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S CIENCE E CONOMY C OHESION EUROPEAN UNION Creating the Future of Lithuania UNIVERSITY OF APPLIED SOCIAL SCIENCES I NDRE R ADAVICIENE CONSUMER BEHAVIOR AND PSYCHOLOGY COURSE HANDBOOK Klaipeda, 2015 Indre Radaviciene CONSUMER BEHAVIOUR AND PSYCHOLOGY Course Handbook Approved by the decision of the Academic Board of SMK University of Applied Social Sciences,15th April 2014, No. 4 Layout by Sigita Cesnauskiene The publication is financed within project „Joint Degree Study programme “International Marketing and Branding “ preparation and implementation“ No. VP1-2.2-ŠMM-07-K-02-086 funded in accordance with the means VP1-2.2-SMM-07-K “Improvement of study quality, development of Internationalization” of priority 2 “Lifelong Learning” of the Action Programme of Human Relations Devel-opment 2007 – 2013. ISBN 978-9955-648-35-2s © Indre Radaviciene, 2015 © SMK University of Applied Social Sciences, 2015 1 CONTENTS INTRODUCTION……………………………..…….…………………………….….....3 Part 1: Conceptions, goals, tasks of consumer’s psychology……………………............5 Part 2: Conception of consumer behaviour, contents, models……………...……........9 Part 3: Segmentation, targeting and positioning …….………………………....……..15 Part 4: Personal factors of a consumer, their influence on behaviour…………...…….22 Part 5: The influence of environmental factors on consumer behaviour………....…...32 Part 6: The features of perception…………………..……………………………….......39 Part 7: Learning and memory…..………..…………………..……...…………………...44 Part 8: Consumer motivation, attitudes and their change………………….…….……....51 Part 9: Consumers as problem solvers: the process of buying consumer goods..…….....58 Part 10: The methods of a research on psychological efficiency of advertising….…..…69 TASKS FOR INDIVIDUAL/GROUP WORKS………………………..………........82 CONSUMER BEHAVIOUR PROJECT STRUCTURE……………………………89 TRIAL CONSUMER BEHAVIOUR SETTLEMENT…….…………..…....………94 LITERATURE……………………………………………………………………....…122 2 INTRODUCTION Consumer behaviour (in consumer business context) referred to as the study of when, why, how, where and what people do or do not buy products. It blends elements from psychology, sociology, social, anthropology and economics. It attempts to understand the buyer decision making process, both individually and in groups. It studies characteristics of individual consumers such as demographics and behavioural variables in an attempt to understand people’s wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. Customer behaviour study is based on consumer buying behaviour, with the customer playing the three distinct roles of user, payer and buyer. Relationship marketing is an influential asset for customer behaviour analysis as it has a keen interest in the re-discovery of the true meaning of marketing through the re-affirmation of the importance of the customer or buyer. The programme of a course unit Consumer Behaviour and Psychology is to introduce students to the basics of psychology and the features of consumer behaviour. The theoretical part of the course defines the conception, goals and tasks of psychology, analyses the variety of advertising, place and meaning in the modern public life; perception of examples is analysed, based on general patterns of psychology, the relationship of advertising with the cognitive processes of personality and consumer needs, their actualisation, formation. Models, features of consumer behaviour are analysed, the characteristics of the impact of branding on consumer behaviour, in the context of marketing communication. The aim of the programme of the course unit Consumer Behaviour and Psychology– to provide students with knowledge on the psychological patterns of marketing, to help future specialist to understand the features of branding impact on consumers, to teach to systemise the acquired knowledge and experience on the link between psychology and consumer behaviour, usage of this for a purposeful consumer motivation, to apply psychological knowledge when designing and providing advertising of various types, when modelling its impact on a consumer. Learning outcomes of a course consumer behaviour and psychology: 1. 2. 3. 4. 5. 6. 7. 8. Will be able to apply psychological knowledge, professional competences when designing branding. Will be able to characterise the goals of psychological impact of branding in the context of integrated marketing communication. Will be able to objectively and critically assess the success and problems of advertising or advertising projects, opportunities of timely development. Will be able to identify the opportunities of using a branding and realisation strategies for the implementation of goals of advertising campaigns. Will be able to appropriately select the strategies of branding and realisation strategies. Will be able to foresee the trends of self-development, to raise, develop one’s professional competences while acting in a dynamic business environment. Will be able to use psychological knowledge, professional competences while maintaining a company’s communication. Will be able to characterise the features and opportunities of the impact of different forms of branding and their combinations on consumer behaviour 3 Acknowledgements The context of this text has been adapted from the following product(s): Schiffman L.G., Kanuk L.L., Hansen H. Consumer behaviour: a European outlook. Pearson Education Limited, 2008, p.494, ISBN:978-0-273-70401-0 Perner L. (2010) The Consumer Behavior: The Psychology of Marketing, access via internet page: http:// www.consumerpsychologist.com/index.html, accessed March/April, 2014 M. Joseph Sirgy, Don R. Rahtz, and Laura Portolese Dias. Consumer Behavior Today v.1.0. Flat World Education, Inc., 2014 Full copyright details and acknowledgements will appear in the aforementioned publications. 4 CONCEPTIONS, G OA L S , T A S K S O F C O N S U M E R ’ S P S YC H O L O G Y Part 1 CONCEPTIONS, GOALS, TASKS OF CONSUMER’S PSYCHOLOGY Objective outline: Chapter key terms: 1. Types of Needs and Wants 2. 3. To analyse critically the task of marketing under contemporary conditions from a behavioural perspective. Marketing Management Philosophies 7KH0XOWLSOH,QÁXHQFHVRQ&RQVXPHU%HKDYLRXU To examine the major functions that comprises the marketing task and their interactions with consumer behaviour. 7UDGLWLRQDO7KHRULHVRI &RQVXPHU%HKDYLRXU To develop an awareness of the major types of marketing and consumer behaviour problems faced by organisations. The study of consumers helps firms and organisations improve their marketing strategies by understanding issues such as how1: - The psychology of how consumers think, feel, reason, and select between different alternatives (e.g., brands, products); The psychology of how the consumer is influenced by his or her environment (e.g., culture, family, signs, media); The behaviour of consumers while shopping or making other marketing decisions; Limitations in consumer knowledge or information processing abilities influence decisions and marketing outcome; How consumer motivation and decision strategies differ between products that differ in their level of importance or interest that they entail for the consumer; How marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer. One “official” definition of consumer behaviour is “The study of individuals, groups, or organisations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.” Although it is not necessary to memorise this definition, it brings up some useful points:1 Behaviour occurs either for the individual, or in the context of a group (e.g., friends influence 1 The part’s information is adopted from Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http://www.consumerpsychologist.com/index.html, accessed March/April, 2014 5 CONCEPTIONS, - - G OA L S , T A S K S O F C O N S U M E R ’ S P S YC H O L O G Y what kinds of clothes a person wears) or an organisation (people on the job make decisions as to which products the firm should use). Consumer behaviour involves the use and disposal of products as well as the study of how they are purchased. Product use is often of great interest to the marketer, because this may influence how a product is best positioned or how we can encourage increased consumption. Since many environmental problems result from product disposal (e.g., motor oil being sent into sewage systems to save the recycling fee, or garbage piling up at landfills) this is also an area of interest. Consumer behaviour involves services and ideas as well as tangible products. The impact of consumer behaviour on society is also of relevance. For example, aggressive marketing of high fat foods, or aggressive marketing of easy credit, may have serious repercussions for the national health and economy. There are four main applications of consumer behavior:1 The most obvious is for marketing strategy, i.e., for making better marketing campaigns. For example, by understanding that consumers are more receptive to food advertising when they are hungry, we learn to schedule snack advertisements late in the afternoon. By understanding that new products are usually initially adopted by a few consumers and only spread later, and then only gradually, to the rest of the population, we learn that (1) companies that introduce new products must be well financed so that they can stay afloat until their products become a commercial success and (2) it is important to please initial customers, since they will in turn influence many subsequent customers’ brand choices. A second application is public policy. In the 1980s, Accutane, a near miracle cure for acne, was introduced. Unfortunately, Accutane resulted in severe birth defects if taken by pregnant women. Although physicians were instructed to warn their female patients of this, a number still became pregnant while taking the drug. To get consumers’ attention, the Federal Drug Administration (FDA) took the step of requiring that very graphic pictures of deformed babies be shown on the medicine containers.1 Social marketing involves getting ideas across to consumers rather than selling something. Marty Fishbein, a marketing professor, went on sabbatical to work for the Centres for Disease Control trying to reduce the incidence of transmission of diseases through illegal drug use. The best solution, obviously, would be if we could get illegal drug users to stop. This, however, was deemed to be infeasible. It was also determined that the practice of sharing needles was too ingrained in the drug culture to be stopped. As a result, using knowledge of consumer attitudes, Dr. Fishbein created a campaign that encouraged the cleaning of needles in bleach before sharing them, a goal that was believed to be more realistic. $VDÀQDOEHQHÀWVWXG\LQJFRQVXPHUEHKDYLRXUVKRXOGPDNHXVEHWWHUFRQVXPHUVCommon sense suggests, for example, that if you buy a 64 liquid ounce bottle of laundry detergent, you should pay less per ounce than if you bought two 32 ounce bottles. In practice, however, you often pay a size premium by buying the larger quantity. In other words, in this case, knowing this fact will sensitise you to the need to check the unit cost labels to determine if you are really getting a bargain. There are several units in the market that can be analysed. Our main thrust in this course is the consumer. However, we will also need to analyse our own firm’s strengths and weaknesses and those of competing firms. Suppose, for example, that we make a product aimed at older consumers, a growing segment. A competing firm that targets babies, a shrinking market, is likely to consider repositioning toward our market. To assess a competing firm’s potential threat, we need to examine its assets (e.g., technology, patents, market knowledge, and awareness of its brands) against pressures it faces from the market. Finally, we need to assess conditions (the marketing environment). For example, although we may have developed a product that offers great appeal for consumers, a recession may cut demand dramatically. 6 CONCEPTIONS, G OA L S , T A S K S O F C O N S U M E R ’ S P S YC H O L O G Y In the mainstream theory of consumer choice economists often refer to demand curves for goods and services. Furthermore, they represent them as smooth continuous curves which slope downward from left to right, reflecting the so-called ‘law of demand’. In fact, demand curves in reality may have multiple segments with different slopes and breaks between them, implying very jerky responses of sales to changes in price. Sometimes a demand curve may even slope upwards along part of its length.2 Discontinuities in demand curves can arise for psychological reasons, such as the consumer’s cognitive mechanisms being subject to threshold effects (a change may need to be substantial to be noticed), or for institutional reasons, such as conventions being used in the setting of budgets. When a price goes above normal ranges of expectations, sales can fall away sharply until customers get used to the idea of that product being that expensive. This phenomenon is known as ‘sticker shock’ (here, ‘sticker’ refers to the pricing stickers attached to products). Kinks in demand curves can also arise as a consequence of how other firms respond to changes in the price charged for the product, by changing their prices. The seemingly perverse case of higher prices leading to higher sales may arise if, in the face of uncertainty, consumers use price as a proxy for quality (and perhaps do not even look at a product at all if its price is less than the lower end of the budget range in which they have chosen to look), or if a higher price means that the product serves better as a status symbol. These phenomena might lead one to expect that when economists theorise about the nature of buyer behaviour they would do so in an interdisciplinary manner, bringing in ideas from psychology and sociology. Pluralist economists do precisely this, but mainstream economists over the past century have sought to distance themselves from these disciplines. Theories of buyer behaviour present simplified pictures of the forces underlying choices in general. They are not intended to provide insights about the distinctive way that a particular consumer chooses, say, which television programme to watch and how such a choice is made in a manner different from a choice of which shampoo to buy, brand of hire car to rent, or whatever. Given this, it may seem remarkable that they could be useful for thinking about consumer choice with respect to specific products. In fact, the mainstream approach is weak in this role precisely because it tries to present all choices as being made in the same way. The frameworks that we find most helpful are those that allow for a variety of approaches to choice and provide a means of assessing which broad kinds of processes are likely to be operating in particular kinds of contexts. A brief introduction to the field of consumer behaviour and an indication of the increased importance that this domain of study has assumed in marketing would be a good starting point. The instructor should discuss the fact that to operationalise the marketing concept it is critical that the marketer have an understanding of some of the consumer decision making processes. Likewise, to effectively design effective advertising and promotions programs, these processes must be understood and considered. It is important to point out that the development of successful marketing communication programs begins with understanding why consumers behave as they do. Those who develop advertising and other promotional strategies begin by identifying relevant markets and then analysing the relationship between target consumers and the product/service or brand. 2 The part’s information adapted from Peter Earl & Tim Wakeley (2005) Business Economics: a Contemporary Approach. Maidenhead, McGraw-Hill. For more detailed discussion and case studies please refer to the original. 7 CONCEPTIONS, G OA L S , T A S K S O F C O N S U M E R ’ S P S YC H O L O G Y Review questions/discussion 1. 2. 3. Describe the different factors that impact consumer behaviour. Which of these factors do you believe would have the greatest impact on how consumers behave? Why should marketers be interested in consumer behaviour? Why marketing managers should be interested in the study of consumer behaviour? Project and teamwork exercises 1. Please identify a risk associated with buying products and give the examples in the table. Type of risk Explanation Examples Physical risk The fear of injury from the product Financial risk Losing or wasting money Functional risk Finding out the product will not do the job you bought it for Psychosocial risk The fear of looking foolish References for further reading 1. 2. 3. Keller, K., Kotler, Ph. Marketing Management (12th edition). Essex: Pearson Education Limited, 2005. S.A. Drakopoulos & A.D. Karayiannis (2004) ‘The historical development of hierarchical behaviour in economic thought’, Journal of the History of Economic Thought, 26, pp.363-378. Michael Solomon, Consumer Behaviour: Buying, Having and Being. Englewood Cliffs, NJ: Prentice-Hall, 2004. 6th edition. 8 CONCEPTION O F C O N S U M E R B E H AV I O U R , C O N T E N T S , M O D E L S Part 2 &21&(37,212)&21680(5%(+$9,285 CONTENTS, MODELS Objective outline: Chapter Key Terms: After studying this unit, you should be able to: Freudian Personality Theory 1. Define the terms “consumer behaviour”. %XLOGLQJD%UDQG,PDJH 2. Describe the importance of ‘consumer behaviour’. 0HDVXULQJ3HUVRQDOLW\DQG%UDQG,PDJH Understand different consumer behaviour models concept. %X\LQJEODFNER[ 3. Decision making The consumer as a decision maker is viewed in different ways by different groups of researchers. The economic view holds that consumers are rational decision makers, while some other researchers view the consumers as uninvolved, passive decision makers. Yet another group of researchers view consumers as cognitive decision makers. But all these views ignore the influence of emotions on consumers’ choices. There are three types of consumer decision making - habitual decision making (low purchase involvement with no external information), limited decision making (consumer evaluates limited alternatives with some external information), and extended decision making (large number of alternatives with the help of extensive information search from both internal and external sources). There are three phases in consumer decision making process – problem recognition, information search, and alternatives evaluation and selection. Problem recognition is initiated with identification of a gap in the actual state and the desired state as perceived by the consumer. The consumer may be aware or unaware of the problem or need. The need awareness can trigger through non-marketing and/or marketing triggers. Marketing triggers involve identifying consumer problems through various techniques and then acting on these. Marketers may also try to suppress problem recognition by consumers for products like cigarettes, alcohol, etc. Information search is initially done from internal sources, i.e., memory and experience, and then from external sources, i.e., friends, internet, etc. Consumer decision making involves seeking information on three important aspects of product – evaluation criteria, alternatives available, and attributes of each alternatives. The amount of external search to be done depends on various market, product, consumer, and situational variables. Alternatives evaluation and selection involves making the brand The information is adopted from Schiffman L.G., Kanuk L.L., Hansen H. Consumer behaviour: a European outlook. Pearson Education Limited, 2008, p.494, ISBN: 978-0-273-70401-0 9 CONCEPTION O F C O N S U M E R B E H AV I O U R , C O N T E N T S , M O D E L S choice after evaluating all the alternatives. There are three types of consumer choice processes – affective choice (based on ‘it feels right’ factor), attitude-based choice (based on decision rules), and attribute-based choice (based on attribute-by-attribute comparison across brands). There are three important models which explain consumer decision making – the Howard-Sheth model of buying behaviour, the Nicosia model, and the Engel-Blackwell-Miniard (EBM) model. The Howard-Sheth model of buying behaviour attempts to explain the complexity of the consumer decision making process in case of incomplete information. However, is quite complex and difficult to understand. The Nicosia model explains the consumers’ buying behaviour from the marketers’ perspective. However, it fails to explain in detail the firm’s and consumer’s attributes and doesn’t take into account that consumer might already be having a predisposition with respect to a particular product/brand. How do consumers make decisions? This question is at the core of much of marketing examination over the past 60 or 70 years. As marketers manipulate the various principles of marketing, so do the consumers they seek to reach-choosing which products and services to buy, and which not to buy, choosing which brands to use, and which brands to ignore. The focus of this paper is to examine the major decision-making models, strategies, and theories that underlie the decision processes used by consumers and to provide some clarity for marketing executives attempting to find the right mix of variables for their products and services. Three Decision Making Models Early economists, led by Nicholas Bernoulli, John von Neumann, and Oskar Morgenstern, puzzled over this question. Beginning about 300 years ago, Bernoulli developed the first formal explanation of consumer decision making. It was later extended by von Neumann and Morgenstern and called the Utility Theory. This theory proposed that consumers make decisions based on the expected outcomes of their decisions. In this model consumers were viewed as rational actors who were able to estimate the probabilistic outcomes of uncertain decisions and select the outcome which maximised their well-being. However, as one might expect, consumers are typically not completely rational, or consistent, or even aware of the various elements that enter into their decision making. In addition, though consumers are good at estimating relative frequencies of events, they typically have difficulty translating these frequencies into probabilities. This Utility model, even though it had been viewed as the dominant decision-making paradigm, had serious shortcomings that could not be explained by the model. Nobel Laureate Herbert Simon proposed an alternative, simpler model in the mid-1950s. This model was called Satisfying, in which consumers got approximately where they wanted to go and then stopped the decision-making process. An example of this would be in the search for a new apartment. Under the Utility theory, consumers would evaluate every apartment in a market, form a linear equation based on all the pertinent variables, and then select the apartment that had the highest overall utility score. With Satisfying, however, consumers might just evaluate apartments within a certain distance to their desired location, stopping when they found one that was “good enough.” This theory, though robust enough to encompass many of the shortcomings of Utility Theory, still left significant room for improvement in the area of prediction. After all, if a marketing executive can’t predict consumer behaviour, then what use is a decision-making paradigm? Simon and others have extended this area in the investigation of the field of bounded rationality. Value provided a reference point and evaluated both gains and losses from that reference point. Additionally, gains and losses have a marginally decreasing increase from the reference point. For The part’s information is adopted from Richarme M. Consumer Decision-Making Models, Strategies, and Theories, Oh My! access by internet: http://www. decisionanalyst.com/publ_art/decisionmaking.dai, accessed March/April, 2014. 10 CONCEPTION O F C O N S U M E R B E H AV I O U R , C O N T E N T S , M O D E L S example, there is a much greater value for the first incremental gain from the reference point than for subsequent gains. Seven Decision-Making Strategies: What this all led to, was the development and exploration of a series of useful consumer decision-making strategies that can be exploited by marketers. For each product, marketers need to understand the specific decision-making strategy utilised by each consumer segment acquiring that product. If this is done, marketers can position their product in such a manner that the decision-making strategy leads consumers to select their product. The first two strategies are called compensatory strategies. In these strategies, consumers allow a higher value of one attribute to compensate for a lesser value of another attribute. For example, if a consumer is looking at automobiles, a high value in gas mileage might compensate for a lower value in seating space. The attributes might have equal weight (Equal Weight Strategy) or have different weights for the attributes (Weighted Additive Strategy). An example of the latter might be to place twice as much importance on gas mileage than seating space. The next three strategies are called no compensatory strategies. In these strategies, each attribute of a specific product is evaluated without respect to the other attributes, and even though a product may have a very high value on one attribute, if it fails another attribute, it is eliminated from consideration. From Simon, the first of these is Satisfying, in which the first product evaluated to meet cut-off values for all attributes is chosen, even if it is not the best. The second of these strategies, Elimination by Aspects, sets a cut-off value for the most important attribute, and allows all competing products that meet that cut-off value to go to the next attribute and its cut-off value. The third strategy, Lexicographic, evaluates the most important attribute, and if a product is clearly superior to others, stops the decision process and selects that product; otherwise, it continues to the next most important attribute. The next two strategies are called partially compensatory strategies, in that strategies are evaluated against each other in serial fashion and higher values for attributes are considered. The first of these strategies is called Majority of Conforming Dimensions, in which the first two competing products are evaluated across all attributes, and the one that has higher values across more dimensions, or attributes, is retained. This winner is then evaluated against the next competitor, and the one that has higher values across more dimensions is again retained. The second partially compensatory strategy is called Frequency of Good and Bad Features, in which all products are simultaneously compared to the cutoff values for each of their relevant attributes, and the product that has the most “good” features that exceed the cut-off values is the winner. There are other expansions upon these seven basic consumer decision-making strategies, but they are generally captured as shown above. However, two major areas of marketing theory also help to provide additional explanatory power to these strategies. Two Marketing Theories: the first marketing theory is called Consideration. In this theory, consumers form a subset of brands from which the decision-making strategies are applied. For example, if asked to enumerate all the restaurants that one could recall, the list might be quite extensive for most consumers. However, when a consumer first addresses the question of where to dine that evening, a short list of restaurants that are actively considered is utilised for the decision-making process. Multistage decision-making models were summarised by Allan Shocker, in which the increasing complexity of a decision produces more steps in the decision process. In essence, more cognitive effort would be expended in evaluating members of the consideration set and reducing that number to an eventual choice. The second marketing theory is called Involvement, in which the amount of cognitive effort applied to the decision-making process is directly related to the level of importance that the consumer places on acquisition of the specific product. For example, there is rarely a significant amount of decision-mak- 11 CONCEPTION O F C O N S U M E R B E H AV I O U R , C O N T E N T S , M O D E L S ing applied to the selection of a pack of chewing gum at the grocery store checkout counter, but there is a much greater amount of decision-making effort applied to the purchase of a new cell phone. This degree of involvement is not necessarily a function of the price, but is more related to the perceived impact on the quality of life of the consumer. The quality of life can come directly from the benefits supplied by the product, or can come indirectly from the social accolades or sanctions provided by members of the peer group. Application of the three decision-making models, the seven decision-making strategies, and the two marketing theories can be seen in current efforts by marketing practitioners and academicians to tease apart the complex decisions made by consumers. For example, choice models and conjoint models are multivariate analysis techniques based on these understandings. Consumers are presented with choices in controlled environments that, hopefully, control for other confounding variables, and then the choices are decomposed to understand both the conscious and unconscious elements driving the consumer’s choices. One caveat for practitioners is important to address at this point. When one is attempting to manipulate marketing variables such as price or promotion, or even conduct research into consumer decision-making, it is critical that a solid theoretical base be used. 7KHEODFNER[PRGHOShows the interaction of stimuli, consumer characteristics, decision process and consumer responses. It can be distinguished between interpersonal stimuli (between people) or intrapersonal stimuli (within people). The black box model is related to the black box theory of behaviourism, where the focus is not set on the processes inside a consumer, but the relation between the stimuli and the response of the consumer. The marketing stimuli are planned and processed by the companies, whereas the environmental stimulus is given by social factors, based on the economic, political and cultural circumstances of a society. The buyer’s black box contains the buyer characteristics and the decision process, which determines the buyer’s response. The black box model considers the buyers response as a result of a conscious, rational decision process, in which it is assumed that the buyer has recognised the problem. However, in reality many decisions are not made in awareness of a determined problem by the consumer. The black box model shows the interaction of stimuli, consumer characteristics, and decision process and consumer responses. It can be distinguished between interpersonal stimuli (between people) or intrapersonal stimuli (within people). The black box model is related to the black box theory of behaviourism, where the focus is not set on the processes inside a consumer, but the relation between the stimuli and the response of the consumer. ENVIRONMENTAL FACTORS BUYER’S Marketing Stimuli Environmental Stimuli Buyer Characteristics Product Price Place Promotion Economic Technical Political Cultural Attitudes Motivation Perceptions Personality Lifestyle BLACK BOX Decision Process Problem recognition Information search Alternative evaluation Purchase decision Post-purchase behaviour BUYER’S RESPONSE Product choice Brand choice Dealer choice Purchase timing Purchase amount FIGURE 1. BUYER’S BLACK BOX MODEL The source: Khosla, Swati (2010). Consumer psychology: The essence of Marketing. International Journal of Educational Administration. 12 CONCEPTION O F C O N S U M E R B E H AV I O U R , C O N T E N T S , M O D E L S The marketing stimuli are planned and processed by the companies, whereas the environmental stimuli are given by social factors, based on the economic, political and cultural circumstances of a society. The buyer’s black box contains the buyer characteristics and the decision process, which determines the buyer’s response. The black box model considers the buyer’s response as a result of a conscious, rational decision process, in which it is assumed that the buyer has recognised the problem. However, in reality many decisions are not made in awareness of a determined problem by the consumer. Review questions/discussions 1. 2. Harley-Davidson Motorcycle Company has used consumer behaviour studies to advance the organisation’s knowledge about its consumers. This strategy has been pivotal in meeting the challenge of the Japanese motorcycle manufacturers. How has Harley-Davidson used focus groups to keep up with its shifting market and varying consumer tastes? What information has the company obtained about its customers? Select five brands of toothpaste and explain how the appeals used in advertising these brands relate to buyer black box model. Project and teamwork exercises 1. Please read the following mini case before answering questions below. Sunshine Cruise Lines is a cruise operator that offers three-to seven-day cruises along any of five Caribbean routes. It has developed a reputation as a party cruise operator and the majority of its revenue comes from vacationing college students. Sunshine would like to scale up its reputation to attract more families and a more mature, affluent clientele, while continuing to cater to the college student crowd. In order to do so, Sunshine has begun offering cruises specifically geared toward families, with babysitting services, day time programming for younger children, and a separate games room with pool tables and ping pong to appeal to older children. Having found that a preponderance of its family passengers book through travel agents, Sunshine specifically promotes these family cruises through travel agencies that will be able to fully explain the benefits of a Sunshine cruise to potential buyers. Sunshine also has remodelled a number of its smaller ships to offer more spacious cabins with more luxurious fittings. These small “First Class Cruises,” which do not allow children, offer not only a gourmet chef, but a string quartet to serenade passengers during their evening meal and a pianist to provide background music during their evening cocktails. These “First Class Cruises” are advertised in business and travel magazines and have a dedicated website for travel information and reservations. Questions: What Sunshine is trying to do itself as a cruise carrier for young families and affluent empty nesters as well as for college spring breakers? 2. Sunshine offers different services to meet the needs of different market segments, advertising each with a different campaign and strategy. What is the strategy Sunshine has? 3. Sunshine developed two completely new cruise options to meet the vacationing needs of families and upper-class adults. What the segmentation of potential market did Sunshine? 4. Sunshine specifically markets its party cruises to college students in January and February in anticipation of spring break. What type of segmentation is it? 1. 13 CONCEPTION O F C O N S U M E R B E H AV I O U R , C O N T E N T S , M O D E L S References for further reading 1. Ayuba B. (2005), Marketing: Principles and Management, Kaduna: Shukrah Printing 2. David L. and Albert J.D. (2002), Consumer Behaviour, New Delhi: Tata McGraw Hill. 3. Del I.H. Roger J.B. and Kenneth A.C. (2001), Consumer Behaviour; Building Marketing Strategy, New York: McGraw-Hill Irwin. 4. Eric A. Linda P. and George Z. (2002), Consumer, New York: McGraw-Hill Irwin. 5. Geoff, R. (1988); Modern Industrial Marketing; New York: McGraw-Hill, 6. Kotler, P. (2000); Marketing Management; New Delhi: Prentice-Hall, Inc. 7. Kotler, P. and Armstrong (1999); Principles of Marketing; New Delhi: Prentice-Hall, 8. Inc. Leon G.S. and Leslie L.K (2004), Consumer Behaviour, Upper SaddleRiver, U.S.A: Pearson Education, Inc. Pearson Prentice Hall. 9. Levitt, T. (1960): The Marketing Mode; New Jersey, Prentice- Hall, Inc.8 10. Mc Carthy, E.J. (1996): Basic Marketing: A Management Approach. Illinois: Irwin. 11. Michael, J.B. (1992): Marketing Strategy and Management; London: Macmillan Press. 12. Morden, A.R. (1991): Elements of Marketing; London: DP Publications. 13. Onu, A.J (2000); Marketing Today; Zaria: Ndyson Publishers Ltd. 14 S E G M E N T AT I O N , T A RG E T I N G A N D P O S I T I O N I N G Part 3 SEGMENTATION, TARGETING AND POSITIONING Objective outline: Chapter Key Terms: After studying this part, you should be able to: Segmentation Strategies 1. State the concept of market segmentation %UDQG3RVLWLRQLQJ 2. State the criteria for segmenting markets %HQHÀW6HJPHQWDWLRQ 3. Describe the process of conducting market segmentation as well as the bases Target group Targeting Demographics are clearly tied to subculture and segmentation. Here, however, we shift our focus from analysing specific subcultures to trying to understand the implications for an entire population of its makeup. Several issues are useful in the structure of a population. For example, in some rapidly growing countries, a large percentage of the population is concentrated among younger generations. In countries such as Korea, China, and Taiwan, this has helped stimulate economic growth, while in certain poorer countries; it puts pressures on society to accommodate an increasing number of people on a fixed amount of land. Other countries such as Japan and Germany, in contrast, experience problems with a “greying” society, where fewer non-retired people are around to support an increasing number of aging seniors. Because Germany actually hovers around negative population growth, the German government has issued large financial incentives, in the forms of subsidies, for women who have children. In the United States, population growth occurs both through births and immigration. Since the number of births is not growing, problems occur for firms that are dependent on population growth (e.g., Gerber, a manufacturer of baby food). Social class is a somewhat nebulous subject that involves stratifying people into groups with various amounts of prestige, power, and privilege. In part because of the pioneering influence in American history, status differentiations here are quite vague. We cannot, for example, associate social class with income, because a traditionally low status job as a plumber may today come with as much income as a traditionally more prestigious job as a school teacher. In certain other cultures, however, stratification is more clear-cut. Although the caste system in India is now illegal, it still maintains a tremendous influence on that society. While some mobility exists today, social class awareness is also somewhat greater in Britain, where social status is in part reinforced by the class connotations of the accent with which one speaks. Textbooks speak of several indices that have been used to “compute” social class in the United States, weighing factors such as income, the nature of one’s employment, and level of education. 15 S E G M E N T AT I O N , T A RG E T I N G A N D P O S I T I O N I N G Segmentation, Targeting, and Positioning Today, Segmentation, Targeting and Positioning (STP) is a familiar strategic approach in Modern Marketing. It is one of the most commonly applied marketing models in practice. This popularity is relatively recent since previously, marketing approaches were based more around products rather than customers. Segmentation, targeting, and positioning together comprise a three stage process. We first (1) determine which kinds of customers exist, then (2) select which ones we are best off trying to serve and, finally, (3) implement our segmentation by optimising our products/services for that segment and communicating that we have made the choice to distinguish ourselves that way. Segmentation involves finding out what kinds of consumers with different needs exist. In the auto market, for example, some consumers demand speed and performance, while others are much more concerned about roominess and safety. In general, it holds true that “You can’t be all things to all people,” and experience has demonstrated that firms that specialise in meeting the needs of one group of consumers over another tend to be more profitable. Generically, there are three approaches to marketing. In the undifferentiated strategy, all consumers are treated as the same, with firms not making any specific efforts to satisfy particular groups. This may work when the product is a standard one where one competitor really can’t offer much that another one can’t. Usually, this is the case only for commodities. In the concentrated strategy, one firm chooses to focus on one of several segments that exist while leaving other segments to competitors. For example, Southwest Airlines focuses on price sensitive consumers who will forego meals and assigned seating for low prices. SEGMENTATION INDENTIFYING MEANINGFULLY DIFFERENT GROUPS OF CUSTOMERS TARGETING PRODUCT PRICE SELECTING WHICH SEGMENT (S) TO SERVE POSITIONING DISTRIBUTION IMPLEMENTING CHOSEN IMAGE AND APPEAL TO CHOSEN SEGMENT PROMOTION FIGURE 2. SEGMENTATION, TARGETING, AND POSITIONING PRINCIPLES The source: Perner L.(2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http://www.consumerpsychologist.com/index.html, accessed March/April, 2014 These travellers—usually business travellers—pay high fares but can only fill the planes up partially. The same airlines then sell some of the remaining seats to more price sensitive customers who can buy The part’s information is adopted from Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http://www.con- sumerpsychologist.com/index.html, accessed March/April, 2014 16 S E G M E N T AT I O N , T A RG E T I N G A N D P O S I T I O N I N G two weeks in advance and stay over. Note that segmentation calls for some tough choices. There may be a large number of variables that can be used to differentiate consumers of a given product category; yet, in practice, it becomes impossibly cumbersome to work with more than a few at a time. Thus, we need to determine which variables will be most useful in distinguishing different groups of consumers. We might thus decide, for example, that the variables that are most relevant in separating different kinds of soft drink consumers are (1) preference for taste vs. low calories, (2) preference for Cola vs. non-cola taste, (3) price sensitivity—willingness to pay for brand names; and (4) heavy vs. light consumers. We now put these variables together to arrive at various combinations. Several different kinds of variables can be used for segmentation. Demographic variables essentially refer to personal statistics such as income, gender, education, location (rural vs. urban, East vs. West), ethnicity, and family size. Campbell’s soup, for instance, has found that Western U.S. consumers on the average prefer spicier soups—thus, you get a different product in the same cans at the East and West coasts. Facing flat sales of guns in the traditional male dominated market, a manufacturer came out with the Lady Remington, a more compact, handier gun more attractive to women. Taking this a step farther, it is also possible to segment on lifestyle and values.” Some consumers want to be seen as similar to others, while a different segment wants to stand apart from the crowd. Another basis for segmentation is behaviour. Some consumers are “brand loyal”— they tend to stick with their preferred brands even when a competing one is on sale. Some consumers are “heavy” users while others are “light” users. For example, research conducted by the wine industry shows that some 80% of the product is consumed by 20% of the consumers — presumably a rather intoxicated group. One can also segment on benefits sought, essentially bypassing demographic explanatory variables. Some consumers, for example, like scented soap (a segment likely to be attracted to brands such as Irish Spring), while others prefer the “clean” feeling of unscented soap (the “Ivory” segment). Some consumers use toothpaste primarily to promote oral health, while another segment is more interested in breathe freshening. In the next step, we decide to target one or more segments. Our choice should generally depend on several factors. First, how well are existing segments served by other manufacturers? It will be more difficult to appeal to a segment that is already well served than to one whose needs are not currently being served well. Secondly, how large is the segment, and how can we expect it to grow? (Note that a downside to a large, rapidly growing segment is that it tends to attract competition). Thirdly, do we have strengths as a company that will help us appeal particularly to one group of consumers? Firms may already have an established reputation. While McDonald’s has a great reputation for fast, consistent-quality, family friendly food, it would be difficult to convince consumers that McDonald’s now offers gourmet food. Thus, McDonald’s would probably be better off targeting families in search of consistent quality food in nice, clean restaurants. Positioning involves implementing our targeting. For example, Apple Computer has chosen to position itself as a maker of user-friendly computers. Thus, Apple has done a lot through its advertising to promote itself, through its unintimidating icons, as a computer for “non-geeks.” The Visual C software programming language, in contrast, is aimed a “techies.” Michael Treacy and Fred Wiersema suggested in their 1993 book The Discipline of Market Leaders that most successful firms fall into one of 17 S E G M E N T AT I O N , T A RG E T I N G A N D P O S I T I O N I N G three categories: Operationally excellent firms, which maintain a strong competitive advantage by maintaining exceptional efficiency, thus enabling the firm to provide reliable service to the customer at a significantly lower cost than those of less well organised and well run competitors. The emphasis here is mostly on low cost, subject to reliable performance, and less value is put on customising the offering for the specific customer. Wal-Mart is an example of this discipline. Elaborate logistical designs allow goods to be moved at the lowest cost, with extensive systems predicting when specific quantities of supplies will be needed. PRODUCT PRICE PREMIUM PREMIUM BASIC POSITIONING LOW PRICE DURABLE IMPLEMENTING CHOSEN IMAGE AND APPEAL TO CHOSEN SEGMENT VALUE PROMOTION DISTRIBUTION PRESTIGE INTENSIVE FUN SELECTIVE POWERFUL EXKLUSIVE FIGURE 3. PRODUCT POSITIONING The source: Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http://www.consumerpsychologist.com/index.html, accessed March/April, 2014 - Customer intimate firms, which excel in serving the specific needs of the individual customer well. There is less emphasis on efficiency, which is sacrificed for providing more precisely what is wanted by the customer. Reliability is also stressed. Nordstrom’s and IBM are examples of this discipline. Technologically excellent firms, which produce the most advanced products currently available with the latest technology, constantly maintaining leadership in innovation. These firms, because they work with costly technology that needs constant refinement, cannot be as efficient as the operationally excellent firms and often cannot adapt their products as well to the needs of the individual customer. Intel is an example of this discipline. Repositioning involves an attempt to change consumer perceptions of a brand, usually because the existing position that the brand holds has become less attractive. Sears, for example, attempted to reposition itself from a place that offered great sales but unattractive prices the rest of the time to a store that consistently offered “everyday low prices.” Repositioning in practice is very difficult to accomplish. A great deal of money is often needed for advertising and other promotional efforts, and in many cases, the repositioning fails. To effectively attempt repositioning, it is important to understand how one’s brand and those of competitors are perceived. One approach to identifying consumer product perceptions is multidimensional scaling. Here, we identify how products are perceived on two or more “dimensions,” allowing 18 S E G M E N T AT I O N , T A RG E T I N G A N D P O S I T I O N I N G us to plot brands against each other. It may then be possible to attempt to “move” one’s brand in a more desirable direction by selectively promoting certain points. There are two main approaches to multi-dimensional scaling. In the a priori approach, market researchers identify dimensions of interest and then ask consumers about their perceptions on each dimension for each brand. This is useful when (1) the market researcher knows which dimensions are of interest and (2) the customer’s perception on each dimension is relatively clear (as opposed to being “made up” on the spot to be able to give the researcher a desired answer). In the similarity rating approach, respondents are not asked about their perceptions of brands on any specific dimensions. Instead, subjects are asked to rate the extent of similarity of different pairs of products (e.g., How similar, on a scale of 1-7, is Snicker’s to KitKat, and how similar is Toblerone to Three Musketeers?) Using a computer algorithm, the computer then identifies positions of each brand on a map of a given number of dimensions. The computer does not reveal what each dimension means—that must be left to human interpretation based on what the variations in each dimension appears to reveal. This second method is more useful when no specific product dimensions have been identified as being of particular interest or when it is not clear what the variables of difference are for the product category. Review questions/discussions 1. 2. 3. 4. 5. 6. 7. Explain the concept of market segmentation and describe the main forces that constitute the positioning. Create a product positioning map (four cell matrix) for wristwatches. Use the dimensions of price and prestige. Summarise your product positioning map and what you learned by doing this positioning map in a two-page report. Think about some of your friends and what you have discovered by visiting their homes. Do they buy different things than you do? If so, why? How might a company distinguish you from them in terms of its targeting? Staples and The Limited have attempted to thwart shoppers who abuse store return policies. When a customer returns items, store clerks swipe the customer’s driver’s license through electronic card readers that track buying and return patterns for any suspicious activity. [1] What drawbacks do you think such a strategy could have? Is it always harder to find new customers than it is to retain old ones? Or does it depend on the business you’re in? Does one-to-one marketing have to be expensive? How can small organisations interact with their customers in a cost-effective way? Are large companies better off using multi segment strategies and small companies better off using niche strategies? Why or why not? 19 S E G M E N T AT I O N , T A RG E T I N G A N D P O S I T I O N I N G Project and teamwork exercises 1. Everett M Rogers postulated that products would be adopted if they possessed most of the attributes in the table below. Please give the examples for each attribute. Attribute Explanation Examples Relative advantage The product must have some advantage over the products already on the market. It must offer the consumer a better range of benefits than the existing solution. Compatibility The product must fit in with the consumers’ lifestyle. Complexity The product must not be too complex for the consumer to understand. Trialability Products which can be tried out are more likely to succeed. Observability The more observable the product, the quicker the diffusion process. If other potential consumers are able to see the product in use, this is bound to raise interest in it. 2. Once people have their core benefits, the market must be segmented to find out how many people have further needs which may be met by new products and services. Consider the changes in transportation. Product type Core benefits Other benefits and drawbacks Horse & carriage Model T Ford Modern Ford vehicle range 3. 4. Break the class into small groups and assign each group a specific industry. Have each group discuss the marketing strategies that they believe important to the effective marketing of products in that industry. Divide the class into three-member groups. Ask each group to bring three similar products (or packages of those products) to class. Examples might include breakfast cereals, soft drinks, or laundry detergent. Ask each group to analyse the target market for each of their three products. Then, based on who they have identified as the target market for each product, ask each group to discuss each element of the marketing mix – explaining how the marketing mix was “built” for each product. 20 S E G M E N T AT I O N , 5. 6. T A RG E T I N G A N D P O S I T I O N I N G Form groups of three students. Think of a product or service that one of you purchased recently on campus. How might you go about developing a customer profile for the product? List the sources you would use. Describe a product you like that you believe more people should use. As a marketer, how would you reposition the product to increase its use? Outline your strategy. References for further reading 1. 2. 3. 4. Ayuba B. (2005), Marketing: Principles and Management, Kaduna: Shukrah PrintingEdward, J. and William J. (1963), Fundamentals of Marketing; NewYork, Mc Graw-Hill, Inc. Kotler P. (2002), Marketing Management 21C., Upper Saddle River, U.S.A: Pearson Education, Inc. Pearson Prentice Hall. Leon G.S. and Leslie L.K (2004), Consumer Behaviour, Upper Saddle River, U.S.A: Pearson Education, Inc. Pearson Prentice Hall. 21 P E R S O NA L FA C T O R S O F A C O N S U M E R , T H E I R I N F L U E N C E O N B E H AV I O U R Part 4 PERSONAL FACTORS OF A CONSUMER, THEIR ,1)/8(1&(21%(+$9,285 Objective outline: Chapter Key Terms After studying this unit, you should be able to: Consumer Personality 1. Personality traits Describe meaning and theories of personality and their potential for understanding consumers. 2. State how consumer personality is measured. 3. Describe the nature of self-concept and brand personality. 4. Define family and a household. 5. Describe traditional and modern family life cycle. 6. State variables affecting family purchase decision. 7. Describe the importance of family influences on consumer behaviour. Personality types Family decision making Definition and consumer personality The sum total of an individual defines his personality. Just as an individual has a personality, similarly products also have a personality of their own. A study of personality as a subject area in consumer behaviour assumes importance as consumers generally decide on product/brand choices on the basis of their personality. A person’s decision with regard to the brand as well as the timing and place of purchase, the amount purchased, its usage and disposal, are all based on his personality. Consumers generally buy those products/brands, whose personality matches their own, or they buy such products/brands that help them fight their inferiority. Thus, the study of consumer personality, personality traits and types as well as general and consumption specific personality traits is important, and holds relevance for a marketer in the design, development and implementation of his marketing strategies. Personality is defined as a sum total of outer physiological as well as the inner psychological charac The part’s information is adopted from Sahney, S., Consumer Behaviour. NPIEL Vinod Gupta School of Management, access via internet page: http://www. consumerpsychologist.com/index.html, accessed March/April, 2014. 22 P E R S O NA L FA C T O R S O F A C O N S U M E R , T H E I R I N F L U E N C E O N B E H AV I O U R teristics that determine and reflect how a person reacts to his environment. It exhibits itself through a unique psychological makeup that activates behaviour on the part of an individual in response to forces in his or her environment. However, the emphasis is on the inner characteristics, i.e., the qualities, attributes, traits, and mannerisms that differentiate one individual from another individual, and make him unique in his own way. It is noteworthy that as individuals we possess such traits, and people who share a particular trait(s) are said to belong to a personality type. Specific to environment here, is the social environment, which posits the social dimension of a person’s psychological makeup. A person’s personal make up is to a large extent influenced by his social environment, e.g., the family, friends, social class, sub culture, culture, nationality and the environment in which he or she grows up. As Schiffman has put it consumer personality refers to the “unique dynamic organisation of characteristics of a particular person, physical and psychological, which influence behaviour and responses to the social and physical environment.” It is a consistent repeated pattern of behaviour. The term personality has been defined variedly, so has been the evolution; while some researchers have stressed the influence that heredity has on the make-up of personality, others have also included experiences in early childhood; still others have laid emphasis on as well as environmental influences across different periods in a person’s life cycle, and illustrated how personality continues to develop over lifetime. The approach towards the study has also been debatable. While some look at personality as a unified whole, others focus on specific personality traits. Consumer personality is defined as the characteristics that determine and reflect how consumers make choices with regard to buying patterns and consumption behaviour. Consumer purchase patterns are always influenced by their personality traits. Just as we consumers, have different personality make ups, the decision choices with regard to purchase of products/brands also differs, especially with the assumption that consumer prefer such product/brand choices that match their personality traits. Such personality traits could be general as well as consumption specific. Personality traits and personality types: we need to differentiate between a “personality trait” and a “personality type”. As mentioned in the above section, as individuals, each one of us is unique with a wide array of qualities, attributes, traits and characteristics. However, each one of us shares with each other a quality or a few trait (s). When we share a trait (s) with another (others), we are said to be similar on that trait and thus we together with the other person (s), is said to fall in a personality type. In other words, a personality trait is a person’s inclination to behave in a particular way while interacting with the external environment to achieve goals; this would be specific to an area of a person’s life. Many personality traits put together, comprise the personal make-up of a person and culminate into his personality. On the other hand, a group of people who share personality traits are said to fall into a personality class; they are expected to react to the environment in a similar manner as they are similar to each other on the basis of certain trait (s). For example, stubbornness may be a trait; dogmatism would become a personality type. The study of personality has been a matter of discussion; contributions are varied and debatable. Major contribution to the topic of study was made by the father of psychology, Sigmund Freud. Other contributions came from psychologists like Carl Jung, the Neo-Freudians (like Adler, Sullivan and Homey) and the Trait theorists. Theories on personality can be categorised as: i) individual theories; ii) social learning theories. However, we would elaborate upon these without any such classification, as it is rightly believed that it is the combination of both individual characteristics/traits (genetics) as well as social learning (social environment) that impacts personality. This lesson deals with The Freudian theory, the Jungian theory and the Neo-Freudian Theory. Sigmund Freud, the father of psychology, became famous with its psychoanalytic theory of person- 23 P E R S O NA L FA C T O R S O F A C O N S U M E R , T H E I R I N F L U E N C E O N B E H AV I O U R ality. In fact the theory is regarded as the cornerstone of modern psychology. Freud based his theory on certain assumptions: - unconscious needs or drives lie at the heart of human motivation and personality; - the socialisation process that takes place within people in a social set up has a huge impact on individual behaviour. Freud explained much of how the psyche or the mind operates, and proposed that the human psyche is composed of parts within our awareness and beyond our awareness. He said that all behaviour within an individual cannot be explained, much lies in the sub-conscious. Freud viewed personality as “an iceberg”; just as majority of the iceberg remains within water and only the tip of the iceberg is above water, similarly, much of our personality exists below our level of awareness, as the unconscious and just as a part of it lies above, as the conscious. Even though an individual is not aware of the contents and processes of the unconscious, much of our behaviour is attributed to it. Based on the level of awareness, the human mind comprises three parts, i.e., conscious, preconscious and the unconscious or the sub-conscious. The conscious mind is what one is aware of at any particular moment of time and reflects one’s present thoughts, feelings, perceptions, fantasies, etc.; it restricts oneself to the current thinking processes and comprises a very large part of our current awareness. The preconscious mind or the “available memory,” is what can be retrieved and made conscious, and brought to mind instantly or quickly; it is what we are aware of but not paying attention to at a point of time; it is something that can be brought into the conscious mind. The larger part of the human mind consists of the unconscious, which is all that stays at the subconscious level, and comprises the unaware, better known as our drives or instincts, feelings and memories and emotions related to trauma; this part in content and process is out of direct reach of the conscious mind, and thinks independently; an individual has no access to because it is unknown and hidden. This unconscious part is the source of all our drives and motives; yet we are often deny or refuse to accept and often resist them from becoming conscious. This is because they form the unaware part and are in a disguised form. It is because of this unconscious part that we are largely unable to control many aspects of our behaviour, especially those acts which we would prefer to avoid. According to Freud, much of human behaviour is driven directly from the subconscious mind; and so it is important that the unconscious material needs to be brought into the conscious state so that it can be examined in a rational manner. Apart from these, Freud spoke of the Id, Ego and Super ego. The Id contains consists of primitive drives that lack the real perception of reality. It operates on the pleasure principle, with the objective of seeking pleasure and avoidance of pain, and doing what one wants to do. The processes that come into play are primary processes like hunger, thirst etc. The Ego is aware of reality and operates via the reality principle, where it recognises what is real and understands that behaviour has consequences. The processes that come into play are secondary processes, like learning and memory, perception etc. It also includes the impact that socialisation has to play in the life of an individual; it recognises the existence of social rules that are necessary in order to live and socialise with other people, and thus, plans to satisfy ones’ needs within the social values and rules. The Super ego comprises the value system and the morals, which emanate from what an individual learns in childhood from his parents. It is contained in the conscious part of our memory. It believes in doing what the society says. While the Ego and Super Ego are partly conscious and partly unconscious, the Id is the unconscious. Further, the Super ego acts as a counterbalance to the Id; the former seeks to restrict the pleasure-seeking demands of the latter, and it is left for the Ego to balance the demands of the Id and Super ego with the constraints of reality; it controls the higher mental processes such as logical reasoning to solve the Id-Super ego dilemma. According to Freud, personality is based on the dynamic and continuous interplay between the Id, 24 P E R S O NA L FA C T O R S O F A C O N S U M E R , T H E I R I N F L U E N C E O N B E H AV I O U R Ego and Super Ego. The Id demands immediate gratification of needs and desires (pleasure principle) regardless of constraints in the external environment; the Ego acts to realistically meet the desires of the Id (reality principle); the Super Ego (conscience) blends morals and societal rules upon the ego, so that the desires are met both realistically and morally. Thus, Freud also pointed out the impact of socialisation on members of a society, especially with reference to how this socialisation impacts individual behaviour. According to him, there exists a state of tension within an individual; this tension arises out if there is a mismatch between an individual’s needs and desires vis-à-vis the norms set up by the society and the socialisation process; the manner in which an individual sorts out the dilemma shapes his personality. An Assessment of the Theory: The Freudian theory is the first comprehensive theory that was proposed on the subject of personality. He described several components that underlie how personality emanates, thus leading to a better understanding of the subject. Other theories have emerged out of this pioneering work. Yet is has been criticised. It is pointed out that his theory lacks reliability and validity; one, it does not lend itself to empirical testing, primarily because the hypotheses are not testable; two, Freud based his theory on the case study approach, and it would be inappropriate to make generalisations based on the case study approach; three, he concentrated only on the impact that childhood experiences have on personality, and ignored other experiences across life span. Carl Jung, a contemporary of Freud proposed the famous Jungian Theory. He elaborated on personality types, and his contribution has great relevance to the study of consumer behaviour. Carl Jung has proposed a typology based upon four bipolar dimensions, where each pole represents an opposite preference and thus illustrates four dichotomies, i.e., Extraversion – Introversion, Sensing – Intuition, Thinking – Feeling, and Judging – Perceiving. The permutations of these 4 pairs help identify sixteen different personality types. The sixteen personality types are defined in terms of acronyms of the combination of the 4 dimensions they represent. The various types are Extraverted Sensing (ESFP, ESTP), Introverted Sensing (ISTJ, ISFJ), Extraverted Intuition (ENFP, ENTP), Introverted Intuition (INFJ, INTJ), Extraverted Thinking (ESTJ, ENTJ), Introverted Thinking (ISTP, INTP), Extraverted Feeling (ESFJ, ENFJ) and Introverted Feeling (INFP, ISFP). The personality types proposed by Carl Jung were developed and incorporated into a scale that came to be famously known and applied as the MBTI or the Myers-Briggs Type Indicator. Essentially a personality inventory, it has been used extensively in social sciences to measure the following pairs of psychological construct/dimensions: sensing-intuiting, thinking-feeling, extroversion-introversion, and judging-perceiving. Each of the four pairs is illustrative of two different personality characteristics. While the scale has been applied successfully in studies on consumer behaviour and market research, recent research has tended to focus on two mental bipolar dimensions or dichotomies, i.e., sensing-intuiting (S-N) and thinking-feeling (T-F). The two dimensions, sensing (S) and intuiting (N) measure how a person receives, gathers and processes information; the people who fall under the S category prefer to gather information through their senses directly; the people who fall under the N category rely upon their understanding of things, based on their perception of the world. Thus we can perceive information through our senses, or our intuition. The other two dimensions, thinking (T) and feeling (F) refer to how individuals take decisions; the people who fall under the T category make decisions based on an unbiased reasoning and logic; the people who fall under the F category base their decisions on feeling and emotions. Thus we can make decisions based on objective logic, or subjective feelings. According to Jung, we all use the S, N, T and F; however each one of us varies in their usage and frequency. The combination of our “preferences” defines our personality type. The same descriptions of the sensing-intuiting (S-N) and thinking-feeling (T-F) personality types may be applied to consumer behaviour; the S and N determine how a consumer gathers and processes information about products, 25 P E R S O NA L FA C T O R S O F A C O N S U M E R , T H E I R I N F L U E N C E O N B E H AV I O U R while the T and F determine how he makes a purchase decision. An Assessment of the Theory: Carl Jung was the first psychologist to speak of personality types. His typology based upon four bipolar dimensions have been widely applied in research in social sciences; it has also been successfully used in studies on consumer behaviour as well. He believed that our behaviour is shaped by past generations’ experience. Families and Family Decision Making The Family Life Cycle: Individuals and families tend to go through a “life cycle:” The simple life cycle goes from: YOUNG SINGLE YOUNG COUPLE EMPTY NEST I/II FULL NEST I/II/III OLDER SINGLE FIGURE 6. FAMILY LIFE CYCLE The source: Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http://www.consumerpsychologist.com/index.html, accessed March/April, 2014 For purposes of this discussion, a “couple” may either be married or merely involve living together. The breakup of a non-marital relationship involving cohabitation is similarly considered equivalent to a divorce. Single parenthood can result either from divorce or from the death of one parent. Divorce usually entails a significant change in the relative wealth of spouses. In some cases, the non-custodial parent (usually the father) will not pay the required child support, and even if he or she does, that still may not leave the custodial parent and children as well off as they were during the marriage. On the other hand, in some cases, some non-custodial parents will be called on to pay a large part of their income in child support. In real life, this situation is, of course, a bit more complicated. For example, many couples undergo divorce. Then we have one of the scenarios: The part’s information is adopted from Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http:// www.conVXPHUSV\FKRORJLVWFRPLQGH[KWPODFFHVVHG0DUFK$SULO- 26 P E R S O NA L FA C T O R S O F A C O N S U M E R , T H E I R I N F L U E N C E O N B E H AV I O U R YOUNG SINGLE YOUNG COUPLE FULL NEST I/II/III SINGLE PARENT FIGURE 7. MODIFIED FAMILY LIFE CYCLE (I) The source: Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http://www.consumerpsychologist.com/index.html, accessed March/April, 2014 This is particularly a problem when the non-custodial parent remarries and has additional children in the second (or subsequent marriages). In any event, divorce often results in a large demand for: • Low cost furniture and household items • Time-saving goods and services Divorced parents frequently remarry, or become involved in other non-marital relationships; thus, we may see: FULL NEST I/II/III SINGLE PARENT BLENDED FIGURE 8. MODIFIED FAMILY LIFE CYCLE (II) The source: Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http://www.consumerpsychologist.com/index.html, accessed March/April, 2014 Another variation involves: YOUNG SINGLE SINGLE PARENT FIGURE 9. MODIFIED FAMILY LIFE CYCLE (III) The source: Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http://www.consumerpsychologist.com/index.html, accessed March/April, 2014 Here, the single parent who assumes responsibility for one or more children may not form a relationship with the other parent of the child. Integrating all the possibilities discussed, we get the following depiction of the 27 P E R S O NA L FA C T O R S O F A C O N S U M E R , T H E I R I N F L U E N C E O N B E H AV I O U R Family Life Cycle: YOUNG SINGLE YOUNG COUPLE EMPTY NEST I/II FULL NEST I/II/III SINGLE PARENT OLDER SINGLE BLENDED FIGURE 10. MODIFIED FAMILY LIFE CYCLE (IV) The source: Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http://www.consumerpsychologist.com/index.html, accessed March/April, 2014 Generally, there are two main themes in the Family Life Cycle, subject to significant exceptions: • As a person gets older, he or she tends to advance in his or her career and tends to get greater income (exceptions: maternity leave, divorce, retirement). • Unfortunately, obligations also tend to increase with time (at least until one’s mortgage has been paid off). Children and paying for one’s house are two of the greatest expenses. Note that although a single person may have a lower income than a married couple, the single may be able to buy more discretionary items. Family Decision Making: Individual members of families often serve different roles in decisions that ultimately draw on shared family resources. Some individuals are information gatherers/holders, who seek out information about products of relevance. These individuals often have a great deal of power because they may selectively pass on information that favours their chosen alternatives. Influencers do not ultimately have the power decide between alternatives, but they may make their wishes known by asking for specific products or causing embarrassing situations if their demands are not met. The decision maker(s) have the power to determine issues such as:7 • Whether to buy; • Which product to buy (pick-up or passenger car?); • Which brand to buy; • Where to buy it; and • When to buy. Note, however, that the role of the decision maker is separate from that of the purchaser. From the point of view of the marketer, this introduces some problems since the purchaser can be targeted by point-of-purchase (POP) marketing efforts that cannot be aimed at the decision maker. Also note that the distinction between the purchaser and decision maker may be somewhat blurred: • The decision maker may specify what kind of product to buy, but not which brand; • The purchaser may have to make a substitution if the desired brand is not in stock; • The purchaser may disregard instructions (by error or deliberately). It should be noted that family decisions are often subject to a great deal of conflict. The reality is that few families are wealthy enough to avoid a strong tension between demands on the family’s resources. Conflicting pressures are especially likely in families with children and/or when only one spouse works 28 P E R S O NA L FA C T O R S O F A C O N S U M E R , T H E I R I N F L U E N C E O N B E H AV I O U R outside the home. Note that many decisions inherently come down to values, and that there is frequently no “objective” way to arbitrate differences. One spouse may believe that it is important to save for the children’s future; the other may value spending now (on private schools and computer equipment) to help prepare the children for the future. Who is right? There is no clear answer here. The situation becomes even more complex when more parties—such as children or other relatives—are involved. Some family members may resort to various strategies to get their way. One is bargaining—one member will give up something in return for someone else. For example, the wife says that her husband can take an expensive course in gourmet cooking if she can buy a new pickup truck. Alternatively, a child may promise to walk it every day if he or she can have a hippopotamus. Another strategy is reasoning—trying to get the other person(s) to accept one’s view through logical argumentation. Note that even when this is done with a sincere intent, its potential is limited by legitimate differences in values illustrated above. Also note that individuals may simply try to “wear down” the other party by endless talking in the guise of reasoning (this is a case of negative reinforcement as we will see subsequently). Various manipulative strategies may also be used. One is impression management, where one tries to make one’s side look good (e.g., argue that a new TV will help the children see educational TV when it is really mostly wanted to see sports programming, or argue that all “decent families make a contribution to the church”). Authority involves asserting one’s “right” to make a decision (as the “man of the house,” the mother of the children, or the one who makes the most money). Emotion involves making an emotional display to get one’s way (e.g., a man cries if his wife will not let him buy a new rap album).7 Review questions/discussion 1. 2. 3. 4. 5. 6. Define Personality. Differentiate between a personality trait and personality types. Explain the Freudian Theory of Personality? How does it relate to consumer behaviour? Why are the meanings produced by elaborate comprehension processes more memorable? What marketers must primarily attend to and examine to understand the inferences consumers make? What purchasing decisions have you been able to influence in your family and why? Is marketing to children a good idea? If not, what if one of your competitors were successfully do so? Would it change your opinion? How do you determine what is distinctive about different groups? What distinguishes one group from other groups? Project and teamwork exercises 1. Erving Goffman developed a useful analogy for the role playing behaviour when he developed his idea, or analogy, of life-as-theatre. This is illustrated by the table below. Please take real examples from life and provide them in the table. 29 P E R S O NA L FA C T O R S O F A C O N S U M E R , T H E I R I N F L U E N C E O N B E H AV I O U R Theatrical terms Explanation Props Items used to make gestures, or to support and emphasis movement, or to set a scene. Costume Items of clothing which serve to establish a role, or set a scene Stage The place where the performance is held, and where the audience is assembled. Backstage The place where the dressing rooms are; where the actors prepare for their performance, and where they meet their friends and intimates. Make-up The face the actor puts on to emphasise the characterisation. Script A pre-planned set of statements intended to communicate the role to the audience. Business The movement’s actors make in the course of playing the role. Applause Feedback from the audience; confirmation that the role projection has been effective 2. Real-life example The family has its own life cycle as shown in the table below. Please give the explanation of each stage of life cycle. Stage of life cycle Explanation Single stage Newly married couples Full nest 1 Full nest 2 Full nest 3 Empty nest 1 Empty nest 2 Solitary survivor Retired solitary survivor 30 P E R S O NA L FA C T O R S O F A C O N S U M E R , T H E I R I N F L U E N C E O N B E H AV I O U R References for further reading 1. 2. 3. 4. 5. 6. Assael, H. (1992), Consumer Behaviour & Marketing Action, 4th. Ed., PWS Kent, Boston, MA. Loudon, D.L. and Bitta A.J. Della, Consumer Behaviour, Fourth Edition, 2002, Tata McGraw-Hill, New Delhi. Kotler P., and Keller K.L., Marketing Management, Thirteenth edition, 2009, Pearson. Peter, P.J. and Olson, J.C., Consumer Behaviour and Marketing Strategy, Seventh Edition, 2005, McGraw-Hill Higher Education. Schiffman, L.G. and Kanuk, L.L., Consumer Behaviour, Eight Edition, 2004, Prentice Hall, India. Wells W.D. and Prensky, D., Consumer Behaviour, 1996, John Wiley & sons, Inc. 31 THE I N F L U E N C E O F E N V I RO N M E N T A L FA C T O R S O N C O N S U M E R B E H AV I O U R Part 5 7+(,1)/8(1&(2)(19,5210(17$/ )$&725621&21680(5%(+$9,285 Objective outline: Chapter Key Terms: After studying this unit, you be able to: Consumer social groups 1. Reference group Define social group and identify different types of consumer social groups 2. Identify characteristics of a social group 3. Describe reference group and its influence on consumer behaviour 4. Describe the concept and meaning of social class 5. State essential characteristics of a social class 6. Describe social class categorisation and measurement 7. Identify problems associated with measuring a social class 8. Describe Meaning of culture and its essential features 9. Describe nature of cultural values and how its influence consumer behaviour Social class Categorisation and measurement Culture Nature of cultural values Cultural changes Strategic marketing practices 10. Describe cultural changes and its implication for strategic marketing practices Culture and subculture Culture is part of the external influences that impact the consumer. That is, culture represents influences that are imposed on the consumer by other individuals. The definition of culture offered in one textbook is “That complex whole which includes knowledge, belief, art, morals, custom, and any other capabilities and habits acquired by man person as a member of society.” From this definition, The part’s information is adopted by Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http://www.consumerpsychologist.com/index.html, accessed March/April, 2014. 32 THE I N F L U E N C E O F E N V I RO N M E N T A L FA C T O R S O N C O N S U M E R B E H AV I O U R we make the following observations: Culture, as a “complex whole,” is a system of interdependent components. Knowledge and beliefs are important parts. In the U.S., we know and believe that a person who is skilled and works hard will get ahead. In other countries, it may be believed that differences in outcome result more from luck. “Chunking,” the name for China in Chinese literally means “The Middle Kingdom.” The belief among ancient Chinese that they were in the centre of the universe greatly influenced their thinking. Other issues are relevant. Art, for example, may be reflected in the rather arbitrary practice of wearing ties in some countries and wearing turbans in others. Morality may be exhibited in the view in the United States that one should not be naked in public. In Japan, on the other hand, groups of men and women may take steam baths together without perceived as improper. On the other extreme, women in some Arab countries are not even allowed to reveal their faces. Notice, by the way, that what at least some countries view as moral may in fact be highly immoral by the standards of another country. For example, the law that once banned interracial marriages in South Africa was named the “Immorality Act,” even though in most civilised countries this law, and any degree of explicit racial prejudice, would itself be considered highly immoral. Culture has several important characteristics: (1) Culture is comprehensive. This means that all parts must fit together in some logical fashion. For example, bowing and a strong desire to avoid the loss of face are unified in their manifestation of the importance of respect. (2) Culture is learned rather than being something we are born with. We will consider the mechanics of learning later in the course. (3) Culture is manifested within boundaries of acceptable behaviour. For example, in American society, one cannot show up to class naked, but wearing anything from a suit and tie to shorts and a T-shirt would usually be acceptable. Failure to behave within the prescribed norms may lead to sanctions, ranging from being hauled off by the police for indecent exposure to being laughed at by others for wearing a suit at the beach. (4) Conscious awareness of cultural standards is limited. One American spy was intercepted by the Germans during World War II simply because of the way he held his knife and fork while eating. (5) Cultures fall somewhere on a continuum between static and dynamic depending on how quickly they accept change. For example, American culture has changed a great deal since the 1950s, while the culture of Saudi Arabia has changed much less. Whether dealing with issues of marketing, managing, or negotiating, the success or failure of a company abroad depends on how effectively its employees can exercise their skills in a new location. That ability will depend on both their job-related expertise and the individual’s sensitivity and responsiveness to the new cultural environment One of the most common factors contributing to failure in international business assignments is the erroneous assumption that if a person is successful in the home environment, he or she will be equally successful in applying technical expertise in a different culture. Hofstede’s dimensions: Gert Hofstede, a Dutch researcher, was able to interview a large number of IBM executives in various countries, and found that cultural differences tended to centre around four key dimensions:9 Individualism vs. collectivism: To what extent do people believe in individual responsibility and reward rather than having these measures aimed at the larger group? Contrary to the stereotype, Japan actually ranks in the middle of this dimension, while Indonesia and West Africa rank to- 33 THE I N F L U E N C E O F E N V I RO N M E N T A L FA C T O R S O N C O N S U M E R B E H AV I O U R ward the collectivistic side. The U.S., Britain, and the Netherlands rate toward individualism. Power distance: To what extent is there a strong separation of individuals based on rank? Power distance tends to be particularly high in Arab countries and some Latin American ones, while it is more modest in Northern Europe and the U.S. Masculinity vs. femininity involves a somewhat more nebulous concept. “Masculine” values involve competition and “conquering” nature by means such as large construction projects, while “feminine” values involve harmony and environmental protection. Japan is one of the more masculine countries, while the Netherlands rank relatively low. The U.S. is close to the middle, slightly toward the masculine side. (The fact that these values are thought of as “masculine” or “feminine” does not mean that they are consistently held by members of each respective gender—there are very large “within-group” differences. There is, however, often a large correlation of these cultural values with the status of women.) Uncertainty avoidance involves the extent to which a “structured” situation with clear rules is preferred to a more ambiguous one; in general, countries with lower uncertainty avoidance tend to be more tolerant of risk. Japan ranks very high. Few countries are very low in any absolute sense, but relatively speaking, Britain and Hong Kong are lower, and the U.S. is in the lower range of the distribution. Although Hofstede’s original work did not address this, a fifth dimension of long term vs. short term orientation has been proposed. +LJKYVORZFRQWH[WFXOWXUHV In some cultures, “what you see is what you get”—the speaker is expected to make his or her points clear and limit ambiguity. This is the case in the U.S.—if you have something on your mind, you are expected to say it directly, subject to some reasonable standards of diplomacy. In Japan, in contrast, facial expressions and what is not said may be an important clue to understanding a speaker’s meaning. Thus, it may be very difficult for Japanese speakers to understand another’s written communication. The nature of languages may exacerbate this phenomenon —while the German language is very precise, Chinese lacks many grammatical features, and the meaning of words may be somewhat less precise. English ranks somewhere in the middle of this continuum. Ethnocentrism and the self-reference criterion: The self-reference criterion refers to the tendency of individuals, often unconsciously, to use the standards of one’s own culture to evaluate others. For example, Americans may perceive more traditional societies to be “backward” and “unmotivated” because they fail to adopt new technologies or social customs, seeking instead to preserve traditional values. In the 1960s, a supposedly well-read American psychology professor referred to India’s culture of “sick” because, despite severe food shortages, the Hindu religion did not allow the eating of cows. Language issues: Language is an important element of culture. It should be realised that regional differences may be subtle. For example, one word may mean one thing in one Latin American country, but something off-colour in another. It should also be kept in mind that much information is carried in non-verbal communication. In some cultures, we nod to signify “yes” and shake our heads to signify “no;” in other cultures, the practice is reversed. Within the context of language: There are often large variations in regional dialects of a given language. The differences between U.S., Australian, and British English are actually modest compared to differences between dialects of Spanish and German. Idioms involve “figures of speech” that may not be used, literally translated, in other languages. For example, baseball is a predominantly North and South American sport, so the notion of “in the ball park” makes sense here, but the term does not carry the same meaning in cultures where the sport is less popular. 34 THE I N F L U E N C E O F E N V I RO N M E N T A L FA C T O R S O N C O N S U M E R B E H AV I O U R - Neologisms involve terms that have come into language relatively recently as technology or society involved. With the proliferation of computer technology, for example, the idea of an “add-on” became widely known. It may take longer for such terms to “diffuse” into other regions of the world. In parts of the World where English is heavily studied in schools, the emphasis is often on grammar and traditional language rather than on current terminology, so neologisms have a wide potential not to be understood. Slang exists within most languages. Again, regional variations are common and not all people in a region where slang is used will necessarily understand this. There are often significant generation gaps in the use of slang. Writing patterns, or the socially accepted ways of writing, will differs significantly between cultures. FIGURE 11. SOCIALLY ACCEPTED WAYS OF WRITING, WILL DIFFERS SIGNIFICANTLY BETWEEN CULTURES The source: Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http://www.consumerpsychologist.com/index.html, accessed March/April, 2014 In English and Northern European languages, there is an emphasis on organisation and conciseness. Here, a point is made by building up to it through background. An introduction will often foreshadow what is to be said. In Romance languages such as Spanish, French, and Portuguese, this style is often considered “boring” and “inelegant.” Detours are expected and are considered a sign of class, not of poor organisation. In Asian languages, there is often a great deal of circularity. Because of concerns about potential loss of face, opinions may not be expressed directly. Instead, speakers may hint at ideas or indicate what others have said, waiting for feedback from the other speaker before committing to a point of view. Because of differences in values, assumptions, and language structure, it is not possible to meaningfully translate “word-for-word” from one language to another. A translator must keep “unspoken understandings” and assumptions in mind in translating. The intended meaning of a word may also differ from its literal translation. For example, the Japanese word hai is literally translated as “yes.” To Americans, that would imply “Yes, I agree.” To the Japanese speaker, however, the word may mean “Yes, I hear what you are saying” (without any agreement expressed) or even “Yes, I hear you are saying something even though I am not sure exactly what you are saying.” Differences in cultural values result in different preferred methods of speech. In American English, where the individual is assumed to be more in control of his or her destiny than is the case in many other cultures, there is a preference for the “active” tense (e.g., “I wrote the marketing plan”) as opposed 35 THE I N F L U E N C E O F E N V I RO N M E N T A L FA C T O R S O N C O N S U M E R B E H AV I O U R to the passive (e.g., “The marketing plan was written by me.”) Because of the potential for misunderstandings in translations, it is dangerous to rely on a translation from one language to another made by one person. In the “decentring” method, multiple translators are used. FRENCH Translator 1 SWAHILI Translator 2 FRENCH SWAHILI Translator 3 FRENCH If still not matched, continue process with the new translators FIGURE 12. TRANSLATION FROM ONE LANGUAGE TO OTHER SPECIFICS The source: Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http://www.consumerpsychologist.com/index.html, accessed March/April, 2014 The text is first translated by one translator—say, from German to Mandarin Chinese. A second translator, who does not know what the original German text said, will then translate back to German from Mandarin Chinese translation. The text is then compared. If the meaning is not similar, a third translator, keeping in mind this feedback, will then translate from German to Mandarin. The process is continued until the translated meaning appears to be satisfactory. A consumer’s behaviour also influenced by social factors such as the consumer’s small groups, family and social roles and status. Groups: A person’s behaviour is influenced by many small groups. Manufacturers of products and brands subjected to strong group influence must figure out how to reach opinion leaders. An opinion leader is a person within a reference group who because of special skills, knowledge, personality, or other characteristics exerts on others. An aspiration group is one to which an individual wishes to belong. Family: – Most important consumer buying organisation in the society. – Family members can strongly influence buyer behaviour. – Marketers are interested in the roles and influence of the husband, wife and children on the purchase of different products and services. Roles and Status: a person belongs to many groups such as family, clubs, organisations etc. The person’s position in each group can be defined in terms of both role and status. A role consists of the activities people are expected to perform according to the persons around them. Each role carries a status reflecting the general esteem given it to by the society. People usually choose products appropriate to their roles and status. For example, as a brand manager, she will buy the kind of clothing that reflects her role and status in her company. 36 THE I N F L U E N C E O F E N V I RO N M E N T A L FA C T O R S O N C O N S U M E R B E H AV I O U R 5ROH ([SHFWHGDFWLYLWLHV Status = Esteem given to role by society Reference groups come with various degrees of influence. Primary reference groups come with a great deal of influence—e.g., members of a fraternity/sorority. Secondary reference groups tend to have somewhat less influence—e.g., members of a boating club that one encounters only during weekends are likely to have their influence limited to consumption during that time period. Another typology divides reference groups into the informational kind (influence is based almost entirely on members’ knowledge), normative (members influence what is perceived to be “right,” “proper,” “responsible,” or “cool”), or identification. The difference between the latter two categories involves the individual’s motivation for compliance. In case of the normative reference group, the individual tends to comply largely for utilitarian reasons—dressing according to company standards is likely to help your career, but there is no real motivation to dress that way outside the job. In contrast, people comply with identification groups’ standards for the sake of belonging—for example, a member of a religious group may wear a symbol even outside the house of worship because the religion is a part of the person’s identity. Review questions/discussions 1. 2. 3. 4. Recently there has been a great deal of attention paid to environmental issues resulting in a number of companies embarking on “green” campaigns. Discuss some of the reasons as to why companies are developing such campaigns. Do you think these campaigns will change consumers’ attitudes toward the environment and/or these companies? The chapter discusses the use of cultural anthropology to understand consumer behaviours. Why is it necessary for marketers to use alternative approaches to consumer behaviour? Why do people in different cultures buy different products? Discuss with your class the types of vehicles you have seen other countries. Why are they different, and how do they better meet buyers’ needs in those countries? What types of cars do you think should be sold in the Lithuania today? What is your opinion of companies like Google that gather information about your browsing patterns? What advantages and drawbacks does this pose for consumers? If you were a business owner, what kinds of information would you gather on your customers and how would you use it? Project and teamwork exercises 1. a. b. Please watch the Mountain Man Brewing Company (MMBC) case via internet: https://www.youtube.com/watch?v=ix8qWNBXrfU and discuss the questions: Why has MMBC been successful in the past? Discuss all aspects of this success in terms of the company, its customers and competitors. Discuss the Mountain Man Lager brand from the perspective of Keller’s model of brand knowledge. Does Mountain Man Lager have strong brand equity and if so, why? What has MMBC done to build customer-based brand equity? 37 THE c. d. e. 2. 3. I N F L U E N C E O F E N V I RO N M E N T A L FA C T O R S O N C O N S U M E R B E H AV I O U R Why has MMBC experienced difficulties in recent years in spite of its strong brand? What options does Chris have? In particular, what are the implications of the “do nothing” option? What are the pros and cons of introducing Mountain Man Light? Discuss this issue from the perspective of the model of brand extension discussed in class. Break up into groups and visit an ethnic part of your town that differs from your own ethnicity(-ies). Walk around the neighbourhood and its stores. What types of marketing and buying differences do you see? Write a report of your findings. Identify how McDonald’s targets both users (primarily children) and buyers (parents, grandparents, etc.). Provide specific examples of strategies used by the fast-food marketer to target both groups. Make it a point to incorporate Happy Meals and Mighty Kids Meals into your discussion. References for further reading 1. 2. 3. 4. David L. and Albert J.D. (2002), Consumer Behaviour, New Delhi: Tata McGraw Hill. Del I.H. Roger J.B. and Kenneth A.C. (2001), Consumer Behaviour; Building Marketing Strategy, New York: McGraw-Hill Irwin. Eric A. Linda P. and George Z. (2002), Consumer, New York: McGraw-Hill Irwin. Inc. Leon G.S. and Leslie L.K (2004), Consumer Behaviour, Upper Saddle River, U.S.A: Pearson Education, Inc. Pearson Prentice Hall. 38 THE F E AT U R E S O F P E RC E P T I O N Part 6 THE FEATURES OF PERCEPTION Objective outline: Chapter Key Terms After studying this unit, you should be able to: Perception 1. Describe nature of consumer perception Processes of perception 2. Identify elements and Processes of perception Strategy marketing 3. Describe implication of consumer perception in strategy marketing Consumer perception Consumer perception applies the concept of sensory perception to marketing and advertising. Just as sensory perception relates to how humans perceive and process sensory stimuli through their five senses, consumer perception pertains to how individuals form opinions about companies and the merchandise they offer through the purchases they make. Merchants apply consumer perception theory to determine how their customers perceive them. They also use consumer perception theory to develop marketing and advertising strategies intended to retain current customers -- and attract new ones. Our perception is an approximation of reality. Our brain attempts to make sense out of the stimuli to which we are exposed. This works well, for example, when we “see” a friend three hundred feet away at his or her correct height; however, our perception is sometimes “off ”—for example, certain shapes of ice cream containers look like they contain more than rectangular ones with the same volume. Factors in perception Several sequential factors influence our perception. Exposure involves the extent to which we encounter a stimulus. For example, we are exposed to numerous commercial messages while driving on the freeway: bill boards, radio advertisements, bumper-stickers on cars, and signs and banners placed at shopping malls that we pass. Most of this exposure is random—we don’t plan to seek it out. Howev The part’s information is adapted from the source: Blank, Ch., Demand, M. Consumer perception theory. The access via internet: http://smallbusiness.chron. com/consumer-perception-theory-40176.html (accessed March/April, 2014). The part’s information is adopted from Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http:// www.consumHUSV\FKRORJLVWFRPLQGH[KWPODFFHVVHG0DUFK$SULO 39 THE F E AT U R E S O F P E RC E P T I O N er, if we are shopping for a car, we may deliberately seek out advertisements and “tune in” when dealer advertisements come on the radio. Exposure is not enough to significantly impact the individual—at least not based on a single trial (certain advertisements, or commercial exposures such as the “Swoosh” logo, are based on extensive repetition rather than much conscious attention). In order for stimuli to be consciously processed, attention is needed. Attention is actually a matter of degree—our attention may be quite high when we read directions for getting an income tax refund, but low when commercials come on during a television program. Note, however, that even when attention is low, it may be instantly escalated—for example, if an advertisement for a product in which we are interested comes on. Interpretation involves making sense out of the stimulus. For example, when we see a red can, we may categorise it as a Coke. In today’s globalising economy, competition is getting fiercer. That means it becomes more difficult for products and services to differentiate themselves from other offerings than ever before. Not only is the number of competitive offerings rising due to globalisation of production, sourcing, logistics and access to information. Many products and services face new competition from substitutes and from completely new offerings or bundles from industry outsiders. Since product differences are closed at an increasing speed and many companies try to win the battle for customers by price reductions, products and services tend to become commodities. On the other hand, customer behaviour becomes more hybrid. On one hand, customers are increasingly price sensitive – searching for bargains at marketplaces like eBay or buying their groceries at discount markets. On the other hand they enjoy branded and luxury goods. One and the same person may plan a weekend trip with a no-frills airline and a stay at a five-star-hotel. In the result, customers have a wider choice of often less distinguishable products and they are much better informed. For many offerings the balance of power shifts towards the customer. Customers are widely aware of their greater power, which raises their expectations on how companies should care for them. Bringing it all together, it becomes ever more difficult to differentiate a product or service by traditional categories like price, quality, functionality etc. In this situation the development of a strong relationship between customers and a company could likely prove to be a significant opportunity for competitive advantage. This relationship is no longer based on features like price and quality alone. Today it is more the perceived experience a customer makes in his various interactions with a company (e.g. how fast, easy, efficient and reliable the process is) that can make or break the relationship. Problems during a single transaction can damage a so far favourable customer attitude. The consequence for companies is that they have to adapt their ways of competing for customers. Traditionally, companies have focused their efforts of customer relationship management on issues like customer satisfaction and targeted marketing activities like event marketing, direct marketing or advertising. Although doubtless necessary and beneficial, these activities are no longer enough. They narrow the relationship between company and customer down to a particular set of contacts in which the company invests its efforts. Most likely this will produce not more than a satisfied customer who is well aware of the companies’ offerings and has a positive attitude towards them. However, a satisfied customer is not necessarily a loyal one. If a customer is satisfied that means that a product of service has met his expectations and that he was not dissatisfied by it. Customer satisfaction is doubtlessly very important. It is the precondition for repeat purchases and it prevents the customer from telling others about his disappointing experiences. A loyal customer, however, is more than a customer who frequently purchases from a company. The difference is the emotional bond which links the customer so closely to the company that he develops a clear preference for these products or brands and is even willing to recommend them to oth- 40 THE F E AT U R E S O F P E RC E P T I O N ers. Loyal customers truly prefer a product, brand or company over competitive offerings. Thus loyalty goes beyond a rational decision for known quality or superior price-performance-ratio. It is about the customers’ feelings and perceptions about the brand or product. When the customer makes his buying decision, he evaluates the benefits he perceives from a particular product and compares them with the costs. The value a customer perceives when buying and using a product or service go beyond usability. There is a set of emotional values as well, such as social status, exclusivity, friendliness and responsiveness or the degree to which personal expectations and preferences are met. Similarly, the costs perceived by the customer, normally comprise more than the actual price. They also include costs of usage, the lost opportunity to use another offering, potential switching costs etc. Hence, the customer establishes an equation between perceived benefits and per-ceived costs of one product and compares this to similar equations of other products. Based on this, customer loyalty can be understood as to how customers feel about a product, service or brand, and whether their perceived total investments with it live up to their expectations. The important point here is the involvement of feelings, emotions and perceptions. In today’s competitive marketplace, these perceptions are becoming much more important for gaining sustainable competitive advantage. Customer perceptions are influenced by a variety of factors. Besides the actual outcome, i.e., did the product or service deliver the expected function and did it fulfil the customers need – the whole process of consumption and all interactions involved are of crucial importance. In today’s globalised information driven economy this can also comprise issues like: – How other customers or influencing groups perceive the product or brand; – The degree to which the customer feels the actual marketing campaign addresses the most important issues; – Responsiveness and service quality of any affiliates, e.g., distribution partners. Customer perceptions are dynamic. First of all, with the developing relationship between customer and company, his perceptions of the company and its products or services will change. The more experience the customer accumulates, the more his perceptions will shift from fact-based judgements to a more general meaning the whole relationship gains for him. Over time, he puts a stronger focus on the consequence of the product or service consumption. Moreover, if the customers’ circumstances change, their needs and preferences often change too. In the external environment, the offerings of competitors, with which a customer compares a product or service will change, thus altering his perception of the best offer around. Another point is that the public opinion towards certain issues can change. This effect can reach from fashion trends to the public expectation of good corporate citizenship. Shells intention to dump its Brent Spar platform into the ocean significantly altered many customers perception of which company was worth buying fuel from. Research has been done on the impact of market share on the perceived quality of a product. Depending on the nature of the product and the customers’ preferences, increasing market share can have positive or negative effects on how the customer perceives the product. Surprising stimuli are likely to get more attention—survival instinct requires us to give more attention to something unknown that may require action. A greater contrast (difference between the stimulus and its surroundings) as well as greater prominence (e.g., greater size, centre placement) also tend to increase likelihood of processing. The information adapted from Krell, E. 2005. Differentiate a satisfied customer from a loyal one. Available under http://searchcrm.techtarget.com/ originalConWHQWVLGBJFLKWPO Hellofs, L., Jacobson, R. 1999. Market share and customers’ perceptions of quality: When can firms grow their way to higher versus lower quality? Journal of0DUNHWLQJSDJH 41 THE F E AT U R E S O F P E RC E P T I O N Subliminal stimuli: Back in the 1960s, it was reported that on selected evenings, movie goers in a theatre had been exposed to isolated frames with the words “Drink Coca Cola” and “Eat Popcorn” imbedded into the movie. These frames went by so fast that people did not consciously notice them, but it was reported that on nights with frames present, Coke and popcorn sales were significantly higher than on days they were left off. This led Congress to ban the use of subliminal advertising. First of all, there is a question as to whether this experiment ever took place or whether this information was simply made up. Secondly, no one has been able to replicate these findings. There is research to show that people will start to giggle with embarrassment when they are briefly exposed to “dirty” words in an experimental machine. Here, again, the exposure is so brief that the subjects are not aware of the actual words they saw, but it is evident that something has been recognised by the embarrassment displayed.12 The concept of customer perception does not only relate to individual customers in consumer markets. It is also valid in business to business situations. For example, a competitor benchmarking survey of a large industrial supplier revealed that the market leader, although recognised for excellent quality and service and known to be highly innovative, was perceived as arrogant in some regions. The backbone of any customer perception management and measurement system, however, is thorough market research and surveys. There are several aspects of measuring customer perceptions: – First of all the company has to find out, how it and its offerings are perceived by the customers. It is essential to identify what the customer is actually buying and which features are the most important to him. Besides that, surveys should also identify the relative importance of several influencing variables in the eyes of the customer. – To know what matters the most to the customer and helps to set priorities for projects. – Of course, as with any market research activities, it should be based on careful customer segmentation. Customer groups that differ by frequency of use, social status, geographical region or other criteria, are likely to have different expectations and preferences. Hence, they will probably perceive an offering in different ways. – Zeithamel et al suggest to incorporate several behavioural-intentions questions to identify signals that are potentially favourable or unfavourable for the company. Questions for behaviour intentions are potentially of higher validity and richer diagnostic value than the “overall service quality” or “customer satisfaction” variables. Since these questions are directed at potential future actions they can not only indicate of changes in demand and market trends. They also provide early warning signs and help to take to take timely corrective action. Only if a company knows which features of its products and services or which other points of contact with the customer are considered most important by the customers, it can develop appropriate strategies. Such a strategy will not only help the company to strengthen the emotional bond with the customer through targeted improvements and activities. It may also have the positive side effect that the customers’ whole experience leads him to the conclusion that this company really understands his distinctive needs and really takes him seriously. Zeithamel, V., Berry, L., Parasuraman, A. 1996. The behavioural consequences of service quality. Journal of Marketing. 60 (2), page 31 42 THE F E AT U R E S O F P E RC E P T I O N Review questions/discussion 1. 2. 3. 4. 5. 6. Explain how someone’s personality differs from his or her self-concept. How does the person’s ideal self come into play in a consumer-behaviour context? Describe the buying patterns women exhibit versus men. Why are companies interested in consumers’ cognitive ages? What are some of the consumer lifestyle factors firms examine? Perceptionis defined as the process by which an individual selects, organises and interprets stimuli into a meaningful and coherent picture of the world. It can be described as “how we see the world around us”. . Find two advertisements depicting two different types of perceptual distortions. Discuss your choice. Project and teamwork exercises 1. 2. 3. 4. Find three examples of print advertisements that use some of the stimulus factors discussed in this chapter to gain attention. For each example, evaluate the effectiveness of the stimulus factors used. Define selective perception. Thinking back, relate one or two elements of this concept to your own attention patterns in viewing print advertisements and television commercials. Select a company that produces several versions of the same product under the same brand name. Visit the firm’s website and prepare a list of the product items and the positioning strategy for each of the products. Using Maslow’s Hierarchy of Needs, identify a list of popular advertising slogans that appeal to each of the five levels. References for further reading 1. 2. 3. 4. 5. 6. David L. and Albert J.D. (2002), Consumer Behaviour, New Delhi: Tata McGraw Hill. Eric A. Linda P. and George Z. (2002), Consumer, New York: McGraw-Hill Irwin. Frederick E. Webster, Jr., and Yoram W. (1972), Organizational Buying Behaviour, Eaglewood Cliffs, NJ: Prentice-Hall. James F. E. Roger D.B and Paul W.M. (1990), Consumer Behaviour, U.S.A: The Dryden Press. John A.H. and Jagdish N. S. (1969), Theory of Buyer Behaviour, NewYork: Wiley. Robbins S.P. (2000), Organizational Behaviour, New Delhi: Prentice-Hall. 43 LEARNING A N D M E M O RY Part 7 LEARNING AND MEMORY Objective outline: Chapter Key Terms: After studying this unit, you should be able to: Learning 1. Define learning and memory. Conditioning 2. Describe method of learning and its implication in understanding consumer behaviour. Memory 3. Explain consumer learning theory and identify the necessary elements. 4. Discuss the elements of Classical Conditioning theory. 5. Identify the three strategic applications of Classical Conditioning. 6. Discuss the concept of licensing and its importance to marketing. 7. Review the elements of Instrumental Conditioning. 8. Discuss the strategic applications of Instrumental Conditioning. 9. Discuss the elements of Classical Conditioning theory. Consumer behaviour Marketing solutions 10. Explain and apply cognitive learning theory in a marketing situation. 11. Describe three ways information may be stored in memory. 12. Relate involvement theory to consumer behaviour. 13. Understand how consumer learning can be measured. Learning and memory Learning involves “a change in the content or organization of long term memory and/or behaviour.” The first part of the definition focuses on what we know (and can thus put to use) while the second focuses on concrete behaviour. For example, many people will avoid foods that they consumed shortly before becoming ill. Learning is not all knowledge based. For example, we may experience the sales 1 The part’s information is adopted from Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http:// www.conVXPHUSV\FKRORJLVWFRPLQGH[KWPODFFHVVHG0DUFK$SULO 44 LEARNING A N D M E M O RY people in one store being nicer to us than those in the other. We thus may develop a preference for the one store over the other; however, if pressed, we may not be able to give a conscious explanation as to the reason for our preference. Much early work on learning was actually done on rats and other animals (and much of this research was unjustifiably cruel, but that is another matter). Classical conditioning: Pavlov’s early work on dogs was known as classical conditioning. Pavlov discovered that when dogs were fed meat powder they salivated. Pavlov then discovered that if a bell were rung before the dogs were fed, the dogs would begin salivating in anticipation of being fed (this was efficient, since they could then begin digesting the meat powder immediately). Pavlov then found that after the meat had been “paired” with the meat powder enough times, Pavlov could ring the bell without feeding the dogs and they would still salivate. In the jargon of classical conditioning, the meat powder was an unconditioned stimulus (US) and the salivation was, when preceded by the meat powder, an unconditioned response (UR). That is, it is a biologically “hard-wired” response to salivate when you are fed. By pairing the bell with the unconditioned stimulus, the bell became a conditioned stimulus (CS) and salivation in response to the bell (with no meat powder) became a conditioned response (CR). Many modern day advertisers use classical conditioning in some way. Consider this sequence: US UR (Unconditioned stimulus) (Unconditioned response) US + Stimulus UR CS CR E. g.: ATTRACTIVE WOMAN Positive affect ATTRACTIVE WOMAN + Car Positive affect Car Positive affect FIGURE 13. CLASSICAL CONDITIONING The source: Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http://www.consumerpsychologist.com/index.html, accessed March/April, 2014 Operant conditioning: Instrumental, or operant, conditioning, involves a different series of events, and this what we usually think of as learning. The general pattern is: 45 LEARNING BEHAVIOR A N D M E M O RY CONSEQUNCES LIKELIHOOD OF BEHAVIOR INCREASES OR DECREASES FIGURE 14. THE GENERAL PATTERN The source: Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http://www.consumerpsychologist.com/index.html, accessed March/April, 2014 There are three major forms of operant learning. In positive reinforcement, an individual does something and is rewarded. He or she is then more likely to repeat the behaviour. For example, you eat a candy bar (behaviour), it tastes good (consequence), and you are thus more likely to eat a similar candy bar in the future (behavioural change). REINFORCEMENT LIKELIHOOD OF BEHAVIOR BEHAVIOR NOT the same thing! NEGATIVE REINFORCEMENT PUNISHMENT LIKELIHOOD OF BEHAVIOR FIGURE 15. PUNISHMENT IS THE OPPOSITE The source: Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http://www.consumerpsychologist.com/index.html, accessed March/April, 2014 Punishment is the opposite. You eat what looks like a piece of candy (behaviour), only to discover that it is a piece of soap with a foul taste (consequences), and subsequently you are less likely to eat anything that looks remotely like that thing ever again (changed behaviour). An example of negative reinforcement is an obnoxious sales person who calls you up on the phone, pressuring you into buying something you don’t want to do (aversive stimulus). You eventually agree to buy it (changed behaviour), and the sales person leaves you alone (the aversive stimulus is terminated as a result of consequences of your behaviour). In general, marketers usually have relatively little power to use punishment or negative reinforcement. However, parking meters are often used to discourage consumers from taking up valuable parking space, and manufacturers may void warranties if the consumers take their product to non-authorised repair facilities. Several factors influence the effectiveness of operant learning. In general, the closer in time the consequences are to the behaviour, the more effective the learning. That is, electric utilities would be more likely to influence consumers to use less electricity at peak hours if the consumers actually had to pay when they used electricity (e.g., through a coin-slot) rather than at the end of the month. Learning is also more likely to occur when the individual can understand a relationship between behaviour and consequences (but learning may occur even if this relationship is not understood consciously). 46 LEARNING A N D M E M O RY Another issue is schedules of reinforcement and extinction. Extinction occurs when behaviour stops having consequences and the behaviour then eventually stops occurring. For example, if a passenger learns that yelling at check-in personnel no longer gets her upgraded to first class, she will probably stop that behaviour. Sometimes, an individual is rewarded every time a behaviour is performed (e.g., a consumer gets a soft drink every time coins are put into a vending machine). However, it is not necessary to reward a behaviour every time for learning to occur. Even if a behaviour is only rewarded some of the time, the behaviour may be learned. Several different schedules of reinforcement are possible: • Fixed interval: The consumer is given a free dessert on every Tuesday when he or she eats in a particular restaurant. • Fixed ratio: Behaviour is rewarded (or punished) on every nth occasion that it is performed. (E.g., every tenth time a frequent shopper card is presented, a free product is provided). • Variable ratio: Every time an action is performed, there is a certain percentage chance that a reward will be given. For example, every time the consumer enters the store, he or she is given a lottery ticket. With each ticket, there is a 20% chance of getting a free hamburger. The consumer may get a free hamburger twice in a row, or he or she may go ten times without getting a hamburger even once. Variable ratio reinforcement is least vulnerable to extinction. Sometimes, shaping may be necessary to teach the consumer the desired behaviour. That is, it may be impossible to teach the consumer to directly perform the desired behaviour. For example, a consumer may first get a good product for free (the product itself, if good, is a reward), then buy it with a large cents off coupon, and finally buy it at full price. Thus, we reinforce approximations of the desired behaviour. Rather than introducing Coca Cola directly in Indonesia, fruit flavoured soft drinks were first introduced, since these were more similar to beverages already consumed. 9LFDULRXVOHDUQLQJ The consumer does not always need to go through the learning process himself or herself—sometimes it is possible to learn from observing the consequences of others. For example, stores may make a big deal out of prosecuting shop lifters not so much because they want to stop that behaviour in those caught, but rather to deter the behaviour in others. Similarly, viewers may empathise with characters in advertisements who experience (usually positive) results from using a product. The Head ‘n’ Shoulders advertisement, where a poor man is rejected by women until he treats his dandruff with an effective cure, is a good example of vicarious learning. Memory ranges in duration on a continuum from extremely short to very long term. Sensory memory includes storage of stimuli that one might not actually notice (e.g., the colour of an advertisement some distance away). For slightly longer duration, when you see an ad on TV for a mail order product you might like to buy, you only keep the phone number in memory until you have dialled it. This is known as short term memory. In order for something to enter into long term memory, which is more permanent, you must usually “rehearse” it several times. For example, when you move and get a new phone number, you will probably repeat it to yourself many times. Alternatively, you get to learn your driver’s license or social security numbers with time, not because you deliberately memorise them, but instead because you encounter them numerous times as you look them up. Several techniques can be used to enhance the memorability of information. “Chunking” involves rearranging information so that fewer parts need to be remembered. For example, consider the phone number (800) 444-1000. The eight digits can be more economically remembered as an 800 number (1 piece), four repeated 3 times (2 pieces), and 1000 (1-2 pieces). “Rehearsal” involves the consumer repeating the information over and over so that it can be remembered; this is often done so that a phone number can be remembered while the “memoree” moves to the phone to dial it. “Recirculation” involves repeated exposure to the same information; the information is not learned deliberately, but is 47 LEARNING A N D M E M O RY gradually absorbed through repetition. Thus, it is to the advantage to a marketer to have an advertisement repeated extensively—especially the brand name. “Elaboration” involves the consumer thinking about the object—e.g., the product in an advertisement—and thinking about as many related issues as possible. For example, when seeing an ad for Dole bananas, the person may think of the colour yellow, going to the zoo seeing a monkey eating a banana, and her grandmother’s banana-but bread. The Dole brand name may then be activated when any of those stimuli are encountered.14 Memories are not always easily retrievable. This could be because the information was given lower priority than something else—e.g., we have done a lot of things since last buying a replacement furnace filter and cannot remember where this was bought last. Other times, the information can be retrieved but is not readily “available”—e.g., we will be able to remember the location of a restaurant we tried last time we were in Paris, but it may take some thinking before the information emerges. “Spreading activation” involves the idea of one memory “triggering” another one. For example, one might think of Coke every time one remembers a favourite (and very wise) professor who frequently brought one to class. Coke might also be tied a particular supermarket that always stacked a lot of these beverages by the entrance, and to baseball where this beverage was consumed after the game. It is useful for firms to have their product be activated by as many other stimuli as possible.15 There are numerous reasons why retrieval can fail or, in less fancy terms, how we come to forget. One is decay. Here, information that is not accessed frequently essentially “rusts” away. For example, we may not remember the phone number of a friend to whom we have not spoken for several months and may forget what brand of bullets an aunt prefers if we have not gone ammunition shopping with her lately. Other times, the problem may rest in interference. Proactive interference involves something we have learned interfering with what we will late later. Thus, if we remember that everyone in our family always used Tide, we may have more difficulty later remembering what other brands are available. You may be unable to remember what a new, and less important, friend’s last name is if that person shares a first name with an old friend. For example, if your best friend for many years has been Jennifer Smith, you may have difficulty remembering that your new friend Jennifer’s last name is Silverman. In retroactive interference, the problem is the reverse—learning something new blocks out something old. For example, if you once used WordPerfect than then switched to Microsoft Word, you may have trouble remembering how to use WordPerfect at a friend’s house—more so than if you had merely not used any word processing program for some time. Memorability can be enhanced under certain conditions. One is more likely to remember favourable—or likable stimuli (all other things being equal). Salience—or the extent to which something is highly emphasised or very clearly evident—facilitates memory. Thus, a product which is very visible in an ad, and handled and given attention by the actors, will more likely be remembered. Prototypicality involves the extent to which a stimulus is a “perfect” example of a category. Therefore, people will more likely remember Coke or Kleenex than competing brands. Congruence involves the “fit” with a situation. Since memory is often reconstructed based on what seems plausible, something featured in an appropriate setting—e.g., charcoal on a porch next to a grill rather than in a garage or kitchen—is more likely to be remembered (unless the incongruence triggers an elaboration—life is complicated!) Redundancies involve showing the stimulus several times. Thus, if a given product is shown several places in a house—and if the brand name is repeated—it is more likely to be remembered. Priming involves tying a stimulus with something so that if “that something” is encountered, the stimulus is more likely to be retrieved. Thus, for example, when one thinks of anniversaries, the Hallmark brand name is more likely to be activated. (This is a special case of spreading activation discussed earlier). A special issue in memory is so called “scripts,” or procedures we remember for doing things. 48 LEARNING A N D M E M O RY Scripts involve a series of steps for doing various things (e.g., how to send a package). In general, it is useful for firms to have their brand names incorporated into scripts (e.g., to have the consumer reflexively ask the pharmacist for Bayer rather than an unspecified brand of aspirin). Positioning involves implementing our targeting. For example, Apple Computer has chosen to position itself as a maker of user-friendly computers. Thus, Apple has done a lot through its advertising to promote itself, through its unintimidating icons, as a computer for “non-geeks.” The Visual C software programming language, in contrast, is aimed a “techies.” Repositioning involves an attempt to change consumer perceptions of a brand, usually because the existing position that the brand holds has become less attractive. Sears, for example, attempted to reposition itself from a place that offered great sales but unattractive prices the rest of the time to a store that consistently offered “everyday low prices.” Repositioning in practice is very difficult to accomplish. A great deal of money is often needed for advertising and other promotional efforts, and in many cases, the repositioning fails. Review questions/discussions 1. 2. 3. Imagine you are the instructor in this course and that you are trying to increase students’ participation in class discussions. How would you use reinforcement to achieve your objective? Visit a supermarket. Can you identify any packages where the marketer’s knowledge of stimulus generalisation and stimulus discrimination was incorporated into the package design? Note these examples and present them in class. Visit the news section at www.caru.org Select three of the press releases featured there (other than the ones discussed in this chapter) and illustrate how they depict the ethics of applying learning theory in advertising to children. Project and teamwork exercises 1. a. b. 2. 3. As indicated in the chapter, behavioural learning theories are sometimes referred to as stimulus-response theories because they are based on the premise that observable responses to specific external signals that learning has taken place. Behavioural theories are not so much concerned with the process of learning as they are with the inputs and outcomes of learning, that is, in the stimuli that consumers select from the environment and the observable behaviours that result. Which of the behavioural learning theories relate most closely conduct of good business ethics? Review each of the behavioural learning theories and briefly describe the theories that you perceive to be most closely associated with the ethical transmission of information for the purpose of learning. Create an example to illustrate your position in the above question. Your group’s assignment is to learn about how Internet brokerage firms attempt to teach you about online trading. Have one part of your group analyse eTrade.com and the other part analyse Charles Schwab (www.charlesschwab.com). Each sub-group should construct a table that indicates how each of the Web sites attempts to enhance consumer learning. What behavioural learning theories does each Web site appear to be using? Gauge effectiveness of the effort. Share the information with one another. Family branding is the practice of marketing a whole line of company products under the same brand name. This strategy capitalises on the consumer’s ability to generalise favourable brand associations from one product to others. Your group assignment is to analyse two separate family 49 LEARNING A N D M E M O RY branding giants—Kellogg’s and C.W. Post cereals. Go to both of the company’s Web sites and make a list of all the products that are under the respective corporate umbrellas. After reviewing the material in the chapter on family branding, evaluate which organisation appears to be superior. How did your group determine this? What behavioural learning principles does each appear to be using? Provide supportive evidence. References for further reading 1. 2. 3. 4. 5. 6. David L. and Albert J.D. (2002), Consumer Behaviour, New Delhi: Tata McGraw Hill. Del I.H. Roger J.B. and Kenneth A.C. (2001), Consumer Behaviour - Building Marketing Strategy, New York: McGraw-Hill Irwin. Edward, J. and William J. (1963): Fundamentals of Marketing; New York, McGraw-Hill, Inc. James F. E. Roger D.B and Paul W.M. (1990), Consumer Behaviour, U.S.A: The Dryden Press. John A.H. and Jagdish N. S. (1969), Theory of Buyer Behaviour, New York: Wiley. Robbins S.P. (2000), Organizational Behaviour, New Delhi: Prentice-Hall. 50 CONSUMER M O T I VAT I O N , AT T I T U D E S A N D T H E I R C H A N G E Part 8 &21680(5027,9$7,21$77,78'(6$1' THEIR CHANGE Objective outline: Chapter Key Terms: After studying this unit, you should be able to: Motives 1. Motivation theories Describe the nature of motives and their role in influencing consumer behaviour; 2. State the basic categories of motives; 3. Motivation theories; 4. Nature of consumer involvement and its market implications. 5. State features of consumer attitude. 6. Describe how consumer attitude affects marketing activities. 7. Describe how attitudes are developed. Consumer attitude Consumer motivation Consumer motivation is one of the driving forces of consumer behaviour. Consumers buy and use products because they are motivated by the need or desire to do so. The key objective of marketing and marketing communications is to motivate consumers to prefer and purchase one product or brand over another. Tied to motivation is the concept of affective states. Simply stated, affective states are emotions, feelings, and moods that are connected with a purchase decision and that can motivate the consumer to buy. In this chapter, we discuss the concepts of motives, emotions, mood, and involvement to show how marketers should account for these concepts when developing strategies. Consumer motivation is the drive to satisfy needs and wants, both physiological and psychological, through the purchase and use of products and services. Some motives are simple—we need food, water, warmth, and shelter in order to survive. Others are more complex, such as the yearning for love or the desire for status and admiration. Marketers have long recognised it as an impelling and compelling force behind most marketplace The part’s information is adapted from M. Joseph Sirgy, Don R. Rahtz, and Laura Portolese Dias. Consumer Behaviour Today v.1.0. Flat World Education, Inc., 2014 51 CONSUMER M O T I VAT I O N , AT T I T U D E S A N D T H E I R C H A N G E behaviours. Consumer motivation can be viewed as a process through which needs are satisfied. The process has five stages, as demonstrated in Figure 16 “Motivation as a Process”. It begins with a latent need, such as hunger. Once the need is recognised, we feel a drive to reduce it. You realise you are hungry and start thinking about lunch options. Need translates into want or desire—you crave pizza. Desire is manifested into a specific goal as you surf on your phone for alternative pizza restaurants and decide on Pizza Hut. That goal is achieved through a behaviour that satisfies the original need and thus reduces tension—you sit down in Pizza Hut and order a large pepperoni pizza. Maslow believed that these motivating forces operate more or less sequentially. That is, as needs at one level are partially or fully satisfied, those at the next are felt more intensely. Lower-level needs must be met or partially met if higher-level needs are to emerge. Although no level of need may ever be completely satisfied, as satisfaction at one level increases, the need at the next level becomes a stronger and stronger motivator.17 FIGURE 16. MOTIVATION MOVES CONSUMERS FROM LATENT NEED THROUGH STAGES OF INCREASING SPECIFICITY TO THE BEHAVIOUR THAT SATISFIES THE NEED. Source: M. Joseph Sirgy, Don R. Rahts, and Laura Portolese Dias. Consumer Behaviour Today v.1.0. Flat World Education, Inc., 2014 Psychologist Abraham Maslow described motivation as a means of satisfying human needs. As summarised in Figure 17 “Maslow’s Hierarchy of Needs”, Maslow explained personal growth through the identification and satisfaction of a hierarchy of needs, from the basics of food and shelter to sophisticated psychological desires. At the base of the pyramid are physiological needs—basic physical needs, such as food and water, and biological needs such as sleep, exercise, and sex. Once these needs are partially or fully met, we begin to yearn for safety—protection from danger, security, and reliable order and routine in daily affairs. From safety evolves a need for love and belonging—the desire to give and receive affection and to be accepted as one who belongs as part of a family or group. Once accepted into the group, we begin to crave esteem or status—the desire for self-respect and the respect of others, as well as the need to feel competent, confident, important, and appreciated. As needs become more abstract and sophisticated, we desire self-actualisation—the need to realise our own potential, to achieve our dreams and 52 CONSUMER M O T I VAT I O N , AT T I T U D E S A N D T H E I R C H A N G E ambitions. As the desire for self-actualisation grows more potent, it evolves into a more specific hunger for knowledge and understanding—the search for meaning and analysis of self and environment. Last comes the most refined need of all: that for beauty. Maslow believed that these motivating forces operate more or less sequentially. That is, as needs at one level are partially or fully satisfied, those at the next are felt more intensely. Lower-level needs must be met or partially met if higher-level needs are to emerge. Although no level of need may ever be completely satisfied, as satisfaction at one level increases, the need at the next level becomes a stronger and stronger motivator. Marketers, managers, and social scientists have used Maslow’s hierarchy extensively to understand what motivates people and how these motivations can be applied in a wide variety of manners to consumers and people in general the world over. FIGURE 17. AS EACH NEED IS SATISFIED, BEGINNING WITH THE BASICS OF FOOD AND SHELTER, HUMAN NEEDS MOVE TO THE EMOTIONAL DESIRES AND FINALLY TO SOPHISTICATED PSYCHOLOGICAL NEEDS. The source: Maslow, A. H. (1970), Motivation and Personality, 2nd ed., Harper & Row: New York Consumer attitudes and beliefs Consumer attitudes are a composite of a consumer’s (1) beliefs about, (2) feelings about, (3) and behavioural intentions toward some object--within the context of marketing, usually a brand or retail store. These components are viewed together since they are highly interdependent and together represent forces that influence how the consumer will react to the object. %HOLHIV The first component is beliefs. A consumer may hold both positive beliefs toward an object (e.g., coffee tastes good) as well as negative beliefs (e.g., coffee is easily spilled and stains papers). In addition, some beliefs may be neutral (coffee is black), and some may differ in valance depending on the person or the situation (e.g., coffee is hot and stimulates - good on a cold morning, but not well on a hot summer evening when one wants to sleep). Note also that the beliefs that consumers hold need The part’s information is adapted from Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http:// www.consumHUSV\FKRORJLVWFRPLQGH[KWPODFFHVVHG0DUFK$SULO 53 CONSUMER M O T I VAT I O N , AT T I T U D E S A N D T H E I R C H A N G E not be accurate (e.g., that pork contains little fat), and some beliefs may, upon closer examination, be contradictory (e.g., that a historical figure was a good person but also owned slaves). AFFECT (FEELING) BELIEFS BEHAVIORAL INTENTIONS FIGURE18. BELIEFS AND AFFECT The source: Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http://www.consumerpsychologist.com/index.html, accessed March/April, 2014 Since a consumer holds many beliefs, it may often be difficult to get down to a “bottom line” overall belief about whether an object such as McDonald’s is overall good or bad. .18 Market related beliefs are general beliefs about how the marketplace works and how to make good decisions in marketplace transactions. The sidebar contains a list of common beliefs that consumers have about the marketplace and how one (as a consumer) should conduct oneself in that environment. Some consumer researchers call these market-related beliefs “decision heuristics,” which are rules of thumb to help the consumer navigate the world of shopping and transactions with manufacturers, retailers, and other service establishments. Market beliefs can be can be related to brand (e.g., “When in doubt, a national brand is always a safe bet”), advertising and sales promotion (e.g., “When you buy heavily advertised products, you are paying for the label, not higher quality”), packaging (e.g., “Larger sized containers are almost always cheaper per unit than smaller sizes”), product (e.g., “New products are more expensive when they are first introduced. Prices tend to settle down as time goes by”), and manufacturer (e.g., “Well-known companies can’t afford to jeopardise their reputations by introducing inferior products”).18 Affect: Consumers also hold certain feelings toward brands or other objects. Sometimes these feelings are based on the beliefs (e.g., a person feels nauseated when thinking about a hamburger because of the tremendous amount of fat it contains), but there may also be feelings which are relatively independent of beliefs. For example, an extreme environmentalist may believe that cutting down trees is morally wrong, but may have positive affect toward Christmas trees because he or she unconsciously associates these trees with the experience that he or she had at Christmas as a child. Attitude Change Strategies: Changing attitudes is generally very difficult, particularly when consumers suspect that the marketer has a self-serving agenda in bringing about this change (e.g., to get the consumer to buy more or to switch brands). Changing affect: One approach is to try to change affect, which may or may not involve getting consumers to change their beliefs. One strategy uses the approach of classical conditioning try to “pair” the product with a liked stimulus. For example, we “pair” a car with a beautiful woman. Alternatively, 54 CONSUMER M O T I VAT I O N , AT T I T U D E S A N D T H E I R C H A N G E we can try to get people to like the advertisement and hope that this liking will “spill over” into the purchase of a product. For example, the Pillsbury Doughboy does not really emphasise the conveyance of much information to the consumer; instead, it attempts to create a warm, fuzzy image. Although Energizer Bunny ads try to get people to believe that their batteries last longer, the main emphasis is on the likeable bunny. Finally, products which are better known, through the mere exposure effect, tend to be better liked-that is, the more a product is advertised and seen in stores, the more it will generally be liked, even if consumers to do not develop any specific beliefs about the product.19 Changing behaviour: People like to believe that their behaviour is rational; thus, once they use our products, chances are that they will continue unless someone is able to get them to switch. One way to get people to switch to our brand is to use temporary price discounts and coupons; however, when consumers buy a product on deal, they may justify the purchase based on that deal (i.e., the low price) and may then switch to other brands on deal later. A better way to get people to switch to our brand is to at least temporarily obtain better shelf space so that the product is more convenient. Consumers are less likely to use this availability as a rationale for their purchase and may continue to buy the product even when the product is less conveniently located. (Notice, by the way, that this represents a case of shaping). Changing beliefs: Although attempting to change beliefs is the obvious way to attempt attitude change, particularly when consumers hold unfavourable or inaccurate ones, this is often difficult to achieve because consumers tend to resist. Several approaches to belief change exist: Change currently held beliefs. It is generally very difficult to attempt to change beliefs that people hold, particularly those that are strongly held, even if they are inaccurate. For example, the petroleum industry advertised for a long time that its profits were lower than were commonly believed, and provided extensive factual evidence in its advertising to support this reality. Consumers were suspicious and rejected this information, however. Change the importance of beliefs. Although the sugar manufacturers would undoubtedly like to decrease the importance of healthy teeth, it is usually not feasible to make beliefs less important--consumers are likely to reason, why, then, would you bother bringing them up in the first place? However, it may be possible to strengthen beliefs that favour us, e.g., a vitamin supplement manufacturer may advertise that it is extremely important for women to replace iron lost through menstruation. Most consumers already agree with this, but the belief can be made stronger. Add beliefs. Consumers are less likely to resist the addition of beliefs so long as they do not conflict with existing beliefs. Thus, the beef industry has added beliefs that beef (1) is convenient and (2) can be used to make a number of creative dishes. Change ideal. It usually difficult, and very risky, to attempt to change ideals, and only few firms succeed. For example, Hard Candy may have attempted to change the ideal away from traditional beauty toward more unique self-expression.20 Review questions/discussions 1. 2. Select an advertisement designed to appeal to specific consumer motives. How does the advertiser succeed—or fail—at appealing to those motives? Consider Maslow’s hierarchy of needs. Take two minutes for each member of your team to write down his or her beliefs on soft drinks, Nike athletic shoes, and Burger King restaurants. Compare notes and explain each of your beliefs. Explore how these beliefs were formed. 55 CONSUMER M O T I VAT I O N , AT T I T U D E S A N D T H E I R C H A N G E 3. Your team is working on a campaign for an on-campus child-care centre; the objective is to create brand associations that will ensure a long-term positive image. Design a campaign strategy that will build brand equity. 4. Are some products or brands more likely to stir affective responses than others? Talk about your feelings toward fashions, cosmetics, computers, fast food, Disney World, Ivory liquid soap, Levi’s jeans, and Hershey’s Chocolate Kisses. To what extent do you think your affective responses are a result of advertising? 5. Using the belief-importance model, analyse two or three of the classes you are planning to sign up for in your next academic year. First, list the attributes of each. Next, decide the importance of those attributes in making your class selections. Next, decide how well you believe the classes will compare on each attribute. Does this exercise help you make your class selections? How might each department increase its enrolments? 6. Describe a purchase situation in which you changed your intention to buy a product. Perhaps you bought an alternative brand, spent the money on something entirely different, or didn’t buy anything at all. What factors made your behaviour inconsistent with your earlier attitudes? Project and teamwork exercises 1. Express your preferences of the brands in terms of ranking choices, based on their personal judgment on importance of benefits and attributes, consumers develop a set of attitudes (or preferences) toward the various brands. Underlying Needs Benefits Attributes 56 CONSUMER M O T I VAT I O N , AT T I T U D E S A N D T H E I R C H A N G E 2. Research Workshop %DFNJURXQG The objective of this workshop is to explore motivations behind alcohol consumption. As a college student aware of the social problems associated with drinking by college students, you have decided to start up a service called Alcohol Breakers to help students give up the habit. Methodology. Conduct a literature search in the area of behaviour modification in relation to drinking cessation. You may need the assistance of the office of student affairs, student clubs, fraternities/ sororities, the university police, the town police, and available support programs in the community. To the Marketplace. Decide which motivational techniques will be most effective on the student population. Identify all motives that lead students to drink. For each motive identified, list a product, service, and/or program to neutralise the source of motivation. 3. Creative Workshop %DFNJURXQG The objective of this workshop is to find the best emotional positioning for a health care organisation. You are marketing director of a company that owns and operates several health care centres, including a women’s health care centre, a centre for home care, a paediatrics practice, and a cancer treatment centre. You are assigned to develop a corporate image campaign to get community residents to feel good about the company. Methodology. You realise that emotions are central to the campaign. You need to get community residents to feel warmth and trust and to care about the company. Make some notes about typical emotions related to each of the company’s four health services. To the Marketplace. From your notes, generate a series of rough sketches for advertisements that will induce feelings of warmth, trust, and caring toward the health care company. 4. Managerial Workshop %DFNJURXQGThe objective of this workshop is to relate involvement to marketing communication decisions. As marketing manager of an electronics store, you are preparing an advertising plan for the forthcoming year. You realise that understanding the psychology of involvement is extremely important in planning both the creative and media aspects of the campaign. Methodology. Apply the learn-feel-do model in your development of the advertising plan. To the Marketplace. Draft a two-page plan showing explicitly how the model is applied to creative and media decisions. References for further reading 1. 2. 3. 4. 5. 6. David L. and Albert J.D. (2002), Consumer Behaviour, New Delhi: Tata McGraw Hill. Del I.H. Roger J.B. and Kenneth A.C. (2001), Consumer Behaviour - Building Marketing Strategy, New York: McGraw-Hill Irwin. Edward, J. and William J. (1963); Fundamentals of Marketing; New York, McGraw-Hill, Inc. Eric A. Linda P. and George Z. (2002), Consumer, New York: McGraw-Hill Irwin. Frederick E. Webster, Jr., and Yoram W. (1972), Organizational Buying Behaviour, Eaglewood Cliffs, NJ: Prentice-Hall. James F. E. Roger D.B and Paul W.M. (1990), Consumer Behaviour, U.S.A: The Dryden Press. 57 CONSUMERS A S P RO B L E M S O LV E R S Part 9 &21680(56$6352%/(062/9(56 Objective outline: Chapter Key Terms 1. Identify the problem solving definition 3UREOHPVROYLQJGHÀQLWLRQ 2. Analyse consumer problem solving process Consumer problem solving process 3. Build consumer information processing model Consumer Information Processing Model Low involvement purchase Level of consumer decision making Problem Recognition One model of consumer decision making involves several steps. The first one is problem recognition—you realise that something is not as it should be. Perhaps, for example, your car is getting more difficult to start and is not accelerating well. The second step is information search—what are some alternative ways of solving the problem? You might buy a new car, buy a used car, take your car in for repair, ride the bus, ride a taxi, or ride a skateboard to work. The third step involves evaluation of alternatives. A skateboard is inexpensive, but may be ill-suited for long distances and for rainy days. Finally, we have the purchase stage, and sometimes a post-purchase stage (e.g., you return a product to the store because you did not find it satisfactory). In reality, people may go back and forth between the stages. For example, a person may resume alternative identification during while evaluating already known alternatives. The part’s information is adapted from Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http:// www.conVXPHUSV\FKRORJLVWFRPLQGH[KWPODFFHVVHG0DUFK$SULO 58 CONSUMERS A S P RO B L E M S O LV E R S PROBLEM RECOGNITION INFORMATION SEARCH EVALUATION ALTERNATIVES PURCHASE POSTPURCHASE EVALUATION/ BEHAVIORS Theory Complications FIGURE 4. INFORMATION SEARCH AND PURCHASE The source: Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http://www.consumerpsychologist.com/index.html, accessed March/April, 2014 Consumer involvement will tend to vary dramatically depending on the type of product. In general, consumer involvement will be higher for products that are very expensive (e.g., a home, a car) or are highly significant in the consumer’s life in some other way (e.g., a word processing program or acne medication). It is important to consider the consumer’s motivation for buying products. To achieve this goal, we can use the Means-End chain, wherein we consider a logical progression of consequences of product use that eventually lead to desired end benefit. Thus, for example, a consumer may see that a car has a large engine, leading to fast acceleration, leading to a feeling of performance, leading to a feeling of power, which ultimately improves the consumer’s self-esteem. A handgun may aim bullets with precision, which enables the user to kill an intruder, which means that the intruder will not be able to harm the consumer’s family, which achieves the desired end-state of security. In advertising, it is important to portray the desired end-states. Focusing on the large motor will do less good than portraying a successful person driving the car. Information search and decision making: Consumers engage in both internal and external information search. INTERNAL Memory Tninking EXTERNAL Word of mouth,media, store visits, trial FIGURE 5. INTERNAL AND EXTERNAL INFORMATION SEARCH The source: Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http://www.consumerpsychologist.com/index.html, accessed March/April, 2014 59 CONSUMERS A S P RO B L E M S O LV E R S Internal search involves the consumer identifying alternatives from his or her memory. For certain low involvement products, it is very important that marketing programs achieve “top of mind” awareness. For example, few people will search the Yellow Pages for fast food restaurants; thus, the consumer must be able to retrieve one’s restaurant from memory before it will be considered. For high involvement products, consumers are more likely to use an external search. Before buying a car, for example, the consumer may ask friends’ opinions, read reviews in Consumer Reports, consult several web sites, and visit several dealerships. Thus, firms that make products that are selected predominantly through external search must invest in having information available to the consumer in need—e.g., through brochures, web sites, or news coverage. A compensatory decision involves the consumer “trading off ” good and bad attributes of a product. For example, a car may have a low price and good gas mileage but slow acceleration. If the price is sufficiently inexpensive and gas efficient, the consumer may then select it over a car with better acceleration that costs more and uses more gas. Occasionally, a decision will involve a non-compensatory strategy. For example, a parent may reject all soft drinks that contain artificial sweeteners. Here, other good features such as taste and low calories cannot overcome this one “non-negotiable” attribute. The amount of effort a consumer puts into searching depends on a number of factors such as the market (how many competitors are there, and how great are differences between brands expected to be?), product characteristics (how important is this product? How complex is the product? How obvious are indications of quality?), consumer characteristics (how interested is a consumer, generally, in analysing product characteristics and making the best possible deal?), and situational characteristics. Two interesting issues in decisions are: • Variety seeking (where consumers seek to try new brands not because these brands are expected to be “better” in any way, but rather because the consumer wants a “change of pace,” and • “Impulse” purchases—unplanned buys. This represents a somewhat “fuzzy” group. For example, a shopper may plan to buy vegetables but only decide in the store to actually buy broccoli and corn. Alternatively, a person may buy an item which is currently on sale, or one that he or she remembers that is needed only once inside the store. A number of factors involve consumer choices. In some cases, consumers will be more motivated. For example, one may be more careful choosing a gift for an in-law than when buying the same thing for one self. Some consumers are also more motivated to comparison shop for the best prices, while others are more convenience oriented. Personality impacts decisions. Some like variety more than others, and some are more receptive to stimulation and excitement in trying new stores. Perception influences decisions. Some people, for example, can taste the difference between generic and name brand foods while many cannot. Selective perception occurs when a person is paying attention only to information of interest. For example, when looking for a new car, the consumer may pay more attention to car ads than when this is not in the horizon. Some consumers are put off by perceived risk. Thus, many marketers offer a money back guarantee. Consumers will tend to change their behaviour through learning—e.g., they will avoid restaurants they have found to be crowded and will settle on brands that best meet their tastes. 60 CONSUMERS A S P RO B L E M S O LV E R S Stages of consumer decision making Traditionally, consumer researchers have approached decision making process from a rational perspective. This dominant school of thought views consumers as being cognitive (i.e., problem-solving) and, to some but a lesser degree, emotional. Such a view is reflected in the stage model of a typical buying process (often called the consumer information processing model) depicted in Figure 19. Problem Recognition Information Search Evaluation and Selection of Alternatives Decision Implementation Post-purchase Evaluation FIGURE 19. THE CONSUMER INFORMATION PROCESSING MODEL Source: Ken Matsuno (2013). Consumer decision making process. Babson College. In this model, the consumer passes through five stages: problem recognition, information search, evaluation and selection of alternatives, decision implementation, and post-purchase evaluation. In this information processing model, the consumer buying process begins when the buyer recognises a problem or need. For example, Doug may realise that his best suit doesn’t look contemporary any more. Or, Kathleen may recognise that her personal computer is not performing as well as she thought it should. These are the kinds of problem that we as consumers encounter all the time. When we found out a difference between the actual state and a desired state, a problem is recognised. When we find a problem, we usually try to solve the problem. We, in other words, recognise the need to solve the problem. When a consumer discovers a problem, he/she is likely to search for more information. Kathleen may simply pay more attention to product information of a personal computer. She becomes more attentive to computer ads, computers purchased by her friends, and peer conversations about computers. Or, she may more actively seek information by visiting stores, talking to friends, or reading computer magazines, among others. Through gathering information, the consumer learns more about some The part’s information is adapted from Ken Matsuno (2013). Consumer decision making process. Babson College. 61 CONSUMERS A S P RO B L E M S O LV E R S brands that compete in the market and their features and characteristics. Theoretically, there is a total set of brands available to Kathleen, but she will become aware of only a subset of the brands (awareness set) in the market. Some of these brands may satisfy her initial buying criteria, such as price and processing speed (consideration set). As Kathleen proceeds to more information search, only a few will remain as strong candidates (choice set).22 How does the consumer process competitive brand information and evaluate the value of the brands? Unfortunately there is no single, simple evaluation process applied by all consumers or by one consumer in all buying situations. One dominant view, however, is to see the evaluation process as being cognitively driven and rational. Under this view, a consumer is trying to solve the problem and ultimately satisfying his/her need. In other words, he/she will look for problem-solving benefits from the product. The consumer, then, looks for products with a certain set of attributes that deliver the benefits. Thus, the consumer sees each product as a bundle of attributes with different levels of ability of delivering the problem solving benefits to satisfy his/her need. The distinctions among the need, benefits, and attributes are very important. One useful way to organise the relationships among the three is a hierarchical one (Figure 20). Although simplified, Figure 20 is an example of how a bundle of attributes (i.e., a product or, more specifically, personal computer) relates to the benefits and underlying needs of Kathleen. From 20 figure and the preceding discussion, you might recognise that the product attributes are relevant and important only to the extent that they lead to a certain set of benefits. Likewise, benefits are meaningful only if they can address the problem and be instrumental to satisfy the underlying need. As the underlying need is often personal, consumers differ as to their beliefs about what product benefits and attributes are more (or less) important and relevant in satisfying their needs. As the underlying need is often personal, consumers differ as to their beliefs about what product benefits and attributes are more (or less) important and relevant in satisfying their needs. Helps Me Survive Babson MBA Pogram Underlying Needs Portability Benefits Doesn’t Break down Economy Computational Horse Power Warranty Attributes Size Brand Reputation Price CPU Speed Software Bundle Hard Drive Size GlobeNet Ready FIGURE 20. HIERARCHICAL VIEW OF NEEDS, BENEFITS, AND ATTRIBUTES Source: Ken Matsuno (2013). Consumer decision making process. Babson College. 62 CONSUMERS A S P RO B L E M S O LV E R S Based on their personal judgment on importance of benefits and attributes, consumers develop a set of attitudes (or preferences) toward the various brands. One may express his/her preferences of the brands in terms of ranking, probability of choice, and so forth. To actually implement the purchase decision, however, a consumer needs to select both specific items (brands) and specific outlets (where to buy) to resolve the problems. There are, in fact, three ways these decisions can be made: 1) simultaneously; 2) item first, outlet second; or 3) outlet first, item second. In many situations, consumers engage in a simultaneous selection process of stores and brands. For example, in our Kathleen’s personal computer case, she may select a set of brands based on both the product’s technical features (attributes) and availability of brands in the computer stores and mail-order catalogues she knows well. It is also possible, that she decides where to buy (e.g., CompUSA in her neighbourhood) and then chooses one or two brands the store carries. Once the brand and outlet have been decided, the consumer moves on to the transaction (“buying”). Post-purchase evaluation processes are directly influenced by the type of preceding decision-making process. Directly relevant here is the level of purchase involvement of the consumer. Purchase involvement is often referred to as “the level of concern for or interest in the purchase” situation, and it determines how extensively the consumer searches information in making a purchase decision. Although purchase involvement is viewed as a continuum (from low to high), it is useful to consider two extreme cases here. Suppose one buys a certain brand of product (e.g., Diet Pepsi) as a matter of habit (habitual purchase). For him/her, buying a cola drink is a very low purchase involvement situation, and he/she is not likely to search and evaluate product information extensively. In such a case, the consumer would simply purchase, consume and/or dispose of the product with very limited post-purchase evaluation, and generally maintain a high level of repeat purchase motivation (Figure 21). Purchase Product Use Simple Evaluation Disposition Repeat Purchase Motivation FIGURE 21. LOW INVOLVEMENT PURCHASE Source: Hawkins, Best, and Coney (1983) However, if the purchase involvement is high and the consumer is involved in extensive purchase decision making (e.g., personal computer), he/she is more likely to be involved in more elaborate post-purchase evaluation – often by questioning the rightness of the decision: “Did I make the right choice? Should I have gone with other brand?” This is a common reaction after making a difficult, complex, relatively permanent decision. This type of doubt and anxiety is referred to as post-purchase cognitive dissonance (Figure 22). Post-purchase Dissonance Purchase Dissatisfaction Product Use Elaborate Evaluation Disposition Repeat Purchase Motivation FIGURE 22. ELABORATE POST-PURCHASE EVALUATIONS Source: Adopted from Hawkins, Best, and Coney (1983) 63 CONSUMERS A S P RO B L E M S O LV E R S According to the research, the likelihood of experiencing this kind of dissonance and the magnitude of it is a function of: The degree of commitment or irrevocability of the decision, The importance of the decision to the consumer, The difficulty of choosing among the alternatives, and The individual’s tendency to experience anxiety. Because dissonance is uncomfortable, the consumer may use one or more of the following approaches to reduce it: Increase the desirability of the brand purchased. Decrease the desirability of rejected alternatives. Decrease the importance of the purchase decision. Reject the negative data on the brand purchased. If the dissonance about the purchase is not reduced, the anxiety may transform into dissatisfaction (general or specific). Certainly, this negative experience leads to new problem recognition (Figure 19), and the consumer will engage in another problem solving process. The difference, however, is that in the next round of process, memory of the previous negative experience and dissatisfaction will be used as part of information. Therefore, the probability for the unsatisfactory brand to be re-selected and repurchased will be significantly lower than before. Another widely-used model in marketing that attempts to explain consumer decision making process is called the hierarchy of effects model. Although different researchers developed slightly different models, the basic idea is the same: people experience a sequence of psychological stages before purchasing a product. Such a model is provided in Figure 23. PURCHASE CONVICTION PREFERENCE LIKING KNOWLEDGE AWARENESS UNAWARENESS FIGURE 23. A GENERAL MODEL OF THE HIERARCHY OF EFFECTS Source: Adopted from Delozier (1976) 64 CONSUMERS A S P RO B L E M S O LV E R S Originally conceived to explain how advertising affects consumer’s purchase decisions, the hierarchy of effects (HOE) model focuses on consumer learning that takes place as he/she processes information from the external world. The HOE model begins with the state where a consumer has no awareness about the brand (unaware) then develops awareness triggered by external stimuli, such as advertising message or “word of mouth.” As he/she obtains and processes more information, the consumer develops more specific knowledge about the brand. The knowledge, then, is used as basis to form a liking (or disliking), leading to a preference of brand(s) relative to the others. However, people need to be pushed beyond the preference stage to actually buy the brand of preference. The preference stage, after all, simply means that the consumer has formed a preference psychologically. Now it takes conviction for him/her before actually buying the brand. By now, you might have realised at least two points. One, it seems reasonable that not all the consumers are at the same stage. For example, Susan may be in the unawareness stage relative to Samuel Adams beer, but Melissa may be in the preference stage. Two, it also seems reasonable that not all people at one stage move onto the next stage. For example, some consumers who have formed preference to Contadina pasta may not form any conviction to buy the product. Furthermore, some people may need more time before moving onto the next stage than others. The HOE model is quite similar to the consumer information processing model because it also assumes that people are cognitively driven, thinking information processors. Controversy exists, of course, as to whether that is necessarily true. Some may claim that they often form liking and preference (emotional response or feeling) toward brands before developing cognitive judgment (knowledge or thinking) on them. Others argue that people form preference and knowledge simultaneously. Although each argument has its own support, the general model (cognition first, preference second) seems to be valid especially in relatively complex – or high-involvement – decision making situations (e.g., cars, computers), providing a conceptual framework for thinking about the sequence of events which begins from the initial awareness to the final action (i.e., purchasing). 65 CONSUMERS A S P RO B L E M S O LV E R S Review questions/discussions 1. 2. 3. 4. 5. 6. 7. What is your opinion of companies like Google that gather information about your browsing patterns? What advantages and drawbacks does this pose for consumers? If you were a business owner, what kinds of information would you gather on your customers and how would you use it? What purchasing decisions have you been able to influence in your family and why? Is marketing to children a good idea? If not, what if one of your competitors were successfully do so? Would it change your opinion? Name some products that have led to post purchase dissonance on your part. Then categorise them as high- or low-involvement products. Describe the decision process for impulse purchases at the retail level. Would they be classified as high- or low-involvement purchases? Check out BMW’s website described in above in Chapter Eight (and watch one of the movies there (‘ambush or ‘the hire’). Why would BMW go to such expense to produce these movies? What is the price the viewer of the movie pays? Remember, price does not have to be economic in nature. Explain your answer in a one-paragraph summary. Go to a local supermarket and a local department store and write a half-page report that observes differences in how prices are displayed at each store. “College tuition is a price just like any other.” Agree or disagree with this statement and explain your answer. Project and teamwork exercises 1. 2. 3. 4. The idea of the information processing model seems reasonable. But, we know that we as individuals are not living in a vacuum. That is, when we are making a purchase decision, we are constantly influenced by other factors than just information, such as family, friends, cultural values, social class, or subculture. Oh, what about physiological needs, such as sex, hunger, safety? Might these also affect which brand we choose and buy? How and where do these factors play roles in the information processing model? What would be some of the practical implications of the information processing model for a marketing manager who is trying to market, say, mountain bikes? If he/she knows about the information processing model, what could he/she do differently in, for example, the new product introduction? Under what circumstances consumers are more likely to develop “liking (feeling)” first, “knowing (thinking)” second? What would be some of the products/services in those situations? Why? Read the scenario below and see if you can recognise the factors that influenced Chris’ purchasing decision as well as the buying process he went through to get his lunch: Chris is on his 30-minute lunch break from his job as a cashier at a convenience store. He started his shift at 7:00 AM this morning and it is now 11:00 AM and he is hungry. He has to be back at his post by 11:30 AM. He checks his wallet and has $5.34 to spend on lunch. He could use his employee discount and purchase lunch from the store, but he knows if he stays at the store the person who is monitoring the cash register while he is gone will continue to ask him questions which will cut into his break time. There is a Taco Bell and Burger King within walking distance of his store. He remembers seeing a television advertisement for 69-cent tacos at Taco Bell and $1.00 hamburgers at Burger King. Both of these options seem like good choices to him as his stomach continues to rumble. He chooses 66 CONSUMERS A S P RO B L E M S O LV E R S Taco Bell because it is on the right hand side of the road so he will not have to waste valuable time crossing the busy intersection to get across the street to Burger King. He also remembers his co-worker raving about the new fire-roasted hot sauce Taco Bell is now offering and he decides he wants to try it. Chris purchases two tacos and a drink from Taco Bell and eats his lunch. He is satisfied with his choice and thinks he might come back tomorrow to try the $99 cent bean burritos. When he is finished, he throws away the trash in the Taco Bell receptacle and returns to his job. Discussion Factors affecting Chris’s buying decision: 1) Economic: He had a limited amount of money to spend on his lunch. He only had 30 minutes so location and convenience were also factors. 2) Psychological: Chris had seen the advertisements for Taco Bell and Burger King and he recognises that both would fit his needs. 3) Sociological: He remembers his friend’s endorsement of Taco Bell’s new hot sauce which helps him make his decision. 4) Situational: Chris was limited in time and money. His location and need (hunger) limited his choices to two establishments. Chris’s decision process: 1. Problem recognition: ………………………………………………….....................………………. 2. Information search: ………………………………………………......................…………………... 3. Alternative evaluation: ……………………………………………......................…..................... 4. Purchase decision: ……………………………………………....................……………………….. 5. Post-purchase behaviour: ………………………………………..................……………………….. 6. Disposal of product: ……………………………………………....................……………………… 67 CONSUMERS A S P RO B L E M S O LV E R S References for further reading 1. Ayuba B. (2005), Marketing: Principles and Management, Kaduna: Shukrah Printing 2. David L. and Albert J.D. (2002), Consumer Behaviour, New Delhi: Tata McGraw Hill. 3. Del I.H. Roger J.B. and Kenneth A.C. (2001), Consumer Behaviour; Building Marketing Strategy, New York: McGraw-Hill Irwin. 4. Eric A. Linda P. and George Z. (2002), Consumer, New York: McGraw-Hill Irwin. 5. Geoff, R. (1988); Modern Industrial Marketing; New York: McGraw-Hill, 6. Inc. John A.H. and Jagdish N. S. (1969), Theory of Buyer Behaviour, NewYork: Wiley. 7. Kotler, P. (2000); Marketing Management; New Delhi: Prentice- Halting. 8. Kotler, P. and Armstrong (1999); Principles of Marketing; New Delhi: Prentice- Hall, 9. Onu, A.J (2000); Marketing Today; Zaria: Ndyson Publishers Ltd. 10. Mc- Graw- Hill, Inc. Stanton, W.J. (1964); Fundamentals of Marketing; New Jersey: McGraw- Hill, Inc. 68 THE M E T H O D S O F A R E S E A RC H O N P S YC H O L O G I C A L E F F I C I E N C Y O F A D V E RT I S I N G Part 10 THE METHODS OF A RESEARCH ON PSYCHOLOGICAL EFFICIENCY OF $'9(57,6,1* Objective outline: Chapter Key Terms: 1. Market research methods Identify the definitions of the research methods of consumer behaviour 2. Analyse the research methods of consumer behaviour in advertising 3. Explain the Application of consumer research methods 4. To understand the role that consumer behaviour plays in the development and implementation of advertising and promotional programs. 5. To understand various internal psychological processes, their influence on consumer decision making, and implications for advertising and promotion. Research methods of consumer behaviour in advertising Market and consumer research methods Market research is often needed to ensure that we produce what customers really want and not what we think they want. Primary vs. secondary research methods: There are two main approaches to marketing. Secondary research involves using information that others have already put together. For example, if you are thinking about starting a business making clothes for tall people, you don’t need to question people about how tall they are to find out how many tall people exist—that information has already been published by the Lithuanian Statistics department. Primary research, in contrast, is research that you design and conduct yourself. For example, you may need to find out whether consumers would prefer that your soft drinks be sweater or tarter. Research will often help us reduce risks associated with a new product, but it cannot take the risk The part’s information is adapted from Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http:// www.conVXPHUSV\FKRORJLVWFRPLQGH[KWPODFFHVVHG0DUFK$SULO 69 THE M E T H O D S O F A R E S E A RC H O N P S YC H O L O G I C A L E F F I C I E N C Y O F A D V E RT I S I N G away entirely. It is also important to ascertain whether the research has been complete. For example, Coca Cola did a great deal of research prior to releasing the New Coke, and consumers seemed to prefer the taste. However, consumers were not prepared to have this drink replace traditional Coke. Surveys are useful for getting a great deal of specific information. Surveys can contain open-ended questions (e.g., “In which city and state were you born? ____________”) or closed-ended, where the respondent is asked to select answers from a brief list (e.g., “__Male ___ Female.” Open ended questions have the advantage that the respondent is not limited to the options listed, and that the respondent is not being influenced by seeing a list of responses. However, open-ended questions are often skipped by respondents, and coding them can be quite a challenge. In general, for surveys to yield meaningful responses, sample sizes of over 100 are usually required because precision is essential. For example, if a market share of twenty percent would result in a loss while thirty percent would be profitable, a confidence interval of 20-35% is too wide to be useful. Surveys come in several different forms. Mail surveys are relatively inexpensive, but response rates are typically quite low—typically from 5-20%. Phone-surveys get somewhat higher response rates, but not many questions can be asked because many answer options have to be repeated and few people are willing to stay on the phone for more than five minutes. Mall intercepts are a convenient way to reach consumers, but respondents may be reluctant to discuss anything sensitive face-to-face with an interviewer. Surveys, as any kind of research, are vulnerable to bias. The wording of a question can influence the outcome a great deal. For example, more people answered no to the question “Should speeches against democracy be allowed?” than answered yes to “Should speeches against democracy be forbidden?” For face-to-face interviews, interviewer bias is a danger, too. Interviewer bias occurs when the interviewer influences the way the respondent answers. For example, unconsciously an interviewer that works for the firm manufacturing the product in question may smile a little when something good is being said about the product and frown a little when something negative is being said. The respondent may catch on and say something more positive than his or her real opinion. Finally, a response bias may occur—if only part of the sample responds to a survey, the respondents’ answers may not be representative of the population.24 Focus groups are useful when the marketer wants to launch a new product or modify an existing one. A focus group usually involves having some 8-12 people come together in a room to discuss their consumption preferences and experiences. The group is usually led by a moderator, who will start out talking broadly about topics related broadly to the product without mentioning the product itself. For example, a focus group aimed at sugar-free cookies might first address consumers’ snacking preferences, only gradually moving toward the specific product of sugar-free cookies. By not mentioning the product up front, we avoid biasing the participants into thinking only in terms of the specific product brought out. Thus, instead of having consumers think primarily in terms of what might be good or bad about the product, we can ask them to discuss more broadly the ultimate benefits they really seek. For example, instead of having consumers merely discuss what they think about some sugar-free cookies that we are considering releasing to the market, we can have consumers speak about their motivations for using snacks and what general kinds of benefits they seek. Such a discussion might reveal a concern about healthfulness and a desire for wholesome foods. Probing on the meaning of wholesomeness, consumers might indicate a desire to avoid artificial ingredients. This would be an important concern in the marketing of sugar-free cookies, but might not have come up if consumers were asked to comment directly on the product where the use of artificial ingredients is, by virtue of the nature of the product, necessary.25 Focus groups are well suited for some purposes, but poorly suited for others. In general, focus 70 THE M E T H O D S O F A R E S E A RC H O N P S YC H O L O G I C A L E F F I C I E N C Y O F A D V E RT I S I N G groups are very good for getting breadth — finding out what kinds of issues are important for consumers in a given product category. Here, it is helpful that focus groups are completely “open-ended”. The consumer mentions his or her preferences and opinions, and the focus group moderator can ask the consumer to elaborate. In a questionnaire, if one did not think to ask about something, chances are that few consumers would take the time to write out an elaborate answer. Focus groups also have some drawbacks, for example, they represent small sample sizes. Because of the cost of running focus groups, only a few groups can be run. Suppose you run four focus groups with ten members each. This will result in an n of 4(10)=40, which is too small to generalise from. Therefore, focus groups cannot give us a good idea of: - What proportion of the population is likely to buy the product. What price consumers are willing to pay. The groups are inherently social. This means that: - Consumers will often say things that may make them look good (i.e., they watch public television rather than soap operas or cook fresh meals for their families daily) even if that is not true. Consumers may be reluctant to speak about embarrassing issues (e.g., weight control, birth control). Personal interviews involve in-depth questioning of an individual about his or her interest in or experiences with a product. The benefit here is that we can get really into depth (when the respondent says something interesting, we can ask him or her to elaborate), but this method of research is costly and can be extremely vulnerable to interviewer bias. To get a person to elaborate, it may help to try a common tool of psychologists and psychiatrists— simply repeating what the person said. He or she will often become uncomfortable with the silence that follows and will then tend to elaborate. This approach has the benefit that it minimises the interference with the respondent’s own ideas and thoughts. He or she is not influenced by a new question but will, instead, go more in depth on what he or she was saying. Personal interviews are highly susceptible to inadvertent “signalling” to the respondent. Although an interviewer is looking to get at the truth, he or she may have a significant interest in a positive consumer response. Unconsciously, then, he or she may inadvertently smile a little when something positive is said and frown a little when something negative is said. Consciously, this will often not be noticeable, and the respondent often will not consciously be aware that he or she is being “reinforced” and “punished” for saying positive or negative things, but at an unconscious level, the cumulative effect of several facial expressions are likely to be felt. Although this type of conditioning will not get a completely negative respondent to say all positive things, it may “swing” the balance a bit so that respondents are more likely to say positive thoughts and withhold, or limit the duration of, negative thoughts. Projective techniques are used when a consumer may feel embarrassed to admit to certain opinions, feelings, or preferences. For example, many older executives may not be comfortable admitting to being intimidated by computers. It has been found that in such cases, people will tend to respond more openly about “someone else.” Thus, we may ask them to explain reasons why a friend has not yet bought a computer, or to tell a story about a person in a picture who is or is not using a product. The main problem with this method is that it is difficult to analyse responses. Projective techniques are inherently inefficient to use. The elaborate context that has to be put into place takes time and energy away from the main question. There may also be real differences between the respondent and the third 71 THE M E T H O D S O F A R E S E A RC H O N P S YC H O L O G I C A L E F F I C I E N C Y O F A D V E RT I S I N G party. Saying or thinking about something that “hits too close to home” may also influence the respondent, who may or may not be able to see through the ruse. Observation of consumers is often a powerful tool. Looking at how consumers select products may yield insights into how they make decisions and what they look for. For example, some American manufacturers were concerned about low sales of their products in Japan. Observing Japanese consumers, it was found that many of these Japanese consumers scrutinised packages looking for a name of a major manufacturer —the product specific-brands that are common in the U.S. (e.g., Tide) were not impressive to the Japanese, who wanted a name of a major firm like Mitsubishi or Proctor & Gamble. Observation may help us determine how much time consumers spend comparing prices, or whether nutritional labels are being consulted. A question arises as to whether this type of “spying” inappropriately invades the privacy of consumers. Although there may be cause for some concern in that the particular individuals have not consented to be part of this research, it should be noted that there is no particular interest in what the individual customer being watched does. The question is what consumers — either as an entire group or as segments — do. Consumers benefit, for example, from stores that are designed effectively to promote efficient shopping. If it is found that women are more uncomfortable than men about others standing too close, the areas of the store heavily trafficked by women can be designed accordingly. What is being reported here, then, are averages and tendencies in response. The intent is not to find “juicy” observations specific to one customer. By understanding the phenomena such as the tendency toward a right turn, the location of merchandise can be observed. It is also possible to identify problem areas where customers may be overly vulnerable to the “but brush,” or overly close encounter with others. This method can be used to identify problems that the customer experiences, such as difficulty finding a product, a mirror, a changing room, or a store employee for help. Online research methods: The Internet now reaches the great majority of households in the U.S., and thus, online research provides new opportunity and has increased in use. One potential benefit of online surveys is the use of “conditional branching.” In conventional paper and pencil surveys, one question might ask if the respondent has shopped for a new car during the last eight months. If the respondent answers “no,” he or she will be asked to skip ahead several questions, e.g., going straight to question 17 instead of proceeding to number 9. If the respondent answered “yes,” he or she would be instructed to go to the next question which, along with the next several ones, would address issues related to this shopping experience. Conditional branching allows the computer to skip directly to the appropriate question. If a respondent is asked which brands he or she considered, it is also possible to customise brand comparison questions to those listed. Suppose, for example, that the respondent considered Ford, Toyota, and Hyundai, it would be possible to ask the subject questions about his or her view of the relative quality of each respective pair—in this case, Ford vs. Toyota, Ford vs. Hyundai, and Toyota vs. Hyundai. There are certain drawbacks to online surveys. Some consumers may be more comfortable with online activities than others—and not all households will have access. Today, however, this type of response bias is probably not significantly greater than that associated with other types of research methods. A more serious problem is that it has consistently been found in online research that it is very difficult—if not impossible—to get respondents to carefully read instructions and other information online—there is a tendency to move quickly. This makes it difficult to perform research that depends on the respondent’s reading of a situation or product description. Online search data and page visit logs provides valuable ground for analysis. It is possible to see how frequently various terms are used by those who use a firm’s web site search feature or to see the 72 THE M E T H O D S O F A R E S E A RC H O N P S YC H O L O G I C A L E F F I C I E N C Y O F A D V E RT I S I N G route taken by most consumers to get to the page with the information they ultimately want. If consumers use a certain term frequently that is not used by the firm in its product descriptions, the need to include this term in online content can be seen in search logs. If consumers take a long, “torturous” route to information frequently accessed, it may be appropriate to redesign the menu structure and/or insert hyperlinks in “intermediate” pages that are found in many users’ routes. Scanner data: Many consumers are members of supermarket “clubs.” In return for signing up for a card and presenting this when making purchases, consumers are often eligible for considerable discounts on selected products. Researchers use a more elaborate version of this type of program in some communities. Here, a number of consumers receive small payments and/or other incentives to sign up to be part of a research panel. They then receive a card that they are asked to present any time they go shopping. Nearly all retailers in the area usually cooperate. It is now possible to track what the consumer bought in all stores and to have a historical record. The consumer’s shopping record is usually combined with demographic information (e.g., income, educational level of adults in the household, occupations of adults, ages of children, and whether the family owns and rents) and the family’s television watching habits. No. of ads seen by shoper Ads seen for competing brands “Split cable” TELEVISION EXPOSURE RECORDED PURCHASES HOUSEHOLD FILE DEMOGRAPHIC INFORMATION Family size Occupation Family size Income Home ownership ANALYSIS Purchase on occasion: Yes, no Time since previous purchase Previous purchases Current price Previous price Current promotional status Previous promotional status Current display status Previous display status Display status of competing bran Promotional status of competing Coupon used: Yes, no Coupon available: Yes, no Coupon available for older brand Amount of coupon FIGURE 21. RELATIVE IMPACT OF A NUMBER OF FACTORS ON THE CONSUMER’S CHOICE Source: Perner L. (2010) The Consumer Behaviour: The Psychology of Marketing, access via internet page: http://www.consumerpsychologist.com/index.html, accessed March/April, 2014 73 THE M E T H O D S O F A R E S E A RC H O N P S YC H O L O G I C A L E F F I C I E N C Y O F A D V E RT I S I N G It is now possible to assess the relative impact of a number of factors on the consumer’s choice, e.g.: What brand in a given product category was bought during the last, or a series of past, purchase occasions; Whether, and if so, how many times a consumer has seen an ad for the brand in question or a competing one; Whether the target brand (and/or a competing one) is on sale during the store visit; Whether any brand had preferential display space; The impact of income and/or family size on purchase patterns; and Whether a coupon was used for the purchase and, if so, its value. A “split cable” technology allows the researchers to randomly select half the panel members in a given community to receive one advertising treatment and the other half another. The selection is truly random since each household, as opposed to neighbourhood, is selected to get one treatment or the other. Thus, observed differences should, allowing for sampling error, the best result of advertising exposure since there are no other systematic differences between groups. Interestingly, it has been found that consumers tend to be more influenced by commercials that they “zap” through while channel surfing even if they only see part of the commercial. This most likely results from the reality that one must pay greater attention while channel surfing than when watching a commercial in order to determine which program is worth watching. Scanner data is, at the present time, only available for certain grocery item product categories, e.g., food items, beverages, cleaning items, laundry detergent, paper towels, and toilet paper. It is not available for most non-grocery product items. Scanner data analysis is most useful for frequently purchased items (e.g., drinks, food items, snacks, and toilet paper) since a series of purchases in the same product category yield more information with greater precision than would a record of one purchase at one point in time. Even if scanner data were available for electronic products such as printers, computers, and MP3 players, for example, these products would be purchased quite infrequently. A single purchase, then, would not be as effective in effectively distinguishing the effects of different factors, e.g., advertising, shelf space, pricing of the product and competitors, and availability of a coupon—since we have at most one purchase instance during a long period of time during which several of these factors would apply at the same time. In the case of items that are purchased frequently, the consumer has the opportunity to buy a product, buy a competing product, or buy nothing at all depending on the status of the brand of interest and competing brands. In the case of the purchase of an MP3 player, in contrast, there may be promotions associated with several brands going on at the same time, and each may advertise. It may also be that the purchase was motivated by the breakdown of an existing product or dissatisfaction or a desire to add more capabilities. Physiological measures are occasionally used to examine consumer response. For example, advertisers may want to measure a consumer’s level of arousal during various parts of an advertisement. This can be used to assess possible discomfort on the negative side and level of attention on the positive side. By attaching a tiny camera to plain eye glasses worn by the subject while watching an advertisement, it is possible to determine where on screen or other ad display the subject focuses at any one time. If the focus remains fixed throughout an ad sequence where the interesting and active part area changes, we can track whether the respondent is following the sequence intended. If he or she is not, he or she is likely either not to be paying as much attention as desired or to be confused by an overly complex sequence. In situations where the subject’s eyes do move, we can assess whether this movement is going in the intended direction. 74 THE M E T H O D S O F A R E S E A RC H O N P S YC H O L O G I C A L E F F I C I E N C Y O F A D V E RT I S I N G Mind-reading would clearly not be ethical and is, at the present time, not possible in any event. However, it is possible to measure brain waves by attaching electrodes. These readings will not reveal what the subject actually thinks, but it is possible to distinguish between beta waves—indicating active thought and analysis—and alpha waves, indicating lower levels of attention. An important feature of physiological measures is that we can often track performance over time. A subject may, for example, be demonstrating good characteristics—such as appropriate level of arousal and eye movement— during some of the ad sequence and not during other parts. This, then, gives some guidance as to which parts of the ad are effective and which ones need to be reworked.27 In a variation of direct physiological measures, a subject may be asked, at various points during an advertisement, to indicate his or her level of interest, liking, comfort, and approval by moving a lever or some instrument (much like one would adjust the volume on a radio or MP3 player). Research sequence: In general, if more than one type of research is to be used, the more flexible and less precise method—such as focus groups and/or individual interviews—should generally be used before the less flexible but more precise methods (e.g., surveys and scanner data) are used. Focus groups and interviews are flexible and allow the researcher to follow up on interesting issues raised by participants who can be probed. However, because the sample sizes are small and because participants in a focus group are influenced by each other, few data points are collected. If we run five focus groups with eight people each, for example, we would have a total of forty responses. Even if we assume that these are independent, a sample size of forty would give very imprecise results. We might conclude, for example, that somewhere between 5% and 40% of the target market would be interested in the product we have to offer. This is usually no more precise than what we already reasonably new. Questionnaires, in contrast, are highly inflexible. It is not possible to ask follow-up questions. Therefore, we can use our insights from focus groups and interviews to develop questionnaires that contain specific questions that can be asked to a larger number of people. There will still be some sampling error, but with a sample size of 1,000+ responses, we may be able to narrow the 95% confidence interval for the percentage of the target market that is seriously interested in our product to, say, 17-21%, a range that is much more meaningful. Project and teamwork exercises 1. Consider the statement that people do not buy goods or services; they buy benefits. What was the last clothing product or personal-care service you purchased? What were the benefits you received from it? Think about both tangible and intangible benefits. 2. Apply the total product concept to the following goods and services: personal computer, movie rental, college sporting event, and mountain bike. For each, identify the benefits that fit into the basic core, the accessory ring, and the psychological ring. How does time affect selection? 3. How is the restaurant marketplace in your town segmented? Describe three different restaurants in terms of consumer benefits offered. Who are the customers in each restaurant segment? How do they differ from one another? In what situations would you go to restaurants in different segments? 4. Look through the advertising section of a daily newspaper and find an advertisement for a store selling women’s apparel and one for a store selling men’s apparel. For each, who is the target market group for the store? What is it about the advertisement that makes you think so? Consider the headline, subheads, body copy, visuals, and overall layout and appearance of the advertisements. Are there any “mixed signals” in the advertisements, or are they totally on target? 75 THE M E T H O D S O F A R E S E A RC H O N P S YC H O L O G I C A L E F F I C I E N C Y O F A D V E RT I S I N G 5. Record a television commercial that you feel is right on target for you. Show it to team members and explain why you chose it. Consider the product, the program during which the commercial appeared, and the network. Consider the creative aspects such as the spokesperson used in the commercial, the situation represented, the music, the visuals, and the copy. 6. Review foreign periodicals in the library and find examples of intermarket segmentation. Also look for examples of imported goods or services that have been localised. 7. Members of the team should go to the Internet independently and find three websites of retailers that sell clothing targeted toward college-age women and/or men. The team should meet and mutually agree on three sites that all will evaluate. Now look at the sites as a team and come to an agreement on how each one is positioned. Why do you think each site is positioned as it is? 8. Think of an important purchase you have recently made. What triggered you to want the product? Explain as clearly as you can the thought processes and the actions you went through as you decided what to buy, which brand to choose, how much to spend, and when and where to make the purchase. How closely does your decision process resemble the five-step process described in the text? 9. On today’s city and suburban highways, we see more trucks or sports utility vehicles than ever before. Increasingly, they’re driven by the kinds of people who just ten years ago were driving sedans or station wagons. Why do you think this is so? 10. Identity theft is often mentioned in the press and on television these days. How are marketers reacting to this situation as they position their products and services? 11. Your team is working for Ford. Ford wants to target young drivers, ages sixteen to eighteen, and the company wants to design a new car for this target market. Research is to be conducted to identify automobile characteristics that would be highly appealing to that target market. What shopper/buyer/consumer behaviour model would you use to assist in this research? Discuss this with your teammates and justify your model selection in the best way you can. 12. Your team is hired by the owner of a local restaurant. The owner wants to make changes to the restaurant to increase patronage. She thinks marketing research is a good idea to help identify possible changes. What shopper/buyer/consumer behaviour model would you use to guide this research? Discuss your choice. 13. The owner of a local clothing boutique hires your team. He is convinced that targeting career women who are somewhat overweight may be the way to develop the business. The owner needs help with developing an ad campaign involving local television, radio, and newspaper. He does not know what images, symbols, and messages to use in the ad campaign. Discuss with your team how research could be conducted to identify those images, symbols, and messages. What shopper/buyer/consumer behaviour model can be used to guide this research? Discuss your choice. 14. Your team is asked to consult on the marketing of a new software package that is targeted to the leaders of professional associations. The goal of this software is to allow association secretaries to process membership applications, conference registrations, and order publications, all on the Internet. Doing this would result in a reduction of paperwork processing and save considerable money. How would your team advise the software developer to market this innovation? What information needs do you have? What are the research questions? Discuss your decisions. 76 THE M E T H O D S O F A R E S E A RC H O N P S YC H O L O G I C A L E F F I C I E N C Y O F A D V E RT I S I N G 15. Using the Question 14 example, have the team discuss potential shopper/buyer/consumer behaviour models that can be used to answer the following question: How will executive directors of professional associations likely evaluate the new software? What decision criteria are they most likely to use? 16. Your team is hired to provide advice on how to deal with shoplifting in a franchise sporting goods store. The marketing manager wants to find ways to discourage shoppers from shoplifting. His idea is to put up signs throughout the store counter arguing against the mental justifications shoplifters commonly use to sustain their illicit practice. What shopper/buyer/consumer behaviour model can be used to conduct research to identify methods? Discuss your choice. 77 THE M E T H O D S O F A R E S E A RC H O N P S YC H O L O G I C A L E F F I C I E N C Y O F A D V E RT I S I N G DISCUSSION Case study: The Kellogg Company The Kellogg Company is the world’s leading producer of cereals. Its products are manufactured in 18 countries and sold in more than 180 countries. For more than 100 years, Kellogg’s has been a leader in health and nutrition through providing consumers with a wide variety of food products. These are designed to be part of a balanced diet and meet the different tastes of consumers. Kellogg’s focuses on sustainable growth. This involves constantly looking for ways to meet consumer needs by growing the cereal business and expanding its product portfolio. Market research is a specific area of marketing that informs businesses like Kellogg’s about the things consumers need, how best to design products to answer those needs and how to advertise those products to consumers. Market research goes beyond finding out what consumers are thinking today. It can identify what consumers might want in the future. In this way market research helps a business to make more informed choices. This reduces the risks for any new product development (NPD). It also increases the likelihood that products will be well received by consumers when they are launched. Kellogg’s launched Crunchy Nut Cornflakes in the UK in 1980. Since then, it has become one of the most important brands for Kellogg’s with a sales value of £68 million (according to IRI sales data). In 2003 the Crunchy Nut brand created a brand extension. This involved using the Crunchy Nut name to launch a new product called Crunchy Nut Clusters. This variant has two varieties, Milk Chocolate Curls and Honey and Nut. Both of them have enabled the brand to reach a wider group of consumers. This brand extension is now worth £21 million in annual value sales (according to IRI sales data). This case study focuses on the importance of market research during the development and launch of Crunchy Nut Bites, a more recent extension to the Crunchy Nut brand. The objective of this innovation was to provide a new flavour and texture for consumers, helping Kellogg’s extend its share of the breakfast cereals market. Many organisations are described as product orientated. This means they develop a product and then look for a market to sell to. Kellogg’s is market orientated. This means that the whole organisation focuses on the needs of its consumers. It is therefore essential that it identifies and anticipates changing consumer needs before the development of new products Market research adds value to businesses like Kellogg’s by identifying consumers’ needs. It helps Kellogg’s to plan ahead, for example, looking at what products or extensions it should develop and for whom. It focuses the business on the needs of its consumers. An organisation that does this can improve its competitive advantage. In an established market, such as breakfast cereals, there is little room to increase the overall sales in the market. Kellogg’s is therefore always looking for ways to strengthen its own portfolio. Designing new products is a good way of doing this. However, this can take a long time and may involve considerable costs. In addition to the resources required during development, suppliers must produce an advertising campaign to raise awareness of the product among consumers and encourage retailers to stock the product. Launching a new product can be a risky business. Of the hundreds of products launched every year in consumer goods markets, very few reach significant market share. In order to reduce risks, market research is, therefore, essential. A product extension is a less risky way of increasing market share by providing consumer products with new features under an existing brand. New product extensions give more choice to consumers and help them to feel more favourably about the existing brands. To develop a new Crunchy Nut brand extension, Kellogg’s commissioned primary research. This is research gathered first-hand to answer questions that are specific to the project. Although primary research is often time-con- 78 THE M E T H O D S O F A R E S E A RC H O N P S YC H O L O G I C A L E F F I C I E N C Y O F A D V E RT I S I N G suming and expensive, it is considered as a reliable source of information because it is directly from the consumer and is specifically designed to meet the objectives of a project. There are a number of different ways of collecting primary data. Sometimes agencies are employed to collect data using, for example, street interviews or a questionnaire. This is a systematic list of questions that obtain feedback from the consumers. Qualitative For the development of Crunchy Nut Bites, Kellogg’s used various different methods of primary data collection. Primary market data may involve qualitative research or quantitative research. Both types of data are valuable in understanding what consumers want or need. Qualitative data is concerned more about opinions, feelings and attitudes. Quantitative data is in numerical form and is usually gathered from a large sample of respondents. Qualitative research establishes a conversation with consumers. It prompts consumer reaction to, for example, a new product idea and helps researchers understand what they think of it, how it makes them feel, why they find it interesting or not. Qualitative research may be obtained through focus groups, where a moderator captures feedback from a group of six or seven consumers to the ideas shown to them. Those ideas may take the format of drawings or having new food prototypes to taste. Quantitative Quantitative research may use questionnaires administered to large numbers of respondents. This allows statistical analysis, such as the calculation of a mean score or percentages. It aims to give a representative picture of what consumers think of a new product idea or a new (real) food. It may involve the use of scales, so numbers get associated with a particular meaning for example, on an evaluation scale of 1 to 7, where 1 means ‘very poor’ and 7 means ‘excellent’. Crucially those numbers need to be interpreted to enable the business to understand the consumer’s overall response. Secondary research In addition, Kellogg’s used secondary research which is existing research that has already been collected by other organisations. Sources of secondary data include books, journals, the internet and government statistics. Market research agencies collect a range of data which they process and use to provide organisations like Kellogg’s with research. The benefits of secondary research are that it is quicker and often less expensive than primary, although it may not always be completely related to the needs of a specific project. For Kellogg’s, the order in which the information is gathered is as important as the type of information being gathered. In order to develop the new Crunchy Nut Bites, Kellogg’s undertook four distinct stages of research. Stage 1: Discovery Initial research aimed to identify a set of new food ideas that would be suitable for developing a new Crunchy Nut product. Secondary research from [market research publications] Mintel and Datamonitor was used to find out about innovation trends in the cereal market. It was also used to find out about new products, flavours and foods from around the world. Food developers at Kellogg’s used this information to come up with a number of new food ideas. Focus groups Focus groups were used to provide qualitative research. These were used to show consumers the new food ideas in the form of a number of different (real) food prototypes, including a mini crispy lattice product and a nutty triangle. The focus groups captured the attitudes and feelings of consumers towards the new foods. This primary research helped Kellogg’s to find out how new product suggestions could be developed and still fit in with the Crunchy Nut brand. It helped Kellogg’s to establish what consumers were looking for in terms of 79 THE M E T H O D S O F A R E S E A RC H O N P S YC H O L O G I C A L E F F I C I E N C Y O F A D V E RT I S I N G potential new flavours and textures. The results allowed Kellogg’s to discard some ideas. Other ideas were appealing for consumers but needed refining and further development. At the end of this stage, Kellogg’s had a number of new food ideas that all seemed to appeal to consumers. Stage 2: Selecting the best idea This stage aimed to select the best idea arising from the stage 1 research. Kellogg’s put the ideas from the focus group on boards. The boards had pictures showing product ideas and a description of what the new product would be like. These boards were then shown to a large group of representative consumers in a quantitative survey. They were asked to rate those ideas against a number of scales, so Kellogg’s could identify which product ideas consumers liked best or disliked. The quantitative data created specific statistical information that indicated that a new Crunchy Nut Bites idea was perceived as the most appealing amongst all the ideas tested. It established what proportion of people liked the new product idea enough to buy it. It also identified those product ideas that had the best or least sales potential. Once the best idea had been selected from stage 2, Kellogg’s needed to make this idea become a real product. The Crunchy Nut Bites food prototype recipe was refined using the feedback from another qualitative and quantitative survey. The qualitative research helped Kellogg’s food technologists to explore the taste and texture of the new food idea in more detail. Kellogg’s needed to understand the ‘eating experience’ of the consumer before a decision could be made about how to develop the recipe in more detail. Following this stage, four product recipes were developed and these prototypes were then tested with representative groups of consumers in a quantitative survey to see which product consumers preferred. This enabled Kellogg’s to select the best one. Also, at this stage, the pack design for the new Crunchy Nut Bites was developed. Several designs were developed aimed at giving the new product the same look and feel as the rest of the Crunchy Nut family. The packaging designs were tested with consumers, which enabled Kellogg’s to select the final packaging design for Crunchy Nut Bites. 6WDJH)RUHFDVWLQJVDOHVIRUWKHQHZ&UXQFK\1XW%LWHV At Kellogg’s, every product has to undergo one final test prior to a new product launch. This is called the ‘In Home Usage Test’. The consumers are given the product to try for several days and this enables Kellogg’s to capture how consumers interact with the product for the first time. At the end of the trial, consumers complete a report on what they thought of the food in the form of a questionnaire. This final survey measures how appealing the new product is to consumers and how likely they would be to buy it in real life. The data collected also helped to calculate a sales forecast for the new product for the first and second year in market. The forecast was used by the finance department to set budgets, organise the supply chain and to schedule food production. Once the data was analysed and the product concept tested, Kellogg’s was able to make the strategic decision to go ahead with the new product. Production could then take place. Kellogg’s used market research throughout the whole development process for a new product for the Crunchy Nut range, from the initial idea to the planning of production and delivery. During the earlier stages of research, consumer responses helped Kellogg’s to explore lots of different ideas in an open way. It then crafted some ideas in more detail and screened those ideas with consumers to select the one which seemed to have the highest appeal. The idea became real by testing several recipes, refining the food prototype selected and developing the design for packaging. Once the food and packaging elements for the new product had been developed, the whole product was tested with consumers to ensure it met their needs. The data also provided a sales forecast to predict the first 80 THE M E T H O D S O F A R E S E A RC H O N P S YC H O L O G I C A L E F F I C I E N C Y O F A D V E RT I S I N G two years of sales of Crunchy Nut Bites. Crunchy Nut Bites has extended the Crunchy Nut family of products. In doing so it has brought new consumers to the brand and increased its consumption. Kellogg’s launched Crunchy Nut Bites in September 2008. Sales data shows it was one of the best performing brands to launch in the breakfast cereal category with a sales value of £6.9 million in its first full year of sales (IRI sales data). This illustrates that the detailed market research undertaken during the planning stages was valuable. It helped to ensure that the product extension hit the spot with consumers straight away. The source: http://manikmukherjee.blogspot.com/2013/09/kelloggs-case-study.html Study case questions: 1. 2. 3. 4. Describe the purpose of market research. Explain the difference between primary research and secondary research. Analyse why an organisation like Kellogg’s would use both qualitative and quantitative data. Evaluate why market research can reduce the risks of a new product launch. References for further reading 1. Ayuba B. (2005), Marketing: Principles and Management, Kaduna: Shukrah Printing 2. David L. and Albert J.D. (2002), Consumer Behaviour, New Delhi: Tata McGraw Hill. 3. Del I.H. Roger J.B. and Kenneth A.C. (2001), Consumer Behaviour; Building Marketing Strategy, New York: McGraw-Hill Irwin. 4. Eric A. Linda P. and George Z. (2002), Consumer, New York: McGraw-Hill Irwin. 5. Geoff, R. (1988); Modern Industrial Marketing; New York: McGraw-Hill, 6. Kotler, P. and Armstrong (1999); Principles of Marketing; New Delhi: Prentice- Hall, 7. Inc. Leon G.S. and Leslie L.K (2004), Consumer Behaviour, Upper Saddle River, U.S.A: Pearson Education, Inc. Pearson Prentice Hall. 8. Levitt, T. (1960): The Marketing Mode; New Jersey, Prentice- Hall, Inc.8 9. Mc Carthy, E.J. (1996): Basic Marketing: A Management Approach. Illinois: Irwin. 10. Onu, A.J (2000); Marketing Today; Zaria: Ndyson Publishers Ltd. 11. Schewe, C.D and Smith, R.M (1980); Marketing Concepts and Applications. USA. 81 TASKS F O R I N D I V I D UA L / G RO U P W O R K S 7$6.6)25,1',9,'8$/*5283:25.6 CASE STUDIES Lecturers often prefer to set their own questions on case studies. Here I restrict myself to making some general observations on the case studies which may be useful in answering many questions that may be posed and related to the case studies. Case Study No.1 Why Do People Buy Hybrid Cars? Consumers are buying increasing numbers of environmentally friendly cars. Increasingly, many of these environmentally conscious consumers choose to purchase petrol-electric hybrid vehicles. In this category of “greener-cars”, Toyota’s Prius model is reported to be the market leader. In 2009-10, it was the best-selling car in Japan, an important leading market for automobile trends (Mick 2010). Sales of the Prius keep growing despite well-publicised quality and safety problems (Mitchell & Linebaugh 2010). In fact, the demand for petrol-electric hybrids is so strong that Toyota has introduced a second and larger Camry branded hybrid vehicle into Australia. Other car manufacturers are following with their own models, indicating that there is likely to be sustained demand for this type of light-duty passenger vehicle. Toyota markets the Prius as an environmentally better alternative to conventional vehicles because it uses less fuel and has lower emissions. This marketing position appears to appeal to consumers who do not wish to further degrade the environment. It has been suggested that these consumers choose to help by driving a car that is more environmentally friendly (Griskevicius, Tybur & Van den Bergh 2010; Bamberg 2003). Popular sentiment has it that intrinsic motives to preserve the environment are the driving force behind the popularity of these vehicles. This is because consumers keep buying petrol-electric hybrid cars like the Prius even though they cost more than twice the amount of a comparable conventional car. But are intrinsic reasons really why consumers choose to buy a car like the Prius? Are there other reasons behind its popularity? It has been recognised that encouraging the adoption of environmentally friendly products is a key challenge for the behavioural scientists (Kaplan 2000). This appears to be why there has been a great deal of research into the reasons behind this adoption. This article seeks to add to this knowledge by exploring the reasons that drive adoption of environmentally friendlier automobiles, specifically, the petrol-electric hybrids that are gaining popularity. This information may potentially be valuable to increase adoption rates for other environmentally friendly products and ideas. Environmental sensitivity and consumption The currently popular paradigm for discussing the environment originated in the 1970s, when the ideas of global warming and finite oil reserves were first proposed (Minton & Rose 1997; Pelletier et al. 1998). While some debate continues on the veracity of these propositions, this thinking has influenced the way people live by increasing their efforts to reduce energy use and to have fewer by-products as a result of consumption. It has been suggested that this type of thinking has led some consumers to prefer products like the Prius (Jansson, Marrell & Nordlund 2009). These consumers with ecological and environmental concerns have been described in various ways, and are sometimes called environmentally-sensitive, -conscious, or as environmentalists. This group of consumers are reportedly more positively oriented towards conservation and environmental issues when compared to other con- 82 TASKS F O R I N D I V I D UA L / G RO U P W O R K S sumer groups (Casey & Scott 2006; Minton & Rose 1997; Stern et al. 1995) and are widely documented as having a higher tendency to adopt eco-friendlier products (Gatersleben, Steg & Vlek 2002; Minton & Rose 1997; Anable 2005; Bamberg 2003; Hansla et al. 2008; Maloney & Ward 1973; Stisser 1994). This hypothesis has also been tested in its inverse, leading to the finding that consumers who were inclined towards eco-friendlier products were also the most sensitive to the environment (Jansson, Marell & Nordlund 2009). The literature into reasons for buying environmentally friendly products appears to be split along the streams of intrinsic versus extrinsic motives. The methodology employed appears to be correlated with the finding for either intrinsic (unmasked data collection methods) or extrinsic (masked/disguised data collection) motivations for adoption. The source: http://www.ukessays.com/essays/marketing/the-concept-of-green-marketing-marketingessay.php Case study questions: 1. 2. In a wide-ranging study that employed disguised surveys on a range of products, Bamberg (2003) reported only a low to moderate association between consumers’ concern about the environment and adoption of consumption behaviour that was considered to be environmentally friendly. If this is the case, is it possible that there are other reasons behind adopting ‘greener’ products? For many consumers, choosing an automobile is often a complicated and high-involvement process. Although cars are regularly used products, they are also rarely bought products. Additionally, an automobile is expensive, there is a large selection and the consequences of not choosing well typically lasts a long period of time and may cost a lot to rectify. Build the consumer decision making process of buying the hybrid cars. Case study No.2 Behavioural Analysis of USA consumers – Nike story The Nike story begins with its founder, running enthusiast Phil Knight. In 1962, Knight started Blue Ribbon Sports, the precursor to Nike. At the time, the athletic shoe industry was dominated by two German companies, Adidas and Puma. Knight recognised a neglected segment of serious athletes who had specialised needs that were not being addressed. The concept was simple: Provide high-quality running shoes designed especially for athletes by athletes. Knight believed that “high-tech” shoes for runners could be manufactured at competitive prices if imported from abroad. Without much cash to do any advertising for his products, Knight crafted his “grass roots” philosophy of selling athletic shoes: Speaking to athletes in their language and on their level; sharing their true passion for running; and listening to their feedback about his products and the sport. Each weekend Knight would travel from track meet to track meet—both high school and collegiate competitions—talking with athletes and selling Tiger shoes from the trunk of his green Plymouth Valiant. The company’s commitment to designing innovative footwear for serious athletes helped it build a cult following that rapidly reached the American consumer. By 1980, after just under two decades in the business, Nike had become the number one athletic shoe company in the United States. Unfortunately for the company, this wave of success was soon to crest as rival companies positioned themselves to take advantage of the aerobics craze, which Nike largely ignored. Companies like Reebok and L.A. Gear developed fashionable and comfortable products aimed at women fitness enthusiasts that sold remarkably well. Nike refused to join a market it saw as low in quality and heavy on cosmetic properties and continued making durable, performance-oriented products. The company lost millions in sales and allowed Reebok to gain basically uncontested market share points. By 1987, Reebok had nearly doubled Nike’s market share, with 30 percentage 83 TASKS F O R I N D I V I D UA L / G RO U P W O R K S points compared to Nike’s 18. Fortunately for Nike, the company chose to fight back with product innovations and persuasive marketing. The company’s “Air” technology revitalised the company with the additional aid of successful advertising campaigns such as the 1987 “Revolution in Motion” spot for the new Air Max shoes and the “Air Jordan” commercials. When Nike unveiled its now-famous “Just Do It” campaign in 1988, just as Reebok developed the “Reeboks Let U.B.U” slogan, the company was on its way to a full recovery. By 1989, Nike had regained the market leader position in America as market share rose three points above Reebok to 25 percent that year. In the 1990s, Nike continued its consumer focus. Nike kept its “finger on the pulse” of the shoe-buying public in part through the use of “EKINs” (Nike spelled backwards) – sports-loving employees whose job was to hit the streets to disseminate information about Nike and find out what was on the minds of retailers and consumers. Nike’s “Brand Strength Monitor” formally tracked consumer perceptions three times a year to identify marketplace trends. In areas where it felt less knowledgeable, e.g., outside of track and basketball, Nike was more likely to commission customised research studies. Nike’s inventory control system, called “Futures,” also helped it better gauge consumer response and plan production accordingly. Innovative product development had always been a cornerstone of the company. By 1998, Nike was unveiling a new shoe style, on average, every day. In 1999, the company put the power to design shoes in the hands of its customers with the NIKEiD project. NIKEiD enabled customers to personalise a pair of selected shoe models using online customisation software. The software led consumers through a step-by-step process: customers could choose the size and width of the shoes, pick the colour scheme, and affix their own 8-character personal ID to the product. Early reviews of the NIKEiD project were full of criticism of the limited selection and availability, so less than a year after its debut, Nike added additional shoe models and more customisation options while increasing site capacity. Though the company had become a household name throughout the world and, more important, achieved the position of global sportswear leader, Nike was still $3 billion shy of reaching the goal of $12 billion that Phil Knight initially intended the company to reach by 2000. In a letter in Nike’s 2000 annual report, Knight addressed the issue of how to jumpstart his company’s slowed growth and offered the following formula: “We need to expand our connection to new categories and toward new consumers.” This quotation is indicative of Nike’s relentless drive to build its brand with a strong consumer focus. The source: http://wps.prenhall.com/bp_kotler_mm_11/2/633/162107.cw/index.html Questions 1. 2. While Nike made significant changes to maintain its global leadership position, there appear to be some problems in maintaining and growing that position. Is Knight correct in his formula for jumpstarting Nike’s growth (last paragraph), or is the matter more complicated? Develop and evaluate the types of pro and con marketing environmental changes that you see for Nike. Given the options and challenges that Nike faces, how would you proceed with a strategic marketing plan for the firm? 84 TASKS F O R I N D I V I D UA L / G RO U P W O R K S Case study No. 3: ADIDAS case study Since it was established in Germany in 1949, by Adolf Dassler, Adidas has been synonymous with the sporting industry. Today, Adidas is a global public company and is one of the largest sports brands in the world. It is a household brand name with its three stripes logo recognised in markets across the world. The company’s product portfolio is vast, ranging from state-of-the-art sports footwear and clothing to accessories such as bags, watches, eyewear and other sports-related goods and equipment. Employing over 46,000 people worldwide, the Adidas Group consists of around 170 subsidiaries including Reebok, Taylor Made-Adidas Golf, Rockport and CCM-Hockey. The Group’s headquarters are in Herzogenaurach, Germany. In the second quarter of 2013 the Group’s revenue was €3.383 billion. The Adidas brand is built on a passion for sports excellence and innovative design to help athletes perform to the best of their ability. It is therefore no surprise that Adidas has supported many iconic athletes to achieve great things at the Olympic Games. In the UK, Adidas has partnered and supplied Team GB since 1984. The company’s heritage with the Olympic Games dates back to the Games in Amsterdam in 1928 when Adidas’ running shoes were debuted. Footwear and clothing by Adidas has been seen on athletes at every Olympic Games since. In fact, all British medal-winning athletes at the last 8 Olympic Games wore Adidas products. There are countless historic sporting achievements that have taken place in Adidas products. These include: • Jesse Owens’ 4 gold medals in Berlin 1936 • Cassius Marcellus Clay (Muhammad Ali) taking gold in the boxing light-heavyweight division at Rome 1960 • Dick Fosbury’s revolutionary new back-first high jump technique at Mexico 1968, known as the ‘Fosbury Flop’ • Gymnast Nadia Comaneci’s perfect 10 at Montreal 1976. This case study demonstrates how Adidas used innovative marketing strategies in its sponsorship deal with the London 2012 Olympic Games to engage with young consumers in the UK and across the globe. For most organisations the marketing function is vital for survival. The Chartered Institute of Marketing defines marketing as: ‘Marketing is the management process responsible for identifying, anticipating and satisfying consumer requirements profitably.’ This definition outlines the key purposes of the marketing function. These are: • to compete in a competitive marketplace • to identify and anticipate consumer requirements and then satisfy these requirements • to make a profit. As a market-orientated organisation Adidas continuously identifies and reviews consumers’ needs to ensure its products meet these needs. It aims to exceed customer expectations by adapting its product portfolio to meet the changing needs of consumers. It is this focus on its customers, teamed with product and marketing innovation, that plays a key role in Adidas’ success. Every organisation must look at its marketing in relation to the marketing mix. The marketing mix, often referred to as the 4Ps, is a means of assessing how to balance the elements of the mix in order to meet customers’ needs. The elements include: • the right product • sold at the right price • in the right place • using the most suitable form of promotion. 85 TASKS F O R I N D I V I D UA L / G RO U P W O R K S No two businesses are identical, as such, every organisation must decide on its own balance of the 4Ps to suit its consumers’ needs. There are many internal and external factors that will influence an organisation’s marketing mix. Key factors include the size of the business, the markets it operates in and available resources. Sports marketing For a global organisation like Adidas its marketing mix is tailored to specific markets. This is known as international marketing as it takes cultural and social differences into account when planning marketing activity. Sports marketing is a key focus for Adidas’ marketing mix. The growing popularity of sports as entertainment has led to a huge increase in sports marketing. The founder of Adidas was one of the first people to see the potential of this form of marketing when he sponsored the FIFA World Cup back in 1978. Sponsorship involves a business paying to be associated with another organisation, event or TV programme. Like many new developments, the sports marketing function has changed dramatically since its introduction. Just consider Sony’s first ever Walkman in 1979 to today’s iPod. The same dramatic difference is evident in the sports marketing arena with sponsorship deals now worth tens of millions of pounds. Rather than simply trying to gain positive associations with particular sports, companies use sports marketing to drive the brand and increase sales. Within the marketing function of any organisation there will be key goals, or objectives, to be achieved. For example, increasing the market share by 3% or entering a new market overseas. To achieve these marketing objectives requires a plan that details the actions needed. These plans are referred to as marketing strategies. A key challenge for Adidas’ marketing strategies is finding innovative ways to inspire and engage its 14-19 year old target audience. Sponsorship For Adidas, London is a key focus for the sportswear market, for both performance sportswear and sports fashion. This market sets more trends than anywhere else in the country. London 2012 gave Adidas a platform to target this audience but with a global reach. The sponsorship deal obtained by Adidas was the broadest set of sportswear rights in Olympic history. It became the Official Sportswear Partner of the London Games and the exclusive licensee of all branded (Adidas + London 2012) and event branded (London 2012 only) clothing. From these rights Adidas set four key marketing objectives: • To ensure a clear association as Sportswear Partner of London 2012, Team GB and Paralympics GB. • To engage and excite the 14-19 year old audience in order to drive brand preference in the UK. • To deliver a Licensed Product Return on Investment (ROI) (branded and event branded licensee rights). • To become the most talked about sports brand in 2012. A major aspect of this sponsorship deal was the athletes’ kit. The kit provided the opportunity to be innovative and excite the target audience whilst creating products to meet commercial sales targets. Market research undertaken by Adidas showed the youth audience wanted something ‘untraditionally British’. Designer Stella McCartney fulfilled this brief with her deconstructed union flag design. Preparations to equip the team started 2 ½ years before the Games were due to start. Over 550 athletes were fitted for over 680 items of kit. This meant the marketing activity for the campaign also started long before the Games in 2012. A photo booth shoot captured every athlete in their kit. These images were used to create excitement around the Team GB kit product launch. All elements of the marketing mix are important. However, in increasingly competitive markets innovative methods of promotion can create a competitive advantage. Promotional activity is used to communicate with consumers about the brand and its products. As there were more than 50 London 2012 sponsors, Adidas needed to ensure it communicated the right messages, at the right time, through the appropriate channels for its target audience. It aimed to create national support for Team GB through its ‘Take the Stage’ campaign. 86 TASKS F O R I N D I V I D UA L / G RO U P W O R K S The acronym AIDA is useful when planning promotional activity, promotion should aim to: • initiate awareness amongst consumers • generate interest for and desire to have the product • ensure action to purchase. Above-the-line promotion There are many different methods of promotion. Above-the-line promotion refers to traditional methods of advertising, such as, print adverts in magazines and newspapers, billboards or online and TV advertisements. This form of promotion is expensive. As mass audiences become harder to reach through advertising, for example, an increasing number of people record TV and fast-forward the adverts, innovative methods of below-the-line activity is becoming increasingly important to engage the audience. Above-the-line activity for Adidas’ campaign included TV adverts that showcased the best UK talent across sport, street and style. The adverts contained carefully planned product placement. Amongst those featured were David Beckham, Wretch 32 and Derrick Rose. In addition to a significant outdoor media spend, Adidas featured artist impressions of athletes on 17 London Metro front pages. TV adverts featuring athletes such as Jessica Ennis and Tom Daley were used to rally support for Team GB. In these adverts athletes shared their intimate goals, fears and thoughts, something which was dramatically different to other sponsors of London 2012. Below-the-line promotion In contrast, below-the-line promotion aims to reach more targeted groups of consumers. For example, through sponsorship deals, direct marketing, public relations and social media. Below-the-line promotion targeted at the youth audience was a key method for Adidas to achieve its marketing objectives. It used a wide range of promotional activities to create deeper engagement with its audience, mixing traditional media with an innovative use of social and digital channels. The scale of the activation of this campaign was an industry first. Its TV adverts aimed to drive consumers to a website where they could demonstrate their talents for a chance to meet their idols. Through ‘Project 32’, Adidas had already rewarded 32 talented youngsters in London with the chance to meet leaders in their chosen fields, such as the sporting and musical industry, giving undiscovered talent the chance to ‘Take the Stage’. Social media played an integral part in Adidas’ campaign. For example, on Twitter #takethestage became the summer trend for supporting Team GB. Videos on YouTube created hundreds of millions of views, including a video of Team GB athletes singing along to Queen’s ‘Don’t stop me now’. In addition, a large photo booth was set up at Westfield shopping centre in Stratford. Members of the public then entered the booth to show support for Team GB. Videos of peoples’ reactions to David Beckham making a surprise appearance received 3.2 million views, as well as international TV coverage Promotional activity is very expensive. Organisations want to see a return on investment (ROI) for the money they spend on a promotional campaign. Sponsorship of London 2012 was no exception. Every aspect of its promotional campaign, both online and offline was continuously monitored and measured. This enabled Adidas to demonstrate that becoming the Official Sportswear Partner of the London Games and the exclusive licensee of all branded (Adidas + London 2012) and event branded (London 2012 only) apparel was cost effective. Throughout the campaign Adidas monitored all of its media coverage. This data was then used to establish whether the marketing objectives had been achieved. The table below demonstrates the significant return achieved through this campaign and how Adidas successfully achieved its marketing objectives. An organisation’s marketing mix is its own way to uniquely position the brand and drive sales. For Adidas, this includes understanding what its consumers want and producing innovative products that fulfil these needs. Using innovative methods of sports marketing, on a scale never before seen in the industry, enabled Adidas to target the 87 TASKS F O R I N D I V I D UA L / G RO U P W O R K S youth audience in London whilst also having a global reach through social media and online promotion. Sponsorship deals such as Adidas’ heritage with the Olympic Games are very expensive. However, as this case study shows, through well planned marketing strategies with clearly defined objectives they can offer a way of creating deeper engagement with consumers. Partnering the brand with London 2012, Team GB and the Paralympics engaged Adidas’ target consumers and created huge amounts of support for Team GB before, during and after the Games. The source: http://businesscasestudies.co.uk/adidas/planning-effective-marketing-strategies-for-a-target-audience Questions and teamwork exercises 1. 2. 3. Evaluate whether below-the-line promotion is better than above-the-line promotion for Adidas. Recognition and recall tests are conducted to determine whether consumers remember seeing an ad, the extent to which they have read it or seen it and can recall its content, their resulting attitudes toward the product and the brand, and their purchase intentions. A number of syndicated research services conduct recognition and recall tests. One such organisation is the Starch Readership Service (see http://www.nopworld.com/products.asp?go=product&key=91). This service evaluates the effectiveness of magazine advertisements. See Figure 7-13 for an example of an ad that has been “Starched.” a. Go to the Starch Readership Service Web site and describe other services that Starch provides to marketers and advertisers. b. Which of these services (beyond the Readership Service) seems to most closely match the marketer or advertiser’s desire to learn how consumers learn, recognise, and recall information? c. After reviewing the information about the Starch services found in the chapter and seen on their Web site, pick a magazine ad and devise your own method for measuring recognition and recall. How does your method match that of Starch? How does your method differ? Try administering your test method to five fellow students. Critique your results. As indicated in the chapter, the basis of co-branding (in which two brand names are featured on a single product) is to use another product’s brand equity to enhance the primary brand’s equity. Notice the synergy that occurs when Nabisco combines its name with Ocean Spray to form Cranberry Newton’s. Your assignment is to go to the Web and find three examples where companies doing business on the Internet have formed co-branding opportunities. List the examples you have found and comment on what you perceive to be the strategies behind these moves. Lastly, suggest a co-branding opportunity among e-commerce companies that has yet to materialise. Comment on why your suggested opportunity would be a good one. 88 CONSUMER B E H AV I O U R P RO J E C T S T RU C T U R E &21680(5%(+$9,285352-(&76758&785( Consumer behaviour project outline All of the following categories need to be addressed by your analysis, unless it can be shown that they are not relevant to your segment or product/service. I. Cover page II. Introduction—overview of project (1-2 pages) a. Market segment description b. Product or service description c. Applicable ethical theory(ies) and societal marketing efforts d. Research method(s) utilised e. Market segmentation f. Basis for segmentation, e.g., geographic, demographic, psychological, etc. g. Criteria for targeting market segment h. Strategies for segmentation III. Consumer motivation a. Needs b. Goals c. Positive/negative aspects d. Rational/emotional components IV. Personality a. Personality traits b. Cognitive factors c. Materialism, fixated and/or compulsive consumption behaviours d. Ethnocentrism e. Brand personality f. Self-image g. Perception h. Perceptual selection i. Perceptual organisation 89 CONSUMER B E H AV I O U R P RO J E C T S T RU C T U R E j. Perceptual interpretation k. Positioning and repositioning l. Perceptual mapping (one or more maps as appropriate) m. Perceived price n. Perceived quality o. Perceived image (store/manufacturer as appropriate) p. Perceived risk V. Consumer learning a. Involvement theory (particularly related to marketing strategy) b. Recognition and recall c. Brand loyalty d. Brand equity VI. Consumer attitude formation and change a. Attitude models b. Attitude change strategies c. Cognitive dissonance d. Attribution theory e. Communication f. Credibility g. Comprehension h. Mood i. Barriers j. Feedback k. Communications strategy l. Media strategy m. Message strategies Rhetoric and persuasion Involvement theory Message presentation Advertising appeals Audience participation VII. Reference groups and family influences a. Reference group influence factors b. Reference groups (assess all that apply) 90 CONSUMER B E H AV I O U R P RO J E C T S T RU C T U R E Friendship groups Shopping groups Work groups Virtual groups or communities Consumer-action groups c. Reference group appeals Celebrities Experts “The common man” The executive and employee spokesperson Trade or spokes-characters Other d. The family Family structure Family consumption roles Family decision-making Family life cycle Non-traditional families VIII. Social class a. Social class categories/clusters b. Affluent/non-affluent consumers c. The “techno-class” d. Selected applications (as appropriate) IX. Culture a. Content analysis b. Value measurement Achievement and success Activity Efficiency and practicality Progress Material comfort Individualism Freedom External conformity 91 CONSUMER B E H AV I O U R P RO J E C T S T RU C T U R E Humanitarianism Youthfulness Fitness and health X. Subcultures a. Nationality—Hispanic, etc. b. Religion (or not) c. Geographic region d. Race—African American, Asian American, etc. e. Age—Gen X, Baby Boomers, older consumers, etc. f. Gender—sex roles, working woman, etc. g. Occupation h. Social class XI. Cross-cultural (international) behaviours a. Cultural traits (as appropriate) b. Strategies (as appropriate) XII. Consumer influence and diffusion of innovations a. Opinion leadership Credibility Positive/negative information Information and advice Category Leader/receiver motivations b. Opinion leadership marketing strategies Programs Advertisements Word of mouth c. Diffusion of innovations Product characteristics Resistance barriers Channels of communication The social system (market segment) Adopter categories 1. Stage 2. Rate 92 CONSUMER B E H AV I O U R P RO J E C T S T RU C T U R E Consumer innovators (as appropriate) XIII. Consumer decision making a. Level of decision making b. Models of decision making Economic Passive Cognitive Emotional c. Purchase behaviour d. Post purchase evaluation e. Consuming and possessing (as appropriate) f. Relationship marketing (as appropriate) 93 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T 75,$/&21680(5%(+$9,256(7//(0(17 MULTIPLE CHOICE QUESTIONS 1. _________________ refers to the buying behaviour of final consumers. a. Consumer buyer behaviour b. Target market buying c. Market segment buying d. Business buying behaviour Answer: (a) 2. ____________ is individuals and households who buy goods and services for personal consumption. a. The target market b. A market segment c. The consumer market d. The ethnographic market Answer: (c) 3. According to the text, the American consumer market consists of: a. 189 million consumers. b. 284 million consumers. c. 375 million consumers. d. 438 million consumers. Answer: (b) 4. Understanding consumer buying behaviour is not easy. The answers are often locked deep within the consumer’s head. The central question for marketers is: a. how much money is the consumer willing to spend? b. how much does the consumer need the product being offered for sale? c. how much does a discount or a coupon affect the purchase rate? d. how do consumers respond to various marketing efforts the company might use? Answer: (d) 5. The starting point in understanding how consumers respond to various marketing efforts the company might use is the: a. Lipinski model of buying behaviour. b. stimulus-response model of buyer behaviour. c. Freudian model of buying behaviour. d. Maslow’s model of life-cycle changes. 94 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T Answer: (b) 6. According to the stimulus-response model of buyer behaviour (as presented in your text), the place where consumers process marketing stimuli prior to making a purchase decision is called the: a. consumer’s value chain. b. consumer’s cognitive schema. c. consumer’s black box. d. consumer’s thoughts-emotions network. Answer: (c) 7. Consumer purchases are influenced strongly by cultural, social, personal, and: a. psychographic characteristics. b. psychological characteristics. c. psychometric characteristics. d. supply and demand characteristics. Answer: (b) 8. ______________ is the most basic cause of a person’s wants and behaviours. a. Culture b. Social class c. Personality d. Lifestyle Answer: (a) 9. A child in the United States is normally exposed to all of the following values EXCEPT: a. achievement and success. b. activity and involvement. c. material comfort. d. collectivism. Answer: (d) 10. Marketers are always trying to spot ____________ in order to discover new products that might be wanted. a. opinion graphers b. dissonant groups c. cultural shifts d. benchmarks 95 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T Answer: (c) 11. The cultural shift toward _____________ has resulted in more demand for casual clothing and simpler home furnishings. a. liberal political causes b. conservative political causes c. informality d. downsizing Answer: (c) 12. A ________________ is a group of people with shared value systems based on common life experiences and situations. a. culture b. subculture c. lifestyle composite d. social class Answer: (b) 13. Hispanics are often called an emerging market. Which of the following general product categories do not sell well to Hispanics? a. automobiles b. computers c. photography equipment d. generics Answer: (d) 14. African American consumers are strongly motivated by: a. quality and ability to return merchandise. b. quality and selection. c. stores who honour their cultural traditions. d. stores who have store credit. Answer: (b) 15. The fastest growing and most affluent U.S. demographic segment is the: a. Hispanic American consumers. b. African American consumers. c. Middle Eastern-American consumers. d. Asian American consumers. 96 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T Answer: (d) 16. The greatest barrier to effectively marketing to the Asian American market is thought to be: a. reluctance to grant credit to this group. b. language and cultural traditions. c. the urban nature of their neighbourhoods. d. lack of a mass media that reaches this group. Answer: (b) 17. Mature consumers are becoming a very attractive market. Currently, the 50 and older population is estimated to be about ___________ strong. a. 75 million b. 85 million c. 95 million d. 115 million Answer: (a) 18. Relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviours are called: a. cultures. b. subcultures. c. social classes. d. social factors. Answer: (c) 19. Which of the following is most true about social class in America? a. Social class is not determined by a single factor. b. Social class is determined by income. c. Social class lines are fixed. d. Social class lines are rigid. Answer: (a) 20. According to the characteristics of the major American social classes, the ________________ are the social elite who live on inherited wealth and have well-known family backgrounds. a. upper-uppers b. lower-uppers c. upper-middles d. upper-lowers 97 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T Answer: (a) 21. According to the characteristics of the major American social classes, the ________________ are primarily concerned with “attaining the better things in life.” They have attained positions as professionals, independent businesspersons, and corporate managers. a. upper-uppers b. lower-uppers c. upper-middles d. upper-lowers Answer: (c) 22. According to the characteristics of the major American social classes, the ________________ are the class who leads a “working-class lifestyle.” They depend heavily on relatives for economic and emotional support. a. upper-uppers b. lower-uppers c. upper-middles d. working class Answer: (d) 23. Sybil, Sara, and Janice are all on the school tennis team. They are very proud of the fact that the team pulled together to accomplish the goal of winning a state championship for their school. Which is the best characterisation of the relationship between these three girls and the rest of their school tennis team? a. group b. trend setters c. VALS pattern d. lifestyle concept Answer: (a) 24. Groups which have a direct influence and to which a person belongs are called: a. membership groups. b. facilitative groups. c. bonding groups. d. social groups. Answer: (a) 25. As a form of a reference group, the _______________ are ones to which the individual wishes to belong. a. secondary groups b. facilitative groups c. primary groups d. aspirational groups 98 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T Answer: (d) 26. The __________________ is a person within a reference group who, because of special skills, knowledge, personality, or other characteristics, exerts influence on others. a. facilitator b. referent actor c. opinion leader d. social role player Answer: (c) 27. Even though buying roles in the family change constantly, the ___________ has traditionally been the main purchasing agent for the family. a. wife b. husband c. teenage children d. grandparent Answer: (a) 28. A major reason for the changing traditional purchasing roles for families is that: a. the economic conditions are forcing more teens to work. b. more women than ever hold jobs outside the home. c. children are spending more time on the Web. d. men and women now shop together or “shop until you drop” for entertainment purposes. Answer: (b) 29. A(n) ________________ consists of the activities people are expected to perform according to the persons around them. a. behaviour b. attitude c. role d. status Answer: (c) 30. The stages through which families might pass as they mature over time is a description of what is called the: a. adoption process. b. lifestyle cycle. c. Values and Lifestyle (VALS) topology. d. family life cycle. 99 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T Answer: (d) 31. A ______________ is a person’s pattern of living as expressed in his or her activities, interests, and opinions. a. role b. status c. position d. lifestyle Answer: (d) 32. According to the SRI Consulting’s Values and Lifestyles (VALS) typology, _____________________ consumers are those that buy based upon their desire for activity, variety, and risk taking. a. principle-oriented b. status-oriented c. action-oriented d. value-oriented Answer: (c) 33. According to Forrester’s Technographics scheme for segmenting Internet customers according to motivation, desire, and ability to invest in technology, __________ are the biggest spenders on computer technology. They adopt new technology for home, office, and personal use before most others. a. New Age Nurturers b. Fast Forwards c. Techno-Strivers d. Mouse Potatoes Answer: (b) 34. ______________ is(are) a person’s unique psychological characteristics that lead to relatively consistent and lasting responses to his or her own environment. a. Psychographics b. Personality c. Demographics d. Lifestyle Answer: (b) 35. The basic premise of the _____________ is that people’s possessions contribute to and reflect their identities; that is, “we are what we have.” a. lifestyle concept b. self-concept c. personality concept d. cognitive concept 100 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T Answer: (b) 36. A _____________ is a need that is sufficiently pressing to direct the person to seek satisfaction of the need. a. motive b. want c. demand d. requirement Answer: (a) 37. A good synonym for motive is a(n) _____________. a. omen b. need c. drive d.cue Answer: (c) 38. The theory of motivation that views people as responding to urges that are repressed but never fully under control was developed by: a. Marshall. b. Kant. c. Freud. d. Maslow. Answer: (c) 39. Dr. Ken Kaser designs qualitative research to probe consumers’ hidden, subconscious motivations. He specialises in using nondirective and projective techniques to uncover underlying emotions and attitudes towards brands and buying situations. Which of the following terms would most appropriately describe what Dr. Kaser is doing? a. market segment research b. cohort research c. psychodemographic research d. motivation research Answer: (d) 40. According to Maslow’s Hierarchy of Needs, the lowest order of needs are called: a. self-actualisation needs. b. social needs. c. safety needs. d. physiological needs. 101 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T Answer: (d) 41. According to Maslow’s Hierarchy of Needs, the highest order of needs are called: a. self-actualisation needs. b. social needs. c. safety needs. d. physiological needs. Answer: (a) 42. __________________ is the process by which people select, organise, and interpret information to form a meaningful picture of the world. a. Readiness b. Selectivity c. Perception d. Motivation Answer: (c) 43. People can form different perceptions of the same stimulus because of three perceptual processes. These processes are best described as being: a. selective attention, selective distortion, and selective retention. b. subliminal perception, selective remembrance, selective forgetting. c. closure, modelling, and perceptual screening. d. needs distortion, wants analysis, and perceptual screening. Answer: (a) 44. Kellye is a loyal Sony user. Her television, DVD player, cassette player, and VCR are all Sony products. When she hears or sees ads for Sony products, she almost always remembers the good points about the brand. In addition, when she hears or sees an ad for a competing product that points out the strengths of its products, she tends forget these points quickly or does not process them at all. The process that Kellye is has gone through is best described as being one of: a. selective retention. b. selective attention. c. selective distortion. d. stimulus actualisation. 102 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T Answer: (a) 45. In 1957, a researcher announced that he had flashed the phrases “Eat popcorn” and “Drink Coca-Cola” on a screen in a movie theatre every five seconds for 1/300th of a second. He reported that although viewers did not consciously recognise these messages, they absorbed them subconsciously and bought 58 percent more popcorn and 18 percent more Coke. This process was eventually named: a. deceptive advertising. b. subliminal advertising. c. psychological manipulation. d. psychological modelling and transfusion. Answer: (b) 46. _______________ describes changes in an individual’s behaviour arising from experience. a. Modelling b. Motivation c. Perception d. Learning Answer: (d) 47. A ___________ is a strong internal stimulus that calls for action. a. drive b. cue c. response d. perception Answer: (a) 48. Jack Lerma has a special relationship with his dog, Chris. Seeing dog toys in a pet store window, hearing of a special price on dog food during a television commercial, or talking with a friend and receiving a recommendation a on kennel are all forms of __________, which may eventually impact Jack’s purchasing decisions and responses to the objects he has seen or heard about. a. drives b. cues c. reinforcements d. dyads 103 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T Answer: (b) 49. If a consumer describes a car as being the “most economical car on the market,” then this descriptor is a(n): a. rule. b. attitude. c. belief. d. cue. Answer: (c) 50. If a consumer tells friends “I like my car more than any other car on the road,” then the consumer has expressed a(n): a. rule. b. attitude. c. belief. d. cue. Answer: (b) 51. ___________ puts people into a frame of mind of liking or disliking things, of moving toward or away from them. a. A rule b. An attitude c. A belief d. A cue Answer: (b) 52. Which of the following is NOT one of the five stages of the buyer decision process? a. need recognition b. brand identification c. information search d. purchase decision Answer: (b) 53. According to the buyer decision process suggested in the text, the first stage is characterised as being one of: a. awareness. b. information search. c. need recognition. d. demand formulation. 104 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T Answer: (c) 54. The buying process can be triggered by a(n) __________ when one of the person’s normal needs— hunger, thirst, sex—rises to a level high enough to become a drive. a. awareness b. external stimuli c. internal stimuli d. experiential motivation Answer: (c) 55. The stage in the buyer decision process in which the consumer is aroused to search for more information is called: a. information search. b. evaluation of alternatives. c. search for needs. d. perceptual search. Answer: (a) 56. The consumer can obtain information from any of several sources. If the consumer were to obtain information from handling, examining, or using the product, then the consumer would have obtained the information by using a(n): a. personal source. b. commercial source. c. informative source. d. experiential source. Answer: (d) 57. How the consumer processes information to arrive at brand choices occurs during which stage of the buyer decision process? a. need recognition b. information search c. evaluation of alternatives d. purchase decision Answer: (c) 58. Generally, the consumer’s purchase decision will be to buy the most preferred brand, but two factors can come between the purchase intention and the purchase decision. These two factors are best described as being: a. the cost and availability of the product. b. the attitude of others and the cost of the product. c. the availability of the product and unexpected situational factors. d. the attitude of others and unexpected situational factors. 105 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T Answer: (d) 59. With respect to post-purchase behaviour, the larger the gap between expectations and performance: a. the greater likelihood of re-purchase. b. the greater the customer’s dissatisfaction. c. the less likely the consumer will be influenced by advertising. d. the less likely the consumer will need sales confirmation and support. Answer: (b) 60. Cognitive dissonance occurs in which stage of the buyer decision process model? a. need recognition b. information search c. evaluation of alternatives d. post-purchase conflict Answer: (d) 61. A company must always guard against dissatisfying customers. On average, a satisfied customer tells 3 people about a good purchase experience. A dissatisfied customer, however, on average gripes to ________ people. a. 7 b. 9 c. 11 d. 30 Answer: (c) 62. The _________________ is the mental process through which an individual passes from first hearing about an innovation to final adoption. a. adoption process b. consumption process c. innovation process d. new product development process Answer: (a) 63. All of the following are part of the adoption process that consumers may go through when considering an innovation EXCEPT: a. awareness. b. process. c. interest. d. trial. 106 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T Answer: (b) 64. With respect to adopter categories, the _______________ are guided by respect, are the opinion leaders in their communities, and adopt new ideas early but carefully. a. seekers b. innovators c. early adopters d. early majority Answer: (c) 65. With respect to adopter categories, the ___________________ are sceptical and they adopt an innovation only after a majority of people have tried it. a. early adopters b. early majority c. late majority d. laggards Answer: (c) 66. Several characteristics are especially important in influencing an innovation’s rate of adoption. _________ is the degree to which the innovation may be tried on a limited basis. a. Relative advantage b. Synchronisation c. Compatibility d. Divisibility Answer: (d) 67. If a company makes products and services for the purpose of reselling or renting them to others at a profit or for use in the production of other products and services, then the company is selling to the: a. business market. b. international market. c. consumer market. d. private sector market. Answer: (a) 68. All of the following are among the primary differences between a business market and a consumer market EXCEPT: a. purchase decisions to satisfy needs. b. market structure and demand. c. the nature of the buying unit. d. the types of decisions and the decision process involved. 107 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T Answer: (a) 69. The business marketer normally deals with _____________ than the consumer marketer does. a. far greater but smaller buyers b. far greater and larger buyers c. far fewer but far larger buyers d. far fewer and smaller buyers Answer: (c) 70. When demand comes (as it does in the business market) from the demand for consumer goods, this form of demand is called: a. kinked demand. b. inelastic demand. c. cyclical demand. d. derived demand. Answer: (d) 71. General Motors buys steel because consumers buy cars. If consumer demand for cars drops, so will General Motors’ demand for steel. This is an example of the relationships found in: a. kinked demand. b. inelastic demand. c. cyclical demand. d. derived demand. Answer: (d) 72. That business markets have more buyers involved in the purchase decision is evidence of which of the following characteristic differences between business and consumer markets? a. market structure and demand b. the nature of the buying unit c. types of decisions made d. type of decision process itself Answer: (b) 73. Purchases in the business market often involve large sums of money, complex technical and economic considerations, and interactions among many people at many levels of the buyer’s organisation. This is evidence of which of the following characteristic differences between business and consumer markets? a. market structure and demand b. the nature of the buying unit c. types of decisions made and the decision process d. type of business classification 108 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T Answer: (c) 74. The place in the business buying behaviour model where interpersonal and individual influences might interact is called the: a. environment. b. response. c. stimuli. d. buying centre. Answer: (d) 75. In a _______________, the buyer reorders something without any modifications. a. habitual rebuy b. straight rebuy c. modified rebuy d. new task buy Answer: (b) 76. In a _______________, the buyer wants to change something about product specifications, prices, terms, or suppliers. a. habitual rebuy b. straight rebuy c. modified rebuy d. new task buy Answer: (c) 77. When a firm buys a product or service for the first time, it is facing a: a. habitual rebuy situation. b. straight rebuy situation. c. modified rebuy situation. d. new task situation. Answer: (d) 78. The “in” suppliers are most likely to get nervous and feel pressure to put their best foot forward in which of the following types of buying situations? a. modified rebuy b. new task buying c. straight rebuy d. indirect rebuy 109 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T Answer: (a) 79. If a firm were to bid to do a “turnkey” operation where they would choose a building site, design a cement factory to build the plant, hire construction crews, assemble materials and equipment to run the new factory, and turn over the finished factory ready to operate to the owners, the bidding firm would be using which of the following? a. core process products selling b. design products selling c. reciprocal selling d. systems selling Answer: (d) 80. The decision-making unit of a buying organisation is called its _____________: all the individuals and units that participate in the business decision-making process. a. buying centre b. purchasing centre c. bidding centre d. demand-supply centre Answer: (a) 81. Considering the major influences on business buyer behaviour, as shown in a model in the text, under which influence stage would you expect to find the influences of authority, status, empathy, and persuasiveness? a. environmental b. organisational c. interpersonal d. individual Answer: (c) 82. The stage of the business buying process where the buyer describes the characteristics and quantity of the needed item is called: a. problem recognition. b. general need description. c. product specification. d. proposal solicitation. 110 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T Answer: (b) 83. If a buying team is asked by the purchasing department to rank the importance of reliability, durability, price, and other attributes of an item, then the team is going through a business buying process stage called: a. problem recognition. b. general need description. c. product specification. d. proposal solicitation. Answer: (b) 84. ________________ is the stage of business buying where an organisation decides on and specifies the best technical product characteristics for a needed item. a. Problem recognition b. General need description c. Product specification d. Proposal solicitation Answer: (c) 85. _________________ is an approach to cost reduction in which components are studied carefully to determine if they can be redesigned, standardised, or made by less costly methods of production. a. Cost analysis b. Order analysis c. Product analysis d. Value analysis Answer: (d) 86. Reviewing trade directories, doing a computer search, or phoning other companies for recommendations would be methods that an interested buyer might perform in which of the following stages of the business buying process model? a. problem recognition b. vendor analysis c. product specification d. supplier search Answer: (d) 87. Factors such as supplier reputation for repair and servicing capabilities are important criteria for evaluation at which stage in the business buying process? a. problem recognition b. supplier search c. supplier selection d. order-routine specification 111 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T Answer: (c) 88. Blanket contracts are typically part of which of the following stages in the business buying process? a. general need description b. product specification c. supplier selection d. order-routine specification Answer: (d) 89. The stage of the business buying process in which the buyer writes the final order with the chosen supplier(s), listing the technical specifications, quantity needed, expected time of delivery, return policies, and warranties is called: a. general need description. b. product specification. c. supplier selection. d. order-routine specification. Answer: (d) 90. The _______________ may lead the buyer to continue, modify, or drop the arrangement that has been entered into by the buyer and seller. a. performance review b. order-routine specification c. supplier selection d. general need description Answer: (a) 91. Increasingly, business buyers are purchasing all kinds of products and services electronically, either through electronic data interchange links (EDI) or on the Internet. The descriptive term for such purchases, exchanges, and links is: a. e-marketing. b. e-commerce. c. e-procurement. d. e-transaction. Answer: (c) 92. E-purchasing by businesses has its drawbacks and problems. More than 80 percent of companies say that __________ is the leading barrier to expanding electronic links with customers and partners. a. security b. privacy c. cost d. lack of correct technology Answer: (a) 112 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T True/false questions 93. One of the beauties of studying consumer buying behaviour is its simplicity. Answer: (False) 94. With respect to studying consumer or buyer behaviour, the central question for marketers is: “How do consumers respond to various marketing efforts the company might use?” Answer: (True) 95. In a simple model of buyer behaviour, marketing and other stimuli are processed in a consumer’s black box. Answer: (True) 96. If consumers have a cultural shift toward greater concern about health and fitness, then a correct marketing response would be to manufacture or market health and fitness services, exercise equipment, and sports clothing. Answer: (True) 97. If the U.S. population of Asian Americans were a separate nation, its buying power of $500 billion annually would rank twelfth in the free world. Answer: (False) 98. The fastest growing and most affluent racial or ethnic subculture within the United States culture is the Asian American group. Answer: (True) 99. In the United States, a source of concern is the fixed lines between social classes and the problems that this rigidity brings. Answer: (False) 100. Inherited wealth characterises the lower upper social class category. Answer: (False) 113 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T 101. Upper lowers in the United States social class lead a “working-class lifestyle.” Answer: (False) 102. Opinion leaders are people within a reference group who, because of special skills, knowledge, personality, or other characteristics, exert influence on others. Answer: (True) 103. Women account for nearly one-half of all hardware purchases. The most accurate correlation with this example would be that of changing social class distinctions. Answer: (False) 104. A person’s lifestyle is reflected by his or her activities, interests, and opinions. Answer: (True) 105. In the VALS typology, action-oriented buyers base their purchases on the actions and opinions of others. Answer: (False) 106. A good illustration of the “Mouse Potatoes” lifestyle (as described by Forrester’s Technographics scheme) would be a person who is dedicated to interactive entertainment and willing to spend for the latest in “technotainment.” Answer: (True) 107. A person’s self-concept is also called the self-image. Answer: (True) 108. Another term for motive is self-concept. Answer: (False) 109. The highest order of needs within Maslow’s hierarchy of needs scheme is esteem needs such as self-esteem, recognition, or status. Answer: (False) 110. Selective attention is the tendency for people to screen out most of the information to which they are exposed. Answer: (True) 114 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T 111. Numerous studies by psychologists and consumer researchers have found no link between subliminal messages and consumer behaviour. Answer: (True) 112. Learning occurs through the interplay between drives, stimuli, cues, responses, and reinforcement. Answer: (True) 113. Research has shown that attitudes are relatively easy to change while beliefs are extremely difficult to change. Answer: (False) 114. The buyer decision process model begins with information search. Answer: (False) 115. The larger the gap between expectations and performance, the greater the consumer’s dissatisfaction. Answer: (True) 116. The early majority segment of adopter classification scheme shown in the text are characterised as being guided by respect—they are the opinion leaders in their communities, and adopt new ideas early but carefully. Answer: (False) 117. In the adopter classification scheme, innovators account for about half of the bell-shaped adoption curve. Answer: (False) 118. The business market consists of all the organisations that buy goods and services to use in the production of other products and services that are sold, rented, or supplied to others. Answer: (True) 119. The business market is huge, however, at present the consumer market still involves more dollars and items for sale. Answer: (False) 115 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T 120. Business buyers usually face more simple situations when purchasing than do consumers because of the amount of information that they have prior to purchase. Answer: (False) 121. A straight rebuy occurs when a business buyer wants to modify product specifications, prices, terms, or suppliers. Answer: (False) 122. The buying centre, by its very nature, is a fixed and formally identifiable unit within an organisation. Answer: (False) 123. Unlike consumer buying behaviour, business buying behaviour is not influenced by interpersonal factors. Answer: (False) 124. The first stage of the business buying process is that of problem recognition. Answer: (True) 125. Value analysis is performed in the supplier search stage of the business buying process model. Answer: (False) 126. In business buying, MRO stands for maintenance, repair, and operations. Answer: (True) 116 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T Essay questions Harley-Davidson Motorcycle Company has used consumer behaviour studies to advance the organisation’s knowledge about its consumers. This strategy has been pivotal in meeting the challenge of the Japanese motorcycle manufacturers. How has Harley-Davidson used focus groups to keep up with its shifting market and varying consumer tastes? What information has the company obtained about its customers? Answer: Harley-Davidson uses focus groups to explore its consumers’ feelings about the company’s products. For example, cut-and-paste collages of pictures (assembled by representative consumers) showed how consumers felt about the company’s motorcycles. This focus group exercise was then followed by a more extensive (16,000 surveys) battery of psychological, sociological, and demographic questions that attempted to classify Harley users into distinct groups (advertising could then be directed toward these specific groups). The company found that Harley customers were buying more than just motorcycles when the company’s product was purchased. The customers were making a lifestyle statement and displaying an attitude. These lifestyle statements and attitudes were then captured in advertisements directed toward the target audiences. The company believes that knowledge of consumer behaviour is very important to the overall success of their strategy and campaigns. Define the consumer market and briefly describe the elements of a simple model of buying behaviour as identified in your text. Answer: The consumer market is made up of all the final consumers of products and services combined. A simple model of consumer behaviour consists of (1) marketing and other stimuli (such as the 4Ps [product, price, place, and promotion] and environmental forces [economic, technological, political, and cultural forces]), (2) the buyer’s black box (that includes the buyer’s characteristics and the buying decision process), and (3) the buyer’s responses (which includes product choice, brand choice, dealer choice, purchase timing, and purchase amount). Describe the importance of culture, subculture, and social class influences on consumer buying behaviour. Answer: Culture is the most basic cause of a person’s wants and behaviour. Subcultures are smaller groups of shared value systems based upon common life experiences or situations. Subcultures often make up significant market segments. Social classes are relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviours related to product preferences and purchase behaviours. 117 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T Briefly, characterise the Hispanic, African American, and Asian American subcultures found in the United States market. Answer: a) Hispanic Americans consist of Cuban, Mexican, Central American, South American, and Puerto Rican peoples. They are approximately 35 million strong, and buy more than $400 billion worth of goods and services each year. They are expected to grow by 64 percent in the next 20 years. They are somewhat easy to reach through the growing number of Spanish media stations and publications. This group has long been a target for food, beverages, and household care items. b) African Americans, if a separate nation, would (with a buying power of $500 billion annually) rank twelfth in the free world. This group is growing in affluence and sophistication. They are strongly motivated by quality and selection. They are brand loyal and do less shopping around. c) Asian Americans are the fastest-growing and most affluent of the subculture segments. They now number 10 million with a disposable income of $229 billion annually. They are estimated to reach 30 million by 2050. Presently, the Chinese group is the largest. Describe what a group is, and the various forms of groups that (according to the text) a consumer might be a part of. Answer: A group is two or more people who interact to accomplish individual or mutual goals. Types of groups would include: a) Membership groups—groups that have a direct influence and to which a person belongs. b) Reference groups—serve as a direct (face-to-face) or indirect points of comparison or reference in forming a person’s attitudes or behaviour. c) Aspirational groups—one to which the individual wishes to belong. List and briefly describe the five categories of Forrester’s Technographics scheme, which segments consumers according to motivation, desire, and ability to invest in technology. Answer: The five categories as outlined in the text include: a) Fast Forwards — the biggest spenders on computer technology. Fast Forwards are early adopters of new technology for home, office, and personal use. b) New Age Nurturers — also big spenders but focused on technology for home uses, such as a family PC. c) Mouse Potatoes — consumers who are dedicated to interactive entertainment and willing to spend for the latest in “technotainment.” d) Techno-Strivers — consumers who use technology primarily to gain a career edge. e) Hand-shakers — older consumers, typically managers, who don’t touch computers at work and leave that to younger assistants. 118 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T List and briefly describe Maslow’s Hierarchy of Needs. Answer: Beginning at the bottom of the pyramid model: a) physiological needs — hunger, thirst b) safety needs — security, protection c) social needs — sense of belonging, love d) esteem needs — self-esteem, recognition, status e) self-actualisation needs — self-development and realisation Discuss and illustrate the difference between an attitude and a belief. Answer: A belief is a descriptive thought that a person holds about something. An attitude is a person’s consistently favourable or unfavourable evaluations, feelings, and tendencies toward an object or idea. Beliefs may be based on knowledge, opinion, or faith, and they may carry an emotional charge. Attitudes are primarily feelings of like and dislike. Attitudes are difficult to change. Identify each of the stages of the buyer decision process. Be sure to give a brief description of each stage. Answer: a) Need recognition: The first stage of the buyer decision process, in which the consumer recognises a problem or need. The buyer senses a difference between his or her actual state and some desired state. The need can be triggered by internal or external stimuli. b) Information search: The stage of the buyer decision process in which the consumer is aroused to search for more information; the consumer may simply have heightened attention or may go into active information search. c) Evaluation of Alternatives: The stage of the buyer decision process in which the consumer uses information to evaluate alternative brands in the choice set. The consumer can use product attributes, degrees of importance, brand beliefs, total product satisfaction, or an evaluation procedure to perform alternative evaluation. d) Purchase decision: The stage in the buyer decision process in which the consumer actually buys the product. Factors that can influence this action phase are: the purchase intention, the attitudes of others, and unexpected situational factors. e) Post purchase behaviour: The stage of the buyer decision process in which consumers take further action after purchase based upon their satisfaction or dissatisfaction. The considerations are the consumer’s expectations and the product’s perceived performance. Cognitive dissonance can set in, and must be dealt with before complete satisfaction can be achieved. 119 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T People differ in their readiness to adopt or try new products. Take each of the five adopter groups mentioned in the text and give a synonym or brief description of each primary characteristic that sets each particular group apart from the others. Answer: a) Innovators — venturesome — they try new ideas at some risk. b) Early adopters — respected — they are the opinion leaders in their communities and adopt new ideas early but carefully. c) Early majority — deliberate — although they are rarely leaders, they adopt new ideas before the average person. d) Late majority — sceptical — they adopt an innovation only after a majority of people have tried it. e) Laggards — tradition bound — they are suspicious of changes and adopt the innovation only when it has become something of a tradition itself. An innovative product’s rate of adoption is influenced by five characteristics. List and then briefly discuss each of these characteristics. Answer: a) Relative advantage—the degree to which an innovation appears superior to existing products. b) Compatibility—the degree to which the innovation fits the values and experiences of potential consumers. c) Complexity—the degree to which the innovation is difficult to understand or use. d) Divisibility—the degree to which the innovation may be tried on a limited basis. e) Communicability—the degree to which the results of using the innovation can be observed or described to others. Explain how business markets differ from consumer markets. Answer: The main differences include market structure and demand, the nature of the buying unit, and the types of decisions and the decision process within the two. Business markets are geographically concentrated and have derived, inelastic, and fluctuating demand. Buying is more professional and involves more people. Decisions are more complex, more formalised, and the buyer and seller are more dependent upon one another. There are three types of buying situations faced by the business buyer. List and briefly explain or characterise each of these situations. Answer: a) Straight rebuy—the buyer reorders something without any modifications. It is usually handled on a routine basis by the purchasing department. b) Modified rebuy—the buyer wants to modify product specifications, prices, terms, or suppliers. More people in the firm are involved in this situation. c) New-task—a company buys a product for the first time. In such cases, the greater the cost or risk, the larger the number of decision participants and the greater their efforts to collect information will be. 120 TRIAL C O N S U M E R B E H AV I O R S E T L L E M E N T List and define the stages in the business buying decision process. Answer: (a) Problem recognition: the stage in which someone in the company recognises a problem or need that can be met by acquiring a good or a service. (b) General need description: the stage in which the company describes the general characteristics and quantity of a needed item. (c) Product specification: the stage in which the buying organisation decides on and specifies the best technical product characteristics for a needed item. (d) Supplier search: the stage in which the buyer tries to find the best vendors. (e) Proposal solicitation: the stage in which the buyer invites qualified suppliers to submit proposals. (f) Supplier selection: the stage in which the buyer reviews proposals and selects a supplier or suppliers. (g) Order-routine specification: the stage in which the buyer writes the final order with the chosen supplier(s), listing the technical specifications, quantity needed, expected time of delivery, return policies, and warranties. (h) Performance review: the stage in which the buyer rates its satisfaction with suppliers, deciding whether to continue, modify, or drop them. 121 L I T E R AT U R E LITERATURE 1. 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