Marketing Management Consumer Behavior

Consumer Behavior

Culture
Beliefs and values that direct behavior in a society the character of a society consumer behavior possession, exchange, grooming, disinvestment rituals Subculture a distinct cultural group that is identifiable as a segment; basis could be nationality, religion, region, race, gender, occupation, social class, ethnicity Baby Boomers, Gen X, Gen Y, Seniors, 9/11 Gen Next, Hinglish, Diaspora, Returned Diaspora

Personality and Self-Concept

Personality refers to the unique psychological characteristics that lead to consistent and lasting responses to the consumers environment Brand personality refers to the specific mix of human traits that may be attributed to a particular brand Sincerity Excitement Competence Sophistication Ruggedness

Self-confidence Social ability Dominance Autonomy Defensiveness Adaptability Aggressiveness

Values and Lifestyle

Lifestyle is a persons pattern of living as expressed in his or her psychographics - measures a consumers AIOs (activities, interests, opinions) to capture information about a persons pattern of acting and interacting in the environment SRI Consultings Values and Lifestyle (VALS) typology Classifies people according to how they spend money and time Primary motivations Resources

Activities, Interests & Opinions

1.I am often interested in theories. Mostly disagree Somewhat disagree Somewhat agree Mostly agree 2.I like outrageous people and things. Mostly disagree Somewhat disagree Somewhat agree Mostly agree

3.I like a lot of variety in my life. Mostly disagree Somewhat disagree Somewhat agree Mostly agree

4.I love to make things I can use every day. Mostly disagree Somewhat disagree Somewhat agree Mostly agree

5.I follow the latest trends and fashions. Mostly disagree Somewhat disagree Somewhat agree Mostly agree

6.Just as the Bible says, the world literally was created in six days. Mostly disagree Somewhat disagree Somewhat agree Mostly agree

VALS Lifestyle Classifications

Motivation

Maslows Hierarchy of Needs

Perception
Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world from three perceptual processes
Selective attention is the tendency for people to screen out most of the information to which they are exposed Selective distortion is the tendency for people to interpret information in a way that will support what they already believe Selective retention is the tendency to remember good points made about a brand they favor and forget good points about competing brands

Perceptions and Preferences

Compensatory vs. Lexicographic Single stage vs Two stage Uncola Black & Decker, Brita etc Familiarity effect choice of company stock when faced with overload "...most plans should offer a limited investment menu to simplify employee decision-making or utilize a tiered investment menu to accommodate the demand for greater choice.

Perceptions and Preferences

90 % will survive first year and 34 % will survive by year five or 10 % will die in surgery and 66 % will die by year 5; 75 % lean or 25 % fat willing to travel to a distant shopping center to save $200 on an $800 business suit, but might be unwilling to make a similar trip to save $200 on an $80,000 automobile
Speaker X Speaker Y Price $1,000 $800 Price $1,000 $800 Quality 99% clarity 95% clarity Quality 1% distortion 5% distortion

Speaker X Speaker Y

Framing Vanguard (1.3 % vs. 0.3 % expense ratios)

Perceptions and Preferences

Asymmetric dominance Cross pen or $ 6 cash vs Cross pen or $ 6 cash or Inferior pen Compromise Effect low priced or moderately priced vs low priced or moderately priced or high priced Mental Accounting gains vs losses

The Buyer Decision Process

Satisfaction is important: Delighted consumers engage in positive word-of-mouth. Unhappy customers tell on average 11 other people. It costs more to attract a new customer than it does to retain an existing customer. Cognitive dissonance is common

Decision Process for New Products

New product is a good, service, or idea that is perceived by some potential customers as new Adoption process is the mental process an individual goes through from first learning about an innovation to final regular use
1. 2. 3. 4. 5.

Awareness Interest Evaluation Trial Adoption

Decision Process for New Products

Individual Differences in Innovation
Early adopters are opinion leaders and adopt new ideas early but cautiously Early majority are deliberate and adopt new ideas before the average person Late majority are skeptical and adopt new ideas only after the majority of people have tried it Laggards are suspicious of changes and adopt new ideas only when they become tradition

Decision Process for New Products

Adoption Categorization on the Basis of Relative Time Adoption of Innovations

Decision Making Under Uncertainty

If people made choices to maximize expected value, they would choose the option with the highest expected value regardless of risk involved But most people are risk averse; they will choose a bundle with higher risk only if its expected value is substantially higher than that of a less risky bundle extend the standard utility maximizing model to include risk

Attitudes toward Risk

A fair bet is a gamble with an expected value of 0 Risk Averse unwilling to make a fair bet Risk Neutral indifferent towards a fair bet Risk Seeking preferring to make a fair bet

Risk Aversion
Cost of vase = $40 A Ming vase is worth $70 and an imitation is worth $10 The probability that the vase is Ming is 0.5 Expected value of vase = Expected utility of vase = This persons attitude toward risk is ______ Risk premium is the amount that a risk-averse person would pay to avoid taking a risk

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Risk Neutrality and Risk Preference

Business to Business
Relatively Rational Long drawn buying cycle Buying Center Small market individual attention is possible Value in use?

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Brand
Brand: name, term, sign, symbol, or design intended to identify the products or services and to differentiate them from the products offered by competitors. Brand: a psychological concept (or set of associations) Brand(ing): The art of taking something common and improving on it in ways that make it more valuable and meaningful. "A product is no more than an artifact around which consumers have experiences.Nike could have spent millions preaching the value of encapsulated gas trapped within a thin pliable membrane. Instead it communicated what the product meantit transcended the product"Just Do It" was not about sneakers, it was about values it tapped into the wide range of emotional rewards that are uniquely relevant to sports and fitness." Scott Bedbury

Brand vs. generic

Linoleum linoleum Nylon nylon Trampoline trampoline Escalator escalator Xerox Kleenex Vaseline =>

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Death of a brand
Shlitz 1974 To cut cost, they reduced brewing time from 12 days to 4; began using corn syrup instead of barley malt. Image problem caused a slight decline in sales 1976 To combat declining sales began aggressive discounting Caused people to think of it as cheap beer, and sales dropped more In a panic, they changed ad campaign to "There's just one word for Beer: Schlitz! And you know it!" 1978, restored formula and former ad campaign, but.

Death of a brand
Liril freshness green with lime Promise the toothpaste with clove oil

Reputation, Reputation, Reputation! I have lost the immortal part of myself. Shakespeare

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Global Differences - Hofstede

Power Distance extent to which less powerful members accept unequal distribution of power (Austria 11, US 40, Arab countries 80) Individualism degree to which individuals are integrated into groups (Guatemala 6, US 91) Masculinity distribution of roles between genders (Netherlands 11, US 62, Germany 66) Uncertainty Avoidance societys tolerance for uncertainty and ambiguity ( Denmark 23, US 46, Germany 65) Long term Orientation - values associated with Long Term Orientation are thrift and perseverance; values associated with Short Term Orientation are respect for tradition, fulfilling social obligations, and protecting one's 'face (US 29, India 61)

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