MARKETING EXAM 1 CHAPTER 3

Acquaintances such as parents, teachers and peers serve as:

NORMATIVE REFERENTS by providing individuals with norms, values and attitudes through personal interactions FOR EXAMPLE: children might continue to vacation at the same destinations that were popular among their parents/other relatives throughout their childhoods -ANOTHER EXAMPLE WOULD BE "spring break" destinations -college students often choose destinations that are popular among other students at their colleges (fraternity/club members)

1. PERSONAL NEEDS/MOTIVES

NEED DEFINED AS: a lack of something or the difference between someones desired and actual states MOTIVE DEFINED AS: a persons inner state that directs the individual toward satisfying a felt need

In addition to the general culture of the US, marketers must also be concerned with:

SUBCULTURES -subcultures include: groups of people within the larger culture who share common beliefs or interests that differ from the majority based on common life experiences -subcultures in marketing are often based on: race, ethnicity, religion, nationality -can also be based on: geographic locations, age and sexual organizations

EXPERIENCE US ALSO A MAJOR INTERNAL INFLUENCE ON:

consumer behavior -as individuals encounter new situations, such as dining in a particular restaurant for the first time, they integrate their perceptions into an experience framework that influences future decisions

Differences in cultures are most apparent when:

a hospitality/tourism firm attempts to expand into international markets -There are significant differences between, FOR EXAMPLE: the way that Europeans make purchase decisions and exhibit travel behavior/the way that Americans do so. -FOR INSTANCE, it is very common for a family to take an extended vacation that might last for 2,3, or more weeks -IN FRANCE, it's very common for businesses to shut down for much of August, while the entire country is on vacation

4. HOUSEHOLD

defined as: those individuals who occupy a single living unit -there are more than 115 million households in the US, and within every household certain characteristics, leadership and norms exist -leadership is normally rotated among members of the household -hospitality marketing research points out that leadership is often shared -for example: the pattern normally decide when the household will go out to eat, but it is the children who decide which restaurant is pattronized

3. REFERENCE GROUPS

definition: group with whom an individual identifies to the point where the group dictates a standard of behavior -exert tremendous influence on consumers hospitality and tourism purchase decisions -every individual is influenced directly and indirectly marketing research has identified THREE TYPE OF REFERENCE GROUPS: comparative, status and normative -2 MOST COMMON TYPES OF REFERENCE GROUPS=COMPARATIVE AND NORMATIVE

Purchase decision

- FOURTH STAGE IN THE CONSUMER DECISION MAKING MODEL IS- PURCHASE DECISIONS -it is at this point that the individual actually makes the decision -all external/internal variables come together to produce a decision -this decision is based on: the perceived risk associated with each alternative an the willingness of the individual tp take risks -the risk factor offers a tremendous competitive advantage for hospitality chains -there is LESS risk with the chain operation because the. product-service mix is well known to customers -independent hospitality operations must work very hard yo establish themselves and thereby reduce some of the risk the consumers associate with patronizing a restaurant where the product-service mix is NOT well known

Roles

- a ROLE is: a pattern of behavior associated with a specific position within a social setting -all individuals assume a variety of roles, some professional, others personal - each role brings with it a set of expectations for behavior FOR EXAMPLE: when a person is in a position of authority, such as the manager of a hotel, employees look to the manager to provide discretion, make decisions and help the operation run smoothly. However, when this manager leaves work and goes home, they may assume a less active decision-making role when interacting with their children. For example, at home, the manager may defer to the children the decision about what type of activity they will engage in during a day that they spend together

Evaluation of alternatives

- after consumers gather a sufficient amount of information, the third element in the decision-making process is: EVALUATE ALTERNATIVES -consumers who ask "at which one of several possible restaurants should I dine tonight?"- go through a cognitive process in answering this question, whereby they weigh the positive and negative aspects of each alternative - ALSO, examine the attributes of the product-service mix of each restaurant -consumers consider the relative importance of each attribute of the product-service mix by making trade-offs between the various attributes and their levels -FINAL RESULT IS AN EVOLVED SET- or a group of brands that will be considered in the final purchase decision

1. PROBLEM RECOGNITION

- the decision making process begins with problem recognition-occurs when a consumer realizes a difference between their actual state and their desired state -thousands of different stimuli can trigger the awareness of a need or problem -hospitality marketing managers should recognize the wide variety of needs that consumers are attempting to satisfy when they dine out

3. more emphasis on specifications and service

- the products in organization markets tend to be more technical in nature, and buyers are more concerned about specifications and service after the sale

2. influencers

- there are people who have some expertise in the product area and help define the necessary specifications -for example, computer systems personnel would help choose a reservation system or point of sale system, and human resources personnel often influence site selection for meetings

Celebrities, such as sports figures and popular entertainers serve as:

-COMPARATIVE referents by providing standards/influencing consumers behavior -ONE EXAMPLE OF THIS IS: the popularity of certain restaurants in major cities (i.e. NYC AND LOS ANGELES -the media report the dining behaviors of celebrities and other consumers who aspire to be like those celebrities dine at the same "TRENDY" restaurants frequented by the celebs. -there is also a status component to reference groups -restaurant critics provide their reviews of restaurants and many consumers want to "be seen" at the highest-rated restaurants -it is important to note that comparative referents are merely observed and there's no interaction between the referent and the individual being influenced

Post purchase evaluation

-Following, the product-service mix consumption, the final stage is POSTPURCHASE EVALUATION -Postconsumption feelings are based on 2 factors: the consumers expectations and the actual performance by the hospitality operation -for this reason, it is very important for any hospitality operation to deliver the product-service mix promised in advertising, promotion or personal selling -failure to perform at or above the level anticipated by the consumer is likely to lead to negative postconsumption feelings

The adage "first impressions are important" applies directly to:

-HOSPITALITY INDUSTRY -if consumers are turned off the first time they walk up to the front desk in a hotel or are greeted by a host in a restaurant, they are unlikely to return -ONE OF THE FACTORS THAT HAVE LED TO THE SUCCESS OF DISNEY WORLD IS THAT THE STAFF, called "cast members" focus on the guests needs from the moment they arrive on-site until they depart

An alternative approach combines the work of Maslow with:

-THE WORK OF PERSONALITY DEVELOPMENT BY ERIK ERIKSON -IN THIS MODEL, adults pass through 3 LIFE STAGES- at each stage will help determine the kinds of experiences will seek as consumers -consumers purchase products either because: they need them, because they desire them OR BOTH -IN THE FIRST STAGE, young adults (age 40 or younger) are seeking satisfaction through purchasing POSSESSION EXPERIENCES in their early career-development and family building years -EXAMPLES OF PRODUCTS PURCHASED DURING THIS STAGE ARE: cars/houses -THEN, as they grow older (age 40-60) consumers focus more on purchasing CATEED EXPERIENCES SUCH AS: travel, restaurants, education and sports -THE THIRD STAGE (age over 60), finds consumers shifting their focus toward BEING EXPERIENCES associated with interpersonal relationships and simple pleasures -in this context, hospitality services would be purchased more in the second stage, although they would be purchased merely for survival throughout a consumers light span -some resorts, spas and other travel destinations target the THIRD STAGE -FOR EXAMPLE, some destinations market themselves to older travelers who are seeking a more spiritual experience

1. Conjunctive

-a conjunctive approach involves setting minimum thresholds for each attribute and eliminating brands that do not surpass this threshold on any one salient attribute -the consumer determines which attributes will be important in choosing between brands -exceed minimums on all attributes -restaurants with good reputations for food quality and menu variety that are within the acceptable price range will be eliminated if they are not within walking distance

There are other factors, in addition to perceived risk and risk aversion, that:

-affect the consumers purchase decision -the actual purchase is based on the consumer problem-solving strategy 8sed by each individual -some consumers base the decision on the evaluation of all the product or service attributes, simulaneously, whereas others evaluate the attributes one at a time -also, it depends on the consumers involvement with the product/service category and the resultant problem-solving -FINAL STAGE OF CONSUMER DECISION MAKING PROCESS: POST PURCHASE EVALUATION

SOCIAL AND BELONGING NEEDS

-after needs at the lower two levels are satisfied, consumers look toward achieving social acceptance by others -from the hospitality/tourism perspective, we cater to consumers who want to join private clubs that offer a variety of social/recreational activities -also make consumers feel like they belong by making special products/services available for frequent guests -hotels that target longer-term guests- I.E. MARRIOTT, will often schedule social events for guests in order to satisfy social needs of those who are away from family/friends for extended periods of time

2. INFORMATION SEARCH

-after the need is raised to a conscious level, the model holds that consumers seek to retrieve information -this search can involve: a variety of info sources, INCLUDING: reference groups and members of the immediate household, as well as the mass media in the form of advertising -CONSUMER DECISION MAKING MODEL PROVIDES A COMPARISON OF INFO SOURCES BASED ON THE EFFORT required and the credibility of the source

Social Setting

-all consumers make decisions and take actions within the larger social setting and in doing so, are influenced by their peers -The same consumers in turn, influence the actions of their consumers -social settings will vary greatly FOR EXAMPLE: the social setting of a consumer living in NYC is very different from that of someone living in Iowa, Paris, France or Eastern European country

PSYCHOLOGICAL NEEDS

-are primary needs for food, shelter and clothing, which one must have before thinking about higher-order needs -nearly all products/services offered to consumers by hospitality/tourism firms address those needs

Factors that influence consumer behavior

-consumers do not make purchase decisions in a vacuum. Rather, they are subject to both EXTERNAL AND INTERNAL FACTORS that influence them

5. GATEKEEPERS

-control the flow of info that is relevant to a purchase decision -for example, administrative assistants or receptionists have the ability to restrict the flow of info to buyers and other members of the buying unit -hotel salespeople must often rely on administrative assistants to get info to meeting planners

In the early 1990s, the phrase "break-ation" was introduced to:

-describe the mini-or getaway vacation that have become common in the US

These negative feelings produce:

-dissatisfaction and reduce the level of repeat patronage -from a management perspective, it is important to promise less and deliver more-underpromise and overdeliver -this is a key concept in producing satisfied customers -finally, there is a period of time between the purchase of hospitality or tourism services and when they are consumed -DURING this period, consumers may have second thoughts/negative feelings about the purchase, this hesitancy is referred to as COGNITIVE DISSONANCE -this is why it is important for hospitality firms to run advertisements that depict satisfied customers -consumer decision making is extremely complex -marketing managers constantly strive to learn more about the way consumers reach decisions -as with other forms of human behavior, consumer behavior may never be totally underestood

PERCEPTION AND ATTITUDE

-each day consumers are exposed to thousands of stimuli -some of these stimuli are consciously received, resulting in a thought process, whereas others are simply ignored PERCEPTION DEFINITION: the process by which stimuli are recognized, received and interpreted -each individual consumer perceives the world differently -perceptions are manifested in attitudes very difficult to change the perceptions and resulting attitudes that individuals have developed over time

PERSONALITY AND SELF-IMAGE

-each individual consumer develops a unique personality/self-image over a period of time - for marketing purposes, individual personality types can be grouped into various classifications such as: swingers, conservatives, leaders and followers -the important thing for hospitality managers to remember is that: no hospitality operation can be all things to all people -firms must select one or more target markets that are subsets or segments of the total market and then appeal directly to these consumers -many hospitality organizations experience difficulty when attempting to appeal to too wide a segment of the total market -the result is quite predictable: FAILURE TO SATISFY ANY OF THE TARGET MARKETS, WHICH LEADS TO POOR FINANCIAL PERFORMANCE/FAILURES

2. DISJUNCTIVE

-exceed minimum on at least one attribute - Some consumers do not get as involved in the purchase process and may prefer to take a less complicated approach to making purchase decisions -with the disjunctive approach, consumers still establish the minimum standard on at least one attribute -Consumers applying this approach tend to have only one or two salient attributes, the products/services tend to be very similar and they are not as highly involved in the decision making process.

extended problem solving

-extended problem solving is most often associated with high priced products that are purchased infrequently -consumers need to engage in an extensive search process to identify salient attributes and alternative brands - consumers are highly involved and exert a good deal of time/effort because of the price and risk of making a bad choice -the cognitive process is substantial because consumers need to evaluate the alternative brands using many attributes

Despite years of consumer behavior research, it is very difficult, if not impossible to fully explain all of the needs consumers feel:

-figure 1.3 illustrates the role of needs in consumer behavior -NEEDS LEAD TO MOTIVATION, WHICH LEADS TO BEHAVIORAL INTENTIONS, WHICH LEADS TO OBSERVABLE BEHAVIOR -it is important to remember that successful marketing is about: IDENTIFYING AND THEN MEETING/EXCEEDING THE EXPECTATIONS OF CONSUMERS

Social forces

-forces within the society set the standards of acceptable behavior. -these rules are both written and unwritten, and they are established by those within the society with the most influence. FOR EXAMPLE: the behavior that a college student exhibits at a party on campus is likely to be quite different than the behavior exhibited while at home during break. -different social forces are at work in these 2 situations

Routine response behavior

-habitual response with little search of evaluation -For some products, consumers exert very little effort in the decision making process -some marketing professionals believe that consumers actually skip stages of the process, whereas others feel that consumers merely move through all the stages very quickly -this routine, or habitual response involves very little info search of cognitive processing because the decision is almost automatic -routine response behavior is typical for low-priced, frequently purchased products where consumer involvement is low -the amount of effort that consumers exert in the problem solving process tends to decrease over time as the learn more about a product category and gain experience through consumption EXAMPLE: workers choosing the employee cafeteria for lunch

2. socioeconomic level

-has a large influence in consumer decision making -marketing managers have long attempted to correlate socioeconomic level w/ dining-out habits and travel patterns -hospitality managers MUST IDENTIFY: the relative socioeconomic levels to which the operation appeals and target those groups directly with a customized marketing mix -FOR EXAMPLE: an upscale/expensive 4/5 star resort property will target its promotional efforts to those in upper-income groups -these resorts are likely to advertise in publications read by professionals/those who are in the top 25% of annual household income-the resorts target market

4. DECIDERS

-have the authority to select or approve a supplier -they are often top executives within the organization who have the formal power to make decisions, but they are normally involved only with high-dollar purchases -EXAMPLE: a GM, CEOS, directors and presidents usually have this type of authority

CONSUMER ADOPTION PROCESS

-hospitality consumers today are demanding more sophisticated dining/lodging experiences -consumers are better educated, earn more money are are more confident when they travel/dine outside home -Today's hospitality consumers are seeking products/services tailored to meet their specific needs -they're more concerned about nutrition/safety, and they know more about value

Consumer behavior can be described, and to some extent it can be predicted based on theory. James McNeal, in his classic book Consumer Behavior, advances the idea that:

-human behavior is influenced by several factors: social setting, social forces, roles and attitudes relative to roles

The amount of info to research and the length of the consumer decision making process will:

-increase with the consumers level of involvement -consumers tend to be more involved when there is greater perceived risk of making a wrong choice, which is normally associated with products or services with higher prices, more visibility or complexity

Cultural differences can be external such as:

-individualism vs. collectism -social gender roles -long term versus short term orientation and the level of risk aversion

When a new hospitality operation opens, it is very important that:

-individuals representing the innovators and early adopters are reached by marketing efforts -these individuals offer excellent potential as early customers, for if they are satisfied, they will tell friends/associates and these people, in turn, may become customers -people falling into the early/late majority categories will not usually try a new hospitality operation until they have heard positive comments from others

Internal influences on consumer behavior

-internal influences affect consumers choices as well- INCLUDES: personal needs/motives, experience, personality and self image and perceptions/attitudes -the exact influence of internal factors is less well known than the external factors, as internal factors are NOT as observable, therefore are NOT as well documented/understood

Two markets that have received a good deal of attention in the travel industry are:

-lesbian, gay, bisexual and transgender (LGBT_ populations and millenials (those born between 1980-2000) BECAUSE of their distinct differences relative to the overall society -FOR EXAMPLE: millenials constitute a large percentage of the labor force for hospitality organizations, but owners/managers have a difficult time relating to these individuals because of their different value systems -in general, millenials are more open to change and more creative than previous generations, but they are alos more narcisistic/individualistic -millenials often want flexible hours and job enrichment and they change jobs frequently because there is no sense of loyalty -this lack of loyalty is also present in millenials as consumers -rely more heavily on word of mouth and objective product review than on traditional advertising

Factors that influence organizational buying

-most of the factors that affect consumers buying behavior are also relevant to organizational buying behavior -THIS INCLUDES- external influences such as 1. environmental factors (political/legal, technological, economic and competitive) 2. reference groups (i.e. trade associations and certification boards) and cultural differences

when consumers make decisions concerning the purchase of goods/services, a very complex decision making process takes place

-numerous variables influence this decision-making process, as the many models of consumer behavior demonstrate THE CONSUMER DECISION-MAKIN MODEL illustrates: the major steps in the decision-making process, as well as the role external and internal influences play as the individual makes purchase decisions -because BOTH EXTERNAL/INTERNAL VARIABLES influence consumers decision making processes, hospitality managers need to develop awareness of the specific influences that are most important to their particular market segments -THIS MODEL ALSO SHOWS FIVE KEY ELEMENTS IN THE DECISION MAKING MODEL- 1. problem recognition 2 information search 3. evaluation of alternatives 4. purchase decision 5. post-purchase evaluation -EACH element is affected by external and internal influences

6. multiple buyers

-often, more than one individual is involved in the buying process and making the ultimate purchase decision for organizations -BUYING CENTER IS: groups of people that influence buying decisions for organizations

5. repeat business

-one of the benefits of selling to organizations is that they tend to become repeat purchasers

Combination strategies

-one of the main questions regarding problem-solving strategies is the ability of consumers to obtain, integrate and evaluate the info available on the myriad brands in most product categories -the compensatory approach is particularly cumbersome in this respect, as it can be non compensatory approaches such as conjunctive or lexicographic strategies -in many cases, the disjunctive approach would seem very simplistic -therefore, it could be argued that consumers actually use a combination of approaches in an attempt to adapt to the purchase situation and simplify the decision process

4. professional buyers and more negotiation

-organization buyers tend to be professionals with an extensive knowledge of the product -therefore, the purchase process tends to be longer and more involved for organizations than regular consumers -also,, when buying large volumes, organization buyers have more power and can negotiate

1. larger volume purchases

-organizational buyers usually purchase in large volumes -meeting planners, for example, book anywhere from 10-1,000 or more rooms and tour operators package trips for groups of 10 or more

Members of the buying unit

-organizations will normally have buying centers/buying units that influence their purchase decisions -5 SPECIFIC ROLES have been identified for individuals constituting a buying unit- user, influencer, buyer decider and gate keeper -in some instances there is more than one person in each role, or the same person occupies more than one role

OPINION LEADERS DEFINITION

-people whose opinions impact the lifestyle choices/purchasing behaviors of others

3. Lexicographic

-prioritize and consider one attribute at a time - the lexicographic approach falls somewhere between conjunctive and disjunctive choice processes in terms of complexity -just as in the other 2 approaches, the consumer determines a set of salient attributes or choice criteria -next, they place these choice criteria in rank order from most important to least -then, the consumer evaluates the alternative brands, starting with the most important attribute -the brand that rates the highest on the most important attribute will be selected -if 2 or more brands tie or are closely rated, then those brands are evaluated by using the second most important attribute -this continues until one brand remains or the list of attributes is exhausted- forcing a choice between the remaining brands -it is important to note that all brands are nOT evaluated on all criteria -consumer puts the attributes in order of price, location and Service quality based on importance (highest to lowest) -therefore, the first step is for the consumer to evaluate all three hotels on price

First, products that are necessary will be adopted more readily than:

-products that are not essential -FOR EXAMPLE, a fine-dining restaurant may take longer to build clientele than a fast-food restaurant in a growing suburb SECOND, the more risk involved with a products purchase, the slower the adoption process

Some of the following TRENDS in individual behavior are affecting consumerism:

-receiving instant gratification rather than the concept of self-denial -feeling terrific rather than feeling responsible -improvising rather than planning -choosing simplicity over complexity -showing concern for status rather than egalitarianism These trends shape the way firms develop and market their products/services -there are consumer models that aid marketers in understanding consumers/determining strategies

Consumers tend to compare the benefits of:

-search (i.e. value, enjoyment, self-confidence) with the COSTS (i.e. money, time convenience) to determine the perceived risk -there are also many other situational factors that will affect the amount of info search, such as: product knowledge, demographics (i.e. income and education) and the market environment

Individuals have been classified according to willingness to change:

-some are not upset by change, whereas others resist change in any form -the diffusion and adoption across the product life cycle (figure 3.4)-illustrates the diffusion of consumers over a typical product life cycle -consumers will adopt new products at different rates depending on: their level of aversion to risk/change

limited problem solving

-some search and evaluation - many consumers purchase decisions involve limited problem solving because of some product differentiation and alternative brands -there is some info search, including external sources, unlike in routine response behavior -consumers have a low to moderate level of involvement, and they consider a moderate number of attributes in making the purchase decision -at this point, the consumer usually has some knowledge and experience with regard to the product category -consumers are willing to exert some time and effort to ensure a good choice

In general, consumer behavior can be defined as the:

-study of how an individuals thoughts, feelings, attitudes, opinions and patterns of behavior affect what they buy, when they buy, why they buy, and how they use the product or service they purchase -consumer behavior EXAMINES the roles and influences that others have on the behavior of individual consumers

INTRO:

-successful marketing managers focus on understanding their consumers wants/needs as clearly as possible - through marketing research has allowed marketing managers of tangible products to understand their customers -more recently, marketers have begun to better understand the subject of consumer behavior as it relates to the consumption of services -this knowledge enables marketing managers to develop sophisticated marketing programs aimed at very specific target market segments

Cultural differences can be internal influences such as:

-the characteristics of the organization (i.e. size, level of technology, and the internal reward system), the characteristics of the individuals buying unit as a whole (i.e. size, authority, leadership and structure). -for example, the ritz carlton hotel chain focuses on quality and it stressed quality in its training/reward structure -buying decisions are based on the willingness of suppliers to adhere to the same concept and support the chains quality goals

Consumer problem-solving techniques

-the consumer decision making process differs in the length of time and effort expended on each stage based on the consumers level of involvement and experience with a product category -also, the level of involvement may change depending on the purchase situation -TABLE 1.3: problem solving techniques- provides a comparison of the three levels of problem solving routine response behavior, limited problem solving and extended problem solving

2.derived demand

-the demand for organization products is derived from the demand for consumer products -for example, when the demand for insurance increases, insurance companies have more sales meetings/sponser more incentive trips -corporations and associations tend to have larger travel budgets when their industries are doing well

SELF ACTUALIZATION NEEDS

-the highest level needs within Maslow's hierarchy focus on an individuals need to reach their full potential -these needs are often beyond the scope of what hospitality/tourism marketers can expect to fulfill -however, there are examples from within hospitality/tourism industry regarding a consumers attempt to satisfy self-actualization needs - FOR EXAMPLE: when guests are attracted to sports programs at 5 star resorts focusing on how to play the best golf/tennis possible, they are seeking to reach a state of self actualization with regard to the sport

If the felt need is as basic as the need to eat because of hunger,

-the info retrieval process is likely to be brief -that is, the restaurant facility selected in this case is likely to be chosen primarily b/c of convenience, and the number of sources of info consulted is likely to be quite small -in other situations, the number of sources consulted could be much larger -the important thing for the hospitality marketing manager to remember is that consumers rely on a certain extent on the mass media for info

Consumers either consciously or subconsciously employ certain processes to integrate:

-the info that they have obtained over time to evaluate and choose among the various alternatives -these formal integration strategies can be termed: compensatory, noncompensatory or a combination of the two

Characteristics of organizational buying

-the organizational buying process includes the stages used by organizations to determine needs (problem recognition), search for info, evaluate alternatives, make a purchase and evaluate the purchase (postconsumption evaluation) -in general, organizations go through the same decision making process as individual consumers -there are some major differences between the activities within the stages:

Hospitality managers must remember that people (consumers) are products of:

-their environments -each new experience is integrated into a frame of reference against which new situations are evaluated -THIS FRAME OF REFERENCE INCLUDES: individuals beliefs, values, norms and assumptions -any amount of time in excess of 60 seconds will likely result in dissatisfaction with the hotel

1. users

-these are people in the firm who actually use the product -FOR EXAMPLE, front desk personnel will use a reservation system, waiters will use a point of sale system and meeting attendees will use hotel facilities

3. BUYERS

-these individuals have the formal authority and responsibility for making the purchase decision -FOR EXAMPLE, an employee at the corporate office for a hotel or restaurant chain will purchase reservation systems or point of sale systems, and a meeting planner will sign a contract for hotel facilities

SAFETY NEEDS

-these second-level needs include: personal security and protection from physical harm. -the movement toward greater security and safety within the hotel industry has addressed these needs -electronic door locks, increasing lighting, outside entrances that are locked after dark and more sophisticated fire detection devices are all designed to meet safety needs

Marketing managers in other industries have long recognized this cognitive process and have:

-used it to their advantage in advertising and promoting their products/services -rather than simply discussing their products or services as they existed in a vacuum, firms make direct comparisons with the competition -THIS assists the consumers cognitive process of evaluating alternatives

ESTEEM NEEDS

-when consumers feel accepted, they seek to enhance their self esteem -hospitality and tourism companies cater to these individuals by providing a higher level of personal service

Attitude relative to roles:

-within each of the roles that we play are attitudes and knowledge that we gain about the setting -ATTITUDES ARE DEFINED AS: consistently favorable or unfavorable evaluations of objects or situations -KNOWLEDGE IS DEFINED AS: facts that we gain about objects or situations. Attitudes are directly tied to a consumers needs. -These needs, which are the cause for all consumer behavior, are linked to an individuals attitudes and knowledge

Several types of risk are associated with the purchase of a product or service:

1. FINANCIAL RISK- the monetary loss that would result from a wrong decision 2. PERFORMANCE RISK- the chance that the product/service will not meet a consumers expectations 3. PHYSICAL RISK- any mental or physical harm that could occur 4. SOCIAL RISK- the possibility that the product will not meet the approval of one's peers FOR EXAMPLE, a cruise can be expensive, it carries a certain prestige and consumers have high expectations. ALSO, there have been instances in which passengers have been harmed or even killed, as a result of fires, taking on water and terrorists

COMPARISON OF INFO SOURCES

1. INTERNAL (past experience) -EFFORT REQUIRED: low -CREDIBILITY: HIGH EXTERNAL PERSONAL (FRIENDS/FAMILY) -EFFORT REQUIRED: low Credibility- HIGH MARKETING (Advertising, promotions, salespeople) -EFFORT REQUIRED: high -CREDIBILITY-low PUBLIC (consumer info, internet) -EFFORT REQUIRED: high -CREDIBILITY: HIGH

Psychologist David McClelland identified THREE SOCIAL MOTIVES:

1. achievement 2. affiliation 3. power ACHIEVEMENT CAUSES AN INDIVIDUAL TO: work harder to reach a goal AFFILIATION CAUSES INDIVIDUALS TO: belong to groups/to seek the approval of others -each person has the need to belong/ be accepted -McClelland identified individuals need for power: individuals want to feel that they have some control over their immediate environment

The study of consumer behavior is based in TWO FUNDAMENTAL IDEAS:

1. consumer behavior is rational and predictable 2. marketers can influence this behavior FOR EXAMPLE: in recent years many consumers have demonstrated an increasing emphasis on healthier diets -this concern has led them to request-even, in come cases, demand- menu choices that are healthier. Restaurants have responded by providing menu choices that are lower in fat/salt and adding more fresh fruits, vegetables and grains -the products/services made available to consumers must respond to the changing needs o the target market segment -contrary to what some may think, the behavior of consumers is not irrational/random. Consumer behavior that appears to be irrational to the outside observer is very rational to the individual making the purchase decisions. As noted, restaurants are increasing the number of healthier menu choices b/c restaurant guests were demanding the. At the same time, the sale of desserts/other sweets has also increased

External influences on consumer behavior include:

1. culture 2. socioeconomic level 3. reference groups 4.household

EXAMPLE CHARACTERISTICS OF ORGANIZATIONAL BUYING

1. larger volume purchases 2. derived demand 3. more emphasis on specifications and service 4. professional buyers and more negotiation 5. repeat business' 6. multiple buyers

In the mid 1990s, Abraham Maslow, an American psychologist, developed:

A MODEL IDENTIFYING FIVE CLASSES OF NEEDS: today, the model remains one of the influential cornerstones of consumer behavior MASLOWS HIERARCHY OF NEEDS IS ARRANGED IN THE FOLLOWING ORDER: FROM LOWEST TO HIGHEST -psychological needs -safety needs -social and belonging needs -esteem needs -self-actualization needs -INDIVIDUALS ARE BELIEVED TO SATISFY THE LOWER-LEVEL NEEDS BEFORE THEY MOVE TO HIGHER-LEVEL NEEDS!!!!

evaluation of alternative hotels table 3.2 B

COMPENSATORY STRATEGY- highest average score CONJUNCTIVE STRATEGY- all scores above minimum threshold of 3.0 for all attributes DISJUNCTIVE STRATEGY- highest score on most important attribute (PRICE) LEXICOGRAPHIC- highest score starting with most important attribute (PRICE)

1. CULTURE

DEFINED AS: the patterns of behavior and social relations that characterize a society/separate it from others -it conveys values, ideals and attitudes that help individuals communicate with with each other and evaluate situations -it's important in viewing culture to draw legitimate generalizations about a given culture or subculture without resorting to stereotyping -an individuals culture provides a frame of reference concerning acceptable behaviors, and as such, culture is a learned set of arbitrary values -THE DOMINANT CULTURE IN THE US TODAY STRESSES: equality, use of resources, materialism, individualism and youth

noncompensatory strategies

DEFINTION- consumer decision making strategies that place an emphasis on examining attributes independently without allowing trade-offs -when using noncompensatory strategies, consumers do NOT allow product strengths in one area to compensate for deficiencies or weaknesses in another area -INSTEAD, consumers place more emphasis on individual attributes and in some cases develop minimum thresholds to use in evaluating products/services -there are THREE MAIN NONCOMPENSATORY STRATEGIES that are used by consumers: 1. conjunctive 2. disjunctive 3. lexicographic

Compensatory strategies:

DEFINTION: consumers use products strengths in one or more areas to compensate for deficiencies in other areas - IN OTHER WORDS, CONSUMERS VIEW PRODUCTS and services as bundles or attributes -the set of alternatives that a consumer is considering for purchase will contain products or services that have various combinations of these attributes and their levels - this multiattribute approach assumes that consumers are capable of evaluating each of a products attributes and then arriving at an overall assessment, or score, for the product that can be compared to alternative products -it is believed that consumers make these complicated comparisons and trade-offs and then choose the product that achieves the highest rating

This process of influencing the innovators and early adopters is called:

DIFFUSION AND ADOPTION -the key is to get the consumers who are most likely to try new products/services to make a TRIAL PURCHASE- that is, to fine at the restaurant, stay in the hotel, rent a car or purchase a flight -if they are satisfied with the products/services received, they will then help spread the positive word to others, and the number of customers will increase over time -how quickly consumers adopt a new product DEPENDS ON THE: actual need for the product and the risk associated with the product's purchase

Why should you study consumer behavior?

FIRST, knowledge of consumer behavior is important because managers in the hospitality industry come into direct contact with many consumers on a daily basis -one of the primary goals for each of these managers is to: create/maintain satisfied consumers -without a working knowledge of their wants and needs, it will be much more difficult to satisfy them -keep in mind that the fundamental reason for being in business is to create and satisfy consumers SECOND: if a company is to grow/prosper, management must anticipate the wants and needs of consumers -FOR EXAMPLE: if a hospitality company is considering whether to build a new hotel, appropriate personnel must anticipate a particular location's demand for hotel rooms, meeting space and food/beverage services -in doing so, they are likely to project demand for several years into the future -ONE OF THE WAYS TO HELP MAKE A BETTER DECISION IN THIS CASE IS TO: understand more thoroughly the current/future behavior of consumers

The internet is a successful tool for firms to reach various socioeconomic groups

FOR EXAMPLE: online travel agents are able to reach price-sensitive consumers who tend to have relatively lower incomes than most frequent travelers -these consumers use websites such as: expedia.com and travelocity.com to find good deals/bargain prices for flights, hotels, rental carts and tourist attractions -hotels also have their own websites that are used to reach frequent travelers who accumulate points and redeem them for free hotel rooms/vacation packages

CONSUMER ADOPTION PROCESS percentages

INNOVATORS- 2.5 % EARLY ADOPTERS- 13.5 % EARLY MAJORITY- 34.0 % LATE MAJORITY- 34 % LAGGARDS- 16 %

Organizational buyer behavior

ORGANIZATION BUYING DEFINITION- the process organizations follow to acquire the goods/services they use to produce/deliver their own products/services Purchase decisions differ between organizations and individual buyers, but both types of buyers are trying to satisfy their particular needs

Hospitality managers often strive to create their own:

REFERENCE GROUPS AND OPINION LEADERS -Frequent guests can be rewarded with complimentary samples of new menu items or complimentary flavored coffee/champagne -creates excitement and is very likely to increase sales, as individuals sitting at other table want to become part of the excitement/often order a bottle for their own table -the desired result is: A SNOWBALL EFFECT among tables, which results in increased sales -frequent guests can also be used for feedback about potential new menu items/new services -if they are favorably impressed w/ the new products/services, they will tell friends/colleagues/ increased business can result

Understanding the behavior of hospitality and tourism consumers is:

THE MOST IMPORTANT CHALLENGES FACING MANAGEMENT - Equally critical is the importance of managers to: pay close attention to consumer needs so that they will be ready to change elements of the marketing mix when consumer preferences, wants or needs change

A hospitality manager can also influence consumer behavior through:

THE USE OF OPINION leaders OPINION LEADERS INCLUDE: formal/informal leaders of reference groups, and their opinions normally influence opinion formation in others -common opinion leaders are: leaders within the community such as: doctors, lawyers and politicians, and those who are viewed as subject matter experts -the survival of restaurants in competitive markets is greatly influenced by: critics and favorable review as necessity

One of the most perplexing problems confronting hospitality managers is to:

Understand why hospitality consumers behave as they do

CHAPTER 3

Understanding the behavior of hospitality consumers