lives reflect this focus and are structured around family, their place of worship, and work. Achievers live conventional lives, are politically conservative, and respect authority and the status quo. They value consensus, predictability, and stability over risk, intimacy, and self-discovery. With many wants and needs, Achievers are active in the consumer marketplace. Image is important to Achievers; they favor established, prestige products and services that demonstrate success to their peers. Because of their busy lives, they are often interested in a variety of time-saving devices. VALS segments VALS types description Experiencers Experiencers are motivated by self-expression. As young, enthusiastic, and impulsive consumers, Experiencers quickly become enthusiastic about new possibilities but are equally quick to cool. They seek variety and excitement, savoring the new, the offbeat, and the risky. Their energy finds an outlet in exercise, sports, outdoor recreation, and social activities. Experiencers are avid consumers and spend a comparatively high proportion of their income on fashion, entertainment, and socializing. Their purchases reflect the emphasis they place on looking good and having "cool" stuff. VALS segments VALS types description Believers Like Thinkers, Believers are motivated by ideals. They are conservative, conventional people with concrete beliefs based on traditional, established codes: family, religion, community, and the nation. Many Believers express moral codes that are deeply rooted and literally interpreted. They follow established routines, organized in large part around home, family, community, and social or religious organizations to which they belong. As consumers, Believers are predictable; they choose familiar products and established brands. They favor American products and are generally loyal customers. VALS segments VALS types description Strivers Strivers are trendy and fun loving. Because they are motivated by achievement, Strivers are concerned about the opinions and approval of others. Money defines success for Strivers, who don't have enough of it to meet their desires. They favor stylish products that emulate the purchases of people with greater material wealth. Many see themselves as having a job rather than a career, and a lack of skills and focus often prevents them from moving ahead. Strivers are active consumers because shopping is both a social activity and an opportunity to demonstrate to peers their ability to buy. As consumers, they are as impulsive as their financial circumstance will allow. VALS segments VALS types description Makers Like Experiencers, Makers are motivated by selfexpression. They express themselves and experience the world by working on it-building a house, raising children, fixing a car, or canning vegetables-and have enough skill and energy to carry out their projects successfully. Makers are practical people who have constructive skills and value self-sufficiency. They live within a traditional context of family, practical work, and physical recreation and have little interest in what lies outside that context. Makers are suspicious of new ideas and large institutions such as big business. They are respectful of government authority and organized labor, but resentful of government intrusion on individual rights. They are unimpressed by material possessions other than those with a practical or functional purpose. Because they prefer value to luxury, they buy basic products. VALS segments VALS types description Survivors (formerly Strugglers) Survivors live narrowly focused lives. With few resources with which to cope, they often believe that the world is changing too quickly. They are comfortable with the familiar and are primarily concerned with safety and security. Because they must focus on meeting needs rather than fulfilling desires, Survivors do not show a strong primary motivation. Survivors are cautious consumers. They represent a very modest market for most products and services. They are loyal to favorite brands, especially if they can purchase them at a discount. Practical application of VALS Commercialization Positioning Communications Business segment VALS™ facilitates successful product launches and helps avoid costly mistakes. Understanding the needs of different consumer groups guides new product and services development. VALS identifies which market opportunities are strongest. Relating features and benefits to distinct segment needs clarifies strategies for targeting and expansion. VALS shows you how to craft more effective messaging campaigns. Understanding what motivates consumers illuminates how to speak to them in ways that will initiate action. Example A European luxury automobile manufacturer used VALS to identify online, mobile applications that would appeal to affluent, early-adopter consumers within the next five years. VALS research identified early-adopter groups and explored their reactions to a variety of mobile services for use in automobiles. The VALS analysis enabled the company to prioritize applications for development and determine the best strategic alliances to pursue. A Minnesota medical center planned to offer a new line of service: cosmetic surgery. It used VALS to identify target consumers (those most interested and able to afford the service). By understanding the underlying motivations of the target, the center and its ad agency were able to develop a compelling selling proposition. The resulting advertising was so successful that just a few weeks into the campaign, the center exceeded its scheduling capabilities. A U.S. long-distance carrier used VALS to select its spokesperson in a major television campaign to increase its customer base. By understanding consumers who are heavy users of long-distance service, the company was able to select a spokesperson to whom the target could relate. Consumer responses are fundamentally influenced by Motivation Perception Learning Memory Marketing and environmental stimuli enter the consumer’s consciousness , and a set of psychological processes combine with certain consumer characteristics to result in decision processes and purchase decisions. The Marketer’s task is to understand what happens in the consumer’s consciousness between the arrival of the outside marketing stimuli and the ultimate purchase decisions. Motivation Perception Learning Memory Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-74 Stimulus Organism Response Three big theorists : Freud, Maslow, Herzberg Needs : A) Biogenic (arising from physiological states of tension – hunger, thirst, discomfort) B) Psychogenic (arising from psychological states of tension ) – recognition, esteem, belonging. A need becomes a motive when it is aroused to a sufficient level of intensity to drive us to act. Motivation has both Direction and Intensity resulting in Goal selection and the vigour with which a goal is pursued. Freud – Unconscious psychological forces shape People’s behaviour and a person cannot fully understand his or her own motivations. When a person examines specific brands he /she will react not only to their stated capabilities, but also to less conscious cues such as shape, size, weight, material, colour and brand name. Laddering is a technique that traces a person’s motivations from the stated instrumental ones to the more terminal ones. Then the marketer can decide at what level to develop the message and appeal. Different products can satisfy different motives eg whiskey can satisfy the need for social relaxation, status or fun. Hence different whiskey brands can be positioned in one of the three appeals. Maslow tried to explain why people are driven by particular needs at particular times. He theorized that human needs are arranged in a hierarchy form most to least pressing and once he succeeds in satisfying an important need he will next try to satisfy the next most important need. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-82 Two factor theory : Distinguished dissatisfiers ( factors that cause dissatisfaction) from satisfiers (factors that cause satisfaction).The absence of dissatisfiers is not enough to motivate a purchase; satisfiers must be present. Eg a computer without a warranty would be a dissatisfier . Yet the presence of a product warranty would not act as a satisfier or motivator of a purchase, because it is not a source of intrinsic satisfaction. Ease of use would be a satisfier. Two implications of Herzberg’s theory Sellers should do their best to avoid dissatisfiers. ( eg. a poor training manual or a poor service policy).Although these may not sell the product they might easily unsell it. Second, the seller should identify the major satisfiers or motivators of purchase in the market and then supply them Freud’s Theory Maslow’s Hierarchy of Needs Herzberg’s Two-Factor Theory Behavior is guided by subconscious motivations Behavior is driven by the lowest, unmet need Behavior is guided by motivating and hygiene factors Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-86 A motivated person is ready to act. How he acts is influenced by how he perceives the situation. Perception is more important than reality and is the process by which we select, organize and interpret information inputs to create a meaningful picture of the world. In Marketing, perceptions are more important than the reality, as it is the perceptions that will affect the consumer’s actual behaviour. Selective Attention (notice) Selective Retention (remember) Selective Distortion (interpret information to fit preconceptions) Subliminal Perception (embed covert messages) 4-88 Attention is the allocation of processing capacity to some stimulus. Voluntary attention is something purposeful; involuntary attention is grabbed by someone or something. The average person is exposed to over 1500 ads or brand communications per day. Selective attention : Screening out of stimuli. This presents a huge challenge to marketers as they must identify which stimuli people will notice. People are more likely to notice stimuli that relate to a current need. People are more likely to notice stimuli they anticipate. People are likely to notice stimuli whose deviations are large in relationship to the normal size of the stimuli. Though much is screened out, unexpected stimuli influence us. Marketers may attempt to promote their offers intrusively in order to bypass selective attention filters. We tend to retain information that supports our attitudes and beliefs. Because of selective retention we are likely to remember good points about a product we like and forget good points about competing products. Selective retention again works to the advantage of strong brands. It also explains why marketers need repetition- to make sure the message is not overlooked Selective distortion is the tendency to interpret information in a way that fits our preconceptions. Consumers will often distort information to be consistent with prior brand and product beliefs and expectations. eg in blind taste tests one group of customers samples a product without knowing which brand it is while another group knows. Invariably , the groups have different opinions , despite consuming exactly the same product. Strong brands can work to the marketers advantage. Thus, beer may seem to taste better, a car may seem to drive more smoothly, the wait in a bank line seem shorter depending on the brands involved Subliminal perception is the argument that marketers embed, covert, subliminal messgaes in ads or packaging. These are messages that consumers are not consciously aware of ,yet they affect behaviour. However, there is no evidence to support this. When we act, we learn. Learning induces changes in our behaviour arising from experience. Most human behaviour is learned, although much learning is incidental. Learning is produced through an interplay of drives, stimuli, cues, responses. Two approaches to learning are : Classical conditioning and Operant conditioning. PAVLOV’S DOG Classical conditioning was accidentally discovered around the beginning of the 20th century by Russian physiologist Ivan Pavlov. Pavlov was studying digestive process in dogs when he discovered that the dogs salivated before they received their food. In fact, after repeated pairing of the lab attendant and the food, the dogs started to salivate at the sight of the lab assistants. Pavlov coined this phenomena “psychic secretions." He noted that dogs were not only responding to a biological need (hunger), but also a need developed by learning. Pavlov spent the rest of life researching why this associate learning occurred, which is now called classical conditioning. To experiment on classical conditioning, Pavlov utilized a tuning fork and meat powder. He hit the tuning fork and followed the sound with the meat powder. Pavlov presented the sound (tuning fork) with the meat powder at the exact same time increments. In the beginning, the dog salivated only to the meat powder, but after this was repeated, salivated at the sound of the tuning fork. Even when Pavlov took away the meat powder, the dog continued to salivate at the sound of the tuning fork. B.F. Skinner (1938) coined the term operant conditioning; it means roughly changing of behavior by the use of reinforcement which is given after the desired response. Skinner identified three types of responses or operant that can follow behavior. • Neutral operants: responses from the environment that neither increase nor decrease the probability of a behavior being repeated. • Reinforcers: Responses from the environment that increase the probability of a behavior being repeated. Reinforcers can be either positive or negative. • Punishers: Responses from the environment that decrease the likelihood of a behavior being repeated. Punishment weakens behavior. Behavior modification is a set of therapies / techniques based on operant conditioning (Skinner, 1938, 1953). The main principle comprises changing environmental events that are related to a person's behavior. For example, the reinforcement of desired behaviors and ignoring or punishing undesired ones. The main principles of operant conditioning, as defined by Skinner, are reinforcement, punishment, shaping, extinction, discrimination, and generalization. Skinner showed how negative reinforcement worked by placing a rat in his Skinner box and then subjecting it to an unpleasant electric current which caused it some discomfort. As the rat moved about the box it would accidentally knock the lever. Immediately it did so the electric current would be switched off. The rats quickly learned to go straight to the lever after a few times of being put in the box. The consequence of escaping the electric current ensured that they would repeat the action again and again. Skinner showed how positive reinforcement worked by placing a hungry rat in his Skinner box. The box contained a lever in the side and as the rat moved about the box it would accidentally knock the lever. Immediately it did so a food pellet would drop into a container next to the lever. The rats quickly learned to go straight to the lever after a few times of being put in the box. The consequence of receiving food if they pressed the lever ensured that they would repeat the action again and again. In fact Skinner even taught the rats to avoid the electric current by turning on a light just before the electric current came on. The rats soon learned to press the lever when the light came on because they knew that this would stop the electric current being switched on. These two learned responses are known as Escape Learning and Avoidance Learning. A drive is a strong internal stimulus impelling action. Cues are minor stimuli that determine when, where and how a person responds. Discrimination means we have learned to recognize differences in sets of similar stimuli and can adjust our responses accordingly. According to Learning Theory marketers can build demand for a product by associating it with strong drives, using motivating cues, and providing positive reinforcement. A new company can enter the market by appealing to the same drives that competitors use and by providing similar cues, because buyers are more likely to transfer loyalty to similar brands or the company might design its brand to appeal to a different set of drives and offer strong cue inducements to switch ( discrimination) The hedonic bias says people have a general tendency to attribute success to themselves and failure to external causes. Consumers are thus more likely to blame a product than themselves, putting pressure on marketers to carefully explicate product functions in well – designed packaging and labels, instructive ads and websites. Cognitive psychologists distinguish between Short Term Memory ( STM) – a temporary and limited repository of information and Long Term Memory ( LTM) – a more permanent and essentially unlimited repository. The Associative Network Memory model views LTM as a set of nodes and links. Nodes are stored information connected by links that vary in strength. Verbal, visual, abstract and contextual information can be stored in the memory network. A spreading activation process from node to node determines how much we retrieve and what information we can actually recall in any given situation In this model consumer brand knowledge is a node in memory with a variety of linked associations. How these associations are organized and their strength will determine the information we can recall about the brand. Brand associations consist of all brand – related thoughts, feelings, perceptions , images, experiences, beliefs, attitudes, that become linked to the brand node. Marketing is a way of making sure consumers have the right type of product and service experiences to create the right brand knowledge structures an maintain them in memory. Companies like P & G, Nike etc create mental maps of consumers depicting their knowledge of a particular brand in terms of the key associations that are likely to be triggered in a marketing setting and their relative strength, favorability and uniqueness to consumers. Memory encoding : describes how and where information gets into memory. The strength of the association depend on how much we process the information at encoding – how much we think about it and in what way. Memory retrieval is the way information gets out of memory. A strong brand association is both more accessible and more recalled by spreading activation. Presence of other product information in memory can produce interference effects and cause us to either overlook or confuse new data. The time between exposure to information and encoding matters - the longer the time delay, the weaker the association. Information may be available in memory but not accessible without the proper retrieval cues or reminders. The Consumer Buying Process http://int.search.myway.com/search/video.jh tml?searchfor=consumer+behaviour+analysis+ video&cb=BA5&pg=GGmain&p2=%5EBA5%5 Exdm039%5ETTAB02%5Ein&n=781aefaa&qid =cc48fbbd13d04949a66f7c413409460d&ss=sub &pn=1&st=tab&ptb=7F81CB66-E9AA-4E5EB37C1B1A67685A85&ct=SS&tpr=tabsbsug&vidOrd =2&vidId=OnU_XA9E4m8 Problem Recognition Information Search Evaluation Purchase Decision Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-118 Postpurchase Behavior Personal Commercial Public Experiential Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-119 Personal : Family, friends, neighbours, acquaintances Commercial : Advertising, websites, sales persons, dealers, packaging, display Public: Mass media, consumer rating organizations Experiential : Handling and examining the product Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-121 The consumer is trying to satisfy a need The consumer is looking for certain product benefits from the product solutions The consumer sees each product as a bundle of attributes with varying abilities for delivering the benefits sought to satisfy this need. Through experience and learning people acquire beliefs and attitudes. Beliefs are descriptive thoughts that a person holds about something. Attitudes are a person’s enduring favorable or unfavourable evaluations, emotional feelings, and action tendencies towards some objects or ideas. Attitudes are difficult to change and company’s need to fit their products into existing attitudes rather than trying to change attitudes. This posits that a consumer arrives at attitudes towards various brands through an attributive evaluation procedure. The expectancy value model of attitude believes that consumers evaluate products and services by combining their brand beliefs – the positives and negatives - according to importance. Suppose Linda has narrowed her choice set to four laptop computers (A, B, C, and D). Assume she’s interested in four attributes: memory capacity, graphics capability, size and weight, and price. Table 6.4 shows her beliefs about how each brand rates on the four attributes. If one computer dominated the others on all the criteria, we could predict that Linda would choose it. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-126 Attributes a consumer considers important are rated on scale from 1 to 10 where 10 is most important (with Price going backwards) and weights are given to her belief about the importance of each attribute. But, as is often the case, her choice set consists of brands that vary in their appeal. If Linda wants the best memory capacity, she should buy C; if she wants the best graphics capability, she should buy A; and so on. If we knew the weights Linda attaches to the four attributes, we could more reliably predict her laptop choice. Suppose she assigned 40 percent of the importance to the laptop’s memory capacity, 30 percent to graphics capability, 20 percent to size and weight, and 10 percent to price. To find Linda’s perceived value for each laptop according to the expectancy-value model, we multiply her weights by her beliefs about each computer’s attributes Conjunctive Heuristic minimum set of acceptable cutoff for each attribute and choose 1st alternative that meets the minimum standard for all attributes (e.g., computer speed) Lexicographic Choose the best brand on the basis of its perceived most important attribute (e.g., printer versatility) Elimination-by-aspects Compares brands on an attribute selected probabilistically (where the probability of choosing an attribute is positively related to its importance) and brands are eliminated if they do not meet minimum acceptable cutoff levels (e.g., cell phone memory) 4-129 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6-130 Richard Perry and John Cacioppo’s Elaboration Likelihood Model describes how consumers evaluate in low and high involvement circumstances. The two means of persuasion in their model are : A)The Central Route – where attitude formation or change stimulates much thought and is based on diligent, rational consideration of important product information B) The Peripheral Route – where attitude formation or change provokes much less thought and results from the association of a brand with either + ive or - ive peripheral cues. Peripheral cues for customers include a celebrity endorsement, a credible source, or any other object that generates positive feelings Consumers follow the central route only if they possess sufficient motivation, ability, and opportunity. If these factors are lacking consumers follow the peripheral route and consider more extrinsic factors. Low - involvement – Products like salt are bought under conditions of low involvement and in the absence of significant brand differences. Link product to some involving issue : eg Toothpaste to avoiding cavities Link product to some involving situation : Fruit juice with strengthening vitamins Advertising to trigger some strong emotions related to personal values or ego defense –eg heart healthy cereals/cooking oils. Fourth – Add an important feature – PUF with refrigerators. Low involvement but significant brand differences eg Biscuits. Brand switching may happen due to desire for variety not dissatisfaction. Market leader strategy would be to dominate shelf space with a variety of related but different product versions, avoiding stock – outs and frequent reminder ads. Challenger firms will encourage variety seeking by offering lower prices, deals, coupons, free samples and creative advertising. Researchers have found that consumers use mental accounting when they handle their money. Mental accounting refers to the way consumers code, categorize and evaluate financial outcomes of choices, not always logically. Derives in part from Prospect Theory which maintains that customers frame their decision alternatives in terms of gains and losses according to a value function. Consumers are generally loss averse. They tend to overweight low probabilities and underweight very high probabilities. Segregate gains eg evaluating multiple benefits separately. Integrate losses – Small Cost being added to another large purchase is not an obstacle to buying.( House plus parking) Integrate smaller losses with larger gains-eg monthly taxation is viewed more favorably than a lump sum deducted on a smaller pay amount Segregate small gains from large losses. Rebates on large purchases like cars are viewed favorably by consumers Functional Physical Financial Social Psychological Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-138 Time Functional Risk eg Machine not working Physical Risk eg Adventure sport Financial Risk eg An investment Social Risk eg Last year’s fashion Pyschological Risk eg hurt to esteem Time Risk eg Late delivery of consignment After purchase consumers might experience dissonance from noticing negative things about the product or service or on hearing favorable things about other brands. And will be alert to information that supports his decision. Marketing communications should supply beliefs and evaluations that reinforce the consumer’s choice and help him feel good about the brand. Markets must, therefore, monitor, postpurchase satisfaction, postpurchase actions and postpurchase product uses. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-141 The consumer adoption process is the mental steps through which an individual passes from first hearing about an innovation to final adoption. These steps are : Awareness Interest Evaluation Trial Adoption The consumer becomes aware of the innovation but lacks information about it. The consumer is stimulated to seek information about the innovation The consumer considers whether to try the innovation The consumer tries the innovation to improve his or her estimate of its value. The consumer decides to make regular use of the innovation. Everett Rogers defines a person’s level of innovativeness as “ the degree to which an individual is relatively earlier in adopting new ideas than the other members of his social system.” Figure 6-7: Adopter Categories Based on Relative Time of Adoption A) Innovators are technology enthusiasts: they are venturesome and enjoy tinkering with new products and mastering their intricacies. B) Early adopters are opinion leaders who carefully search for new technologies that might give them a dramatic competitive advantage. They are less price sensitive and willing to adopt the product if given personalized solutions and good service support C) Early majority are deliberate pragmatists who adopt the new technology when its benefits are proven and a lot of adoption has already taken place. They make up the mainstream D) Late majority are skeptical conservatives who are risk averse, technology shy and price sensitive. E) Laggards are tradition bound and resist the innovation until the status quo is no longer defensible. Product Characteristics Relative Advantage Compatibility Complexity Divisibility Communicability 6 - 152 International Consumer Behavior Values, attitudes and behaviors differ greatly in other countries. Physical differences exist that require changes in the marketing mix. Customs vary from country to country. Marketers must decide the degree to which they will adapt their marketing efforts. 6 - 153