Mma6e chapter-06 final

Marketing Management:An Asian Perspective, 6th Edition

Instructor Supplements Created by Geoffrey da Silva

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Analyzing Consumer Markets

6© Pearson Education South Asia Pte Ltd 2013. All rights reserved

Learning Issues for Chapter Six

1. How do consumer characteristics influence buying behavior?

2. What major psychological processes influence consumer responses to the marketing program?

3. How do consumers make purchasing decisions?

4. In what ways do consumers stray from a deliberative, rational decision process?

4 © Pearson Education South Asia Pte Ltd 2013. All rights reserved

Importance of Understanding Customers

• The aim of marketing is to meet and satisfy target customers’ needs and wants better than competitors.

• Marketers must have a thorough understanding of how consumers think, feel, and act and offer clear value to each and every target consumer.


Importance of Understanding Customers

• Successful marketing requires that companies fully connect with their customers.

• Adopting a holistic marketing orientation means understanding customers—gaining a 360-degree view of both their daily lives and the changes that occur during their lifetimes so the right products are always marketed to the right customers in the right way.


What Influences Consumer Behavior?

• Consumer behavior is the study of how individuals, groups, and organizations, select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants.

• Marketers must fully understand both the theory and reality of consumer behavior.

• A consumer’s buying behavior is influenced by cultural, social, and personal factors. Cultural factors exert the broadest and deepest influence.


Cultural Factors

• Culture, subculture, and social class are particularly important influences on consumer buying behavior.

• Culture is the fundamental determinant of a person’s wants and behaviors.


Marketers use cultural factors to their advantage. In Japan, for instance, it is a New Year’s custom for merchants to offer fukubukuro ( 福袋 ) or lucky mystery bags.

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Fukubukuro are lucky mystery bags started by Ginza Matsuya Department Store and has since spread to most Japanese retailers. This Japanese custom has spread to other cultures. Many Sanrio stores in the U.S. adopt this tradition. For the opening of the Apple store in San Francisco, $250 lucky bags were offered containing a mix of software, audio accessories, and an iPod in randomly selected bags.

© Pearson Education South Asia Pte Ltd 2013. All rights reserved

Sub-Cultures

• Each culture consists of smaller subcultures that provide more specific identification and socialization for their members.

• Subcultures include nationalities, religions, racial groups, and geographic regions.

• Multicultural marketing grew out of careful marketing research, which revealed that different ethnic and demographic niches did not always respond favorably to mass marketing.


Examples of Behaviors in Different Asian Sub-Cultures

• Chinese consumers, for instance, may respond differently from Indian, Malay, or Filipino consumers.

• To the Chinese, especially those of the Cantonese dialect group, feng shui (literally meaning wind water) or geomancy is important.

• Some Chinese avoid buying houses with the number four in the address because it sounds like, and thus connotes, “death;” while favoring the number eight as it sounds like “prosperity.”

• The Beijing Olympics was officially opened on 8 August 2008 (8-8-08).


Hong Kong Disneyland and Feng Shui

Disney officials consulted feng shui experts in building Hong Kong’s Disneyland. The park faces water with mountains behind to suggest plentiful inflow of revenue and visitors, while being protected at the rear.


Social Stratification

• Virtually all human societies exhibit social stratification.

• Most often, it takes the form of social classes, relatively homogeneous and enduring divisions in a society, hierarchically ordered and with members who share similar values, interests, and behavior.


Social Classes

One class depiction of social classes in the United States definedseven ascending levels:

1. Lower lowers2. Upper lowers3. Working class4. Middle class5. Upper middles6. Lower uppers7. Upper uppers


China’s Occupational Classes—China has 10 distinctoccupational strata

Social classes differ in dress and where they shop. High-end shopping malls like the Plaza 66 in Shanghai attract higher social class consumers who have disposable income to buy high-ticket items.


Characteristics of Social Classes

1. First, those within each class tend to behave more alike than persons from two different social classes. Social classes differ in dress, speech patterns, recreational preferences, and many other characteristics.

2. Second, people are perceived as occupying inferior or superior positions according to social class.

3. Third, social class is indicated by a cluster of variables—for

example, occupation, income, wealth, education, and value orientation—rather than by any single variable.


Characteristics of Social Classes

4. Fourth, individuals can move up or down the social class ladder during their lifetimes. The extent of this mobility varies according to how rigid the social stratification is in a given society.


Marketing Implications of Social Classes

1. Social classes show distinct product and brand preferences in many areas, including clothing, home furnishings, leisure activities, and automobiles.

2. Social classes differ in media preferences, with upper-class consumers often preferring magazines and books, and lower-class consumers often preferring television. Even within a media category such as TV, upper-class consumers tend to prefer news and drama, and lower-class consumers tend to prefer soap operas and sports programs.

3. There are also language differences among the social classes. Advertising copy and dialogue must ring true to the targeted social class.


Social Factors

Social factors such as reference groups, family, and social roles and statuses affect our buying behavior.


Reference Groups

• A person’s reference groups are all the groups that have a direct (face-to-face) or indirect influence on their attitudes or behavior.

• Groups having a direct influence are called membership groups.

• Some membership groups are primary groups such as family, friends, neighbors, and co-workers with whom the person interacts fairly continuously and informally.

• Some membership groups are secondary groups such as religious, professional groups that tend to be more formal.


Reference Groups

People are also influenced by groups to which they do not belong:

• Aspiration groups are those a person hopes to join.

• Dissociative groups are those whose values or behavior an individual rejects.


Influence of Reference Groups

• Reference groups expose an individual to new behaviors and lifestyles, influencing attitudes and self-concept.

• They create pressures for conformity that may affect actual product and brand choices.


Opinion Leaders

• Where reference group influence is strong, marketers must determine how to reach and influence the group’s opinion leaders.

• An opinion leader is the person in informal, product-related communications who offers advice or information about a specific product or product category.

• Marketers try to reach opinion leaders by identifying demographic and psychographic characteristics associated with opinion leadership, identifying the media read by opinion leaders, and directing messages at opinion leaders.


Family

• The family is the most important consumer-buying organization in society, and family members constitute the most influential primary reference group.

• There are two families in the buyer’s life.

– The family of orientation consists of parents and siblings.

– A more direct influence on everyday buying behavior is the family of procreation—namely, the person’s spouse and

children.


Families in Asia

In Asia, the family is a strong reference group, influencing members on numerous aspects of their daily life.


Family—Roles and Influence of Family Members

• Marketers are interested in the roles and relative influence of family members in the purchase of a large variety of products and services.

• These roles vary widely in different countries and social classes.

• Given women’s increasing wealth and income generating ability, household purchasing patterns are gradually changing in Asia.

• Thus, marketers of products traditionally purchased by men are now thinking about women as possible buyers.


Focus on Women as Car Buyers

• Korean car makers are taking women more seriously as they represent 30% of domestic sales.

• Hyundai introduced the Sonata Elegance Special, a female-oriented version of its flagship mid-sized sedan.

• To provide a more feminine touch to its cars, Kia Motors focused on fashionable appearances.


Marketing Implications

• For expensive products and services, the vast majority of husbands and wives engage in joint decision making.

• Men and women may respond differently to marketing messages.

• Another shift in buying patterns is an increase in the amount of dollars spent and the direct and indirect influence wielded by children and teens.


Roles and Statuses

• A person participates in many groups—family, clubs, and organizations.

• The person’s position in each group can be defined in terms of role and status.

• A role consists of the activities a person is expected to perform.

• Each role carries a status.

• Marketers must be aware of the status-symbol potential of products and brands.


Marketing Insight: Face-Saving and the Chinese Consumer


Personal Factors

Personal characteristics that influence a buyer’s decision include age and stage in the life cycle; occupation and economic circumstances; personality and self-concept; and lifestyle and values.


Age and Stage in Life Cycle

• People’s taste in food, clothes, furniture, and recreation is often related to our age.

• Consumption is also shaped by the family-life cycle and the number, age, and gender, of people in the household at any point in time.

• In addition, psychological life-cycles may matter.

• Marketers should also consider critical life events or transitions as giving rise to new needs.


Japan’s aging population

Japan’s aging population has seen the introduction of a plethora of elderly-friendly products such as the electronic nurse and therapeutic electronic pets.


Example of a Marketer Responding to the Critical Life Event of Motherhood

Eversoft realizes that in Asia, being a mother is a critical life event. In a symbiotic way, Eversoft cares for your skin, just like how a mother cares for her child.


Occupation and Economic Circumstances

• Occupation also influences consumption patterns.

• Marketers try to identify the occupational groups that have above-average interest in their products and services.

• A company can even tailor its products for certain occupational groups.


Economic Circumstances

• Product choice is greatly affected by economic circumstances: spendable income (level, stability, and time pattern), savings and assets (including the percentage that is liquid), debts, borrowing power, and attitudes toward spending and saving.

• Purchasing discretionary items on credit has risen in Asia.


Marketing in a Recession

If economic indicators point to a recession, marketers can take steps to redesign, reposition, and re-price their products or introduce or increase the emphasis on discount brands so that they can continue to offer value to target customers.


Personality and Self-Concept

• Each person has personality characteristics that influence his or her buying behavior.

• Definition of Personality: A set of distinguishing human psychological traits that lead to relatively consistent and enduring responses to environmental stimuli.

• Brands also have personalities, and consumers are likely to choose brands whose personalities match their own.

• We define brand personality as the specific mix of human traits that we can attribute to a particular brand.


7 Brand Personalities—Jennifer Aaker

1. Sincerity (down-to-earth, honest, wholesome, and cheerful) For example, Hello Kitty

2. Excitement (daring, spirited, imaginative, and up-to-date) For example, MTV

3. Competence (reliable, intelligent, and successful) For example, Samsung

4. Sophistication (upper-class and charming) For example, Shiseido


7 Brand Personalities—Jennifer Aaker

5. Ruggedness (outdoorsy and tough) For example, Timberland

6. Passion (emotional intensity, spirituality, and mysticism) For example, Zara

7. Peacefulness (harmony, balance, and natural) For example, Yamaha


Hello Kitty Brand Personality

• Hello Kitty has a wholesome, sincere personality. Consumers who see themselves as being honest and down-to-earth are more likely to purchase.

• Hello Kitty products than those who have a different self concept.


BreadTalk Brand Personality

BreadTalk creates personalities for its bread to reflect different social themes and lifestyle.


Self-Concept

• Consumers often choose and use brands with a brand personality consistent with their actual self-concept (how we view ourselves).

• Although in some cases, the match may instead be based on the consumer’s ideal self-concept (how we would like to view ourselves).

• Others self-concept (how we think others see us).


Lifestyles and Values

• People from the same subculture, social class, and occupation may lead quite different lifestyles.

• A lifestyle is a person’s pattern of living in the world as expressed in activities, interests, and opinions.

• Lifestyle portrays the “whole person” interacting with his or her environment.


Marketing and Lifestyles

• Marketers search for relationships between their products and lifestyle groups.

• For example, a computer manufacturer might find that most computer buyers are achievement oriented.

• The marketer may then aim the brand more clearly at the achiever lifestyle.

• Marketers are always uncovering new trends in consumer lifestyles.


Lifestyle: Time Constraints

• Lifestyles are shaped partly by whether consumers are money-constrained or time-constrained.

• Companies aiming to serve money-constrained consumers will create lower cost products and services.


Lifestyle: Time Constraints

• Local brands usually fill this need in many emerging markets, while their foreign counterparts target more affluent consumers.

• Consumers who experience time famine are prone to multitasking, that is, doing two or more things at the same time. Companies aiming to serve them will create convenient products and services for this group.


Core Values

• Consumer decisions are also influenced by core values, the belief systems that underlie consumer attitudes and behaviors.

• Core values go much deeper than behavior or attitude, and determine, at a basic level, people’s choices and desires over the long-term.

• Marketers who target consumers on the basis of their values believe that by appealing to people’s inner selves, it is possible to influence their outer selves—their purchase behavior.


Key Psychological Processes

• The starting point for understanding consumer behavior is the stimulus-response model.

• See Figure 6.1.

• Marketing and environmental stimuli enter the consumer’s consciousness. A set of psychological processes combine with certain consumer characteristics to result in decision processes and purchase decisions.

• The marketer’s task is to understand what happens in the consumer’s consciousness between the arrival of the outside marketing stimuli and the ultimate purchase decisions.


Figure 6.1: Model of Consumer Behavior


Motivation: Freud, Maslow, Herzberg

• We all have many needs at any given time.

• Some needs are:a. Biogenic (arise from physiological states of tension such as

hunger).

b. Others are psychogenic and arise from a need for recognition, esteem, or belonging.

• A need becomes a motive when it is aroused to a sufficient level of intensity to drive us to act.


Motivation: Freud, Maslow, Herzberg

• A motive is a need that is sufficiently pressing to drive the person to act.

• Motivation has both direction—we select one goal over another—and intensity—we pursue the goal with more or less vigor.

• Three of the best-known theories of human motivation—those of Sigmund Freud, Abraham Maslow, and Frederick Herzberg—carry quite different implications for consumer analysis and marketing strategy.


Freud’s Theory

• Sigmund Freud assumed that the psychological forces shaping people’s behavior are largely unconscious, and that a person cannot fully understand his or her own motivations.

• When a person examines specific brands, he or she will react not only to their stated capabilities, but also to other, less conscious cues.

• A technique called laddering lets us trace a person’s motivations from the stated instrumental ones to the more terminal ones.


Motivation Research

• Motivation researchers often collect “in-depth interviews” to uncover deeper motives triggered by a product.

• Projective techniques such as word association, sentence completion, picture interpretation, and role-playing are used.


Maslow’s Theory

• Abraham Maslow sought to explain why people are driven by particular needs at particular times.

• Maslow’s answer is that human needs are arranged in a hierarchy from most to least pressing.

• In order of importance, they are:a. Physiological needsb. Safety needsc. Social needsd. Esteem needse. Self-actualization needs


Figure 6.2: Maslow Hierarchy of Needs


Asian Perspective on Needs Importance

• In collectivistic societies like Asia, it is debatable whether self-actualization is applicable to Asian consumers.

• These needs may be socially directed instead, given the strong desire of Asians to enhance their image and position through contributions to society.

• Socially directed needs considered the most important for Asians:– Affiliation– Admiration– Status


Three types of socially directed needs may be considered the most important for Asians:

• Affiliation—This is the acceptance of an individual as a member of a group. Consumers seeking this need will tend to conform to group norms.

• Admiration—Once affiliation needs are satisfied, admiration is sought. This is respect from group members, which is earned through acts.

• Status—This is esteem received from society at large. Unlike admiration which tends to be at a more intimate level, status requires the regard of outsiders.


Herzberg’s Theory

• Frederick Herzberg developed a two-factor theory that distinguishes dissatisfiers (factors that cause dissatisfaction) from satisfiers (factors that cause satisfaction).

• The absence of dissatisfiers is not enough to motivate a purchase; satisfiers must be present.

• Herzberg’s theory has two implications:i. Sellers should do their best to avoid dissatisfiers.ii. Sellers should identify the major satisfiers or motivators of

purchase in the market and supply them.


Perception

• A motivated person is ready to act—how is influenced by his or her perception of the situation.

• Perception is the process by which we select, organize, and interpret information inputs to create a meaningful picture of the world.

• It depends not only on physical stimuli, but also on the stimuli’s relationship to the surrounding environment and on conditions within each of us.


Perception: China’s Growing Economic Power

• China’s growing economic power—The number of people who consider China’s economic might as a “bad thing” is growing fast in many countries.

• It is perceived negatively in the U.S. and Canada, while such growth is welcomed in Pakistan, Indonesia, Africa, and the Philippines.


Selective Attention

• Attention is the allocation of processing capacity to some stimulus.

• It is estimated that the average person may be exposed to over 1,500 ads or brand communications a day.

• Because we cannot possibly attend to all these, we screen most stimuli out—a process called selective attention.

• Selective attention means that marketers have to work hard to attract consumers’ notice.


Selective Perception

Selective perception: It’s impossible for people to pay attention to the thousands of ads they’re exposed to every day, so they screen most of them out. Apple’s iPod poster ads are eye-catching to minimize screening out.


Selective Attention: Some Findings

1. People are more likely to notice stimuli that relates to a current need.

2. People are more likely to notice stimuli that they anticipate.

3. People are more likely to notice stimuli whose deviations are large in relation to the normal size of the stimuli.


Tobacco Warnings: An Example of Overcoming Selective Attention

• The Indian government is wrapping tobacco products with photographs of rotting gums and faces eaten away by cancer to try to scare Indians into quitting smoking.

• Such vivid pictorial scare tactics have also been used in Singapore and elsewhere after text warnings failed to deter smokers.


Marketing Applications of Selective Attention

• Although people screen out much of the surrounding stimuli, they are influenced by unexpected stimuli, such as sudden offers in the mail, over the phone, or from a salesperson.

• Marketers may attempt to promote their offers intrusively to bypass selective attention filters.


Selective Distortion

• Selective distortion is the tendency to interpret information in a way that fits our preconceptions.

• Consumers will often distort information to be consistent with prior brand and product beliefs and expectations.

• Examples of branded differences can be found in virtually every type of product.

• Selective distortion can work to the advantage of marketers with strong brands when consumers distort neutral or ambiguous brand information to make it more positive.


Apple vs Samsung

Apple and Samsung are suing each other over copyright infringement, with each believing that it is in the right and the competitor is in the wrong.


Selective Retention

• Most consumers don’t remember much of the information to which they are exposed, but they do retain information that supports their attitudes and beliefs.

• Because of selective retention, consumers are likely to remember good points about a product they like and forget good points about competing products.


Subliminal Perception

• The selective perception mechanisms require consumers’ active engagement and thought.

• The topic of subliminal perception, the argument that marketers embed covert, subliminal messages in ads or packages and consumers are not consciously aware of these messages, but yet they affect their behavior.


Learning

• Learning involves changes in behavior arising from experience.

• A drive is a strong internal stimulus impelling action.

• Cues are minor stimuli that determine when, where, and how a person responds.

• Discrimination means that the person has learned to recognize differences in sets of similar stimuli and can adjust responses accordingly.


Marketing Implications of Learning Theory

• Learning theory teaches marketers that they can build demand for a product by associating it with strong drives, using motivating cues, and providing positive reinforcement.

• A new company can enter the market by appealing to the same drives that competitors use and by providing similar cue configurations, because buyers are more likely to transfer loyalty to similar brand (generalization); or the company might design its brand to appeal to a different set of drives and offer strong cue inducements to switch (discrimination).


De Beers Diamonds in China

• The idea that diamond symbolizes a lifetime of love has taken root in China, a country that traditionally prefers gold and jade.

• Chinese consumers have learnt to associate diamond with love, and diamond rings are now popular for weddings.


De Beers Diamonds in China

• The younger generation of Chinese are influenced by Western lifestyle and culture where diamonds are seen as the most important symbol of love and loyalty.

• Many Chinese are also buying diamonds for investment purposes.


Hedonic Bias

• The hedonic bias says people have a general tendency to attribute success to themselves and failure to external causes.

• Consumers are thus more likely to blame a product than themselves, putting pressure on marketers to carefully explicate product functions in well-designed packaging and labels, instructive ads and Web sites, and so on.


Emotions

• Consumer response is not all cognitive and rational; much may be emotional and invoke different kinds of feelings.

• A brand or product may make a consumer feel proud, excited, or confident.

• An ad may create feelings of amusement, disgust, or wonder.


Marketers Impact on Emotions

Reckitt & Benckiser and Procter & Gamble—Both these companies launched advertising approaches for Woolite and Tide, respectively, that tapped not into the detergents’ performance benefits but into the emotional connection—and challenges—of laundry Woolite’s style guide focuses on the emotional benefits of choosing and preserving the right look in clothes for women.


Memory

• Cognitive psychologists distinguish between short-term memory (STM)—a temporary repository of information, and

• Long-term memory (LTM)—a more permanent repository.

• The associative network memory model views LTM as a set of nodes and links.

• Nodes are stored information connected by links that vary in strength.

• Any type of information—verbal, visual, abstract, or contextual—can be stored in the memory network.


Brand Associations

• Consumer brand knowledge is a node in memory with a variety of linked associations.

• The strength and organization of these associations will be important determinants of the information that can be recalled about the brand.

• Brand associations consist of all brand-related thoughts, feelings, perceptions, images, experiences, beliefs, attitudes, and so on that become linked to the brand node.


Brand Association

Sangaria associates itself as oxygen water by having the scientific notation for oxygen (O2) clearly written on the bottle.


Marketing Applications of Consumer Brand Knowledge

• Marketing can be seen as making sure that consumers have the right types of product and service experiences such that the right brand knowledge structures are created and maintained in memory.

• Companies seek to create mental maps highlighting brand beliefs in different product categories.


Figure 6.3: Hypothetical Mental Map of the Haier Brand


Memory Processes

• Memory is a very constructive process, because we don’t remember information and events completely and accurately.

• Often we remember bits and pieces and fill in the rest.

• Memory encoding describes how and where information gets into memory.

• The more attention placed on the meaning of information during encoding, the stronger the resulting associations in memory will be.


Memory Retrieval

• Memory retrieval refers to how information gets out of memory.

• Affected by three factors:i. The presence of other product information in memory can

produce interference effects.ii. The time between exposure to information and encoding has

been shown generally to produce only gradual decay.iii. Information may be “available” in memory (potentially

recallable) but may not be “accessible” (unable to be recalled) without the proper retrieval cues or reminders.


Pepsi

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Pepsi’s branding strategy is to introduce a new can and bottle designs every few weeks with plans to sell 20 or more new different ones annually in every market. This departure from marketing convention comes as Pepsi believes that consumer attention span is getting shorter and consumers are faced with a proliferation of brands competing for their time.


The Buying Decision Process: The Five Stage Model

• The basic psychological processes we’ve reviewed play an important role in consumers’ actual buying decisions.

• Marketers must understand every facet of consumer behavior.

• Table 6.1 provides a list of some key consumer behavior questions in terms of “who, what, when, where, how, and why.”

• Smart companies try to fully understand the customers’ buying decision process—all their experiences in learning, choosing, using, and even disposing of a product.


Table 6.1: Understanding Consumer Behavior


The Buying Decision Process: The Five Stage Model

• Marketing scholars have developed a “stage model” of the buying-decision process.

• The consumer passes through five stages: problem recognition, information search, evaluation of alternatives, purchase decision, and post-purchase behavior.

• Consumers do not always pass through all five stages in buying a product. They may skip or reverse some stages.


Figure 6.4: Five-Stage Model of theConsumer Buying Process


Problem Recognition

• The buying process starts when the buyer recognizes a problem or need.

• The need can be triggered by internal or external stimuli.

• Marketers need to identify the circumstances that trigger a particular need by gathering information from a number of consumers.

• They can then develop marketing strategies that trigger consumer interest.


Information Search

• An aroused consumer will be inclined to search for more information. We can distinguish between two types of arousal:

• The milder state is called heightened attention where a person simply becomes more receptive to information about a product.

• The second level is active information search where a person looks for reading material, going online, etc. to learn about the product.


Four Main Sources of Information Search

1. Personal—Family, friends, neighbors, acquaintances

2. Commercial—Advertising, Web sites, salespersons, dealers, packaging, displays

3. Public—Mass media, consumer-rating organizations

4. Experiential—Handling, examining, using the product


Relative Importance of Information Sources

• The relative amount and influence of these sources vary with the product category and the buyer’s characteristics.

• Generally speaking, the consumer receives the most information about a product from commercial sources—that is, marketer-dominated sources.

• However, the most effective information often comes from personal sources or public sources that are independent authorities.


Relative Importance of Information Sources

• Each information source performs a different function in influencing the buying decision.

• Commercial sources normally perform an information function, whereas personal sources perform a legitimizing or evaluation function.


Search Dynamics

• By gathering information, the consumer learns about competing brands and their features.

• See Figure 6.5.

• The first box shows the total set of brands available to the consumer.

• The individual consumer will come to know only a subset of these brands (awareness set).

• Some brands will meet initial buying criteria (consideration set).

• As the consumer gathers more information, only a few will remain as strong contenders (choice set). The consumer makes a final choice from this set.


Figure 6.5: Successive Sets Involved in Consumer Decision Making


Search Dynamics

• Marketers need to identify the hierarchy of attributes that guide consumer decision making in order to understand different competitive forces and how these various sets get formed.

• This process of identifying the hierarchy is called market partitioning.


Search Dynamics

• The hierarchy of attributes also can reveal customer segments.

• Buyers who first decide on price are price dominant; those who first decide on the type of car (sports, passenger, station wagon) are type dominant; those who first decide on the car brand are brand dominant.

• Type/price/brand-dominant consumers make up a segment; quality/ service/type buyers make up another.

• Each segment may have distinct demographics, psychographics, and mediagraphics, and different awareness, consideration, and choice sets.


Search Dynamics and Marketing Implications

• From Figure 6.5 it is important that a company seeks to strategize to get its brand into the prospect’s awareness set, consideration set, and choice set.

• The company must also identify the other brands in the consumer’s choice set so that it can plan the appropriate competitive appeals.

• In addition, marketers should identify the consumer’s information sources and evaluate their relative importance.


Evaluation of Alternatives

• No single process is used by all consumers, or by one consumer in all buying situations.

• There are several processes, the most current models of which see the process as cognitively oriented

• The most current models see the consumer forming judgments largely on a conscious and rational basis.


Consumer Evaluation Process

1. First, the consumer is trying to satisfy a need.

2. Second, the consumer is looking for certain benefits from the product solution.

3. Third, the consumer sees each product as a bundle of attributes with varying abilities for delivering the benefits.


The attributes of interest to buyers vary by product.

For example:

•Cameras—Picture sharpness, camera speed, camera size, price

•Hotels—Location, cleanliness, atmosphere, price

•Tires—Safety, tread life, ride quality, price


Example of Attributes in Consumer Evaluation

Sharp’s Healsio, a steam oven, reduces the fat and salt in food while keeping its vitamin C.

Sharp found that mothers with small children and elders with health needs were willing to spend more money to benefit from the added values of new products that would improve their health.

However, in other parts of Asia, the concern is still more on price than product benefits.

In North America and Europe, Healsio’s benefits are not so much its health qualities, but rather its convenience. It can double as a microwave oven, defroster, steamer, and grill.


Marketing Implications

• Consumers will pay the most attention to attributes that deliver the sought-after benefits.

• The market for a product can often be segmented according to attributes that are important to different consumer groups.


Beliefs and Attitudes

• Through experience and learning, people acquire beliefs and attitudes.

• These in turn influence buying behavior.

• Belief—a descriptive thought that a person holds about something.

• Attitude—a person’s enduring favorable or unfavorable evaluation, emotional feeling, and action tendencies toward some object or idea.


Attitudes

• Attitudes put people into a frame of mind: liking or disliking an object, moving toward or away from it.

• Attitudes lead people to behave in a fairly consistent way toward similar objects.

• Because attitudes economize on energy and thought, they can be very difficult to change.

• A company is well-advised to fit its product into existing attitudes rather than to try to change attitudes.


Cosmetic Surgery—Changes in Attitudes

• More teenagers in Singapore are wanting to go for cosmetic surgery.

• Several reasons account for the change in attitude. With the Internet, information about various procedures is easily available. Youths are also influenced by the celebrities they see in the media and want to be like them.


Expectancy-Value Model

• The consumer arrives at attitudes toward various brands through an attribute evaluation procedure, developing a set of beliefs about where each brand stands on each attribute.

• The expectancy-value model of attitude formation posits that consumers evaluate products and services by combining their brand beliefs—the positives and negatives—according to importance.

• Most consumers consider several attributes in their purchase decisions.


Table 6.2: A Consumer’s Brand Beliefs about Computers

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Note: Each attribute is rated from 0 to 10, where 10 represents the highest level on that attribute. Price, however, is indexed in a reverse manner, with a 10 representing the lowest price, because a consumer prefers a low price to a high price.


Computations on Expectancy-Value

• Suppose the buyer assigned 40% of the importance to the computer’s memory capacity, 30% to graphics capability, 20% to size and weight, and 10% to price.

• This computation leads to the following perceived values:

1. Computer A = 0.4(10) + 0.3(8) + 0.2(6) + 0.1(4) = 8.02. Computer B = 0.4(8) + 0.3(9) + 0.2(8) + 0.1(3) = 7.83. Computer C = 0.4(6) + 0.3(8) + 0.2(10) + 0.1(5) = 7.34. Computer D = 0.4(4) + 0.3(3) + 0.2(7) + 0.1(8) = 4.7

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An expectancy-model formulation would predict that the buyer will favor computer A, which (at 8.0) has the highest perceived value.


What could the manufacturer of Brand B do in order to stimulate interest in the brand?

1. Redesign the computer—This technique is called real repositioning.

2. Alter beliefs about the brand—This technique is called psychological repositioning.

3. Alter beliefs about competitors’ brands—This strategy, called competitive de-positioning, makes sense when buyers mistakenly believe a competitor’s brand has more quality than it actually has.


What could the manufacturer of Brand B do in order to stimulate interest in the brand?

4. Alter the importance weights—The marketer could try to persuade buyers to attach more importance to the attributes in which the brand excels.

5. Call attention to neglected attributes—The marketer could draw buyers’ attention to neglected attributes, such as styling or processing speed.

6. Shift the buyer’s ideals—The marketer could try to persuade buyers to change their ideal levels for one or more attributes.


Influencing Consumer Attitudes

Consumer attitude towards GOLD by Safi is optimized by its adherence to Islamic beliefs, the reminder of gold as a traditional Malayan treatment for beauty, and an endorsement from the religious authority.


Purchase Decisions

• In the evaluation stage, the consumer forms preferences among the brands in the choice set and may also form an intention to buy the most preferred brand.

• In executing a purchase intention, the consumer may make up to five sub-decisions:

i. Brand (brand A)ii. Dealer (dealer 2)iii. Quantity (one)iv. Timing (weekend)v. Payment method (credit card)


Non-Compensatory Models of Consumer Choice

• The expectancy-value model is a compensatory model, in that perceived good things about a product can help to overcome perceived bad things.

• But consumers often take “mental shortcuts” called heuristics or rules of thumb in the decision process.

• With non-compensatory models of consumer choice, positive and negative attribute considerations do not necessarily net out.



1. With conjunctive heuristic method, the consumer sets a minimum acceptable cutoff level for each attribute and chooses the first alternative that meets this minimum.

2. With the lexicographic heuristic method, the consumer chooses the best brand on the basis of its perceived most important attribute.



3. With the elimination-by-aspects heuristic method, the consumer compares brands on a attribute selected and eliminates brands that do not meet minimum acceptable cutoffs.

Consumers do not adopt only one type of choice rule and maycombine two or more decision rules.


Intervening Factors

• Even if consumers form brand evaluations, two general factors can intervene between the purchase intention and the purchase decision.

• See Figure 6.6.

• There are two main factors:i. Attitude of othersii. Unanticipated situational factors


Figure 6.6: Steps Between Evaluationof Alternatives and a Purchase Decision


Attitude of Others

• The extent to which another person’s attitude reduces the preference for an alternative depends on two things:

i. the intensity of the other person’s negative attitude toward the consumer’s preferred alternative and

ii. the consumer’s motivation to comply with the other person’s wishes.

• The more intense the other person’s negativism and the closer the other person is to the consumer, the more the consumer will adjust his or her purchase intention.


Attitude of Others

Wipro introduced the “cloth feel” diapers to overcome the attitude Indian grandmothers have towards disposable diapers and satisfy the needs of comfort sought by modern mothers.


Influence of “informediaries”

• Related to the attitudes of others is the role played by infomediaries who publish their evaluations.

• Examples include Consumer Reports, which provides unbiased expert reviews of all types of products and services; professional movie, book, and music reviewers; customer reviews of books and music on Amazon.com; and the increasing number of chat rooms where people discuss products, services, and companies.


Unanticipated Situational Factors

• The second factor is unanticipated situational factors that may erupt to change the purchase intention.

• A consumer might lose her job, some other purchase might become more urgent, or a store salesperson may turn her off.

• Preferences and even purchase intentions are not completely reliable predictors of purchase behavior.


Perceived Risks

• A consumer’s decision to modify, postpone, or avoid a purchase decision is heavily influenced by perceived risk.

• There are many types of risks that consumers may perceive in buying and consuming a product.

• Six types of risks are discussed.


Types of Perceived Risks

1. Functional risk—The product does not perform up to expectations.

2. Physical risk—The product poses a threat to the physical well-being or health of the user or others.

3. Financial risk—The product is not worth the price paid.


Types of Perceived Risks

4. Social risk—The product results in embarrassment from others.

5. Psychological risk—The product affects the mental well-being of the user.

6. Time risk—The failure of the product results in an opportunity cost of finding another satisfactory product.


Post-purchase Behavior

• After the purchase, the consumer might experience dissonance about their purchase and be alert to information that supports their decision.

• Marketing communications should supply beliefs and evaluations that reinforce the consumer’s choice and help him or her feel good about the brand.

• Marketers must monitor post-purchase satisfaction, post-purchase actions, and post-purchase uses.


Post-purchase Satisfaction

• Satisfaction is a function of the closeness between expectations and the product’s perceived performance.

• If the performance falls short of expectations the consumer is disappointed.

• If the performance meets expectations the consumer is satisfied.

• If the performance exceeds expectations the consumer is delighted.


Post-purchase Actions

• A satisfied consumer is more likely to purchase the product again and will also tend to say good things about the brand to others.

• On the other hand, dissatisfied consumers may abandon or return the product. They may take public action by complaining to the company, going to a lawyer, or complaining to other groups (such as business, private, or government agencies).


Post-purchase Actions

• Private actions include making a decision to stop buying the product (exit option) or warning friends (voice option).

• Post-purchase behavior will have implications for customer relationship management (CRM).


Post-purchase Use and Disposal

• Marketers should also monitor how buyers use and dispose of the product. A key driver of sales frequency is product consumption rate.

• One potential opportunity to increase frequency of product use is when consumers’ perceptions of their usage differ from reality.

• Marketers also need to know how the consumer disposes of the product once it is used.


Figure 6.7: How Customers Use or Dispose of Products


Reminding Consumers on Replacements

Oral B toothbrushes come with color indicators to inform consumers when the bristles are worn off and the toothbrushes need to be changed.


Product Disposal

• If consumers throw the product away, the marketer needs to know how they dispose of it, especially if it can damage the environment (as in the case with batteries, beverage containers, and disposable diapers).

• Increased public awareness of recycling and ecological concerns as well as consumer complaints need to be considered.


Moderating Effects on Consumer Decision-Making

The manner or path by which a consumer moves through the decision-making stages depends on several factors, including the:

a. level of involvement; and

b. extent of variety-seeking.


Low-involvement Consumer Decision-making

• The expectancy-value model assumes a high level of consumer involvement, or engagement and active processing the consumer undertakes in responding to a marketing stimulus.

• Elaboration Likelihood Model


Low-involvement Consumer Decision-making

• Describes how consumers make evaluations in both low and high involvement circumstances.– Central route– Peripheral route

• Consumers follow the central route only if they possess sufficient motivation, ability, and opportunity. If any of these are lacking then the consumers tend to follow the peripheral route.


Converting a Low-Involvement Product into One of Higher Involvement

Techniques used by marketers include:

a. They can link the product to some involving issue.

b. They can link the product to some involving personal situation.

c. They might design advertising to trigger strong emotions related to personal values or ego defenses.

d. They might add important features.


The Peripheral Route

• If, regardless of what the marketer can do, consumers still have low involvement with a purchase decision, they are likely to follow the peripheral route.

• Marketers must pay special attention to giving consumers one or more positive cues that they can use to justify their brand choice.

• Brand familiarity can be important if consumers decide to just buy the brand about which they have heard or seen the most.

• Frequent ad repetition, visible sponsorships, and vigorous PR are all ways to enhance brand familiarity.


Variety-seeking Buying Behavior

• Some buying situations are characterized by low involvement but significant brand differences.

• Brand switching occurs for the sake of variety rather than dissatisfaction.


Kit Kat—Example of Variety Seeking Behavior

Japanese consumers, especially the young, seek variety. This led KitKat to introduce limited edition flavors such as Cantaloupe Melon and Koshian Maccha (green tea with red bean filling).


Market Leaders versus Challenger Firms

• The market leader and the minor brands in this product category have different marketing strategies.

• The market leader will try to encourage habitual buying behavior by dominating the shelf space with a variety of related but different product versions, avoiding out-of-stock conditions, and sponsoring frequent reminder advertising.

• Challenger firms will encourage variety seeking by offering lower prices, deals, coupons, free samples, and advertising that tries to break the consumer’s purchase and consumption cycle and presents reasons for trying something new.


Behavioral Decision Theory and BehavioralEconomics

• As a result of low-involvement decision making and variety-seeking, consumers don’t always process information or make decisions in a deliberate, rational manner.

• One of the most active academic research areas in marketing over the past three decades has been behavioral decision theory (BDT).

• Behavioral decision theorists have identified many situations in which consumers make seemingly irrational choices.


Table 6.3: Selected Behavioral Decision Theory Findings


Decision Heuristics

• Other heuristics similarly come into play in everyday decision making when consumers forecast the likelihood of future outcomes or events.

a. The availability heuristic—Consumers base their predictions on the quickness and ease with which a particular example of an outcome comes to mind.

b. The representativeness heuristic—Consumers base their predictions on how representative or similar the outcome is to other examples.

c. The anchoring and adjustment heuristic— Consumers arrive at an initial judgment and then adjust it based on additional information.


Framing

• Decision framing is the manner in which choices are presented to and seen by a decision-maker.

• Richard Thaler and Cass Sunstein show how marketers can influence consumer decision making through what they call the choice architecture—the environment in which decisions are structured and buying choices are made.


Mental Accounting

• Researchers have found that consumers use mental accounting when they handle their money.

• Mental accounting refers to the way consumers code, categorize, and evaluate financial outcomes of choices.

• Formally, it is “the tendency to categorize funds or items of value even though there is no logical basis for the categorization, e.g., individuals often segregate their savings into separate accounts to meet different goals even though funds from any of the accounts can be applied to any of the goals.


Core Principles of Mental Accounting

1. Consumers tend to segregate gains. When a seller has a product with more than one positive dimension, it’s desirable to have the consumer evaluate each dimension separately. Listing multiple benefits of a large industrial product, for example, can make the sum of the parts seem greater than the whole.

2. Consumers tend to integrate losses. Marketers have a distinct advantage in selling something if its cost can be added to another large purchase. House buyers are more inclined to view additional expenditures favorably given the high price of buying a house.


Core Principles of Mental Accounting

3. Consumers tend to integrate smaller losses with larger gains. The “cancellation” principle might explain why withholding taxes from monthly paychecks is less aversive than large, lump-sum tax payments—the smaller withholdings are more likely to be absorbed by the larger pay amount.

4. Consumers tend to segregate small gains from large losses. The “silver lining” principle might explain the popularity of rebates on big-ticket purchases such as cars.


Prospect Theory

• The principles of mental accounting are derived in part from prospect theory.

• Prospect theory maintains that consumers frame their decision alternatives in terms of gains and losses according to a value function.

• Consumers are generally loss-averse. They tend to overweight very low probabilities and underweight very high probabilities.


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Mma6e chapter-06 final

Business

Transcript of Mma6e chapter-06 final