COMM 362 Final Notes PDF

Ch. 6 Personality, Lifestyles, and Values Traditionally, marketers rely on demographic segmentation of the market (e.g. age, gender, income, etc.) Psychographic segmentation = segmenting the market based on consumers’ psychological character Personally traits (measured with scales = Big 5, nee...

Ch. 6 Personality, Lifestyles, and Values Traditionally, marketers rely on demographic segmentation of the market (e.g. age, gender, income, etc.) Psychographic segmentation = segmenting the market based on consumers’ psychological character Personally traits (measured with scales = Big 5, needs) Values and lifestyles (measured with scales = VALS) Opinions Interests Qualitative Quantitative Type of question Probing (open-ended) Simple (Likert scale) Sample size Small Large Information per respondent High Low (ish) Type of analysis Subjective, interpretative Objective, statistical Consumer responses Implicit attitudes Explicit attitudes Feelings, motivation, Awareness, choice  memory association Laddering: a series of structured questions that gradually move from the tangible features of a product or service to the personal and emotional benefits it provides → An interview technique (qualitative research) that can be used to generate insights on - Brand equity - A product category → Present customer knowledge in a hierarchical way 1. Important product attributes 2. Why product attributes are important = consequences 3. Why these consequences are important = values and needs (e.g. status, accomplishment, belonging, self-esteem, family, security What laddering tells you: Exploratory research (investigate a problem that is not clearly defined) ○ Gathers insights on important values and needs ○ Provides ideas for product positioning Best to interview customers with high product involvement) Limitations of laddering: It won’t tell you information on different needs/values across different segments of customers ○ Needs descriptive research (observing and documenting a phenomenon to understand its characteristics, behaviors, or patterns without exploring causation) ○ It won’t tell you which product positioning is best ○ Needs experimental research (tests cause-and-effect relationships by manipulating independent variables and observing their effects on dependent variables under controlled conditions) Probing = any questions by the interviewer that try to influence the consumer Ch. 7 Attitude  Overview: Three components of attitudes Attitude consistency ○ Cognitive dissonance theory ○ Balance theory Influencing attitudes ○ Commitment and consistency ○ Normative influence ○ Reciprocity Attitude: a lasting, general evaluation of people, objects, places, behaviors, or ideas. Components: 1. Affective component…how consumers feel about an object ○ I like Pepsi 2. Behavioural component…whether consumers intend to do something with an object ○ I intend to buy Pepsi 3. Cognitive component…what consumers believe about an object ○ I believe Pepsi has 23 flavours Cognitive Dissonance Theory: Principle of cognitive consistency…consumers value harmony among their attitudes (beliefs, actions, feelings) Cognitive Dissonance… the uncomfortable tension that occurs when we hold conflicting attitudes (e.g. traveling by plane is convenient vs I believe planes are bad for the environment) → Cognitive Dissonance Reduction (rationalization) 1. Change behaviors (e.g. I’ll travel by train) 2. Add consonant attitudes (e.g. I pay carbon tax when I travel by plane) 3. Discard dissonant attitudes (e.g. Polluting planes, that’s fake news!) Balance Theory: psychological concept that explains how people try to maintain consistency in their attitudes and relationships Involved triad attitude structure: Person Perception of an attitude for an object Perception of another person → perception can be positive or negative Balanced/Harmonious Triad elements: Balance occurs when all three elements in the triad are consistent and harmonious - Unit Relation: This refers to the connection between the person and the attitude object (e.g., the person likes the product). - Sentiment Relation: This refers to the feeling the person has about another person (e.g., the person likes or dislikes the celebrity endorsing the product). Unbalanced triad: need to restore balance Marketing applications: Celebrity endorsement (Kendal Jenner and Pepsi) Word-of-mouth from friends Influencing Attitudes: Commitment and consistency…we want to act consistently with our stated commitments ○ Door-in-the-face technique: ask for a big favor, then adjust it down (e.g. ask them if they can volunteer for 3 years, then ask them to volunteer for a day) ○ Foor-in-the-door technique: start with a small request, then a bigger one (e.g. have people sign a petition, then ask them for money) ○ Low-ball technique: change initial “smaller” agreement for a bigger one (e.g. advertise a price, then once agreed, add multiple fees…car salesmen) Normative influence…we rely on others’ attitudes to guide our own attitude (e.g. share your sales numbers = everyone’s buying it so it must be good, highlight customer reviews, build a community of users, generational branding, cause marketing) ○ 1951 Asch Experiment: 37% systematically followed the group even when wrong ○ Informational conformity: the group must be right ○ Normative conformity: the group is wrong, but I want to fit in, I fear being excluded → Need for affiliation!  ○ Injunctive Norms: behaviours which are perceived as being approved by others (what people should do) ○ Descriptive Norms: perceptions of how other people are actually behaving, whether or not there are approved of. (what people actually do) → Combing low descriptive norm with high support for the injunctive norm Reciprocity…we feel obligated to return favors, we feel indebted ○ Works best when the other party acts first (e.g. send $1 with the survey) Liking…we say yes to people we like Authority…we trust experts Scarcity…we like things that are scarce, available in limited supply Ch. 8 Attitude Change Overview: Elaboration likelihood model Source ○ Source attractiveness and the halo effect of beauty ○ Source credibility and biases Message ○ Emotional appeals ○ Repetition and wear-out ○ Comparative advertising ○ Two-sided arguments The Elaboration Likelihood Model: psychological theory that explains how people process persuasive messages and form attitude Persuasion depends on consumers’ level of product involvement. Involvement: a person’s perceived relevance of the product based on their inherent needs, values, and interests Involvement depends on: Product type…a pen vs a car Consumer type…shampoo for women vs men Situation…buying a suit for your wedding vs for your distant cousin’s wedding Two pathways to influence attitudes HIGH involvement consumers LOW involvement consumers Central Route Peripheral Route Influencing attitudes with: Influencing attitudes with: Focus on important information like Focus on effect (fears, desires) and evidence, logic, rational arguments associations with positive or Utlitiraian framing negative cues  High cognitive effort (actively and Hedonic framing carefully processes the information) Low cognitive effort (don’t spend E.g. produce comparisons, expert advice, energy or time analyzing consumer testimonials, trials information. Instead, relies on “This produce has been proven to be simple cues and emotional appeal) effective” E.g. Celebrity endorsement, visuals “This produce will bring happiness” Accumulation of information drives behavior: Cognition → Behavior (cognition Emotional reactions drive behavior: Affect predicts purchase) → Behavior (affect predicts purchase) Using Emotions: get attention, improve recall, reduce counterarguments → world especially for low-involvement consumers - Ads with sex appeals…get attention, can lead to more elaboration and evaluative bias, and effectiveness varies between genders - Ads with humor appeals…get attention, can mitigate counterarguing, should match the product’s image and culture - Ads with fear appeals….get attention, but self-defense mechanisms (distraction and counterarguing) may decrease evaluative effects - Better with a moderate amount of fear - Better if information on what to do next The Source Source credibility…source’s perceived competence; expertise, objectivity or trustworthiness. - The source must be connected with the product - 3 types of credible sources: celebrity, expert, or “typical” customer Source attractiveness: source’s perceived social value; physical appearance, but as well as personality, social status → Halo effect of beauty: beautiful people are perceived as smarter, happier, more competent, etc. Biased Sources: consumers' beliefs about products can be weakened by a source perceived to be biased: Knowledge bias: The source’s knowledge about a topic is not accurate Reporting bias: The source (e.g., a person, company, or organization) has the knowledge or expertise to provide accurate information but chooses not to communicate it honestly or fully due to ulterior motives, pressures, or incentives. Repetition: Mere exposure (positive) vs adaption (negative) Mere exposure: repeated exposure to a message or product increases familiarity and positive feelings. Adaption: Over time, too much repetition can cause the message to feel boring, annoying, or repetitive, leading to a negative reaction. Two-factor theory: two opposite forces operate at the same time (learning vs tedium) - Learning effect: with each repetition, consumers understand the message better and grow more comfortable with it. - Tedium effect: at the same time, excessive repetition causes boredom or frustration, leading to negative attitudes. Comparative Advertising: Why does it work? - Brand as our identity - Brands have stepped in as pillar of our identity PROS: Can be more effective than non-comparative ads in terms of attention, elaboration, brand attitude, purchase intentions, and purchase behavior CONS: Source derogation…consumer's tendency to discredit or criticize the source of a message when they perceive it as overly aggressive, biased, or offensive ○ In Asia, comparative ads are rare,and perceived as offensive It primes the competitor (free exposure) → new entrants and small actors should do comparative ads - Allows them to "borrow" the familiarity and reputation of an established competitor. - It can signal that they’re confident in their offering and can compete with the best. - Instead of building awareness from scratch, they "piggyback" on the market leader's recognition and frame themselves as a better alternative. Two-Sided Messages: One-sided: one supportive information Two-sided: positive and negative information Ch. 9 Judgment and Decision-Making I Problem Recognition ○ Ideal vs actual state Information Search ○ Satisficers vs maximizers ○ Heuristics Evaluation of alternatives ○ Evoked set, inert set, inept set ○ Evaluative criteria: asymmetric dominance Product choice Stages of Consumer Decision Making: ① Problem Recognition: occurs when the consumer perceives a difference between their current state and some desired or ideal state. Two types of problem recognition: 1. Opportunity recognition: due to an increase in the ideal state (e.g. My friend’s TV screen is better than mine) 2. Need recognition: due to a decrease in actual state (e.g. I’m running out of gas) ② Information Search: the process in which consumers scan their memory (=internal search) or their environment (=external search) for appropriate information to make a reasonable decision. - The amount of information search and the type of information search (internal or external, deliberate or accident) varies with product involvement Maximizers vs Satisficers Satisficers: to pursue the minimum satisfactory condition or outcome—you look for a good enough solution Maximizers: You look for the solution that delivers the best possible answer to your problem → But consumers have to “settle” at some point…Bounded rationality (forces all consumers, even perfectionist maximizers, to satisfice when their mental, time, or information resources run out!) Maximizers and Satisficers differ in:  - Degree of involvement - Amount of information they search - Regret - Decision satisfaction → Doing better but feeling worse = maximizers tend to feel more negative effects and lower satisfaction even after researching a lot. → This is because maximizers have higher expectations and keep looking for alternatives even after making a decision. Heuristics: mental shortcuts to more extensive information processing. They simplify decision-making but are not necessarily correct. - E.g. Price-quality belief - Brand-quality belief - Country of origin beliefs…logos, “made in China” ③ Evaluation of Alternatives Consideration set…alternatives actively considered Inset set…alternatives that do not come to mind at all Inept set…alternatives that you are aware of but would not consider buying Evaluative Criteria: the dimensions used to judge the merits of competing options Asymmetric dominance effect (Decoy Effect): the presence of a third, less attractive option influences consumers to choose one of the original options over another. ④ Product Choice Sunk Cost Fallacy: having paid for or invested in something makes us reluctant to waste it. - E.g. Keeping a bad stock in a portfolio after you paid a high price for it This is irrational because: → The resources (time, money, energy) you’ve already spent are irretrievable and shouldn't affect your current decisions. Choice Overload: having too many options can make it harder - → Usually people like choosing, but too much choice can hurt. - An extensive selection of items is initially more attractive to individuals - However, an extensive choice is ultimately detrimental to motivating the purchase of a product → Too much choice is paralyzing! Ch. 10 Group Influence and Social Media Reference Groups: an individual or group with particular relevance for an individual’s evaluations, aspirations, or behavior Brand Communities: a set of consumers who share a set of social relationships based on usage of or interest in a product/brand Why is it important for brands to build communities? Loyalty…maintain cognitive consistency (beliefs, attitudes, and actions are aligned) Spread positive word of mouth…brand missionaries? ○ Brand missionaries: highly loyal and enthusiastic customers who actively promote a brand to others, often without being paid or officially affiliated with the company Facilitate brand extension strategies and brand ecosystem (e.g. Apple) In-groups…groups we see ourselves as part of, like a community, a cultural group, or even a brand community Interpersonal attraction: people feel a stronger connection to those in their in-groups because they share similarities, values, and goals. Propinquity (physical and psychological proximity): like-attracts-like ○ People tend to like and form connections with those who are physically close to them (e.g., classmates, or coworkers) or psychologically similar (e.g., shared interests or values). In-groups are part of people’s extended self…people incorporate groups, brands, or affiliations into their identity. Need to belong/Need for affiliation Group cohesiveness: the degree to which members of a group are attracted to each other and value their group membership. How to increase group cohesiveness? - Smaller group - Membership restriction/exclusivity - Symbols - Defined limits between ingroup and outgroup Reference Groups (In-groups)...groups we identify with and feel connected to. Propinquity, identification, affiliation (e.g. brand communities) Aspirational Reference Groups (Out-group)...groups we do not currently belong to but aspire to join or emulate. Idealized/aspirational figures (e.g. influencers) Dissociative Reference Groups (Out-groups)...groups we do not want to be associated with and actively avoid. Groups with values, behaviors, or characteristics that conflict with our own. Brands can use dissociative groups in their advertising to highlight what they don’t stand for. (e.g. Samsung talking about Apple in its ad) Anti-conformity: The deliberate act of going against the group’s expectations or norms. - Often driven by the need for uniqueness Reactance: the unpleasant feeling when something feels forced or imposed by an authority or by a social norm - Leads people to do exactly the opposite..if you forbid something, people are more interested in the product Social loafing: individuals do not devote as much effort to a task when their contribution is part of a larger group effort Diffusion of responsibility: individuals feel less accountable for the outcome of a decision when many people are involved → Bystander Effect: individuals won’t help a person in need when other people are present. (a form of diffusion of responsibility) - E.g. customers tip less in groups, so restaurants automatically charge a fixed gratuity fee for large groups Ch. 12 Income and Social Class Gini Coefficient: a number between 0 and 100, where 0 corresponds with perfect equality (where everyone has the same income) and 100 corresponds with perfect inequality (where one person has all the income—and everyone else has zero income). What explains Gini disparities? - Economic structure (minimum wage)  - Tax redistribution - Corporate culture (high salaries for top executives) - History - Geographical features (more people in the rural areas) Consumer Confidence: consumer’s beliefs about what the future holds Measurement: e.g. would you say you are better or worse off financially than a year ago? → consumer confidence is a major goal for economic policy because: - It predicts savings rate (-), consumption rate (+), and ultimately investment and employment rate (+) - If people are confident, people tend to spend more and save less. This increases business investment and leads to more jobs being created. - Macroeconomics driven by animal spirits (Keynes) - The economy is influenced by people’s emotions, optimism, or fear rather than just logical decisions Money and Pain Neural predictors of purchases: If we LIKE the product: A part of our brain called the nucleus accumbens lights up. (excitement, pleasure, anticipation of a reward) When the price feels TOO HIGH: the insula, activates. (pain, discomfort, distress) How purchases are DECIDED: If the reward feeling is stronger than the pain of paying, we're more likely to buy. If the pain of paying is greater, we hold back. → People spend money until it HURTS! → How can we minimize the pain of paying? Contactless payment (Apple Pay) One-click payment (Amazon) Automatic re-ordering (Amazon) Tightwads vs Spendthrifts Tightwads: experiences too much pain from paying. Spendthrifts: does not experience enough pain from paying. → Tightwads save more and have less debt, than spendthrifts at each income level. Who’s more likely to be tightwads? - Men - Older people - Educated people Social Class and Status Signaling Social class…overall rank of people in society. (E.g. occupation, income, education, family) → Social class is dynamic and subjective: Social mobility…passage of individuals from one social class to another ○ Horizontal, downward, upward mobility Marriage can lead to social mobility ○ Homogamy…marrying people similar in social class to ourselves ○ Hypergamy…marrying up ○ Hypogamy…marrying down  Subjective social class…the class that which a consumer identifies rather than the one to which they actually belong Conspicuous Consumption…buying expensive items to display wealth, income, and social class = status signaling Conspicuous vs Inconspicuous Consumption Brand prominence… is NOT a function of wealth, but a function of NEED OF STATUS. Conspicuous consumption Inconspicuous consumption Loud signal (big logos) Quiet signals (small logos) Target: consumers with a high need Target: customers with a lower need for status, who want to display their for status, who only want to display wealth their wealth to other wealthy people Not necessarily very wealthy, or → If you know you know became wealthy recently Ch. 13 Cultural Influences I —-No two markets are the same! Standardized vs Localized marketing Standardization Localized/Adaption PROS Economies of scale (the Respect local specifications more you prudence the and expectations cheaper it becomes) Excellent local image Faster set-up time Customers keep their Single coherent global landmarks and feel noticed image Excellent monitoring of communication CONS Possible loss of advertising Higher cost effectiveness Time-consuming and poor Little reactivity and little speed of execution flexibility Difficult to know what Can create a negative consumers really want reaction from neglecting local needs Cross-Cultural Marketing Different cultures can differ in: Tastes: what’s considered beautiful, palatable, etc. Norms: rules dictating what’s right/wrong, acceptable/unacceptable ○ Customs: basic behavior (e.g. what time you eat) ○ Mores: cultural norms or customs that are deeply rooted in a society's sense of morality and ethics (also taboos) (e.g. what we can eat) ○ Conventions: the correct conduct of everyday life (e.g. utensils used to eat) Values: beliefs that something is preferable to its opposite Food/Taste - In Western cultures, consumers categorize foods as healthy/unhealthy based on specific nutrients (fat, carbs, sodium, etc.)  - In Chinese cultures, healthy dishes are those that balance heaty and cooling elements (e.g., deep-fried chip + cucumber) Hofstede—Six Value Dimensions 1. Individualism vs collectivism = the degree to which a culture values the welfare of the individual rather than the group 2. Uncertainty avoidance = aversion toward uncertain, ambiguous, risky situations 3. Power distance = the degree to which a society’s members are equal in terms of status 4. Masculinity vs femininity = the extent to which a culture stresses masculine values such as assertiveness, success, and competition over feminine values such as warm personal relationships and caring 5. Indulgence vs restraint = society permits gratification, fun, enjoyment 6. Long-term orientation = long-term oriented societies attach more importance to the future (e.g. perseverance) rather than the present (short term gratification) or past (traditions) Rituals and Social Conventions Rituals = set of symbolic behaviors that occur in a fixed sequence and that tend to be repeated periodically (e.g. diamonds for engagement, KFC for Christmas) Ritual artifact = item used in the performance of rituals Gift-giving = can be viewed as a ritual or a social convention - Economic exchange = transfer of value, with reciprocity norm (equal value) - Symbolic exchange = No expectation or reciprocity (e.g. In Japan, gift-giving is more symbolic than economic exchange) Ch. 13/15 Cultural Influences II—Creation and Diffusion of Culture Innovation: any product or service that consumers perceive to be new or novel in some way. Type of Innovation: 1. Continuous Innovation…modifications of an existing product (e.g. iPhone 16) 2. Dynamically Continuous Innovation…more pronounced change, required behavior change (e.g. introduction of a virtual keyboard on the first iPhone in 2007) 3. Discontinuous Innovation…major change, new product category (e.g. first commercialized cell phones) Crossing the Chasm Psychology of Early Adopters 1. They tend to be category-specific—very knowledgeable and high-involvement Inform and educate with utilitarian/functional communication Get them even more involved (crowdsourcing, crowd financing, beta testing) 2. They are high in need of uniqueness ○ Manage the impression of scarcity - Limited supply (PS5 in 2021) - Invite-only + subscription (Spotify in 2008) - Waiting list (Windows 10 in 2015) 3. Price ○ Price skimming = set high prices first then reduce ( ○ Penetration pricing = set low price first, then increase (Android, Netflix) Psychology of Majority (80%) 1. They are low-involvement consumers ○ Entertain them with fun/emotional communication—hedonic ads 2. They are high in need for conformity; they need social proof (evidence that the product has already been adopted and validated by other consumers) ○ Celebrity endorsement, product placement ○ Endorsement or advocacy by friends (early adopters) on social media 3. Price ○ In a mature market: different prices for different consumer segments → Price discrimination! You want to price discriminate to maximize your profit as much as possible. 5 prerequisites for Successful Adoption 1. Relative advantage: must give advantages other products don’t have. 2. Compatibility: must fit the consumer’s lifestyle 3. Observability: ones that are observable spread faster (seeing others use it) 4. Trialability: reduce risk by letting consumers try it (test drive new cars) 5. Conmplexity: lower the better! Adoption S-Curve...consumption spreads faster today! Diffusion of fashion Fad: short-lived fashion that doesn’t get adopted by the majority (hammer pants) Classic: fashion with a long acceptance cycle (staple pieces like white sneakers) Fashion—Trickle Down Effect (rich people addapt fashion first, then middle class, etc.) BUT, it can go the other way (e.g. skating culture, thrifting culture feeds back into the market) Mixed and match = mixing high-upscale items and low-downscale items → who is buying the mix-and-match items? - High-scale, high-class individuals purchase mixed and matched. Middle-class consumers by upscale items. - Need of uniqueness, wanting to differentiate themselves from the other rich Trickle round effect: high-status consumers adopt low-status signals to distinguish themselves from middle-status consumers (a form of inconspicuous …. Moderator and confounds Moderator: what you want to research and prove Confounds: something you don’t address but affects your relationship