Consumer Behaviour

Introduction to Consumer Behavior

Learning Objectives

y y y y

What is CB? Why is it necessary to study CB? Who needs to study CB? The ‘Dark’ side of CB

We Are Consumers 24-7! Why? Because: • We are always consuming something

(like the clothes we are wearing or the bed we are sleeping on) • We are sometimes planning future consumption • We are sometimes enjoying the memory of past consumption

Q. Can you think of any moments when you are NOT being a Consumer?

WHAT IS CONSUMER BEHAVIOR? Consumer Behavior is the Mental and Physical Activities undertaken to Acquire, Consume and Dispose the Products and Services so as to fulfill Needs and Wants.

9Physical Activity: Buying a product; preparing a product for consumption, etc. 9 Mental Activity: Evaluating a product in your mind

NEED and WANTS NEED: A Discomforting Human Condition WANT: A Desire for a Specific Product so as to Alleviate That Condition

Q. Discussion: Which of these is a Need: Food, Clothing, Nike shoes, Nano, Orkut etc. Why? Why Not?

3 ESSENTIALS of CONSUMER BEHAVIOR

1. Exchange—An interchange between two parties where each receives value

Five Resources:

ƒ Money ƒ Time 2. Resources—Something that ƒ Physical energy others value ƒ Knowledge & Skills 3. Value—Sum total of all benefits ƒ Social capital we receive from a product

USER U Utilitarian S Social E Ego-Identity R Recreation/Hedonic

Discussion: Examples of Products that consumers use to receive each Value

DOES MARKETING CREATE A NEED? Would Marketing Create a Need for these products?

Discussion: Consumers who Might Buy These Products-From Where Do They Learn/Acquire These Needs?

SOURCE DISCIPLINES for CONSUMER BEHAVIOR

1.

Anthropology

2.

Sociology

3.

Economics

4.

Psychology

WHO SHOULD STUDY CONSUMER BEHAVIOR 1.

Marketers

2.

Social Organizations

3.

Public Policy Makers

4.

Consumers

Discussion:

Why?

WHAT IS the PURPOSE OF Marketing?

To Make Money OR To Create a Satisfied Customer

9Focus on Consumers’ Needs Rather Than Products 9Identify Consumers’ Latent Needs 9Understand Consumer Behavior

The Tattoo is Already Inside the Consumer

To satisfy the consumer, you have to bring that tattoo out

The Desire to Wear a Shoe like this is Already Inside the Consumer Tattoo : Desire

(Tattoo as a metaphor)

The PURPOSE OF MARKETING is to Help the Consumer Experience the Proverbial Tattoo that is already Within Him/Her

The Consumer “Dark Side”

Consumer Motivation

Learning Objectives Why is it necessary to understand Consumer Motivation? y What are the different consumer needs? y How do we understand consumer needs? y Emotion and its impact on motivation y Introduction to ‘Involvement’ y

C.O.N.S.U.M.E.R. M.O.T.I.V.A.T.I.O.N. MOTIVATION Human Drive to Attain a Goal Object DRIVE Energy That Impels Us to Act Goal Object Something We Seek,That Which We Judge Will Bring Us Comfort/Value Purposive Behavior Expenditure of Energy toward a Goal Object

C.O.N.S.U.M.E.R. M.O.T.I.V.A.T.I.O.N.

C.O.N.S.U.M.E.R. M.O.T.I.V.A.T.I.O.N. ORIGINS of Needs 9 Innate 9 Learned ------------------------------9 Biogenic 9 Psychogenic -------------------------------

DISCUSS : Where Do Learned and Psychogenic Needs Come From?

C.O.N.S.U.M.E.R. M.O.T.I.V.A.T.I.O.N.

9Approach Motivation 9Avoid Motivation ------------------------------------------

9Approach-Avoid Conflict 9 Approach-Approach Conflict 9Avoid-Avoid Conflict Doesn’t Every Product Present an ApproachAvoid Conflict? A Compromise? Product Improvement Opportunity …..

Frustration

Failure to achieve a goal may result in frustration. Some adapt; others adopt defense mechanisms to protect their ego

Defense Mechanism

Methods by which people mentally redefine frustrating situations to protect their self-images and their self-esteem.

DEFENSE MECHANISMS

1. 2. 3. 4. 5. 6.

Rationalization Projection Aggression Repression Withdrawal Regression

Needs Unveiled y y y y

Maslow’s need hierarchy Murray’s list of needs Dichter’s consumption needs Trio of needs

C.O.N.S.U.M.E.R. M.O.T.I.V.A.T.I.O.N.

C.O.N.S.U.M.E.R. M.O.T.I.V.A.T.I.O.N.

Murray’s List of NEEDS 1.

AUTONOMY

2.

DOMINANCE

3.

NURTURANCE

4.

EXHIBITION

5.

COGNIZANCE

6.

EXPOSITION

C.O.N.S.U.M.E.R. M.O.T.I.V.A.T.I.O.N. Dichter’s List of Subconscious Motives 1.

Mastery over Environment

2.

Masculinity

3.

Individuality

4.

Status

5.

Love and Affection

C.O.N.S.U.M.E.R. M.O.T.I.V.A.T.I.O.N. Trio of Needs POWER

AFFILIATION

ACHIEVEMENT

C.O.N.S.U.M.E.R. M.O.T.I.V.A.T.I.O.N. RESEARCHING CONSUMER MOTIVES Conscious

Unconscious

Public

1

X

Private

2

3

1. Undisguised Questioning 2. Disguised Questioning (Conscious Projection) 9

Third Person

9

Mason Haire Technique

3. Disguised, Unguarded (Natural) response (Unconscious Projection) 9 Word Association 9 Sentence Completion 9 Story Completion 9 Mason Haire Technique

C.O.N.S.U.M.E.R. M.O.T.I.V.A.T.I.O.N.

The MAO Model

C.O.N.S.U.M.E.R. E.M.O.TI.O.N.S. EMOTIONS : Sudden Surge of Feelings

This Sudden Surge produces Strong Drive to Approach the Source of that Feeling Thus, Emotions serve as Motivation

HEDONIC MOTIVE „

Seeking Recreation

„

Seeking Pleasure

INTRINSIC Enjoyment 9 Sensory Pleasure 9 Aesthetic pleasure 9 Emotional Experience 9 Fun and Play

CONSUMER INVOLVEMENT

The Degree of Interest a Consumer Finds in a Product or object

CB Exercise

Learning Objectives • To empathize and appreciate the lived  experience of the customer • To get a vocabulary for discussing CB issues • To appreciate the complexity of CB  phenomena • To debunk bias towards rational CB model • To understand issues and problems in the  conduct and analysis of qualitative  interviewing for understanding the consumer

Theory of Choice  Variation in Choice Utilitarian decision stage? triggers? problem solving? search?

Low Involvement

Hedonic

Theory of Choice  Choice Brand/ Product New Old

Candy bar Pad of paper Perfume Car

Influence Factors

DecisionMaking Roles/Unit

Trigger

Search Consid Sets

Decision Sequence___________ Evaluation Decision Choice

Process

Rules

Role of Price

Theory of Choice  Difference in Extensive, Limited, and Routinized Problem‐Solving Models DECISION STAGE WHEN  WHEN  PRODUCT  BRAND IS: CLASS IS: EXTENSIVE  PROBLEM  SOLVING LIMITED  PROBLEM  SOLVING ROUTINIZED  RESPONSE

NEW

FAMILIAR

FAMILIAR

NEED  AROUSAL

INFORMATION  SEARCH

EVALUATION 

BEHAVIOR

PURCHASE  DECISION

POST‐ PURCHASE EVALUATION

NEW

NEW NEED

EXTENSIVE

CAREFUL

NEW

NEW  BRAND

LIMITED 

CASUAL

FAMILIAR

PRODUCT DEPLETED

NONE

BY  EXCEPTION

AWARENESS               INTEREST               DESIRE              ACTION KNOW                               FEEL                         DO

Variations in Consumer Choice Phenomena  Utilitarian/ Instrumental

Know Æ Feel Æ Do Trigger = gap (actual – desired) Active Search Rational Use of Information; Rational Evaluation of Alternatives Process: Extensive Problem Solving Æ routine response Choice heuristic: “Buy the Best” Ultimate Choice: Trade off among competing alternatives Price as trade-off variable

Low Involvement know Æ Do Æ (Feel) Trigger = Stock depletion Passive Search Limited/no evaluation of alternatives Rational Use of Information Expectancy – confirming

Hedonic/Ego-Expressive

Feel Æ Do Æ (Know) Trigger = Impulse, need Confirmatory Search Rationalizing evaluation of alternatives Process: Choice heuristic: “Buy What I like” Ultimate Choice: Satisfying model Process: Choice heuristics: “Buy the Familiar”; “Buy the Cheapest” Price as secondary concern Ultimate Choice: Satisficing model Price as deciding factor

Theory of Usage  Variation in Usage Utilitarian Satisfaction? Loyalty? Relationship? Effects?

Low Involvement

Hedonic

Theory of Usage  Usage Nature Length Category/ of of Brand Relationship Loyalty Satisfaction Relationship Meaning Stressors Vulnerabilities Consequence

Jeans Computers Ketchup

Variations in Usage Phenomena  Utilitarian/ Instrumental

Loyalty = reward for performance Satisfaction = (Performance minus Expectations) compared to alternatives Relationship = Brand Partner Quality Relationship => repeat, word-of-mouth, price premium

Low Involvement Loyalty = Inertia, Habit Satisfaction = Absence of Negatives Relationship = Behavioral Interdependence Relationship => Predisposition to Rebuy

Hedonic/Ego-Expressive Loyalty = Affective Commitment Satisfaction = Brand-Self Image Congruency Relationship = Love, Commitment, Self-Concept Connection Relationship => Trial Extensions; Word-of-Mouth Missionary, Forgiveness, Tolerance, Price Premium

Marketing Considerations Across Core  Motivational Conditions  Utilitarian/ Instrumental

Keys to Continuity:

Product Performance Provision of Information

Central Threat to Continuity: Better Performing Alternative

Low Involvement Keys to Continuity: Saliency of brand Insured Product Availability Central threat to continuity: interrupts in purchase cycle

Hedonic/Ego-Expressive Key to Continuity: Clear, Relevant Articulation of Brand Image Central threat to continuity: change in self or brand image

Issues regarding the research process

Take‐Away • Many useful concepts and frameworks to  understand consumer • Rational model often inappropriate • At basic level, there are three motivational  conditions: Low involvement, hedonic,  utilitarian • What is low involvement for A may be hedonic  for B • Understanding the customer is an art 

Personality

Learning Objectives

y y

Personality theories and its marketing applications Self-concept and its applications

P. E. R. S. O. N. A. L. I. T. Y. A Person’s Psychological Makeup that Determines his/her Responses to Environment/Stimuli 9 Behavior is NOT Personality 9 Even Consistent Behavior is NOT Personality 9 Personality is PSYCHOLOGICAL Makeup UNDERLYING That Behavior Psychological Makeup: Values, Motives, and Learned and Stored Behavior/Response Patterns. 9 These Produce Automatic Responses (i.e., Consistent Behaviors). 9 In Practice, from Consistent Behaviors, We Infer Personality.

P.

E.

R.

S.

O.

N. A.

L.

Freudian theory y Neo-Freudian personality theory y Trait theory y

I. T. Y.

P.

E.

R.

S.

O.

N. A.

L.

I. T. Y.

Freudian Theory

Gratification

ID

EGO

SUPEREGO

P. E. R. S. O. N. A. L. I. T. Y. FREUDIAN THEORY of Personality 1. Id Pleasure seeking. Selfish 2. Superego Impose Morality. Conformity 3. Ego Compromise between Id and Superego. Reality Personality Develops by How a Person Navigates Between His/Her Id and the forces of Superego (i.e., Society’s Desires) That is How a Person Develops His/Her Ego/His Identity

Ad Portraying the Forces of the Id Axe Ad: http://www.youtube.com/watch?v= 6v_eorFolHQ

P. E. R. S. O. N. A. L. I. T. Y.

Neo-Freudian Theories Karen Horney: ◦ Described people as moving toward others (compliant), away from others (detached), or against others (aggressive). y Carl Jung: ◦ Collective unconscious: A storehouse of memories inherited from our ancestral past ◦ Believed people are shaped by cumulative experiences of past generations ◦ Archetypes: Universally shared ideas and behavior patterns created by shared memories y

Ad Applying Horney’s Detached Personality

P. E. R. S. O. N. A. L. I. T. Y.

TRAIT THEORY A Personality TRAIT is a Characteristic Behavior. • • •

How Many Traits? Actually Thousands Marketers link traits to how consumers make their choices about consumption of a broad product category - not a specific brand

P. E. R. S. O. N. A. L. I. T. Y. TRAIT THEORY Marketers’ Eight (An Arbitrary List) 1. INNOVATIVENESS—Being Predisposed to embrace new ideas. 2. VARIETY/NOVELTY SEEKER—Desiring New and Diverse experiences 3. HEDONISM—Seeking maximal pleasure from life 4. VANITY—Excessive pride in one’s appearance and accomplishment 5. UNIQUENESS SEEKER—Wanting to Differentiate Oneself 6. ETHNOCENTRISM—Believing that it is wrong to purchase foreign-made products 7. NEED FOR COGNITION—Craving for enjoyment of thinking 8. MATERIALISM—Acquiring and showing-off possessions

Ad Targeting Visualizers

Ad Targeting Verbalizers

P. E. R. S. O. N. A. L. I. T. Y.

Discussion Question y

y

This classic ad starts off with the line: “The Datsun 240-Z is not exactly what you would call a common site.” What consumer personality trait is this ad appealing to?

P. E. R. S. O. N. A. L. I. T. Y. S.E.L.F. C.O.N.C.E.P.T. A Person’s Conception of Him/Herself The Sum Total of All the Ideas a Person has about Him/Herself. 1. Actual 2. Ideal 3. Social-Actual 4. Social-Ideal Measuring Self-Concept Image Congruity: Self-Concept Brand-image Congruency Theory

P. E. R. S. O. N. A. L. I. T. Y.

S.E.L.F. C.O.N.C.E.P.T. COMPONENTS OF SELF 1. Body 2. Values and Character 3. Competence and Success 4. Social Roles 5. Personality Traits

Extended Self ¾Ethnic/Cultural identity ¾Family Identity ¾Work Organization ¾Social Networks + 9POSSESSIONS

P. E. R. S. O. N. A. L. I. T. Y. S.E.L.F. C.O.N.C.E.P.T. Read Self-Concept Descriptions in your Study Material 1. Any Comments? 2. Write Your Own Then write: Your Self-concept as a Consumer (What Kind of a Consumer do you think You Are?) (e.g., spendthrift, impulsive, consummate, hedonic, experimental, guarded, trend-seeker, Etc..)

Perception

Learning Objectives y

Consumer Perception Process and its marketing applications

y

Positioning and its methods

P.E.R.C.E.P.T.I.O.N Perception. The process by which Humans become aware of and interpret a stimulus.

P.E.R.C.E.P.T.I.O.N P.e.r.c.e.p.t.i.o.n. P.r.o.c.e.s.s. Exposure Æ ATTENTION Æ INTERPRETATION EXPOSURE How To Get it By WISE MEDIA Selection By Product Placement Voluntary ATTENTION Involuntary STIMULUS FACTOR: vividness/contrast Topic Interest/Involvement INTERPRETATION Depends on Prior Stock of Knowledge Prior Expectations O

O

P.E.R.C.E.P.T.I.O.N Factors Influencing Perception STIMULUS Characteristics: Sensory (size, color, movement) Information Content CONTEXT Store, brand name, isolation, contrast CONSUMER Involvement, Interest Sensory and Cognitive Skills Prior Knowledge (Prior Expectations)

P.E.R.C.E.P.T.I.O.N ABSOLUTE AND PERCEPTUAL THRESHHOLD Absolute Threshold: An Example

Perceptual Threshold ‰ Weber’s Law ‰ J.n.d. ¾ When You Want to Lie BELOW Perceptual Threshold ¾ And When You Want to Rise ABOVE the Threshold (Examples)

1. Make Explicit (Product’s sensory features) 2. CHANGE

P.E.R.C.E.P.T.I.O.N Betty Crocker Changes Fall Below the J.N.D.

P.E.R.C.E.P.T.I.O.N

Gradual Changes in Brand Name Fall Below the J.N.D.

P.E.R.C.E.P.T.I.O.N PERCEPTUAL ORGANIZATION ‰ GESTALT ‰ FIGURE AND GROUND ‰ GROUPING ‰ CLOSURE

Try to remember a 13/14 digit no. Try to remember a 5/7 digit no.

P.E.R.C.E.P.T.I.O.N SUBLIMINAL PERCEPTION Subliminal Perception. Perception of a stimulus without being aware of it. Mere Exposure effect: Liking due to even brief, unrecalled, exposure. Prior exposure creates warmth (even without memory) Therefore, we like things we have seen before even though we may not remember seeing them! Automated Response Lesson: Just Make All Stimuli elements P L E A S A N T. .

P.E.R.C.E.P.T.I.O.N PERCEPTION: MARKETING APPLICATIONS Psychology of Price Perceptions ¾ Reference Price. ¾ Assimilation vs. Contrast ¾ Price as Quality Cue Country of Origin Brand Image Perceptual Maps Sensory Marketing

P.E.R.C.E.P.T.I.O.N How Consumers Perceive Marketing Stimuli BRAND IMAGE Q. How do you change brand image? A. By Changing Consumer Perceptions. Based, of course, on the Brand’s Reality. Brand Image is 100% Consumer Perception.

P.E.R.C.E.P.T.I.O.N PERCEPTUAL MAPS

Discuss: Why the two maps are different?

P.E.R.C.E.P.T.I.O.N Positioning + REPOSITIONING POSITIONING. Consumer perception of a brand relative to competing brands and relative to one’s goals REPOSITIONING. The practice of changing consumer perceptions about a brand.

ƒ POSITIONING METHODS: ¾ By Functional Benefits ¾ By Symbolic Image ¾ By User Image ¾ By Usage Situation ¾ By Competition

P.E.R.C.E.P.T.I.O.N Positioning + REPOSITIONING ¾ Secondary Demand Creation ¾ Primary Demand Creation BREAKING Free from Category Restriction

P.E.R.C.E.P.T.I.O.N SENSORY Marketing Creating Favorable Brand Impressions in the consumer mind by appealing to senses Sound Taste Sense of Smell Sense of Touch Sight Two Approaches: ¾ 1. Varied Stimuli/Product Design ¾ 2. Unique sensory feature

P.E.R.C.E.P.T.I.O.N Perception Meets Marketing SENSORY Marketing Sound Taste Sense of Smell Sense of Touch Sight New trend in Sensory Communication: Cross-modality (Example: communicating sensory pleasure of taste or smell on printed page)

P.E.R.C.E.P.T.I.O.N Perceptions: bits of Wisdom There Are No FACTS in Life, only Statements of FACTS. There is no Objective Reality, Only Perceptions. Sometimes Perceptions come close to reality, sometimes they are far off. All OUR Perceptions are TRUE. Perceptions, NOT Reality, form the basis of our Actions. Consumer Perceptions, Not Reality, determine the fates of brands and of Businesses.

Molding Consumer Attitude through Communication

Learning Objectives How to change attitude How to design persuasive communication

M.o.l.d.i.n.g. C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E. Theories of Attitude Molding High-Low Involvement Theories Heider’s Balance Theory Theories of Attribution Theory Self Perception Theory ACTIVE vs. Passive Audience Theory

M.o.l.d.i.n.g. C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E. Four Modes High Involvement-THINK High Involvement-FEEL Low Involvement-THINK Low Involvement-FEEL

M.o.l.d.i.n.g. C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E. HIGH-LOW INVOLVEMENT THEORIES Attitude Change Process is FUNDAMENTALLY DIFFERENT under Low versus High Involvement Conditions. Low Involvement: Peripheral Route: Low Attention, Low Defense, Repetition is key High Involvement: Central Route: High Attention, High Defense, Message Content is key Elaboration Likelihood Model

M.o.l.d.i.n.g. C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E. Heider’s Balance Theory and Attitude Change Scenario: On March 25, 2007, Columbian singer Shakira gave a concert in Bombay. Among many costume changes during the show, she also wore a saree. (Google “Shakira in Bombay” for story and images) Assume, hitherto you did not like a saree. Now after seeing your favorite singer star Shakira donning it, how will your attitude toward the saree change? Let Heider’s Balance Theory help us predict.

M.o.l.d.i.n.g. C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E.

M.o.l.d.i.n.g. C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E.

M.o.l.d.i.n.g. C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E.

M.o.l.d.i.n.g. C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E. Molding Attitude Through the Multi-Attribute Model 1. Change Perception of Attribute Level 2. Change Evaluation of an Attribute’s Desirability 3. Introduce a New Attribute

DISCUSSION Apply this model to changing your attitude (in either direction) toward: (a) Starbucks (b) The idea of wearing Bohemian clothing (c) The idea of vegetarianism (d) Your least favorite music band.

M.o.l.d.i.n.g. C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E. HOW LOW INVOLVEMENT ADVERTISING WORKS

Defenses are Down Repeated Exposure Passive processing

M.o.l.d.i.n.g. C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E. Attitude toward the Ad Nota Bene It is NOT that the ad, and attitude toward the ad is not that important for a high involvement product. Rather that in high-involvement situations, the ad’s role is to create strong brand beliefs. In contrast, in low involvement situation, the ad attitude directly impacts brand attitude even when it creates no brand beliefs.

M.o.l.d.i.n.g. C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E.

APPEAL TYPES: Emotional vs. Rational, Humor, Fear, Sexual, Two-sided vs. One-sided, Comparative You Should Know: a. What These types are b. When They Work c. When they are ineffective d. When they can backfire e. Any precautions (You should fill this for each appeal type in next few slides)

M.o.l.d.I.n.g. C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E. THE ROLE OF SOURCE IN PERSUASION SOURCE CREDIBILITY ¾ Source expertise ¾ Source independence SOURCE ATTRACTIVENESS SOURCE SIMILARITY Match-up Hypothesis The Chosen Celebrity should have an image similar to the Brand’s Desired Image

M.o.l.d.i.n.g. C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E.

Sleeper Effect

The idea that both positive and negative credibility effects tend to disappear after a period of time

M.o.l.d.i.n.g. C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E. Designing Persuasive Communications Message Structure and Presentation y y

Resonance Order effects

y y

Wordplay Used to create a double meaning when used with a relevant picture

M.o.l.d.i.n.g. C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E. Designing Persuasive Communications Message Structure and Presentation y y

Resonance Order effects

y y y

Primacy Recency Brand name

M.o.l.d.i.n.g. C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E. FUNDAMENTAL WISDOM ON ATTITUDE MOLDING Other people’s attitudes are important to us. If they are negative, we will gain nothing from those consumers. We want them to be positive, so we may benefit from them. That is why we are always trying to mold those attitudes. (And others are trying to mold ours.) But no one can mold another’s attitude. People persuade themselves. Attitude Molding boils down, then, to helping consumers in their own endeavor to self-mold their attitudes.

Consumer Attitude

Learning Objectives y y y

How does a consumer develop an attitude? What does attitude do? How can marketers influence attitude?

C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E. Attitude. A learned predisposition to respond to an object in a consistently favorable/unfavorable way.

Predisposition. Pregnant with meaning

My Attitude toward: ¾

Drinking snake blood ¾ Body piercing

C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E.S.

Also called Tricomponent Attitude Model

C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E.

C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E.

C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E.

C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E.

C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E.

C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E.

C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E. FOUR FUNCTIONS of Attitudes 1. Utilitarian 2. Value-expressive 3. Ego-defense 4. Knowledge

C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E.

Also called Attitude towards Object

The Fishbein Model: An Example Attribute

Evaluation (ei)

Shock absorbent

Beliefs (bi) Brand Brand Brand A B C

+2

+2

+1

-1

-1

-3

-1

+3

Durability

+3

+3

+1

-1

Comfort

+3

+2

+3

+1

Desired color

+1

+1

+3

+3

Arch support

+2

+3

+1

-2

+29

+20

-6

Price less than 500

Total Σ bi ei score

C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E.

Incorporates Attitude towards Behavior

C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E.

C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E.

Change the Cognitive Component y y y y

Change Beliefs Shift Importance Add Beliefs Change Ideal

C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E.

Change the Affective Component y y y

Classical Conditioning Affect toward the ad or website Mere exposure

C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E.

Change the Behavioral Component y

y y y

y y

Reciprocity ◦ Door-in-the-face technique (big request first - target refuses, then the communicator “concedes” by asking for a small favor -target agrees) Scarcity - “one-day offer”, “two-days sale”, must suggest better value Authority - expert endorsers Commitment - make the target commit to some small thing ◦ Foot-in-the-door technique (small request first) ◦ Low-balling - to commit to an attractive option first (car deals) ◦ Even-a-penny-will-help technique Liking/compliments - persuasion by favorite or/and similar endorsers Social validation -“statistical advertisements”(85 % of the population)

C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E. Attitudes. How is the concept useful to a marketing manager? Prediction Diagnosis Getting Consumer to BUY: The Only way to get someone to buy your product is by first creating a favorable attitude in the consumer mind toward your product or brand.

C.O.N.S.U.M.E.R. A.T.T.I.T.U.D.E. Attitudes. Every marketing manager must understand the concept of attitude and know how to measure it. As a marketer, there is no task of greater importance than to build and sustain a positive consumer attitude. To build and sustain positive consumer attitudes, you will need every bit of knowledge about how attitudes are formed and sustained.

Innovation Diffusion and Adoption Process

Learning Objectives Innovation: Meaning, What influences adoption y Adopter types and characteristics y How to communicate to ensure adoption of innovation y

Defining Innovations Firm-oriented definitions y Product-oriented definitions y Market-oriented definitions y Consumer-oriented definitions y

Product-Oriented Definitions Continuous Innovation Dynamically Continuous Innovation Discontinuous Innovation

Telephone Innovations Discontinuous Innovations

Telephone

Cell Phone

Fax Machine

Dynamically Continuous Innovations

Continuous Innovations

Telephone answering machines Call forwarding Call waiting Caller ID Banking by telephone Call-prompting systems

Hold button Line-in-use indicator Redial button Auto dialing feature Touch-tone service 800 Numbers 900 Numbers

Ability to send/receive email Incorporate PDA functions Calendar/Phonebook Voice-activated dialing

Switch from analog to digital Include camera Ringer styles Play games

Fax modem Mobile fax machines Home office systems (combined fax, copier, computer printer)

Plain paper fax Speed dial buttons Delayed send Copy function Paper cutter

Product Characteristics That Influence Diffusion CHARACTERISTICS

EXAMPLES

Air travel over train travel, cordless Relative Advantage phones over corded telephones

Compatibility

Gillette MACH3 over disposable razors, digital telephone answering machines over machines using tape Electric shavers, instant puddings

Complexity Trialability Observability

Trial size jars and bottles of new products, free trials of software, free samples, cents-off coupons Clothing, such as a new Tommy Hilfiger jacket, a car, wristwatches, eyeglasses

I.N.N.O.V.A.T.I.O.N.S. Diffusion of Innovations

I.N.N.O.V.A.T.I.O.N.S. Innovation ADOPTER CATEGORIES

I.N.N.O.V.A.T.I.O.N.S. INNOVATORS • •

Risk takers Variety Seekers

•

High product Interest •

Less Well Integrated • More Individualistic

Measure of Consumer Innovativeness

I.N.N.O.V.A.T.I.O.N.S.

CHARACTERISTICS of OTHER ADOPTER GROUPS • • • •

Early Adopters—They Deliberate, Independent and Quick to Assess Early Majority—Very Deliberative, Adopt if see no risk Late Majority—Very skeptical, extremely risk averse. Laggards—resist/postpone adopting innovations

I.N.N.O.V.A.T.I.O.N.S. Adoption Process The AIDA Model

An Enhanced Adoption Process Model

Discontinuation or Rejection

Rejection

Evaluation Preexisting problem or Need

Awareness

Interest

Evaluation

Adoption or Rejection

Discontinuation

Trial

Adoption or Rejection

Postadoption or Postpurchase Evaluation

The Relative Importance of Different Types of Information Sources in the Adoption Process High Personal and interpersonal sources Importance Impersonal mass-media sources

Adoption

Trial

Evaluation

Interest

Awareness

Low

A Theory of Communication Flow

I.N.N.O.V.A.T.I.O.N.S./News WORD OF MOUSE ¾ Emails ¾ Chat Rooms ¾ Weblogs ¾ Public Blog Sites RECIPE FOR SUCCESSFUL BUZZ • • • • •

BUZZ MARKETING Rapid Spreading of Product News thru Word-of-Mouth ¾ Peer-to-peer marketing ¾ Viral marketing: Spreading product acceptance through consumers in an exponential fashion ¾ Cyber buzz (buzz thru Internet)

Consumer Learning

Learning Objectives y y y

How human beings learn How human memory works How marketers help consumers learn

Consumer As A Learner

Consumer As A Learner Pavlovian Model of Classical Conditioning Unconditioned Stimulus Meat paste Unconditioned Response Salivation Conditioned Stimulus Bell AFTER REPEATED PAIRINGS

Conditioned Stimulus Bell

Conditioned Response Salivation

Consumer As A Learner

Example of Classical Conditioning

Consumer As A Learner Example of Instrumental Conditioning Other examples: coupons, sweepstakes, thank you calls

Consumer As A Learner An Application of Instrumental Conditioning: Shaping

(Source: Hawkins et al, 2004)

Consumer As A Learner Modeling

The shot of a home buzzing with excitement. The housewarming ceremony is in progress.

..."Mummy, naariyal kyon toda?" Her mother explains, "Kyonki, yeh shudh...

Seeing her grand father break a coconut, a little girl scampers to her mother and asks...

...hai Aur shudhta se shakti badhti hai aur ghar mein khushiyaan aati hain."

Consumer As A Learner Contd:

The girl is now seen playing outside in the garden, building her own mud castle.

And repeats her mother's words to her perplexed friend, "Yeh shudh hai. Ghar mein...

Marketing Example?

She takes out a bottle of Parachute, and imitating her grandfather, hits it on the ground.

...khushiyaan aati hain." Product Window: Parachute. MVO: "Shudhta ki shakti."

Consumer As A Learner Cognitive Learning Low Involvement Learning. High Involvement Learning Brand name, jingles, slogans, package recognition;

Product benefits; Long message content;

Consumer As A Learner

Consumer As A Learner Memory Short Term How Short is STM ƒ Duration ƒ Capacity

Long Term How Long is LTM ƒ Duration ƒ Capacity

Consumer As A Learner

Consumer As A Learner

Consumer As A Learner

Consumer As A Learner Stimulus Generalization A process wherein a consumer extends a learned response for one stimulus to another stimulus

Example: Store brands use a

look-alike package , product line and form extension, family branding, licensing

Stimulus Discrimination A process wherein a consumer perceives two stimuli to be different and consequently does not apply the same response to both. Example: Shalimar and

Parachute coconut oil packages are designed to look different

Consumer As A Learner Product Line and Form Extension

Consumer As A Learner Repetition: Three-Hit Theory y

3 exposures to an ad are necessary for the ad to be effective

y

The number of actual repetitions to equal three exposures is more than 3

Consumer As A Learner Flip Side of Ad Repetition: Two-Factor Theory

Consumer As A Learner Effect of Ad Repetition y

Advertising wearout

Substantive Variations in Ads

Cosmetic Variations in Ads

Consumer As A Learner Measures of Consumer Learning y

Recognition and Recall Measures -Aided and Unaided Recall

y

Cognitive Responses to Advertising -Copytesting Measure

y

Attitudinal and Behavioral Measures of Brand Loyalty

Culture, Sub-Culture, Cross-Culture

Learning Objectives Culture: Meaning, Elements, Characteristics y How to understand culture y Subculture y Cross-culture and marketing blunders y

C.U.L.T.U.R.E. CULTURE—Everything Humans Learn and Share as Members of a Society Two Essentials of Culture ¾ LEARNING ¾ SHARING Culture vs. Nature 9Both within Ourselves 9And in the Physical world Outside us

C.U.L.T.U.R.E.

Elements of Culture • • • • • • • • • •

Values Norms Rituals Symbols Customs Myths Knowledge, Science, and Technology Laws Arts Material Culture

Discuss Are the following examples of culture or not? ¾

A Café Coffee Day cup of latte

¾

A bar of Dove soap

¾

A TV commercial for Nike featuring a celebrity

¾

A print ad for a medicine focusing entirely on medical benefits

C.U.L.T.U.R.E.

C.U.L.T.U.R.E. Universal Cultural Value Dimensions (Hofstede’s FIVE) ¾ Individualism vs. Collectivism ¾ Power Distance ¾ Uncertainty Avoidance ¾ Masculinity vs. Femininity ¾ High Context vs. Low Context And one more from Trompenaars ¾ Universalism vs. Particularism

C.U.L.T.U.R.E. Some Differences in Cultural Norms ¾ ¾ ¾ ¾

Offering and Sharing Chivalry Candid talk Informality in Social Relations

Discussion: Compare these for any two cultures you are familiar with

C.U.L.T.U.R.E. CULTURAL PRACTICES ¾ RITUALS ¾ Myths ¾ Customs Some Ancient Customs: Dowry Price Bride Price Some Modern day Customs: ¾ Bridal Shower ¾ Wedding Rituals

C.U.L.T.U.R.E. Discussion: How do these apply to: a. Olympic torch b. College commencement ceremony c. Engagement ring ceremony

C.U.L.T.U.R.E. Grooming Ritual

Exchange Ritual

C.U.L.T.U.R.E. The Measurement of Culture y y y

Content Analysis Consumer Fieldwork Value Measurement Instruments

S.U.B.-C.U.L.T.U.R.E.

Subculture

A distinct cultural group that exists as an identifiable segment within a larger, more complex society.

S.U.B.-C.U.L.T.U.R.E. Sub-Culture y y y y y y y

Social Class ( Upper, Middle) Religion (Hindus, Muslims) Geographic Region (North India, South India) Age (Children, Adults) Gender (Male, Female) Language ( Hindi, Bengali) Occupation ( Doctor, Engineer)

C.R.O.S.S.-C.U.L.T.U.R.E.

Cross-Cultural Consumer Analysis

The effort to determine to what extent the consumers of two or more nations are similar or different

C.R.O.S.S.-C.U.L.T.U.R.E. Globalization of Local Cultures a. Global Culture: A Myth or Reality? b. Global Culture does not mean death of Local Culture c. Local Culture thrives side by side Global Culture (Earlier, Local Culture existed Exclusively) Many Customs, Behaviors are now Everywhere d. Some consumers have embraced Global Culture.

C.R.O.S.S.-C.U.L.T.U.R.E. Global Versus Local… McDonald’s customized its products to be a part of Indian culture Since India’s majority Hindus (80% of India’s population) revere cows as sacred and 150 million of Indian Muslims do not eat pork and beef, McD introduced a mutton-based “Maharaja Mac” in India, as opposed to its flagship beef-based Big Mac elsewhere

C.U.L.T.U.R.E. Enculturation

Learning from one’s own culture has a bearing on one’s behaviour as a consumer The goodness of neem leaves gave the oppurtunity to the marketers to introduce it in the form of a bath soap

C.U.L.T.U.R.E. Acculturation

C.U.L.T.U.R.E. Measuring Consumer Ethnocentrism

C.U.L.T.U.R.E. Marketing Blunders (Crossing Cultures):

¾ ¾ ¾ ¾ ¾ ¾

Lost in Translation Written Scripts Colors Numbers and Other symbols Standards of Nudity and Taboo Topics Product Consumption Differences

C.U.L.T.U.R.E. Marketing Mistakes in India…

C.U.L.T.U.R.E. International Mistakes… Ford Fierra (ugly old woman in Spanish)

Parker Pen [It won’t embarazar you (in Mexican..‘It won’t leak in your pocket and make you pregnant’)]

Let it loose (In Spanish…‘Suffer from diarrhea’)

Source: http://www.cxo.eu.com/currentissue/article.asp?art=269413&issue=190

Reference Groups and Family Influence

Learning Objectives Reference groups: Types, strong vs. weak influence, types of influence, types of appeal y Opinion leadership: qualities, how to identify them y Family vs. household, family decision making, consumer socialization of children y

R.e.f.e.r.e.n.c.e. G.r.o.u.p.s. Persons, groups, and Institutions one uses as Points of Reference. (Uses as a Guide for one’s own values and behavior) Referent: A person one uses as a point of reference. Everyone has at least one Referent, or Reference Group. No one lives by him/herself, for him/herself, of him/herself.

R.e.f.e.r.e.n.c.e. G.r.o.u.p.s. Groups.Two or more persons sharing a common purpose.. GROUP Members: ¾ ¾ ¾ ¾ ¾

Share Some Values Recognize Interdependency Assume Specific Roles Communicate Mutual Expectations and Evaluations Provide some rewards/punishments (tangible or intangible)

R.e.f.e.r.e.n.c.e. G.r.o.u.p.s. Types of Groups ¾ ¾ ¾ ¾ ¾

Primary vs. Secondary Formal vs. Informal Ascribed Vs. Choice Associative Vs. Dissociative Membership Vs Symbolic

R.e.f.e.r.e.n.c.e. G.r.o.u.p.s.

R.e.f.e.r.e.n.c.e. G.r.o.u.p.s.

R.e.f.e.r.e.n.c.e. G.r.o.u.p.s.

R.e.f.e.r.e.n.c.e. G.r.o.u.p.s.

R.e.f.e.r.e.n.c.e. G.r.o.u.p.s. Measurement of SIPI (Rate Yourself)

Reference Group Appeals Celebrity Appeal: Dhoni for pen

Celebrities The expert The “common man” The executive and employee spokesperson y Trade or spokescharacters y Other reference group appeals y y y y

Types of Celebrity Appeals TYPE

DEFINITION

EXAMPLE

Testimonial

Based on personal usage, a celebrity attests to the quality of the product or service

Amitabh Bachchan for Navratna……(so many years in the industry…)

Endorsement

Celebrity lends his name and Shah Rukh for Santro appears on behalf of a product or service with which he/she may not be an expert

Actor

Celebrity presents a product or service as part of a character endorsement

Amitabh Bachchan as Father Principal(priest)

Spokesperson

Celebrity represents the brand or company over an extended period of time

Aishwaraiya Rai for Loreal

O.P.I.N.I.O.N. L.E.A.D.E.R.S. People Who Hold and Give an Opinion, Which is ACCEPTED by Opinion Recipient

Two Essential Qualities:

Other Characteristics of OLs:

¾Expertise

¾High Product Involvement

¾Trustworthiness

¾Recognized as Leaders ¾Socially Well–Integrated ¾More exposed to Media ¾Hold leadership positions in organizations

O.P.I.N.I.O.N. L.E.A.D.E.R.S. IDENTIFYING OPINION LEADERS 1. Observation 2. Self-Designation 3. Sociometry 4. Key-Informants Trustworthiness

Discussion Apply these methods to identify O.L.s for (a) For a rally on campus (b) For an environmental awareness campaign

O.P.I.N.I.O.N. L.E.A.D.E.R.S. Measuring Opinion Leadership

F.A.M.I.L.Y. Define Family Define Household Q. What is the Difference between a Family and Household Q. Is every household a family? Q. Is every family equal to one household?

F.A.M.I.L.Y. FAMILY LIFE CYCLE

Discuss: How can Marketer use the FLC?

F.A.M.I.L.Y. FAMILY DECISION MAKING PROCESS Discuss: 1. Can family members make “individual” decisions? 2. Do all these steps inevitably occur in joint family decisions?

Eight Roles in the Family Decision-Making Process ROLE Influencers

DESCRIPTION Family member(s) who provide information to other members about a product or service

Gatekeepers

Family member(s) who control the flow of information about a product or service into the family

Deciders

Family member(s) with the power to determine unilaterally or jointly whether to shop for, purchase, use, consume, or dispose of a specific product or service

Buyers

Family member(s) who make the actual purchase of a particular product or service

Preparers

Family member(s) who transform the product into a form suitable for consumption by other family members

Users

Family member(s) who use or consume a particular product or service

Maintainers

Family member(s) who service or repair the product so that it will provide continued satisfaction.

Disposers

Family member(s) who initiate or carry out the disposal or discontinuation of a particular product or service

F.A.M.I.L.Y. Husband-Wife DECISION Roles

Discuss: Which products decisions are likely to be of each type?

F.A.M.I.L.Y. FACTORS Influencing Spousal Roles

Discuss: Which factors will favor a greater role by the husband? Which by the wife?

F.A.M.I.L.Y. Family Types 1. 2. 3. 4.

Authoritarian Neglectful Democratic Permissive

Discussion: How would you classify your family? How has that affected your development as a consumer? Would you have been a different type of consumer if your family were of another type?

F.A.M.I.L.Y. Conflicts and Resolution Strategies Discuss: Can you give an example of each quadrant from your own experience?

F.A.M.I.L.Y. Consumer Socialization of Children What do children learn about the marketplace? Where do they learn these from—i.e., who are the socializing agents?

Decision-making

Learning Objectives

D.E.C.I.S.I.O.N. –M.A.K.I.N.G.

Consumer Decisions

Whether to Buy a Product at all? What Feature (versus price) trade-offs to Accept? Which Brand to Buy? Where to Buy it from? ……………….. And in Deciding on all this, How Much Effort to Put In?

D.E.C.I.S.I.O.N. –M.A.K.I.N.G. Consumer Decision Process

D.E.C.I.S.I.O.N. –M.A.K.I.N.G. STEP 1: What is PROBLEM RECOGNITION? Gap Concept of Needs

D.E.C.I.S.I.O.N. –M.A.K.I.N.G. STEP 1: What is PROBLEM RECOGNITION?

D.E.C.I.S.I.O.N. –M.A.K.I.N.G. How PROBLEM RECOGNITION Occurs? Types of Stimuli •A Problem Stimulus •A Solution Stimulus Sources of Stimuli Opportunity Recognition •Internal Stimuli •External Stimuli Problem Recognition Situations ¾Stock Depletion ¾Life-stage Changes ¾Developing New Tastes

Discuss: Student Examples

D.E.C.I.S.I.O.N. –M.A.K.I.N.G. STEP 2: INFORMATION SEARCH BRANDS WE KNOW

D.E.C.I.S.I.O.N. –M.A.K.I.N.G. STEP 2: INFORMATION SEARCH (Contd.) Sources of Information ƒ Marketer Sources ƒ

Non-Marketer Sources

Personal Independent

Q. Which Source is Called Advocate Source?

D.E.C.I.S.I.O.N. –M.A.K.I.N.G. STEP 2: INFORMATION SEARCH (Contd.) Sources of Information Q. Do Knowledgeable Consumers Depend More on Some Sources than Others (Compared to Not-soknowledgeable sources)?

D.E.C.I.S.I.O.N. –M.A.K.I.N.G. STEP 2: INFORMATION SEARCH (contd.) SEARCH STRATEGIES Rules of Thumb ¾Quick Inference ¾Brand Name ¾Past Experience ¾Recommendation

D.E.C.I.S.I.O.N. –M.A.K.I.N.G. STEP 2: INFORMATION SEARCH (contd.) Simplifiers Vs. Extenders (Depends on) Cognitive Style Problem Complexity –Routine, Limited, and Extended Are You A Simplifier or Extenders? Q.

Have You Ever Wished You Were (For a Specific Decision) an Extender (Or Even more of an Extender)? Explain?

D.E.C.I.S.I.O.N. –M.A.K.I.N.G. STEP 2: INFORMATION SEARCH (contd.) Discuss: Place a + or – sign to indicate each factor’s increase/decrease direction of influence? Name various shopping styles Familiarity & Expertise: Same thing, similar effect?

D.E.C.I.S.I.O.N. –M.A.K.I.N.G. STEP 2: INFORMATION SEARCH (contd.) Some Key Concepts in “Determinants of Search” ¾ Perceived Risk and Types ¾ Difference between Familiarity and Expertise ¾ Are Effects of Familiarity and Expertise Different? ¾ Deficit Hypothesis ¾ Shopping Style ¾ Ignorance Paradox

D.E.C.I.S.I.O.N. –M.A.K.I.N.G. STEP 3: ALTERNATIVE EVALUATION

How Do You Know What Features You Want? Or Should want?

D.E.C.I.S.I.O.N. –M.A.K.I.N.G. STEP 3: ALTERNATIVE EVALUATION (contd.) Judgment Models (Decision Rules or Models) Compensatory Model Non-Compensatory Models ¾ Conjunctive ¾ Disjunctive ¾ Lexicographic ¾ Elimination by Aspect (EBA)

D.E.C.I.S.I.O.N. –M.A.K.I.N.G. STEP 3: STEP 3: ALTERNATIVE EVALUATION (contd.) Imperfections in Consumer Judgment FRAMING EFFECTS

D.E.C.I.S.I.O.N. –M.A.K.I.N.G. STEP 3: ALTERNATIVE EVALUATION (contd.) Imperfections in Consumer Judgment (Contd.) TOP DOWN vs. BOTTOM UP Customization (Which one makes you spend more?) WHY IT HAPPENS: ƒ Cognitive Effort ƒ Anchoring Effect

D.E.C.I.S.I.O.N. –M.A.K.I.N.G. STEP 3: ALTERNATIVE EVALUATION (contd.) Imperfections in Consumer Judgment (Contd.) Inference Making: 1. Intra-attribute inference 2. 3.

Evaluative Consistency Negative Cue Alternative Evaluation Phase Concluded by SATISFICING The Chosen Alternative is NOT OPTIMUM Yet We Are Satisfied, even Relieved

Describe Your Own “Moments of Satisficing”

D.E.C.I.S.I.O.N. –M.A.K.I.N.G. How We Choose Expressive Products?

D.E.C.I.S.I.O.N. –M.A.K.I.N.G. STEP 4: PURCHASE

D.E.C.I.S.I.O.N. –M.A.K.I.N.G. Decision Process by Involvement

D.E.C.I.S.I.O.N. –M.A.K.I.N.G. OVERVIEW Problem recognition opens new markets for innovative and insightful marketers. All consumers are satisfiers, not optimizers? Are you an extender or a simplifier? Discuss. Is it better to be an extender than a simplifier? We use judgment models/decision rules all the time. There is nothing theoretical about them Heuristics are very handy; they serve us by allocating our effort judiciously. Involvement is the big arbiter of all decision processes.

Learning Objectives

Discussion: ƒ

Have you experienced similar moments? When?

ƒ

What kinds of consumer decisions produce second thoughts?

Postpurchase Dissonance y y

Postpurchase Dissonance: a consumer reaction after making a difficult decision that involves doubt and anxiety Probability of experiencing dissonance increases based on: ◦ Degree of commitment or irrevocability ◦ Importance of the decision ◦ Difficulty in choosing ◦ Individual’s tendency to experience anxiety

Postpurchase Dissonance y

Approaches to reduce dissonance: ◦ Increase the desirability of the brand purchased ◦ Decrease the desirability of rejected brand ◦ Decrease the importance of the purchase ◦ Reverse the purchase decision (return before use)

¾Decision Confirmation ¾Cognitive Dissonance ¾Consuming in Evaluative Mode (vs. Mindlessly) Discuss 1. Describe when you may have felt the need to confirm your decision. 2. Describe when you consumed something in an evaluative mode.

Future Response Exit Voice Loyalty

Psychology of Satisfaction

Customer Satisfaction Outcomes

Dissatisfaction Response

Future Response Why Do Dissatisfied Customers NOT Leave?

SWITCHING COSTS ¾ contract investment lost ¾ New search/shopping costs ¾ New Set up costs ¾ Learning costs ¾ Performance risk ¾ No known better alternatives ¾ Some current feature lure

Consumer Complaining

Related Concepts: ƒ ƒ ƒ

Perceived Justice Recovery Make-Goods

Disposition Alternatives

Recycling Which item can you yourself Reduce Reuse Recycle Will You?

Product Disposal Two-Factor Model of Recycling

Post-Choice Experience by Involvement

DISCUSSION: How Would You Motivate Consumer Complaining? (Should You? Why?)

How Would You Encourage Consumer Recycling?

How Would You Enhance Consumers’ Product Use Experience?

Enhancing Post-Choice Experience 1. 2.

3. 4. 5. 6. 7. 8.

Free sampling helps mostly when product is significantly different; Draw attention to hidden attributes (e.g., made from recycled

paper) made from wholesome ingredients); usage instructions for full benefits; Offer convenient product use support; Usage Guide Interaction quality Authenticity certificate Post purchase communication (To validate) Aesthetic package design (if in view during Any Other?

Use)

Consumer as a Shopper

Learning Objectives

C.O.N. S.U.M.E.R. A.S. A.

S.H.O.P.P.E.R.

Outlet Selection and Purchase y

y

Decision Sequence ◦ Outlet First, Brand Second ◦ Brand First, Outlet Second ◦ Simultaneous Influences on store evaluative criteria ◦ List and rank evaluative criteria (characteristics) when shopping for: x x x x x

major grocery shopping trip buying a quart of milk in a hurry buying a suit buying a watch buying a newspaper

C.O.N. S.U.M.E.R. A.S. A.

S.H.O.P.P.E.R.

Marketing Strategy Based on Decision Sequence

C.O.N. S.U.M.E.R. A.S. A.

S.H.O.P.P.E.R.

Shopping Motives ¾Browsing ¾Bargain Hunting ¾Socialization ¾Seeking Status ¾Self-gratification ¾Market Learning ¾Recreation ¾Acquisition Discussion Q. What % of time that you spend in the mall do you spend on each?

C.O.N. S.U.M.E.R. A.S. A. SHOPPING ORIENTATIONS Task Vs. Leisure Orientation ¾ ¾

Task Oriented Leisure oriented

Four Sub-orientations of Task Oriented Shoppers: ¾ ¾ ¾ ¾

Product Quality Shopper Economic Shopper Convenience Shopper Experience Shopper

Discussion Q. Which Type Are You? (Get Class Distribution--By M vs. F)

S.H.O.P.P.E.R.

C.O.N. S.U.M.E.R. A.S. A.

S.H.O.P.P.E.R.

Planned or Unplanned Buying Q. Are All Unplanned Purchases Impulse Purchases? Types of Unplanned Purchases: ¾

1. Unplanned Restocking

¾

2. Unplanned Evaluated, New Purchases

¾

3. Impulse purchases

Discussion. Describe Your own recent purchase of the second type. And then the third type. Notice any difference?

C.O.N. S.U.M.E.R. A.S. A.

S.H.O.P.P.E.R.

Discussion: Recall and describe your most recent instance of extended browsing. Then check off which factors aided it.

C.O.N. S.U.M.E.R. A.S. A. In-Store Purchase Behavior

S.H.O.P.P.E.R.

C.O.N. S.U.M.E.R. A.S. A.

S.H.O.P.P.E.R.

STORE ENVIRONMENT ¾ ¾

PHYSICAL SOCIAL

Four Elements of Physical Environment ¾Design Factors—architecture, décor, furnishings

Store by Chase Design Group

¾Ambient factors—sights, sounds, smells, light, music, temp, etc. ¾Layout ¾Merchandise variety and visual display Now Can You Build a List of Elements of Social Environment? ¾ .. ¾ ... ¾…

C.O.N. S.U.M.E.R. A.S. A.

S.H.O.P.P.E.R.

Store Atmosphere

C.O.N. S.U.M.E.R. A.S. A.

S.H.O.P.P.E.R.

C.O.N. S.U.M.E.R. A.S. A.

S.H.O.P.P.E.R.

Discussion: Name YOUR Stores for each of the orange circles in the diagram.

C.O.N. S.U.M.E.R. A.S. A.

S.H.O.P.P.E.R.

Discussion: Name YOUR stores at each stage

C.O.N. S.U.M.E.R. A.S. A.

S.H.O.P.P.E.R.

Discussion: Does This Model Work For You?

C.O.N. S.U.M.E.R. A.S. A.

S.H.O.P.P.E.R.

DISCUSSION: Name two stores, one you are more loyal to (or at least prefer more) and one less; then rate each on the “What” and “How” factors.

C.O.N. S.U.M.E.R. A.S. A.

S.H.O.P.P.E.R.

DISCUSSION:

Do Store Brands Make Stores More Attractive? For Whom?

C.O.N. S.U.M.E.R. A.S. A.

S.H.O.P.P.E.R.

Discussion: Rate these stores: (a) Pantaloons, (b) Café Coffee Day; (c) Westside; (d) Spencer’s (e) McDonald’s; (f) Pizza Hut

C.O.N. S.U.M.E.R. A.S. A.

S.H.O.P.P.E.R.

Discussion: Rate Yourself. Do you believe you are an impulse buyer? Do your ratings confirm that? For what kinds of products? When Can Impulse buying become an addiction?

C.O.N. S.U.M.E.R. A.S. A.

S.H.O.P.P.E.R.

C.O.N. S.U.M.E.R. A.S. A.

S.H.O.P.P.E.R.

Impact of a Stockout Situation

C.O.N. S.U.M.E.R. A.S. A.

S.H.O.P.P.E.R.

LAST WORD Shopping ¾It is Necessary ¾And, for many, it is Fun.

Store by Chase Design Group

Becoming the Favorite Store: ¾Recognize Consumer Diversity (in terms of shopping orientations and shopping motives). ¾Create Atmospherics ¾Provide positive shopping experience.

Discussion: Write an essay on what your life will be like if there were no modern-day indoor or outdoor malls and shopping plazas.

Saxonville Case

Learning Objectives How to determine optimal positioning for a brand based on consumers’ motivations, influences and values y Understand how a 4-step process utilizing research results can be used to determine viable positioning alternatives y How to recommend tactics accompanying a positioning strategy including brand name, product varieties, advertising and sales promotion y

Introduction Segmentation is the identification and profiling of distinct groups of buyers who might require varying product and service mixes by examining demographic, psychographic and behavioral differences among buyers y Positioning is the designing of the company’s offering and image to occupy a distinctive place in the mind of the target market y

Current Situation y

Market/Industry (Since 2004, 0% vol. increase in bratwurst & breakfast, Italian sausage 9% and 15% growth in ’04 & ’05, Saxonville has flat growth in brats, double digit decline in breakfast sausage and matched Italian usage industry growth)

y

Competition (Mama Mia with ‘authentic Italian heritage’, Hertfordshire ‘freshly and locally made’, Pagalia Brothers with both)

y

Customer (FFH, 20-50 years old)

y

Company Status/Issues/4Ps

y

SWOT

Research Methodology y y

y 1.

Use of Previous Research Identification of Segments (w.r.t demographic and behavioral characteristics) Four-Step Process Mini pilot groups to understand what current Italian sausage users say about use of the product, AND Focus group to understand current behaviors, triggers to purchase, unmet demands, product benefits, attributes, ideals, core value of products

2.

Develop positioning ideas

3.

Consumers prioritize and improve positioning concepts

4.

Monadic testing with purchase intent scores

Considerations to assure surveying the ‘right’ consumers Age (20-30 years, 30-40 years, 40-50 years) y Lifestyle (Working fill-time/part-time, Stay-at-home-mom) y Geography (Saxonville bratwurst territory for Saxonville brand,Vivio Italian territory for Vivio brand, Territories with both brands in market for perceptions of the ‘other’ brand, Italian sausage territories for competitive brands) y

Research Results y

Focus Group -Heavy users purchased once a week in winter and once every two weeks in summer, light users purchased at least once every six weeks -Husband and children enjoyed -Females cooked -Italian sausage is ingredient for other meals -Vivio is of exceptionally good quality, color, taste, texture -Vivio not a suitable name -Women did not feel good about pre-packaged food -Women wanted to make wholesome and appealing meals for family but did not have time or skills for it -Desired to be nurturing mothers and homemakers -Believed a meal could be a magnet to bring everyone to the table

y y

Six concepts Two top alternatives

Alternatives and Recommendations Family Concept (Pros Cons) y Clever Cooking (Pros Cons) y

Brand laddering Value y Emotional benefit y Functional benefit y Attributes y

Brand laddering y

Family Connection

Value- Job well done Emotional benefit- Togetherness/Connectivity Functional benefit- Everybody loves it Attributes- Perfect blend of seasoning and spices

y

Clever Cooking

Value-Job well done Emotional benefit- Creativity Functional benefit- Product versatility Attributes- Unique flavor combinations and forms

Family Concept Name Positioning Statement Tagline Communication Strategy -Key functional benefit -Key emotional benefit Product Variations -Flavors -Forms Packaging In-store tactics

Clever Cooking Name Positioning Statement Tagline Communication Strategy -Key functional benefit -Key emotional benefit Product Variations -Flavors -Forms Packaging In-store tactics

Tactics and Recommendations Product Varieties y Packaging y Advertising and Sales Promotions y

What happened? Saxonville adopted ‘Clever positioning’ and supported it with the following tactics: y

The brand name selected was an Italianate equivalent to “Primo”; some time after the first year of introduction (depending on performance and other activity in the entire sausage category), the Saxonville Company name would be introduced in some form (for example, “From Saxonville” or “Saxonville’s Primo Brand of Italian Sausage”).

y

Oval-shaped label to resemble a finished meal on a serving or dinner plate.

y

In-pack recipes (inserted under the label on top of the plastic wrap—i.e., not touching the sausage) in a 3”x5” recipe card size with new recipes rotated in every four weeks.

y

The label was tagged to indicate that the package included a recipe and required ingredients were listed.

y

Line items were rationalized, and pre-sliced and pre-formed disk and patty line items were introduced in “mild” and “sweet” varieties. Different flavors were developed as “in and out” line items to add news to the brand without incurring increased permanent slotting fees.

What happened? y

y

y y

y

A print ad campaign was launched geographically in concert with product launch. The initial depiction of happy family members realizing what’s for dinner and running to the table included a different recipe from the series used in product packages. The brand was introduced in geographies where Vivio had distribution, with a plan to leave the two brands in the market initially and determine how to fade Vivio out (depending on performance) in the future. “Primo” gained distribution in successive geographic introductions and continued to gain as the brand caught on. “Primo” sales volume growth matched and then slightly exceeded overall category growth in some areas; sales volume growth continues today and cannot be attributed only to distribution gains. Competitive response included deeper discounting with several regional players and increased advertising spending with others. “Primo” continues to be expanded throughout the country and at this point maintains its status as the only Italian sausage close to being a “national” player. Competitive activities did not appear to deter the brand’s performance: in some geographies, “Primo” is the premium-priced brand.