Consumer Behavior Exam 1 Review

• Consumer behavior is the study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of different things in order to satisfy needs

Key Questions in Consumer Behavior

• Who? Individuals, groups, and organizations
• What? Behaviors in selecting, securing, using, and disposing of products, services, experiences, or ideas
• Why? To satisfy needs, solve problems, have a positive impact, and benefit society

Marketing Strategy

• It always starts with the consumer
• Considers market needs and industry
• Utilizes the 4P's of marketing or marketing mix (the solution)
• Selects a target market
• Aims to bring value

Regulatory Policy

• Focuses on understanding the consumer
• Determines if something is good or bad for the consumer

Social Marketing

• Creates or alters behavior

• Modifies behaviors to create a positive impact

• Informed individuals are becoming better consumers

• Value is the total benefit divided by the total cost (benefits/total cost)

Social Marketing Defined

• It is the application of marketing strategies and tactics to alter or create behaviors that have a positive effect on targeted individuals or society

Market Analysis Components

• Consumers

• Company

• Competitors

• Conditions

• Market segmentation involves four steps and represents a portion of a larger market with distinct needs

• Market segmentation is a portion of a larger market whose needs differ from the larger market and involves four steps.

Steps to Market Segmentation

• Identify product-related need sets
• Group customers with similar need sets
• Describe each group
• Select attractive segments to serve

Marketing Strategy Question

• How will we provide superior customer value to our target market?
• The answer requires a consistent marketing mix that includes: product, communications, price, distribution, and service

Consumer Behavior Applications

• These include Marketing Strategy, Regulatory Policy, Informed consumers, and Social Marketing
• Human resource management is NOT an application of consumer behavior

Outcomes of Consumer Behavior

• Firm outcomes include profit, employee satisfaction, cash on hand, and increasing shareholder wealth
• There are also individual and society outcomes

Creating Satisfied Customers

• Total product of you and your competitors influence the consumer decision process
• This process results in superior value expected, which leads to sales and perceived value delivered, culminating in customer satisfaction

Consumer Focus

• People buy products based on how they make them feel, not just for what they do

• Self-concept is the totality of an individual's thoughts and feelings about oneself

• Lifestyle encompasses how one lives, including product choices, usage, thoughts, and feelings

Consumer Decisions

• These result from perceived problems and opportunities

• Arise in specific situations where the nature influences consumer behavior

• Consumption has meaning beyond satisfying basic consumer needs

Symbolic Needs

• Status
• Identity
• Group acceptance

Customer Value

• The difference between perceived benefits and the cost to acquire these benefits

Culture Components

• Language

• Demographics

• Values

• Nonverbal communications

• Consumer behavior and marketing strategy are linked

• Values form cultural values, which influence consumption and consumer behavior

Consumption Influences

• Value

World Citizens (4 Major Types)

• Global citizens are positive towards international products and value high quality and corporate social responsibility (CSR)

• Global dreamers are positive toward international products and high quality but don't really care about CSR

• Anti-globals hate anything international

• Global agnostics don't see anything special about international products; they treat them as local products

• Culture is a "complex whole" that includes knowledge, belief, art, law, morals, customs, and habits acquired as members of society

• Cultures tend to evolve and change slowly over time rather than stay static

• Norms specify ranges of appropriate behavior

• Norms = specify ranges of appropriate behavior

• Sanctions = penalties for violating norms

Sanctions

• Violation of cultural norms results in these which range from mild social disapproval to banishment

Orientated Values

• Other: relationship between individuals and their groups (individual/collective)
• Environment: society's view of the economy, environment, and technology
• Self: what individual members find most desirable

Time Perspectives

• Monochronic cultures view time as money

• Polychronic cultures view time as relationship

• Space use and assigned meanings can vary widely among different cultures

• The cultural meaning of Things can affect purchase patterns

• Cultures attach different meanings to things, including products

Time Perspective Monochronic

• Those like Ralph who are very prompt and complete tasks before starting another

• Demographics describe a population by size, structure, and distribution

• Distribution is the density of a population

• Demographics are usually a result and a cause of cultural values

• Income is measured by Purchasing Parity Power (PPP)

• Glocalization refers to adapting products and services to local considerations

Glocalization

• Strategy for adapting the products and services of Starbucks to local consumers

• Cultural values affirm what is desirable; they are dynamic

• A shift in values leads to a corresponding shift in culture and consumption

• Observable shifts in behavior reflect underlying cultural values

Understanding Value Shifts

• It is necessary for understanding current and future consumer behavior

• Shifts in values are trends

• The most important one is "emerging"

• Environment-oriented values prescribe a society's relationship to economic, technical, and physical environment

• Other-oriented values reflect a society's view of the appropriate relationships between individuals and groups within that society

Cultural Values Defined

• Widely held beliefs that affirm what is desirable

Marketing & Values

• Green marketing
• Cause-related marketing
• Marketing to gay and lesbian consumers
• Gender-based marketing

Green Marketing

• Developing products whose production, use, or disposal is less harmful to the environment

• Creating products that have a positive impact on the environment

• Linking product purchases to environmental organizations/events

• The FTC has updated its Green Guides which include qualifying claims and third-party certifications and seals

• Firms must avoid greenwashing which is promoting unsubstantiated environmental benefits

Cause-Related Marketing (CRM)

• This ties a company and its products to a cause for improving sales/image & providing benefits
• The consumer types include skeptics, balancers, attribution-oriented, and socially concerned

Focus on Gratification

• Americans began to place increased emphasis on leisure, immediate gratification, and sensual gratification after the end of World War II

Gender-Based Marketing

• Focuses on gender identity versus gender roles

• Considers ascribed versus achievement roles

• Addresses traditional versus modern gender orientation

• Gender roles are societal expectations for men and women

• Gender Identity is one's personal sense of gender

• Ascribed Identity is society's expectation, difficult to change

• Achievement Role is based on performance, can be changed through education

• Traditional means the old way of doing things

• Modern is changing daily

Market Segmentation (Gender)

• Traditional housewife
• Trapped housewife
• Trapped working woman
• Career working woman

Product Strategy (Gender)

• Rather than adapting colors, companies are adapting features to improve functionality

• Retail Strategy recognizes differing purchasing habits between men and women

• Differences in loyalty, switching, coupon use, and shopping style are considered

Skeptics

• Consumers who doubt effectiveness of cause-related marketing programs

Self-Concept and Lifestyle

• You feel about yourself whether it is demographic or social status
• It expresses that through purchases, people buy feelings
• Demographics and social status form personal values, which drives consumption

Values

• Change with factors like population size, occupation, education, income, and age

Population Parameters

• Size, structure, and distribution affect it

• Structure includes occupation, education, income, and age, which are interrelated

• Distribution refers to population density, being higher in cities and lower in rural areas

• Chronological age is based on date of birth and "look"

• Cognitive age is based on how you behave/feel

• Marketing typically caters to cognitive age

• A generation or age cohort experiences a shared social, political, historical, and economic environment

• Cohort analysis describes attitudes, values, and behaviors of an age group, predicting future trends

• Gerontographics identifies four segments of the mature market: healthy indulgers, ailing outgoers, healthy hermits, and frail recluses

Age Cohort

• A group of people who have experienced a common social, political, historical, and economic environment

Baby Boomers

• From 1946-1964
• They have higher income and education
• They are more tech savvy
• They are redefining retirement as self-sufficient
• They are a strong market for anti-aging products, travel, and financial services
• They are often alienated by overly "youth oriented" appeals in ads

Generation X

• From 1965-1976
• They were smaller than previous generations
• They come from single parent households and divorces
• They are highly educated and Xerox women are more highly educated than men
• They are entrepreneurial in approach to jobs and are less prone to devote life to a large corporation
• They are more diverse and open to diversity
• Cynical and sophisticated about products, ads and shopping

Generation Y (Millennials)

• From 1977-1994
• Has two sub-markets: young gen y and old gen y
• Expected to have at least as high of education level as previous generation
• Factors believe make their generation unique: technology use, music and pop culture, tolerance, intelligence, and clothes (apparel, alcohol, music, technology)

Generation Z

• From 1995-2008 (feel good)
• Known as digital natives, generation @, net generation
• Has $200 billion purchase power
• Buying patterns formed as young teen will follow through life
• Reaching them can be challenging for brands, as they easily get bored They use more digital platforms and switch among five screens simultaneously

Generation Y

• People born between 1977-1994

• Societal rank is one's position relative to others by societal class and standing

• A social class system forms entire hierarchy based on attitudes, values and lifestyles

• Social standing is derived from and influences behavior

• Socioeconomic factors: occupation, education, ownership, income, heritage

• Social standing: upper, middle, working, lower class

• Unique behaviors: preferences, purchases, consumption, communication

Upper Americans

• Upper-Upper class (0.3%) is "capital S society" with inherited wealth and aristocratic names
• Lower-Upper class (1.2%) is the newer social elite of current professional and corporate leadership

Middle Americans

• Middle Class (32%) is average pay white/blue collar workers, live on "the better side of town" and try to "do the proper things"
• Working Class (38%) is average pay blue-collar workers and lead "working-class lifestyles" whatever, the income school or the job

Social Class

• Middle class aspires to belong to upper-middle class product purchase
• Upper class symbolism is positioned for middle-class products

Measurements of Social Class

• Single-item index (education, occupation, income), direct influencers less accurate
• Multi-item index, Hollingshead Index of Social Position (ISP)

Demographics

• Companies use this to describe new markets in terms of size, structure, and distribution

• A subculture is a segment of a larger culture whose members share distinguishing values and patterns of behavior

• This can cause subcultural values which affect consumption

• Identification with core/subculture leads to mass market behaviors/unique market behaviors

Subcultures Defined

• Segments of a larger culture sharing distinct values and behaviors

Ethnic Subcultures

• These are based on shared racial, language, or nationality background

African Americans (4 Segments)

• New Middle Class are younger, positive about the future, highest education and income

• Broadcast Blacks are middle aged, single parented, female, income is the least and who live in urban areas

• Black is Better are middle aged, upper-middle income, values are family, religion

• Black Onliners are younger, middle to upper income and who value education, work, and family

• Must have ethnic products, must employ African Americans, expect respect when they come into the stores in media, products, communication, and retail with African Americans

Hispanic Americans

• Mexican Americans form the majority

• Income, education, language, and Hispanic culture identification change occurs across generations

• Roughly 34% of growth in the Hispanic population is due to immigration

• Acculturation is a major role in the attitudes and behaviors

Hispanic: Generational Stratas

• 1st generation: parents born outside the US, then immigrated
• 2nd generation: the children of first gen
• 3rd (+) generation: parents born in US and children as well
• Acculturation is how you adapt the new culture, directly related to language use and generational factors

Asian Americans

• Majority are Chinese American
• They have the highest education and highest income group
• Is expected to have $1.6 trillion by 2024
• It is the most diverse group with numerous nationalities, languages, and religions
• As of 2025 Chinese are still largest; second group are South Asians in Product & Media

Native Americans

• Approximately 570 native American tribes, each with its own language and traditions
• Many have reservations and quasi-independent political status
• Talk about their heritage, they are proud, less tolerant of stereotypes when it comes to Media, product, and Communications

Arab Americans

• Well educated, business-oriented people
• Mostly U.S. Citizens
• They are made up of Community support and funding from within

Chinese

• Largest national background amongst Asian Americans

• Secular means not of religion or being controlled by a religious group

• Religious and Non-Religious subcultures do exist

Regional Subcultures

• These arise because of the following: climate conditions, natural environment / resources, immigrant groups'/characteristics, and significant social/political events

• Hispanic is how a person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish origin regardless of race are defined according to the Census Bureau

• Key element is understanding this is crucial to marketing strategy = household purchase and consumption behavior = structure of household unit → stage of HH Life Cycle (HLC) → household decision process

• Household consists of all the people who occupy a housing unit

Key Terms (Households)

• Family is those who occupy the unit are related by birth, marriage, or adoption, & someone pays rent
• Non-Family is those who live together for pure economic purposes & saving money on rent, etc

Household

• All the people who occupy a housing unit

Traditional Family

• Refers to a married opposite-sex couple and their own or adopted children living at home
• Stepfamily is a married couple-family household with at least one child under 18 who is a stepchild

American Household Evolution

• Includes single parent families, blended families, family size, mothers in the workforce, and mothers as the breadwinner

• American households follow more complex cycles today which is known as Household Life Cycle (HLC)

• HLC stage presents unique needs, wants, and financial conditions + experiences

• Segmentation: HLC provides marketers with similar needs relating to household related problems and purchases

Stages of HLC

• Younger <35

• Middle Age: 35-64

• Older >64

• Important segmentation variable

• Family decision making is how decisions that affect 2+ family members

• Those in family are often compared to those in organizational since this is less criteria and those that affect family

Affects on Family

• Inherently emotional + that relationships between family members

Initiator

• They recognize the need or start of the purchase in terms of the family which will take the purchase process known

• Initiators/Decision Makers can be parents or children

• Purchases are parents, users are children

Roles in Family Purchase Decisions

• Encompass culture/subculture, role Specialization, degree of involvement and the characteristics of each family member

Conflict resolution:

• Reasoning is using a logical argument to win

• Playing on emotion is using the silent treatment

• Additional information is information via a third party opinion or info

• Consumer Socialization: Acquiring knowledge, skills & attitudes relevant to consumers in the marketplace to functions due to knowledge & skills

• Content means what to you pass on

• Process means how do you pass it on

Sensorimotor Intellegence

• Behavior that is not primarily motor and cognitive development is seen but still not “thinking” conceptually

• Consumer & Consumption skills are those capabilities that determine evaluation, knowledge, brands, and advertising amongst other processes

• Occurs when people attach values/ preferences to products and different retail outlets

• Affects marketplace stimuli to occur ( advertising, salespeople, warranties, etc)

• Happens through family: Instrumental Training for bringing reinforcement, Modeling through observation, and Mediation through interpretations

Piaget’s Stages

• This a key theory in marketing to children because of their inability process and understand commercial messages