Consumer Attitudes and Decision Making

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the main goal of marketers when creating marketing mixes?

To attract only high-income customers

To minimize production costs

To meet the needs of different market segments (correct)

To promote a single product to all customers

What best describes mass marketing?

Segments are created based on individual preferences

Every customer receives a customized product

It is the most effective method for distinct consumer needs

All customers are treated uniformly without segments (correct)

Which type of marketing focuses on tailoring products to each individual's desires?

Segmented marketing

Mass marketing

Niche marketing

One-to-one marketing (correct)

What happens as the size of market segments increases?

Segments become more heterogeneous Signup and view all the answers

What is a potential drawback of demographic segmentation?

It creates overly simple stereotypes of consumers. Signup and view all the answers

Which strategy focuses on reaching multiple market segments effectively?

Breadth strategy Signup and view all the answers

What is one requirement for effective segmentation?

Measurable Signup and view all the answers

Why do marketers create segments?

Because customers vary in preferences Signup and view all the answers

What does it mean for a market segment to be 'accessible'?

The segment can be reached and served effectively Signup and view all the answers

Which aspect does the bottom-up evaluation of market segments NOT primarily consider?

Brand popularity Signup and view all the answers

What is meant by a 'tailored strategy' in segmentation?

Customizing products for specific segments Signup and view all the answers

What should be considered regarding the power of buyers in evaluating market segments?

It influences the segment's attractiveness Signup and view all the answers

What does a substantial market segment refer to?

A segment large or profitable enough to justify marketing efforts Signup and view all the answers

What are attitudes primarily composed of?

Beliefs and importance weights Signup and view all the answers

In the multi-attribute model of attitude, what is the first step to order brand attitude?

Identify relevant attributes to evaluate products Signup and view all the answers

What is meant by a non-compensatory consideration set in decision making?

Only brands that meet a minimum attribute threshold are included Signup and view all the answers

System 1 thinking is best characterized as which of the following?

Automatic and efficient thinking Signup and view all the answers

According to prospect theory, how do losses and gains typically compare psychologically?

Losses loom larger than gains Signup and view all the answers

Which sociocultural factor influences consumer impressions and preferences?

Social class Signup and view all the answers

In the compensatory model of decision making, what allows a poor attribute to be overlooked?

An excellent attribute Signup and view all the answers

What type of decision-making process is characterized by the use of heuristics?

System 1 thinking Signup and view all the answers

What is the main focus of micromarketing?

Tailoring products and marketing to specific individuals and locations Signup and view all the answers

Why is understanding cultural differences important in marketing?

To tailor marketing strategies to diverse consumer preferences Signup and view all the answers

What is a significant effect of age on consumer buying behavior?

Buying patterns shift as needs change with age Signup and view all the answers

Which of the following is a drawback of local marketing?

Increased costs and potential brand dilution Signup and view all the answers

What method can be used to help estimate market sizes more accurately?

Customer surveys combined with secondary data Signup and view all the answers

What does individual marketing entail?

Tailoring products and marketing to the needs of individual customers Signup and view all the answers

Which factor is NOT relevant when selecting target market segments?

Company's color scheme Signup and view all the answers

What is a potential risk of using concentrated marketing?

Dependency on a small segment that may change suddenly Signup and view all the answers

Which of the following best describes differentiated marketing?

Targeting multiple segments with separate offers for each Signup and view all the answers

What should companies evaluate to ensure strategic fit with the market?

The company’s long-run objectives and resources Signup and view all the answers

What typically causes opportunities and threats in a market?

Alterations in the 5Cs factors Signup and view all the answers

Which market targeting strategy involves mass marketing?

Undifferentiated marketing Signup and view all the answers

In competitive perceptual maps, which factors are typically compared?

Products’ price and quality relative to competitors Signup and view all the answers

What is one major disadvantage of differentiated marketing compared to undifferentiated marketing?

It incurs higher costs due to separate offers for different segments Signup and view all the answers

The terms

Clear-cut strategic decisions in market targeting Signup and view all the answers

Study Notes

Attitudes

Attitudes are comprised of beliefs and importance weights.
Beliefs are opinions about specific product attributes.
Importance weights determine the value of each attribute in a consumer's decision.
Consumer preferences can differ on both importance weights and beliefs.

Multi-attribute Models of Attitude

Steps involve identifying relevant attributes, assigning importance weights (w), determining brand perceptions (x), and summing the product of (w) and (x).

Decision Making

Consumers engage in a two-stage process when faced with numerous choices.
In the first stage, they create a consideration set using non-compensatory methods like the lexicographic method.
The second stage involves detailed comparisons within the consideration set, using compensatory models that weigh costs and benefits.

Behavioral Economics

Research explores differences between system 1 and system 2 thinking.
System 1 is automatic, unconscious, and efficient, relying on heuristics. It is often used for routine decisions.
System 2 is effortful, conscious, and reasoned, involved in complex decisions.

The Psychology of Prospect Theory

Introduces the concept of a reference point, usually the price, with gains and losses positioned on either side.
Losses have a greater psychological impact than gains. This is reflected in the steeper slope on the loss side of the graph.

Cultural Differences

Sociocultural factors influence consumer impressions and preferences, shaping shopping patterns.
Social classes have distinct consumption behaviors, with old-monied individuals seeking exclusivity and the nouveau riche engaging in conspicuous consumption.
Age also plays a role, with buying patterns evolving across different life stages.

Market Segmentation

Segmentation involves breaking down the market into homogeneous consumer groups.
Psychologists recognize varied motivations behind consumer purchases, while economists acknowledge imperfect competition and diverse needs.
Marketers leverage segmentation to create targeted marketing mixes.

Types of Segmentation

Mass marketing treats all customers equally, often prioritizing efficiency over personalization.
One-to-one marketing tailors products to each individual, prioritizing personalization over efficiency.
Segmentation falls between these extremes, with marketers seeking an optimal segment size that balances efficiency and effectiveness.

Bases for Segmentation in B2C

Demographics are easy to acquire and recognize, but can lead to stereotypes.
Fit with corporate goals is crucial, ensuring the segment aligns with a company's image and objectives.
Actionability is key, focusing on criteria leading to actionable marketing strategies.

Segmentation Strategies

Breadth strategy targets multiple segments with a broad appeal.
Depth strategy focuses on serving one segment well, offering specialized products.
Tailored strategy caters to specific segments through customized offerings.

Requirements for Effective Segmentation

Measurability involves the ability to measure segment size, purchasing power, and profiles.
Accessibility refers to the ease of reaching and serving targeted segments.
Substantiality ensures segments are large or profitable enough to justify marketing efforts.
Differentiability allows segments to be distinguished and respond differently to marketing mixes.
Actionability enables the design of effective programs to attract and serve segments.

Targeting

Targeting involves selecting one or more market segments that align with the company's resources and goals.

Evaluating Market Segments

Bottom-up approach focuses on profitability factors:
- Segment size and growth: while larger segments are often attractive, they must be within a company's resources.
- Segment structural attractiveness considers long-term factors like competitor presence and supplier power.
Top-down approach assesses strategic fit:
- Alignment with the company's long-term objectives.
- Understanding the firm's strengths, weaknesses, and brand personality.

Strategic Criteria for Targeting

"Go for it" and "Avoid" decisions are straightforward.
"Hmms" represent dilemma scenarios, requiring careful analysis of SWOT and external factors.

Competitive Perceptual Maps

Visualize customer perceptions of a company's strengths and weaknesses relative to competitors.
Often use price and quality as key dimensions, where quality is industry-defined.

Market Targeting Strategies

Undifferentiated marketing targets the entire market with a single offering.
Differentiated marketing targets multiple segments with separate offerings.
Concentrated marketing targets a large share of a smaller market.
Micromarketing tailors products and programs to specific individuals and locations:
- Local marketing focuses on local customer segments.
- Individual marketing caters to the needs and preferences of individual customers.

Selecting Target Market Segments

Company resources, product life-cycle stage, market variability, and competitor marketing strategies should be considered.

Sizing Markets

Precisely defined segments are easier to estimate.
Utilize secondary data, customer survey data, and behavioral data to refine estimates.
Conduct sensitivity analysis on less certain numbers.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

This quiz focuses on the concepts of attitudes, multi-attribute models, and consumer decision-making processes. It explores how beliefs and importance weights influence consumer preferences and the stages involved in making choices. Challenge your understanding of behavioral economics and its impact on consumer behavior.