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Chapter 9: Individual Decision Making

Steps of making a purchase – Consumer decision making (A consumerpurchase may be a response to a perceived problem)

1. Problem ecognition

!. "nformation Search#. $valuation of Alternatives%. Product Choice&. Consumption and learning

Consumer 'yperchoice A condition here the large number ofavailable options forces us to make repeated choices that may drainpsychological energy hile decreasing our abilities to make smartdecisions (too many choices leads consumers to be less satis*ed iththeir purchase e+perience – e+tensive and limited choice)

ational Perspective People calmly and carefully integrate as muchinformation as possible ith hat they already kno about theproduct, painstakingly eigh the pluses and minuses of eachalternative and *nally arrive at a satisfactory decision (assumes ecollect -ust the amount of data e need and make a perfectly informeddecision) his utilitarian assumption also implies that e collect themost valuable units of information, and only absorb ne ones to thee+tent that e think it/ll add to hat e already kno

Purchase 0omentum ccur hen these initial impulses (randomconsumption) actually increase the likelihood that e ill buy even

more.• Some of us tend to have a rational system of cognition that

processes information analytically and se2uentially using rules of logic, hile others rely on experiential system of cognition that processes information more holistically and in parallel

3ehavior "n4uence Perspective 5nder these circumstances managersmust concentrate on assessing the characteristics of the environment,such as physical surroundings and product placement, that in4uencesmembers of a target market (consumers tend to put the least amountof e6ort in decision making unless it is necessary to put in a lot of

e6ort – lo involvement, learned purchases 'abitual)

$+periential Perspective Stresses gestalt, or totality, of the product orthe service. 0arketers focus on measuring consumers/ a6ectiveresponses to products or services and develop o6erings that elicitappropriate sub-ective reactions (moods, emotions, feelings) – for highinvolvement, important and meaningful purchases

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A continuum of 3uying 7ecision 3ehavior (8igure page !%9:!%;)

• 'abitual 7ecision 0aking 'abitual problem solving involves

decisions that are made ith little or no conscious e6ort (choicescharacteriupper funnel? hene e+perience a signi*cant di6erence beteen our current state ofa6airs and some state e desire

• Actual State:@eed ecognition Physical need like needing gas

• "deal State:@eed ecognition Craving a neer, 4ashier iPhone

o @eed ecognition Can occur if you run out of

something or if you need to *ll a gap (like movinginto a house you/ll need furniture)

o pportunity ecognition hen e/re e+posed to a

di6erent or better:2uality version of a product thate ant

"nternal Search Scanning our on memory banks to assembleinformation about di6erent product alternatives

$+ternal Search "nformation is obtained from advertisements, friends

and or people atching

7irected =earning herein a previous occasion e had alreadysearched for relevant information or e+perience some of thealternatives

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"ncidental =earning 0ore e+posure over time to conditioned stimuliand observations of others results in the learning of much material thatmay rarely be needed

nline Search hen e search online for product information e/re a

perfect target for advertisers because e declare our desire to make apurchase (either searching on Boogle or on social media channels)

0a+imi

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3ecause e+perts have a better sense of hat information is relevant tothe decision, they tend to engage in selective search, hich meanstheir e6orts are more focused and eDcient. "n contrast, novices aremore likely to rely on the opinions of others and upon non:functional

attributes, such as brand name and price, to distinguish amongst thealternatives. hey may also process information in a >top:don? ratherthan a >bottom up? manner. 8ocusing less on details than on the bigpicture (search tends to be greatest among those consumers ho aremoderately knoledgeable about the product)

3lissful "gnorance $6ect (people ho have details about a productbefore they buy it do not e+pect to be happy ith it as do those hogot only ambiguous information) ccurs because e ant to feel likee/ve bought the right thing – and if e kno precisely ho to productshould perform it/s not as easy to rationali

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 he category e assign to a product is important, because it in4uenceshat e compare it to, ho e use it and hat attributes e give it(hen consumers evaluate a product, they associate it ith hat theyalready kno and compare it to other brands) – Cognitive structure isimportant because they ant to insure that their products are properly

grouped

=evels of Product Categori

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1. "t should point out that there are signi*cant di6erences amongbrands on the attribute

!. "t should supply the consumers ith a decision:making rule, suchas >if Jdeciding amongst competing brandsK, then, Juse theattribute as a criterionK

#. "t should convey a rule that is easily integrated ith the ay theperson has made this decision in the past. therise therecommendation is likely to be ignored because it re2uires toomuch mental ork

@euromarketing 5ses functional magnetic resonance imaging (80"),a brain:scanning device that tracks blood 4o as e perform mentaltasks (Scientists found that the most popular vehicles – the Porscheand the 8errari triggered activity in a section of the brain they call thefusiform face area, hich governs facial recognition

Cybermediary An intermediary that helps to *lter and organi

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Consumers often form speci*c market beliefs about relationships in themarketplace. hese beliefs become the shortcuts – hether or not theyare accurate that guide their decisions (page !H;)

$thnocentrism the tendency to prefer products or people of one/s on

culture to those from other countries (purchasing foreign madeproducts is un:Canadian, curbs should be put on all imports,responsible for putting fello citi

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• @on:Compensatory ules Some poor attributes may eliminatethe choice despite its strength on other attributes (peopleeliminate all options that do not meet their basic standards. 5sedhen people aren/t familiar ith the product category or don/tant to process comple+ information)

o =e+icographic ule the brand that is the best on the mostimportant attribute is selected

o $limination by Aspects ule Same as le+icographic but

ith cut:o6so  he con-unctive ule A brand is chosen and if it meets all

the cut:o6s, hile failing to meet the cut:o6s meansre-ection

o  he 7is-unctive ule he consumer develops acceptable

standards for each attribute, hich are usually higher thanthe shopper/s minimum cut:o6s for attributes. "f a choicealternative e+ceeds the standard for any attribute, it is

accepted

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C$"%&'( ): "ttitudes

Attitude A lasting, general evaluation of people (including one self),

ob-ects or issues (anything that someone has an attitude toards iscalled a Attitude ob-ect). An attitude has three components (A3C 0odelof Attitudes – emphasi

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8unctional heory of Attitudes as initially discovered by psychologist7aniel Nat< to e+plain ho attitudes facilitate social behavior.According to this pragmatic approach, attitudes e+ist because theyserve some function for the personF that is, they are determined by aperson/s motive

Attitude functions (A dominant function of a product is basically >hatbene*ts it provides?)

1. 5tilitarian 8unction e develop some of our attitudes toardproducts simply on the basis of hether these products providepleasure or pain (basis principles of reard and punishment)

!. alue:$+pressing 8unction A person forms a product attitude notbecause of its ob-ective bene*ts, but because of hat theproduct says about him or her as a person (e+press theconsumer/s central values or self:concept and social identity)

#. $go:7efensive 8unction Attitudes that are formed to protect the

person, either from e+ternal threats or internal feelings, performan ego:defensive function (appealing to peoples insecurities)

%. Nnoledge 8unction Some attitudes are formed as the result of aneed for order, structure, or meaning (usually presented hen aperson is in an ambiguous situation or is confronted ith a neproduct)

 he Attitude toard the Advertisement (Aad) "s de*ned as a pre:disposition to respond in a favorable and unfavorable manner to aparticular advertising stimulus during a particular e+posure occasion.7eterminants of Aad include the vieers attitude toard the advertiser,

evaluation of ad e+ecution itself, and the mood evoked by the ad, andthe degree to hich the ad e6ects vieers arousal level (basicallystates the importance of an ad/s entertainment value in the purchaseprocess)

'o is Attitudes CreatedOo Classical Conditioning (Pavlov/s association)

o "nstrumental Conditioning (perant

conditioningeinforcement)

=evels of commitment to an attitude

• Compliance At the loest level of involvement, compliance, anattitude is formed because it helps gain reards or avoidspunishment from others (this attitude is very super*cial and illchange hen no longer being monitored by others or anotheroption becomes available)

• "denti*cation his process occurs hen attitudes are formed so

that the consumer ill then feel similar to another person or

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group (depicting social conse2uences of choosing some productsover others)

• "nternaliSmoking causes cancer but " smoke, but my ;Q grandmatoo?

• Post Purchase 7issonance hinking about the option you missed

out on by choosing this speci*c product, also knon as >forgoneoption?

Self:Perception heory his theory assumes that people useobservations of their on behavior to determine hat their attitudesare, -ust as e assume that e kno the attitudes of others by

atching hat they do. "t states that e maintain consistency byinferring that e must have a positive attitude toard an ob-ect thate have bought or consumed it (relevant to the lo:involvementhierarchy)

• 8oot in the 7oor echni2ue A consumer is more likely to comply

ith a re2uest if he or she has agreed to comply ith a smallerre2uest

Social Rudgment heory Assumes that people assimilate neinformation about attitude ob-ects in the light of hat they alreadykno or feel (frame of reference)

• People di6er in terms of the information they ill *nd acceptable

or unacceptable. hey form *atitudes of "cceptance and(e+ection around an attitude standard. "deas that fall ithin alatitude ill be favorable received, hile those falling outside the

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3alance heory Considers relationships among elements a personmight perceive as belonging together. his perspective involvesrelations (alays from the perceivers sub-ective point of vie) amongthree elements, so the resulting attitude structures are called triads.(,nit relation is hen one element is seen as someho belonging to

or being apart of the other, like a belief or a entiment relation inhich the to elements are linked because one has e+pressedpreference or dislike for the other) Pg 1;H:1;

1. A person and his or her perception!. An attitude ob-ect#. Some other person or ob-ective

0ulti:Attribute 0odel his model assumes that a consumer/s attitude(evaluation) of an attitude ob-ect (Ao) ill depend on the beliefs she orhe has about many or several attributes of the ob-ect. he use of amulti:attribute model implies that an attitude toard a product or

brand can be predicted by identifying these speci*c beliefs andcombining them to derive a measure of the consumer/s overall attitude

• Attributes Characteristics of the A (they can be identi*ed andused to develop a product)

• 3eliefs Cognitions about the speci*c A (the e+tent to hich a

consumer perceives that a brand posses a particular attribute)

• "mportance eights he relative priority of an attribute to aconsumer

 he 8ishbein 0odel he most in4uential multi:attribute model, itmeasures three components of attitude (his model assumes that e

have been able to specify ade2uately all the relevant attributes thate/ve evaluated all possible choices) Page 1;;:!QQ

1. Salient 3eliefs people have about A (those beliefs about theob-ect that are considered during evaluation)

!. b-ect:Attribute =inkages he probability that a particular ob-ecthas an important attribute

#. $valuation of each of the important attributes

Strategic Applications of the 0ulti:Attribute 0odel

• Capitali

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• "n4uence Competitors atings 7ecreasing the positivity ofcompetitors (comparative advertising like 0ac vs. PCcampaigns)

 he $+tended 8ishbein 0odel

•  he theory of easoned Actions An updated version of theoriginal model but it has an improved ability to predict relevantbehavior (this action aims to measure behavioral intentions,recogni

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• Consistency People try not to contradict themselves in terms ofhat they say or do about an issue

• Consensus e often take into account hat others are doing

before e decide hat to do

 actical Communications ptions• ho ill be depicted using the product in the adO

• 'o should the message be constructedO

• hat media should be used to transmit the messageO

• hat characteristics of the target market might in4uence the

ad/s acceptanceO

 he $lements of CommunicationSources must chose and encode a message (putting a meaning)F themessage must be then transmitted via a medium (television, print ad,social media). he message is the decoded by the receiver hointerprets the message and then feedback is given back to the sender(through actions etc.)

Permission 0arketing 3ased on the idea that the marketer ill bemuch more successful trying to persuade consumers ho have optedinto their messages (oday, consumers have much more choiceavailable to them and a greater control over hich messages theychose to process)

5ses and Brati*cation heory Argue that consumers are an active,

goal:directed audience that dras on mass media as a resource tosatisfy needs ("nstead of asking hat media do for or to people, theyask hat people do ith their media). his theory emphasi

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result in an order, hich is most de*nitely a response(transaction that provides revenue but also a ay to measure thee6ectiveness of the marketing e6orts)

!. Second:rder esponse 0essages can prompt useful responsesfrom customers, even though these recipients do not necessarily

place an order immediately after being e+posed to thecommunication (if they ant to see ho people respond sociallyabout a message or a brand)

Persuasion Nnoledge 0odel (PN0) Suggests that consumers developknoledge about persuasion and use this knoledge to >cope? ith ordeal ith persuasive attempts (persuasion is a to ay interactionbeteen the consumer and the agent ith their on separate goals). he target has three types of knoledge (o important sourcecharacteristics is credibility and attractiveness)

1. opic Nnoledge speci*c knoledge related to the speci*c issue

at hand!. Agent Nnoledge knoledge about the source of the persuasion#. Persuasion Nnoledge knoledge about the persuasive tactics

being used

Source Credibility efers to the communicator/s e+pertise, ob-ectivityor trustorthiness (his dimension relates to consumer/s beliefs thatthis person is competent and ill provide the necessary information eneed hen evaluation competing products)

• Celebrities increase aareness of a *rms advertising and

enhance both company image and brand attitudes (e6ective ay

of di6erentiating beteen products)• Sleeper $6ect People appear to forget about the negative source

and change their attitudes anyays

• Credibility can be enhanced if the source/s 2uali*cations are

perceived as relevant to the product being endorsed (An olderomen advertising cream)

• Source 3iases are a consumers beliefs about a products

attributes can be eakened if the source is perceived to be thevictim of a bias in presenting information

o Nnoledge 3ias "mplies that a source/s knoledge

about a topic is not accurateo eporting 3ias ccurs hen a source has the

re2uired knoledge but is not illing to convey itaccurately

Corporate Parado+ he more involved a company appears to be in thedissemination of nes about its products, the less credible it becomes

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(consumer ord of mouth is typically the most convincing kind ofmessage)

o 3uhat is beautiful is good? stereotype

o Ads ith beautiful people get more attention and change

attitudes more easily but don/t necessarily mean that the peopleactually read it. People tend to have more positive feelings to aproductadbrand if a beautiful person is suggesting it, and theyare more likely to purchase it

o Social Adaptation Perspective Assumes that information seen to

be instrumental in forming an attitude ill be more heavilyeighted by the perceiverF e *lter out irrelevant information tominimi

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are most appropriate for high:involvement situations, such as printconte+ts here readers are motivated to pay attention to advertising

o ividness Poerful descriptions or graphics command attention

and are more strongly embedded in memory because they tendto activate mental imagery, hile abstract stimuli e+hibit this

process (be speci*c)o epetition 0ultiple e+posures to a stimulus are usually re2uired

for learning (especially conditioning) to occur 0eer $+posure $6ect People tend to like things that are

more familiar to them, even if they ere not too keen onthem initially

'abituation he consumer no longer pays attention to the

stimulus because of fatigue or boredom (too used to it)

 o 8actor heory Proposes that to separate psychological processesare operating hen a person is repeatedly e+posed to an ad. he

positive side of repetition is that it increases familiarity and thusreduces uncertainty about the product. he negative side is that overtime, boredom increases ith each e+posure

Supportive Arguments 0essages that present one or more

positive attribute about the product or reasons to buy it  o Sided 0essage 3oth positive and negative information is

presented ((efutational "rguments: a negative issue is raisedand then dismissed)

Comparative Advertising A strategy herein a message

identi*es to or more speci*cally named or recogni

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esonance A form of presentation that combines play on ords ith arelevant picture (uses an element that has a double meaning, such asa pun. (A straberry commercial ith the tagline >berried treasure?)

•=ecture A speech in hich the source speaks directly to theaudience members in an attempt to inform them about a productor to persuade them to buy it

• 7rama A drama dras consumers into the action, here they

are addressed indirectly and they interact ith each other abouta product or service in an imaginary setting (they attempt to bee+periential – to involve the audience emotionally)

•  ransformational Advertising he consumer associates the

e+perience of product usage ith some sub-ective sensation

 he $laboration =ikelihood 0odel ($=0) Assumes that once a

consumer receives a message, he or she begins to process it. oroutes can be taken

1. he Central oute to Persuasion ('igh "nvolvement) hen theconsumer *nds the information in a persuasive message to berelevant or someho interesting, he or she ill carefully attendto the message content (the person is likely to think activelyabout the arguments presented and generate cognitiveresponses to these arguments)

!. he Peripheral oute to Persuasion (=o "nvolvement) his routeis taken hen the person is not motivated to think about thearguments presented (consumer is likely to use other cues such

as the product/s package, attractiveness of the source or theconte+t of the message in deciding the suitability of themessage) – Sources of information e+traneous to the actualmessage content are called peripheral cues because theysurround the actual message

>he relative e6ectiveness of a strong message and a favorable sourcedepends on consumers/ level of involvement ith the product beingadvertised. 'ighly involved consumers look for the steak (strong,rational arguments), hile those ho are less involved are morea6ected by the si

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C$"%&'( 00: 1roup In2uence and ocial Media

eference Broup "s an actual or imaginary individual or group

conceived of as having signi*cant relevance upon an individual/sevaluations, aspirations, or behavior. eference groups in4uenceconsumers in three ays (ho other people in4uence our purchasedecisions) Page #!Q

1. "nformational (conformity under acceptance of evidence aboutreality hich has been proven by others)

!. 5tilitarian#. alue:$+pressive

@ormative "n4uence he reference group helps to set and enforcefundamental standards of conduct (our parents forming us attitudes of

ho to marry and here to go to 5niversity). his is more like informalgroups that tend to be more involved in individuals day:to:day life(high in normative in4uence)

Comparative "n4uence 7ecisions about speci*c brands or activities area6ected (8ormal groups tend to be more product or activity speci*cand thus are high in comparative in4uence)

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3rand Community A set of consumers ho share a set of socialrelationships based on usage or interest in a product (typically don/tlive close and meet infre2uently). People part of brand communitiestend to feel more positively and associate themselves ith the brandmore, thus increasing their brand loyalty and turns them into brand

missionaries)

Aspirational eference Broups comprise of ideali

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actively change their behavior to please or identify ith areferent)

• "nformation Poer A person can have information poer simply

because he or she knos something others ould like to kno

• =egitimate Poer Sometimes people are granted poer by

virtue of social agreements, such as that given to police oDcersand politicians (recogni

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• 8oot:in:the:7oor echni2ue consumer is *rst asked a smallre2uest and then is hit up for something bigger

• =o:ball echni2ue a person is asked for a small favor and it

informed, after agreeing to it, that it ill be more costly thanthey *rst anticipated

• 7oor:in:the 8ace echni2ue a person is *rst asked to dosomething e+treme (a re2uest that is usually refused) and then isasked a smaller, more reasonable re2uest since they tend to goalong ith the smaller one

7eindividuation "ndividual identities get submerged ith groups(they/re all knon as one, not individuals)

• isky Shift Broups are more illing to make riskier decision than

individualso 7i6usion of esponsibility everyone held accountable as a

groupo alue 'ypothesis iskiness is a cultural thing and social

pressures operate on individuals to conform to attributesvalues by society

7ecision Polari

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eactance People have a deep:seated need to preserve freedom ofchoice. hen they are threatened ith a loss of this freedom, they tryto overcome this loss

pinion =eader A person ho is fre2uently able to in4uence other/s

attitudes or behaviors (opinion leaders tend to be slightly higher ineducation, social status and rank than those they are in4uencing)1. hey are technically competent thus are convincing because

they possess e+pert poer!. hey represent their on interest and their on unbiased opinion

about hat is right#. hey tend to be socially active and highly interconnected in their

communities%. hey tend to be similar to the consumer in terms of their values

and beliefs, so they possess referent poer&. pinion leaders are often among the *rst to buy ne products,

so they absorb much of the risk

0onomorphic $+perts in a limited *eldPolymorphic $+perts in several *elds

 o Step 8lo 0odel of "n4uence A small group of in4uencers areresponsible for dissemination of information, since they can modify theopinions of a large number of other people

"n4uence @etork "n4uence is driven less by in4uential and more bythe interaction among those ho are easily in4uencedF they

communicate the information vigorously to one another and they alsoparticipate in to:ay dialogue ith the opinion leader

• Cascades ccurs hen a piece of information triggers ase2uence of interactions

0arket 'aven (A consumer category) 'as been proposed to describepeople ho are actively involved in transmitting marketplaceinformation of all types (they tend to have solid overall knoledge ofho and here to procure products)

Surrogate Consumer "s a person ho is hired to provide input into

purchase decisions (interior decorator, stockbrokers etc.)

 he Self:7esignating 0ethod he most commonly used techni2ue toidentify opinion leaders is simply to ask individual consumer hetherthey consider themselves to be opinion leaders (may have some biasbecause people tend to in4ate their on ego)

• An alternative to this is to select certain group members (key:

informants) ho are then asked to identify opinion leaders

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Sociometry race communication patterns among group membersFallo researchers to systematically map out interactions that takeplace among group members (esearchers speculated that the reasonthat social contagion e3ect is that hen our best buds get fat, this

alters our perception of normal body eight so e aren/t as concernedhen e put on some eight ourselves)

• Can be used to better understand referral behavior and to locate

strengths and eaknesses in terms of ho ones reputation iscommunicated through a community

• @etork analysis focuses on communication in social systemsF it

considers the relationship among people in a referral netorkand measures the tie strength among them (Strong Primary U Lour spouse, eak Secondary U Lour ac2uaintance you rarelysee)

• 3ridging 8unction ne of your friends introducing you to a group

hich you share a similarity ith (a subgroup)

ord:of:0outh Communication (0) Product informationtransmitted by individuals to individuals (since this usually comes frompeople e kno, this information tends to be more trustorthy thenrecommendations e get through formal marketing channels – oftenbacked up by social pressure to conform to these recommendations)this is e+ceptionally poerful hen the consumer is unfamiliar ith theproduct category

• People may ant to -ust gloat about their knoledge

• 0ay bring up product attributes out of genuine concern forsomeone else

•  hey may be highly involved ith the product and take pleasure

in talking about it

@egative ord of 0outh "s eighted more heavily by consumers thanare positive comments (hen people really hate something they pass ita long – strongly in4uences consumers not to buy product)

3u

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• iral 0arketing he strategy of getting customers to sell aproduct on behalf of the company that creates it (sharing theirdeal ith friends etc.)

Social 0edia All about community, the collective participation of

members ho together build and maintain a site (a uni*ed body ofindividuals, uni*ed by interests, locations, occupation, common history,or political and economic concerns)

• Cyberspace a place here people connect online ith kindred

spirits, engage in supportive and sociable relationships iththem, and imbue their activity online ith meaning, belongingand identity)

Social @etork (sometimes referred to as social graphs) a set ofsocially relevant nodes connected by one or more relations

• @odes 0embers of the netork (netork units or ties)

o @odes in a netork e+perience interactionsF these arebehavior:based ties such as talking ith each others,attending an event together or orking together

o 8los ccur beteen nodes, they are e+changes of

resources, information or in4uence among members of thenetork (sharing pictures, information, videos on 8acebooketc.)

o 0edia 0ultipli+ity he theory that these 4os of

communication go in many directions at any point in timeand often on multiple platforms

o 8or marketers, 4os are especially important because they

are the actionable components of any social netorksystem in terms of the sharing of information, delivery ofpromotional materials, and sources of social in4uence

Social b-ect heory Suggests that social netorks ill be morepoerful communities if there is a ay to activate relationships amongpeople and ob-ects (in this perspective, an ob-ect is something ofcommon interest and its primary function is to mediate the interactionsbeteen people)

b-ect Sociability he e+tent to hich an ob-ect can be shared insocial media, is clearly related to an audience/s uni2ue interests – byvirtue of tying the site relationships to a speci*c ob-ect such as photosof people/s cats or bookmarked ebsites that provide details about thehistory of alternative music (people ho -oin these things are probablyobsessed ith the topic)

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irtual Community of Consumption A collection of people ho interactonline to share their enthusiasm for knoledge about a speci*cconsumption activity (forming common love for a product) –Communities help members meet their needs for aDliation, resourceac2uisition, entertainment and information.

"nteractive platforms enable online communities to e+hibit these basiccharacteristics

• Conversation Communities thrive on communication among

members

• Presence he e6ect people e+perience hen they interact ith

computer:mediated or a computer generated environment (lookand feel real)

• Collective "nterests Commonalties to create bonds among

members (share peoples passion)

• 7emocracy =eaders emerge due to the reputation they earn

among the general membership

0edia 7emocrati

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C$"%&'( 04: Income5 ocial Class and 6amily tructure

 he speci*c products and services e buy are often intended to makesure other people kno hat our social standing is – or hat e ouldlike to be. Products are fre2uently bought and displayed as markers ofsocial class/ they are valued as status symbol. his is especially true inlarge, modern societies here behavior and reputation can no longerbe counted on to convey one/s position in a community

 o factors play a huge role in the booming Canadian economy1. omen/s more advanced roles in the orkforce

!. "mproving educational rates

7iscretionary "ncome "s the money available to a household over andabove that re2uired for a comfortable standard of living (increases asoverall income goes up and decrease as debt goes up)

 o types of frugal consumers (cautious ith their money)1. Spendthrifts hose ho spend cautiously because they en-oy

saving money!. ightads hose ho spending money is an unpleasant

e+perience (more likely to be men, older people or those more

educated) >he evidence suggests that frugality is driven by a pleasure of

saving, as compared ith tighaddism, hich is driven by a painof paying?

 he three shopper groups (& product categories are food,entertainment, apparel, home goods and pharmaceuticals)

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• 3rand Aspirational People ith lo incomes ho are obsessedith brand names, such as NitchenAid

• alue:Price Shoppers hose ho like lo prices and cannot

a6ord much more

• Price:Sensitive AVuent ealthier shoppers ho love deals

3ehavioral $conomics ($conomic Psychology) this *eld of study isconcerned ith the >human? side of economic decisions. his disciplinestudies ho consumer/s motives and their e+pectations about thefuture a6ect their current spending and ho these individual decisionsadd up to a6ect a societies economic ell:being

• Consumer Con*dence Consumers beliefs about hat the future

holds, hich re4ects the e+tent to hich people are optimistic orpessimistic about the future health of the economy and hothey/ll predict they/ll fare don the road (this determines homuch money consumers ill pump into economy) ne thing that

loers consumer con*dence is 1as %rices 

Savings ate is in4uenced by1. Consumer/s pessimism or optimism about their personal

circumstances!. @ational and orld events#. Cultural di6erences and attitudes toard saving

Social Class (A consumer/s standing in society) is determined by acomple+ set of variables that include income, family background,education and occupation (e divide all societies into >haves? and>have nots?

• Narl 0ar+, an economic theorist, felt that position in a society

as determined by a person/s relationship to the means ofproduction. he >haves? control the resources and use the laborof others to preserve their privileged positions, hile the >havenots? depend on their on labor for survival, so these peoplehave the most to gain by changing the system

• 'omogamy (Assortative 0ating) e tend to marry people

similar in social class to ourselves

• Social Strati*cation efers to the creation of arti*cial decisions,those processes in a social system by hich scarce and valuable

resources are distributed une2ually to status positions thatbecome more or les permanently ranked in terms of the share ofvaluable resources each receives

• Status 'ierarchy Some members are someho better o6 than

others, they may have more authority or poer, or othermembers simply like or respect them (Paris 'ilton)

Achieved Status resources earned by orking hard for it

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Ascribed Status esources you/re born into or lucky enough to inherit

Social 0obility efers to the passage of individuals from one socialclass to another (depends on hat culture you live in cause some arepermanent and others are not)

•'ori

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o Social class is a better predictor of purchases that have

symbolic aspects but lo:to:moderate prices (cosmeticsand li2uor)

o "ncome is a better predictor of ma-or e+penditures that do

not have status or symbolic pickup truck aspects (ma-or

appliances)o 3oth social class and income data are needed to predict

purchases of e+pensive, symbolic products (cars andhomes)

Potent Actors hose ho believe they have the ability to take actionsthat a6ect their orld"mpotent Actors hose ho feel they are at the mercy of theireconomic situations

ESocial class involves much more than absolute income. "t is also a ay

of life, and factors including here they got their money, ho they gotit, and ho long they have had it signi*cantly a6ect aVuent consumer/interests and spending priorities

S" Consulting 3usiness intelligence divides consumers into threegroups on the basis of their attitudes toard lu+ury

1. =u+ury is 8unctional hese consumers buy things that ill lastand have enduring value. hey conduct e+tensive prepurchaseresearch and make logical decisions rather than emotional orimpulsive choices

!. =u+ury is a eard hese consumers tend to be younger than

the *rs group but older than the third group. hey often uselu+ury goods to say, >"/ve made it?. he desire to be successfuland to demonstrate their success to others motivates theseconsumers to purchase conspicuous lu+ury items, such as high:end cars and homes in e+clusive communities

#. =u+ury is "ndulgence he smaller of the to and also theyoungest, hich tends to include more males. o theseconsumers, the purpose of oning lu+ury items is to bee+tremely lavish and self:indulgent. his group is illing to pay apremium for goods that e+press its individuality and make otherstake notice have an emotional attachment to lu+ury spending

and are more likely to make impulse purchases)

 aste Culture 7i6erentiates people in terms of their aesthetic andintellectual preferences

o 5pper and 5pper 0iddle Class consumers are more likely to visit

museums and attend live theatero 0iddle Class consumers are more likely to go camping or *shing

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Social class remains an important ay to categorihether or not the

person lives ith another person and if so, hether or not he orshe is related to that person (s)

• Census 8amily A married couple and the children, if any, ofeither or both partners, a couple living common la ith childrenof both spouses or a lone parent of any marital status living ithat least one child (also includes children living ith theirgrandparents)

•  he $+tended 8amily Consists of three generations living

together hich often includes grandparents, aunts, uncles andcousins

• @uclear family A mother and father and one or more children

(the model family)8amily Age

•  he average age in hich people are getting married is getting

older as time goes by (people are aiting to get married)

• 5nderstanding the family life stage helps marketers understand

ho to position anything toards families more e6ectively8amily Si

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 he 8amily life Cycle here are many factors that determine ho acouple spends their time and money (ho many children, age,employment etc.), but there are to primary ones

1. hether they have children

!. hether the omen orks outside the home (must makealloances for daycare, cleaning services, ardrobe etc.)

8amily =ife Cycle Concept (8=C) (Segments 'ouseholds) "t combinestrends in income and family compensation ith the changes thesedemands place upon this income (as e age, our preferences andneeds for products and activities tend to change)

• A life:cycle approach to the study of family assumes that pivotalevents alter role relationships and trigger ne stages of life thatalter our priorities (these vents include couples moving intogether, giving birth to a child, the departure of the last child

from home, the death of a spouse, retirement and divorce)

 here are four variables that describe these changes ade2uately1. Age!. 0arital Status#. he presence or absence of a child from home%. he children/s age

o "n addition, our de*nition of a household must be rela+ed

to include >any couple living together in a long:termrelationship?

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C$"%&'( 07: Buying and Disposing

elationship 0arketing 3ased on building strong customer service

e+perience ith loyal customers in ays that foster a continuedrelationships over time

Consumption Situation 7e*ned by conte+tual factors over and abovecharacteristics of the person and the product (Can be behavioral orperceptual)

"ssues elated to Purchase and Postpurchase ActivitiesAntecedent States

• Situational 8actors

• 5sage Conte+ts

•  ime Pressure• 0ood

• Shopping rientationPurchase $nvironment

•  ime Shopping $+perience

• Point:of:Purchase Stimuli

• Sales "nteractions

Postpurchase Processes

• Customer Satisfaction

• Product 7isposal

• Alternative 0arkets

Physical and Social Surroundings his can make a big di6erence inmotives for product usage and also a6ect ho the product isevaluated. "mportant cues include the person/s physical surroundingsas ell as the number and type of other consumers also present in thesituation

• Consumer Contamination "f another consumer touches the

product in a retail conte+t, this can lead to consumers negativelyevaluating the product (unless the person as attractive, thenthey evaluate it positively)

•  he presence of large numbers of people in a consumer

environment increases arousal levels so that a consumer/ssub-ective e+perience of a setting tends

• Croding he amount of people in a physical pro+imity, and

usually has a negative psychological connotation (croding in aretail conte+t results in more variety seeking amongstconsumers)

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 emporal 8actors ur perspective on time can e6ect many stages ofdecisions making and consumption, such as hen needs arestimulated, the amount of information search e undertake etc.

• $conomic ime Consumers try to ma+imi

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•  ime is a Pressure Cooker omen ho personify this metaphorare usually analytic in their planning, other:oriented, andmonochromic in their time styles. hey treat shopping in amethodical manner and often feel under pressure and in con4ict

•  ime is a 0ap omen ho e+emplify this metaphor are usually

analytic planners and have a future temporal orientation andpolychromic timestyle. hey often engage in e+tensiveinformation search and comparison shopping

•  ime is a 0irror omen in this group are also analytic planners

and have a polychromic orientation. 'oever, they have a pasttemporal orientation. 7ue to their risk:averseness in time use,these omen are usually loyal to products and services theykno and trust (hey prefer convenience:oriented products)

•  ime is a iver omen hose timestyles can be described by

this metaphor are usually spontaneous in their planningorientation and have a present focus. hey go on unplanned,

short, fre2uent shopping trips on impulse•  ime is a 8east hese omen are analytic planners ho have a

present temporal orientation. hey vie time as something to beconsumers in the pursuit of sensory pleasure and grati*cationFhence, they are motivated by hedonic and variety:seekingdesires in their consumption behavior, hich e+plains hy theyprefer fresh and novel ingredients hen they buy food

Wueuing heory he mathematical theory of aiting lines (Aconsumers/ e+perience of aiting can drastically in4uence theirperceptions of the service)

 here are to dimensions that determine hether a shopper ill reactpositively or negatively to a store environment

1. Pleasure (Bloomy or ela+ing)!. Arousal (7istressing or e+citing)

Shopping can be done for to reasons1. 5tilitarian easons (8unctional or angible)!. 'edonic easons (Pleasure or "ntangible)

• omen shop to love (*nding emotional ful*llment by

shopping) hile men shop to in (seek to demonstratetheir e+pertise or ability to procure status items)

'edonic Shopping 0otives can includeo Social $+periences Bathering place for people

o Sharing of Common "nterests Stores o6er speciali

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o "nterpersonal Attraction Shopping malls are natural places to

congregateo "nstant Status 8eeling important because someone is serving

youo  he thrill of the Chase People pride themselves on their

knoledge of the market and relish the process of haggling andbargaining

Shopping rientation Beneral attitudes about shopping, ith severalshopping type

1. $conomic Consumer A rational, goal:oriented shopper ho isprimarily interested in ma+imi

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Store "magePersonality =ocation, merchandise suitability, andknoledge and congeniality of the sales sta6 (can really help peopledecide hich store to visit)

o Consumers evaluate stores in terms of their speci*c attributes

and global evaluations or gestalt) – $voked Sets

Atmospherics he conscious designing of space and its variousdimensions to evoke certain e6ects in buyers (colors, scents, andsounds etc.)

o =ight colors impart a feeling of spaciousness and serenity

o 3right Colors create e+citement

5nplanned 3uying occurs hen a person unfamiliar ith a store/slayout is under time pressure (recogni

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of 2uality (if something fails to live up to hat e thought it ould be,a negative e6ect may result – "f performance e+ceed our e+pectations,e/re pleased)

"f consumers are not happy ith their product or service, they can do

three things1. oice esponse he consumer can appeal directly to the retailerfor redress

!. Private esponse he consumer can e+press dissatisfactionabout the store or productservice to friends andor boycott thestore (negative ord of mouth)

#. hird:Party esponse he consumer can take legal actionagainst the merchant, register a complaint ith the 3etter3usiness 3ureau or post revieshelp on ebsites, forums andthe nespaper

 otal Wuality 0anagement (W0) A comple+ set of management andengineering procedures aimed at reducing errors and increasing2uality, has in4uenced this perspective. o help attain this ob-ective,researches can go to the gemba (one true source of information, like aphysical location here people can be atched and observed in theirnatural behavioral habitat)

7isposal ptions hen a consumer decides that a product is no longerin use, they can keep it, temporarily dispose of it or permanentlydispose of it. "n most cases, a ne product is already ac2uired eventhough the old one is still functional. Some reasons for replacement

include a desire for ne features, a change in the person/senvironment or a change in the person/s role of self:image (Page #QH)

=oss 8rame 8ocusing on hat ould be lost if consumers did notrecycle

• orks best ith e+act instructions in order to make recycling

more understandable, easy and attractiveBain 8rame 8ocusing on hat ould be gained if consumers didrecycle

• orks better hen combined ith abstract information regarding

the more general 2uestion of hy people should recycle (to

bene*t the environment)

=ateral Cycling Already purchased ob-ects are sold to others ore+changed7ivestment ituals People take steps to gradually distance themselvesfrom things they treasure so that they can sell them or give themaay. esearchers identi*ed the folloing rituals,

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• "conic ransfer itual aking pictures and videos of ob-ectsbefore getting rid of them

•  ransition:Place itual Putting items in an out:of:the ay

location, such as a garage or an attic, before disposing of them

• itual Cleansing ashing, "roning, andor meticulously rapping

the item

C$"%&'( 08: u#cultures

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Subculture a group hose members share beliefs and commone+periences that set them apart from the others (hey are groupmemberships ithin our society that help to de*ne us relateddemographically to our age, ethic background or region of here elive etc.)

0icroculture 3ased on a lifestyle or aesthetic preference, and typicallycommand *erce loyalty (people ho share a passion of 00A *ghting orreally devoted Star ars fans)

Sony/s Age elated Segments

• Ben L (Lounger than !&)

•  Loung Professionals7"@Ns (7ouble income, no kids, age !&:#%)

• 8amilies (#& to &% years old)

• Moomers (hose older than &&)

Age Cohort A group of consumers of the same or appro+imate ageho have undergone similar e+periences (8or e+ample, they sharemany common memories of cultural heroes like sports stars, celebritiesand important historical events like ar, stock market crash etc.)

Benerational Categories (Consumers ithin an age group confrontcrucial life changes at roughly the same time, so the values andsymbolism used to appeal to them can evoke poerful feelings ofnostalgia (shared moments) G Possessions play a key role in letting usidentify ith others of a certain age and e+press the priorities andneeds e encounter at each life stage)

•  he "nterbellum Beneration People born at the beginning of the

!Qth century

•  he Silent Beneration People born beteen the to orld ars

•  he ar 3aby 3oomers Beneration People born during orldar !

• 3aby 3oomers People born beteen 1;%H – 1;H%

• Beneration X People born beteen 1;H& – 1;9&

• Beneration L People born beteen 1;9H – !QQ!

• Beneration M People born !QQ# and later

0ultigenerational 0arketing Strategy hey use imagery that appealsto consumers from more than one generation ($+ample he Super3o 3est 3uy ad featuring

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•  hey have positive associations ith the ords change, ne,progress, hope and e+citement

•  eens (Age 1Q:1%) and eens (Age 1&:1;)

• Are often brought up by non:traditional families such as singleparents or a orking mother

•  hey tend to feel like they belong to the global community *rstand love being ethically diverse

•  hey hold relatively traditional values and believe in *tting ratherthan rebelling (hey stress teamork, collaboration and servicelearning)

• 7igital @atives 0ultitaskers that group up and live ith

technologyo  e+ting

o ideo

o nline 3rand 0

o

Consumer Benerated Content• 5niversity students are at a time here they are illing to try

ne products so it is a good time for companies to try and attractthem and get them into your franchise (because they live aayfrom home, brand loyalty doesn/t usually stick depending onhat they can a6ord)

• 0arketing to teens is action:oriented and depicts teens using the

products. Consumers at this age have a number of needsincluding e+perimentation, belonging, independence,responsibility and approval from others and status

•  8our basic con4icts that are common to all teens

1. Autonomy vs. 3elonging eens need to ac2uireindependence, so they try to break aay from theirfamilies. 'oever, they need to attach themselves to asupport structure, such as peers, to avoid being alone

!. ebellion vs. Conformity eens need to rebel against socialstandards or appearance and behavior, yet they still needto *t in and be accepted

#. "dealism vs. Pragmatism eens tend to vie adults ashypocrites, hile they see themselves as sincere. heystruggle to reconcile their vie of ho the orld should beith the realities they perceive around them

%. @arcissism vs. "ntimacy eens tend to obsess about theirappearance and needs. 'oever, they still feel the need toconnect ith others on a meaningful level

•  ules of engagement hen it comes to consumers

1. ule 1 7on/t talk don (teens like to feel like they/redraing their on conclusions and don/t like being toldhat to do)

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!. ule ! 7on/t try to be hat you/re not (stay true to yourbrand image)

#. ule # $ntertain them (make it interactive and keep thesell short)

%.  ule % Sho that you kno hat they/re going through,

but keep it light• 0arketers vie teens as >consumers in training? because e

often develop brand loyalty during adolescents (getting brandloyal teens can 4ourish a long lasting relationship beteen theto)

•  eens also have a huge impact on the products consumed by the

entire household and the purchase patterns of their parents

Beneration X (A group profoundly e6ected by the economic donturnof the 1;;Q/s and they are less adept to technology)

•  hey/re a small group sandiched beteen Ben L and the baby

boomers that often don/t get targeted by marketers too often –knon as the forgotten generation

3aby 3oomers

•  he biggest age cohort available, and also those that had the

most in4uence and collective poer behind some of the biggestevents in history, such as oodstock, $+po H, democracy, lasetc.

• 3oomers have huge spending poer because as they got older,they earned more. @o as they are beginning to retire (somemay continue to ork ell beyond their years), they have a lot of money to spend on lu+uries and to live their lives

• Although the older generation still accounts for their typical

products such as healthcare and medical bills, they still make upa huge market of car sales and vacations (he older generationsare getting younger)

 he Brey 0arket 5sually refers to people aged H& and older (fastestgroing age group on earth). Although they may be considered >seniorciti

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surgery, skin treatments and >ho to? books that o6er enhancedlearning opportunities

• Age is more a state of mind than of body

• Chronological Age he actual number of years the person has

actually been alive

• Perceived Age 'o old the person feels (measured based on>feel age?, ho old a person feels, and >look age?, ho old aperson looks)

• As people get older, they feel younger so marketers emphasi

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component of a consumer/s self:concept) – Subculture memberships doshape many attitudes, values, activities and preferences

• 7imensions of ethnicity that are important to marketers include

heritage, life e+periences, religion and beliefs

• 'igh:Conte+t Cultures Broup members tend to be tightly knit,

and they infer meanings that go beyond the spoken ord(symbols and gestures, rather than ords, carry much of theeight of the message – China, 3ra

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• Benerally arrive in Canada ith high income education levels andare likely to speak $nglish

Advertising methods that seem e6ective among recent immigrants arebased on messages of comfort, familiarity and appropriateness of

language (in response to feelings of fear and insecurity on coping to ane country)

• Second generation Canadians highly value a good arranty and

the ability to return a product (all about trust)

C$"%&'( 0: Cultural In2uences on Consumer Behavior

Culture A societies personality, an accumulation of shared meanings,rituals, norms, and traditions among the members of an organi

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eDcient use of space because of the cramped conditions in thatisland nation)

!. Social Structure A ay in hich orderly social life is maintained,including the domestic and political groups dominant ithin theculture (the nuclear family versus the e+tended family)

#. "deology efers to the mental characteristics of a people and theay in hich they relate to their environment and social groups. his area revolves around the belief that members of a societypossess a common orldvieF that is, they share certain ideasabout principles of order and fairness (hey also share an ethos,or a set of moral and aesthetic principles)

alues efers to share beliefs shaped by individual, social and culturalforces. he most common universal cultural values are family, health,happiness and isdom, but hat sets cultures a part is hat emphasisthey put on each (meaning that hat/s appealing to one culture may

not be appealing to another)• Core alues his is our reason for being, and its hat guides us

to be the ay e are (American culture its usually freedom,youthfulness, achievement and activity hile in Rapan it/s safetyand security)

'ofstede/s Study 7iscovered the *ve dimensions in hich ork:relatedvalues di6ered across cultures. Cultures that are more individualistictend to donplay poer di6erences, hile those that are morecollectivistic tend to accentuate poer di6erences.

1. Poer 7istance he e+tent to hich society members accept an

une2ual distribution of poer. "n large poer distant cultures,"ne2uality is acceptable, superiors are inaccessible and poerdi6erences are highlighted. (Small is opposite)

!. 5ncertainty Avoidance he e+tent to hich people areuncomfortable ith uncertain and ambiguous situations. Stronguncertainty avoidance cultures stress rules and regulations, hardork, conformity and security. (eak is the opposite)

#. 0asculinity8emininity 0ore masculine cultures di6erentiategender roles, support the dominance of men and stresseconomic performance. 0ore feminine cultures accept 4uidgender rolesF stress se+ual e2uality and stress 2uality of life.

(here are to aspects to this dimension – ho assertive peopleare and ho much they value gender e2uality)

%. "ndividualismCollectivism "ndividualistic societies stressindependence, individual initiative and privacy hile collectivecultures favor interdependence and loyalty to family or clans.(here are to aspects to this dimension – ho much thecollective distribution of resources is stressed and ho muchone/s group or organi

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o Collectivist Culture People subordinate their personal goals

to those of a stable in:groupo "ndividualist Culture Attach more importance to personal

goals, and people are more likely to change membershipshen the demands of the group become too costly

&. =ong:termShort:term rientation Cultures ith a long:termorientation tend to stress persistence, perseverance, thrift andclose attention to status di6erences. Cultures ith short:termorientation stress personal steadiness and stability, face:savingand social niceties (things to do in a social setting).

@orms (aboo) ules dictating hat is right or rong, acceptable orunacceptable

o $nacted @orms @orms that have been e+plicitly decided upon

(Breen light means go and ed light means stop)o Crescive @orms @orms embedded in culture, and discovered

only through interaction ith other members of that culture(operate to completely de*ne a culturally appropriate behavior). hey include

A Custom is a norm handed don from the past that

controls basic behaviors such as division of labor in ahousehold or the practice of particular ceremonies

A more is a custom norm ith a strong moral overtone

(forbidden behavior such as incest or cannibalism hichmeets strong punishment from members of society)

Conventions are norms regarding the conduct of everyday

life (the correct ay to furnish ones house, ear ones

clothes, conduct ourselves in public etc.)

A 8ood Culture A pattern of food and beverage consumption thatre4ects the values of a social group (this pattern changes due totastes, traditions, health and culture)

0yth "s a story containing symbolic elements that e+press the sharedemotions and ideals of a culture (the story often features some kind ofcon4ict beteen to opposing forces, and its outcome serves as amoral guide for people)

0yths serve as the folloing four interrelated functions in a culture1. 0etaphysical hey help to e+plain the origins of e+istence!. Cosmological hey emphasi

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3inary pposition o opposing ends of some dimension arerepresented (good vs. evil or nature vs. technology) – 0yths can beanaly

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ites of Passage Special times marked by a change in social status(puberty, death or hen getting divorced etc.) "t consists of threephases

1. Separation ccurs hen the individual is detached from his orher original group or status (the university student leaves home

for the *rst time)!. =iminality he person is literally beteen statuses (a ne arrivalon campus is trying to *gure out hat/s happening on orientationeek)

#. Aggregation akes place hen the person re:enters societyhen the right of passage is complete (the student returns homefor the summer as a university veteran)

Sacred Consumption "nvolves ob-ects and events that are set apartfrom normal activities and are treated ith some degree of respect orae (most religious items and events are sacred)

• Sacred Places Places of high meaning and involvement (0eca,0alls)

• Sacred People People themselves can be sacred hen they are

idoli

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$mic Perspective 8ocuses on variations ithin a culture (hisperspective believes that every culture is uni2ue, ith its on valuesystem, conventions, and regulations, a long ith a national characterand a distinctive set of behaviors and personality characteristics)

Cross:Cultural Analysis his involves e+amining the degree to hichconsumers of to or more cultures are di6erent or similar in terms ofpsychological, social and cultural factors (hether to use standardi