Buying, Having, and Being: An Introduction to Consumer Behavior PDF

Buying, Having, and Being: An Introduction to Consumer Behavior CHAPTER-1 Consumer Behavior Consumer behavior is the study of the processes involved when individuals or groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy needs a...

Buying, Having, and Being: An Introduction to Consumer Behavior CHAPTER-1 Consumer Behavior Consumer behavior is the study of the processes involved when individuals or groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy needs and desires.  A consumer may purchase, use, and dispose of a product, but different people may perform these functions. In addition, we can think of consumers as role players who need different products to help them play their various parts.  Marketers have to understand the wants and needs of different consumer segments. Market segmentation is an important aspect of consumer behavior. Consumers can be segmented according to many dimensions Consumers are different. How we divide the up Demographics Age Gender product usage Family structure Social class and income Race and ethnicity Geography Psychological Lifestyles  The use of market segmentation strategies means an organization targets its products, service or idea only to specific groups of consumers rather than to everybody. Brands often have clearly defined images or personalities. That advertising, packaging, branding and other marketing elements help to shape. People often purchase a product because they like its image or because they feel it’s personality somehow corresponds to their own.  Emerging developments, such as the new emphasis on relationship marketing and the practice of database marketing, mean that marketers are much more attuned to the wants and needs of different consumer groups. Marketers full subscribe to the philosophy of relationship marketing interact with customers on a regular basis and give them solid reasons to maintain a bond with the company over time. Database marketing tracks, specific consumers buying habits closely and tailor products and messages precisely 2 peoples wants and needs based on this information. The collection and analysis of extremely large data sets is called big data. Our Motivations To Consume Are Complex And Varied. Marketers try to satisfy consumer needs, but the reasons people purchase any product can vary widely. The identification of consumer motives is an important step to ensure that a product will satisfy appropriate needs. Traditional approaches to consumer behavior focus on the abilities of products to satisfy rational needs (utilitarian motives), but hedonic motives (e.g. the need for exploration or for fun) also play a key role in many purchase decisions. Technology And Culture Create A New "Alwayson" Consumer.. The internet and social media transform the way consumers interact with companies and with each other. Online commerce allows us to locate obscure products from around the world, and consumption communities provide forums for people to share opinions and product recommendations. Many Types Of Specialists Study Consumer Behavior. The field of consumer behavior is interdisciplinary; it is composed of researchers from many fields who share an interest in how people interact with the marketplace. We can categorize these disciplines by the degree to which their focus is micro (the individual consumer) or macro (the consumer as a member of groups or of the larger society). Perspectives Regarding How And What We Should Understand About Consumer Behavior. Researchers who study consumer behavior do so both for academic purposes and to inform marketing organizations about practical decisions.  We can roughly divide research orientations into two approaches: The positivist perspective emphasizes the objectivity of science and the consumer as a rational decision maker. The interpretivist (or CCT) perspective, in contrast, stresses the subjective meaning of the consumer's individual experience and the idea that any behavior is subject to multiple interpretations rather than to one single explanation. Consumer Behavior Is a Process Most marketers now recognize that consumer behavior is in fact an ongoing process, not merely what happens at the moment a consumer hands over money or a credit card and in turn receives some good or service. The exchange, a transaction in which two or more organizations or people give and receive something of value, is an integral part of marketing. A consumer is a person who identifies a need or desire, makes a purchase, and then disposes of the product during the three stages of the consumption process In many cases, however, different people play a role in this sequence of events. The purchaser and user of a product might not be the same person, as when a parent picks out clothes for a teenager. In other cases, another person may act as an influencer when he or she recommends certain products without actually buying or using them. Finally, consumers may take the form of organizations or groups. One or several persons may select products that many will use, as when a purchasing agent orders a company's office supplies. In other organizational situations, a large group of people may make purchase decisions: for example, company accountants, designers, PERCEPTION CHAPTER 2  Products and commercial messages often appeal to our senses, but because of the profusion of these messages we don’t notice most of them.  Sensation refers to the immediate response of our sensory receptors (eyes, ears, nose, mouth, fingers, skin) to basic stimuli such as light, color, sound, odor, and texture. Perception is the process by which people select, organize, and interpret these sensations. The study of perception, then, focuses on what we add to these raw sensations to give them meaning. STIMULI Our brains receive external stimuli, or sensory inputs, on a number of channels. We may see a billboard, hear a jingle, feel the softness of a cashmere sweater, taste a new flavor of ice cream, or smell a leather jacket. These inputs are the raw data that begin the perceptual process. Sensory data from the external environment (e.g., hearing a tune on the radio) can generate internal sensory experiences; a song might trigger a young man’s memory of his first dance.  Marketers’ messages are more effective when they appeal to several senses. For example, in a recent study one group read ad copy for potato chips that only mentioned the taste, whereas another group’s ad copy emphasized the product’s smell and texture, in addition to its taste. The participants in the second group came away thinking the chips would taste better than did those whose ad message only focused on taste.  Each product’s unique sensory qualities help it to stand out from the competition, especially if the brand creates a unique association with the sensation.  MARKETING STIMULI Marketing stimuli have important sensory qualities. We rely on colors, odors, sounds, tastes, and even the “feel” of products when we evaluate them. Not all sensations successfully make their way through the perceptual process. Many stimuli compete for our attention, and we don’t notice or accurately interpret the majority of them.  SENSORY MARKETING Welcome to the new era of sensory marketing, where companies think carefully about the impact of sensations on our product experiences. ‘ From hotels to carmakers to brewers, companies recognize that our senses help us decide which products appeal to us—and which ones stand out from a host of similar offerings in the marketplace. In this section, we’ll take a closer look at how some smart marketers use our sensory systems to create a competitive advantage.  1. Vision Vision plays a critical role in consumer behavior as visual elements in products and ads can shape perceptions of modernity and appeal. Marketers rely on color, size, and style to enhance product desirability. For instance, sleek designs like Apple’s are associated with sophistication and coolness. 2. Color Colors evoke emotional responses and are linked to cultural meanings. Red may stimulate appetite or energy, while blue is calming and creates trust. Marketers use color strategically in branding to enhance perceptions and affect consumer choices, such as how American Express used blue for its credit card to signify peace.  3. Sound Sound influences consumer emotions and brand recognition. BMW’s audio watermark creates a sound signature that represents pleasure. Similarly, music linked to a brand enhances the consumer experience, improving enjoyment and even increasing purchasing likelihood. 4. Touch (Haptics) Touch influences consumer confidence in products. The "endowment effect" shows that people value products more after physical contact. Touchscreens and tangible interactions in-store make products feel more real, often increasing consumer willingness to purchase.  5. Scent Scent has a powerful influence on memory and emotions. Businesses like Hugo Boss use signature scents to enhance brand identity, while retailers use scents like vanilla to increase the appeal of premium products. The right fragrance can deepen emotional connections to a brand. 6. Taste Taste plays a vital role in the food industry and consumer satisfaction. Flavor houses create new tastes to suit changing preferences. For instance, airlines offer tomato juice because noise dulls the ability to taste sweet foods, and umami flavors become preferable in high-noise environments like flights.  7. Augmented Reality (AR) AR integrates digital layers over the physical world, enhancing sensory experiences with products. Companies use AR in apps or marketing (e.g., test- driving cars or exploring homes), making the interaction with products more engaging and personalized. This approach explains how each sense contributes to consumer behavior in marketing contexts. Let me know if you'd like further elaboration on any point!  THE STAGES OF PERCEPTION Perception is a three-stage process that trans- lates raw stimuli into meaning. Perception is the process by which physical sensations, such as sights, sounds, and smells, are selected, organized, and interpreted. The eventual interpretation of a stimulus allows it to be assigned meaning. A perceptual map is a widely used marketing tool that evaluates the relative standing of competing brands along relevant dimensions. STAGE 1: EXPOSURE Exposure occurs when a stimulus comes within a person's sensory range. Consumers notice some stimuli but may ignore others, depending on sensory thresholds. Marketers must create stimuli that surpass the absolute threshold, meaning they can be detected consciously. For example, subtle changes in product packaging may go unnoticed unless they surpass the differential threshold (just noticeable difference). SENSORY THRESHOLDS These thresholds refer to the minimum intensity required for a stimulus to be detected. Absolute thresholds refer to the lowest level at which a stimulus can be perceived, while differential thresholds refer to the ability to detect changes between two stimuli. STAGE 2: ATTENTION Attention is the allocation of mental resources to a stimulus. Consumers are often exposed to more information than they can process, leading to selective attention. Factors like stimulus intensity, contrast, and personal relevance determine which stimuli receive attention. Marketers use strategies like vivid colors, larger sizes, and novel ad placements to break through sensory overload. STAGE 3: INTERPRETATION Interpretation is how consumers make sense of sensory stimuli based on prior experiences, beliefs, and expectations. Marketers must align their messaging with consumers’ schemas (mental frameworks) for better recall and understanding. Gestalt principles, such as figure-ground and closure, show how consumers organize and interpret sensory input.  So-called subliminal persuasion and related techniques that expose people to visual and aural messages below the sensory threshold are controversial. Although evidence that subliminal persuasion is effective is virtually nonex- istent, many consumers continue to believe that advertis- ers use this technique. Some of the factors that determine which stimuli (above the threshold level) do get perceived include the amount of exposure to the stimulus, how much attention it generates, and how it is interpreted. In an increasingly crowded stimulus environment, advertis- ing clutter occurs when too many marketing-related mes- sages compete for attention.  We don’t attend to a stimulus in isolation. We classify and organize it according to principles of perceptual organization. A Gestalt, or overall pattern, guides these principles. Specific grouping principles include clo- sure, similarity, and figure-ground relationships. The final step in the process of perception is interpretation. Symbols help us make sense of the world by providing us with an interpretation of a stimulus that others often share. The degree to which the symbolism is consistent with our previous experience affects the meaning we assign to related objects.  The field of semiotics helps us to understand how marketers use symbols to create meaning. Marketers try to communicate with consumers by creat- ing relationships between their products or services and desired attributes. A semiotic analysis involves the cor- respondence between stimuli and the meaning of signs. The intended meaning may be literal (e.g., an icon such as a street sign with a picture of children playing). Or it may be indexical if it relies on shared characteristics (e.g., the red in a stop sign means danger). Meaning also can be conveyed by a symbol in which an image is given meaning by convention or by agreement of members of a society (e.g., stop signs are octagonal, whereas yield signs are triangular). Marketer-created associations often take on lives of their own as consumers begin to believe that hype is, in fact, real. We call this condition hyperreality. LEARNING AND MEMORY CHAPTER 3 (PART-1)  LEARNING Learning is a relatively permanent change in behavior caused by experience. The learner need not have the experience directly, however; we can also learn when we observe events that affect others. We learn even when we don’t try: Incidental learning.  Learning is an ongoing process. (Our knowledge about the world constantly updates as we are exposed to new stimuli and as we receive ongoing feedback that allows us to modify our behavior when we find ourselves in similar situations at a later time. )  The concept of learning covers a lot of ground, ranging from a consumer’s simple association between a stimulus such as a product logo (e.g., Coca-Cola) and a response (e.g., “refreshing soft drink”) to a complex series of cognitive activities (e.g., writing an essay on learning for a consumer behavior exam). Psychologists who study learning advance several theories to explain the learning process. These theories range from those that focus on simple stimulus– response connections (behavioral theories) to perspectives that regard consumers as solvers of complex problems who learn abstract rules and concepts when they observe what others say and do (cognitive theories). Behavioral Theory (Stimulus-Response): Imagine you see a McDonald's ad on TV showing a burger (stimulus) and immediately feel hungry and want to buy it (response). Over time, every time you see the McDonald's logo, you feel that same craving. This is learning through repeated exposure and association.. Cognitive Theory (Problem Solving) Let's say you're shopping for a new phone. Instead of just buying the first one you see, you watch reviews, read about different features, and compare prices. You learn by observing and thinking about which phone will be best for you. This involves more active learning and decision-making. Behavioral Learning Theories Behavioral learning theories assume that learning takes place as the result of responses to external events. Psychologists who subscribe to this viewpoint do not focus on internal thought processes. Instead, they approach the mind as a “black box” and emphasize the observable aspects of behavior. The observable aspects consist of things that go into the box (the stimuli or events perceived from the outside world) and things that come out of the box (the responses, or reactions to these stimuli).  Approaches to learning Two major approaches to learning represent this view: Classical conditioning and Instrumental conditioning. According to the behavioral learning perspective, the feedback we receive as we go through life shapes our experiences. Similarly, we respond to brand names, scents, jingles, and other marketing stimuli because of the learned connections we form over time. People also learn that actions they take result in rewards and punishments; this feedback influences the way they will respond in similar situations in the future. Consumers who receive compliments on a product choice will be more likely to buy that brand again, whereas those who get food poisoning at a new restaurant are not likely to patronize that restaurant in the future.  Classical conditioning occurs when a stimulus that elicits a response is paired with another stimulus that Classical initially does not elicit a response on its own. Over time, this second conditioning stimulus causes a similar response because we associate it with the first stimulus.  Ivan Pavlov, a Russian physiologist who conducted research on digestion in animals, first demonstrated this phenomenon in dogs. Pavlov induced classically conditioned learning when he paired a neutral stimulus (a bell) with a stimulus known to cause a salivation response in dogs (he squirted dried meat powder into their mouths). The powder was an unconditioned stimulus (UCS) because it was naturally capable of causing the response. Over time, the bell became a conditioned stimulus (CS); it did not initially cause salivation, but the dogs learned to associate the bell with the meat powder and began to salivate at the sound of the bell only. The drooling of these canine consumers because of a sound, now linked to feeding time, was a conditioned response (CR). Classical conditioning can have similar effects for more complex reactions, too. Even a credit card becomes a conditioned cue that triggers greater spending, especially because as a stimulus it’s present only in situations where we spend money. People learn they can make larger purchases with credit cards, and they also leave larger tips than when they pay by cash.Small wonder that American Express reminds us, “Don’t leave home without it.” Conditioning effects are more likely to occur after the conditioned (CS) and unconditioned (UCS) stimuli have been paired a number of times. Repeated exposures—repetition—increase the strength of stimulus–response associations and prevent the decay of these associations in memory. Stimulus Generalization Stimulus generalization refers to the tendency of stimuli similar to a CS to evoke similar, conditioned responses. For example, Pavlov noticed in subsequent studies that his dogs would sometimes salivate when they heard noises that only vaguely resembled a bell, such as keys jangling.  People also react to other, similar stimuli in much the same way they responded to the original stimulus; we call this generalization a halo effect. A drugstore’s bottle of private-brand mouthwash that is deliberately packaged to resemble Listerine mouth- wash may evoke a similar response among consumers, who assume that this “me-too” product shares other characteristics of the original. When the quality of the me-too product turns out to be lower than that of the original brand, consumers may exhibit even more positive feelings toward the original. However, if they perceive the quality of the two competitors to be about equal, consumers may conclude that the price premium they pay for the original is not worth it. Stimulus Discrimination Stimulus discrimination occurs when a UCS does not follow a stimulus similar to a CS. When this happens, reactions weaken and will soon disappear. Part of the learning process involves making a response to some stimuli but not to other, similar stimuli. Manufacturers of well-established brands commonly urge consumers not to buy “cheap imitations” because the results will not be what they expect. Marketing Applications of Classical Conditioning Principles Behavioral learning principles apply to many consumer phenomena, such as when a marketer creates a distinctive brand image or links a product to an underlying need. The transfer of meaning from an unconditioned stimulus to a conditioned stimulus explains why “made-up” brand names, such as Marlboro, Coca-Cola, or Adidas, exert such powerful effects on consumers.  The association between the Marlboro man and the cigarette is so strong that in some cases the company no longer even bothers to include the brand name in its ads that feature the cowboy riding off into the sunset. Indeed, recent research shows that these linkages cement early on; scans of children show how the pleasure and appetite centers of their brains light up when they view fast-food- company advertising images such as the McDonald’s logo. Marketing Applications of Repetition One advertising researcher argued that any more than three exposures to a marketing communication are wasted. The first exposure creates awareness of the product, the second demonstrates its relevance to the consumer, and the third reminds him or her of the product’s benefits. However, even this bare-bones approach implies that we need repetition to ensure that the consumer is actually exposed to (and processes) the message at least three times. As we’ve seen, this exposure is by no means guaranteed, because people tend to tune out or distort many marketing communications. Marketers who attempt to condition an association must ensure that the consumers they target will be exposed to the stimulus a sufficient number of times to make it “stick.” Marketing Applications of Conditioned Product Associations Advertisements often pair a product with a positive stimulus to create a desirable association. Various aspects of a marketing message, such as music, humor, or imag- ery, can affect conditioning. In one study, for example, subjects who viewed a slide of pens paired with either pleasant or unpleasant music were more likely later to select the pen that appeared with the pleasant music. Marketing Applications of Stimulus Generalization The iconic (and deceased) reggae singer Bob Marley’s name and image appears on a vast range of products, including caps, lanyards, T-shirts, rolling papers, handbags and purses, belts and buckles, beach towels, and knapsacks. His daughter Cedella launched High Tide swimwear to further extend the franchise, and his son Rohan created the Marley Coffee brand; each variety is named after a different Marley tune. The process of stimulus generalization often is central to branding and packaging decisions that try to capitalize on consumers’ positive associations with an existing brand or company name. We clearly appreciate the value of this kind of linkage when we look at universities with winning sports teams: Loyal fans snap up merchandise, from clothing to bathroom accessories, emblazoned with the school’s name. Instrumental Conditioning Instrumental conditioning (or operant conditioning) occurs when we learn to perform behaviors that produce positive outcomes and avoid those that yield negative outcomes. We most closely associate this learning process with the psychologist B. F. Skinner, who demonstrated the effects of instrumental conditioning by teaching pigeons and other animals to dance, play Ping-Pong, and perform other activities when he systematically rewarded them for desired behaviors.  Whereas responses in classical conditioning are involuntary and fairly simple, we make those in instrumental conditioning deliberately to obtain a goal, and these may be more complex. We may learn the desired behavior over a period of time as a shaping process rewards our intermediate actions. For example, the owner of a new store may award prizes to shoppers who simply drop in; she hopes that over time they will continue to drop in and eventually even buy something. Instrumental conditioning occurs in one of three ways: 1 When the environment provides positive reinforcement in the form of a reward, this strengthens the response and we learn the appropriate behavior. For example, a woman who gets compliments after wearing Obsession perfume learns that using this product has the desired effect, and she will be more likely to keep buying the product. 2 Negativereinforcement also strengthens responses so that we learn the appropriate behavior. A perfume company might run an ad showing a woman sitting home alone on a Saturday night because she did not wear its fragrance. The message this conveys is that she could have avoided this negative outcome if only she had used the perfume. 3 In contrast to situations where we learn to do certain things to avoid unpleasantness, punishment occurs when unpleasant events follow a response (such as when our friends ridicule us if we wear a nasty-smelling fragrance). We learn the hard way not to repeat these behaviors.  Chapter 3 (Part II) MEMORY Memory is a process of acquiring information and storing it over time so that it will be available when we need it. Contemporary approaches to the study of memory employ an information-processing approach. They assume that the mind is in some ways like a computer: Data are input, processed, and output for later use in revised form. Figure 4.5 summarizes the memory process: Stages of Memory 1 In the encoding stage, information enters in a way the system will recognize. 2 In the storage stage, we integrate this knowledge with what is already in memory and “warehouse” it until it is needed. 3 During retrieval stage, we access the desired information. How Our Brains Encode Information The way we encode, or mentally program, information helps to determine how our brains will store this information. In general, it’s more likely that we’ll retain incoming data when we associate it with other things already in memory. For example, we tend to remember brand names that we link to physical characteristics of a product category (e.g., Coffee- Mate creamer or Sani-Flush toilet bowl cleaner) or that we can easily visualize (e.g., Tide detergent or Ford Mustang cars) compared to more abstract brand names. Similarly, our brains automatically react to images of familiar celebrities and use them to guide how we think about them to ascribe meaning to other images of people or products with which they appear. Types of Meaning Sometimes we process a stimulus simply in terms of its sensory meaning, such as the literal color or shape of a package. We may experience a feeling of familiarity when, for example, we see an ad for a new snack food we have recently tasted. In many cases, though, we encode meanings at a more abstract level. Semantic meaning refers to symbolic associations, such as the idea that rich people drink champagne or that fashionable women have navel piercings. Let’s take a closer look at how we encode these deeper meanings. Episodic memories Episodic memories relate to events that are personally relevant. As a result, a person’s motivation to retain these memories will likely be strong. Couples often have “their song,” which reminds them of their first date or wedding.  A narrative, or a description of a product that is written as a story, is often an effective way to convey product information. Our memories store a lot of the social information we acquire in story form; it’s a good idea to construct ads in the form of a narrative so they resonate with the audience. A Narratives persuade people to construct mental representations of the information they see or hear. Narrative, Pictures aid in this construction and allow us to develop more detailed mental representations. Research supports the idea that we are more likely to positively evaluate and purchase brands when they connect with us like this. Memory System Researchers describe three distinct memory systems: sensory memory  short-term memory (STM), and long-term memory (LTM). Each plays a role in processing brand- related information Memory System Sensory memory stores the information we receive from our senses. This storage is temporary; it lasts a couple of seconds at most. For example, a man who walks past a donut shop gets a quick, enticing whiff of something baking inside. Although this sensation lasts only a few seconds, it is sufficient to allow him to consider whether he should investigate further. If he retains this information for further processing, it transfers to short-term memory. Short-term memory (STM) also stores information for a limited period of time, and it has limited capacity. Similar to a computer, this system is working memory; it holds the information we are currently processing. Our memories can store verbal input acoustically (in terms of how it sounds) or semantically (in terms of what it means). Memory System Long-term memory (LTM) is the system that allows us to retain information for a long period of time. A cognitive process of elaborative rehearsal allows information to move from STM into LTM. This involves thinking about the meaning of a stimulus and relating it to other information already in memory. Marketers assist in the process when they devise catchy slogans or jingles that consumers repeat on their own. How Our Memories Store Information The relationship between STM and LTM is a source of some controversy. The traditional multiple-store perspective assumes that STM and LTM are separate systems. More recent research has moved away from the distinction between the two types of memory; it emphasizes the interdependence of the systems. According to activation models of memory, depending on the nature of the processing task different levels of processing occur that activate some aspects of memory rather than others. The more effort it takes to process information (so-called deep processing), the more likely it is that information will transfer into LTM. Storing information in memory Associative Networks According to activation models of memory, an incoming piece of information gets stored in an associative network that contains many bits of related information. We each have organized systems of concepts that relate to brands, manufacturers, and stores stored in our memories; the contents, of course, depend on our own unique experiences. Think of these storage units, or knowledge structures, as complex spider webs filled with pieces of data. Incoming information gets put into nodes that connect to one another (if you haven’t guessed, this is also why we called cyberspace the World Wide Web). When we view separate pieces of information as similar for some reason, we chunk them together under some more abstract category. Then, we interpret new, Retrieving information for purchase decision Factors influencing Retrieval Physiological factors(Eg Age) Pioneering brand: first brand to enter a market. Is generally easier to retrieve from memory. Descriptive brand names easier to recall than names that do not provide cues to what the product is.  -viewing environment: commercials shown first in a series of ads are recalled better than those shown last. Post advertising effect: when consumers confuse recently viewed at with their own experience Pictorial versus verbal cues There is some evidence for the superiority of visual memory over verbal memory. Serial ads may enhance recall. But do not necessarily improve comprehension.. How many of these ad icons can you remember from the picture alone? Measuring memory for marketing stimuli Recognition versus recall: Two basic measures of impact Typical recognition test: subject are shown ads and asked if they have seen them before. Typical recall test: subjects are asked to independently think of what they have seen without being prompted first. The starch test-widely used commercial measure of advertising recall for magazines. Problems with memory measures Response biases: Contaminated result due to the instrument of the respondent, rather than the object that is being measured. Memory lapses: Unintentionally forgetting information: Omitting: leaving facts out Averaging: normalising memories by not reporting extreme cases Telescoping: in accurate recall of time professional for the meeting PERSONALITY, LIFESTYLE, AND VALUES CHAPTER 4 INTRODUCTION TO PERSONALITY, LIFESTYLE, AND VALUES Personality refers to a person’s unique psychological makeup and how it consistently influences the way a person responds to his or her environment. Key Point: Personality affects purchasing decisions by influencing a consumer’s preferences, perceptions, and attitudes toward products. DEFINITION OF LIFESTYLE IN CONSUMER BEHAVIOR Lifestyle represents the way a person lives, reflecting their interests, activities, and opinions. It goes beyond just what a person buys—it includes how they spend their time, their hobbies, and their general outlook on life. A person's lifestyle often aligns with their consumption patterns, revealing whether they value luxury, convenience, sustainability, or other attributes. Key Point: Understanding lifestyle allows marketers to predict what types of products or services consumers may be interested in, as it reflects broader patterns of behavior. DEFINITION OF VALUES IN CONSUMER BEHAVIOR Values are enduring beliefs about what is important or desirable in life. They guide consumers in making decisions that are consistent with their moral, ethical, and cultural beliefs. Values often reflect deeper motivations, such as the desire for environmental sustainability, social responsibility, or personal growth. Key Point: Consumers tend to support brands and products that align with their core values, making value-based marketing highly effective. IMPORTANCE OF PERSONALITY, LIFESTYLE, AND VALUES IN UNDERSTANDING CONSUMER CHOICES These factors give marketers a deeper understanding of why consumers choose certain products or brands over others, going beyond basic demographics like age and gender. IMPORTANCE OF PERSONALITY, LIFESTYLE, AND VALUES IN UNDERSTANDING CONSUMER CHOICES Personality influences product preferences based on individual traits (e.g., outgoing consumers might prefer bold fashion, while introverts might choose minimalist designs). Lifestyle helps segment the market based on consumers' broader life patterns (e.g., health-conscious individuals might prioritize organic food or fitness-related products). Values guide ethical and emotional choices, with consumers often selecting brands that reflect their own worldview (e.g., purchasing eco-friendly products due to a commitment to sustainability).  Examples: A person with an adventurous personality may choose an off-road vehicle, reflecting their need for excitement and challenge. A consumer who values social justice might prefer to buy from a brand that supports fair-trade practices. THEORIES OF PERSONALITY Freudian Theory: The role of unconscious motives in consumer behavior. Trait Theory: Identification of specific personality traits (e.g., innovativeness, materialism) that influence buying behavior. Neo-Freudian Theories: The role of social relationships in shaping personality.  : FREUDIAN THEORY The famous psychologist Sigmund Freud proposed that much of one’s adult personality stems from a fundamental conflict between a person’s desire to gratify his or her physical needs and the necessity to function as a responsible member of society. This struggle plays out in the mind among three systems. Based on the work of Sigmund Freud, this theory suggests that human behavior is influenced by unconscious motives and is driven by dynamic psychological forces.  Freud divides personality into three components: Id: Represents the primitive, instinctual desires (e.g., hunger, sex) that seek immediate gratification. The id is selfish and illogical. It directs a person’s psychic energy toward pleasurable acts without any regard for consequences. Ego: Ego is the system that mediates between the id and the superego. It’s basically a referee in the fight between temptation and virtue. The ego tries to balance these opposing forces according to the reality principle, which means it finds ways to gratify the id that the outside world will find acceptable Superego: The superego is the counterweight to the id. This system is essentially the person’s conscience. It internalizes society’s rules (especially as parents teach them to us) and tries to prevent the id from seeking selfish gratification.  In consumer behavior, Freudian Theory suggests that products can appeal to unconscious motives. For instance, luxury goods may appeal to the id by offering indulgence and pleasure, while the ego might justify the purchase through rational arguments (e.g., quality, longevity). Application in Marketing: Advertisers often target consumers' unconscious desires by linking products to themes of power, sexuality, and self-indulgence. Example: Perfume ads often appeal to sensuality and desire, tapping into the unconscious appeal to the id. TRAIT THEORY Trait Theory emphasizes that individual personalities are composed of specific traits or characteristics that can be measured and quantified. It focuses on identifying these stable traits to predict behavior across various contexts, including consumption. What are some crucial personality traits? Consumer researchers have looked at many to establish linkages to product choice, such as “need for uniqueness,” “introversion/extroversion” (whether people are shy or outgoing), and “attention to social comparison information.” Some research evidence suggests that ad messages that match how a person thinks about himself or herself are more persuasive. APPLICATION IN MARKETING: Marketers often segment their target audience based on personality traits and tailor messages accordingly. Example: High-need-for-cognition consumers might respond better to informative, fact-based ads, while low-need-for-cognition individuals may prefer emotional or visual appeals. NEO-FREUDIAN THEORIES Neo-Freudian theorists, such as Karen Horney, Carl Jung, and Alfred Adler, expanded on Freud’s ideas, emphasizing the importance of social relationships and cultural influences on personality. Karen Horney identified three major personality types based on how individuals cope with anxiety in social settings: Compliant: Those who move toward others, seeking approval and affection. Aggressive: Individuals who move against others, seeking power and control. Detached: Those who move away from others, valuing independence and self-sufficiency. This theory posits that consumers' social environment plays a key role in shaping their personality traits and consumer choices. APPLICATION IN MARKETING: Brands can appeal to different personality types identified by Neo-Freudian theory. For instance: Compliant consumers may prefer brands that emphasize social acceptance, warmth, and belonging (e.g., family-oriented products). Aggressive consumers may be drawn to brands that symbolize power and success (e.g., sports cars or high-status luxury goods). Example: A brand like Rolex, associated with status and achievement, may attract aggressive personality types seeking to assert dominance and power through luxury products. INTRODUCTION TO BRAND PERSONALITY Brand personality refers to the set of human traits or characteristics attributed to a brand. Just as individuals have personalities that influence their behaviors and relationships, brands too can possess personalities that shape how consumers perceive and interact with them. Why Brand Personality Matters: Emotional Connection: Brands with strong, well-defined personalities can form deeper emotional connections with consumers. This emotional bond often fosters brand loyalty, as consumers are drawn to brands that resonate with their own self-image or aspirations. Differentiation: In crowded markets, brand personality helps distinguish one brand from another. Consumers often choose products not just for their functional benefits but because they align with the brand’s personality traits. Consumer-Brand Relationships: Just as people are drawn to others with certain personality traits, consumers are attracted to brands that reflect traits they admire or aspire to. This enhances brand equity and consumer loyalty. DIMENSIONS OF BRAND PERSONALITY (AAKER’S MODEL) Sincerity (e.g., Hallmark) Excitement (e.g., Nike) Competence (e.g., IBM) Sophistication (e.g., Chanel) Ruggedness (e.g., Harley-Davidson) Visuals: Examples of brands representing each personality trait. THE ROLE OF BRAND PERSONALITY IN CONSUMER BEHAVIOR 1. Enhances Consumer Trust: When consumers perceive a brand’s personality as consistent and genuine, it builds trust. A sincere brand like Hallmark creates a sense of reliability and emotional connection, fostering loyalty. 2. Creates Differentiation: Brand personality serves as a key differentiator in competitive markets. For instance, Nike’s “Just Do It” campaign portrays a personality of excitement and athleticism, distinguishing it from other sportswear brands by associating it with personal achievement and adventure. 3. Drives Brand Loyalty: Consumers tend to develop attachments to brands whose personalities align with their own values and identities. A consumer with an affinity for adventure and independence may gravitate toward Harley-Davidson because the brand's rugged personality aligns with their lifestyle aspirations. 4. Enables Emotional Branding: Brands with well-defined personalities can engage in emotional branding by appealing to consumers’ desires and aspirations. Chanel, for example, appeals to consumers’ desire for sophistication, luxury, and status, creating an emotional connection that goes beyond the functional value of its products. INTRODUCTION TO PSYCHOGRAPHICS Psychographics is the study of consumer lifestyles, including their attitudes, interests, and opinions (AIOs). Unlike demographics, which focus on objective traits like age and income, psychographics provides insight into the psychological and behavioral factors that influence how consumers live and make purchasing decisions. Why Psychographics Matter: Psychographics helps marketers segment the market based on lifestyle rather than just traditional demographics. By understanding a consumer’s lifestyle choices, marketers can more effectively tailor products, services, and advertisements to resonate with specific target audiences. Example: Two consumers may both be 35-year-old women with similar incomes, but if one prioritizes sustainability and the other values luxury, they will respond very differently to marketing messages. THE ROLE OF AIOS IN PSYCHOGRAPHICS AIOs (Activities, Interests, and Opinions) are the core components of psychographic research and play a critical role in understanding consumer lifestyles. They help marketers develop rich, detailed consumer profiles.  Activities represent how consumers spend their time, including their daily routines, hobbies, and entertainment choices. These activities reflect their priorities, lifestyle, and consumption behavior. Interests represent what consumers find personally important or engaging. This could include hobbies, social causes, cultural activities, or types of entertainment. Opinions reflect how consumers think about themselves, their social environment, politics, brands, products, and current events. These opinions shape their worldview and influence their purchasing decisions. VALUES The role of cultural, personal, and social values in consumer behavior. Rokeach Value Survey and LOV (List of Values) for understanding how values influence buying patterns.. THE SELF-CONCEPT How consumers view themselves and how this affects purchasing decisions. Actual vs. Ideal Self: The impact on product selection. DECISION MAKING CHAPTER 5 Consumer decision making is a central part of consumer behavior, but the way we evaluate and choose products (and the amount of thought we put into these choices) varies widely, depending on such dimensions as the degree of novelty or risk related to the decision. We almost constantly need to make decisions about products. Some of these decisions are important and entail great effort, whereas we make others on a virtually automatic basis. Perspectives on decision making range from a focus on habits that people develop over time to novel situations involving a great deal of risk in which consumers must carefully collect and analyze information before making a choice. Many of our decisions are highly automated; we make them largely by habit. The way we evaluate and choose a product depends on our degree of involvement with the product, the marketing message, or the purchase situation. Product involvement can range from low, where purchase decisions are made via inertia, to high, where consumers form strong bonds with what they buy.  The three categories of consumer decision making are Cognitive categories of consumer decision making Habitual affective.  Cognitive Decision Making A cognitive purchase decision is the outcome of a series of stages that results in the selection of one product over competing options. According to this view, people calmly and carefully integrate as much information as possible with what they already know about a product, painstakingly weigh the pluses and minuses of each alternative, and arrive at a satisfactory decision. This kind of careful, deliberate thinking is especially relevant to activities such as financial planning that call for a lot of attention to detail and many choices that impact a consumer’s quality of life.16 Steps in the Cognitive Decision-Making Process We describe these steps as (1) Problem recognition, (2) Information search, (3) Evaluation of alternatives, and (4) Product choice  Problem Recognition The decision-making process begins when a consumer perceives a difference between their current state and a desired state. This stage, known as "problem recognition," can occur through need recognition (when actual state worsens) or opportunity recognition (when the ideal state improves). Recognizing this gap motivates the consumer to seek a solution to address the identified need or opportunity. Information Search Once a problem is recognized, consumers start gathering information to address it. This stage involves actively searching for data to support decision-making. Consumers might conduct a prepurchase search to address a specific need or engage in an ongoing search for enjoyment or to stay informed. Generally, information search intensity varies with the purchase's importance, familiarity with the product, and ease of obtaining information. Both novice and expert consumers use different search strategies, with moderately knowledgeable consumers typically putting in the most search effort. Evaluation of Alternatives Consumers then evaluate potential solutions by comparing different brands or products. This stage includes identifying the evoked set (all known brands) and the consideration set (brands seriously considered for purchase). Marketers aim to ensure their brand is part of the consumer's consideration set, as products rejected initially are rarely reconsidered. Consumers assess alternatives based on specific attributes, often influenced by previous knowledge, recommendations, or personal preferences Product Choice At this point, consumers make a final selection based on the decision rules they find most convenient or appealing, ranging from quick, simplified choices to complex analyses. However, excessive features, or "feature creep," can overwhelm consumers, leading to frustration. Although more features may seem desirable, simplicity often enhances user satisfaction. Postpurchase Evaluation The final stage involves assessing satisfaction after the purchase. Consumers compare their expectations with the product's actual performance, leading to either satisfaction or dissatisfaction. This stage often includes social scoring, where consumers and service providers rate each other's behaviors, influencing future interactions and reputations. Social scoring systems now enable providers to evaluate customers, adding a new dimension to postpurchase evaluation. ONLINE DECISION MAKING With so much information online, it can be overwhelming to decide where to look and what to buy. Cybermediaries (like comparison websites or forums) help by sorting and organizing options, making it easier to find what we need. Websites like Amazon also use smart programs that learn from past purchases to suggest things we might like. Because we usually only look at the top search results, companies use search engine optimization (SEO) to try to make their content appear at the top when we search online. Reviews from other users are also important, as many of us trust recommendations from people we know or online ratings, even though these aren’t always fully accurate.  ONLINE DECISION MAKING Companies like Amazon and Netflix also use the long tail model, which means they make money not just from bestsellers but from offering lots of niche items that only a few people buy but add up to big profits. This way, they meet a variety of interests, selling a little bit of a lot of things.  Decision rules When we make a decision, we use different rules to help us choose. Here’s a super simple breakdown: 1. Compensatory Rules (Looking at All the Good and Bad Points Together) With these rules, we look at all the good and bad parts of each option. A good feature can make up for a bad one. Simple Additive Rule: We pick the option with the most good features, even if some features don’t really matter to us. Weighted Additive Rule: We decide which features are the most important, and we pick the option that has the best mix of those important features.  Decision rules 2. Noncompensatory Rules (Deal-Breakers)With these rules, if an option doesn’t have something we need, we reject it right away. Lexicographic Rule: We choose the option that’s best in the most important feature. If it’s a tie, we look at the next most important feature. Elimination-by-Aspects Rule: We decide on must-have features (like “must have a sleep timer”) and eliminate any options that don’t have them. Conjunctive Rule: We set minimum standards for all features. If an option doesn’t meet even one standard, we reject it.  Habitual decision making Most of our daily decisions are made automatically, without much thought. For example, Richard probably doesn’t overthink choices like adding cream and sugar to his coffee or getting fries with a meal. Habitual decision making is when we choose things with little or no conscious effort, simply because we’re used to them. This makes life easier and faster, so we don’t spend all our time making small decisions.  Habitual decision making When someone buys the same brand repeatedly, it can mean one of two things: 1. Inertia: They buy it out of habit because it’s easy and familiar, not because they’re particularly loyal to it. If the brand isn’t available, they might just pick another. 2. Brand Loyalty: This is different and much stronger. Brand loyalty means a person consciously chooses to keep buying the same brand because they like it and are committed to it. If the store is out of their brand, they might go to another store to find it instead of choosing a replacement. In short, inertia is mindless habit, while brand loyalty is a committed choice.  Heuristics Heuristics are mental shortcuts that help us make decisions quickly and with less effort. Instead of analyzing every detail, we rely on these “rules of thumb” to reach a decision that feels good enough. This approach, known as bounded rationality, means we’re often okay with a satisfactory choice (a “satisficing” solution) rather than the absolute best choice (a “maximizing” solution). For example, default bias is one kind of shortcut where we choose the easiest option available. Similarly, we might also rely on mental accounting or assumptions to simplify choices, like Richard assuming one store has everything he needs and not bothering to look elsewhere.  Heuristics Common heuristics include: Price = Quality: Assuming that a higher-priced product is better quality. Familiarity: Sticking to a brand we’ve used before, like “buy the same brand I bought last time.” Family Influence: Choosing products our family used, such as buying the brand of sugar your mother always bought. While these shortcuts can save time, they can sometimes lead us to poor decisions. For instance, if you hear about a few people having problems with a certain car, you might avoid it, even if research would show it’s generally reliable. In short, heuristics are helpful mental shortcuts, but they’re not foolproof.  Country of Origin (COO) and Its Influence on Choices Consumers often associate certain products with specific countries (e.g., Italian shoes, Japanese cars).COO as a Shortcut: People may prefer products from particular countries, assuming they’re better.Ethnocentrism: Some people believe local products are superior, avoiding imported goods.Consumer Animosity: Political or social issues can lead to boycotts of certain brands (e.g., boycotting brands linked to controversies).  Heuristics – Familiar Brands and Price as Quality Indicators Familiar Brands: People often choose brands they know or have used before, trusting them over new ones. Price as a Quality Indicator: Many assume higher prices mean better quality, although this isn’t always true. Example: Campbell’s Soup and Ivory Soap have stayed popular for decades due to strong brand trust.  AI in Consumer Choices AI Personal Shoppers: Companies use AI to recommend products, making shopping easier. Example: The North Face uses IBM’s Watson AI to help customers find the right jacket. AI Predictive Technology: AI can predict preferences based on age, gender, or past choices (e.g., KFC China’s facial recognition). Social Media Integration: West Elm suggests furniture based on Pinterest boards, making personalized recommendations.  Priming and Nudging in Consumer Behavior Priming: Environmental cues influence decisions unconsciously (e.g., background music impacts wine choices). Framing Effects: How choices are presented affects decisions (e.g., loss aversion—people dislike losing more than they enjoy gaining). Examples: Priming with “cute” products can lead to indulgent behaviors. Framing questions in certain ways can drive positive decisions (e.g., nudging people to opt into programs).  Buying using and disposing Chapter 6 Introduction A consumption situation includes a buyer, seller, product/service, and other factors. Understanding consumer behavior is critical for marketers  Situational Effects on Consumer Behavior Many factors affect a purchase. These include  The consumer’s antecedent state (e.g., his or her mood, time pressure, or disposition toward shopping).  Time often determines how much effort and search will go into a decision.  Moods are influenced by the degree of pleasure and arousal a store environment creates. Tailoring Purchases to Occasions Consumers align purchases with specific occasions. Common sense tells us that we tailor our purchases to specific occasions and that the way we feel at a specific point in time affects what we want to do—or buy. Example: Book clubs promoting heavily in June. Influence of the Physical Environment Store design and ambiance significantly affect decisions. Example: Casinos encourage prolonged engagement. Temporal Factors Time influences our decisions. Gender and Time allocation Men and women allocate time differently. Example: Household task distribution has evolved since the 1960s. Peak Times for Marketing Timing matters for marketing. Example: Email open rates peak mid-day during work lunch breaks. Time as a Resource: Time is like money; we all have to decide how to spend it on work, play, or other activities. Some people prioritize work, while others focus on leisure, shaping their "time styles." Feeling Short on Time: Many people feel they don't have enough time, a concept called time poverty. But studies show we actually have more free time now compared to past decades; it's just that we have so many options, which makes us feel overwhelmed. Social Influences on Shopping: The people around us can influence what we buy. For example, crowded places can feel lively, while empty stores or bars might seem unappealing. How We Experience Time: Time feels different depending on the situation. Fun activities seem to pass quickly, while boring ones drag on. Marketers study this because people tend to buy more when they're in the right mood or at the right time.  Different Time styles: People manage and view time in unique ways. Researchers grouped women into five types based on their attitudes toward time: Pressure Cookers: These people are always busy, stressed, and plan everything carefully. Maps: They are organized and future-focused, researching a lot before buying. Mirrors: These individuals value past experiences and prefer reliable, familiar products. Rivers: They are spontaneous, making unplanned purchases often. Feasts: They live in the moment and enjoy shopping for fun and variety.  The usage context of a product is a segmentation variable; consumers look for different product attributes depending on the use to which they intend to put their. purchase. The presence or absence of other people(co-consumers)—and the types of people they are—can also affect a consumer’s decisions. The shopping experience also is a pivotal part of the purchase decision. In many cases, retailing is like theater: The consumer’s evaluation of stores and products may depend on the type of “performance” he witnesses.  The actors (e.g., salespeople), the setting (the store environment), and the props (e.g., store displays) influence this evaluation. Like a brand personality, a number of factors, such as perceived convenience, sophistication, and expertise of salespeople, determine store image. With increasing competition from non-store alternatives, creating a positive shopping experience has never been more important. Online shopping is growing in importance, and this new way to acquire products Emerging Trends in Retail and Digital Payments From Clicks Back to Bricks : Online stores are moving back to physical locations. In the past, many businesses moved from physical stores to online shopping. But now, online companies are also opening real stores where customers can visit. This helps them connect better with people and give a real shopping experience. Amazon, known for its online shopping, bought Whole Foods, a grocery store chain. This gave Amazon physical stores where people can shop for groceries. It’s an example of how an online company is going offline.  Evolving Shopping Centers Shopping malls are changing to attract people. Malls are adding new features like restaurants, gyms, and small pop-up stores for online brands. This gives people more reasons to visit malls, not just for shopping but also for food, exercise, and entertainment.  The Rise of Digital Currency : Cash is being replaced by digital payment methods. Many people now prefer to pay using their phones or other digital tools. Digital wallets (like Google Pay or PayPal) make payments faster and easier. Even new types of money, like Bitcoin, are becoming popular.  Technology Behind Digital Payments NFC and P2P payments are the backbone of digital transactions. Two types of technologies are making digital payments easy: NFC (Near-Field Communication): You can pay just by tapping your phone at a machine. P2P (Peer-to-Peer Payments): Apps like PayPal and Venmo let people send money directly to others through their phones.  Advantages of Digital Currency Digital money is safe, transparent, and easy to use. Using digital currency has many benefits: Secure: Transactions are protected by advanced technology like blockchain. Transparent: Everyone can see the records, so there’s no cheating. Convenient: You can pay or send money instantly without needing cash. Ownership and the Sharing Economy  The growth of a “sharing economy” changes how many consumers think about buying rather than renting products.  In the rapidly growing sharing economy people rent what they need rather than buy it. New technologies make this process much easier and online networks allow us to form bonds of trust with strangers.  In addition, many consumers no longer place a premium. on owning products and prefer to “borrow” them only for the specific times when they actually need them. Product Disposal Our decisions about how to dispose of a product are as important as how we decide to obtain it in the first place. Concern about the environment and waste make the issue of product disposal key in many categories. In addition to understanding if and how consumers recycle, newer recommerce models such as swishing are emerging that enable people to share moreof their used goods with one another rather than disposing of them.  The new trend of recommerce (a play on the term e-commerce) shows that many consumers want to squeeze more value out of their possessions by selling or trading them. This focus has given birth to the swishing movement, where people organize parties to exchange clothing or other personal possessions with others. Chapter 7 Groups Humans are social animals. We belong to groups, try to please others, and look to others’ behavior for clues about what we should do in public settings. In fact, our desire to “fit in” or to identify with desirable individuals or groups is the primary motivation for many of our consumption behaviors. We may go to great lengths to please the members of a group whose acceptance we covet. Social Power Social power refers to the ability to influence others' actions, whether they comply willingly or not. Groups are persuasive due to the power they hold, which enables them to shape behavior. Power bases classify the reasons for exerting influence, its voluntary nature, and its lasting effect even in the absence of the power source. These dynamics highlight how and why individuals yield to group influence. 1.Referent Power: Influence arises when individuals admire a person or group and mimic their behaviors, often seen in celebrity endorsements and trends. Marketers leverage this by aligning products with aspirational figures. EX:Consumers buy Nike because they admire athletes like LeBron James endorsing the brand. 2.Information Power: Held by those with exclusive knowledge others desire, such as editors or experts, who influence decisions through privileged insights that offer competitive advantages.EX:Shoppers trust product reviews on Wirecutter for tech gadgets due to its expertise and insider insights. POWER CLASSIFICATION (CONTINUATION) Legitimate Power: Granted by social roles or authority, like police or doctors. Marketers capitalize on this by using figures of authority in ads to establish credibility. EX:Toothpaste ads featuring actors in lab coats imply dental authority to persuade buyers. Expert Power: Derived from specialized knowledge or expertise, such as endorsements by professionals or trusted critics, which instills trust in products or ideas. Consumers choose skincare recommended by dermatologists like Dr. Sandra Lee (Dr. Pimple Popper) POWER CLASSIFICATION (CONTINUATION) 1.Reward Power: Involves providing tangible or intangible rewards, like praise or incentives, to influence behavior positively, commonly used in competitions or shows. Loyalty programs like Starbucks Rewards encourage repeat purchases by offering free drinks. 2.Coercive Power: Based on threats or intimidation to enforce compliance. While effective in the short term, its influence is often temporary. Retailers use "limited-time offers" to pressure customers into immediate purchases. A reference group is an actual or imaginary individual or group that significantly influences an individual's evaluations, aspirations, or behavior. Example: When buying a smartphone, a consumer might choose the same brand as their tech- savvy friends, valuing their recommendations and aligning with the group's preferences. 1.Membership Reference Group 1. Definition: A group consisting of individuals we personally know and interact with, which directly influences our behavior and choices. 2. Example: A college student wearing a specific clothing brand because their close friends in the group also wear it. 2.Aspirational Reference Group 1. Definition: A group of individuals we admire and aspire to be like, even if we don’t know them personally. 2. Example: A young entrepreneur buying a luxury watch because successful business leaders are seen wearing it. 3.Avoidance Group 1. Definition: A group we deliberately avoid being associated with, leading us to make opposite choices to distance ourselves. 2. Example: A young professional avoids using budget smartphones because they don’t want to be associated with a perceived "low-status" group, opting instead for premium brands like Apple or Samsung. Conformity is the adjustment of beliefs or behaviors due to real or perceived group pressure. Societies create norms to prevent chaos, such as rules governing behavior like traffic signals. We conform daily to unspoken norms in consumption, like gift-giving, dress codes, or social expectations. These norms help structure interactions and maintain order. Even when we don't realize it, conformity influences many aspects of our lives. Collective Decision Making: How Groups Influence What We Buy Many purchasing decisions are made collaboratively, involving multiple people with varying levels of investment, preferences, and priorities. Group Roles in Decision Making: Initiator: The person who identifies the need or brings up the idea. Example: A parent suggests buying a new family car because the current one is too small for the growing family. Gatekeeper: Controls the flow of information and conducts the search for options. Example: A teenager researches different smartphone models online and filters out the less popular options before presenting the best choices to their parents. Collective Decision Making: How Groups Influence What We Buy. (Continued) Influencer: Tries to sway the group's decision based on their preferences or arguments. Example: A friend influences a group of friends to buy a particular brand of sneakers after raving about their comfort and style. Buyer: The individual who actually makes the purchase. Example: A father goes to the electronics store to buy the family’s new TV, after the decision is made by the family. User—The person who actually consumes the product or service. Example: A teenager uses the new smartphone to browse social media and play games, becoming the primary user of the device. B2B Decision Making Organizational Buyers: Individuals who make purchases for companies, such as corporations, government agencies, and hospitals, to support manufacturing, distribution, or resale. Market Size: B2B transactions account for over $2 trillion in product and service exchanges, surpassing consumer purchases. Key Factors in Decision Making: Organizational buyers consider factors such as product quality, supplier competence, past experiences, and company values. Learning Process: Organizational buyers engage in a learning process, sharing information and developing "organizational memory" to make better purchasing decisions. Differences from Consumer Behavior: While there are similarities in the decision-making process, organizational buying often involves more complex and strategic factors. Compare with Consumer Decision Making? B2B Purchase Decisions Involvement of Multiple People: Purchase decisions often involve various individuals, including buyers, influencers, and end- users. Technical Specifications: B2B purchases are typically based on precise technical specifications, requiring expert knowledge of the product. Rational Decision Making: Impulse buying is rare; decisions are made carefully, based on experience and weighing alternatives. High Risk & Responsibility: Decisions are risky, as buyers' careers may depend on the choices made. Large Dollar Volume: B2B purchases often involve substantial amounts, with a small number of customers accounting for most of a supplier’s sales. Emphasis on Personal Selling: B2B marketing relies more on personal selling and face-to-face contact than on advertising or promotions. B2B Buying Strategies ("Buy classes") 1.Straight Rebuy: 1. A routine, automatic purchase, often triggered by inventory levels. 2. Involves minimal information search or evaluation, using approved vendors. 2.Modified Rebuy: 1. Limited decision-making for a repurchase with minor changes. 2. May involve a small-scale search for vendors and a few decision-makers. 3.New Task: 1. Extensive decision-making for first-time purchases with high risk. 2. Requires a buying center with specialists to gather information and evaluate options. B2B E-Commerce Business-to-business (B2B) e-commerce refers to internet interactions between two or more businesses or organizations. This includes exchanges of information,products, services, or payments. In the simplest form of B2B e-commerce, companies provide an online catalog of products and services that other businesses need. Companies such as Dell Computer use their site to deliver online technical support, product information, order status information, and customer service to corporate customers. What is Agile Marketing? Agile marketing is a fast and flexible way of doing marketing. It uses data and feedback to quickly find and test new ideas. If something works, the team improves it and does it again. The goal is to stay ahead of the competition by being faster and smarter. How Does Agile Marketing Work? 1.Look at data to find new ideas or problems. 2.Test these ideas quickly. 3.Check the results to see what works best. 4.Improve and repeat the process. Example: Online Retailer Goal: Get more people to buy from their website. Agile Approach: Test different designs or offers on the website. Check which version gets more sales. Use the best version and keep improving. The Intimate Corporation: Family Decision Making Members of a family unit play different roles and have different amounts of influence when the family makes purchase decisions. How Families Make Decisions Families often face disagreements when deciding things like vacations, dinner, or chores. Conflict happens when: The decision is important or new. Family members have strong opinions. What Affects Family Decisions? 1.Interpersonal Need: 1. How much someone cares about the decision. 2. Example: A teenager might care more about family choices than a college student living away. 2.Product Use: 1. How much the decision affects someone’s life. 2. Example: A coffee-loving mom cares about picking a coffee machine, but her soda-drinking son doesn’t. 3.Responsibility: 3. Who will take care of the item or task? 4. Example: Deciding to get a dog might cause arguments over who feeds or walks it. 4.Power: 3. Who has the most influence in the family? 4. Example: In some families, parents make most decisions, but kids might argue if they feel ignored. Examples of Family Disagreements Where to go on vacation – Everyone wants a different destination. What to eat for dinner – Different food preferences can cause arguments. Who does the chores – Fighting over tasks like dishes or cleaning. Families make decisions based on needs, responsibilities, and influence. Understanding these factors can help avoid fights and make decisions smoother. Who Makes Family Buying Decisions? Marketers need to know who decides what to buy in a family to target the right person. Key Role: The Family Financial Officer (FFO) is responsible for managing bills and spending extra money. Traditional vs. Modern Roles 1.Traditional Families: 1. Men earn the money, women manage and spend it. 2. Each spouse has specific roles, like men handling maintenance and women handling household tasks. 2.Modern Families: 1. Both spouses share responsibilities, including: 1. Cleaning 2. Grocery shopping 3. Household maintenance 2. Men now take on roles traditionally seen as “female.” The Synoptic Ideal A model where husband and wife make decisions together: They weigh options. Assign clear roles. Choose what’s best for both. Common among U.S. couples, especially younger ones. Family roles in decision-making vary by tradition and modern norms.Marketers must adapt strategies based on who holds influence in a household.The trend is shifting toward shared responsibilities and joint decision-making. Word-of-mouth communication Word-of-mouth communication is the most important driver of product choice. Much of what we know about products we learn through word-of-mouth (WOM) communication rather than formal advertising. We tend to exchange product- related information in casual conversations. Although WOM often is helpful to make consumers aware of products, it can also hurt companies when damaging product rumors or negative WOM occur. Social media Social media changes the way we learn about and select products. Social media platforms significantly increase our access to others’ opinions about products and services. Virtual consumption communities unite those who share a common passion for products that include apparel, cars, music, beer, political candidates, etc. Many social media users post content online that satisfies the motive for. self-enhancement as well as the desire to share opinions and experiences about products and services. Consumers may engage with these brands via social games. Viral marketing techniques enlist individuals to spread online WOM about brands. Online opinion leaders play a pivotal role in disseminating influential recommendations and product information. Income and social class Chapter 8  Consumer demand for goods and services depends on both our ability and our willingness to buy. Although demand for necessities tends to be stable over time, we postpone or eliminate other expenditures if we don’t feel that now is a good time to spend money. Consumer confidence Our confidence in our future, as well as in the overall economy, determines how freely we spend and the types of products we buy. The field of behavioral economics studies how consumers decide what to do with their money. Consumer confidence Consumer confidence—the state of mind consumers have about their own personal situation, as well as their feelings about their overall economic prospects—helps to determine whether they will purchase goods and services, take on debt, or save their money. Consumer confidence Example: During a recession, families prioritize saving and essential purchases, while in periods of economic stability, spending on non- essentials increases.  Our financial behavior is not always rational and is often influenced by emotions like optimism or fear. Example: During Black Friday sales, consumers often overspend due to the fear of missing out (FOMO) on discounts, even when they don’t need the items. social classes We group consumers into social classes that say a lot about where they stand in society. A consumer’s social class refers to his or her standing in society. Factors including education, occupation,and income determine the class to which we belong. Virtually all groups make distinctions among members in terms of relative superiority, power, and access to valued resources. This social stratification creates a status hierarchy in which consumers prefer some good to others. social classes People in different classes have unique consumer behaviors and preferences. Upper class: Invest in luxury vacations, designer goods. Middle class: Focus on education, housing. Lower class: Prioritize essentials like food and utilities.  Although income is an important indicator of social class, the relationship is far from perfect. Factors such as place of residence, cultural interests, and world view also determine social class. As income distributions change around the world, it is getting more difficult to distinguish among members of social classes; many products succeed because they appeal to a newly emerging group that marketers call the mass class (people with incomes high enough to purchase luxury items, at least on a small scale). Social Stratification Social stratification refers to the division of society into hierarchical layers based on access to resources, power, and prestige. Key Concept: This creates a status hierarchy, where people aspire to move to higher levels by acquiring goods or resources associated with higher classes. Example: In traditional Indian society, caste systems defined access to resources; in modern times, income and education play a larger role in determining status.  Factors that determine social class include: Education: Higher degrees often lead to better job opportunities and higher status. Occupation: Some professions carry more prestige than others. Income: Affects what goods/services you can afford but isn’t the sole determinant of class. Education and cultural knowledge can elevate someone’s class even if their income is modest. Example: A university professor earning less may be seen as more prestigious than a wealthy entrepreneur in some societies. Social Mobility Social mobility is the ability to move up or down the social class ladder over time. Key Concept: The rise of the mass class has blurred class lines. This group consists of middle-income consumers who can now afford small luxuries. Example: Brands like Zara and H&M cater to middle-income consumers, offering affordable luxury clothing and accessories. Income vs. Social Class Income alone doesn’t define social class; cultural factors like education, occupation, and lifestyle are equally important. Key Insight: Someone with a high income but low cultural capital (e.g., a lottery winner) may not be considered part of the elite. Example: A rural farmer with high export earnings is not perceived as upper class compared to an urban lawyer with a modest salary.  Conspicuous consumption is the practice of showcasing wealth by purchasing luxury items or services. Key Concept: It signals affluence and status to others. Example: Purchasing a luxury car like a Lamborghini or owning a large mansion are classic examples of conspicuous consumption.  Nouveau riche refers to individuals who recently acquired wealth, often through entrepreneurship or other modern means. Key Concept: They tend to display their wealth more conspicuously than old-money families, who often adopt understated lifestyles. Example: Tech billionaires buying private islands or yachts, contrasting with old-money families who may prefer conservative investments.  Status Symbols Definition: Status symbols are items or services that signal a person’s wealth, success, or social standing. Key Concept: These symbols vary by culture but often reflect scarcity or exclusivity. Example: Owning a Tesla in the US signals affluence and environmental consciousness, while traditional gold jewelry signifies wealth in Oman.