Chapter 6 - Understanding Consumer and Business Markets

6.1 The consumer decision-making process

6.1 Define consumer behavior, and explain the purchase decision-making process. Compelling new products, clever packaging, and creative advertising surround us, clamoring for our attention—and our money. And that's not all—the internet allows us to shop on our mobile phones and tablets 24/7 from any location, it provides information on a gazillion different products from just about as many sellers, and it gives us product and seller reviews by other consumers. But consumers don't all respond in the same way. Each of us is unique, with our own reasons to choose one product over another. Remember: The focus of the marketing concept is to satisfy consumers' wants and needs. To accomplish that crucial goal, we first need to appreciate what those wants and needs are. What causes one consumer to step into an International House of Pancakes for an order of IHOP Rooty Tooty Fresh 'N Fruity® Pancakes, whereas another opts for a quick Starbucks latte and Danish, and a third will only eat a healthy serving of "natural" Kashi cereal and fruit? And what, other than income, will cause one consumer to buy that box of Kashi cereal only when it's "on deal" while her neighbor never even looks at the price? Consumer behavior is the process individuals or groups go through to select, purchase, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and desires. Marketers recognize that consumer decision making is an ongoing process; it's much more than what happens the moment a consumer forks over the cash and in turn receives a good or service. Let's go back to the shoppers who want to buy a box of dry cereal. Although this may seem like a simple purchase, in reality, there are quite a few steps in the process that cereal marketers need to understand. The first decision in the purchasing process is where to buy your cereal. If you eat a lot of it, you may choose to make a special trip to a warehouse-type retailer that sells super-duper-sized boxes rather than just picking up a box while you're at the local supermarket. If you want to choose from healthier organic alternatives, you may browse for cereal at Whole Foods or a local food co-op. Of course, if you get a craving for cereal in the middle of the night, you may dash to the local convenience store. Then, what type of cereal do you buy? Do you eat only low-fat, high-fiber bran cereals, or do you go for the sugar-coated varieties with marshmallows? Of course, you may also like to have a variety of cereals available so you can mix and match. Marketers also need to know how and when you consume their products. Do you eat cereal only for breakfast, or do you snack on it while you sit in front of the TV at night? Do you eat certain kinds of cereal only at certain times (like sugary kids' cereals that serve as comfort food when you pull an all-nighter)? What about storing the product (if it lasts that long)? Do you have a kitchen pantry where you can store the supersized box, or is space an issue? And there's more. Marketers also need to understand the many factors that influence each of these steps in the consumer behavior process—internal factors unique to each of us, situational factors at the time of purchase, and the social influences of people around us. In this chapter, we'll talk about how all these factors influence how and why consumers do what they do. But first we'll look at the types of decisions consumers make and the steps in the decision-making process. Not All Decisions Are the Same Old school researchers assumed that consumers carefully collect information about competing products, determine which products possess the characteristics or product attributes important to their needs, weigh the pluses and minuses of each alternative, and arrive at a satisfactory decision. But how accurate is this picture of the decision-making process? Is this the way you buy cereal? Although it does seem that people take these steps when they make an important purchase, such as a new car, is it realistic to assume that they do this for everything they buy, like that box of cereal? Today, we realize that decision makers actually employ a set of approaches that range from painstaking analysis to pure whim, depending on the importance of what they are buying and how much effort they choose to put into the decision.2 As we see in Figure 6.1, researchers think in terms of an "effort" continuum that is anchored on one end by habitual decision making, such as deciding to purchase a box of cereal, and at the other end by extensive problem solving, such as deciding to purchase a new car. When consumers engage in extensive problem solving, they do indeed carefully go through the steps Figure 6.2 outlines: problem recognition, information search, evaluation of alternatives, product choice, and postpurchase evaluation. When we make habitual decisions, however, we make little or no conscious effort. Rather, the search for information and the comparison of alternatives may occur almost instantaneously, as we recall what we have done in the past and the satisfaction we received. You may, for example, simply throw the same brand of cereal in your shopping cart week after week without thinking about it too much. Many decisions fall somewhere in the middle and are characterized by limited problem solving, which means that we do some work to make decisions but not a great deal. This is probably how you decide on a new pair of running shoes or a cool new case for your smartphone. Just how much effort do we put into our buying decisions? The answer depends on our level of involvement—how important we perceive the consequences of the purchase to be. Figure 6.1 shows the decision-process continuum and some of the differences between extensive problem solving, limited problem solving. and habitual decision making. Of course, habitual decision making, limited problem solving, and extensive problem solving are not discrete categories. Rather, we think of our product purchases as being on a continuum on which each purchase we make is at a slightly different point. As a rule, we are more involved in the decision-making process for products when we think the decision may be risky in some way. Perceived risk may be present if the product is expensive or complex and hard to understand, such as a new computer or a sports car. Perceived risk also can play a role when we think that making a bad choice will result in embarrassment or social rejection. For example, a young woman might decide against purchasing a nice-looking and functional Nine West purse from Kohl's for fear that she might be teased or ridiculed by her sorority sisters who all sport trendy Coach handbags. When perceived risk is low—such as when we buy a box of cereal—we experience a low amount of involvement in the decision-making process. In these cases, we're not overly concerned about which option we choose because it is not especially important or risky. The worst-case scenario is that you don't like the taste and pawn off the box on your unsuspecting roommate! In low-involvement situations, the consumer's decision is often a response to environmental cues, such as when you decide to try a new type of cereal because the grocery store prominently displays it at the end of the aisle, known as an end cap. Under these circumstances, managers must concentrate on how a store displays products at the time of purchase to influence the decision maker. For high-involvement purchases, such as when we buy a house or a car, we are more likely to carefully process all the available information and to have thought about the decision well before we buy the item. The consequences of the purchase are important and risky, especially because a bad decision may result in significant financial losses, aggravation, or social embarrassment. Most of us would not just saunter into an auto dealer's office at lunchtime and casually plunk down a deposit on a new Tesla Roadster. For high-involvement products, managers must start to reduce perceived risk by educating the consumer about why their product is the best choice well in advance of the time that the person is ready to make a decision. To understand each of the steps in the decision-making process, we'll follow the fortunes of a consumer named Brandon, who, as Figure 6.2 shows, is in the market for a new ride—a highly involved purchase decision, to say the least.

6.2 Internal Influences on Consumers' Decisions

6.2 Explain how internal factors influence consumers' decision-making processes. What is your dream car? It may be a sporty Ferrari. However, your roommate dreams of a tricked-out Mustang, and your dad is set on owning a cool new Tesla. As the saying goes, "That's why they make chocolate and vanilla." We can attribute much of these differences to internal influences on consumer behavior—those things that cause each of us to interpret information about the outside world, including which car is the best, differently from one another. Perception Perception is the process by which people select, organize, and interpret information from the outside world. We receive information in the form of sensations. As you can see in Figure 6.5, our sensory receptors—eyes, ears, nose, mouth, and skin—have immediate responses to sights, sounds, smells, tastes, and textures. We try to make sense of the sensations we receive as we interpret them in light of our past experiences. We are bombarded with information about products—thousands of ads both on-and off-line, in-store displays, special offers, our friends' opinions posted on Facebook, and on and on. The perception process has important implications for marketers: As we absorb and make sense of the vast quantities of information that compete for our attention, the odds are good that any single message will get lost in the clutter. And, if we do notice the message, there's no guarantee that the meaning we give it will be the same one the marketer intended. To improve the likelihood that a consumer will notice and make sense of a message correctly, marketers need to understand the three steps that occur during this process: exposure, attention, and interpretation. Exposure The stimulus must be within range of people's sensory receptors to be noticed; in other words, people must be physically able to see, hear, taste, smell, or feel the stimulus. For example, the lettering on a highway billboard must be big enough for a passing motorist to read easily, or the message will be lost. Exposure is the extent to which a person's sensory receptors are capable of registering a stimulus. Marketers work hard to achieve exposure for their products, but sometimes it's just a matter of making sure that cool people use your product—and that others observe them doing so. Many people believe that even messages they can't see will persuade them to buy advertised products. Claims of subliminal advertising messages being hidden in ice cubes or baked into the tops of crackers have been surfacing since the 1950s. A survey of American consumers found that almost two-thirds believe in the existence of subliminal advertising, and more than one-half are convinced that this technique can get them to buy things they don't really want.7 There is not much evidence to support the argument that this technique actually has any effect at all on our perceptions of products, and even less that marketers are or ever have used subliminal advertising methods. But still, concerns persist. ABC once rejected a commercial for KFC that invites viewers to slowly replay the ad to find a secret message, citing the network's long-standing policy against subliminal advertising. The ad (which other networks aired) is a seemingly ordinary pitch for KFC's $0.99 Buffalo Snacker chicken sandwich. But if you replay it slowly on a digital video recorder, it tells you that viewers can visit KFC's website to receive a coupon for a free sandwich. Ironically, this technique is really the opposite of subliminal advertising because instead of secretly placing words or images in the ad, KFC blatantly publicized its campaign by informing viewers that it contains a message and how to find it.8 The short story: Hidden messages are intriguing and fun to think about (if a little scary), but they don't really work. Sorry for the letdown—and don't bother trying to read this paragraph backward. Attention As you drive down the highway, you pass hundreds, maybe thousands, of other cars. But to how many do you pay attention? Probably only one or two—the bright pink and purple VW Bug and the Honda with the broken taillight that cut you off at the exit ramp. Attention is the extent to which we devote mental-processing activity to a particular stimulus. Because attention is critical to advertising effectiveness, marketers continue to look for ways to ensure that consumers will attend to their messages. Some factors that influence consumers' likelihood of devoting processing activity to a stimulus include the following: Personal needs and goals: Consumers are more likely to pay attention to messages that speak to their current needs. A car that almost causes you to be in an accident will speak to your current need to get where you are going safely. That's the same reason you're far more likely to notice an ad for a fast-food restaurant when you're hungry. Size: A larger magazine or newspaper ad or a longer TV commercial is more likely to command attention. Novelty: Stimuli that present something unexpected tend to grab our attention. That includes the red-and-white polka-dot VW bug driving in front of us, ads that are in black and white in an all-color world, or ads in unconventional places, such as painted on a sidewalk, on the backs of shopping carts, or on bathroom walls. Novelty can also make product packaging stand out. When Pepsi came out with Pepsi One and Coke introduced Coca Cola Zero in black cans, these new versions stood out on store shelves. Another problem marketers face when it comes to attention is multitasking, which occurs when we flit back and forth between emails, TV channels, text messages, and so on. For college students, more serious multitasking involves getting those three term papers that are due the same day completed on time—while still catching the latest episode of The Bachelor. Today, multitasking is so prevalent that it is considered the norm. Most jobs require multitasking skills of some sort. Prospective employers list the ability to multitask successfully in their job descriptions. Career counselors may advise you to have examples ready of how you have handled multiple tasks or projects in the past.9 But as we'll see later in the book, this process creates headaches for marketers that want you to pay full attention to what they're saying! Online advertisers keep innovating to get visitors to watch their messages. Some have turned to rich media, a digital advertising term for an ad that includes advanced features, like video and audio elements, that encourage viewers to interact and engage with the content. The web page for the 2019 Corvette Stingray RWD Convertible allows potential buyers to see the car with different colors and trims and even allows you to see what your Stingray would look like with the full-length dual-racing-stripe package and the wing-style spoiler—for just a little over $78,000.10 Online rich media for the Metropolitan Museum of Art allows web visitors to view a moving panorama of an exhibit or to examine details of a painting by clicking the image. Interpretation Interpretation is the process of assigning meaning to a stimulus based upon prior associations we have with it and assumptions we make about it. Two people can see or hear the same event, but their interpretation of it can be as different as night and day, depending on what they had expected the stimulus to be. In one study, kids ages 3 to 5 who ate McDonald's French fries served in a McDonald's bag overwhelmingly thought they tasted better than those who ate the same fries out of a plain white bag. Even carrots tasted better when they came out of a McDonald's bag—more than half the kids preferred them to the same carrots served in a plain package! Ronald would be proud.11

6.3 Situational and social influences on consumers' decisions

6.3 Show how situational factors and consumers' relationships with other people influence consumer behavior. We've seen that internal factors, such as how people perceive marketing messages, their motivation to acquire products, and their unique personalities, age groups, family life cycle, and lifestyle, influence the decisions people make. In addition, situational and social influences—factors external to the consumer—have a big impact on the choices consumers make and how they make them. Situational Influences When, where, and how we shop—what we call situational influences—shape our purchase choices. Some important situational cues are our physical surroundings and time pressures. Marketers know that dimensions of the physical environment, including factors such as decor, smells, lighting, music, and even temperature, can significantly influence consumption. When casino operators replaced old school "one-armed bandits" with electronic slot machines that no longer made the familiar whirring noises when players pulled the handle, earnings fell by 24 percent.23 And the Hard Rock Hotel in Orlando, Florida, boosted ice cream sales by 50 percent simply by spraying a waffle cone scent into the air outside its shop.24 Sensory marketing appeals to consumers' five senses: taste, sight, touch, smell, and hearing. Sensory marketing is becoming big business. Specialized companies sell scents to hotels, car manufacturers, and even banks (like customers don't know what money smells like). Some offer individual scents, like vanilla, whereas others sell combinations of popular scents. Brands such as Cinnabon make sure the aroma of fresh baked cinnamon rolls floats down the mall to attract consumers. Does this tactic work? The scent is so successful that some locations heat brown sugar and cinnamon just to keep hungry consumers pouring in.25 But for some retailers, like Victoria's Secret and Bloomingdale's, it's not enough to have just any scent; these retailers have actually purchased custom scents that not only appeal to their customers but also enhance their brand. And, coming soon: Books, movies, and even clothing that will deliver specific scents via pellets that you insert into your iPhone!26 Marketers term this strategy sensory branding.27 Let's see how some other situational factors influence the consumer decision-making process. The Physical Environment It's no secret that physical surroundings strongly influence people's moods and behaviors. Despite all their efforts to presell consumers through advertising, marketers know that the store environment influences many purchases. For example, one study of purchasing habits showed that consumers decide on about three out of every four of their supermarket product purchases in the aisles (so always eat before you go to the supermarket). The study also showed that in-store marketing and branding had a strong influence on shoppers' purchasing decisions.28 The Purchase Setting Two dimensions, arousal and pleasure, determine whether a shopper will react positively or negatively to a store environment. In other words, the person's surroundings can be either dull or exciting (arousing) and either pleasant or unpleasant. Just because the environment is arousing doesn't necessarily mean it will be pleasant—we've all been in crowded, loud, hot stores that are anything but. The importance of these surroundings explains why many retailers focus on packing as much entertainment as possible into their stores. For example, Bass Pro Shops, a chain of outdoor sports equipment stores built in the style of an enormous hunting lodge, features giant aquariums, waterfalls, trout ponds, archery and rifle ranges, putting greens, and fish and wildlife mounts at every turn. It also offers free classes (for adults and kids) in everything from ice fishing to conservation to meat processing. Every Easter, Bass Pro Shops offers free family events at their stores where families can pose with the Easter Bunny and take home a free 4-by-6 color photo, enjoy kid's craft activities, and participate in an old-fashioned Easter egg hunt.29 And if all that sensory overload leaves you famished, many of the more than 60 Bass Pro Shops locations have on-site restaurants. Time Time is one of consumers' most limited resources. We talk about "making time" or "spending time," and we remind one another that "time is money." Marketers know that the time of day, the season of the year, and how much time a person has to make a purchase affect decision making. Indeed, many consumers, especially college students, believe that they are more pressed for time than ever before. This sense of time poverty makes consumers responsive to marketing innovations that allow them to save time, including services such as drive-through lanes at pharmacies, to-your-door grocery delivery, and mobile pet grooming. Time poverty is a major factor in the increasing demand for online college courses by students who need to fit getting their degree in between family commitments, jobs, and an occasional trip to the gym. Then, of course, there is the "always open" convenience of "stores" on the web, ready to serve you whenever, wherever, and however you want. In fact, online shopping is growing at about seven times the rate of overall retail spending in the United States. Consumers browse products on mobile devices while in brick-and-mortar stores (known as showrooming) and 71 percent say they are searching for the lowest product prices online from any smart device (known as webrooming).30 But this doesn't mean your favorite brick-and-mortar store is going away anytime soon. The Internet gives marketers the opportunity to drive traffic to their stores with coupons, mobile apps, email, etc. Stores can then adapt their in-store services to meet customer needs, offering data-driven personalization of the shopping experience. Rent the Runway is an e-commerce brand that opened showrooms in major U.S. cities only after developing an online presence. Customers sign in when they enter the store, making it easy for store "stylists" to recommend dresses and accessories based on previous purchases. Rent the Runway makes the process easy for customers by providing a pre-paid, pre-addressed package to return the purchase.31

6.4 Business markets: buying and selling when the customer is another organization

6.4 Understand the characteristics of business-to-business markets and how marketers classify business-to-business customers. You might think most marketers spend their days dreaming up the best way to promote cutting-edge products for consumers—like new apps for your iPhone, a new power drink to keep you fit, or some funky shoes to add to your collection. But this is not the whole picture. Many marketers know that the "real action" also lies in products that companies sell to businesses and organizations rather than to end-user consumers like you—software applications to make a business more efficient, safety goggles for industrial plants, the carts shoppers push in supermarkets, or the sensors that keep track of your luggage at the airport. In fact, some of the most interesting and lucrative jobs for young marketers are in businesses you've never heard of because these companies don't deal directly with consumers. Like an end consumer, a business buyer makes decisions—but with an important difference: The purchase may be worth millions of dollars, and both the buyer and the seller have a lot at stake (maybe even their jobs). A consumer may decide to buy two or three T-shirts at one time, each emblazoned with a different design. Fortune 500 companies, such as ExxonMobil, PepsiCo Inc., and FedEx, buy thousands of employee uniforms embroidered with their corporate logos in a single order. Consider these transactions: P&G contracts with several advertising agencies to promote its brands at home and around the globe. The Metropolitan Opera buys costumes, sets, and programs. Mac's Diner buys a case of canned peas from BJ's Wholesale Club. The U.S. government places an order for 3,000 new HP laser printers. Emirates Airlines signs a $16 billion order for up to 36 of the superjumbo 500-passenger Airbus A380s.47 All these exchanges have one thing in common: they're part of business-to-business (B2B) marketing. As we saw in Chapter 1, this is the marketing of goods and services that businesses and other organizations buy for purposes other than personal consumption. Some firms resell these goods and services, so they are part of a channel of distribution, a concept we'll revisit in Chapter 11 and Chapter 12. Other firms use the goods and services they buy to produce still other goods and services that meet the needs of their customers or to support their own operations. These business-to-business (B2B) markets, also called organizational markets, include manufacturers and other product producers, wholesalers, retailers, and a variety of other organizations, such as hospitals, universities, and governmental agencies. To put the size and complexity of business markets into perspective, let's consider a single product—a pair of jeans. A consumer may browse through several racks of jeans and ultimately purchase a single pair, but the buyer who works for the store at which the consumer shops had to purchase many pairs of jeans in different sizes, styles, and brands from different manufacturers. Each of these manufacturers purchases fabrics, zippers, buttons, and thread from other manufacturers, which in turn purchase the raw materials to make these components. In addition, all the firms in this chain need to purchase equipment (maybe a machine to make all those holes in just the right places), electricity, labor, computer systems, legal and accounting services, insurance, office supplies, packing materials, and countless other goods and services. So, even a single purchase of a pair of 7 For All Mankind jeans is the culmination of a series of buying and selling activities among many organizations; many people have been keeping busy while you're out shopping! In this section, we'll first talk about the different types of business customers that buy goods and services, the different types of B2B purchases, and the steps in the B2B decision process. Finally, we'll look at B2B e-commerce and digital marketing. Types of Business-to-Business Customers As we noted before, many firms buy products in business markets so they can produce other goods. Other B2B customers resell, rent, or lease goods and services. Still other customers, including governments and not-for-profit institutions, such as the Red Cross or a local church, serve the public in some way. In this section, we'll look at the three major classes of B2B customers shown in Figure 6.8 (producers, resellers, and organizations). Then, we'll look at how marketers classify specific industries. Producers Producers purchase products for the production of other goods and services that they, in turn, sell to make a profit. For this reason, they are customers for a vast number of products from raw materials to goods that still other producers manufacture. For example, Dell buys microprocessor chips from Intel and AMD that go into its line of computers, and Marriott hotels buys linens, furniture, and food to produce the accommodations and meals their guests expect. In addition to manufacturers of goods, the fishing, agricultural, and lumber industries are considered producers. Resellers Resellers, including both brick-and-mortar stores and online sellers, buy finished goods for the purpose of reselling, renting, or leasing to consumers and other businesses. Although resellers do not actually produce goods, they do provide their customers with the time, place, and possession utility we talked about in Chapter 1 because they make the goods available to consumers when and where they want them. For example, Walmart buys toothpaste, peanuts, kids' shoes, and about a gazillion other products to sell in its more than 11,600 stores worldwide.48 Increasingly, large retail businesses such as Walmart, Walgreen's, and Kroger Supermarkets and wholesale clubs such as Costco and Sam's have taken over the functions that were previously the job of wholesalers and distributors. This means that there are fewer of these resellers today. More on this in Chapter 12. Government and Not-for-Profit Organizations Governments and not-for-profit institutions are two other types of organizations in the business marketplace. Government markets make up the largest single business and organizational market in the United States. The U.S. government market includes more than 3,000 county governments, 35,000 municipalities and townships, 37,000 special district governments, 50 states and the District of Columbia, plus the federal government. The Bureau of Economic Analysis (BEA) reported that in 2016, spending by governments was $3,267 billion—actually more than the "mere" $3,057 billion that businesses spent.49 And of course, there are thousands more government customers around the globe, and many of those governments are just about the only customers for certain products, such as jet bombers and nuclear power plants. But many government expenditures are for more familiar items. Pens, pencils, and paper for offices; cots, bedding, and toiletries for jails and prisons; and cleaning supplies for routine facilities maintenance are just a few examples of items that consumers buy one at a time but that governments purchase in bulk. As we said in Chapter 1, not-for-profit or nongovernmental organizations (NGOs) are organizations with educational, community, and other public service goals, such as hospitals, churches, universities, museums, and charitable and cause-related organizations, like the Salvation Army and the Red Cross. These institutions tend to operate on low budgets. Because nonprofessional part-time buyers who have other duties often make purchases, these customers may rely on marketers to provide more advice and assistance before and after the sale. The North American Industry Classification System In addition to looking at B2B markets within these three general categories, marketers rely on the North American Industry Classification System (NAICS) to identify their customers. This is a numerical coding of industries the United States, Canada, and Mexico developed. Table 6.1 illustrates how the NAICS coding system works. NAICS replaced the U.S. Standard Industrial Classification system in 1997 so that the North American Free Trade Agreement (NAFTA) countries could compare economic and financial statistics.50 The NAICS reports the number of firms, the total dollar amount of sales, the number of employees, and the growth rate for industries, all broken down by geographic region. Many firms use the NAICS to assess potential markets and to determine how well they are doing compared to others in their industry group. Table 6.1The North American Industry Classification System: A Sample Frozen Fruit Example Wireless Telecommunications Example Sector (two digits) 31-33 Manufacturing 51 Information Subsector (three digits) 311 Food manufacturing 517 Telecommunications Industry group (four digits) 3114 Fruit and vegetable preserving and specialty food manufacturing 5173 Wired and wireless telecommunications carriers Industry (five digits) 31141 Frozen food manufacturing 51731 Wired and wireless telecommunications carriers U.S. industry (six digits) 311411 Frozen fruits, fruit juice, and vegetables, manufacturing 517312 Wireless telecommunications carriers (except satellite) Source: United States Census Bureau, "North American Industry Classification System," https://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=311411&search=2017%20NAICS%20Search (accessed March 10, 2018). Firms may also use the NAICS to find new customers. A marketer might first determine the NAICS industry classifications of his or her current customers and then evaluate the sales potential of other firms occupying these categories.

6.5 Business buying situations and the business buying decision process

6.5 Identify and describe the different business buying situations and the business buying decision process, including the use of e-commerce and social media. So far we've talked about how B2B markets are different from consumer markets and about the different types of customers that make up business markets. In this section, we'll discuss some of the important characteristics of business buying situations. This is important because just like companies that sell to end-user consumers, a successful B2B marketer needs to understand how his or her customers make decisions. Armed with this knowledge, the company is able to participate in the buyer's decision process from the start. The Buyclass Framework Like end-user consumers, business buyers spend more time and effort on some purchases than on others. This usually depends on the complexity of the product and how often they need to make the decision. A buyclass framework, as Figure 6.11 illustrates, identifies the degree of effort required of the firm's personnel to collect information and make a purchase decision. These classes, which apply to three different buying situations, are straight rebuys, modified rebuys, and new-task buys. Of course, in reality, the complexity and frequency of the decision may place the purchase anywhere on a continuum ranging from the simplest rebuy to a highly complicated new-task buy. Straight Rebuy A straight rebuy refers to the routine purchase of items that a B2B customer regularly needs. The buyer has purchased the same items many times before and routinely reorders them when supplies are low, often from the same suppliers. Reordering the items takes little time. Buyers typically maintain a list of approved vendors that have demonstrated their ability to meet the firm's criteria for pricing, quality, service, and delivery. GE Healthcare's customers routinely purchase its line of basic surgical scrubs (the clothing and caps doctors and nurses wear in the operating room) without much evaluation on each occasion. Because straight rebuys often contribute the "bread-and-butter" revenue a firm needs to maintain a steady stream of income, many business marketers go to great lengths to cultivate and maintain relationships with customers who submit reorders on a regular basis. Salespeople may regularly call on these customers to personally handle orders and to see if there are additional products the customer needs—and to take the purchasing agent to lunch. The goal is to be sure that the customer doesn't even think twice about just buying the same product every time he or she runs low. Rebuys keep a supplier's sales volume up and help cover selling costs. Modified Rebuy Life is sweet for companies whose customers automatically do straight rebuys. Unfortunately, these situations don't last forever. A modified rebuy occurs when a firm decides to shop around for suppliers with better prices, quality, or delivery times. This situation also can occur when the organization confronts new needs for products it already buys. A buyer who purchased many Dell laptops for its salesforce, for example, may have to reevaluate several other options when it is time for the firm to replace these older machines. Modified rebuys require more time and effort than straight rebuys. The buyer generally knows the purchase requirements and has a few potential suppliers in mind. Marketers know that modified rebuys can mean that some vendors get added to a buyer's approved supplier list, whereas others may be dropped. So even if in the past a company purchased its laptops from Dell, this doesn't necessarily mean it will do so in the future as Apple, HP, and other companies introduce faster, smaller, lighter, and more powerful computers. New-Task Buy A first-time purchase is a new-task buy. Uncertainty and risk characterize buying decisions in this classification, and these decisions require the most effort because the buyer has no previous experience on which to base them. Your university, for example, may decide (if it hasn't done so already) to develop "active-learning" classrooms. Furnishing the classrooms for a different form of learning that will meet the needs of classes in different disciplines is a complex new-task buy for a school. In new-task buying situations, not only do buyers lack experience with the product, but they also are often unfamiliar with firms that supply the product. Supplier choice is critical, and buyers gather much information about quality, pricing, delivery, and service from several potential suppliers. Marketers know that to get the order in a new-buy situation, they must develop a close working relationship with the business buyer. There are many situations in which marketers focus on selling their product by wooing people who recommend their products—over and above the end consumers who actually buy them. To use an example close to home, think about all of the goods and services that make up the higher-education industry. For instance, even though you are the one who shelled out the money for this extremely awesome text, your professor was the one who made the exceptionally wise decision to assign it. He or she made this choice (did we mention it was a really wise choice?) only after carefully considering numerous texts and talking to several publishers' sales representatives.

B2B demand

Demand in business markets differs from consumer demand. Most demand for B2B products is derived, inelastic, fluctuating, and joint. Understanding how these factors influence B2B demand is important for marketers when they forecast sales and plan effective marketing strategies. Let's look at each of these concepts in a bit more detail. Derived Demand Consumer demand is based on a direct connection between a need and the satisfaction of that need. But business customers don't purchase goods and services to satisfy their own needs. Businesses instead operate on derived demand because a business's demand for goods and services comes either directly or indirectly from consumers' demand for what it produces. To better understand derived demand, take a look at Figure 6.10 (beginning at the bottom). Demand for forestry products comes from the demand for pulp, which in turn is derived from the demand for paper that publishers buy to make the textbooks you may use in your classes. The demand for textbooks comes from the demand for education (yes, education is the "product" you're buying—with the occasional party or football game thrown in as a bonus). As a result of derived demand, the success of one company may depend on another company in a different industry. The derived nature of business demand means that marketers must constantly be alert to changes in consumer trends that ultimately will have an effect on B2B sales. So, if fewer students attend college and those who do increasingly choose to purchase digital textbooks, the forestry industry has to find other sources of demand for its products. Inelastic Demand Inelastic demand means that it usually doesn't matter if the price of a B2B product goes up or down—business customers still buy the same quantity. Demand in B2B markets is mostly inelastic because what an individual firm sells often is just one of the many parts or materials that go into producing the consumer product. It is not unusual for a large increase in a business product's price to have little effect on the final consumer product's price. For example, you can buy a BMW M4 Coupe "loaded" with options for just over $80,000.52 To produce the car, BMW purchases thousands of different parts. If the price of tires, batteries, or stereos goes up or down, BMW will still buy enough to meet consumer demand for its cars. As you might imagine, increasing the price by $30 or $40 or even $100 won't change consumer demand for the M4—so demand for parts remains the same. (If you have to ask how much it costs, you can't afford it!). We'll discuss inelastic demand more in Chapter 10. Fluctuating Demand Business demand also is subject to greater fluctuations than is consumer demand. There are two reasons for this. First, even modest changes in consumer demand can create large increases or decreases in business demand. Take, for example, air travel. A rise in jet fuel prices, causing higher ticket prices and a shift by some consumers from flying to driving vacations, can cause airlines to postpone or cancel orders for new equipment. This change in turn creates a dramatic decrease in demand for planes from manufacturers such as Boeing and Airbus. A product's life expectancy is another reason for fluctuating demand. Business customers tend to purchase certain products infrequently. They may need to replace some types of large machinery only every 10 or 20 years. Thus, demand for such products fluctuates—it may be high one year when a lot of customers' machinery wears out but low the following year because everyone's old machinery works fine. Marketers can also generate fluctuating demand. When Boeing or Airbus develops jetliners that are more fuel efficient, airlines may decide they can increase profits by buying a whole new fleet and selling their old planes to a global market for used aircraft. Joint Demand Joint demand occurs when two or more goods are necessary to create a product. For example, BMW needs tires, batteries, and spark plugs to make that M4 that piqued your interest earlier. If the supply of one of these parts decreases, Porsche will be unable to manufacture as many automobiles, so it will not buy as many of the other items either.

Lifestyle

Demographic characteristics, such as age, income, and family life cycle, tell marketers what products people buy, but they don't reveal why. Two consumers can share the same demographic characteristics yet be totally different people—all 20-year-old male college students are hardly identical to one another. That's why marketers often further profile consumers in terms of their lifestyles. A lifestyle is a pattern of living that determines how people choose to spend their time, money, and energy and that reflects their values, tastes, and preferences. Savvy marketers often try to identify how consumers' lifestyle preferences create opportunities for products and services that relate to their values. Consider, for example, the growing cannabis revolution. Almost overnight, legal pot has become big business, with revenues in the United States of close to $3 billion per year already. As more states decide to legalize marijuana, businesses large and small are rushing in to satisfy customers' needs for not only weed but also related items (Oreos, anyone?). The magazine High Times, founded by a former drug smuggler way back in 1974, is a trade paper for this lifestyle. Today, it's at the forefront of the revolution. It hosts the High Times Cannabis Cups, weekend festivals that feature more than 500 vendors, seminars, and appearances by celebrities such as Ice Cube and David Arquette. Now it's moving into other ventures, including nightclubs that offer cannabis menus and merchandise, such as socks emblazoned with pot leaves.21 To identify consumers' lifestyles, marketers turn to psychographics, which groups consumers according to psychological and behavioral similarities. One way to do this is to describe people in terms of their activities, interests, and opinions (AIOs). These dimensions are based on preferences for vacation destinations, club memberships, hobbies, specific political and social viewpoints, food, and fashion, and so on. Using data from large samples, marketers create profiles of customers who resemble one another in terms of their activities and patterns of product use.22 A related and very popular technique today is to tell a detailed story about the life of a "typical" brand user. This persona becomes the rallying point for the company as he or she helps the marketing team to visualize how real people actually integrate the brand into their daily lives. We'll talk more about psychographics in Chapter 7. Metrics Moment There are many potential metrics available to assess aspects of consumer behavior. Here are some popular ones and an example of each. Overall awareness: The percentage of all consumers who recognize or know the name of a brand. This can be "aided" or "unaided." A marketer can measure unaided awareness for Sensodyne toothpaste simply by asking consumers to name all the brands of toothpaste that come to mind. Aided recognition is measured by asking consumers questions such as "Have you heard of Tom's of Maine Wicked Cool! Flouride Toothpaste?" Then follow-up questions can be asked to ascertain additional pertinent information. Top-of-mind awareness (TOMA): The first brand that comes to a consumer's mind when he or she thinks of a product category. Marketers measure TOMA with questions such as "What school comes to mind when you think of Ivy League universities?" Consumer knowledge: Measured by asking consumers if they have some specific knowledge about a brand. To measure brand knowledge, marketers may ask consumers if they believe the brand possesses certain attributes or characteristics, such as "Does the Kia Soul come with Bluetooth wireless technology as a base feature?" Attitude toward a brand: Often measured with survey questions about beliefs that the brand possesses certain characteristics, the relative importance of those characteristics to the product category, and the overall measure of how much the consumer likes the brand. A resulting question might be "What is your overall feeling toward Chick-fil-A?" (measured on a scale from very unfavorable to highly favorable). Purchase intentions: A consumer's stated willingness to buy or expressed likelihood of certain behavior. A consumer survey may ask, "If you are in the market for a new pair of running shoes, what is the likelihood that you would purchase a pair of Brooks running shoes?" (measured on a scale from highly unlikely to highly likely). Caution: Stated intent to purchase does not perfectly translate into actual purchase behavior! Purchase habits: Another measure of a consumer's self-reported behavior. Marketers ask questions such as "On average, how many times a month does your family eat out?"; "Which restaurant did you go to the last time you ate out?"; and "How much do you normally spend on a dinner out with your family?" Customer loyalty: A measure of a consumer's commitment to a specific brand. Once the marketer has determined which brand the consumer typically uses, they follow up with questions such as "If on your next trip to the store you plan to purchase hand soap and your favorite brand of hand soap is not available, would you buy another brand or wait until you find your favorite brand to make the purchase?" Customer satisfaction: A consumer survey may ask questions such as "How satisfied are you with the level of cabin service provided by JetBlue Airlines?" (measured on a scale from very dissatisfied to very satisfied). Apply the Metrics Consider the consumer behavior metrics mentioned. For each of the items that follow, pick out one or two metrics you believe would aid in providing a better understanding of that item. 1. Gain greater insights about a firm's existing customers. 2. Identify potential new customers for a firm. 3. Gauge the market potential for a new product.

zmot

Google's term for the zero moment of truth when the consumer decides to make a purchase, often on a smartphone, tablet, or laptop.

reverse marketing

a business practice in which a buyer firm attempts to identify suppliers who will produce products according to the buyer firm's specifications

modified rebuy

a buying situation classification used by business buyers to categorize a previously made purchase that involves some change and that requires limited decision making

straight rebuy

a buying situation in which business buyers make routine purchases that require minimal decision making

firewall

a combination of hardware and software that ensures that only authorized individuals gain entry into a computer system

family life cycle

a means of characterizing consumers within a family structure on the basis of different stages through which people pass as they grow older. The pattern of living that determines how people choose to spend their time, money, and energy and that reflects their values, tastes, and preferences. The use of psychological, sociological, and anthropological factors to construct market segments based on activities, interests, and opinions (AIOs). Measures of consumer activities, interests, and opinions used to place consumers into dimensions.

heuristics

a mental rule of thumb that leads to a speedy decision by simplifying the process

brand loyalty

a pattern of repeat product purchases, accompanied by an underlying positive attitude toward the brand, based on the belief that the brand makes products superior to those of its competition. The overall feelings or attitude a person has about a product after purchasing it

reciprocity

a trading partnership in which two firms agree to buy from one another

product specifications

a written description of the quality, size, weight, and other details required of a product purchase

motivation

an internal state that drives us to satisfy needs by activating goal-oriented behavior

organizational markets

another name for business-to-business markets

spyware

Software that covertly gathers information about a user through an Internet connection without the user's knowledge.

problem recognition

The process that occurs whenever the consumer sees a significant difference between his current state of affairs and some desired or ideal state; this recognition initiates the decision-making process.

webrooming

consumers comparing prices of products online

time poverty

consumers' belief that they are more pressed for time than ever before

dervied demand

demand for business or organizational products caused by demand for consumer goods or services

joint demand

demand for two or more goods that are used together to create a product

consideration set

the alternative brands a consumer seriously considers when making a decision

outsourcing

the business buying process of obtaining outside vendors to provide goods or services that otherwise might be supplied in-house

status symbol

visible markers that provide a way for people to flaunt their membership in higher social classes (or at least to make others believe they are members)

comparison shopping agents or shopbots

web applications that help online shoppers find what they are looking for at the lowest price and provide customer reviews and ratings of products and sellers

showrooming

Consumers browsing products on their mobile devices while in a brick-and-mortar store.

ABC Theory of Attitudes

A term for referring to attitudes that brings to mind the three components of attitudes.

sadvertising

Advertising designed to arouse negative emotions in order to get our attention and create a bond with the brand's products.

Social Influences on Consumers' Decisions

Although we are all individuals, we are also members of many groups that influence our buying decisions. Families, friends, and classmates often sway us, as do larger groups with which we identify, such as ethnic groups and political parties. Now let's consider how social influences, such as culture, social class, influential friends and acquaintances, and trends within the larger society, affect the consumer decision-making process. And, of course, today this includes Facebook and other online friends. Culture We can think of culture as a society's personality. It is the values, beliefs, customs, and tastes a group of people produces or practices. Although we often assume that what people in one culture (especially our own) think is desirable or appropriate will be appreciated in other cultures as well, that's far from the truth. For example, simply translating American marketing messages or brand names into French (Café chain Au Bon Pain) or German (Yoplait Geek Yogurt) or any other language doesn't mean those messages will be accepted by French or German-speaking consumers—especially those living in the United States who have a strong desire to maintain their ethnic identity. Instead, marketers must "recognize that all consumers buy brands that empower their cultural relevancy."32 That means developing relationships with customers and considering their family and religious values. Values (Again) As we saw in Chapter 2, cultural values are deeply held beliefs about right and wrong ways to live.33 Marketers who understand a culture's values can tailor their product offerings accordingly. But over time, cultural values change. Consider, for example, that the values for collectivist countries differ greatly from those of individualistic cultures, where immediate gratification of one's own needs comes before all other loyalties. In collectivist cultures, loyalty to a family or a tribe overrides personal goals. Today, we see the economic growth of some collectivist countries, such as India, Japan, and China, making many consumers more affluent—and more individualistic. For marketers, this means growth opportunities in the travel business, luxury goods, sports activities like tennis and golf, and entertainment. Subcultures A subculture is a group that coexists with other groups in a larger culture but whose members share a distinctive set of beliefs or characteristics, such as members of a religious organization or an ethnic group. Microcultures are groups of consumers who identify with a specific activity or art form. These groups form around TV shows, like The Voice; movies, like Star Wars; online games, like Candy Crush Saga; and leisure activities, like extreme sports. Social media have been a real boon to subcultures and microcultures; they provide an opportunity for like-minded consumers to share their thoughts, photos, videos, and so on. More on these important new sharing platforms later in the book. For marketers, some of the most important subcultures are racial and ethnic groups because many consumers identify strongly with their heritage, and products that appeal to this aspect of their identities appeal to them. To grow its business, Clorox got down and dirty with its Hispanic consumers. After studying how Hispanics traditionally clean their homes, Clorox introduced its Clorox Fraganzia line of cleaning products to meet all of their cleaning needs—a thorough process of cleaning, disinfecting, and aromatizing. Even the Fraganzia line's toilet-bowl cleaners, in the shape of little baskets, or canastillas, look like those people use in Latin America.34 Figure 6.18-1 Full Alternative Text Description Conscientious Consumerism: An Emerging Lifestyle Trend Powerful new social movements within a society also contribute to how consumers make decisions about what they want and what they don't. One such influence is consumerism, the social movement directed toward protecting consumers from harmful business practices. Much of the current focus of consumerism is about business activities that harm the environment and the potential damage to our planet. Worries about climate change, entire species going extinct, widespread exposure to carcinogens and harmful bacteria, and many other issues are front and center. As consumers and the media place more and more emphasis on this, many of us are much more mindful of environmental issues when we shop and when we make decisions about the foods we eat, the clothes we wear, the buildings in which we live and work, and the cars we drive. And marketers are following the consumerism call to action. Patagonia is a company that does this in a number of different ways. On Black Friday, 2016, Patagonia donated 100 percent of sales, $10 million, to grassroots organizations working for positive change on the planet. Patagonia's re\\\collection line uses recycled down, wood, polyester, labels, zippers, and buttons.35 Some analysts call this new value conscientious consumerism.36 We see evidence of its impact everywhere, in the form of vegan restaurants, electric cars, recycling activities, solar heating panels on homes, and more. Social Class Social class is the overall rank of people in a society. People who are within the same class tend to exhibit similarities in occupation, education, and income level, and they often have similar tastes in clothing, decorating styles, and leisure activities. Class members also share many political and religious beliefs as well as preferences for AIOs. Many marketers design their products and stores to appeal to people in a specific social class. Working-class consumers tend to evaluate products in more utilitarian terms, such as sturdiness or comfort instead of trendiness or aesthetics. They are less likely to experiment with new products or styles, such as modern furniture or colored appliances, because they tend to prefer predictability to novelty.37 Marketers need to understand these differences and develop product and communication strategies that appeal to different social classes. Luxury goods often serve as status symbols, visible markers that provide a way for people to flaunt their membership in higher social classes (or at least to make others believe they are members). The bumper sticker "He who dies with the most toys wins" illustrates the desire to accumulate these badges of achievement. However, it's important to note that over time, the importance of different status symbols rises and falls. For example, when James Dean starred in the 1956 movie Giant, the Cadillac convertible was the ultimate status symbol car in the United States. Today, wealthy consumers who want to let the world know of their success are far more likely to choose a Mercedes, a Tesla, or even a humbler Prius. In addition, traditional status symbols today are available to a much wider range of consumers around the world with rising incomes. This change fuels demand for mass-consumed products that still offer some degree of panache, or style. Think about the success of companies like Nokia, H&M, Zara, ING, Dell Computers, Gap, Nike, EasyJet, or L'Oréal. They cater to a consumer segment that analysts label mass class. This term refers to the hundreds of millions of global consumers who now enjoy a level of purchasing power that's sufficient to let them afford high-quality products offered by well-known multinational companies. Group Membership Anyone who's ever "gone along with the crowd" knows that people act differently in groups than they do on their own. When there are more people in a group, it becomes less likely that any one member will be singled out for attention, and normal restraints on behavior may evaporate (think about the last wild party you attended). In many cases, group members show a greater willingness to consider riskier alternatives than they would if each member made the decision alone.38 A reference group is a set of people that a consumer wants to please or imitate. Consumers refer to these groups when they decide what to wear, where they hang out, and what brands they buy. This influence can take the form of family and friends; a sorority or fraternity; a respected statesman, like Martin Luther King Jr.; celebrities, like Angelina Jolie; or even (dare we say it) your professors. Marketers often try to cultivate a loyal community of fans who will spread the word about their clothing, cars, music, sports teams, and movies. Nobody does this better than Lucasfilm for its Star Wars franchise. The studio even employs a full-time head of fan relations.39 Opinion Leaders If, like Brandon, you are in the market for a new car, is there a certain person to whom you'd turn for advice? An opinion leader is a person who influences others' attitudes or behaviors because they believe that he or she possesses expertise about the product.40 Opinion leaders usually exhibit high levels of interest in the product category. They continuously update their knowledge as they read blogs, talk to salespeople, or subscribe to podcasts about the topic. Because of this involvement, opinion leaders are valuable information sources. Unlike commercial endorsers, who are paid to represent the interests of just one company, opinion leaders have no ax to grind and can impart both positive and negative information about the product (unless they're being compensated to blog on behalf of a brand, which is actually quite common these days!). In addition, these knowledgeable consumers often are among the first to buy new products, so they absorb much of the risk and reduce uncertainty for others who are not as courageous. Sex Roles Some of the strongest pressures to conform come from our sex roles, society's expectations regarding the appropriate attitudes, behaviors, and appearance for men and women.41 Of course, marketers play a part in teaching us how society expects us to act as men and women. Marketing communications and products often portray women and men differently. These influences teach us what the "proper" gender roles of women or men should be and which products are appropriate for each gender. Gender roles vary across cultures, and they can change rapidly over time (as the recent debate over transgender people using bathrooms shows). In other cultures, however, old expectations can be hard to change: A husband in Italy (which has fairly traditional gender role expectations compared to some other countries) had the police formally charge his 40-year-old wife with "mistreatment of the family." He accused her of two years of neglect, including an unwillingness to cook and clean. She faces up to six years in prison if she is convicted for these offenses.42 Many products are sex-typed, which means they are intended specifically to appeal to one gender or the other. For years, consumers and feminists, for example, have claimed that the Barbie doll reinforces unrealistic ideas about what women's bodies should look like, and Mattel recently reintroduced its traditional blonde Barbie in a variety of skin tones, hairstyles, and outfits to attract a more diverse market. In 2018, the company even released new versions based upon role models like Amelia Earhart (but the dolls still are pretty thin!).43 Sex roles constantly evolve; in a complex society like ours, we often encounter contradictory messages about "appropriate" behavior. We can clearly see this in the messages girls have been getting from the media for the last several years: It's cool to be overly provocative. Role models like Paris Hilton, Lindsay Lohan, and Miley Cyrus convey standards about how far preteens and teens should go to broadcast their sexuality. Of course, not everyone, especially parents, agree with this trend. Men's sex roles are changing too. For one, men are concerned as never before with their appearance. In fact, appearance ranks as their second-biggest worry (topped only by money worries and weighing on them more than worries about their family and their health).44 To prove this point, guys spend $17.5 billion on toiletries globally each year—and that doesn't include the cost of razors, razor blades, or shaving cream.45 How does this obsession with hair gels and moisturizers coexist with the traditional "macho" guy who can hardly be bothered to comb his hair? Clearly, our cultural definition of masculinity is evolving as men try to redefine sex roles while they stay in a "safety zone" of acceptable behaviors bounded by danger zones of sloppiness at one extreme and effeminate behavior at the other. And some cultural observers report the emergence of "retrosexuals"—men who want to emphasize their old-school masculinity as they get plastic surgery to create a more rugged look that includes hairier chests and beards, squarer chins, and more angular jawlines.46

Attitudes

An attitude is a lasting evaluation of a person, object, or issue.15 Consumers have attitudes toward brands, such as whether McDonald's or Wendy's has the best hamburgers. They also evaluate more general consumption-related behaviors, such as whether high-fat foods, including hamburgers, are a no-no in a healthy diet. Marketers often measure consumer attitudes because they believe attitudes predict behavior—people like Brandon who think Honda Fit is a "cool" car are more likely to buy one than consumers who cherish the plush comfort of a big Buick. To make attitude measurement meaningful, marketers understand that a person's attitude has three components: affect, cognition, and behavior. This is easy to remember—just think of it as the ABC Theory of Attitudes. Affect is the feeling component of attitudes. This term refers to the overall emotional response a person has to a product. Affect is usually dominant for expressive products, such as perfume, where we choose a fragrance if it makes us feel happy. In other cases, advertisers try to arouse more negative emotions to get our attention and create a bond with their products. This new trend even has a name, sadvertising. Ads that provoke a good cry are all around us; think about all the adorable puppies and ponies you see in modern Super Bowl spots.16 These emotional reactions actually cause physiological changes, such as an increase in pulse and sweating when a well-done commercial really gets to us. Some advertising researchers measure heart rate and skin conductivity and track the eye gaze of consumers while they view ads over the Internet, mobile devices, and TVs.17 This technique is so common that Taco Bell spoofed it to advertise its new Quesarito, a combination of a quesadilla and a burrito. The chain developed overly dramatic tearjerker ads—including one where two friends have an emotional "reunion" after being apart for only six days—to convey the message that some things are better together.18 Cognition, the knowing component, refers to the beliefs or knowledge a person has about a product and its important characteristics. Cognition is important for complex products, such as computers, for which we may develop beliefs on the basis of technical information. Behavior, the doing component, involves a consumer's intention to do something, such as the intention to purchase or use a certain product. For products such as cereal, consumers act (purchase and try the product) on the basis of limited information and then form an evaluation of the product simply on the basis of how the product tastes or performs.

B2B E-commerce and social media

We know that the Internet transformed marketing—from the creation of new products to providing more effective and efficient marketing communications to the actual distribution of some products. This is certainly true in business markets as well. Business-to-business (B2B) e-commerce refers to Internet exchanges of information, goods, services, and payments between two or more businesses or organizations. It's not as glitzy as consumer e-commerce, but it sure has changed the way businesses operate. Using the Internet for e-commerce allows business marketers to link directly to suppliers, factories, distributors, and their customers, radically reducing the time necessary for order and delivery of goods, tracking sales, and getting feedback from customers. In the simplest form of B2B e-commerce, the Internet provides an online catalog of goods and services that businesses need. Companies find that their Internet site is important for delivering online technical support, product information, order status information, and customer service to corporate customers. Many companies, for example, save millions of dollars a year when they replace hard-copy manuals with electronic downloads. And, of course, B2B e-commerce creates some exciting opportunities for a variety of B2B service industries. Intranets and Extranets Although the Internet is the primary means of B2B e-commerce, many companies maintain an intranet, which provides a more secure means of conducting business. As we said in Chapter 4, this term refers to an internal corporate computer network that uses Internet technology to link a company's departments, employees, and databases. Intranets give access only to authorized employees. They allow companies to process internal transactions with greater control and consistency because of stricter security measures than those they can use on the entire web. Businesses also use intranets to videoconference, distribute internal documents, communicate with geographically dispersed branches, and train employees. In contrast to an intranet, an extranet allows certain suppliers, customers, and others outside the organization to access a company's internal system. A business customer that a company authorizes to use its extranet can place orders online. Extranets can be especially useful for companies that need to have secure communications between the company and its dealers, distributors, or franchisees. As you can imagine, intranets and extranets are cost efficient and save money for organizations. In addition to saving companies money, extranets allow business partners to collaborate on projects (such as product design) and build relationships. GE's extranet, the Trading Process Network, began as a set of online purchasing procedures and has morphed into an extensive online extranet community that connects GE with large buyers, such as Con Edison. The Dark Side of B2B E-Commerce Doing business the web-enabled way sounds great—perhaps too great. There are indeed security risks because so much information gets passed around in cyberspace. You've no doubt heard stories about hackers obtaining vast lists of consumers' credit card numbers from a number of retailers, including Target and Neiman-Marcus. In 2018, two global organizations, Facebook and the Winter Olympics, were both hacked.55 But companies have even greater worries. When hackers break into company sites, they can destroy company records and steal trade secrets. Both B2C and B2B e-commerce companies worry about authentication and ensuring that transactions are secure. This means making sure that only authorized individuals are allowed to access a site and place an order. Your university may have already instituted an authentication system whereby the system must make an individual contact with you once a week or so in order to access your grades, your Blackboard account, or how much you owe in parking fines. Maintaining security also requires firms to keep the information transferred as part of a transaction, such as a credit card number, from criminals' hard drives. Well-meaning employees can also create security problems. They can give out unauthorized access to company computer systems by being careless about keeping their passwords into the system a secret. For example, hackers can guess at obvious passwords—nicknames, birth dates, hobbies, or a spouse's name. Some employees (and even nonemployees) are not so well-meaning; they deliberately create security breaches by leaking confidential documents or hacking into an organization's computer system for sensitive information. Edward Snowden became famous (or, rather, infamous) for his role in leaking thousands of classified documents to the media while working as a consultant for the National Security Agency. And Target's computer system was breached when hackers installed malware (software designed specifically to damage or disrupt computer systems) that captured more than 40 million credit card numbers and other customer data despite safeguards the retailer had in place.56 Another security risk comes from spyware, software that covertly gathers information from an individual's or an organization's intranet without them giving consent or even knowing it. Much of spyware is for the purpose of tracking and storing movements on the web in order to send those pop-up ads that we all enjoy so much. Of course, there is also more malicious spyware that seeks not just to track users but also to steal user logins and credit card and bank information. All this has made it necessary for organizations to maintain antimalware and antispyware protection in addition to antivirus software. To increase security of their internet sites and transactions, most companies now have safeguards in place—firewalls and encryption devices, to name the two most common methods, though, as we saw with Target, even these safeguards aren't always 100 percent hacker-proof. A firewall is a combination of hardware and software that ensures that only authorized individuals gain entry into a computer system. The firewall monitors and controls all traffic between the Internet and the intranet to restrict access. Companies may even place additional firewalls within their intranet when they wish only designated employees to have access to certain parts of the system. Although firewalls can be fairly effective (even though none is totally foolproof), they require costly, constant monitoring. Encryption means scrambling a message so that only another individual (or computer) with the right "key" can unscramble it. Otherwise, it looks like gobbledygook. The message is inaccessible without the appropriate encryption software—kind of like a decoder ring your favorite superhero might wear. Without encryption, it would be easy for unethical people to get a credit card number by creating a "sniffer" program that intercepts and reads messages. A sniffer finds messages with four blocks of four numbers, copies the data, and voilà!—someone else has your credit card number. Despite firewalls, encryption, and other security measures, web security for B2B marketers remains a serious problem. The threat to intranet and extranet usage goes beyond competitive espionage. The increasing sophistication of hackers and internet criminals who create viruses, worms, and other approaches to disrupting individual computers and entire company systems means that all organizations—and consumers—are vulnerable to attacks and must remain vigilant. B2B and Social Media Although most of us associate business use of social media such as Facebook, LinkedIn, and Twitter with consumer marketing, B2B organizations are increasing their use of and their budgets for social media:57 A recent study found three social media sites that B2B marketers are most likely to use: LinkedIn (89 percent), Twitter (77 percent), and Facebook (76 percent). Importance ratings for the three sites were lower: LinkedIn (71 percent), Twitter (55 percent), and Facebook (38 percent). Eighty-three percent used social media content to deliver their content marketing tactics.58 As with consumer marketing, a number of strategies can be successful in using social media marketing for B2B firms.59 First, social media sites are good sources of information to identify target audiences. It's helpful to know which potential customers your competitors interact with on social media. And, one of the most important uses of social media for both consumer marketers and business marketers is to monitor what your customers and others say about your product, your firm, and your competitors. A number of tools, such as Google Analytics, Radian6, and Social Mention, have been developed for this purpose. Social media provide platforms for marketers or consumers to join in conversations, get answers to their questions, and share experiences. Marketers who understand social media contribute to conversations on Twitter, Facebook, and blogs. They give good answers to questions and establish their credibility and a leadership position in the industry.

The business buying decision process

We've seen that there are a number of players in the business buying process, beginning with an initiator and ending with a buyer. To make matters even more challenging to marketers, members of the buying team go through several stages in the decision-making process before the marketer gets an order. The business buying decision process, as Figure 6.12 shows, is a series of steps similar to those in the consumer decision process we discussed previously in this chapter. To help understand these steps, let's say you've just started working at the Way Radical Skateboard Company and your boss just assigned you to the buying center for the purchase of new software for web page design—a new-task buy for your firm. Step 1: Recognize the Problem As in consumer buying, the first step in the business buying decision process occurs when someone sees that a purchase can solve a problem. For straight rebuy purchases, this may occur because the firm has run out of paper, pens, or garbage bags. In these cases, the buyer places the order, and the decision-making process ends. Recognition of the need for modified rebuy purchases often comes when the organization wants to replace outdated equipment, when technology changes, or when an ad, brochure, or some other marketing communication offers the customer a better product or one at a lower price. Two events may occur in the problem-recognition step. First, a member of the firm makes a request or requisition, usually in writing. Today, as firms are moving the purchasing process into their larger data management system, the request is likely to be in online form. Then, depending on the complexity of the purchase, the firm may form a buying center. The need for new-task purchases often occurs because the firm wants to enhance its operations in some way or a smart salesperson tells the business customer about a new product that will increase the efficiency of the firm's operations or improve the firm's end products. Step 2: Search for Information In the second step of the decision process (for purchases other than straight rebuys), the buying center searches for information about products and suppliers. Members of the buying center may individually or collectively refer to reports in trade magazines and journals, seek advice from outside consultants, and pay close attention to marketing communications from different manufacturers and suppliers. As in consumer marketing, it's the job of marketers to make sure that information is available when and where business customers want it—by placing ads in trade magazines, by mailing brochures and other printed material to prospects, by using search engine marketing and/or optimization as well as other means of communication via the Internet, and by having a well-trained sales force regularly calling on customers to build long-term relationships. We'll talk more about how B2B firms can use the Internet and social media to increase their sales later in this chapter. There are thousands of specialized publications out there that cater to just about any industry you can think of. Usually sponsored by leading industry trade associations, each is bursting with information from competing companies that cater to a specific niche. Who needs that fluffy romance novel at the beach? Try leafing through the latest issue of Chemical Processing or Meat and Poultry Magazine instead. And, of course, these publications are also available online. Of course, sometimes B2B marketers try to get the information about their product into the hands of buyers via less specialized media. For example, in recent years AFLAC—the American Family Life Assurance Company of Columbus (the firm behind the famous duck)—has heavily advertised on TV even though most of its customers are in the B2B space. In fact, many end-user consumers don't have the foggiest notion what AFLAC sells—but they sure love to "quack up" over the duck's antics. The truth is, AFLAC's primary business is working with businesses (more than 400,000 of them, in fact) to enhance their employee benefits packages with various types of insurance and other benefits in order to improve recruiting and retention of the firms' people. But their strategy of advertising directly on mass media was brilliant; now when an organizational buyer or human resources manager searches for these services, AFLAC's name will surely be at the top of the list. Now there's a duck that's not out of water!53 Business buyers often develop product specifications, that is, a written description of the quality, size, weight, color, features, quantity, training, warranty, service terms, and delivery requirements for the purchase. When the product needs are complex or technical, engineers and other experts are the key players who identify specific product characteristics they require and determine whether the organizations can get by with standardized, off-the-shelf items or if they need to acquire customized, made-to-order goods and services. Once the product specifications are in hand, the next step is to identify potential suppliers and obtain written or verbal proposals, or bids, from one or more of them. For standardized or branded products in which there are few if any differences in the products of different suppliers, this may be as simple as an informal request for pricing information, including discounts, shipping charges, and confirmation of delivery dates. At other times, the potential suppliers receive a formal written request for proposal or request for quotation that requires detailed information from vendors. Step 3: Evaluate the Alternatives In this stage of the business buying decision process, the buying center assesses the proposals it receives. Total spending for goods and services can have a major impact on the firm's profitability, so, all other things being equal, price can be a primary consideration. Pricing evaluations must take into account discount policies for certain quantities, returned-goods policies, the cost of repair and maintenance services, terms of payment, and the cost of financing large purchases. For capital equipment, cost criteria also include the life expectancy of the purchase, the expected resale value, and disposal costs for the old equipment. In some cases, the buying center may negotiate with the preferred supplier to match the lowest bidder. Although a firm often selects a bidder because it offers the lowest price, there are times when it bases the buying decision on other factors. For example, in its lucrative B2B market, American Express wins bids for its travel agency business because it offers extra services other agencies don't or can't, such as a corporate credit card, monthly reports that detail the company's total travel expenses, and perks tied to the company's customer loyalty program. The more complex and costly the purchase, the more time buyers spend searching for the best supplier—and the more marketers must do to win the order. In some cases, a company may even ask one or more of its current customers to participate in a customer reference program. In these situations, customers formally share success stories and actively recommend products to other potential clients, often as part of an online community composed of people with similar needs. Marketers often make formal presentations and product demonstrations to the buying center group. In the case of installations and large equipment, they may arrange for buyers to speak with or even visit other customers to examine how the product performs. For less complex products, the buying firm may ask potential suppliers for samples of the products so that its people can evaluate them personally. The buying center may ask salespeople from various companies to demonstrate their software for your Way Radical group so that you can all compare the capabilities of different products. Step 4: Select the Product and Supplier Once buyers have assessed all proposals, it's time for the rubber to hit the road. The next step in the buying process is the purchase decision when the group selects the best product and supplier to meet the organization's needs. Reliability and durability rank especially high for equipment and systems that keep the firm's operations running smoothly without interruption. For some purchases, warranties, repair service, and regular maintenance after the sale are important. One of the most important decisions a buyer makes is how many suppliers can best serve the firm's needs. Sometimes having one supplier is more beneficial to the organization than having multiple suppliers. Single sourcing, in which a buyer and seller work quite closely, is particularly important when a firm needs frequent deliveries or specialized products. Single sourcing also helps assure consistency of quality of materials input into the production process. But reliance on a single source means that the firm is at the mercy of the chosen supplier to deliver the needed goods or services without interruption. If the single source doesn't come through, the firm's relationship with its own end users will likely be affected. However, using one or a few suppliers rather than many has its advantages. A firm that buys from a single supplier becomes a large customer with a lot of clout when it comes to negotiating prices and contract terms. Having one or a few suppliers also lowers the firm's administrative costs because it has fewer invoices to pay, fewer contracts to negotiate, and fewer salespeople to see than if it uses many sources. In contrast, multiple sourcing means buying a product from several different suppliers. Under this system, suppliers are more likely to remain price competitive. And if one supplier has problems with delivery, the firm has others to fall back on. The automotive industry practices this philosophy: A vehicle manufacturer often won't buy a new product from a supplier unless the vendor's rivals also are capable of making the same item. This policy tends to stifle innovation, but it does ensure a steady supply of parts to feed to the assembly line. Sometimes supplier selection is based on reciprocity, which means that a buyer and seller agree to be each other's customers by saying, essentially, "I'll buy from you, and you buy from me." For example, a firm that supplies parts to a company that manufactures trucks would agree to buy trucks from only that firm. The U.S. government frowns on reciprocal agreements and often determines that such agreements between large firms are illegal because they limit free competition; new suppliers simply don't have a chance against the preferred suppliers. Reciprocity between smaller firms, that is, firms that are not so large as to control a significant proportion of the business in their industry, is legal in the United States if both parties voluntarily agree to it. In other countries, reciprocity is a practice that is common and even expected in B2B marketing. Outsourcing occurs when firms obtain outside vendors to provide goods or services that might otherwise be supplied in-house. For example, Sodexo is the world's largest outsourcer for quality-of-life services, including food and facilities management services in 80 countries. Sodexo serves 15 million consumers at 13,000 client sites in North America alone.54 Colleges and universities are a major category of clientele for Sodexo (are they your school's vendor?) because these educational institutions want to focus on educating students rather than preparing and serving food. (Fortunately, your professors don't have to cook as well as teach!) Outsourcing is an increasingly popular strategy, but in some cases, it can be controversial. Many critics object when U.S. companies contract with companies or individuals in remote places like China or India to perform work they used to do at home, a process known as offshoring. These tasks range from complicated jobs like writing computer code to fairly simple ones like manning reservations desks, staffing call centers for telephone sales, and even taking drive-through orders at U.S. fast-food restaurants. (Yes, in some cases, it's actually more efficient for an operator in India to relay an order from a customer for a #3 Burger Combo to the restaurant's cooks than for an on-site person to take the order.) Yet another type of buyer-seller partnership is reverse marketing. Instead of sellers trying to identify potential customers and then "pitching" their products, buyers try to find suppliers that can produce specifically needed products and then attempt to "sell" the idea to the suppliers. Often large poultry producers practice reverse marketing. Purdue supplies baby chickens, chicken food, financing for chicken houses, medications, and everything else necessary for farmers to lay "golden eggs" for the company. This assures the farmer that he or she will have a buyer while at the same time Purdue knows it can rely on a steady supply of chickens. Step 5: Evaluate Postpurchase Just as consumers evaluate purchases, an organizational buyer assesses whether the performance of the product and the supplier lives up to expectations. The buyer surveys the users to determine their satisfaction with the product as well as with the installation, delivery, and service that the supplier provides. For producers of goods, this may relate to the level of satisfaction of the final consumer of the buying firm's product. Has demand for the producer's product increased, decreased, or stayed the same? By documenting and reviewing supplier performance, a firm decides whether to keep or drop the supplier. An important element in postpurchase evaluation is measurement. When you think about measuring elements of a customer's experience with a company and its products and brands, we'll bet you automatically think about end-user consumers—like travelers' views of their Marriott hotel stay or the taste of that new Starbucks coffee flavor. Similarly, in the B2B world, managers pay a lot of attention to the feedback they get from their customers about the purchases they've made.

The Hive Mind: Consumer Decision Making in the Digital Age

What we have just described is the traditional model of consumer decision making. Google refers to the moment when the consumer decides to make a purchase as ZMOT, short for zero moment of truth. Today, ZMOT occurs on mobile phones, laptops, and any other type of wired device. ZMOT is just as, if not more, likely to occur at home, in the car, at work, or in the gym as it is in a store. Consumers have also changed how they make decisions. Today, consumers are far more likely to spend hours seeking information, even for small purchases. The "always on" consumer makes decisions collectively by seeking advice from her social network. And, of course, the traditional steps in the consumer decision-making process are changing as well. Here are some ways they are changing: Problem recognition is likely to occur collectively as consumers continuously search Google and ask, "How can I know what I want until I read what other people say?" Information search is big business as companies spend almost $40 billion per year on search engine advertising. Still, the consumer looking for the perfect dress is more likely to check out teenage fashion blogs, such as Style Rookie and Tolly Dolly Posh. Want ideas for a new cool bedroom makeover or an over-the-top pair of sunglasses? Image banks such as Pinterest offer hundreds, if not thousands, of visuals. Evaluation of alternatives presents another challenge: We have too many choices, which is referred to by researchers as hyperchoice. Studies show that consumers actually make poorer decisions and feel more frustrated when they have a lot of choices than when they have only a few. When it comes to product choice, many consumers make purchases online and on their phone without ever entering a brick-and-mortar store. Brick-and-mortar retailers bemoan the fact that some consumers visit retail stores to see, touch, feel, and even get advice on a product before making the actual purchase online for a cheaper price. In the traditional decision-making process, postpurchase evaluation involved consumers getting confirmation of their good purchase decision via compliments from others. Today, social media provides constant feedback as consumers post everything from selfies at concerts to photos of what's on their plate, popularly called food porn.

Step 4: Product Choice

When Brandon examines his alternatives and takes a few test drives, it's time to "put the pedal to the metal." Deciding on one product and acting on this choice is the next step in the decision-making process. After agonizing over his choice for a few weeks, Brandon decides that even though the Nissan Versa and the Honda Fit have attractive qualities, the Fit offers the affordability he needs, and its carefree image reflects how he wants to be perceived by others. All this thinking about cars is driving him crazy, and he's relieved to make a decision to buy the Fit and get on with his life. So just how do consumers like Brandon choose among the alternatives they consider? These decisions often are complicated because it's hard to juggle all the product characteristics in your head. One car may offer better gas mileage, another is $2,000 cheaper, whereas another boasts a better safety record. How do we make sense of all these qualities and arrive at a decision? For extended problem-solving decisions, we often consider all of the characteristics and the relative importance to us of each one. This type of decision uses compensatory decision rules that allow information about attributes of competing products to be averaged in some way. The poor standing of one attribute can potentially be offset by the good standing of another. For example, Brandon may find one car has a better fuel efficiency record, while a second has better styling. Brandon might choose the better looking one because the coolness factor compensates for the lower fuel efficiency. Realistically, there are only so many times we exert this much "cognitive sweat" when we make decisions—life is too short! Many times, we rely upon simple rules of thumb, or heuristics, instead of painstakingly learning all the ins and outs of every product alternative. These heuristics provide consumers with shortcuts that simplify the decision-making process. One such heuristic is price = quality; many people willingly buy the more expensive brand because they assume that if it costs more, it must be better (even though this isn't always true). Does this mean that consumers who use this heuristic are not good decision makers? Not at all. Most consumers have bought a very low-priced box of cereal or running shoes or bottle of shampoo, only to be disappointed with the product's performance. In other words, many times it's actually a smart move to use a heuristic that is based on our prior experience. Perhaps the most common heuristic is brand loyalty; this occurs when we consciously choose to buy the same brand over and over. As you might guess, brand loyalty is the Holy Grail for marketers. People form preferences for a favorite brand and then may never change their minds in the course of a lifetime, making it extremely difficult for rivals to persuade them to switch. Still another heuristic is based on country of origin. We assume that a product has certain characteristics if it comes from a certain country. In the car category, many people associate German cars with fine engineering and Swedish cars with safety. Brandon assumed that the Japanese Honda Fit would be more dependable than the Kia or the Chevrolet, so he factored that into his decision.

chatbots

a computer program that uses either voice or text to allow consumers to talk with the computer's AI capability

conscientious consumerism

a continuation of the consumerism movement in which consumers are much more mindful of environmental issues in their daily purchases and marketers support consumerism issues in their advertising

rich media

a digital advertising term for an ad that includes advanced features, like video and audio elements, that encourage viewers to interact and engage with the content

customer reference program

a formalized process by which customers formally share success stories and actively recommend products to other potential clients, usually facilitated through an on-line community

subculture

a group within a society whose members share a distinctive set of beliefs, characteristics, or common experiences

attitude

a learned predisposition to respond favorably or unfavorably to stimuli on the basis of relatively enduring evaluations of people, objects, and issues

new-task buy

a new business-to-business purchase that is complex or risky and that requires extensive decision making

opinion leader

a person who is frequently able to influence others' attitudes or behaviors by virtue of his or her active interest and expertise in one or more product categories

extranet

a private, corporate computer network that links company departments, employees, and databases to suppliers, customers, and others outside the organization

offshoring

a process by which companies contract with companies or individuals in remote places like China or India to perform work they used to do at home

learning

a relatively permanent change in behavior caused by acquired information or experience

consumerism

a social movement that attempts to protect consumers from harmful business practices

gamification

a strategy in which marketers apply game design techniques, often by awarding of points, badges, or levels, to non-game experiences in order to drive consumer behavior

hyperchoice

a term used to describe the condition in which consumers have too many choices, leading them to make poorer decisions and experience greater frustration.

evoked set

all of the alternative brands a consumer is aware of when making a decision

reference group

an actual or imaginary individual or group that has a significant effect on an individual's evaluations, aspirations, or behavior

hierarchy of needs

an approach that categorizes motives according to five levels of importance, the more basic needs being on the bottom of the hierarchy and the higher needs at the top

self-concept

an individual's self-image that is composed of a mixture of beliefs, observations, and feelings about personal attributes

microcultures

groups of consumers who identify with a specific activity or art form

operant conditioning

learning that occurs as the result of rewards or punishments

observational learning

learning that occurs when people watch the actions of others and note what happens to them as a result

sensory marketing

marketing techniques that link distinct sensory experiences such as a unique fragrance with a product or service

activities, interests, and opinions (AIOs)

measures of consumer activities, interests, and opinions used to place consumers into dimensions

Multitasking

moving back and forth between various activities, such as checking emails, watching tv shows, sending instant messages, and so on

buyclass

one of three classifications of business buying situations that characterizes the degree of time and effort required to make a decision

food porn

social media posts featuring consumers' photos of their meals

sex roles

society's expectations regarding the appropriate attitudes, behaviors, and appearance for men and women

malware

software designed specifically to damage or disrupt computer systems

subliminal advertising

supposedly hidden messages in marketers' communications

buyer's remorse

the anxiety or regret a consumer may feel after choosing from among several similar attractive choices. Google's term for the zero moment of truth when the consumer decides to make a purchase, often a smartphone, tablet, or laptop.

perceived risk

the belief that choice of a product has potentially negative consequences, whether financial, physical, and/or social

single sourcing

the business practice of buying a particular product from only one supplier

multiple sourcing

the business practice of buying a particular product from several different suppliers

evaluative criteria

the dimensions consumers use to compare competing product alternatives

behavior

the doing component of attitudes; involves a consumer's intention to do something, such as the intention to purchase or use a certain product

attention

the extent to which a person devotes mental processing to a particular stimulus

exposure

the extent to which a person's sensory receptors are capable of registering a stimulus

determinant attributes

the features most important to differentiate and compare among the product choices

government markets

the federal, state, county, and local governments that buy goods and services to carry out public objectives and to support their operations

affect

the feeling component of attitudes; refers to the overall emotional response a person has to a product

Business-to-business (B2B) markets

the group of customers that include manufacturers, wholesalers, retailers, and other organizations

buying center

the group of people in an organization who participate in a purchasing decision

mass class

the hundreds of millions of global consumers who now enjoy a level of purchasing power that's sufficient to let them afford high-quality products- except for big-ticket items like college educations, housing, or luxury cars

resellers

the individuals or organizations that buy finished goods for the purpose of reselling, renting, or leasing to others to make a profit and to maintain their business operations

producers

the individuals or organizations that purchase products for use in the production of other goods and services

cognition

the knowing component of attitudes; refers to the beliefs or knowledge a person has about a product and its important characteristics

classical conditioning

the learning that occurs when a stimulus eliciting a response is paired with another stimulus that initially does not elicit a response on its own but will cause a similar response over time because of its association with the first stimulus

compensatory decision rules

the methods for making decisions that allow information about attributes of competing products to be averaged in some way

North American Industry Classification System (NAICS)

the numerical coding system that the united states, canada, and mexico use to classify firms into detailed categories according to their business activities

consumer satisfaction/dissatisfaction

the overall feelings or attitude a person has about a product after purchasing it

social class

the overall rank or social standing of groups of people within a society according to the value assigned to factors such as family background, education, occupation, and income

lifestyle

the pattern of living that determines how people choose to spend their time, money, and energy and that reflects their values, tastes, and preferences

perception

the process by which people select, organize, and interpret information from the outside world

consumer behavior

the process involved when individuals or groups select, purchase, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and desires

interpretation

the process of assigning meaning to a stimulus based on prior associations a person has with it and assumptions he or she makes about it

encryption

the process of scrambling a message so that only another individual (or computer) with the right "key" can unscramble it

information search

the process whereby a consumer searches for appropriate information to make a reasonable decision

involvement

the relative importance of perceived consequences of the purchase to a consumer

personality

the set of unique psychological characteristics that consistently influences the way a person responds to situations in the environment

sensory branding

the use of distinct sensory experiences not only to appeal to customers but also to enhance their brand

culture

the values, beliefs, customs, and tastes a group of people produces or practices

behavioral learning theories

theories of learning that focus on how consumer behavior is changed by external events or stimuli

cognitive learning theory

theory of learning that stresses the importance of internal mental processes and that views people as problem solvers who actively use information from the world around them to master their environment

Motivation

Motivation is an internal state that drives us to satisfy needs. Once we activate a need, a state of tension exists that drives the consumer toward some goal that will reduce this tension by eliminating the need. Have you ever been on an Interstate highway and seen a billboard with a giant picture of a hamburger available at the next exit, realized how good a big fat juicy hamburger would taste at that moment, and decided to pull off the road for it? That's motivation at work. Psychologist Abraham Maslow developed an influential approach to motivation.12 He formulated a hierarchy of needs that categorizes motives according to five levels of importance, the more basic physical needs being on the bottom of the hierarchy and the higher spiritual and psychological needs at the top. The hierarchy suggests that before a person can meet needs at a given level, he or she must first meet the lower level's needs—somehow those hot new 7 For All Mankind jeans don't seem as enticing when you don't have enough money to buy food. Later Maslow amended the model by adding a sixth level to the hierarchy, self-transcendence. Consumers seeking to achieve this level focus on some higher goal outside themselves through altruistic endeavors or spiritual awakening. Relevant products for this level might be organizations that provide assistance to others and religious organizations. Have you done your downward-facing dog in yoga class today?13 As you can see from Figure 6.6, people start at the lowest level with basic physiological needs for food and sleep. Then, they progress to higher levels to satisfy more complex needs, such as the need to be accepted by others or to feel a sense of accomplishment. Ultimately, they can reach the highest-level needs, where they will be motivated to attain such goals as self-fulfillment. As the figure shows, if marketers understand the level of needs relevant to consumers in their target market, they can tailor their products and messages to them. For example, when an insurance company reassures you that "you're in good hands with Allstate," it's addressing your need for safety. Marketers use their understanding of consumer needs for prestige, status, and accomplishment when they use gamification. This term refers to a hot new strategy in which marketers apply game design techniques to nongaming contexts, like shopping. They often do this by awarding points or badges to motivate consumers. Nike+, for example, allows consumers to earn points and set goals to push themselves to exercise more. Stride gum introduced "Gumulon," the world's first chewing-based mobile game. Players position the camera on their mobile devices to use their mouths to control the intergalactic game. A simple chewing motion causes the main character, Ace, to jump and advance through levels of the game, which takes place in a cavernous outer space mine (on the planet "Gumulon"). Although it's too soon to tell if this strategy is just a fad, at least for today, gamification is a multibillion dollar industry.14 Would you study more if you could collect badges for your efforts?

Step 3: Evaluation of Alternatives

Once Brandon identifies his options, it's time to decide on a few true contenders. There are two components to this stage of the decision-making process. First, a consumer armed with information identifies a small number of products in which he or she is interested. Then, he or she focuses on determinant attributes, the features most important to differentiate and compare among the product choices. In reality, consumers' search for information and evaluation of alternatives occur simultaneously. As consumers gather information about different brands in a product category, it would be impossible not to do some evaluation of the brands, leaving some in their consideration set while not including others. Brandon has always wanted a red Ferrari. But after he allows himself to daydream for a few minutes, he returns to reality and reluctantly admits that an Italian sports car is probably not in the cards for him right now. He decides that the cars he likes—and can actually afford—are the Nissan Versa, the Kia Rio, the Chevrolet Spark, and the Honda Fit. He narrows down his options as he considers only affordable cars that come to mind or that his Facebook friends suggest. Now it's decision time. Brandon has to look more systematically at each of the three possibilities and identify the important product characteristics, what marketers refer to as evaluative criteria, he will use to decide among them. The characteristics may be power, comfort, price, the style of the car, and yes, even safety. Keep in mind that marketers often play a role in educating consumers about which product characteristics they should use as evaluative criteria—usually they will "conveniently" emphasize the dimensions on which their product excels. Atkins Nutritionals, Inc., was founded by Dr. Robert Atkins, author of the 1972 best seller about low-carb dieting, Dr. Atkins' Diet Revolution. For decades, the medical profession argued that low-fat diets were healthy and Atkins diets were not. It was not until 2007 that research—demonstrating that the low-fat, low-carb Atkins diet was superior for everyone, not just for dieters—changed the minds of the medical community. Today, consumers, even those who are not trying to lose weight, strive for a healthy lifestyle, which means a low-carb, low-fat, high-protein diet. To address the changing health values for both men and women, Atkins' new ad campaign promotes its products as part of a healthy lifestyle for everyone.4 To make sure customers like Brandon come to the "right" conclusions in their evaluation of the alternatives, marketers must understand which criteria consumers use and which they believe are more and less important. With this information, sales and advertising professionals can point out a brand's superiority on the most important criteria as they have defined them.

Step 2: Information Search

Once Brandon recognizes his problem—he wants a newer car—he needs adequate information to resolve it. Information search is the step of the decision-making process in which the consumer checks his or her memory and surveys the environment to identify what options might Solve his or her problem. Advertisements on TV, information we Google on the Internet, and videos on YouTube, for example, often provide valuable guidance during this step. Brandon might rely on recommendations from his friends, Facebook groups for drivers, information he finds at www.caranddriver.com, brochures from car dealerships, or the manufacturers' websites. We'll talk more about opportunities for consumers to gather information in the digital world in Chapter 14. The information search step includes discovering what alternatives are available and which meet our personal needs. We call the alternatives a consumer knows about the evoked set and the ones he or she seriously considers the consideration set. If a brand isn't in the consumer's evoked set, there's pretty much zero chance of purchase. That's why marketers know it's important for consumers to be exposed to messages about their brand frequently, thus ensuring a place in the consumers' evoked set. Increasingly, consumers use the Internet to search for information about products. Search engines, such as Google (www.google.com) and Bing (www.bing.com), help us locate useful information as they search millions of web pages for key words and return a list of sites that contain those key words. We'll talk more about marketing and search engines in Chapter 13. Comparison-shopping agents (shopbots), such as Bizrate.com or Pricegrabber.com, are web applications that can help online shoppers find what they are looking for at the lowest price. In addition to listing where a product is available and the price, these sites often provide customer reviews and ratings of the product and the sellers. They enable consumers to view both positive and negative feedback about the product and the online retailer from other consumers. Increasingly, consumers also search out other consumers' opinions and experiences through networking websites such as YouTube and Facebook. We'll talk more about these sites and others similar to them, later in the chapter. Shopbots are so popular with consumers that new services have sprung up all over the world. Pricena, launched in 2013 in the United Arab Emirates, is now helping shoppers find deals in Egypt, Saudi Arabia, and Kuwait.3 In the U.S., there are several site-specific shopbots that search the vast array of products on sites like eBay and Craigslist.

business-to-business (B2B) e-commerce

Online exchanges between two or more businesses or organizations.

Age

A person's age is another internal influence on purchasing behavior. Many of us feel we have more in common with those of our own age because we share a common set of experiences and memories about cultural events, whether these involve Woodstock, Woodstock II, or even Woodstock III. Goods and services often appeal to a specific age group. Although there are exceptions, it is safe to assume that most buyers of Rihanna's MP3s are younger than those who buy Barbra Streisand songs. Age is important, but regardless of how old we are, what we buy often depends more on our current position in the family life cycle—the stages through which family members pass as they grow older. Singles (of any age) are more likely to spend money on expensive cars, entertainment, and recreation. Couples with small children purchase baby furniture, insurance, and a larger house, whereas older couples whose children have "left the nest" are more likely to buy a retirement home in Florida. Marketers know that the family life cycle is often a better predictor of purchasing behavior than simple demographics alone. Take, for example, a 40-year-old man who has managed to stay single. He graduated from a top engineering school and has a great job with an annual salary of around $175,000. What is he spending his money on? Luxury vacations? Expensive electronics? Dinners at top restaurants (yes, with a lady friend)? Expensive cars? Now take a man of the same age and income who is married, has a 10-year-old daughter, a 17-year-old son entering college in the fall, and a 19-year-old who is a student at an Ivy League school. What do you think he spends his money on (whatever he has left)? Get the picture?

Changes in Consumer Decision Making: Welcome to AI

As we discussed in Chapter 5, artificial intelligence (AI) is rapidly moving forward in its influence on both consumer and B2B behavior. AI in the simplest terms is intelligence demonstrated by machines rather than the natural intelligence of humans. AI enables computer systems to perform such tasks as visual perception, speech recognition, decision making and language translation. AI has the possibility to change the behavior of consumers and marketers.5 For consumers, AI is already in many parts of our lives. Amazon's Alexa, for example, follows our requests because of AI. It is AI that allows retailers to make recommendations to individual customers that meet their particular preferences. The same is true when consumers search for a hotel room or a seat on a plane. For marketers, AI can generate advertising messages that are customized to individual customers based on their preferences. Chatbots are computer programs that use either voice or text to allow consumers to talk with a computer through the use of AI. While marketers are hoping that they will soon sound like real people, there is no evidence that consumers care so long as they get accurate information. Email marketing (the sort that is approved by consumers) is one of the most effective forms of marketing today. AI can create personalized emails to individual customers based on their previous purchases, what brands they have searched or purchased, and what pages they spend the most time on. Sixty-one percent of consumers enjoy their weekly or daily promo emails, which probably explains why email marketing results in more sales than social media and search combined. In a study, business students wrote complaint letters to companies. The companies responded with a free sample, a letter of apology, or no response at all. When the company sent a free sample, attitudes toward the company improved significantly; when the company sent a letter of apology, there was no change in attitude; and when the company did not respond, the attitude was more negative than before.6 In addition to understanding the mechanics of the consumer decision-making process, marketers need to understand what influences in consumers' lives affect this process. As we see in Figure 6.4, there are three main influences in the decision-making process: internal, situational, and social influences. All of these factors work together to affect the ultimate choice each person makes.

Step 5: Postpurchase Evaluation

In the last step of the decision-making process, the consumer evaluates just how good a choice he or she made. Everyone has experienced regret after making a purchase ("What was I thinking?"), and (hopefully!) we have all been pleased with something we've bought. The evaluation of the product results in a level of consumer satisfaction/dissatisfaction. This refers to the overall feelings, or attitude, a person has about a product after he or she purchases it. Just how do we decide if we're satisfied with what we bought? When we buy a product, we have some expectations of product quality. How well a product or service meets or exceeds these expectations determines customer satisfaction. In other words, we tend to assess product quality by comparing what we have bought to a preexisting performance standard. Think about the customer who finds his new car gets 25 mpg. If his expectation is the same 25 mpg, he will be satisfied; if his expectation is 20 mpg, he will be extremely satisfied; but if, based on the information he received before he purchased the vehicle, he expects to get 30 mpg, he will be dissatisfied. We form our product expectations via a mixture of information from marketing communications, informal information sources such as friends and family, and our own prior experience with the product category. That's why it's important that marketers manage expectations of their product through advertising and other communications. One moral: To prevent or diminish consumers experiencing buyer's remorse, don't overpromise! No product is perfect, so don't claim that yours is. Holiday Inn motels found that out the hard way: At one point the chain's slogan was, "No surprises." Inevitably, some guests were surprised (and not in a good way), so the line had to be scrapped. Even when a product performs up to expectations, consumers may experience regret, or buyer's remorse, after they make a purchase. When we reject product alternatives with attractive features, we may second-guess our decision. Brandon, for example, might begin to think, "Maybe I should have chosen the Kia Rio—Kia makes great cars and the price is right." To generate satisfied customers and (hopefully) avoid buyer's remorse, marketers often seek to reinforce purchases through follow-up communications with the customer after the sale.

Factors that make a difference in business markets

In theory, the same basic marketing principles should hold true in both consumer and business markets—firms identify customer needs and develop a marketing mix to satisfy those needs. For example, take the company that makes the desks and chairs for a university classroom. Just like a firm that markets consumer goods, the classroom furniture company first must create an important competitive advantage for its target market of universities. Next, the firm develops a marketing mix strategy that begins with a product—classroom furniture that will withstand years of use by thousands of students—while it provides a level of comfort that a good learning environment requires (and you thought those hardback chairs were intended just to keep you awake during class). The firm must offer the furniture at prices that universities will pay and that will allow the firm to make a reasonable profit. Then, the firm must develop a sales force or other marketing communication strategy to make sure the university (and hundreds of others) considers—and hopefully chooses—its products when it furnishes classrooms. Although marketing to business customers does have a lot in common with consumer marketing, there are differences that make this basic process more complex.51 Figure 6.9 summarizes the key areas of difference, and Table 6.2 provides a more extensive set of comparisons between the two types of markets. Organizational Markets Consumer Markets Purchases made for some purpose other than personal consumption Purchases for individual or household consumption Purchases made by someone other than the user of the product The ultimate user often makes the purchase Several people frequently make the decisions Individuals or small groups like couples and families usually decide Purchases made according to precise technical specifications based on product expertise Purchases often based on brand reputation or personal recommendations with little or no product expertise Purchases made after careful weighing of alternatives Purchases frequently made on impulse Purchases based on rational criteria Purchases based on emotional responses to products or promotions Purchasers often engage in lengthy decision processes Individual purchasers often make quick decisions Interdependencies between buyers and sellers; long-term relationships Buyers engage in limited-term or one-time-only relationships with many different sellers Purchases may involve competitive bidding, price negotiations, and complex financial arrangements Most purchases made at "list price" with cash or credit cards Products frequently purchased directly from producer Products usually purchased from someone other than producer of the product Purchases frequently involve high risk and high cost Most purchases are relatively low risk and low cost Limited number of large buyers Many individuals or household customers Buyers often geographically concentrated in certain areas Buyers generally dispersed throughout total population Products often complex; classified based on how organizational customers use them Products: consumer goods and services for individual use Demand derived from demand for other goods and services, generally inelastic in the short run, subject to fluctuations, and may be joined to their demand for other goods and services Demand based on consumer needs and preferences, is generally price elastic, steady over time, and independent of demand for other products Promotion emphasizes personal selling Promotion emphasizes advertising Multiple Buyers In business markets, products often must do more than satisfy an individual's needs. They must meet the requirements of everyone involved in the company's purchase decision. If you decide to buy a new chair for your room or apartment, you're the only one you must satisfy. For your classroom, the furniture must satisfy not only students but also faculty, administrators, campus planners, and the people at your school who actually do the purchasing. If your school is a state or other governmental institution, the furniture may also have to meet certain government-mandated engineering standards. If you have a formal green initiative, the purchase must satisfy environment-friendly criteria. Number of Customers Organizational customers are few and far between compared to end-user consumers. In the United States, there are about 100 million consumer households but less than half a million businesses and other organizations. Size and Cost of Purchases B2B products dwarf consumer purchases both in the quantity of items ordered and in how much a single item may cost. A company that rents uniforms to other businesses, for example, buys hundreds of large drums of laundry detergent each year to launder its uniforms. In contrast, even a hard-core soccer mom who deals with piles of dirty socks and shorts goes through a box of detergent only every few weeks. Organizations purchase many products, such as a highly sophisticated piece of manufacturing equipment, computer-based marketing information systems that can cost a million dollars or more, and a dozen or so new jetliners costing billions. Recognizing such differences in the size of purchases allows marketers to develop effective marketing strategies. Geographic Concentration Another difference between business markets and consumer markets is geographic concentration, meaning that many business customers may locate in a single region of the country. Whether they live in the heart of New York City or in a small fishing village in Oregon, consumers buy and use toothpaste and TVs. For years, Silicon Valley, a 50-mile-long corridor close to the California coast, has been home to thousands of electronics and software companies because of its high concentration of skilled engineers and scientists. For B2B marketers who wish to sell to these markets, this means that they can concentrate their sales efforts and perhaps even locate distribution centers in a single geographic area.

Professional buyers and buying centers

Just as it is important for marketers of consumer goods and services to understand their customers, it's essential that B2B marketers understand who handles the buying for their business customers. Large retailers, for example, will often have a large number of trained professional buyers, each assigned to a single product category, who perform a buying function in B2B markets. These people have titles such as purchasing agents, procurement officers, or directors of materials management. Although some consumers like to shop 'til they drop almost every day, most of us spend far less time roaming the aisles. However, professional purchasers do it all day, every day—it's their job and their business to buy. These individuals focus on economic factors beyond the initial price of the product, including transportation and delivery charges, accessory products or supplies, maintenance, and other ongoing costs. They are responsible for selecting quality products and ensuring their timely delivery. And, in our retailer example, they are responsible for the final impact on the company's bottom line for their purchases. They shop as if their jobs depend on it—because they do. Many times in business buying situations, several people—ranging from a production worker to the CFO—work together to reach a decision. The buying center is the group of people in the organization who participate in the decision-making process. Although this term may conjure up an image of "command central" buzzing with purchasing activity, a buying center is not a place at all. Instead, it is a cross-functional team of decision makers. Generally, the members of a buying center have some expertise or interest in the particular decision, and as a group they are able to make the best decision. Depending on the complexity of the purchase and the size of the buying center, a participant may assume one, several, or all of the six roles that Table 6.3 shows. Let's review them now. Table 6.3Roles in the Buying Center Role Potential Player Responsibility Initiator Production employees, sales managers, almost anyone Recognizes that a purchase needs to be made User Production employees, secretaries, almost anyone Individual(s) who will ultimately use the product Gatekeeper Buyers, purchasing agents Controls flow of information to others in the organization Influencer Engineers, quality control experts, technical specialists, outside consultants Affects decision by giving advice and sharing expertise Decider Purchasing agents, managers, CEOs Makes the final purchase decision Buyer Purchasing agents Executes the purchase decision The initiator begins the buying process by first recognizing that the firm needs to make a purchase. A production employee, for example, may notice that a piece of equipment is not working properly and notify a supervisor that it is slowing up the production line. Depending on the initiator's position in the organization and the type of purchase, the initiator may or may not influence the actual purchase decision. For marketers, it's important to make sure that individuals who might initiate a purchase are aware of improved products they offer. The user is the member of the buying center who actually needs the product. The user's role in the buying center varies. For example, a firm's administrative assistants may be asked to give their input on the features a new copier should have because they will be chained to the machines for several hours a day. Marketers need to inform users of their products' benefits, especially if the benefits outweigh those that competitors offer. The gatekeeper is the person who controls the flow of information to other members. Typically, the gatekeeper is the purchasing agent, who gathers information and materials from salespeople, schedules sales presentations, and controls suppliers' access to other participants in the buying process. For salespeople, developing and maintaining strong personal relationships with gatekeepers is critical to being able to offer their products to the buying center. An influencer affects the buying decision when he or she dispenses advice or shares expertise. Highly trained employees, like engineers, quality control specialists, and other technical experts in the firm, generally have a great deal of influence in purchasing equipment, materials, and component parts the company uses in production. The influencers may or may not wind up using the product. Marketers need to identify key influencers in the buying center and persuade them of their product's superiority. The decider is the member of the buying center who makes the final decision. This person usually has the greatest power within the buying center; he or she often has power within the organization to authorize spending the company's money. For a routine purchase, the decider may be the purchasing agent. If the purchase is complex, a manager or even the CEO may be the decider. The decider is critical to a marketer's success and deserves a lot of attention in the selling process. The buyer is the person who has responsibility to execute the purchase. The buyer obtains competing bids, negotiates contracts, and arranges delivery dates and payment plans. Once a firm makes the purchase decision, marketers turn their attention to negotiating the details of the purchase with the buyer. Successful marketers are well aware that providing exemplary service in this stage of the purchase can be a critical factor in achieving future sales from this client.

Learning

Learning is a change in behavior caused by information or experience. Psychologists who study learning have advanced several theories to explain the learning process, and these perspectives are important because a major goal for marketers is to "teach" consumers to prefer their products. We refer to the two major perspectives on how people learn as behavioral and cognitive learning. Behavioral Learning Behavioral learning theories assume that learning occurs as the result of experience and the connections we form between events. In one type of behavioral learning, classical conditioning, a person perceives two stimuli at about the same time. After a while, the person transfers his or her response from one stimulus to the other. For example, an ad shows a product and a breathtakingly beautiful scene so that (the marketer hopes) you will transfer the positive feelings you get when you look at the scene to the advertised product. Hint: Did you ever notice that car ads often show a new auto on a beautiful beach at sunset or speeding down a mountain road with brightly colored leaves blowing across the pavement? Another common form of behavioral learning is operant conditioning, which occurs when people learn that their actions result in rewards or punishments. This feedback influences how they will respond in similar situations in the future. Just as a rat in a maze learns the route to a piece of cheese, consumers who receive a "reward," like the toy that you used to get in your Happy Meal at McDonald's, will be more likely to buy that brand again. We don't like to think that marketers can train us like lab mice, but like it or not, that kind of feedback does reward us for the behavior and make it more likely that we'll repeat it in the future. Cognitive Learning In contrast to behavioral theories of learning that emphasize simple stimulus-response connections, cognitive learning theory views people as problem solvers who learn as they proactively absorb new information. Supporters of this viewpoint stress the role of creativity and insight during the learning process. Cognitive learning occurs when consumers make a connection between ideas or by observing things in their environment. Observational learning occurs when people watch the actions of others and note what happens to them as a result. They store these observations in memory and at some later point use the information to guide their own behavior. Marketers often use this process to create advertising and other messages that allow consumers to observe the benefits of using their products. Health clubs and manufacturers of exercise equipment feature ripped men and women pounding away on treadmills, whereas mouthwash makers imply that fresh breath is the key to romance. Now we've discussed how the three internal processes of perception, motivation, and learning influence consumer behavior. But the results of these processes—the interpretation the consumer gives to a marketing message or action—differ depending on unique consumer characteristics. Let's talk next about some of these characteristics: existing consumer attitudes, the personality of the consumer, and consumer age groups.

Personality and the Self: Are you what you buy?

Personality is the set of unique psychological characteristics that consistently influences the way a person responds to situations in the environment. One adventure-seeking consumer may always be on the lookout for new experiences and cutting-edge products, whereas another is happiest in familiar surroundings where he or she can use the same brands over and over. Today, popular online matchmaking services like Match.com, Matchmaker.com, and eHarmony.com offer to create your "personality profile" and then hook you up with other members whose profiles are a good match. A person's self-concept is his or her attitude toward himself or herself. The self-concept is composed of a mixture of beliefs about one's abilities and observations of one's own behavior and feelings (both positive and negative) about one's personal attributes, such as body type or facial features. The extent to which a person's self-concept is positive or negative can influence what products he or she buys and even the extent to which he or she fantasizes about changing his or her life. Self-esteem refers to how positive a person's self-concept is. Our society is obsessed with the self. Consumers track their health and diet on apps like Fitbit, they post their relationship updates on Facebook, and they spend billions on apparel and beauty products to "edit" the person that others see. The "selfie" epidemic is another symptom of this infatuation, as people go to great lengths to record their presence at parties, museums, and many other locations. A recent survey of young consumers reported that they spend an average of 54 hours per year taking selfies. About half of the respondents were OK with the idea of snapping selfies during childbirth, and one in five think it's OK to take them during a funeral!19 As Dondeena at Weight Watchers knows, the appeal of many products relates directly to their promise to improve self-image. A lot of these appeals focus on body parts and how people feel about their physical appearance. Of course, in our society "thin is in," and women are constantly bombarded with images of anorexic-looking models. That focus may be starting to change as the movement toward more realistic body ideals gains steam. Alpine Butterfly sells vibrant, fashionable swimwear in sizes large to 5XL, while Swimsuits For All launched its first "fatkini" collection. Sports Illustrated, Eloquii, Forever21, and Fashion Nova all released plus-size swim collections in 2017. These new brands are starting to take a bigger share of the $20 billion swimwear industry.20

Step 1: Problem Recognition

Problem recognition occurs whenever a consumer sees a significant difference between his or her current state of affairs and some desired or ideal state. A woman whose 10-year-old Hyundai lives at the mechanic's shop has a problem, as does the man who thinks he'd look so much "cooler" if he traded his Toyota for a new sports car. You may fall into the latter category if your old clunker runs okay, but you want to sport some wheels that will get you admiring stares instead of laughs. Problem recognition is also why clothing and home décor designers create new styles in new colors every few years. They hope consumers will suddenly realize that they must have new clothes and totally redecorate their apartment or risk social disapproval. Do marketing decisions have a role in consumers' problem recognition? Although most problem recognition occurs spontaneously or when a true need arises, marketers often develop creative advertising messages that stimulate consumers to recognize that their current state (that old car) just doesn't equal their desired state (a shiny, new convertible). Figure 6.3 provides examples of marketers' responses to consumers' problem recognition and the other steps in the consumer decision-making process.