Consumer Behavior Summary

Mod: 1 – People as Consumers

Studying People as consumers:

Positivist Aproach: Focuses on predicting what the consumer will do under certain specified conditions. Uses scientific research. Focuses on the following points:

  1. All behavior has objectively identifiable causes and effects that can be studied and measured.
  2. When faced with a problem people process all the relevant information available to deal with it.
  3. After processing this information people make a rational decision about the best choice.

The main problem is that it leaves a lot of human behavior unaccounted for.

Reductionist Approach: All human behavior can be reduced to consumerism, such as a doctor-patient relationship. What is missing is the psychological content of the relationship.

InterpretivistAproach: Combines Positivist and Reductionist approaches.

  1. Cause and effect can’t be isolated.
  2. Reality is an individuals subjective experience of it. Each consumers experience is unique.
  3. People are not always rational. This takes into account emotional states, fantasies, feelings and fun.

Consumer: is a much more general term

Customer: usually implies a relationship over time between the buyer and a particular brand or retail outlet.

Consumer Behavior: The emotional, mental and physical activities that people engage in when selecting, purchasing using, and disposing of products and services so as to satisfy needs and desires.

Markets and Marketing:

Production Orientation: Demand exceeds supply. Consumers are forced to buy what there is rather than what they really want.

Marketing Concept: The producer first has to Identify the needs, wants and preferences of the consumer and then satisfy them better than the competition would. Supply exceeds demand.

Mod: 2 – Market Segmentation

Positioning: Products are positioned to satisfy different segments in the market.

A number of marketing conditions must be met for segmentation to work:

  1. Identify: The consumer must be identifiable and distinguishable form other consumers.
  2. Access: How easy is it to reach this segment with marcom?
  3. Size: Is the segment large enough to justify the cost of marketing to them?

Types of segmentation:

  1. Geographic segmentation: People living in a given location have the same needs, wants and preferences that differ from people living in other locations. For example Campbell’s Southwestern US soups are much spicier than the Midwestern versions. This is known as micromarketing.

Climactic conditions also vary. For example many more swimming pools are sold in Florida than Illinois. And the water in Scotland is harder and therefore less foaming to soap than the water in London.

Cultural effects also differ over different locales.

  1. Demographic segmentation: Deals with statistically categorizing the people of a population. Several trends may be discerned in the industrialized world:
  2. The population is aging.
  3. Baby boomers are now middle aged.
  4. The proportion of young people is declining.
  5. Average household sizes have declined.
  6. Women are having fewer children later in life.

Types of demographic segmentation:

  1. Age: People of the same age usually have the same needs, wants and interests. A problem is people that perceive themselves as being a different age than what they actually are.
  2. Sex
  3. Socio-Economic: Education, Income and Occupation. Income is usually considered the most important SES Variable because it is so easily measured.
  4. Geodemographic segmentation:deviding up markets according to Neighborhoods.

PRIZM – Uses 40 categories to divide up Americas zip code districts From the Blue Blood estates to Public assistance to Grain Belt.

ACORN - Devides Britain into 38 types of Neighborhoods.

  1. Psychological (Lifestyle) segmentation:

Divides consumers into segments based on Activities, Interests and Opinions. Using this approach the American market has been divided into 10 segments of which the five female segments are:

Thelma: Traditionalists, devoted to husband children and home is a churchgoer has no higher education and watches a lot of TV. 25%

Candice: Chic suburbanite, Highly educated and sophisticated reads and watches little TV. 20%

Mildred: Militant mother, Maried young and has children. Husband has insecure job, not happy with her lot, listens to rock and watches a lot of TV. 20%

Cathy: Contented housewife, a younger version of Thelma but without the religion avoids news and looks for wholesome family entertainment. 18%

Eleanor: Elegant socialite, Big city version of Candice through career rather than community. 17%

VALS: (Values and Lifestyles) The most elaborate psychological segmentation classification. Was carried out in the 70’s and classified Americans into 9 categories such as Survivor, sustainer, believer, belonger, struggler. Updated in the 80’s VALS-2 reduced to 8 categories.

  1. Usage Segmentation: Uses EPOS (electronic point of sale) systems to gather info. The market is usually divided into users and non users. Only a small percentage of users will be heavy users. 80-20 rule. Infrequent buyers may still buy the product in great bulk. There is some evidence that it is easier to increase sales by getting existing buyers to increase usage. Time is also important. Students who have small bank accounts now will most likely turn into much more attractive customers after graduation.
  2. Benefit Segmentation: Based on a knowledge of the benefits that consumers seek from a product.

Mod: 3 – New Products and Innovations

Pressures that lead companies to the development of new products:

  1. Declining birth rates.
  2. Technological innovation the shortening of PLC’s.
  3. Pressure of organizational change and renewal.

Total Product Concept: Theodore Levitt sees a product as being a combination of various attributes that increase in complexity through 4 levels:

  1. Generic Product: The core of the product (Hamburger, shoes, life insurance).
  2. Expected Product: The Generic attributes PLUS minimal expectations (price, packaging, delivery).
  3. Augmented Product: The Generic attributes PLUS the attributes that differentiate the product from it’s competitors (bonuses, gifts, free service included)
  4. Potential Product: What is possible but not yet attained.

Potential Product

INNOVATIONS

Augmented Product

Expected

Product

Generic

Product

Successful Innovation – The most potent secret lies in changing some aspect, however small, of the way society is organized, which results in satisfying a demand that consumers were perhaps unaware that hey had.

Kaizen – continuous improvement.

Big leaps forward are much more satisfying than small incremental changes. Yet, it is notoriously slow and difficult to make money from a great invention. It is the small innovations targeted directly at someone’s needs that produce the quick and generous paybacks.

Product Life Cycle

S

a

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Introduction Growth Maturity SaturationDecline

Time

The five stages of the life cycle will be common to all products but the shape of the curve will differ from product to product.

Product Champions: Can be difficult to work with because they are unusual to the corporate world. Tom Peters list their characteristics as: Energy, passion, idealism, pragmatism, impatience, don’t recognize barriers, love hate relationships with colleagues.

Opinion Leaders: As consumers they are not always innovators but are more open to new ideas. They range from 10 to 25% of the population. They tend to be more outgoing, and knowledgeable about the product in question. Are very important for the word of mouth communication about the product.

La Coste gave away shirts to famous tennis players. Advertisers use celebrities in advertisements.

Diffusion of new Products and Innovations: The process by which an innovation is communicated through certain channels over time among the members of a social system.

3 main types of Innovation

  1. Continuous: Modifications to existing products, new models and flavors. New model car, a new flavor of yougurt.
  2. Dynamically Continuous: Requires more change in consumer behavior. Can be the modification of an existing product or the creation of a new one.Compact disks, new foods.
  3. Discontinuous: Requires a new form of consumer behavior. The rarest innovations but th ones with the greatest social impact. Telephone, Radio, TV.

5 product characteristics which determine consumer response:

  1. Relative Advantage
  2. Compatibility
  3. Complexity
  4. Trialability
  5. Observability

Adoption of new Products:

  • Different generations grow up with different innovations.
  • Some innovations are so widely diffused they are accepted by all generations.
  • Some innovations are so user friendly that all generations use them.
  • Some innovations can achieve widespread penetration because of usefulness but only be user friendly to the younger generation.
  • No innovation will ever be adopted by everyone

A

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InovatorsEarlyEarlyLateLaggards

AdoptersMajorityMajority

Mod: 4 – Perception

We each perceive the world differently and construct our own reality out of it.

Using our senses

Traditionally people have referred to the 5 senses:

1.Vision2.Hearing3.Touch4.Taste 5.Smell

We can now add two more senses:

1.Bodily movement2.Balance

There are really 4 senses of taste:

1. Bitter2. Sweet3.salty4. Sour

There are really 4 senses of touch:

1. Pressure2. Pain3.Cold4. Warmth

There are two senses of Vision:

  1. Color 2. Black and white

Vision

We rely most on our sense of vision, Package designers know this and make packages easy to recognize and read.

Hearing

Volume – It was found that people spent more time shopping when music was quiet.

Tempo – It was found that when the tempo was slow people walked slower and sales went up!

Common Properties of the Senses

Threshold of Awareness: A stimulus has to be strong enough for us to be aware of it. This is known as the absolute threshold.

Difference Threshold: The minimum amount of difference that you can detect is the J.N.D..

  • A product that claim to be better than the competition must be noticeably better.
  • Producers can reduce the size of products by less than the JND.

Sensory Adaptation: You are not aware of thing that are constant such ass te pressure exerted on your skin by a watch. If the stimulus changes your sensual receptors are back in business.

Processing Sensory Information: We have to learn how to interpret sensory information as to make it useful. Past experience and current emotional states can effect our perceptions and change a bush in a dark alley into a mugger!

Focusing and Attention: By focusing our perceptions we give attention to certain stimuli. We concentrate on only immediately important stimuli and ignore the rest, filtering out all of the unimportant noise.

Selective Perception and Distortion: In order to perceive something we must give it attention.

Psychologists refer to external and internal factors in trying to understand attention-getting and selective perception.

External FactorsInternal Factors

  1. Change 1. Emotional States
  2. Contrast2. Different Interests
  3. Movement3. Perceptual Set
  4. Repetition
  5. Size
  6. Intensity

Perceptual Distortion: People distort their perception to fit what they expect to see.

Organizing Perceptual Clues:

  1. Illusions
  2. Figure and Background
  3. Contour
  4. Grouping
  5. Closure

Zeigarnik Effect – Because of our need to complete the incomplete interrupted tasks tend to stick in our memory better than completed tasks.

Gestalt Psychology – We perceive things as a gestalt, German for configuration.

Perceptual Constancy: From our angle of sight we see the top of a cup as an ellipse but we know that it is round.

Depth and Distance: Helps us to translate two-dimensional information into three-dimensional.

Movement – Much of the movement that we perceive is illusionary such as films and flashing neon light that look like they are moving. The Phi Phenomenon.

Subliminal Perception

James Vicary flashed messages into movies. Remains suspect as to it’s effect.

Self imposed psychological impressions of how we se ourselves are potent forces in marketing.

For example young executives see themselves driving BMWs and teachers sdee themselves driving VWs.

Perceived Risk – 6 forms have been Identified:

  1. Performance
  2. Financial
  3. Physical
  4. Time
  5. Social
  6. Psychological

Uncertainty about Purchase Goals – Is the car for commuting or occasional trips?

Uncertainty about best alternative choice – is the blue or red hair ince more effective in achieving a youthful look.

Uncertainty about making or not making a purchase

Coping with Risk:We cope with risk by:

  1. Information Gathering
  2. Relying on brand loyalty
  3. Some official seal of approval
  4. The image of a major new brand
  5. The image of the store

Mod: 5 – Personality

Personality – The traits that make a person unique, the Characteristic ways in which he behaves,.

4 Formal Theories of Personality

  1. Freudian Psychoanalysis

The human personality is made up of the id, ego and superego.

  1. Id – raw impulses of sex and aggression. Unconscious.
  2. Ego – rational conscious thinking part of our personality.
  3. Superego – Unconscious, deals with morality our conscience. Responsible for our feelings of guilt.

Freud believed the first few years of a person’s life to be crucial in shaping his personality.

Freud’s Developmental Stages
  1. Oral Stage – Lack of Satisfaction produces a hostile sarcastic personality and to much satisfaction a dependant gullible personality.
  2. Anal Stage – Strictness leads to an anal personality and laxness leads to disorder and messiness.
  3. Phallic Stage – is crucial to determining ones attitudes towards people of the opposite sex and positions of authority.

Applications to Marketing EarnestDicter

The consumer is often unaware of the needs that the product may be satisfying.

The consumer might be trying to live out his fantasies.

Marketers try to appeal to lifestyles with the key element being wish fulfillment rather than the attributes of the product itself.

Marketers use personality tests to get behind the public face of the individual

Minnesota Multiphasic Personality inventory (MMPI):has 550 questions where the testee answers true, false or cannot say. Is good for revealing patterns of behavior and attitudes.

Thematic Appreciation Test (TAT): Requires the subject to project onto some vaguely defined picture what is on his mind. Consists of 20 black and white pictures. The pictures act like a screen on which the testees inner life is projected.

Rorchach Ink Blot Test: Ten Pictures of ink blots are used 5 in color and 5 in black and white. Subjects are asked what they see in the ink blot, what it reminds them off. No right or wrong answers.

  1. Neo- Freudian Psychoanalysis

Felt that Freud gave to much importance to biological drives. Neo-Freudians tend to de-emphasize the id in favor of the Ego.

Karen Horney states that people can be classified according to their relationships with others:

1. Compliant

2. Aggressive

3. Detached

This is measured on a CAD personality scale.

Compliant people preferred recognized brands.

Detached people were less interested in being consumers.

  1. Self Theory

Centered on the work of Carl Rogers.

People try to live up to their potential. The fact that their potential so often remains unfulfilled is due to the oppressive effects of family school and other social institutions that shape the lives of the subjects.

Rogers believes that people are basically rational and are motivated to be the best that they can be.

The concept of Self:

As infants grow they explore themselves and their surrounding. Young children have no choice but to think of themselves as how their parents tell them they are. By the end of adolescence our selfimage has been set although not finalized. Thus it has long been known that the way you think of yourself has bearing on how others see you.

Marketing the concept of self:

Actual self Image – How we actually see ourselves.

Ideal self Image – How we would like to see ourselves.

Social self Image – How we think others see us.

Ideal social self Image – How we would like others to see us.

Advertisers try to appeal to the different self-images for different products. It is especially important when people are trying to change an actual physical self-image into an Ideal one. An example is as the black self-image improved the sale of hair straiteners declined.

  1. Trait Theory:

The leading theorist is Raymond Cattell. He states that we all have characteristics called traits that are shared but we all differ on the strengths of various traits.

Cattel eventually came up with a list of 16 different factors on which he bases personality profiles. His personality test known as the 16PF is now widely used in job selection and vocational guidance. Cattell suggests that there are 3 important sources of personality data: Life data, self-report questionnaire data, and objective data from personality tests.

Over 300 studies found very few strong links between aspects of personality and particular products. There are probably a number of reasons for this:

  1. The above techniques were adopted from clinical tools.
  2. Personality and consumer choice are so complex that it is hard to find a correlation.
  3. There are many other factors excluding personality that lie behind consumer behavior. Money and availability being the most obvious.

Brand Personality

A more modest and attainable approach in marketing is the development of a brand personality. To give a product characteristics such as old fashioned, elegant rugged or masculine.

Ego

Conscious

Unconscios

IdSuperego

Mod: 6 – Learning Memory and Thinking

Learning is the relatively permanent process by which changes in behavior, knowledge, feelings or attitudes occur as the result of prior experience.

  1. Is permanent and not temporary.
  2. Based on previous experience and not maturation.
  3. Behavior and knowledge refer to the two dominant schools.
Behaviorist Approach

Founded by J.B. Watson, is purely objective and the goal is the prediction and control of behavior.

Watson believed that the only thing to be studied was someone’s observable physical behavior.

Pavlov and Classical Conditioning