Chapter 1: The foundations of consumer behaviour

What is consumer behaviour?Consumer behaviour: the behaviour that consumers undertake in seeking, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their personal needs.

Anything that involves having which involves an element of reciprocity How consumers think (mental decisions) and feel, and the physical actions that result from

those decisions. CB isn’t just about buying; it’s also about how the purchaser is not the user.

e.g. underwear for men is bought by women.

Personal consumers and organisational consumersThere are 2 types of consumers:

1. Personal consumer: buys goods and services for his/her own use, use by the whole household, for another member of the household, or as a gift for a friend. (bought for the end-user)

2. Organisational consumer: includes profit/ non-profit businesses, public sector agencies, institutions, all of which buy products, equipment and services in order to run their organisations

Buyers and usersThe market place activities of individuals involve 3 functions as part of the processes involved in CB:

1. Consumer – the person who consumes or uses the product or service2. Buyer – the person who undertakes the activities to acquire the product or service 3. Payer – the person who provides the monetary exchange to obtain the product or service

Marketers must decide who to target their marketing at: the buyer, the payer or the user. For some products or services, they must identify the person who is most likely to influence the decision.e.g. should a retirement community advertise to the elderly or to their middle-aged children?

Toy manufacturers advertise their products on children’s TV shows to reach the user, whilst other advertise in parenting magazines to reach the buyers, and others run dual campaigns to reach both.

Waste disposal has become a major environmental problem that marketers must address in their development or products and packaging. Many manufacturers have begun to remanufacture old components to install in new products, because remanufacturing is often cheaper and more efficient than recycling.

Consumer behaviour as an academic discipline and an applied fieldEarly marketing research was more managerial, they regarded the CB discipline as an applied marketing science: if they could CB, they could influence it. The ability to understand and influence consumers is deeply rooted in consumer research.Consumer research: the process and tools used to study CB, there are 2 theoretical perspectives that guide the development of CR:

1. Positivist approach: tend to be objective and empirical, seeks causes for behaviour, and conducts research studies that can be generalised to larger population

Designed to provide data to be used for strategic managerial decisions2. Interpretivist methodology: tends to be qualitative and based on small samples. Although both

tend to view each consumption situation as unique and non-predictable, interpretivists seek to

find common patterns of operative values, meanings and behaviour across consumption situations

The interdisciplinary nature of consumer behaviour researchThe interdisciplinary nature of CB serves to integrate existing knowledge from other fields into a comprehensive body of knowledge about individuals in their consumption roles.Inputs to the study of consumer behaviour include:

Psychology – study of individuals (motivation, perception, attitudes, personality & learning styles) Sociology – study of groups, group behaviour and the actions of individuals within groups Social psychology – combination of psychology and sociology, how individuals operate in groups Cultural anthropology – the study of human society (development of core beliefs, customs & values) Economics – an important component of economics is the study of consumers

Why marketers study CB Shorter product life cycles

o Due to the introduction of new products and changes in technologyo Product life cycles are reduced due to modified products, improvements or

replacements by new and substitute productso CR conducted to place appropriate ads to entice consumers to try new products

Environmental concernso Increased public concern about environmental deterioration and resource shortages

have made marketers more aware of product packaging (e.g. aerosol sprays)o CR reveals that consumers are socially aware and favour products that have been

modified to meet environmental concerns (e.g. recycled packaging) Consumer protection and public policy concerns

o CR has provided a no. of recommendations concerning consumer and trade practices legislation --> the lobbying of various consumer protection groups, public policy makers at all levels of gov. have become more aware of their responsibility to protect consumer interests

Growth of services marketingo Knowledge of consumer needs and wants are essential to develop effective mktg strategies

Not-for-profit/social marketingo CR helps NPO to gain a better understanding of their target mkt and thus develop more

effective mktg strategies. Growth of global marketing

o Domestic --> international to increase sales and achieve ec. of scale.

The application of CB principles to marketing managementTo operate successfully, orgs must have an explicit understanding of factors that influence CB.

Why do consumers by? What needs consumers are trying to satisfy? What influences consumers’ product & brand choice in order to design persuasive mktg strategies?

Development of the marketing conceptProduction concept: a feasible marketing strategy when dd>ss.

Cheap, efficient production, intense distribution Consumer will buy what is available, rather than wait for what they really want. (Consumer is

more interested in obtaining the product than they are in its specific features)

Product concept: when g/s become more readily available and competition intensifies Consumers will buy the product that offers the highest quality, the best performance and the

most features Leads a company to strive constantly to improve the quality of its product offering -> marketing

myopia (a focus on the product rather than on the consumer need it presumes to satisfy)

Selling concept: consumers are unlikely to buy a product unless they are actively and aggressively persuaded to do so.

Selling concept doesn’t take consumer satisfaction into account. e.g. if consumers are induced to buying a product they don’t want or need, their unhappiness is

communicated by negative word-of-mouth -> dissuades potential customers

Such goods include: life insurance, non-profit marketing activities (e.g. fundraisers)Marketing concept: to be successful, a company must determine the needs and wants of specific target markets and deliver the desired satisfaction better than the competition.

Where the selling concept focuses on the seller, the marketing concept focuses on the buyer Resulted in more products, in sizes, models, versions and packages, offered to more precisely

targets target markets -> a more competitive marketplace.

The societal marketing conceptSocietal marketing concept: sees all marketers sticking to principles of social responsibility in the marketing of their g/s, they endeavour to satisfy the needs and wants of their target markets in ways that preserve and enhance the well-being of consumers and society as a whole.

Segmentation, Targeting and Positioning Market segmentation: process of dividing a market into subsets of consumers with common needs or characteristics. Companies have limited resources; so few companies can pursue all market segmentsMarketing targeting: selecting on e or more of the segments identified for the company to pursuePositioning: developing a distinct image for the g/s in the mind of the consumer, an image that will differentiate the offering from competing ones and squarely communicate to consumers that particular g/s will fulfil their needs better than competing brands. Successful positioning centres around 2 key principles:

1. The benefits that the product will provide are communicated rather than the products’ features2. Many products are similar, so effective positioning strategy must be developed and

communicate a ‘unique selling proposition’ – a distinct benefit or point of difference - for the g/s

The marketing mix1. Product – features, designs, brands, packaging offered, post-purchase benefits

(warranties/return policy)2. Price – list price, including discounts, allowances and payment methods3. Place – the distribution of the g/s through specific stores and non-store outlets4. Promotion – advertising, sales promotion, public relations and sales efforts designed to build

awareness of and dd for the g/s

Customer value, satisfaction and retentionThe 3 drivers of successful relationships between marketers and customers are:

1. Providing customer value: the ratio between customer’s perceived benefits (economic, functional and psychological) and the resources (monetary, time, effort, psychological) used to obtain those benefits. Perceived value is relative and subjective – ‘what they get’ as opposed to ‘what they give’ to get the g/s

2. Customer satisfaction: consumer’s perception of the performance of the product or service in relation to his or her expectations. CS is a function of customer expectations, past experience and encounters with the marketing stimuli.

Customer whose experience falls below expectations: dissatisfied Customer whose experiences match expectations: satisfied Customers whose expectations are exceeded: very satisfied

There are levels of customer satisfaction with customer behaviour: Loyalists: who keep purchasing whose experiences > their expectations (+ve W-O-M) Defectors: neutral or satisfied, likely to stop doing business with the company Terrorists: negative experience, spread –ve W-O-M

Hostages: unhappy customers who stay with the company because of a monopolistic environment, low prices – difficult to deal with because of frequent complaints

Mercenaries: very satisfied customers but have no real loyalty to the company and may defect because of lower prices elsewhere

Companies should strive to create apostles, raise the satisfaction of defectors, turn them into loyalists, avoid having terrorists or hostages, and reduce the mercenaries.

3. Customer retention: make it in the best interest of customers to stay with the company rather than switch to another firm. Studies have shown that small reductions in customer defections product significant increases in profits because:

Loyal customers buy more Loyal customers are less price-sensitive and play less attention to competitors’ advertising Cheaper to keep existing customers - are familiar with the firms’ offerings and processes Loyal customers spread more +ve W-O-M and refer other customers. Marketing efforts aimed at attracting new customers are expensive

Chapter 2: Market segmentation

Market = people x purchasing power x willingness to buy (disposable income)

What is market segmentation?Market segmentation: process of dividing a market into distinct subsets of consumers with common needs or characteristics and selecting one or more segments to target with a distinct marketing strategy

Separating the total group of potential buyers into two or more subgroups using specific segmentation criteria (e.g. being measurable, accessible, substantial and congruent)

Mass marketing: offering the same product and marketing mix to all consumers. If all consumers were alike, mass (undifferentiated) marketing would be a logical strategy Advantages: costs less, needs only one marketing strategy, ad campaign, channel of distribution,

price and one standardised product. e.g. Agricultural products

But consumers are NOT all alike, today companies are focusing on product differentiation, products tailored to a specific segment -> moving towards target marketing.

Targeting: helps marketers find their marketing opportunities more efficiently. Instead of spreading their marketing efforts, marketers can develop the right product for each target market and adjust their prices, distribution channels and marketing communications to reach the target market more efficiently. Micromarketing: markets each having different lifestyle with different requirements

The strategy of segmentation allows orgs to avoid head-on competition in the marketplace by differentiating their offerings, not just on the basis of price but also through styling, packaging, promotional appeals, methods of distribution and superior service. To accomplish this, companies must decide on a specific marketing mix (4Ps) for each distinct segment.

Market segmentation is just the first step in a 3-phase marketing strategy (segmenting /targeting/ positioning, or STP). After segmenting the heterogeneous market into homogeneous clusters, the market must then select one or more segments to target with a specific marketing mix strategy. The third step is to position the product so that it’s perceived by each target market as more satisfying for their needs than their competitors.

Who uses market segmentation? Manufacturers

o e.g. Swatch employed market segmentation to expand its offerings of inexpensive and fashionable watches for men and women. It markets a wide range of wristwatches designed to cater to interests and lifestyles of different segments of consumers

Retailerso DJ and Myer target the upscale market and their stores carry the expensive high-fashion

clothing and other consumer goods sought by more affluent consumerso Big W and Kmart target consumers looking for economy and practicality, cheaper

Industrial manufacturers Non-profit sector

How market segmentation operatesSegmentation studies are designed to discover the needs and wants of specific groups of consumers, so that specialised g/s can be developed and promoted to satisfy their needs. Segmentation studies are also used to guide the redesign or repositioning of existing products or the identification and targeting of a new market segment.

Repositioning strategy: identification of new market segment, changing consumer needs, or stagnant or declining sales. Repositioning is accomplished by changing the promotional appeal, the distribution strategy or the price, based on the characteristics of new segment or changing characteristics of the existing segment.e.g. Cadbury repositioned its Schweppes ginger ale brand from a mixer for alcoholic drinks to a soft drink by refocusing its product mix (more emphasis on flavoured ginger ales), its advertising and packaging.

Marketers have to consider different segmentation variables in order to find the best way to understand the market structure. e.g. increased consumer interest in health and natural foods – frozen yoghurt can be repositioned as an ice-cream substitute. Also, segmentation research is used by marketers to identify the most appropriate media in which to place advertisements.

Bases for segmentationGeographic segmentation: divided by location, region, city or metro size, density and climate

People who live in the same area share some similar needs and wants, and these needs and wants differ from those who live in other areas

Geographic segments can be reached easily via local media, including TV and radio, and regional editions of newspapers and magazines.

Useful in terms of determining social class

Demographic segmentation: the identifiable and measureable statistics of a population. Demographic characteristics such as:

o Age o Sexo Marital statuso Income, occupation and education

More accessible and cost-effective in identifying a target market Easier to measure and help locate a target market, whereas psychological and sociocultural

characteristics help describe how members think, feel and behave

Psychological segmentation: focuses on the inner or psychological characteristics of consumers. It refers to the intrinsic qualities of the individual consumer, and such consumer segmentation strategies are often based on specific psychological variables. e.g. segmented in terms of their motivations, learning, attitudes

Psychographic segmentation: employ battery of statements designed to identify relevant aspects of a consumer’s personality, buying motives, interests, attitudes, beliefs and values

As an approach to constructing consumer psychographic profiles, AIO (activities, interests and opinions) research seeks consumers’ responses to a large no. of statements that measure:

o Activities: how consumers spend time – working, holidays, leisure time), o Interest: consumer’s preferences and priorities – home, fashion, food

o Opinions: how consumers feel about a wide variety of events and issues – politics, social issues, education and the future

Sociocultural segmentationSociocultural segmentation variables: (i.e. group and cultural) provide further bases for market segmentation.

Family life cycle segmentation: based on the premise that many families pass through similar phases in their formation, growth and final dissolution. At each stage, the family unit needs different products and product styles. e.g. young single people need basic furniture for their first flat, whereas parents with children, need more specific styles of furniture.

Social class: implies a hierarchy in which individuals in the same class generally have the same degree of status, while members of other classes have either higher or lower status.

Consumers of different social classes vary in terms of value, product preferences and buying habits. e.g. those with a higher status (higher Y) have more funds to purchase luxury items

Culture, subculture and cross-cultural affiliation Marketers who use cultural segmentation stress specific, widely held cultural values with which

they hope consumers will identify. o Useful in international marketing, but marketers must fully understand the beliefs, values

and customs of the countries in which the product is being marketed. Subculture: united by certain experiences, values or beliefs that make effective market segments

o Could be based on specific demographic characteristics (age, race, religion) or lifestyle characteristics (working women, golfers)

International marketers who base their products and promotional campaigns on the results of cross-cultural studies are more likely to succeed in specific ethnic markets

o e.g. Parker Brothers, the manufacturer of Monopoly have introduced a Russian version of the broad game in Russia, appropriate changes were made to fit in with their culture

User-related segmentationUser-related segmentation: categorises consumers in terms of product, brand or service usage characteristics, such as:

Rate of usageo Differentiates between heavy users, medium users, light users and non-users of a specific

product, service or brand.o Marketers of a wide variety of products have found that a relatively small group of heavy

users account for a disproportionately large percentage of product usage, so targeting these heavy users has become the basis of their marketing strategies, rather than spending more money in trying to attract light users

Awareness levelo Notion of consumer awareness, interest level or buyer readiness, also, do they need to

be informed about the product? Brand loyalty

o

User-situation segmentation Situational factors might influence a purchase or consumption choice

o e.g. The greeting card industry stresses cards for a variety of occasions

o Time pressure is a component of the usage situation, consumers in a rush will select a convenience store rather than a shopping centre

Benefit segmentationBenefit (or needs-based) segmentation: requires finding the major benefits people look for in the product class, the kinds of people who look for each benefit and the brands that deliver each benefit.

e.g. financial security (AXA), health benefits (Visalia yoghurt), relief of arthritis (Blackmores) Changing lifestyles play a major role in determining the product benefits that are important to

consumers, and provide marketers with opportunities for new g/s Benefit segmentation can be used to position various brands within the same product category

e.g. Toothpaste – Colgate Tartar Control is targeted towards adults as a means of removing tartar (cosmetic benefit) and plaque (health benefit)

Hybrid segmentation approachesDemographic/psychographic profiles: combining the knowledge gained from both, marketers are provided with powerful info about target markets, such as insights for segmenting mass markets, choosing which promotional appeals to use, selecting advertising media that will reach the target market.

It’s widely used in the development of advertising campaigns to answer 3 questions:1. Who should we target?2. What should we say?3. Where should we say it?

Geodemographic segmentation: useful when advertises’ best prospects (in terms of wealth, available time, goals and interests) can be isolated in terms of where they live.

SRI Values and Lifestyle Programs (VALS2™):A research service that tracks marketing-relevant shifts in the beliefs, values and lifestyles of a sample of the population that has been divided into a small number of consumer segments

Criteria for effective targeting of market segmentsIdentificationIn order to separate segments on the basis of common needs relevant to the g/s, marketers must be able to identify and measure the relevant characteristics

Some are relatively easy to identify and even observable, e.g. geography (location), demographics (age, gender, occupation)

Others, such as education, income or marital status, can be determined through questionnaires. Whereas characteristics such as benefits sought or lifestyle, are difficult to identify.

SufficiencyMarket segment must be a worthwhile target, must have sufficient no. of people to warrant tailoring a product or promotional campaign to its specific needs or interests

StabilityMost marketers prefer target consumer segments that are relatively stable in terms of needs and demographic and psychological factors, likely to grow larger over time. e.g. the Pokémon craze AccessibilityMarketers must be able to reach the market segments they wish to target in an economical way.

Finding the appropriate and seeking new media that will enable them to reach their target markets with a minimum of waste circulation and competition

e.g. HP and Microsoft send email updates to registered product users and others interested in receiving product info.

Implementing segmentation strategiesFirms that employ market segmentation can pursue a:Concentrated marketing strategy: targeting just one segment with a unique marketing mix

works if the company is small or new to the field company can survive and prosper by filling a niche not occupied by stronger competitors

e.g. Pearl Drops toothpaste targeted smokers who were concerned about tooth discolouration, enjoyed a market leadership position in a small but important niche of the overall toothpaste mkt

Differentiated marketing strategy: targeting several segments using individual marketing mixes works for financially strong companies that are well established in a product category and

competitive with other firms that are also strong in the category e.g. soft drinks, cars, detergent

Countersegmentation: a strategy in which a company recombines two or more segments into a single segment to be targeted with an individually tailored product or promotional campaign

Product positioning strategies Position on product features Position on benefits (toothpaste for children, whitening, plaque) Position on usage Position on user Position against competition

o Priceo Features – warranty/durabilityo e.g. Dell – service guarantees

Chapter 3: Consumer needs and motivation

What is motivation?Motivation: the driving force within individuals that impels them to action

NeedsEvery individual has 2 needs:

1. Innate needs: physiological/biogenic needs – food, water, air, clothing, shelter and sex Considered primary needs or motives as they sustain biological life

2. Acquired needs: needs that we learn in response to our culture or environment Self-esteem Prestige Affection

Power Learning

Generally psychological (psychogenic),considered secondary needs or motives as they results from the individuals’ subjective psychological state and from relationships with others. Psychological needs arise from the need for recognition, esteem and belonging

A need becomes a motive when aroused to a sufficient level of intensity.e.g. humans need shelter, when we don’t have shelter, we seek it

Any unsatisfied need represents a problem

GoalsThere are 2 types of goals:

1. Generic goals e.g. I want to be a MD

2. Product-specific goals e.g. I want to get an MD from Oxford University

The selection of goalsThe goals selected by individuals depend on their personal experiences, physical capacity, prevailing cultural norms and values, and the goal’s accessibility in the physical and social environment.

Our perception of ourselves also serves to influence the specific goals we select. The products we own, would like to own or not own are often perceived in terms of how closely they reflect our self-image. A product that is perceived as matching our self-image has a greater probability of being selected than one that is not.

Research on personal goal orientation has distinguished 2 types of people:1. those with a promotion focus are interested in their growth and development, have hopes and

aspirations, and favour the presence of positive outcomes2. those with a prevention focus are interested in safety and security, are more concerned with

duties and obligations, and favour the absence of negative outcomesResearch distinguishes between 2 types of goals:

1. ideals, represent hopes, wishes and aspirations (rely on feeling and affects in evaluating ads)2. oughts, represent duties, obligations and responsibilities (rely on substantive and factual content)

Interdependence of needs and goals

Individuals are usually somewhat more aware of their physiological needs than they are of their psychological needs. But may however subconsciously engage in behaviour that satisfies these psychological (acquired) needs. e.g. A local politician may not consciously be aware of a power need but may regularly run for public office

Positive and negative motivationNeeds, wants or desires may create goals that can be positive or negative. A positive goal is one towards which behaviour is directed (approach object), a negative goal is one from which behaviour is directed away (avoidance object).e.g. A middle-aged woman may have a positive goal of fitness – approach object

Her husband may have a negative goal of getting fat (avoidance object) and swims regularly to stay fitApproach object = positive motivationAvoidance object = negative motivation

Psychological reactance: motivationally aroused by a threat to, or elimination of, a behaviour freedom, manifested by a negative consumer response. e.g. New Coke

Rational versus emotional motivesRationality: consumers select goals based on totally objective criteria, such as size, weight, price or km/L.Emotional motives: the selection of goals according to personal or subjective criteria (e.g. pride, fear, desire, affection or status)

The dynamic nature of motivationMotivation is a highly dynamic construct that is constantly changing in reaction to life experiences. Our needs and goals are always growing and changing due to our physical condition, environment, interaction with others and experiences. As we attain our goals, we develop new ones.

Needs are never fully satisfied At regular intervals people experience hunger needs that must be satisfied Most people regularly seek companionship and approval from others to satisfy social needs

New needs emerge as old needs are satisfied

Success and failure influence goalsThose who successfully achieve their goals usually set new and higher goals for themselves; they raise their level of aspirations. (They become more confident in reaching higher goals) Conversely, those who do not reach their goals sometime lower their aspirations. Thus, goal selection is often a function of success or failure.

Substitute goalsSubstitute goal: a goal that replaces an individual’s primary goal when that goal becomes unattainable.

FrustrationFrustration: feeling of failure to achieve a goal. People who cannot cope with frustration often mentally redefine the frustrating situation in order to protect their self-image and defend their self-esteem.Defence mechanisms

Aggression: frustrated consumers boycott manufacturers in an effort to improve product quality

Rationalisation: invent plausible reason for not being able to attain their goals, or the goal wasn’t worth pursuing

Regression: react to frustrating situations with childish or immature behaviour Withdrawal: stop doing it Projection: projecting blame or their failures and inabilities onto other objects or persons (golf) Escapism: live out a fantasy to get away from reality and enjoy the luxury of a different lifestyle Identification: companies using stereotypical situations to attract individuals in eliminating their

frustrating situation by buying their product. e.g. Man is ugly -> Lynx gets you girls Repression: forcing the need out of their conscious awareness Sublimation: the manifestation of repressed needs in a socially acceptable form

Multiplicity of needsPrepotent need: an overriding need, from among several needs, that serve to initiate goal-directed behaviour. e.g. Jacob wants to stop smoking because he wants to rid himself of a chronic cough, he’s concerned about cancer and his girlfriend may be ‘turned off’ by the smell, if the cumulative amount of tension product by these three reasons is sufficiently strong, he will stop smoking. However, just 1 reason (girlfriend’s influence) may serve as a triggering mechanism

Needs and goals vary among individualsPeople with the same needs may seek fulfilment through different goals.

Arousal motivesArousal of any particular set of needs may be caused by internal stimuli (physiological or emotional) or external stimuli in the environment. Unsatisfied needs create a state of tension. Physiological arousalMost physiological cues are involuntary, but arouse related needs that cause uncomfortable tensions until they are satisfied. e.g. You’re cold, you’ll turn on the heater and make a mental note to buy a blanket

Emotional arousalThinking or daydreaming result in arousal or stimulation of latent needs. These thoughts tend to be dormant needs, which may produce uncomfortable tensions that push them to goal-orientated goals.e.g. A young man who wants to play professional football may identify with a league player and use the products he endorses commercially

Cognitive arousalRandom thoughts or personal achievements can lead to a cognitive awareness of needs. Ads that provoke memories might trigger instant recognition of the need to speak with someone special. e.g. Telephone company campaigns that stress their low rates for international long-distance calls.

Environmental arousalThe set of needs activities at a particular time are often determined by specific cues in the environment. Without these cues, the needs would remain dormant. e.g. evening news, fast-food commercials, and children home from school – all arouse the need for food.

Smelly shoes trigger the need for Glen20There are 2 opposing philosophies concerned with the arousal of human motives:

1. Behaviourists consider motivation to be a mechanical process, behaviour is the response to a stimulus, and elements of conscious thought are ignoredStimulus-response theory: impulse buyer reacts mainly to external stimuli in the buying situation

2. Cognitives’ believe that all behaviour is directed at goal achievementTypes and systems of needsMaslow’s hierarchy of needs

The theory suggests that we seek to satisfy lower-level needs first, and must achieve this satisfaction before higher-level needs emerge.

When the need is reasonably well satisfied, a new (higher-level) need emerges that we are motivated to fulfil

Dissatisfaction, not

satisfaction, motivates behaviour

An evaluation of needs hierarchyThe needs hierarchy has received wide acceptance in many social disciplines as it reflects the assumed or inferred motivations of many people in our society. Whereas others claim Maslow’s concept is too general and that it cannot be tested empirically as there is no way of measuring precisely how satisfied one need is before the next higher need becomes operative.

The hierarchy is adaptable in 2 ways:

Self-actualisation

Ego needs(prestige, status, self-respect)

Social needs(affection, friendship, belonging)

Safety and security needs(protection, order, stability)

Physiological needs(food, water, air, shelter, clothing, sex)

1. Enables marketers to focus their advertising appeals on a need level that is likely to be shared by a large segment of the prospective audience

2. Facilitates product positioning

Segmentation applicationsMaslow’s hierarchy is readily adaptable to market segmentation and the development of advertising appeals because there are consumer goods designed to satisfy each of the need levels and because most needs are shared by large segments of consumers.e.g. soft drink ads directed to teenagers often stress a social appeal by showing a group of young people sharing a good time with the advertised product (Coca Cola Summer ad 2010)

Positioning applicationsThe hierarchy also helps to decide how the product should be perceived by prospective consumers

Key to positioning – find a niche (unsatisfied need) not occupied by a competing product / brand e.g. Most luxury car manufacturers use status appeals, self-actualising appeals or social appeals.

The versatility of the needs hierarchyThe hierarchy also shows how workable appeals for a single product can be developed from each level. e.g. Home exercise equipment

Physiological appeal – improve body tone and health Safety appeal – demonstrate how safe the equipment is for home use Social appeal – fun to exercise with friends Self esteem – demonstrate through a narcissistic appeal “If you got it, flaunt it!” Self-actualisation – career couples that deserve the convenience and luxury from working out

at home after a long day at work.A trio of needs

1. Power needs: our desire to control our environment Control others and various objects Closely related to ego needs as many individuals experience increased self-

enhancement when they exercise power over objects or people (as well as safety needs) e.g. luxury cars to promote power or superiority

2. Affiliation needs: behaviour is highly influenced by the desire for friendship, acceptance and belonging.

People with high affiliation have strong social dependence on others, they select goods to meet the approval of friends

3. Achievement needs: related to both the ego need and the self-actualisation need. People with high achievement needs are more self-confident, enjoy taking calculated

risks, research their environment actively and are very interested in feedback.

The measurement of motivesMotives are hypothetical constructs; they cannot be seen, touched, smelled or tangibly observed. And therefore cannot be measured with a reliable index.Constructing a scale that measures a specific need while meeting the criteria of reliability and validity can be complex.

Motivational researchMotivational research: includes all types of research into human motives, is generally used to refer to qualitative research designed to uncover the consumer’s subconscious or hidden motivations. Consumers aren’t always aware of the reasons for their actions, MR attempts to discover underlying feelings, attitudes and emotions concerning product, service or brand use.

The development of motivational researchFreud’s psychoanalytic theory of personality provided the basis for the development of motivational research. This theory was built on the premise that unconscious needs or drives (biological and sexual drives) are at the heart of human motivation and personality.

Qualitative research techniques used in motivational researchThere are a no. of qualitative research techniques that are used to delve into the consumer’s unconscious or hidden motivations, such as:

1. Metaphor analysis e.g. a DuPont studied women’s emotions regarding pantyhose, revealed that they

evoked feelings of sensuality, being sexy & attractive to men. Implication of these feelings is that pantyhose ads must appeal to their sensual feelings not women’s executive personas.

2. Storytelling: customers tell real-life stories regarding their use of the product being studied.3. Word of association and sentence completion

Word association method: respondents presented with words one at a time and asked to say the first word that comes to mind.

Helps in determining consumers’ association with existing brand names and those under development

4. Thematic Apperception Test Developed by Henry Murray – showing pictures to individual respondents and asking

them to tell a story about each picture5. Drawing pictures and photo sorts

Motivational research todaySemiotics: concerned with the conscious and subconscious meanings of non-verbal symbols to consumers.

Motivational research often reveals unsuspected consumer motivations concerning product or brand usage, its principal use is in the development of new ideas for promotional campaigns, ideas that can penetrate consumers’ conscious awareness by appealing to unrecognised needs.

Provides marketers with a basic orientation for new product categories Enables them to explore consumer reactions to ideas and advertising copy at an early stage, so

that costly errors can be avoided Suggest new ways for marketers to present their products to the public

Ethics and consumer motivationAlthough marketers may not be able to sell consumers things they do not truly need, advertising often motivates consumers to buy and consume larger amounts of certain products.e.g. Kraft Foods stopped TV advertising of certain products to children, and increased it advertising of sugar-free drinks and smaller packages of biscuits

University students are often provided with too much easy credit, putting them into financial riskDirect-to-consumer pharmaceutical advertising has increased the consumption of numerous categories or medication. Research confirmed that consumers obtain most info about medications from TV commercials rather than their doctors

The examples cited above indicate that aggressive advertising can increase the level of demand for some products, sometimes in a manner that is detrimental to the welling being of the consumers targeted and the society.

Chapter 4: Consumer personality and self-concept

What is personality?Personality: inner psychological characteristics that both determine and reflect how people respond to their environment

The nature of personalityThere are 3 distinct properties that are of central importance:

1. Personality reflects individual differences2. Personality is consistent and enduring3. Personality can change

Theories of personalityFreudian theoryFreud’s psychoanalytic theory of personality proposes that every individual’s personality is the product of a struggle among three interconnecting forces:

Id: basic physiological needs where the individual seeks immediate satisfaction such as thirst, hunger and sex. The id operates on the pleasure principle; where it acts to avoid pain and maximise intimate pleasure.

Superego: the individual’s inner expression of society’s moral and ethic code of conduct. It defines what is good and what isn’t good and what is right through internalising the values of society. The superego’s role is to assure that the individual satisfies their needs in a socially acceptable way, it contrasts from the id as it restrains the impulsive forces

Ego: the individual’s conscious control. Its role is to act as an internal monitor by balancing impulsive demands of the id and socio-cultural restraints from the superego. The ego develops individual’s capabilities of realistic thinking which evolves from learning and experiences.

There are situations where the ego is not able to resolve conflict between the id and the superego. In these cases, a defence mechanism is used to reduce the tension brought on by the lack of compromise.There are 2 examples of defence mechanisms:

1. Repression: selective forgetting2. Projection: occurs when unacceptable feeling generated by the id are projected onto another

person or group

IdSystem 1

EgoSystem 3

SuperegoSystem 2

GRATIFICATION

Stages of personality developmentFreud emphasised that our personality is formed as we pass through 5 distinct stages of infant and childhood development:

1. Oral stage: infant first experiences social contact with the outside world through the mouth (eating, drinking, sucking). Crisis at the end of this stage, child is weaned from mother’s breast.

2. Anal stage: child’s primary source of pleasure is the process of elimination. Crisis at the end of this stage is when parents try to toilet train the child.

3. Phallic stage: child experiences self-oriented sexual pleasure during this phase with discovery of the sex organs. Third crisis is when child experiences sexual desire for the parent of the opposite sex. How the child resolves this crisis affects later relationships with people of the opposite sex and with authority figure.

4. Latency stage: Freud believed that sexual instincts of the child lie dormant from about the age of 5 until the beginning of adolescence

5. Genital stage: at adolescence, the individual develops a sexual interest in people of the opposite sex, beyond self-oriented love and love for parents.

According to Freud, an adult’s personality is determined by how well they deal with the crises that are experienced while passing through each stage. e.g. If a child’s oral needs are not adequately satisfied at the first stage of development, the person may become fixated at this stage and, as an adult, display a personality that includes such traits as dependence and excessive oral activity (gum chewing or smoking)

Marketing applications of Freudian theoryResearchers who apply Freud’s psychoanalytic theory to the study of consumer personality tend to stress the idea that human drives are largely unconscious, and that consumers are primarily unaware of their true reasons for buying what they buy

1. Tend to focus on consumer purchases and or consumption situations, treating them as a reflection and extension of the consumer’s own personality. (i.e. our appearances and possession – how we’re groomed, what we wear, carry and display – reflect our personality)

Neo-Freudian personality theoryNeo-Freudians disagree with Freud’s contention that personality is instinctual and sexual in nature, they believed that social relationships are fundamental to the formation and development of personality,

Karen Horney identified 10 major needs which are classified into 3 orientations that describe general strategies (CAD) for relating to others:

1. Compliant: those who move toward people and stress the need for love, approval and affection2. Aggressive: those who move against people and stress the need for power, strength and

manipulate others3. Detached: those who move away from people and stress the need for independence and self-

reliance

Trait theoryTraits are general and relatively stable personality characteristics which influence behaviour tendencies to act in a certain manner.Trait theory is primarily quantitative or empirical, focusing on the identification and measurement of personality in terms of specific psychological characteristics.

Assumes that we have many dimensions to our personalities, but some people possess such dimensions more strongly or weakly than others. (i.e. they have more or less of each trait)

Provides info about a no. of personality traits that make up the personality of the individual, doesn’t provide a single label for each personality type.

One of the most influential of the trait theories is the ‘Big Five’ model. Each 5 dimensions is represented by 6 more specific scales that measure facets of the dimension.

1. Neuroticism: tendency to experience negative effects, (fear, sadness embarrassment, anger, guilt, disgust) a low score indicates emotional stability characteristics by calmness and an even-tempered, relaxed nature. The facets of neuroticism are:

(1) Anxiety(2) Angry hostility(3) Depression

(4) Self-consciousness(5) Impulsiveness(6) Vulnerability

2. Extroversion: tendency to interact with the world, enjoy excitement and stimulation, are upbeat, energetic and optimistic, they like people and prefer large groups and gatherings. A low score on this dimension indicates introversion (reserved and independent, solitary) Facets include:

(1) Warmth(2) Gregariousness(3) Assertiveness

(4) Activity(5) Excitement-seeking(6) Positive emotions

3. Openness to experience: tendency to seek a variety of experiences, to entertain novel ideas and unconventional values, to experience both positive and negative emotions more keenly. A high score is associated with an active imagination, preference for variety, intellectual curiosity and independence of judge. Low score indicates conservative outlook and desire for familiarity, conventional. The facets of openness are:

(1) Fantasy(2) Aesthetics(3) Feelings

(4) Actions(5) Ideas(6) Values

4. Agreeableness: tendency to move towards people and act kindly. High score is associated with altruism, eagerness to help people, cooperativeness and a belief that others will be equally helpful in return. Low score indicates the tendency to be antagonistic, egocentric, competitive and sceptical of others’ intentions. Facets include

(1) Trust(2) Straightforwardness(3) Altruism

(4) Compliance(5) Modesty(6) Tender-mindedness

5. Conscientiousness: tendency to control impulses and pursue goals. A high score on this dimension is associated with an individual who is purposeful, strong-willed, punctual, reliable and determined. Low score indicates a tendency to be laid-back in working towards goals. The facets include:

(1) Competence(2) Order(3) Dutifulness

(4) Achievement-striving(5) Self-discipline(6) Deliberation

These traits may be inherited, imprinted by early childhood experience or modified by psychological intervention, but define an individual’s potential and direction at any given time.

The ‘Big Five’ model has been used to understand consumer’s propensity to engage in certain activities.

Single-trait personality tests: measure just one trait, e.g. self-confidence, are increasingly being developed specifically for use in consumer behaviour and marketing.

Personality and consumer behaviourThis section examines some specific personality traits that influence specific behaviours and as such as useful to marketers for better understanding of CB.

Consumer innovativeness: the degree to which consumers are receptive to new products, new services or new practices.

Important to both marketers and consumers as both can benefit from the right innovation

Consumer dogmatism: personality trait that measures the degree of rigidity people display towards the unfamiliar or towards info that is contrary to their established beliefs.

A highly dogmatic person approaches the unfamiliar defensively, uncertainty and discomfort Consumers who are low in dogmatism (open-minded/innovators) are more likely to prefer

innovative products to established or traditional alternatives and are more receptive to messages that stress factual differences and product benefits

Highly dogmatic consumers (closed-minded/non-innovators) are more likely to choose established products. Are more likely to accept ads for new g/s that contain an authoritative appeal (celebrities or experts)

Consumer social characterSocial character: identification and classification of individuals into distinct sociocultural types.

Inner-directed consumers: rely on their own inner values or standards in evaluating new products (likely to be innovators)

o Prefer ads that stress product features and personal benefits Other-directed consumers: look at others for direction on what is ‘right’ or ‘wrong’, therefore

less likely to be innovators.o Prefer ads that feature a social environment or social acceptance.o Easily influenced because of their natural inclination to go beyond the content of an ad

and think in terms of social approval of the potential purchase.

Need for uniqueness (NFU)Research revealed that when consumers are asked to explain their choices, but are not concerned about being criticised by others, they are more open to marketing unique choices.

Consumer susceptibility to interpersonal influence (CSII)CSII: the need to identify with or enhance one’s image in the opinion of others, the willingness to conform to the expectations of others and the tendency to learn by observing others or seeking info from others.

Has influence on info processing, attitude development and purchase behaviour Those who are higher in CSII perceive some brands as being higher in status, showing that those

who are susceptible to interpersonal influence use specific brands to either fit in or stand out. In terms of personality trait, influence varies e.g. teenagers are influenced by anti-smoking ads, but not campaigns against excessive drinking

Optimum stimulation level (OSL)The level or amount of novelty or complexity that individuals seek their personal experiences. High OSL consumers tend to accept risky and novel products more readily than low OSL consumers.

OSL seems to reflect a person’s desired level of lifestyle stimulation.

o OSL = that current lifestyle = satisfiedo OSL > that current lifestyle = understimulated/boredo OSL < that current lifestyle = overstimulated/seek rest or relief

Suggesting that the relationship between consumers’ lifestyles and their OSL are likely to influence their choice of products or services, and how they manage to spend their time.

Consumers requiring higher levels of stimulation might be expected to respond favourably to products, service environments and promotional campaigns that stress more risk & excitemente.g. a person who feels bored is attracted to a holiday that offers activity and excitement

The reverse would be true for consumers seeking lower levels of stimulation.e.g. a person who feels overwhelmed is likely to seek a quiet, isolated, relaxing holiday

Variety seekingVariety seeking: a personality-driven trait similar to OSL. There are 3 types:

1. Exploratory purchase behaviour (e.g. switching brands to experience new/better alternatives 2. Vicarious exploration (e.g. consumers has info about the new alternative and contemplates or

even daydreams about the option)3. Use-innovativeness (e.g. where the consumer uses an already adopted product in a new way)

Relevant to technological products - home electronic products with features & functionse.g. consumers with higher variety-seeking scores bought calculators with more features than consumers with lower variety-seeking scores

Cognitive personality factorsThere are 2 cognitive personality traits that are useful in understanding selected aspects of CB:

1. Visualisers vs verbalisersVisualisers: consumers who prefer visual info and products that stress visualVerbalisers: consumers who prefer written or verbal info and products

2. Need for cognition (NFC)NFC: measures a person’s craving for or enjoyment of thinking.

High NFC Low NFC Responsive to the part of an ad rich in

product-related info or description, and unresponsive to the contextual or peripheral aspects of the ad

Attracted to the background or peripheral aspects of the ad

Partial to cool colours (green and blue) Impartial to cool colours Process all product info to arrive at a final

consumption decision, Form an attitude about an attitude object

by relying on easily processable peripheral cues such as humour, boldface slogans or an attractive endorser.

Motivated to engage in more extensive processing of issue-relevant info

Unmotivated to attend to issue-relevant elements of communication

Take more time and effort to seek out and carefully scrutinise info

More influenced by peripheral cues rather than issue-relevant info

Characterised as being curious, organised, task-orientated and purposeful

Willingness to consider new ideas Sounder self-concept

Need for cognition: the individual’s tendency to desire, engage in and enjoy effortful cognition.

Locus of control (LOC)LOC can be used to understand where consumers prefer to shop (e.g. Web or Mall?)Internal LOC: those who believe they have personal control over outcomes

Engage in greater and more complex info-search Use various media for info More likely to go for the Web

External LOC: those who believe that their destiny is controlled by other circumstances Rely on info gained in the past Find ads more credible and believe that sales are a signal of quality Prefer the Mall, more control.

Self-monitoring (SM)Consumers SM characteristics may be reflected in product brand choices because of differences in orientations and concerns for prestige and appearance.High SM - more aware of external environment cues & modify their behaviour to be socially appropriate

Preoccupied with what others think or their actions or appearance Readily interpret interpersonal or situational cues and respond by changing their behaviour Using products to fit in, reject unbranded products, prefer branded ones Influenced by images in ads and tend to give socially based arguments for product purchase Feel the need to browse (e.g. best fashion trends)

Low SM - less sensitive to external cues & don’t modify their behaviour to be more socially appropriate Have little concern with either their physical or social environment (insensitive to social cues) Might even avoid situations where they may be required to change their self-image Seek goods that offer functionality over style or brand Judgement on quality of argument offered and give utilitarian-based arguments for purchase

decisions (believe they have less control over and even aliened from the marketplace)

Uncertainty orientation: relates to info-seeking and makes a distinction b/w individuals who are: Uncertainty-oriented: actively seek clarity and info about themselves and the environment in

which they find themselveso Motivated to resolve uncertaintyo Systematically process info during uncertain situationso Possess a discovery-oriented cognitive styleo Actively seek new info and continually challenge themselves with new ideaso Motivated by diagnostic tasks

Certainty-oriented: maintain things as they are, not seeking new info or situations which only cause a sense of confusion

o More attuned to, and comfortable in, handling familiar and safe situationso Do not deal well in uncertaintyo Prefer to stay with the status quo within a predictable environment o Motivated by non-diagnostic tasks

Consumer ethnocentrism: responses to foreign-made products Consumer ethnocentrism: suspicion of brands from other countries unrelated to characteristics of the product.

Highly ethnocentric consumerso it’s wrong to purchase foreign-made products because of economic impact on dom. ec.

o Domestic marketers can attract these consumers by stressing nationalistic theme in their ads

Non-ethnocentric consumerso Evaluate foreign-made products more objectively for their extrinsic characteristics

Responses to foreign-made productsProduct is positive – follow options in positive column and vice versa.

Consumer self-conceptSelf-concept: the totality of the individual’s thoughts and feelings in reference to themselves as an object. Consumers’ behaviour is often directed towards enhancing their self-concept through consumption of g/s as symbols of self-concept.

Self and self-imagesOne self or multiple selves?Single self: interested in products or services that satisfy that single self.Multiple self: an individual embodies a no. of different ‘selves’

The make-up of the self-imageThere are 5 specific kinds of self-image:

1. Actual self-image: how consumers see themselves2. Ideal self-image: how consumers would like to see themselves3. Social self-image: how consumers feel others see them4. Ideal social self-image: how consumers would like others to see them5. Expected self-image: how consumers expect to see themselves at some specified time

Lies somewhere between the actual (what is) and ideal (would like to be) self-images Provides consumers with a realistic opportunity to change the ‘self’, therefore more

valuable to marketers than actual or ideal as a guide for designing and promoting g/s

Consumers may select different self-images in different contexts.e.g. products consumed privately (household products) are guided by actual self-image, whereas holidays or clothing is guided by ideal self-image or ideal social self-image.

Marketers can segment their markets based on relevant consumer self-images and position their products or stores as a symbol of such self-images. It’s a strategy that is consistent with the marketing concept

The extended selfConsumers’ possessions can be seen to define, confirm or extend their self-images.e.g. Krisa might acquire a sought-after motorcycle which expands Mary’s image or ‘self’, Krisa might see herself as more competitive, fit and successful, adding to her inventory of self-enhancing possessionsPossessions can extend the self in a no. of ways:

Allowing the person to do things that otherwise would be very difficult or impossible to do Symbolically, making the person feel better or ‘bigger’ (driving a sexy sports car) Conferring status or rank (owning a rare work of art) Conferring feelings of immortality, by leaving valued possessions to young family members Conferring magical powers (ring inherited from grandma symbolising long and happy marriage)

Altering the self‘Self-altering products’ consumers are frequently attempting to express their in individualism or uniqueness by creating a new self, maintaining the existing self or extending the self.

New glasses Hair restyling or colouring

From fixated consumers to compulsive buying and consumptionThere are traits that impel consumers to engage in negative consumption. These traits are abnormal acquisitive behaviour, ranging from:

Fixated consumption behaviour: don’t keep their objects a secret, they frequently display them, and their involvement is openly shared with others who have the same interest. They have:

o A deep interest in a particular product categoryo Willingness to go to any lengths to secure that producto Dedicate a considerable amount of time and money searching for the product

Compulsive consumption behaviour: have an addiction, they are out of control and their actions have damaging consequences to themselves and those around them

o Compulsive buying: Buy products they don’t need Spend more than they can afford Derive satisfaction not from consuming what’s bought but by the act of buying

o Compulsive consumption Engages in an obsessive consumption of the product or service Strong urge to behave in a certain way Denying any harmful consequence of their behaviour e.g. drug addiction, alcoholism, eating disorders.

Brand personality: association of brand whereby it is instilled with human-like personality traits

Chapter 5: Consumer Perception

Elements of perceptionPerception: process by which an individual receives, selects and interprets stimuli (input to any of the senses) to form a meaningful and coherent picture of the world.

SensationSensation: the immediate and direct response of the sensory organs to simple stimuli (e.g. ad or brand)Sensory receptors: human organs (eyes, ears, nose, mouth & skin) that receive sensory inputsAs sensory input decreases, our ability to detect changes in input or intensity increases, to the point that we attain maximum sensitivity under conditions of minimal stimulation (‘It was so quiet I could hear a pin drop’) e.g. a black and white ad in a colour magazine.

The absolute thresholdAbsolute threshold: lowest level at which we can experience a sensation. The point at which we can detect a difference between something and nothing.Adaptation: getting used to certain sensations, becoming accommodated to a certain level of stimulatione.g. Road-trip, after some billboards, it’s not stimuli anymore, it blends in with all the others you passed

Sensory adaptation: getting used to the sensations of the ad. That’s why advertisers change their advertising campaigns regularly to stimulate the senses again

The differential thresholdJust noticeable difference (j.n.d): the minimal difference that can be detected between two stimuli.

Weber’s law: the stronger the initial stimulus, the greater the additional intensity needed for the second stimulus to be perceived as different.

Marketing applications of j.n.d.Manufacturers and marketers endeavour to determine the relevant j.n.d for their products for 2 reasons:

So that negative changes are not readily discernible to the publice.g. ↓in product size, ↑in price, or ↓quality remain below j.n.d.

The product improvements are readily discernible to consumers without being wastefule.g. improved packaging, large size, lower price are at just above the j.n.d.

Example 1:a) Because of rising ingredient costs, Cherry Ripe manufacturers can increase prices or reduce

quantity of the product at the existing price. A chocolate bar is relatively inexpensive, but price increases are very noticeable, so decreasing the size f the product to just under the j.n.d. is a simpler, it could also substitute ingredients that can be substituted

b) In periods of increasing competition, the consumer would decrease prices in hopes of attracting consumers to purchase their product instead of the competition.

c) In periods where there is heightened awareness regarding nutrition and ingredient labelling, the manufacturers could adjust their recipes with the intention of keeping any differences in taste under the j.n.d. as well as including ingredient labelling on the packages to reassure consumers of their product quality. Could also keep the price, decrease the content and size of the chocolate bar because of consumer’s concern on sugar content.

Subliminal perceptionSubliminal perception: stimuli that are too weak or brief to be consciously seen or heard may nevertheless be strong enough to be perceived by one or more receptor cells.Supraliminal perception: perception of stimuli that are above the level of conscious awareness

Subliminal stimuli can influence affective reactions, but there is no evidence that subliminal stimulation can influence consumption motives or actions

Prohibited in Australia

The dynamics of perceptionSelective perception: heightened awareness of stimuli relevant to one’s needs or interests

Individual is only aware other things it wants to be aware of.

Nature of stimulusMarketing stimuli include an enormous number of variables that affect the consumer’s perception

Nature of the product, physical attributes, package design, brand name, ads Contrast is the most attn-compelling attributes of a stimulus Infomercials: 30-minute commercials Advertorials: advertisers run print ads which resemble editorial material

ExpectationsPeople usually see what they expect to see, but stimuli that conflict sharply with expectations often receive more attn that those that conform to expectations

Expectations of quality will affect how service is perceived

MotivesPeople tend to perceive things they need or want, the stronger the need, the greater the tendency to ignore unrelated stimuli in the environmente.g. if I need a new laptop, I’ll disregard all ads that aren’t related to laptops

Important selective perception concepts Selective exposure: conscious or subconscious exposure of the consumer to certain media or

messages, and the subconscious or active avoidance of others Selective attn: a heightened awareness of stimuli relevant to one’s needs or interests Perceptual defence: process of subconsciously distorting stimuli to render them less threatening

or inconsistent with one’s needs, values , beliefs or attitudes Perceptual blocking: subconscious ‘screening out’ of stimuli that are threatening or inconsistent

with one’s needs, values, beliefs or attitudes

Perceptual organisationPerceptual organisation: subconscious ordering and perception of stimuli into groups or configurations according to certain principles of Gestalt psychology

Gestalt psychology: developed specific principles underlying perceptual organisation and understanding of stimuli

Figure and groundFigure is perceived clearly in contrast to the ground to separate and provide greater definition.

Affected by motive Advertisers need to be careful that their stimulus is seen as the figure and not the ground

Grouping/chunking info increases info retention

Closure consumers derive pleasure from completion incomplete tasks are remembered better than complete tasks

Perceptual interpretationPeople’s interpretations of reality depends on the clarity of the stimulus, people’s past experiences and their motives, interests and time of perception.

Distorting influences (perceptual distortion)Individuals are subject to a no. of influences that tend to distort their perceptions, including:

Physical appearance (highly attractive models don’t increase message effectiveness) Stereotypes (stimuli may have typical meanings in specific situations) Irrelevant cues First impressions (first impressions are lasting and may cause the wrong impression) Jumping to conclusions Halo effect: a situation in which the perception of a person on a multitude of dimensions is

based on the evaluation of a single dimension. e.g. He’s hot cos he’s got a broad backo Perceptual interpretation: individual interpretation of stimuli based on expectations in

the light of previous experiences, on the no. of plausible explanations that they can envision, and on their motives and interests at the time of perception

Consumer imageryProducts and brands have symbolic value and consumers evaluate them on the basis of their consistency with consumers’ personal picture of themselves. Some products agree with consumer’s self-image, while others don’t.

Positioning and repositioning products and servicesPositioning: the image that a product or service has in the mind of the consumer, is more important to its ultimate success than its actual characteristics.

Marketers strive to create a positioning consistent with the relevant self-image of the targeted consumer segment.

Stress benefits rather than provide products’ physical features Experience product: a product whose attributes can be discerned only after purchase or during

consumption Conspicuous product: a product that is particularly noticeable, either visually or verbally. These

products are often bought in consideration of others’ opinions

Umbrella positioning: creating an overall image of the company around which many products can be featured individually. e.g. McDonalds, Coca Cola

Positioning against the competitione.g. Visa’s past slogan – ‘We make American Express green with envy’

‘Duracell lasts up to 3 times longer than Eveready Super Heavy Duty‘

Positioning based on specific benefitEffective depictions of core benefits often include memorable imagery

FedEx’s slogan ‘when it absolutely, positively has to be there overnight’ Maxwell House Coffee ‘good to the last drop’

Finding an ‘unowned’ position Finding a niche unfilled by other companies

e.g. Palmolive’s dishwashing liquid ‘Tough on grease, soft on hands’

Filling several positions‘Unowned’ perceptual positions present opportunities for competitors, so marketers create several distinct offerings, often in the form of different brands, to fill several identified niches

Colgate-Palmolive is the largest producer of laundry detergents includingo Fab (deep cleans, whitens and brightens clothes)o Dynamo (for front-loading washers)o Cuddly (softness and freshness)

Product repositioningRepositioning: strategy used by marketers to change the attributes consumers associate with their brande.g. DJ attaining exclusive fashion designers (Collette Dinnigan) and various suppliers (Witchery) to achieve a point of distinction against Myer.

Perceptual mapping: helps marketers determine just how their products or service appear to consumers in relation to competitive brands, on one or more relevant characteristics

Enables them to see gaps in the positioning of all brands in the product or service class Identify areas in which consumer needs are not being met

The positioning of servicesBecause services are intangible, image becomes a key factor in differentiating the service from its competitors. e.g. The Commonwealth Bank logo is a clear attempt to brand the service

The service environment: ambience of the physical environment represents quality and position

Perceived priceHow consumers perceive price – in terms of both the actual amount to be sacrificed and the value to be gained – will affect how they evaluate what marketers offer them

Price is unfair, cheap, expensive or trivial, purchase intentions will be greatly affected Perceptions of price unfairness affect consumers’ perceptions of product value and ultimately

their willingness to patronise a store or service

Reference priceReference price: any price that a consumer uses as a basis for comparison in judging another price

Internal reference prices: learned and perceived by the customero Play a major role in consumers’ evaluation and perception of value of an advertised

(external) price deal External reference price: the normal price

Tensile and objective price claimsTensile price claims: specific phrases that are used to promote a range of price discounts (‘save 10-40%’)Objective price claims: provide a single discount level (‘save 25%’)

Bundle pricing: marketing of 2 or more products in a single package for a special price

Prospect theoryProspect theory: all choices are evaluated in 2 stages:

1. Editing – where available info is simplified and framing is done - process of assigning losses (e.g. monetary sacrifice) and gains (e.g. value of product acquired)

2. Evaluation – where the consumer works out which alternative involves the best value

Perceived qualityConsumers often judge the quality of a product or service on the variety of infoal cues that they associate with the product.

Perceived quality of products Intrinsic cues: physical characteristics of the product (size, colour, flavour) that serve to

influence the consumer’s perceptions of product quality Extrinsic cues: cues external to the product, such as price, store image, brand image, that serve

to influence the consumer’s perception of the product’s quality

Perceived quality of servicesQuality of services is difficult to evaluate because of:

Intangibility Simultaneously produced and consumed

Variability Perishability

Therefore, consumers rely on surrogate cues (extrinsic cues that signal quality) to evaluate services SERVQUAL measures the gap between customers’ expectations of services and their perceptions

of the actual service delivered along 5 dimensions of service quality: reliability, responsiveness, assurance, empathy and tangibles.

SERVPERF is based on consumer perceptions of performancePerceptions of high service quality and high customer satisfaction lead to higher levels of purchase intentions and repeat buying

Price/Quality relationshipPerceived value is often seen as a trade-off between perceived benefits and perceived sacrifice

Perception of value differs according to segment (such as age and income) Because price is often considered to be an indicator of quality Sometimes lower prices may be perceived as reduced quality

Store imageRetail stores have images of their own that serve to influence the perceived quality of the products they carry, as well as the decisions of consumers as to where to shop.

Consumers tend to perceive stores that offer a small discount on a large no. of items as having lower prices overall than competing stores that offer larger discounts on a small no. of items

The types of product consumers wish to buy influences their selection of retail outlet, conversely, consumers’ evaluation of the product is often influenced by the knowledge of where they bought it

Manufacturer’s image Manufacturers who enjoy a favourable image generally find that their new products are

accepted more readily than manufacturers with less favourable or ‘neutral’ image. Positive pioneer brand image is correlated with ideal self-image, giving them an advantage Pioneer brands are so well known they form the generic name for a category (Thermos flasks) Companies sometimes use stealth parentage to persuade consumers that the new brands are

produced by independent companies, not giant corporate entities, to enter a product category totally unrelated to the one of their corporate name

Today, companies use advertising, sponsorships to enhance self-image

Perceived riskPerceived risk: the uncertainty that consumers face when they cannot foresee the consequences of their purchase decisions. The degree of risk that consumers perceive and their own tolerance for risk taking are factors that influence their purchase strategies

Perception of risk variesConsumer perception of risk varies, depending on the person, product, situation and culture.

High-risk perceivers are often describe as narrow categorisers because they limit their choices to few safe alternatives (exclude perfectly good alternatives than chance a poor selection)

Low-risk perceivers have been described as broad categorisers because they tend to make their choices from a wide range of alternatives (risk poor selection that limit the no. of alternatives from which to choose from)

Individual’s perception of risk varies with product categories Degree of risk perceived by a consumer is also affect by the shopping situation (Net vs Mall)

How consumers handle riskSome common risk-reduction strategies where:

Consumers seek info Consumers are brand loyal Consumers select by brand image

Consumers rely on store image Consumers buy the most expensive model Consumers seek reassurance

Implications for new productsPerceived risk has major implications for introduction of new products.

High-risk perceivers are less likely to purchase new or innovative products than low-risk perceivers, so marketers must provide consumers with persuasive risk-reduction strategies

o Brand nameso Informative advertising

o Free sampleso Publicity stores in the media

o Dist. thru reputable retail outlets

Ethics and consumer perception Marketers blur the distinction between figure and ground (blending together of TV show & ad) Marketers use the knowledge of j.n.d. to ensure that reduction in product quantity or quality

and increases in price go unnoticed by consumers Marketers manipulate consumers’ perception and behaviour by using physical setting where

consumption occurs (supermarkets have cold temperatures to ↑food sampling -> buy more Marketers can also portray socially undesirable stereotypes in advertising (Barbie is getting

thinner)

Chapter 6: Learning and consumer involvement

What is learning?Consumer learning: process by which individuals acquire the purchase and consumption knowledge and experience they apply to future related behaviour.

Consumer learning is a process, it’s continually evolving and changing as a result of info acquired or from actual experience

Info and experiences serve as feedback to the consumer and provide the basis for future behaviour in similar situations

Learning results from acquired knowledge from info and experience

The elements included in most learning theories are:Motivation: based on needs and goals and in effect acts as a catalyst for learning, with needs and goals serving as stimuli.

Degree of personal relevance or involvement determines the consumer’s level of motivation to serve for knowledge or info about a product or service

People interested in a particular topic are motivated to learn all they can about it (prices, quality) conversely, individuals not interested will ignore all info related to the topic.

CuesMotives serve to stimulate learning. Cues are stimuli that give direction to those motives.

Cues direct consumer drives when they are consistent with consumer expectations Marketers must be careful to provide cues that don’t upset those expectations

e.g. Person wants to get fit, the ad is the cue or stimulus, suggesting a specific way to satisfy a salient motive. Consumer expects home fitness machine to be in excellent condition, so actors used to demonstrate the machine must appear to be in good shape

ResponseResponse: how individuals react or behave towards a cue

Learning occurs when responses are not overte.g. car manufacturer provides consistent cues to a consumer, but may not succeed in stimulating purchase, even if the individual is motivated to buy. However, if the manufacturer succeeds in forming a favourable image of a particular model in the consumer’s mind, the consumer may then make a purchase

Reinforcement Reinforcement increases the likelihood that specific response will occur in the future as a results of particular cues.

e.g. if fitness machine works, learning has taken place since the machine meets expectations, same as if the machine didn’t work, the consumer would be unlikely to buy another one

Behavioural learning theoriesBehavioural learning theories (stimulus-response theories): based on the premise that observable responses to specific external stimuli signal that learning has taken place.

Classical conditioning: assumes consumers are passive beings who react with predictable responses to stimuli after a no. of trials(learning that results from exposure to relationships between events in the environment)

1. Pavlov sounded a bell (CS)2. Immediately applied meat paste (US)

to dog’s tongue3. Causing them to salivate (UR)(Learning (conditioning) occurred when after a sufficient no. of times of repetition of the bell followed immediately by the food; the bell alone caused the dogs to salivate.)

4. Dogs associated bell with meat paste.5. The UR to the meat paste became the

CR to the bell.

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1. The CS precedes the US (forward conditioning)

2. A CS and a US that logically belong together

3. A CS that is novel and unfamiliar4. Repeating pairing of the CS and US5. A US that is biologically or symbolically significant

In CB context, CS consists of consumption objects (brands, products, retail stores) and CR would be purchase or store patronage. US would be celebrity endorsers etc.

Neo-Pavlovian theory: consumers viewed as info seekers who use logical and perceptual relations between events, together with their own preconceptions, to form a sophisticated representation of the world.

3 basic concepts are fundamental to classical conditioning:

1. Repetition: increases the strength of association between conditioned stimulus and an unconditioned stimulus and by slowing the process of forgetting

Over-learning (repetition beyond what’s necessary to learn) aids retention Advertising wearout: overexposure to repetitive advertising that causes individuals to

become satiated and their attn and retention to decline Three-hit theory: the optimum no. of exposures to an ad to induce learning is 3:

(1) gain consumers’ awareness, (2) show relevance of the product, (3) show it’s benefits

2. Stimulus generation: making the same response to slightly different stimuli Private brands try to make their packaging resemble national brand leaders, hoping to

confuse their packages with the leading brando e.g. Palsonic has a very similar font to Panasonic

Product line, form and category extensions: adding related products to an already established brand is another of stimulus generation. (different sizes, colours, flavours)

o e.g. Cadbury Chocolate bars to Cadbury ice-creams and biscuits Family branding: practice of marketing a whole line of company products under the

same brand name (Campbell’s Soup products) Licensing: names of designers, celebrities are attached (rented)to a variety of products

for a fee, enabling the manufacturers and marketers of such products to achieve instant recognition and implied quality for the licensed producte.g. Dior, CK, Versace appear on a wide variety of products (sheets, shoes, perfume)

3. Stimulus discrimination: results in the selection of a specific stimulus from among similar stimuli (opposite of stimulus generalisation)

Consumer’s ability to discriminate between stimuli is the basis of positioning strategy, which seeks to establish a unique image for the brand in the consumer’s mind

Difficult to unseat brander leader once stimulus discrimination has occurred Evaluation of classical conditioning

Repetition, stimulus general and stimulus discrimination are useful concepts in explaining how consumers learn to behave in the marketplace.o But don’t explain all the activities classified as consumer learning

Operant conditioning: requires link between a stimulus and a response, the stimulus provides an optimal response that is learned.

Believes that learning occurs through a trial-and-error process Habits are formed as a results of rewards received for certain responses Classical conditioning: explains how consumers learn very simple kinds of behaviour Operant conditioning: helpful in explaining complex, goal-directed activities

Positive reinforcement: events that strengthen the likelihood of a specific response e.g. Shampoo that leaves your hair feeling silky and clean is likely to result in repeat purchase

Negative reinforcement: unpleasant or negative outcome that serves to encourage a specific behaviour is not punishment, which is designed to discourage behaviour (parking tickets to deter drivers) e.g. An ad that shows a model with wrinkled skin is designed to encourage consumers to buy

and use the advertised cream to improve wrinkled skin e.g. Fear appeals in ad messages:

o life insurance commercials - fear of losing a loved oneo headaches – illustrate unpleasant symptoms of an unrelieved headacheo In these cases, the consumer is encouraged to avoid the negative consequences of

buying the advertised product.

Forgetting and extinctionWhen a learning response is no longer reinforced, it is diminished to the point of extinction. e.g. If a consumer is no longer satisfied that her hair is silky smooth after using a brand of shampoo, the link between the stimulus (shampoo) and the response (silky smooth hair) is no longer reinforced, and therefore ‘unlearned’. Unlearned is not forgetting. Forgetting is the process of decay.

Strategic applications of instrumental conditioning Customer satisfaction (reinforcement)

o Apart from the experience of using the product itself, consumers can receive reinforcement from other elements of the purchase situation (e.g. environment of transaction, service, attn by employees)

Relationship marketing Reinforcement schedules – 3 types

1. Total (continuous) reinforcement – free fruit plate after dinner at restaurant2. Systematic (fixed ratio) reinforcement – provided every ‘nth’ time the g/s is purchased3. Random (variable ratio) reinforcement – gambling at casinos

Shaping: reinforcement performed before the desired CB actually takes place

Massed or distributed learningDistributed learning: learning spread over a period of timeMassed learning: learning all ‘bunched up’ at once

When advertisers want an immediate impact, they generally use massed schedule to hasten consumer learning

When advertisers want a long-lasting repeat buying on a regular basis, a distributed schedule is preferable. It usually results in more long-term learning and is relatively immune to extinction

Evaluation of instrumental conditioning Applies to many situations in which consumers learn about products, services and stores. A considerable amount of learning takes place in the absence of direct reinforcement

o We don’t need to be arrested to know we’ve done something wrongo e.g. I move to Melbourne, I learn by myself where my favourite shops are

Modelling: observe the behaviour of others, remember it and imitate it

Cognitive learning theoryCognitive learning: learning based on mental activity (consumer thinking and problem solving)

Info processingInfo processing: a cognitive theory of human learning patterned after computer info processing which focuses on how info is stored in human memory and how it is retrieved

Consumers process product info by attributes, brands and comparison between brands Consumers with higher cognitive ability acquire more product info and more capable of

integrating info on several attributes than consumers with less ability. Consumers differ in terms of imagery (mental images) which influence their ability to recall info

o Imagery processing can be measured with tests of: imagery vividness – ability to evoke clear images Processing style – preference for, frequency of, visual vs verbal processing Tests of daydream content and frequency – fantasy

Brands have low awareness because of lack of salience (degree to which stimulus attracts attn)

The structure of memory Sensory store: all data comes to us through our senses but lasts for just a second of two in the

mind’s sensory store. We subconsciously block out a lot of info. Therefore marketers can easily get info into consumer’s sensory store, but it’s more difficult in making a lasting impression

Short-term store: stage of real memory in which info is processed and held for just a brief period. If info is rehearsed, it is transferred (takes 2-10 seconds) to the long-term store. If info is not rehearsed and transferred, it is lost in less than 30s (Chunking makes it easier to remember)

Long-term store: retains information for relatively extended periods of time. Info lasts for days, weeks, even years

Rehearsal and encodingHow much info available for delivery from ST store to LT store depends on the amount of rehearsal (silent, mental repetition of material) given to it. Failure to rehearse input leads to fading or eventual loss of info. Info can be lost due to competition for attn.

The purpose of rehearsal is to hold info in ST storage long enough for encoding to take place.Encoding: process by which word or visual image is selected and assigned to represent a perceived object. e.g. Marketers help consumers encode brands by using brand symbols

‘Learning’ a picture takes less time than learning verbal information Information overload makes it difficult for consumers to encode or store info, resulting in

confusion and poor purchase decisions Schema: total package of associations brought to mind when a cue is activated Product info stored in memory tends to be brand-based, consumers interpret new info in a

manner consistent with the way it’s already organised Consumers are able to recode what they’ve already encoded to include larger chunks of info

Info is stored in LT memory in 2 ways:1. Episodically – by order in which it’s acquired2. Semantically – according to significant concepts

Information retrieval: process by which consumers recover info from LT storage Forgetting is failure of retrieval system Advertising msgs are more effective when they combine the product’s attributes with the

benefits that consumers seek in the product. A clear link must be provided for the two.

The greater no. of competitive ads in a product category, the lower the recall of brand claims in a specific ad

Limited and extensive information processingLow-involvement purchases: Purchases of minimal personal involvementHigh-involvement purchases: complex and search-oriented purchases

Involvement theoryInvolvement theory: the tendency of individuals to make personal connections between their own life and the stimulus object (ad or brand)

Hemispheral lateralisation or split-brain theory: learning theory in which the basic premise is that the right and left hemispheres of the brain specialise in the way they process info.

Left side is rational, active and realistic, and is responsible for cognitive activities (reading, speaking and attributional info processing)

Right side is emotional, metaphoric, impulsive and intuitive, responsible for non-verbal, timeless, pictorial and holistic information

In CB, different types of involvement occur for different objects that are the focus of a consumer’s involvement. Consumer involvement is well recognised as a causal, or motivating, factor that drives consumer attitudes and influences consumer decision making.

AntecedentsThere are 3 types of antecedents that drive a consumer’s involvement towards an ad or product:

1. Person: the amount of interest a consumer has in the product category If the product is personally relevant to the consumer -> higher involvement

2. Situation: the important or personal relevance of the occasion the consumer faces If the product is useful -> involvement increases

3. Product/Stimulus: product category or an ad that could encourage or discourage involvement Perceived financial, social or physical risk all affect the level of involvement

o Expensive products are usually more involving because of financial implications of incorrect decision

Moderating factorsThere are many factors that influence the growth or decline of involvement for consumers, such as:

Opportunity to process the info: other cognitive demands or distractions in the environment during the presentation of the info

o e.g. driver drives by a billboard he would normally involve in, but is distracted by traffic Ability to process the info: whether the consumer possesses the required knowledge and

familiarity with the product category to understand the info presented

Degree of involvementA consumer’s degree of involvement is characterised by 3 properties:

1. Intensity: degree of involvement felt by consumer – high or low (continuum) 2. Direction: target of the involvement intensity

e.g. The ad’s tag-line was the catalyst for involvement, but you were involved with the text itself.3. Persistence: duration of the involvement intensity

Consumer responses

A highly involved consumer is assumed to search for more information, find fewer acceptable alternatives and use a greater no. of choice criteria than consumers at lower involvement. This is because high-involvement purchases are those that are very important to the consumer and provoke extensive problem solving. (e.g. car or head lice shampoo)

3 theories that show the concepts of extensive and limited problem solving high-and low-involvement consumers in purchase situations include:

1. Central and peripheral routes of persuasion Central route of persuasion: communication which focuses directly on the product or

services benefits, usually for high-involvement purchases Peripheral route of persuasion: communication taking an indirect approach to

persuasive communication1.Usually for low-involvement purchases because consumer is less motivated to

exert cognitive effort, learning is more likely to occur through repetition, the passive processing of visual cues and holistic perception

2. Social judgement theory: processing of information about an issue is determined by our involvement with the issue

Highly involved consumers find fewer brands acceptable (narrow categorisers) and are likely to interpret messages about these brands in a manner similar with their previous experiences and opinions about the product

Uninvolved consumers are likely to be receptive to a greater no. of messages regarding the purchase and will consider more brands (wide categorisers), are not brand-loyal

3. Informational/transformational theory Informational motivation: negative motivation which consists of 5 types:

1.Problem removal2.Problem avoidance3.Incomplete satisfaction

4.Mixed approach/avoidance5.Normal depletion (out of stock)

Transformational theory: positive motivation which consists of 3 types:1.Sensory gratification2.Intellectual stimulation

3.Social approval

MemoryInvolvement affects the info retrieved from memory during decision-making. Low-involvement consumers make the same decision time and time again, whereas more involved consumers make different decisions based on the info, not past evaluations, retrieved from memory

Measures of involvementResearchers believe an involvement profile is better than measuring single involvement level

Marketing applications of involvementBy understanding the nature of low-involvement information processing, marketers can take steps to increase customer involvement with their ads. The best strategy for increasing the personal relevance of products to consumers is to provide benefits that are important and relevant to customers, improve the product, add benefits as competition intensifies, and focus on forging relationships with your customer.

Brand loyalty and brand equityBrand loyalty: consistent preference and/or purchase of one brand in a specific g/s category

Double jeopardy: minor market share brands are at a disadvantage compared to major brands, because minor brands have fewer buyers and are purchased less frequently by these buyers, while major have more buyers and are purchased more frequently.

Brand-loyal customers provide the basis for a stable and growing market share, and can be a major intangible asset reflected in the purchase price of a company. But brand loyalty isn’t equally shared.

Just because you buy something repeatedly doesn’t mean you’re loyal, you could be making that same purchase because of its availability or price, but you don’t necessarily prefer it.

Developing brand loyaltyBrand loyalty results from:

Initial product trial that is reinforced through satisfaction, leading to repeat purchases Consumers engage in extensive problem-solving behaviour involving brand and attribute

comparisons, leading to a strong brand preference and repeat purchase behaviour

Declining brand loyalty? Dazzling array of new products Private label brands: Comparative advertising

Increased targeting of specialty niches Increased sales promotion Boredom or dissatisfaction with a product

Increased concern with price at the expense of brand loyalty Increased diversity of supermarket shoppers (pregnant women, children, bachelors)

Undermining brand loyalty – inducing consumers to switch brands

Brand equityBrand equity: the value inherent in a well-known brand name. It’s the value added to a product by the perceptions a consumer has of a particular brand name.

Contributes to the acceptance of new products, allocation of preferred shelf space, perceived value and quality as well as premium pricing options

Value depends on meaning, changing brand meaning is equal to changing the value of the brand Because a brand that has been promoted heavily in the past retains a cumulative level of name

recognition, companies actually buy and sell brand names (licensing, franchising – McDonalds, Coca-Cola, Campbell’s Soup)

Brand equity is important to marketers because it leads to brand loyalty, increased market share and greater profits. To marketers, the major function of learning theory is to teach consumers that their product is the best, encourage repeat purchase, and ensure loyalty to the brand

Chapter 7: Consumer attitude formation and change

Attitudes: learned predisposition to behave in a consistently favourable or unfavourable way with respect to a given object

The attitude ‘object’ Brands, product, service, issues, people, ads, websites, price, retailer

Attitudes are a learned predispositionAttitudes are learned; therefore attitudes relevant to purchase behaviour are formed as a result of direct experience with the product, W-O-M info, or exposure to mass-media advertising etc.As a learned predisposition, attitudes have a motivational quality; they might propel or repel consumers towards a particular behaviour.

Attitudes have consistencyWhen a consumer is free to act as they wish, we anticipate that their actions will be consistent with their attitudes. However, sometimes circumstances prevent consistency, e.g. cost

Attitudes occur within a situationA specific situation can cause consumers to behave in ways seemingly inconsistent with their attitudes.e.g. Braden purchases a different brand of toothpaste each time he runs low, his brand-switching behaviour may indicate a negative attitude with the brands he’s tried, when really he might just want to buy the cheapest brand.

Kira stays the Holiday Inn every time she goes to town for work, suggesting that she has favourable attitudes towards Holiday Inn. On the contrary, Kira may find the Holiday Inn just ‘okay’ and that it’s ‘good enough’ given she’s paying less than if she stayed at Sheraton or Hilton hotel

When measuring attitudes it is important to consider the situation in which the behaviour takes place, or the relationship between attitude and behaviour can be misinterpreted.

Structural models of attitudeEach model provides a different perspective on the no. of component parts of an attitude and how those parts are arranged or interrelated, allowing a better understanding of the relationship between attitudes and behaviour.

Tricomponent model: attitude model consisting of 3 major components

1. Cognitive – beliefs about the attitude object2. Affective – emotions of feelings about the object3. Conative – the action a person wants to take

toward an object

Intention-to-buy scales: consumer state where a decision has been made to purchase, but purchase has not occurred

Juster scale: a measure where consumers estimate the probably that they will perform a behaviour.e.g. buying a car

Multi-attribute attitude modelMulti-attribute attitude model: portrays consumer’s attitudes with regard to an attitude object as a function of consumers’ perception and assessment of the key attributes or beliefs held with regard to the particular attitude object.

The attitude-toward-object model: a model that proposes that a consumer’s attitude towards a product or brand is a function of the presence of certain attributes and the consumer’s evaluation of those attributes

Consumers have favourable attitudes towards brands that they believe have adequate level of attributes that they evaluate as positive

Have unfavourable attitudes towards brands they feel do not have an adequate level of desired attributes or too many negative or undesired attributes

e.g. Dialup vs. ADSL2+

The attitude-toward-behaviour model: designed to capture the individual’s attitude towards behaving or acting with respect to an object rather than the attitude towards the object itself.

e.g. knowing a consumer’s attitude about the act of purchasing a Rolex wristwatch (her attitude towards the behaviour) reveals more about the potential act of purchasing that does knowing her attitude towards expensive watches (attitude towards the object)

Consumers might have a positive attitude towards an expensive Rolex wristwatch, but a negative attitude as to her prospects of purchasing such an expensive wristwatch.

Theory-of-reasoned-action model: a comprehensive theory of the interrelationships among attitudes, intentions and behaviour.

To understand intention, subjective norms must be measured as they influence an individual’s intention to act

Subjective norms can be measured by assessing consumer’s feelings as to what referents (family, friends, and co-workers) would think of their action (favourable or unfavourable?)e.g. A girl wants to get a bob, her boyfriend and best friend’s opinion of her behaviour constitutes as her subjective norm.

Theory of planned behaviour: helps understand consumer willingness to engage in a broad range of activities (e.g. blood donation)

Theory of trying-to-consume modelTheory of trying-to-consume model: designed to account for the many cases on which the action or outcome isn’t certain but reflects the consumer’s attempts to consume.

e.g. consumer trying to find just the right shoes to go with her new dress for under $150

Attitudes-towards-the-ad modelsAttitudes-towards-the-ad models: consumer’s affective and cognitive evaluation of advertising

Consumer forms various feelings and judgements to the ad, these feelings and judgement affect the consumer’s attitudes towards the ad.

Beliefs about the brand are secured from the ad The consumer’s attitudes towards the ad and the beliefs about the brand influence their attitude

towards the brand

Attitude formation1. How attitudes are learned

Consumers often purchase products that are associated with a favourable viewed brand name. Their favourable attitude towards the brand name is frequently the result of repeated satisfaction with other products produced by the same company.

Attitudes follow the purchase and consumption of a product In situations where consumers seek to solve a problem or satisfy a need, they are likely

to form attitudes (+ve/-ve) about products on the basis of info exposure and their own cognition (knowledge and belief)

2. Sources of influence on attitude formationFormation of consumer attitudes strongly influenced by

Personal experience: how we evaluate and re-evaluate objects Needs: how well do they satisfy us? Selective perception: people operate according to their interpretations of reality Group associations: attitudes are influenced by groups that we value Family: the most influential group that shapes our attitudes Peer groups: sets norms and standards that impact on our attitudes Culture: affect our socialisation process and thus our attitudes Attitudes can be changed from contact with influential friends, family or experts, and also through W-O-M as well as salespersons.

3. The impact of personality on attitude formationPersonality affects how attitudes are formed.

Individuals with a high need for cognition (info and thinking) form positive attitudes to ads or direct mail that is rich in product-related info

Consumers who are relatively low in need for cognition form positive attitudes in response to ads that feature an attractive model or well-known celebrity

Strategies of attitude changeAttitude changes are learned and influence by personal experience and info. Attitude-change strategies include:

Changing the basic motivational functionOne method of changing motivation is known as the functional approach, where attitudes can be classified in terms of 4 functions:

1. Utilitarian function: how well does the product work? Is it useful? Favourable?2. Ego-defensive function: enhances one’s self-esteem and security and self-confidence3. Value-expressive function: product reflects our values, lifestyle and outlook4. Knowledge function: how well do you know the product? do you trust it?

Combining several functionse.g. 3 consumers all have positive attitudes towards L’Oreal hair-care products, but one might be using it purely because it works well (1), the second because she has the inner confidence to agree with the point “because you’re worth it” (2) and the third because L’Oreal stresses quality (4).

Associating the product with an admired group or eventIt is possible to alter attitudes towards companies and their products, service and brands by highlighting their relationships to certain social groups, events or causes. e.g. Avon supports breast cancer research

Resolving two conflicting attitudesAttitude-change strategies can sometimes resolve actual conflict between 2 attitudes, especially if consumers have a negative attitude towards a product.

Altering components of the multi-attribute modelThe multi-attribute model s have implications for attitude-change (cognitive-oriented) strategies, they provide markers with additional insights into how to bring about attitude change by:

1. Changing the relative evaluation of attributes When a product category is naturally divided according to distinct product features or

benefits that appeal to a certain segment of consumers, marketers usually have the opportunity to persuade consumers to ‘cross over’ e.g. Panadol and Nurofen

2. Changing brand beliefs Info suggesting a change in attitude needs to be compelling and repeated enough to

overcome the natural resistance to letting go of established attitudes 3. Adding an attribute

Adding an attribute that was previously ignored o e.g. Yoghurt has more potassium than bananas, this persuades consumers

worried about their potassium intake to purchase yoghurt instead of bananas adding one that represents an improvement or technological innovation

o e.g. Melitta introduced a coffee-maker that includes a weather forecast screen linked to the Internet

Sometimes removing an attribute also enhances the outcomeo e.g. Dove has a market for unscented versions of original Dove products

4. Changing the overall brand rating No attempts to improve or change Needs a big global statement to set the brand apart

e.g. “the largest-selling brand”

Changing beliefs about competitors’ brands Claim can be subtle – “Burgers are better at Hungry Jacks” Claim can be explicit – direct comparison between Panadol and Herron Should be careful because comparative advertising can give visibility to a competing brand

The elaboration likelihood model (ELM)ELM: proposes the more global view that consumer attitudes are changed by two distinctly different ‘routes of persuasion’:

Central route: attitude change occurs because consumer actively and willingly seeks out info relevant to the attitude object itself.

Peripheral route: consumer motivation or assessment is low (low involvement) Dual mediation model (DMM): a link between attitude towards the ad and brand cognitions

Behaviour can precede or follow attitude formationCognitive dissonance theoryCognitive dissonance theory: discomfort or dissonance occurs when a consumer holds conflicting thoughts about a belief or an attitude object.

e.g. when consumers have made a commitment (a car) they begin to feel cognitive dissonance when they think of the unique, positive qualities of the brands not selected.

When cognitive dissonance occurs after a purchase = ‘post-purchase dissonance’o Therefore post-purchase dissonance is an attitude change that is frequently an outcome

of an action or behaviour Tactics on reducing cognitive dissonance:

o Rationalisation: seek ads that support the choice, avoid competitive adso Try and ‘sell’ friends on the positive features of the brando Look to known satisfied owners for reassurance

Marketers can:o Include messages in their ads messages aimed at reinforcing consumers’ decisionso Complimenting wisdom, strong guarantees or warrantieso Providing detailed brochures on how to use the product correctly

Attribution theoryAttribution theory: attempts to explain how people assign causality (blame or credit) to events on the basis of either their own behaviour or behaviour of others. The underlying question is WHY?

Self-perception theory: suggests that attitudes develop as consumers look at and make judgements about their own behaviour

Internal attributions: principle that suggests that consumers are likely to credit their success in using a product to their own skill (“I took a great picture!”)

External attributions: principle that suggests that consumers are likely to credit their success in using a product to outside sources (“This camera is great!”)

Defensive attribution: consumers are likely to accept credit personally for success (internal attribution) and credit failure to others or to outside events (external attribution)

‘Foot-in-the-door’ technique: based on the premise that individuals look at their prior behaviour (e.g. compliance with a minor request) and conclude that they are the kind of person who says ‘yes’ (internal attribution) to such requests.

How do incentives influence consumer attitudes and purchase behaviour?o If incentive is too big, marketers run the risk of consumers externalising the cause of their

behaviour, makes them less likely to change their attitudes or make future purchaseso Moderate incentive: just big enough to stimulate initial purchase but small enough to

encourage consumer to internalise their positive usage and allow positive attitude change

Attributions towards others: when consumers feel that another person is responsible for either positive or negative product performance

Attributions towards things: consumers judge a product’s performance and attribute its success or failure on the product itself

Chapter 8: Social influences on buying behaviour

Communication via the mediaAn essential component of communication is feedback, which alerts the sender as to whether the intended message was in fact received.

The senderSender initiates communication using words, images, symbols.Formal source: sender represents either a commercial org of NPO.Informal source: parent or friend who gives product info or adviceW-O-M: highly persuasive

The messageMessage can be verbal (spoken or written) or non-verbal (photograph) or a combination of both.

Communication strategy Establish the primary communication objectives

o Creating awareness?o Promoting sales of a producto Encouraging/discouraging certain practices

Messages might be aimed at reinforcing beliefs, not changing them

Persuasive message strategiesPersuasive messages should first appeal to the needs and interests of the audience, and end with appeal relevant to the marketer’s own needs.

Resonance: a strong fit between the receiver and the message on both the emotional and cognitive level

Marketers should follow the central route of persuasion by presenting advertising with strong, well documented, issue-relevant arguments that encourage cognitive processing

When involvement is low, marketers should follow the peripheral route to persuasion by emphasising non-tent message elements (background scenery, music, celebrity spokesperson)

Overcoming barriers to communication The best way for a sender to overcome clutter (or noise) is simple to repeat the message several times. Repeated exposure to an ad message helps surmount psychological barriers to message reception and thus facilitates reception.

Message framing: depends on the product category. (See Chapter 5)

One-sided vs. two-sided messagesClaim credibility: can be enhanced by actually disclaiming the superiority of some productsCounterarguments: a type of thought or cognitive response a consumer has that is counter or opposed to the position advocated in the messageOne-sided message (supportive): stresses only favourable info

Useful if audience is friendly and not likely to hear an opposing argumentTwo-sided message (refutational): stresses good and bad

Useful if audience is critical, well-educated, or likely to hear opposing claims

More credible as they acknowledge the advertised brand’s shortcomings Effective in personal selling, PR campaigns designed to address negative publicity

Comparative advertising: where the marketer claims product superiority over one or more explicitly named (or implicitly identified) competitors either on an overall basis or on selected product attributes.

Mentioning a credible source - ABS

Order effects The order in which a message is presented affects audience receptivity Order is also important in listing product benefits in the ad

o Audience interest is low – important points should be made first to attract attn.o Interest is high – ascending order, most important point mentioned lasto Favourable info should come before unfavourable info

Repetition Repetition affects persuasion, ad recall, brand name recall and brand preferences Increases likelihood of brand being included in the consumer’s consideration set However, over-repetition of advertising can cause wearout (ad loses effectiveness)

Emotional advertising appealsFear appeals

e.g. ‘Alcohol kills concentration. Don’t drink and drive’ o Provides a compelling set of reasons for immediate action to prevent a fatal accident

Strong fear appeals tend to be less effective than mild fear appeals Ads that stress the possible losses from not taking an action (e.g. allowing breast cancer to

remain undiagnosed) are more effective than ads that stress positive gain from acting Ordered Protection Motivation (OPM): proposes that individuals cognitively appraise the

available info regarding the severity of the threat, they then appraise the likelihood of that threat occurring, then they evaluate whether coping behaviour can eliminate the threat’s danger, and if so, whether they have the ability to perform the coping behaviour

Humour in advertising Attracts attn Doesn’t harm comprehension, usually aids it Doesn’t enhance source credibility More effective with existing products that new products More appropriate for low-involvement products and ‘feel-oriented’ products than high.

Agony advertising e.g. Heartburn, indigestion, headache, Quitline anti-smoking campaign.

Abrasive advertisingSleeper effect: tendency for persuasive communication to lose impact of source credibility overtime(high-credibility source decreases overtime, whereas low-credibility source increases overtime)Suggests that memory of unpleasant commercials that saturate the media and antagonises listeners or viewed dissipate in the end, leaving only the brand name and the persuasive message

Sex in advertisingWhen visual sex content is present, consumers tend to be distracted from the cognitive ad content. But continue to use it as it gains attn. But nudity can have a negative effect on the product image

The channel (medium)Personal conversation: direct marketing (salespeople, direct mail)Impersonal communications: mass media (print, broadcast, cinema advertising, Internet)Permission marketing:Media fragmentation:

Mass media strategyMedia strategy: placement of ads in the specific media that are read, viewed or heard by selected target markets. To do this, marketers develop a consumer profile of their target customers that includes the specific media they read or watch. A cost-effective media choice is one that closely matches the advertiser’s consumer profile to the medium’s audience profile.

Psychological noise: barrier to message reception (e.g. competing advertising messages or distracting thoughts)

Effective reach: the no. of people in an advertising target group who have received 3 or more confirmed exposures to an ad or program.

The receiverReceiver: customer or targeted prospect

Demographics, sociocultural memberships, personality and lifestyle all determine how a message is interpreted

Audiences’ level of involvement plays a key role in how much attn is paid to the message and how it’s decoded

Mood affects how the message is decodedIntermediary audience: wholesalers, distributors, retailers who are sent to trade advertising designed to persuade them to order and stock merchandiseUnintended audiences: stakeholders, employees, shareholders, creditors, suppliers, bankers, the public

Credibility: Built on the perceived intentions of the source If intentions of the source are clearly profit-making, reputation, expertise and knowledge are

important factors in message credibility

Feedback Essential to both interpersonal and impersonal communications Interpersonal communication: ability to obtain immediate feedback through verbal and non-

verbal cues Feedback is harder to obtain for mass communications Audience participation reinforces the message

Market research extensively used in 3 main ways:1. Pre-testing: effectiveness of new communication and advertising is presented to a sample

audience and designed to measure the overall effect of the ad on consumers. Results of this research can reshape or remake the particular ad.

2. Advertising tracking: response to ads are measured repeatedly to see how they change in response to advertising

3. Post-campaign research: effectiveness of mass communication and advertising, designed to measure the awareness, recall and accuracy of the message

Reference groups

What are reference groups?Reference group: are groups that serve as frames of reference for individuals in their purchase or consumption decision

Places no restrictions on group size or membershipNormative reference groups: reference groups that influence general/broadly defined values or behaviour (influence behaviour)Comparative reference groups: reference groups that serve as benchmarks for specific attitudes or behaviour (influence the expression of specific consumer attitudes)

Broadening the reference group concept Indirect reference groups: individuals or groups with whom a person does not have direct face-

to-face contact (movie stars, sports heroes, politians) Some groups have negative influence on CB, political parties whose values we don’t share

Factors that affect reference group influence Info and experience Credibility, attractiveness and power of the reference group Conspicuousness of the product Reference groups and consumer conformity Selected consumer-related reference groups

o Friendship groups (informal groups – not structure or authority levels)o Shopping groupso Work groupso Virtual groups or communitieso Brand communitieso Consumer-action groups (Greenpeace)

Celebrities and other reference group appealso The experto Trade characters or spokes-characters (cartoon characters – Bart)o Common person appeals (people like us – Four ‘N Twenty Pies)o Other reference group appeals (GQ)

Chapter 9: The family

Foundations of the familyHousehold: the related family members and all unrelated persons within a housing unit. Households may be families or non-families.

Family: a group of two or more persons related by blood, marriage or adoption and residing together in a household.

Single-parent family households: consisting of one custodial parent and at least one child

Couple-only family: representative of newly married couples who have no children yet, or older couples who have already raised their children

Nuclear family: two-parent family includes a husband, wife and one or more children

Extended family: A nuclear family with at least one grandparent living with them in the household

In Australia, the age at which people are getting married continues to rise, with men and women marrying in their late 20s.

Divorce rate is 47.45% with remarriage being low.

Functions of the familyThe family performs 4 basic functions:1. Socialisation of family members

Socialisation: the process consists of imparting to children and other family members the basic values and modes of behaviour consistent with the culture.

Socialisation skills (manners, goals, values) are imparted to a child directly through instruction, and indirectly through observation of the behaviour of parents and older siblings

Consumer socialisation: process by which people acquire skills, knowledge, attitudes and preferences relevant to their own functioning and participation in the marketplace. o Has 2 distinct components:

1. Socialisation directly related to consumption (acquisition of skills, knowledge, attitudes towards price and brands)

2. Socialisation indirectly related to consumption (motivation for that specific purchase) Child consumer socialisation

o Shared shopping experiences allows children to learn how to shop, evaluate attributes of the store or product and how to select brands.

o As children get older, they learn the different payment methods

o Also influence by the media Adult consumer socialisation

o Socialisation is an ongoing process

o Intergenerational consumer behaviour influences: aspects of purchasing and consumption

that are passed from parents to children and vice versa. Stronger in convenience goods and in extended families

2. Economic well-being Because most married women work, the economic input of husband and wife in a family

have altered the buying behaviour of many families (nature of purchases made) Economic role of children has also changed with teenagers working, providing for their

clothes, entertainment and costs of their formal education3. Emotional support (love, affection and intimacy)

Recognition of a need to link family issues to working life, so more flexible working hours, working from home, casual, part-time, contract work, allowing parents to attend their children’s school concerts, sports events, open days

4. Provision of family lifestyle Family lifestyle commitments, including the allocation of time, greatly influence consumption

patterns.

The family life cycle (FLC): used by consumer researchers and marketers as a way to classify family units into meaningful stages in order to examine their purchase and consumption behaviour – predicts the types of products you buy, not the brands

Traditional family life cycleSpending patterns and consumption will change as a household develops and the family changes its structure or composition during the FLC stages. Key aspects of the FLC are the age at which women have children and whether there are any dependent children below the age of five (Full nest II), since this means that at least one parent will be out of the workforce or that there is a cut in disposable income for the family to pay for child care.

Stage I: Young Singles Young single men and women who have established households apart from their parents. Have sufficient disposable income, spend money on rent, travel, entertainment and clothing

Stage II: Young Marrieds (or Defacto) Starts right after the marriage vows and generally continues until the arrival of the first child Many young married are career-oriented (have high combined disposable Y for a pleasure-

seeking lifestyle) or seek to create a stable and secure environment in which to start a family

Stage III: Parenthood (Full nest) Starts when a couple has its first child, and extends over more than a 20-year period Throughout this stage, the interrelationships of family members and the structure of the family

gradually change (due to the shorter phases – preschool, primary, secondary, tertiary)

Stage IV: Post-parenthood (Empty nest) Empty nest I: children have left home, both still working Empty nest II: both retired or one partner working Wealthiest people because of savings, investment and superannuation They have the time and money to spend on things they couldn’t have when they were still

raising children (travel)

Stage V: Dissolution (Solitary survivor) Death of one spouse Leads to remarriage or a more economical lifestyle

Each of these stages of the FLC can be considered a separate subculture, since important shifts occur in the demand for specific types of products and services

Modifications to the FLC model The underlying sociodemographic forces that drive the modified FLC model include divorce and

later marriages, with and without the presence of children

Families and the cost of raising children - impacts on what is bought Double income, no children (dinks)

Consumption in non-traditional families When households undergo status changes (divorce, death of a spouse, temporary retirement)

they often undergo spontaneous changes in brand preferences and thus become attractive targets for marketers. e.g. divorce person might need a real estate agent, lawyer and furniture

Dual-income couple with an adult child living at home has the advantage of an additional potential source of income to contribute to the economic well-being of the household, alleviating the cost of young children who cannot contribute financially

Family decision makingDifferent family members take on different roles and perform different tasks in the decision-making process related to buying and consuming products. e.g. Women are usually the ones who buy underwear for men, but for marketers, they seek the views of both men who wear them (user) and the women who buy them (purchaser), as well as other influencers

Family rolesFamily-related roles constantly change; however, 8 distinct roles can be identified in family decision-making

1. Influencers – family member who provides info to other members about g&s2. Gatekeepers – family member who controls the flow of info about the g&s into the family

3. Deciders – family member who have the power to determine unilaterally/joint whether to for, purchase, use or dispose of a specific g&s

4. Buyers – family member who make the actual purchase of a particular g&s5. Preparers – family member who transforms the product into a form suitable for consumption6. Users - family member who use or consume the product 7. Maintainers - family member who repair the product for continued satisfaction8. Disposers - family member who carry out the disposal of a particular product

The actual family members who fill the decision-making, purchasing and consumption roles will vary from family to family and from product to product.

In some families, a single family member will independently assume a no. of roles, in other cases, it may be jointly decided by 2 or more family members

the family size plays an important role in consumption patterns and consumer behaviour

Dynamics of husband-wife decision makingSyncratic decisions: joint decisionsAutonomic decision: individual decisionsDecision making is different in different cultures. e.g. Chinese - more husband-dominated decisions

Variations by stage in the decision-making processThe roles of husbands and wives differ during the decision-making process. The decision-making process consists of:

1. the search for information2. making a shortlist3. making the final decision

Influencing spouses and resolving conflictThere are 6 influence strategies that resolve husband-wife consumer-related conflict:

1. expert – use information knowledge to influence spouse2. legitimacy – influence spouse on their position in the household3. bargaining – secure influence now and exchange with the other spouse in the future4. reward – influence the other spouse by offering a reward5. emotional - using an emotion-laden reaction to influence other spouse’s behaviour6. impression – persuasive attempts

Variations by product or service The relative influence of a male and his female partner on a particular consumer decision

depends in part on the product or service category.

Children As soon as children possess the basic communication skills needed to interact with the

family, that child will attempt to influence family decisions – ‘I want McDonalds’ The parent-child relationship, as it relates to CB, can be viewed as an influence versus yield

situation. (children attempt to influence their parents to make a purchase [to yield]) Children attempt to influence their parents in:

o Purchases of special interest to them (Fruit Loops, Chupa Chups)o Purchases of remote interest to them they’re seen in TV (laundry detergent)

Children and TV TV advertising impact varies among children of different age groups

Older children recall more advertising slogans, exert a direct influence on family decisions and recognise more symbolism in advertising than young children

Commercials targeted at adults have a great influence on childrenTeenagers and post-teens

Young people aged 10-17 spend around $3.3 billion annually Teenagers prefer premium brands and spend rather than save

University-aged dependants Uni students consume a wide range of necessities (books, petrol, clothing), elective

purchases (CDs, concerts) and exert influence on the purchase decisions of their families Marketers attempt to gain the attention and loyalty of uni students as they are the

current future prospects of consumers

Chapter 10: Social class and consumer behaviour

What is social class?Social class: the division of members of a society into a hierarchy of distinct status classes, so that members of each class have relatively the same status and members of all other classes have either higher or lower status.

Social class and social statusSocial status: the status an individual has in society. Status is determined by power, income or one’s occupation amongst others

Social class is hierarchical Social class categories are usually ranked in a hierarchy ranging from low to high status. Thus,

members of a specific social class perceive members of other social classes as having either more or less status than they do.

Members of a specific social class may turn to other members of the same class for cues regarding appropriate behaviour

Those of lower social standing may emulate the behaviour of higher class members, thus serving as a reference group.

Social class provides a basis for market segmentation for many products and services. e.g. Consumers may purchase products because they are owned by the upper class (champagne) or avoid products that are perceived as lower class (digital watch)

The acquisition of material goods for status purposes is one of the strongest measures of social success and achievement

People who are most admired aren’t necessarily the highest paid in occupation (Reader’s Digest study found that ambulance workers were 1st whereas politicians were 26th) This list shows that social class and hierarchy aren’t necessarily based on power and income.

Social class categoriesThe classification of society’s members into a small number of social classes has enabled the identification of shared and differing values, attitudes and behavioural patterns among members within each and between social classes

The measurement of social classSystematic approaches for measuring social class include:

1. Subjective measures – consumers are asked to estimate their own social class position Subjective perceptions of one’s social class membership are related to product usage

and consumption preferences2. Reputational measures – where selected community informants make judgements concerning

the social class membership of others within the community, rather than themselves3. Objective measures – selected demographic or socioeconomic variables (occupation, income

and education) concerning the individual under the study. This measure falls into 2 categories: Single-variable index: uses just one socioeconomic variable to evaluate social class

1. Occupation2. Education3. Income4. Other variables – where you live

5. Possessions Composite-variable index: combine a no. of socioeconomic factors to form one overall

measure of social class standing. These include1. Index of Status Characteristics - occupation, source of Y, house type, dwelling area2. Socioeconomic Status Score - occupation, family Y and educational attainment3. Coleman’s Status Index – education, occupational prestige, area of residence, Y

Lifestyle profiles of the social classesWithin each of the social classes there is a collection of specific lifestyle factors (shared beliefs, attitudes, activities and behaviour) that tend to distinguish the members of each class from members of all other social classes. There are 6 social class groups:

1. Upper-upper class2. Lower-upper class3. Upper-middle class

4. Lower-middle class5. Upper-lower class6. Lower-lower class

Social class mobilityUpward mobility: displayed by people who affluence is increasing, relative to the rest of society

Has always been attainable in Australian society, thereby making higher social classes reference groups for ambitious men and women of lower social status

Marketers frequently incorporate the symbols of high-class membership to target lower-social class audiences

Signs of downward mobilityDownward mobility: consumers who are losing influence relative to the rest of the communityDue to periodic recessions, people lose their jobs, widening the gap between the rich and the poor, making those of higher class status smaller in number and lower class lower.

Geodemographic clustering: a composite segmentation strategy that uses both geographic variables (postcodes, local gov. area) and demographic variables (Y, occupation) to identify target markets

The affluent consumerAffluent consumer: segment with high contestable income

a very attractive segment because members have incomes that provide them with a disproportionately larger share of all discretionary income – increased luxury spending

appliances initially owned by the affluent spread throughout society affluent, rich consumers are often time-poo, leading them to buy in-home services that save

them time or effortMedia exposure of the affluent consumer

social classes differ in their selective exposure to various types of mass media Different social classes use media differently Higher-class consumers have greater exposure to magazines and newspapers and watch less

TV than lower-class consumers Lower-class consumers like publications that dramatise romance, middle-class working

women like reading about the problems , fame and fortune of others (New Idea)Segmenting the affluent market

Wealth is spread in niches and don’t all share the same lifestyle

Middle-class consumers

Middle market: the ‘middle’ 50% of household incomeMiddle class: composed of university-educated adults, use computers for a living, involved with their children’s education.

Includes households ranging from lower-middle class to middle-middle class in terms of some acceptable variable or combination of variables (Y, education, occupation).

This does not include the upper-middle class, which over the years has been treated as the affluent consumer.

Middle-class consumers are increasingly moving upstream to the ranks of the upper-middle class, and another smaller segment is slipping backwards to the ranks of working class

Moving up to more ‘near’ luxuries Masstige: Luxury and technological products have become more affordable for many

consumers, allowing middle-class consumers the access to products and brands once considered to be beyond their reach

The availability of credit has enhanced this trend Middle-class consumers are willing to cut back on certain purchases to splurge on others

o Buy from Aldi and Target, but drive a BMW Middle class customers purchase more high-style items at not-so-high prices

o Leading marketers of luxury products to expand their offerings. e.g. Coach selling a collection of vintage wristlets in leather for US$78

o However, upper-class products must maintain their image if they do target middle-class customers, if one of their products slips into the mass market, they will need a new product to take its place in the luxury market

Recognising the ‘techno-class’The degree of literacy, familiarity and competency with technology, especially computers and the Internet appears to be a new basis for a kind of ‘class standing’ status or prestige. Those unfamiliar with computers or lack computers skills have been referred to as ‘technologically underclassed’

Children at younger ages are learning to use computers, as well as older and retired people, once reluctant to learn, no longer want to be left out by not knowing how to use computers

Consumers all around the world believe that it is critical to acquire a functional understanding of computers so they aren’t hindered socially or professionally

Selected consumer behaviour applications of classClothing, fashion and shopping

Most people dress to fit their self-image, includes their perception of their own social class Members of specific social classes differ in what they consider fashionable

o Lower-middle-class consumers prefer t-shirts, caps, clothes that offers an external point of identification (name of admired person or group)

o Upper-class consumers buy clothing that is free from such association, they seek a more subtle look (sportswear found overseas) rather than designer jeans

Social class is important in determining where a consumer shops. Retailing is divided into:o Mass market stores – Kmart, Woolworths, Aldio Specialty stores – Myer, David Jones

Target affluent consumers Retailers should pay attention to the social class of their customer base and the social class of

their store appeal to ensure that they send the appropriate message through ads

Home decoration

The living room of a family expresses how they want to be seen by others, therefore lounge room furnishings are likely to be particularly sensitive to class influences

Pursuit of leisure Social class membership is closely related to the choice of recreational and leisure time activities Upper class – theatre and concerts, PC browsing Lower class – watch TV and like to attend football games

Saving, spending and credit Upper-class are more willing to invest in insurance, shares and real estate Lower class are generally more concerned with immediate gratification, when they save they’re

interested in safety and security Lower social classes use their bank credit cards for instalment purchases (buy now, pay later),

whereas members of the upper social classes pay their credit card bills in full each month (convenient substitute for cash)

Chapter 11: The influence of culture on consumer behaviour

What is culture?Culture: sum total of learned beliefs, values and customs that serve to direct the CB of members of a particular society.Beliefs: large number of mental or verbal statements that reflect our particular knowledge and assessment of something (brand, person, store, product)Values: similar to beliefs but they’re a guide for culturally appropriate behaviour, difficult to change, not tied to specific objects or situations and are widely accepted by members of a societyCustoms: overt modes of behaviour that constitute culturally approved or acceptable ways of behaving in specific situations. (Consist of everyday behaviour and accepted rituals - Christmas) Beliefs and values are guides for behaviour; customers are usual and acceptable ways of behaving

The invisible hand of culture The impact of culture is natural and automatic – ‘It’s the right thing to do’ Consumers view themselves in the context of their culture and react to their environment based

upon the cultural framework that they bring to that experience. Each individual perceives the world through their own cultural lens

There are 3 levels of subjective culture1. Supranational: culture that affects multiple cultures or different societies2. National : shared core values, customs, personalities3. Group: various subdivisions of a country or society

Culture satisfies needs In a cultural context, a firm’s products and services can be viewed as offering appropriate or

acceptable solutions for individual and societal needs Marketers must be alert of changing customs and values, and update their products accordingly

Culture is learnedHow culture is learned

1. Formal learning – when adults and older siblings teach a young family member ‘how to behave’2. Informal learning – when a child learns primarily by imitating or modelling the behaviour of

selected others (family, friends, sporting icons)3. Technical learning – when teachers instruct the child in an educational environment as to what,

how and why it should be done Many product advertisements enhance informal cultural learning by providing the audience

with a model of behaviour to imitate. Repetition of advertising messages both creates and reinforces cultural beliefs and values, as

well as teaching future generations of consumers to expect the same benefits from the product category

Enculturation and acculturationEnculturation: learning of one’s own cultureAcculturation: learning of a new or foreign culture (useful for international marketers)

Language and symbolsA common language is needed to order to communicate. To communicate effectively with their audiences, symbols are used to convey desired product images or characteristics. e.g. Cadbury’s glass-and-a-half full symbol, the red of Nestlé’s KitKat

Symbol: anything that stands for something else e.g. Jaguar is symbolic in suggesting a fine luxury car, wealth and status, as well as a wildcat in a jungle

Through a shared language and culture, individuals already know what the image means, and association can be made without actively thinking about it

Symbols can be contradictory, so it is important for advertisers to ascertain exactly what the symbols is communicating to the intended audience

Price and slang are significant symbols, price implies quality to potential buyers, and slang must be used appropriately so as not to offend anyone or be dismissed.

Ritual: type of symbolic activity consisting of a series of steps occurring in a fixed sequence and repeated over time

Usually formal and scripted behaviour and occurs repeatedly overtime Ritualistic behaviour: any behaviour that a person has made into a ritual

Culture is shared Social institutions that play a major role in the transfer of culture throughout society include:

Family Educational institutions

Religious bodies Mass media

The scope of advertising is limited to influencing the demand for specific products or services.

Culture is dynamicCulture must continually evolve to function in the best interests of a society.

Marketer must therefore monitor the sociocultural environment in order to market an existing product more effectively, or to develop promising new products.

Women are increasingly active in social, athletic activities and working outside the homeo Market to women

Men are concerned about their looks - cosmetic firms marketing skin care to men

The measurement of cultureContent analysis: focuses on the content of verbal, written and pictorial communications

Provides a relatively objective means of determining whether social and cultural changes have occurred in a specific society. e.g. examine how migrants, families, women depict mass media

Useful to both marketers and public policy makers interested in comparing the advertising claims of competitors within a specific industry, and for evaluating the nature of advertising claims targeted at specific audiences (women, elderly, children)

Consumer fieldworkDistinct characteristics of field observation:

1. Takes place within a natural environment2. Sometimes performed without the subjects’ awareness3. Focuses on observation of behaviour (usually focuses on in-store shopping behaviour)

Participant-observers: researcher becomes an active member of the environment they are studyingShadow shopping: market research technique in which the researcher acts like an ordinary shopper, in order to evaluate the service actually delivered

Researchers need to separate their emotions from what they observe In-depth interviews and focus groups are often employed by marketers to get a ‘first look’ at an

emerging social or cultural changeo Consumers can reveal attitudes or behaviour that could signal a shift in values which

may affect the long-run market acceptance of a product or service

Means-end chains: understand the ultimate values that drive behaviouro Uses laddering - consumers give an account of their behaviour, are asked to elaborate

after each given answer until the ultimate reasons (values or motives) are uncovered

Value measurement survey instruments Value instruments: data collection instrument that asks people how they feel about such basic

personal and social concepts as freedom, comfort, national security and peace Rokeach Value Survey: self-administered value inventory, divided into 2 complementary parts.

First half measures the ends, the second half considers the means List of Values: designed to study consumers’ personal values

Social trends researchBy interpreting social trends and determining which demographic segments are most affected by a particular group of trends, marketers can gain advance warnings of likely shifts in demand for various product and service categories

Australian core valuesAustralia consists of a variety of subcultures, is constantly changing due to migration, the economy and technology and has a contradictory valuesCore values: values that are held by almost every person in a particular society. A core value must fulfil 3 criteria:

1. The value must be pervasive - widely accepted and serves as a guide for attitude and actions2. The value must be relatively enduring - influenced the actions of the Australian people over an

extended period of time3. The value must be consumer related – provides insights that help explain the consumption

actions of the Australian people (useful to marketers)

Ten core Australian values – useful for segmenting the market1. Achievement – intrinsic (feels good), success (extrinsic)2. Power – social power, wealth, public image and authority (Lexus – economic and social power)3. Hedonism – indulge themselves for the sheer pleasure of doing so4. Stimulation – desire for change and excitement (shampoo ads)5. Self-direction – freedom, creativity, curiosity6. Universalism – wisdom, world of beauty, social justice, equality and unity of nature7. Benevolence – honesty, loyalty, helpfulness, forgiveness, responsibility (Salvation Army)8. Tradition – Cricket and Vegemite9. Conformity – obedience, politeness, respect for parents and elders, peers 10. Security – national security, social order, cleanliness

Core values for services Consistency – predictability and reliability Timeliness – don’t like to wait Effectiveness – service or product gets the job done Efficiency – saves them time and money Ease – product should be hassle-free and simple (value for money) Responsiveness – understand the consumer’s problem or what they want (customer profiling )

Core values are not uniquely Australian

The core values above are not all Australian, neither are they all accepted, this is due to Australia’s multicultural society.

Consumer materialism and the impact of materialistic valuesMaterialism: the important people attach to owning worldly possessions.

A cause for the rise in credit card usage and consumer debt Individuals with materialistic values place possessions in a central position in their lives, seeing

them as a sign of success and deriving happiness from them People who are materialistic are self-centred, self, share less, like to show off their possessions

but these possessions don’t actually give them greater personal satisfaction Personal values and materialism is also linked to purchase involvement

o Highly materialistic – highly involved in fashion clothing, meaning of life is discovered through acquisition of material goods

Chapter 12: Subcultural aspects of consumer behaviour

What is subculture?Subculture: a distinct cultural group that exists as an identifiable segment within a larger, more complex multicultural society

The cultural profile is the composite of 4 distinct elements :1. The unique beliefs, values and customs subscribed to by members of specific subcultures 2. The core cultural themes that are shared by most of the population, regardless of specific

subculture memberships 3. The language used 4. Self identification

Relationship between culture and subcultures Example of simultaneous subcultures

READ LECTURE SLIDESEthnic subcultures: people who identify with a particular distinct cultural group that is a segment within a larger society

NESB cultures in Australia Many Australian citizens frequently retain a sense of identification and pride in language and

customs of their ancestors There are over 200 community languages in common use in Australia

This is a reflection of the mass migration to Australia since World War II About one quarter of Australians were born overseas This means there are significant markets for people of a non-English-speaking background Understanding NESB behaviour

o There are over 100 publications in over 35 non-English languages frequently published in Australia, there are also a number of ethnic radio stations

o SBS is a TV station dedicated to this marketo Pay-TV also has several channels dedicated to programs in specific languageso It also applies to food (Chinese/Italian restaurants), festivals (St Patrick’s Day), financial

services, culturally appropriate services (funeral directors – Chinese monks)

Chapter 13: Cross-cultural consumer behaviour: An international perspective

Glocal: global + local campaign that includes in their marketing efforts a blend of standardised and local elements in order to secure the benefits of each strategy.

World brand: product that is manufactured, packaged and distributed in the same way, regardless of the country in which it is sold

Acquiring exposure to other culturesConsumers’ exposure to different cultures comes about through:

The consumer’s own initiatives – travel, living and working in foreign countries, immigration Foreign movies, theatre, art, artifacts Marketers seeking to expand their markets by bringing new products, service, practices, ideas

and experiences to potential consumers residing in different countries and possessing a different cultural view

o Cultural transfer – Japanese magazines available in Australia Internet allows for the exposure of other cultures, facilitating a global consumer culture

Country-of-origin effect Consumers use their knowledge of where products are made in the evaluation of their purchase

options COO effect occurs because consumers are aware that a particular firm or brand name is

associated with a particular country Consumers tend to have an attitude or preference when it comes to a particular product being

made in a particular countryo Such COO effects influence how consumers rate quality and which brands they will

ultimately select Consumer motivation high -> consumers less likely to base judgements on COO information Some consumers may refrain from purchasing products from particular countries due to

animosity Consumers are also influenced by racist attitudes toward particular ethnic groups, which

provides international marketers and gov. with significant challenges in this globalised market

Cross-cultural consumer analysisCross-cultural consumer analysis: the effort to determine to what extent the consumers of 2 or more nations are similar or different

Provides marketers with an understanding of psychological, social and cultural characteristics of foreign consumers they wish to target to design effective marketing strategies

Similarities and differences among people The greater the similarity between nations, the more feasible it is to use relatively similar

marketing strategies in each nation If cultural beliefs, values and customs of specific target countries differ widely, then a highly

individualised marketing strategy is indicated for each country.

The content and structure of value types10 value types are ordered in 2 dimensions

The values directly across from each other in the circle are in conflict. If one culture values self-direction and universalism and another culture values security and power, then an advertising message that might appeal in one culture may be offensive in another.

Time effects - pace of life differs from one nation to another

Acculturation is a necessary marketing viewpoint Marketers must thoroughly orient themselves to the values, beliefs and customs of the new

society in order to appropriately position and market their products Gain acceptance for a culturally new product in a foreign society, they must develop a strategy

that encourages members of that society to modify or even break with their traditions

Distinctive characteristics of cross-cultural analysisCross-cultural consumer research: consumer research strategies designed to understand the similarities and differences between consumers of different cultures and countries

Applying research techniquesWhen marketing in different countries, marketers should be aware of the differences in: language and meaning (back translation) Market segmentation opportunities (income, social class, age, sex) Consumption patterns The perceived benefits of products and services (country may consume same g/s in diff. ways) The criteria for evaluating products and services (benefits sought from g/s may differ) Economic and social conditions and family structure Marketing research and conditions (demographic and legal differences) The Advertising is recalled

Alternative multinational strategies: Global versus localKey issue for multinational marketing is to decide whether to use shared needs and values as a segmentation strategy or to use national borders as a segmentation strategy

Favouring a world brand – global advertising strategy

Adaptive global marketing – McDonalds (serves beer in European countries)

Frameworks for assessing multinational strategies – standardise or localise the product?

A framework for alternative global marketing strategiesCommunications strategy

Product strategy Standardised communications Localised communicationsStandardised product Global strategy:

Uniform product/Uniform messageMixed strategy: Uniform product/customised message

Localised product Mixed strategy:Customised product/uniform message

Local strategy:Customised product/customised message

Product standardisation is most successful for high-involvement products

Cross-cultural psychographic segmentation: tailoring marketing strategies to needs (psychological, social, cultural and functional) of specific segments

Marketing mistakes: a failure to understand differences

Chapter 14: Decision making

Decision: selection of an action from two or more alternative choicesHobson’s choice: no-choice decision (forced to make a particular purchase)

Four views of consumer decision making Economic model Passive model Cognitive model Emotional model

A model of consumer decision makingExtensive problem solving: a search by the consumer to establish the necessary product criteria to evaluate knowledgeably the most suitable product to fulfil a need.Limited problem solving: a limited search by a consumer for a product that will satisfy his or her basic criteria from among a selected group of brandsRoutinised response behaviour: a habitual purchase response based on predetermined criteria

Input Marketing inputs

o Marketing activities: direct attempt to reach, inform and persuade consumers to buy and use its products. these inputs to the consumer’s decision-making process take the form of (s16)

Sociocultural inputso Sociocultural environment: consists of a wide range of non-commercial influences, such

as comments of a friend, an editorial in the newspaper, usage by a family membero Don’t support the purchase of a product, but influences consumers to avoid a product

Process How consumers make decisions Psychological field: represents the internal influences that affect consumers’ decision-making

processes The process of the simple decision model consists of 3 stages:

1. Need recognition: the realisation by the consumer that there is a difference between ‘what is’ and ‘what should be’

2. Pre-purchase search: consumer perceives a need and actively seeks out information concerning products that will help satisfy that need

3. Evaluation of alternatives: consumer appraises the benefits to be derived from each of the product alternatives being considered

Inept set: brands the consumer excludes from purchase consideration Inert set: brands the consumer is indifferent towards

Consumer decision rules – Non-compensatory decision rulesDisjunctive rule: considers only the sheer presence or absence of the attribute, not the amount of the attribute the brand possesses. Trade-off tends to be between two attributes relating to the same benefit.

Lexicographic rule: Consumers rank their attributes, and then compare the various brand alternatives in terms of the single attribute that is considered most important. Whichever brand has the highest score for this attribute is purchased. Regardless of scores of other attributesElimination-by-aspects rule: Most important attribute is considered first and any brand that does not have the minimum acceptable amount of the attribute is eliminated, it then goes through to the 2nd highest attribute and continues until there is only 1 brand remaining.

Affect referral rule: simplified decision rule where consumers make a product choice on the basis of their previously established overall ratings of the brands considered, rather than on specific attributes

The consumption process consists of 3 stages:1. Input stage: establishes the consumption set and consuming style2. Process of consuming and possessing: includes possessing, collecting and disposing of things and

experiences3. Output stage: includes changes in feelings, moods attitudes and behaviour towards the product

or service

Chapter 15: Consumer influence and diffusion of innovations

Opinion leader: person who informally influences the attitudes or behaviour of others

Opinion leadership: process by which one person informally influences the actions or attitudes of others, who may be

opinion seekers: consumers who actively seek info about the g/s they are considering opinion receiver/recipient: individual who either actively seeks product information from others

or receives unsolicited info

Opinion leadership overlap: the degree to which people who are opinion leaders in one product category are also opinion leaders in one or more categories

Viral marketing: any strategy that encourages individuals to pass on a marketing message to others, creating the potential for exponential growth in the message’s exposure and influence.

Marriage of WOM and electronic communication

Dynamics of the opinion leadership processOpinion leaders are effective because:

Credibility Positive and negative product info Information and advice Category-specific Two-way street Motivation behind opinion leadership

o Relieve post-purchase cognitive dissonanceo The need and product involvement to tell others about the product

Needs of opinion receivers Surrogate buyers vs opinion leaders

Measurement of opinion leadershipSelf-designating method: respondents are asked to evaluate the extent to which they have provided others with info about the product category/brand or have otherwise influenced the purchase deicisions of others (most frequently used)

Sociometric method: measures the person-to-person informal communication of consumers concerning products or product categories

Key informant: person who is keenly aware of or knowledgeable about the nature of social communications among members of a specific group.

Objective method: involves placing new products/information with selected individuals and then tracing the resulting ‘web’ of interpersonal communication concerning the relevant products

Frequency and overlap of opinion leadership Market maven: possess a wide range of info about many types of products, retail outlets, they

initiate discussions and request for market info. Different to opinion leaders as they are price conscious.

The situational environment of opinion leadership The situation/environment that you’re in leads to discussions of products, for example, in the

workplace, you might talk about this great bar you went to, or in your tea break you might talk about this really good coffee shop you went to.

The interpersonal flow of communication

2-step flow of communication

Step 1 Step 2

Multi-step flow of communication theoryStep 2

Step 1a

Step 3

Opinion leadership and the firm’s marketing strategyOpinion leadership influences consumer preferences and purchase behaviour. Marketers seek to either stimulate or simulate opinion leadership.Stimulate: run advertisements that are so interesting that consumers will walk about them, or run a direct campaign based on generating WOM that will encourage opinion receivers to talk to others about the product Simulate: (lecture slides)

WOM may be uncontrollable Is extremely effective but negative WOM can dissuade consumers from consumption

Diffusions of innovations: an area of research concerned with diffusion and adoption of new products and services though a consumer market

Mass Media Opinion leaders

Opinion receivers

(the masses)

Mass Media Opinion leaders

Opinion receivers

(the masses)

Information ReceiversStep 1b

The diffusion process1. The innovation: any new product, service, idea or practice

Product characteristics that influence the acceptance of new products1) Relative advantage: customers perceive a new product as superior to existing substitutes2) Compatibility: new product is consistent with their present needs, vales and practices3) Complexity: new product is difficult to understand or use, affects acceptance4) Trialability: new product is capable of being tried on a limited basis5) Observability: product’s benefits or attributes can be observed, imagined or described

Resistance to innovation – innovation overload2. The channels of communication

Permission mktg: consumer gives permission to marketer to communicate promotional info.3. The social system: a physical, social or cultural environment to which people belong and within

which they function. e.g. New drug – neurologists, New corn - all farmers 4. Time

Is the backbone of the diffusion process. It’s in interrelated in 3ways: The amount of purchase time – the amount of time that elapses between consumers’

initial awareness of a new g/s and the point at which they purchase/reject it The identification of adopter categories

o Adopter categories: classification scheme that indicates where a consumer stands in relation to other consumers in terms of time (or when they adopt a new product)

The rate of adoption: how long it takes a new product to be adopted by members of a social system. (How quickly it takes a new product to be accepted by those who will ultimately adopt it.)

The adoption process and information sourcesThe adoption process provides a framework for determining which types of information sources consumers find most important at specific decision stages.

A profile of the consumer innovatorConsumer innovator: the relatively small group of consumers who are the earliest purchasers of a new product.Innovativeness: the degree to which an individual makes innovation decisions independently of the communicated experience to others.

Interest in the product categoryInnovators are more interested than either later adopters or non-adopters in the product categories that they are among the first to purchase.Consumer innovators are more likely than non-innovators to seek info concerning their specific interests from a variety of informal and mass-media sources.For discontinuous innovations it is often novices who purchase the product, whereas experts in the subject area are often laggards with respect to product adoption

Characteristics of a consumer innovator: The innovator acts as an opinion leader Less dogmatic than non-consumers

Approach new products with openness and little anxiety, whereas non-innovators find new products threatening and delay purchase until the product’s success has been established

Are inner-directed, they rely on their own values or standards when making a decision about a new product. whereas non-innovators rely on others for guidance

Have high optimum stimulation levels

Perceived risk and venturesomeness Perceived risk: the degree of uncertainty or fear about the consequences of a purchase that a

consumer feels when considering the purchase of a new product. Consumers who perceive little or no risk in the purchase of a new product are much more likely

to make innovative purchases than consumers who perceive a great deal of risk. Venturesomeness: broad measure of a consumer’s willingness to accept the risk of purchasing

new products

Purchase and consumption characteristics Less brand loyal Deal prone Heavy users of the product category in which they innovate

Media habits Greater exposure to magazines than non-innovators Less likely to watch television

Social characteristics Innovators are more socially accepted

Demographic characteristics Innovators are younger than late adopters or non-adopters Have more formal education, higher personal or family incomes and are more likely to have

higher occupational status

Are there generalised consumer innovators? No, consumer innovators in one product category are no t consumer innovators in others But they are innovators of other new products in the same general product category

Use-innovativeness The way g/s are used in novel and creative ways

o Can apply e.g. use baking soda to remove carpet stains Use existing or new products in different ways

o Using a computer for financial records, developing websites, online shopping People who are use-innovative extend a product’s life cycle, furthering the growth of existing

products and new product acceptance The tendency to use g/s in innovative ways implies a greater acceptance of new g/s