Chapter 6: Understand Consumers and Business Markets

Personality trait theories basic assumptions

(1) each person has a set of consistent, enduring personal characteristics, and (2) those characteristics can be measured to identify differences between individuals.

Situational Factors

-Physical Surroundings -Personal circumstances -Time

Internal drivers

Basic human needs such as hunger and security. Someone is hungry (real state) and wants to eat (preferred state). This will lead to a number of choices: eat at home, dine out, or go to the grocery store.

Aspirational purchases

By offering special financing terms, individuals with lower income levels now drive a BMW, Mercedes-Benz, or Audi. This enables people to drive a car they normally could not afford, an aspirational purchase.

Positive nonverbal communication

Eye contact Smiling Steady breathing Tone of voice Moving closer to the person

multiattribute attitude model

Model that evaluates the object on several important attributes.

Internal Forces (Personal Characteristics)

Most difficult to understand as they vary by individual, change overtime, affect decisions in a complex way that are difficult to know

Internal Forces Affecting Consumer Choices (Psychological Attributes)

Motivation Attitude Perception Learning Personality

Model of consumer decision process

a complex interaction of internal (personal and psychological characteristics) and external (cultural, situational, and social stimuli) forces that, joined with a company's marketing activities and environmental forces, affect the purchase decision process.

Social Class

a group of people with similar backgrounds, incomes, and ways of living

When there is a discrepancy in the two states

a problem is created and the consumer decision-making process begins.

Personality definition

a set of unique personal qualities that produce distinctive responses across similar situations.

operant conditioning

a type of learning in which behavior is strengthened if followed by a reinforcer or diminished if followed by a punisher

classical conditioning

a type of learning in which one learns to link two or more stimuli and anticipate events

Gender roles definition

behaviors regarded as proper for men and women in a particular society

Types of Conditioning

classical and operant

nonverbal communication

communicating through facial expressions, eye behavior, gestures, posture, and any other body language.

Model of the Consumer Decision Process (external factors)

cultural, situational, and social stimuli

External factors shape consumer choices

cultural, situational, and social.

personality traits

extroversion, instability, agreeableness, openness to new experiences, and conscientiousness. These core traits then lead to outward characteristics, which are what people notice

Personal circumstances

factors outside of one's control. While it is not possible for marketers to control personal circumstances, it is important to understand how personal situations influence the choice process.

Social Factors

family, household life cycle (HLC), social class, reference groups, opinion leaders and market mavens

Learning definition

long-term memory or behavior. Learning occurs when information is processed and added to long-term memory.

Preferred state

people desires that reflect how they would like to feel or live in the present time.

Selective Retention definition

the process of placing in one's memory only those stimuli that support existing beliefs and attitudes about a product or brand.

subliminal stimuli on perception definition

the registration of sensory input without conscious awareness

Family definition

Group of genera that share many characteristics

Reference Groups

A group of individuals whose beliefs, attitudes, and behavior influence (positively or negatively) the beliefs, attitudes, and behavior of an individual.

Subculture

A group of people with shared value systems based on common life experiences and situations. subcultures are also different from each other like African-Americans or Asian-Americans. for example, USA, L'Oréal, cosmetics company

Model of the Consumer Decision Process

1. problem opportunity recognition 2. information search 3. evaluation of alternatives 4. product choice decision 5. post-purchase assessment

Minimal information search example

A couple notices the low-fuel light comes on as they are driving home from a party. The driver recalls their "local" station is on the way home and, without any additional information, stops at the station and fills up the car.

Attitude definition

A person's consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea

Lifestyle definition

A person's pattern of living as expressed in his or her activities, interests, and opinions

primary group

A reference group an individual has frequent contact with.

secondary group

A reference group with which an individual has limited contact.

household life cycle (HLC)

A structured set of chronological activities a particular household follows over time.

Culture definition

A system of values, beliefs, and morals shared by a particular group of people that permeates over time.

cognitive learning

Active learning that involves mental processes that acquire information to work through problems and manage life situations.

Internal Forces Affecting Consumer Choices (Personal Characteristics)

Age Education Occupation Income Lifestyle Gender

Language

An established system of ideas and phonetics shared by members of a particular culture that serves as their primary communication tool. It is important to understand the language, making sure that words understand correctly. example, Dogpile, a US-based meta search engine.

Life Cycle Stage (Age)

As individuals age, their lives change dramatically, and as a result, their purchase patterns changes too. Marketers realize that changes in life stage transform an individual's buying habits and this is referred as the "Family life cycle".

Motivation

At any given time people experience many different needs. When need reaches a particular strength or intensity, it becomes a motive that drives behavior. People prioritize needs, making sure that stronger, more urgent needs get met first.

Approaches to Learning

Conditioning and Cognitive learning

Core of marketing

Delivering value to the customer through accurate and timely understanding

Reference group characteristics

Desirability, and degree of affiliation.

Environmental forces affect consumer decision process

Economic, technological, political

family

Families are the single most important buying group, and they influence the consumer choice process in two ways. First, the family unit is the most influential teacher of cultural values. Second, children learn consumer behavior from their parents. As adults and later parents, they model the behavior first learned as a child.

Key points from attitude definition

First, attitudes are learned or influenced by new information. Second, attitudes are favorable or unfavorable, positive or negative

Personal Characteristics

First, comparing demographic data such as age and income to competitor data enables assessing to target markets match up with those of competitors. Second, personal characteristics like age, income, and education play a critical role in consumer decision making, affecting information search, possible product choices, and the product decision itself. Demographics are also an important tool in market segmentation

Marketers need to understand problem recognition for several reasons

First, it is essential to learn about the problems and needs of the target market to create value-added products. Second, key elements of an effective marketing strategy, particularly communication, are predicated on a good knowledge of problem recognition triggers.

Marketers need to be aware of culture for two reasons

First, learning a target market's culture is essential to an effective marketing strategy. Second, failing to understand cultural norms has a significant negative effect on product acceptance.

External factors

Forces external to the consumer also have a direct and profound effect on consumer decision process. Three wide-ranging external factors that have the most significant impact on consumer choices are: Cultural, situational, social.

Social Class

From a marketing perspective, the impact of social status on consumption behavior is profound, affecting everything from the media people choose to view (lower classes watch more TV while upper classes tend to read more) to the products they buy (lower classes tend to buy more generics while the upper classes select more branded products).

External drivers

Happen as people interact with the world. Some of these triggers result from a company's marketing efforts, but most arise when an individual experiences something that creates a desire, like seeing a friend driving a new car or hearing about a good new restaurant.

selective retention

Implies storing in memory stimuli that support existing beliefs and attitude

Gender roles

In general, women have been adding new roles as they move into the workforce and positions of political power. Differences in women's roles have created vastly different market segments. Marketing managers understand that men and women vary not only in the products they require but also in the marketing communications they are receptive to. In addition, the message itself varies by gender, with men preferring a "self-help" message and women responding to a "help others" communication. All this suggests that gender roles are a critical personal characteristic affecting consumer choices.

Perception

In marketing, perception of a product is even more important than the reality of that product because, in a very real sense, an individual's perception is his or her reality. Perception drives attitudes, beliefs, motivation, and, eventually, behavior. Since each individual's perception is unique, everyone's perceptual response to a given reality will vary.

market mavens

Individuals who have information about many kinds of products, places to shop, and other facets of markets, and initiate discussions with consumers and respond to requests from consumers for market information.

opinion leaders

Individuals with expertise in certain products or technologies who classify, explain, and then bestow information to a broader audience.

The discrepancy is created by

Internal or External drivers.

Motivation definition

It is the force by which powerful unmet needs, or motives, energize someone to action.

Personality effects

Knowing the personality tendencies of a target audience can help marketers develop specific product features, such as chat options in many applications that allow people to engage with others who have similar interests.

Three factors of culture

Language, cultural values, nonverbal communication

Personality

Many theories of personality have been developed, but marketers tend to focus on personality trait theories because they offer the greatest insights on consumers.

Learning

Marketers can therefore affect learning by providing information using a message, format, and delivery that will encourage customers to retain the information in memory.

life style

Marketers seek to match their products and services with the consumer's lifestyle. By choosing particular activities, developing unique interests, and holding on to specific opinions, an individual identifies what is really important.

long-term memory

Marketing managers are particularly interested in understanding an individual's long-term memory recall about their brand. Selective retention tends to reinforce existing attitudes and creates a real challenge for marketers trying to overcome negative beliefs and attitudes since people are less likely to be aware of or retain information to the contrary

Search for information stage

Once a problem is recognized and action is required, people seek information to facilitate the best decision. The search for information is not categorical; rather, it operates on a continuum from limited to extensive.

occupation

People are influenced by their work environment. People who work together tend to buy and wear similar clothes, shop at the same stores, as a result, marketers identify target groups based on an individual's position in an organization. marketers also target specific occupations. For example, blue collar workers vs executives.

Real state

People live in the perceived reality of present time.

opinion leaders

People seek out opinion leaders for a variety of reasons, including unfamiliarity with a product, reassurance about a product selection before purchasing, and anxiety resulting from high involvement with the purchase of a particular product. Anyone whose opinions are valued by the individual can be an opinion leader.

Cultural values

Principles shared by a society that assert positive ideals. Consider the value of limited versus extended family: in USA, the obligation and commitment to family are often limited to an individual's immediate family, while most Latin American cultures have more wide-ranging definition of family.

Problem Recognition Stage

Problems or needs are the result of differences between a person's real and preferred states. Every purchase decision made by an individual is initiated by a problem or need that drives the consumer decision-making process.

Aspirational purchases definition

Products bought outside the individual's social standing.

Situational Factors characteristics

Situational factors are time-sensitive and interact with both internal and external factors to affect change in the consumer. Because they are situational, they are difficult, if not impossible, for the marketer to control. However, it is possible to mitigate their effects with a good marketing strategy

Negative nonverbal communication

Swaying Stuttering Hands in pockets Fidgeting Looking at watch or clock

Perception definition

System to select, organize, and interpret information to create a useful, informed picture of the world.

degree of affiliation

The amount of interpersonal contact an individual has with the reference group

family life cycle

The changes in life stage that transform an individual's buying habits

Psychological Attributes

The consumer decision process involves a number of psychological forces that profoundly affect the consumer choice process. These forces drive the need, shape the content and format of information stored in memory, and have an effect on point of view about products and brands.

Conditioning

The creation of a psychological association between two stimuli.

When the conflict between real and preferred states reaches a certain level

The decision-making process begins.

desirability

The extent and direction of the emotional connection an individual wishes to have with a particular group

When the two states are in balance

The individual does not require anything and no purchase occurs.

selective distortion

The issue for marketers is that selective distortion can work for or against a product. If an individual has a positive belief about a powerful brand or product, information that is ambiguous or neutral will likely be interpreted positively. Even negative data can be adjusted to align with an individual's existing beliefs.

Selective Distortion definition

The process in which an individual can misunderstand information or make it fit existing beliefs.

subliminal stimuli on perception

These stimuli are termed subliminal, and many critics of advertising suggest the stimuli can affect consumer behaviour. Despite many claims to the contrary, however, research has uncovered no evidence that a subliminal message, whether sent deliberately or accidentally, has any effect on product attitudes or choice behaviour.

nonverbal communication focuses

Time and Personal space. The perception of time varies across cultures. Americans and Western Europeans place a high value on time and view it in discrete blocks of hours, days, and weeks. Latin Americans and Asians, on the other hand, view time as much more flexible and less discrete. How does this affect marketing? Salespeople who have been trained in an American sales environment are often frustrated to find their Asian and Latin American customers less concerned about specific meeting times and more concerned about spending time building a personal relationship.

Time

Time is a critical situational factor that affects individuals throughout the consumer choice process. An emerging consumer trend in many industrialized countries is the willingness to trade time for money.

Developing effective marketing strategy

Understanding the behavior of a target market

Marketing activities affect consumer decision process

Value proposition, distribution, marketing communications

Minimal information search

When a consumer makes a purchase decision based on very little information or investigation.

Despite internal or external stimuli

people do not respond to every gap between a real and preferred state. Sometimes the disparity is not sufficient to drive the person to action. A person may want a new car but does not act on that feeling because he or she lacks the financial resources or simply cannot justify the purchase.

Attitude

people's beliefs/values impact their purchase decisions, marketing managers try to learn about those beliefs/values. They do that by having customers check off rating scales that evaluate a product's performance on a list of attributes

Model of the Consumer Decision Process (internal factors)

personal and psychological characteristics

physical surroundings

retailers devote a lot of time and resources to creating the right physical surrounding to maximize the customer's shopping experience. They know people respond differently to changes in colour, lighting, or location of the product within the store; indeed, almost every element of the customer's experience is considered important in the consumer choice process.

selective awareness

selective awareness help customers focus on what is relevant and eliminate what is not. The challenge for marketers is breaking through people's decision rules, which are designed to reject the vast majority of stimuli they see every day.

Perception psychological tools

selective awareness, selective distortion, and selective retention.

selective awareness definition

the focusing of conscious awareness on a particular stimulus