CHP 1 & 2Introduction & CultureConsumer behavior is the study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.Market segmentation is a portion of a larger market whose needs differ from the larger market. Market Segmentation Involves Four Steps: 1. Identifying Product-Related Need Sets 2. Grouping Customers with Similar Need Sets 3. Describing Each Group 4. Selecting an Attractive Segment(s) to Serve The consumer decision process intervenes between the marketing strategy, as implemented in the marketing mix, and the outcomes. The firm can succeed only if consumers see a need that its product can solve, become aware of the product and its capabilities, decide that it is the best available solution, proceed to buy it, Become satisfied with the result of the purchase. External Influences The following are the major external influences: Culture Demographics and social stratification Ethnic, religious, and regional subcultures Families and households Groups Internal Influences Internal influences include: Perception Learning Memory Motives Personality Emotions Attitudes

Self-Concept and LifestyleSelf-concept is the totality of an individuals thoughts and feelings about oneself.Lifestyle is how one lives, including the products one buys, how one uses them, what one thinks about them, and how one feels about them.Situations and Consumer Decisions Consumer decisions result from perceived problems and opportunities. Consumer problems arise in specific situations and the nature of the situation influences the resulting consumer behavior. -Culture is the complex whole that includes knowledge, beliefs, art, law, morals, customs, and any other capabilities acquired by humans as members of society. -Culture is the collective programming of the mind that distinguishes the members of one category of people from those of anotherCulture includes almost everything that influences an individuals thought processes and behaviors. Factors influencing nonverbal communications Time Space Symbols Relationship Agreements Things EtiquetteCultural values are widely held beliefs that affirm what is desirable. These values affect behavior through norms. Hofstedes Cultural Power Distance Social Status Individualism / Collectivism In-group favorism Masculinity/Femininity roles of men and women Uncertainty Avoidance no tolerance to ambiguity Long-term Orientation care long-term rewards Indulgence vs. Restraint have fun or notConsumption Purchase Communications Other oriented values(society view of relationship between people) Environment oriented values(society view of relationship with environment) Self-oriented values(objectives/approaches to life society find desirable)SubcultureA segment of a larger culture whose members share distinguishing patterns of behavior. The existence of these subcultures provides marketers with the opportunity to develop unique marketing programs to match the unique needs of each. Nationalities Religions Racial groups Geographic regions Special interestCHP 3 The influence of demographics, households and reference groupsBasic criteriaSocial Stratification Age- Occupation Gender - Income EducationA social class system is defined as the hierarchical division of a society into relatively permanent and homogeneous groups with respect to attitudes, values, and lifestyles. Ten social classes in China High position civil servants Business managers Entrepreneurs Professionals Clerks Merchants Employee in retailing and wholesaling Industrial workers Peasants UnemployedFamily Family households (married, nuclear and extended)Non-family households (unmarried, friends and boarders)Household Consists of all the people who occupy a housing unit (a house,apartment, group of rooms, or single room designed to be occupied as a separate living quarters). Family Household One having at least two members related by birth, marriage, or adoption, one of whom is the householder (householder owns or rents the residence). Nonfamily Household A householder living alone or exclusively with others to whom he or she is not related.

The household is the basic purchasing and consuming unit and is, therefore, of great importance to marketing managers of most products. Family households also are the primary mechanism whereby cultural and social-class values and behavior patterns are passed on to the next generation.

Marketing StrategyStructure of household unitStage of the household life cycle -Household purchase & consumption behaviorHousehold decision processHousehold life cycle (HLC) People married by their early 20s Couple had several children Their children grew up and started their own families The original couple retired The male would eventually died The female would died Each HLC stage presents unique needs and wants as well as financial conditions and experiences, and each stage posing unique problems and opportunities. HLC can be an important segmentation variable.Factors such as income, occupation, and education heavily influence how an individual meets his/her needs, and it makes sense to combine stage in the HLC with one of these variables to aid in market segmentation and strategy formulation (e.g. social class, occupation, etc.). The typical households Canada : nuclear family Thailand : extended family USA : not married, blended familyFamily decision making is the process by which decisions that directly or indirectly involve two or more family members are made.CHP 4 Perception, Learning & MemoryInformation process a series of activities by which stimuli are perceived, transformed into information and stored. Exposure + attention + interpretation + memoryQuality signals tend to operate more strongly when consumers lack the expertise, involvement in the decision is low and when other quality-related information is lacking.Perception The process, by which an individual selects, organizes and interprets stimuli into a meaningful and coherent picture of the worlds.Exposure It occurs when a stimulus comes within range of one of our primary sensory receptors.Attention occurs when the stimulus activates one or more of the sensory receptors and the resulting sensations go into the brain for processing.Interpretation it is the assignment of meaning to stimuli that have been attended to.Brand names can influence anything from food taste to color preference. It is complex to create an appropriate name in global marketing.Learning is defined as any change in the content or organization of long-term memory and or behavior resulting from information processing. Semantic memory: basic knowledge and feelings an individual has about a concept. Episode memory: memory of a sequence of events in which a person participated. Schematic memory: also called a knowledge structure, is a complex web of associations.

CHP 5 Attitude, Self-ConceptAttitude components consists of affective, cognitive and behavioral componentsTRA theory of reasoned action The individuals attitude toward performing the behavior and the subjective norm about performing the behavior are assumed to influence behavioral intention. Fishbein & Ajzen, 1975.TPB Theory of planned behavior The more resources and opportunities individuals think they possess, the greater should be their perceived behavioral control over the behavior.

Multiattribute Attitude ModelAb = WiXibAttitude toward a particular brand b = imporatance attached to attribute i, belief about brand bs performance on attribute i.Attitude Change Strategies cognitive component Change belief Shift importance Add beliefs Change idealAttitude change strategies affective components Classical conditioning Affect toward the ad or website Mere exposureChange the behavioral componentPurchase or use behavior may precede the development of cognition and affect. It is based on operant conditioning and the key is inducing product trial while ensuring the trial will be rewarding. Coupons Free sample Point of purchase displays Tie in purchase Price reductionsCore Tenants of ELM: Compared to attitudes formed under the peripheral route,attitudes formed under the central route tend to be Stronger more resistant to counter-persuasion attempts more accessible from memory more predictive of behaviorsCue Relevance : Central Cues ( CC) vs. Peripheral Cues (PC) An attractive model (and her hair) may be decision irrelevant (PC) in an ad for a car, but decision relevant (CC) in an ad for shampoo. In this case, the attractive model would influence persuasion under high involvement for shampoos but not for cars.Competitive Situation - PCs can influence persuasion under HI INVOLVEMENT in competitive situations when: Central cues neutralize due to homogeneity across competing brands (PC then becomes tie breaker). Attribute tradeoffs across central cues engenders decision difficulty which PCs help to alleviate.Individuals involvement situational factors + communication strategies = persuasion effectiveness ( individual, situational and communication)Communication characteristics that influence attitude formation and change Source characteristics Appeal characteristics Message structure characteristicsFunctional theories of attitudePsychological functionsSocial functions Knowledge- self - expressive Utilitarian- social - adjustive Ego defensiveWhen consumers hold a value-expressive attitude towards a product, they are motivated to consume it as a form of self-expressionWhen consumers have a social-adjustive attitude towards a product, they are motivated to consume it to gain approval in social situations (self-presentation). Consumers likelihood of purchasing counterfeit luxury brands will be greater when their attitudes towards luxury brands serve a social-adjustive function than when their attitudes serve a value-expressive function.

Exposure to a counterfeit brand will have a more negative effect on consumers preferences for the real brand when their luxury brand attitudes serve a social-adjustive function than when the attitudes serve a value-expressive function.

Self concept: the totality of the individuals thoughts and feelings about himself / herself.Interdependent self-concept: Asian cultural belief. Dependent self-concept: Western cultural beliefCHP 6 lifestyleLifestyle is basically how a person lives. It is how one enacts his or her self-concept. It influences all aspects of ones consumption behavior and is determined by the persons Past experiences Innate characteristics Current situationLifestyle segmentation Activities, interest and opinion + demographicsTwo dimension of VALS system Dimension 1 - Primary Consumer Motivations Ideals Motivation Achievement Motivation Self Expression MotivationDimension 2 Resources Psychological Physical Demographic MaterialThree Primary Consumer Motivations: Ideals Motivation: guided in their choices by their beliefs and principles rather than by feelings or desire for social approval. They purchase functionality and reliability. Achievement Motivation: Consumers who strive for a clear social position and are strongly influenced by the actions, approval, and opinions of others. They purchase status symbols. Self-Expression Motivation: Action-oriented consumers who strive to express their individuality through their choices. They purchase experiences.CHP 7 Costumer Decision Process

Involvement is a motivational state caused by consumer perceptions that a product, brand or advertisement is relevant or interesting. Purchase involvement is the level of concern for, or interest in, the purchase process triggered by the need to consider a particular purchase. Being involved pay more attention to relevant marketing messages Engage in analytical reasoning to process and learn new information Seek out information from numerous sources prior to a decision Many attributes are used in the decision Act as opinion leaderProcess of problem recognition

Non-marketing factors affecting problem recognition

Buying an new cell phone More features and better performances utilitarian need Self-expression; quality and value seeking expressive need Fit in with a social group affiliation needInformation Search

Categories of Decision AlternativesSuccessive Sets of PurchaseTotal Set Awareness Set Consideration Set Choice Set DecisionConsideration set = evoked set

Information sources

Factors affecting external Searchi. Market characteristicsa. Number of alternativesIncreaseb. Price rangeIncreasec. Store concentrationIncreased. Information availabilityIncreasei. Advertisingii. Point of purchaseiii. Sales personneliv. Packagingv. Experienced consumersvi. Independent sourcesii. Product characteristicsi. PriceIncreaseii. DifferentiationIncreaseiii. Positive ProductsIncrease

How consumers make choice

Why not attribute based choice?

Attribute-based Choice

CHP 8 Situational FactorsUnplanned Purchase and Impulsive Purchase Situational influence all the factors particular to a time and place that do not follow from a knowledge of the stable attributes of the consumer and the stimulus and that have an effect on current behavior. Factors influence Physical surroundings(atmosphere) Color Aromas Music Crowding Social surroundings(with whom) Embarrassment (negative influence) Temporal perspective(time) Task definition(gift vs personal use) Reason the consumption activity is occuring Antecedent states(mood) MoodsMoods tend to be less intense than emotions and may operate without the individuals awareness. Although moods may affect all aspects of a persons behavior, they generally do not completely interrupt ongoing behavior as an emotion might. Consumers actively manager their mood states,often seeking situations, activities, or objects that will alleviate negative moods or enhance positive ones. Momentary conditions ( tired, extra money, feeling broke) As with moods, individuals attempt to manage their momentary conditions, often through the purchase or consumption of products and services. Thus, a great deal of marketing activity is directed toward momentary conditions.