Analyzing Marketing Opportunities

CHAPTER 5

Analyzing Marketing Opportunities

2

5Consumer Decision Making

6Business Marketing

7Segmenting and Targeting Markets

8Decision Support Systems and Marketing Research

9Competitive Intelligence

Chapter 5

After studying this chapter, you should be able to

1Explain why marketing managers should understand consumer behavior

2Analyze the components of the consumer decision-making process

3Explain the consumerÕs postpurchase evaluation process

4Identify the types of consumer buying decisions and discuss the significance of consumer involvement

5Identify and understand the cultural factors that affect consumer buying decisions

6Identify and understand the social factors that affect consumer buying decisions

7Identify and understand the individual factors that affect consumer buying decisions

8Identify and understand the psychological factors that affect consumer buying decisions

entrepreneurial insights

Millennium Fever Seizes the NationÕs Marketers

The turn of the century in the year 2000 is driving consumer behavior in all sorts of interesting ways. The new millennium brings to mind images of death and rebirth, things ending and beginning, a time of celebration and a time of repentance. Turn-of-the-century fever characterizes every end-of-century period. But the phenomenon has special intensity this time around, for several reasons.

First, itÕs the turn of a millennium, not just a century. TodayÕs consumers are the privileged few to usher in a new millennium. Second, the omnipresent and influential media are amplifying the importance of the year 2000. Already there are dozens of Web sites that provide a countdown to January 1, 2000. Scientists at the Center for Millennial Studies are busy recording and analyzing the prophecies and the events leading up to and following the year 2000. Third, the seventy-plus million baby boomers, already the most commercially influential population in history, have turned or will turn fifty between 1996 and 2014, more or less coinciding with the new millennium. Through their sheer size and penchant for glorifying the past and fantasizing about the future, baby boomersÕ attitudes will pervade society. Finally, the information age will help increase the fever because individuals are exposed to much more hype. Spurts of religious apocalyptic prophecies of the end of the world and an interest in spiritualism have figured in other end-of-century periods and will be prevalent this time as well.

In the wake of millennial fever, companies large and small are figuring that an event capable of inspiring apocalyptic novels, doomsday prophecies, shortages of vintage champagne, and plans for twenty-four-hour blowouts in the worldÕs twenty-four time zones to ring in the year 2000 has to have some commercial potential. Associating a product or service with the millennium makes it seem forward looking and innovative. Already companies are changing their names, designing new logos, and introducing new products with millennial themes.

Companies are elbowing each other to cash in on the year 2000. The U.S. Patent and Trademark Office in Washington has been swamped with millennium-related trademark applications to trademark phrases and products with the word ÒmillenniumÓ and ÒY2K,Ó shorthand for the year 2000. A sampling of products and services seeking approval include millennium herbs, bells, health care, fishing tackle, biotherapeutics, bottled water, Internet-solutions providers, and pet food.

Already there are countless millennium products and services available. Batesville Casket Company of Batesville, Indiana, markets a stainless steel model called the Millennium. Iron Horse Vineyards in California has released a special vintage especially for the millennial celebration. There is also a Òtoothbrush for the millenniumÓ designed with twin heads heralding Òa new age in what a toothbrush can doÓ; a Third Millennium Bible; a millennium semiautomatic nine-millimeter gun; a ÒThird Millennium CigarÓ; and a Òpersonal injury firm of the new millenniumÓ to call next time youÕre whiplashed in a car accident.

Even the major marketers are considering capitalizing on millennium fever. M&M/Mars has already launched an advertising campaign with a millennial theme, featuring the Roman-numeral equation MM = 2000. General Mills trademarked a Millennium Crunch cereal. Philip MorrisÕs Miller Brewing Company has trademarked the word ÒMillerennium.Ó Bell Atlantic has tagged its new electronic billing system ÒBilling Into the Next Millennium.Ó Playboy Enterprises has trademarked ÒThe Magazine of the Millennium.Ó And News Corp.Õs 20th Century Fox has trademarked the name Ò21st Century Fox.Ó

The champagne industry, whose sales have been flat for years, is urging consumers to purchase their bubbly for the millennium celebration now. Rumors of champagne shortages in anticipation of the millennium have caused people to invest hundreds of thousands of dollars into vintage champagne, particularly Dom Perignon 1990.

Advertising experts, meanwhile, predict that the millennium might be a massive marketing bust. New York advertising agency Saatchi & Saatchi has been surveying consumers about the impending century since 1994 and has been amazed to learn that most people simply donÕt care and those with an opinion are filled with dread. Marketers, on the other hand, are betting that New YearÕs Eve 1999 will be a very special occasion, but just how special isnÕt yet clear.18

Global prespectives

The Pace of Life and Use of Time Around the World

How consumers view and use time varies greatly across cultures. These measures relate to the deeply rooted values that each culture shares.

Several researchers have been studying the tempo of life in other cultures as well as how people spend their time. Robert Levine, professor of psychology at California State University, Fresno, has been studying the tempo of life in other cultures for over a decade. John Robinson, a sociology professor from the University of Maryland at College Park, has been involved in AmericansÕ Use of Time Project since its beginnings in 1965. Here is what these two researchers have found on how Americans and other cultures view and use time.

From his research, Levine developed three measures of the pace of life: 1. walking speedÑthe speed with which pedestrians in downtown areas walk a distance of sixty feet; 2. work speedÑhow quickly postal clerks complete a standard request to purchase a stamp; and 3. accuracy of public clocks. Data were collected in at least one large city in each of thirty-one nations around the world to measure each countryÕs pace of life.

Japan and Western European countries scored fastest overall, with Switzerland achieving the distinction of first place. Bank clocks in Switzerland, for example, were off by an average of only nineteen seconds. Following Switzerland were Ireland, Germany, Japan, Italy, England, Sweden, Austria, and the Netherlands. The United States, represented in the survey by New York City, scored a respectable sixth place on walking speed, but ranked twenty-third on postal times and twentieth on clock accuracy, for an overall rank of sixteenth place.

There were few surprises at the slow end of the list, where the last eight ranks were occupied by nonindustrialized countries from Africa, Asia, the Middle East, and Latin America. Slowness in countries such as Brazil, Indonesia, and Mexico, all of which fell to the bottom of the pace-of-life scale, seeps into the fabric of daily life. Brazilians not only expect a casual approach to time but seem to have abandoned any semblance of fidelity to the clock. When asked how long they would wait for a late arriver to show up at a nephewÕs birthday party, for example, Brazilians said they would hold on for an average of 129 minutesÑover two hours! Few Brazilians wear watches and the watches they do wear are often inaccurate.

How people spend their time also varies from culture to culture. For example, time-use specialists often refer to France, Germany, and other Western European countries as Òeating and sleeping culturesÓ because Europeans spend much more time than Americans or Asians on these two activities. Europeans also work fewer hours per week and enjoy more vacation time, up to six weeks mandatory vacation in some European countries. In Sweden, vacation time goes as high as eight weeks out of the year. In contrast, people in Japan and the United States spend more time working and take less vacation than their European counterparts. Workers in Japan, for instance, put in an annual average of 202 hours more than workers in the United States and 511 hours more than workers in West Germany. In a study comparing people living in the Netherlands to people in California, the Dutch spend much less time than Californians do working, traveling, shopping, and watching television. Instead, the Dutch spend their time on entertainment and social activities, education, child care, sports, hobbies, and housework.

How Americans spend their time also varies among ethnic subcultures. Over the decades that John Robinson has been studying how Americans use time, he has found distinct differences in how African-American, Asian, Hispanic, and non-Hispanic white subcultures in the United States spend their time. This phenomenon reflects in part on their value systems. African-Americans, for instance, tend to spend more time on religious activities, spending almost twice as much time going to church as whites do. Whites spend the most time on housework, Asians spend the most time on education, and Hispanics spend the most time on child care.

All cultures have something to learn from othersÕ conceptions of time. Without fully understanding a cultural context, consumers are likely to misinterpret its peopleÕs motives. The result, inevitably, is conflict. Marketers who use sales personnel to sell in other countries where the pace of life and the use of time vary greatly must consider the customs of each culture. For instance, marketers from a relatively fast-paced culture like the United States can blunder badly when selling to slower-paced Mexican neighbors.

Marketers can adjust to another cultureÕs sense of time by learning to translate appointment times. For instance, is it appropriate to arrive a little late or is punctuality important? In Mexico it is understood that you should arrive late when invited to a social function. Additionally, marketers should understand the line between work time and social time. Recall that in the United States, the typical ratio of time spent on-task and time spent socializing on the job is about 80:20. But in countries like India and Nepal, the balance is closer to 50:50.

One of the hardest aspects of time for people of fast cultures to assimilate is the move from Òclock timeÓ to Òevent time.Ó Clock time uses the hour on the clock to schedule activities, and event time allows activities to transpire according to their own spontaneous schedule. A move from clock time to event time, however, requires a complete shift of consciousness and entails the suspension of industrialized societyÕs golden rule: ÒTime is money.Ó Middle Easterns, for example, resist fixed schedules, viewing them as rude and insulting. Americans, Japanese, and Europeans, on the other hand, are very tied to clock time in their daily life.26

ethics in marketing

Fear as a Marketing Tool: Does It Sell?

Public-health advocates often use fear in their public service advertising to influence public opinion. For example, a recent magazine ad from the American Cancer Society featured a fancy tortoise-shell cigar cutter resting on green velvet. Nearby, a fat cigar burns in a crystal ashtray. It looks like another glamorous image promoting the cigar industry, except for the pointed tag line: ÒYou can also use it to cut the tumor off your lip.Ó Other related ads from California health authorities depict a woman tossing a cigar on the sidewalk. A man walking his dog uses a pooper scooper to clean it up. The tag line: ÒCigars, they look like what they smell like. DonÕt put them in your mouth.Ó

Like public-health advocate groups, mainstream marketers also use fear to persuade consumers to purchase their products. One popular advertising tactic is to claim that the other guyÕs products donÕt work. Recently, a splashy new ad campaign claimed the other guyÕs product may kill you. ÒA government panel has determined that some laxatives may cause cancer,Ó blared the full-page ad that ran in forty newspapers, pointing the finger at the popular Ex-Lax brand. Looming behind the adÕs headline was a giant American eagle, suggesting an official government pronouncement. The copy gave a toll-free number and raised the possibility of regulatory action that Òmay even include a recall.Ó The ad was from Schering-Plough, maker of a rival laxative, Correctol, and a prime example of the use of fear to persuade consumersÕ purchase decisions. Although the Food and Drug Ad-ministration had not made a final determination on the safety of phenolphthalein, a key ingredient in Ex-Lax, Schering-Plough used the FDA report to instill fear in consumers using the competitorÕs brand.

Similarly, the use of alarming disease statistics is common among health-advocacy groups and marketers alike. Projections of the incidence of disease are rampant these days as advertisers compete for peopleÕs limited attention and money. For example, Òtwelve million Americans have asthma,Ó Òone in three Americans is obese,Ó and Òat least sixty million Americans have high blood pressureÓ are just a few of the statistics used in advertising today. Since big numbers get more attention than small ones, the estimates are often alarmingly high. Unfortunately, most of the numbers are extrapolations or estimates at best, because the government keeps only a few statisticsÑon birth, death, cancer, and infectious diseases. Most conditions for which people consult a doctor are not recorded in a national database. Yet the media report the numbers and marketers exploit them as quantifiable fact.63

What current marketing or advertising examples can you think of that use fear or alarming statistics to sell their products? Would the use of such fear tactics cause you to distrust a marketer or vice versa? Explain your answer.