GS MKT 306 CH 4 - Consumer Behavior

Another key difference is in family orientation. For example, the

needs or interests of a consumer's family have a greater impact on consumer behavior in China than in the U.S. and Europe.

Unplanned purchases are

purchases made in a retail outlet that are different from those the consumer planned prior to entering the store. • Reminder Purchases • Impulse Purchases

situational influences : time

Consumers value their time greatly, and time considerations often affect what consumers buy. Time can also affect what a consumer pays for a good or service. Consumers are often willing to pay more for products if the placement of those products saves them time. For example, a consumer may realize that soft drinks, potato chips, and bread are significantly more expensive at a local gas station than at a supermarket. Yet he or she may be willing to pay a premium for the time savings of parking close, shopping in a smaller store, and checking out quickly.

A subculture is a

a segment of a larger culture whose members share distinguishing values and patterns of behavior.

Consumer Decision Making Process : Information Search : Sources of Information (Cont)

According to a recent survey, more than 80 percent of shoppers research products online before purchasing. Further, 60 percent begin their research on a search engine before going to a specific e-commerce website. Search-engine marketing is a form of Internet marketing that promotes websites by increasing their visibility in search-engine results pages.

Buying Center Roles : Initiator

is the individual who first suggests making the purchase.

System 2 thinking

Reflective thinking that is slow, deliberate, and conscious. Often less charged with emotions. effortful, slow, and controlled way of thinking. It allocates attention to the effortful mental activities that demand it, including complex computations. has the task of monitoring, and if necessary, overriding decisions made by System 1. Yet System 2 tends to be a "lazy" controller; energy is required to engage it. Once activated, however, it has the ability to filter the sometimes-faulty instincts of System 1 Examples of activities associated with System 2 processing include: • Calculating the answer to 17 × 24. • Focusing on the voice of a particular person in a crowded, noisy room. • Maintaining a faster than normal walking pace. • Parking in a narrow space. • Checking the validity of a complex logical argument.

Types of business customers : Reseller Markets

Resellers include retailers and wholesalers that buy finished goods and resell them for a profit. A retailer is any organization that sells directly to end-user consumers, like you. Wholesaling is the sale of goods to retailers, to industrial, commercial, institutional, or other professional business users, or to other wholesalers.

Consumer Decision Making Process : Outlet Selection and Purchase

Selecting a retail outlet involves comparing options based on a consumer's evaluative criteria. Commonly considered factors include: store location or convenience, price, merchandise quality and selection, service levels, attractiveness of physical facilities (or website), shopping atmosphere, return policies, marketing promotions, and retailer reputation.

North American Industry Classification System (NAICS) (cont)

Since each member country uses a common criteria in categorizing businesses, NAICS is a valued tool that helps marketers assess business markets and select attractive target market segments. The first two numbers in the code represent the two-digit sector designation—manufacturing, for example. The third digit reflects the subsector, the fourth digit reflects the industry group, and the fifth digit represents the industry. The first five digits of the NAICS codes are fixed among the members of NAFTA. The sixth digit can vary among NAFTA countries.

Thinking, Fast and Slow In his book Thinking, Fast and Slow, Nobel Prize winner Daniel Kahneman metaphorically describes the emotional and cognitive modes of thought as

System 1 and System 2.

A wholesaler is

a company that buys large quantities of products from manufacturers and then sells those products to retailers. Wholesalers frequently purchase a large quantity of a good (e.g., hamburger meat) at a low cost and then sell off smaller quantities of the good (e.g., hamburger meat packaged for an individual family) at a higher per-unit price.

Culture is the

broad set of knowledge, beliefs, laws, morals, customs, and any other capabilities or habits acquired by humans as members of society.

Buying Center Roles : User

are members of the organization who will actually end up using the product.

Cognitive dissonance is sometimes referred to as

buyer's remorse or buyer's regret. It often arises when consumers begin to wonder if they made the right purchase decision. Feelings of cognitive dissonance following a purchase can arise for numerous reasons. Perhaps you discover that the gas mileage of the car you just bought isn't as good as you'd expected. Or you find out a member of your extended family bought the same car for a lower price. Or you hear a friend talking about how much she enjoys another make of car.

Derived demand is

demand for one product that occurs because of demand for a related product. Businesses buy goods and services in order to produce goods and services to sell to consumers. Thus, we say that the need for business goods is derived from demand for consumer goods.

It is possible for you to be part of several different subcultures, each of which influences a different aspect of your lifestyle. For instance,

food preferences may be strongly influenced by your ethnic subculture; your taste in music and clothing may be more closely defined by your generation subculture. Identifying the subculture, if any, to which a specific product will appeal is a key task for marketing managers.

Individuals who exert an unequal amount of influence on the decisions of others because they are considered knowledgeable about particular products are

opinion leaders. Opinion leadership ranges from Stephen Curry endorsing a pair of Under Armour shoes to Rachael Ray promoting a specific type of cooking utensil.

Social media have fueled the

opinion-leader trend, enabling everyday people to become powerful sources of influence. For example, Ree Drummond, known as The Pioneer Woman, blogs about her life on a cattle ranch with her husband and four children. As one of the 10 most popular female bloggers in the United States, she influences her readers' buying decisions on a variety of topics, including food purchases and preparation.

A social network is a set of

social actors (such as individuals or organizations) along with the set of ties between each pair of actors. By studying the properties of the social networks within which each of us interacts, scientists—and marketers—are gaining new understanding of the social roots underlying our behavior.

consumer behavior

social science the study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs. Consumer behavior also entails study of the impact these processes have on the consumer and society.

Marketers are trying to tap into the power of social media opinion leaders through perks and other benefits. For example, credit card companies offer

special rewards to customers they deem to be possible opinion leaders; airlines, too, give opinion leaders free flights in an effort to encourage them to use their influence on behalf of the company's products.

Consumer Decision Making Process

1. need / problem recognition 2. information search 3. evaluation of alternatives 4. purchase 5. post purchase behavior

Every second, billions of people across the world make decisions. By some estimates, the average U.S. adult makes as many as

35,000 remotely conscious decisions each day.1 In fact, the average American makes approximately 227 choices each day on food alone.

However, today it is widely accepted that at least

95 percent of all cognition occurs below the level of conscious awareness.6 As part of this realization, many scientists now view emotions as being closely interwoven in reasoning processes. Behavioral economist George Loewenstein, who uses brain-scanning tools to study decision making, suggests that much of what happens in the brain is dominated by fairly automatic processes. Rather than guiding or controlling behavior, he suggests, consciousness seems mainly to make sense of behavior after it has executed.

norms

Culture supplies boundaries within which most individuals think and act. They are formal or informal societal rules that specify or prohibit certain behaviors in specific situations. Violations of cultural norms can results in sanctions, or penalties, by other members of society. These sanctions range from mild social disapproval to banishment from the group.

Psychological processes : Motivation : Esteem

Esteem is the need all humans have to be respected by others and by themselves. Maslow described two kinds of esteem needs: • lower Lower esteem needs include the need for the respect of others, status, recognition, fame, prestige, and attention. Lexus commercials often focus on all of the neighbors admiring the new Lexus. • higher Higher esteem needs include the need for self-respect, strength, competence, mastery, self-confidence, independence, and freedom. For example, makers of foreign language education software market their products as a way for consumers to fulfill a lifelong dream of speaking another language.

Lowering prices, even temporarily, can

permanently change buyers' brand perceptions and their price expectations in the future. Lowering prices to attract new customers also has the potential to negatively affect the level of a company's customer satisfaction and retention, as well as the profits derived from its existing client base.

Buying Center Roles : Gatekeepers

regulate the flow of information and access to other members of the buying center. Purchasing agents derive much of their power within the buying center through the gatekeeping role.

These diverse buying situations pose unique challenges for institutional marketers. They must

develop flexible, customized solutions that meet the specific needs of differently sized organizations. Educating institutional customers about how specific goods and services can make their organizations more efficient or effective is a firm's best tool for selling products in this type of B2B market.

Derived demand also provides an important reason to

develop mutually beneficial relationships with B2B partners. Understanding the impact of your prices on end-user demand would play a major role in determining whether to raise prices for the university. Marketers must take a strategic view of business-to-business relationships and understand the potential impact of their actions on derived demand.

Internal stimuli are experienced

directly. For example, imagine studying for an exam, but you are finding it hard to concentrate due to a grumbling stomach. You would rather not feel hungry, so you think about taking a snack break at the student union.

The family life cycle describes the

distinct family-related phases that an individual progresses through over the course of his or her life. Figure 4.3 illustrates six stages that an individual might go through as part of the family life cycle: (1) unmarried, (2) married with no kids, (3) married with small children or tweens, (4) married with teens, (5) married without dependent children, and (6) unmarried survivor.

Personality is the set of

distinctive characteristics that lead an individual to respond in a consistent way to certain situations. Personality strongly influences a consumer's decision to purchase products. For example, driving a Toyota Prius might demonstrate a consumer's passion for the environment. Buying a Ford F-150 truck might represent an individual's commitment to hard work.

A membership reference group is the

group to which a consumer actually belongs. Membership groups could include school clubs, fraternities and sororities, and the workplace.

Be aware that in some instances, the buying process can be drawn out. In such cases, the influence of buying center members may

grow or decrease over time. For instance, senior executives may drop out during the middle stages, only to re-emerge later to oversee the deal closing.

Using affective choice, consumers make a choice based on

how they think the product will them make them feel. Affective choice relies on the immediate emotional response to the offering, based on a "How do I feel about it?" decision rule.

Children's Influence on Family Purchases In the middle stages of the family life cycle, children often greatly

influence family purchases, particularly in food-related sectors. Marketers at McDonald's, Sonic, and Burger King spend a significant amount of money advertising to young consumers and giving away toys and books with their kids' meals.

Selective distortion is the tendency to

interpret information in a way that fits our preconceptions. Consumers often distort new information to be consistent with prior brand and product beliefs.

B2B buying situations : New Buy

involves a business customer purchasing a product for the very first time. For example, let's say that Dell is looking to market its personal computers to a college that has not previously bought from the company. Since the college has little or no experience with Dell, its decision process will likely be extensive; it may require a significant amount of information and negotiation.

For example, the potential demand for pizza is almost unlimited in the United States. However, the demand for large-sized pizza ovens is confined to medium and large pizza establishments;

many of these belong to major national chains like Pizza Hut and Little Caesars. Because there are only a few buyers for the large-sized ovens, a bad relationship with Pizza Hut might cost a pizza oven maker its entire annual profit, or even its future. In contrast, a bad relationship with an individual pizza consumer might cost the local Pizza Hut only $20 per week. Thus, B2B marketers feel pressure to offer high-quality products to their business customers and maintain good relationships with them.

Business-to-business (B2B) marketing consists of

marketing to organizations that acquire goods and services in the production of other goods and services that are then sold or supplied to others. For example, American Tower builds cell phone towers that it sells to businesses like AT&T and Sprint, to help those businesses provide service to consumers like you. In fact, more dollars now change hands in sales to business buyers than in sales to end-consumers.

Each stage affects consumer behavior in different ways, and thus affects a firm's marketing strategy. Imagine two 30-year-old best friends. Both grew up in the same town, went to the same university, graduated with the same degree, attend the same church, and now live next door to each other. Based on those similarities, a marketer might

mistakenly assume that their purchase behaviors are very similar. However, one is an unmarried pharmaceutical executive who travels 200 days a year for business. The other is a married, stay-at-home mom with two small children. Despite their similarities, family life cycle differences place these two individuals into very different groups for marketers. The products they buy and the marketing strategies most likely to appeal to them are very different.

Selective retention relates to the human tendency to

more easily recall information that is consistent with their feeling and beliefs. Because of selective retention, we are likely to remember good points about products we like and forget good points about competing brands

Modified rebuys provide marketers with both positive and

negative feedback. By wanting to buy from Dell again, the college signals that it is pleased with at least certain parts of its purchase experience. However, modified rebuys can also be negative if the college asks Dell to reduce its price or modify design characteristics to a point where the agreement no longer earns Dell a profit.

The difference between low-involvement and high-involvement products is

not always absolute. It depends on the priorities of the individual consumer. If marketers can effectively remove doubts about the efficacy of the product, they can transition certain high-involvement products to low-involvement products for satisfied consumers.

Another major advantage of a straight rebuy is that the customer typically does

not look for competing bids from other companies. In addition, Dell marketers might also look for ways to make ordering additional PCs easier: Dell might initiate simple online or automated reordering systems through which the college can order new computers without delays or hassle.

B2B buying situations : Straight Rebuy

occurs when a business customer signals its satisfaction by agreeing to purchase the same product at the same price. B2B marketers prefer the straight rebuy outcome to any other.

Consumer Decision Making Process : Problem Recognition

occurs when consumers recognize a gap between their current situation and a desired end-state. The recognized gap must be sufficient to arouse the individual to action to resolve it. The level of a consumer's desire to resolve a particular problem depends on two factors: • The magnitude of the discrepancy between the desired and actual states. • The relative importance of the problem.

B2B buying situations : Modified Rebuy

occurs when the customer's needs change slightly or the customer is not completely satisfied with the product it purchased.

Marketers do various things to reduce buyer's remorse. For example, a car company might

offer an extended warranty or a toll-free number for you to call with any issues about your new car. It might enhance your early experience with your new car by offering free trials of features like the OnStar system or SiriusXM satellite radio. These additional free features typically extend through the first 6 to 12 months after your new car purchase, the time during which consumers are most likely to experience cognitive dissonance. By making consumers feel better about their car purchase, marketers increase the likelihood that those consumers will provide positive external information about the car to other people and ultimately consider returning for their next purchase.

By placing products in a more convenient location, marketers can

often increase their profits on individual items while still providing great value to their customers.

External stimuli arise from an

outside source, such as a distinctive ringtone, the innovative package design of the tablet you have been eyeing, or an online review about that new tapas restaurant you've heard about.

Marketers can capitalize on consumer learning by designing marketing strategies that promote

reinforcement. Bounty has promoted its paper towels for more than 40 years using the slogan "the quicker picker upper." Through repetition in promotion, the company wants to influence consumer learning by associating the Bounty product with the idea of cleaning up spills quickly.

The complex process involved in selling to governments has made some marketers, especially in small businesses,

reluctant to bid on government business. Of the 20 million small businesses in the U.S., only about 500,000 have completed the documentation necessary to be eligible to sell to the federal government.53 However, smart marketers and organizations have found government markets highly lucrative.

Traditionally, wholesalers were physically closer to the markets they supplied than the source from which they got the products. However,

technology advances in developing nations have increased the number of wholesalers located near manufacturing bases in, among other places, China, Taiwan, and Southeast Asia.

The rapid growth of mobile payment systems reduces

the "pain of paying" even further. Mobile payment, also referred to as digital wallets, refers broadly to payment services performed from or via a mobile device, and operated under financial regulation.

Marketers who make it as easy as possible for customers to do business with their firm increase

the likelihood that the customers will perceive value and develop loyalty.

The size and makeup of the buying center will depend upon

the magnitude, complexity, and importance of the purchase decision. As the level of each increases, the buying center will involve more personnel from a wider variety of functional areas and organizational levels

For consumers to make purchase decisions, they must engage in certain psychological processes. Psychological processes are

the underlying psychological mechanisms that can influence consumer behavior. They include • perception, • motivation, • attitudes, and • learning. These processes, combined with personal and situational influences, ultimately result in consumer decisions and purchases.

Attitude-based choice is a selection process that involves

the use of general attitudes and summary impressions. For instance, many Mac users were favorably inclined to purchase the original iPhone when it came out because they already held such positive attitudes toward other Apple products.

situational influences like

time and involvement that serve as an interface between consumers and their decision-making process.

But business buyers are human beings, too: B2B purchasers and purchasing processes are subject

to the same types of cultural, social, individual, psychological, and situational influences as B2C buying. Several factors, though, are unique to business markets, and we look at them in the sections that follow.

Lifestyle is a person's

typical way of life as expressed by his or her activities, interests, and opinions. Lifestyle characteristics are often easier for a firm to understand and measure than personality traits. Fashion and apparel makers, such as Patagonia and J. Crew, have long emphasized lifestyle in their branding efforts.

Opinion leaders are not just celebrities. Research suggests that

1 in 10 Americans has a disproportionate influence on the attitudes, beliefs, and behaviors of the other nine. However, the active lifestyles and eclectic media habits of opinion leaders make them hard to reach by marketers. Building affinity through cause-related marketing and community sponsorship is a more effective strategy to reach opinion leaders than traditional one-way marketing communications.

When they can't find the precise product they're looking for, consumers do one of five things:

1. Find a substitute of the same brand. 2. Substitute a different brand. 3. Delay their purchase until the item is back in stock at that particular store. 4. Decide not to buy the item at all. 5. Buy the item at another store, the worst option for the retailer.

Buying Center Roles

1. Initiator 2. Influencer 3. Decider 4. Buyer 5. User 6. Gatekeeper

Psychological processes : Learning

Almost all consumer behavior is learned. Learning refers to the modification of behavior that occurs over time due to experiences and other external stimuli. Consumer learning may or may not result from things marketers do, though marketers can influence consumer learning. By doing so, they affect consumer decisions and strengthen consumer relationships. Marketers must first understand the basic learning process: • Learning typically begins with a stimulus that encourages consumers to act to reduce a need or want. • The stimulus is followed by a response, which attempts to satisfy that need or want. • Reinforcement of the learning process occurs when the response reduces the need.

Types of business customers : Producers : original equipment manufacturer (OEM)

An OEM is a producer whose products are used as components or subsystems in another firm's products. An OEM will typically work very closely with the company that sells the finished product to customize designs based on that company's needs.

System 1 thinking

Automatic, fast, little or no effort, no sense of voluntary control automatic and nonconscious way of thinking. It is capable of making quick decisions based on very little information. Also, it is good at recognizing patterns, often answering questions based on resemblances and associations. System 1 is emotional; it is what leads us to go with our "gut" instinct. Examples of activities associated with System 1 processing include: Knowing the answer to 2 + 2. Completing the phrase "bread and ..." Detecting hostility in a voice. Driving a car on an empty road. Understanding a simple sentence

Caitlin Winey Sales Representative Forest Pharmaceuticals

For me, it was all about knowing the right people. My position had been open for six months, and my company just hadn't found the right person to fill the spot. My boss contacted my university's athletic director, looking for possible job candidates who were athletes and business majors. Apparently, my company likes to hire athletes because they know we are competitive, driven, coachable, and work well as a member of a team. What has been the most important thing in making you successful at your job? My positive attitude. This job can be very stressful. Your bosses are always checking your sales numbers. That, together with the reality of being told no multiple times a day, can definitely wear on a person. What advice would you give soon-to-be graduates? Network everywhere you go and make a conscious effort to make a good impression on everyone you meet. You never know who could be the key that opens the door for a potential job offer.

Psychological processes : Motivation : Physiological Needs

For the most part, physiological needs are the simple requirements for human survival. These form the base of Maslow's hierarchy. According to Maslow, a consumer who lacks food, safety, love, and esteem would consider food his or her greatest need, and would seek to fulfill that need before any of the others. Marketers of food, bottled water, and medicine are often focused on meeting the physiological needs of their target customers.

Family is of primary importance in the

Hispanic culture, for example. It therefore should be a central theme when developing targeted messages for Hispanic populations in the United States and throughout the world. In addition, the composition of families has changed greatly in recent decades to include more single parents and same-sex households. Such changes can affect consumer decisions in different ways important to marketers. The power of family as personal external information sources highlights why marketers must establish good relationships with all customers. It's impossible to predict how one consumer's experience might influence the buying decision and information of another potential customer.

Tracey Rogers Vice President and General Manager KAIT-TV

I must surround myself with people who are positive minded, can deliver what they promise, and want to win. Master and exceed customer service expectations no matter whom you are serving, your client or your coworker. If you want customers to come back, you have to provide excellent customer service every time. Customers will be loyal and even willing to pay more if they feel they are getting world-class service. At a television station, we have to be good marketers to be successful, but we also have to help our customers be good marketers. If our customers' marketing efforts succeed, that usually means that we are succeeding as well. Yes, absolutely. I have seen firsthand the positive impact opinion leaders have had on advertising. Athletes, actors, former elected officials, or simply well-respected people in the community seem to resonate with a wide audience. If matched well with the product being advertised, these opinion leaders can make viewers more likely to consider or buy a specific product. The key step is making sure the opinion leader fits the audience to which you want to sell the product. The simplest answer is that there are relatively few B2B buyers out there. Regardless of the size of market you are in, there is a finite number of firms that can be potential customers. We try very hard to make sure that each of our business customers receives great value from its relationship with KAIT.

Consumer Decision Making Process : Outlet Selection and Purchase (cont)

If transactions aren't crisp or if the checkout process is not clear at a glance, shoppers may feel frustrated and walk away. Many times they won't even enter a store if the line to pay looks long or chaotic. Brick-and-mortar retailers try to speed up checkout as much as possible: Some invest in self-service kiosks. Some cross-train floor employees to step in as cashiers if checkout lines are long. Some provide in-store delivery and pick-up for items consumers buy online. Streamlining checkout and payment is perhaps even more essential for online retailers. By some estimates, as much as 68 percent of all e-commerce shopping carts are abandoned before the purchase is complete. That percentage translates to over $4 trillion in lost retail sales each year.

Consumer Decision Making Process : Evaluating Alternatives

In this process, consumers use a set of evaluative criteria: the attributes they consider important about a certain product. The type of evaluative criteria a consumer uses in a decision varies from tangible features, like cost and performance, to intangible factors such as style, taste, feelings-generated, and brand image. Evaluative criteria can differ from consumer to consumer.

Some cultures emphasize and reward individual initiative.

Individualism is a defining characteristic of many Western cultures, such as the U.S., Australia, U.K, Canada, and Sweden.

Others value cooperation and group conformity.

Individuals in countries such as China, Korea, Mexico, India, and Russia tend to be more collective in their orientation.

North American Industry Classification System (NAICS)

It is an industry-classification system used by the members of the North American Free Trade Agreement (NAFTA) to Page 133generate comparable statistics for businesses and industries across the three countries. NAICS divides industrial activity into 20 sectors, from construction and retail to education services. Producers in the United States, Canada, and Mexico are categorized according to the North American Industry Classification System

B2B buying situations

Marketers can classify business-to-business buying situations into three general categories— • new buy, • straight rebuy, and • modified rebuy

Consumer Decision Making Process : Post-Purchase Evaluation

Marketers seeking to influence consumers' post-purchase evaluation often focus on reducing buyers' feelings of unease or remorse associated with the purchase. This phenomenon, known as cognitive dissonance, refers to the mental conflict that people undergo when they acquire new information that contradicts their beliefs or assumptions.

Business-to-business (B2B) marketing

Marketing to organizations that acquire goods and services in the production of other goods and services that are then sold or supplied to others.

Psychological processes : Motivation

Motivation is the inward drive we have to get what we need or want. One of the most well-known models for understanding consumer motivation was developed by Abraham Maslow in the mid-1900s. He theorized that humans have various types of needs; these range from simple needs like water and sleep to complex needs like love and self-esteem.40 Maslow's hierarchy of needs model, shown in Figure 4.4, illustrates the needs Maslow identified. His theory is that people seek to meet their basic needs (those at the bottom of the pyramid) before fulfilling higher-level needs.

Consumer Decision Making Process : Information Search (cont)

On the basis of information you found in your information search process, you whittle down your choice. Your list of possibilities shrinks from all phone models you know of to a shorter list of options you actually will consider. That shorter list of brands or products you will evaluate as options for the solution of a particular consumer problem is known as an evoked set (also called a consideration set). For instance, larger purchases, like buying a new truck or a house, often require a great deal of information gathering. However, even smaller purchases, such as a birthday card for a new boyfriend or girlfriend, may involve extensive information searches because of their importance to the consumer.

Consumer Decision Making Process : Information Search

Once consumers recognize a problem, they seek information that will help them identify and sort through available alternatives. Such information will be aimed at answering questions such as: 1. What are the appropriate criteria for evaluating solutions to the problem? 2. What alternative solutions exist? 3. How well does each solution perform on each evaluative criterion?

Psychological processes : Motivation : Safety Needs

Once the physical needs have been satisfied, consumers' safety needs take precedence and begin to dominate behavior. Safety can take different forms, including physical safety and economic safety. The absence of economic safety—due to economic crisis or lack of job opportunities—leads consumers to want job security, savings accounts, insurance policies, reasonable disability accommodations, and the like.

The implications of stockout events for retailers can be significant. For certain classes of products, consumers can be very brand-loyal.

Other research indicates that, depending on the product category, 7 percent to 25 percent of consumers faced with a stockout will continue shopping but won't buy a substitute for their desired item at the store. Another 21 percent to 43 percent will actually go to another store to buy the item. Overall, retailers stand to lose nearly half of intended purchases when customers encounter stockouts.

The incidence of unplanned purchases may be influenced by a number of shopper-related differences. For example:

People who consider themselves very "fast and efficient" shoppers are far less likely to make impulse buys; they buy 82 percent less than the average. Young, unmarried adult households with higher incomes do 45 percent more unplanned buying. If a shopping trip includes stops at multiple stores, 9 percent less unplanned buying occurs at the second or third store. The amount of unplanned buying goes up with the total number of categories.

The affective component is made up of feelings or emotional reactions to the attitude object. It is a classic

System 1-type response; it often exists as nothing more a vague, general feeling. Despite its seeming ambiguous nature, affective attitudes can have a powerful impact on actual behavior. For instance, studies have shown affective attitudes more strongly influence health intentions and behaviors than do cognitive attitudes. Further, individuals may need only to anticipate the experience of affect for it to play a role in shaping overall attitudes. Think about your favorite Super Bowl advertisements from last year. Odds are that the ones that you remember most favorably offered little in the way of product information. Instead, they sought to improve your liking of the brand through use of humor or by tugging at your heartstrings.

Psychological processes : Attitudes : Affective

The affective component of attitudes refers to feelings or emotions linked to an attitude object, such as, "I am afraid of snakes." It is a classic System 1-type response; it often exists as nothing more a vague, general feeling. Despite its seeming ambiguous nature, affective attitudes can have a powerful impact on actual behavior. Further, individuals may need only to anticipate the experience of affect for it to play a role in shaping overall attitudes.

Psychological processes : Attitudes : Behavioral

The behavioral component of attitudes refers to past experiences and future intentions regarding an attitude object, such as, "If I see a snake, I will try to avoid it." While actual behaviors largely reflect these intentions, they may be modified by the situation in which the behavior occurs.

Traditional Perspectives on Consumer Decision Making

The buying decision is the focal point of all marketing efforts. Traditional views of decision making portray a highly informed, logically minded consumer following a deliberate, step-by-step sequence. In this sequence, a person would: 1. Identify an unmet need. 2. Carefully collect information about competing products. 3. Consciously weigh the relative value of the attributes of alternative products. 4. Create a choice set. 5. Carefully (sometimes even mathematically) compute this information to make a purchase decision. 6. After purchase, compare product performance to expectations and hold that data in memory to guide future actions.

Psychological processes : Attitudes : Cognitive

The cognitive component of attitudes relates to beliefs and thoughts we associate with an object, such as, "Snakes are dangerous and gross." For most attitude objects, individuals can simultaneously hold a number of beliefs.

Consumer Decision Making Process : Problem Recognition (cont)

The consumer's perception of the actual state, not some objective reality, drives problem recognition. It is no surprise, then, a key objective for many marketing campaigns is to heighten consumer awareness of a perceived gap. Marketing messages may use rational or emotional appeals to elevate concerns or alter perceptions of the consumer's existing state. To improve marketing performance at this stage, companies often conduct research. The aim of such research is to flesh out consumers' needs or problems and learn how the need or problem led the consumer to a particular brand or solution.

Such approaches have been less common in more mundane categories, like personal health—until now. In 2016, Johnson & Johnson's Listerine mouthwash brand launched a global "Bring Out the Bold"

The insight behind the campaign came from what J&J calls its Spotlight process, a 16-week deep dive into "a brand's core consumers, character, assets, promises, and purpose," said Dave Crutchfield, president, Global Oral Care and Compromised Skin.32 It included talking with 6,000 consumers in six countries, split evenly among brand users and nonusers. Researchers offered both groups odder, more challenging, or spicier foods. Listerine users were more likely to choose them than were nonusers. Listerine users proved to "have a little more edge than non-Listerine users," Crutchfield said.

Psychological processes : Motivation : Love and Belonging

The love and belonging needs of humans deal with intimacy, family, friendships, and the strength of those relationships. Smart marketers recognize this basic human motivation to connect with others and proactively incorporate it into their products and customer experiences.

Psychological processes : Motivation : Self Actualization

The top tier of Maslow's hierarchy is the aspiration to become everything that one is capable of becoming. Self-actualization pertains to a person's full potential and the need to realize that potential. When applied to individual consumers, the need for self-actualization is specific. For example, one individual may have a strong desire to become an ideal parent; another may want to become a superior athlete;

System 1 vs System 2 thinking

Though System 1 requires little energy to operate, it is also prone to biases and systematic errors in judgment. On the other hand, though reason dominates System 2, its heavy-footed, analytical style makes its use impractical in many social settings. Sometimes, in emergencies, System 2 can even be life-threatening. We typically identify our sense of being with the rational System 2. The nonconscious System 1, though, is actually more influential, guiding and steering System 2 to a large extent.

Psychological processes : Perception

We experience practically our entire understanding of the world via our senses. They are our link to memory. They tap into our emotions, past and present. Sensation is the result of a stimulus impinging on the receptor cells of a sensory organ. Sensations are both biochemical and neurological in nature. In turn, perception is the psychological process by which people select, organize, and interpret sensory information to form a meaningful picture of the world. In essence, perception is the way we see the world around us.

Using attribute-based choice, consumers select

a product based on attribute-by-attribute comparisons across brands. Attribute-based choice relies heavily on System 2 mental processing. Consumers must know products' specific attributes at the time of choice in order to make brand comparisons. Attribute-based choice is mentally effortful and time-consuming. As a result, consumers use it most often for important purchases, in which the consumer is motivated to make an optimal decision.

Stockouts A stockout occurs when

a retail outlet is temporarily out of a particular brand. The occurrence of out-of-stock events is surprisingly common, especially for fast-moving consumer goods. Research shows that for every 13 items a consumer wants to buy on a typical trip, at least one will be out of stock.

Values reflect a consumer's belief that

a specific behavior is socially or personally preferable to another behavior. Personal values include everything from a consumer's religious beliefs to a belief in self-responsibility. It is likely that your value system also corresponds to your buying behavior for many goods and services. For example, a consumer who values self-responsibility might have been influenced by Ford's 2009 marketing message that Ford was the only major U.S. automaker that didn't take a taxpayer-funded bailout.

The ability of a supplier to walk away from a modified rebuy provides marketers with

an important negotiation tactic. If Dell consistently agrees to terms that cause the company to lose money in order gain new business, its long-term health as an organization could be jeopardized. There are many instances in which top executives, as well as mid-tier marketing and sales managers, are financially rewarded for pursuing short-term gains in market share by reducing prices—and sacrificing profitability.

Impulse purchases occur when a consumer sees

an item in-store and purchases it, with little or no deliberation, as the result of a sudden, powerful urge to have it. This type of purchase behavior typically results from additional information processing that occurs within the retail outlet or e-commerce website.

The perception process begins when a consumer is exposed to either an internal or external stimulus, which is

any input affecting one of the five senses: sight, sound, smell, touch, or taste.

A buying center is the group of people within an organization who

are involved in a purchase decision. In most instances, the buying center will consist of individuals from various areas of the firm, such as accounting, engineering, operations, and marketing. They will meet specifically to evaluate options and make a purchase decision.

Buying Center Roles : Influencers

are people who influence the decision. They often define technical specifications and provide information for evaluating options.

Types of business customers : Producers

are profit-oriented individuals and organizations that use purchased goods and services to produce other products or to facilitate their daily operations. They include both manufacturers and service providers, totaling more than 13 million U.S. firms. Producers range in size from large, multinational companies like American Airlines and IBM down to your locally owned dental practice and hardware store.

High-Involvement Buying Decisions High-involvement products

are significant purchases that carry a greater risk to consumers if they fail. The two most common examples of high-involvement purchases are a car and a house. Companies that market high-involvement products must provide potential consumers with extensive and helpful information as they go through the decision-making process.

The cognitive component of consumer attitudes rests largely upon a person's

beliefs about a product, brand, or other attitude object. A belief is an organized pattern of knowledge that an individual holds to be true about his or her world. For most attitude objects, individuals can simultaneously hold a number of beliefs. Influencing the cognitive component of someone's attitude depends upon altering these underlying beliefs. When multiple beliefs are held about a brand, some are likely to be more strongly held than others. Beliefs that are weakly held are more susceptible to persuasion attempts. Strengthening the cognitive component of consumer attitudes often involves providing consumers with facts or statements about functional capabilities; those facts or statement are intended to change existing beliefs or provide the basis for new beliefs.

Country-of-origin effects are the

beliefs and associations people in one country have about goods and services produced in another country. They can reflect an overall positive or negative feeling about that country or be specific to certain products. The image that global consumers have of other countries can lead to what are called country-of-origin effects.

However, industry studies have shown the ability to pay by credit rather than cash increases

both the amount consumers are willing to pay and the number of items they purchase. This behavior is not simply a matter of greater convenience. Rather, brain scans show that having to shell out cash for something actually activates the pain centers of the brain. The use of credit cards effectively anesthetizes the "pain of paying." Buying on credit separates the consumption experience from payment for that same experience.

Habitual decision making refers to

consumer decisions made out of "habit," without much deliberation or product comparison. An example is buying a pack of gum.

Extended problem solving refers to

consumer decisions requiring considerable cognitive activity, thought, and behavioral effort. An example is deciding to purchase a new automobile.

A consumption subculture is a

distinctive subgroup of society that self-selects on the basis of a shared commitment to a particular product class, brand, or consumption activity. Consumption subcultures range from interests like hip-hop to extreme sports. Of course, binge viewing a few episodes of Star Trek one weekend does not make you a full-fledged "Trekkie." Self-selecting into such a subculture requires commitment to its shared beliefs and values, participation in its activities, and use of its jargon and rituals.

It turns out that in many important ways the mind of the modern consumer does

does not strictly conform to earlier models of how people make (or should make) decisions. In order to gain a grasp on the mental processing that underlies human behavior, psychologists and economists of the last century sought to simplify this complexity by focusing tightly on cognition and rationality.

Reminder purchases are those that occur

due to retailers' prompts to consumers while consumers are in the store. For instance, reminder purchases occur when a consumer notices an end-of-aisle display for tortilla chips and remembers that she is almost out at home.

Another unique factor for business markets relates to size: Business marketers typically deal with

far fewer buyers than consumer marketers. However, business buyers usually buy in much larger order quantities. As a result, each individual customer tends to be much more essential to the firm's success.

Did you know that the biggest predictor of the grades of students enrolled at U.S. universities is the

grades of the other students living in the same dormitory?26 Germs are not the only things that can spread; behaviors can spread as well. Sociologists have shown that we are subtly, and often unconsciously, influenced by the people around us—by social networks.

Family Influences Family members are one of the

greatest influences on consumer behavior. Think about buying a new car and what those in your life might say about different brands or types of vehicles. You might be impressed by the salespeople and commercials for a certain type of car. But if your parents or other relatives tell you about a bad experience they had with that brand, their opinions may carry more weight than your impressions.

Research has shown that consumers' use of Systems 1 and 2 in decision making, as well as the quality of their decisions, may be

greatly affected by external factors. Such factors include the way in which a choice is framed and external environmental cues. For instance, one study showed that thirsty beach-goers would willingly pay nearly twice as much for a beer from a resort hotel than for the same brew from a small, rundown bodega.

Reference groups can provide consumers with perspective on

how to live their lives. A reference group is the collection of people to whom a consumer compares himself or herself. You might recall what you saw people around the office wearing when you interviewed. Or you might make a guess on that first day and then ask your new coworkers what they wear to work. In such a case, your coworkers serve as your reference group. For example, reference groups tend to significantly influence a consumer's clothing purchases.

Not all attitudes are explicitly understood or stated; consumers may also hold

implicit attitudes. These are positive or negative evaluations that exist below the level of consciousness; they are independent of any explicitly held thoughts or beliefs. Research has found implicit attitudes to be especially useful in predicting behavior that is automatic and spontaneous.

Types of business customers : Government Markets

include thousands of federal, state, and local entities. They purchase everything from heavy equipment used to clear snowy roads to paperclips used to keep office records organized. The federal government is one of the world's largest customers, spending hundreds of billions of dollars a year. Marketing goods and services to the U.S. government requires strict adherence to certain policies, procedures, and documentation obligations.

Dissociative reference group include people that the

individual would not like to be like. Teenagers and young adults provide perhaps the most notable example of dissociative reference groups: They actively seek to dissociate themselves from groups they view as "uncool" or as something their parents might be interested in. But dissociative reference groups can play a role in marketing to all consumers. DIRECTV has run a series of marketing campaigns to encourage consumers not to be like those who have traditional cable television.

It evolves slowly, but can also exhibit rapid change due to current events and global changes. For instance, the behavior of young Chinese consumers appears to be increasingly driven by a spirit of

individualism, or "what fits me." The behavior of young U.S. consumers, in contrast, is often driven by a desire to make a social statement.23 As more firms market to international consumers, they must be aware of the unique patterns of consumer behavior around the world.

An aspirational reference group refers to the

individuals a consumer would like to emulate. For example, professional athletes represent an ideal for many people. Subway made use of this reference group in its marketing campaign in the weeks leading up to the 2012 Summer Olympics in London. Subway commercials showed athletes, such as swimmer Michael Phelps, talking about Subway products as an important part of their training regimen.

Low-Involvement Buying Decisions Low-involvement products are

inexpensive products that can be purchased without much forethought and that are purchased with some frequency. Consumers often do not recognize their desire for a low-involvement product until they are in the store. That behavior influences the strategic decisions for marketing these items. Impulse purchases usually occur with low-involvement products.

Psychological processes : Attitudes

is a relatively enduring organization of beliefs, feelings, and behavioral tendencies toward socially significant objects, groups, events, or symbols Individuals express these tendencies by indicating some degree of favor or disfavor toward particular individuals or objects. Attitudes are widely thought to be one of the most significant topics within social psychology and can greatly influence consumer behavior. Of the various ways psychologists think about attitudes and attitude change, the most influential is the ABC model. It suggests that the structure of the way we feel about something (i.e., an attitude object), is comprised of three dimensions: • Affective • Behavioral • Cognitive

Buying Center Roles : Purchaser

is the person who actually negotiates the terms of the purchase.

Buying Center Roles : Decider

is the person who has the formal or informal power to approve selection of the supplier or brand.

situational influences : involvement

is the personal, financial, and social significance of the decision being made.51 The study of involvement focuses on how consumers choose which alternative to purchase. Involvement may be high or low

Unplanned purchases actually may not be completely unplanned. Even if shoppers have a list of items when they walk into a store, they often

leave room in their mental budget for additional non-list items (sometimes called "in-store slack"). Slack is usually spent on fun, self-indulgent items—things like ice cream or cookies. Decisions to buy those items usually come toward the end of the shopping trip, when consumers are tired and want to reward themselves.

Increasingly, many consumers look for goods and services that embrace sustainability, that is,

products produced in a way that meets the needs of the present without compromising future generations. Nielsen's 2014 Global Survey on Corporate Social Responsibility showed that 55 percent of global online consumers across 60 countries were willing to pay more for products and services from companies that are committed to positive social and environmental impact.

Because the public holds government accountable for its expenditures, the buying procedures are often complex. These procedures are in place to ensure that

purchases meet the necessary requirements. To succeed at marketing to federal agencies and departments, such as the Department of Defense, for example, firms must complete extensive documentation.

Types of business customers : Institutional Markets

represent organizations such as hospitals, schools, churches, and other nonprofit organizations. Institutional markets can vary widely in their buying practices. For example, a mega-church with thousands of members and a multimillion-dollar budget will likely have a buying manager or purchasing agent. In contrast, marketing to a new church with a very small congregation might simply require speaking with the pastor.

The behavioral component of an attitude relates to someone's tendencies to

respond in a certain manner toward an attitude object based on past experiences or future intentions. While actual behaviors largely reflect these intentions, they may be modified by the situation in which the behavior occurs. Marketers seeking to influence consumer behaviors should be on the lookout for factors that may keep someone from acting on favorable attitudes. For instance, an advertising campaign may be well-received by consumers; but if it's not widely distributed or viewed, it may not have the desired financial impact. The relationship may also work the opposite way: Past experiences might serve as the basis of consumer's future affective or cognitive attitudinal components.

Marketers can provide cues, such as advertisements, that encourage a consumer to

satisfy a need or want using the firm's good or service. The specific response a consumer chooses depends on many of the factors we've already discussed. Consistent reinforcement that, for example, a particular hamburger satisfies the consumer's need can lead the consumer to develop a habit of making the same purchase decision over and over again without much thought.

In response to visual clutter, companies are seeking to incorporate

scent, sound, taste, and material textures into their branding efforts. By appealing to senses other than sight, marketers seek to garner attention and build stronger connections with consumers. Scientific evidence backs up the benefits of brands engaging with consumers through multiple senses. For instance, research has found that different characteristics of ambient sound, such as music heard in restaurants and hotels, can influence consumer mood, time spent in a location, and even spending.35 In a study that took place in a wine store, the type of music played affected purchases: Shoppers bought more French wine when French music played and more German wine when German music played.

Consumers today are bombarded with stimuli, such as brand messaging, throughout the course of their hectic days. It is practically impossible for them to process each and every input received from their environment. Therefore, they use

selective attention to decide which stimuli to notice and which ones to ignore. Two concepts closely related to selective exposure are • selective distortion and • selective retention:

Business-to-consumer (B2C) marketing involves

selling goods and services to end-user customers. Examples of B2C businesses include restaurants, car dealerships, and barber shops, each of which market to individual consumers like you who might use their products.

Sensory marketing is marketing that engages consumers'

senses and affects their behaviors. Through use of sensory marketing, brands can create subconscious triggers. In the face of increasingly fragmented and competitive markets, some firms are seeking to use sensation and perception to influence consumer preferences and choice.

Ethnic subcultures, which are based upon

shared race, language, or national background, are the most commonly described subcultures. In the United States, religions, geographic regions, and generations are also bases for strong subcultures.

Examples of marketing strategies for low-involvement products include:

• Colorful packaging that highlights newly released DVDs for sale at Target. • Kellogg's signage at Walmart stores explaining the relatively low cost of eating breakfast at home versus at a restaurant. • A promotional display in a supermarket aisle that features a promotional tie-in between Kraft's Macaroni-and-Cheese dinners and the Dreamworks movie Minions. Tactics like low-tech cardboard displays found at the end of aisles can drive more impulse purchases than temporary price reductions.

Companies must take care to:

• Incentivize top managers to act in the best long-term interests of the company and brand. • Negotiate prices in a manner that is consistent with the broader marketing plan and marketing mix tactics.

Consumer Decision Making Process : Information Search : Sources of Information

• internal information search, consumers use prior searches or past experiences with items from the same brand or product class as sources of information. • external information search - In contrast, when consumers seek information beyond their personal knowledge and experience to support a buying decision External search frequently arises as the result of problem recognition. Some individuals, though, find the learning process itself pleasurable, and they routinely acquire information for potential later use. For instance, an avid musician may enjoy researching different guitars and music accessories even in the absence of an explicit problem with his existing equipment.

Firms typically focus on three consumer reference groups when developing a marketing strategy:

• membership reference group • aspirational reference group • Dissociative reference groups

Consumers also of course make decisions based on their individual differences. A consumer's

• personality, • lifestyle, and • values directly affect his or her behavior.

To develop successful marketing campaigns, organizations need to understand consumer behavior. Over the years, researchers have drawn from areas such as

• psychology, • sociology, • anthropology, • economics, • cognitive neuroscience, and • marketing to gain knowledge of the mechanisms underlying consumption.